UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                         FORM 10-Q/ A (Amendment No. 1)

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

                  For the quarterly period ended June 30, 2004

              [ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                          Commission File Number 0-556

                             SUREWEST COMMUNICATIONS
--------------------------------------------------------------------------------
             (Exact Name of Registrant as Specified in Its Charter)

                 California                                68-0365195
--------------------------------------------       --------------------------
        (State or Other Jurisdiction                    (I.R.S. Employer
      of Incorporation or Organization)                Identification No.)

200 Vernon Street, Roseville, California                      95678
----------------------------------------           --------------------------
(Address of Principal Executive Offices)                   (Zip Code)

        Registrant's telephone number, including area code (916) 786-6141
                                                           --------------


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                                    Yes X No

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act).

                                    Yes X No

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.

As of July 31, 2004,  14,579,501  shares of the  registrant's  Common Stock were
outstanding.




<PAGE>





                             SUREWEST COMMUNICATIONS

                                   FORM 10-Q/A

                      QUARTERLY PERIOD ENDED JUNE 30, 2004

                                EXPLANATORY NOTE

This Amendment No. 1 on Form 10-Q/A for SureWest  Communications (the "Company")
for the  quarter  ended June 30,  2004,  is being filed to amend and restate the
items described below contained in the Company's  Quarterly  Report on Form 10-Q
for such period originally filed with the Securities and Exchange  Commission on
August 9, 2004.

This  Amendment  No. 1 amends  Part I,  Item 1,  Financial  Statements;  Item 2,
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations;  Item 4,  Controls  and  Procedures;  and  Part  II,  Item 1,  Legal
Proceedings, for the following purposes:

     o    To amend Part I, Item 1, Financial  Statements,  to provide additional
          textual information in certain of the Notes to Condensed  Consolidated
          Financial  Statements  (without  any  modifications  to the  financial
          statement amounts or quantitative disclosures in the footnotes);

     o    To amend Part I, Item 2, to  clarify  information  regarding  Costs of
          Services and Products, and provide supplementary information regarding
          "Liquidity and Capital  Resources" and "Critical  Accounting  Policies
          and Estimates";

     o    To  amend  Part  I,  Item  4,  Controls  and  Procedures,  to  clarify
          management's  position regarding  disclosure  controls and procedures,
          and provide  additional  information  regarding the matters  discussed
          therein; and

     o    To amend Part II, Item 1, Legal  Proceedings to clarify the amounts of
          certain monetary figures described therein.

Pursuant to Rule 12b-15  promulgated under the Securities  Exchange Act of 1934,
as amended,  this Form 10-Q/A sets forth the complete  text of each item of Form
10-Q  listed  above  as  amended,  and  included  in  Exhibits  31  and  32  new
certifications by the Chief Executive Officer and Chief Financial Officer.

For the  convenience  of the reader,  this Form  10-Q/A sets forth the  original
filing date, except as amended by this Amendment No. 1. In order to preserve the
nature and  character of the  disclosures  set forth in such items as originally
filed,  this Amendment No. 1 does not reflect events  occurring after the filing
of the original  Quarterly Report on Form 10-Q,  except to reflect the revisions
described  above,  and  except  with  respect  to Part I, Item 4,  Controls  and
Procedures,  which  has been  updated  for  events  and  developments  occurring
subsequent to the filing of the original  Quarterly  Report on Form 10-Q through
the date of filing of this Amendment No. 1. Accordingly, this Form 10-Q/A should
be read in conjunction with the Company's  filings made subsequent to the filing
of the original Form 10-Q, including any amendments to those filings.



<PAGE>


<TABLE>
<CAPTION>

                                TABLE OF CONTENTS


                                                                                                                  Page

PART I.  FINANCIAL INFORMATION
<S>                     <C>                                                                                       <C>
Item 1.       Financial Statements..............................................................................    4

Item 2.       Management's Discussion And Analysis of Financial Condition and Results of Operations.............   16

Item 3.       Quantitative and Qualitative Disclosures About Market Risk........................................   38

Item 4.       Controls And Procedures...........................................................................   39

PART II. OTHER INFORMATION

Item 1.       Legal Proceedings.................................................................................   48

Item 4.       Submission of Matters to a Vote for Security Holders..............................................   50

Item 6.       Exhibits And Reports On Form 8-K..................................................................   51

SIGNATURES    ..................................................................................................   55



</TABLE>




<PAGE>




                             SUREWEST COMMUNICATIONS
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)
                (Amounts in thousands, except per share amounts)
<TABLE>
<CAPTION>

                                                         Quarter Ended June 30,              Six Months Ended June 30,
                                                         2004               2003              2004               2003
<S>                                                     <C>                <C>                 <C>            <C>
                                                    ----------         ---------         ---------          ---------
   Operating revenues:
     Local service                                   $  16,699          $  16,292         $  33,833          $  31,288
     Network access service                             11,760             13,984            23,370             27,401
     Directory advertising                               3,939              3,705             8,041              7,543
     Long distance service                               1,336              1,257             2,553              2,510
     Wireless service                                    7,629              6,686            15,049             13,189
     Internet service                                    4,268              3,957             8,419              7,671
     Residential broadband service                       4,084              2,239             7,637              4,052
     Business broadband service                          1,362                917             2,632              1,667
     Other                                               1,038              1,215             2,169              2,306
                                                     ---------          ---------         ---------          ---------
       Total operating revenues                         52,115             50,252           103,703             97,627

   Operating expenses:
     Cost of services and products (exclusive
      of depreciation and amortization)                 18,027             15,052            36,638             31,036
    Customer operations and selling                      8,470              8,184            17,108             16,552
    General and administrative                          10,272              8,938            21,559             17,669
    Depreciation and amortization                       11,575             12,511            22,869             24,898
                                                     ----------         ---------         ---------          ---------
       Total operating expenses                         48,344             44,685            98,174             90,155
                                                     ----------         ---------         ---------          ---------
   Income from operations                                3,771              5,567             5,529              7,472

   Other income (expense):
    Interest income                                         44                189               103                272
    Interest expense                                    (1,073)            (1,262)           (2,158)            (2,094)
    Other, net                                             (87)               136              (158)               109
                                                     ---------          ---------         ---------           --------
       Total other expense, net                         (1,116)              (937)           (2,213)            (1,713)
                                                     ---------          ---------         ---------           --------
   Income before income taxes                            2,655              4,630             3,316              5,759

   Income taxes                                          1,094              1,917             1,374              2,371
                                                     ---------          ---------         ---------           --------
   Net income                                        $   1,561          $   2,713         $   1,942           $  3,388
                                                     =========          =========         =========           ========
   Basic and diluted earnings per share (1)          $    0.11          $    0.19         $    0.13           $   0.23
                                                     =========          =========         =========           ========
   Cash dividends per share (2)                      $    0.25          $    0.25         $    0.50           $   0.50
                                                     =========          =========         =========           ========
   Shares of common stock used to calculate
    earnings per share:
    Basic                                               14,530             14,521            14,530             14,521
                                                     =========          =========         =========           ========
    Diluted                                             14,576             14,531            14,573             14,533
                                                     =========          =========         =========           ========
</TABLE>

(1)  Shares used in the computation of basic earnings per share are based on the
     weighted average number of common shares  outstanding,  excluding  unvested
     restricted  common  shares.  Shares  used  in the  computation  of  diluted
     earnings per share are based on the weighted  average  number of common and
     other potentially dilutive securities outstanding in each period.

(2)  Cash  dividends per share are based on the actual  dividends per share,  as
     declared by the Company's Board of Directors.

                             See accompanying notes.


<PAGE>



                             SUREWEST COMMUNICATIONS
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)
                             (Amounts in thousands)
<TABLE>
<CAPTION>

                                                                                        June 30,        December 31,
    ASSETS                                                                                2004              2003
                                                                                       -----------      ------------
        <S>                                                                               <C>                  <C>
    Current assets:
       Cash and cash equivalents                                                       $    14,675       $    39,008
       Short-term investments                                                                6,975             2,699
       Accounts receivable, net                                                             19,930            18,846
       Deferred income tax asset                                                               209               209
       Inventories                                                                           5,541             5,537
       Deferred directory costs                                                              4,639             5,320
       Prepaid expenses                                                                      4,581             2,752
       Other current assets                                                                  1,329               688
                                                                                       -----------      ------------
    Total current assets                                                                    57,879            75,059

    Property, plant and equipment, net                                                     354,021           342,967

    Intangible and other assets:
       Wireless spectrum licenses, net                                                      13,566            13,566
       Goodwill                                                                              2,171             2,171
       Intangible asset relating to pension plans                                              125               125
       Intangible asset relating to favorable operating leases, net                            577               649
       Deferred charges and other assets                                                       638               672
                                                                                       -----------      ------------
                                                                                            17,077            17,183
                                                                                       -----------      ------------
                                                                                       $   428,977       $   435,209
                                                                                       ===========      ============

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current liabilities:
       Current portion of long-term debt                                               $     3,779       $     3,779
       Current portion of capital lease obligations                                            342               347
       Accounts payable                                                                      1,071             2,206
       Other accrued liabilities                                                            13,044            14,727
       Estimated shareable earnings obligations                                             12,642            13,389
       Advance billings and deferred revenues                                               10,315             9,882
       Accrued income taxes                                                                  1,142             1,908
       Accrued compensation                                                                  5,628             4,860
                                                                                       -----------      ------------
    Total current liabilities                                                               47,963            51,098

    Long-term debt                                                                          92,799            92,870
    Long-term capital lease obligations                                                         99               265
    Deferred income taxes                                                                   27,683            25,946
    Other liabilities and deferred revenues                                                  7,771             7,502
    Commitments and contingencies

    Shareholders' equity:
       Common stock, without par value; 100,000 shares authorized, 14,579 and
         14,578 shares issued and outstanding at
         June 30, 2004 and December 31, 2003, respectively                                 160,933           160,911
       Deferred stock-based compensation                                                      (961)           (1,419)
       Accumulated other comprehensive loss                                                   (261)             (261)
       Retained earnings                                                                    92,951            98,297
                                                                                       -----------      ------------
    Total shareholders' equity                                                             252,662           257,528
                                                                                       -----------      ------------
                                                                                       $   428,977       $   435,209
                                                                                       ===========      ============
</TABLE>

                             See accompanying notes.


<PAGE>



                             SUREWEST COMMUNICATIONS
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
                                   (Unaudited)
                             (Amounts in thousands)

<TABLE>
<CAPTION>
                                                                                              Six Months Ended
                                                                                                  June 30,
                                                                                           2004              2003
                                                                                        ----------        ----------
        <S>                                                                               <C>                   <C>
    Cash flows from operating activities
       Net income                                                                       $    1,942        $    3,388
       Adjustments to reconcile net income to net cash provided by operating
         activities:
           Depreciation and amortization                                                    22,869            24,898
           Provision for deferred income taxes                                               1,736             4,887
           Provision for doubtful accounts                                                   1,329             1,627
           Stock-based compensation                                                            469               129
           Other, net                                                                           71               538
           Net changes in:
                Receivables                                                                 (2,413)           (2,679)
                Refundable and accrued income taxes, net                                      (766)           (1,449)
                Inventories, prepaid expenses and other current assets                      (2,643)           (1,389)
                Accounts payable                                                            (1,135)              996
                Accrued liabilities and other deferred credits                                 (17)           11,271
                                                                                        ----------        ----------
         Net cash provided by operating activities                                          21,442            42,217

       Capital expenditures for property, plant and equipment, including network
         parts inventory                                                                   (33,968)          (32,348)
       Purchases of held-to-maturity investments                                            (4,276)          (38,763)
        Increase in deferred charges and other assets                                          (11)              (30)
                                                                                        ----------        ----------
         Net cash used in investing activities                                             (38,255)          (71,141)

     Cash flows from financing activities:
       Repayment of short-term borrowings                                                        -           (15,000)
       Proceeds from long-term debt                                                              -            60,000
       Principal payments of long-term debt and capital lease obligations                     (242)           (1,217)
       Debt issuance costs                                                                       -              (367)
       Proceeds from exercise of stock options                                                  10                 -
       Dividends paid                                                                       (7,288)           (7,268)
                                                                                        ----------        ----------
         Net cash (used in) provided by financing activities                                (7,520)           36,148
                                                                                        ----------        ----------

    (Decrease) increase in cash and cash equivalents                                       (24,333)            7,224

    Cash and cash equivalents at beginning of period                                        39,008            20,385
                                                                                        ----------        ----------

    Cash and cash equivalents at end of period                                          $   14,675        $   27,609
                                                                                        ==========        ==========
</TABLE>




                             See accompanying notes.

<PAGE>



                             SUREWEST COMMUNICATIONS
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
           (Amounts in thousands, except share and per share amounts)

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The condensed consolidated financial statements of SureWest  Communications (the
"Company") have been prepared in accordance with accounting principles generally
accepted in the U.S. for interim financial information and pursuant to the rules
and  regulations  of the  Securities  and Exchange  Commission  ("SEC").  In the
opinion of management,  all  adjustments  (consisting  only of normal  recurring
adjustments) considered necessary for a fair presentation of the results for the
interim  periods  shown have been  included.  Certain  information  and footnote
disclosures  normally  included  in  annual  financial  statements  prepared  in
accordance  with  U.S.  generally  accepted  accounting   principles  have  been
condensed or omitted  pursuant to such SEC rules and  regulations and accounting
principles  applicable  for  interim  periods.   Management  believes  that  the
disclosures made are adequate to make the information  presented not misleading.
These condensed  consolidated financial statements should be read in conjunction
with the  consolidated  financial  statements and notes thereto  included in the
Company's 2003 Annual Report on Form 10-K filed with the SEC.

The Company is a holding  company with  wholly-owned  subsidiaries  that provide
integrated  communications  services  in  Northern  California.   The  Company's
principal  operating   subsidiary  is  SureWest  Telephone  (formerly  known  as
Roseville  Telephone  Company).  SureWest  Directories,  SureWest  Long Distance
(formerly  known as Roseville  Long Distance  Company),  SureWest  Broadband and
SureWest Wireless are each subsidiaries of the Company. The Company expects that
the sources of its  revenues and its cost  structure  may be different in future
periods,  both as a result  of its entry  into new  communications  markets  and
competitive forces in each of the markets in which the Company has operations.

Stock-based Compensation

The Company has two stock-based  compensation plans.  Effective January 1, 2003,
the Company  adopted  the fair value  recognition  provisions  of  Statement  of
Financial  Accounting  Standards  ("SFAS") No. 123,  "Accounting for Stock-Based
Compensation."  Under the prospective method of adoption selected by the Company
under the provisions of SFAS No. 148, "Accounting for Stock-Based Compensation -
Transition and  Disclosure,"  the fair value method of accounting was applied to
all employee  awards  granted,  modified,  or settled after January 1, 2003. The
adoption of the fair value recognition  provisions' of SFAS No. 123 did not have
a material effect on the Company's condensed  consolidated  financial statements
for the quarter and six months  ended June 30,  2003.  Stock-based  compensation
associated  with employee stock options is recognized  over the vesting  periods
(which range from 1 to 5 years) using the graded vesting method.

The fair values of the Company's  employee  stock options were  estimated at the
date of grant using the  Black-Scholes  option-pricing  model with the following
weighted-average  assumptions for the quarter and six months ended June 30, 2004
and 2003:
<TABLE>
<CAPTION>

                                Quarter Ended June 30,     Six Months Ended June 30,
                                ------------------------   --------------------------
                                2004             2003        2004             2003
                                ----------  ------------   -----------  -------------
        <S>                        <C>              <C>        <C>             <C>
  Risk-free Interest Rate          -               1.73%        -               1.79%
  Expected Dividend Yield          -               2.50%        -               2.50%
  Expected Volatility              -              42.72%        -              42.48%
  Expected Lives                   -           4.0 years        -           4.0 years

</TABLE>

The Black-Scholes option pricing model includes  assumptions  regarding dividend
yields, expected volatility,  expected lives and risk-free interest rates. These
assumptions  reflect  management's  best  estimates,  but  these  items  involve
inherent  uncertainties  based on market  conditions  generally  outside  of the
control of the Company.  As a result,  if other assumptions had been used in the
current period, actual and pro forma stock-based compensation expense could have
been materially  different.  If management uses different  assumptions in future
periods, stock-based compensation expense could be materially impacted in future
periods.


<PAGE>



                             SUREWEST COMMUNICATIONS
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

The  expense  related  to  stock-based  employee  compensation  included  in the
determination  of net income is less than that which would have been  recognized
if the fair value  method  had been  applied  to all  awards  granted  after the
original effective date of SFAS No. 123. If the Company had elected to adopt the
fair value recognition  provisions of SFAS No. 123 as of its original  effective
date, pro forma net income and earnings per share would be as follows:
<TABLE>
<CAPTION>

                                                       Quarter Ended June 30,          Six Months Ended June 30,
                                                    ----------------------------      ----------------------------
                                                       2004             2003             2004             2003
                                                    ------------  --------------      ------------  --------------
        <S>                                             <C>             <C>               <C>             <C>
     Net income, as reported                        $    1,561       $    2,713       $    1,942       $    3,388


     Add:  Stock-based employee compensation
      expense included in reported net income,
      net of related tax effects                          112               36              275               76

     Deduct:  Total stock-based employee
      compensation expense determined using
      the fair value method for all awards,
      net of related tax effects                         (295)            (387)            (767)            (782)
                                                    ------------  --------------      ------------  --------------
     Pro forma net income                           $    1,378       $    2,362       $    1,450       $    2,682
                                                    ============  ==============      ============  ==============

     Earnings per share:

      Basic--as reported                            $     0.11       $     0.19       $     0.13       $     0.23
      Basic--pro forma                              $     0.09       $     0.16       $     0.10       $     0.19

      Diluted--as reported                          $     0.11       $     0.19       $     0.13       $     0.23
      Diluted--pro forma                            $     0.09       $     0.16       $     0.10       $     0.19
</TABLE>


There were no  options  granted to  employees  during the  quarter or six months
ended June 30,  2004.  The  weighted-average  grant date fair  values of options
granted to employees were $8.81 per share and $8.75 per share during the quarter
and six months ended June 30, 2003, respectively.

Other Comprehensive Income (Loss)

The Company's  consolidated  net income equaled its  consolidated  comprehensive
income for the quarters and six-month periods ended June 30, 2004 and 2003.

