10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 ______________________________________________________________________

FORM 10-Q

________________________________________________________________

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2013

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from          to         

Commission File Number 001-32408

______________________________________________________________________

FairPoint Communications, Inc.

(Exact name of registrant as specified in its charter)

 ______________________________________________________________________

Delaware	13-3725229
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
521 East Morehead Street, Suite 500 Charlotte, North Carolina	28202
(Address of principal executive offices)	(Zip Code)

(704) 344-8150

(Registrant's telephone number, including area code)

______________________________________________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	o	Accelerated filer	x
Non-accelerated filer	o  (Do not check if a smaller reporting company)	Smaller reporting company	o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  o    No  x

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.    Yes  x    No  o

As of May 3, 2013, there were 26,476,958 shares of the registrant's common stock, par value $0.01 per share, outstanding.

TABLE OF CONTENTS

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets as of March 31, 2013 (Unaudited) and December 31, 2012	5
	Condensed Consolidated Statements of Operations for the three months ended March 31, 2013 and 2012 (Unaudited)	6
	Condensed Consolidated Statements of Comprehensive Loss for the three months ended March 31, 2013 and 2012 (Unaudited)	7
	Condensed Consolidated Statement of Stockholders' Deficit for the three months ended March 31, 2013 (Unaudited)	8
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2013 and 2012 (Unaudited)	9
	Notes to Condensed Consolidated Financial Statements (Unaudited)	10
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	36
Item 4.	Controls and Procedures	36
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	38
Item 1A.	Risk Factors	38
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38
Item 3.	Defaults Upon Senior Securities	38
Item 4.	Mine Safety Disclosures	38
Item 5.	Other Information	38
Item 6.	Exhibits	38
	Signatures	39

2

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Some statements in this quarterly report on Form 10-Q for our quarter ended March 31, 2013 (this "Quarterly Report") are known as "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These forward-looking statements include, but are not limited to, statements about our plans, objectives, expectations and intentions and other statements contained in this Quarterly Report that are not historical facts. When used in this Quarterly Report, the words "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates" and similar expressions are generally intended to identify forward-looking statements. Because these forward-looking statements involve known and unknown risks and uncertainties, there are important factors that could cause actual results, events or developments to differ materially from those expressed or implied by these forward-looking statements, including our plans, objectives, expectations and intentions and other factors discussed in this Quarterly Report, including the information in "Item 1A. Risk Factors", in "Item 1A. Risk Factors" of our annual report on Form 10-K for the year ended December 31, 2012 (the "2012 Annual Report") and the factors set forth below:

• future performance generally and our share price as a result thereof;

• restrictions imposed by the agreements governing our indebtedness;

• our ability to satisfy certain financial covenants included in the agreements governing our indebtedness;

• financing sources and availability, and future interest expense;

• our ability to repay or refinance our indebtedness;

• our ability to fund substantial capital expenditures;

• anticipated business development activities and future capital expenditures;

• the effects of regulation, including changes in federal and state regulatory policies, procedures and mechanisms including but not limited to the availability and levels of regulatory support payments, and the remaining restrictions and obligations imposed by federal and state regulators as a condition to the approval of the Merger (as defined herein) and the Plan (as defined in the notes to the condensed consolidated financial statements);

• adverse changes in economic and industry conditions, and any resulting financial or operational impact, in the markets we serve;

• labor matters, including workforce levels, our workforce reduction initiatives, labor negotiations and any resulting work stoppages, and any resulting financial or operational impact;

• material technological developments and changes in the communications industry, including declines in access lines and disruption of our third party suppliers' provisioning of critical products or services;

• change in preference and use by customers of alternative technologies;

• the effects of competition on our business and market share;

• our ability to overcome the impact of pricing pressures on our profitability;

• intellectual property infringement claims by third parties;

• failure of, or attack on, our information technology infrastructure;

• risks related to our reported financial information and operating results;

• availability of net operating loss ("NOL") carryforwards to offset anticipated tax liabilities;

• the impact of changes in assumptions on our ability to meet obligations to our company-sponsored qualified pension plans and post-retirement healthcare plans;

• the impact of lump sum payments related to accrued vested benefits under our company-sponsored qualified pension plans on future pension contributions;

• the effects of severe weather events, such as hurricanes, tornadoes and floods, terrorist attacks, cyber-attacks or other natural or man-made disasters; and

• changes in accounting assumptions that regulatory agencies, including the Securities and Exchange Commission (the "SEC"), may require or that result from changes in the accounting rules or their application, which could result in an impact on earnings.

You should not place undue reliance on such forward-looking statements, which are based on the information currently available to us and speak only as of the date on which this Quarterly Report was filed with the SEC. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. However, your attention is directed to any further disclosures made on related subjects in our subsequent reports filed with the SEC on Forms 10-K, 10-Q and 8-K.

3

Except as otherwise required by the context, references in this Quarterly Report to:

• "FairPoint Communications" refers to FairPoint Communications, Inc., excluding its subsidiaries.

• "FairPoint," the "Company," "we," "us" or "our" refer to the combined business of FairPoint Communications, Inc. and all of its subsidiaries after giving effect to the merger on March 31, 2008 with Northern New England Spinco Inc., a subsidiary of Verizon Communications Inc. ("Verizon"), which transaction is referred to herein as the "Merger".

• "Northern New England operations" refers to the local exchange business acquired from Verizon and certain of its subsidiaries after giving effect to the Merger.

• "Telecom Group" refers to FairPoint, exclusive of our acquired Northern New England operations.

4

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

FAIRPOINT COMMUNICATIONS, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

March 31, 2013 and December 31, 2012

(in thousands, except share data)

	March 31, 2013			December 31, 2012
	(unaudited)
Assets:
Cash	$	17,478		$	23,203
Restricted cash	5,664			6,818
Accounts receivable (net of $18.8 million and $18.9 million allowance for doubtful accounts)	88,590			86,999
Prepaid expenses	16,062			20,128
Other current assets	3,981			4,219
Deferred income tax, net	16,236			16,376
Assets held for sale	—			12,549
Total current assets	148,011			170,292
Property, plant and equipment (net of $722.6 million and $642.1 million accumulated depreciation, respectively)	1,381,466			1,438,309
Intangible assets (net of $24.4 million and $21.6 million accumulated amortization, respectively)	114,203			116,992
Debt issue costs, net	7,491			1,111
Restricted cash	651			651
Other assets	4,697			5,006
Total assets	$	1,656,519		$	1,732,361
Liabilities and Stockholders’ Deficit:
Current portion of long-term debt	$	6,400		$	10,000
Current portion of capital lease obligations	1,235			1,220
Accounts payable	63,860			57,832
Claims payable and estimated claims accrual	1,182			1,282
Accrued interest payable	9,470			176
Other accrued liabilities	60,323			72,036
Liabilities held for sale	—			407
Total current liabilities	142,470			142,953
Capital lease obligations	1,143			1,470
Accrued pension obligations	208,702			203,537
Employee benefit obligations	631,426			619,108
Deferred income taxes	106,440			127,361
Other long-term liabilities	12,526			8,745
Long-term debt, net of current portion	914,501			947,000
Total long-term liabilities	1,874,738			1,907,221
Total liabilities	2,017,208			2,050,174
Commitments and contingencies (See Note 12)
Stockholders’ deficit:
Common stock, $0.01 par value, 37,500,000 shares authorized, 26,477,258 and 26,288,998 shares issued and outstanding at March 31, 2013 and December 31, 2012, respectively	264			262
Additional paid-in capital	508,012			506,153
Retained deficit	(615,724		)	(568,239		)
Accumulated other comprehensive loss	(253,241		)	(255,989		)
Total stockholders’ deficit	(360,689		)	(317,813		)
Total liabilities and stockholders’ deficit	$	1,656,519		$	1,732,361

See accompanying notes to condensed consolidated financial statements (unaudited).

5

FAIRPOINT COMMUNICATIONS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

Three Months Ended March 31, 2013 and 2012

(Unaudited)

(in thousands, except per share data)

	Three Months Ended March 31,
	2013			2012
Revenues	$	235,469		$	248,474
Operating expenses:
Cost of services and sales, excluding depreciation and amortization	116,611			121,475
Selling, general and administrative expense, excluding depreciation and amortization	88,886			89,428
Depreciation and amortization	91,433			93,207
Reorganization related income	(163		)	(1,392		)
Total operating expenses	296,767			302,718
Loss from operations	(61,298		)	(54,244		)
Other income (expense):
Interest expense	(18,002		)	(17,028		)
Loss on debt refinancing	(6,787		)	—
Other	425			302
Total other expense	(24,364		)	(16,726		)
Loss from continuing operations before income taxes	(85,662		)	(70,970		)
Income tax benefit	28,133			24,258
Loss from continuing operations	(57,529		)	(46,712		)
Gain on sale of discontinued operations, net of taxes	10,044			—
Net loss	$	(47,485	)	$	(46,712	)
Weighted average shares outstanding:
Basic	26,147			25,931
Diluted	26,147			25,931
Earnings (loss) per share, basic:
Continuing operations	$	(2.20	)	$	(1.80	)
Discontinued operations	0.38			—
Loss per share, basic	$	(1.82	)	$	(1.80	)
Earnings (loss) per share, diluted:
Continuing operations	$	(2.20	)	$	(1.80	)
Discontinued operations	0.38			—
Loss per share, diluted	$	(1.82	)	$	(1.80	)

See accompanying notes to condensed consolidated financial statements (unaudited).

6

FAIRPOINT COMMUNICATIONS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Loss

Three Months Ended March 31, 2013 and 2012

(Unaudited)

(in thousands)

	Three Months Ended March 31,
	2013			2012
Net loss	$	(47,485	)	$	(46,712	)
Other comprehensive income, net of taxes:
Qualified pension and post-retirement healthcare plans (net of $0.6 million and $0.5 million tax expense, respectively)	2,748			2,070
Total other comprehensive income	2,748			2,070
Comprehensive loss	$	(44,737	)	$	(44,642	)

See accompanying notes to condensed consolidated financial statements (unaudited).

7

FAIRPOINT COMMUNICATIONS, INC. AND SUBSIDIARIES

Condensed Consolidated Statement of Stockholders' Deficit

Three Months Ended March 31, 2013

(Unaudited)

(in thousands)

	Common Stock			Additional paid-in capital			Retained deficit			Accumulated other comprehensive loss			Total stockholders' deficit
	Shares	Amount
Balance at December 31, 2012	26,289	$	262	$	506,153		$	(568,239	)	$	(255,989	)	$	(317,813	)
Net loss	—	—		—			(47,485		)	—			(47,485		)
Issuance of common stock	185	2		(2		)	—			—			—
Exercise of stock options	3	—		17			—			—			17
Stock-based compensation expense	—	—		1,844			—			—			1,844
Employee benefit amounts reclassified from accumulated other comprehensive loss	—	—		—			—			2,748			2,748
Balance at March 31, 2013	26,477	$	264	$	508,012		$	(615,724	)	$	(253,241	)	$	(360,689	)

See accompanying notes to condensed consolidated financial statements (unaudited).

8

FAIRPOINT COMMUNICATIONS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

Three Months Ended March 31, 2013 and 2012

(Unaudited)

(in thousands)

	Three Months Ended March 31,
	2013			2012
Cash flows from operating activities:
Net loss	$	(47,485	)	$	(46,712	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Deferred income taxes	(21,428		)	(24,373		)
Provision for uncollectible revenue	2,489			(1,857		)
Depreciation and amortization	91,433			93,207
Post-retirement healthcare	14,135			13,266
Qualified pension	5,884			(285		)
Gain on sale of business	(16,774		)	—
Loss on debt refinancing	6,787			—
Other non-cash items	938			64
Changes in assets and liabilities arising from operations:
Accounts receivable	(4,152		)	4,060
Prepaid and other assets	3,342			2,982
Restricted cash	1,171			(6,643		)
Accounts payable and accrued liabilities	(5,758		)	7,935
Accrued interest payable	9,294			(6		)
Other assets and liabilities, net	3,612			(230		)
Reorganization adjustments:
Non-cash reorganization income	(180		)	(1,855		)
Claims payable and estimated claims accrual	80			(5,550		)
Restricted cash - cash claims reserve	(17		)	13,076
Total adjustments	90,856			93,791
Net cash provided by operating activities	43,371			47,079
Cash flows from investing activities:
Net capital additions	(29,910		)	(26,257		)
Proceeds from sale of business	30,315			—
Distributions from investments	421			338
Net cash provided by (used in) investing activities	826			(25,919		)
Cash flows from financing activities:
Refinancing costs	(13,217		)	—
Proceeds from issuance of long-term debt	920,590			—
Repayments of long-term debt	(957,000		)	(2,500		)
Restricted cash	—			111
Proceeds from exercise of stock options	17			—
Repayment of capital lease obligations	(312		)	(326		)
Net cash used in financing activities	(49,922		)	(2,715		)
Net change	(5,725		)	18,445
Cash, beginning of period	23,203			17,350
Cash, end of period	$	17,478		$	35,795
Supplemental disclosure of cash flow information:
Reorganization costs paid	$	228		$	270
Non-cash settlement of claims payable	$	—		$	5,268

See accompanying notes to condensed consolidated financial statements (unaudited).

9

FAIRPOINT COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS (Unaudited)

(1) Organization and Principles of Consolidation

Organization

FairPoint is a leading provider of advanced communications services to business, wholesale and residential customers within its service territories. FairPoint offers its customers a suite of advanced data services such as Ethernet, high capacity data transport and other IP-based services over a ubiquitous, next-generation fiber network with more than 15,000 route miles (the "Next Generation Network") in addition to Internet access, high-speed data ("HSD") and local and long distance voice services. FairPoint is the incumbent communications provider in the markets it serves, primarily rural communities and small urban markets. Many of its local exchange carriers ("LECs") have served their respective communities for more than 80 years. As of March 31, 2013, the Company's service territory spanned 17 states and operated with approximately 1.3 million access line equivalents in service, including approximately 330,000 broadband subscribers.

On October 26, 2009, the Company and substantially all of its direct and indirect subsidiaries filed voluntary petitions for relief under chapter 11 of title 11 ("Chapter 11") of the United States Code. These cases were jointly administered under the caption In re FairPoint Communications, Inc. (collectively, the "Chapter 11 Cases") in the United States Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court"). On January 24, 2011 (the "Effective Date"), the Company substantially consummated its reorganization through a series of transactions contemplated by its Third Amended Joint Plan of Reorganization Under Chapter 11 of the United States Code (as confirmed by the Bankruptcy Court, the "Plan").

Principles of Consolidation

The consolidated financial statements include all majority-owned subsidiaries of the Company. Partially owned equity affiliates are accounted for under the cost method or equity method when the Company demonstrates significant influence, but does not have a controlling financial interest. Intercompany accounts and transactions have been eliminated.

(2) Accounting Policies

(a) Presentation and Use of Estimates

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States, which require management to make estimates and assumptions that affect reported amounts and disclosures. Actual results could differ from those estimates. The condensed consolidated financial statements reflect all adjustments that, in the opinion of management, are necessary for a fair presentation of results of operations and financial condition for the interim periods shown, including normal recurring accruals and other items.

Examples of significant estimates include the allowance for doubtful accounts, revenue reserves, the depreciation and recoverability of property, plant and equipment, valuation of intangible assets, qualified pension and post-retirement healthcare plan assumptions, stock-based compensation and income taxes.

(b) Revenue Recognition

Revenues are recognized as services are rendered and are primarily derived from the usage of the Company's networks and facilities or under revenue-sharing arrangements with other communications carriers. Revenues are primarily derived from: voice services, access (including pooling), Internet and broadband services, Connect America Fund ("CAF") receipts and other miscellaneous services. Local access charges are billed to local end users under tariffs approved by each state's Public Utilities Commission ("PUC") (or its similar agency) or by rates, terms and conditions determined by the Company. Access revenues are derived for the intrastate jurisdiction by billing access charges to interexchange carriers and to other LECs. These charges are billed based on toll or access tariffs approved by the local state's PUC. Access charges for the interstate jurisdiction are billed in accordance with tariffs filed by the National Exchange Carrier Association ("NECA") or by the individual company and approved by the Federal Communications Commission (the "FCC").

Revenues are determined on a bill-and-keep basis or a pooling basis. If on a bill-and-keep basis, the Company bills the charges to either the access provider or the end user and keeps the revenue. If the Company participates in a pooling environment (interstate or intrastate), the toll or access billed is contributed to a revenue pool. The revenue is then distributed to individual

10

companies based on their company-specific revenue requirement. This distribution is based on individual state PUCs' (intrastate) or the FCC's (interstate) approved separation rules and rates of return. Distribution from these pools can change relative to changes made to expenses, plant investment or rate-of-return. Some companies participate in federal and certain state universal service programs that are pooling in nature but are regulated by rules separate from those described above. These rules vary by state. Revenues earned through the various pooling arrangements are initially recorded based on the Company's estimates. These rule changes impact the NECA interstate pooling, in that a portion of the Company's interstate Universal Service Fund ("USF") revenues, which are administered through the NECA pools, and which prior to January 1, 2012 were based on costs, are now based on the CAF Phase I rules and will be based on CAF Phase II rules when those are put into effect (as more fully described in "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations—Regulatory Environment" included elsewhere in this Quarterly Report).

Long distance retail and wholesale services can be recurring due to coverage under an unlimited calling plan or usage sensitive. In either case, they are billed in arrears and recognized when earned. Data and Internet services revenues are substantially all recurring revenues and are billed one month in advance and deferred until earned.

As of March 31, 2013 and December 31, 2012, unearned revenue of $17.0 million and $18.3 million, respectively, was included in current other accrued liabilities on the consolidated balance sheets.

The majority of the Company's other miscellaneous services revenue is generated from ancillary special projects at the request of third parties, video services, directory services and late payment charges to end users and interexchange carriers. The Company requires customers to pay for ancillary special projects in advance. Once the ancillary special project is completed and all project costs have been accumulated for proper accounting recognition, the advance payment is recognized as revenue with any over payments refunded to the customer as appropriate. The Company recognizes revenue upon the provision of video services in certain markets by reselling DirecTV content and providing cable and IP television video-over-digital subscriber line services. The Company also publishes telephone directories in some of its markets and recognizes revenues associated with these publications. The Company bills late payment fees to customers who have not paid their bills in a timely manner. In general, late fee revenue is recognized as it is collected.

Non-recurring customer activation fees, along with the related costs up to, but not exceeding, the activation fees, are deferred and amortized over the customer relationship period.

The Company is subject to retail service quality plans in the states of Maine, New Hampshire and Vermont for 2012 and Maine and Vermont for 2013, pursuant to which service quality index ("SQI") penalties are imposed upon the Company's failure to meet the requirements of the respective plans. Penalties resulting from these commitments are recorded as a reduction to revenue and to current other accrued liabilities on the consolidated balance sheets. The Company also adopted a separate performance assurance plan ("PAP") for certain services provided on a wholesale basis to competitive local exchange carriers ("CLECs") in the northern New England service territories of each of the states of Maine, New Hampshire and Vermont, pursuant to which FairPoint is required to provide performance credits in the event the Company is unable to meet the provisions of the respective PAP. Penalties resulting from these commitments are recorded as a reduction to revenue. In Maine and New Hampshire, these penalties are recorded as a reduction to accounts receivable since they are paid by the Company in the form of credits applied to CLEC bills. PAP penalties in Vermont are recorded to other accrued liabilities as a majority of these penalties are paid to the Vermont Universal Service Fund ("VUSF"), while the remaining credits assessed in Vermont are paid by the Company in the form of credits applied to CLEC bills.

Revenue is recognized net of tax collected from customers and remitted to governmental authorities.

Management makes estimated adjustments, as necessary, to revenue or accounts receivable for billing errors, including certain disputed amounts.

(c) Accounting for Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management determines its estimates of future taxable income based upon the scheduled reversal of deferred tax liabilities and tax planning strategies. The

11

Company establishes valuation allowances for deferred tax assets when it is estimated to be more likely than not that the tax assets will not be realized.

FairPoint Communications files a consolidated income tax return with its subsidiaries. All intercompany tax transactions and accounts have been eliminated in consolidation.

(d) Business Segments

Management views its business of providing data, video and voice communication services to business, wholesale and residential customers as one reportable segment. The Company's services consist of retail and wholesale telecommunications and data services, including voice and HSD in 17 states. The Company's chief operating decision maker assesses operating performance and allocates resources based on the consolidated results.

(3) Recent Accounting Pronouncements

In February 2013, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2013-02 related to disclosure of reclassifications out of accumulated other comprehensive income. This ASU requires companies to report, in one place, information about reclassifications out of accumulated other comprehensive income. In addition, it also requires companies to report changes in accumulated other comprehensive income balances. This new guidance was to be applied prospectively and was effective for interim and annual periods beginning after December 15, 2012, with early adoption permitted. The Company adopted this ASU during the quarter ended March 31, 2013 and it did not have a material impact on the Company's condensed consolidated financial statements.

(4) Dividends

The Company currently does not pay a dividend on its common stock and does not expect to pay dividends in the foreseeable future.

(5) Income Taxes

The Company recorded a tax benefit on the loss from continuing operations for the three months ended March 31, 2013 and 2012 of $28.1 million and $24.3 million, respectively, which equates to an effective tax rate of 32.8% and 34.2%, respectively. For both the three months ended March 31, 2013 and 2012, the effective tax rate differs from the 35% federal statutory rate primarily due to an increase in the valuation allowance offset by state taxes. In addition, the Company recorded deferred income tax expense for the three months ended March 31, 2013 of $6.7 million on the gain on sale of its Idaho-based operations on January 31, 2013, which is reported within discontinued operations in the statement of operations for the three months ended March 31, 2013.

Deferred Income Taxes

At March 31, 2013, the Company had gross federal NOL carryforwards of $172.3 million after taking into consideration the NOL tax attribute reduction of $581.8 million resulting from the Company's discharge of indebtedness upon emergence from Chapter 11 protection. The Company's remaining federal NOL carryforwards will expire from 2022 to 2033. At March 31, 2013, the Company had a net, after attribute reduction, state NOL deferred tax asset of $10.3 million. At March 31, 2013, the Company had no alternative minimum tax credits. Telecom Group completed an initial public offering on February 8, 2005, which resulted in an "ownership change" within the meaning of the United States federal income tax laws addressing NOL carryforwards, alternative minimum tax credits and other similar tax attributes. The Merger and the Company's emergence from Chapter 11 protection also resulted in ownership changes. As a result of these ownership changes, there are specific limitations on the Company's ability to use its NOL carryforwards and other tax attributes. The Company believes that it can use the NOLs even with these restrictions in place.

Valuation Allowance. At March 31, 2013 and December 31, 2012, the Company established a valuation allowance against its deferred tax assets of $195.8 million and $192.5 million, respectively, which consist of a $162.1 million and $159.5 million federal allowance, respectively, and a $33.7 million and $33.0 million state allowance, respectively. During the three months ended March 31, 2013, a decrease in the Company's valuation allowance of approximately $0.7 million was allocated to accumulated other comprehensive loss in the condensed consolidated balance sheet.

Unrecognized Tax Benefits. Unrecognized tax benefits are reserves established for probable loss contingencies that could be reasonably estimated. The Company's unrecognized tax benefits totaled $3.8 million as of March 31, 2013 and $3.8 million as

12

of December 31, 2012. The total unrecognized tax benefits that, if recognized, would affect the effective tax rate are $3.8 million. The Company does not expect a significant increase or decrease in its unrecognized tax benefits during the next twelve months.

The Company recognizes any interest and penalties accrued related to unrecognized tax benefits in income tax expense. During the three months ended March 31, 2013 and 2012, the Company did not make any payment of interest and penalties. There was nothing accrued in the condensed consolidated balance sheets for the payment of interest and penalties at March 31, 2013 and December 31, 2012, respectively, as the remaining unrecognized tax benefits would only serve to reduce the Company's current federal and state NOL carryforwards, if ultimately recognized.

Income Tax Returns

The Company and its eligible subsidiaries file consolidated income tax returns in the United States federal jurisdiction and certain consolidated, combined and separate entity tax returns, as required, with various state and local governments. The Company is no longer subject to United States federal, state and local, or non-United States income tax examinations by tax authorities for years prior to 2008. NOL carryovers from closed tax years may be subject to examination by federal or state taxing authorities if utilized in a year open to examination. As of March 31, 2013 and December 31, 2012, the Company does not have any significant additional jurisdictional tax audits.

(6) Long-Term Debt

Long-term debt for the Company at March 31, 2013 and December 31, 2012 is shown below (in thousands):

	March 31, 2013			December 31, 2012
New Term Loan, due 2019 (weighted average rate of 7.50%) (a)	$	640,000		$	—
Discount on New Term Loan (b)	(19,099		)	—
Notes, 8.75%, due 2019 (c)	300,000			—
Old Term Loan, due 2016 (weighted average rate of 6.50%)(d)	—			957,000
Total long-term debt	920,901			957,000
Less: current portion	(6,400		)	(10,000		)
Total long-term debt, net of current portion	$	914,501		$	947,000

(a) The estimated fair value of the Company's New Term Loan (as defined below) at March 31, 2013 was approximately $620.8 million based on market prices of the Company's debt securities at the respective balance sheet date, which falls within Level 2 of the fair value hierarchy.

(b) The $19.4 million discount, at the date of distribution, on the New Term Loan (as defined below) will be amortized using the effective interest method over the term of the senior secured credit facility due 2019.

(c) The estimated fair value of the Notes (as defined below) at March 31, 2013 was approximately $294.0 million based on market prices of the Company's debt securities at the respective balance sheet date, which falls within Level 2 of the fair value hierarchy.

(d) The estimated fair value of the Old Term Loan (as defined below) at December 31, 2012 was approximately $929.5 million based on market prices of the Company's debt securities at the respective balance sheet date, which falls within Level 2 of the fair value hierarchy.

As of March 31, 2013 the Company had $61.7 million, net of $13.3 million of outstanding letters of credit, available for additional borrowing under the New Revolving Facility (as defined below). The Company also has a standby letter of credit facility at Bank of America, N.A. that supports certain letters of credit issued under the Old Revolving Facility (as defined below) that have not yet been transitioned to its New Revolving Facility (as defined below). This standby letter of credit facility at Bank of America, N.A. will be canceled once all of the letters of credit have been transitioned.

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The approximate aggregate maturities of long-term debt, excluding the debt discount on the New Term Loan (as defined below), for each of the five years subsequent to March 31, 2013 and thereafter are as follows (in thousands):

Trailing twelve months ending March 31,	Balance Due
2014	$	6,400
2015	6,400
2016	6,400
2017	6,400
2018	6,400
Thereafter	908,000
Total long-term debt, including current portion	$	940,000

Refinancing

On February 14, 2013 (the "Refinancing Closing Date"), FairPoint Communications refinanced the Old Credit Agreement Loans (as defined herein) (the "Refinancing"). In connection with the Refinancing, FairPoint Communications (i) issued $300.0 million aggregate principal amount of its 8.75% senior secured notes due 2019 (the "Notes") in a private offering exempt from registration under the Securities Act pursuant to an indenture (the "Indenture") that FairPoint Communications entered into on the Refinancing Closing Date with certain of its subsidiaries that guarantee the indebtedness under the New Credit Agreement (as defined herein) (the "Subsidiary Guarantors") and U.S. Bank National Association, as trustee and collateral agent, and (ii) entered into a new credit agreement (the "New Credit Agreement"), dated as of the Refinancing Closing Date, with the lenders party thereto from time to time and Morgan Stanley Senior Funding, Inc., as administrative agent and letter of credit issuer. The New Credit Agreement provides for a $75.0 million revolving credit facility (the ''New Revolving Facility''), which has a sub-facility providing for the issuance of up to $40.0 million in letters of credit, and a $640.0 million term loan facility (the ''New Term Loan'' and, together with the New Revolving Facility, the ''New Credit Agreement Loans"). On the Refinancing Closing Date, FairPoint Communications used the proceeds of the Notes offering, together with $640.0 million of borrowings under the New Term Loan and cash on hand to (i) repay principal of $946.5 million outstanding on the Old Term Loan (as defined herein), plus approximately $7.7 million of accrued interest and (ii) pay approximately $32.6 million of fees, expenses and other costs relating to the Refinancing.

The New Credit Agreement. The principal amount of the New Term Loan and commitments under the New Revolving Facility may be increased by an aggregate amount of up to $200.0 million, subject to certain terms and conditions specified in the New Credit Agreement. The New Term Loan will mature on February 14, 2019 and the New Revolving Facility will mature on February 14, 2018, subject in each case to extensions pursuant to the terms of the New Credit Agreement.

Interest Rates and Fees. Interest on borrowings under the New Credit Agreement Loans accrue at an annual rate equal to either a British Bankers Association London Inter-Bank Offered Rate ("LIBOR") or the base rate, in each case plus an applicable margin. LIBOR is a per annum rate for dollar deposits with an interest period of one, two, three or six months (at FairPoint Communication's election), subject to a minimum LIBOR floor of 1.25%. The base rate is the per annum rate equal to the greatest of (x) the federal funds effective rate plus 0.50%, (y) the rate of interest publicly quoted from time to time by The Wall Street Journal as the United States ''Prime Rate'' and (z) LIBOR with an interest period of one month plus 1.00%. The applicable margin for the New Term Loan is (a) 6.25% per annum with respect to term loans bearing interest based on LIBOR or (b) 5.25% per annum with respect to term loans bearing interest based on the base rate. The applicable interest rate for the New Revolving Facility is, initially, (a) 5.50% with respect to revolving loans bearing interest based on LIBOR or (b) 4.50% per annum with respect to revolving loans bearing interest based on the base rate, in each case subject to adjustment after March 31, 2013 based on FairPoint Communication's consolidated total leverage ratio, as defined in the New Credit Agreement. FairPoint Communications is required to pay a quarterly letter of credit fee on the average daily amount available to be drawn under letters of credit equal to the applicable interest rate for revolving loans bearing interest based on LIBOR, plus a fronting fee of 0.125% per annum on the average daily amount available to be drawn under such letters of credit. In addition, FairPoint Communications is required to pay a quarterly commitment fee on the average daily unused portion of the New Revolving Facility, which is 0.50% initially, subject to reduction to 0.375% after March 31, 2013 based on FairPoint Communication's consolidated total leverage ratio.

Security/Guarantors. All obligations under the New Credit Agreement, together with certain designated hedging obligations and cash management obligations, are unconditionally guaranteed on a senior secured basis by each of the Subsidiary Guarantors and secured by a first-priority lien on substantially all personal property of FairPoint Communications and the Subsidiary Guarantors, subject to certain exclusions set forth in the related security documents, pari passu with the lien securing the obligations under the Notes.

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Mandatory Repayments. FairPoint Communications is required to make quarterly repayments of the New Term Loan in a principal amount equal to $1.6 million during the term of the New Credit Agreement, beginning June 30, 2013. In addition, amounts due under the New Credit Agreement are mandatorily repayable with (i) a percentage, initially equal to 50% and subject to reduction to 25% based on FairPoint Communication's consolidated total leverage ratio, of FairPoint Communication's excess cash flow, as defined in the New Credit Agreement, beginning with the fiscal year ending December 31, 2013, (ii) the net cash proceeds of certain asset dispositions, insurance proceeds and condemnation awards and (iii) issuances of debt not permitted to be incurred under the New Credit Agreement. Optional prepayments and mandatory prepayments resulting from the incurrence of debt not permitted to be incurred under the New Credit Agreement are required to be made at (i) 103.0% of the aggregate principal amount prepaid if such prepayment is made on or prior to February 14, 2014, (ii) 102.0% of the aggregate principal amount prepaid if such prepayment is made after February 14, 2014, but on or prior to February 14, 2015 and (iii) 101.0% of the aggregate principal amount prepaid if such prepayment is made after February 14, 2015 and on or prior to February 14, 2016. No premium is required to be paid for prepayments made after February 14, 2016.

