FairPoint Communications 2009 Annual Report Download - page 42

Table of Contents
regulatory structure, the NHPUC has instituted rules and policies to expedite offerings of new services, but we are subject to regulations, such as tariff
filing and cost allocation requirements, that are not applicable to our competitors. In addition to our access tariff, we maintain two New Hampshire
wholesale tariffs, one for interconnection, co-location and UNEs and another for services offered to carriers for resale. The order of the NHPUC
approving the spin-off and the Merger includes conditions generally limiting rates for existing retail, wholesale and DSL services during the three years
following the closing of the Merger to those in effect as of the close date of the Merger.
In a case similar to that of the MPUC described under "—Maine—Unbundling of Network Elements," the NHPUC had entered orders asserting
authority under federal law to require the Verizon Northern New England business to continue offering certain network elements no longer required to
be offered pursuant to Section 251 of the 1996 Act, and at existing total element long run incremental cost rates until the NHPUC decided otherwise.
The Verizon Northern New England business challenged the orders in the United States District Court for the District of New Hampshire and obtained
an order enjoining the NHPUC from enforcing the orders. The recent First Circuit decision that considered the MPUC order also considered this New
Hampshire decision and affirmed the District Court's opinion.
In 2008, the NHPUC issued an order determining that intra-LATA carrier common line switched access charges did not apply to certain
interexchange calls where neither the calling nor the called party is served by our Northern New England operations. This decision was reversed by the
New Hampshire Supreme Court on appeal. Following this decision, the NHPUC directed us to file tariff revisions to remove such charges
prospectively, and we objected to this requirement. The matter remains pending before the NHPUC.
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In April 2006, the Vermont Board issued a final order adopting an amended alternative regulatory plan (the "Amended Incentive Regulation Plan")
for the Verizon Northern New England business to replace a plan adopted in 2000. The Amended Incentive Regulation Plan is retroactive to July 1,
2005, and runs through December 31, 2010. Under the amended plan, the Verizon Northern New England business committed to make broadband
capability available to 75% of its access lines in Vermont by 2008 and 80% of its access lines in Vermont by 2010 with milestones of 65% and 77% for
2007 and 2009, respectively. The Amended Incentive Regulation Plan provides pricing flexibility for all new services, and no price increases are
permitted for existing services such as basic exchange service, message toll service and most vertical services. The final order also continues a service
quality plan with a $10.5 million penalty cap. Other provisions of the order include lifeline credits for qualified customers that subscribe to bundled
services and a requirement to separately publish and distribute white and Yellow Pages directories. The VT 2008 Order was conditioned on our being
subject to the terms and conditions of the Amended Incentive Regulation Plan. As a part of our settlement with the Vermont DPS, and as ordered by the
Vermont Board as a condition of approval of the Merger, we have agreed to exceed the existing Amended Incentive Regulation Plan's broadband build-
out milestones and have agreed to a condition that requires us to reach 100% broadband availability in 50% of our exchanges in Vermont by
December 31, 2010. This requirement has been adopted by the Vermont Board as a condition of approval and is in addition to the broadband expansion
requirements contained in the existing Amended Incentive Regulation Plan. We have also agreed in our settlement with the Vermont DPS to implement
a performance enhancement plan, which was adopted by the Vermont Board as a condition of approval (in addition to the retail service quality plan
required under the Amended Incentive Regulation Plan). As noted above, some of these matters are subject to modifications as part of the Vermont
Regulatory Settlement, for which we are seeking approval from the Vermont Board.
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