As of June 30, 2004 and 2003, the accumulated other  comprehensive loss was $261
and $1,637, respectively, which consisted of minimum pension and post-retirement
benefit liability adjustments, net of income taxes.

Cumulative Effect of Change in Accounting Principle

The Company  adopted SEC Staff  Accounting  Bulletin  ("SAB") No. 101,  "Revenue
Recognition in Financial  Statements," effective January 1, 2000, which requires
non-recurring  revenues  associated  with service and  activation  charges to be
deferred.  The  cumulative  effect of this change in  accounting  principle  was
$3,273, net of tax, ($0.21 per share) in 2000.



<PAGE>



For the  three-month  periods  ended  March 31 and June 30,  2004 and 2003,  the
Company  recognized the following  revenues that were included in the cumulative
effect adjustment as of January 1, 2000:

     Three Months Ended:
     -------------------
        March 31, 2004                      $  56
        June 30, 2004                       $  40
        March 31, 2003                      $ 128
        June 30, 2003                       $ 114

The net  effect of these  revenues  in 2004 was to  increase  net  income in the
three-month periods ended March 31 and June 30 by $32 (no effect on earnings per
share) and $23 (no effect on earnings per share), respectively.

The net  effect of these  revenues  in 2003 was to  increase  net  income in the
three-month  periods ended March 31 and June 30 by $75 ($0.01 per share) and $68
(no effect on earnings per share), respectively.

Adjustments and Reclassifications

During the Company's  financial  statement closing process for the quarter ended
December 31, 2003,  certain matters were  identified  related to prior financial
reporting  periods  that  necessitated  the  recording  of  adjustments  to  the
Company's  condensed   consolidated   financial  statements.   Such  adjustments
pertained principally to property,  plant and equipment, and management believes
that  weaknesses  in the  Company's  internal  controls  caused the errors  that
resulted  in  these  adjustments.  The  Company  does  not  believe  any  of the
aforementioned  amounts are material,  individually or in the aggregate,  to the
respective  prior interim  periods based on both  quantitative  and  qualitative
factors,  including  the trend of operating  results.  Accordingly,  the Company
prospectively  corrected these errors during the fourth quarter of 2003. Certain
of the  aforementioned  amounts relating to prior periods would have reduced the
Company's consolidated net income by $119, or $0.01 per basic and diluted share,
and $342,  or $0.02 per basic and  diluted  share,  during the  quarter  and six
months ended June 30, 2003, respectively,  had such errors been corrected in the
periods in which they originated.

Certain  amounts  in  the  Company's  2003  condensed   consolidated   financial
statements  have  been  reclassified  to  conform  to  the  presentation  of the
Company's 2004 condensed consolidated financial statements.

2. CORPORATE TREASURY INVESTIGATION

In December 2003, the Company discovered certain irregular bank transactions and
deposits  in a routine  investigation  following  the abrupt  resignation  of an
employee in the Company's  Corporate Finance Department.  Immediately  following
the Company's  initial  review that  uncovered  suspect  transfers,  the Company
broadened  its  review  of the  investment  and cash  operations,  and a special
corporate  investigation  was  launched by the Audit  Committee  of the Board of
Directors,   which  engaged   outside   counsel  and  forensic   auditors.   The
investigations   revealed  concealed  illegal  transfers  in  violation  of  the
Company's investment and cash management policies. The Company believes that the
irregularities  were  limited  to the  2003  calendar  year.  The  investigation
suggests  that as much as $25,000 may have been  involved in the scheme.  Nearly
all of the funds have been recovered; however, at present,  approximately $1,828
remains  outstanding and was reflected as a non-operating  loss in the Company's
2003 consolidated financial statements. The Company has filed an insurance claim
to  recover  the  missing  funds.   In  January  2004,  the  Federal  Bureau  of
Investigation ("FBI") launched its own probe into the illegal funds transfer. On
February 5, 2004, the FBI made three arrests,  including the former  employee of
the Company's Corporate Finance Department, on charges of mail fraud, conspiracy
and money  laundering.  The Company has been advised that one of the individuals
has entered a plea of guilty.  The Company has filed a civil lawsuit  seeking to
recover the  misappropriated  funds and other costs from five  individuals and a
private company  allegedly  associated  with the fraudulent  scheme to illegally
transfer the Company's funds to outside  accounts.  The Company will recognize a
recovery of funds,  if any, in future periods to the extent of its insurance and
litigation recoveries.



<PAGE>



3. CHANGE IN ESTIMATE

In January 2004, the Company  revised its long-term  network  operating plan for
its  Telecommunications  ("Telecom")  and  Wireless  segments as a result of the
successful  adoption  of certain  new  technologies  that  enable the Company to
maximize  the return on  existing  network  facilities  and migrate to other new
technologies at the point in time in which the benefit to do so exceeds the cost
of  conversion.  As a result of this change in  strategic  direction,  which was
formally  approved by the  Company's  Board of Directors in December  2003,  the
Company has  evaluated  the  appropriateness  of its  estimated  useful lives of
certain property, plant and equipment at both the Telecom and Wireless segments.
Based on this  evaluation,  the Company  increased the estimated useful lives of
Telecom's digital  switching,  circuit and cable equipment by one to three years
and Wireless' base stations,  towers and network software by one to eight years.
The Company also  decreased the estimated  useful lives of certain other Telecom
assets, including certain other switching and voicemail equipment. These changes
were made effective January 1, 2004. The Company's revisions have been supported
by an assessment  and report from an  independent  third party with expertise in
this area that found the  revisions to be  reasonable  in light of the Company's
plan and useful life estimates in comparable businesses.

During the quarter and six months ended June 30,  2004,  this change in estimate
decreased consolidated depreciation expense by $2,679 and $5,956,  respectively,
and  increased  consolidated  net income by $1,575  ($0.11 per share) and $3,490
($0.24 per share),  respectively.  This change in accounting  estimate decreased
Telecom  depreciation  expense and increased  Telecom income from  operations by
$1,319  and  $3,288  for the  quarter  and  six  months  ended  June  30,  2004,
respectively.   In  addition,   Wireless  depreciation  expense  and  loss  from
operations decreased by approximately $1,360 and $2,668,  respectively,  for the
quarter  and six  months  ended  June 30,  2004 as a result  of this  change  in
accounting estimate.

4. BUSINESS SEGMENTS

The Company has three  reportable  business  segments:  Telecom,  Broadband  and
Wireless. The Telecom segment includes SureWest Telephone,  SureWest Directories
and SureWest Long Distance, which provide landline telecommunications  services,
directory  advertising,  Digital Subscriber Line ("DSL") service,  long distance
services and certain non-regulated  services.  SureWest Telephone,  which is the
principal operating  subsidiary of the Telecom segment,  provides local and toll
telephone services,  network access services and certain non-regulated services.
SureWest Directories  publishes and distributes SureWest Telephone's  directory,
including the sale of yellow pages  advertising.  SureWest  Directories  is also
engaged in the business of producing, publishing and distributing directories in
other Northern California  communities  outside of SureWest  Telephone's service
area. SureWest Long Distance is a reseller of long distance services.

The Broadband segment includes the Company's subsidiaries SureWest Broadband and
SureWest Broadband  Business  Services.  SureWest Broadband Business Services is
comprised of a division of SureWest  Telephone  operating as a Competitive Local
Exchange Carrier.  The Broadband  segment provides various  services,  including
high-speed and dial-up  Internet,  digital video,  local,  network access,  toll
telephone and managed services in the greater  Sacramento  area,  principally to
customers  residing  outside of SureWest  Telephone's  service area. The Company
offers  high-speed  Internet,  digital video and local and long  distance  phone
service  as a  bundled  package  referred  to as  fiber-to-the-premise  ("FTTP")
(previously  referred to as "Triple Play"). In December 2003, SureWest Broadband
began offering digital video services to customers  inside SureWest  Telephone's
service area.

The Wireless segment  consists of the Company's  subsidiary  SureWest  Wireless,
which provides wireless services. SureWest Wireless derives its revenue from the
provision   of  wireless   voice   services,   sales  of  handsets  and  related
communication equipment, long distance,  handset insurance,  roaming service and
custom  calling  features.  Wireless  services are provided on a  month-to-month
basis and are generally  billed in advance for  non-contract  subscribers and in
arrears for contract subscribers.

In accordance with the provisions of SFAS No. 131, "Disclosure About Segments of
an Enterprise and Related  Information,"  the Company has aggregated  certain of
its  operating  segments  within the Telecom and Broadband  segments  because it
believes that such operating segments share similar economic characteristics.

Corporate Operations are allocated to the appropriate segments, except for cash,
investments,  certain  property,  plant, and equipment and  miscellaneous  other
assets. However, the investment income associated with cash and investments held
by  Corporate  Operations  is included in the results of the  operations  of the
Company's segments.  The Company evaluates the performance of its segments based
on income (loss) from operations.

These segments are strategic  business units that offer  different  products and
services.  The  Company  accounts  for  intersegment  revenues  and  expenses at
prevailing  market  rates.  The Company's  business  segment  information  is as
follows:
<TABLE>
<CAPTION>

                                                                                 Corporate     Intercompany
                                       Telecom      Broadband      Wireless     Operations     Eliminations   Consolidated
                                     ----------    -----------    ----------    ----------   ---------------  -------------
        <S>                             <C>              <C>            <C>             <C>          <C>           <C>
  For the three months ended June
    30, 2004:
  Operating revenues from
     external customers              $   34,772    $    9,714     $    7,629    $        -   $         -      $   52,115
  Intersegment revenues                   6,489           435            378             -        (7,302)              -
  Operating expenses *                   20,320        14,594          9,157             -        (7,302)         36,769
  Depreciation and amortization           6,348         2,271          2,956             -             -          11,575
  Income (loss) from operations      $   14,593    $   (6,716)    $   (4,106)   $        -   $         -      $    3,771

  For the three months ended June
    30, 2003:
  Operating revenues from
     external customers              $   36,453    $    7,113     $    6,686    $        -    $        -      $   50,252
  Intersegment revenues                   5,867           254            146             -        (6,267)              -
  Operating expenses *                   19,996        10,352          8,093             -        (6,267)         32,174
  Depreciation and amortization           7,691           965          3,855             -             -          12,511
  Income (loss) from operations      $   14,633    $   (3,950)    $   (5,116)   $        -    $        -      $    5,567

  As of and for the six months
    ended June 30, 2004:
  Operating revenues from
     external customers              $   69,966    $   18,688     $   15,049    $        -   $         -      $  103,703
  Intersegment revenues                  12,704           888            689             -       (14,281)              -
  Operating expenses *                   43,137        28,528         17,921             -       (14,281)         75,305
  Depreciation and amortization          12,527         4,289          6,053             -             -          22,869
  Income (loss) from operations          27,006       (13,241)        (8,236)            -             -           5,529
  Total assets                       $  590,743    $  168,810     $  135,240    $  139,485   $  (605,301)     $  428,977

  As of and for the six months
    ended June 30, 2003:
  Operating revenues from
     external customers              $   71,048    $   13,390     $   13,189    $        -    $        -      $   97,627
  Intersegment revenues                  11,390           782            302             -       (12,474)              -
  Operating expenses *                   41,471        20,453         15,807             -       (12,474)         65,257
  Depreciation and amortization          15,450         1,814          7,634             -             -          24,898
  Income (loss) from operations          25,517        (8,095)        (9,950)            -             -           7,472
  Total assets                       $  561,194    $   82,689     $  132,380    $   68,497   $  (390,893)     $  453,867

</TABLE>
* Exclusive of depreciation and amortization



<PAGE>



5. ESTIMATED SHAREABLE EARNINGS OBLIGATIONS AND OTHER REGULATORY MATTERS

Certain  of the  Company's  rates  are  subject  to  regulation  by the  Federal
Communications Commission ("FCC") and the California Public Utilities Commission
("CPUC").  Pending and future  regulatory  actions may have a material impact on
the Company's consolidated financial position and results of operations.

Revenues  from certain  telephone  services are affected by rates  authorized by
various regulatory agencies.  Intrastate service rates are subject to regulation
by the CPUC.  With respect to toll calls  initiated by  interexchange  carriers'
customers,  the  interexchange  carriers are assessed  access  charges  based on
tariffs  filed by SureWest  Telephone.  Interstate  access  rates and  resulting
earnings  are  subject to  regulation  by the FCC.  With  respect to  interstate
services,  SureWest  Telephone  has  filed its own  tariff  with the FCC for all
elements  of access  services  except  carrier  common line  charges,  for which
SureWest  Telephone  concurs with tariffs filed by the National Exchange Carrier
Association ("NECA").

Prior to January 1, 2002,  SureWest Telephone billed SBC Communications  ("SBC")
various charges for certain local service and network access service revenues in
accordance  with certain  agreements as described  below. In 1999, SBC expressed
interest in withdrawing  from the  designated  carrier plan ("DCP") for SureWest
Telephone's  toll  traffic.  The  DCP  was a  compensation  arrangement  between
SureWest  Telephone  and SBC for  certain  intrastate  toll  services.  SureWest
Telephone  and SBC  agreed to allow the DCP  arrangement  to expire in  December
2001. The termination of the DCP did not have a material impact on the Company's
consolidated  financial  position  as of June 30,  2004 and 2003 or  results  of
operations for the quarter and six months then ended.

In  1999,  SBC  also  expressed  interest  in  entering  into a  new,  permanent
compensation  arrangement for extended area service  ("EAS").  At that time, SBC
had  been  paying  SureWest  Telephone  approximately  $11,500  per year for EAS
pursuant  to a  Settlement  Transition  Agreement.  In November  2000,  the CPUC
authorized  SBC to  terminate  its annual EAS  payments  to  SureWest  Telephone
effective November 30, 2000. The CPUC authorized replacement funding to SureWest
Telephone  on an interim  basis using funds from the  California  High Cost Fund
("CHCF").  The CHCF is a program  designed  by the CPUC to  establish a fair and
equitable  local rate structure and to reduce any disparity in the rates charged
by  telephone  companies  serving  high-cost  areas.  This  interim  funding  is
currently  due to expire on  January  1, 2005.  However,  there is an  amendment
pending, SB1276, to the existing legislation,  which would extend the expiration
date to January 1, 2009.  This bill has passed the California  Senate and awaits
action by the  Assembly.  Action on this matter is expected  during 2004. In the
event this  pending  bill is not  enacted,  the Company  would file for emergent
relief under its existing New Regulatory  Framework  ("NRF")  mechanism or other
regulatory  mechanisms.  In  addition,  the CPUC  opened  an  Order  Instituting
Investigation  ("OII") for the purpose of determining whether future recovery of
all, none, or a portion of the approximate  $11,500 annual  payments  previously
received  from SBC should come from  SureWest  Telephone's  ratepayers  or other
regulatory  recovery  mechanisms.  This  proceeding  began in 2001,  evidentiary
hearings were held during 2002,  and briefing was completed in February 2003. In
this proceeding,  the Office of Ratepayer Advocates ("ORA") recommended that the
CPUC discontinue  SureWest Telephone's present interim EAS funding from the CHCF
without replacement revenues from ratepayers. The CPUC's decision in this matter
is expected  during 2004.  The CPUC has made no  indication  as to what, if any,
changes  will be  forthcoming  relating  to EAS  revenues.  The results of these
proceedings  and their  potential  effects on SureWest  Telephone  cannot yet be
determined.

In 1996,  the CPUC issued a decision in  connection  with  SureWest  Telephone's
general rate proceeding,  which authorized SureWest Telephone to implement a NRF
for services  furnished  within  SureWest  Telephone's  service area in order to
accommodate  market and  regulatory  movement  toward  competition  and  greater
pricing  flexibility.  Under the NRF,  SureWest  Telephone is subject to ongoing
monitoring and reporting  requirements,  including a sharing mechanism,  whereby
SureWest  Telephone  is  required  to  share  earnings  with  customers  through
reductions  of  revenues  if  its  earned  annual  rate-of-return  exceeds  that
authorized by the CPUC.

In accordance  with the  requirements  of its general rate case order,  SureWest
Telephone filed an application for review of its NRF in 1999. In connection with
this  proceeding,  the CPUC's ORA  undertook  a  verification  audit of SureWest
Telephone's  non-regulated and affiliated  transactions  pursuant to the general
rate case and other CPUC orders.  In June 2001, the CPUC adopted its decision in
this matter (the "Decision"). The Decision did not suspend the sharing mechanism
as SureWest Telephone had requested,  and the CPUC ruled that SureWest Telephone
must change the method used to allocate costs for services  provided by SureWest
Telephone to its affiliates, the treatment of certain directory revenues and the
treatment of internal-use software costs.

The Company has been  involved in a proceeding  at the CPUC that has  considered
the  continued  need  for  certain   sharing   requirements  in  the  intrastate
jurisdiction and, in connection with that review,  has also considered the issue
of whether the  Company  overearned  in the  intrastate  jurisdiction  in recent
monitoring  periods and, if so, the amount of such  overearnings  that should be
shared with  customers.  On July 27, 2004, the Company entered into a settlement
agreement  with the other  parties in the  proceeding,  the ORA and The  Utility
Reform  Network  ("TURN"),  which is  intended  to  resolve  all  issues  in the
proceeding.  Among other things, the settlement agreement addresses and resolves
all earnings  issues for the  monitoring  periods 2000 through  2004,  puts into
place a surcredit  mechanism for the amount of the settlement,  and suspends the
requirement  for any intrastate  sharing for monitoring  periods from January 1,
2005 through at least December 31, 2010. The settlement  agreement is subject to
approval by the CPUC. When the settlement agreement is approved by the CPUC, the
Company will reassess its estimated intrastate shareable earnings obligations.

The FCC monitors  SureWest  Telephone's  interstate  earnings through the use of
annual cost separation  studies  prepared by SureWest  Telephone,  which utilize
estimated cost information and projected demand usage. The FCC establishes rules
that  carriers  must  follow  in  the   preparation   of  the  annual   studies.
Additionally,  under current FCC rules governing rate making, SureWest Telephone
is required to establish  interstate  rates based on projected  demand usage for
its various  services and  determine  the actual  earnings from these rates once
actual volumes and costs are known.