Covenants. The New Credit Agreement contains customary representations and warranties and affirmative and negative covenants for a transaction of this type, including two financial maintenance covenants: (i) a consolidated interest coverage ratio and (ii) a consolidated total leverage ratio. The New Credit Agreement also contains a covenant limiting the maximum amount of capital expenditures that FairPoint Communications and its subsidiaries may make in any fiscal year. As of March 31, 2013, FairPoint Communications was in compliance with all covenants under the New Credit Agreement.

Events of Default. The New Credit Agreement also contains customary events of default for a transaction of this type.

The Notes. On the Refinancing Closing Date, FairPoint Communications issued $300.0 million of the Notes in a private offering exempt from registration under the Securities Act pursuant to the Indenture.

The terms of the Notes are governed by the Indenture. The Notes are senior secured obligations of FairPoint Communications and are guaranteed by the Subsidiary Guarantors. The Notes and the guarantees thereof are secured by a first-priority lien on substantially all personal property of FairPoint Communications and the Subsidiary Guarantors, subject to certain exclusions set forth in the related security documents, pari passu with the lien securing the obligations under the New Credit Agreement. The Notes will mature on August 15, 2019 and accrue interest at a rate of 8.75% per annum, which is payable semi-annually in arrears on February 15 and August 15, commencing on August 15, 2013.

On or after February 15, 2016, FairPoint Communications may redeem all or part of the Notes at the redemption prices set forth in the Indenture, plus accrued and unpaid interest thereon, to the applicable redemption date. At any time prior to February 15, 2016, FairPoint Communications may redeem all or part of the Notes at a redemption price equal to 100% of the principal amount of the Notes redeemed, plus a "make-whole" premium as of, and accrued and unpaid interest to, the applicable redemption date. In addition, at any time prior to February 15, 2016, FairPoint Communications may, on one or more occasions, redeem up to 35% of the original aggregate principal amount of the Notes, using net cash proceeds of certain qualified equity offerings, at a redemption price of 108.75% of the principal amount of Notes redeemed, plus accrued and unpaid interest to the applicable redemption date.

The holders of the Notes have the ability to require FairPoint Communications to repurchase all or any part of the Notes if FairPoint Communications experiences certain kinds of changes in control or engages in certain asset sales, in each case at the repurchase prices and subject to the terms and conditions set forth in the Indenture.

The Indenture contains certain covenants which are customary with respect to non-investment grade debt securities, including limitations on FairPoint Communication's ability to incur additional indebtedness, pay dividends on or make other distributions or repurchase FairPoint Communication's capital stock, make certain investments, enter into certain types of transactions with affiliates, create liens and sell certain assets or merge with or into other companies. These covenants are subject to a number of important limitations and exceptions.

The Indenture also provides for customary events of default, including cross defaults to other specified debt of FairPoint Communications and certain of its subsidiaries.

Old Credit Agreement

On the Effective Date, FairPoint Communications and FairPoint Logistics, Inc. (collectively, the "Old Credit Agreement Borrowers") entered into a $1,075.0 million senior secured credit facility with a syndicate of lenders and Bank of America, N.A., as the administrative agent for the lenders (the "Old Credit Agreement"), comprised of a $75.0 million revolving facility (the "Old Revolving Facility") and a $1.0 billion term loan (the "Old Term Loan" and together with the Old Revolving Facility, the "Old Credit Agreement Loans"). On the Effective Date, the Company paid to the lenders providing the Old Revolving Facility an aggregate fee equal to $1.5 million. Interest on the Old Credit Agreement Loans accrued at an annual rate equal to either (a) LIBOR plus 4.50%, with a minimum LIBOR floor of 2.00% for the Old Term Loan or (b) a base rate plus 3.50% per annum, which base

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rate was equal to the highest of (x) Bank of America's prime rate, (y) the federal funds effective rate plus 0.50% and (z) the applicable LIBOR plus 1.00%. In addition, the Company was required to pay a 0.75% per annum commitment fee on the average daily unused portion of the Old Revolving Facility. The entire outstanding principal amount of the Old Credit Agreement Loans was to be due and payable five years after the Effective Date. The Old Credit Agreement required quarterly repayments of principal of the Old Term Loan after the first anniversary of the Effective Date. During 2012 and in the first quarter of 2013, prior to the Old Credit Agreement being retired, the Company made $43.0 million and $10.5 million, respectively, of principal payments on the Old Term Loan.

The Old Credit Agreement contained customary representations, warranties and affirmative and negative covenants. The Old Credit Agreement also contained minimum interest coverage and maximum total leverage maintenance covenants, along with a maximum senior leverage covenant measured upon the incurrence of certain types of debt. As of December 31, 2012, the Old Credit Agreement Borrowers were in compliance with all covenants under the Old Credit Agreement.

On February 14, 2013, the Company completed the Refinancing and paid all amounts outstanding under the Old Credit Agreement.

Debt Issue Costs

On February 14, 2013, the Company completed the Refinancing and capitalized $7.6 million of debt issue costs associated with the New Credit Agreement and Notes. These debt issue costs are being amortized over a weighted average life of 6.2 years using the effective interest method.

On the Effective Date, the Company entered into the Old Credit Agreement and capitalized $2.4 million of debt issue costs associated with the Old Credit Agreement. These debt issue costs were being amortized over a weighted average life of 3.7 years using the effective interest method. Upon the completion of the Refinancing, the balance of the Old Credit Agreement debt issue costs was written off.

As of March 31, 2013 and December 31, 2012, the Company had capitalized debt issue costs of $7.5 million and $1.1 million, respectively, net of amortization.

(7) Employee Benefit Plans

The Company sponsors noncontributory qualified pension plans and post-retirement healthcare plans, which provide certain cash payments and medical and dental benefits to covered retired employees and their beneficiaries and covered dependents. These plans were assumed as part of the acquisition of the Northern New England operations from Verizon. The qualified pension plan and the post-retirement healthcare plan covering non-represented employees are frozen. Therefore, no new benefits are being earned by participants and no new participants are becoming eligible for benefits in these plans. Participants in the qualified pension plan and the post-retirement healthcare plan covering represented employees continue to accrue benefits in accordance with the respective plan documents and contractual requirements in the collective bargaining agreements. Eligibility to participate in the plans is based on an employee's age and years of service. The Company makes contributions to the qualified pension plans to meet minimum Employee Retirement Income Security Act of 1974, as amended (ERISA) funding requirements and has the ability to elect to make additional discretionary contributions. Payments of benefits under the post-retirement healthcare plans are funded by the Company as the benefits are paid.

Annually, the Company remeasures the net liabilities of its qualified pension and other post-retirement healthcare plans.

Net Periodic Benefit Cost. Net periodic benefit cost is generally recognized as a component of selling, general and administrative expense on the consolidated statements of operations; however, the Company capitalizes a portion of net periodic benefit cost in conjunction with its use of internal labor resources utilized on capital projects. Components of the net periodic benefit cost related to the Company's qualified pension plans and post-retirement healthcare plans for the three months ended March 31, 2013 and 2012 are presented below (in thousands).

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	Three Months Ended March 31, 2013					Three Months Ended March 31, 2012
	Qualified Pension			Post- retirement Healthcare		Qualified Pension			Post- retirement Healthcare
Service cost	$	4,638		$	7,482	$	4,096		$	6,784
Interest cost	3,697			6,493		3,662			6,182
Expected return on plan assets	(3,170		)	—		(3,279		)	(8		)
Amortization of actuarial loss	1,156			2,235		517			1,682
Plan settlement	—			—		356			—
Net periodic benefit cost	$	6,321		$	16,210	$	5,352		$	14,640

Contributions and Benefit Payments. On July 6, 2012, the Moving Ahead for Progress in the 21^st Century Act was signed into law. This act contained a pension funding stabilization provision, which allows pension plan sponsors to use higher interest rate assumptions when determining funded status and funding obligations. As a result, the Company's 2013 minimum required qualified pension plan contribution is $7.4 million, which is significantly lower than it would have been in the absence of this stabilization provision. On September 25, 2012, the Company elected to defer use of the higher segment rates under the act until the first plan year beginning on or after January 1, 2013 solely for determination of the adjusted funding target attainment percentage ("AFTAP") used to determine benefit restrictions under Internal Revenue Code Section 436.

The Company expects to contribute approximately $15.0 million to its qualified pension plans in 2013, which includes the minimum required contribution amount required by the Pension Protection Act of 2006 in addition to discretionary contributions. No contributions to the qualified pension plans were made during the three months ended March 31, 2013. The Company expects to fund approximately $5.1 million in benefit payments to its post-retirement healthcare plans during fiscal year 2013, of which $0.9 million was funded during the three months ended March 31, 2013. Accordingly, during the remainder of fiscal year 2013, the Company expects to contribute approximately $15.0 million to its qualified pension plans and fund approximately $4.2 million in benefit payments to its post-retirement healthcare plans.

Return on Plan Assets. For the three months ended March 31, 2013 and 2012, the actual return on the pension plan assets were gains of approximately 3.8% and 5.7%, respectively. Net periodic benefit cost for 2013 assumes a weighted average annualized expected return on plan assets of approximately 7.6%. Should the Company's actual return on plan assets be lower than the expected return assumption, the net periodic benefit cost may increase in future periods and the Company may be required to contribute additional funds to its qualified pension plans.

(8) Accumulated Other Comprehensive Loss

The following table provides a reconciliation of adjustments reclassified from accumulated other comprehensive loss (in thousands):

	Three Months Ended March 31, 2013
Employee benefits:
Qualified pension plans' amortization of actuarial loss (a)	$	1,156
Post-retirement healthcare plans' amortization of actuarial loss (a)	2,235
Total employee benefit amounts reclassified from accumulated other comprehensive loss	3,391
Tax expense	(643		)
Total employee benefit amounts reclassified from accumulated other comprehensive loss, net	$	2,748

(a) These accumulated other comprehensive loss components are included in the computation of net periodic benefit cost. See note (7) "Employee Benefit Plans" for details.

(9) Earnings Per Share

Basic earnings per share of the Company is computed by dividing net loss by the weighted average number of shares of common stock outstanding for the period. Except when the effect would be anti-dilutive, the diluted earnings per share calculation calculated using the treasury stock method includes the impact of stock units, shares of non-vested restricted stock and shares that could be issued under outstanding stock options.

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The following table provides a reconciliation of the common shares used for basic earnings per share and diluted earnings per share (in thousands):

	Three Months Ended March 31,
	2013	2012
Weighted average number of common shares used for basic earnings per share (a)	26,147	25,931
Effect of potential dilutive shares (b)	—	—
Weighted average number of common shares and potential dilutive shares used for diluted earnings per share	26,147	25,931
Anti-dilutive shares outstanding at period-end that are excluded from the above reconciliation (c)	5,349	4,916

(a) Weighted average number of common shares used for basic earnings per share excludes 285,060 and 266,157 weighted average shares of non-vested restricted stock as of the three months ended March 31, 2013 and 2012, respectively. Non-vested restricted stock is included in common shares issued and outstanding in the condensed consolidated balance sheets.

(b) Since the Company incurred a loss for the three months ended March 31, 2013 and 2012, all potentially dilutive securities are anti-dilutive for these periods and, therefore, are excluded from the determination of diluted earnings per share.

(c) Anti-dilutive shares outstanding at period-end that are excluded from the above reconciliation include warrants, non-vested restricted stock and stock options issued under the FairPoint Communications, Inc. 2010 Long Term Incentive Plan.

(10) Stockholders' Deficit

At March 31, 2013, 37,500,000 shares of common stock were authorized and 26,477,258 shares of common stock (including shares of non-vested restricted stock) and 3,582,402 warrants, each eligible to purchase one share of common stock, were outstanding.

The initial exercise price applicable to the warrants is $48.81 per share of common stock. The exercise price applicable to the warrants is subject to adjustment upon the occurrence of certain events described in the warrant agreement that the Company entered into with the Bank of New York Mellon, as the warrant agent, on the Effective Date. The warrants may be exercised at any time on or before the seventh anniversary of the Effective Date.

(11) Assets Held for Sale and Discontinued Operations

On November 28, 2012, the Company entered into an agreement to sell the capital stock of its Idaho-based operations to Blackfoot Telecommunications Group ("Blackfoot") of Missoula, Montana for $30.3 million in gross cash proceeds. The closing of the transaction was completed on January 31, 2013. Eleven FairPoint employees joined the Blackfoot organization at closing. The Company recorded a gain, before $6.7 million of deferred taxes, of $16.8 million upon the closing of the transaction, which is reported within discontinued operations in the condensed consolidated statement of operations for the three months ended March 31, 2013. Due to differences between the book and tax basis of the Idaho-based operations, the gain reported on the sale for income tax purposes will be $27.5 million.

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The Idaho-based operations' assets and liabilities were classified as held for sale and were recorded as single line items in the current asset and current liability sections of the condensed consolidated balance sheet at December 31, 2012. A summary of assets and liabilities held for sale at December 31, 2012 is as follows (in thousands):

	December 31, 2012
Assets held for sale:
Accounts receivable, net	$	261
Prepaid expenses	37
Other current assets	3
Property, plant and equipment (net of $4.6 million accumulated depreciation)	6,441
Other assets	5,807
Total assets held for sale	$	12,549
Liabilities held for sale:
Accounts payable	137
Other accrued liabilities	148
Other long-term liabilities	122
Total liabilities held for sale	$	407

The operations of the Idaho-based operations are immaterial to the financial results of the consolidated Company and therefore have not been segregated as discontinued operations in the condensed consolidated statements of operations. Revenue and income before income taxes of the Idaho-based operations for the three months ended March 31, 2013 and 2012 are as follows (in thousands):

	Three Months Ended March 31,
	2013(a)		2012
Revenue	$	674	$	2,058
Income before income taxes	$	477	$	838

(a) Reflects revenue and income before income taxes of the Idaho-based operations for the period of January 1, 2013 through the completion of the transaction on January 31, 2013.

(12) Commitments and Contingencies

(a) Leases

The Company does not have any leases with contingent rental payments or any leases with contingency renewal, purchase options, or escalation clauses.

(b) Legal Proceedings

From time to time, the Company is involved in litigation and regulatory proceedings arising out of its operations. The Company's management believes that it is not currently a party to any legal or regulatory proceedings, the adverse outcome of which, individually or in the aggregate, would have a material adverse effect on the Company's financial position or results of operations. Notwithstanding that the Company emerged from Chapter 11 protection on the Effective Date, one of the Chapter 11 Cases (Northern New England Telephone Operations LLC - Case No. 09-16365) remains open.

(c) Service Quality Penalties

The Company's Northern New England operations are, or in the case of New Hampshire, were, subject to certain retail service quality plans in Maine, New Hampshire and Vermont pursuant to which the Company incurs SQI penalties resulting from the Company's failure to meet certain benchmarks for operating performance metrics set forth in the respective plans. The retail service quality plan in New Hampshire was eliminated effective August 10, 2012. Penalties resulting from these commitments

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are recorded as a reduction to revenue. The certain regulatory approvals relating to the Chapter 11 Cases and the Plan and certain modifications to the requirements imposed by state regulatory authorities as a condition to approval of the Merger (each a "Merger Order", and collectively, the "Merger Orders") or subsequent regulation plan in each state provide that any SQI penalties assessed under the plans be paid by the Company in the form of credits applied to retail customer bills. However, as the result of separate orders in New Hampshire and Vermont issued in 2012, certain previously assessed SQI penalties in each respective state may be used for expansion of broadband services to unserved and underserved areas in those states as described below.

As of March 31, 2013 and December 31, 2012, the Company has an estimated liability of $1.9 million and $2.1 million, respectively, for SQI penalties based on the Company's actual results relative to the benchmarks for the operating performance metrics set forth in the respective retail service quality plans. As of March 31, 2013 and December 31, 2012, the liability is located in other accrued liabilities.

For the plan year ended July 31, 2012, the Company incurred $1.7 million in Maine SQI penalties, which are being issued in the form of credits applied to retail customers' bills in the amount of $0.48 per access line per month over the twelve months beginning in December 2012.

During the quarter ended March 31, 2012, the Vermont Public Service Board ("VPSB") approved the Company's request to use $2.5 million of the SQI penalties incurred under the Vermont retail service quality plan to deploy broadband into unserved areas. At that time, these SQI penalties were reclassified from the claims reserve established to pay outstanding bankruptcy claims and various other bankruptcy related fees (the "Claims Reserve") to other accrued liabilities.

In New Hampshire, as the result of a New Hampshire PUC ("NHPUC") recommendation and the approval by the governor and executive council of New Hampshire of a certain broadband expansion agreement, the Company received authorization to move forward with the next phase of developing a detailed engineering plan for use of $2.8 million in SQI penalties incurred under the New Hampshire retail service quality plan, together with another $0.5 million of Company funds, to build out broadband connections to customers in rural areas beyond the commitments made in New Hampshire's Merger Order. On January 29, 2013, the NHPUC approved the Company's detailed engineering plan in its entirety. At December 31, 2012, these SQI penalties were reclassified from the Claims Reserve to other accrued liabilities given the NHPUC's subsequent approval to utilize these penalties for an alternative use.

Based on the Company's current estimate of its SQI penalties in the Northern New England operations, changes in the accrual impacting revenue and payments are as follows (in thousands):

	Three Months Ended March 31,
	2013			2012
Increase (decrease) in liability recorded as a reduction (increase) to revenue	$	142		$	(1,088	)
SQI penalties paid out in the form of customer rebates	$	(345	)	$	—

(d) Performance Assurance Plan Credits

As part of the Merger Orders, the Company adopted a PAP that measures the Company's performance in the provision of wholesale services to CLECs in the northern New England service territories of Maine, New Hampshire and Vermont. Penalties resulting from failure to meet the specified performance standards as defined in the provisions of the separate plans in each state are recorded as a reduction to revenue and, in general, are issued in the form of credits applied to affected CLEC bills. However, as a result of a Vermont order in 2012, certain previously assessed PAP penalties in Vermont will be used for expansion of broadband services to unserved areas of Vermont.

As of March 31, 2013 and December 31, 2012, the Company has recorded a reserve of $1.0 million and $1.4 million, respectively, for the estimated amount of PAP penalties incurred that have not yet been credited to CLECs. Penalties assessed in Maine and New Hampshire are recorded as a reduction to accounts receivable since they are paid by the Company in the form of credits applied to CLEC bills. Penalties for Vermont are recorded as other accrued liabilities since a significant portion of these penalty amounts are paid to the VUSF, while the remaining credits assessed in Vermont are paid by the Company in the form of credits applied to CLEC bills.

During the quarter ended March 31, 2012, the VPSB approved the Company's request to use $4.1 million of certain accrued PAP penalties to deploy broadband into unserved areas. At that time, these accrued PAP penalties were reclassified from the Claims Reserve to other accrued liabilities.

Based on the Company's current estimate of its PAP credits in the Northern New England operations, changes in the accrual impacting revenue and payments are as follows (in thousands):

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	Three Months Ended March 31,
	2013			2012
Increase (decrease) in estimated reserve recorded as a reduction (increase) to revenue	$	1,601		$	205
PAP credits issued	$	(2,084	)	$	(588	)

During early 2011, the NHPUC ordered an audit of the Company's existing PAP in the state of New Hampshire, which commenced in October 2011 and is ongoing. The existing PAP in Maine and Vermont may also be subject to audit, as determined by the Maine PUC and the VPSB, respectively.

(e) Restricted Cash

As of March 31, 2013, the Company had $6.3 million of restricted cash, of which $0.7 million is reserved for payment of outstanding bankruptcy claims (the "Cash Claims Reserve"), $1.8 million is reserved for broadband build-out in Vermont, $3.2 million is reserved for broadband build-out in New Hampshire and $0.6 million is restricted for other purposes.

During the three months ended March 31, 2013, there was little activity in the Cash Claims Reserve. During the three months ended March 31, 2013, $1.0 million of restricted cash reserved for broadband build-out in Vermont was utilized and $0.1 million of restricted cash reserved for broadband build-out in New Hampshire was utilized. For further information on the establishment of restricted funds set aside for broadband build-out in Vermont and New Hampshire, see "—(c) Service Quality Penalties" and "—(d) Performance Assurance Plan Credits" herein.

(f) Magnitude of Bankruptcy Claims

Claims totaling $4.9 billion were filed with the Bankruptcy Court against the Company. As of May 2, 2013, through the claim resolution process, $3.8 billion of these claims have been settled and $1.1 billion of these claims have been disallowed by the Bankruptcy Court. Additionally, $10.1 million of these claims have been withdrawn by the respective creditors and $5.5 million of these claims remain open.

(g) Capital Expenditure Obligations

Under a regulatory settlement in New Hampshire, the Company is required to make certain capital expenditures in New Hampshire. Beginning from the date of the Merger, the Company is required to spend $285.4 million through March 31, 2013 in New Hampshire. This spend requirement was exceeded during fiscal year 2012.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion should be read in conjunction with our condensed consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report. The following discussion includes certain forward-looking statements. For a discussion of important factors, including the continuing development of our business, actions of regulatory authorities and competitors and other factors which could cause actual results to differ materially from the results referred to in the forward-looking statements, see "Item 1A. Risk Factors" contained elsewhere in this Quarterly Report and in the 2012 Annual Report, respectively, and "Cautionary Note Regarding Forward-Looking Statements" contained in this Quarterly Report. Our discussion and analysis of financial condition and results of operations are presented in nine sections:

•Overview

•February 2013 Refinancing

•Regulatory Environment

•Basis of Presentation

•Results of Operations

•Off-Balance Sheet Arrangements

•Critical Accounting Policies

•New Accounting Standards

•Liquidity and Capital Resources

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Overview

We are a leading provider of advanced communications services to business, wholesale and residential customers within our service territories. We offer our customers a suite of advanced data services such as Ethernet, high capacity data transport and other IP-based services over our Next Generation Network in addition to Internet access, HSD and local and long distance voice services. Our service territory spans 17 states where we are the incumbent communications provider primarily serving rural communities and small urban markets. Many of our LECs have served their respective communities for more than 80 years. We operate with approximately 1.3 million access line equivalents, including approximately 330,000 broadband subscribers, in service as of March 31, 2013.

We own and operate the Next Generation Network in the northern New England states of Maine, New Hampshire and Vermont, giving us capacity to support more HSD services and extend our fiber reach into more communities across the region. The IP/Multiple Protocol Label Switched network architecture of our Next Generation Network allows us to provide Ethernet, transport and other IP-based services with the highest level of reliability at a lower cost of service. This fiber network also supplies critical infrastructure for wireless carriers serving the region as their bandwidth needs increase, driven by mobile data from smartphones, tablets and other wireless devices. As of March 31, 2013, we provide cellular transport, also known as backhaul, through over 900 mobile Ethernet backhaul connections. We have fiber connectivity to more than 900 cellular telecommunications towers in our service footprint.

Evolution of our Business

Access lines have historically been an important element of our business. Communications companies, including FairPoint, continue to experience a decline in access lines due to increased competition from CLECs, wireless carriers and cable television operators, increased availability of alternative communications services, including wireless and voice over IP ("VoIP"), and challenging economic conditions. Our objective is to transform our revenue by continuing to add advanced data products and services such as Ethernet, high capacity data transport and other IP-based services over our Next Generation Network in addition to HSD services, to minimize our dependence on voice access lines. We will continue our efforts to retain customers to mitigate the loss of voice access lines through bundled packages including video and other value added services.

Over the past few years, we have made significant capital investments in our Next Generation Network to expand our business service offerings to meet the growing data needs of our customers and to increase broadband speeds and capacity in our consumer markets. We have also focused our sales and marketing efforts on these advanced data solutions. Specifically, within the last couple of years, we built and launched high capacity Ethernet services to allow us to meet the capacity needs of our business customers as well as supply high capacity infrastructure to our wholesale customers. These advanced data services are our flagship product and are laying the foundation not only for new business but also for additional IP-based voice services in the future.

Additionally, we believe the bandwidth needs of cellular backhaul will continue to grow with the continued adoption of bandwidth-intensive technology. Our extensive fiber network, with over 15,000 route miles, including over 900 cellular telecommunications towers currently served with fiber, puts us in an excellent position to grow our revenue base as demand for cellular backhaul services increases. We expect to see demand increase on existing fiber-connected towers where we would provision or expand mobile Ethernet backhaul connections or construct new fiber routes to cellular telecommunications towers.

Coupled with recent regulatory reform in the states of Maine, New Hampshire and Vermont that will serve to promote fair competition among communication services providers in the region, we believe that there is a significant organic growth opportunity within the business and wholesale markets given our extensive fiber network and IP-based product suite combined with our relative low market share in these areas.

February 2013 Refinancing

On February 14, 2013, the Refinancing Closing Date, we completed the Refinancing of the Old Credit Agreement Loans. In connection with the Refinancing, we (i) issued $300.0 million of Notes in a private offering exempt from registration under the Securities Act pursuant to the Indenture that we entered into on the Refinancing Closing Date and (ii) entered into the New Credit Agreement, dated as of the Refinancing Closing Date. The New Credit Agreement provides for the $75.0 million New Revolving Facility, including a sub-facility for the issuance of up to $40.0 million in letters of credit, and the $640.0 million New Term Loan. On the Refinancing Closing Date, we used the proceeds of the Notes offering, together with $640.0 million of borrowings under the New Term Loan and cash on hand to (i) repay principal of $946.5 million outstanding on the Old Term Loan, plus approximately $7.7 million of accrued interest and (ii) pay approximately $32.6 million of fees, expenses and other costs relating to the Refinancing. For further information regarding the New Credit Agreement, the Notes and our repayment of the Old Credit Agreement Loans, see "—Liquidity and Capital Resources" herein and note (6) "Long-Term Debt" to our condensed consolidated financial statements in "Item 1. Financial Statements" included elsewhere in this Quarterly Report.

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Regulatory Environment

We are subject to common carrier regulation primarily by federal and state governmental agencies. At the federal level, the FCC generally exercises jurisdiction over communications common carriers, such as FairPoint, to the extent those carriers provide, originate or terminate interstate or international communications. State regulatory commissions generally exercise jurisdiction over common carriers to the extent those carriers provide, originate or terminate intrastate communications. In addition, pursuant to the Telecommunications Act of 1996, which amended the Communications Act of 1934 (the "Communications Act"), state and federal regulators share responsibility for implementing and enforcing the domestic pro-competitive policies introduced by that legislation.

We are required to comply with the Communications Act which requires, among other things, that telecommunications carriers offer telecommunications services at just and reasonable rates and on terms and conditions that are not unreasonably discriminatory. The Communications Act contains requirements intended to promote competition in the provision of local services and lead to deregulation as markets become more competitive.

The FCC's CAF/ICC Order (as defined herein and sometimes referred to in the industry as the "Transformation Order") modified regulation for us beginning January 1, 2012. Effective January 1, 2012, the FCC eliminated the rural/non-rural distinction among incumbent local exchange carriers ("ILECs") and treats ILECs as either price cap or rate-of-return. Under the new rules, effective January 1, 2012, all of our ILECs are treated as price cap companies for CAF purposes, including the Telecom Group rate-of-return companies. However, the Telecom Group rate-of-return companies continue to be treated as rate-of-return for regulation of interstate switched and special access services. In addition, the FCC has preempted certain state regulation over our ILECs, including capping all state originating and terminating switched access charges and reducing state switched access charges beginning July 1, 2012, in a two-year transition to make state switched access charges equal to interstate switched access charges. Following this two-year transition and starting July 1, 2014, all terminating usage rates will transition to zero over the following four to seven years.

Overview of FCC Order to Reform Universal Service and Intercarrier Compensation

On March 16, 2010, the FCC submitted the National Broadband Plan ("NBP") to the United States Congress. The NBP is a plan to bring high-speed Internet services to the entire country, including remote and high-cost areas. In accordance with the NBP, the FCC commenced several rulemakings that concern, among other things, reforming high-cost and low-income programs to promote universal service to make those funds more efficient while promoting broadband communications in areas that otherwise would be unserved and to address changes to interstate access charges and other forms of intercarrier compensation ("ICC").

On November 18, 2011, the FCC released its comprehensive and landmark order to modify the nationwide system of universal support and the ICC system (referred to hereafter as the "CAF/ICC Order"). In this order, the FCC replaced all existing USF for price cap carriers with its CAF. The intent of the CAF is to bring high-speed affordable broadband services to all Americans. The CAF/ICC Order fundamentally reforms the ICC system that governs how communications companies bill one another for exchanging traffic, gradually phasing down these charges.

In conjunction with the CAF/ICC Order, the FCC adopted a Notice of Proposed Rulemaking to deal with related matters, including but not limited to: (i) the actual cost model to be adopted for CAF Phase II funding, (ii) treatment of originating access charges, (iii) modifications to CAF for rate-of-return ILECs, (iv) development of CAF Phase II for mobility, (v) CAF Phase II reverse auction rules, (vi) remote areas funding and (vii) IP to IP interconnection issues. It is not known what decisions will be made on these issues or how they may impact us. In general, CAF Phase I is interim support provided to price cap carriers during the period in which the FCC establishes its permanent CAF funding rules for CAF Phase II. CAF Phase I includes certain support structures, including frozen support and optional incremental support. CAF Phase I will continue until CAF Phase II is implemented, which is dependent on how long it takes the FCC to complete its CAF Phase II proceedings.

CAF Phase I and Phase II Support. Pursuant to the CAF/ICC Order, beginning in 2012, we received monthly CAF Phase I frozen support, which is based on and equal to all forms of USF high-cost support we received during 2011. This support is considered transitional funding while the FCC is developing its CAF Phase II program. FCC rules require that if we continue receiving CAF Phase I frozen support beyond 2012, we will have specific broadband spending obligations starting in 2013. According to the FCC rules, in 2013 we will need to spend one-third of the frozen support to "build and operate broadband-capable networks used to offer the provider's own retail broadband service in areas substantially unserved by an unsubsidized competitor." Should we continue to receive CAF Phase I frozen support in 2014 and 2015, this spend obligation will increase to two-thirds and 100%, respectively. We have filed a petition with the FCC for a partial waiver of the spending obligations, but do not know when, or if, the FCC will act on the petition.

Pursuant to the revised CAF programs, during 2012, we were offered $4.8 million of one-time funding under the FCC's CAF Phase I incremental support program. Under this program, we can use some or all of this support subject to certain restrictions. We

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notified the FCC that we accepted $2.0 million of CAF Phase I incremental support funding, which will primarily be used in Vermont. On September 10, 2012, we filed a petition, which is still pending, with the FCC asking it to waive its rules to allow us to use the remaining $2.8 million of CAF Phase I incremental support funding to bring high-speed broadband services to 697 customer locations in the state of Maine. The FCC is considering whether to offer additional CAF Phase I incremental support during 2013 or whether to include the funding amount in its CAF Phase II program. We do not know when the FCC will act on this consideration.

FCC New Rules for ICC System. The CAF/ICC Order reforms rules associated with local, state toll and interstate toll traffic exchanged among communications carriers including ILECs, CLECs, cable companies, wireless carriers and VoIP providers. The new rules, the majority of which were effective beginning July 1, 2012, establish separate rules for price cap carriers and rate-of-return carriers. Although the FCC order treats our rate-of-return carriers (including companies operating under average schedules) as price cap carriers for CAF funding, it treats them as rate-of-return carriers for purposes of ICC reform. For both price cap and rate-of-return carriers, the FCC establishes a multi-year transition of terminating traffic compensation to "bill and keep", or zero compensation. For both price cap and rate-of-return carriers, the FCC requires carriers to establish fiscal year 2011 ("FY2011") baseline compensation, which is the amount of relevant compensation billed during the period beginning October 1, 2010 and ending September 30, 2011, and collected by March 31, 2012. This FY2011 revenue is used as a starting point for revenue for the transitional period, which is six years for price cap operations and nine years for rate-of-return operations. For each FairPoint ILEC, the FY2011 baseline revenue is reduced by a specified percent during each year of the transition, resulting in a target revenue for each tariff year. At the same time, the FCC rules require reductions in ICC rates for specified services and jurisdictions. As the recoverable revenue declines and the rates decline, any target revenue which will not be covered by ICC revenue can be recovered, in part, from end users through an access recovery charge ("ARC"). Price cap ILECs are permitted to implement monthly end user ARCs with five annual increases of no more than $0.50 for residential/single-line business consumers, for a total monthly ARC of no more than $2.50 in the fifth year; and $1.00 (per month) per line for multi-line business customers, for a total of $5.00 (per month) per line in the fifth year, provided that: (1) any such residential increases would not result in regulated residential end user rates that exceed the $30.00 residential rate ceiling; and (2) any multi-line business customer's total subscriber line charge ("SLC") plus ARC does not exceed $12.20. Rate-of-return ILECs are permitted to implement monthly end user ARCs with six annual increases of no more than $0.50 (per month) for residential/single-line business consumers, for a total ARC of no more than $3.00 in the sixth year; and $1.00 (per month) per line for multi-line business customers for a total of $6.00 (per month) per line in the sixth year, provided that: (1) such increases would not result in regulated residential end user rates that exceed the $30.00 Residential Rate Ceiling; and (2) any multi-line business customer's total SLC plus ARC does not exceed $12.20. If the combination of ICC and ARC revenue is not sufficient to cover the targeted revenue, then additional funding will be provided by the CAF in certain circumstances, though there is no guarantee that the ILEC will be made whole.

