SCHEDULE
14A INFORMATION


Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934


(Amendment
No. n/a)





Filed by the
Registrant                                                                [X]


Filed by a Party
other than
Registrant                                                                           [  ]





Check the
appropriate box:





[X]           Preliminary
Proxy Statement


[  ]           Confidential,
for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))


[]           Definitive
Proxy Statement


[  ]           Definitive
Additional Materials


[  ]           Soliciting
Material Pursuant to '240.14a-11(c)
or '240.14a-12





General Communication,
Inc.


____________________________________________________________________


(Name of Registrant as Specified in Its
Charter)





N/A


____________________________________________________________________


(Name of Person(s)
Filing Proxy Statement if other than the Registrant)





(Payment of Filing
Fee (Check the appropriate box):





[X]
            No fee
      required.


[  ]
            Fee computed
      on table below per Exchange Act Rules 14a-6(I)(1) and
  0-11.





1)
            Title of each
      class of securities to which transaction applies: __________________________





2)
            Aggregate
      number of securities to which transaction applies:__________________________





3)
            Per unit
      price or other underlying value of transaction computed pursuant to
      Exchange Act Rule 0-11 (set forth the amount on which the filing fees is
      calculated and state how it was
determined):


____________________________________________________________________________





4)
            Proposed
      maximum aggregate value of transaction:__________________________




5)           Total
fee paid: _______________________________________________________________





[  ]        Fee
paid previously with preliminary materials.


[  ]
            Check box if
      any part of the fee if offset as provided by Exchange Act Rule 0-11(a)(2)
      and identify the filing for which the offsetting fee was paid
      previously.  Identify the previous filing by registration
      statement number, or the Form or Schedule and the date of its
      filing.





1)           Amount
Previously Paid:_______________________________________________________





2)           Form,
Schedule or Registration Statement No.: ____________________________________





3)           Filing
Party: _________________________________________________________________





4)           Date
Filed: __________________________________________________________________








General
Communication, Inc. Notice of 2009


Annual
Meeting and Proxy Statement








May 18,
2009





Re:  2009
Annual Meeting of Shareholders


of General
Communication, Inc.











Dear
Shareholder:





The board of directors of General
Communication, Inc. cordially invites and encourages you to attend our 2009
annual meeting of shareholders.  The meeting will be held at the
Anchorage Hilton Hotel at 500 West 3rd Avenue in Anchorage, Alaska at 6:00 p.m.
(Alaska Daylight Time) on Monday, June 29, 2009.  Our board has chosen
the close of business on May 4, 2009 as the record date for determining the
shareholders entitled to notice of, and to vote at, the
meeting.  Please join us for a reception preceding the meeting,
commencing at 5:00 p.m.





Copies of the Notice of Annual Meeting of
Shareholders, Proxy Statement and Proxy Card are attached covering the formal
business to be conducted at the meeting.  We have also made available
a copy of our annual report to shareholders in the form of our Form 10-K, as
amended for the year ended December 31, 2008 as filed with the United States
Securities and Exchange Commission.  We encourage you to read all of
this information.





This year, we will be using the new notice and
access method of providing proxy materials and our annual report to you via the
internet.  In our view, this new method will provide you with a
convenient and timely means of access to these materials and to vote your
shares.  At the same time, it allows us to conserve resources and to
reduce costs of printing and distributing these materials.  On or
about May 18, 2009, we will deliver to our shareholders a Notice of Internet
Availability of Proxy Materials containing instructions on how to access our
proxy statement and annual report and to vote electronically via the
internet.  That notice also contains instructions on how to receive a
paper copy of our proxy materials.





We encourage you to take part in our corporate
affairs by voting on the business to come before the
meeting.  Regardless of the number of shares you own, your careful
consideration of, and vote on, these matters is important.  Whether or
not you plan to attend the meeting, please vote electronically via the internet
or by telephone, or, if you requested a paper copy of the proxy materials,
please complete, sign, date and return accompanying Proxy Card in the enclosed
postage-paid envelope.  See, "About the Annual Meeting" in the Proxy
Statement for more details.





In addition to conducting formal business at
the meeting, we shall also review our activities over the past year and our
plans for the future.  We hope you will be able to join
us.





Sincerely,


/s/ Ronald
      A. DuncanRonald A.
      DuncanPresident and
      Chief Executive Officer








NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS


TO
BE HELD ON JUNE 29, 2009





May 18,
2009





To the Shareholders
of


General
Communication, Inc.





You are cordially invited to attend the 2009
annual meeting of shareholders ("Annual Meeting") of General Communication, Inc.
("Company", "we", "our", "us").  Our Annual Meeting will be held at
the Anchorage Hilton Hotel at 500 West 3rd Avenue in Anchorage, Alaska at 6:00
p.m. (Alaska Daylight Time) on Monday, June 29, 2009.  At our Annual
Meeting, shareholders will consider and vote upon the following
matters:





·
            Electing
      three directors, each for a three year term, as part of Class II of our
      classified board of directors and electing one director to complete the
      remaining two years in the three-year term in Class I of our
      board.





·
            Approving an
      amendment to our Amended and Restated 1986 Stock Option Plan specifically
      permitting a one-time offer of exchange of certain options,
      granted under the plan to certain of the officers and employees of the
      Company and other persons, for grants of certain stock awards under the
      plan.





·
            Transacting
      such other business as may properly come before the annual meeting and any
      adjournment or adjournments of it.





The above matters are more fully described in
the accompanying Proxy Statement.  Please join us for a reception
preceding our Annual Meeting, commencing at 5:00 p.m.





The close of business on May 4, 2009 has been
fixed as the record date for the Annual Meeting ("Record Date").  Only
holders of shares of our Class A common stock and Class B common stock of record
as of that date will be entitled to notice of, and to vote at, the Annual
Meeting or any adjournment or adjournments of it.





The accompanying Proxy Card is solicited by our
board.  The enclosed Proxy Statement contains further information with
regard to the business to be transacted at our Annual Meeting.  A list
of our shareholders as of the Record Date will be kept at the offices of the
Company at 2550 Denali Street, Suite 1000, Anchorage, Alaska  99503
for a period of 30 days prior to our Annual Meeting and will be subject to
inspection by any of our shareholders at any time during normal business
hours.





The presence and voting of your shares in the
Company at our Annual Meeting is important.  You can vote your shares
electronically via the internet or by telephone or by completing and returning
the Proxy Card if you requested paper proxy materials.  Voting
instructions are provided in the Notice of Internet Availability of Proxy
Materials, or, if you requested paper proxy materials, the instructions are
printed on your Proxy Card and included in the accompanying Proxy
Statement.  You can revoke a proxy at any time prior to its exercise
at our Annual Meeting by following the instructions in the Proxy
Statement.





BY ORDER OF THE BOARD OF
DIRECTORS


/s/ John
      M. LowberJohn M.
      Lowber, Secretary





IMPORTANT
NOTICE REGARDING AVAILABILITY OF PROXY MATERIALS FOR OUR ANNUAL SHAREHOLDER
MEETING TO BE HELD ON JUNE 29, 2009





This
Notice of Annual Meeting, the Proxy Statement and Annual Report to Shareholders
are available on the internet at www.proxyvote.com.














GENERAL
COMMUNICATION, INC.


2009
ANNUAL MEETING


PROXY
STATEMENT








TABLE
OF CONTENTS







PageABOUT THE ANNUAL MEETING
                1MATTERS TO BE VOTED UPON
                12Director Elections
                12Plan Amendment
                14Other Business
                29GOVERNANCE OF COMPANY
                30Directors and Executive
      Officers
                30Board and Committee Meetings
                35Director Independence
                41Compensation Committee Interlocks and
      Insider Participation
                42Compensation Committee
      Report
                42Director Compensation
                42Litigation and Regulatory Matters
                44COMPENSATION DISCUSSION AND
      ANALYSIS
                44Overview
                44Principles of the Compensation
    Program
                45Process
                45Elements of Compensation
                48Performance Rewarded
                55Timing of Equity Awards
                56Tax and Accounting Treatment of Executive
      Compensation
                57EXECUTIVE COMPENSATION
                57Summary Compensation
Table
                57Grant of Plan-Based Awards Table
                60Outstanding Equity Awards at Fiscal Year-End
      Table
                60Option Exercises and Stock Vested
      Table
                62Potential Payments upon Termination or
      Change-in-Control
                62NONQUALIFIED DEFERRED
      COMPENSATION
                63Deferred Compensation
    Plan
                63Deferred Compensation
      Arrangements
                63CODE OF BUSINESS CONDUCT AND
      ETHICS
                66CERTAIN TRANSACTIONS
                66Transactions with Related Persons
                66Review Procedure for Transactions with Related
      Persons
                68OWNERSHIP OF COMPANY
                70Principal Shareholders
                70Changes in Control
                73Securities Authorized for Issuance under
      Equity Compensation Plans
                74Section 16(a) Beneficial Ownership Reporting
      Compliance
                74AUDIT COMMITTEE REPORT
                74RELATIONSHIP WITH INDEPENDENT REGISTERED PUBLIC
      ACCOUNTING FIRM
                75Overview
                75Pre-Approval Policies and
      Procedures
                75Fees and Services
                76ANNUAL REPORT
                77SHAREHOLDER COMMUNICATIONS
                77FUTURE SHAREHOLDER PROPOSALS AND
      RECOMMENDATIONS
                78Proposals
                78Recommendations
                80
 i


PROXY
STATEMENT


May
18, 2009





We are providing these proxy materials in
connection with the 2009 annual shareholder meeting ("Annual Meeting") for
General Communication, Inc. (unless the context otherwise requires, includes its
direct and indirect subsidiaries and is referred to as "Company," "we," "us" or
"our").  The Notice of Internet Availability of Proxy Materials
("Internet Notice"), this Proxy Statement, any accompanying Proxy Card or voting
instruction card ("Voting Instruction Card") and our annual report for 2008 on
Form 10-K, as amended ("Annual Report") were first made available to our
shareholders on or about May 18, 2009.  This Proxy Statement contains
important information for you to consider when deciding how to vote on the
matters brought before the Annual Meeting.  Please read it
carefully.





ABOUT THE ANNUAL MEETING





Where
and when is the meeting to be held?





The Company's board of directors has called our
Annual Meeting to be held at the Anchorage Hilton Hotel at 500 West 3rd Avenue
in Anchorage, Alaska at 6:00 p.m. (Alaska Daylight Time) on Monday, June 29,
2009.  A reception for our shareholders will commence at 5:00 p.m. at
that location.





How
do I get to the meeting site?





From Anchorage International Airport– Continue
on International Airport Road out of the airport going east; take entrance to
Minnesota Drive to downtown going north (becomes Minnesota Bypass and then I
Street); turn right on 6th Avenue going east; turn left on E Street going north–
hotel at corner of 3rd Avenue and E Street.





From New Seward Highway– Going north, turn left
on 5th Avenue going west; turn right on E Street going north– hotel at corner of
3rd Avenue and E Street.





From Glenn Highway– Going west, at intersection
with New Seward Highway, continue west on 5th Avenue; turn right on E Street
going north– hotel at corner of 3rd Avenue and E Street.





Who
is soliciting my vote?





Our board of directors is soliciting your vote
for the Annual Meeting.  We invite you to attend the Annual Meeting
and request that you vote on the election of directors and another proposaldescribed in this Proxy
Statement.  Regardless of whether you intend to attend the Annual
Meeting, we ask that you complete your Proxy Card or Voting Instruction Card, as
the case may be, or otherwise vote electronically as described in the Internet
Notice.





1




What
materials are provided to me by the board in this solicitation?





The board has made available to you, as
described in the Internet Notice and in conjunction with our Annual Meeting, the
Letter to Shareholders, Notice of Annual Meeting, this Proxy Statement, Proxy
Card and Annual Report in the form of Form 10-K, as amended.  Exhibits
to the Annual Report are not included with it.  However, the Annual
Report includes a list briefly describing all of those exhibits.  We
will furnish a copy of an exhibit to the Annual Report to a shareholder upon
written request to us and payment of a fee to cover our expenses in furnishing
that exhibit.





Who
is entitled to vote at the Annual Meeting?





The board has chosen the close of business on
May 4, 2009 as the record date for our Annual Meeting ("Record
Date").  All shareholders who own shares of Company common stock as of
the Record Date may attend and vote at our Annual Meeting.





What
is the purpose of the Annual Meeting?





You will be voting on the following
matters:





·
            Electing
      three individuals as directors, each for a three-year term, as part of
      Class II of our eight member classified board of directors and electing
      one individual to complete the remaining two years of the three-year term
      in Class I of our board, as identified in the Proxy Card and this Proxy
      Statement.





·
            Approving an
      amendment ("Plan Amendment") to our Amended and Restated 1986 Stock Option
      Plan ("Stock Option Plan") specifically permitting a one-time offer
      of exchange of certain options, granted under the plan ("Prior Options")
      to certain of the officers and employees of the Company and other persons
      ("Prior Optionees"), for grants of certain stock awards under the plan
      ("Exchange Awards").





·
            Transacting
      such other business as may properly come before the meeting and any
      adjournment or adjournments of it.





What
are the board's recommendations on these agenda items?





The board recommends a vote –




2




·
            For
      the election of board-nominees as
directors.





·
            For
      approval of the Plan
Amendment.


·
            For or
      against other matters that come before our Annual Meeting, as the
      proxy holder deems advisable.





What
happens if additional matters are presented at the Annual Meeting?





Other than the adoption of the minutes of the
2008 annual meeting and the proposals described in this Proxy Statement, we are
not aware of other business to be acted upon at the Annual
Meeting.  If you grant a proxy to us, the persons named as proxy
holders then have the discretion to vote your shares on any additional matters
properly presented for a vote at the Annual Meeting in accordance with Alaska
law and our Bylaws.





What
are my voting rights for purposes of the Annual Meeting?





Our Company's Articles of Incorporation, as
amended and restated ("Articles") provide for two classes of common
stock:  Class A for which the holder of a share is entitled to one
vote, and Class B for which the holder of a share is entitled to ten
votes.





How
many shares of Company stock are outstanding and may be voted at the Annual
Meeting?





On the Record Date, there were 49,606,501
shares of our Class A common stock and 3,198,773 shares of our Class B common
stock outstanding and entitled to be voted at our Annual Meeting.





What
are the quorum requirements for the Annual Meeting?





In order to carryout the business of a
shareholder meeting, a quorum of shares entitled to vote must be
present.  At our Annual Meeting, a simple majority of our issued and
outstanding common stock entitled to be voted as of the Record Date, represented
in person or by proxy, will constitute a quorum.  As an example and
based upon the shareholdings as of the Record Date, a quorum would be
established by the presence of shareholders, directly or by proxy, holding at
least 23,203,864 shares of our Class A common stock and all 3,198,773
shares of our Class B common stock.





If a quorum is not present at the Annual
Meeting, the meeting may be adjourned until a quorum is
present.  Broker non-votes (described below) are counted as present
for purposes of determining the presence of a quorum.





3


How
many votes are required for approval of agenda items, and what is the impact of
the voting power of the outstanding Company stock?





Because of the ten-for-one voting power of our
Class B common stock, shares of that stock have a substantial impact on the
voting power for purposes of taking votes on matters addressed at our Annual




Meeting.  The
total number of votes to which our Class A common stock and our Class B common
stock were entitled as of the Record Date were 49,606,501 and 31,987,730,
respectively.  Under our Articles, voting on these items must be by
our Class A and Class B common stock, all voting as a group.





With a quorum present, adoption of our Annual
Meeting proposals will require the following affirmative votes:





·
            For the
      election of three nominees as in Class II of our board, the three nominees
      receiving the most "For" votes (among votes properly cast in person or by
      proxy) and in each case constituting a tally of at least a majority of the
      votes entitled to be cast.





·
            For the
      separate election of a nominee as director in Class I of our board, the
      nominee receiving the most "For" votes (among votes properly cast in
      person or by proxy) and constituting a tally of at least a majority of the
      votes entitled to be cast.





·
            For each
      other matter to come before the Annual Meeting, "For" votes (among votes
      properly cast in person or by proxy) constituting a tally of at least a
      majority of the votes entitled to be
cast.





Will
cumulative voting be allowed on election of directors at the Annual
Meeting?





Our Articles expressly provide for
non-cumulative voting in the election of directors.  Therefore,
cumulative voting will not be allowed at our Annual Meeting.





How
many outstanding shares of the Company are held by the Company's directors and
executive officers?





As of the Record Date, the number and
percentage of outstanding shares entitled to vote held by our directors and
executive officers and their affiliates were 2,289,242 shares of our Class A
common stock, constituting approximately 4.6% of our outstanding stock in that
class, and 991,338 shares of our Class B common stock, constituting
approximately 31.0% of the outstanding stock in that class.





4




Why
did I receive the Internet Notice in the mail regarding the internet
availability of proxy materials this year instead of a paper copy of the proxy
materials?





Under rules adopted by the United States
Securities and Exchange Commission ("SEC"), we are now furnishing our proxy
materials to our shareholders via the internet, rather than mailing printed
copies of those materials to each shareholder.  For purposes of the
Annual Meeting, on or about May 18, 2009 we mailed the Internet Notice to our
shareholders of record.  Since you received an Internet Notice by
mail, you are not to receive a printed copy of these materials unless you
request one.





The Internet Notice includes instructions on
accessing and reviewing our proxy materials and our Annual Report on the
internet.  The Internet Notice also provides instructions on
submitting a proxy on the internet.





At the time we began mailing of the Internet
Notice, we also first made available on the internet at www.proxyvote.com our
Notice of Annual Meeting, Proxy Statement and Annual Report.





How
do I request paper or email copies of the proxy materials?





You may receive a paper or email copy of our
proxy materials and Annual Report by requesting them by any of the following
methods and following the instructions given:





·
            Online – Go
      to www.proxyvote.com.





·
            Email – Send
      message to sendmaterial@proxyvote.com.





·
            Telephone –
      Call 1.800.579.1639.





Any request to
receive proxy materials by mail or email will remain in effect until you revoke
it.





How
may I vote my shares?





The answer to this question depends upon your
relationship to the shares to be voted.





Registered
shares.  If you hold shares in you own name, you may vote by
proxy in any of three ways:





·
            Online–
      Go to www.proxyvote.com
      and follow the instructions.  You need to enter certain
      information that is printed on your Internet Notice or Proxy
      Card.  You can also use this website to elect to be notified in
      the future by email that future proxy statements and annual reports are
      available online instead of receiving paper copies of those materials by
      mail.




5





·
            By
      Telephone– Call toll-free 1.800.690.6903 within the United States
      and follow the instructions.  You need to enter certain
      information that is printed on your Internet Notice or Proxy Card in order
      to vote by telephone.





·
            By
      Mail– Complete, sign and date your Proxy Card and return it in the
      envelope provided.





In
the alternative, you may vote in person at our Annual Meeting.





Stock Purchase
Plan shares.  If you hold shares in the Company's Qualified
Employee Stock Purchase Plan ("Stock Purchase Plan"), the proxy you submit also
instructs the plan committee appointed by our board which administers the Stock
Purchase Plan ("Plan Committee") on how to vote your plan shares.  You
can vote online, by telephone or by returning the Proxy Card in the envelope
provided.  You cannot vote your Stock Purchase Plan shares in person
at the Annual Meeting.  If you do not submit a Proxy Card, the Plan
Committee will vote your plan shares proportionately with those shares for which
the Plan Committee will receive a proxy.  To allow sufficient time for
the Plan Committee to tabulate the vote of the plan shares, your vote must be
received before the close of business on June 15, 2009.  Should a
participant in the Stock Purchase Plan decline or otherwise not respond timely
to an opportunity to vote those shares, the plan provides that the shares are to
be voted by the Plan Committee.  These shares are also to be counted
for purposes of establishing a quorum.





Street name
shares.  If you hold shares through a bank, broker or other
institution, you should receive material from that firm explaining how to
vote.





What
is the difference between holding shares as a shareholder of record and as a
beneficial owner?





A shareholder may hold shares through a broker,
bank or other nominee rather than directly in the shareholder's own
name.  As summarized below, there are some differences between shares
held of record and those owned beneficially.





Shareholder of
Record.  If your shares are registered directly in your name
with our transfer agent, BNY Mellon Shareholder Services, you are considered the
shareholder of record with respect to those shares, and the Internet Notice and
these proxy materials are being sent directly to you.  As the
shareholder of record, you have the right to grant your voting proxy directly to
us, to vote electronically or to vote in




6




person at our
Annual Meeting.  If we have received a request from you for printed
proxy materials, we have enclosed a Proxy Card for you to use.





Beneficial
Owner.  If your shares are held in a stock brokerage account or
by a bank or other nominee, you are considered the beneficial owner of the
shares held in "street name," and the Internet Notice and these proxy materials
are being forwarded to you by your broker, bank or nominee who is considered the
shareholder of record with respect to those shares.  As a beneficial
owner, you have the right to direct your broker, bank or nominee on how to vote
and are also invited to attend our Annual Meeting.  However, since you
are not the shareholder of record, you may not vote these shares in person at
our Annual Meeting, unless you request, complete and deliver a legal proxy from
your broker, bank or nominee.  If you requested printed proxy
materials, your broker, bank or nominee has enclosed a Voting Instruction Card
for you to use in directing that person as to how to vote your
shares.





May
I vote my shares by filling out and returning the Internet Notice?





No.  The Internet Notice identifies
the items to be voted on at our Annual Meeting.  However, you cannot
vote by marking the Internet Notice and returning it.  The Internet
Notice provides instructions on how to vote by internet, by requesting and
returning a paper Proxy Card, by telephone, or by returning a ballot or
otherwise voting in person at our Annual Meeting.





How
will instructions which I provide in my Proxy Card be addressed in voting at the
Annual Meeting?





The shares represented by each executed, valid
Proxy Card submitted to us will be voted at our Annual Meeting in accordance
with the instructions in that Proxy Card and subject to conditions as described
in the Proxy Card.  The Proxy Card will be voted for our board's
nominees for directors as a classified board and as otherwise specified in the
Proxy Card, unless a contrary choice is specified.  The Proxy Card
also gives discretionary authority to the holder on other matters as described
in the Proxy Card and Proxy Statement.





What
if I do not give specific voting instructions in filling out my Proxy
Card?





The answer to this question depends upon your
relationship to the shares to be voted.





Shareholder of
Record.  If you are a shareholder of record and you indicate,
when voting by the internet or by telephone, that you wish to vote as
recommended by our board, or return a signed Proxy Card but do not indicate how
you wish to vote, then your shares are to be voted in accordance with the
recommendations of our board on all matters presented in this Proxy Statement
and as the proxy holders may




7




determine in their
discretion regarding any other matters properly presented for a vote at the
Annual Meeting.  If you indicate a choice with respect to any matter
to be acted upon on your Proxy Card, the shares are to be voted in accordance
with your instructions, subject to the terms of the card.





Beneficial
Owner.  If you are a beneficial owner, hold your shares in
street name and do not provide the organization that holds your shares with
voting instructions, the broker or other nominee is to determine if it has the
discretionary authority to vote on the particular matter.  Under
applicable rules, brokers have the discretion to vote on routine matters, such
as the uncontested election of directors, but do not have discretion to vote on
non-routine matters such as the Plan Amendment.  If you do not provide
voting instructions to your broker, e.g., using a Voting Instruction Card, and
the broker has indicated that it does not have discretionary authority to vote
on a particular proposal, your shares are to be considered "broker non-votes"
with regard to that matter.  A broker non-vote has the same effect as
a vote against a non-routine proposal at our Annual Meeting.





What
if I abstain from a vote?





Abstentions are included in the determination
of shares present for purposes of establishing a quorum.  Because an
abstention represents shares entitled to vote on any matter presented for
shareholder approval, the effect of the abstention is the same as a vote against
the proposal.