During  the  quarter  ended  March 31,  2004,  SureWest  Telephone  changed  its
estimates for a portion of its  interstate  and  intrastate  shareable  earnings
obligations as a result of periodic cost  separation  studies.  These changes in
accounting estimates increased the Company's  consolidated  revenues by $539 and
net income by $310 ($0.02 per share) for the six months ended June 30, 2004.

During  the  quarter  ended  March 31,  2003,  SureWest  Telephone  changed  its
estimates for a portion of its  interstate  and  intrastate  shareable  earnings
obligations  and certain NECA Carrier  Common Line ("CCL")  accounts  receivable
balances as a result of  periodic  cost  separation  studies.  These  changes in
accounting estimates decreased the Company's  consolidated  revenues by $277 and
net income by $166 ($0.01 per share) for the six months ended June 30, 2003.

During the year ended  December 31, 2001,  SureWest  Telephone  made payments to
certain  telecommunications  companies  aggregating $6,800 related to interstate
shareable earnings  obligations for the monitoring period 1999-2000.  No similar
payments  were made during the quarter or six-month  periods ended June 30, 2004
or 2003.  On June 26,  2003,  the Company  entered  into an agreement to recover
$1,950 of the amount paid to a  telecommunications  company in 2001.  Therefore,
the Company recognized a receivable from this telecommunications  company in the
amount of $1,950 as of June 30, 2003 through a credit to network  access service
revenues  for the three months  ended June 30,  2003.  The Company  received the
funds on July 8, 2003.  The Company is currently  seeking a similar  refund from
another telecommunications company. However, the recoverability of the remaining
funds cannot presently be determined because the bankruptcy  proceeding relating
to the telecommunications company from which the Company is seeking a refund has
not been completed.

Beginning in January 2002, SureWest Telephone began paying a customer refund for
intrastate  overearnings  relating to the years 1998 and 1999.  A portion of the
consumer's  intrastate  service  charges was returned in the form of a surcredit
beginning in January  2002 and ending in January  2003,  totaling  approximately
$4,605 (of which $294 was  returned  during  January  2003).  Such  refunds were
recorded as a reduction of the Company's estimated intrastate shareable earnings
obligations.

Beginning in November 2003,  SureWest  Telephone  began paying a customer refund
for  intrastate  overearnings  relating  to the  year  2002.  A  portion  of the
consumer's  intrastate service charges was returned to the consumers in the form
of a surcredit  beginning in November 2003 and ending in February 2004, totaling
$483 (of which $208 was returned during the first quarter of 2004). Such refunds
were recorded as a reduction of the  Company's  estimated  intrastate  shareable
earnings obligations.

As of  June  30,  2004,  the  Company's  condensed  consolidated  balance  sheet
reflected  aggregate  liabilities  of $12,642  relating to SureWest  Telephone's
estimated  interstate  and  intrastate  shareable  earnings   obligations.   The
calculations supporting these liabilities are very complex and involve a variety
of estimates prior to the ultimate settlement of such obligations.  In addition,
SureWest  Telephone's  interstate shareable earnings obligations lapse over time
if SureWest Telephone's  interexchange  carrier and other customers do not claim
the  amounts  ascribed to them.  Further,  a final  decision  from the CPUC that
adopts the settlement  agreement,  described  above,  would settle the Company's
existing estimated  intrastate  shareable earnings obligations and eliminate the
exposure  of the  Company  to  sharing of any  intrastate  overearnings  for the
immediate future and promote decision making that is focused more on competitive
market needs rather than these  regulatory  considerations.  Accordingly,  it is
reasonably possible that management's estimates of the Company's liabilities for
interstate and intrastate  shareable  earnings  obligations  could change in the
near term, and the amounts involved could be material.

6. PENSION AND OTHER POST-RETIREMENT BENEFITS

Components of Net Periodic Benefit Cost

Net periodic pension costs recognized in the condensed  consolidated  statements
of income for the quarters and  six-month  periods  ended June 30, 2004 and 2003
under the defined benefit pension plan ("Pension Plan"),  Supplemental Executive
Retirement  Plan  ("SERP")  and  post-retirement  benefits  other than  pensions
("Other Benefits") plan included the following components:
<TABLE>
<CAPTION>

                                                       Pension Plan and SERP                 Other Benefits
                                                    -----------------------------   -------------------------------
                                                       2004             2003             2004             2003
                                                    ------------  ---------------   --------------  ---------------
        <S>                                             <C>             <C>             <C>             <C>
     Quarter ended June 30,
     Service cost-benefits earned during the
       period                                       $     1,340    $       1,065    $          64    $          89
     Interest cost on projected benefit
       obligation                                         1,773            1,514               51               82
     Expected return on plan assets                      (2,009)          (1,342)             (26)             (27)
     Amortization of prior service cost                      87              234                6                6
     Recognized net actuarial loss                          120               60                -                -
                                                    ------------  ---------------   ------------- -----------------
     Net pension cost                               $     1,311    $       1,531    $          95    $         150
                                                    ------------  ---------------   ------------- -----------------

     Six months ended June 30,
     Service cost-benefits earned during the
       period                                       $     2,680    $       2,327    $         173    $         177
     Interest cost on projected benefit
       obligation                                         3,547            3,305              139              163
     Expected return on plan assets                      (4,017)          (2,930)             (70)             (54)
     Amortization of prior service cost                     173              511               16               13
     Recognized net actuarial loss                          240              130                -                -
                                                    ------------  ---------------   ------------- -----------------
     Net pension cost                               $     2,623    $       3,343    $         258    $         299
                                                    ============  ===============   ============= =================
</TABLE>


Employer Contributions

The Company expects to contribute  $5,500 and $460 to the Pension Plan and Other
Benefits  plan,  respectively,  in 2004.  As of June 30,  2004,  the Company has
contributed  $3,200 to the Pension Plan (no contributions  have been made during
2004 to the Other Benefits plan).

7.  LINE OF CREDIT

In March 2000,  the Company  entered into a business loan  agreement with a bank
for a $30,000 line of credit with a term of three years.  In July 2002, the bank
amended the credit  facility  increasing the borrowing  capacity from $30,000 to
$50,000.  In March 2004, the bank further amended the credit facility  extending
the expiration date until June 1, 2005 and revising certain covenants.  Interest
on this credit  facility is based on a LIBOR-based  pricing  formula.  While the
Company  has  borrowed  previously  under this  credit  facility,  there were no
amounts  outstanding  under this credit  facility as of June 30, 2004, nor since
the issuance of the Company's Series B Notes in March 2003. The Company obtained
a waiver as of June 30,  2004  with  respect  to a  technical  violation  of the
business loan agreement;  however, the Company does not believe the violation to
be of any consequence since there were no amounts  outstanding as of the time of
the technical violation.

8. COMMITMENTS AND CONTINGENCIES

The Company has entered into various cable television  franchise agreements with
associated letters of credit totaling $150 in the aggregate as of June 30, 2004.

The  Company  is  subject  to  certain  legal  and  regulatory  proceedings  and
examinations, Internal Revenue Service examinations and other tax exposures, and
other claims arising in the ordinary  course of its business.  In the opinion of
management, the ultimate outcome of these matters will not materially affect the
consolidated financial position or results of operations of the Company.



<PAGE>




PART I

ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS.

 (Amounts in thousands, except selected operating metrics and per share amounts)

Certain  information  included in the Company's  quarterly  report on Form 10-Q,
including  that  which  relates  to the  impact on future  revenue  sources  and
potential sharing obligations of pending and future regulatory orders, continued
expansion of the telecommunications  network and expected changes in the sources
of the Company's revenue and its cost structure resulting from its entrance into
new communications markets, are forward looking statements and are made pursuant
to the safe harbor  provisions of the Securities  Litigation Reform Act of 1995.
Such forward  looking  statements are subject to a number of risks,  assumptions
and  uncertainties  that could cause the Company's actual results to differ from
those projected in such forward looking statements.

Important factors that could cause actual results to differ from those set forth
in the forward looking statements  include,  but are not limited to: advances in
telecommunications  technology,  changes  in the  telecommunications  regulatory
environment,  changes in the  financial  stability  of other  telecommunications
providers who are customers of the Company, changes in competition in markets in
which the  Company  operates,  adverse  circumstances  affecting  the economy in
California in general,  and in the Sacramento,  California  Metropolitan area in
particular,  the  availability  of future  financing,  changes in the demand for
services and products,  new product and service  development and  introductions,
pending and future  litigation,  internal control  weaknesses and  unanticipated
changes  in the  growth  of the  Company's  emerging  businesses  including  the
wireless,  Internet,  digital  video  and  Competitive  Local  Exchange  Carrier
operating entities.

                               Corporate Structure

SureWest  Communications  (the "Company") is a holding company with wholly-owned
subsidiaries  operating in the  Telecommunications  ("Telecom"),  Broadband  and
Wireless segments.

The Telecom segment  includes  SureWest  Telephone  (formerly known as Roseville
Telephone Company),  SureWest Directories,  and SureWest Long Distance (formerly
known  as   Roseville   Long   Distance   Company),   which   provide   landline
telecommunications  services,  directory  advertising,  Digital  Subscriber Line
("DSL")  service,  long distance  services and certain  non-regulated  services.
SureWest Telephone,  which is the principal operating  subsidiary of the Telecom
segment, provides local and toll telephone services, network access services and
certain non-regulated  services.  SureWest Directories publishes and distributes
SureWest Telephone's directory,  including the sale of yellow pages advertising.
SureWest  Directories  is also engaged in the business of producing,  publishing
and distributing directories in other Northern California communities outside of
SureWest  Telephone's service area. SureWest Long Distance is a reseller of long
distance services.

The Broadband segment includes the Company's subsidiaries SureWest Broadband and
SureWest Broadband  Business  Services.  SureWest Broadband Business Services is
comprised of a division of SureWest  Telephone  operating as a Competitive Local
Exchange  Carrier.  The Broadband  segment provides various services  including:
high-speed and dial-up Internet,  digital video, local and network access,  toll
telephone and managed services in the greater  Sacramento  area,  principally to
customers  residing  outside of SureWest  Telephone's  service area. The Company
offers  high-speed  Internet,  digital video and local and long  distance  phone
service  as a  bundled  package  referred  to as  fiber-to-the-premise  ("FTTP")
(previously  referred to as "Triple Play"). In December 2003, SureWest Broadband
began offering digital video services to customers  inside SureWest  Telephone's
service area.

The Wireless segment  consists of the Company's  subsidiary  SureWest  Wireless,
which provides wireless services. SureWest Wireless derives its revenue from the
provision   of  wireless   voice   services,   sales  of  handsets  and  related
communication equipment, long distance,  handset insurance,  roaming service and
custom  calling  features.  Wireless  services are provided on a  month-to-month
basis and are generally  billed in advance for  non-contract  subscribers and in
arrears for contract subscribers.

The Company  expects that the sources of its revenues and its cost structure may
be  different  in  future  periods,  both as a  result  of its  entry  into  new
communications  markets and  competitive  forces in each of the markets in which
the Company has operations.

               Treasury Investigation and Internal Control Matters

In January 2004, the Audit Committee of the Board of Directors launched a formal
investigation   and   retained   independent   legal   counsel  to  conduct  the
investigation  with the assistance of forensic  accountants.  The  investigation
resulted from a preliminary  investigation by Company  management,  triggered by
the  abrupt  resignation  in  December  2003  of an  employee  in the  Company's
Corporate Finance Department.  The investigation indicated irregularities by the
former employee in the Company's cash management and investment  functions,  and
violations of the Company's investment policies. At the time of the commencement
of the  special  investigation,  approximately  $1,828  of  Company  funds  were
outstanding without proper documentation, and such funds remain outstanding, and
were  reflected  as a  non-operating  loss in the  Company's  2003  consolidated
financial statements.

The independent legal counsel,  with the assistance of the forensic accountants,
undertook an extensive  process to (i) investigate  the facts and  circumstances
giving rise to the  misappropriation  of Company funds,  (ii) determine  whether
there were any  similar  or  related  transactions,  and any  Company  employees
involved in the previously-identified transactions other than those known to the
Company at the commencement of the investigation, (iii) determine the underlying
mechanics in the origination of the  transactions  and the  circumstances  under
which detection failed to occur and (iv) evaluate  internal controls relating to
the affected portion of the Company's business.

The Audit  Committee of the Board of Directors  has been advised by  independent
legal counsel that:

     o    All of the  unauthorized  transactions  occurred in 2003 and  remained
          undetected until December 2003;

     o    The unauthorized transactions were actively concealed by the Company's
          former employee in the Company's books and records; and

     o    Independent   legal   counsel  did  not  uncover  any  other   similar
          transactions  nor  any  evidence  that  any  other  Company  employees
          intentionally participated in the unauthorized transactions.

The independent  legal counsel  further  reported to the Audit Committee (i) its
view that  existing  Company  control  procedures  prior to the discovery of the
unauthorized  transactions were either circumvented or ignored,  and the control
procedures  existing  at the  time of the  unauthorized  transactions  were  not
adequate and (ii) the Company,  subsequent to the discovery of the  unauthorized
transactions,  had developed and implemented a number of key internal  controls.
In  addition,   the  independent  legal  counsel  provided   additional  control
recommendations to the Audit Committee for review and consideration.

In connection with the audit of the Company's  consolidated financial statements
for  the  year  ended  December  31,  2003,  Ernst & Young  LLP,  the  Company's
independent  auditors,  advised the Company that it had concluded  that material
weaknesses in the Company's internal control existed,  including with respect to
certain of the issues  identified as a result of the Audit  Committee's  special
investigation.  The  Company has  performed  substantial  additional  procedures
designed  to  ensure  that the  internal  control  deficiencies  did not lead to
material misstatements in its consolidated financial statements, notwithstanding
the presence of the noted internal control weaknesses.

During 2004,  the Company  instituted  additional  processes  and  procedures to
improve internal  control.  Subsequent to the discovery of the unauthorized wire
transactions, the Company implemented a number of internal controls with respect
to cash and investment activities.

The Audit Committee made a number of additional recommendations to the Company's
Board of Directors  for further  review and  consideration,  which were formally
acted upon  beginning  early in the  second  quarter  of 2004,  and  contemplate
additional actions in 2004. Such initiatives relate to:

     o    An assessment to be conducted with respect to the Company's  Corporate
          Finance  Department,  which  encompasses the Company's  accounting and
          finance personnel,  including  specifically  relating to the number of
          personnel,  and  the  collective  mix  and  technical  skills  of such
          personnel, and the addition of new personnel if necessary.  During the
          second quarter, the Company's Board of Directors approved the addition
          of six personnel in the Corporate Finance Department.  As of August 6,
          2004, the Company has hired three of the six additional  personnel and
          is actively recruiting the remaining three. Further evaluation will be
          conducted by the Chief Financial  Officer and, if deemed  appropriate,
          with the assistance of a third party, in continuing  consultation with
          the Board;

     o    An  internal  audit  process,  with  tasks to be  performed  either by
          Company  personnel  or a third  party,  with  reporting  duties to the
          Chairman of the Company's Audit Committee  (implemented in part by the
          Company's hiring of a Senior Internal Auditor in July 2004);

     o    A more significant  effort devoted to internal  controls  training for
          all affected personnel, and an increased emphasis on the completion of
          internal controls documentation,  including as required by Section 404
          of the Sarbanes-Oxley Act of 2002 (including the retention in May 2004
          of third-parties  to assist in performing  internal control reviews of
          all of the Company's  accounting systems,  and to assist in expediting
          the completion of the internal controls documentation); and

     o    The preparation and implementation of a formal accounting policies and
          procedures manual or electronic  database to serve as a reference tool
          for Company  personnel  and to establish  uniformity  and  consistency
          throughout the Company. The preparation of the accounting policies and
          procedures  manual is in process and the Company  expects that it will
          be completed by the end of the third quarter.

The Company has previously taken actions that it believes have improved internal
controls, including:

     o    The  establishment of a Disclosure  Committee  comprised of Management
          personnel  and  senior  representatives  of  the  Company's  Corporate
          Finance  Department,  which  undertakes  reviews prior to  significant
          filings with the Securities and Exchange Commission ("SEC");

     o    The modification of written ethics and compliance  materials  provided
          to Company employees,  and the formal adoption of a Code of Ethics and
          Business  Conduct,  and  the  related  establishment  of  confidential
          procedures which permit Company  employees to communicate  anonymously
          in the event of  suspected  violations  of laws or  Company  standards
          (together with mandatory  classes in 2004 for all Company employees to
          review the Code of Ethics and Business Conduct); and

     o    The  implementation  in 2003 of new enterprise  resource  planning and
          accounting  software,  which likely assisted in identifying certain of
          the accounting  deficiencies  noted above relating to property,  plant
          and equipment.  (The Company also anticipates completing  enhancements
          to certain  modules of its new  enterprise  resource  planning  system
          relating to property,  plant and  equipment by September  30, 2004 and
          undertaking  revised  physical  verification  and other  procedures to
          improve its accounting for property, plant and equipment).

On April 15, 2004, Michael D. Campbell,  the Company's  Executive Vice President
and Chief Financial Officer retired from the Company.  Brian H. Strom, President
and Chief  Executive  Officer  of the  Company,  is  serving  as  interim  Chief
Financial  Officer,  while the  Company  undertakes  the  search for a new Chief
Financial Officer, which the Company intends to complete in the third quarter of
2004.

The Company has filed an  insurance  claim to recover the missing  funds and has
filed a civil  lawsuit  seeking  to  recover  $1,828  and other  costs from five
individuals  and a private  company  allegedly  associated  with the  fraudulent
scheme to  illegally  transfer  the  Company's  funds to outside  accounts.  The
Company has been advised that one of the  individuals  has pleaded  guilty.  The
Company  will  recognize a recovery of funds,  if any, in future  periods to the
extent of its insurance and litigation recoveries.

The Company,  in early 2004,  has engaged in informal  discussion  with the SEC,
which has possession of certain background information,  regarding the facts and
circumstances  of  the  unauthorized  funds  transfers.   The  Company  provided
supplemental  information to the SEC regarding the results of the investigation,
including with respect to the report by  independent  legal counsel to the Audit
Committee,  and it will provide additional information in response to any future
requests.