Vermont Incentive Regulation Plan

Effective April 1, 2011, we entered into an Incentive Regulation Plan ("IRP") for our northern New England Vermont service territory. The IRP includes a 2011-2015 Amended Retail Service Quality Plan ("RSQP") which significantly reduced FairPoint's exposure to retail SQI penalties from $10.5 million to $1.65 million. Additionally, the RSQP and related SQI penalties may be eliminated in Vermont as early as March 31, 2013 if we achieve certain retail service metrics. We believe the IRP and RSQP should allow our Northern New England operations' retail rates in Vermont to compete with those competitive carriers under a relatively level regulatory scheme, while preserving certain regulatory protections for consumers in areas where competition may not be adequate.

Recent Legislation for Maine and New Hampshire

During the middle of fiscal year 2012, legislation was enacted into law in both Maine and New Hampshire, which decreases the scope of retail telecommunications regulation for us, eliminating many of the state-specific Merger conditions and providing us with increased ability to compete in the Maine and New Hampshire telecommunications marketplace.

Effective August 10, 2012, the New Hampshire legislation was enacted in its Session Laws of 2012, Chapter 177 (known as Senate Bill 48) ("SB 48"). SB 48 created a new class of telecommunications carriers known as "excepted local exchange carriers" ("ELECs") and our Northern New England operations qualify as an ELEC in New Hampshire. SB 48 essentially levels the regulatory scheme imposed upon New Hampshire telecommunications carriers and states that the NHPUC has no authority to impose or enforce any obligation on a specific ELEC that also is not applicable to all other ELECs in New Hampshire except with respect to:

(i) Obligations that arise pursuant to the Communications Act, as amended;

(ii) Obligations imposed on our Northern New England operations that arose prior to February 1, 2011 that relate to the availability of broadband services, soft disconnect processes and capital expenditure commitments within New Hampshire;

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(iii) Obligations that relate to the provision of services to CLECs, interexchange carriers and wireless carriers, regardless of technology; or

(iv) Certain obligations related to telephone poles and carrier of last resort responsibilities.

In New Hampshire, beginning with the August 10, 2012 effective date of the legislation, our exposure to annual SQI penalties was eliminated (from $12.5 million to zero) and we have pricing discretion with respect to existing and new retail telecommunications services other than basic local exchange service and certain services provided to customers who qualify for the federal lifeline discount.

On April 12, 2012, Maine Governor Paul LePage signed Public Law 2011, Chapter 623 (also known as P.L. 2011, c.623) (the "Maine Deregulation Legislation") into law. The Maine Deregulation Legislation significantly deregulates retail telecommunications service offerings and reduces regulation applicable to ILECs, such as our Northern New England operations. The legislation eliminated regulatory oversight on all retail services other than the basic exchange service defined in Maine as Provider of Last Resort ("POLR") service and significantly reduced FairPoint's maximum exposure to SQI penalties, along with reducing the number of reportable retail metrics.

Under the Maine Deregulation Legislation, our maximum exposure to annual SQI penalties, beginning with Maine's fiscal year ending July 31, 2013, decreased from $12.5 million to $2.0 million and, beginning in August 1, 2013, we will have pricing discretion with respect to existing and new telecommunications services other than POLR services.

In this new retail regulatory environment, rules relating to ELECs in New Hampshire and POLR services in Maine are either untested or still being created. There is some risk that state regulators will seek to increase their scope of regulations.

We estimate that these significant changes in both federal and state regulation did not have a material impact through March 31, 2013 and will not have a material impact in 2013. However, in the long run, we are uncertain of the ultimate impact as federal and state regulation continues to evolve.

Furthermore, the Maine Public Utilities Commission ("MPUC") issued a show cause order on March 19, 2013 (the "Show Cause Order"), which required us to show cause by written comments filed by April 5, 2013, stating: (1) why the MPUC should not establish August 14, 2013, April 14, 2014 and April 14, 2015 as the deadlines for the remainder of our broadband build-out obligations which the Show Cause Order described as 85%, 87% and 90%, respectively, in Maine; and (2) why the MPUC should not require us to prepare and file, by April 30, 2013, a detailed engineering plan for the remaining portions of our build-out project. The Show Cause Order also required us to file, by April 5, 2013, a detailed report cataloging the number and percentage of addressable lines as of February 28, 2013. In our filing on April 5, 2013, we stated that directives in the Show Cause Order are based on the unfounded assumption that the Maine Supreme Judicial Court sitting as the Law Court has upheld a determination by the MPUC in the calculation order issued on January 11, 2012 (the "Calculation Order") "that a line may only be counted as an 'addressable' line in the numerator if it is capable of achieving an upload speed of 512 kilobits per second and a download speed of 1.5 megabits per second" even if that line is served by the legacy Asynchronous Transfer Mode ("ATM") network we acquired from Verizon. Our response demonstrated that (1) there is no basis in law or fact for the assumption that this speed requirement applies to lines on the legacy ATM network and (2) no determination regarding any such assumption has been lawfully made by the MPUC in the Calculation Order or elsewhere, or upheld by the Law Court. Furthermore, the parties to the Chapter 11 related Maine regulatory settlement, dated February 9, 2010, upon which the assumption purports to rest, never considered such a project and the parties never presented such a project to the Bankruptcy Court or the MPUC for approval. We do not know when the MPUC might act, if at all, on our response or what the outcome of any MPUC action might be. If the assumption reflected in the Show Cause Order were to prevail in any manner, it may have a significant impact on current and future capital expenditures of the Company.

Basis of Presentation

We view our business of providing data, voice and communication services to business, wholesale and residential customers as one reportable segment.

Beginning in the second quarter of 2012, we reclassified certain revenues from voice services revenues to data and Internet services revenues to more accurately reflect the underlying service provided. For comparative purposes, we have reclassified the prior periods to be consistent with the current period presentation.

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Results of Operations

The following table sets forth our consolidated operating results reflected in our condensed consolidated statements of operations. The year-to-year comparisons of financial results are not necessarily indicative of future results (in thousands, except for access line equivalents):

	Three Months Ended March 31,
	2013			2012
Revenues:
Voice services	$	103,717		$	114,777
Access	81,632			86,823
Data and Internet services	38,174			33,332
Other	11,946			13,542
Total revenues	235,469			248,474
Operating expenses:
Costs of services and sales, excluding depreciation and amortization	116,611			121,475
Selling, general and administrative expense, excluding depreciation and amortization	88,886			89,428
Depreciation and amortization	91,433			93,207
Reorganization related income	(163		)	(1,392		)
Total operating expenses	296,767			302,718
Loss from operations	(61,298		)	(54,244		)
Other income (expense):
Interest expense	(18,002		)	(17,028		)
Loss on debt refinancing	(6,787		)	—
Other	425			302
Total other expense	(24,364		)	(16,726		)
Loss before income taxes	(85,662		)	(70,970		)
Income tax benefit	28,133			24,258
Loss from continuing operations	(57,529		)	(46,712		)
Gain on sale of discontinued operations, net of tax	10,044			—
Net loss	$	(47,485	)	$	(46,712	)
Access line equivalents (1):
Residential	568,594			631,724
Business	295,834			309,078
Wholesale	63,068			72,233
Total voice access lines	927,496			1,013,035
Broadband subscribers	330,082			318,510
Total access line equivalents	1,257,578			1,331,545

(1) In August 2012, we divested our pay phone operations in our northern New England footprint and are in the process of transitioning these pay phone stations to the buyer. The Company currently retains access lines for any pay phone stations the buyer continues to operate. In addition, on January 31, 2013, we completed the sale of our Idaho-based operations. Individually and in aggregate, the operations of these divestitures are immaterial to our financial results and, therefore, have not been segregated as discontinued operations in the statements of operations. At March 31, 2013, excluding all access lines equivalents associated with these divestitures on a pro forma basis, we would have had 1,256,097 access line equivalents, which included 568,594 residential, 294,353 business and 63,068 wholesale voice access lines and 330,082 broadband subscribers. At March 31, 2012, excluding these divestitures on a pro forma basis, we would have had 1,321,310 access line equivalents, which included 629,329 residential, 302,524 business and 72,233 wholesale voice access lines and 317,224 broadband subscribers.

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Voice Services Revenues

We receive revenues through the provision of local calling services to business and residential customers, generally for a fixed monthly charge and service charges for special calling features. We also generate revenue through long distance services within our service areas on our network and through resale agreements with national interexchange carriers. In addition, through our wholly-owned subsidiary, FairPoint Carrier Services, Inc., we provide wholesale long distance services to communications providers that are not affiliated with us. As of March 31, 2013 and 2012, voice access lines in service decreased 8.4% and 8.1% year-over-year, respectively, which directly impacts local voice services revenues and our opportunity to provide long distance services to our customers, resulting in a decrease of minutes of use. Excluding divestitures, on a pro forma basis, March 31, 2013 and 2012 voice access lines in services would have declined 7.8% and 8.1% year-over-year, respectively. We expect the trend of decline in voice access lines in service, and thereby a decline in aggregate voice services revenues, to continue as customers are turning to the use of alternative communications services as a result of our ever-increasing competition.

We were subject to retail service quality plans in the states of Maine, New Hampshire and Vermont for the three months ended March 31, 2012 and, for the three months ended March 31, 2013, are still subject to retail service quality penalties in Maine and Vermont, pursuant to which we incur SQI penalties resulting from any failure to meet the requirements of the respective plans. In New Hampshire, the retail service quality plan was eliminated by SB 48 effective August 10, 2012, thereby extinguishing our exposure to SQI penalties in that state. Penalties resulting from these commitments are recorded as a reduction to local voice services revenues and, due to recent deregulation legislation, our maximum exposure to SQI penalties has been or will be reduced. Under the Maine Deregulation Legislation enacted in August 2012, our maximum exposure to annual SQI penalties in Maine was reduced from $12.5 million to $2.0 million beginning with Maine's fiscal year ending July 31, 2013. In addition, effective April 2011, the maximum annual exposure under the Vermont retail service quality plan was reduced from $10.5 million to $1.65 million and may be eliminated as early as March 31, 2013 if we achieve certain retail service quality metrics. For additional information on our SQI penalties, see note (12) "Commitments and Contingencies" to our condensed consolidated financial statements in "Item 1. Financial Statements" included elsewhere in this Quarterly Report.

We adopted a separate PAP for certain services provided on a wholesale basis to CLECs in each of the states of Maine, New Hampshire and Vermont, pursuant to which we are required to issue performance credits in the event we are unable to meet the provisions of the respective PAP. In 2012, a majority of the penalty credits resulting from these commitments is recorded as a reduction to local voice services revenues with a small portion recorded to access revenues. However, as our wholesale business shifts from unbundled network elements ("UNEs") to access-driven services, a majority of penalty credits have followed and are now being recorded to access revenues. We expect this trend to continue and the impact of penalty credits to voice services revenues to decrease. Our maximum exposure to penalties under the PAPs has not been reduced by the recent deregulation legislation in Maine and New Hampshire or by the IRP adopted in Vermont. During each of the three months ended March 31, 2013 and 2012, local voice services revenues were reduced by $0.2 million as a result of our failure to meet specified performance standards as defined by the provisions of the separate PAPs in Maine, New Hampshire and Vermont. For additional information on our PAP penalties, see note (12) "Commitments and Contingencies" to our condensed consolidated financial statements in "Item 1. Financial Statements" included elsewhere in this Quarterly Report.

We receive support to supplement the amount of local service revenue received by us to ensure that basic local service rates for customers in high-cost areas are consistent with rates charged in lower cost areas through CAF Phase I frozen support. We expect to receive the same level of CAF Phase I frozen support revenue in 2013, plus or minus small adjustments recorded during the respective quarters, until the FCC completes its proceedings to adopt a CAF cost model and develops CAF Phase II for our operating areas. Timing of when these FCC proceedings will be completed or whether we will accept or refuse any funding under the CAF Phase II support programs due to the cost of our obligations associated with the funding is unknown. For the three months ended March 31, 2013 and 2012, we recognized $3.3million and $3.5million, respectively, of high-cost loop funding from the CAF Phase I frozen support program.

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		Three Months Ended
		March 31, 2013
(in millions)		Increase (Decrease)		%
Local voice services revenues, excluding:	$	(8.0	)
(Increase) decrease in accrual of SQI penalties (1)		(1.2	)
Decrease in high-cost loop credits to customers (2)		0.6
Divestiture of Idaho-based operations		(0.5	)
Long distance services revenues		(2.0	)
Total change in voice services revenues	$	(11.1	)	(10	)%

(1) In the first quarter of 2012, a $1.6 million reversal of SQI penalties was a large contributor to the $1.1 million net increase to local voice services revenues. During the same period of 2013, SQI penalties resulted in a decrease to local voice services revenues of $0.1 million.

(2) In 2012, the VPSB and the MPUC each approved a tariff change whereby we are no longer required to provide high-cost loop credits to customers. For the three months ended March 31, 2012, we recognized a reduction to local voice services revenues related to high-cost loop credits remitted to customers of $0.6 million.

Access Revenues

We receive revenues for the provision of network access through carrier Ethernet based products and legacy access products to end user customers and long distance and other competing carriers who use our local exchange facilities to provide interexchange services to their customers. Network access can be provided to carriers and end users that buy dedicated local and interexchange capacity to support their private networks (i.e. special access) or it can be derived from fixed and usage-based charges paid by carriers for access to our local network (i.e. switched access).

Carriers are migrating from legacy access products, such as DS1, DS3, frame relay, ATM and private line, to carrier Ethernet based products. These carrier Ethernet based products are more sustainable, but generally, at the outset, have lower average revenue per user than the legacy products they are replacing, resulting in a decline in access revenues. We expect the decline in access revenues to continue with customer migration; however, with the increasing need for bandwidth, including cellular backhaul, demand for carrier Ethernet based products is expected to increase over time. Our extensive fiber network, with over 15,000 route miles, including over 900 cellular telecommunications towers currently served with fiber, puts us in a position to grow our revenue base as demand for cellular backhaul and other Ethernet services expands. We expect to see demand increase on existing fiber-connected towers where we would provision or expand mobile Ethernet backhaul connections. We will also construct new fiber routes to cellular telecommunications towers when the business case presents itself.

As described above, we adopted a separate PAP for certain services provided on a wholesale basis to CLECs in each of the states of Maine, New Hampshire and Vermont, pursuant to which we are required to issue performance credits in the event we are unable to meet the provisions of the respective PAP. As our wholesale business shifts from UNEs to access-driven services, a majority of penalty credits have transitioned in the same manner and are now being recorded to access revenues instead of voice services revenues. We expect this trend to continue and the impact of penalty credits to access revenues to increase. Our maximum exposure to penalties under the PAPs has not been reduced by the recent deregulation legislation in Maine and New Hampshire or by the IRP adopted in Vermont.

		Three Months Ended
		March 31, 2013
(in millions)		Increase (Decrease)		%
Carrier Ethernet services (1)	$	1.9
Increase in accrual of PAP penalties (2)		(1.4	)
Divestiture of Idaho-based operations		(0.7	)
Legacy access services (3)		(5.0	)
Total change in access revenues	$	(5.2	)	(6	)%

(1) We offer carrier Ethernet services throughout our market to our wholesale customers, which include Ethernet virtual circuit technology for cellular backhaul. As of March 31, 2013, we provide cellular transport through over 900 mobile Ethernet backhaul connections on our Next Generation Network, which has grown significantly over the last two years.

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(2) During the three months ended March 31, 2013, access services revenues were reduced by $1.4 million as a result of our failure to meet specified performance standards as defined by the provisions of the separate PAPs in Maine, New Hampshire and Vermont. The impact of PAP penalties on access revenues to the three months ended March 31, 2012 was negligible, given that a majority of these penalties were recorded to voice services revenues in fiscal year 2012. For additional information on our PAP penalties, see note (12) "Commitments and Contingencies" to our condensed consolidated financial statements in "Item 1. Financial Statements" included elsewhere in this Quarterly Report.

(3) Legacy access services includes products such as DS1, DS3, frame relay, ATM and private line.

Data and Internet Services Revenues

We receive revenues from monthly recurring charges for the provision of data and Internet services to residential and business customers through digital subscriber line ("DSL") technology, fiber-to-the-home technology, retail Ethernet, dedicated T-1 connections, Internet dial-up, high-speed cable modem and wireless broadband.

We have invested in our broadband network to extend the reach and capacity of the network to customers who did not previously have access to data and Internet products and to offer more competitive services to existing customers, including retail Ethernet products. From March 31, 2012 to March 31, 2013, we grew broadband subscribers by 3.6% and added more than 11,500 subscribers as penetration reached 35.6% of voice access lines at March 31, 2013 from 31.4% at March 31, 2012. We expect to continue our investment in our broadband network to further grow data and Internet services revenues in the coming years.

		Three Months Ended
		March 31, 2013
(in millions)		Increase (Decrease)	%
Retail Ethernet services (1)	$	2.2
Other data and Internet technology based services		2.6
Total change in data and Internet services revenues	$	4.8	15	%

(1) Retail Ethernet services revenue is comprised of data services provided through E-LAN, E-LINE and E-DIA technology on our Next Generation Network. In the three months ended March 31, 2013 and 2012, respectively, we recognized $6.0 million and $3.8 million of retail Ethernet revenues from our Next Generation Network.

Other Services Revenues 

We receive revenues from other services, including special purpose projects on behalf of third party requests, video services (including cable television and video-over-DSL), billing and collection, directory services, the sale and maintenance of customer premise equipment and certain other miscellaneous revenues. Other services revenues also include revenue we receive from late payment charges to end users and interexchange carriers. Due to the composition of other services revenues, it is difficult to predict future trends.

		Three Months Ended
		March 31, 2013
(in millions)		Increase (Decrease)		%
Special purpose projects (1)	$	(0.8	)
Late payment fees (2)		(1.2	)
Other (3)		0.4
Total change in other services revenues	$	(1.6	)	(12	)%

(1) Special purpose projects are completed on behalf of third party requests.

(2) Late payment fees are related to customers who have not paid their bills in a timely manner.

(3) Other revenues were primarily attributable to fluctuations in directory services, billing and collections and in various other miscellaneous services revenues.

Cost of Services and Sales

Cost of services and sales includes the following costs directly attributable to a service or product: salaries and wages, benefits (including stock-based compensation), materials and supplies, contracted services, network access and transport costs, customer provisioning costs, computer systems support and cost of products sold. Aggregate customer care costs, which include

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billing and service provisioning, are allocated between cost of services and sales and selling, general and administrative expenses. We expect cost of services and sales to decrease as voice access lines decline and we continue to make operational improvements and align our human resources with the changing telecommunications landscape.

		Three Months Ended
		March 31, 2013
(in millions)		Increase (Decrease)		%
Access expense (1)	$	(4.4	)
Employee expense (2)		(1.6	)
Severance expense (3)		(1.1	)
Other		2.2
Total change in cost of services and sales	$	(4.9	)	(4	)%

(1) Decrease in 2013 access expense is primarily attributable to increased usage of our IP infrastructure, which has enabled us to significantly reduce the associated costs of utilizing other carriers.

(2) For the three months ended March 31, 2013 and 2012, we recognized $54.9 million and $56.5 million of employee expense, respectively.

(3) For the three months ended March 31, 2013 and 2012, we recognized $0.5 million and $1.6 million of severance expense, respectively.

Selling, General and Administrative Expense

Selling, general and administrative ("SG&A") expense includes salaries and wages and benefits (including stock-based compensation) not directly attributable to a service or product, bad debt charges, taxes other than income, advertising and sales commission costs, customer billing, call center and information technology costs, professional service fees and rent for administrative space. We expect our SG&A expense to increase primarily as a result of our increasing qualified pension and post-retirement healthcare obligations.

		Three Months Ended
		March 31, 2013
(in millions)		Increase (Decrease)		%
Bad debt expense (1)	$	4.3
Contracted services (2)		(4.0	)
Post-retirement healthcare expense (3)		1.2
Pension expense (4)		0.8
Employee expense (5)		1.0
Severance expense (6)		(1.1	)
Other		(2.7	)
Total change in SG&A expense	$	(0.5	)	(1	)%

(1) The increase in 2013 bad debt expense is primarily due to settlements with wholesale carriers and an improvement in accounts receivable aging realized during the first quarter of 2012. For the three months ended March 31, 2013 and 2012, we recognized $2.5 million bad debt expense and $1.8 million benefit from the reversal of bad debt expense, respectively.

(2) The decrease in 2013 contracted services is primarily attributable to reductions in consulting fees and the use of contract labor associated with our process improvements. For the three months ended March 31, 2013 and 2012, we recognized $5.3 million and $9.3 million of contracted services, respectively.

(3) Increase in 2013 post-retirement healthcare net periodic benefit cost is primarily attributable to (i) an increase in service cost resulting from a reduction of approximately 46 basis points in the weighted average discount rate used to value the post-retirement healthcare obligations at December 31, 2012 compared to December 31, 2011; and (ii) an increase in amortization of actuarial losses resulting from higher unamortized actuarial losses being accrued in accumulated other comprehensive loss at December 31, 2012 compared to December 31, 2011.

(4) Increase in 2013 qualified pension net periodic benefit cost is primarily attributable to (i) an increase in service cost resulting from a reduction of approximately 54 basis points in the weighted average discount rate used to value the

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qualified pension obligations at December 31, 2012 compared to December 31, 2011; and (ii) an increase in amortization of actuarial losses resulting from higher unamortized actuarial losses being accrued in accumulated other comprehensive loss at December 31, 2012 compared to December 31, 2011.

(5) For the three months ended March 31, 2013 and 2012, we recognized $34.0 million and $33.0 million of employee expense, respectively. The increase in the first quarter of 2013 is primarily attributable to employee benefits.

(6) For the three months ended March 31, 2013 and 2012, we recognized $0.2 million and $1.3 million of severance expense, respectively.

Depreciation and Amortization

Depreciation and amortization includes depreciation of our communications network and equipment and amortization of intangible assets. We require significant capital expenditures to maintain, upgrade and enhance our network facilities and operations. We expect to reduce our capital expenditures in the upcoming years, which will likely reduce or stabilize our depreciation expense. We expect amortization expense to remain consistent throughout the remainder of our intangible assets' useful lives.

For the three months ended March 31, 2013 and 2012, we recognized $88.6 million and $90.4 million of depreciation expense, respectively. For each of the three months ended March 31, 2013 and 2012, we recognized $2.8 million of amortization expense.

Reorganization Related Income

Reorganization related income represents income or expense amounts that have been recognized as a direct result of the Chapter 11 Cases occurring after the Effective Date. We will continue to incur expenses associated with the Chapter 11 Cases until all such cases have been closed with the Bankruptcy Court. In addition, income may be recognized to the extent that we favorably settle outstanding claims in the Claims Reserve. As of March 31, 2013, the Claims Reserve has a balance of $1.2 million.

Interest Expense

		Three Months Ended March 31,
(in millions)		2013		2012
New Credit Agreement Loans	$	6.4	$	—
Senior Notes		3.3		—
Old Credit Agreement Loans		7.7		16.8
Amortization of debt issue costs		0.2		0.2
Amortization of debt discount		0.3		—
Other interest expense		0.1		—
Total interest expense	$	18.0	$	17.0

Interest expense increased $1.0 million (6%) in the three months ended March 31, 2013 as compared to the same period in 2012.

The increase in interest expense is primarily attributable to the increase in interest rates and the debt discount on the New Term Loan as a result of the Refinancing, partially offset by a lower weighted average long-term debt outstanding during the first quarter of 2013 as compared to the first quarter of 2012. Interest on borrowings under the Old Credit Agreement Loans accrued at an annual rate equal to either LIBOR or the base rate, in each case plus an applicable margin. Generally, the Old Credit Agreement Loans accrued interest at 6.50%. During the first quarter of 2012, the Old Credit Agreement Loans had an outstanding balance of $1.0 billion, taking into consideration the regularly scheduled $2.5 million repayment on March, 31, 2012. During the first half of the first quarter of 2013, the Old Credit Agreement Loans had an outstanding weighted average balance of $952.3 million, taking into consideration $10.5 million of prepayments made during this period. On February 14, 2013, in connection with the Refinancing, we repaid the entire outstanding balance of the Old Credit Agreement Loans, issued $300.0 million aggregate principal amount of the Notes and entered into the New Credit Agreement Loans, which include the $640.0 million New Term Loan outstanding and the undrawn $75.0 million New Revolving Facility. The Notes accrue interest at a rate of 8.75% per annum. Interest on borrowings under the New Credit Agreement Loans accrues at an annual rate equal to either LIBOR or the base rate, in each case plus an applicable margin. Generally, the New Term Loan accrued interest at 7.50% during the first quarter of 2013. In addition, the New Term Loan was issued at a $19.4 million discount, which will be amortized using the effective interest method.

For further information regarding the New Credit Agreement Loans and the Notes, see "—Liquidity and Capital Resources—Debt" herein.

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Loss on Debt Refinancing

On February 14, 2013, we completed the Refinancing and paid all amounts outstanding under the Old Credit Agreement. In connection with this Refinancing, we incurred $5.6 million in related fees and wrote off $1.2 million of debt issue costs and other prepayments related to the Old Credit Agreement.

Other Income

During the three months ended March 31, 2013 and 2012, respectively, we recognized $0.5 million and $0.3 million of other income, net. Other income includes non-operating gains and losses such as those incurred on sale or disposal of assets.

Income Taxes

The effective income tax rate on the loss from continuing operations for the three months ended March 31, 2013 and 2012 was a 32.8% benefit and a 34.2% benefit, respectively. For both the three months ended March 31, 2013 and 2012, the effective tax rate differs from the 35% federal statutory rate primarily due to an increase in the valuation allowance offset by state taxes.

Gain on Sale of Discontinued Operations, Net of Tax

On January 31, 2013, we completed the sale of our capital stock in our Idaho-based operations to Blackfoot for $30.3 million in cash. The operating results of these Idaho-based operations are immaterial and, accordingly, have not been segregated as discontinued operations for reporting purposes. A gain, before $6.7 million of deferred taxes, of $16.8 million was recorded upon the closing of the transaction, which is reported within discontinued operations in the condensed consolidated statement of operations for the three months ended March 31, 2013.

Details of our Idaho-based operations' operating results are included in note (11) "Assets Held for Sale and Discontinued Operations" to our condensed consolidated financial statements in "Item 1. Financial Statements" included elsewhere in this Quarterly Report.

Off-Balance Sheet Arrangements

As of March 31, 2013, we had approximately $13.3 million in outstanding standby letters of credit under the New Revolving Facility. We also have a standby letter of credit facility at Bank of America, N.A. that supports certain letters of credit issued under the Old Revolving Facility that have not yet been transitioned to our New Revolving Facility. This standby letter of credit facility at Bank of America, N.A. will be canceled once all of the letters of credit under the Old Revolving Facility have been transitioned.

We do not have any other off-balance sheet arrangements.

Critical Accounting Policies

Our critical accounting policies are as follows:

•Revenue recognition;

•Allowance for doubtful accounts;

•Accounting for qualified pension and other post-retirement healthcare benefits;

•Accounting for income taxes;

•Depreciation of property, plant and equipment;

•Stock-based compensation; and

•Valuation of long-lived assets.

There have been no material changes to our critical accounting policies described in our 2012 Annual Report.

New Accounting Standards

In February 2013, the FASB issued ASU 2013-02 related to disclosure of reclassifications out of accumulated other comprehensive income. This ASU requires companies to report, in one place, information about reclassifications out of accumulated other comprehensive income. In addition, it also requires companies to report changes in accumulated other comprehensive income balances. This new guidance was to be applied prospectively and was effective for interim and annual periods beginning after

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December 15, 2012, with early adoption permitted. We adopted this ASU during the quarter ended March 31, 2013 and it did not have a material impact on our consolidated financial statements.

Liquidity and Capital Resources

Overview

Our current and future liquidity is greatly dependent upon our operating results. We expect that our primary sources of liquidity will be cash flow from operations, cash on hand and funds available under the New Revolving Facility. Our short- and long-term liquidity needs arise primarily from:

(i) interest and principal payments on our indebtedness;

(ii) capital expenditures;

(iii) working capital requirements as may be needed to support and grow our business; and

(iv) contributions to our qualified pension plan and payments under our post-retirement healthcare plans.

Based on our current and anticipated levels of operations and conditions in our markets, we believe that cash on hand (including amounts available under our New Revolving Facility) as well as cash flow from operations will enable us to meet our working capital, capital expenditure, debt service and other funding requirements for at least the next 12 months. We expect to be in compliance with the maintenance covenants contained in the New Credit Agreement for 2013.

Cash Flows

Cash and cash equivalents at March 31, 2013 totaled $17.5 million compared to $23.2 million at December 31, 2012, excluding restricted cash of $6.3 million and $7.5 million, respectively. During the three months ended March 31, 2013, cash outflows were largely associated with the Refinancing and $29.9 million of capital expenditures, a majority of which was offset by $30.3 million in proceeds from the sale of our Idaho-based operations and cash flows from operations of $43.4 million.

The following table sets forth our condensed consolidated cash flow results reflected in our condensed consolidated statements of cash flows (in millions):

	Three Months Ended March 31,
Net cash flows provided by (used in):	2013			2012
Operating activities	$	43.4		$	47.1
Investing activities	0.8			(25.9		)
Financing activities	(49.9		)	(2.7		)
Net increase (decrease) in cash	$	(5.7	)	$	18.4

Operating activities.Net cash provided by operating activities is our primary source of funds. Net cash provided by operating activities for the three months ended March 31, 2013decreased$3.7 million as compared to the same period in 2012. Net cash provided by operating activities for the three months ended March 31, 2012 includes payment of $5.6 million in claims of the Company as of and prior to the Effective Date (the "Predecessor Company"), of which $3.0 million of these claims were paid using funds of the Cash Claims Reserve established on the Effective Date by the Predecessor Company. Accordingly, $2.6 million of cash on hand was used to pay claims of the Predecessor Company during the three months ended March 31, 2012. During the three months ended March 31, 2012, $4.8 million of the Cash Claims Reserve was reclaimed by the Company as a source of cash on hand.

In addition, during the first quarter of 2012, $5.3 million of the Cash Claims Reserve was reclassified to another restricted cash account in conjunction with the VPSB's approval of our request to use these funds to deploy broadband in unserved areas of Vermont. This reclassification had no impact on cash provided by operating activities.

Investing activities.Net cash provided by investing activities for the three months ended March 31, 2013increased$26.7 millionas compared to the same period in 2012. This increase is driven by the sale of our Idaho-based operations during the first quarter of 2013 for $30.3 million in cash proceeds. Capital expenditures were $29.9 million and $26.3 million for the three months ended March 31, 2013 and 2012, respectively.

