FairPoint Communications 2009 Annual Report Download - page 52

Table of Contents
position. We cannot predict the number of competitors that will emerge, particularly in light of possible regulatory or legislative actions that could
facilitate or impede market entry, but increased competition from existing and new entities could have a material adverse effect on our business, financial
condition, results of operations and liquidity.
Competition may lead to loss of revenues and profitability as a result of numerous factors, including:
•loss of customers (given the likelihood that when we lose customers for local service, we will also lose them for all related services);
•reduced network usage by existing customers who may use alternative providers for long distance and data services;
•reductions in the service prices that may be necessary to meet competition; and
•increases in marketing expenditures and discount and promotional campaigns.
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Rapid and significant changes in technology and new service introductions occur frequently in the communications industry and industry standards
evolve continually. We cannot predict the effect of these changes on our competitive position, profitability or industry. Technological developments may
reduce the competitiveness of our networks and require unbudgeted upgrades or the procurement of additional products that could be expensive and
time consuming. In addition, new products and services arising out of technological developments may reduce the attractiveness of our services. If we
fail to adapt successfully to technological changes or obsolescence or fail to obtain access to important new technologies, we could lose customers and
be limited in our ability to attract new customers and sell new services to our existing customers. Our ability to respond to new technological
developments may be diminished or delayed while our management devotes significant effort and resources to integrating Legacy FairPoint's business
and our Northern New England operations.

 

As of December 31, 2009, approximately 86% of our access line equivalents were located in Maine, New Hampshire and Vermont. As a result of
this geographic concentration, our financial results will depend significantly upon economic conditions and consumer trends in these markets. From
January 1, 2009 through December 31, 2009, our Northern New England operations experienced a 12.2% decline in total voice access lines in service,
compared to a decline of 8.1% for Legacy FairPoint during the same period. A deterioration in economic conditions in any of these markets could result
in a further decrease in demand for our services and resulting loss of access line equivalents which could have a material adverse effect on our business,
financial condition, results of operations and liquidity.
In addition, if state regulators in Maine, New Hampshire or Vermont were to take an action that is adverse to our operations in those states, we
could suffer greater harm from that action by state regulators than we would from action in other states because of the concentration of our operations in
those states.
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