FairPoint Communications 2011 Annual Report Download - page 18

Table of Contents
Other Obligations under Federal Law
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.
Broadband and Internet Regulation
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 carrier arrangements on negotiated commercial
terms. The FCC order also allows rural rate-of-return carriers, including most of our Telecom Group 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 FCC’s previous ruling that broadband Internet access is an information service, the FCC continues to evaluate this finding and is expected to issue a
NPRM that could re-regulate broadband Internet access. We can provide no assurance about the outcome of such NPRM and how it may affect our business,
financial condition, results of operations, liquidity and/or the market price of our Common Stock.
In addition, a Verizon petition asking the FCC to forbear from applying common carrier regulation to certain broadband services sold primarily to larger
business customers was deemed granted by operation of law on March 19, 2006 when the FCC did not deny the petition by the statutory deadline. The
U.S. Court of Appeals for the District of Columbia Circuit has rejected a challenge to that outcome. The forbearance deemed granted to Verizon has been
extended to our Northern New England operations by the FCC in its order approving the Merger. In October 2007, the FCC stated its intention to define more
precisely the scope of forbearance obtained by Verizon, but it has not yet done so. On October 4, 2011, tw telecom, Inc. filed a petition with the FCC asking it
to reverse the forbearance granted to Verizon by operation of law on March 19, 2006. Comments have been filed in this proceeding by FairPoint and other
parties. Following reply comments, the FCC may issue an order on this petition. We do not know how this would be resolved or the impact it may have on us
if the FCC reversed, eliminated or modified the forbearance granted to Verizon in 2006.
The FCC has imposed particular regulatory obligations on IP-based telephony. It has concluded that interconnected VoIP providers must comply with
CALEA; provide enhanced 911 emergency calling capabilities; comply with certain disability access requirements; comply with the FCC’s rules protecting
CPNI; provide local number portability; and pay regulatory fees. Recently there have also been discussions among policymakers concerning “net neutrality.”
The FCC released a statement of principles favoring customer choice of content and services available over broadband networks. It has adopted open Internet
access rules applicable to all broadband Internet access providers. However, we cannot predict what impact, if any, this may have on our business, financial
condition, results of operations, liquidity and/or the market price of our Common Stock. The FCC has preempted some state regulation of VoIP.
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