Financing activities.Net cash used in financing activities for the three months ended March 31, 2013increased$47.2 million as compared to the same period in 2012. This increase is largely attributable to the Refinancing, whereby we issued $300.0 million

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aggregate principal amount of the Notes, entered into the New Credit Agreement including the $640.0 million New Term Loan and used the proceeds, along with cash on hand, to repay principal of $946.5 million outstanding on the Old Term Loan, and approximately $32.6 million of fees, expenses and other costs relating to the Refinancing. For further information regarding the New Credit Agreement, the Notes and our repayment of the Old Credit Agreement Loans, see "—Debt" herein and note (6) "Long-Term Debt" to our condensed consolidated financial statements in "Item 1. Financial Statements" included elsewhere in this Quarterly Report. During the quarter ended March 31, 2012, we paid $2.5 million of principal outstanding on the Old Term Loan.

Pension Contributions and Post-Retirement Healthcare Plan Expenditures

During the three months ended March 31, 2013, we funded benefit payments of $0.9 million under our post-retirement healthcare plans. No contributions were made to our company-sponsored qualified pension plans during the three months ended March 31, 2013.

On July 6, 2012, the Moving Ahead for Progress in the 21st Century Act was signed into law. This act contains a pension funding stabilization provision which allows pension plan sponsors to use higher interest rate assumptions when determining funded status and funding obligations. As a result, our 2013 minimum required pension plan contribution is $7.4 million, which is lower than it would have been in the absence of this stabilization provision. We believe that the intent of the stabilization provision is to alter the timing of pension plan contributions, not to reduce the long-term funding of pension plans. Accordingly, the relief we will receive as a result of the stabilization provision may be temporary in nature in that our near-term required contributions will be less than they otherwise would have been and will increase in the medium to long-term.

On September 25, 2012, we elected to defer use of the higher segment rates under this act until the first plan year beginning on or after January 1, 2013 solely for determination of the AFTAP used to determine benefit restrictions under Section 436 of the Code.

In 2013, we expect to contribute approximately $15.0 million, which includes the $7.4 million minimum required contribution amount required by the Pension Protection Act of 2006 in addition to discretionary contributions, to our qualified pension plans and we expect to fund approximately $5.1 million in benefit payments under our post-retirement healthcare plans.

Capital Expenditures

We require significant capital expenditures to maintain, upgrade and enhance our network facilities and operations. During the first three months of 2013, our capital expenditures totaled $29.9 million compared to $26.3 million during the same period in 2012. We anticipate that we will fund future capital expenditures through cash flows from operations and cash on hand (including amounts available under our New Revolving Facility).

Debt

The New Credit Agreement. In connection with the Refinancing, we entered into the New Credit Agreement, which provides for the $75.0 million New Revolving Facility, including a sub-facility for the issuance of $40.0 million in letters of credit, and the $640.0 million New Term Loan. The New Credit Agreement Loans replace the Old Credit Agreement Loans, which were terminated on the Refinancing Closing Date. The principal amount of the New Term Loan and commitments under the New Revolving Facility may be increased by an aggregate amount up to $200.0 million, subject to certain terms and conditions specified in the New Credit Agreement. The New Term Loan will mature on February 14, 2019 and the New Revolving Facility will mature on February 14, 2018, subject in each case to extensions pursuant to the terms of the New Credit Agreement.

Interest Rates and Fees. Interest on borrowings under the New Credit Agreement Loans accrue at an annual rate equal to either LIBOR or the base rate, in each case plus an applicable margin. LIBOR is the per annum rate for an interest period of one, two, three or six months (at our election), with a minimum LIBOR floor of 1.25% for the New Term Loan. The base rate for any date is the per annum rate equal to the greatest of (x) the federal funds effective rate plus 0.50%, (y) the rate of interest publicly quoted from time to time by The Wall Street Journal as the United States ''Prime Rate'' and (z) LIBOR with an interest period of one month plus 1.00%. The applicable margin for the New Term Loan is (a) 6.25% per annum with respect to term loans bearing interest based on LIBOR or (b) 5.25% per annum with respect to term loans bearing interest based on the base rate. The applicable rate for the New Revolving Facility is, initially, (a) 5.50% with respect to revolving loans bearing interest based on LIBOR or (b) 4.50% per annum with respect to revolving loans bearing interest based on the base rate, in each case subject to adjustment after March 31, 2013 based on our consolidated total leverage ratio, as defined in the New Credit Agreement. We are required to pay a quarterly letter of credit fee on the average daily amount available to be drawn under letters of credit issued under the New Revolving Facility equal to the applicable rate for revolving loans bearing interest based on LIBOR plus a fronting fee of 0.125% per annum on the average daily amount available to be drawn under such letters of credit. In addition, we are required to pay a quarterly commitment fee on the average daily unused portion of the New Revolving Facility, which is 0.50% initially, subject to reduction to 0.375% after March 31, 2013 based on our consolidated total leverage ratio.

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Security/Guarantors. All obligations under the New Credit Agreement, together with certain designated hedging obligations and cash management obligations, are unconditionally guaranteed on a senior secured basis by each of the Subsidiary Guarantors and secured by a first-priority lien on substantially all personal property of FairPoint Communications and the Subsidiary Guarantors, subject to certain exclusions set forth in the related security documents, pari passu with the lien securing the obligations under the Notes.

Mandatory Repayments. We are required to make quarterly repayments of the New Term Loan in a principal amount equal to $1.6 million during the term of the New Credit Agreement, beginning June 30, 2013, with such repayments being reduced based on the application of mandatory and optional prepayments of the New Term Loan made from time to time. In addition, amounts due under the New Credit Agreement are mandatorily repayable with (i) a percentage, initially equal to 50% and subject to reduction to 25% in subsequent fiscal years based on our consolidated total leverage ratio, of our excess cash flow, as defined in the New Credit Agreement, beginning with the fiscal year ending December 31, 2013, (ii) the net cash proceeds of certain asset dispositions, insurance proceeds and condemnation awards and (iii) issuances of debt not permitted to be incurred under the New Credit Agreement. Optional prepayments and mandatory prepayments resulting from the incurrence of debt not permitted to be incurred under the New Credit Agreement are required to be made at (i) 103.0% of the aggregate principal amount prepaid if such prepayment is made on or prior to February 14, 2014, (ii) 102.0% of the aggregate principal amount of the New Term Loan so prepaid if such prepayment is made after February 14, 2014, but on or prior to February 14, 2015 and (iii) 101.0% of the aggregate principal amount prepaid if such prepayment is made after February 14, 2015 and on or prior to February 14, 2016. No premium is required to be paid for prepayments made after February 14, 2016.

Covenants. The New Credit Agreement contains customary representations and warranties and affirmative and negative covenants for a transaction of this type, including two financial maintenance covenants: (i) a consolidated interest coverage ratio, and (ii) a consolidated total leverage ratio. The New Credit Agreement also contains a covenant limiting the maximum amount of capital expenditures that we and our subsidiaries may make in any fiscal year. We expect to be in compliance with the maintenance covenants contained in the New Credit Agreement for 2013.

Events of Default. The New Credit Agreement also contains customary events of default for a transaction of this type.

The Notes.On the Refinancing Closing Date, we issued $300.0 million in aggregate principal amount of the Notes in a private offering exempt from registration under the Securities Act pursuant to the Indenture.

The terms of the Notes are governed by the Indenture. The Notes are senior secured obligations of FairPoint Communications and are guaranteed by the Subsidiary Guarantors. The Notes and the guarantees thereof are secured by a first-priority lien on substantially all personal property of FairPoint Communications and the Subsidiary Guarantors, subject to certain exclusions set forth in the related security documents, pari passu with the lien securing the obligations under the New Credit Agreement. The Notes will mature on August 15, 2019 and accrue interest at a rate of 8.75% per annum, which is payable semi-annually in arrears on February 15 and August 15, commencing on August 15, 2013.

On or after February 15, 2016, we may redeem all or part of the Notes at the redemption prices set forth in the Indenture, plus accrued and unpaid interest thereon, to the applicable redemption date. At any time prior to February 15, 2016, we may redeem all or part of the Notes at a redemption price equal to 100% of the principal amount of the Notes redeemed, plus a "make-whole" premium as of, and accrued and unpaid interest to, the applicable redemption date. In addition, at any time prior to February 15, 2016, we may, on one or more occasions, redeem up to 35% of the original aggregate principal amount of the Notes, using net cash proceeds of certain qualified equity offerings, at a redemption price of 108.75% of the principal amount of Notes redeemed, plus accrued and unpaid interest to the applicable redemption date.

The holders of the Notes have the ability to require us to repurchase all or any part of the Notes if we experience certain kinds of changes in control or engage in certain asset sales, in each case at the repurchase prices and subject to the terms and conditions set forth in the Indenture.

The Indenture contains certain covenants which are customary with respect to non-investment grade debt securities, including limitations on our ability to incur additional indebtedness, pay dividends on or make other distributions or repurchase our capital stock, make certain investments, enter into certain types of transactions with affiliates, create liens and sell certain assets or merge with or into other companies. These covenants are subject to a number of important limitations and exceptions.

The Indenture also provides for customary events of default, including cross defaults to other specified debt of FairPoint Communications and certain of its subsidiaries.

The Old Credit Agreement. On the Effective Date, the Old Credit Agreement Borrowers entered into the Old Credit Agreement. The Old Credit Agreement was comprised of the Old Revolving Facility, which had a sub-facility providing for the issuance of up to $30.0 million of letters of credit, and the Old Term Loan. The entire outstanding principal amount of the Old Credit Agreement Loans was due and payable five years after the Effective Date, subject to certain conditions. On February 14,

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2013, we entered into the New Credit Agreement and repaid all outstanding amounts under the Old Credit Agreement, which was subsequently terminated. In addition, the following agreements relating to the Old Credit Agreement Loans were terminated on the Refinancing Closing Date: (i) the Security Agreement, dated as of January 24, 2011, among FairPoint Communications, the subsidiaries of FairPoint Communications party thereto and Bank of America, N.A., as administrative agent, (ii) the Pledge Agreement, dated as of January 24, 2011, made by FairPoint Communications and the subsidiaries of FairPoint Communications party thereto in favor of Bank of America, N.A., as administrative agent, and (iii) the Continuing Guaranty, dated as of January 24, 2011, made by the subsidiaries of FairPoint Communications party thereto in favor of Bank of America, N.A., as administrative agent.

Pre-Petition Agreements. As a condition to the approval of the Merger and related transactions by state regulatory authorities we agreed to make certain capital expenditures following the completion of the Merger, which were modified by regulatory settlements agreed to with representatives for each of Maine, New Hampshire and Vermont and approved by the applicable regulatory authorities in Maine, New Hampshire and Vermont and approved by the Bankruptcy Court as part of the Plan. For further information on these capital expenditure requirements, see note (12) "Commitments and Contingencies" to our condensed consolidated financial statements in "Item 1. Financial Statements" included elsewhere in this Quarterly Report.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

We are exposed to market risk in the normal course of our business operations due to ongoing investing and funding activities, including those associated with our qualified pension plan assets. Market risk refers to the potential change in fair value of a financial instrument as a result of fluctuations in interest rates, fixed income securities and equity prices. We do not hold or issue derivative instruments, derivative commodity instruments or other financial instruments for trading or speculative purposes. As a result, we do not undertake any specific actions to cover our exposure to market risks and we are not party to any market risk management agreements other than in the normal course of business. Our primary market risk exposures are interest rate risk and market risk as follows:

Interest Rate Risk.We are exposed to interest rate risk, primarily as it relates to the variable interest rates we are charged under credit agreements to which we are a party. As of March 31, 2013, our interest rate risk exposure was attributable to the New Credit Agreement, which includes the New Term Loan and the New Revolving Facility, each of which is subject to variable interest rates. We use our variable rate debt, in addition to fixed rate debt, to finance our operations and capital expenditures and believe it is prudent to limit the variability of our interest payments on our variable rate debt. To meet this objective, from time to time, we may enter into interest rate derivative agreements to manage fluctuations in cash flows resulting from interest rate risk.

As of March 31, 2013, we were not a party to any interest rate derivative agreements. Accordingly, on March 31, 2013, the entire $640.0 million principal balance of the New Term Loan was subject to interest rate risk. Interest payments on the New Term Loan are subject to a LIBOR floor of 1.25% and while LIBOR remains below 1.25% we incur interest costs above market rates. A change in interest rates would materially affect our condensed consolidated financial statements. For example, with the principal balance of the New Term Loan as of March 31, 2013, a 1% increase in the interest rate would unfavorably impact interest expense and pre-tax earnings by approximately $6.4 million on an annual basis.

For further information regarding the New Credit Agreement, see "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Debt" and note (6) "Long-Term Debt" to our condensed consolidated financial statements in "Item 1. Financial Statements" included elsewhere in this Quarterly Report.

Market Risk.We are also exposed to fixed income securities risk and equity price risk from changes in the fair value of our qualified pension plan assets and from changes to rates at which benefit payments are discounted. For activity in our qualified pension plan assets, see note (7) "Employee Benefit Plans" to our condensed consolidated financial statements in "Item 1. Financial Statements" included elsewhere in this Quarterly Report. Our qualified pension plan assets have historically funded a large portion of the benefits paid under our qualified pension plans. Payment of significant lump sum payments, lower returns on plan assets and lower discount rates could negatively impact the funded status of the plan and we may be required to make larger contributions to the pension plan than currently anticipated. Due to uncertainties in the pension funding calculation, the amount and timing of any other pension contributions are unknown.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this Quarterly Report, we carried out an evaluation under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of our "disclosure controls and procedures" (as defined in Rule 13a-15(e) of the Exchange Act). Disclosure controls and procedures are controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer

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in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC.

Based upon this evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective as of March 31, 2013.

Changes in Internal Control Over Financial Reporting

We are committed to continuing to improve our internal control processes and will continue to review and update our financial reporting controls and procedures as necessary to accommodate modifications to our business processes and accounting procedures. There have been no changes in our internal control over financial reporting during the quarter ended March 31, 2013 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, we are involved in litigation and regulatory proceedings arising out of our operations. Management believes that we are not currently a party to any legal or regulatory proceedings, the adverse outcome of which, individually or in the aggregate, would have a material adverse effect on our business, financial position or results of operations. Notwithstanding that we emerged from Chapter 11 protection on the Effective Date, one of the Chapter 11 Cases remains open.

Item 1A. Risk Factors.

The risk factors previously disclosed in "Item 1A. Risk Factors" of the 2012 Annual Report under the heading "Risks Related to Our Business" are updated by adding the risk factor below.

Price increases or price retention for certain products and customers may result in an acceleration of access line losses or an unanticipated decline in our growth-oriented products, which may materially adversely affect our business, financial condition, results of operations, liquidity and/or the market price of our outstanding securities.

From time to time, we expect to implement price increases for certain products and customers.  Although we intend for the price increase to provide a net revenue benefit, it is possible that customers will disconnect at a faster rate than they otherwise would have, which could negate the benefit of the price increase. Additionally, a weaker economic environment can result in increased demand by our customers for price reductions at the same or better level of service. In some of our more competitive markets, we may need to offer more favorable terms to our customers for contract renewal, which could result in reduced profitability. Despite continuous efforts by our sales force to retain customers, we cannot provide assurance that we will be able to renew customers dissatisfied with our contract renewal terms.

There have been no other material changes to the risk factors disclosed in "Item 1A. Risk Factors" of the 2012 Annual Report.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

Not applicable.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Not applicable.

Item 6. Exhibits.

The exhibits filed as part of this Quarterly Report are listed in the index to exhibits immediately preceding such exhibits, which index to exhibits is incorporated herein by reference.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Quarterly Report to be signed on its behalf by the undersigned, thereunto duly authorized.

		FAIRPOINT COMMUNICATIONS, INC.
Date: May 7, 2013	By:	/s/ Ajay Sabherwal
	Name:	Ajay Sabherwal
	Title:	Executive Vice President and Chief Financial Officer
		(duly authorized officer and principal financial officer)

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Exhibit Index

Exhibit No.	Description
2.1	Third Amended Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code.(1)
3.1	Ninth Amended and Restated Certificate of Incorporation of FairPoint.(2)
3.2	Second Amended and Restated By Laws of FairPoint.(2)
4.1	Warrant Agreement, dated as of January 24, 2011, by and between FairPoint and The Bank of New York Mellon.(3)
4.2	Specimen Stock Certificate.(2)
4.3	Specimen Warrant Certificate.(3)
4.4	Indenture dated as February 14, 2013, among FairPoint Communications, Inc., the Subsidiary Guarantors and U.S. Bank National Association, as trustee.(4)
10.1	Credit Agreement, dated as of February 14, 2013, among FairPoint Communications, Inc., the lenders party thereto from time to time and Morgan Stanley Senior Funding, Inc., as administrative agent and letter of credit issuer. (4)
10.2	Pledge Agreement, dated as of February 14, 2013, made by FairPoint Communications, Inc. and the subsidiary guarantors party thereto in favor of Morgan Stanley Senior Funding, Inc., as administrative agent. (4)
10.3	Security Agreement, dated as of February 14, 2013, among FairPoint Communications, Inc., the subsidiary guarantors party thereto and Morgan Stanley Senior Funding, Inc., as administrative agent. (4)
10.4	Continuing Guaranty Agreement, dated as of February 14, 2013, made by the subsidiary guarantors party thereto in favor of Morgan Stanley Senior Funding, Inc., as administrative agent. (4)
10.5	Pledge Agreement, dated as of February 14, 2013, among FairPoint Communications, Inc., the subsidiary guarantors party thereto and U.S. Bank National Association, as collateral agent. (4)
10.6	Security Agreement, dated as of February 14, 2013, among FairPoint Communications, Inc., the subsidiary guarantors party thereto and U.S. Bank National Association, as collateral agent. (4)
10.7	Amended and Restated Employment Agreement, dated as of April 9, 2013, by and between FairPoint Communications, Inc. and Paul H. Sunu. †*
10.8	Employment Agreement, made and entered into as of January 22, 2013, by and between FairPoint Communications, Inc. and Ajay Sabherwal. †(5)
10.9	Employment Agreement, made and entered into as of January 22, 2013, by and between FairPoint Communications, Inc. and Shirley J. Linn. †(5)
10.10	Employment Agreement, made and entered into as of January 22, 2013, by and between FairPoint Communications, Inc. and Peter G. Nixon. †(5)
11	Statement Regarding Computation of Per Share Earnings (included in the financial statements contained in this Quarterly Report).
31.1	Certification as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
31.2	Certification as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
32.1	Certification required by 18 United States Code Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.‡
32.2	Certification required by 18 United States Code Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.‡
101.INS	XBRL Instance Document.**
101.SCH	XBRL Taxonomy Extension Schema Document.**
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.**
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.**

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Exhibit No.	Description
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.**
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.**

* Filed herewith.

† Indicates a management contract or compensatory plan or arrangement.

‡ Submitted herewith. Pursuant to SEC Release No. 33-8238, this certification will be treated as "accompanying" this Quarterly Report on Form 10-Q and not "filed" as part of such report for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of Section 18 of the Exchange Act and this certification will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.

** Pursuant to Rule 406T of Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

(1) Incorporated by reference to the Current Report on Form 8-K of FairPoint filed on January 14, 2011.

(2) Incorporated by reference to the Registration Statement on Form 8-A of FairPoint filed on January 24, 2011.

(3) Incorporated by reference to the Current Report on Form 8-K of FairPoint filed on January 25, 2011, Film Number 11544980.

(4) Incorporated by reference to the Current Report on Form 8-K of FairPoint filed on February 14, 2013.

(5) Incorporated by reference to the Annual Report on Form 10-K of FairPoint filed on March 7, 2013.

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EX-10.7

Exhibit 10.7

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”), made and entered into as of this 9th day of April 2013, by and between FairPoint Communications, Inc., a Delaware corporation, and Paul H. Sunu (the “Employee”), amends, restates, and entirely replaces that certain Employment Agreement between the Company and Employee dated August 16, 2010.

W I T N E S S E T H :

WHEREAS, the Company desires to employ Employee and to enter into this Agreement embodying the terms of such employment, and Employee desires to enter into this Agreement and to accept such employment, subject to the terms and provisions of this Agreement.

NOW, THEREFORE, in consideration of the promises and mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are mutually acknowledged, the Company and Employee hereby agree as follows:

Section 1.Definitions.

(a)“Accrued Obligations” shall mean (i) all accrued but unpaid Base Salary through the date of termination of Employee's employment, (ii) any unpaid or unreimbursed expenses incurred in accordance with Section 7 hereof, (iii) any benefits provided under the Company's employee benefit plans upon a termination of employment, in accordance with the terms contained therein, and (iv) any amounts payable under the FairPoint Communications, Inc. 2010 Long Term Incentive Plan (“LTIP”), in accordance with the terms contained therein.

(b)“Agreement” shall have the meaning set forth in the preamble hereto.

(c)“Annual Bonus” shall have the meaning set forth in Section 4(b) hereof.

(d)“Base Salary” shall mean the salary provided for in Section 4(a) hereof or any increased salary granted to Employee pursuant to Section 4(a) hereof.

(e)“Board” shall mean the Board of Directors of the Company.

(f)“Cause” shall mean (i) Employee's act(s) of gross negligence or willful misconduct in the course of Employee's employment hereunder, including a failure to follow a material lawful directive from the Board, (ii) willful failure or refusal by Employee to perform in any material respect his duties or responsibilities, (iii) misappropriation (or attempted misappropriation) by Employee of any assets or business opportunities of the Company or any other member of the Company Group, (iv) embezzlement or fraud committed (or attempted) by Employee, or at his direction, (v) Employee's conviction of, indictment for, or pleading “guilty” or “ no contest” to, (x) a felony or (y) any other criminal charge that has, or could be reasonably expected to have, an adverse impact on the performance of Employee's duties to the Company or any other member of the Company Group or otherwise result in material injury to the reputation or business of the Company or any other member of the Company Group, (vi) any material violation by Employee of the policies of the Company, including but not limited to those relating to sexual harassment or business conduct, and those otherwise set forth in the manuals or statements of policy of the Company, which violation has a material adverse effect on the Company, or (vii) Employee's material breach of this Agreement or material breach of the Non-Interference Agreement.

(g)“Change in Control” shall mean

(i)a change in ownership or control of the Company effected through a transaction or series of transactions (other than an offering of stock to the general public through a registration statement filed with the Securities and Exchange Commission) whereby any “person” (as defined in Section 3(a)(9) of the Exchange Act) or any two or more persons deemed to be one “person” (as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act), other than the Company or any of its affiliates, or an employee benefit plan maintained by the Company or any of its affiliates, directly or indirectly acquire “beneficial ownership” (within the meaning of Rule 13d-3 under the Exchange Act) of securities of the Company possessing more than fifty percent (50%) of the total combined voting power of the Company's securities outstanding immediately after such acquisition; or

(ii)at any time following the Commencement Date, the date upon which less than a majority of the Board is made up of the incumbent members of the Board of the Company; provided, however, that any individual becoming a director subsequent to the Commencement Date whose election, or nomination for election by the Company's stockholders, was approved by a vote of at least a majority of the directors then constituting the Board shall be considered as though such individual were an incumbent member of the Board of the Company, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a person other than the Board; or

(iii)the sale or disposition, in one or a series of related transactions, of all or substantially all of the assets of the Company to any “person” (as defined in Section 3(a)(9) of the Exchange Act) or to any two or more persons deemed to be one “person” (as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) other than the Company's affiliates.

(h)“Code” shall mean the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder.

(i)“Commencement Date” shall mean the date as set forth in the preamble to this Agreement.

(j)“Company” shall mean FairPoint Communications, Inc., a Delaware corporation.

(k)“Company Group” shall mean the Company together with any direct or indirect subsidiaries of the Company.

(l)“Compensation Committee” shall mean the committee of the Board designated to make compensation decisions relating to senior executive officers of the Company Group, or in the absence of such a committee, the independent, non-employee members of the Board.

(m)“Disability” shall mean any physical or mental disability or infirmity of Employee that prevents the performance of Employee's duties for a period of (i) ninety (90) consecutive days or (ii) one hundred twenty (120) non-consecutive days during any twelve (12) month period. Any question as to the existence, extent, or potentiality of Employee's Disability upon which Employee and the Company cannot agree shall be determined by a qualified, independent physician selected by the Company and approved by Employee (which approval shall not be unreasonably withheld). The determination of any such physician shall be final and conclusive for all purposes of this Agreement.

(n)“Employee” shall have the meaning set forth in the preamble hereto.

(o)“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time, including rules thereunder and successor provisions and rules thereto.

(p)“Good Reason” shall mean, without Employee's consent, (i) a material diminution in Employee's title, duties, or responsibilities as set forth in Section 3 hereof, (ii) a reduction, without Employee's consent, in Base Salary set forth in Section 4(a) hereof or Annual Bonus opportunity set forth in Section 4(b) hereof, (iii) the relocation of Employee's principal place of employment (as provided in Section 3(c) hereof) more than fifty (50) miles from its current location, unless recommended by Employee, or (iv) any other material breach of a provision of this Agreement by the Company (other than a provision that is covered by clause (i), (ii), or (iii) above). Employee acknowledges and agrees that his exclusive remedy in the event of any breach of this Agreement shall be to assert Good Reason pursuant to the terms and conditions of Section 8(f) hereof. Notwithstanding the foregoing, during the Term of Employment, in the event that the Board reasonably believes that Employee may have engaged in conduct that could constitute Cause hereunder, the Board may, in its sole and absolute discretion, suspend Employee from performing his duties hereunder, and in no event shall any such suspension constitute an event pursuant to which Employee may terminate employment with Good Reason or otherwise constitute a breach hereunder; provided, that no such suspension shall alter the Company's obligations under this Agreement during such period of suspension.

(q)“Non-Extension Notice” shall have the meaning set forth in Section 2 hereof.

(r)“Non-Interference Agreement” shall mean the Confidentiality, Non-Interference, and Invention Assignment Agreement attached hereto as Exhibit A.

(s)“Person” shall mean any individual, corporation, partnership, limited liability company, joint venture, association, joint‑stock company, trust (charitable or non-charitable), unincorporated organization, or other form of business entity.

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(t)“Release of Claims” shall mean the Release of Claims in substantially the same form attached hereto as Exhibit B, provided, however, that the Company may be revise such Release of Claims from time to time upon the advice of counsel, and such revised Release of Claims shall be deemed to constitute the Release of Claims.

(u)“Severance Benefits” shall have the meaning set forth in Section 8(h) hereof.

(v)“Severance Term” shall mean the twelve (12) month period following Employee's death or termination due to Disability, or the twenty-four (24) month period following Employee's termination by the Company without Cause (other than by reason of death or Disability) or by Employee for Good Reason, as applicable.

(w)“Term of Employment” shall mean the period specified in Section 2 hereof.

Section 2.Acceptance and Term of Employment.

The Company agrees to employ Employee, and Employee agrees to serve the Company, on the terms and conditions set forth herein. The Term of Employment shall commence on the Commencement Date and, shall continue during the period ending on the close of business of August 31, 2016, unless terminated sooner as provided in Section 8; provided, however, that the Term of Employment shall be extended automatically for successive one (1) year terms, without the requirement of any action on the part of either party unless notice of termination (a “Non-Extension Notice”) is given by either the Company or Employee not less than ninety (90) days prior to the expiration of the Term of Employment (including any extension thereof).

Section 3.Position, Duties, and Responsibilities; Place of Performance.

(a)Position, Duties, and Responsibilities. During the Term of Employment, Employee shall be employed and serve as the Chief Executive Officer of the Company (together with such other position or positions consistent with Employee's title as the Board shall specify from time to time), shall be nominated to serve as a member of the Board (and shall so serve if elected), and shall have such duties and responsibilities commensurate with such title. Employee also agrees to serve as an officer and/or director of any other member of the Company Group, in each case without additional compensation.

(b)Performance. Employee shall devote his full business time, attention, skill, and best efforts to the performance of his duties under this Agreement and shall not engage in any other business or occupation during the Term of Employment, including, without limitation, any activity that (x) conflicts with the interests of the Company or any other member of the Company Group, (y) interferes with the proper and efficient performance of Employee's duties for the Company, or (z) interferes with Employee's exercise of judgment in the Company's best interests. Notwithstanding the foregoing, nothing herein shall preclude Employee from (i) from continuing to serve on the board of directors of Integra Telecom (or, should his service on the board of Integra Telecom end, from serving on one board of directors other than the Company's Board), and with the prior consent of the Governance or other designated Committee of the Board, as a member of the boards of directors or advisory boards (or their equivalents in the case of a non-corporate entity) of non-competing businesses and charitable organizations, (ii) engaging in charitable activities and community affairs, and (iii) managing his personal investments and affairs; provided, however, that the activities set out in clauses (i), (ii) and (iii) shall be limited by Employee so as not to materially interfere, individually or in the aggregate, with the performance of his duties and responsibilities hereunder.

(c)Principal Place of Employment. Employee's principal place of employment shall be in Charlotte, North Carolina, although Employee understands and agrees that he may be required to travel from time to time for business reasons.

Section 4.Compensation.

During the Term of Employment, Employee shall be entitled to the following compensation:

(a)Base Salary. Employee shall be paid an annualized Base Salary, payable in accordance with the regular payroll practices of the Company, of not less than $800,000. Employee's Base Salary will be subject to annual review by the Compensation Committee, and may be increased in the discretion of the Compensation Committee following consultation with the independent directors of the Board.

(b)Annual Bonus. Beginning with calendar year 2013, Employee shall be eligible for an annual incentive bonus award (the “Annual Bonus”) through participation in the Company's Annual Incentive Plan in respect of each fiscal year during the Term of Employment (with a target level of 100% of Base Salary and a maximum level of up to 150% of Base Salary), with the actual Annual Bonus payable being based upon the level of achievement of annual Company and individual performance objectives for such fiscal year, as determined by the Compensation Committee

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and communicated to Employee. The Annual Bonus shall be paid to Employee at the same time as annual bonuses are generally payable to other senior executives of the Company subject to Employee's continuous employment through the payment date.

(c)Relocation Expenses. Upon conclusion of Employee's employment for any reason other than his death or a termination by the Company for Cause, the Company will reimburse Employee for any relocation expenses he incurs in an amount not to exceed $480,000. To the extent the reimbursement provided under this Section 4(c) is considered income and increases Employee's income tax liability, the Company shall pay Employee a tax reimbursement payment in an amount such that, after deduction for all income taxes payable with respect to such tax reimbursement benefit, the amount retained by Employee will be equal to the amount of such increased income tax liability; provided, that in no event shall the aggregate amount of any reimbursed income tax liability and the total reimbursement for relocation expenses exceed $480,000. Such expenses will be reimbursed in accordance with the Company's regular reimbursement policies, and any related tax reimbursement shall be made no later than the last day of the calendar year next following the calendar year in which Employee remits to the applicable taxing authority such taxes being reimbursed. The obligation under this Section 4(c) to reimburse Employee for relocation expenses shall survive the termination or expiration of this Agreement without limitation, provided, however, that Employee must incur the expenses reimbursable under this Section 4(c) and submit requests for such reimbursement within eighteen (18) months of the termination of Employee's employment with the Company; provided, further, however, that the relocation expenses shall, for purposes of this Agreement, be deemed expended in full by Employee on the date that is eighteen (18) months subsequent to such termination, and Employee shall receive $480,000 no later than thirty days subsequent to such date.

(d)Equity. Employee will be eligible to be granted shares of the common stock of the Company and/or options to acquire shares of the common stock of the Company, as determined in the discretion of the Compensation Committee. Such shares and/or options will be subject to the terms and conditions as determined by the Company, as set forth in the LTIP. Shares and/or options granted under this Section will be subject to vesting upon such terms as the Compensation Committee may direct at the time of grant. In any year that the Compensation Committee determines to make a grant or grants under the LTIP, the grant date value of any award to Employee is anticipated to be no less than 1.5 times the annual Base Salary payable to Employee in effect at such time. For purposes of determining the number of options that may be granted under the LTIP, the value of any common stock shall be established based upon the Black-Scholes value based on volume-weighted average price of the Company's common stock for the twenty (20) trading days preceding the date of any grant.