Are
all votes cast at the Annual Meeting to be counted?





All votes cast by our shareholders directly or
by proxy, completed and executed in accordance with the instructions on the
Proxy Card or Voting Instruction Card (honored by the broker or other nominee
and timely presented to the Company), will be counted at our Annual
Meeting.  A Proxy Card clearly marked as withholding authority to
elect a nominee or otherwise as abstaining on a proposal to be addressed at our
Annual Meeting will be honored and not voted (although present and entitled to
vote).  Similarly, a broker holding shares of record for a beneficial
owner generally is not entitled to vote on matters presented at our Annual
Meeting (as previously described) unless the owner gives that broker specific
voting instructions.





A Proxy Card having no clear indication of a
vote on a proposal to be addressed at our Annual Meeting is to be voted "For"
the corresponding proposal, as the case may be.  A Proxy Card having
conflicting indications or more than one selection on a proposal to be addressed
at our Annual Meeting is not to be voted on that matter but is to be used for
purposes of establishing a quorum.





8


How
are votes counted?





Votes are to be tabulated through a vendor
selected by the Company to establish the platform for internet
voting.  Proxy Cards and other evidences of voting are to be reviewed
by an independent inspector of election, retained by the Company for the Annual
Meeting, for compliance with instructions adopted by our board for voting in the
context of that meeting.  Separate counts of "For" and "Withhold
Authority" and, with




respect to any
proposals other than the election of directors, "Against" and "Abstain," and
broker non-votes are to be made.  Abstentions and broker non-votes
will not be counted towards the affirmative vote total for any
proposal.





May
I change my vote after I have voted?





Even if you voted by telephone or on the
internet, or if you requested paper proxy materials and signed the Proxy Card in
the form accompanying this Proxy Statement, you retain the power to revoke your
proxy or change your vote.  A proxy executed using the Proxy Card
enclosed may be revoked by the shareholder signing the Proxy Card at any time
before the authority granted under the Proxy Card is exercised by giving written
notice to the Secretary of our board at the principal executive offices of the
Company.  This notice may also be delivered to the Secretary at our
Annual Meeting prior to a vote using the Proxy Card.





Thereafter, a shareholder revoking the proxy
may vote in person or by other proxy as provided by our Bylaws, as revised and
in effect as of the Record Date ("Bylaws").  A shareholder wishing to
revoke the Proxy Card may do so by executing another valid proxy bearing a later
date.  However, please note that, if you wish to vote at our Annual
Meeting and your broker, bank or nominee is, and you are not, the shareholder of
record, you must request, complete and deliver a legal proxy from that
person.





What
does it mean if I receive more than one Internet Notice, Proxy Card or Voting
Instruction Card?





It generally means your shares are registered
differently or are in more than one account.  Please provide voting
instructions for all Internet Notices, Proxy Cards and Voting Instruction Cards
you receive.





Who
may attend the Annual Meeting?





All shareholders as of the Record Date, or
their duly appointed proxies, may attend the Annual Meeting.  Each
shareholder may also bring one guest to our Annual Meeting if there is space
available.





9


Are
there any prerequisites for admission to the Annual Meeting?





In order to be admitted to our Annual Meeting,
a shareholder must present proof of ownership of Company stock as of the Record
Date.  This proof may be in the form of the Internet Notice, a
brokerage






statement or letter
from a bank or broker indicating ownership as of the Record Date, a Proxy Card,
or legal proxy or Voting Instruction Card provided by your broker, bank or
nominee.  Any holder of a proxy from a shareholder must present the
Proxy Card, properly executed, and a copy of proof of ownership.  A
shareholder or proxy holder may also be required to present a form of photo
identification such as a driver's license.





Please note that, for security reasons, all
bags and other items brought to the Annual Meeting may be subject to search, and
all persons who attend the meeting may be required to pass through a metal
detector.  We will be unable to admit anyone who does not comply with
these security procedures.  Cameras and other recording devices will
not be permitted in the meeting room.





Who
pays for the proxy solicitations?





The expenses of the proxy solicitation made by
our board for our Annual Meeting, including the cost of preparing and assembling
for use on our website of, and use in mailing at a shareholder's request paper
copies of, the Notice of Annual Meeting, Proxy Card, Proxy Statement, and return
envelopes, the handling and tabulation of proxies received, and charges of
brokerage houses and other institutions, nominees or fiduciaries for forwarding
such documents to beneficial owners, are to be paid by us.





How
will the Company solicit votes for the Annual Meeting?





We plan to solicit proxies for our Annual
Meeting via the internet, mail as needed, in person or by telephone, electronic
mail or other electronic transmission.  These solicitations may be
carried out by our officers, directors and regular employees.  None of
these individuals are to receive additional compensation for that
effort.





Is
a list of shareholders available to me?





A list of names of shareholders of record as of
the Record Date entitled to vote at our Annual Meeting will be available to
shareholders entitled to vote at the meeting for 30 days prior to the meeting
for any purpose relevant to the meeting.  This list can be viewed
between the hours of 9:00 a.m. and 5:00 p.m. at our principal executive offices
at 2550 Denali Street, Suite 1000, Anchorage, Alaska.





10


How
do I find out the voting results?





Voting results will be announced at our Annual
Meeting.  Also, the results will be included in our quarterly report
on Form 10-Q for the quarter ending June 30, 2009, which we will file with the
SEC.  Furthermore, we will post the results on our website at www.gci.com.  After
the Form 10-Q is filed, you may obtain a copy by visiting our
website.





What
if I have questions about lost stock certificates or I need to change my mailing
address?




Shareholders may
contact our transfer agent, BNY Mellon Shareholder Services, by calling
1.877.277.9943, or by writing to BNY Mellon Shareholder Services at P.O. Box
358015, Pittsburgh, Pennsylvania 15252, or by visiting the transfer agent's
website at www.bnymellon.com/shareowner/ids,
to get more information about these matters.





Who
was the Company's independent registered public accounting firm for
2008?





Our independent registered public accounting
firm is selected by our Audit Committee ("External Accountant").  That
committee selected KPMG LLP as our External Accountant for 2008.  A
representative of that External Accountant is expected to be present at our
Annual Meeting.  That representative will have the opportunity to make
a statement, if so desired, and will be available to respond to appropriate
questions.





Where
can I find more information about the Company?





We file annual reports on Form 10-K, quarterly
reports on Form 10-Q, current reports on Form 8-K and make other filings with
the SEC.  The public may read and copy any materials we file with the
SEC on these forms at the SEC's Office of Public Reference at 100 F Street,
N.E., Room 1580, Washington, D.C. 20549.  The public may obtain
information on the operation of the Public Reference Room by calling the SEC at
1.800.SEC.0330.  The SEC also maintains an internet site that contains
reports, proxy statements and other information regarding issues, including us,
that file electronically with the SEC.  The internet address is www.sec.gov.





We make available, at no charge through our
website at www.gci.com our
annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on
Form 8-K and amendments to them, as well as copies of our proxy statements filed
with the SEC, as soon as reasonably practicable after we electronically file
that material with the SEC.  In addition, we have posted on our
website our Audit Committee Charter,




11


Nominating and
Corporate Governance Committee Charter and Code of Business Conduct and Ethics
("Ethics Code").  Information on our website does not form a part of
this Proxy Statement.





When
are shareholder proposals and recommendations for the 2010 annual shareholder
meeting due?





The time period during which we must receive
proposals and recommendations, if any, from our shareholders for placement in
our 2010 proxy statement is controlled by our Bylaws and as further described in
this Proxy Statement.  See, "Future Shareholder Proposals and
Recommendations."





MATTERS TO BE VOTED UPON




The agenda for our
Annual Meeting centers on two action items presented to our shareholders, i.e.,
the election of a portion of our board and approval of the Plan
Amendment.  Other matters may be taken up as described
below.





Director Elections





Overview.  As of the Record
Date, our board of directors was composed of eight directors classified into the
following three classes with the number of members as indicated: Class I (two
members), Class II (three members), and Class III (three members).





At our Annual Meeting, three individuals will
be elected in Class II of our board each for a three-year term and one
individual will be elected in Class I of our board to complete the remaining two
years of the three-year term of that class.  The individuals so
elected will serve subject to the provisions of our Bylaws and until the
election and qualification of their respective successors.





Our Nominating and Corporate Governance
Committee has as one of its responsibilities to seek out, from time to time,
candidates as prospective board members.  These candidates may be
identified through the efforts of individual members of the Nominating and
Corporate Governance Committee, members of our board, shareholder
recommendations accepted by the committee, and, in the committee's discretion,
through consultants as otherwise provided in our Nominating and Corporate
Governance Committee Charter.  See, "Future Shareholder Proposals and
Recommendations: Recommendations."





Prospective candidates must meet the minimum
criteria set forth in the Nominating and Corporate Governance Committee Charter
taking into consideration the appropriate size of our board, the committee's




12


understanding of
our strategic direction requirements, and the specific compositional needs of
our board.  In addition, in reviewing and making recommendations
regarding existing board members, the committee takes into consideration results
of evaluations of existing board members and the wishes of an affected existing
board member to be re-nominated.





The minimum criteria set forth in the Bylaws
and Nominating and Corporate Governance Committee Charter for selection as a
committee-recommended nominee for a position on our board are as
follows:





·
            Be between
      and including 21 and 75 years of age (although, in the event a person
      reaches the upper limit of that age while a director, that person's term
      as director immediately terminates and the director is required by our
      Bylaws to resign from the board).




·
            Possess basic
      skills and characteristics required as prerequisites for each member,
      unless otherwise specified, on the board which must include, but are not
      limited to, the following –





o
            Knowledge,
      skills and experience in at least one of the primary industries in which
      we operate.





o
            Ability to
      read and understand fundamental financial statements, including our
      balance sheet, income statement and cash flow statement, and have at least
      familiarity with the underlying accounting rules and
      practices.





o
            Ability to
      understand our key business and financial
risks.





o
            Appreciation
      of the relationship of our business to changing needs of
      society.





o
            With respect
      to at least one member of our board, skills, attributes, and financial
      sophistication of an audit committee financial expert as the term is
      defined in the charter.





o
            With respect
      to at least a simple majority of the authorized members of our board, each
      be an independent director as the term is defined in the Nasdaq Stock
      Market ("Nasdaq") corporate governance listing standards (to which we are
      subject) and incorporated into the charter, i.e., an individual other than
      one of our executive officers or employees or any other
      individual  having a relationship which in the opinion of our
      board would interfere with the exercise of independent judgment in
      carrying out the responsibilities of a director ("Independent
      Director").




13





o
            Other skills
      and characteristics specifically identified and approved by the
      committee.





We believe that our nominees proposed for
election as directors at the Annual Meeting are willing to serve.  Our
board intends that the proxy holders named in the accompanying Proxy Card or
their substitutes are to vote for the election of these nominees unless
specifically instructed to the contrary.  However, in the event any
nominee at the time of the election shall be unable or unwilling, or shall
otherwise be unavailable for election and as a consequence other nominees shall
be designated, those proxy holders or their substitutes will have discretion and
authority to vote or refrain from voting in accordance with their judgment with
respect to other nominees.





In 2008, the Company through Mr. Duncan
approached senior management of Arctic Slope Regional Corporation ("ASRC"), a
holder of a significant percentage of our outstanding Class A common stock, as


to
the possibility of ASRC proposing from its senior management an individual to be
on our board.  The ASRC management responded with a recommendation of
Mr. Kroloff, one of its senior executive officers.  Our Nominating and
Corporate Governance Committee then made a recommendation to our board to
appoint Mr. Kroloff to a newly created seat on our expanded eight-member
board.  He joined our board in February 2009.





Recommendation
of Board.  Our board
recommends to our shareholders a vote "FOR" the slate of four individuals, each
as a director in a position for election at our Annual Meeting, i.e., a vote for
proposal number 1 of the Proxy Card.  This slate is as
follows:





·
            Stephen M.
      Brett – Class II


·
            Ronald A.
      Duncan – Class II


·
            Stephen R.
      Mooney – Class II


·
            Mark W.
      Kroloff – Class I





These nominees have
been recommended by our Nominating and Corporate Governance
Committee.  Background and other information on the nominees are
provided elsewhere in this Proxy Statement.  See, "Governance of
Company:  Directors and Executive Officers."





Plan Amendment





Overview.  We are asking you
to approve the proposed plan amendment which amends our Stock Option Plan
specifically permitting a one-time offer of exchange of the Prior Options
held by Prior Optionees for grants of corresponding Exchange Awards, subject to
terms and conditions of the Plan Amendment.  The Plan Amendment was
adopted by us as a part of our contemplated shift in compensation




14


structure in 2009
as described elsewhere in this Proxy Statement.  See "Compensation
Discussion and Analysis:  Elements of Compensation – Contemplated
Shift in Compensation Structure."





Plan.We adopted our
stock option plan in 1986.  It has been subsequently amended from time
to time and presently is our Stock Option Plan, i.e., our Amended and Restated
1986 Stock Option Plan.  Under our Stock Option Plan, we are
authorized to grant options to purchase shares of Class A common stock to
selected officers, directors and other employees of, and consultants or advisors
to, the Company and its subsidiaries.  These options are more
specifically referred to as nonstatutory stock options or incentive stock
options within Section 422 of the Internal Revenue Code of 1986, as amended
("Internal Revenue Code").  In addition, under the Stock Option Plan
restricted stock awards may be granted as further described below.





The number of shares of Class A common stock
allocated to the Stock Option Plan is 15.7 million shares.  The number
of shares for which options may be granted is subject to adjustment upon the
occurrence of stock dividends, stock splits, mergers, consolidations and certain
other changes in corporate structure or capitalization.  As of the
Record Date, there were 6,845,666 shares subject to outstanding options under
the Stock Option Plan, 628,557 share grants had been awarded, 7,853,697 shares
had been issued upon the exercise of options under the plan, 480,968 share
options had been repurchased and 853,048 shares remained available for
additional grants under the plan.





Under our Stock Option Plan, the individuals
administering the plan are to consist only of our board members, or solely of
two or more "non-employee directors" as defined in federal securities
regulation, or, in the context of implementing the provisions of Section 162(m)
of the Internal Revenue Code, solely of two or more "outside directors" when
options are granted to "covered employees" as those terms are defined in that
section.





During 2008 and through the Record Date, our
Stock Option Plan was administered by our Compensation Committee, the members of
which are identified elsewhere in this Proxy Statement ("Compensation
Committee").  See, "Governance of Company:  Board and
Committee Meetings."





Under our Stock Option Plan, our key employees
(including officers and directors who are employees) and non-employee directors
of, and consultants or advisors to, us are eligible for option
grants.  The selection of optionees is made by our Compensation
Committee.





15


Restricted stock awards granted under the Stock
Option Plan may be subject to vesting conditions based upon service or
performance criteria as the Compensation Committee may specify.  These
specifications may include attainment of one or more performance
targets.  Shares acquired pursuant to such an award may not be
transferred by the participant until vested.  Unless otherwise
provided by the Compensation Committee, a participant will forfeit any shares of
restricted stock where the restrictions have not lapsed prior to the
participant's termination of service with us.  Participants holding
restricted stock will have the right to vote the shares and to receive dividends
paid, if any.  However, those dividends or other distributions paid in
shares will be subject to the same restrictions as the original
award.





Our Compensation Committee selects each grantee
and the time of grant of an option or award and determines the terms of each
grant, including the number of shares covered by each grant and the exercise
price.  In selecting a participant, as well as in determining these
other terms and conditions of each grant, our Compensation Committee takes into
consideration such factors as it deems, in its sole discretion, relevant in
connection with accomplishing the purpose of the plan.





Under the Stock Option Plan, an option becomes
vested and exercisable at such time or upon such event and subject to such
terms, conditions, performance criteria or restrictions as specified by the
Compensation Committee.  The maximum term of any option granted under
the plan is 10 years, provided that an incentive stock option granted to a
person who at the time of grant owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or any subsidiary
corporation of the Company ("Ten Percent Shareholder") must have a term not
exceeding five years.  Unless otherwise permitted by the Compensation
Committee, an option generally remains exercisable for 30 days following the
participant's termination of service, with limited exception.  The
exception arises if service terminates as a result of the participant's death or
disability, in which case the option generally remains exercisable for 12
months.  In any event, the option must be exercised no later than its
expiration date.





In particular, under the present Stock Option
Plan, the Compensation Committee may set an option exercise price not less than
the fair market value of the stock on the effective date of grant of the
option.  However, in the case of an incentive stock option granted to
a Ten Percent Shareholder, the exercise price must equal at least 110% of the
fair market value of the stock on the date of grant.





Our Compensation Committee may, subject to
certain limitations on the exercise of its discretion required by Section 162(m)
of the Internal Revenue Code, amend, cancel or renew any option granted under
the Stock Option Plan, waive any restrictions or conditions applicable to any
option under the plan, and accelerate, continue, extend or defer the vesting of
any option under the plan.  The Stock Option Plan provides,




16


subject to certain
limitations, for indemnification by the Company of any director, officer, or
employee against all reasonable expenses incurred in connection with any legal
action arising from that person's action or failure to act in administering the
plan.  All grants of options under the Stock Option Plan are to be
evidenced by a written agreement between the Company and the optionee specifying
the terms and conditions of the grant.





Options granted that have not become
exercisable terminate upon the termination of the employment or directorship of
the optionholder.  Exercisable options terminate from one month to one
year after such termination, depending upon the cause of such
termination.  If an option expires or terminates, the shares subject
to such option become available for subsequent grants under the Stock Option
Plan.





Incentive stock options are nontransferable by
the participant other than by will or by the laws of descent and distribution,
and are exercisable during the participant's lifetime only by the
participant.  However, a nonstatutory stock option may be assigned or
transferred to members of the optionholder's immediate family, to the extent
permitted by the Compensation Committee in its sole discretion.





Our Stock Option Plan provides that payment
upon exercise of an option may be in the form of money or shares of our Class A
common stock.  If the optionee chooses the latter form of payment, the
shares must have a fair market value not less than the exercise
price.  The plan further provides, notwithstanding other restrictions
on transferability of options, that an optionee, with approval of our
Compensation Committee, may transfer an option for no consideration to, or for
the benefit of, the optionee's immediate family.  There is no
restriction in the Stock Option Plan that an option granted under the plan must
be held by the optionee for a minimum period of time.





Under our Stock Option Plan, our authority to
modify or amend the plan is subject to prior approval of our shareholders only
in cases of increasing the number of shares of our stock allocated to, and
available and reserved for, issuance under the plan, changing the class of
persons eligible to receive incentive stock options or where shareholder
approval is required under applicable law, regulation or rule.  One
such law requiring shareholder approval before the Company may rely on it is
Section 162(m) of the Internal Revenue Code.





Subject to these limitations, the Company may
terminate or amend the Stock Option Plan at any time.  However, no
termination or amendment may affect any outstanding option or award unless
expressly provided by the Compensation Committee.  In any event, no
termination or amendment of the plan may adversely affect an outstanding option
or award without the consent of the participant unless necessary to comply with
applicable law, regulation or rule.





17


With limited exception, no maximum or minimum
exists with regard to the amount, either in dollars or in numbers, of options
that may be exercised in any year, either by a single optionee or by all
optionees under our Stock Option Plan.  At the 2002 annual meeting,
our shareholders approved an amendment to the plan placing a limitation on
accumulated grants of options of not more than 500,000 shares of Class A common
stock per optionee per year.





With these exceptions, there are no fixed
limitations on the number or amount of securities being offered, other than the
practical limitations imposed by the number of employees eligible to participate
in the plan and the total number of shares of stock authorized and available for
granting under the plan.   Shares covered by options which have
terminated or expired for any reason prior to their exercise are available for
grant of new options pursuant to the plan.





There were, as of the Record Date, 14 executive
officers, including all of our Named Executive Officers(as defined elsewhere,
see "Executive Compensation:  Summary Compensation Table"), no current
directors (including their affiliated companies) who are not executive officers,
and 221 other employees (including officers who are not executive officers),
participating in the Stock Option Plan.  This level of


participation is
out of a total of 14 eligible executive officers, all of our Named Executive
Officers, 7 current directors who are not executive officers, and approximately
1,600 employees (including officers who are not executive officers) of the
Company.  The plan has been in place for many
years.  Options under the plan are granted in the discretion of our
Compensation Committee.





As of the Record Date, the closing sales price
on Nasdaq was $8.00 per share for our Class A common stock.





Plan
Amendment–Structure.  The Plan
Amendment would permit us to offer Exchange Awards in the form of restricted
shares of our Class A common stock to Prior Optionees in exchange for their
Prior Options.  If implemented, the exchange is only to Prior
Optionees, i.e., certain of our officers and employees and other persons who
participated in, and were granted Prior Options under, the Stock Option Plan
during the time period 1999 through February 15, 2009 ("Option Grant Period"),
with further limitations and eligibility requirements as described
below.





The Prior Optionees consist of approximately
235 of our employees and 3 of our vendors who have provided goods or services to
us and taken payment in lieu of cash in the form of a portion of those Prior
Options.  The Prior Optionees include 4 of our Named Executive
Officers, 9 of our other senior officers and 221 of our other officers and other
employees.  Our directors, including Mr. Duncan, will not be eligible
to participate in the exchange through the terms of the proposed Plan
Amendment.





18


Under the exchange through the terms of the
proposed Plan Amendment, each Prior Optionee will be offered the right to
exchange Prior Options for Exchange Awards on an unrestricted basis at a current
market value set at the time of implementation of the proposal for both the
Prior Options and the Exchange Awards.  Each Prior Option will be
valued at the Black-Scholes Model value calculated as of five days before (or
such other period as may be required) the date of the offer, as specified in the
Plan Amendment and further described below.





The Black-Scholes Model is a method of valuing
options in stock which is traded.  We believe it is an appropriate
basis for valuing the Prior Options, and it is a widely accepted means of such
valuation.  Furthermore, it is the same method that we have used for a
number of years to determine our stock option expense under, and is an
acceptable method for that purpose under, the Financial Standards Board
Statement of Financial Accounting Standards No. 123 (revised 2004) on
share-based payment ("FAS 123R").





–Principal
Terms.We have not
commenced the exchange through the terms of the proposed Plan
Amendment.  We will not do so unless our shareholders approve the
proposed Plan Amendment to permit the Prior Option exchange.  Our
board authorized the Prior Option exchange on May 1, 2009, subject to such
shareholder approval.  If this proposal is approved, and our board and
the Compensation


Committee determine
to implement the Prior Option exchange, the exchange would commence within 12
months of the date of the Annual Meeting.  The principal terms of the
exchange through the proposed Plan Amendment are briefly as
follows.





The exchange through the terms of the proposed
Plan Amendment will be open to all eligible employees who are employed by the
Company or by one of its majority-owned subsidiaries as of the start of the
exchange and who remain employed by the Company or one of those subsidiaries
through the completion date of the exchange.  The exchange will also
be open to certain vendors (consultants and advisors) who have previously been
issued Prior Options and who are at the time of the exchange retained by the
Company to perform services.  In particular, an executive officer of
the Company is allowed to participate in the exchange unless that officer is
also one of the directors on our board.  That is, Company directors
will not be eligible to participate in the exchange.





Participation in the exchange through the
proposed Plan Amendment is voluntary.  There are no penalties if an
eligible Prior Optionee elects not to participate.  In the event that
a Prior Optionee elects not to participate, the optionee's outstanding Prior
Options would remain outstanding in accordance with the current terms and
conditions applying to the options.





19


All outstanding options to acquire our Class A
common stock issued pursuant to the Stock Option Plan and granted after the end
of the Option Grant Period will not be eligible to participate in the
exchange.  An option granted to one of our officers or employees where
vesting is contingent upon our adjusted EBIDTA exceeding $202 million in 2009 is
excluded from the Prior Options.  That is, such an option was granted
for a separate defined purpose tied to targets, some of which have not as yet
been satisfied.