Results of Operations

Consolidated Overview

The tables below reflect certain  financial data (on a consolidated  and segment
basis) and selected  operating metrics for each reportable segment as of and for
the quarter and six months ended June 30, 2004 and 2003. Both the financial data
and the selected operating metrics demonstrate the increasing  importance of the
Company's Broadband and Wireless segments.
<TABLE>
<CAPTION>

                                 Financial Data

                                     Quarter Ended June 30,                      Six Months Ended June 30,
                            -----------------------------------------    -----------------------------------------
                             2004       2003      $ Change   % Change     2004       2003      $ Change   % Change
                            --------   --------   --------   --------    --------   --------   --------   --------
        <S>                       <C>       <C>       <C>        <C>         <C>       <C>          <C>       <C>
Operating revenues (1)
  Telecom                   $ 34,772   $ 36,453   $ (1,681)      (5)%    $ 69,966   $ 71,048   $ (1,082)      (2)%
  Broadband                    9,714      7,113      2,601       37        18,688     13,390      5,298       40
  Wireless                     7,629      6,686        943       14        15,049     13,189      1,860       14
  Total operating
    revenues                  52,115     50,252      1,863        4       103,703     97,627      6,076        6

Operating income (loss)
  Telecom                     14,593     14,633        (40)       -        27,006     25,517      1,489        6
  Broadband                   (6,716)    (3,950)    (2,766)      70       (13,241)    (8,095)    (5,146)      64
  Wireless                    (4,106)    (5,116)     1,010      (20)       (8,236)    (9,950)     1,714      (17)
  Total operating income       3,771      5,567     (1,796)     (32)        5,529      7,472     (1,943)     (26)

Net income (loss)
  Telecom                      8,567      8,727       (160)      (2)       15,838     15,096        742        5
  Broadband                   (4,318)    (2,727)    (1,591)      58        (8,509)    (5,321)    (3,188)      60
  Wireless                    (2,688)    (3,287)      599       (18)       (5,387)    (6,387)     1,000      (16)
  Total net income          $  1,561   $  2,713   $ (1,152)     (42)%    $  1,942   $  3,388   $ (1,446)     (43)%

</TABLE>
(1) External customers only


<TABLE>
<CAPTION>
                           Selected Operating Metrics

                                                               As of June 30,
                                           2004             2003            Change         % Change
<S>                                      <C>                 <C>            <C>               <C>
Telecom
 ILEC access lines                       134,274          136,850          (2,576)           (2)%
 Long distance lines                      44,682           41,071           3,611             9

Broadband
 DSL subscribers (1)                      20,610           17,995           2,615            15
 FTTP subscribers (2)                     13,739            7,628           6,111            80
 Revenue-generating units (3)             32,101           17,769          14,332            81

Wireless
 Subscribers                              48,531           44,490           4,041             9%
</TABLE>


(1)  DSL  subscribers  are customers who receive data services  within  SureWest
     Telephone's service area.
(2)  FTTP subscribers are customers who receive digital video, voice and/or data
     services from broadband residential services.
(3)  The  Broadband  segment  can  deliver  multiple  services  to  a  customer.
     Accordingly,    the   Company   maintains    statistical   data   regarding
     Revenue-generating  units for digital video, voice and data, in addition to
     the number of  customers.  For example,  a single  customer  who  purchases
     digital  video,  voice  and  data  services  would  be  reflected  as three
     Revenue-generating units.

The Company's  consolidated  operating  revenues increased $1,863 and $6,076 for
the quarter and six months  ended June 30, 2004,  respectively,  compared to the
same periods in 2003  primarily due to an increase in the number of  subscribers
and services within the Broadband and Wireless segments.

Broadband  segment  operating  revenues  increased  $2,601 and $5,298 during the
quarter and six months ended June 30, 2004,  respectively,  compared to the same
periods in 2003. This segment experienced a 15% increase in the aggregate number
of DSL  subscribers  at June  30,  2004,  as  compared  to June 30,  2003.  More
significantly,   this  segment  reported  13,739  FTTP  subscribers  and  32,101
Revenue-generating  units,  representing increases of 80% and 81%, respectively,
at June 30, 2004 as  compared to June 30,  2003,  within  broadband  residential
services business.  While continuing to produce  significant  revenue increases,
the  expansion of the  broadband  residential  services has and will continue to
require significant capital and expense commitments.  Accordingly, the Broadband
segment incurred larger  quarter-over-quarter  and year-over-year  operating and
net losses.

The Wireless segment reported increases in operating revenues of $943 and $1,860
during the quarter and six months ended June 30, 2004, respectively, compared to
the same periods in 2003. The number of wireless subscribers increased to 48,531
at June 30,  2004,  representing  a 9%  increase  from June 30,  2003.  SureWest
Wireless  established its market share in the Sacramento market in large part by
promoting an unlimited  flat rate  regional  calling plan.  Throughout  2003 and
during the first six months of 2004, SureWest Wireless initiated a number of new
service options for customers, including additional regional plans, an unlimited
national  plan and a  family  plan,  which  have  attracted  new  customers.  In
addition,  during  2004,  SureWest  Wireless  also plans to launch new  vertical
services,  such as wireless data capabilities.  Evolution of the marketplace has
prompted SureWest Wireless to open four retail stores in its service area, and a
fifth is  planned  for late  2004.  It is also  seeking  to expand  its  service
penetration  among major  accounts  in 2004,  while  seeking to reduce  customer
turnover ("churn") and increase revenues from its existing customer base.

Operating  revenues in the Telecom segment  decreased  $1,681 and $1,082 for the
quarter and six months ended June 30, 2004,  respectively,  compared to the same
periods in 2003.  While the  Company  continues  to  experience  growth from the
Broadband and Wireless segments,  the Telecom segment continues to be subject to
the  competitive  and regulatory  challenges  faced by incumbent  local exchange
carriers ("ILECs") both nationally and in California. As a result of competitive
pressures,  this  segment  experienced  decreases  in local and  network  access
revenues due to decreases in (i) access  lines of  approximately  2%,  resulting
from increased competition from wireless and wireline competitors, (ii) zone and
toll calls and (iii) switched and special access rates.

While the  Telecom  operating  revenues  continue  to generate a majority of the
Company's  revenues and yield significant cash flows and net income, the Company
believes  that the results of the Telecom  segment in recent  years  support the
Company's  decision  to  enter  and  commit   significant   resources  to  newer
businesses, particularly in the Broadband segment.

The Company's consolidated operating expenses increased $3,659 and $8,019 during
the quarter and six months  ended June 30, 2004,  respectively,  compared to the
same periods in 2003 due to an increase in cost of services and products expense
associated with a larger number of subscribers and services within the Broadband
and Wireless segments. Customer operations and selling expenses increased due to
additional  advertising  activity in the current year in the  Broadband  segment
offset in part from internal  efficiencies  resulting from  integrated  customer
support systems and  productivity  gains.  General and  administrative  expenses
increased as a result of increases in (i)  consulting  and legal fees due to the
treasury  investigation,  audit services and  Sarbanes-Oxley  implementation and
compliance  and  (ii)  the  size of the  Company's  workforce,  resulting  in an
increase to salaries and wages and medical insurance costs.


<PAGE>




The Company's consolidated  depreciation and amortization expense decreased $936
and $2,029 during the quarter and six months ended June 30, 2004,  respectively,
compared to the same periods in the 2003.  This  decrease is due  primarily to a
change in accounting  estimate during the first quarter of 2004,  resulting from
the successful  adoption of certain new technologies  that enable the Company to
maximize  the return on  existing  network  facilities  and migrate to other new
technologies at the point in time in which the benefit to do so exceeds the cost
of  conversion.  As a result of this change in  strategic  direction,  which was
formally  approved by the  Company's  Board of Directors in December  2003,  the
Company has  evaluated  the  appropriateness  of its  estimated  useful lives of
certain property, plant and equipment at both the Telecom and Wireless segments.
Based on this  evaluation,  the Company  increased the estimated useful lives of
Telecom's digital  switching,  circuit and cable equipment by one to three years
and Wireless' base stations,  towers and network software by one to eight years.
The Company also  decreased the estimated  useful lives of certain other Telecom
assets,  including certain other switching and voicemail equipment.  The changes
were made effective January 1, 2004. The Company's revisions have been supported
by an assessment  and report from an  independent  third party with expertise in
this area that found the  revisions to be  reasonable  in light of the Company's
plan and useful life estimates in comparable businesses.

During the quarter and six months ended June 30,  2004,  this change in estimate
decreased consolidated depreciation expense by $2,679 and $5,956,  respectively,
and  increased  consolidated  net income by $1,575  ($0.11 per share) and $3,490
($0.24 per share),  respectively.  This change in accounting  estimate decreased
Telecom  depreciation  expense and increased  Telecom income from  operations by
$1,319  and  $3,288  for the  quarter  and  six  months  ended  June  30,  2004,
respectively.   In  addition,   Wireless  depreciation  expense  and  loss  from
operations decreased by approximately $1,360 and $2,668,  respectively,  for the
quarter  and six  months  ended  June 30,  2004 as a result  of this  change  in
accounting estimate.

         Adjustments and Reclassifications

During the Company's  financial  statement closing process for the quarter ended
December 31, 2003,  certain matters were  identified  related to prior financial
reporting  periods  that  necessitated  the  recording  of  adjustments  to  the
Company's  condensed   consolidated   financial  statements.   Such  adjustments
pertained principally to property,  plant and equipment, and management believes
that  weaknesses  in the  Company's  internal  controls  caused the errors  that
resulted  in  these  adjustments.  The  Company  does  not  believe  any  of the
aforementioned  amounts are material,  individually or in the aggregate,  to the
respective  prior interim  periods based on both  quantitative  and  qualitative
factors,  including  the trend of operating  results.  Accordingly,  the Company
prospectively  corrected these errors during the fourth quarter of 2003. Certain
of the  aforementioned  amounts relating to prior periods would have reduced the
Company's consolidated net income by $119, or $0.01 per basic and diluted share,
and $342,  or $0.02 per basic and  diluted  share,  during the  quarter  and six
months ended June 30, 2003, respectively,  had such errors been corrected in the
periods in which they originated.

Certain  amounts  in  the  Company's  2003  condensed   consolidated   financial
statements  have  been  reclassified  to  conform  to  the  presentation  of the
Company's 2004 condensed consolidated financial statements.



<PAGE>



Segment Results of Operations

Telecom
<TABLE>
<CAPTION>
                                          Quarter Ended June 30,                    Six Months Ended June 30,
                                -----------------------------------------   ----------------------------------------
                                                          $          %                               $          %
                                   2004       2003      Change     Change      2004      2003      Change     Change
                                ---------  ---------  ---------  ---------  ---------  --------- ---------  ---------
<S>                                   <C>      <C>       <C>        <C>         <C>        <C>      <C>        <C>
Local service                   $  16,699  $  16,292  $    407       2%     $  33,833  $ 31,288  $  2,545       8%
Network access service             11,760     13,984    (2,224)    (16)        23,370     27,401   (4,031)    (15)
Directory advertising               3,939      3,705       234       6          8,041      7,543      498       7
Long distance service               1,336      1,257        79       6          2,553      2,510       43       2
Other                               1,038      1,215      (177)    (15)         2,169      2,306     (137)     (6)
Total operating revenues from
  external customers               34,772     36,453    (1,681)     (5)        69,966     71,048   (1,082)     (2)
Intersegment revenues               6,489      5,867       622      11         12,704     11,390    1,314      12
Operating expenses *               20,320     19,996       324       2         43,137     41,471    1,666       4
Depreciation and amortization       6,348      7,691    (1,343)    (17)        12,527     15,450   (2,923)    (19)
Operating income                   14,593     14,633       (40)      -         27,006     25,517    1,489       6
Net income                      $8,567     $   8,727  $   (160)     (2)%    $  15,838  $ 15,096  $    742       5%
</TABLE>
   * Exclusive of depreciation and amortization



         Operating Revenues

Operating  revenues from  external  customers in the Telecom  segment  decreased
$1,681  and  $1,082  for the  quarter  and  six  months  ended  June  30,  2004,
respectively,  compared  to the same  periods in 2003.  The  Telecom  segment is
encountering  the  competitive  and  regulatory  challenges  faced by ILECs both
nationally and in California.  As a result of competitive pressures, the Telecom
segment  experienced  decreases  in local and  network  access  revenues  due to
decreases in (i) access lines of  approximately  2%,  resulting  from  increased
competition from wireless and wireline competitors, (ii) zone and toll calls and
(iii) switched and special access rates.

Revenues  within the Telecom  segment are also affected by SureWest  Telephone's
shareable earnings obligations. As a result of a decrease in revenues subject to
regulation and increased  operating  expenses  during 2004, as described  below,
SureWest   Telephone's   provision  related  to  its  estimated  interstate  and
intrastate shareable earnings obligations decreased, which resulted in increased
revenues of $963 and $1,846  during the  quarter  and six months  ended June 30,
2004, respectively,  compared to the same periods in 2003. In addition, SureWest
Telephone  had changes in estimates  for  shareable  earnings  obligations  as a
result of periodic cost  separation  studies.  For the six months ended June 30,
2004,  changes in estimates,  which were recorded during the quarter ended March
31, 2004,  pertaining  to the  Company's  estimated  interstate  and  intrastate
shareable earnings obligations  increased the Telecom segments' revenues and net
income by $539 and $310  ($0.02  per  share),  respectively.  For the six months
ended June 30,  2003,  changes in  estimates,  which  were  recorded  during the
quarter ended March 31, 2003,  pertaining to the Company's estimated  interstate
and intrastate  shareable  earnings  obligations and certain  National  Exchange
Carrier  Association  ("NECA") Carrier Common Line ("CCL")  accounts  receivable
balances  decreased  the Telecom  segments'  revenues and net income by $277 and
$166 ($0.01 per share),  respectively.  In  addition,  the decrease in operating
revenues  in the  Telecom  segment was due to an  agreement  SureWest  Telephone
entered into during  2003.  As  discussed  in greater  detail in the  Regulatory
Matters  section,  the  agreement  provided  for a $1,950  refund  from  another
telecommunications  company  for a payment  made by SureWest  Telephone  in 2001
related to interstate shareable earnings obligations.

The Company  adopted SEC Staff  Accounting  Bulletin  ("SAB") No. 101,  "Revenue
Recognition in Financial  Statements," effective January 1, 2000, which requires
non-recurring  revenues  associated  with service and  activation  charges to be
deferred.  The  cumulative  effect of this change in  accounting  principle  was
$3,273, net of tax, ($0.21 per share) in 2000.

For the  three-month  periods  ended  March 31 and June 30,  2004 and 2003,  the
Company  recognized the following  revenues that were included in the cumulative
effect adjustment as of January 1, 2000:

     Three Months Ended:

        March 31, 2004                  $  56
        June 30, 2004                   $  40
        March 31, 2003                  $ 128
        June 30, 2003                   $ 114

The net  effect of these  revenues  in 2004 was to  increase  net  income in the
three-month periods ended March 31 and June 30 by $32 (no effect on earnings per
share) and $23 (no effect on earnings per share), respectively.

The net  effect of these  revenues  in 2003 was to  increase  net  income in the
three-month  periods ended March 31 and June 30 by $75 ($0.01 per share) and $68
(no effect on earnings per share), respectively.

Directory  advertising  revenues increased $234 and $498 for the quarter and six
months ended June 30, 2004,  respectively,  compared to the same periods in 2003
due to an increase in advertising sales.

         Operating Expenses

Operating  expenses for the Telecom  segment  increased  $324 and $1,666 for the
quarter and six months ended June 30, 2004,  respectively,  compared to the same
periods in 2003. Cost of services and products  (exclusive of  depreciation  and
amortization)  increased $591 and $777 for the quarter and six months ended June
30, 2004, respectively,  compared to the same periods in 2003. This increase was
primarily  due  to  an  increase  in  SureWest  Directories  outside  sales  and
advertisers as well as a two-month  delay in the release of the 2003  Sacramento
Directory.  Customer  operations and selling expense  decreased $81 and $228 for
the quarter and six months  ended June 30, 2004,  respectively,  compared to the
same periods in 2003 due  primarily to an increase in the  allocation of Telecom
resources  provided  to other  segments.  General  and  administrative  expenses
decreased  $186 and  increased  $1,117 for the quarter and six months ended June
30, 2004, respectively,  compared to the same periods in 2003. This increase was
due primarily to increases in (i)  consulting and legal fees due to the treasury
investigation,  audit services and Sarbanes-Oxley  implementation and compliance
and  (ii) the size of the  Company's  workforce,  resulting  in an  increase  to
salaries and wages and medical insurance costs.

Depreciation  and  amortization  decreased $1,343 and $2,923 for the quarter and
six months  ended June 30, 2004,  respectively,  compared to the same periods in
2003.  This decrease is due primarily to a change in accounting  estimate during
the  first  quarter  of  2004,  resulting  from  the  adoption  of  certain  new
technologies which increased the estimated useful lives of Telecom's  switching,
circuit and cable  equipment by one to three years and  decreased  the estimated
useful lives of certain other Telecom assets,  including  certain  switching and
voicemail equipment.  This change in accounting estimate decreased  depreciation
expense by $1,319 and $3,288 for the quarter and six months ended June 30, 2004,
respectively.  This decrease was  partially  offset by the effects of continuing
additions  of circuit  equipment,  cable and wire  facilities  and  internal-use
software.

Certain of the Company's customers filed for bankruptcy  protection in 2002, the
most notable of which was WorldCom, Inc. ("WorldCom"),  which, together with its
affiliates,  filed for bankruptcy  protection on July 21, 2002.  With respect to
post-petition obligations, WorldCom had proposed, pursuant to a provision of the
Bankruptcy  Code,  and the  Bankruptcy  Court has  agreed,  that  utilities  are
entitled to "adequate assurances" that WorldCom will satisfy its obligations for
post-petition  services. In its original filings,  WorldCom proposed its own set
of assurances to utilities,  but such assurances did not include either deposits
or advance  payments.  Although the Bankruptcy Court did not require WorldCom to
provide any deposits or advance  payments as adequate  assurance of payment,  it
did provide,  with respect to any  post-petition  services provided after August
14, 2002, that all utilities will have a junior superiority administrative claim
senior  to  other  administrative  claims  and  junior  only  to the  claims  of
WorldCom's  post-petition  lenders.  If WorldCom fails to pay for  post-petition
services,  a utility can either take  appropriate  action  under any  applicable
tariff  or  regulation,  or seek,  on an  expedited  basis,  an  order  from the
Bankruptcy Court requiring immediate payment or other relief. On April 20, 2004,
WorldCom emerged from federal bankruptcy. Settlement(s) of the Company's pending
pre-bankruptcy  claims against  WorldCom will remain subject to the distribution
terms, applicable to creditors,  contained in WorldCom's plan of reorganization.
As of June 30, 2004 the amount of any settled  pre-bankruptcy  claims  cannot be
determined.  Through June 30, 2004,  obligations owed by WorldCom to the Company
for post-petition services have been paid on a timely basis.