(e)Indemnification. The Company shall indemnify Employee and hold Employee harmless in connection with the defense of any lawsuit or other claim to which he is made a party by reason of being an officer, director or employee of the Company, to the fullest extent permitted by the laws of the State of Delaware, as in effect at the time of the subject act or omission; provided that any settlement, consent to judgment, or similar action taken by Employee without the prior written consent of the Company in respect of any such lawsuit or other claim shall not be subject to indemnification hereunder. In addition, the Company shall provide Employee with evidence of Directors and Officers insurance covering Employee at all times Employee provided services to the Company in any capacity, and such insurance coverage shall remain in force for not less than six (6) years subsequent to the termination of Employee's employment with the Company. The Company shall, within thirty (30) days of an invoice submitted by Employee, reimburse Employee for any expenses incurred by Employee in connection with the defense of any lawsuit or other claim to which Employee is made a party by reason of being an officer or director or employee of the Company.

Section 5.Employee Benefits.

During the Term of Employment, Employee shall be entitled to participate in health, insurance, retirement, and other benefits provided generally to similarly situated employees of the Company. Employee shall also be entitled to the same number of holidays, vacation days, and sick days, as well as any other benefits, in each case as are generally allowed to similarly situated employees of the Company in accordance with the Company policy as in effect from time to time. Nothing contained herein shall be construed to limit the Company's ability to amend, suspend, or terminate any employee benefit plan or policy at any time without providing Employee notice, and the right to do so is expressly reserved.

Section 6.Key-Man Insurance.

At any time during the Term of Employment, the Company shall have the right to insure the life of Employee for the sole benefit of the Company, in such amounts, and with such terms, as it may determine. All premiums payable thereon shall be the obligation of the Company. Employee shall have no interest in any such policy, but agrees to cooperate with the Company in procuring such insurance by submitting to physical examinations, supplying all information required by the insurance company, and executing all necessary documents, provided that no financial obligation is imposed on Employee by any such documents.

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Section 7.Reimbursement of Business Expenses.

Employee is authorized to incur reasonable business expenses in carrying out his duties and responsibilities under this Agreement, and the Company shall promptly reimburse him for all such reasonable business expenses, subject to documentation in accordance with the Company's policy, as in effect from time to time.

Section 8.Termination of Employment.

(a)General. The Term of Employment shall terminate upon the earliest to occur of (i) Employee's death, (ii) a termination by reason of a Disability, (iii) a termination by the Company with Cause or without Cause, (iv) a termination by Employee with or without Good Reason, and (v) the close of business on the last day of the Term of Employment following delivery of a Non-Extension Notice. Upon any termination of Employee's employment for any reason, except as may otherwise be requested by the Company in writing and agreed upon in writing by Employee, Employee shall resign from any and all directorships, committee memberships, and any other positions Employee holds with the Company or any other member of the Company Group. Notwithstanding anything herein to the contrary, the payment (or commencement of a series of payments) hereunder of any nonqualified deferred compensation (within the meaning of Section 409A of the Code) upon a termination of employment shall be delayed until such time as Employee has also undergone a “separation from service” as defined in Treas. Reg. 1.409A-1(h), at which time such nonqualified deferred compensation (calculated as of the date of Employee's termination of employment hereunder) shall be paid (or commence to be paid) to Employee on the schedule set forth in this Section 8 as if Employee had undergone such termination of employment (under the same circumstances) on the date of his ultimate “separation from service.”

(b)Termination Due to Death or Disability. Employee's employment shall terminate automatically upon his death. The Company may terminate Employee's employment immediately upon the occurrence of a Disability, such termination to be effective upon Employee's receipt of written notice of such termination. Upon Employee's death or in the event that Employee's employment is terminated due to his Disability, Employee or his estate or his beneficiaries, as the case may be, shall be entitled to:

(i)The Accrued Obligations;

(ii)Any unpaid Annual Bonus in respect of any completed fiscal year that has ended prior to the date of such termination, which amount shall be paid at such time annual bonuses are paid to other senior executives of the Company, but in no event later than the date that is 2½ months following the last day of the fiscal year in which such termination occurred; and

(iii)An amount equal to the sum of (x) Employee's then-current Base Salary, (y) Employee's Annual Bonus for the immediately preceding fiscal year, and (z) the cost of continued health and disability insurance coverage for Employee and his covered dependents during the Severance Term, based on the monthly cost of continuation coverage under COBRA as of the date of termination, as applicable, under the applicable Company benefit plans, such amount to be paid as soon as practicable following Employee's termination, but in no event later than the date that is 2½ months following the last day of the fiscal year in which such termination occurred.

Following Employee's death or a termination of Employee's employment by reason of a Disability, except as set forth in this Section 8(b), Employee shall have no further rights to any compensation or any other benefits under this Agreement.

(c)Termination by the Company with Cause.

(i)The Company may terminate Employee's employment at any time with Cause, effective upon Employee's receipt of written notice of such termination; provided, however, that (x) with respect to any Cause termination relying on clause (i) of the definition of Cause set forth in Section 1(f) hereof, to the extent that such act or acts or failure or failures to act are curable, Employee shall be given not less than five (5) business days' written notice by the Board of its intention to terminate him with Cause, or (y) with respect to any Cause termination relying on clause (ii), (vi), or (vii) of the definition of Cause set forth in Section 1(f) hereof, to the extent that such act or acts or failure or failures to act are curable, Employee shall be given not less than ten (10) business days' written notice by the Board of its intention to terminate him with Cause, and with respect to each of clauses (x) and (y) hereof such notice to state in detail the particular act or acts or failure or failures to act that constitute the grounds on which the proposed termination with Cause is based, and such termination shall be effective at the expiration of such five (5) business day or ten (10) business day notice period, as the case may be under clause (x) or (y) respectively, unless Employee has fully cured such act or acts or failure or failures to act that give rise to Cause during such period.

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(ii)In the event that the Company terminates Employee's employment with Cause, he shall be entitled only to the Accrued Obligations, which amounts shall be paid as soon as practicable following Employee's termination. Following such termination of Employee's employment with Cause, except as set forth in this Section 8(c)(ii), Employee shall have no further rights to any compensation or any other benefits under this Agreement.

(d)Termination by Company without Cause or upon Expiration of the Term of Employment Following the Company's Delivery of a Non-Extension Notice. The Company may terminate Employee's employment at any time without Cause, effective upon Employee's receipt of written notice of such termination, or by delivery to Employee of a Non-Extension Notice in accordance with the provisions of Section 2 above. In the event that Employee's employment is terminated by the Company without Cause (other than due to death or Disability) or upon the expiration of the Term of Employment following the Company's delivery of a Non-Extension Notice, Employee shall be entitled to:

(i)The Accrued Obligations;

(ii)Any unpaid Annual Bonus in respect of any completed fiscal year that has ended prior to the date of such termination, which amount shall be paid at such time annual bonuses are paid to other senior executives of the Company, but in no event later than the date that is 2½ months following the last day of the fiscal year in which such termination occurred;

(iii)A pro rata portion of the bonus for the year in which the termination occurred, as determined by the Compensation Committee in good faith based on the amount of time the Employee worked during the calendar year prior to termination and the Company's actual performance during such period;

(iv)An amount equal to the sum of (x) two times the amount of Employee's then-current Base Salary, (y) two times the amount of Employee's average Annual Bonus determined based on the Employee's actual Annual Bonus in the two (2) years immediately preceding the year in which termination occurs, and (z) the cost of continued health and disability insurance coverage for Employee and his covered dependents during the Severance Term, based on the monthly cost of continuation coverage under COBRA as of the date of termination, as applicable, under the applicable Company benefit plans, such amount to be paid as soon as practicable following Employee's termination or receipt of a Non-Extension Notice, but in no event later than seventy five days of the date such termination occurred;

(v)Immediate accelerated vesting of the next tranche of any time-based equity award that would have otherwise vested except for the termination or receipt of a Non-Extension Notice; and

(vi)Immediate accelerated vesting of any performance-based equity award, if, in the discretion of the Compensation Committee, the performance vesting criteria have been met as of the date of termination, prorated for the time employed during the performance period prior to the date of termination or receipt of a Non-Extension Notice.

Notwithstanding the foregoing, the payments and benefits described in clauses (iii) and (iv) above shall immediately terminate, and the Company shall have no further obligations to Employee with respect thereto, in the event that Employee breaches any material provision of the Non-Interference Agreement. Following such termination of Employee's employment by Company without Cause or upon the expiration of the Term of Employment following the Company's delivery of a Non-Extension Notice, except as set forth in this Section 8(d), Employee shall have no further rights to any compensation or any other benefits under this Agreement. For the avoidance of doubt, Employee's sole and exclusive remedy upon a termination of employment by the Company without Cause or upon the expiration of the Term of Employment following the Company's delivery of a Non-Extension Notice shall be receipt of the Severance Benefits.

(e)Termination by Company without Cause in Connection with a Change in Control. In the event that Employee's employment is terminated by the Company without Cause (other than due to his death or Disability) within twelve (12) months before or twelve (12) months after a Change in Control,Employee shall be entitled to the same payments and benefits as provided in Section 8(d) hereof, subject to the same conditions on and timing of payment and the same benefits as described in Section 8(d) hereof, provided, however, that the amount described in Section 8(d)(iv)(y) will be adjusted to the greater of the amount payable under Section 8(d)(iv)(y) or two times the amount of Employee's target Annual Bonus for the year in which the termination occurred, and provided further that, in lieu of the benefits described in Sections 8(d)(v) and 8(d)(vi), Employee will receive immediate accelerated vesting of all outstanding unvested equity awards.

(f)Termination by Employee with Good Reason. Employee may terminate his employment with Good Reason by providing the Company ten (10) days' written notice setting forth in reasonable specificity the event that constitutes Good Reason, which written notice, to be effective, must be provided to the Company within sixty (60) days of the occurrence of such event. During such ten (10) day notice period, the Company shall have a cure right (if

6

curable), and if not cured within such period, Employee's termination will be effective upon the expiration of such cure period, and Employee shall be entitled to the same payments and benefits as provided in Section 8(d) hereof for a termination by the Company without Cause, subject to the same conditions on and timing of payment and the same benefits as described in Section 8(d) hereof. Following such termination of Employee's employment by Employee with Good Reason, except as set forth in this Section 8(e), Employee shall have no further rights to any compensation or any other benefits under this Agreement. For the avoidance of doubt, Employee's sole and exclusive remedy upon a termination of employment with Good Reason shall be receipt of the Severance Benefits.

(g)Termination by Employee without Good Reason or upon the Expiration of the Term of Employment following Employee's Delivery of a Non-Extension Notice. Employee may terminate his employment without Good Reason by providing the Company thirty (30) days' written notice of such termination or by delivery of a Non-Extension Notice in accordance with the provisions of Section 2 above. In the event of a termination of employment by Employee under this Section 8(g), Employee shall be entitled only to the Accrued Obligations. In the event of termination of Employee's employment without Good Reason, the Company may, in its sole and absolute discretion, by written notice accelerate such date of termination without changing the characterization of such termination as a termination by Employee without Good Reason. Following such termination of Employee's employment by Employee without Good Reason or upon the expiration of the Term of Employment following Employee's delivery of a Non-Extension Notice, except as set forth in this Section 8(g), Employee shall have no further rights to any compensation or any other benefits under this Agreement. Notwithstanding anything in this Section 8(g) to the contrary, in the event Employee provides the Company with notice of his termination of employment without Good Reason during the thirteenth (13^th) calendar month following the consummation of a Change in Control, such termination shall be deemed a termination with Good Reason for all purposes of this Agreement, and Employee shall be entitled to receive the payments and benefits as provided in Section 8(e) hereof for a termination by Employee with Good Reason, subject to the same conditions on payment and benefits as described in Section 8(e) hereof.

(h)Release. Notwithstanding any provision herein to the contrary, the payment of any amount or provision of any benefit pursuant to subsection (b), (d), (e), or (f) of this Section 8 (collectively, the “Severance Benefits”) shall be conditioned upon Employee's execution, delivery to the Company, and non-revocation of the Release of Claims (and the expiration of any revocation period contained in such Release of Claims) within sixty (60) days following the date of Employee's termination of employment hereunder. If Employee fails to execute the Release of Claims in such a timely manner so as to permit any revocation period to expire prior to the end of such sixty (60) day period, or timely revokes his acceptance of such release following its execution, Employee shall not be entitled to any of the Severance Benefits, other than the Accrued Obligations. Further, to the extent that any of the Severance Benefits constitutes “nonqualified deferred compensation” for purposes of Section 409A of the Code, any payment of any amount or provision of any benefit otherwise scheduled to occur prior to the sixtieth (60^th) day following the date of Employee's termination of employment hereunder, but for the condition on executing the Release of Claims as set forth herein, shall not be made until the first regularly scheduled payroll date following such sixtieth (60^th) day, after which any remaining Severance Benefits shall thereafter be provided to Employee according to the applicable schedule set forth herein. For the avoidance of doubt, in the event of a termination due to Employee's death or Disability, Employee's obligations herein to execute and not revoke the Release of Claims may be satisfied on his behalf by his estate or a person having legal power of attorney over his affairs.

Section 9.Non-Interference Agreement.

As a condition to receipt of the benefits set forth under this Agreement, Employee shall have executed and delivered to the Company the Non-Interference Agreement attached hereto as Exhibit A. The parties hereto acknowledge and agree that this Agreement and the Non-Interference Agreement shall be considered separate contracts.

Section 10.Representations and Warranties of Employee.

Employee represents and warrants to the Company that-

(a)Employee is entering into this Agreement voluntarily and that his employment hereunder and compliance with the terms and conditions hereof will not conflict with or result in the breach by him of any agreement to which he is a party or by which he may be bound;

(b)Employee has not violated, and in connection with his employment with the Company will not violate, any non-solicitation, non-competition, or other similar covenant or agreement of a prior employer by which he is or may be bound; and

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(c)in connection with his employment with the Company, Employee will not use any confidential or proprietary information he may have obtained in connection with employment with any prior employer.

Section 11.Taxes.

The Company may withhold from any payments made under this Agreement all applicable taxes, including but not limited to income, employment, and social insurance taxes, as shall be required by law. Employee acknowledges and represents that the Company has not provided any tax advice to him in connection with this Agreement and that he has been advised by the Company to seek tax advice from his own tax advisors regarding this Agreement and payments that may be made to him pursuant to this Agreement, including specifically, the application of the provisions of Section 409A of the Code to such payments.

Section 12.Mitigation; Company Recovery Rights.

Employee shall not be required to mitigate the amount of any payment provided pursuant to this Agreement by seeking other employment or otherwise, and the amount of any payment provided for pursuant to this Agreement shall not be reduced by any compensation earned as a result of Employee's other employment or otherwise. Any payment pursuant to this Agreement shall, however, be subject to any rights that the Company may have under Section 304(b) of the Sarbanes-Oxley Act of 2002, and Section 957 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Section 13.Additional Tax Provisions.

(a)If any payment or benefit Employee would receive pursuant to this Agreement (“Payment”) would constitute a “Parachute Payment” within the meaning of Section 280G of the Code and would be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then the Employee will have the option to accept the “Reduced Amount” (as defined below) or accept the Payment in full, in which case Employee will be responsible for the payment of the Excise Tax and any other taxes that may be due as a result of his receipt of the Payment. The “Reduced Amount”will be the largest portion of the Payment that would result in no portion of the Payment being subject to the Excise Tax. If a reduction in payments or benefits constituting Parachute Payments is necessary so that the Payment equals the Reduced Amount, reduction shall occur as designated by Employee.

(b)Notwithstanding any provision in this Agreement to the contrary-

(i)Any payment otherwise required to be made hereunder to Employee at any date as a result of the termination of Employee's employment shall be delayed for such period of time as may be necessary to meet the requirements of Section 409A(a)(2)(B)(i) of the Code (the “Delay Period”). On the first business day following the expiration of the Delay Period, Employee shall be paid, in a single cash lump sum, an amount equal to the aggregate amount of all payments delayed pursuant to the preceding sentence, and any remaining payments not so delayed shall continue to be paid pursuant to the payment schedule set forth herein.

(ii)Each payment in a series of payments hereunder shall be deemed to be a separate payment for purposes of Section 409A of the Code.

(iii)To the extent that any right to reimbursement of expenses or payment of any benefit in-kind under this Agreement constitutes nonqualified deferred compensation (within the meaning of Section 409A of the Code), (i) any such expense reimbursement shall be made by the Company no later than the last day of the taxable year following the taxable year in which such expense was incurred by Employee, (ii) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, and (iii) the amount of expenses eligible for reimbursement or in-kind benefits provided during any taxable year shall not affect the expenses eligible for reimbursement or in-kind benefits to be provided in any other taxable year; provided,that the foregoing clause shall not be violated with regard to expenses reimbursed under any arrangement covered by Section 105(b) of the Code solely because such expenses are subject to a limit related to the period the arrangement is in effect.

(iv)While the payments and benefits provided hereunder are intended to be structured in a manner to avoid the implication of any penalty taxes under Section 409A of the Code, in no event whatsoever shall the Company or any member of the Company Group be liable for any additional tax, interest, or penalties that may be imposed on Employee as a result of Section 409A of the Code or any damages for failing to comply with Section 409A of the Code (other than for withholding obligations or other obligations applicable to employers, if any, under Section 409A of the Code).

Section 14.Successors and Assigns; No Third-Party Beneficiaries.

(a)The Company. This Agreement shall inure to the benefit of the Company and its respective successors and assigns. Neither this Agreement nor any of the rights, obligations, or interests arising hereunder may be

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assigned by the Company to a Person (other than another member of the Company Group, or its or their respective successors) without Employee's prior written consent (which shall not be unreasonably withheld, delayed, or conditioned); provided, however, that in the event of a sale of all or substantially all of the assets of the Company, the Company may provide that this Agreement will be assigned to, and assumed by, the acquiror of such assets, it being agreed that in such circumstances, Employee's consent will not be required in connection therewith.

(b)Employee. Employee's rights and obligations under this Agreement shall not be transferable by Employee by assignment or otherwise, without the prior written consent of the Company; provided, however, that if Employee shall die, all amounts then payable to Employee hereunder shall be paid in accordance with the terms of this Agreement to Employee's devisee, legatee, or other designee, or if there be no such designee, to Employee's estate.

(c)No Third-Party Beneficiaries. Except as otherwise set forth in Section 8(b) or Section 14(b) hereof, nothing expressed or referred to in this Agreement will be construed to give any Person other than the Company, the other members of the Company Group, and Employee any legal or equitable right, remedy, or claim under or with respect to this Agreement or any provision of this Agreement.

Section 15.Waiver and Amendments.

Any waiver, alteration, amendment, or modification of any of the terms of this Agreement shall be valid only if made in writing and signed by each of the parties hereto; provided, however, that any such waiver, alteration, amendment, or modification must be consented to on the Company's behalf by the Board. No waiver by either of the parties hereto of their rights hereunder shall be deemed to constitute a waiver with respect to any subsequent occurrences or transactions hereunder unless such waiver specifically states that it is to be construed as a continuing waiver.

Section 16.Severability.

If any covenants or such other provisions of this Agreement are found to be invalid or unenforceable by a final determination of a court of competent jurisdiction, (a) the remaining terms and provisions hereof shall be unimpaired, and (b) the invalid or unenforceable term or provision hereof shall be deemed replaced by a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision hereof.

Section 17.Governing Law and Jurisdiction.

THIS AGREEMENT IS GOVERNED BY AND IS TO BE CONSTRUED UNDER THE LAWS OF THE STATE OF NORTH CAROLINA, WITHOUT REGARD TO CONFLICT OF LAWS RULES. ANY DISPUTE OR CLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR CLAIM OF BREACH HEREOF SHALL BE BROUGHT EXCLUSIVELY IN STATE OR FEDERAL COURT IN THE STATE OF NORTH CAROLINA. BY EXECUTION OF THE AGREEMENT, THE PARTIES HERETO, AND THEIR RESPECTIVE AFFILIATES, CONSENT TO THE EXCLUSIVE JURISDICTION OF SUCH COURT, AND WAIVE ANY RIGHT TO CHALLENGE JURISDICTION OR VENUE IN SUCH COURT WITH REGARD TO ANY SUIT, ACTION, OR PROCEEDING UNDER OR IN CONNECTION WITH THE AGREEMENT. EACH PARTY TO THIS AGREEMENT ALSO HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY IN CONNECTION WITH ANY SUIT, ACTION, OR PROCEEDING UNDER OR IN CONNECTION WITH THIS AGREEMENT.

Section 18.Notices.

(a)Place of Delivery. Every notice or other communication relating to this Agreement shall be in writing, and shall be mailed to or delivered to the party for whom or which it is intended at such address as may from time to time be designated by it in a notice mailed or delivered to the other party as herein provided; provided, that unless and until some other address be so designated, all notices and communications by Employee to the Company shall be mailed or delivered to the Company at its principal executive office, attention: General Counsel, and all notices and communications by the Company to Employee may be given to Employee personally or may be mailed to Employee at Employee's last known address, as reflected in the Company's records.

(b)Date of Delivery. Any notice so addressed shall be deemed to be given (i) if delivered by hand, on the date of such delivery, (ii) if mailed by courier or by overnight mail, on the first business day following the date of such mailing, and (iii) if mailed by registered or certified mail, on the third business day after the date of such mailing.

Section 19.Section Headings.

The headings of the sections and subsections of this Agreement are inserted for convenience only and shall not be deemed to constitute a part thereof or affect the meaning or interpretation of this Agreement or of any term or provision hereof.

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Section 20.Entire Agreement.

This Agreement, together with any exhibits attached hereto, constitutes the entire understanding and agreement of the parties hereto regarding the employment of Employee. This Agreement supersedes all prior negotiations, discussions, correspondence, communications, understandings, and agreements between the parties relating to the subject matter of this Agreement.

Section 21.Survival of Operative Sections.

Upon any termination of Employee's employment, the provisions of Section 8 through Section 22 of this Agreement (together with any related definitions set forth in Section 1 hereof) shall survive to the extent necessary to give effect to the provisions thereof.

Section 22.Counterparts.

This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument. The execution of this Agreement may be by actual or facsimile signature.

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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above written.

FAIRPOINT COMMUNICATIONS, INC.

/s/ Shirley J. Linn

By: Shirley J. Linn

Title: Executive Vice President

EMPLOYEE

/s/ Paul H. Sunu

Paul H. Sunu

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Exhibit A

CONFIDENTIALITY, NON-INTERFERENCE, AND INVENTION ASSIGNMENT AGREEMENT

As a condition of my becoming employed by FairPoint Communications, Inc., a Delaware corporation (the “Company”), and in consideration of my employment with the Company and my receipt of the compensation now and hereafter paid to me by the Company, I agree to the following:

Section 1.Confidential Information.

a.Company Group Information. I acknowledge that, during the course of my employment, I will have access to information about the Company and its direct and indirect subsidiaries and affiliates (collectively, the “Company Group”) and that my employment with the Company shall bring me into close contact with confidential and proprietary information of the Company Group. In recognition of the foregoing, I agree, at all times during the term of my employment with the Company and for the three (3) year period following my termination of my employment for any reason, to hold in confidence, and not to use, except for the benefit of the Company Group, or to disclose to any person, firm, corporation, or other entity without written authorization of the Company, any Confidential Information that I obtain or create. I understand that “Confidential Information” means information that the Company Group has developed, acquired, created, compiled, discovered, or owned or will develop, acquire, create, compile, discover, or own, that has value in or to the business of the Company Group that is not generally known and that the Company wishes to maintain as confidential. I understand that Confidential Information includes, but is not limited to, any and all non-public information that relates to the actual or anticipated business and/or products, research, or development of the Company, or to the Company's technical data, trade secrets, or know-how, including, but not limited to, research, product plans, or other information regarding the Company's products or services and markets, customer lists, and customers (including, but not limited to, customers of the Company on whom I called or with whom I may become acquainted during the term of my employment), software, developments, inventions, processes, formulas, technology, designs, drawings, engineering, hardware configuration information, marketing, finances, and other business information disclosed by the Company either directly or indirectly in writing, orally, or by drawings or inspection of premises, parts, equipment, or other Company property. Notwithstanding the foregoing, Confidential Information shall not include (i) any of the foregoing items that have become publicly known through no unauthorized disclosure by me or others who were under confidentiality obligations as to the item or items involved, (ii) any information that I am required to disclose to, or by, any governmental or judicial authority, (iii) any information known to me prior to signing this Confidentiality, Non-Interference, and Invention Assignment Agreement (the “Non-Interference Agreement”) other than information acquired in preparation for my service to the Company, or (iv) any information developed independently by me that does not relate to the business of the Company Group; provided, however, that in the event of such requirement to disclose I will give the Company prompt written notice thereof so that the Company Group may seek an appropriate protective order and/or waive in writing compliance with the confidentiality provisions of this Non-Interference Agreement.

b.Former Employer Information. I represent that my performance of all of the terms of this Non-Interference Agreement as an employee of the Company has not breached and will not breach any agreement to keep in confidence proprietary information, knowledge, or data acquired by me in confidence or trust prior or subsequent to the commencement of my employment with the Company, and I will not disclose to any member of the Company Group, or induce any member of the Company Group to use, any developments, or confidential or proprietary information or material I may have obtained in connection with employment with any prior employer in violation of a confidentiality agreement, nondisclosure agreement, or similar agreement with such prior employer.

Section 2.Developments.

a.Developments Retained and Licensed. If, during any period during which I perform or performed services for the Company Group (the “Assignment Period”), whether as an officer, employee, director, independent contractor, consultant, or agent, or in any other capacity, I incorporate (or have incorporated) into a Company Group product or process any development, original work of authorship, improvement, or trade secret that I created or owned prior to the commencement of my employment or in which I have an interest (collectively referred to as “Prior Developments”), I hereby grant the Company, and the Company Group shall have, a non-exclusive, royalty-free, irrevocable, perpetual, transferable worldwide license (with the right to sublicense) to make, have made, copy, modify, make derivative works of, use, sell, and otherwise distribute such Prior Development as part of or in connection with such product or process.

b.Assignment of Developments. I agree that I will, without additional compensation, promptly make full written disclosure to the Company, and will hold in trust for the sole right and benefit of the Company all developments, original works of authorship, inventions, concepts, know-how, improvements, trade secrets, and similar proprietary rights, whether or not patentable or registrable under copyright or similar laws, which I may solely or jointly conceive or develop or reduce to practice, or have solely or jointly conceived or developed or reduced to practice, or have caused or may cause to be conceived or developed or reduced to practice, during the Assignment Period, whether or not during regular working hours, provided they either (i) relate at the time of conception, development or reduction to practice to the business of any member of the Company Group, or the actual or anticipated research or development of any member of the Company Group; (ii) result from or relate to any work performed for any member of the Company Group; or (iii) are developed through the use of equipment, supplies, or facilities of any member of the Company Group, or any Confidential Information, or in consultation with personnel of any member of the Company Group (collectively referred to as “Developments”). I further acknowledge that all Developments made by me (solely or jointly with others) within the scope of and during the Assignment Period are “works made for hire” (to the greatest extent permitted by applicable law) for which I am, in part, compensated by my salary, unless regulated otherwise by law, but that, in the event any such Development is deemed not to be a work made for hire, I hereby assign to the Company, or its designee, all my right, title, and interest throughout the world in and to any such Development.

c.Maintenance of Records. I agree to keep and maintain adequate and current written records of all Developments made by me (solely or jointly with others) during the Assignment Period. The records may be in the form of notes, sketches, drawings, flow charts, electronic data or recordings, and any other format. The records will be available to and remain the sole property of the Company Group at all times. I agree not to remove such records from the Company's place of business except as expressly permitted by Company Group policy, which may, from time to time, be revised at the sole election of the Company Group for the purpose of furthering the business of the Company Group.

d.Intellectual Property Rights. I agree to assist the Company, or its designee, at the Company's expense, in every way to secure the rights of the Company Group in the Developments and any copyrights, patents, trademarks, service marks, database rights, domain names, mask work rights, moral rights, and other intellectual property rights relating thereto in any and all countries, including the disclosure to the Company of all pertinent information and data with respect thereto, the execution of all applications, specifications, oaths, assignments, recordations, and all other instruments that the Company shall deem necessary in order to apply for, obtain, maintain, and transfer such rights and in order to assign and convey to the Company Group the sole and exclusive right, title, and interest in and to such Developments, and any intellectual property and other proprietary rights relating thereto. I further agree that my obligation to execute or cause to be executed, when it is in my power to do so, any such instrument or papers shall continue after the termination of the Assignment Period until the expiration of the last such intellectual property right to expire in any country of the world; provided, however, the Company shall reimburse me for my reasonable expenses incurred in connection with carrying out the foregoing obligation. If the Company is unable because of my mental or physical incapacity or unavailability for any other reason to secure my signature to apply for or to pursue any application for any United States or foreign patents or copyright registrations covering Developments or original works of authorship assigned to the Company as above, then I hereby irrevocably designate and appoint the Company and its duly authorized officers and agents as my agent and attorney in fact to act for and in my behalf and stead to execute and file any such applications or records and to do all other lawfully permitted acts to further the application for, prosecution, issuance, maintenance, and transfer of letters patent or registrations thereon with the same legal force and effect as if originally executed by me. I hereby waive and irrevocably quitclaim to the Company any and all claims, of any nature whatsoever, that I now or hereafter have for past, present, or future infringement of any and all proprietary rights assigned to the Company.

Section 3.Returning Company Group Documents.

I agree that, at the time of termination of my employment with the Company for any reason, I will deliver to the Company (and will not keep in my possession, recreate, or deliver to anyone else) any and all Confidential Information and all other documents, materials, information, and property developed by me pursuant to my employment or otherwise belonging to the Company. I agree further that any property situated on the Company's premises and owned by the Company (or any other member of the Company Group), including disks and other storage media, filing cabinets, and other work areas, is subject to inspection by personnel of any member of the Company Group at any time with or without notice.

Section 4.Disclosure of Agreement.

As long as it remains in effect, I will disclose the existence of this Non-Interference Agreement to any prospective employer, partner, co-venturer, investor, or lender prior to entering into an employment, partnership, or other business relationship with such person or entity.

Section 5.Restrictions on Interfering.

a.Non-Competition. During the period of my employment with the Company (the “Employment Period”) and the Post-Termination Non-Compete Period, I shall not, directly or indirectly, individually or on behalf of any person, company, enterprise, or entity, or as a sole proprietor, partner, stockholder, director, officer, principal, agent, or executive, or in any other capacity or relationship, engage in any Competitive Activities. For avoidance of doubt, during the Post-Termination Non-Compete Period, merely serving as a Chief Executive Officer, president or other similar leadership capacity or a member of a board of directors shall not be deemed a violation of this section without evidence of direct conduct by Employee in violation of this section.

b.Non-Interference. During the Employment Period and the Post-Termination Non-Interference Period, I shall not, directly or indirectly for my own account or for the account of any other individual or entity, engage in Interfering Activities; provided, however, that I shall not be deemed to violate this subsection (b) to the extent that any employee of any subsequent employer of mine, in the ordinary course of business, conducts any activity described in subsection (c)(iii)(C) below as to any Business Relation, provided that I have not directed or instructed any such employee (either personally or through another) to contact any such Business Relation. For avoidance of doubt, during the Post-Termination Non-Interference Period, merely serving as a Chief Executive Officer, president or other similar leadership capacity or a member of a board of directors shall not be deemed a violation of this section without evidence of direct conduct by Employee in violation of this section.

c.Definitions. For purposes of this Non-Interference Agreement :

i.“Business Relation” shall mean any current or prospective client, customer, licensee, or other business relation of the Company Group, or any such relation that was a client, customer, licensee, or other business relation within the six (6) month period prior to the expiration of the Employment Period, in each case, to whom I provided services, or with whom I transacted business, or whose identity became known to me in connection with my relationship with or employment by the Company and is not publicly known.

ii.“Competitive Activities” shall mean telecommunication services provided by a local exchange carrier business which has substantial business operations in the states of Maine, New Hampshire or Vermont.

iii.“Interfering Activities” shall mean (A) encouraging, soliciting, or inducing, or in any manner attempting to encourage, solicit, or induce, any Person employed by, or providing consulting services to, any member of the Company Group to terminate such Person's employment or services (or in the case of a consultant, materially reducing such services) with the Company Group; (B) hiring any individual who was employed by the Company Group within the six (6) month period prior to the date of such hiring; or (C) encouraging, soliciting, or inducing, or in any manner attempting to encourage, solicit, or induce, any Business Relation to cease doing business with or reduce the amount of business conducted with the Company Group, or in any way interfering with the relationship between any such Business Relation and the Company Group.

iv.“Person” shall mean any individual, corporation, partnership, limited liability company, joint venture, association, joint‑stock company, trust (charitable or non-charitable), unincorporated organization, or other form of business entity.

v.“Post-Termination Non-Compete Period” shall mean the period commencing on the date of the termination of the Employment Period for any reason and ending on the twenty-four (24) month anniversary of such date of termination.

vi.“Post-Termination Non-Interference Period” shall mean the period commencing on the date of the termination of the Employment Period for any reason and ending on the twenty-four (24) month anniversary of such date of termination.

d.Non-Disparagement. I agree that during the Employment Period, and at all times thereafter, I will not make any disparaging or defamatory comments regarding any member of the Company Group or its respective current or former directors, officers, or employees in any respect or make any comments concerning any aspect of my relationship with any member of the Company Group or any conduct or events which precipitated any termination of my employment from any member of the Company Group. However, my obligations under this subparagraph (d) shall not apply to disclosures required by applicable law, regulation, or order of a court or governmental agency.