The exchange ratio used to determine the number
of shares of Exchange Awards to be granted in the exchange for Prior Options
surrendered is to be equal to the lesser of the following:  (1) a
number of shares of restricted stock having a fair value equal to the fair value
of the Prior Options exchanged; or (2) a number of shares of Exchange Awards
equal to 40% of the number of shares issuable pursuant to the Prior Options
surrendered.





The current value of the eligible Prior Options
will be calculated using the Black-Scholes Model.  That current value
will be determined using the following assumptions:  (1) an exercise
price equal to the exercise price of the Prior Option; (2) an assumed per share
value of the Company's Class A common stock equal to the closing price per share
as reported on Nasdaq shortly before commencement of the exchange offer; (3) an
expected remaining term of the Prior Option equal to the period beginning on
February 28, 2009 through the remaining contractual life of the eligible
Prior Option; (4) an expected dividend yield of 0%; (5) an expected volatility
of our Class A common stock closing market price equal to 50%; and (6) an
interest rate equal to the interest rate on five-year U.S. Treasury debt (or
otherwise as determined by our board).





The fair value of each Exchange Award, i.e.,
share of restricted stock, will be the closing price per share of the Company's
Class A common stock as reported on Nasdaq on a date shortly before commencement
of the exchange offer.





Based upon these assumptions, the exchange
through the terms of the proposed Plan Amendment will result in participating
Prior Optionees receiving a substantially smaller number of shares of Exchange
Awards than the number of shares that are covered by the surrendered Prior
Options.  In some cases, small cash payments will be made in exchange
for Prior Options rather than issuing fractional shares of restricted
stock.





Under an exchange through the terms of the
proposed Plan Amendment, none of the Exchange Awards will be vested on the date
of grant.  Rather, each sum of Exchange Awards issued to a Prior
Optionee will vest as follows:  (1) 50% of those Exchange Awards will
vest on December 20, 2011; and (2) 50% of those Exchange Awards will vest on
February 28, 2012.  This vesting is subject to (in the case of
officers and




20


employees) that
Prior Optionee's continued employment with us.  In the case of
vendors, vesting is subject to the continued provision of services to us on the
applicable vesting date.





Under the exchange, stock certificates will not
be issued for shares of Exchange Awards that have not vested.  Shares
of Exchange Awards will be issued and held of record in the name of the Company
on the records of its transfer agent and held for the benefit of the
corresponding participating Prior Optionee until they vest.  As these
shares vest and all tax withholding requirements have been taken into account,
certificates will be transferred to the corresponding participating Prior
Optionee.  In this context, such a participating Prior Optionee will
recognize ordinary income at the time the shares of Exchange Awards vest in an
amount equal to the fair market value of those shares on the date of vesting,
unless a Section 83(b) of the Internal Revenue Code election has been
made.  In the event of such an election, ordinary income will be
recognized as of the effective date under that election.





All of the shares of Exchange Awards granted in
the exchange through the terms of the proposed Plan Amendment are to be issued
under the Stock Option Plan.  Such shares are to be drawn from the
pool of shares authorized for issuance under the Stock Option
Plan.  Additionally, all Prior Options exchanged through the proposed
Plan Amendment will be returned to that pool of authorized shares under the
Stock Option Plan.  For example, assuming a Prior Optionee elects to
exchange 100 Prior Options (options to acquire 100 shares) for 40 Exchange
Awards, i.e., 40 shares of restricted Class A common stock, the stock available
for grant under the Stock Option Plan would increase by 60 shares (100 options
shares less 40 shares).





The exchange through the proposed Plan
Amendment will be subject to certain conditions.  These include the
following:  (1) an affirmative vote of at least a majority of the
votes cast by our shareholders


eligible to vote at
our Annual Meeting approving the Plan Amendment; and (2) compliance with the
tender offer rules of the SEC.  While the terms of the option exchange
are expected to be materially similar to the terms described in this proposal,
each of our board and Compensation Committee will have the discretion to change
the terms of the option exchange to take into account a change in circumstances
or local regulations and to determine not to implement the option exchange even
if shareholder approval of the proposed Plan Amendment is obtained.





–Analysis.  Our analysis of
the fair value of the Prior Options shows that most of the conversion ratios
fall very near to 40%, i.e., four Exchange Award shares for each block of ten
Prior Options held.  Relative weighting assigned by the Black-Scholes
Model to a remaining Prior Option term and resulting volatility create option
values that depend much more upon the remaining term than on the relationship




21


between current
market price and the Prior Option exercise price.  Given that most of
the lower exercise price Prior Options are older (have less time left to run),
their relative value at any current stock price does not deviate all that much
from the value of higher exercise price Prior Options with longer remaining
terms.





We have analyzed the Prior Options from the
standpoint of remaining average term, total Black-Scholes Model value, actual
exchange rate and the break even exchange price.  The break even
exchange price is the price which the stock would have to exceed prior to the
expiration of the current term of a Prior Option before the option would have
more value than the grant stock offered as the Exchange Award.





Of the 6.8 million shares of our Class A common
stock subject to Prior Options, 6.1 million shares would be eligible for
exchange through the proposed Plan Amendment.  Therefore, as many as
2.4 million shares of Exchange Awards in the form of restricted stock could be
issued as a part of the implementation of the exchange.





Specifically, a brief description of the
application of the terms of the exchange through the proposed Plan Amendment to
each of the eligible Named Executive Officers, should it have occurred on the
Record Date, is as follows.





The number of Prior Options held as of the end
of last year (both exercisable and unexercisable) and basic terms of exercise of
them for each of the Named Executive Officers is set forth in a table elsewhere
in this Proxy Statement.  See, "Executive
Compensation:  Outstanding Equity Awards at Fiscal Year-End
Table."  This data had not changed as of the commencement date of the
Option Grant Period.  Assuming each Named Executive Officer eligible
to participate in the exchange through the proposed Plan Amendment accepted (as
of the Record Date) exchange of all Prior Options held by that officer for
Exchange Awards, the amount of Exchange Awards that the officer would receive
and the exchange ratio applying to that exchange is displayed in the following
table:





Example
As of Record Date of Acceptance of


Proposed
Exchange under Plan Amendment


for
Each Named Executive Officer





Name
              Prior
      Options
                (#
      Shares)
              Exchange
      Awards
                (#
      Shares)
              Exchange
      Ratio
                (%)Ronald A.
      Duncan1
              - -
      -
              - -
      -
              - -
      -G. Wilson
      Hughes
              650,000
              230,000
              35John M.
      Lowber
              650,000
              236,000
              36William C.
      Behnke
              450,000
              172,000
              38Gregory F.
      Chapados
              480,000
              190,000
              40





22





1           Mr.
Duncan, as one of the directors on our board, is excluded from participating in
the exchange through the terms of the proposed Plan Amendment.








In the event shareholders approve the proposed
Plan Amendment and the offer of exchange of Prior Options for Exchange Awards is
made, the number of Prior Options subject to the exchange as displayed on this
table does not change.  However, the exchange ratio may be different
for a given Named Executive Officer in that it would be calculated based upon an
exchange offer date different from the Record Date as previously
described.  Therefore, the amount of Exchange Awards received by that
Named Executive Officer would be different from that shown in the
table.  See within this section, "–Plan Amendment – Principal
Terms."





–Federal Income
TaxConsequences.  The
federal income tax consequences of the exchange through the terms of the
proposed Plan Amendment to the Company and to the Prior Optionees are briefly
described as follows.





The option exchange through the terms of the
proposed Plan Amendment should be treated as a non-taxable exchange for U.S.
federal income tax purposes.  We and our participating Prior Optionees
should recognize no income for U.S. federal income tax purposes upon the
issuance of the new Exchange Awards.  Recipients of cash payments will
recognize ordinary income for U.S. federal income tax purposes on the date the
cash payments are made to them.  Those payments will be subject to
applicable tax withholdings.





In the case of an Exchange Award, the award is
taxable to its recipient when it vests.  When an Exchange Award vests
for one of our employees, we are required under the Internal Revenue Code to
withhold an appropriate amount from the employee's compensation for the income
tax consequence of the transaction.





Generally, there will be no federal income tax
consequence to us upon the grant or termination of a Prior Option or an Exchange
Award under our Stock Option Plan.  However, upon the exercise of a
Prior Option by the Prior Optionee or the vesting of the Exchange Award, we are
entitled to claim a deduction against our gross income, for federal income tax
purposes, equal to the amount of ordinary income the Prior


Optionee is
required to recognize as a result of the exercise, or vesting in the case of an
award, with two limitations.  These limitations are that the cost to
us of the options must constitute an ordinary and necessary business expense and
that we must have satisfied our withholding obligations under the Internal
Revenue Code.





Additionally, restricted stock is subject
to Internal Revenue Code Section 162 (m)
limitations.  Effectively, these limitations are that, if the total of
non-exempt cash compensation plus the value of restricted stock vesting in any
year for the top five officers of the Company exceeds $1 million each, we are
then unable to deduct amounts in excess of $1 million.  The amount
that is ultimately determined to be ineligible for a




23


tax deduction is
dependent upon future compensation, future stock prices and potential changes to
Section 162(m).





–Accounting
Impact.  There will be no
accounting impact for the currently outstanding options under the Stock Option
Plan.  All currently outstanding options will continue to be expensed
based upon the original FAS 123R value and vesting
schedule.   However, for options that are exchanged through the
terms of the proposed Plan Amendment, we must measure, on an option by option
basis, the value of the options on the day of the exchange as compared to the
value of the restricted stock on the day of the exchange.  To the
extent that the value of the restricted stock granted exceeds the value of the
options received, the expense will be amortized ratably over the term that the
restricted stock vests.  We expect this process to result in a
significant book expense as we are attributing the full remaining term of the
options to the Prior Optionees participating in the exchange, while FAS 123R
will shorten that term, potentially significantly.





As an example, if we had 5 million Prior
Options tendered for 2 million shares of Exchange Awards and the fair value of
our stock was $8 per share, we would see the value of both (on the exchange
date) as approximately $16 million (2 million shares at $8 per
share).  However, FAS 123R would shorten the life of the Prior Options
such that the value would be an estimated $5 million less.  In this
example, the $5 million additional book charge would be amortized into expense
from the exchange date through February 28, 2012. The final book charge will
depend on the total number of Prior Options exchanged, the stock price on the
date of the offer of exchange, the date of exchange and the ultimate reductions
in remaining term required to comply with FAS 123R.





–Potential
Modification To Term To Comply with Governmental Requirements.  The terms of the
exchange under the proposed Plan Amendment will be described in a tender offer
document that will be filed with the SEC.  Although we do not
anticipate that the SEC would require us to modify the terms materially, it is
possible that we will need to alter the terms of the exchange to comply with
potential SEC


comments.  In
addition, it is currently our intention to make the exchange through the terms
of the proposed Plan Amendment available to our eligible employees, including
eligible employees of our majority-owned subsidiaries.  It is possible
that we will make modifications to the terms of the exchange offered to Prior
Optionees for tax or accounting reasons.





–Benefits of the
Plan Amendment To Prior Optionees.  Because the
decision whether to participate in the exchange through the terms of the
proposed Plan Amendment is completely voluntary, we are not able to predict who
will participate, how many Prior Options any particular group of employees or
vendors will elect to exchange, or the number of new Exchange Awards that we may
grant.  However, members of




24


our board are not
eligible to participate in the proposed Plan Amendment.





–Effect of Plan
Amendment on Shareholders.  The exchange
through the terms of the proposed Plan Amendment is designed to provide renewed
incentives and motivate employees who are Prior Optionees to continue to create
shareholder value and reduce the number of shares currently subject to
outstanding options.  In this way, we avoid the dilution in ownership
that normally results from supplemental grants of new stock options or other
awards under the Stock Option Plan.  We are unable to predict the
precise impact of the exchange through the terms of the proposed Plan Amendment
on our shareholders because we cannot predict which or how many employees who
are Prior Optionees may elect to participate in the Plan
Amendment.  Also, we are unable to predict the precise impact of the
exchange through the terms of the proposed Plan Amendment on our shareholders
because we cannot predict which or how many vendors who are Prior Optionees may
elect to participate in the exchange.  Finally, we are unable to
predict which or how many Prior Options such Prior Optionees will elect to
exchange.





Stock
Option Plan Administration.The Stock Option
Plan provides for the Compensation Committee to establish the terms,
restrictions and conditions of options granted under the plan, including but not
limited to setting the exercise price for each option.  In particular,
the Stock Option Plan limits that exercise price to be determined by the
Compensation Committee to equal an amount not less than the fair market value of
the share of common stock granted on the effective date of the grant of the
option, with limited exception not relevant to the Plan Amendment.





Under the Stock Option Plan, "fair market
value" means the closing price of the stock on the principal exchange on which
the stock is traded, or if not traded then as reported by Nasdaq, or if not so
traded then as determined by the Compensation Committee in good faith by any
reasonable means.  In the case of the Prior Options, the fair market
value of the stock subject to the options was determined on the date of grant
based upon the value of the Company's Class A common stock as traded on
Nasdaq.





The Stock Option Plan provides that awards and
options may be granted only to eligible persons.  These eligible
persons are limited to our employees, consultants and directors, as well as
prospective employees, prospective consultants and prospective directors to whom
awards are granted in connection with a written offer of employment or other
service relationship with the Company.  The term "consultant" is


defined under the
Stock Option Plan as meaning a person engaged to provide consulting or advisory
services to us (other than as one of our employees or
directors).  These persons, other than our employees, are referred to
elsewhere in this Proxy Statement as our "vendors."





25


The Stock Option Plan provides not only for
granting of options but also expressly extends power to the Compensation
Committee to amend, modify, extend, cancel or renew any award (including an
option such as a Prior Option).  It further provides power in the
Compensation Committee to waive any restrictions or conditions applicable to any
such option or any shares acquired pursuant to such options or
awards.





Need for
Plan Amendment.  As of the Record
Date, the Company was contemplating a shift in compensation structure for senior
officers and managerial level employees within the Company.  This move
was as of that date being considered as a part of the Company's ongoing efforts
to maintain a compensation package to promote retention of, and recruitment of,
individuals who have the motivation and skills to contribute to the success of
the Company in an ever increasingly competitive telecommunication
marketplace.





We believe the Plan Amendment is in the best
interest of our shareholders and the Prior Optionees.  If approved by
our shareholders, we believe the Plan Amendment would enable us to do the
following:





·
            Motivate and
      encourage Prior Optionees who are our employees to continue to build
      shareholders value.





·
            Motivate and
      encourage Prior Optionees who are some of our vendors to refocus on
      providing quality goods and services to us in the
  future.





·
            Reduce the
      total number of our outstanding options under, and use of shares of our
      common stock allocated to, our Stock Option Plan since a substantially
      smaller number of Exchange Awards are to be granted for the surrendered
      Prior Options.





·
            Recapture
      retentive and incentive value from the compensation expense that we record
      in our financial statements with respect to Prior
  Options.





In designing the Plan Amendment, we have taken
into account interests of our shareholders by focusing on the following
principles:





·
            Members of
      our board are excluded from participating in the Plan
      Amendment.  All other employees holding Prior Options will
      generally be eligible to
participate.


·
            Only options
      granted through the Stock Option Plan during the Option Grant Period are
      eligible Prior Options to participate in the Plan
    Amendment.




26




·
            None of the
      Exchange Awards will be vested on the date of exchange.  The
      Exchange Awards will be scheduled to vest 50% on December 20, 2011 with
      the balance on February 28, 2012.





·
            Prior Options
      surrendered in the exchange through the proposed Plan Amendment will be
      cancelled, and shares subject to those cancelled options will be available
      for future issuance under the terms of the Stock Option
    Plan.





·
            Instead of
      granting Exchange Awards, a small cash payment will be issued in exchange
      for surrendered Prior Options to avoid issuance of fractional
      shares.





As of the Record Date, approximately one-half
of the Prior Options had exercise prices for the issuance of our Class A common
stock which were greater than the market price for that stock on
Nasdaq.  In other words, each of these Prior Options was "underwater,"
requiring the corresponding Prior Optionee to pay a premium of that amount to
exercise the option.  Of course, the Prior Optionee is not required to
exercise the Prior Option, although the Prior Optionee would lose the option if
not exercised by the termination date associated with the option.  For
the Company not to address the effect of these market changes on the Prior
Options would frustrate the intent of the Stock Option Plan as further described
below.





We operate in a challenging economic
environment with uncertain impact of our efforts to guide our business in that
environment.  We believe the underwater portion of the Prior Options
are no longer effective as incentives to motivate and retain
employees.  We believe that employees perceive that these Prior
Options have little or no value.  In addition, although these Prior
Options are not likely to be exercised as long as our stock price is lower than
the applicable exercise price, they will remain on our books with the potential
to dilute stockholders' interests for up to the full remaining term of these
options, while delivering little or no retentive or incentive value and no
opportunity to recapture value from the associated compensation expense, unless
they are surrendered or cancelled.





An objective of our equity incentive plans has
been, and continues to be, to link the personal interests of participants in
those plans to those of our shareholders.  We believe that, should our
shareholders approve the Plan Amendment, the exchange provided under it would be
an important component in our efforts to do the following:




27





·
            Motivate
      Prior Optionees who are our officers and employees to continue to build
      shareholder value and achieve future stock price growth by exchanging
      Prior Options for Exchange Awards with new extended vesting periods and
      which have a value that moves directly in line with our stock
      price.





·
            Reduce our
      total number of outstanding options under the Stock Option Plan, since a
      substantially smaller number of Exchange Awards will be granted for the
      surrendered Prior Options.





·
            Recapture
      value from the compensation expense that we record with respect to certain
      Prior Options.





Usefulness
of Prior Options.  The Prior Options
were granted pursuant to the Stock Option Plan in the context of the board's
continued belief that the plan offers a proven usefulness as a vehicle through
which special incentives may be provided to participants in the
plan.  Under normal circumstances, a participant in the Stock Option
Plan is given the opportunity to secure a right to acquire Company Class A
common stock at an exercise price determined at the time of grant of the
option.  The optionee may hold the option for a time during which the
value of the stock can increase in part through the efforts of the
optionee.  The optionee can then subsequently exercise the option at
the original exercise price and take advantage of the increase in value of the
stock during that time period by holding the shares in the optionee's investment
portfolio, or sell those shares and pocket that increase in
value.  This incentive purpose of the Stock Option Plan is frustrated
when the value of the stock decreases during that time period.





In the context of Prior Options granted to our
officers and employees, the grants were made as a part of our Compensation
Program to provide incentive to those individuals to work diligently and
successfully in the best interests of the Company.  While these
officers and employees have in good faith pursued their respective tasks, market
conditions beyond their control and not related to the Company's operations have
greatly reduced the value of the Prior Options.  The incentive which
the Company hoped to place before those officers and employees in the form of
the Prior Options has become far less attractive to the Prior
Optionees.  In fact, the Prior Options have become a disincentive for
them to acquire greater equity interest in the Company through exercise of the
Prior Options.  While market values may eventually rise to levels


existing at the
time of grant of the Prior Options on which the exercise prices for the Prior
Options were based, the Prior Optionees have no incentive to exercise the
corresponding options for the foreseeable future.  The proposed Plan
Amendment is an attempt by the Company to replace the Prior Options with
compensation in the form of the Exchange Awards to make them what they were
intended to be at the time of the Prior Option grant – incentive, in lieu of
other compensation, to work diligently and successfully in the best interests of
the Company.





In the context of Prior Options granted to
persons other than our officers and employees, the grants were made in
accordance with the terms of the Stock Option Plan to certain of our vendors, in
lieu of cash payment for goods or services rendered.  This means of
payment allowed us to avoid draws on our cash reserves and allowed us to use
those critical reserves for other corporate purposes, e.g., improving our




28


competitiveness by
expanding our services in the telecommunications marketplace.  At the
same time, this means of payment allowed the vendors to acquire modest equity
interests in us.





Recommendation
of Board.  Our board has
passed a resolution expressly approving the Plan Amendment.  As a
further step in the approval process, the following resolution will be offered
at our Annual Meeting for consideration by our shareholders:





RESOLVED, that the shareholders of
General Communication, Inc. ("Company") hereby approve an amendment to the
Company's Amended and Restated 1986 Stock Option Plan specifically permitting a
one-time offer of exchange of certain options, granted to certain of its
officers and employees and other persons, for grants of certain stock awards
under the plan, all of which prior options, such terms of that amendment and
those optionees are as described in management's proxy materials for that
shareholder meeting.





Other Business





Other matters, beyond the election of directors
and approval of the Plan Amendment which may be addressed at our Annual Meeting
consist of approval (but not the ratification) of the minutes of our past annual
shareholder meeting held on June 23, 2008, matters incident to the conduct of
our Annual Meeting, and other business as may properly come before our
shareholders at our Annual Meeting.  A vote for the adoption of those
minutes will be an affirmation that the minutes, as written, properly reflect
the proceedings of that meeting and the action taken at that
meeting.  However, such a vote will not be an action constituting
approval or disapproval of the matters referred to in those
minutes.





While we were, as of the Record Date, unaware
of other matters of business to come before the Annual Meeting, they could
include election of a person to our board for which a bona fide nominee is named
in this Proxy Statement and where that nominee is unable to serve or for good
cause refuses to serve, and matters proposed by our shareholders for which we
have not received timely notice.  Our board intends to




29


use discretionary
voting authority given it under the Bylaws and in compliance with Rule 14a-4(c)
adopted under the Securities Exchange Act of 1934 ("Exchange Act") should any of
these matters come before our Annual Meeting.





Other than these matters, our board does not
intend to bring business before our Annual Meeting and does not know of any
other matter which anyone else proposes to present for action at our Annual
Meeting.  However, in the event any other matters shall properly come
before our Annual Meeting, the persons named in the accompanying Proxy Card or
their duly constituted substitutes acting at the meeting will be deemed
authorized to vote or otherwise act upon those matters in accordance with their
judgment.





GOVERNANCEOF COMPANY





Directors and Executive Officers





As of the Record Date, our board consisted of
eight director positions, divided into three classes of directors serving
staggered three-year terms.





A director on our board is elected at an annual
meeting of shareholders and serves until the earlier of his or her resignation
or removal, or his or her successor is elected and qualified.  Our
executive officers generally are appointed at our board's first meeting after
each annual meeting of shareholders and serve at the discretion of the
board.





The following table sets forth certain
information about our directors and executive officers as of the Record
Date.





Name
              Age
              PositionStephen M.
      Brett1
              68
              Chairman,
      DirectorRonald A.
      Duncan1
              56
              President,
      Chief Executive Officer and DirectorJohn M.
      Lowber
              59
              Senior Vice
      President, Chief Financial Officer, Secretary, and
    TreasurerG. Wilson
      Hughes
              63
              Executive
      Vice President and General ManagerWilliam C.
      Behnke
              51
              Senior Vice
      President – Strategic InitiativesNatalie W.
      Blaylock
              45
              Vice
      President – General Manager, Network Access ServicesGina R.
      Borland
              46
              Vice
      President, Product Management – Voice and MessagingMartin E.
      Cary
              44
              Vice
      President – General Manager, Managed Broadband ServicesGregory F.
      Chapados
              51
              Senior Vice
      President – Federal Affairs and Business DevelopmentRichard P.
      Dowling
              65
              Senior Vice
      President – Corporate DevelopmentPaul E.
      Landes
              51
              Vice
      President and General Manager, Consumer
Services
   30
   Terry J.
      Nidiffer
              58
              Vice
      President, Product Management – Data and EntertainmentGregory W.
      Pearce
              46
              Vice
      President and General Manager, Commercial ServicesDana L.
      Tindall
              47
              Senior Vice
      President – Legal, Regulatory and Governmental AffairsRichard D.
      Westlund
              65
              Senior Vice
      President, Network Access ServicesJerry A.
      Edgerton1
              67
              DirectorScott M.
      Fisher1
              43
              DirectorWilliam P.
      Glasgow1
              50
              DirectorMark W.
      Kroloff1
              52
              DirectorStephen R.
      Mooney1
              49
              DirectorJames M.
      Schneider1
              56
              Director











1
            The present
      classification of our board is as follows: (1) Class I – Mr. Edgerton,
      whose present term expires at the time of our 2011 annual meeting, and Mr.
      Kroloff, who was appointed to the board on February 9, 2009 and who stands
      for election at the Annual Meeting to complete the present term ending at
      the time of our 2011 annual meeting; (2) Class II – Messrs. Brett, Duncan
      and Mooney whose present terms expire at the time of our present Annual
      Meeting; and (3) Class III – Messrs. Fisher, Glasgow, and Schneider, whose
      present terms expire at the time of our 2010 annual
    meeting.