         Regulatory Matters

Revenues from services  subject to  regulation,  which include local and network
access services  constituted  approximately 55% of the Company's total operating
revenues for the quarter and  six-month  period ended June 30, 2004. In the same
periods  in 2003,  revenues  from  services  subject to  regulation  constituted
approximately 60% of the Company's total operating  revenues.  Such revenues are
derived from various sources, including:

     o    business and residential subscribers, for basic exchange services;
     o    surcharges,  mandated by the California  Public  Utilities  Commission
          ("CPUC");
     o    long distance carriers, for network access service;
     o    competitive  access  providers  and  subscribers,  for network  access
          services;
     o    interstate pool settlements, from NECA;
     o    support payments from the Universal Service Fund; and
     o    support   payments  from  the  California  High  Cost  Fund  ("CHCF"),
          recovering costs of services including extended area service.

Revenues  from certain  telephone  services are affected by rates  authorized by
various regulatory agencies.  Intrastate service rates are subject to regulation
by the CPUC.  With respect to toll calls  initiated by  interexchange  carriers'
customers,  the  interexchange  carriers are assessed  access  charges  based on
tariffs  filed by SureWest  Telephone.  Interstate  access  rates and  resulting
earnings  are subject to  regulation  by the Federal  Communications  Commission
("FCC").  With respect to interstate services,  SureWest Telephone has filed its
own tariff  with the FCC for all  elements  of access  services  except  carrier
common line charges,  for which SureWest Telephone concurs with tariffs filed by
NECA.

The FCC monitors  SureWest  Telephone's  interstate  earnings through the use of
annual cost separation  studies  prepared by SureWest  Telephone,  which utilize
estimated cost information and projected demand usage. The FCC establishes rules
that  carriers  must  follow  in  the   preparation   of  the  annual   studies.
Additionally,  under current FCC rules governing rate making, SureWest Telephone
is required to establish  interstate  rates based on projected  demand usage for
its various  services and  determine  the actual  earnings from these rates once
actual volumes and costs are known.

In  January  2001,  the FCC  issued a  Memorandum  Opinion  and Order to another
telephone company in which it clarified how Internet traffic,  which the FCC had
prior to that date  characterized  as largely  interstate  in nature,  should be
treated.   During  2000  and  2001,   Internet  traffic  and  DSL  service  grew
substantially,  far exceeding SureWest Telephone's estimates,  which resulted in
actual  earnings  exceeding the levels  allowed by the FCC. Based on preliminary
cost  studies,   the  Company  recognized   liabilities   relating  to  SureWest
Telephone's estimated interstate shareable earnings obligations of $86 and $172,
respectively,  for the  quarter  and six  months  ended  June 30,  2003  through
reductions of revenues.  The Company did not identify any  interstate  shareable
earnings  obligations  at SureWest  Telephone  during the quarter and six months
ended June 30, 2004.

During the year ended  December 31, 2001,  SureWest  Telephone  made payments to
certain  telecommunications  companies  aggregating $6,800 related to interstate
shareable earnings  obligations for the monitoring period 1999-2000.  No similar
payments  were made during the quarter or six-month  periods ended June 30, 2004
or 2003.  On June 26,  2003,  the Company  entered  into an agreement to recover
$1,950 of the amount paid to a  telecommunications  company in 2001.  Therefore,
the Company recognized a receivable from this telecommunications  company in the
amount of $1,950 as of June 30, 2003 through a credit to network  access service
revenues  for the three months  ended June 30,  2003.  The Company  received the
funds on July 8, 2003.  The Company is currently  seeking a similar  refund from
another telecommunications company. However, the recoverability of the remaining
funds cannot presently be determined because the bankruptcy  proceeding relating
to the telecommunications company from which the Company is seeking a refund has
not been completed.

Prior to January 1, 2002,  SureWest Telephone billed SBC Communications  ("SBC")
various charges for certain local service and network access service revenues in
accordance  with certain  agreements as described  below. In 1999, SBC expressed
interest in withdrawing  from the  designated  carrier plan ("DCP") for SureWest
Telephone's  toll  traffic.  The  DCP  was a  compensation  arrangement  between
SureWest  Telephone  and SBC for  certain  intrastate  toll  services.  SureWest
Telephone  and SBC  agreed to allow the DCP  arrangement  to expire in  December
2001. The termination of the DCP did not have a material impact on the Company's
consolidated  financial  position  as of June 30,  2004 and 2003 or  results  of
operations for the quarter and six months then ended.

In  1999,  SBC  also  expressed  interest  in  entering  into a  new,  permanent
compensation  arrangement for extended area service  ("EAS").  At that time, SBC
had  been  paying  SureWest  Telephone  approximately  $11,500  per year for EAS
pursuant  to a  Settlement  Transition  Agreement.  In November  2000,  the CPUC
authorized  SBC to  terminate  its annual EAS  payments  to  SureWest  Telephone
effective November 30, 2000. The CPUC authorized replacement funding to SureWest
Telephone on an interim  basis using funds from the CHCF.  The CHCF is a program
designed by the CPUC to establish a fair and equitable  local rate structure and
to reduce any  disparity  in the rates  charged by telephone  companies  serving
high-cost  areas.  This interim funding is currently due to expire on January 1,
2005.  However,  there  is  an  amendment  pending,   SB1276,  to  the  existing
legislation,  which would extend the  expiration  date to January 1, 2009.  This
bill has passed the California Senate and awaits action by the Assembly.  Action
on this matter is expected  during  2004.  In the event this pending bill is not
enacted,  the Company  would file for  emergent  relief  under its  existing New
Regulatory  Framework  ("NRF")  mechanism  or other  regulatory  mechanisms.  In
addition,  the CPUC opened an Order  Instituting  Investigation  ("OII") for the
purpose of determining whether future recovery of all, none, or a portion of the
approximate  $11,500 annual  payments  previously  received from SBC should come
from SureWest  Telephone's  ratepayers or other regulatory recovery  mechanisms.
This proceeding began in 2001,  evidentiary  hearings were held during 2002, and
briefing  was  completed in February  2003.  In this  proceeding,  the Office of
Ratepayer  Advocates  ("ORA")  recommended  that the CPUC  discontinue  SureWest
Telephone's  present  interim  EAS  funding  from the CHCF  without  replacement
revenues from ratepayers.  The CPUC's decision in this matter is expected during
2004.  The CPUC has made no  indication  as to  what,  if any,  changes  will be
forthcoming relating to EAS revenues. The results of these proceedings and their
potential effects on SureWest Telephone cannot yet be determined.

In 1996,  the CPUC issued a decision in  connection  with  SureWest  Telephone's
general rate proceeding,  which authorized SureWest Telephone to implement a NRF
for services  furnished  within  SureWest  Telephone's  service area in order to
accommodate  market and  regulatory  movement  toward  competition  and  greater
pricing  flexibility.  Under the NRF,  SureWest  Telephone is subject to ongoing
monitoring and reporting  requirements,  including a sharing mechanism,  whereby
SureWest  Telephone  is  required  to  share  earnings  with  customers  through
reductions  of  revenues  if  its  earned  annual  rate-of-return  exceeds  that
authorized by the CPUC.

In accordance  with the  requirements  of its general rate case order,  SureWest
Telephone filed an application for review of its NRF in 1999. In connection with
this  proceeding,  the CPUC's ORA  undertook  a  verification  audit of SureWest
Telephone's  non-regulated and affiliated  transactions  pursuant to the general
rate case and other CPUC orders.  In June 2001, the CPUC adopted its decision in
this matter (the "Decision"). The Decision did not suspend the sharing mechanism
as SureWest Telephone had requested,  and the CPUC ruled that SureWest Telephone
must change the method used to allocate costs for services  provided by SureWest
Telephone to its affiliates, the treatment of certain directory revenues and the
treatment of  internal-use  software costs. In accordance with the provisions of
the Decision,  the Company  recorded  liabilities  and reductions of revenues of
$807 and $1,675,  respectively,  relating to its estimated  intrastate shareable
earnings  obligations during the quarter and six months ended June 30, 2003. The
Company did not  identify  any  interstate  shareable  earnings  obligations  at
SureWest  Telephone  for the quarter  and six months  ended June 30,  2004.  The
decrease  in the  provision  for its  estimated  intrastate  shareable  earnings
obligation is primarily  due to decreased  revenues  subject to  regulation  and
increased expenses.

The Company has been  involved in a proceeding  at the CPUC that has  considered
the  continued  need  for  certain   sharing   requirements  in  the  intrastate
jurisdiction and, in connection with that review,  has also considered the issue
of whether the  Company  overearned  in the  intrastate  jurisdiction  in recent
monitoring  periods and, if so, the amount of such  overearnings  that should be
shared with  customers.  On July 27, 2004, the Company entered into a settlement
agreement  with the other  parties in the  proceeding,  the ORA and The  Utility
Reform  Network  ("TURN"),  which is  intended  to  resolve  all  issues  in the
proceeding.  Among other things, the settlement agreement addresses and resolves
all earnings  issues for the  monitoring  periods 2000 through  2004,  puts into
place a surcredit  mechanism for the amount of the settlement,  and suspends the
requirement  for any intrastate  sharing for monitoring  periods from January 1,
2005 through at least December 31, 2010. The settlement  agreement is subject to
approval by the CPUC. When the settlement agreement is approved by the CPUC, the
Company will reassess its estimated intrastate shareable earnings obligations.

Beginning in January 2002, SureWest Telephone began paying a customer refund for
intrastate  overearnings  relating to the years 1998 and 1999.  A portion of the
customers'  intrastate  service  charges was returned in the form of a surcredit
beginning in January  2002 and ending in January  2003,  totaling  approximately
$4,605 (of which $294 was returned during 2003). Such refunds were recorded as a
reduction of the Company's estimated intrastate shareable earnings obligations.

Beginning in November 2003,  SureWest  Telephone  began paying a customer refund
for  intrastate  overearnings  relating  to the  year  2002.  A  portion  of the
consumer's  intrastate service charges was returned to the consumers in the form
of a surcredit  beginning in November 2003 and ending in February 2004, totaling
$483 (of which $208 was returned during the first quarter of 2004). Such refunds
were recorded as a reduction of the  Company's  estimated  intrastate  shareable
earnings obligations.

During  the  quarter  ended  March 31,  2004,  SureWest  Telephone  changed  its
estimates for a portion of its  interstate  and  intrastate  shareable  earnings
obligations as a result of periodic cost separations  studies.  These changes in
accounting estimates increased the Company's  consolidated  revenues by $539 and
net income by $310 ($0.02 per share) for the six months ended June 30, 2004.

During  the  quarter  ended  March 31,  2003,  SureWest  Telephone  changed  its
estimates for a portion of its  interstate  and  intrastate  shareable  earnings
obligations  and certain  NECA CCL accounts  receivable  balances as a result of
periodic  cost  separation  studies.   These  changes  in  accounting  estimates
decreased  the  Company's  consolidated  revenues by $277 and net income by $166
($0.01 per share) for the six months ended June 30, 2003.

As of  June  30,  2004,  the  Company's  condensed  consolidated  balance  sheet
reflected  aggregate  liabilities  of $12,642  relating to SureWest  Telephone's
estimated  interstate  and  intrastate  shareable  earnings   obligations.   The
calculations supporting these liabilities are very complex and involve a variety
of estimates prior to the ultimate settlement of such obligations.  In addition,
SureWest  Telephone's  interstate shareable earnings obligations lapse over time
if SureWest Telephone's  interexchange  carrier and other customers do not claim
the  amounts  ascribed to them.  Further,  a final  decision  from the CPUC that
adopts the settlement  agreement,  described  above,  would settle the Company's
existing estimated  intrastate  shareable earnings obligations and eliminate the
exposure  of the  Company  to  sharing of any  intrastate  overearnings  for the
immediate future and promote decision making that is focused more on competitive
market needs rather than these  regulatory  considerations.  Accordingly,  it is
reasonably possible that management's estimates of the Company's liabilities for
interstate and intrastate  shareable  earnings  obligations  could change in the
near term, and the amounts involved could be material.


<PAGE>



Broadband
<TABLE>
<CAPTION>
                                      Quarter Ended June 30,                     Six Months Ended June 30,
                            ------------------------------------------   ------------------------------------------
                              2004       2003     $ Change   % Change     2004       2003     $ Change    % Change
                            --------   --------   --------   --------    --------   --------  --------    --------
<S>                             <C>     <C>             <C>       <C>       <C>        <C>        <C>         <C>
Internet service            $  4,268   $  3,957   $    311         8%    $  8,419   $  7,671   $    748       10%
Residential Broadband
  service                      4,084      2,239      1,845        82        7,637      4,052      3,585       88
Business Broadband service     1,362        917        445        49        2,632      1,667        965       58
Total operating revenues
  from external customers      9,714      7,113      2,601        37       18,688     13,390      5,298       40
Intersegment revenues            435        254        181        71          888        782        106       14
Operating expenses *          14,594     10,352      4,242        41       28,528     20,453      8,075       38
Depreciation and
  amortization                 2,271        965      1,306       135        4,289      1,814      2,475      136
Operating loss                (6,716)    (3,950)    (2,766)       70      (13,241)    (8,095)    (5,146)      64
Net loss                    $ (4,318)  $ (2,727)  $ (1,591)       58%    $ (8,509)  $ (5,321)  $ (3,188)      60%
</TABLE>
   * Exclusive of depreciation and amortization


         Operating Revenues

Operating  revenues from external  customers in the Broadband  segment increased
$2,601  and  $5,298  for the  quarter  and  six  months  ended  June  30,  2004,
respectively,  compared to the same  periods in 2003.  The increase in Broadband
revenues is due to the combined effects of (i) a 15% increase in residential and
business DSL  subscriber  customer  base,  (ii) an 80% increase in the number of
FTTP  subscribers  for  broadband  residential  services and (iii) the continued
expansion of the broadband business services.

         Operating Expenses

Total operating  expenses for the Broadband  segment increased $4,242 and $8,075
for the quarter and six months  ended June 30, 2004,  respectively,  compared to
the  same  period  in  2003.  Cost  of  services  and  products   (exclusive  of
depreciation  and  amortization)  increased $2,339 and $4,645 during the quarter
and six months ended June 30, 2004, respectively, compared to the same period in
2003 primarily due to (i) an increase in programming and transport costs related
to the 80% increase in FTTP subscriber growth of broadband residential services,
(ii) an increase in repairs and maintenance  expense  resulting from an increase
in outside plant and (iii) an increase in maintenance and service agreements and
network  administration  resulting  from an increase in  subscriber  and network
growth.

Customer  operations  expense  increased  $467 and $935 for the  quarter and six
months  ended June 30,  2004,  respectively,  as compared to the same periods in
2003 primarily due to increases in (i)  advertising  costs due to an increase in
marketable  homes  passed and  expansion  of bundled  services  into  Roseville,
California and (ii) customer  service expense due to an increase in headcount to
support  the  increased  subscriber  base.  General and  administrative  expense
increased  $1,436 and $2,495 for the quarter and six months ended June 30, 2004,
respectively, compared to the same periods in 2003 due primarily to increases in
(i) consulting and legal fees due to the treasury investigation,  audit services
and  Sarbanes-Oxley  implementation  and  compliance  and  (ii)  the size of the
Company's workforce,  resulting in an increase to salaries and wages and medical
insurance  costs.  Depreciation and  amortization  expense  increased $1,306 and
$2,475  for the  quarter  and six  months  ended  June 30,  2004,  respectively,
compared to the same periods in 2003,  primarily due to an increase in property,
plant and equipment.



<PAGE>



Wireless
<TABLE>
<CAPTION>

                                      Quarter Ended June 30,                     Six Months Ended June 30,
                            ------------------------------------------   ------------------------------------------
                              2004       2003      $ Change   % Change     2004       2003     $ Change    % Change
                            ------------------------------------------   ------------------------------------------
<S>                              <C>       <C>        <C>          <C>      <C>       <C>         <C>          <C>
Wireless revenues from
  external customers        $  7,629   $  6,686   $    943        14%    $ 15,049   $ 13,189   $  1,860       14%
Intersegment revenues            378        146        232       159          689        302        387      128
Operating expenses *           9,157      8,093      1,064        13       17,921     15,807      2,114       13
Depreciation and
amortization                   2,956      3,855       (899)      (23)       6,053      7,634     (1,581)     (21)
Operating loss                (4,106)    (5,116)     1,010       (20)      (8,236)    (9,950)     1,714      (17)
Net loss                    $ (2,688)  $ (3,287)  $    599       (18)%   $ (5,387)  $ (6,387)  $  1,000      (16)%
</TABLE>
  * Exclusive of depreciation and amortization


         Operating Revenues

Operating  revenues from external  customers in the Wireless  segment  increased
$943  and  $1,860  for  the  quarter  and  six  months   ended  June  30,  2004,
respectively,  compared to the same  periods in 2003.  The  increase in Wireless
revenues  was due  primarily to (i) a 9% increase in Wireless  subscriber  base,
(ii) an  increase in roaming and long  distance  revenues  due to an increase in
minutes  of use and  (iii)  the  introduction  of  bundled  features,  including
voicemail and text messaging.

         Operating Expenses

Total operating  expenses for the Wireless  segment  increased $1,064 and $2,114
for the quarter and six months  ended June 30, 2004,  respectively,  compared to
the  same  periods  in  2003.  Cost  of  services  and  products  (exclusive  of
depreciation and amortization)  increased $826 and $1,626 during the quarter and
six months  ended June 30, 2004,  respectively,  compared to the same periods in
2003.  This  increase was due  primarily  to increases in (i) handset  costs and
interconnect  expenses due to an increase in  subscriber  base and the number of
handsets sold, (ii)  maintenance  expense  resulting from an increase in network
plant, (iii) tower rents due to an increase in cell sites and (iv) long distance
expense due to an increase in minutes of use.  This increase was offset by a 34%
decrease in the average unit cost per handset and a decrease in roaming expenses
due to lower roaming rates. General and administrative expense increased $61 and
$259 for the quarter and six months ended June 30, 2004, respectively,  compared
to the same periods in 2003 due  primarily to  increases in (i)  consulting  and
legal fees due to the treasury investigation,  audit services and Sarbanes-Oxley
implementation  and  compliance  and (ii) the size of the  Company's  workforce,
resulting in an increase to salaries and wages and medical insurance costs.