Section 6.Reasonableness of Restrictions.

I acknowledge and recognize the highly competitive nature of the Company's business, that access to Confidential Information renders me special and unique within the Company's industry, and that I will have the opportunity to develop substantial

relationships with existing and prospective clients, accounts, customers, consultants, contractors, investors, and strategic partners of the Company Group during the course of and as a result of my employment with the Company. In light of the foregoing, I recognize and acknowledge that the restrictions and limitations set forth in this Non-Interference Agreement are reasonable and valid in geographical and temporal scope and in all other respects and are essential to protect the value of the business and assets of the Company Group. I acknowledge further that the restrictions and limitations set forth in this Non-Interference Agreement will not materially interfere with my ability to earn a living following the termination of my employment with the Company and that my ability to earn a livelihood without violating such restrictions is a material condition to my employment with the Company.

Section 7.Independence; Severability; Blue Pencil.

Each of the rights enumerated in this Non-Interference Agreement shall be independent of the others and shall be in addition to and not in lieu of any other rights and remedies available to the Company Group at law or in equity. If any of the provisions of this Non-Interference Agreement or any part of any of them is hereafter construed or adjudicated to be invalid or unenforceable, the same shall not affect the remainder of this Non-Interference Agreement, which shall be given full effect without regard to the invalid portions. If any of the covenants contained herein are held to be invalid or unenforceable because of the duration of such provisions or the area or scope covered thereby, I agree that the court making such determination shall have the power to reduce the duration, scope, and/or area of such provision to the maximum and/or broadest duration, scope, and/or area permissible by law, and in its reduced form said provision shall then be enforceable.

Section 8.Injunctive Relief.

I expressly acknowledge that any breach or threatened breach of any of the terms and/or conditions set forth in this Non-Interference Agreement may result in irreparable injury to the members of the Company Group. Therefore, I hereby agree that, in addition to any other remedy that may be available to the Company, any member of the Company Group shall be entitled to seek injunctive relief, specific performance, or other equitable relief by a court of appropriate jurisdiction in the event of any breach or threatened breach of the terms of this Non-Interference Agreement without the necessity of proving irreparable harm or injury as a result of such breach or threatened breach. Notwithstanding any other provision to the contrary, I acknowledge and agree that the Post-Termination Non-Compete Period, or Post-Termination Non-Interference Period, as applicable, shall be tolled during any period of violation of any of the covenants in Section 5 hereof.

Section 9.Cooperation.

I agree that, following any termination of my employment, I will continue to provide reasonable cooperation to the Company and/or any other member of the Company Group and its or their respective counsel in connection with any investigation, administrative proceeding, or litigation relating to any matter that occurred during my employment in which I was involved or of which I have knowledge. As a condition of such cooperation, the Company shall reimburse me for reasonable out-of-pocket expenses incurred at the request of the Company with respect to my compliance with this paragraph. I also agree that, in the event that I am subpoenaed by any person or entity (including, but not limited to, any government agency) to give testimony or provide documents (in a deposition, court proceeding, or otherwise) that in any way relates to my employment by the Company and/or any other member of the Company Group, I will give prompt notice of such request to the Company and will make no disclosure until the Company and/or the other member of the Company Group has had a reasonable opportunity to contest the right of the requesting person or entity to such disclosure.

Section 10.General Provisions.

a.Governing Law and Jurisdiction. THIS NON-INTERFERENCE AGREEMENT IS GOVERNED BY AND IS TO BE CONSTRUED UNDER THE LAWS OF THE STATE OF NORTH CAROLINA, WITHOUT REGARD TO CONFLICT OF LAWS RULES. ANY DISPUTE OR CLAIM ARISING OUT OF OR RELATING TO THIS NON-INTERFERENCE AGREEMENT OR CLAIM OF BREACH HEREOF SHALL BE BROUGHT EXCLUSIVELY IN STATE OR FEDERAL COURT IN THE STATE OF NORTH CAROLINA. BY EXECUTION OF THE NON-INTERFERENCE AGREEMENT, THE PARTIES HERETO, AND THEIR RESPECTIVE AFFILIATES, CONSENT TO THE EXCLUSIVE JURISDICTION OF SUCH COURT, AND WAIVE ANY RIGHT TO CHALLENGE JURISDICTION OR VENUE IN SUCH COURT WITH REGARD TO ANY SUIT, ACTION, OR PROCEEDING UNDER OR IN CONNECTION WITH THE NON-INTERFERENCE AGREEMENT. EACH PARTY TO THIS NON-INTERFERENCE AGREEMENT ALSO HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY IN CONNECTION WITH ANY SUIT, ACTION, OR PROCEEDING UNDER OR IN CONNECTION WITH THIS NON-INTERFERENCE AGREEMENT.

b.Entire Agreement. This Non-Interference Agreement sets forth the entire agreement and understanding between the Company and me relating to the subject matter herein and merges all prior discussions between us. No modification or amendment to this Non-Interference Agreement, nor any waiver of any rights under this Non-

Interference Agreement, will be effective unless in writing signed by the party to be charged. Any subsequent change or changes in my duties, obligations, rights, or compensation will not affect the validity or scope of this Non-Interference Agreement.

c.No Right of Continued Employment. I acknowledge and agree that nothing contained herein shall be construed as granting me any right to continued employment by the Company, and the right of the Company to terminate my employment at any time and for any reason, with or without cause, is specifically reserved.

d.Successors and Assigns. This Non-Interference Agreement will be binding upon my heirs, executors, administrators, and other legal representatives and will be for the benefit of the Company, its successors, and its assigns. I expressly acknowledge and agree that this Non-Interference Agreement may be assigned by the Company without my consent to any other member of the Company Group as well as any purchaser of all or substantially all of the assets or stock of the Company, whether by purchase, merger, or other similar corporate transaction, provided that the license granted pursuant to Section 2(a) may be assigned to any third party by the Company without my consent.

e.Survival. The provisions of this Non-Interference Agreement shall survive the termination of my employment with the Company and/or the assignment of this Non-Interference Agreement by the Company to any successor in interest or other assignee.

***

I, Paul H. Sunu, have executed this Confidentiality, Non-Interference, and Invention Assignment Agreement on the respective date set forth below:

Date: April 9, 2013/s/ Paul H. Sunu

(Signature)

Exhibit B

RELEASE OF CLAIMS

As used in this Release of Claims (this “Release”), the term “claims” will include all claims, covenants, warranties, promises, undertakings, actions, suits, causes of action, obligations, debts, accounts, attorneys' fees, judgments, losses, and liabilities, of whatsoever kind or nature, in law, in equity, or otherwise.

For and in consideration of the Severance Benefits (as defined in my Amended and Restated Employment Agreement, dated April __, 2013, with FairPoint Communications, Inc. (the “Employment Agreement”)), and other good and valuable consideration, I, Paul H. Sunu, for and on behalf of myself and my heirs, administrators, executors, and assigns, effective as of the date on which this release becomes effective pursuant to its terms, do fully and forever release, remise, and discharge each of the Company and each of its direct and indirect subsidiaries and affiliates, together with their respective officers, directors, partners, shareholders, employees, and agents (collectively, the “Group”), from any and all claims whatsoever up to the date hereof that I had, may have had, or now have against the Group, whether known or unknown, for or by reason of any matter, cause, or thing whatsoever, including any claim arising out of or attributable to my employment or the termination of my employment with the Company, whether for tort, breach of express or implied employment contract, intentional infliction of emotional distress, wrongful termination, unjust dismissal, defamation, libel, or slander, or under any federal, state, or local law dealing with discrimination based on age, race, sex, national origin, handicap, religion, disability, or sexual orientation. This release of claims includes, but is not limited to, all claims arising under the Age Discrimination in Employment Act (“ADEA”), Title VII of the Civil Rights Act, the Americans with Disabilities Act, the Civil Rights Act of 1991, the Family Medical Leave Act, the Equal Pay Act, the Genetic Information Nondiscrimination Act, the North Carolina Equal Employment Practices Act, and the North Carolina Persons with Disabilities Act, each as may be amended from time to time, and all other federal, state, and local laws, the common law, and any other purported restriction on an employer's right to terminate the employment of employees. The release contained herein is intended to be a general release of any and all claims to the fullest extent permissible by law.

I acknowledge and agree that as of the date I execute this Release, I have no knowledge of any facts or circumstances that give rise or could give rise to any claims under any of the laws listed in the preceding paragraph.

By executing this Release, I specifically release all claims relating to my employment and its termination under ADEA, a United States federal statute that, among other things, prohibits discrimination on the basis of age in employment and employee benefit plans.

Notwithstanding any provision of this Release to the contrary, by executing this Release, I am not releasing (i) any claims relating to my rights under Sections 4(e) and 8 of the Employment Agreement, (ii) any claims that cannot be waived by law, or (iii) my right of indemnification as provided by, and in accordance with the terms of, the Company's by-laws or a Company insurance policy providing such coverage, as any of such may be amended from time to time.

I expressly acknowledge and agree that I -

▪Am able to read the language, and understand the meaning and effect, of this Release;

▪Have no physical or mental impairment of any kind that has interfered with my ability to read and understand the meaning of this Release or its terms, and that I am not acting under the influence of any medication, drug, or chemical of any type in entering into this Release;

▪Am specifically agreeing to the terms of the release contained in this Release because the Company has agreed to pay me the Severance Benefits in consideration for my agreement to accept it in full settlement of all possible claims I might have or ever have had, and because of my execution of this Release;

▪Acknowledge that, but for my execution of this Release, I would not be entitled to the Severance Benefits;

▪Understand that, by entering into this Release, I do not waive rights or claims under ADEA that may arise after the date I execute this Release;

▪Had or could have had [twenty-one (21)][forty-five (45)]¹ days from the date of my termination of employment (the “Release Expiration Date”) in which to review and consider this Release, and that if I execute this Release prior to the Release Expiration Date, I have voluntarily and knowingly waived the remainder of the review period;

▪Have not relied upon any representation or statement not set forth in this Release or my Employment Agreement made by the Company or any of its representatives;

▪Was advised to consult with my attorney regarding the terms and effect of this Release; and

▪Have signed this Release knowingly and voluntarily.

I hereby agree to waive any and all claims to re-employment with the Company or any other member of the Company Group (as defined in my Employment Agreement) and affirmatively agree not to seek further employment with the Company or any other member of the Company Group.

Notwithstanding anything contained herein to the contrary, this Release will not become effective or enforceable prior to the expiration of the period of seven (7) calendar days following the date of its execution by me (the “Revocation Period”), during which time I may revoke my acceptance of this Release by notifying the Company and the Board of Directors of the Company, in writing, delivered to the Company at its principal executive office, marked for the attention of its [General Counsel]. To be effective, such revocation must be received by the Company no later than 11:59 p.m. on the seventh (7^th) calendar day following the execution of this Release. Provided that the Release is executed and I do not revoke it during the Revocation Period, the eighth (8^th) day following the date on which this Release is executed shall be its effective date. I acknowledge and agree that if I revoke this Release during the Revocation Period, this Release will be null and void and of no effect, and neither the Company nor any other member of the Company Group will have any obligations to pay me the Severance Benefits.

The provisions of this Release shall be binding upon my heirs, executors, administrators, legal personal representatives, and assigns. If any provision of this Release shall be held by any court of competent jurisdiction to be illegal, void, or unenforceable, such provision shall be of no force or effect. The illegality or unenforceability of such provision, however, shall have no effect upon and shall not impair the enforceability of any other provision of this Release.

EXCEPT WHERE PREEMPTED BY FEDERAL LAW, THIS RELEASE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH FEDERAL LAW AND THE LAWS OF THE STATE OF NORTH CAROLINA, APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN THAT STATE WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAWS. I HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN CONNECTION WITH ANY SUIT, ACTION, OR PROCEEDING UNDER OR IN CONNECTION WITH THIS RELEASE.

Capitalized terms used, but not defined herein, shall have the meanings ascribed to such terms in my Employment Agreement.

/s/ Paul H. Sunu____________________________

Paul H. Sunu

Date: April 9, 2013

¹ To be selected based on whether applicable termination was “in connection with an exit incentive or other employment termination program” (as such phrase is defined in the Age Discrimination in Employment Act of 1967).

EX-31.1

Exhibit 31.1

CERTIFICATION

PURSUANT TO 17 CFR 240.13a-14

PROMULGATED UNDER

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Paul H. Sunu, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of FairPoint Communications, Inc. (the “Company”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Quarterly Report;

3. Based on my knowledge, the financial statements, and other financial information included in this Quarterly Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this Quarterly Report;

4. The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in the Securities Exchange Act of 1934, as amended (the “Exchange Act”) Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:

(i) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Quarterly Report is being prepared;

(ii) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(iii) evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Quarterly Report based on such evaluation; and

(iv) disclosed in this Quarterly Report any change in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter (the Company’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting;

5. The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions):

(i) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and

(ii) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

Date: May 7, 2013

/s/ Paul H. Sunu

Paul H. Sunu

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

PURSUANT TO 17 CFR 240.13a-14

PROMULGATED UNDER

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Ajay Sabherwal, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of FairPoint Communications, Inc. (the “Company”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Quarterly Report;

3. Based on my knowledge, the financial statements, and other financial information included in this Quarterly Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this Quarterly Report;

4. The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in the Securities Exchange Act of 1934, as amended (the “Exchange Act”) Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:

(i) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Quarterly Report is being prepared;

(ii) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(iii) evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Quarterly Report based on such evaluation; and

(iv) disclosed in this Quarterly Report any change in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter (the Company’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting;

5. The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions):

(i) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and

(ii) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

Date: May 7, 2013

/s/ Ajay Sabherwal

Ajay Sabherwal

Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of FairPoint Communications, Inc. (the “Company”) for the quarter ended March 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Paul H. Sunu, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

1.    The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of

1934; and

2.    The information contained in the Report fairly presents, in all material respects, the financial condition and

results of operations of the Company.

/s/ Paul H. Sunu

Paul H. Sunu

Chief Executive Officer

May 7, 2013

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of FairPoint Communications, Inc. (the “Company”) for the quarter ended March 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Ajay Sabherwal, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

1.    The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of

1934; and

2.    The information contained in the Report fairly presents, in all material respects, the financial condition and

results of operations of the Company.

/s/ Ajay Sabherwal

Ajay Sabherwal

Chief Financial Officer

May 7, 2013

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Stockholders' Deficit (Details Textual) (USD $)	Mar. 31, 2013	Dec. 31, 2012	Jan. 24, 2011 Common Stock [Member]
Class of Warrant or Right [Line Items]
Common stock, authorized	37,500,000	37,500,000
Common stock, outstanding	26,477,258	26,288,998
Warrants, outstanding	3,582,402
Exercise price of warrants (in dollars per share)			$ 48.81

XML

Long Term Debt (Details Textual) (USD $)	0 Months Ended	1 Months Ended												0 Months Ended		6 Months Ended				6 Months Ended			0 Months Ended	6 Months Ended								0 Months Ended
	Feb. 14, 2013	Feb. 14, 2013	Mar. 31, 2013	Dec. 31, 2012	Mar. 31, 2013 Term Loan, due 2019 [Member]		Feb. 14, 2013 Term Loan, due 2019 [Member]	Mar. 31, 2013 Senior Secured Notes due 2019 [Member]	Feb. 14, 2013 Senior Secured Notes due 2019 [Member]	Dec. 31, 2012 Old Term Loan Due 2016 [Member]	Mar. 31, 2013 Term Loan under the Credit Agreement [Member]	Feb. 14, 2013 Revolving Credit Facility [Member] Line of Credit [Member] covenants	Feb. 14, 2013 Revolving Credit Facility [Member] Letter of Credit [Member]	Feb. 14, 2013 Term Loan, due 2019 [Member] Notes Payable to Banks [Member]	Jan. 24, 2011 Term Loan, due 2019 [Member] Term Loan under the Credit Agreement [Member]	Jun. 30, 2012 Condition One [Member]	Jun. 30, 2012 Condition One [Member] Term Loan under the Credit Agreement [Member]	Jun. 30, 2012 Condition Two, Subcondition One [Member]	Jun. 30, 2012 Condition Two, Subcondition Two [Member]	Jun. 30, 2012 Condition Two, Subcondition Three [Member]	Feb. 14, 2013 Senior Secured Notes Due 2019 [Member]	Feb. 14, 2013 Senior Secured Notes Due 2019 [Member] Term Loan, due 2019 [Member]	Jan. 24, 2011 Line of Credit [Member]	Jun. 30, 2012 Line of Credit [Member]	Jun. 30, 2012 Line of Credit [Member] Years 1-3 [Member]	Feb. 14, 2013 Maximum [Member] Revolving Credit Facility [Member] Line of Credit [Member]	Feb. 14, 2013 Maximum [Member] Term Loan, due 2019 [Member] Notes Payable to Banks [Member]	Feb. 14, 2013 Minimum [Member] Revolving Credit Facility [Member] Line of Credit [Member]	Feb. 14, 2013 Minimum [Member] Term Loan, due 2019 [Member] Notes Payable to Banks [Member]	Feb. 14, 2013 Federal Funds Effective Rate [Member]	Feb. 14, 2013 London Interbank Offered Rate (LIBOR) [Member]	Feb. 14, 2013 Commitment Fee, Period One [Member] Revolving Credit Facility [Member] Line of Credit [Member]	Feb. 14, 2013 Commitment Fee, Period Two [Member] Revolving Credit Facility [Member] Line of Credit [Member]	Feb. 14, 2013 Debt Instrument, Redemption, Period Six [Member] [Member] Senior Secured Notes Due 2019 [Member] Term Loan, due 2019 [Member] Notes Payable to Banks [Member]	Feb. 15, 2013 Debt Instrument, Redemption, Period Six [Member] [Member] Senior Secured Notes Due 2019 [Member] Term Loan, due 2019 [Member] Notes Payable to Banks [Member]	Feb. 14, 2013 Mandatory Repayments, Period One [Member] Senior Secured Notes Due 2019 [Member] Term Loan, due 2019 [Member] Notes Payable to Banks [Member]	Feb. 14, 2013 Mandatory Repayments, Subsequent Periods [Member] Senior Secured Notes Due 2019 [Member] Term Loan, due 2019 [Member] Notes Payable to Banks [Member]	Feb. 15, 2013 Debt Instrument, Redemption Period Four [Member] Senior Secured Notes Due 2019 [Member] Term Loan, due 2019 [Member] Notes Payable to Banks [Member]	Feb. 15, 2013 Debt Instrument, Redemption, Period Five [Member] Senior Secured Notes Due 2019 [Member] Term Loan, due 2019 [Member] Notes Payable to Banks [Member]	Feb. 15, 2013 Debt Instrument, Redemption, Period One [Member] Senior Secured Notes Due 2019 [Member]	Jan. 24, 2011 Bank of America Syndicate [Member] Revolving Credit Facility [Member] Senior Secured Credit Facility [Member]	Jan. 24, 2011 Bank of America Syndicate [Member] Line of Credit [Member] Senior Secured Credit Facility [Member]
Long Term Debt (Textual) [Abstract]
Estimated fair value of long-term debt					$ 620,800,000			$ 294,000,000		$ 929,500,000
Debt Instrument, Unamortized Discount					19,099,000	[1]	19,400,000
Refinancing [Abstract]
Debt Instrument, Face Amount									300,000,000.0						1,000,000,000.0						300,000,000.0
Debt Instrument, Interest Rate, Stated Percentage									8.75%												8.75%					5.50%	6.25%	4.50%	5.25%
Line of Credit Facility, Amount Outstanding												75,000,000.0	40,000,000.0
Long-term Debt			940,000,000											640,000,000.0
Line of Credit Facility, Increase, Additional Borrowings														640,000,000.0
Repayments of Debt		946,500,000
Interest Paid		7,700,000
Payments of Debt Issuance Costs		32,600,000
Point in addition to base interest rate under condition																4.50%		3.50%		1.00%		1.25%								0.50%	1.00%
Debt Instrument, Fronting Fee, Percentage																												0.125%
Percentage commitment fee on average daily unused portion of exit revolving facility																								0.75%								0.50%	0.375%
Debt Instrument, Periodic Payment, Principal																																		1,600,000
Debt Instrument, Mandatory Repayments, Percentage of Excess Cash Flow																																				50.00%	25.00%
Debt Instrument, Redemption Price, Percentage																																			101.00%			103.00%	102.00%	108.75%
Debt Instruments, Retrictive Covenants, Number												2
Debt Instrument, Default Redemption, Percent of Principal																																								100.00%
Debt Instrument, Principal, Redemption Percentage, Maximum																																								35.00%
Old Credit Agreement [Abstract]
Maximum borrowing capacity																											200,000,000.0														75,000,000.0	1,075,000,000.0
Loan origination fees of Revolving Facility for future years																									1,500,000
Minimum floor interest rate on Term Loan under condition one																	2.00%
Interest rate in addition to Libor under subcondition two of condition two																			0.50%
Base interest rate under condition																LIBOR		Bank of America's prime rate		LIBOR
Debt Instrument, Annual Principal Payment			10,500,000	43,000,000
Debt Issue Costs [Abstract]
Deferred Finance Costs, Noncurrent, Gross	7,600,000	7,600,000
Amortization period	6 years 2 months 12 days																						3 years 8 months 12 days
Deferred Finance Costs, Gross																							2,400,000
Deferred Finance Costs, Noncurrent, Net			7,491,000	1,111,000
Long Term Debt (Additional Textual) [Abstract]
Weighted Average Rate of Senior Secured Credit Facility								8.75%
Variable rates of Senior Secured Credit Facility					7.50%						7.50%
Line of Credit Facility, Remaining Borrowing Capacity			61,700,000
Letter of Credit Outstanding			$ 13,300,000

[1] The $19.4 million discount, at the date of distribution, on the New Term Loan (as defined below) will be amortized using the effective interest method over the term of the senior secured credit facility due 2019.

XML

Earnings Per Share (Tables)

3 Months Ended

Mar. 31, 2013

Earnings Per Share [Abstract]

Calculation of Basic and Diluted Earnings per Common Share

The following table provides a reconciliation of the common shares used for basic earnings per share and diluted earnings per share (in thousands):

	Three Months Ended March 31,
	2013	2012
Weighted average number of common shares used for basic earnings per share (a)	26,147	25,931
Effect of potential dilutive shares (b)	—	—
Weighted average number of common shares and potential dilutive shares used for diluted earnings per share	26,147	25,931
Anti-dilutive shares outstanding at period-end that are excluded from the above reconciliation (c)	5,349	4,916

XML

Commitments and Contingencies (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Service quality penalties
Increase (decrease) in liability recorded as a reduction (increase) to revenue	$ 142	$ (1,088)
SQI penalties paid out in form of customer rebates	(345)	0
Performance assurance plan credits
Increase (decrease) in estimated reserve recorded as a reduction (increase) to revenue	(1,601)	(205)
PAP credits paid out	$ (2,084)	$ (588)

XML

Earnings Per Share (Details) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013		Mar. 31, 2012
Calculation of basic and diluted earnings per common share
Weighted average number of common shares used for basic earnings per share	26,147	[1]	25,931	[1]
Effect of potential dilutive shares	0	[2]	0	[2]
Weighted average number of common shares and potential dilutive shares used for diluted earnings per share	26,147		25,931
Anti-dilutive shares outstanding at period-end excluded from the above reconciliation.	5,349	[3]	4,916	[3]

[1] Weighted average number of common shares used for basic earnings per share excludes 285,060 and 266,157 weighted average shares of non-vested restricted stock as of the three months ended March 31, 2013 and 2012, respectively. Non-vested restricted stock is included in common shares issued and outstanding in the condensed consolidated balance sheets.

[2] Since the Company incurred a loss for the three months ended March 31, 2013 and 2012, all potentially dilutive securities are anti-dilutive for these periods and, therefore, are excluded from the determination of diluted earnings per share.

[3] Anti-dilutive shares outstanding at period-end that are excluded from the above reconciliation include warrants, non-vested restricted stock and stock options issued under the FairPoint Communications, Inc. 2010 Long Term Incentive Plan.

XML

Organization and Principles of Consolidation

3 Months Ended

Mar. 31, 2013

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization and Principles of Consolidation

Organization and Principles of Consolidation

Organization

FairPoint is a leading provider of advanced communications services to business, wholesale and residential customers within its service territories. FairPoint offers its customers a suite of advanced data services such as Ethernet, high capacity data transport and other IP-based services over a ubiquitous, next-generation fiber network with more than 15,000 route miles (the "Next Generation Network") in addition to Internet access, high-speed data ("HSD") and local and long distance voice services. FairPoint is the incumbent communications provider in the markets it serves, primarily rural communities and small urban markets. Many of its local exchange carriers ("LECs") have served their respective communities for more than 80 years. As of March 31, 2013, the Company's service territory spanned 17 states and operated with approximately 1.3 million access line equivalents in service, including approximately 330,000 broadband subscribers.

On October 26, 2009, the Company and substantially all of its direct and indirect subsidiaries filed voluntary petitions for relief under chapter 11 of title 11 ("Chapter 11") of the United States Code. These cases were jointly administered under the caption In re FairPoint Communications, Inc. (collectively, the "Chapter 11 Cases") in the United States Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court"). On January 24, 2011 (the "Effective Date"), the Company substantially consummated its reorganization through a series of transactions contemplated by its Third Amended Joint Plan of Reorganization Under Chapter 11 of the United States Code (as confirmed by the Bankruptcy Court, the "Plan").

Principles of Consolidation

The consolidated financial statements include all majority-owned subsidiaries of the Company. Partially owned equity affiliates are accounted for under the cost method or equity method when the Company demonstrates significant influence, but does not have a controlling financial interest. Intercompany accounts and transactions have been eliminated.

XML

Accounting Policies (Details Textual) (USD $) In Millions, unless otherwise specified	Mar. 31, 2013 States	Dec. 31, 2012
Accounting Policies [Abstract]
Deferred revenue	$ 17.0	$ 18.3
Number of operating states	17

XML

Organization and Principles of Consolidation (Details Textual)	Mar. 31, 2013 States
Product Information [Line Items]
Number of operating states	17
Communication Services [Member]
Product Information [Line Items]
Number of Access Line Equivalents	1,300,000
Number of Data Subscribers	330,000,000
Communication Services [Member] | Minimum [Member]
Product Information [Line Items]
Number of route miles in fiber network	15,000

XML

Income Taxes (Details Textual) (USD $)	3 Months Ended		9 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Sep. 30, 2012	Dec. 31, 2012
Income Tax Contingency [Line Items]
Income tax benefit	$ 28,133,000	$ 24,258,000
Effective tax expense (benefit) rate	32.80%	34.20%
Federal statutory rate	35.00%
Deferred Income Tax Expense (Benefit)	(21,428,000)	(24,373,000)
NOL carryforwards	172,300,000
Estimated NOL tax attribute reduction	581,800,000
Expiration period of NOL carryforwards			2022 to 2033
State NOL deferred tax asset	10,300,000
Tax valuation allowance	195,800,000			192,500,000
Federal tax valuation allowance	162,100,000			159,500,000
State tax valuation allowance	33,700,000			33,000,000
Decrease in valuation allowance	700,000
Unrecognized tax benefits, total	3,800,000			3,800,000
Unrecognized tax benefits, affect tax rate if recognized	3,800,000
Blackfoot Telecommunications Group [Member]
Income Tax Contingency [Line Items]
Deferred Income Tax Expense (Benefit)	$ 6,700,000

XML

Long Term Debt (Details) (USD $)	Mar. 31, 2013	Dec. 31, 2012	Mar. 31, 2013 Term Loan, due 2019 [Member]		Feb. 14, 2013 Term Loan, due 2019 [Member]	Mar. 31, 2013 Senior Secured Notes due 2019 [Member]		Dec. 31, 2012 Senior Secured Notes due 2019 [Member]		Dec. 31, 2012 Old Term Loan Due 2016 [Member]
Long term debt for the Company
Senior secured credit facility	$ 920,901,000	$ 957,000,000	$ 640,000,000	[1]						$ 957,000,000	[2]
Discount on New Term Loan (b)			(19,099,000)	[3]	(19,400,000)
Senior notes, 8.75% Due 2019						300,000,000	[4]	0	[4]
Less: current portion	(6,400,000)	(10,000,000)
Total long-term debt, net of current portion	914,501,000	947,000,000
Long-term Debt, Fair Value			$ 620,800,000			$ 294,000,000				$ 929,500,000

[1] The estimated fair value of the Company's New Term Loan (as defined below) at March 31, 2013 was approximately $620.8 million based on market prices of the Company's debt securities at the respective balance sheet date, which falls within Level 2 of the fair value hierarchy.

[2] The estimated fair value of the Old Term Loan (as defined below) at December 31, 2012 was approximately $929.5 million based on market prices of the Company's debt securities at the respective balance sheet date, which falls within Level 2 of the fair value hierarchy.

[3] The $19.4 million discount, at the date of distribution, on the New Term Loan (as defined below) will be amortized using the effective interest method over the term of the senior secured credit facility due 2019.

[4] The estimated fair value of the Notes (as defined below) at March 31, 2013 was approximately $294.0 million based on market prices of the Company's debt securities at the respective balance sheet date, which falls within Level 2 of the fair value hierarchy.