Stephen M.
Brett.  Nominee.  Mr.
Brett has served as Chairman of our board since June 2005 and as a director on
our board since January 2001.  He has been of counsel to Sherman and
Howard, a law firm, since January 2001.  He served as Senior Executive
Vice President for AT&T Broadband from March 1999 to April
2000.  His present term as a director on our board expires at the time
of our present Annual Meeting.





Ronald A.
Duncan.  Nominee.  Mr.
Duncan is a co-founder of the Company and has served as a director on our board
since 1979.  Mr. Duncan has served as our President and Chief
Executive Officer since January 1989.  His present term as director on
the board expires at the time of our present Annual Meeting.





John M.
Lowber.  Mr. Lowber has
served as our Chief Financial Officer since January 1987, as our Secretary and
Treasurer since July 1988 and as our Senior Vice President since December
1989.





G. Wilson
Hughes.  Mr. Hughes has
served as our Executive Vice President and General Manager since June
1991.





31


William C.
Behnke.  Mr. Behnke has
served as our Senior Vice President – Strategic Initiatives since January
2001.  Prior to that, he had served as our Senior Vice President –
Marketing and Sales from January 1994.





Natalie W.
Blaylock.  Ms. Blaylock has served as our Vice President –
General Manager, Network Access Systems since April 2009.  Prior to
that, she had served as our Vice President, Roaming Services from July 2008 and
was a consultant in a comparable role through Strong-Bridge Consultants from
April 2008 through June 2008.  Prior to joining us, Mr. Blaylock
served as Vice President, Revenue for Sea Mobile (a Seattle, Washington
business) from February 2006 to April 2008.  The bulk of her
telecommunications career took place with T-Mobile and its predecessors (Voice
Stream, Western Wireless and Pacific Northwest Cellular).  She has
served in various information technology, revenue assurance and product
development roles from August 1992 through December 2005.





Gina R.
Borland.  Ms. Borland has
served as our Vice President, Product Management – Voice and Messaging since
September 2005.  Prior to that, she had served as our Vice
President-General Manager, Local Services beginning in January
2001.  Prior to that, she was a member of our Corporate Development
Department serving in various capacities generally involving business
development from September 1996 through December 2000.





Martin E.
Cary.  Mr. Cary has
served as our Vice President – General Manager, Managed Broadband Services since
September 2004.  Prior to that Mr. Cary was our Vice President –
Broadband Services from June 1999 to September 2004.





Gregory F.
Chapados.  Mr. Chapados has served as our Senior Vice President
– Federal Affairs & Business Development since June 2006.  Prior
to that Mr. Chapados was the Managing Director of Integrated Strategies
Initiatives LLC from August 2004 to May 2006.  Integrated Strategies
was at the time a boutique investment bank servingmiddle-market companies
in defense and other areas of federal contracting.  Prior to that Mr.
Chapados was the Managing Director of the investment bank, Hoak Breedlove
Wesneski & Co. from February 1995 to July 2004.





Richard P.
Dowling.  Mr. Dowling has
served as our Senior Vice President – Corporate Development since December
1990.





Paul E.
Landes.  Mr. Landes has
served as our Vice President and General Manager, Consumer Services since
September 2005.  Prior to that, he was our Vice President – Marketing
and Sales, Chief Marketing Officer beginning in 2002.  Prior to that,
he was our Vice President – Marketing from 1999 to 2002.





32


Terry J.
Nidiffer.  Mr. Nidiffer has served as our Vice President,
Product


Management – Data
and Entertainment since September 2005.  Prior to that, he served as
our Vice President – General Manager, Internet Services beginning in February
2000.





Gregory W.
Pearce.  Mr. Pearce has served as our Vice President and
General Manager, Commercial Services since September 2005.  Prior to
that, he was our Vice President /Director of Long Distance




Products beginning
in January 1998.  Prior to that, Mr. Pearce served us in various
engineering management functions beginning with his joining us in November
1990.





Dana L.
Tindall.  Ms. Tindall has
served as our Senior Vice President – Legal, Regulatory, and Governmental
Affairs since January 1994.





Richard D.
Westlund.  Mr. Westlund has
served as our Senior Vice President, Network Access Services since April
2009.  Prior to that, he was our Senior Vice President and General
Manager, Network Access Services beginning in September 2005.  Prior
to that, he was our Vice President-General Manager, Long Distance and Wholesale
Services beginning in January 2001.  He was our Vice President –
General Manager, Wholesale and Carrier Services from January 1999 through
December 2000.





Jerry A.
Edgerton.  Mr. Edgerton has
served as a director on our board since June 2004.  Since November
2007, he has served as Chief Executive Officer for Command Information, Inc., a
Next Generation Internet Service Company.  From April 2007 to October
2007, Mr. Edgerton served as an advisor on matters affecting the
telecommunications industry as well as the U.S. government.  Prior to
that from January 2006 to April 2007, he served as Group President of Verizon
Federal.  Prior to that, he had since November 1996 served as Senior
Vice President – Government Markets for MCI Communications Corporation, an
affiliate of MCI, which was later acquired by Verizon Communications, Inc.
(collectively with its subsidiaries, "Verizon").  His present term as
a director on our board expires at the time of our 2011 annual
meeting.





Scott M.
Fisher.  Mr. Fisher was
appointed to our board in December 2005.  He has since 1998 been a
partner of Fisher Capital Partners, Ltd., a private equity and real estate
investment company located in Denver, Colorado.  Prior to that from
June 1990 to April 1998, he was Vice President at The Bank of New York and BNY
Capital Resources Corporation, an affiliate of The Bank of New York, where he
worked in the corporate lending and commercial leasing
departments.  His present term as director on our board expires at the
time of our 2010 annual meeting.





William P.
Glasgow.  Mr. Glasgow has
served as a director on our board since 1996.  From 2005 to the
present, Mr. Glasgow has been Chief Executive Officer of AmericanWay
Education.  From 1999 to December 2004, he was President/CEO of
Security Broadband Corp.  From 2000 to the present Mr. Glasgow has
been President of Diamond Ventures, L.L.C., a Texas limited liability company
and sole general




33


partner of Prime II
Management, L.P., and Prime II Investments, L.P., both of which are Delaware
limited partnerships.  Since 1996, he has been President of Prime II
Management, Inc., a Delaware corporation, which was formerly the sole general
partner of Prime II Management, L.P.  His present term as a director
on our board expires at the time of our 2010 annual meeting.





Mark W.
Kroloff.Nominee.  Mr. Kroloff has served as a
director on our board since his appointment to the expanded eight-member board
in February 2009.  Since May 2005, he has served as Senior Executive
Vice President and Chief Operating Officer of ASRC, one of several corporations
formed under Alaska corporate law and pursuant to the federal Alaska Native
Claims Settlement Act of 1971, as amended.  From 2001 to April 2005,
Mr. Kroloff served as Chief Operating Officer of Cook Inlet Region, Inc., also
one of those corporations formed pursuant to that federal act.  Prior
to that, from 1989 to 2001 he served as Vice President and General Counsel of
Cook Inlet Region, Inc.  Mr. Kroloff stands for election at the Annual
Meeting to complete a present term as director on our board which expires at the
time of our 2011 annual meeting.





Stephen R.
Mooney.  Nominee.  Mr.
Mooney has served as a director on our board since January
1999.  Since February 2008, Mr. Mooney has served as Vice President,
Business Development for Affiliated Computer Services, Inc., a global
information technology and business process outsourcing company.  From
October 2007 to January 2008, he served as a consultant with Allied Capital
Corp., a business development company specializing in private finance and
development.  From January 2006 to September 2007, he served as
Executive Director, Business Development of VerizonBusiness, a unit of
Verizon.  Prior to that, he had served as Vice President, Corporate
Development and Treasury Services at MCI beginning in 2002.  From 1999
to 2002, he was Vice President of WorldCom Ventures Fund, Inc.  His
present term as a director on our board expires at the time of our present
Annual Meeting.





James M.
Schneider.  Mr. Schneider has
served as a director on our board since July 1994.  He has been
Chairman of Frontier Bancshares, Inc. since February 2007.  Prior to
that, Mr. Schneider had been Senior Vice President and Chief Financial Officer
for Dell, Inc. from March 2000 to February 2007.  Prior to that, he
was Senior Vice President – Finance for Dell Computer Corporation from September
1998 to March 2000.  He presently serves on the board of directors of,
and is a member of the audit committee of, GAP, Inc.  He also serves
on the board of, and is a member of, the audit and management development and
compensation committees of, Lockheed Martin Corporation.   His
present term as a director on our board expires at the time of our 2010 annual
meeting.





34


Board and Committee Meetings





The standing committees of our board are as
follows:





·
            Audit
      Committee.





·
            Compensation
      Committee.





·
            Executive
      Committee.




·
            Finance
      Committee.





·
            Nominating
      and Corporate Governance Committee.





The membership and
chairs of these committees are as follows:





Board
Committee Members





Name
              Audit
              Compensation
              Executive
              Finance1
              Nominating
      &  Corporate GovernanceStephen M.
      Brett
              
              Chair
              Chair
              
              ChairRonald A.
      Duncan
              
              
              XJerry A.
      Edgerton
              
              X
              
              
              XScott M.
      Fisher
              
              X
              
              X
              XWilliam P.
      Glasgow
              X
              X
              X
              X
              XMark W.
      Kroloff
              
              X
              
              
              XStephen R.
      Mooney
              X
              X
              X
              
              XJames M.
      Schneider
              Chair
              ­­
      X
              
              
              X








1           Mr.
Lowber is also a member of this committee.








Audit
Committee.  Our Audit
Committee is governed by, and carries out its responsibilities under, the Audit
Committee Charter, as adopted and amended from time to time by our
board.  The charter sets forth the purpose of the Audit Committee and
its membership prerequisites, operating principles, relationship with our
External Accountant and primary responsibilities.  A copy of our Audit
Committee Charter is available to our shareholders on our internet website:
www.gci.com
(click on "About GCI," then click on "Corporate Governance," and then click on
"Audit Committee Charter").





35


The Nasdaq corporate governance listing
standards require that at least one member of our Audit Committee must have past
employment experience in finance or accounting, requisite professional
certification in accounting, or comparable experience or background which
results in the individual's "financial sophistication."  This
financial sophistication may derive from the person being or having been a chief
executive officer, chief financial officer or other senior officer with
financial oversight responsibilities.  Our board believes that Messrs.
Glasgow, Mooney and Schneider, are audit committee financial experts ("Audit
Committee Financial Experts") and also meet the Nasdaq requirements for
financial sophistication.  Our board further believes these
individuals are Independent Directors.





Under the SEC's rules, an Audit Committee
Financial Expert is defined as a person who has all of the following
attributes:





·
            Understanding
      of U.S. generally accepted accounting principles and financial
      statements.





·
            Ability to
      assess the general application of such principles in connection with
      accounting for estimates, accruals and
reserves.





·
            Experience in
      preparing, auditing, analyzing or evaluating financial statements that
      present a breadth and level of complexity of accounting issues that are
      generally comparable to the breadth and complexity of issues that can
      reasonably be expected to be raised by our financial statements, or
      experience actively supervising one or more persons engaged in such
      activities.




·
            Understanding
      of internal control over financial
reporting.





·
            Understanding
      of audit committee functions.





The Audit Committee Charter specifies how one
may determine whether a person has acquired the attributes of an Audit Committee
Financial Expert.  They are one or more of the following:





·
            Education and
      experience as a principal financial officer, principal accounting officer,
      controller, public accountant or auditor or experience in one or more
      positions that involved the performance of similar
    functions.





·
            Experience
      actively supervising a principal financial officer, principal accounting
      officer, controller, public accountant, auditor or person performing
      similar functions.




36




·
            Experience
      overseeing or assessing the performance of companies or public accountants
      with respect to the preparation, auditing or evaluation of financial
      statements.





·
            Other
      relevant experience.





Our Audit Committee acts on behalf of our board
and generally carries out specific duties including the following, all of which
are described in detail in our Audit Committee Charter:




·
            Principal
      Accountant Selection, Qualification–
      Is directly responsible for appointment, compensation, retention,
      oversight, qualifications and independence of our External
      Accountant.





·
            Financial
      Statements–Assists in our board's oversight of integrity of the Company
      financial statements.





·
            Financial
      Reports, Internal Control–
      Is directly responsible for oversight of the audit by our External
      Accountant of our financial reports and reports on internal
      control.





·
            Annual
      Reports–
      Prepares reports required to be included in our annual proxy
      statement.  See, "Audit Committee
  Report."





·
            Complaints–
      Receives and responds to certain complaints relating to internal
      accounting controls, and auditing matters, confidential, anonymous
      submissions by our employees regarding questionable accounting or auditing
      matters, and certain alleged illegal acts or behavior-related conduct in
      violation of our Ethics Code.  See, "Code of Business Conduct
      and Ethics."





·
            Principal
      Accountant Disagreements–
      Resolves disagreements, if any, between our External Accountant and us
      regarding financial reporting.





·
            Non-Audit
      Services–
      Reviews and pre-approves any non-audit services offered to us by our
      External Accountant ("Non-Audit
Services").





·
            Attorney
      Reports–Addresses certain attorney reports, if any, relating to violation
      of securities law or fiduciary duty by one of our officers, directors,
      employees or agents.




37




·
            Related
      Party Transactions–
      Reviews certain related party transactions as described elsewhere in this
      Proxy Statement.  See, "Certain
  Transactions."





·
            Other–
      Carries out other assignments as designated by our
  board.





Our Audit Committee met five times during
2008.  See, "Audit Committee Report."





Compensation
Committee.  Our board had not
as of the Record Date adopted a charter for the Compensation
Committee.  However, consideration and determination of compensation
of our executive


officers and
directors during 2008 was subject to processes and procedures carried out
through our Compensation Committee ("Compensation Program"), the aspects of
which are described elsewhere in this Proxy Statement.  See,
"Compensation Discussion and Analysis."  All members of the committee
are considered by our board to be Independent Directors.





Our Compensation Program sets forth the scope
of authority of our Compensation Committee and requires the committee to
carryout the following:





·
            Review, on an
      annual basis, plans and targets for executive officer and board member
      compensation, if any –





o
            Review is
      specifically to address expected performance and compensation of, and the
      criteria on which compensation is based for, the chief executive officer
      and such other of our executive officers as our board may designate for
      this purpose.





·
            Monitor the
      effect of ongoing events on and the effectiveness of existing compensation
      policies, goals, and plans –





o
            Events
      specifically include but are not limited to the status of the premise that
      all pay systems correlate with our compensation goals and
      policies.





o
            Report from
      time to time, its findings to our
board.





·
            Administer
      our Stock Option Plan and approve grants of options and awards pursuant to
      the plan.





·
            Monitor
      compensation-related publicity and public and private sector developments
      on executive compensation.




38




·
            Familiarize
      itself with, and monitor the tax, accounting, corporate, and securities
      law ramifications of, our compensation policies, including but not limited
      to –




o
            Comprehending
      a senior executive officer's total compensation
  package.





o
            Comprehending
      the package's total cost to us and its total value to the
      recipient.





o
            Paying close
      attention to salary, bonuses, individual insurance and health benefits,
      perquisites, historical loans made by us, special benefits to specific
      executive officers, individual pensions, and other retirement
      benefits.




·
            Establish the
      overall cap on executive compensation and the measure of performance for
      executive officers, either by predetermined measurement or by a subjective
      evaluation.





·
            Strive to
      make our compensation plans simple, fair, and structured so as to maximize
      shareholder value.





In carrying out its duties, our Compensation
Committee may accept for review and inclusion in its annual review with our
board, recommendations from our chief executive officer as to expected
performance and compensation of, and the criteria on which compensation is based
for, executive officers other than the chief executive
officer.  However, our Compensation Committee, in being established as
a committee of the board under our Bylaws, was not specifically authorized to
delegate any of its duties to another person.  Our Compensation
Committee has in the past retained and made use of compensation consultants in
determining or recommending the amount or form of executive compensation as
further discussed elsewhere in this proxy statement.  See
"Compensation Discussion and Analysis:  Process."





Our Compensation Committee met four times
during 2008.  See, "Governance of Company:  Compensation
Committee Interlocks and Insider Participation" and


"–Compensation
Committee Report."





Executive
Committee.  Our Executive
Committee was established by our board to manage and operate the affairs of the
Company between our board meetings, except to the extent shareholder
authorization is required by law, our Articles or our Bylaws.  The
Executive Committee has the power to perform or authorize any act that could be
done or accomplished by majority action of all the directors of our




39


board, except as
set forth in our Bylaws.  Those exceptions are responsibilities
expressly reserved to our board by state law.  Our Executive Committee
did not meet during 2008.





Finance
Committee.  Our Finance
Committee is responsible for reviewing our finance matters from time to time and
providing guidance to our chief financial officer regarding these
matters.  The Finance Committee did not meet
during 2008.





Nominating
and Corporate Governance Committee.  Our Nominating
and Corporate Governance Committee is governed by, and carries out its
responsibilities under, the Nominating and Corporate Governance Committee
Charter.  The charter sets forth the purpose of the Nominating and
Corporate Governance Committee and its membership prerequisites, operating
principles and primary responsibilities.  A copy of the Nominating and
Corporate Governance Committee Charter is available to our shareholders on our
internet website: www.gci.com (click on
"About GCI," then click on "Corporate Governance," and then click on "Nominating
and Corporate Governance Committee Charter").  All members of the
committee are considered by our board to be Independent Directors.





The Nominating and Corporate Governance
Committee is principally responsible for carrying out the following, all of
which are described in detail in the Nominating and Corporate Governance
Committee Charter:





·
            Nominations–
      Identifies and recommends nominees for our board and its
      committees.





·
            Corporate
      Governance– Reviews and recommends
      to our board, or independently takes, action on various corporate
      governance issues.





·
            Complaints–
      Receives and responds to certain complaints raised by our employees, and
      not otherwise addressed by our Audit Committee, regarding alleged illegal
      acts or behavior-related conduct by our board members in violation of our
      Ethics Code.





·
            Supervision–
      Supervises our chief financial officer in the context of our Ethics
      Code.





·
            Other–
      Carries out other assignments as designated by our
  board.





In addition to setting forth the purpose of the
committee, as previously outlined, the Nominating and Corporate Governance
Committee Charter establishes committee membership qualifications, terms,
definition of Independent Director (same as that described in the previous
discussion of our Audit Committee), and operating principles. In the context of
its corporate governance responsibilities, our committee is to




40


develop and
recommend to our board, from time to time, a set of corporate governance
principles applicable to us, and to review and recommend changes, if any, to our
Ethics Code.





Under its charter, the Nominating and Corporate
Governance Committee is to review on an annual basis our board's committee
structure and recommend changes, if any, to it, establish criteria and processes
for, and lead our board and each of its committees in, its annual performance
self-evaluation.  The committee is also to work with the chair of our
Compensation Committee on issues of management objectives, evaluation of our
chief executive officer, and management development and succession.





Our Nominating and Corporate Governance
Committee met two times during 2008.





Board,
Committee Attendance.  Our board held
eight meetings during 2008.  All incumbent directors, as disclosed in
this Proxy Statement, attended 75% or more of the meetings of our board and of


committees of the
board for which they individually were seated as directors.





Meetings
of Independent Directors.  The Independent
Directors seek to meet at least two times per year.  The Independent
Director meetings are held without any of our management directors or employees
present.  The presiding director at this meeting is the Chairman of
the Board.  During 2008, the Independent Directors met three
times.





Director Independence





Mr. Brett, our Chairman of the Board, while in
that capacity an officer under our Bylaws and responsible for the conduct of our
board meetings and shareholder meetings when present, is considered by our board
to have no greater influence on our affairs or authority to act on behalf of us
than any of the non-executive directors on our board.





Our board believes each of its members
satisfies the definition of an Independent Director, with the exception of Mr.
Duncan who is an officer and employee of the Company.  That is, in the
case of all other board members, our board believes each of them is an
individual having a relationship which does not interfere with the exercise of
independent judgment in carrying out the member's director responsibilities to
us.





41


Compensation Committee Interlocks and Insider
Participation





Our Compensation Committee is composed of seven
members of our board as identified elsewhere in this Proxy
Statement.  With the exception of Mr. Kroloff who was appointed to the
board and to our Compensation Committee in February 2009, all of these members
served on the committee for all of 2008.  See, "Governance of
Company:  Board and Committee Meetings – Compensation
Committee."  The relationships of them to us are described elsewhere
in this Proxy Statement.  See, "Governance of
Company:  Directors and Executive Officers"; "Ownership of Company";
and "Certain Transactions."





Compensation Committee Report





The Compensation Committee has reviewed and
discussed with management the Compensation Discussion and
Analysis.  Based upon that review and discussion, the Compensation
Committee recommended to our board that the Compensation Discussion and Analysis
be included in our Annual Report and in this Proxy Statement.





Compensation Committee


Stephen M. Brett, Chair


Jerry A. Edgerton


Scott M. Fisher


William P. Glasgow


Mark W. Kroloff


Stephen R. Mooney


James M. Schneider





DirectorCompensation





The following table sets forth certain
information concerning the cash and non-cash compensation earned by our
directors ("Director Compensation Plan"), each for services as a director
during the year ended December 31, 2008:


42





2008
Director Compensation1





Name
              Fees
                Earned
                or
                Paid
      in
                Cash
                ($)
              Stock
                Awards2
                ($)
              Option
                Awards
                ($)
              Non-Equity
                Incentive
      Plan
                Compensation
                ($)
              Change
      in
                Pension
                Value
      and
                Nonqualified
                Deferred
                Compensation
                Earnings
                ($)
              All
      Other
                Compensation
                ($)
              Total
                ($)Stephen M.
      Brett
              40,000
              24,509
              - -
      -
              - -
      -
              - -
      -
              - -
      -
              64,509Jerry A.
      Edgerton3
              130,623
              88,844
              - -
      -
              - -
      -
              - -
      -
              25,734
              245,201Scott M.
      Fisher
              40,000
              24,509
              - -
      -
              - -
      -
              - -
      -
              507
              65,016William P.
      Glasgow
              50,000
              24,509
              - -
      -
              - -
      -
              - -
      -
              1,523
              76,032Mark W.
      Kroloff4
              - -
      -
              - -
      -
              - -
      -
              - -
      -
              - -
      -
              - -
      -
              - -
      -Stephen R.
      Mooney5
              189,623
              88,844
              - -
      -
              - -
      -
              - -
      -
              25,734
              304,201James M.
      Schneider
              50,000
              24,509
              - -
      -
              - -
      -
              - -
      -
              - -
      -
              74,509








1
            Compensation
      to Mr. Duncan as a director is described elsewhere in this
      report.  See, "Executive Compensation" and "Compensation
      Discussion and Analysis."