Depreciation and amortization  decreased $899 and $1,581 for the quarter and six
months ended June 30, 2004, respectively,  compared to the same periods in 2003.
This  decrease is due primarily to a change in  accounting  estimate  during the
first quarter of 2004,  resulting from the adoption of certain new  technologies
which increased the estimated useful lives of base stations,  towers and network
software by one to eight years.  This change in  accounting  estimate  decreased
depreciation  expense by $1,360 and $2,668 for the quarter and six months  ended
June 30,  2004,  respectively.  This  decrease  was  offset  by the  effects  of
continuing  additions of  property,  plant and  equipment  and  amortization  of
internal-use software.

         Local Number Portability

Effective November 24, 2003, the FCC mandated that wireless carriers provide for
local number portability  ("LNP"). LNP allows subscribers to keep their wireless
phone  numbers while  switching to a different  service  provider.  Although the
Company has experienced  favorable porting activity,  the  implementation of LNP
has not had a material effect on the Company's  consolidated  financial position
or results of operations.



<PAGE>



Non-operating Items

         Interest income and expense, Net

Consolidated  interest  income  decreased $145 and $169,  respectively,  for the
quarter and six months ended June 30, 2004 compared to the same periods in 2003,
due to lower average invested cash balances. Interest expense decreased $189 for
the quarter  ended June 30, 2004  compared to the same period on 2003 due to the
commencement of principal  payments on the Company's  Unsecured  Series A Senior
Notes in December 2003.  Interest expense increased $64 for the six months ended
June 30, 2004  compared to the same prior year period due to the issuance of the
Company's unsecured Series B Senior Notes in March of 2003.

         Income Taxes

Consolidated  income  taxes for the quarter  ended and six months ended June 30,
2004,  decreased  $823 and $997,  respectively,  compared to the same periods in
2003,  due primarily to  corresponding  decreases in income  subject to tax. The
effective federal and state income tax rates were approximately  41.4% and 41.2%
for the six month periods ended June 30, 2004 and 2003, respectively.

                         Liquidity and Capital Resources

As reflected in the Condensed  Consolidated  Statements of Cash Flows,  net cash
provided  by  operating  activities  was  $21,442  and $42,217 for the six month
periods  ended  June 30,  2004 and  2003,  respectively.  The  decrease  in cash
provided  by  operating  activities  for the current  year  compared to the same
period in the prior year was due  primarily  to  decreases  in the change of (i)
liabilities related to the Company's pension obligation of approximately  $3,832
due to the timing of payments to fund the pension plan and a decrease in pension
liability  resulting  from  an  increase  in the  return  on plan  assets,  (ii)
liabilities related to the Company's estimated shareable earnings obligations of
approximately  $3,517  due to the  Company's  periodic  preparation  of its cost
separation  studies  resulting in changes in estimates to prior year  monitoring
periods and a decrease  in the amount  required  to be  provided  primarily  for
Intrastate   shareable   earnings   obligations,   (iii)  accrued   interest  of
approximately  $868  related to the  issuance of the  Company's  Series B Senior
Notes ("Series B Notes") in March 2003, (iv) trade accounts  payable and accrued
liabilities  of  approximately  $6,524  resulting from the timing of payments to
vendors and decreased  expenditures  related to the Broadband network build-out,
(v) a decrease in net income of $1,446  primarily  due to an increase in general
and  administrative  expenses  related  to  the  treasury  investigation,  audit
services and Sarbanes-Oxley implementation and compliance and (vi) the provision
for  deferred  income  taxes of  approximately  $2,468  due to  accelerated  tax
depreciation,  (vii)  non-cash  charges  primarily  related to  depreciation  of
approximately  $2,029  due to a change  in  estimated  useful  lives of  certain
Telecom and Wireless assets.  Operating cash flows in the next few years will be
negatively  impacted  by higher  federal  income tax  payments  as the timing of
accelerated tax depreciation in 2002 and 2003 begins to reverse.

Net cash provided by operating activities during the six month period ended June
30,  2004 was  greater  than net  income  of  $1,942  due to  non-cash  charges,
consisting of depreciation and amortization due to increased capital investments
in the  Broadband  and  Wireless  segments  offset by (i)  decreases  in accrued
liabilities  resulting from the timing of payments to vendors and (ii) decreases
in liabilities related to the Company's estimated shareable earnings obligations
due  to the  Company's  periodic  preparation  of its  cost  separation  studies
resulting  in  changes  in  estimates  to prior year  monitoring  periods  and a
decrease  in  the  amount  required  to be  provided  primarily  for  Intrastate
shareable earnings obligations. During the six month period ended June 30, 2004,
the  Company  used  cash  flows  from  operations  and  existing  cash  and cash
equivalents to fund (i) capital  expenditures  of $33,968  pertaining to ongoing
plant construction projects and (ii) dividends of $7,288.

The  Company's  most  significant  use of  funds  for the  remainder  of 2004 is
expected to be for (i) budgeted capital  expenditures of approximately  $48,789,
(ii)  scheduled  payments  of  long-term  debt of $3,708,  (iii)  support of the
operations of broadband  residential  services up to an  anticipated  $4,479 and
(iv) support of the operations of SureWest Wireless up to an anticipated $1,350.
A  substantial  portion of the 2004  budgeted  capital  expenditures  are at the
discretion of the Company,  and are dependent upon the Company's working capital
position,  operating cash flows and ability to borrow,  as described  below. The
Company is required to comply with its cable  franchise  agreements  to continue
its build-out in the franchise areas.

As described in Regulatory Matters above, the Company currently receives funding
of $11,500 annually from the CHCF, a program designed by the CPUC to establish a
fair and equitable local rate structure and to reduce any disparity in the rates
charged by certain  telephone  companies  serving  high-cost areas. This interim
funding is  currently  due to expire on January  1, 2005.  However,  there is an
amendment  pending,  SB1276, to the current  legislation,  which will extend the
expiration date to January 1, 2009. A decision on this matter is expected during
2004. In the event this pending law is not approved,  the Company would file for
emergent relief from its existing NRF mechanism or other regulatory mechanisms.

In March 2003, the Company completed a note purchase  agreement for the issuance
of its Series B Notes in the aggregate principal amount of $60,000. The Series B
Notes have a final  maturity  of ten years and an average  life of eight  years.
Interest is payable  semi-annually at a fixed rate of 4.74%.  Principal payments
are due in equal annual  installments  of $12,000  commencing  in March 2009 and
ending in March  2013.  The  Company  used a portion  of the  proceeds  from the
issuance of the Series B Notes to retire certain  short-term  borrowings,  which
had an  aggregate  outstanding  principal  balance  of  $15,000.  A  substantial
intended use of the Series B Notes  proceeds was and continues to be the funding
of  capital  expenditures  for  the  Company's  broadband  residential  services
business.

In March 2000,  the Company  entered into a business loan  agreement with a bank
for a $30,000 line of credit with a term of three years.  In July 2002, the bank
amended the credit  facility  increasing the borrowing  capacity from $30,000 to
$50,000.  In March 2004, the bank further amended the credit facility  extending
the expiration date until June 1, 2005 and revising certain covenants.  Interest
on this credit  facility is based on a LIBOR-based  pricing  formula.  While the
Company  has  borrowed  previously  under this  credit  facility,  there were no
amounts  outstanding  under this credit  facility as of June 30, 2004, nor since
the issuance of the Series B Notes. The Company obtained a waiver as of June 30,
2004 with  respect to a technical  violation  of the  business  loan  agreement;
however,  the Company does not believe the  violation  to be of any  consequence
since  there  were  no  amounts  outstanding  as of the  time  of the  technical
violation.  The Company is currently having  discussions with the bank regarding
the covenants,  which may include  obtaining a waiver or an amendment for future
periods affected.

In February  2000,  the Board of Directors  authorized the repurchase of up to 1
million  shares  of the  Company's  common  stock.  In June  2002,  the Board of
Directors  approved the  repurchase of an additional  500 thousand  shares.  The
shares are purchased  from time to time in the open market or through  privately
negotiated  transactions  subject to overall  financial  and market  conditions.
Additionally, the Company implemented an odd-lot repurchase program during 2001.
Through June 30, 2004,  approximately 1 million shares of common stock have been
repurchased through these programs. The Company has remaining authorization from
the Board of Directors to  repurchase  an  additional  469 thousand  outstanding
shares as of June 30, 2004.

The Company had cash, cash  equivalents  and short-term  investments at June 30,
2004,  of $21,650.  The Company  believes  that its  working  capital  position,
operating cash flows and borrowing  capacity are more than sufficient to satisfy
its liquidity  requirements  for the remainder of 2004.  The Company's  forecast
indicates  it is likely that the Company  will  borrow  additional  funds in the
second-half of 2004 to fund operations and planned capital  expenditures,  while
maintaining  adequate  cash  and  cash  equivalents.  Such  borrowing  might  be
undertaken  under the newly  extended  credit  facility or by the  incurrence of
additional  long-term  indebtedness,  or a  combination  of short and  long-term
borrowing. The Company believes, given its financial position and debt-to-equity
position, it has substantial  additional short-and long-term borrowing capacity.
As indicated above, a substantial portion of the Company's 2004 budgeted capital
expenditures is at the discretion of the Company.  Accordingly, the Company also
believes that it could modify its planned  construction  and  commitments if the
results of operations or borrowing opportunities so require.

Dividends are declared at the  discretion  of the Company's  Board of Directors.
However,  unsecured  Series A Senior Notes,  unsecured  Series B Notes and other
unsecured credit arrangements contain provisions that could restrict the payment
of  dividends  in certain  circumstances.  These  restrictions  include  various
positive  and  negative  covenants  with  respect to  interest  coverage  ratio,
tangible net worth and  leverage  ratio.  At June 30, 2004 and 2003,  the entire
amount of retained earnings was unrestricted.

                   Critical Accounting Policies and Estimates

Below is a summary of the Company's critical  accounting policies and estimates.
Management  has  discussed  development  and  selection  of critical  accounting
policies and estimates with the Company's Audit Committee.

     o    Total  revenues  from   telephone   services  are  affected  by  rates
          authorized by various regulatory  agencies.  The FCC monitors SureWest
          Telephone's  interstate  earnings  through  the  use  of  annual  cost
          separation studies prepared by SureWest Telephone. The FCC establishes
          rules  that  carriers  must  follow in the  preparation  of the annual
          studies.   Based  on  these   rules,   the   Company  is  required  to
          prospectively   set  its  annual   interstate   rates   based  on  the
          aforementioned  cost  separation  studies.  These cost studies include
          estimates and assumptions  regarding  various financial data including
          operating  expenses,  taxes  and  investment  in  property,  plant and
          equipment.  Non-financial  data  estimates  are also  utilized  in the
          preparation of these cost studies,  including  projected  demand usage
          and detailed network information. The Company must also make estimates
          of the  jurisdictional  separation  of  this  data to  assign  current
          financial  and  operating   data  to  the   interstate  or  intrastate
          jurisdiction.  These  estimates  are  finalized  in future  periods as
          actual data  becomes  available to complete  the  separation  studies.
          Additionally,   certain  FCC  rules  regarding   interstate  shareable
          earnings  obligations  have not yet been  clarified  as to whether the
          Company's  rate filings are deemed  lawful and,  therefore,  protected
          from  over-earnings  liability.   Further,  the  Company's  separation
          studies include estimates and assumptions  regarding issues before the
          FCC involving  intercarrier  interconnection,  Internet  traffic,  and
          traffic utilizing Internet Protocol.  The Company also participates in
          the NECA pool for  certain  interstate  revenues.  In  addition to the
          estimates noted above,  the Company's  earned rate-of- return from its
          participation  in the NECA pool can also be impacted  by the  earnings
          and data of other carriers who participate in the pool.

          In accordance with the NRF,  SureWest  Telephone is subject to ongoing
          monitoring and reporting requirements by the CPUC, including a sharing
          mechanism whereby SureWest Telephone may be required to share earnings
          with customers based on its earned annual rate-of-return.  The Company
          utilizes models,  which rely on estimates regarding the jurisdictional
          separation of financial data and operational  data into the intrastate
          and interstate  jurisdictions as discussed previously for the purposes
          of  calculating  its earned annual  rate-of-return.  In addition,  the
          Company must make estimates and assumptions  regarding  various issues
          before  the  FCC  and  CPUC  involving  intercarrier  interconnection,
          Internet traffic, traffic utilizing Internet Protocol, methods used to
          allocate costs for services  provided by SureWest  Communications  and
          SureWest  Telephone  to its  affiliates  and the  treatment of certain
          plant and tax costs, including internal-use software costs.

          As a result  of these  estimates  and  assumptions,  it is  reasonably
          possible that management's estimates of SureWest Telephone's shareable
          earnings  obligations  could change in the near term,  and the amounts
          involved  could be  material.  For  example,  in 2002 the Company made
          changes in its  estimates  for  interstate  and  intrastate  shareable
          earnings  obligations for approximately  $6,200,  principally due to a
          D.C.  Circuit  Court of  Appeals  decision  issued in May 2002,  which
          determined   that  a  tariff   filed   properly   under   Section  204
          "streamlined"  procedures  and  allowed  to  go  into  effect  without
          suspension   is  deemed   lawful.   Therefore,   the  carrier  is  not
          subsequently  obligated  to pay refunds for  earnings  higher than the
          permitted rate of return as prescribed by the FCC for that  monitoring
          period. (See Footnote 5. Estimated Shareable Earnings Obligations)

     o    The Company  recognizes  revenue  when (i)  persuasive  evidence of an
          arrangement between the Company and the customer exists, (ii) delivery
          of the  product to the  customer  has  occurred  or  service  has been
          provided to the customer,  (iii) the price to the customer is fixed or
          determinable and (iv)  collectibility of the sales price is reasonably
          assured.

     o    The Company  maintains  allowances for doubtful accounts for estimated
          losses resulting from the potential inability of its customers to make
          required  payments.  In evaluating the  collectibility of its accounts
          receivable,  the  Company  assesses a number of  factors,  including a
          specific  customer's  or  carrier's  ability  to  meet  its  financial
          obligations to the Company, the length of time the receivable has been
          past due and historical and future expectations of conditions that may
          impact the Company's  ability to collect its accounts  receivable.  If
          circumstances  change  or  economic  conditions  worsen  such that the
          Company's  past  collection  experience  is no  longer  relevant,  the
          Company's  estimate of the  recoverability of its accounts  receivable
          could be further  reduced from the levels  reflected in the  Company's
          condensed  consolidated  balance  sheet.  If  uncollectibility  of the
          Company's  billed  revenue  changes by 1%, the Company would expect an
          increase  in  uncollectible  expense  of  approximately  $2,100  on an
          annualized basis. As of June 30, 2004, the Company had three customers
          that accounted for 6% of the consolidated  accounts  receivable in the
          aggregate.  Although  management  believes  that  thes  customers  are
          creditworthy,  a severe adverse  impact on their  business  operations
          could have a  corresponding  material  effect on their  ability to pay
          timely and,  therefore,  on the Company's results of operations,  cash
          flows and  financial  condition.  In  addition,  certain  revenues are
          subject  to refund if the  customer  terminates  services  or  returns
          equipment within a stipulated time period,  or if certain  performance
          criteria  are not met.  Accordingly,  the Company  maintains  accounts
          receivable   allowances  and  recognizes   certain   customer   refund
          liabilities,  through charges to revenues, based on the Company's best
          estimates of the resolution of these contingencies, which are based on
          historical experience.

     o    The Company states its  inventories  held for sale at lower of cost or
          market. In assessing the ultimate  recoverability of inventories,  the
          Company is required to make estimates regarding future customer demand
          and technological advances of equipment.

     o    Property,  plant and equipment are recorded at cost.  Retirements  and
          other  reductions  of  regulated  telephone  plant and  equipment  are
          charged  against  accumulated   depreciation  with  no  gain  or  loss
          recognized  in  accordance  with the composite  group  remaining  life
          methodology   utilized  for  telephone  plant  assets.  When  property
          applicable to non-telephone  operations is sold or retired,  the asset
          and related accumulated depreciation are removed from the accounts and
          the  associated  gain or  loss  is  recognized.  Property,  plant  and
          equipment is depreciated or amortized using the  straight-line  method
          over their estimated  economic lives. The economic lives are estimated
          at the  time the  assets  are  acquired  and are  based on  historical
          experience with similar assets,  as well as anticipated  technological
          or other changes. If technological  changes were to occur more rapidly
          than anticipated or differently than  anticipated,  the economic lives
          assigned to these  assets may need to be  shortened,  resulting in the
          recognition  of increased  depreciation  and  amortization  expense in
          future periods.  Likewise,  if the anticipated  technological or other
          changes  occur more  slowly  than  anticipated,  the life of the asset
          group could be extended based on the life assigned to new assets added
          to the group.  This could  result in a reduction of  depreciation  and
          amortization  expense  in future  periods.  The  Company  reviews  the
          estimated useful lives of its property, plant and equipment once every
          three  years,  or when  events  or  circumstances  indicate  that  the
          carrying amount may not be recoverable over the remaining lives of the
          assets.  In assessing the  recoverability  of the Company's  property,
          plant and  equipment,  the  Company  must make  assumptions  regarding
          estimated  future cash flows and other  factors to determine  the fair
          value of the respective assets.

     o    The Company  accounts for asset  retirement  obligations in accordance
          with  Statement of Financial  Accounting  Standards  ("SFAS") No. 143,
          "Accounting  for Asset  Retirement  Obligations,"  which  requires the
          Company to recognize a retirement  obligation (future cost of removal)
          when a legal  obligation  exists to remove  plant at some point in the
          future.  The  Company  believes  it  may  have  potential   retirement
          obligations  relating  to its  wireless  cell  sites.  Based  on terms
          outlined in its tower  leases,  the Company is obligated to return the
          land or facilities to their original  condition at the end of the cell
          site lease term, should the lease be terminated.  The Company has used
          a probability-weighted  cash flow approach in estimating its potential
          retirement obligation. The Company calculates the net present value of
          the retirement obligation assuming an inflation rate of 3%, a discount
          rate of 7% and a market  risk  premium  of 4%.  The  Company  has also
          assumed  the  settlement  date is 25 years  from the date the asset is
          placed into service. The Company has also used a  probability-weighted
          assessment to address the  uncertainty  regarding the timing of future
          cash flows to settle the  potential  liability.  The Company  believes
          that utilizing probabilities less than 100% is appropriate because the
          Company believes the likelihood of incurring material asset retirement
          expenditures  is  remote.  The  Company  monitors  the  estimates  and
          assumptions   used  in  determining  its  potential  asset  retirement
          obligations  for its cell sites.  However,  the Company  believes  the
          likelihood any future  adjustment to its asset  retirement  obligation
          will be material to the Company's consolidated financial statements is
          remote.

     o    In  accordance  with SFAS No.  142,  "Goodwill  and  Other  Intangible
          Assets,"  goodwill  and  wireless  spectrum  licenses are reviewed for
          impairment  annually,  or  more  frequently  if  an  event  occurs  or
          circumstances  change  that  would  reduce  the fair  value  below its
          carrying value. The impairment test for goodwill  requires the Company
          to estimate the fair value at the reporting unit level. The fair value
          is estimated using a discounted cash flow method. Under the discounted
          cash flow method, the Company determines fair value by using estimated
          cash flow forecasts, as well as estimates of terminal value, which are
          discounted  using  applicable  discount  rates.  The use of  different
          assumptions  within the  Company's  discounted  cash flow method could
          result  in  different  valuations  for  goodwill.  As a result  of the
          Company's  annual  test  for  2003,  no  impairment  of  goodwill  was
          indicated.

