FairPoint Communications 2010 Annual Report Download - page 44

Table of Contents
that it is in the public interest to extend some or all of these requirements to our rural LECs, we would be required to provide UNEs to competitors in our rural
telephone company areas. As a result, more competitors could enter our traditional telephone markets than are currently expected, which could have a material
adverse effect on our business, financial condition, results of operations, liquidity and/or the market price of our Common Stock.
Risks posed by costs of regulatory compliance. Regulations create significant compliance costs for us. Subsidiaries that provide intrastate services are
generally subject to certification, tariff filing and other ongoing regulatory requirements by state regulators. Our interstate and intrastate access services are
currently provided in accordance with tariffs filed with the FCC and state regulatory authorities, respectively. Challenges in the future to our tariffs by
regulators or third parties or delays in obtaining certifications and regulatory approvals could cause us to incur substantial legal and administrative expenses,
and, if successful, these challenges could adversely affect the rates that we are able to charge our customers, which could have a material adverse effect on our
business, financial condition, results of operations, liquidity and/or the market price of our Common Stock.
In addition, our non-rural operations are subject to regulations not applicable to our rural operations, including but not limited to requirements relating to
interconnection, the provision of UNEs, and the other market-opening obligations set forth in the 1996 Act. In approving the transfer of authorizations to us
in the Merger, the FCC determined that our non-rural operations would be regulated as a Bell Operating Company following the completion of the Merger,
subject to the same regulatory requirements that currently apply to the other Bell Operating Companies. The FCC also stated that we would be entitled to the
same regulatory relief that Verizon New England had obtained in the region. Any changes made in connection with these obligations could increase our non-
rural operations’ costs or otherwise have a material adverse effect on our business, financial condition, results of operations, liquidity and/or the market price
of our Common Stock. Moreover, we cannot predict the precise manner in which the FCC will apply the Bell Operating Company regulatory framework to us.
State regulators have also imposed conditions in various regulatory proceedings that could materially adversely affect our business, financial condition,
results of operations, liquidity and/or the market price of our Common Stock.
Our business also may be affected by legislation and regulation imposing new or greater obligations related to open Internet access, assisting law
enforcement, bolstering homeland security, minimizing environmental impacts, protecting customer privacy or addressing other issues that affect our
business. We cannot predict whether or to what extent the FCC might modify its rules or what compliance with those new rules might cost. Similarly, we
cannot predict whether or to what extent federal or state legislators or regulators might impose new network access, security, environmental or other obligations
on our business.
Risk of losses from rate reduction. Our local exchange companies that operate pursuant to intrastate rate-of-return regulation are subject to state regulatory
authority over their intrastate telecommunications service rates. State review of these rates could lead to rate reductions, which in turn could have a material
adverse effect on our business, financial condition, results of operations, liquidity and/or the market price of our Common Stock.
For a more thorough discussion of the regulatory issues that may affect our business, see “Item 1. Business—Regulatory Environment.”
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Not applicable.
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We own or lease all of the properties material to our business. Our headquarters is located in Charlotte, North Carolina, in a leased facility. We also have
administrative offices, maintenance facilities, rolling stock, central office and remote switching platforms and transport and distribution network facilities in
each of the 18 states in which we operate our LEC business. Our administrative and maintenance facilities are generally located in or near the communities
served by our LECs and our central offices are often within the administrative building. Auxiliary battery or other non-utility power sources are at each central
office to provide uninterrupted service in the event of an electrical power failure. Transport and distribution network facilities include fiber optic backbone and
copper wire
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