2
            Except as
      noted in the table and as further described below, each director received
      a grant of awards of 3,330 shares of Company Class A common stock on June
      1, 2008.  The value of the shares on the date of grant was $7.36
      per share, i.e., the closing price of the stock on Nasdaq on that date and
      as required in accordance with FAS
123R.





3
            Includes
      $90,623 in board fees, $64,335 in Class A common stock and $25,734 in tax
      reimbursement for prior years' service on our board during which Mr.
      Edgerton's previous employer did not allow board compensation to accrue to
      the benefit of an individual serving on the
  board.





4
            Mr. Kroloff
      was appointed to the board in February 2009 and did not receive director
      compensation for 2008.





5
            Includes
      $139,623 in board fees, $64,335 in Class A common stock and $25,734 in tax
      reimbursement for prior years' service on our board during which Mr.
      Mooney's previous employer did not allow board compensation to accrue to
      the benefit of the individual serving on the
  board.








Our initial Director Compensation Plan was
adopted in 2004 by our board to acknowledge and compensate, from time to time,
directors on the board for ongoing dedicated service.  During 2008 and
up through the Record Date, the plan provided for $40,000 per year (prorated for
days served and paid quarterly) plus $10,000 per year for each director serving
on our Audit Committee.





During 2008 and up through the Record Date, the
stock compensation portion of our Director Compensation Plan consisted of a
grant of 3,330 shares to a director for a year of service, or a portion of a
year of service.  Grants are made and vest annually under the plan on
June 1 of each year.  For 2008, grants of awards were made under our
Director Compensation Plan as of June 1, 2008.  As of the Record Date,
our




43


board anticipated
that grants of awards of 5,000 shares of Class A common stock to each director
would be made under the plan as of June 1, 2009.  Because the shares
vest upon award, they are subject to taxation based upon the then fair market
value of the vested shares.





Under our Director Compensation Plan,
compensation is to be paid only to those directors who are to receive the
benefit individually, whether or not they are our employees.





Except for our Director Compensation Plan,
during 2008 the directors on our board received no other direct compensation for
serving on the board and its committees.  However, they were
reimbursed for travel and out-of-pocket expenses incurred in connection with
attendance at meetings of our board and its committees.  The director
fee structure as described in this section continued otherwise unchanged through
the Record Date.





Litigation and Regulatory Matters





We were, as of the Record Date, involved in
several administrative and civil action matters primarily related to our
telecommunications markets in Alaska and the remaining 49 states and other
regulatory matters.  These actions are discussed in our Annual
Report.  See, "Annual Report."  However, as of that date,
our board was unaware of any legal proceedings in which one or more of our
directors, officers, affiliates or owners of record or beneficially of more than
5% of any class of our voting securities, or any associates of the previously
listed persons were parties adverse to us or any of our
subsidiaries.  Furthermore, as of that date, our board was unaware of
any events occurring during the past five years materially adverse to an
evaluation of the ability or integrity of any director, person nominated to
become a director or executive officer of the Company.





COMPENSATIONDISCUSSION AND
ANALYSIS





Overview





This compensation discussion and analysis
("Compensation Discussion and Analysis") addresses the material elements of our
Compensation Program as applied to our chief executive officer, our chief
financial officer, and to each of our three other most highly compensated
executive officers other than the chief executive officer and chief financial
officer who were serving as executive officers as of December 31,
2008.  All five of these officers are identified in the Summary
Compensation Table ("Named Executive Officers").  See, "Executive
Compensation:  Summary Compensation Table."





44


Both the Compensation Committee and the Company
believe that the compensation paid to the Named Executive Officers under our
Compensation Program is fair, reasonable, competitive and consistent with our
Compensation Principles.





Principles of the Compensation Program





Our Compensation Program is based upon the
following principles ("Compensation Principles"):





·
            Compensation
      is related to performance and must cause alignment of interests of
      executive officers with the long term interests of our
      shareholders.





·
            Compensation
      targets must take into consideration competitive market conditions and
      provide incentives for superior performance by the
  Company.





·
            Actual
      compensation must take into consideration the Company's and the executive
      officer's performance over the prior year and the long term, and the
      Company's resources.





·
            Compensation
      is based upon both qualitative and quantitative
  factors.





·
            Compensation
      must enable the Company to attract and retain management necessary to
      cause the Company to succeed.





Process





Compensation
Committee and Compensation Consultant Interaction.  Our Compensation
Committee reviews annually and recommends to our board for approval the base
salary, incentive and other compensation of the chief executive
officer.  These reviews are performed and recommendations are made in
executive session that excludes all members of management.  Board
action on the recommendations is done by vote of our Independent
Directors.





Our Compensation Committee further reviews
annually and recommends to our board for approval the base salary, incentive and
other compensation of our senior executive officers, including the Named
Executive Officers.  These reviews are performed and recommendations
are made in executive session that excludes all members of
management.  The analyses and recommendations of the chief executive
officer




45


on
these matters as relating to senior executive officers other than the chief
executive officer may be considered by our Compensation Committee in its
deliberations and recommendations to our board.  Board action on the
recommendations is done by vote of our Independent Directors.





Other elements of executive compensation and
benefits as described in this section are also reviewed by our Compensation
Committee on a regular basis.





In October 2005, our Compensation Committee
selected, retained and commenced a process of working with Towers Perrin, an
outside compensation consultant ("Compensation Consultant").  The
Compensation Consultant reported directly to our Compensation Committee and
assisted the committee in evaluating and analyzing the Compensation Program, its
principles and objectives, and in evaluating and analyzing the specific
compensation element recommendations presented by our chief executive
officer.  The Compensation Consultant has, at the request of the
Compensation Committee, subsequently reviewed and consulted with the committee
in 2007 regarding that initial evaluation in light of changing market conditions
and compensation of executive officers of businesses similar to that of the
Company.





Discussions on executive compensation and
benefits made by the Compensation Committee have been guided by our Compensation
Principles.  The elements of compensation as described later in this
section are believed by the Compensation Committee to be integral and necessary
parts of the Compensation Program.





Our Compensation Committee has concluded that
each individual segment of each element of executive compensation continues
generally to be consistent with one or more of our Compensation
Principles.  Our Compensation Committee has further concluded the
amount of compensation provided by the segment is reasonable, primarily based
upon a comparison of the compensation amounts and segments we provide when
compared to those offered by other similar companies in our industry and in our
market.





Our process for determining executive
compensation and benefits does not involve a precise and identifiable formula or
link between each element and our Compensation Principles.  However,
it takes into consideration market practice and information provided by our
Compensation Consultant and management.  It is also the result of
discussion among our Compensation Committee members and
management.  Ultimately it is based upon the judgment of our
Compensation Committee.





We chose to include as an alternative in each
agreement to allow the Company to elect to pay a portion of the compensation in
the form of non-cash items, e.g., options and awards, to limit the immediate
cash outlay and at the same time allow us to provide an incentive to the officer
to work hard toward the goal of making us successful in our
marketplace.  That is, as we prove successful in the marketplace, the




46


investing public
should see our publicly traded stock as more valuable, which in turn makes the
stock subject to the options or awards held by the officers more valuable when
the options are exercised and the stock is issued or the awards
vest.





The Compensation Committee will during 2009
perform a review of all elements of our Compensation Program.





In early 2007, base salary and incentive stock
targets were compared to amounts offered by a group of similar
companies.  The Company's relative financial performance was reviewed
in order to determine


what a reasonable
amount of compensation might be in relation to its peer group.  The
compensation peer group is principally made up of the following:





·
            Publicly held
      companies in industries similar to our
Company.





·
            Companies
      with which our Company competes for executive
  talent.





·
            Our Company's
      direct business competitors.





·
            Companies
      that compete with our Company for investment
  dollars.





The compensation peer group list used in
determining the reasonableness of our Compensation Program consisted of 19
companies as follows:





Alaska
      Communications Systems Group, Inc.
            CT
      Communications, Inc.FairPoint
      Communications, Inc.
            Equinix,
      Inc.Iowa
      Telecommunications Services, Inc.
            Golden
      Telecom, Inc.Mediacom
      Communications Corp.
            North
      Pittsburgh Systems, Inc.Northrim
      BanCorp, Inc.
            RCN
      CorpCincinnati
      Bell, Inc.
            SureWest
      CommunicationsCommonwealth
      Telephone Enterprises, Inc.
            Talk America
      Holdings, Inc.Consolidated
      Communications Holdings, Inc.
            Time Warner
      Telecom, Inc.Covad
      Communications Group
            XO Holdings,
      Inc.Crown Media
      Holdings, Inc.





The results of this benchmark analysis were
size-adjusted to take into consideration differences between the Company's
revenue size and that of the peer group companies.  Individual levels
of element compensation were generally targeted to be set within a range of
between the 50th and 75th percentile, based upon the executive's individual
performance in the prior year relative to his or her peers, the executive's




47


future potential,
and the scope of the executive's responsibilities and
experience.  Input from the individual executives in terms of their
expectation and requirements were considered as well.





We believe this method of setting compensation
enables the Company to attract and retain individuals who are necessary to lead
and manage the Company while enabling the Company to differentiate between
executives and performance levels and responsibility.  The comparison
to other companies also allowed the Compensation Committee to determine the
reasonableness of the balance between long-term incentive and annual
compensation.





Based upon the initial information received
from its Compensation Consultant, the Compensation Committee determined that, in
general, compensation levels for the Company's senior officers were reasonable
when compared to officers of companies in our peer group having comparable
financial performance.  As a result, the Compensation Committee in
early 2008 made de
minimis adjustments to the compensation of the Company's senior executive
officers, except for option grants to certain of them.





In establishing 2008 base salary and incentive
compensation targets, the Compensation Committee, although it did review the
information and, except for grants that vested over multiple years, concluded it
was not appropriate to take into account payments or compensation earned by
executive officers as a result of options or awards granted in prior
years.





Other compensation elements as discussed in
this section were periodically reviewed to ensure that they continued to remain
both competitive and reasonable based upon market survey data obtained from
various sources at the time of review.  While such data were typically
not customized to the Company, they were used by our Compensation Committee as a
guide for overall reasonableness and competitiveness of the
benefits.





Elements of Compensation





Overview.  The elements of
compensation in our Compensation Program were for 2008 and (except as noted
below) are for 2009 as follows:





·
            Base
      Salary.





·
            Incentive
      Compensation Bonus Plan ("Incentive Compensation
  Plan").





·
            Stock Option
      Plan.





·
            Perquisites.




48





·
            Retirement
      and Welfare Benefits.





There are no compensatory plans or arrangements
providing for payments to any of the Named Executive Officers in conjunction
with any termination of employment or other working relationship of such an
officer with us (including without limitation, resignation, severance,
retirement or constructive termination of employment of the
officer).  Furthermore, there are no such plans or arrangements
providing for payments to any of the Named Executive Officers in conjunction
with a change of control of us or a change in such an officer's responsibilities
to us.





Base
Salary.  Effective January
1, 2008, based upon the process previously described in this section, the base
salaries reported in the Summary Compensation Table (see, "Executive
Compensation:  Summary Compensation Table") were approved by the
Compensation Committee.





Mr. Duncan's base salary reflects cash
compensation of $600,000 per year until adjusted by the Compensation
Committee.  Mr. Duncan's duties remained unchanged during
2008.





Mr. Hughes' base salary reflects cash
compensation of $200,000 per year, $225,000 credited to his Deferred
Compensation Arrangement account with us, and amortization of the prepaid
portion of a retention agreement with him in the amount of
$37,500.  Mr. Hughes' compensation is subject to change by the
Compensation Committee, and his duties remain unchanged during
2008.





Mr. Lowber's base salary reflects cash
compensation of $260,000 and $65,000 credited to his Deferred Compensation
Arrangement account with us.  Mr. Lowber's compensation is subject to
change by the Compensation Committee, and his duties have remained unchanged
during 2008.





Mr. Behnke's base salary reflects cash
compensation of $250,000.  Mr. Behnke's compensation is subject to
change by the Compensation Committee, and his duties have remained unchanged
during 2008.





Mr. Chapados' base salary reflects cash
compensation of $240,000.  He did not participate in a Deferred
Compensation Arrangement with us in 2008.  Mr. Chapados' compensation
is subject to change by the Compensation Committee, and his duties have remained
unchanged during 2008.





Incentive
Compensation Plan.  A portion of the
Company's compensation to each Named Executive Officer relates to, and is
contingent upon, the officer's performance and our financial performance and




49


resources.  This
portion of compensation took the form of incentive bonus agreements with each of
the Named Executive Officers pursuant to our Incentive Compensation
Plan.





In early 2008, our Compensation Committee,
using as a guide the Compensation Principles, established compensation levels
for 2008 for all senior corporate officers, including the Named Executive
Officers.  The specific level for a given officer and related terms
for the program and the Incentive Compensation Plan were set forth in agreements
between the Company and each officer.  Targeted incentive compensation
amounts were established at $350,000 for Mr. Duncan and $100,000 for each of
Messrs. Behnke, Hughes and Lowber.  Mr. Chapados' incentive
compensation was in the form of a stock option


agreement with a
targeted vesting of 20,000 shares per year.  However, the Company
adjusted the amount to 40,000 shares vested for 2008.   During
June 2008, the Incentive Compensation Plan for Mr. Chapados was adjusted to
provide an additional cash target of $100,000.





The specific form and targeted amount of
incentive compensation for a Named Executive Officer once adopted by the
Compensation Committee as a part of the Compensation Program, was submitted to
the board for approval.  Thereafter, these matters were informally
reviewed with the employee by our Chief Executive Officer.





The payout opportunities for our senior
executive officers, including our Named Executive Officers, are for each officer
based upon subjective levels of achievement by the individual officer and are
heavily influenced by the financial performance of the Company against its
current year business plan.  In general, if the plan is met and the
individual performed as expected, the targeted amount of incentive compensation
would be paid.  From time to time, a special award may be made to an
individual following an effort resulting in a significant benefit to the
Company.  Should the Company’s financial performance materially exceed
its business plan, the Compensation Committee would take that into consideration
in possibly increasing the amount of the bonus awarded for that
year.  In the event an incentive goal is not met, the Compensation
Committee may decrease the corresponding bonus.





The Company has no specific policies for
allocating between long-term and currently paid out compensation.  The
Compensation Committee attempts to strike an appropriate balance between
available resources, the desires of the applicable employee, and a determination
of reasonableness based upon an awareness of the competitive
environment.  This desire for balance also extends to the allocation
between cash and non-cash compensation and among different forms of non-cash
compensation.  The Company has no specific policy in the context of
long-term compensation for the basis for allocating compensation to each
different form of award but strives to encourage management at an appropriate
cost to the Company to focus on the long-term performance of the Company in
order that management share in the Company’s success as well as participate in
any downturns.





50


Compensation levels may be adjusted by
the Compensation Committee based upon a number of factors including available
Company resources, financial performance of the Company, an evaluation of the
competitive marketplace, and the requirements of its key
employees.  Accounting and income tax treatments of compensation are
considered by the Compensation Committee with the primary focus on ascertaining
that taxable income to the recipients is deductible by the Company and the
accounting treatment is consistent with the requirements of current accounting
literature.





The Company has no requirements with respect to
security ownership by its officers or directors, and it has no policies
regarding hedging the economic risk of ownership of Company
equity.  Executive officers are invited to provide their input with
respect to their compensation to the Compensation Committee primarily through
our Chief Executive Officer.





A Named Executive Officer participating in the
Compensation Program could, under terms of the corresponding Incentive
Compensation Plan agreement with us and pursuant to our Deferred Compensation
Plan, elect to defer a significant portion of that compensation.  In
this instance, the Named Executive Officer becomes our unsecured
creditor.  See, "Nonqualified Deferred Compensation."





During 2008, all of our Named Executive
Officers participated in the Incentive Compensation Plan.  Our
Compensation Committee determined that the performance requirements of the
Incentive Compensation Plan had been exceeded during 2008 and authorized
payments pursuant to the plan and determined that, but for Mr. Chapados, they
would be made entirely in cash.  The committee authorized payments of
$750,000 to Mr. Duncan and $200,000 to each of Messrs. Behnke, Chapados, Hughes
and Lowber.  Mr. Chapados' incentive stock option agreement was vested
in the amount of 40,000 shares of our Class A common stock.





Stock
Option Plan.  Options and
awards, if granted to the Named Executive Officers, were granted pursuant to
terms of our Stock Option Plan.  In particular, the exercise price for
options in each instance was identified as an amount within the trading range
for our Class A common stock on Nasdaq on the day of the grant of the
option.  Options, if granted, were granted contemporaneously with the
approval of the Compensation Committee, typically early in the year in question
or late the previous year as described above.  See within this
section, "– Elements of Compensation – Incentive Compensation
Plan."  For further description of the Stock Option Plan, see "Matters
To Be Voted Upon:  Plan Amendments."





Perquisites.  The Company
provides certain perquisites to its Named Executive Officers.  The
Compensation Committee believes these perquisites are reasonable and appropriate
and consistent with our awareness of perquisites offered by similar publicly
traded companies.  The perquisites assist in attracting and retaining
the Named Executive Officers and, in the case of certain perquisites, promote
health, safety




51


and efficiency of
our Named Executive Officers.  These perquisites are as
follows:





·
            Use of
      Company Leased Aircraft – The Company permits employees, including
      the Named Executive Officers, to use Company aircraft for personal travel
      for themselves and their guests.  Such travel is limited to a
      space available basis on flights that are otherwise
      business-related.  When employees, including the Named Executive
      Officers, use Company aircraft for such travel they are attributed with
      taxable income in accordance with IRS regulations.  The Company
      does not "gross up" or reimburse employees for taxes they owe on such
      attributed income.  Messrs. Behnke, Duncan and Hughes have made
      use of the aircraft for personal travel, the value of which is included in
      the Summary Compensation Table.  See, "Executive
      Compensation:  Summary Compensation
  Table."


·
            Enhanced
      Long Term Disability Benefit – The Company provides the Named
      Executive Officers and other senior executive officers of the Company with
      an enhanced long term disability benefit.  This benefit provides
      a supplemental replacement income benefit of 60% of average monthly
      compensation capped at $10,000 per month.  The normal
      replacement income benefit applying to other of our employees is capped at
      $5,000 per month.





·
            Enhanced
      Short Term Disability Benefit  – The Company provides the
      Named Executive Officers and other senior executive officers of the
      Company with an enhanced short term disability benefit.  This
      benefit provides a supplemental replacement income benefit of 66 2/3%
      of average monthly compensation, capped at $2,300 per week.  The
      normal replacement income benefit applying to other of our employees is
      capped at $1,150 per week.





·
            Miscellaneous
      –Aside from benefits offered to its employees generally, the
      Company provided miscellaneous other benefits to its Named Executive
      Officers including the following (see, "Executive
      Compensation:  Summary Compensation Table – Components of 'All
      Other Compensation'"):





o
            Success
      Sharing – An incentive program offered to all of our employees that shares
      15% of the excess earnings before interest, taxes, depreciation,
      amortization and share based compensation expense over the highest
      previous year ("Success Sharing").




52





o
            Tax
      Reimbursement – Provided to Mr. Duncan, as one of our directors, on
      restricted stock awards granted to him under our Director Compensation
      Plan during 2006 and provided to other employees and senior executive
      officers, including the Named Executive Officers, from time to time, on
      $100 longevity stock awards.





o
            Board Fees –
      Provided to Mr. Duncan as one of our
directors.





Retirement
and Welfare Benefits–Stock Purchase
Plan.  Named Executive Officers may, along with our employees
generally, participate in our Stock Purchase Plan, i.e., our Qualified Employee
Stock Purchase Plan, in which we may provide matching contributions in
accordance with the terms of the plan.





We initially adopted our qualified employee
stock purchase plan effective in January 1987.  It has been
subsequently amended from time to time and presently is our Stock Purchase
Plan.  The plan is


qualified under
Section 401 of the Internal Revenue Code.  All of our employees
(excluding employees subject to a collective bargaining agreement) who have
completed at least one year of service are eligible to participate in the
plan.  Eligible employees may elect to reduce their taxable
compensation up to 12% of such compensation for employees (those highly
compensated earning more than $105,000 within the prior year) and up to 50% of
such compensation for all others, both up to a maximum per employee of $16,500
for 2009.  Employees may contribute up to an additional 10% of their
compensation with after-tax dollars.  Participants over the age of 50
may make additional elective deferral contributions to their accounts in the
plan of up to $5,500 for 2009.





Subject to certain limitations, we may make
matching contributions to the Stock Purchase Plan for the benefit of
employees.  Matching contributions will vest in accordance with a
six-year schedule if the employee completes at least 1,000 hours of service in
each year.  Such a contribution will vest in increments over the first
six years of employment.  Thereafter, they are fully vested when
made.





Except for additional elective contributions
made by participants over age 50, the combination of pre-tax elective
contributions, after-tax contributions and our matching contributions for any
employee cannot exceed $49,000 for 2009.





Under the terms of the Stock Purchase Plan,
participating eligible employees may direct their contributions to be invested
in common stock of the Company and shares of various identified mutual
funds.





53


The Stock Purchase Plan is administered through
a plan administrator (currently Mr. Lowber, our Senior Vice President and Chief
Financial Officer) and our Plan Committee.  The plan administrator and
members of the Plan Committee are all our employees.  The Plan
Committee has broad administrative discretion under the terms of the
plan.





As of March 31, 2009, there remained 726,587
shares of Class A and 463,989 shares of Class B common stock allocated to the
Stock Purchase Plan and available for issuance by us or otherwise acquisition by
the plan for the benefit of participants in the plan.





– Deferred
Compensation Program.  The Company provides to certain of our
employees, including our executive officers and Named Executive Officers,
opportunities to defer certain compensation under our nonqualified, unfunded,
deferred compensation plan ("Deferred Compensation Plan").  In
addition, we offer to our executive officers and to certain of our Named
Executive Officers nonqualified, deferred compensation arrangements more
specifically fashioned to the needs of the officer and us ("Deferred
Compensation Arrangements").  Together, the Deferred Compensation Plan
and Deferred Compensation Arrangements constitute our Deferred Compensation
Program and is part of our Compensation Program.  During 2008, three
of our officers participated in the Deferred Compensation
Plan.  Furthermore, during 2008


and up and through
the Record Date, six of our officers (including four of the Named Executive
Officers) participated in Deferred Compensation Arrangements.





The Deferred Compensation Program enables these
individuals to defer compensation in excess of limits that apply to qualified
plans, like our Stock Purchase Plan, and to pursue other income tax goals which
they set for themselves.  The Deferred Compensation Program is
described in more detail elsewhere in this Proxy Statement.  See,
"Nonqualified Deferred Compensation."





Based upon its review of our Deferred
Compensation Program, our Compensation Committee concluded that the benefits
provided under the program are both reasonable and an important tool in
attracting and retaining executive officers, including the Named Executive
Officers as well as other employees eligible to participate in the Stock
Purchase Plan.





– Welfare
Benefits.  With the exception of the enhanced long term and
short term disability benefits described previously, the Company provided to the
Named Executive Officers the same health and welfare benefits provided generally
to all other employees of the Company at the same general premium rates as
charged to those employees.  The cost of the health and welfare
programs is subsidized by the Company for all eligible employees including the
Named Executive Officers.





54


Contemplated
Shift in Compensation Structure.  As of the Record
Date, the Company was contemplating a shift in compensation structure to
establish a defined mix of base compensation, annual cash incentive compensation
and long term incentive compensation for senior officers and managerial level
employees within the Company.  Both the annual cash incentive
compensation and the long term equity compensation would be awarded following
each year end based upon performance measured against defined
targets.