          The   Company's    wireless   spectrum   licenses   include   Personal
          Communications  Services  ("PCS")  and Local  Multipoint  Distribution
          Service  ("LMDS")  licenses.  In assessing the  recoverability  of the
          Company's PCS licenses,  the Company reviewed  transactions  involving
          sales of comparable  wireless  spectrum  licenses in the  aftermarket,
          using characteristics of the license and the related market, including
          geographic  location,  market size, megahertz frequency and population
          density.

          In assessing the  recoverability  of the Company's LMDS licenses,  the
          Company obtained an independent valuation, as comparable license sales
          data was not available. The independent valuation estimates fair value
          of the  Company's  LMDS licenses  using a discounted  cash flow model.
          Assumptions used in this model include the following:

          o    cash flow assumptions regarding investment in network facilities,
               distribution   channels  and  customer   base  (the   assumptions
               underlying   these  inputs  are  based  upon  a  combination   of
               historical results and trends, new industry  developments and the
               Company's business plans);
          o    a 25% weighted average cost of capital based on industry weighted
               averaged cost of capital  adjusted to reflect the inherent  risks
               associated with the introduction of a new service offering; and
          o    no terminal value.

          The use of different  estimates or  assumptions  within the discounted
          cash flow model when  determining  fair  value of the  Company's  LMDS
          licenses  could result in  different  values for these  licenses.  For
          example,  the Company used a discount rate of 25% in its assessment of
          fair value.  If the discount rate were to decrease one percent and the
          terminal  growth rate were to increase one percent,  the fair value of
          the LMDS licenses would increase by $400.

          If the estimated fair value is less than the carrying value,  then the
          carrying  value is written down to the fair value.  As a result of the
          Company's  annual test in 2003,  no  impairment  of either PCS or LMDS
          licenses was indicated.

          o    The Company accounts for income taxes using the liability method.
               Under  this  method,  deferred  tax assets  and  liabilities  are
               determined based on differences  between the financial  reporting
               and tax bases of assets and  liabilities  and are measured  using
               the enacted tax rates and laws that are  expected to be in effect
               when the  differences  are expected to reverse.  The Company does
               not have a valuation  allowance  on its  deferred tax asset as of
               June 30, 2004 or 2003  because it believes it is more likely than
               not that such  deferred  tax asset will be  realized.  Should the
               Company  determine  that it would not be able to  realize  all or
               part of its deferred tax asset in the future,  an  adjustment  to
               the  deferred  tax asset would be charged to income in the period
               in which the determination was made.

          o    The Company has pension  and  post-retirement  benefit  costs and
               obligations.  The Company's pension and  post-retirement  benefit
               obligations  are  actuarially  determined  based on  estimates of
               discount  rates,  long-term  rates of return on plan  assets  and
               increases  in  future  compensation  levels.   Changes  in  these
               estimates  and  other  factors  could  significantly  impact  the
               Company's   pension  and   post-retirement   benefit   costs  and
               obligations.

          o    The  Company  is a party to a variety of  litigation,  regulatory
               proceedings  and other  contingencies  that arise in the ordinary
               course of  business.  The  Company  is  required  to  assess  the
               likelihood of any adverse judgments or outcomes to these matters,
               as well as  potential  ranges of  probable  losses for certain of
               these matters. The determination of the liabilities  required, if
               any, for loss  contingencies  is made after  careful  analysis of
               each individual issue. In the opinion of management, the ultimate
               outcome of these matters will not materially affect the Company's
               consolidated financial position and results of operations.

          o    The Company  currently  sponsors two Equity  Incentive Plans (the
               "Plans") for certain employees, outside directors and consultants
               of  the   Company,   which  were   approved   by  the   Company's
               shareholders.  The Plans permit issuance by the Company of awards
               in the  form  of  restricted  shares,  stock  units,  performance
               shares,  stock options and stock  appreciation  rights.  Prior to
               2003, the Company accounted for those plans under the recognition
               and measurement provisions of Accounting Principles Board Opinion
               ("APB") No. 25,  "Accounting  for stock issued to employees," and
               related interpretations.  No stock-based compensation expense for
               stock  options  was  reflected  in net income for the years ended
               December 31, 2002 and 2001,  as all stock  options  granted under
               those plans had an exercise  price equal to the fair value of the
               underlying  common stock on the date of grant.  Effective January
               1,  2003,  the  Company   adopted  the   preferable   fair  value
               recognition  provisions  of  Statement  of  Financial  Accounting
               Standards   ("SFAS")  No.  123,   "Accounting   for   Stock-Based
               Compensation."  Under the prospective  transition method selected
               by the Company,  as described  in SFAS No. 148,  "Accounting  for
               Stock-Based Compensation-Transition and Disclosure," compensation
               expense was recognized in 2003 for all employee  awards  granted,
               modified or settled after January 1, 2003.

          The Company  voluntarily  made the choice to change to the  preferable
          method of accounting  for employee  stock  options in accordance  with
          SFAS No. 123. The Company  concluded  that stock options are a form of
          employee  compensation expense and, therefore,  it is appropriate that
          these  expenses  be  recorded  in the  results of  operations  to more
          clearly reflect economic reality.

          The Black-Scholes option pricing model includes assumptions  regarding
          dividend  yields,  expected  volatility,  expected lives and risk-free
          interest rates. These assumptions reflect management's best estimates,
          but  these  items  involve  inherent  uncertainties  based  on  market
          conditions  generally  outside  of the  control of the  Company.  As a
          result,  if other  assumptions  had been used in the  current  period,
          stock-based compensation expense could have been materially different.
          If  management   uses  different   assumptions   in  future   periods,
          stock-based  compensation  expense  could be  materially  impacted  in
          future years.

                    Factors That Could Affect Future Results

As a result of the following factors,  as well as other variables  affecting our
operating results, past financial performance may not be a reliable indicator of
future  performance,  and  historical  trends should not  necessarily be used to
anticipate results or trends in future periods.

Representative  examples  of these  factors  include  (without  limitation)  the
following:

     We expect to continue to face  significant  competition in all parts of our
     business  and the  level of  competition  is  expected  to  intensify.  The
     telecommunications  industry  is  highly  competitive.  We face  actual  or
     potential competition from many existing and emerging companies,  including
     other incumbent and competitive  local telephone  companies,  long-distance
     carriers and resellers,  wireless  telephone  companies,  Internet  service
     providers,  satellite companies and cable television companies.  We may not
     be able to  successfully  anticipate  and  respond to  various  competitive
     factors  affecting  the  industry,  including  regulatory  changes that may
     affect our competitors and us differently,  new  technologies  and services
     that may be introduced, changes in consumer preferences, demographic trends
     and discount pricing strategies by competitors. As the incumbent carrier in
     Sacramento,   SBC  Communications   enjoys  certain  business   advantages,
     including its size,  financial  resources,  favorable  regulatory position,
     brand  recognition  and  connection  to virtually  all of our customers and
     potential  customers there. As the largest cable operator in Sacramento and
     Placer County,  Comcast enjoys certain business  advantages,  including its
     size, financial resources,  ownership or superior access to programming and
     other content, brand recognition, and first-in-the-field  advantages with a
     customer base that generates positive cash flow for its operations. We face
     intense  competition in our markets for long-distance,  Internet access and
     other  ancillary  services  that are  important  to our business and to our
     growth strategy.

     We must adapt to rapid  technological  change.  Technological  developments
     could increase our costs and cause a decline in demand for our services. In
     addition,   technology   changes  can  give  competitors   significant  new
     advantages.  If we do not replace or upgrade  technology and equipment that
     becomes obsolete,  we will be unable to compete effectively because we will
     not  be  able  to  meet  the  needs  or   expectations  of  our  customers.
     Additionally, replacing or upgrading our infrastructure in the future could
     result in significant capital expenditures.

     We are  subject to a complex and  uncertain  regulatory  environment.  Some
     parts  of our  business  are  extensively  regulated,  and  the  nature  of
     regulation continues to undergo fundamental change and reinterpretation.

     Our operations have undergone  material  changes,  and our actual operating
     results  can be  expected  to  differ  from the  results  indicated  in our
     historical financial  statements.  As a result of our acquisition of assets
     from Western Integrated  Networks,  LLC and certain affiliates in 2002, our
     mix of  operating  assets  differs  from  those  operations  upon which our
     historical  financial  statements are based.  Consequently,  our historical
     financial statements may not be reliable as an indicator of future results.

     Our success depends upon our ability to manage our growth and expansion. If
     our acquisitions and growth initiatives are not successful, we could suffer
     an adverse  effect on our  business and results of  operations.  Our growth
     strategy will require us to invest significant capital in services that may
     not achieve the desired returns.  Our future success depends, in part, upon
     our ability to manage our growth,  including  our ability to build  network
     and related facilities to serve new customers,  integrate our operations to
     take advantage of new capabilities and systems;  attract and retain skilled
     personnel across the Company,  effectively manage the demands of day to day
     operations in new areas while attempting to execute our business  strategy,
     and realize the projected  growth and revenue targets  developed by Company
     management.

     We are reliant on support funds  provided  under federal and state laws. We
     receive  revenues from various  federal or state support  funds:  long term
     support from the Universal Service Program,  CHCF-B and Universal  Lifeline
     Service  Fund.  These  governmental  programs are reviewed and amended from
     time to time, and are likely to change in the near future.  As described in
     Regulatory Matters above, the Company currently receives funding of $11,500
     annually from the CHCF, a program  designed by the CPUC to establish a fair
     and equitable local rate structure and to reduce any disparity in the rates
     charged  by certain  telephone  companies  serving  high-cost  areas.  This
     interim  funding is  currently  due to expire on January 1, 2005.  However,
     there is an amendment pending,  SB1276, to the existing legislation,  which
     would extend the expiration  date to January 1, 2009.  This bill has passed
     the  California  Senate and awaits action by the  Assembly.  Action on this
     matter is  expected  during  2004.  In the event  this  pending  law is not
     enacted,  the Company would file for emergent  relief from its existing NRF
     mechanism  or other  regulatory  mechanisms.  The outcome and impact on the
     Company's  operations  resulting from future changes to these  governmental
     programs cannot be determined at this time.

     We could be harmed  by the  recent  adverse  developments  affecting  other
     communications  companies.  There have been numerous bankruptcies and other
     financial  difficulties  experienced by other carriers and suppliers in the
     telecommunications  and  Internet  sectors.  Similar  situations  with  our
     suppliers,  some of whom provide  products and services for which there are
     few substitutes, could cause us to experience delays, service interruptions
     or additional expenses.

     We depend on third  parties,  over whom we have no control,  to deliver our
     services.  Because of the interconnected  nature of the  telecommunications
     industry,   we  depend   heavily  on  other  local   telephone   companies,
     long-distance  carriers,  and numerous  other third  parties to deliver our
     services.  In addition,  we are  dependent  on  easements,  franchises  and
     licenses  from  various  private  parties  such  as  established  telephone
     companies and other utilities,  railroads,  long-distance companies,  state
     highway  authorities,  local governments and transit authorities for access
     to aerial pole space, underground conduits and other rights-of-way in order
     to construct  and operate our  networks.  The failure to maintain in effect
     the necessary third party  arrangements  on acceptable  terms would have an
     adverse effect on our ability to conduct our business.

     If we are unable to  effectively  and  efficiently  implement the necessary
     initiatives to eliminate the material weaknesses identified in our internal
     controls and procedures, there could be an adverse affect on our operations
     or financial results.  Our auditors,  Ernst & Young LLP, in connection with
     the audit of the Company's  consolidated  financial statements for the year
     ended  December 31, 2003,  advised us that they had concluded that material
     weaknesses  in the  Company's  internal  control  existed,  including  with
     respect  to  issues  identified  as a result of the  special  investigation
     instituted by the Audit Committee. The specific matters identified by Ernst
     &  Young  LLP  encompassed  (i)  control  of  cash  and  investments,  (ii)
     accounting  personnel,  policies and  procedures  and (iii)  accounting for
     property,   plant  and  equipment.   We  performed  substantial  additional
     procedures  designed to ensure that the internal  control  deficiencies did
     not  lead  to  material   misstatements  in  our   consolidated   financial
     statements.

     We have  already  implemented  various  initiatives,  and  are  considering
     additional  initiatives to improve our internal  controls,  and address the
     matters  identified  by  Ernst  &  Young  LLP.  The  implementation  of the
     initiatives and the consideration of additional necessary  improvements are
     among our highest priorities.  The Board of Directors,  under the direction
     of the  Audit  Committee,  will  continually  assess  the  progress  of the
     initiatives  and the  improvements,  and take  further  actions  as  deemed
     necessary.  Until all of the identified material weaknesses are eliminated,
     there  is a risk  of an  adverse  affect  on our  operations  or  financial
     results.  In addition,  we anticipate that the initiatives will require the
     hiring of additional  employees and the  incurrence of fees and expenses of
     third parties necessary to improve the internal controls,  likely resulting
     in increased operating expenses.

     We continue to devote significant  resources and efforts in connection with
     the compliance  requirements  imposed by Section 404 of The  Sarbanes-Oxley
     Act  of  2002.  It  is  anticipated  that  a  substantial  portion  of  the
     documentation  and testing phases relating to internal  control review will
     be completed by September 30, 2004.

     As part of our  efforts,  we are  currently  documenting  the  policies and
     procedures relating to the accounting for property, plant and equipment. In
     that  regard,  we  anticipate  completing  enhancements  to  certain of the
     modules of the enterprise  resource  planning  system relating to property,
     plant and  equipment by September  30, 2004.  Testing will be undertaken in
     the fourth  quarter of 2004 to assess the  related  internal  controls,  as
     required by Sarbanes-Oxley.  It is our current view that the testing of the
     internal controls relating to property, plant and equipment, in view of the
     short time period  before the end of the 2004  fiscal  year,  will  require
     manual  processes to increase the  likelihood of our  favorable  assessment
     with respect to such internal controls.


                          Regulatory and Legal Matters

SureWest  Telephone is subject to  regulation  by the FCC and CPUC. In the past,
there have been  various  proceedings  before these  agencies to which  SureWest
Telephone has been a party. In 1996, Congress passed the  Telecommunications Act
of 1996 (the "Act"), which significantly changed the regulatory  environment for
telecommunications  companies.  Beginning in 1996, the FCC conducted proceedings
and adopted  orders  implementing  the Act's  provisions to open local  exchange
service markets, such as the market of SureWest Telephone, to competition. These
proceedings  and orders  address  interconnection,  access charges and universal
service.  With  respect  to local  competition,  the FCC rules  outline  pricing
methodologies for the states to follow when setting rates for incumbent carriers
(such as SureWest  Telephone) to charge competitors for resale,  interconnection
and unbundled network elements.

Given the Act's relatively  recent  enactment,  the ongoing actions taken by the
FCC to promulgate  rules and regulations on  interconnection  access charges and
universal service reform, and the various on-going legal challenges  considering
the validity of these FCC orders,  it is not yet possible to determine fully the
impact  of  the  Act  and  related  FCC  regulations  on  SureWest   Telephone's
operations.

The Company's  financial  condition and results of operations have been and will
be affected by recent and future  proceedings  before the CPUC and FCC.  Pending
before the FCC and CPUC are proceedings, which are considering:

     o    additional rules governing the opening of markets to competition;

     o    the goals and definition of universal  telephone service in a changing
          environment,  including  examination of subsidy support mechanisms for
          subscribers of different carriers  (including  incumbent carriers) and
          in various geographic areas;

     o    rules that will provide non-discriminatory access by competing service
          providers to the network capabilities of local exchange carriers and

     o    the regulated rates and earnings of SureWest Telephone.

The Company has been  involved in a proceeding  at the CPUC that has  considered
the  continued  need  for  certain   sharing   requirements  in  the  intrastate
jurisdiction and, in connection with that review,  has also considered the issue
of whether the  Company  overearned  in the  intrastate  jurisdiction  in recent
monitoring  periods and, if so, the amount of such  overearnings  that should be
shared with  customers.  On July 27, 2004, the Company entered into a settlement
agreement  with the other  parties in the  proceeding,  the ORA and The  Utility
Reform  Network  ("TURN"),  which is  intended  to  resolve  all  issues  in the
proceeding.  Among other things, the settlement agreement addresses and resolves
all earnings  issues for the  monitoring  periods 2000 through  2004,  puts into
place a surcredit  mechanism for the amount of the settlement,  and suspends the
requirement  for any intrastate  sharing for monitoring  periods from January 1,
2005 through at least December 31, 2010. The settlement  agreement is subject to
approval by the CPUC. When the settlement agreement is approved by the CPUC, the
Company will reassess its estimated intrastate shareable earnings obligations.