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Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Cash flows from operating activities:
Net loss	$ (47,485)	$ (46,712)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Deferred income taxes	(21,428)	(24,373)
Provision for uncollectible revenue	2,489	(1,857)
Depreciation and amortization	91,433	93,207
Post-retirement healthcare	14,135	13,266
Qualified pension	5,884	(285)
Gain on sale of business	(16,774)	0
Loss on debt refinancing	6,787	0
Other non cash items	938	64
Changes in assets and liabilities arising from operations:
Accounts receivable	(4,152)	4,060
Prepaid and other assets	3,342	2,982
Restricted cash	1,171	(6,643)
Accounts payable and accrued liabilities	(5,758)	7,935
Accrued interest payable	9,294	(6)
Other assets and liabilities, net	3,612	(230)
Reorganization adjustments:
Non-cash reorganization income	(180)	(1,855)
Claims payable and estimated claims accrual	80	(5,550)
Restricted cash - cash claims reserve	(17)	13,076
Total adjustments	90,856	93,791
Net cash provided by operating activities	43,371	47,079
Cash flows from investing activities:
Net capital additions	(29,910)	(26,257)
Proceeds from sale of business	30,315	0
Distributions from investments	421	338
Net cash provided by (used in) investing activities	826	(25,919)
Cash flows from financing activities:
Refinancing costs	(13,217)	0
Proceeds from issuance of long-term debt	920,590	0
Repayments of long-term debt	(957,000)	(2,500)
Restricted cash	0	111
Proceeds from exercise of stock options	17	0
Repayment of capital lease obligations	(312)	(326)
Net cash used in financing activities	(49,922)	(2,715)
Net change	(5,725)	18,445
Cash, beginning of period	23,203	17,350
Cash, end of period	17,478	35,795
Supplemental disclosure of cash flow information:
Reorganization costs paid	228	270
Non-cash settlement of claims payable	$ 0	$ 5,268

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Long Term Debt (Maturities of Long-term Debt) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013
Approximate Aggregate Maturities of Long-term Debt
2014	$ 6,400
2015	6,400
2016	6,400
2017	6,400
2018	6,400
Thereafter	908,000
Long-term Debt	$ 940,000

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Assets Held for Sale and Discontinued Operations (Details) (USD $)	3 Months Ended				3 Months Ended			12 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012	Nov. 28, 2012	Mar. 31, 2013 Blackfoot Telecommunications Group [Member]		Mar. 31, 2012 Blackfoot Telecommunications Group [Member]	Dec. 31, 2012 Blackfoot Telecommunications Group [Member] employee
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Gross cash proceeds				$ 30,300,000
Number of employees retained								11
Deferred income taxes	(21,428,000)	(24,373,000)			6,700,000
Recorded gain, net of tax					16,800,000
Gross gain on sale for income tax purposes					27,500,000
Assets held for sale:
Accounts receivable, net								261,000
Prepaid expenses								37,000
Other current assets								3,000
Property, plant and equipment (net of $4.6 million accumulated depreciation)								6,441,000
Accumulated depreciation								4,600
Other assets								5,807,000
Total assets held for sale	0		12,549,000					12,549,000
Liabilities held for sale:
Accounts payable								137,000
Other accrued liabilities								148,000
Other long-term liabilities								122,000
Total liabilities held for sale	0		407,000					407,000
Income Statement Disclosures:
Revenue					674,000	[1]	2,058,000
Income before income taxes					$ 477,000	[1]	$ 838,000

[1] Reflects revenue and income before income taxes of the Idaho-based operations for the period of January 1, 2013 through the completion of the transaction on January 31, 2013.

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Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Current assets:
Cash	$ 17,478	$ 23,203
Accounts receivable (net of $18.8 million and $18.9 million allowance for doubtful accounts)	5,664	6,818
Accounts receivable, net	88,590	86,999
Prepaid expenses	16,062	20,128
Other current assets	3,981	4,219
Deferred income tax, net	16,236	16,376
Assets held for sale	0	12,549
Total current assets	148,011	170,292
Property, plant and equipment (net of $722.6 million and $642.1 million accumulated depreciation, respectively)	1,381,466	1,438,309
Intangible assets (net of $24.4 million and $21.6 million accumulated amortization, respectively)	114,203	116,992
Debt issue costs, net	7,491	1,111
Restricted cash	651	651
Other assets	4,697	5,006
Total assets	1,656,519	1,732,361
Liabilities and Stockholders' Deficit
Current portion of long-term debt	6,400	10,000
Current portion of capital lease obligations	1,235	1,220
Accounts payable	63,860	57,832
Claims payable and estimated claims accrual	1,182	1,282
Accrued interest payable	9,470	176
Other accrued liabilities	60,323	72,036
Liabilities held for sale	0	407
Total current liabilities	142,470	142,953
Capital lease obligations	1,143	1,470
Accrued pension obligation	208,702	203,537
Employee benefit obligations	631,426	619,108
Deferred income taxes	106,440	127,361
Other long-term liabilities	12,526	8,745
Long-term debt, net of current portion	914,501	947,000
Total long-term liabilities	1,874,738	1,907,221
Total liabilities	2,017,208	2,050,174
Commitments and contingencies (See Note 12)
Stockholders' deficit
Common stock, $0.01 par value, 37,500,000 shares authorized, 26,477,258 and 26,288,998 shares issued and outstanding at March 31, 2013 and December 31, 2012, respectively	264	262
Additional paid-in capital	508,012	506,153
Retained deficit	(615,724)	(568,239)
Accumulated other comprehensive loss	(253,241)	(255,989)
Total stockholders' deficit	(360,689)	(317,813)
Total liabilities and stockholders' deficit	$ 1,656,519	$ 1,732,361

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Condensed Consolidated Statements of Comprehensive Loss (Unaudited) (Parenthetical) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Statement of Other Comprehensive Income [Abstract]
Tax expense on qualified pension and post-retirement healthcare plans	$ 0.6	$ 0.5

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Employee Benefit Plans (Details Textual) (USD $)	3 Months Ended				12 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Mar. 31, 2013 Qualified Pension [Member]	Mar. 31, 2013 Post-retirement Healthcare [Member]	Dec. 31, 2013 Post-retirement Healthcare [Member]	Mar. 31, 2013 Minimum [Member] Qualified Pension [Member]
Employee Benefit Plans (Textual) [Abstract]
Expected employer contributions in current fiscal year			$ 15,000,000			$ 7,400,000
Employer pension contribution year-to-date			0
Expected employer contribution amount, post-retirement healthcare plan					5,100,000
Employer contribution year-to-date				900,000
Expected benefit payments, remainder of fiscal year				$ 4,200,000
Actual return for qualified pension plan assets	3.80%	5.70%
Weighted average annualized expected return on qualified pension plan assets	7.60%

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Long Term Debt (Tables)

3 Months Ended

Mar. 31, 2013

Debt Disclosure [Abstract]

Schedule of Long-term Debt Balances

Long-term debt for the Company at March 31, 2013 and December 31, 2012 is shown below (in thousands):

	March 31, 2013			December 31, 2012
New Term Loan, due 2019 (weighted average rate of 7.50%) (a)	$	640,000		$	—
Discount on New Term Loan (b)	(19,099		)	—
Notes, 8.75%, due 2019 (c)	300,000			—
Old Term Loan, due 2016 (weighted average rate of 6.50%)(d)	—			957,000
Total long-term debt	920,901			957,000
Less: current portion	(6,400		)	(10,000		)
Total long-term debt, net of current portion	$	914,501		$	947,000

Schedule of Maturities of Long-term Debt

The approximate aggregate maturities of long-term debt, excluding the debt discount on the New Term Loan (as defined below), for each of the five years subsequent to March 31, 2013 and thereafter are as follows (in thousands):

Trailing twelve months ending March 31,	Balance Due
2014	$	6,400
2015	6,400
2016	6,400
2017	6,400
2018	6,400
Thereafter	908,000
Total long-term debt, including current portion	$	940,000

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Accumulated Other Comprehensive Loss (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013		Mar. 31, 2012
Reclassification Adjustment Out of Accumulated Other Comprehensive Income [Line Items]
Loss from continuing operations before income taxes	$ (85,662)		$ (70,970)
Tax expense	28,133		24,258
Net loss	(47,485)		(46,712)
Reclassification out of Accumulated Other Comprehensive Income [Member] | Accumulated Defined Benefit Plans Adjustment [Member]
Reclassification Adjustment Out of Accumulated Other Comprehensive Income [Line Items]
Loss from continuing operations before income taxes	3,391
Tax expense	(643)
Net loss	2,748
Reclassification out of Accumulated Other Comprehensive Income [Member] | Accumulated Defined Benefit Plans Adjustment [Member] | Qualified Pension [Member]
Reclassification Adjustment Out of Accumulated Other Comprehensive Income [Line Items]
Amortization of actuarial loss	1,156	[1]
Reclassification out of Accumulated Other Comprehensive Income [Member] | Accumulated Defined Benefit Plans Adjustment [Member] | Post-retirement Healthcare [Member]
Reclassification Adjustment Out of Accumulated Other Comprehensive Income [Line Items]
Amortization of actuarial loss	$ 2,235	[1]

[1] These accumulated other comprehensive loss components are included in the computation of net periodic benefit cost. See note (7) "Employee Benefit Plans" for details.

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Accumulated Other Comprehensive loss (Tables)

3 Months Ended

Mar. 31, 2013

Accumulated Other Comprehensive Loss [Abstract]

Schedule of Accumulated Other Comprehensive Income (Loss)

The following table provides a reconciliation of adjustments reclassified from accumulated other comprehensive loss (in thousands):

	Three Months Ended March 31, 2013
Employee benefits:
Qualified pension plans' amortization of actuarial loss (a)	$	1,156
Post-retirement healthcare plans' amortization of actuarial loss (a)	2,235
Total employee benefit amounts reclassified from accumulated other comprehensive loss	3,391
Tax expense	(643		)
Total employee benefit amounts reclassified from accumulated other comprehensive loss, net	$	2,748

(a) These accumulated other comprehensive loss components are included in the computation of net periodic benefit cost. See note (7) "Employee Benefit Plans" for details.

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Condensed Consolidated Statement of Stockholders' Deficit (Unaudited) (USD $) In Thousands, except Share data, unless otherwise specified	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained deficit [Member]	Accumulated other comprehensive loss [Member]
Beginning Balance at Dec. 31, 2012	$ (317,813)	$ 262	$ 506,153	$ (568,239)	$ (255,989)
Beginning Balance, Shares at Dec. 31, 2012	26,288,998	26,289,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(47,485)	0	0	(47,485)	0
Issuance of Common Stock, Shares		185,000
Issuance of Common Stock	0	2	(2)	0	0
Exercise of stock options, Shares		3,000
Exercise of stock options	17	0	17	0	0
Stock based compensation expense, Shares		0
Stock based compensation expense	1,844	0	1,844	0	0
Employee benefit adjustment to comprehensive income, Shares		0
Employee benefit adjustment to comprehensive income	2,748	0	0	0	2,748
Ending Balance at Mar. 31, 2013	$ (360,689)	$ 264	$ 508,012	$ (615,724)	$ (253,241)
Ending Balance, Shares at Mar. 31, 2013	26,477,258	26,477,000

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $)	Mar. 31, 2013	Dec. 31, 2012
Statement of Financial Position [Abstract]
Property plant and equipment, accumulated depreciation	$ 722,600,000	$ 642,100,000
Intangible assets accumulated amortization	24,400,000	21,600,000
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	37,500,000	37,500,000
Common stock, shares issued	26,477,258	26,288,998
Common stock, shares outstanding	26,477,258	26,288,998
Allowance for doubtful accounts	$ 18.8	$ 18.9

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Earnings Per Share

3 Months Ended

Mar. 31, 2013

Earnings Per Share [Abstract]

Earnings Per Share

Earnings Per Share

Basic earnings per share of the Company is computed by dividing net loss by the weighted average number of shares of common stock outstanding for the period. Except when the effect would be anti-dilutive, the diluted earnings per share calculation calculated using the treasury stock method includes the impact of stock units, shares of non-vested restricted stock and shares that could be issued under outstanding stock options.

The following table provides a reconciliation of the common shares used for basic earnings per share and diluted earnings per share (in thousands):

	Three Months Ended March 31,
	2013	2012
Weighted average number of common shares used for basic earnings per share (a)	26,147	25,931
Effect of potential dilutive shares (b)	—	—
Weighted average number of common shares and potential dilutive shares used for diluted earnings per share	26,147	25,931
Anti-dilutive shares outstanding at period-end that are excluded from the above reconciliation (c)	5,349	4,916

(a) Weighted average number of common shares used for basic earnings per share excludes 285,060 and 266,157 weighted average shares of non-vested restricted stock as of the three months ended March 31, 2013 and 2012, respectively. Non-vested restricted stock is included in common shares issued and outstanding in the condensed consolidated balance sheets.

(b) Since the Company incurred a loss for the three months ended March 31, 2013 and 2012, all potentially dilutive securities are anti-dilutive for these periods and, therefore, are excluded from the determination of diluted earnings per share.

(c) Anti-dilutive shares outstanding at period-end that are excluded from the above reconciliation include warrants, non-vested restricted stock and stock options issued under the FairPoint Communications, Inc. 2010 Long Term Incentive Plan.

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Document and Entity Information	3 Months Ended
	Mar. 31, 2013	May 03, 2013
Document and Entity Information [Abstract]
Entity Registrant Name	FAIRPOINT COMMUNICATIONS INC
Entity Central Index Key	0001062613
Document Type	10-Q
Document Period End Date	Mar. 31, 2013
Amendment Flag	false
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q1
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		26,476,958

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Stockholders' Deficit

3 Months Ended

Mar. 31, 2013

Stockholders' Equity Note [Abstract]

Stockholders' Deficit

Stockholders' Deficit

At March 31, 2013, 37,500,000 shares of common stock were authorized and 26,477,258 shares of common stock (including shares of non-vested restricted stock) and 3,582,402 warrants, each eligible to purchase one share of common stock, were outstanding.

The initial exercise price applicable to the warrants is $48.81 per share of common stock. The exercise price applicable to the warrants is subject to adjustment upon the occurrence of certain events described in the warrant agreement that the Company entered into with the Bank of New York Mellon, as the warrant agent, on the Effective Date. The warrants may be exercised at any time on or before the seventh anniversary of the Effective Date.

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Condensed Consolidated Statements of Operations (Unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2013		Mar. 31, 2012
Revenues	$ 235,469		$ 248,474
Operating expenses:
Cost of services and sales, excluding depreciation and amortization	116,611		121,475
Selling, general and administrative expense, excluding depreciation and amortization	88,886		89,428
Depreciation and amortization	91,433		93,207
Reorganization related income	(163)		(1,392)
Total operating expenses	296,767		302,718
Loss from operations	(61,298)		(54,244)
Other income (expense):
Interest expense	(18,002)		(17,028)
Loss on early retirement of debt	(6,787)		0
Other	425		302
Total other expense	(24,364)		(16,726)
Loss from continuing operations before income taxes	(85,662)		(70,970)
Income tax benefit	28,133		24,258
Loss from continuing operations	(57,529)		(46,712)
Gain on sale of discontinued operations, net of taxes	10,044		0
Net loss	$ (47,485)		$ (46,712)
Weighted average shares outstanding:
Basic, in shares	26,147	[1]	25,931	[1]
Diluted, in shares	26,147		25,931
Earnings (loss) per share, basic:
Continuing operations, in dollars per share	$ (2.20)		$ (1.80)
Discontinued operations, in dollars per share	$ 0.38		$ 0.00
Loss per share, basic, in dollars per share	$ (1.82)		$ (1.80)
Earnings (loss) per share, diluted:
Continuing operations, in dollars per share	$ (2.20)		$ (1.80)
Discontinued operations, in dollars per share	$ 0.38		$ 0.00
Loss per share, diluted, in dollars per share	$ (1.82)		$ (1.80)

[1] Weighted average number of common shares used for basic earnings per share excludes 285,060 and 266,157 weighted average shares of non-vested restricted stock as of the three months ended March 31, 2013 and 2012, respectively. Non-vested restricted stock is included in common shares issued and outstanding in the condensed consolidated balance sheets.

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Dividends

3 Months Ended

Mar. 31, 2013

Dividends [Abstract]

Dividends

Dividends

The Company currently does not pay a dividend on its common stock and does not expect to pay dividends in the foreseeable future.

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Recent Accounting Pronouncements (Notes)

3 Months Ended

Mar. 31, 2013

Accounting Changes and Error Corrections [Abstract]

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In February 2013, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2013-02 related to disclosure of reclassifications out of accumulated other comprehensive income. This ASU requires companies to report, in one place, information about reclassifications out of accumulated other comprehensive income. In addition, it also requires companies to report changes in accumulated other comprehensive income balances. This new guidance was to be applied prospectively and was effective for interim and annual periods beginning after December 15, 2012, with early adoption permitted. The Company adopted this ASU during the quarter ended March 31, 2013 and it did not have a material impact on the Company's condensed consolidated financial statements.

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Employee Benefit Plans (Tables)

3 Months Ended

Mar. 31, 2013

Compensation and Retirement Disclosure [Abstract]

Schedule of Net Periodic Benefit Costs of Pension and Post-Retirement Healthcare

Components of the net periodic benefit cost related to the Company's qualified pension plans and post-retirement healthcare plans for the three months ended March 31, 2013 and 2012 are presented below (in thousands).

	Three Months Ended March 31, 2013					Three Months Ended March 31, 2012
	Qualified Pension			Post- retirement Healthcare		Qualified Pension			Post- retirement Healthcare
Service cost	$	4,638		$	7,482	$	4,096		$	6,784
Interest cost	3,697			6,493		3,662			6,182
Expected return on plan assets	(3,170		)	—		(3,279		)	(8		)
Amortization of actuarial loss	1,156			2,235		517			1,682
Plan settlement	—			—		356			—
Net periodic benefit cost	$	6,321		$	16,210	$	5,352		$	14,640

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Assets Held for Sale and Discontinued Operations (Notes)

3 Months Ended

Mar. 31, 2013

Discontinued Operations and Disposal Groups [Abstract]

Assets Held for Sale and Discontinued Operations

Assets Held for Sale and Discontinued Operations

On November 28, 2012, the Company entered into an agreement to sell the capital stock of its Idaho-based operations to Blackfoot Telecommunications Group ("Blackfoot") of Missoula, Montana for $30.3 million in gross cash proceeds. The closing of the transaction was completed on January 31, 2013. Eleven FairPoint employees joined the Blackfoot organization at closing. The Company recorded a gain, before $6.7 million of deferred taxes, of $16.8 million upon the closing of the transaction, which is reported within discontinued operations in the condensed consolidated statement of operations for the three months ended March 31, 2013. Due to differences between the book and tax basis of the Idaho-based operations, the gain reported on the sale for income tax purposes will be $27.5 million.

The Idaho-based operations' assets and liabilities were classified as held for sale and were recorded as single line items in the current asset and current liability sections of the condensed consolidated balance sheet at December 31, 2012. A summary of assets and liabilities held for sale at December 31, 2012 is as follows (in thousands):

	December 31, 2012
Assets held for sale:
Accounts receivable, net	$	261
Prepaid expenses	37
Other current assets	3
Property, plant and equipment (net of $4.6 million accumulated depreciation)	6,441
Other assets	5,807
Total assets held for sale	$	12,549
Liabilities held for sale:
Accounts payable	137
Other accrued liabilities	148
Other long-term liabilities	122
Total liabilities held for sale	$	407

The operations of the Idaho-based operations are immaterial to the financial results of the consolidated Company and therefore have not been segregated as discontinued operations in the condensed consolidated statements of operations. Revenue and income before income taxes of the Idaho-based operations for the three months ended March 31, 2013 and 2012 are as follows (in thousands):

	Three Months Ended March 31,
	2013(a)		2012
Revenue	$	674	$	2,058
Income before income taxes	$	477	$	838

(a) Reflects revenue and income before income taxes of the Idaho-based operations for the period of January 1, 2013 through the completion of the transaction on January 31, 2013.

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Employee Benefit Plans

3 Months Ended

Mar. 31, 2013

Compensation and Retirement Disclosure [Abstract]

Employee Benefit Plans

Employee Benefit Plans

The Company sponsors noncontributory qualified pension plans and post-retirement healthcare plans, which provide certain cash payments and medical and dental benefits to covered retired employees and their beneficiaries and covered dependents. These plans were assumed as part of the acquisition of the Northern New England operations from Verizon. The qualified pension plan and the post-retirement healthcare plan covering non-represented employees are frozen. Therefore, no new benefits are being earned by participants and no new participants are becoming eligible for benefits in these plans. Participants in the qualified pension plan and the post-retirement healthcare plan covering represented employees continue to accrue benefits in accordance with the respective plan documents and contractual requirements in the collective bargaining agreements. Eligibility to participate in the plans is based on an employee's age and years of service. The Company makes contributions to the qualified pension plans to meet minimum Employee Retirement Income Security Act of 1974, as amended (ERISA) funding requirements and has the ability to elect to make additional discretionary contributions. Payments of benefits under the post-retirement healthcare plans are funded by the Company as the benefits are paid.

Annually, the Company remeasures the net liabilities of its qualified pension and other post-retirement healthcare plans.

Net Periodic Benefit Cost. Net periodic benefit cost is generally recognized as a component of selling, general and administrative expense on the consolidated statements of operations; however, the Company capitalizes a portion of net periodic benefit cost in conjunction with its use of internal labor resources utilized on capital projects. Components of the net periodic benefit cost related to the Company's qualified pension plans and post-retirement healthcare plans for the three months ended March 31, 2013 and 2012 are presented below (in thousands).

	Three Months Ended March 31, 2013					Three Months Ended March 31, 2012
	Qualified Pension			Post- retirement Healthcare		Qualified Pension			Post- retirement Healthcare
Service cost	$	4,638		$	7,482	$	4,096		$	6,784
Interest cost	3,697			6,493		3,662			6,182
Expected return on plan assets	(3,170		)	—		(3,279		)	(8		)
Amortization of actuarial loss	1,156			2,235		517			1,682
Plan settlement	—			—		356			—
Net periodic benefit cost	$	6,321		$	16,210	$	5,352		$	14,640

Contributions and Benefit Payments. On July 6, 2012, the Moving Ahead for Progress in the 21^st Century Act was signed into law. This act contained a pension funding stabilization provision, which allows pension plan sponsors to use higher interest rate assumptions when determining funded status and funding obligations. As a result, the Company's 2013 minimum required qualified pension plan contribution is $7.4 million, which is significantly lower than it would have been in the absence of this stabilization provision. On September 25, 2012, the Company elected to defer use of the higher segment rates under the act until the first plan year beginning on or after January 1, 2013 solely for determination of the adjusted funding target attainment percentage ("AFTAP") used to determine benefit restrictions under Internal Revenue Code Section 436.

The Company expects to contribute approximately $15.0 million to its qualified pension plans in 2013, which includes the minimum required contribution amount required by the Pension Protection Act of 2006 in addition to discretionary contributions. No contributions to the qualified pension plans were made during the three months ended March 31, 2013. The Company expects to fund approximately $5.1 million in benefit payments to its post-retirement healthcare plans during fiscal year 2013, of which $0.9 million was funded during the three months ended March 31, 2013. Accordingly, during the remainder of fiscal year 2013, the Company expects to contribute approximately $15.0 million to its qualified pension plans and fund approximately $4.2 million in benefit payments to its post-retirement healthcare plans.

Return on Plan Assets. For the three months ended March 31, 2013 and 2012, the actual return on the pension plan assets were gains of approximately 3.8% and 5.7%, respectively. Net periodic benefit cost for 2013 assumes a weighted average annualized expected return on plan assets of approximately 7.6%. Should the Company's actual return on plan assets be lower than the expected return assumption, the net periodic benefit cost may increase in future periods and the Company may be required to contribute additional funds to its qualified pension plans.

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Income Taxes

3 Months Ended

Mar. 31, 2013

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company recorded a tax benefit on the loss from continuing operations for the three months ended March 31, 2013 and 2012 of $28.1 million and $24.3 million, respectively, which equates to an effective tax rate of 32.8% and 34.2%, respectively. For both the three months ended March 31, 2013 and 2012, the effective tax rate differs from the 35% federal statutory rate primarily due to an increase in the valuation allowance offset by state taxes. In addition, the Company recorded deferred income tax expense for the three months ended March 31, 2013 of $6.7 million on the gain on sale of its Idaho-based operations on January 31, 2013, which is reported within discontinued operations in the statement of operations for the three months ended March 31, 2013.

Deferred Income Taxes

At March 31, 2013, the Company had gross federal NOL carryforwards of $172.3 million after taking into consideration the NOL tax attribute reduction of $581.8 million resulting from the Company's discharge of indebtedness upon emergence from Chapter 11 protection. The Company's remaining federal NOL carryforwards will expire from 2022 to 2033. At March 31, 2013, the Company had a net, after attribute reduction, state NOL deferred tax asset of $10.3 million. At March 31, 2013, the Company had no alternative minimum tax credits. Telecom Group completed an initial public offering on February 8, 2005, which resulted in an "ownership change" within the meaning of the United States federal income tax laws addressing NOL carryforwards, alternative minimum tax credits and other similar tax attributes. The Merger and the Company's emergence from Chapter 11 protection also resulted in ownership changes. As a result of these ownership changes, there are specific limitations on the Company's ability to use its NOL carryforwards and other tax attributes. The Company believes that it can use the NOLs even with these restrictions in place.

Valuation Allowance. At March 31, 2013 and December 31, 2012, the Company established a valuation allowance against its deferred tax assets of $195.8 million and $192.5 million, respectively, which consist of a $162.1 million and $159.5 million federal allowance, respectively, and a $33.7 million and $33.0 million state allowance, respectively. During the three months ended March 31, 2013, a decrease in the Company's valuation allowance of approximately $0.7 million was allocated to accumulated other comprehensive loss in the condensed consolidated balance sheet.

Unrecognized Tax Benefits. Unrecognized tax benefits are reserves established for probable loss contingencies that could be reasonably estimated. The Company's unrecognized tax benefits totaled $3.8 million as of March 31, 2013 and $3.8 million as of December 31, 2012. The total unrecognized tax benefits that, if recognized, would affect the effective tax rate are $3.8 million. The Company does not expect a significant increase or decrease in its unrecognized tax benefits during the next twelve months.

The Company recognizes any interest and penalties accrued related to unrecognized tax benefits in income tax expense. During the three months ended March 31, 2013 and 2012, the Company did not make any payment of interest and penalties. There was nothing accrued in the condensed consolidated balance sheets for the payment of interest and penalties at March 31, 2013 and December 31, 2012, respectively, as the remaining unrecognized tax benefits would only serve to reduce the Company's current federal and state NOL carryforwards, if ultimately recognized.

Income Tax Returns

The Company and its eligible subsidiaries file consolidated income tax returns in the United States federal jurisdiction and certain consolidated, combined and separate entity tax returns, as required, with various state and local governments. The Company is no longer subject to United States federal, state and local, or non-United States income tax examinations by tax authorities for years prior to 2008. NOL carryovers from closed tax years may be subject to examination by federal or state taxing authorities if utilized in a year open to examination. As of March 31, 2013 and December 31, 2012, the Company does not have any significant additional jurisdictional tax audits.

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Long Term Debt

3 Months Ended

Mar. 31, 2013

Debt Disclosure [Abstract]

Long Term Debt

Long-Term Debt

Long-term debt for the Company at March 31, 2013 and December 31, 2012 is shown below (in thousands):

	March 31, 2013			December 31, 2012
New Term Loan, due 2019 (weighted average rate of 7.50%) (a)	$	640,000		$	—
Discount on New Term Loan (b)	(19,099		)	—
Notes, 8.75%, due 2019 (c)	300,000			—
Old Term Loan, due 2016 (weighted average rate of 6.50%)(d)	—			957,000
Total long-term debt	920,901			957,000
Less: current portion	(6,400		)	(10,000		)
Total long-term debt, net of current portion	$	914,501		$	947,000

(a) The estimated fair value of the Company's New Term Loan (as defined below) at March 31, 2013 was approximately $620.8 million based on market prices of the Company's debt securities at the respective balance sheet date, which falls within Level 2 of the fair value hierarchy.

(b) The $19.4 million discount, at the date of distribution, on the New Term Loan (as defined below) will be amortized using the effective interest method over the term of the senior secured credit facility due 2019.

(c) The estimated fair value of the Notes (as defined below) at March 31, 2013 was approximately $294.0 million based on market prices of the Company's debt securities at the respective balance sheet date, which falls within Level 2 of the fair value hierarchy.

(d) The estimated fair value of the Old Term Loan (as defined below) at December 31, 2012 was approximately $929.5 million based on market prices of the Company's debt securities at the respective balance sheet date, which falls within Level 2 of the fair value hierarchy.

As of March 31, 2013 the Company had $61.7 million, net of $13.3 million of outstanding letters of credit, available for additional borrowing under the New Revolving Facility (as defined below). The Company also has a standby letter of credit facility at Bank of America, N.A. that supports certain letters of credit issued under the Old Revolving Facility (as defined below) that have not yet been transitioned to its New Revolving Facility (as defined below). This standby letter of credit facility at Bank of America, N.A. will be canceled once all of the letters of credit have been transitioned.

The approximate aggregate maturities of long-term debt, excluding the debt discount on the New Term Loan (as defined below), for each of the five years subsequent to March 31, 2013 and thereafter are as follows (in thousands):

Trailing twelve months ending March 31,	Balance Due
2014	$	6,400
2015	6,400
2016	6,400
2017	6,400
2018	6,400
Thereafter	908,000
Total long-term debt, including current portion	$	940,000

Refinancing

On February 14, 2013 (the "Refinancing Closing Date"), FairPoint Communications refinanced the Old Credit Agreement Loans (as defined herein) (the "Refinancing"). In connection with the Refinancing, FairPoint Communications (i) issued $300.0 million aggregate principal amount of its 8.75% senior secured notes due 2019 (the "Notes") in a private offering exempt from registration under the Securities Act pursuant to an indenture (the "Indenture") that FairPoint Communications entered into on the Refinancing Closing Date with certain of its subsidiaries that guarantee the indebtedness under the New Credit Agreement (as defined herein) (the "Subsidiary Guarantors") and U.S. Bank National Association, as trustee and collateral agent, and (ii) entered into a new credit agreement (the "New Credit Agreement"), dated as of the Refinancing Closing Date, with the lenders party thereto from time to time and Morgan Stanley Senior Funding, Inc., as administrative agent and letter of credit issuer. The New Credit Agreement provides for a $75.0 million revolving credit facility (the ''New Revolving Facility''), which has a sub-facility providing for the issuance of up to $40.0 million in letters of credit, and a $640.0 million term loan facility (the ''New Term Loan'' and, together with the New Revolving Facility, the ''New Credit Agreement Loans"). On the Refinancing Closing Date, FairPoint Communications used the proceeds of the Notes offering, together with $640.0 million of borrowings under the New Term Loan and cash on hand to (i) repay principal of $946.5 million outstanding on the Old Term Loan (as defined herein), plus approximately $7.7 million of accrued interest and (ii) pay approximately $32.6 million of fees, expenses and other costs relating to the Refinancing.

The New Credit Agreement. The principal amount of the New Term Loan and commitments under the New Revolving Facility may be increased by an aggregate amount of up to $200.0 million, subject to certain terms and conditions specified in the New Credit Agreement. The New Term Loan will mature on February 14, 2019 and the New Revolving Facility will mature on February 14, 2018, subject in each case to extensions pursuant to the terms of the New Credit Agreement.

Interest Rates and Fees. Interest on borrowings under the New Credit Agreement Loans accrue at an annual rate equal to either a British Bankers Association London Inter-Bank Offered Rate ("LIBOR") or the base rate, in each case plus an applicable margin. LIBOR is a per annum rate for dollar deposits with an interest period of one, two, three or six months (at FairPoint Communication's election), subject to a minimum LIBOR floor of 1.25%. The base rate is the per annum rate equal to the greatest of (x) the federal funds effective rate plus 0.50%, (y) the rate of interest publicly quoted from time to time by The Wall Street Journal as the United States ''Prime Rate'' and (z) LIBOR with an interest period of one month plus 1.00%. The applicable margin for the New Term Loan is (a) 6.25% per annum with respect to term loans bearing interest based on LIBOR or (b) 5.25% per annum with respect to term loans bearing interest based on the base rate. The applicable interest rate for the New Revolving Facility is, initially, (a) 5.50% with respect to revolving loans bearing interest based on LIBOR or (b) 4.50% per annum with respect to revolving loans bearing interest based on the base rate, in each case subject to adjustment after March 31, 2013 based on FairPoint Communication's consolidated total leverage ratio, as defined in the New Credit Agreement. FairPoint Communications is required to pay a quarterly letter of credit fee on the average daily amount available to be drawn under letters of credit equal to the applicable interest rate for revolving loans bearing interest based on LIBOR, plus a fronting fee of 0.125% per annum on the average daily amount available to be drawn under such letters of credit. In addition, FairPoint Communications is required to pay a quarterly commitment fee on the average daily unused portion of the New Revolving Facility, which is 0.50% initially, subject to reduction to 0.375% after March 31, 2013 based on FairPoint Communication's consolidated total leverage ratio.