In the past, the Company has used the Stock
Option Plan to motivate our employees with compensation that is tied to the
Company's stock performance.  However, many employees do not recognize
the tangible benefits of holding stock options.  The Black-Sholes
Model, although elegant and deterministic, is at its core very
complex.  A much simpler calculation that is often used by employees
is to multiply the number of options by the amount that the options are in the
money to calculate the current "value" of those
options.  Unfortunately, this simpler calculation effectively ignores
the remaining term of the option and drastically reduces its value in motivating
and retaining option holders.





In the future, we expect to use restricted
stock in place of options for all but the most senior
executives.  That is, for all but the most senior officers (senior
vice presidents and business line managers), the long term equity component
would possibly be paid in grant stock vesting anywhere from one- to five- years
in the future.  In concert with this contemplated shift in
compensation structure, our board has adopted the


Plan
Amendment.  We hope to implement the full shift in compensation
structure by summer of this year.  See, "Matters To Be Voted
Upon:  Plan Amendment."





Performance Rewarded





Our Compensation Program is, in large part,
designed to reward individual performance.  What constitutes
performance varies from officer to officer, depending upon the nature of the
officer's responsibilities.  Consistent with the Compensation Program,
the Company identified key business drivers and established defined targets
related to those drivers for each Named Executive Officer.  The
targets were regularly reviewed by management, from time to time, and provided
an immediate and clear picture of performance and enabled management to respond
quickly to both potential problems as well as potential
opportunities.





The Compensation Program also was used to
establish and track corresponding applicable targets for individual management
employees.  At year end, the results from this program were factored
in determining the level of payout for the personal performance portion of the
annual incentive for Named Executive Officers.





55


In 2008, the Compensation Program was used in
development of each Named Executive Officer's individual performance goals and
established incentive compensation targets.  The Compensation
Committee evaluated the performance of each of the executive officers and the
financial performance of the Company and awarded incentive compensation as
described above.





Timing of Equity Awards





Director
Compensation Plan.  As a part of the
Director Compensation Plan, we grant awards of our common stock to board
members, including those persons who may be also serving as one or more of our
executive officers.  Mr. Duncan, a board member and Named Executive
Officer, has been granted such awards in the past.  These awards are
made annually in June of each year in accordance with the terms of the Director
Compensation Plan.  The awards are made through our Stock Option
Plan.  See within this section, "– Elements of Compensation – Stock
Option Plan."





Incentive
Compensation Plan.  As a part of our
Compensation Program, from time to time, we grant stock options in our Class A
common stock to our executive officers, including the Named Executive
Officers.  In particular, stock options are granted in conjunction
with the agreements that we enter into with Named Executive Officers pursuant to
our Incentive Compensation Program.  The grants of such options are
typically made early in the year at the time each agreement is entered into with
the corresponding executive officer.  All such options are granted
through the Stock Option Plan.  See within this section, "– Elements
of Compensation – Incentive Compensation Plan" and "– Elements of Compensation –
Stock Option Plan."





Stock
Option Plan.  As a part of our
Compensation Program, from time to time, we grant stock options in our Class A
common stock to our executive officers, including the Named Executive Officers,
and to certain of our advisors.  In the case of an executive officer,
these options may be granted regardless of whether there is in place an
agreement entered into with the officer under our Incentive Compensation
Plan.  In the case of a new hire and where we choose to grant options
or awards, the grant may be done at the time of hire.  Under the Stock
Option Plan, the Compensation Committee may set the exercise price for our Class
A common stock at not less than its fair market value.  That value is
presently determined on Nasdaq.  In all cases, regardless of the
identity of the grantee, the timing, amount and other terms of the grant of
options under our Stock Option Plan are determined in the sole discretion of our
Compensation Committee.  See within this section, "– Elements of
Compensation – Stock Option Plan."





In the event an executive level employee is
hired or promoted during a year, that employee may be eligible to receive an
equity option under the plans previously described in this
section.  Grants of options in




56


this context may be
made at the recommendation of management and only with action of the
Compensation Committee.





Grant
Policy, Past Practice.  In 2007, the
Compensation Committee implemented a new granting procedure with the
anticipation of simplifying, streamlining and reducing uncertainty as to the
timing and pricing of stock option grants on a prospective
basis.  Under the policy, potential stock option grants were
accumulated until the last day of each of the following
months:  March, June, September and December.  During the
first meeting following the end of the applicable month, the potential grants
were reviewed and approved by the Compensation Committee.  All
approved grants were granted effective the date they were approved by the
committee and were priced at an amount not less than the market value at the
close of trading on that date.  The terms of the award were then
communicated immediately to the recipient.  During 2008, the policy
was amended such that awards are accumulated and granted without regard to any
particular calendar quarter.





The Company does not, and has not in the past,
timed its release of material nonpublic information for purposes of affecting
the value of equity compensation.





Tax and Accounting Treatment of Executive Compensation





In determining the amount and form of
compensation granted to executive officers, including the Named Executive
Officers, the Company takes into consideration both tax treatment and accounting
treatment of the compensation.  Tax and accounting treatment for
various forms of compensation is subject to changes in, and changing
interpretations of, applicable laws, regulations, rulings and other factors not
within the


Company's
control.  As a result, tax and accounting treatment is only one of
several factors that the Company takes into account in designing the previously
described elements of compensation.





EXECUTIVECOMPENSATION





Summary Compensation Table





As of the Record Date, the Company did not have
employment agreements with any of the Named Executive Officers.  The
following table summarizes total compensation paid or earned by each Named
Executive Officer for fiscal years 2008, 2007 and 2006.  The process
followed by the Compensation Committee in establishing total compensation for
each Named Executive Officer as set forth in the table is described elsewhere in
this Proxy Statement.  See, "Compensation Discussion and
Analysis."





57


Summary
Compensation Table





Name
      and
                Principal
      Position
              Year
              Salary1
                ($)
              Bonus
                ($)
              Stock
                Awards
                ($)
              Option
      Awards
                ($)
              Change in
      Pension Value and Nonqualified Deferred Compensation Earnings
                ($)
              All Other
      Compensation
                ($)2
              Total
                ($)Ronald A.
      Duncan3
                President
      and Chief
                Executive
      Officer
              2008
                2007
                2006
              600,000
                585,208
                345,000
              750,000
                100,000
                900,000
              1,101,263
                596,132
                43,656
              237,258
                325,968
                308,713
              -
      - -
                -
      - -
                -
      - -
              75,143
                90,800
                96,324
              2,763,664
                1,698,108
                1,693,693G. Wilson
      Hughes
                Executive
      Vice
                President
      and
                General
      Manager
              2008
                2007
                2006
              462,5004
                462,5004
                461,4594
              203,000
                77,000
                65,500
              -
      - -
                -
      - -
                100
              659,545
                308,470
                230,219
              7,556
                10,516
                21,471
              24,806
                21,801
                31,833
              1,357,407
                880,287
                810,582John M.
      Lowber
                Senior
      Vice President,
                Chief
      Financial Officer
                and
      Secretary/
                Treasurer
              2008
                2007
                2006
              325,000
                323,919
                296,888
              203,000
                76,000
                65,500
              -
      - -
                -
      - -
                -
      - -
              426,357
                284,915
                321,147
              646
                633
                -
      - -
              24,268
                22,500
                30,524
              979,271
                707,967
                714,059William C.
      Behnke
                Senior
      Vice President –
                Strategic
      Initiatives
              2008
                2007
                2006
              250,000
                248,959
                225,000
              202,000
                125,000
                94,000
              -
      - -
                -
      - -
                -
      - -
              482,687
                272,323
                180,343
              -
      - -
                -
      - -
                -
      - -
              30,824
                18,750
                724
              965,511
                665,032
                500,067Gregory F.
      Chapados
                Senior
      Vice President –
                Federal
      Affairs &
                Business
      Development
              2008
                2007
                2006
              240,000
                239,333
                121,621
              204,000
                53,000
                -
      - -
              -
      - -
                -
      - -
                -
      - -
              926,443
                519,871
                280,364
              -
      - -
                -
      - -
                -
      - -
              43,771
                62,000
                29,589
              1,414,214
                874,204
                431,574











1
            For 2006
      through 2008, salary includes deferred compensation of $225,000 and
      $65,000 for Messrs. Hughes and Lowber,
  respectively.





2           See,
"Components of 'All Other Compensation'" table displayed below for more
detail.


3
            In 2006, Mr.
      Duncan received $107,119 in compensation relating to his service on our
      board including $46,000 in board fees, $43,656 in stock awards, and
      $17,463 in tax reimbursements on those stock awards.  In 2007,
      Mr. Duncan received $84,422 in compensation relating to his service on our
      board including $40,000 in board fees and $44,422 in stock
      awards.  In 2008, Mr. Duncan received $64,509 in compensation
      relating to his service on our board including $40,000 in board fees and
      $24,509 in stock awards.





4
            For 2006
      through 2008, includes $37,500 for Mr. Hughes representing the amount
      vested during 2006 through 2008 pursuant to prepaid retention
      agreements.








The amounts reported under the "All Other
Compensation" column are comprised of the following:





58


Components
of "All Other Compensation"





Name
      and
                Principal
      Position
              Year
              Stock
      Purchase
                Plan1
                ($)
              Board
                Fees
                ($)
              Success
      Sharing2
                ($)
              Tax
                Reimbursement
                on
      Stock
                Awards3
                ($)
              Use of
      Company Leased
                Aircraft4
                ($)
              Miscell-aneous5
                ($)
              Total
                ($)Ronald A.
      Duncan
              2008
                2007
                2006
              23,000
                22,500
                22,000
              40,000
                40,000
                46,000
              -
      - -
                -
      - -
                -
      - -
              -
      - -
                -
      - -
                17,463
              12,143
                28,300
                10,861
              -
      - -
                -
      - -
                -
      - -
              75,143
                90,800
                96,324G. Wilson
      Hughes
              2008
                2007
                2006
              23,000
                21,801
                22,000
              -
      - -
                -
      - -
                -
      - -
              1,268
                -
      - -
                579
              -
      - -
                -
      - -
                27
              538
                -
      - -
                -
      - -
              -
      - -
                -
      - -
                9,227
              24,806
                21,801
                31,833John M.
      Lowber
              2008
                2007
                2006
              23,000
                22,500
                22,000
              -
      - -
                -
      - -
                -
      - -
              1,268
                -
      - -
                579
              -
      - -
                -
      - -
                -
      - -
              -
      - -
                -
      - -
                -
      - -
              -
      - -
                -
      - -
                7,945
              24,268
                22,500
                30,524William C.
      Behnke
              2008
                2007
                2006
              21,646
                18,750
                -
      - -
              -
      - -
                -
      - -
                - -
      -
              1,268
                -
      - -
                724
              -
      - -
                -
      - -
                -
      - -
              7,910
                -
      - -
                -
      - -
              -
      - -
                -
      - -
                -
      - -
              30,824
                18,750
                724Gregory F.
      Chapados
              2008
                2007
                2006
              21,670
                12,000
                -
      - -
              -
      - -
                -
      - -
                -
      - -
              1,268
                -
      - -
                422
              -
      - -
                -
      - -
                -
      - -
              -
      - -
                -
      - -
                -
      - -
              20,833
                50,000
                29,167
              43,771
                62,000
                29,589











1
            Amounts are
      contributions by us matching each employee's
      contribution.  Matching contributions by us under the Stock
      Purchase Plan are available to each of our full time employees with over
      one year of service.  During 2008, the match was based upon the
      lesser of $23,000 ($22,500 for 2007 and $22,000 for 2006), 10% of the
      employee's salary and the total of the employee's pre-tax and post-tax
      contributions to the plan.  See, "Compensation Discussion and
      Analysis:  Elements of Compensation – Retirement and Welfare
      Benefits – Stock Purchase Plan."





2
            The highest
      year on which the Success Sharing was based was 2008.  See,
      "Compensation Discussion and Analysis:  Elements of Compensation
      – Perquisites."





3
            Mr. Duncan's
      reimbursement relates to stock awards received for services on our
      board.  Mr. Hughes' reimbursements relate to his receipt of
      awards of $100 in our stock for longevity of service under a program open
      to all of our employees.





4
            Use of
      Company aircraft is based upon standard industrial fare
      levels.





5
            Includes, for
      Mr. Hughes, an event (for 2006, valued at $9,227) hosted by him outside of
      Alaska for a gathering of a group of Company executives to celebrate the
      achievement of a specific corporate performance
      target.  Includes, for Mr. Lowber, forgiveness (for 2006, valued
      at $7,945) of interest on a loan.  Includes for Mr. Chapados
      vesting of a $100,000 signing bonus received in 2006.  See,
      "Certain Transactions:  Transactions with Related Persons" and
      "Compensation Discussion and Analysis:  Elements of Compensation
      – Perquisites."








59


Grant of Plan-Based Awards Table





The following table displays specific
information on grants of options and awards under our Compensation Program and,
in addition, in the case of Mr. Duncan, our Director Compensation Plan, made to
Named Executive Officers during 2008.  We had no non-equity payouts
during that year, and under our present Compensation Program we did not as of
the Record Date contemplate having any such payouts for any of the Named
Executive Officers pertaining to that year.





Grants
of Plan-Based Awards





Name
              Grant
      Date
              Estimated
      Future Payouts
                Under
                Equity
      Incentive Plan Awards
              All
      Other
                Stock
                Awards:
                Number
      of
                Shares
                of
      Stock
                or
      Units
              All
      Other
                Option
                Awards:
                Number of
      Securities
                Underlying
                Options
              Exercise
                or
      Base
                Price
      of
                Option
                Awards
                ($/Sh)
              Grant
      Date
                Fair Value of
      Stock and Option Awards1
                ($)Threshold
                (#)
              Target
                (#)
              Maximum
                (#)
              (#)
              (#)Ronald A.
      Duncan
              6/01/08
              - -
      -
              - -
      -
              - -
      -
              3,3302
              - -
      -
              - -
      -
              24,509G. Wilson
      Hughes
              1/09/08
              -
      - -
              - -
      -
              - -
      -
              - -
      -
              100,000
              7.95
              438,680John M.
      Lowber
              -
      - -
              -
      - -
              - -
      -
              - -
      -
              - -
      -
              - -
      -
              - -
      -
              - -
      -William C.
      Behnke
              1/09/08
              -
      - -
              - -
      -
              - -
      -
              - -
      -
              100,000
              7.95
              438,680Gregory F.
      Chapados
              1/09/08
              -
      - -
              - -
      -
              - -
      -
              - -
      -
              100,000
              7.95
              438,680








1
            Determined as
      the closing price of the stock on Nasdaq on the date of grant and as
      required by FAS 123R.





2
            Mr. Duncan's
      stock award was granted pursuant to the terms of our Director Compensation
      Plan.  See, "Governance of Company:  Director
      Compensation."





Outstanding Equity Awards at Fiscal Year-End
Table





The following table displays specific
information on unexercised options, stock that has not vested and equity
incentive plan awards for each of the Named Executive Officers and outstanding
as of December 31, 2008.  Vesting of these options and awards varies
for the Named Executive Officers as described in the footnotes to the
table.








60


Outstanding
Equity Awards at Fiscal Year-End





Name
                Option
      Awards1
                Stock
      AwardsNumber of
      Securities
                  Underlying
                  Unexercised
                  Options
                  (#)
                  Exercisable
                Number
      of
                  Securities
                  Underlying
                  Unexercised
                  Options (#)
      Unexercisable
                Option
                  Exercise
                  Price
                  ($)
                Option
                  Expiration
                  Date
                Number of
      Shares or
                  Units of
      Stock
                  That Have
      Not
                  Vested
      (#)
                Market
      Value
                  of Shares
      or
                  Units of
      Stock
                  that
      Have
                  Not
      Vested
                  ($)
                Equity
      Incentive Plan Awards:  Number of Unearned Shares, Units or
      Other Rights That Have Not Vested (#)
                Equity
      Incentive Plan Awards:  Market or Payout Value of Unearned
      Shares, Units or Other Rights That Have Not Vested ($)Ronald A.
      Duncan
                -
      - -
                  150,000
                  250,0003
                  150,0004
                -
      - -
                  -
      - -
                  -
      - -
                  -
      - -
                -
      - -
                  6.50
                  8.403
                  7.254
                -
      - -
                  3/14/10
                  6/24/143
                  2/08/124
                225,0002
                  -
      - -
                  -
      - -
                  -
      - -
                1,820,2502
                  -
      - -
                  -
      - -
                  -
      - -
                -
      - -
                  -
      - -
                  -
      - -
                  -
      - -
                -
      - -
                  -
      - -
                  -
      - -
                  -
      - -G. Wilson
      Hughes
                -
      - -
                  200,0004
                  200,000
                  50,0006
                  - - -
                -
      - -
                  -
      - -
                  -
      - -
                  100,0006
                  100,0007
                -
      - -
                  7.25
                  6.50
                  12.996
                  7.957
                -
      - -
                  2/08/12
                  3/14/10
                  6/25/176
                  1/09/187
                -
      - -
                  -
      - -
                  -
      - -
                  -
      - -
                  -
      - -
                -
      - -
                  -
      - -
                  -
      - -
                  -
      - -
                  -
      - -
                50,0005
                  -
      - -
                  -
      - -
                  -
      - -
                  -
      - -
                437,5005
                  -
      - -
                  -
      - -
                  -
      - -
                  -
      - -John M.
      Lowber
                100,0003
                  200,000
                  30,0008
                  150,000
                -
      - -
                  -
      - -
                  170,0008
                  -
      - -
                8.403
                  7.25
                  12.998
                  6.50
                6/24/143
                  2/08/12
                  6/25/178
                  3/14/10
                -
      - -
                  -
      - -
                  -
      - -
                  -
      - -
                -
      - -
                  -
      - -
                  -
      - -
                  -
      - -
                -
      - -
                  -
      - -
                  -
      - -
                  -
      - -
                -
      - -
                  -
      - -
                  -
      - -
                  -
      - -William C.
      Behnke
                208,3259
                  -
      - -
                  -
      - -
                41,6759
                  100,00010
                  100,00011
                7.259
                  12.9910
                  7.9511
                2/08/128
                  6/25/179
                  1/09/1811
                -
      - -
                  -
      - -
                  -
      - -
                -
      - -
                  -
      - -
                  -
      - -
                -
      - -
                  -
      - -
                  -
      - -
                -
      - -
                  -
      - -
                  -
      - -Gregory F.
      Chapados
                -
      - -
                  80,000
                  82,00012
                  30,000
                  -
      - -
                -
      - -
                  120,000
                  68,00012
                  -
      - -
                  100,0007
                -
      - -
                  13.11
                  13.1112
                  6.00
                  7.95
                -
      - -
                  6/01/16
                  6/01/1612
                  2/01/13
                  1/09/187
                -
      - -
                  -
      - -
                  -
      - -
                  -
      - -
                  -
      - -
                -
      - -
                  -
      - -
                  -
      - -
                  -
      - -
                  -
      - -
                15,0005
                  -
      - -
                  -
      - -
                  -
      - -
                  -
      - -
                131,2505
                  -
      - -
                  -
      - -
                  -
      - -
                  -
      - -








1
            Stock option
      awards generally vest over five years and expire ten years from grant
      date, except as noted in the footnotes
below.





2
            Stock Award
      vests 75,000 shares each on February 19 of 2009, 2010 and
      2011.





3
            Options vest
      20% per year, and the first vesting date occurred on December 4,
      2004.





4
            All options
      vested on February 8, 2007.





5
            Stock awards
      fully vest on April 1, 2010 subject to our adjusted EBITDA reaching $210
      million in 2009.  Awards will vest at 20% for $202 million and
      ratably thereafter to 100% for $210
million.





6
            Options vest
      33.3% on each of February 19, 2008, 2009 and
  2011.





7
            Optionsvest 50% on each
      of December 31, 2010 and 2011,
respectively.





8
            Options vest
      15%, 20%, 20%, 20% and 25% on February 19 of 2008, 2009, 2010, 2011 and
      2012, respectively.





9
            Options vest
      16.7% each year from February 8, 2004 through February 8,
      2009.





61


10
            Options vest
      33.3% on February 19 of 2009, 2010 and
2011.




11
            Options vest
      25% on December 31, 2010 and 75% on December 31,
  2011.





12
            Options vest
      27,000 shares on January 1, 2007 and 15,000, 40,000, 20,000, 20,000,
      20,000 and 8,000 shares on December31, 2007, 2008,
      2009, 2010, 2011 and 2012, respectively, subject to adjustments based upon
      performance.








Option Exercises and Stock Vested Table





The following table displays specific
information on each exercise of stock options, stock appreciation rights, and
similar instruments, and each vesting of stock, including restricted stock,
restricted stock units and similar instruments on an aggregate basis, for each
of the Named Executive Officers during 2008.





Option
Exercises and Stock Vested





Option
      Awards
              Stock
      AwardsName
              Number of
      Shares
                Acquired on
      Exercise (#)
              Value
      Realized on Exercise
                ($)
              Number of
      Shares
                Acquired on
      Vesting
                (#)
              Value
      Realized
                On
      Vesting
                ($)Ronald A.
      Duncan1
              - -
      -
                - -
      -
              - -
      -
                - -
      -
              3,3301
                75,000
              24,3091
                470,250G. Wilson
      Hughes
              - -
      -
              - -
      -
              - -
      -
              - -
      -John M.
      Lowber
              - -
      -
              - -
      -
              - -
      -
              - -
      -William C.
      Behnke
              5,425
              20,941
              - -
      -
              - -
      -Gregory F.
      Chapados
              - -
      -
              - -
      -
              - -
      -
              - -
      -











1
            Mr. Duncan's
      stock awards relate to his service as one of our
  directors.








Potential Payments upon Termination or
Change-in-Control





Except as described in this Proxy Statement, as
of the end of 2008 and the Record Date, there were no compensatory plans or
arrangements providing for payments to any of the Named Executive Officers in
conjunction with any termination of employment or other working relationship of
such an officer with us (including without limitation, resignation, severance,
retirement or constructive termination of employment of the
officer).  Furthermore, there were, as of that date, no such plans or
arrangements providing for payments to any of the Named Executive Officers in
conjunction with a change of control of us or a change in such an officer's
responsibilities to us.





62


NONQUALIFIED DEFERRED COMPENSATION





Deferred Compensation Plan





We established our Deferred Compensation Plan
in 1995 to provide a means by which certain of our employees may elect to defer
receipt of designated percentages or amounts of their compensation and to
provide a means for certain other deferrals of
compensation.  Employees eligible to participate in our Deferred
Compensation Plan are determined by our board.  We may, at our
discretion, contribute matching deferrals in amounts as we select.





Participants immediately vest in all elective
deferrals and all income and gain attributable to that
participation.  Matching contributions and all income and gain
attributable to them vest on a case-by-case basis as determined by
us.  Participants may elect to be paid in either a single lump-sum
payment or annual installments over a period not to exceed ten
years.  Vested balances are payable upon termination of employment,
unforeseen emergencies, death or total disability of the participant, or change
of control of us or our insolvency.  Participants become our general
unsecured creditors with respect to deferred compensation benefits of our
Deferred Compensation Plan.





None of our Named Executive Officers
participated in our Deferred Compensation Plan during 2008 and up through the
Record Date.





DeferredCompensation Arrangements





We have, from time to time, entered into
Deferred Compensation Arrangements with certain of our executive officers,
including several of the Named Executive Officers.  The status of
these arrangements during 2008 is summarized for each of our Named Executive
Officers in the following table and further descriptions of them are provided
following the table.





