FairPoint Communications 2009 Annual Report Download - page 27

Table of Contents
Electric utilities could also become a competitive threat to our local calling, long distance and high-speed Internet services, since they have existing
assets and access to low cost capital that could allow them to enter a service area rapidly and accelerate network development.
Other Competitors
 VoIP service is increasingly being embraced by all industry participants. VoIP service involves the routing of voice calls over the public
Internet or private IP networks, through packets of data instead of transmitting the calls over the existing public switched telephone network. This
routing mechanism may give VoIP service providers a cost advantage, and enable them to offer services to end users at a lower price. While current
VoIP applications typically complete calls using ILEC infrastructure and networks, as VoIP services obtain acceptance and market penetration and
technology advances further, a greater number of calls may be placed without utilizing the public switched telephone network. The proliferation of
VoIP, particularly to the extent these calls do not utilize our LECs' networks or are accorded different regulatory treatment, may result in an erosion of
our customer base and loss of local, long distance and network access revenues.
 In addition to wireline and cable companies, our Internet services also compete with Internet service providers. In
addition to Internet access, many of these companies, such as Microsoft and Yahoo!, offer online content services consisting of access to closed,
proprietary information networks.
 Satellite companies also currently offer broadband access to the Internet, primarily to remote, unserved locations, and competition from
satellite companies may intensify in the future.
 Wireline, wireless, cable and utility companies have formed and may continue to form strategic alliances to offer bundled
services in our service areas. Competition from these strategic alliances could increase if applications for certain broadband development funding
submitted by certain of these strategic alliances under the American Recovery Act of 2009 are approved.
 Municipalities, public utilities and private businesses receiving government stimulus funds may also choose
to enter the high-speed Internet business.
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As of December 31, 2009, we employed a total of 4,066 employees. 2,682 employees of our local exchange companies are covered by fifteen
collective bargaining agreements. We believe the state of our relationship with our union and non-union employees is generally good.

We believe we own or have the right to use all of the intellectual property that is necessary for the operation of our business as we currently
conduct it.

We are subject to extensive federal, state and local regulation. At the federal level, the FCC generally exercises jurisdiction over facilities and
services of common carriers, such as us, to the extent those facilities are used to provide, originate or terminate interstate or international
communications. State regulatory commissions generally exercise jurisdiction over common carriers' facilities, services and rates to the extent those
facilities are used to provide, originate or terminate intrastate communications. In addition, pursuant to local competition provisions of the
Communications Act, as amended by the 1996 Act, state and federal regulators share responsibility for implementing and enforcing certain pro-
competitive policies. In particular, state regulatory agencies exercise substantial
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