Security/Guarantors. All obligations under the New Credit Agreement, together with certain designated hedging obligations and cash management obligations, are unconditionally guaranteed on a senior secured basis by each of the Subsidiary Guarantors and secured by a first-priority lien on substantially all personal property of FairPoint Communications and the Subsidiary Guarantors, subject to certain exclusions set forth in the related security documents, pari passu with the lien securing the obligations under the Notes.

Mandatory Repayments. FairPoint Communications is required to make quarterly repayments of the New Term Loan in a principal amount equal to $1.6 million during the term of the New Credit Agreement, beginning June 30, 2013. In addition, amounts due under the New Credit Agreement are mandatorily repayable with (i) a percentage, initially equal to 50% and subject to reduction to 25% based on FairPoint Communication's consolidated total leverage ratio, of FairPoint Communication's excess cash flow, as defined in the New Credit Agreement, beginning with the fiscal year ending December 31, 2013, (ii) the net cash proceeds of certain asset dispositions, insurance proceeds and condemnation awards and (iii) issuances of debt not permitted to be incurred under the New Credit Agreement. Optional prepayments and mandatory prepayments resulting from the incurrence of debt not permitted to be incurred under the New Credit Agreement are required to be made at (i) 103.0% of the aggregate principal amount prepaid if such prepayment is made on or prior to February 14, 2014, (ii) 102.0% of the aggregate principal amount prepaid if such prepayment is made after February 14, 2014, but on or prior to February 14, 2015 and (iii) 101.0% of the aggregate principal amount prepaid if such prepayment is made after February 14, 2015 and on or prior to February 14, 2016. No premium is required to be paid for prepayments made after February 14, 2016.

Covenants. The New Credit Agreement contains customary representations and warranties and affirmative and negative covenants for a transaction of this type, including two financial maintenance covenants: (i) a consolidated interest coverage ratio and (ii) a consolidated total leverage ratio. The New Credit Agreement also contains a covenant limiting the maximum amount of capital expenditures that FairPoint Communications and its subsidiaries may make in any fiscal year. As of March 31, 2013, FairPoint Communications was in compliance with all covenants under the New Credit Agreement.

Events of Default. The New Credit Agreement also contains customary events of default for a transaction of this type.

The Notes. On the Refinancing Closing Date, FairPoint Communications issued $300.0 million of the Notes in a private offering exempt from registration under the Securities Act pursuant to the Indenture.

The terms of the Notes are governed by the Indenture. The Notes are senior secured obligations of FairPoint Communications and are guaranteed by the Subsidiary Guarantors. The Notes and the guarantees thereof are secured by a first-priority lien on substantially all personal property of FairPoint Communications and the Subsidiary Guarantors, subject to certain exclusions set forth in the related security documents, pari passu with the lien securing the obligations under the New Credit Agreement. The Notes will mature on August 15, 2019 and accrue interest at a rate of 8.75% per annum, which is payable semi-annually in arrears on February 15 and August 15, commencing on August 15, 2013.

On or after February 15, 2016, FairPoint Communications may redeem all or part of the Notes at the redemption prices set forth in the Indenture, plus accrued and unpaid interest thereon, to the applicable redemption date. At any time prior to February 15, 2016, FairPoint Communications may redeem all or part of the Notes at a redemption price equal to 100% of the principal amount of the Notes redeemed, plus a "make-whole" premium as of, and accrued and unpaid interest to, the applicable redemption date. In addition, at any time prior to February 15, 2016, FairPoint Communications may, on one or more occasions, redeem up to 35% of the original aggregate principal amount of the Notes, using net cash proceeds of certain qualified equity offerings, at a redemption price of 108.75% of the principal amount of Notes redeemed, plus accrued and unpaid interest to the applicable redemption date.

The holders of the Notes have the ability to require FairPoint Communications to repurchase all or any part of the Notes if FairPoint Communications experiences certain kinds of changes in control or engages in certain asset sales, in each case at the repurchase prices and subject to the terms and conditions set forth in the Indenture.

The Indenture contains certain covenants which are customary with respect to non-investment grade debt securities, including limitations on FairPoint Communication's ability to incur additional indebtedness, pay dividends on or make other distributions or repurchase FairPoint Communication's capital stock, make certain investments, enter into certain types of transactions with affiliates, create liens and sell certain assets or merge with or into other companies. These covenants are subject to a number of important limitations and exceptions.

The Indenture also provides for customary events of default, including cross defaults to other specified debt of FairPoint Communications and certain of its subsidiaries.

Old Credit Agreement

On the Effective Date, FairPoint Communications and FairPoint Logistics, Inc. (collectively, the "Old Credit Agreement Borrowers") entered into a $1,075.0 million senior secured credit facility with a syndicate of lenders and Bank of America, N.A., as the administrative agent for the lenders (the "Old Credit Agreement"), comprised of a $75.0 million revolving facility (the "Old Revolving Facility") and a $1.0 billion term loan (the "Old Term Loan" and together with the Old Revolving Facility, the "Old Credit Agreement Loans"). On the Effective Date, the Company paid to the lenders providing the Old Revolving Facility an aggregate fee equal to $1.5 million. Interest on the Old Credit Agreement Loans accrued at an annual rate equal to either (a) LIBOR plus 4.50%, with a minimum LIBOR floor of 2.00% for the Old Term Loan or (b) a base rate plus 3.50% per annum, which base rate was equal to the highest of (x) Bank of America's prime rate, (y) the federal funds effective rate plus 0.50% and (z) the applicable LIBOR plus 1.00%. In addition, the Company was required to pay a 0.75% per annum commitment fee on the average daily unused portion of the Old Revolving Facility. The entire outstanding principal amount of the Old Credit Agreement Loans was to be due and payable five years after the Effective Date. The Old Credit Agreement required quarterly repayments of principal of the Old Term Loan after the first anniversary of the Effective Date. During 2012 and in the first quarter of 2013, prior to the Old Credit Agreement being retired, the Company made $43.0 million and $10.5 million, respectively, of principal payments on the Old Term Loan.

The Old Credit Agreement contained customary representations, warranties and affirmative and negative covenants. The Old Credit Agreement also contained minimum interest coverage and maximum total leverage maintenance covenants, along with a maximum senior leverage covenant measured upon the incurrence of certain types of debt. As of December 31, 2012, the Old Credit Agreement Borrowers were in compliance with all covenants under the Old Credit Agreement.

On February 14, 2013, the Company completed the Refinancing and paid all amounts outstanding under the Old Credit Agreement.

Debt Issue Costs

On February 14, 2013, the Company completed the Refinancing and capitalized $7.6 million of debt issue costs associated with the New Credit Agreement and Notes. These debt issue costs are being amortized over a weighted average life of 6.2 years using the effective interest method.

On the Effective Date, the Company entered into the Old Credit Agreement and capitalized $2.4 million of debt issue costs associated with the Old Credit Agreement. These debt issue costs were being amortized over a weighted average life of 3.7 years using the effective interest method. Upon the completion of the Refinancing, the balance of the Old Credit Agreement debt issue costs was written off.

As of March 31, 2013 and December 31, 2012, the Company had capitalized debt issue costs of $7.5 million and $1.1 million, respectively, net of amortization.

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Accumulated Other Comprehensive Loss Accumulated Other Comprehensice Loss

3 Months Ended

Mar. 31, 2013

Accumulated Other Comprehensive Loss [Abstract]

Accumulated Other Comprehensive Loss

Accumulated Other Comprehensive Loss

The following table provides a reconciliation of adjustments reclassified from accumulated other comprehensive loss (in thousands):

	Three Months Ended March 31, 2013
Employee benefits:
Qualified pension plans' amortization of actuarial loss (a)	$	1,156
Post-retirement healthcare plans' amortization of actuarial loss (a)	2,235
Total employee benefit amounts reclassified from accumulated other comprehensive loss	3,391
Tax expense	(643		)
Total employee benefit amounts reclassified from accumulated other comprehensive loss, net	$	2,748

(a) These accumulated other comprehensive loss components are included in the computation of net periodic benefit cost. See note (7) "Employee Benefit Plans" for details.

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Employee Benefit Plans (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Qualified Pension [Member]
Schedule of net periodic benefit cost related to pension and post-retirement healthcare
Service cost	$ 4,638	$ 4,096
Interest cost	3,697	3,662
Expected return on plan assets	(3,170)	(3,279)
Amortization of actuarial loss	1,156	517
Plan settlement	0	356
Net periodic benefit cost	6,321	5,352
Post-retirement Healthcare [Member]
Schedule of net periodic benefit cost related to pension and post-retirement healthcare
Service cost	7,482	6,784
Interest cost	6,493	6,182
Expected return on plan assets	0	(8)
Amortization of actuarial loss	2,235	1,682
Plan settlement	0	0
Net periodic benefit cost	$ 16,210	$ 14,640

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Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2013

Accounting Policies [Abstract]

Principles of Consolidation

Principles of Consolidation

The consolidated financial statements include all majority-owned subsidiaries of the Company. Partially owned equity affiliates are accounted for under the cost method or equity method when the Company demonstrates significant influence, but does not have a controlling financial interest. Intercompany accounts and transactions have been eliminated.

Presentation and use of estimates

(a) Presentation and Use of Estimates

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States, which require management to make estimates and assumptions that affect reported amounts and disclosures. Actual results could differ from those estimates. The condensed consolidated financial statements reflect all adjustments that, in the opinion of management, are necessary for a fair presentation of results of operations and financial condition for the interim periods shown, including normal recurring accruals and other items.

Examples of significant estimates include the allowance for doubtful accounts, revenue reserves, the depreciation and recoverability of property, plant and equipment, valuation of intangible assets, qualified pension and post-retirement healthcare plan assumptions, stock-based compensation and income taxes.

Revenue Recognition

(b) Revenue Recognition

Revenues are recognized as services are rendered and are primarily derived from the usage of the Company's networks and facilities or under revenue-sharing arrangements with other communications carriers. Revenues are primarily derived from: voice services, access (including pooling), Internet and broadband services, Connect America Fund ("CAF") receipts and other miscellaneous services. Local access charges are billed to local end users under tariffs approved by each state's Public Utilities Commission ("PUC") (or its similar agency) or by rates, terms and conditions determined by the Company. Access revenues are derived for the intrastate jurisdiction by billing access charges to interexchange carriers and to other LECs. These charges are billed based on toll or access tariffs approved by the local state's PUC. Access charges for the interstate jurisdiction are billed in accordance with tariffs filed by the National Exchange Carrier Association ("NECA") or by the individual company and approved by the Federal Communications Commission (the "FCC").

Revenues are determined on a bill-and-keep basis or a pooling basis. If on a bill-and-keep basis, the Company bills the charges to either the access provider or the end user and keeps the revenue. If the Company participates in a pooling environment (interstate or intrastate), the toll or access billed is contributed to a revenue pool. The revenue is then distributed to individual companies based on their company-specific revenue requirement. This distribution is based on individual state PUCs' (intrastate) or the FCC's (interstate) approved separation rules and rates of return. Distribution from these pools can change relative to changes made to expenses, plant investment or rate-of-return. Some companies participate in federal and certain state universal service programs that are pooling in nature but are regulated by rules separate from those described above. These rules vary by state. Revenues earned through the various pooling arrangements are initially recorded based on the Company's estimates. These rule changes impact the NECA interstate pooling, in that a portion of the Company's interstate Universal Service Fund ("USF") revenues, which are administered through the NECA pools, and which prior to January 1, 2012 were based on costs, are now based on the CAF Phase I rules and will be based on CAF Phase II rules when those are put into effect (as more fully described in "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations—Regulatory Environment" included elsewhere in this Quarterly Report).

Long distance retail and wholesale services can be recurring due to coverage under an unlimited calling plan or usage sensitive. In either case, they are billed in arrears and recognized when earned. Data and Internet services revenues are substantially all recurring revenues and are billed one month in advance and deferred until earned.

As of March 31, 2013 and December 31, 2012, unearned revenue of $17.0 million and $18.3 million, respectively, was included in current other accrued liabilities on the consolidated balance sheets.

The majority of the Company's other miscellaneous services revenue is generated from ancillary special projects at the request of third parties, video services, directory services and late payment charges to end users and interexchange carriers. The Company requires customers to pay for ancillary special projects in advance. Once the ancillary special project is completed and all project costs have been accumulated for proper accounting recognition, the advance payment is recognized as revenue with any over payments refunded to the customer as appropriate. The Company recognizes revenue upon the provision of video services in certain markets by reselling DirecTV content and providing cable and IP television video-over-digital subscriber line services. The Company also publishes telephone directories in some of its markets and recognizes revenues associated with these publications. The Company bills late payment fees to customers who have not paid their bills in a timely manner. In general, late fee revenue is recognized as it is collected.

Non-recurring customer activation fees, along with the related costs up to, but not exceeding, the activation fees, are deferred and amortized over the customer relationship period.

The Company is subject to retail service quality plans in the states of Maine, New Hampshire and Vermont for 2012 and Maine and Vermont for 2013, pursuant to which service quality index ("SQI") penalties are imposed upon the Company's failure to meet the requirements of the respective plans. Penalties resulting from these commitments are recorded as a reduction to revenue and to current other accrued liabilities on the consolidated balance sheets. The Company also adopted a separate performance assurance plan ("PAP") for certain services provided on a wholesale basis to competitive local exchange carriers ("CLECs") in the northern New England service territories of each of the states of Maine, New Hampshire and Vermont, pursuant to which FairPoint is required to provide performance credits in the event the Company is unable to meet the provisions of the respective PAP. Penalties resulting from these commitments are recorded as a reduction to revenue. In Maine and New Hampshire, these penalties are recorded as a reduction to accounts receivable since they are paid by the Company in the form of credits applied to CLEC bills. PAP penalties in Vermont are recorded to other accrued liabilities as a majority of these penalties are paid to the Vermont Universal Service Fund ("VUSF"), while the remaining credits assessed in Vermont are paid by the Company in the form of credits applied to CLEC bills.

Revenue is recognized net of tax collected from customers and remitted to governmental authorities.

Management makes estimated adjustments, as necessary, to revenue or accounts receivable for billing errors, including certain disputed amounts.

Accounting for Income Taxes

(c) Accounting for Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management determines its estimates of future taxable income based upon the scheduled reversal of deferred tax liabilities and tax planning strategies. The Company establishes valuation allowances for deferred tax assets when it is estimated to be more likely than not that the tax assets will not be realized.

FairPoint Communications files a consolidated income tax return with its subsidiaries. All intercompany tax transactions and accounts have been eliminated in consolidation.

Business Segments

(d) Business Segments

Management views its business of providing data, video and voice communication services to business, wholesale and residential customers as one reportable segment. The Company's services consist of retail and wholesale telecommunications and data services, including voice and HSD in 17 states. The Company's chief operating decision maker assesses operating performance and allocates resources based on the consolidated results.

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Assets Held for Sale and Discontinued Operations (Tables)

3 Months Ended

Mar. 31, 2013

Discontinued Operations and Disposal Groups [Abstract]

Schedule of Disposal Groups, Including Discontinued Operations, Income Statement, Balance Sheet and Additional Disclosures [Table Text Block]

A summary of assets and liabilities held for sale at December 31, 2012 is as follows (in thousands):

	December 31, 2012
Assets held for sale:
Accounts receivable, net	$	261
Prepaid expenses	37
Other current assets	3
Property, plant and equipment (net of $4.6 million accumulated depreciation)	6,441
Other assets	5,807
Total assets held for sale	$	12,549
Liabilities held for sale:
Accounts payable	137
Other accrued liabilities	148
Other long-term liabilities	122
Total liabilities held for sale	$	407

Revenue and income before income taxes of the Idaho-based operations for the three months ended March 31, 2013 and 2012 are as follows (in thousands):

	Three Months Ended March 31,
	2013(a)		2012
Revenue	$	674	$	2,058
Income before income taxes	$	477	$	838

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Commitments and Contingencies (Details Textual) (USD $)	0 Months Ended	3 Months Ended	4 Months Ended	12 Months Ended								12 Months Ended	3 Months Ended	60 Months Ended	3 Months Ended
	Jan. 29, 2013	Mar. 31, 2012	May 02, 2013	Jul. 31, 2012	Mar. 31, 2013	Mar. 31, 2013 Service quality penalties [Member]	Dec. 31, 2012 Service quality penalties [Member]	Mar. 31, 2013 Performance assurance plan credits [Member]	Dec. 31, 2012 Performance assurance plan credits [Member]	Mar. 31, 2013 Claims reserve [Member]	Mar. 31, 2013 Other purposes [Member]	Jul. 31, 2012 Maine [Member]	Mar. 31, 2013 Vermont [Member] Broadband build-out [Member]	Mar. 31, 2013 New Hampshire [Member] Capital Addition Purchase Commitments [Member]	Mar. 31, 2013 New Hampshire [Member] Broadband build-out [Member]
Service Quality Penalties [Abstract]
Total estimated liability recognized for service quality penalties						$ 1,900,000	$ 2,100,000
Service Quality Penalties, Costs Incurred												1,700,000
Service Quality Penalty Credits, Per Access Line				0.48
Total retail service quality plan penalties approved for broadband deployment		2,500,000
New Hampshire's Authorization for next phase of developing expansion plan	2,800,000
Build broadband connections in rural areas	500,000
Performance Assurance Plan Credits [Abstract]
Total reserve related to PAP								1,000,000	1,400,000
Total accrued PAP penalties approved to deploy broadband		4,100,000
Restricted Cash [Abstract]
Restricted cash					6,300,000					700,000	600,000		1,800,000		3,200,000
Restricted cash utilized													1,000,000		100,000
Magnitude of Bankruptcy Claims [Abstract]
Claims filed with Bankruptcy Court against company			4,900,000,000
Amount of bankruptcy claims settled			3,800,000,000
Claims Disallowed by Court			1,100,000,000
Claims Withdrawn by Creditors			10,100,000
Claims remain open pending settlement or objection			5,500,000
Capital Expenditure Obligations [Abstract]
Capital expenditure obligations in New Hampshire														$ 285,400,000

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Condensed Consolidated Statements of Comprehensive Loss (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Net loss	$ (47,485)	$ (46,712)
Other comprehensive income, net of taxes:
Qualified pension and post-retirement healthcare plans (net of $0.6 million and $0.5 million tax expense, respectively)	2,748	2,070
Total other comprehensive income	2,748	2,070
Comprehensive (loss) income	$ (44,737)	$ (44,642)

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Accounting Policies

3 Months Ended

Mar. 31, 2013

Accounting Policies [Abstract]

Accounting Policies

Accounting Policies

(a) Presentation and Use of Estimates

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States, which require management to make estimates and assumptions that affect reported amounts and disclosures. Actual results could differ from those estimates. The condensed consolidated financial statements reflect all adjustments that, in the opinion of management, are necessary for a fair presentation of results of operations and financial condition for the interim periods shown, including normal recurring accruals and other items.

Examples of significant estimates include the allowance for doubtful accounts, revenue reserves, the depreciation and recoverability of property, plant and equipment, valuation of intangible assets, qualified pension and post-retirement healthcare plan assumptions, stock-based compensation and income taxes.

(b) Revenue Recognition

Revenues are recognized as services are rendered and are primarily derived from the usage of the Company's networks and facilities or under revenue-sharing arrangements with other communications carriers. Revenues are primarily derived from: voice services, access (including pooling), Internet and broadband services, Connect America Fund ("CAF") receipts and other miscellaneous services. Local access charges are billed to local end users under tariffs approved by each state's Public Utilities Commission ("PUC") (or its similar agency) or by rates, terms and conditions determined by the Company. Access revenues are derived for the intrastate jurisdiction by billing access charges to interexchange carriers and to other LECs. These charges are billed based on toll or access tariffs approved by the local state's PUC. Access charges for the interstate jurisdiction are billed in accordance with tariffs filed by the National Exchange Carrier Association ("NECA") or by the individual company and approved by the Federal Communications Commission (the "FCC").

Revenues are determined on a bill-and-keep basis or a pooling basis. If on a bill-and-keep basis, the Company bills the charges to either the access provider or the end user and keeps the revenue. If the Company participates in a pooling environment (interstate or intrastate), the toll or access billed is contributed to a revenue pool. The revenue is then distributed to individual companies based on their company-specific revenue requirement. This distribution is based on individual state PUCs' (intrastate) or the FCC's (interstate) approved separation rules and rates of return. Distribution from these pools can change relative to changes made to expenses, plant investment or rate-of-return. Some companies participate in federal and certain state universal service programs that are pooling in nature but are regulated by rules separate from those described above. These rules vary by state. Revenues earned through the various pooling arrangements are initially recorded based on the Company's estimates. These rule changes impact the NECA interstate pooling, in that a portion of the Company's interstate Universal Service Fund ("USF") revenues, which are administered through the NECA pools, and which prior to January 1, 2012 were based on costs, are now based on the CAF Phase I rules and will be based on CAF Phase II rules when those are put into effect (as more fully described in "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations—Regulatory Environment" included elsewhere in this Quarterly Report).

Long distance retail and wholesale services can be recurring due to coverage under an unlimited calling plan or usage sensitive. In either case, they are billed in arrears and recognized when earned. Data and Internet services revenues are substantially all recurring revenues and are billed one month in advance and deferred until earned.

As of March 31, 2013 and December 31, 2012, unearned revenue of $17.0 million and $18.3 million, respectively, was included in current other accrued liabilities on the consolidated balance sheets.

The majority of the Company's other miscellaneous services revenue is generated from ancillary special projects at the request of third parties, video services, directory services and late payment charges to end users and interexchange carriers. The Company requires customers to pay for ancillary special projects in advance. Once the ancillary special project is completed and all project costs have been accumulated for proper accounting recognition, the advance payment is recognized as revenue with any over payments refunded to the customer as appropriate. The Company recognizes revenue upon the provision of video services in certain markets by reselling DirecTV content and providing cable and IP television video-over-digital subscriber line services. The Company also publishes telephone directories in some of its markets and recognizes revenues associated with these publications. The Company bills late payment fees to customers who have not paid their bills in a timely manner. In general, late fee revenue is recognized as it is collected.

Non-recurring customer activation fees, along with the related costs up to, but not exceeding, the activation fees, are deferred and amortized over the customer relationship period.

The Company is subject to retail service quality plans in the states of Maine, New Hampshire and Vermont for 2012 and Maine and Vermont for 2013, pursuant to which service quality index ("SQI") penalties are imposed upon the Company's failure to meet the requirements of the respective plans. Penalties resulting from these commitments are recorded as a reduction to revenue and to current other accrued liabilities on the consolidated balance sheets. The Company also adopted a separate performance assurance plan ("PAP") for certain services provided on a wholesale basis to competitive local exchange carriers ("CLECs") in the northern New England service territories of each of the states of Maine, New Hampshire and Vermont, pursuant to which FairPoint is required to provide performance credits in the event the Company is unable to meet the provisions of the respective PAP. Penalties resulting from these commitments are recorded as a reduction to revenue. In Maine and New Hampshire, these penalties are recorded as a reduction to accounts receivable since they are paid by the Company in the form of credits applied to CLEC bills. PAP penalties in Vermont are recorded to other accrued liabilities as a majority of these penalties are paid to the Vermont Universal Service Fund ("VUSF"), while the remaining credits assessed in Vermont are paid by the Company in the form of credits applied to CLEC bills.

Revenue is recognized net of tax collected from customers and remitted to governmental authorities.

Management makes estimated adjustments, as necessary, to revenue or accounts receivable for billing errors, including certain disputed amounts.

(c) Accounting for Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management determines its estimates of future taxable income based upon the scheduled reversal of deferred tax liabilities and tax planning strategies. The Company establishes valuation allowances for deferred tax assets when it is estimated to be more likely than not that the tax assets will not be realized.

FairPoint Communications files a consolidated income tax return with its subsidiaries. All intercompany tax transactions and accounts have been eliminated in consolidation.

(d) Business Segments

Management views its business of providing data, video and voice communication services to business, wholesale and residential customers as one reportable segment. The Company's services consist of retail and wholesale telecommunications and data services, including voice and HSD in 17 states. The Company's chief operating decision maker assesses operating performance and allocates resources based on the consolidated results.

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Commitments and Contingencies (Tables)

3 Months Ended

Mar. 31, 2013

Commitments and Contingencies Disclosure [Abstract]

Schedule of Service Quality Penalties Activity

Based on the Company's current estimate of its SQI penalties in the Northern New England operations, changes in the accrual impacting revenue and payments are as follows (in thousands):

	Three Months Ended March 31,
	2013			2012
Increase (decrease) in liability recorded as a reduction (increase) to revenue	$	142		$	(1,088	)
SQI penalties paid out in the form of customer rebates	$	(345	)	$	—

Schedule of Performance Assurance Plan Credits Activity

Based on the Company's current estimate of its PAP credits in the Northern New England operations, changes in the accrual impacting revenue and payments are as follows (in thousands):

	Three Months Ended March 31,
	2013			2012
Increase (decrease) in estimated reserve recorded as a reduction (increase) to revenue	$	1,601		$	205
PAP credits issued	$	(2,084	)	$	(588	)

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Earnings Per Share (Details Textual) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Earnings Per Share (Textual) [Abstract]
Weighted average shares of non-vested restricted stock excluded from basic earnings per share	285	266

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2013

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

(a) Leases

The Company does not have any leases with contingent rental payments or any leases with contingency renewal, purchase options, or escalation clauses.

(b) Legal Proceedings

From time to time, the Company is involved in litigation and regulatory proceedings arising out of its operations. The Company's management believes that it is not currently a party to any legal or regulatory proceedings, the adverse outcome of which, individually or in the aggregate, would have a material adverse effect on the Company's financial position or results of operations. Notwithstanding that the Company emerged from Chapter 11 protection on the Effective Date, one of the Chapter 11 Cases (Northern New England Telephone Operations LLC - Case No. 09-16365) remains open.

(c) Service Quality Penalties

The Company's Northern New England operations are, or in the case of New Hampshire, were, subject to certain retail service quality plans in Maine, New Hampshire and Vermont pursuant to which the Company incurs SQI penalties resulting from the Company's failure to meet certain benchmarks for operating performance metrics set forth in the respective plans. The retail service quality plan in New Hampshire was eliminated effective August 10, 2012. Penalties resulting from these commitments are recorded as a reduction to revenue. The certain regulatory approvals relating to the Chapter 11 Cases and the Plan and certain modifications to the requirements imposed by state regulatory authorities as a condition to approval of the Merger (each a "Merger Order", and collectively, the "Merger Orders") or subsequent regulation plan in each state provide that any SQI penalties assessed under the plans be paid by the Company in the form of credits applied to retail customer bills. However, as the result of separate orders in New Hampshire and Vermont issued in 2012, certain previously assessed SQI penalties in each respective state may be used for expansion of broadband services to unserved and underserved areas in those states as described below.

As of March 31, 2013 and December 31, 2012, the Company has an estimated liability of $1.9 million and $2.1 million, respectively, for SQI penalties based on the Company's actual results relative to the benchmarks for the operating performance metrics set forth in the respective retail service quality plans. As of March 31, 2013 and December 31, 2012, the liability is located in other accrued liabilities.

For the plan year ended July 31, 2012, the Company incurred $1.7 million in Maine SQI penalties, which are being issued in the form of credits applied to retail customers' bills in the amount of $0.48 per access line per month over the twelve months beginning in December 2012.

During the quarter ended March 31, 2012, the Vermont Public Service Board ("VPSB") approved the Company's request to use $2.5 million of the SQI penalties incurred under the Vermont retail service quality plan to deploy broadband into unserved areas. At that time, these SQI penalties were reclassified from the claims reserve established to pay outstanding bankruptcy claims and various other bankruptcy related fees (the "Claims Reserve") to other accrued liabilities.

In New Hampshire, as the result of a New Hampshire PUC ("NHPUC") recommendation and the approval by the governor and executive council of New Hampshire of a certain broadband expansion agreement, the Company received authorization to move forward with the next phase of developing a detailed engineering plan for use of $2.8 million in SQI penalties incurred under the New Hampshire retail service quality plan, together with another $0.5 million of Company funds, to build out broadband connections to customers in rural areas beyond the commitments made in New Hampshire's Merger Order. On January 29, 2013, the NHPUC approved the Company's detailed engineering plan in its entirety. At December 31, 2012, these SQI penalties were reclassified from the Claims Reserve to other accrued liabilities given the NHPUC's subsequent approval to utilize these penalties for an alternative use.

Based on the Company's current estimate of its SQI penalties in the Northern New England operations, changes in the accrual impacting revenue and payments are as follows (in thousands):

	Three Months Ended March 31,
	2013			2012
Increase (decrease) in liability recorded as a reduction (increase) to revenue	$	142		$	(1,088	)
SQI penalties paid out in the form of customer rebates	$	(345	)	$	—

(d) Performance Assurance Plan Credits

As part of the Merger Orders, the Company adopted a PAP that measures the Company's performance in the provision of wholesale services to CLECs in the northern New England service territories of Maine, New Hampshire and Vermont. Penalties resulting from failure to meet the specified performance standards as defined in the provisions of the separate plans in each state are recorded as a reduction to revenue and, in general, are issued in the form of credits applied to affected CLEC bills. However, as a result of a Vermont order in 2012, certain previously assessed PAP penalties in Vermont will be used for expansion of broadband services to unserved areas of Vermont.

As of March 31, 2013 and December 31, 2012, the Company has recorded a reserve of $1.0 million and $1.4 million, respectively, for the estimated amount of PAP penalties incurred that have not yet been credited to CLECs. Penalties assessed in Maine and New Hampshire are recorded as a reduction to accounts receivable since they are paid by the Company in the form of credits applied to CLEC bills. Penalties for Vermont are recorded as other accrued liabilities since a significant portion of these penalty amounts are paid to the VUSF, while the remaining credits assessed in Vermont are paid by the Company in the form of credits applied to CLEC bills.

During the quarter ended March 31, 2012, the VPSB approved the Company's request to use $4.1 million of certain accrued PAP penalties to deploy broadband into unserved areas. At that time, these accrued PAP penalties were reclassified from the Claims Reserve to other accrued liabilities.

Based on the Company's current estimate of its PAP credits in the Northern New England operations, changes in the accrual impacting revenue and payments are as follows (in thousands):

	Three Months Ended March 31,
	2013			2012
Increase (decrease) in estimated reserve recorded as a reduction (increase) to revenue	$	1,601		$	205
PAP credits issued	$	(2,084	)	$	(588	)

During early 2011, the NHPUC ordered an audit of the Company's existing PAP in the state of New Hampshire, which commenced in October 2011 and is ongoing. The existing PAP in Maine and Vermont may also be subject to audit, as determined by the Maine PUC and the VPSB, respectively.

(e) Restricted Cash

As of March 31, 2013, the Company had $6.3 million of restricted cash, of which $0.7 million is reserved for payment of outstanding bankruptcy claims (the "Cash Claims Reserve"), $1.8 million is reserved for broadband build-out in Vermont, $3.2 million is reserved for broadband build-out in New Hampshire and $0.6 million is restricted for other purposes.

During the three months ended March 31, 2013, there was little activity in the Cash Claims Reserve. During the three months ended March 31, 2013, $1.0 million of restricted cash reserved for broadband build-out in Vermont was utilized and $0.1 million of restricted cash reserved for broadband build-out in New Hampshire was utilized. For further information on the establishment of restricted funds set aside for broadband build-out in Vermont and New Hampshire, see "—(c) Service Quality Penalties" and "—(d) Performance Assurance Plan Credits" herein.

(f) Magnitude of Bankruptcy Claims

Claims totaling $4.9 billion were filed with the Bankruptcy Court against the Company. As of May 2, 2013, through the claim resolution process, $3.8 billion of these claims have been settled and $1.1 billion of these claims have been disallowed by the Bankruptcy Court. Additionally, $10.1 million of these claims have been withdrawn by the respective creditors and $5.5 million of these claims remain open.

(g) Capital Expenditure Obligations

Under a regulatory settlement in New Hampshire, the Company is required to make certain capital expenditures in New Hampshire. Beginning from the date of the Merger, the Company is required to spend $285.4 million through March 31, 2013 in New Hampshire. This spend requirement was exceeded during fiscal year 2012.