FairPoint Communications 2010 Annual Report Download - page 24

Table of Contents
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The FCC has required that ILECs that provide interstate long-distance services originating from their local exchange service territories must do so in
accordance with “non-structural separation” rules. These rules have required that our long-distance affiliates (i) maintain separate books of account, (ii) not
own transmission or switching facilities jointly with the local exchange affiliate and (iii) acquire any services from their affiliated LEC at tariffed rates, terms
and conditions. The Bell Operating Companies are subject to a different set of rules allowing them to offer both long-distance and local exchange services in the
regions where they operate as Bell Operating Companies, subject to certain conditions with which we comply. In addition, our operations have been obligated
under the FCC’s “equal access” scripting requirement to read new customers a list of all available long-distance carriers presented in random order. Not all of
our competitors must comply with these requirements. Therefore, these requirements may put us at a competitive disadvantage in the interstate long-distance
market. The FCC recently ruled that the Bell Operating Companies need no longer comply with these rules for their long-distance services in order to avoid
classification as a dominant carrier, and that their ILEC affiliates need no longer comply with the separation rules for their long-distance services, provided
that they comply with certain existing and additional safeguards, such as providing special access performance metrics, offering low-volume calling plans and
making available certain monthly usage information on customers’ bills. The FCC also has ruled that the Bell Operating Companies and their ILEC affiliates
are no longer required to comply with the equal access scripting requirement. However, until similar relief is granted in each state by the state PUC, FairPoint
will continue to comply with the equal access scripting requirements.
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We are subject to a number of other statutory and regulatory obligations at the federal level. For example, the Communications Assistance for Law
Enforcement Act (“CALEA”), requires telecommunications carriers to modify equipment, facilities and services to allow for authorized electronic surveillance
based on either industry or FCC standards. Under CALEA and other federal laws, we may be required to provide law enforcement officials with call records,
content or call identifying information, pursuant to an appropriate warrant or subpoena.
The FCC limits how carriers may use or disclose customer proprietary network information (“CPNI”), and specifies what carriers must do to safeguard
CPNI provided to third parties. Congress has enacted, and state legislatures are considering, legislation to criminalize the unauthorized sale of call detail
records and to further restrict the manner in which carriers make such information available.
In addition, if we seek in the future to acquire companies that hold FCC authorizations, in most instances we will be required to seek approval from the
FCC prior to completing those acquisitions. The FCC has broad authority to condition, modify, cancel, terminate or revoke operating authority for failure to
comply with applicable federal laws or rules, regulations and policies of the FCC. Fines or other penalties also may be imposed for such violations.
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The FCC has adopted a series of orders that recognize the competitive nature of certain services that utilize advanced technologies.
With respect to our local network facilities, the FCC has determined that certain unbundling requirements do not apply to certain fiber facilities such as
certain types of loops and packet switches.
The FCC has ruled that dedicated broadband Internet access services offered by telephone companies (using DSL technology), cable operators, electric
utilities and terrestrial wireless providers qualify as largely deregulated information services. LECs or their affiliates may offer the underlying broadband
transmission services that are used as an input to dedicated broadband Internet access services through private carriage arrangements on negotiated commercial
terms. The FCC order also allows rural rate-of-return carriers, including most of our Legacy FairPoint operations, the option to continue providing DSL
service as a common carrier (status quo) offering. The FCC also has concluded that broadband Internet access service providers must comply with CALEA.
Despite the
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