FairPoint Communications 2010 Annual Report Download - page 19

Table of Contents
CLECs not only provide competition for our voice services, but most also provide Internet services at competitive speeds and prices. In addition, CLECs
are capable of offering video services in competition with us and we expect that they will increasingly do so in the future.
Cable television companies have aggressively entered the communications market by upgrading their networks with fiber optics and installing facilities to
provide voice, video and Internet services to residential and business customers. Cable high-speed Internet services are generally competitive with our Internet
services in both pricing and the speed of such services. We estimate that as of December 31, 2010, most of the customers that we serve had access to voice and
Internet services through a cable television company.
The FCC’s requirement that telephone companies offer wireline-to-wireline number portability has increased the competition we face from both CLECs and
cable television providers. In addition, CLECs and cable television companies have the ability to bundle voice, high-speed Internet and video services to their
customers, which has and will likely continue to intensify the competition we face from these providers.
Electric utilities could also become a competitive threat to voice 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.
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VoIP. 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 voice services and
network access revenues.
Internet Service Providers. 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. 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.
Strategic Alliances. 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 Recovery and Reinvestment Act of 2009 (the “Recovery Act”) are approved and the networks funded thereby are built.
Recipients of Government Stimulus. Municipalities, public utilities and private businesses receiving government stimulus funds may also choose to enter
the high-speed Internet business.
Other. Our market is rapidly growing and providers of other emerging technologies and alternative communication services continue to enter our markets.
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As of December 31, 2010, we employed a total of 4,032 employees, 2,578 of whom were covered by fourteen collective bargaining agreements. As of
December 31, 2010, 113 of our employees were covered by six collective bargaining agreements that expire during the next calendar year. We believe the state of
our relationship with our union and non-union employees is generally good.
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