Nonqualified
Deferred Compensation





Name
              Executive
                Contributions
                in Last
      FY
                ($)
              Registrant
                Contribution
                in Last
      FY
                ($)
              Aggregate
                Earnings
      (Loss)
                in Last
      FY1
                ($)
              Aggregate
                Withdrawals/
                Distributions
                ($)
              Aggregate
                Balance
                at Last
      FY
                ($)Ronald A.
      Duncan
              - -
      -
              - -
      -
              (128,918)
              - -
      -
              1,580,228G. Wilson
      Hughes
              125,000
              100,000
              (84,118)
              - -
      -
              2,712,253John M.
      Lowber2
              65,000
              90,538
              88,812
              (400,000)
              1,087,384William C.
      Behnke
              - -
      -
              - -
      -
              (8,097)
              - -
      -
              99,248Gregory F.
      Chapados
              - -
      -
              - -
      -
              - -
      -
              - -
      -
              - -
      -





63





1
            Includes
      earnings of $7,556 for Mr. Hughes and $646 for Mr. Lowber that is reported
      in the Summary Compensation Table.





2
            Includes
      $90,538 in Company contributions, $13,894 in aggregate earnings and a year
      end balance of $194,845 which vests 100% on December 31, 2010 pursuant to
      a retention agreement.








Mr.
Duncan's Deferred Compensation Arrangement with us is comprised of 195,331
shares of our Class A common stock.  The earnings on his account for
2008 relate to the decrease in the price of the stock from $8.75 per share on
December 31, 2007 to $8.09 per share on December 31, 2008.  In
December 2008, Mr. Duncan's Deferred Compensation Arrangement was amended such
that payment would be made in cash on February 6, 2009 rather than
shares.  The amount of the cash payment was fixed based upon the value
of the stock on an election date specified by Mr. Duncan.  Mr. Duncan
made that election, and his Deferred Compensation Arrangement was paid out in
cash in February 2009.





Mr. Hughes' Deferred Compensation Arrangement
with us consists of three components, i.e., consideration for agreeing to
continue his employment by us in the past, a salary deferral plan, and
consideration for agreeing to continue his employment by us in the
future.  In consideration for agreeing to continue his employment
during 2003 and 2004, he was granted deferred compensation in the amount of
$275,000 which accrues interest at the rate of 3% per year.  This
arrangement also allows Mr. Hughes' personal use of, and a first right of
refusal to purchase, property which we own on Lake Nerka in western Alaska for
two weeks per year until the earlier of December 31, 2034 or the election by him
to receive payment of his deferred compensation.  As of December 31,
2008 and under this agreement, there was accrued $332,750, of which $8,250 had
accrued during 2008.  In exchange for immediate payment of the amounts
accrued, the agreement was amended in December 2008 to eliminate the first right
of refusal to purchase the property and to terminate the agreement upon the
earliest of December 31, 2034, Mr. Hughes' death or sale of the property by the
Company.  The amounts accrued under the Deferred Compensation
Arrangement were paid out in January 2009.  During 2008 and up through
the Record Date, no unreimbursed personal use of the property was made by Mr.
Hughes or by the other Named Executive Officers.





Mr. Hughes' salary Deferred Compensation
Arrangement with us earns interest at the rate of 10% per year based upon the
balance at the beginning of the year plus new salary deferrals during the
year.  As of December 31, 2008 and under this plan, there were accrued
$1,989,503, of which $125,000 in salary were deferred and $21,050 in interest
were accrued during 2008.  In November 2007 at the request of Mr.
Hughes, the Company used $1,998,467 of Mr. Hughes' deferred compensation account
to acquire 217,300 shares of Company Class A common
stock.  Accordingly, a portion of Mr. Hughes' deferred compensation
account was denominated in 217,300 shares of Company Class A common stock at
year-end.  In consideration for agreeing to continue his employment
from January 1, 2006 through December 31, 2009 and under




64


a
separate Deferred Compensation Arrangement with us, Mr. Hughes received a
payment of $150,000 and was granted deferred compensation of $400,000 with
interest at 7.5% per year.  Under this Deferred Compensation
Arrangement, the deferred portion of the compensation vests at the rate of
$100,000 per year.  As of December 31, 2008 and under this plan, there
were accrued $390,000, of which $100,000 were vested for 2008 service and
$30,000 were accrued for 2008 interest.





Mr. Hughes' Deferred Compensation Arrangement
provides that after five years employment, or at termination, he is entitled to
receive the full amount owed in a lump sum, or in monthly installments paid over
a ten-year period.





Mr. Lowber's Deferred Compensation Arrangement
with us consists of deferred salary which earns interest on the amounts deferred
at 9% per year.  As of December 31, 2008 and under this plan,
there were accrued $892,539, of which $139,988 had accrued and $400,000 had been
paid out during 2008.  Effective January 1, 2007 the Company agreed to
enter into a retention agreement with Mr. Lowber.  In exchange for his
commitment to remain in the employ of the Company through the end of 2010, the
Company agreed to establish a deferred compensation account in the amount of
$350,000 that is to vest on December 31, 2010.  The account was
credited with $70,000 effective February 19, 2007 and $70,000 effective on each
of December 31, 2007 and 2008.  Thereafter, it will be credited
$70,000 annually on December 31 of 2009 and 2010.  The account is to
accrue interest at the rate of 7.25% per annum, compounding
annually.





Mr. Behnke's Deferred Compensation Arrangement
with us consists of deferred compensation denominated in the form of 12,268
shares of Company Class A common stock in which he is fully
vested.  In addition, Mr. Behnke may defer additional amounts of
compensation that may be invested in up to an additional 11,518 shares of
Company Class A common stock at a price of $7.78125 per share.  Mr.
Behnke received all of his shares in January 2009.





Mr. Chapados did not participate in a Deferred
Compensation Arrangement with us during 2008.





65


CODE OF BUSINESS CONDUCT AND ETHICS





Our Ethics Code, i.e., our Code of Business
Conduct and Ethics, was adopted by our board in 2003.  It applies to
all of our officers, directors and employees.  The Ethics Code takes
as its basis a set of business principles adopted by our board several years
ago.  It also builds upon the basic requirements for a code of ethics
as required by federal securities law and rules adopted by the SEC.





Through our Ethics Code, we reaffirm our course
of business conduct and ethics as based upon key values and characteristics and
through adherence to a clear code of ethical conduct.  Our Ethics Code
promotes honest and ethical conduct, including ethical handling of actual or
apparent conflicts of interest between personal and professional relationships
of our employees.  It also promotes full, fair, accurate, timely and
understandable disclosure in our reports and documents filed with, or submitted
to, the SEC and other public communications made by us.  Our Ethics
Code further promotes compliance with applicable


governmental laws,
rules and regulations, internal reporting of violations of the code to
appropriate persons as identified in the code and accountability for adherence
to the code.





A copy of our Ethics Code is displayed on our
internet website at www.gci.com  (click
on "About GCI," then click on "Corporate Governance," and then click on "Code of
Business Conduct and Ethics").  Also, a copy of the Ethics Code may be
obtained at no charge and upon written request to us at the following
address:





ATTN: Secretary (Ethics Code)


General Communication, Inc.


2550 Denali Street, Suite 1000


Anchorage,
Alaska  99503





CERTAIN TRANSACTIONS





Transactionswith Related Persons





Stanton
Shareholdings, Registration Rights Agreement.  As of the Record
Date and as a result of the sale by Verizon of all its shareholdings in our
Class B common stock to John W. Stanton and Theresa E. Gillespie, husband and
wife (collectively, "Stantons"), the Stantons are significant shareholders of
that class of our stock.  As of the Record Date, neither the Stantons
nor the Stantons' affiliates were our directors, officers, nominees for election
as directors, or members of the immediate family of such directors, officers, or
nominees.





We are a party to a registration rights
agreement ("Stanton Registration Rights Agreement") with the Stantons regarding
all shares the Stantons hold in our Class B common stock and any shares of our




66


Class A common
stock resulting from conversion of that Class B common stock to Class A common
stock.  The basic terms of the Stanton Registration Rights Agreement
are as follows.  If we propose to register any of our securities under
the Securities Act of 1933, as amended ("Securities Act") for our own account or
for the account of one or more of our shareholders, we must notify the Stantons
of that intent.  In addition, we must allow the Stantons an
opportunity to include the holder's shares ("Stanton Registerable Shares") in
that registration.





Under the Stanton Registration Rights
Agreement, the Stantons also have the right, under certain circumstances, to
require us to register all or any portion of the Stanton Registerable Shares
under the Securities Act.  The agreement is subject to certain
limitations and restrictions, including our right to limit the number of Stanton
Registerable Shares included in the registration.  Generally, we are
required to pay all


registration
expenses in connection with each registration of Stanton Registerable Shares
pursuant to this agreement.





The Stanton Registration Rights Agreement
specifically states we are not required to effect any registration on behalf of
the Stantons regarding Stanton Registerable Shares if the request for
registration covers an aggregate number of Stanton Registerable Shares having a
market value of less that $1.5 million.  The agreement further states
we are not required to effect such a registration for the Stantons where we have
at that point previously filed two registration statements with the SEC, or
where the registration would require us to undergo an interim audit or prepare
and file with the SEC sooner than otherwise required financial statements
relating to the proposed transaction.  Finally, the agreement states
we are not required to effect such a registration when in the opinion of our
legal counsel a registration is not required in order to permit resale under
Rule 144 as adopted by the SEC pursuant to the Exchange Act.





The Stanton Registration Rights Agreement
provides that the first demand for registration by the Stantons must be for no
less than 15% of the total number of Stanton Registerable
Shares.  However, the Stantons may take the opportunity to require us
to include the Stanton Registerable Shares as incidental to a registered
offering proposed by us.





Duncan
Leases.  In 1991, we
entered into a long-term capital lease agreement with a partnership in which Mr.
Duncan held a 50% ownership interest.  Mr. Duncan later sold that
interest to an individual who later became his spouse.  However, Mr.
Duncan remains a guarantor on the note which was used to finance the acquisition
of the property subject to the lease.  The leased asset was
capitalized in 1991 at the owner's cost of $900,000 and the related obligation
was recorded in the accompanying financial statements.  The lease
agreement was amended in 2008, and we have increased our existing capital lease
asset and




67


liability by $1.3
million to record the extension of the capital lease.  The amended
lease terminates on September 30, 2026.  The property consists of a
building presently occupied by us.  As of December 31, 2008, the
payments on the lease were $21,532 per month.  They continue at that
rate through September 2011.  In October 2011, the payments on the
lease will increase to $22,332 per month.





On September 11, 1997, we purchased, for
$150,000, a parcel of property adjoining the property subject to that Duncan
lease.  The parcel was purchased to provide space for additional
parking facilities for our use of the adjoining property under the previously
described lease involving Mr. Duncan.  A portion of the parcel, valued
at $87,900, was simultaneously deeded to Mr. Duncan's spouse in order to
accommodate the platting requirements of the Municipality of Anchorage necessary
to allow use of the parcel for parking facilities.  In June 1999, we
agreed, in exchange for a payment of $135,000, to extend the lease term for an
additional five-year term expiring September 30, 2011 at a rental rate of
$20,000 per month and to incorporate the adjoining property into the lease
agreement.  The lease was further amended in 2002 to increase the


rental rate in
steps with the rate being $21,532 per month for the period October 1, 2006
through September 30, 2011, the end of the base term.





In January 2001 we entered into an aircraft
operating lease agreement with a company owned by Mr. Duncan.  The
lease agreement is presently month-to-month and may be terminated at any time
upon 120 days' prior written notice.  The lease rate is $75,000 per
month.  Upon signing the lease, the lessor was granted an option
purchase 250,000 shares of Company Class A common stock at $6.50 per share, of
which 150,000 shares of the option remained and were exercisable at December 31,
2008.  We paid a deposit of $1.5 million in connection with the
lease.  The deposit will be repaid to us upon the earlier of six
months after the agreement terminates, or nine months after the date of a
termination notice.  The lessor may sell to us the stock arising from
the exercise of the stock option or surrender the intrinsic value of the right
to purchase all or a portion of the stock option to repay the deposit, if
allowed by our debt instruments in effect at that time.





Review Procedure for Transactions with Related
Persons





The following describes our policies and
procedures for the review, approval or ratification of transactions in which we
are to be a participant and where the amount involved in each instance exceeds
$120,000 and in which any related person had or is to have a direct or indirect
material interest ("Related Transactions").  Here, we use the term
"related person" to mean any person who is one of our directors, a nominee for
director, an immediate family member of one of our directors or executive
officers, any person who is a holder of five percent or more of a class of our
common stock, or any immediate family member of such a holder.





68


A related person who is one of our officers,
directors or employees ("Employee") is subject to our Ethics
Code.  The Ethics Code requires the Employee to act in the best
interest of the Company and to avoid situations which may conflict with this
obligation.  The code specifically provides that a conflict of
interest occurs when an Employee's private interest interferes in any way with
our interest.  In the event an Employee suspects such a conflict, or
even an appearance of conflict, he or she is urged by the Ethics Code to report
the matter to an appropriate authority.  The Ethics Code, Nominating
and Corporate Governance Committee Charter and the Audit Committee Charter
define that authority as being our Chief Financial Officer, the Nominating and
Corporate Governance Committee, the Audit Committee (in the context of suspected
illegal or unethical behavior-related violations pertaining to accounting, or
internal controls on accounting or audit matters), or the Employee's supervisor
within the Company, as the case may be.





The Ethics Code further provides that an
Employee is prohibited from taking a personal interest in a business opportunity
discovered through use of corporate position, information or property that
properly


belongs to
us.  The Ethics Code also provides that an Employee must not compete
with, and in particular, must not use corporate position, information, or
property for personal gain or to compete with, us.





The Ethics Code provides that any waiver of its
provisions for our executive officers and directors may be made only by our
board and must be promptly disclosed to our shareholders.  This
disclosure must include an identification of the person who received the waiver,
the date of the grant of the waiver by our board, and a brief description of the
circumstances and reasons under which it was given.





The Ethics Code is silent as to the treatment
of immediate family members of our Employees, holders of five percent or more of
a class of our stock, or the immediate family members of them.  We
consider such Related Transactions with such persons on a case-by-case basis, if
at all, by analogy to existing procedures as above described pertaining to our
Employees.





During 2008 and for the period in 2009 up
through the Record Date, there were no Related Transactions.  The
leases described previously were entered into prior to the establishment of the
Ethics Code.





69


OWNERSHIP OF COMPANY





Principal Shareholders





The following table sets forth, as of the
Record Date (unless otherwise noted), certain information regarding the
beneficial ownership of our Class A common stock and Class B common stock by
each of the following:





·
            Each person
      known by us to own beneficially 5% or more of the outstanding shares of
      Class A common stock or Class B common
stock.





·
            Each of our
      directors.





·
            Each of the
      Named Executive Officers.





·
            All of our
      executive officers and directors as a
group.





All information
with respect to beneficial ownership has been furnished to us by the respective
shareholders.   Names
      of
                Beneficial
      Owner1
              Title
      of
                Class2
              Amount
      and
                Nature
      of
                Beneficial
                Ownership
                (#)
              %of
      Class
              % of Total
      Shares Outstanding
                (Class
      A & B)2
              %
      Combined
                Voting
                Power
                (Class A
      & B)2Stephen M.
      Brett
              Class
      A
                Class
      B
              41,6503
                -
      - -
              *
                - -
      -
              *
              *Ronald A.
      Duncan
              Class
      A
                Class
      B
              1,633,0083,4
                459,9704
              3.3
                14.4
              3.9
              7.6Jerry A.
      Edgerton
              Class
      A
                Class
      B
              16,6503
                -
      - -
              *
                - -
      -
              *
              *Scott M.
      Fisher
              Class
      A
                Class
      B
              104,2623,5
                437,6885
              *
                13.7
              1.0
              5.5William P.
      Glasgow
              Class
      A
                Class
      B
              66,5943,6
                -
      - -
              *
                - -
      -
              *
              *G. Wilson
      Hughes
              Class
      A
                Class
      B
              938,7107
                2,6957
              1.9
                *
              1.8
              1.2Mark W.
      Kroloff8
              Class
      A
                Class
      B
              10,000
                -
      - -
              *
                - -
      -
              *
              *John M.
      Lowber
              Class
      A
                Class
      B
              627,6449
                6,2569
              1.3
                *
              1.2
              *Stephen R.
      Mooney
              Class
      A
                Class
      B
              16,6503
                -
      - -
              *
                - -
      -
              *
              *  70
  James M.
      Schneider
              Class
      A
                Class
      B
              38,0503
                -
      - -
              *
                - -
      -
              *
              *William C.
      Behnke
              Class
      A
                Class
      B
              296,89510
                -
      - -
              *
                - -
      -
              *
              *Gregory F.
      Chapados
              Class
      A
                Class
      B
              252,99711
                -
      - -
              *
                - -
      -
              *
              *Arctic Slope
      Regional Corp.
                3900 C
      Street, Suite 801
                Anchorage,
      Alaska 99503
              Class
      A
                Class
      B
              7,481,240
                -
      - -
              15.0
                - -
      -
              14.1
              9.2Barclays
      Global Investors
                45 Fremont
      Street
                San
      Francisco, CA 94105
              Class
      A
                Class
      B
              3,540,87912
                -
      - -
              7.1
                - -
      -
              6.7
              4.3GCI Qualified
      Employee
                Stock
      Purchase Plan
                2550 Denali
      St., Ste. 1000
                Anchorage, AK
      99503
              Class
      A
                Class
      B
              5,047,33013
                68,87313
              10.1
                2.2
              9.6
              7.0Gary
      Magness
                c/o Raymond
      L. Sutton, Jr.
                303 East 17th
      Ave., Ste 1100
                Denver, CO
      80203-1264
              Class
      A
                Class
      B
              1,347,96112
                433,92412
              2.7
                13.6
              3.4
              7.0John W.
      Stanton and
                Theresa E.
      Gillespie
                155 108th
      Avenue., N.E.,
                Suite
      450
                Bellevue, WA
      98004
              Class
      A
                Class
      B
              2,503,305
                1,275,791
              5.0
                39.9
              7.1
              18.7Robert M.
      Walp
                804 P Street,
      Apt. 4
                Anchorage, AK
      99501
              Class
      A
                Class
      B
              124,51714
                202,35014
              *
                6.3
              *
              2.6All Directors
      and Executive
                Officers
      As a Group
                (21
      Persons)
              Class
      A
                Class
      B
              5,404,33315
                991,33815
              10.8
                31.0
              11.4
              18.1


*           Represents
beneficial ownership of less than 1% of the corresponding class or series
stock.





1
            Beneficial
      ownership is determined in accordance with Rule 13d-3 of the Exchange
      Act.  Shares of our stock that a person has the right to acquire
      within 60 days of the Record Date are deemed to be beneficially owned by
      such person and are included in the computation of the ownership and
      voting percentages only of such person.  Each person has sole
      voting and investment power with respect to the shares indicated, except
      as otherwise stated in the footnotes to the table.  Addresses
      are provided only for persons other than management who own beneficially
      more than 5% of the outstanding shares of Class A or B common
      stock.





2
            "Title of
      Class" includes our Class A common stock and Class B common
      stock.  "Amount and Nature of Beneficial Ownership" and "% of
      Class" are given for each class of stock.  "% of Total Shares
      Outstanding" and "% Combined Voting Power" are given for the combination
      of outstanding Class A common stock and Class B common stock, and the
      voting power for Class B common stock (10 votes per share) is factored
      into the calculation of that combined voting
  power.




71





3
            Includes
      3,330 shares of our Class A common stock granted to each of those persons
      pursuant to the Director Compensation Plan for services performed during
      2008.





4
            Includes
      147,391 shares of Class A common stock and 6,219 shares of Class B common
      stock allocated to Mr. Duncan under the Stock Purchase Plan as of December
      31, 2008.  Includes 400,000 shares of Class A common stock
      subject to stock options granted under the Stock Option Plan to Mr. Duncan
      which he has the right to acquire within 60 days of the Record Date by
      exercise of the stock options.  Does not include 35,560 shares
      of Class A common stock or 8,242 shares of Class B common stock held by
      the Amanda Miller Trust, with respect to which Mr. Duncan has no voting or
      investment power.  Ms. Miller is Mr. Duncan's daughter, and Mr.
      Duncan disclaims beneficial ownership of the shares.   Does
      not include 27,760 shares of Class A common stock or 27,020 shares of
      Class B common stock held by Dani Bowman, Mr. Duncan's wife, of which Mr.
      Duncan disclaims beneficial ownership.  Includes 150,000 shares
      of Class A common stock which a company owned by Mr. Duncan has the right
      to acquire within 60 days of the Record Date by the exercise of stock
      options.  Includes 714,392 shares of Class A common stock and
      453,751 shares of Class B common stock pledged as
  security.





5
            Includes
      87,512 shares of Class A and 437,688 shares of Class B common stock owned
      by Fisher Capital Partners, Ltd. of which Mr. Fisher is a
      partner.





6
            Does not
      include 158 shares owned by a daughter of Mr. Glasgow.  Mr.
      Glasgow disclaims any beneficial ownership of the shares held by his
      daughter.





7
            Includes
      500,000 shares of Class A common stock which Mr. Hughes has the right to
      acquire within 60 days of the Record Date by the exercise of vested stock
      options.  Includes 81,422 shares of Class A common stock and
      2,695 shares of Class B common stock allocated to Mr. Hughes under the
      Stock Purchase Plan, as of December 31, 2008.  Includes a grant
      of restricted stock the vesting of which is contingent on 2009 adjusted
      EBITDA, exceeding $202 million and ratably thereafter as previously
      described.  See "Executive Compensation:  Outstanding
      Equity Awards at Fiscal Year-End Table."  Includes 325,890
      shares of Class A common stock pledged as security.  Excludes
      217,300 shares held by the Company pursuant to Mr. Hughes' Deferred
      Compensation Agreement.





8
            Mr. Kroloff
      joined our board on February 9, 2009.  Includes 10,000 shares of
      Class A common stock purchased by Mr. Kroloff.  Excludes shares
      held by Arctic Slope Regional Corporation where Mr. Kroloff is the Chief
      Operating Officer.





9
            Includes
      520,000 shares which Mr. Lowber has the right to acquire within 60 days of
      the Record Date by the exercise of vested stock
      options.  Includes 28,321 shares of Class A common stock and
      ­­­5,986 shares of Class B common stock allocated to Mr.
      Lowber under the Stock Purchase Plan, as of December 31,
    2008.




10
            Includes
      283,333 shares which Mr. Behnke has the right to acquire within 60 days of
      the Record Date by the exercise of vested stock
      options.  Includes 8,800 shares of Class A common stock
      allocated to Mr Benhke under the Stock Purchase Plan, as of December 31,
      2008.





11
            Includes
      232,000 shares of Class A common stock which Mr. Chapados has the right to
      acquire within 60 days of the Record Date by the exercise of vested stock
      options.  Includes a grant of restricted stock the vesting of
      which is contingent on 2009 adjusted EBITDA exceeding $202 million and
      ratably thereafter as previously described.  See "Executive
      Compensation:  Outstanding Equity Awards at Fiscal Year-End
      Table."  Includes 5,997 shares of Class A common stock allocated
      to Mr. Chapados under the Stock Purchase Plan, as of December 31,
      2008.





12
            Balance as of
      December 31, 2008.





13
            Balance as of
      March 31, 2009.





14
            Includes
      16,098 shares of Class A common stock and 457 shares of Class B common
      stock allocated to Mr. Walp under the Stock Purchase
      Plan.  Includes 25,000 shares of Class A common stock which Mr.
      Walp has the right to acquire within 60 days of the Record Date by the
      exercise of vested stock options.





15
            Includes
      3,115,091 shares of Class A common stock which such persons have the right
      to acquire within 60 days of the Record Date through the exercise of
      vested stock options.  Includes 549,549 shares of Class A common
      stock and 25,601 shares of Class B common stock allocated to such persons
      under the Stock Purchase Plan.  Does not include shares held by
      Arctic Slope Regional Corporation where Mr. Kroloff is the Chief Operating
      Officer.





72





Changesin Control





Pledged
Assets and Securities.  Our obligations
under our credit facilities are secured by substantially all of our
assets.  Should there be a default by us under such agreements, our
lenders could gain control of our assets.  We have been at all times
since January 1, 2008 and up through the Record Date, in compliance with all
material terms of these credit facilities.  These obligations and
pledges are further described in our Annual Report.  See, "Annual
Report."





Senior
Notes.  In February 2004
GCI, Inc., our wholly-owned subsidiary, sold $250 million in aggregate principal
amount of senior debt securities, and in December 2004 GCI, Inc. sold an
additional $70 million in similar debt securities, with the full complement of
$320 million due in 2014.  The net proceeds from these senior notes
were used to repay our then existing $180 million in senior notes, to repay term
and revolving portions of our senior credit facility totaling $53.8 million, to
repurchase equity from Verizon (at the time of repurchase, MCI), and for other
of our ongoing operations.





The senior notes are subject to the terms of an
indenture entered into by GCI, Inc.  Upon the occurrence of a change
of control, as defined in the Indenture, GCI, Inc. is required to offer to
purchase those senior notes at a price equal to 101% of their principal amount,
plus accrued and unpaid interest.  The indenture provides that those
senior notes are redeemable at the option of GCI, Inc. at specified redemption
prices commencing in 2009.  The terms of the senior notes contain
limitations on the ability of GCI, Inc. and its restricted subsidiaries to incur
additional indebtedness, limitations on investments, payment of dividends and
other restricted payments and limitations on liens, asset sales, mergers,
transactions with affiliates and operation of unrestricted
subsidiaries.  The indenture also limits the ability of GCI, Inc. and
its


restricted
subsidiaries to enter into, or allow to exist, specified restrictions on the
ability of GCI, Inc. to receive distributions from restricted
subsidiaries.





For purposes of the indenture and the senior
notes, the restricted subsidiaries consist of all of our direct or indirect
subsidiaries, with the exception of the unrestricted subsidiaries, none of which
existed as of the Record Date.  Under the terms of the Indenture an
unrestricted subsidiary is a subsidiary of GCI, Inc. so designated from time to
time in accordance with procedures as set forth in the Indenture.





We and GCI, Inc. have since the issuance of the
senior notes and up through the Record Date, been in compliance with all
material terms of the Indenture including making timely payments on the
obligations of GCI, Inc.





73


Securities Authorized for Issuance under Equity
Compensation Plans





The following table sets forth, as of the end
of 2008, information on equity compensation plans approved by our shareholders
and separately such plans not approved by our shareholders.  The
information is focused on outstanding options, warrants and rights, and so the
only such plan is our Stock Option Plan as approved by our
shareholders.





Equity
Compensation Plan Information





Plan
      category
              Number of
      securities
                to be issued
      upon exercise of outstanding options, warrants and rights
              Weighted-average
                exercise
      price of
                outstanding
      options,
                warrants and
      rights
                ($)
              Number of
      securities
                remaining
      available for future issuance under equity compensation plans (excluding
      securities reflected in the second column)Equity
      compensation
                plans
      approved by
                security
      holders
              7,205,186
              9.08
              917,855Equity
      compensation
                plans not
      approved by
                security
      holders
              150,000
              6.50
              -0-Total:
              7,355,186
              9.03
              917,855





Section 16(a) Beneficial Ownership Reporting
Compliance





During 2008, one of our officers (Mr. Chapados)
inadvertently failed to file with the SEC a Form 4 (Change in Beneficial
Ownership Report) on a timely basis as required under Section 16(a) of the
Securities Exchange Act of 1934.  That is, he failed to file two Forms
4 on due dates of March 19, 2008 and March 31, 2008, but in both cases filings
were made by February 13, 2009.





AUDITCOMMITTEE REPORT




Our Audit Committee has reviewed and discussed
with management our audited financial statements for 2008.  In
addition, the committee has discussed with KPMG LLP, our External Accountant for
that year, the matters required to be discussed by Statement of Accounting
Standard 61 (as amended), as adopted by the Public Company Accounting Oversight
Board ("PCAOB").  Those matters included our External Accountant
discussing with the committee the External Accountant's judgment about the
quality, not just acceptability, of our accounting principles as applied to our
financial reporting.





Our Audit Committee has received written
disclosures and a letter dated March 20, 2009 from our External Accountant
for 2008 required by applicable requirements of PCAOB pertaining to the External




74


Accountant's
communications with our Audit Committee as to independence and has discussed
with our External Accountant its independence from us.  The letter
addressed all relationships with us that could affect independence and stated
that, as of March 20, 2009, our External Accountant for 2008 considered itself
as independent accountants with respect to us under all relevant professional
and regulatory standards.





Based upon these reviews and discussions, our
Audit Committee has recommended to our board that the audited financial
statements for 2008 be included in our Annual Report on Form 10-K, as
amended.





Audit Committee


James M. Schneider, Chair


William P. Glasgow


Stephen R. Mooney





RELATIONSHIP WITH INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM





Overview





Our Audit Committee has retained KPMG LLP as
our External Accountant for 2008.  A representative of KPMG LLP is
expected to be present at our Annual Meeting.  That representative
will have the opportunity to make a statement, if so desired, and will be
available to respond to appropriate questions.





Pre-Approval Policies and Procedures





We have established as policy, through the
adoption of the Audit Committee Charter that, before our External Accountant is
engaged by us to render audit services, the engagement must be approved by the
Audit Committee.





Our Audit Committee Charter provides that our
Audit Committee is directly responsible for appointment, compensation,
retention, oversight, qualifications and independence of our External
Accountant.  Also


under our Audit
Committee Charter, all audit services provided by our External Accountant must
be pre-approved by the Audit Committee.





Our pre-approval policies and procedures with
respect to Non-Audit Services include as a part of the Audit Committee Charter
that the Audit Committee may choose any of the following options for approving
such services:





·
            Full Audit
      Committee–
      The full Audit Committee can consider each Non-Audit
    Service.




75





·
            Designee–
      The Audit Committee can designate one of its members to approve a
      Non-Audit Service, with that member reporting approvals to the full
      committee.





·
            Pre-Approval
      of Categories–
      The Audit Committee can pre-approve categories of Non-Audit
      Services.  Should this option be chosen, the categories must be
      specific enough to ensure both of the following
  –





o
            The Audit
      Committee knows exactly what it is approving and can determine the effect
      of such approval on auditor
independence.





o
            Management
      will not find it necessary to decide whether a specific service falls
      within a category of pre-approved Non-Audit
  Service.





The Audit Committee's pre-approval of Non-Audit
Services may be waived under specific provisions of the Audit Committee
Charter.  The prerequisites for waiver are as follows: (1) the
aggregate amount of all Non-Audit Services constitutes not more than 5% of the
total amount of revenue paid by us to our External Accountant during the fiscal
year in which those services are provided; (2) the service is originally thought
to be a part of an audit by our External Accountant; (3) the service turns out
to be a Non-Audit Service; and (4) the service is promptly brought to the
attention of the Audit Committee and approved prior to completion of the audit
by the committee or by one or more members of the committee who are members of
our board to whom authority to grant such approvals has been delegated by the
committee.





During 2008, there were no waivers of our Audit
Committee pre-approval policy.





Feesand Services





KPMG LLP has, as our External Accountant for
2008, provided certain audit, audit-related, and tax services.  The
aggregate fees billed to us by our External Accountant in each of these
categories for each of 2008 and 2007 (same External Accountant in both years)
are set forth as follows:





76


External
Accountant Auditor Fees





Type of
      Fees
              2008
              2007Audit
      Fees1
              $1,442,605
              $646,500Audit-Related
      Fees2
              17,500
              13,500Tax Fees3
              45,695
              26,250All Other
      Fees4
              0
              0Total
              $1,505,800
              $686,250











1
            Consists of
      fees for our annual financial statement audit, quarterly financial
      statement reviews, reviews of other filings by us with the SEC, audit of
      our internal control over financial reporting and for services that are
      normally provided by an auditor in connection with statutory and
      regulatory filings or engagements.





2
            Consists of
      fees for audit of the Stock Purchase Plan and review of the related annual
      report on Form 11-K filed with the
SEC.





3
            Consists of
      fees for review of our state and federal income tax returns and
      consultation on various tax advice and tax planning
    matters.





4
            Consists of
      fees for any services not included in the first three types of fees
      identified in the table.











All of the services described above were
approved in conformity with the Audit Committee's pre-approved
policy.





ANNUAL REPORT





The Annual Report to our shareholders in the
form of Form 10-K, as amended for 2008 is enclosed with this Proxy Statement,
subject to the delivery provisions described elsewhere in this Proxy
Statement.  See, "About the Annual Meeting."  In addition,
our internet website provides a link to the SEC website containing copies of our
filings with the SEC, including our Annual Report, recent quarterly reports on
Form 10-Q and current reports on Form 8-K.





SHAREHOLDERCOMMUNICATIONS





Our board follows a process of open
communication with our shareholders.  We file various reports with the
SEC and issue public releases to the media through our board, from time to time,
on matters relating to our business and our shareholders.





In addition, our shareholders are encouraged to
contact our board with their questions, concerns, and comments.  This
communication can most efficiently be accomplished by writing to our board,
generally, or to specific board members, individually, at the following mailing
address:





77


ATTN: Secretary (Shareholder – Board
Communication)


General Communication, Inc.


2550 Denali Street, Suite 1000


Anchorage,
Alaska  99503





A copy of each shareholder communication will
be forwarded to all members of our board within no more than five business days
of receipt.  In the event a shareholder communication shall be to one
or more but not all of our board members, copies of it shall be distributed to
all board members for their review or information, as the case may
be.  Each shareholder communication must include the shareholder's
full name and address as they appear in our records, as well as an
identification of the number of shares registered or beneficially owned by the
shareholder.  Our board may, in its sole discretion, not respond to a
shareholder communication not containing this information.





As a part of its open communication policy with
our shareholders, our board encourages shareholders to attend annual and
special, if any, shareholder meetings and to voice their questions, concerns and
comments to management and the board.  A portion of each such meeting
is set aside for such dialogue.  Our board members are encouraged to
attend annual shareholder meetings to respond directly to shareholder
inquiries.  All seven members of our board were present at the 2008
annual shareholder meeting.





FUTURE SHAREHOLDER PROPOSALS AND
RECOMMENDATIONS





Proposals





Certain matters are required to be considered
at an annual meeting of our shareholders, e.g., the election of
directors.  In addition, from time to time, our board may wish to
submit to those shareholders other matters for
consideration.  Furthermore, our shareholders may be asked to consider
and take action on a proposal of business submitted by other of our shareholders
who are not members of management and where the proposal covers a matter deemed
proper under SEC rules and applicable state law.





Under our Bylaws, should one or more of our
shareholders wish to have a proposal of business included in management’s proxy
statement and form proxy for our 2010 annual meeting of shareholders, the
proposal must be received by us at the following address not earlier than
December 18, 2009 and not later than January 19, 2010:





78


ATTN: Secretary (2010 Annual Meeting
Proposal)


General Communication, Inc.


2550 Denali Street, Suite 1000


Anchorage,
Alaska  99503





Under our Bylaws, a shareholder of ours wishing
to make a proposal of a nomination for director or wishing to introduce a
proposal of any business at our 2010 annual meeting must give us timely advance
notice as described in our Bylaws.  To be timely, we must receive the
nomination or other shareholder proposal for the 2010 meeting at our offices as
identified above not earlier than December 18, 2009 and not later than January
19, 2010.  Nominations for director must describe various matters as
specified in our Bylaws, including the name and address of each nominee, his or
her occupation and number of shares held, and certain other
information.  The nomination must also be accompanied by written
consent by the nominee to being named in the proxy statement as a nominee and to
serving as a director if elected.





In addition to the timely submission of advance
notice, a shareholder of ours wishing to make a proposal at our 2010 annual
meeting must include in that notice a statement describing the proposal (which
must otherwise be a proper subject for action by our shareholders), the reasons
for that other business and other matters as specified in our
Bylaws.  Our board or the presiding officer at the meeting may reject
any such proposals that are not made in accordance with these procedures or that
are not a proper subject for shareholder action in accordance with applicable
law.  Our Articles and Bylaws also set forth specific requirements and
limitations applicable to nominations and other shareholder proposals at special
meetings of our shareholders.





A shareholder of ours making a nomination or
other shareholder proposal of business for the 2010 annual meeting must be a
person who is a shareholder of record both at the time of giving of notice and
at the time of the meeting and who is entitled to vote at the
meeting.  In addition, such a shareholder must be a person who has
continuously held at least $2,000 in market value, or at least 1%, of our
outstanding securities entitled to be voted on the matter at the meeting for at
least one year by the date of submission of the proposal to us for inclusion on
the agenda of the meeting.  Any such notice must be given to our
Secretary at the address identified above.  Any shareholder of ours
who shall desire a copy of our Articles or Bylaws will be furnished a copy
without charge upon written request to the Secretary at the above given
address.





For any proposal by a shareholder of ours that
is not submitted for inclusion in the management proxy statement for our 2010
annual meeting but is instead sought to be presented directly at that meeting,
the SEC rules permit our board to vote proxies in its discretion if we (i)
receive notice of the proposal during the time interval December 18, 2009
through January 19, 2010 and we advise shareholders in the 2010




79


proxy statement
about the nature of the matter and how our board intends to vote on that matter,
or (ii) do not receive notice of the proposal during the time interval
December 18, 2009 through January 19, 2010.  Our board intends to
exercise this authority, if necessary, in conjunction with the 2010
meeting.





Our board carefully considers all proposals
from our shareholders.  When adoption of a proposal is clearly in the
best interest of us and our shareholders generally and does not require approval
of our shareholders, it is usually adopted by our board, if appropriate, rather
than being included in management's proxy statement.





Recommendations





As our policy, the Nominating and Corporate
Governance Committee will, for our 2010 shareholder annual meeting, consider
director candidates recommended by certain of our shareholders, subject to the
shareholder recommendation procedure set forth in the Nominating and Corporate
Governance Committee Charter.  A copy of the charter is available as
described elsewhere in this Proxy Statement.  See, "Governance of
Company: Board and Committee Meetings – Nominating and Corporate Governance
Committee."





A shareholder of ours recommending such a
candidate must submit the recommendation to the Nominating and Corporate
Governance Committee timely in order to ensure committee consideration of
it.  To be timely, the recommendation must be received at the
following address not earlier than December 18, 2009 and not later than January
19, 2010:





ATTN: Chair, Nominating and Corporate
Governance


Committee (2010 Annual Meeting
Recommendation)


General Communication, Inc.


2550 Denali Street, Suite 1000


Anchorage,
Alaska  99503





The shareholder recommendation must be
accompanied by a written statement in support of it.  The statement
must describe various matters as specified in the Nominating and Corporate
Governance Committee Charter, including the name and address of the recommended
candidate, his or her occupation and certain other information about him or her
as well as about the shareholder recommending the candidate.  The
recommendation and statement must also be accompanied by written consents by the
recommending shareholder and recommended candidate, should the committee and our
board accept the shareholder recommendation, to being named in our 2010
management proxy statement as a nominee and to serving as a director if
elected.





80


Our Nominating and Corporate Governance
Committee is only required to consider a shareholder recommendation made by a
shareholder of ours who, as of the date of the shareholder recommendation and
the record date for the 2010 annual meeting, is a beneficial owner of at least
one share of our voting securities.  That is, the shareholder must be
the holder of at least one share of Class A common stock, one share


of
Class B common stock, or one share of preferred stock which either has voting
rights directly or indirectly on an equivalent as-converted basis in our common
stock.





Upon timely receipt of a recommendation and
statement in support of it satisfying the requirements of the Nominating and
Corporate Governance Committee Charter, our Nominating and Corporate Governance
Committee shall review the recommendation, subject to minimum qualifications,
skills and characteristics and other requirements of our board as set forth in
the charter and as generally described elsewhere in this Proxy
Statement.  See, "Governance of Company: Board and Committee Meetings
– Nominating and Corporate Governance Committee."  The shareholder
recommendation will be evaluated by the committee and the committee's
determination on that recommendation will be subject to those criteria the same
as will be the case for a determination by the committee on existing board
members standing for re-election.





With regard to each nominee, if any, approved
by our Nominating and Corporate Governance Committee for inclusion in our 2010
proxy (other than executive officers or directors standing for re-election), the
persons or entities who recommended the nominee will be identified in the proxy
statement for that meeting as falling within one of the following
categories:  security holder, non-management director, chief executive
officer, other executive officer, third-party search firm, or other specified
source.





In the event our Nominating and Corporate
Governance Committee shall receive by a date not later than January 19, 2010 a
shareholder recommendation from a shareholder or group of shareholders that
beneficially owned more than 5% of our voting common stock for at least one year
as of the date of the recommendation, the committee shall identify in our 2010
proxy statement, the recommended candidate and the shareholder or shareholder
group recommending the candidate, and disclose whether the committee chose to
nominate the candidate, with one limitation.  Should those persons not
give us written consent to identify them, we would not be required to identify
them in that proxy statement.





81


PROXY CARD
            PROXY
CARD








GENERAL
COMMUNICATION, INC.





THIS
PROXY IS SOLICITED BY THE BOARD OF DIRECTORS





FOR
THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON





JUNE
29, 2009





The undersigned, having received the Notice of
Annual Meeting and Proxy Statement dated May 18, 2009 and holding Class A common
stock or Class B common stock of General Communication, Inc. ("Company") of
record determined as of May 4,  2009 ("Record Date"), hereby appoints
Ronald A. Duncan, on behalf of the board of directors of the Company, and each
of them, the proxy of the undersigned, with full power of substitution, to
attend that meeting, to be held at the Anchorage Hilton Hotel at 500 West 3rd
Avenue, in Anchorage, Alaska at 6:00 p.m. (Alaska Daylight Time) on
Monday,  June 29, 2009 and any adjournment or adjournments of
that meeting ("Annual Meeting").  The undersigned further directs
those holders of this proxy to vote at that Annual Meeting, as specified in this
Proxy Card, all of the shares of stock of the undersigned in the Company, which
the undersigned would be entitled to vote if personally present on the following
items (each item is described in the Proxy Statement through which the board
solicits the undersigned's proxy) as indicated:





(1)
            Election of
      Directors – To elect three directors, each for a three-year term, as part
      of Class II of our eight member classified board of directors and to elect
      one director to complete the remaining two years of the three-year term in
      Class I of that board, as identified in this Proxy Card.  The board
      recommends a vote FOR the listed
  nominees:





o           FOR
the nominees listed
below                                                                           o          WITHHOLD
AUTHORITY


(except as marked to
the                                                                                                 
 to vote for nominees


contrary)                                                                                                                         
 listed below





Class
II:            Stephen
M. Brett


Ronald A. Duncan


Stephen R. Mooney





Class
I:             Mark
W. Kroloff









INSTRUCTIONS:





To
      withhold authority under this proxy to vote for one or more of the
      individual nominees, draw a line through the name of the nominee for which
      you wish the authority to be
withheld.





(2)
            To approve an
      amendment to our Amended and Restated 1986 Stock Option Plan specifically
      permitting a one-time offer of exchange of certain options,
      granted under the plan to certain of the officers and employees of the
      Company and other persons, for grants of certain stock awards under the
      plan – The board
      recommends a vote FOR this item
(2):





oFOR                                           oAGAINST                                           oABSTAIN





(3)
            To transact
      in the proxy holder's discretion such other business as may come before
      the Annual Meeting, including the approval (but not the ratification) of
      the minutes of the June 23, 2008 annual meeting of shareholders of the
      Company and other matters as described in the Proxy
      Statement.  As of the record date, the Company's board was
      unaware of any other business to be addressed at the meeting other than
      the approval of those minutes.





In the event the undersigned shall choose to
mark this Proxy Card as withholding authority to vote for one or more nominees
as listed above or otherwise as abstaining from a vote on a proposal set forth
above, this Proxy Card will, nevertheless, be used for purposes of establishing
a quorum at the Annual Meeting.





In the event the Proxy Card shall have
conflicting indications of more than one selection on a vote on a nominee or
otherwise on a proposal to be addressed at the Annual Meeting, the Proxy Card
will not be voted on that matter but will be used for purposes of establishing a
quorum at the meeting.  Voting by proxy is subject to other conditions
as set forth in the Proxy Statement.  See within the Proxy Statement,
"About the Annual Meeting."





The undersigned hereby ratifies and confirms
all that the proxy holder or the holder's substitute lawfully does or causes to
be done by virtue of this proxy and hereby revokes any and all proxies given
prior to this proxy by the undersigned to vote at the Annual Meeting or any
adjournments of the meeting.  The undersigned acknowledges receipt of
the Notice of the Annual Meeting and the Proxy Statement accompanying that
notice.  If transmitting voting instructions electronically, the
undersigned acknowledges and hereby declares that the undersigned has authorized
that transmission as reflected through the undersigned's following







the instructions
above stated to cause those instructions to be submitted to the proxy holder
through the undersigned's agent, the Company's transfer agent or other
authorized person.





DATED:_____________________                                   ________________________________


Signature of Shareholder


Print Name:______________________











________________________________


Signature of Shareholder


Print Name:______________________




If voting this proxy
in paper format, please date this Proxy Card, sign it above as your name appears
printed elsewhere on this Proxy Card, and return it in the enclosed envelope
which requires no postage.  Joint owners should each sign
personally.  When signing as attorney, executor, trustee, guardian,
administrator, or officer of a corporation or other entity, please give that
title.  If transmitting voting instructions electronically, please
follow instructions as set forth in the Notice of Internet Availability of Proxy
Materials ("Internet Notice") and below.





The board recommends a vote FOR
proposals (1)–(2).  This Proxy Card, when properly executed, will be
voted as directed.  If no clear direction is made, it will be voted
FOR proposals (1)–(2).  If any other business shall be properly
presented at the Annual Meeting, this Proxy Card will be voted in accordance
with the best judgment and discretion of the proxy holder.





Electronic
Voting Alternatives





Although you may have received your proxy
materials by mail this year, you can still vote the shares conveniently by
telephone or by the internet.  Please see below for
instructions.





Important notice regarding internet
availability of proxy materials for the Annual Meeting.  Letter
to Shareholders, Notice of Annual Meeting, Proxy Statement and Annual Report are
available at sendmaterial@proxyvote.com.





Vote by internet –www.proxyvote.com.Use the internet
to transmit your voting instructions and for electronic delivery of information
up until 11:59 p.m. Eastern Time the day prior to the Annual
Meeting.  Have your Proxy Card available when you access the website,
and follow the instructions to obtain your records and to create an electronic
voting instruction form.








Electronic delivery of future
shareholder communications.To reduce the costs incurred by
the Company in mailing proxy materials, you can consent to receiving all future
proxy materials and annual reports electronically via email or the
internet.  To sign up for electronic delivery, please follow the
instructions above to vote using the internet and, when prompted, indicate that
you agree to receive or access shareholder communications electronically in
future years.





Vote by telephone –
1.800.690.6903.  Use any touch-tone telephone to transmit your
voting instructions up until 11:59 p.m. Eastern Time the day prior to the Annual
Meeting.  Have your Proxy Card available when you call, and then
follow the instructions.





Vote by mail.  Mark,
sign and date your Proxy Card, and return it in the postage-paid envelope we
have provided or return it to:





Vote Processing


c/o Broadridge


51 Mercedes Way


Edgewood, NY 11717





SHAREHOLDERS
ARE URGED TO DATE, MARK, SIGN AND RETURN THIS PROXY CARD IN THE ENVELOPE
PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED WITHIN THE UNITED
STATES.