There are a number of  pending  and  anticipated  other  regulatory  proceedings
occurring  at the  federal and state  levels that may have a material  impact on
SureWest Telephone.  These regulatory  proceedings  include, but are not limited
to,   consideration  of  changes  to  the  interstate  universal  service  fund,
intercarrier  compensation  (including access charges) reform and the regulation
of local exchange carriers,  and regulation of IP-enabled services. The outcomes
and impact on SureWest  Telephone's  operations of these proceedings and related
court matters cannot be determined at this time.

The  eventual  impact  on the  Company  of the  effect  of all  the  proceedings
described above cannot presently be determined.



<PAGE>



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's 2003 Annual Report on Form 10-K contains certain disclosures about
the  Company's  limited  exposure to market risk for changes in interest  rates.
There have been no  material  changes to the  information  provided  which would
require additional disclosures as of the date of this filing.

<PAGE>



ITEM 4. CONTROLS AND PROCEDURES

Company  management,  including the chief executive  officer and chief financial
officer,  have  evaluated the Company's  disclosure  controls and procedures (as
defined in Rule 13a-15(e) under the Securities  Exchange Act of 1934, as amended
(the  "Exchange  Act")) as of the end of the period  covered  by this  Quarterly
Report on Form 10-Q. Based upon that evaluation, the chief executive officer and
chief financial officer have concluded at the time of the original filing of the
Form 10-Q,  and at the time of filing of this  amendment to Form 10-Q,  that the
Company's  disclosure  controls  and  procedures  were  not  effective,  at  the
reasonable  assurance level, as a result of the material  weaknesses in internal
control described below. As discussed below, Philip A. Grybas joined the Company
as Senior Vice  President and Chief  Financial  Officer on October 4, 2004,  and
concurs  with  the  present  conclusion  and the  conclusion  at the time of the
original  filing of the Form 10-Q that the  Company's  disclosure  controls  and
procedures were not effective at the reasonable assurance level as of the end of
the period covered by this Quarterly Report on Form 10-Q.

In January 2004, the Audit Committee of the Board of Directors launched a formal
investigation,  and retained the law firm of Reed Smith LLP as independent legal
counsel to conduct the investigation with the assistance of forensic accountants
(the  firm of  Deloitte  & Touche  LLP was  retained  by Reed  Smith  LLP).  The
investigation  resulted from a preliminary  investigation by Company management,
(commenced  approximately  December  15, 2003 and  concluded  December 26, 2003)
triggered by the abrupt  resignation  of an employee in the Company's  Corporate
Finance  Department,  indicating  irregularities  by the former  employee in the
Company's  cash  management  and  investment  functions,  and  violations of the
Company's  investment  policies.  At the time of the commencement of the special
investigation,  approximately  $1,828,000  of  Company  funds  were  outstanding
without proper documentation.

The independent legal counsel,  with the assistance of the forensic accountants,
undertook an extensive  process to (i) investigate  the facts and  circumstances
giving rise to the  misappropriation  of Company funds,  (ii) determine  whether
there  were any  similar  or  related  transactions  and any  Company  employees
involved in the previously-identified transactions other than those known to the
Company at the commencement of the investigation, (iii) determine the underlying
mechanics in the origination of the  transactions  and the  circumstances  under
which detection failed to occur and (iv) evaluate  internal controls relating to
the affected portion of the Company's business.

The Audit  Committee of the Board of Directors was advised by independent  legal
counsel that:

     o    All of the  unauthorized  transactions  occurred in 2003 and  remained
          undetected  until  December  2003,  consisting  of  thirteen  distinct
          principal  transfers to and from the Company  beginning on January 10,
          2003,  with  additional  transfers  occurring  in the months of March,
          April, July, August and December 2003;

     o    The unauthorized transactions were actively concealed by the Company's
          former employee in the Company's books and records; and

     o    Independent   legal   counsel  did  not  uncover  any  other   similar
          transactions  nor  any  evidence  that  any  other  Company  employees
          intentionally participated in the unauthorized transactions.

The independent  legal counsel  further  reported to the Audit Committee (i) its
view that  existing  Company  control  procedures  prior to the discovery of the
unauthorized  transactions were either circumvented or ignored,  and the control
procedures  existing  at the  time of the  unauthorized  transactions  were  not
adequate and (ii) the Company,  subsequent to the discovery of the  unauthorized
transactions,  had developed and implemented a number of key internal  controls.
In  addition,   the  independent  legal  counsel  provided   additional  control
recommendations to the Audit Committee for review and consideration.

The firm of Reed Smith LLP made an oral report to the Company's  Audit Committee
on March 1, 2004,  and  subsequently  delivered a written report dated March 16,
2004.  The  independent  legal counsel  provided the  following  reasons for its
conclusion  regarding the inadequacy of the Company's control  procedures at the
time of the unauthorized transactions:

     o    The Company's then existing  control  procedures  relating to its wire
          transfer  process were either  circumvented  or ignored,  and controls
          relating  to  bank  reconciliations,   investment  schedules,  journal
          entries and the review process were not followed; and

     o    The  Company's  then  existing  control  procedures  were not adequate
          because  of  (i)   insufficient   documentation  of  internal  control
          procedures,  (ii) the absence of an internal  audit  function  testing
          internal  controls  and  reporting  directly  to the  Chief  Financial
          Officer or Board of Directors;  (iii) the lack of management oversight
          and diligence,  and  communication of specific  responsibilities,  and
          (iv) the absence of policies or procedures to report control issues.

The Company's  Audit  Committee  was further  advised by the  independent  legal
counsel  that,  in response to the  unauthorized  transactions,  the Company had
taken significant steps to strengthen  internal  controls,  categorized in three
main areas: entity-level controls, banking controls, and investment controls.

At the  entity  level,  and even  prior  to the  discovery  of the  unauthorized
transactions,  the  Company  had begun the  process  of  documenting  all of its
controls and processes in accordance with Section 404 of the Sarbanes-Oxley Act.

With  respect to banking  controls,  independent  legal  counsel  noted that the
Company  formalized  its  bank  reconciliation   process  and  review  policies,
including the requirement of a thorough  secondary  review by segment  financial
analysts,  independent  of the Company's  Treasury  Group.  The Company,  it was
noted, had immediately  suspended use of one of its wire transfer  systems,  and
implemented  administrative  modifications  requiring  specific approval in each
instance by the Company's Chief Financial Officer. Further, since late 2003 wire
transfers are reviewed by the Chief Financial  Officer or Controller on a weekly
basis. Additional changes were made to security procedures relating to passwords
to access the Company's banking information.

The independent  legal counsel noted, as to investment  controls,  the Company's
identification  and  requirement of standard  supporting  documentation  for any
investment  transactions and related  wire-transfer  approvals.  Included in the
documentation  now necessary for approval of investment  transactions  are (a) a
written  analysis  of  excess  cash  and a  determination  of the  amount  to be
invested; (b) an investment compliance worksheet to be completed by the Treasury
Supervisor; (c) wire-transfer request forms; and (d) manual journal entry forms.
All documentation must be approved by the Chief Financial Officer, the President
(in the Chief Financial  Officer's  absence),  or the Chief Financial  Officer's
designee.  Investment  schedules are prepared by accountants  independent of the
Treasury  Group,  with reviews  ultimately  by the Treasury  Supervisor  and the
Controller  or Chief  Financial  Officer,  or both.  Investment-related  journal
entries are  prepared by  accountants  independent  of the  Treasury  Group with
reviews by the Treasury Supervisor. Investment compliance is tested on a monthly
basis  (and  each  time  investment  activity  is  requested)  by  the  Treasury
Supervisor,  with reviews by the Controller or the Chief Financial  Officer,  or
both.

The independent legal counsel also recommended a number of additional changes to
strengthen  further the Company's  internal  controls,  also  categorized in the
areas of entity  level  controls,  banking  controls  and  investment  controls,
including as follows:

Entity Level Controls

It was recommended that the Audit Committee  undertake  appropriate  measures to
establish the proper management tone regarding internal controls,  with a strong
commitment  and  regular  communication  throughout  the Company  regarding  the
importance  of  controls.   Further,   counsel   recommended  that  the  Company
objectively   assess  all  Corporate   Finance  personnel  to  assure  necessary
competence and technical  skills  appropriate  for the relevant job duties,  and
further recommended a focused effort on developing and implementing  appropriate
internal control training for all employees.  The Audit Committee met on various
occasions  during  the  second  quarter  of  2004  with  representatives  of the
Company's  Corporate Finance  Department to emphasize the importance of internal
controls.  All Company  employees  attended  training  sessions  relating to the
Company's  Code of Conduct during the second and third quarters of 2004. A large
portion of the assessment of Corporate  Finance  personnel was undertaken in the
second and third quarters of 2004. This review and the Chief Financial Officer's
report to the Audit Committee were completed in February 2005.

It was also  recommended  that  the  Company  commit  appropriate  and  adequate
resources  to the  internal  audit  function,  with  the  head  of the  function
reporting directly to the Audit Committee and/or providing periodic reporting to
the Audit  Committee  regarding  control  testing plans and results.  Additional
recommendations  related to encouragement  of Company  personnel to consult with
management  or the  Audit  Committee  with any  concerns,  and  annual  employee
acknowledgment  and  affirmation  of the Code of  Conduct.  The  internal  audit
function was authorized and filled in the second quarter of 2004 with the hiring
of the Company's  Senior Internal  Auditor.  As described  above,  the Company's
employee  training  sessions were  conducted in the second and third quarters of
2004,  and  it  is  anticipated  that  an  annual  employee  acknowledgment  and
affirmation of the Code of Conduct will begin in 2005.

Banking Controls

With respect to banking controls, the independent legal counsel recommended that
the Company (i) assess the number of its bank  accounts and consider a reduction
in  the  number  of  accounts,   resulting  in  a  decrease  in  the  number  of
reconciliations,   less   complexity   and  better   controls,   (ii)   consider
implementation  of lockbox  processing  for checks,  (iii)  periodically  verify
account  signatures and banking  software user access with bank records and bank
personnel,  and (iv) segregate the function of performing  bank  reconciliations
from the Treasury function.  The Company has completed an assessment of its bank
accounts and lockbox  processing,  and has not effected  any  immediate  changes
based upon its  assessment,  the  requirement of the Company's  operations,  the
other  modifications  made to its bank  reconciliation  processes  in the  first
quarter of 2004, and the scheduled  implementation  of a new enterprise  billing
system in 2005.  In the third  quarter  of 2004,  the  Company  implemented  its
procedures  requiring  verification of account  signatures and banking  software
user access with bank records and bank personnel.

Investment Controls

The independent legal counsel recommended,  with respect to investment controls,
that the Company  (i)  formalize  the  instructions  provided to approved  money
managers,   and  secure   evidence  from  money   managers   acknowledging   the
instructions,  (ii) take  steps to ensure  that  appropriate  Corporate  Finance
personnel are assigned to, and complete, adequate investment schedule reviews on
a monthly  basis,  (iii)  obtain  SAS 70 Type II  reports  from all third  party
service  providers (such as approved money  managers),  providing an independent
opinion on the effectiveness and design of the third party's internal  controls,
and (iv) assign preparation of the monthly  investment  schedule to the Treasury
Group,  with review by a non-Treasury  employee and the Controller.  The Company
completed the implementation of all of the investment control recommendations in
the second  quarter of 2004,  with the  exception  of  obtaining  SAS 70 Type II
reports that were not available from certain third party service providers.

In connection with the audit of the Company's  consolidated financial statements
for  the  year  ended  December  31,  2003,  Ernst & Young  LLP,  the  Company's
independent  registered public  accounting firm,  advised the Audit Committee on
March 12, 2004,  and delivered a formal  letter to the Audit  Committee on March
26, 2004,  that it had  concluded  that  material  weaknesses  in the  Company's
internal  control  existed,  including  with  respect  to  certain of the issues
identified as a result of the Audit  Committee's  special  investigation.  Other
than the material  weaknesses  described below, Ernst & Young LLP did not advise
the  Company of any other  reportable  conditions.  The  Company  has  performed
substantial  additional  procedures designed to ensure that the internal control
deficiencies  did  not  lead  to  material  misstatements  in  its  consolidated
financial statements, notwithstanding the presence of the noted internal control
weaknesses.  The  specific  matters  identified  by Ernst & Young LLP  involving
internal  control  and  its  operation  considered  to  be  material  weaknesses
encompassed:

     o    Control of cash and  investments,  including  with respect  control of
          cash disbursements,  reconciliation procedures,  segregation of duties
          and investment policy compliance;
     o    Accounting  personnel,  policies and procedures;  and
     o    Accounting for property, plant and equipment.

The material  weaknesses  associated  with the  categories  described  above are
described in more detail as follows:

Control of Cash and Investments

Ernst & Young LLP provided  four specific  comments  relating to control of cash
and investments, including with respect to:

     o    control of cash  disbursements,  evidenced  by the  former  employee's
          unauthorized  transactions  during 2003, in which the former  employee
          was  able  to  unilaterally  authorize,   initiate  and  execute  wire
          transfers from the Company's bank accounts;

     o    cash   and   investment   reconciliation   procedures,   noting   that
          reconciliations  had not been reviewed and approved by an  appropriate
          member of Company management;

     o    segregation of duties, including a single employee reconciling certain
          accounts,  preparing the manual journal  entries and recording them in
          the general ledger (in each instance without review or approval of the
          Controller); and

     o    investment  policy  compliance,  relating  to the  absence of a formal
          process  to  monitor  the  Company's  compliance  with its  investment
          policy.

Accounting Personal Policies and Procedures

Ernst & Young LLP  advised  that the  increase  in scope and  complexity  of the
Company's  operations  during 2003 placed  demands on the  Company's  accounting
department  that  exceeded its  capabilities,  as evidenced by (i) the adjusting
journal  entries  recorded by the Company in connection  with the 2003 audit and
post-closing   reconciliations   process,   and  (ii)  the   unauthorized   wire
transactions  ultimately leading to the  misappropriation  of Company funds, and
specifically cited the collective mix of experience, technical skills, attention
to detail and diligence of the Company's accounting department personnel.

Further, the Audit Committee was apprised that the Company did not then maintain
a  comprehensive   accounting  policies  and  procedures  manual  or  electronic
database,  instead  relying  on the  memory  and  experience  of its  accounting
personnel to account for the routine and more complex  aspects of the  Company's
operations.

Accounting for Property, Plant and Equipment

The Company's Audit Committee was advised that the Company's  wireless affiliate
did not have  appropriate  accounting  policies  and  procedures  to (i) capture
internal labor costs that were subject to capitalization,  (ii) evaluate whether
decommissioned  network  assets were  impaired  and (iii)  ensure that its parts
inventory  general ledger  balance was reflective of actual  quantities on hand,
including consideration of obsolete items.

Remediation Efforts

As a result of the material  weaknesses noted above, the Company had implemented
a number of actions and  procedures in response to its discovery of the material
weakness  related to control of cash and  investments  prior to  year-end  2003,
which included the following:

     o    With respect to investment transfers,  a segregation of duties between
          initiation and approval of wire transfers;

     o    With respect to non-investment  transfers,  requests must be initiated
          by a  Company  business  segment  external  to the  Corporate  Finance
          Department or the Treasury Group;

     o    The  preparation of supporting  documentation  for all wire transfers,
          including  review  and  approval  of the  disbursement  based upon the
          Company's expenditure approval policy;

     o    The suspension of the particular wire transfer system utilized for all
          but one of the unauthorized transfers;

     o    A requirement that  modification of dual  administration  function for
          the wire transfer  system be approved by the Chief  Executive  Officer
          and Chief Financial Officer; and

     o    Segregation  of duties  with  respect to  journal  entries so that the
          approver of a wire  transfer does not prepare the  associated  journal
          entry.

The material  weakness  related to cash and  investments  was  identified by the
Company in December  2003, and the material  weakness  related to accounting for
property,  plant and  equipment  was  identified by the Company in late November
2003.  Ernst & Young LLP advised the Audit Committee of the material  weaknesses
relating  to  control of cash and  investments,  including  with  respect to the
control of cash disbursements,  reconciliation procedures, segregation of duties
and investment policy compliance,  accounting for property,  plant and equipment
and  accounting  personnel,  policies and  procedures on March 12, 2004,  and by
formal letter delivered on March 26, 2004.

All of the material  weaknesses  existed at December  31, 2003,  but the Company
believes that the actions it undertook in December 2003 and the first quarter of
2004 and described herein remediated the cash and investments material weakness.
The  additional  steps which must be completed to remediate  the other  material
weakness are as follows:

     Accounting Personnel, Policies and Procedures

     o    The completion of the assessment of the Corporate  Finance  Department
          by  management,  including  the new Senior  Vice  President  and Chief
          Financial  Officer who joined the Company on October 4, 2004,  and the
          implementation  of a training  program and the hiring of new personnel
          as  necessary,  to assure the proper mix of  technical  skills and the
          relevant  personnel,  which the  Company.  This  review  and the Chief
          Financial  Officer's  report to the Audit  Committee were completed in
          February 2005.

     Accounting for Property, Plant and Equipment

     o    The completion of  enhancements to the Company's  enterprise  planning
          and accounting  software,  for which  implementation  commenced in the
          second quarter of 2004 and is ongoing.

The Company  performed a number of procedures to compensate  for the  identified
material  weaknesses in internal  controls to permit its certifying  officers to
state that the Company's  financial  statements fairly presented in all material
respects the  Company's  financial  condition,  results of  operation,  and cash
flows.  Specifically,  with respect to the control of cash and investments,  the
Company  performed a  comprehensive  reconciliation  of all cash and  investment
accounts  for each month  during the 2003 fiscal year and each month during 2004
(in  addition  to  procedures  performed  in  connection  with  prior  years  in
connection with the Audit Committee's special investigation).

With respect to the material weakness relating to Accounting for Property, Plant
and Equipment, in the first quarter of 2004:

     o    The Company performed  physical counts of certain aspects of materials
          and supplies  inventories  at each of its  subsidiaries  in connection
          with year-end closing procedures;
     o    The results of the physical inventories were reconciled to the general
          ledger;
     o    With  respect to the  reconciliation  of its plant under  construction
          account,  the  Company  performed  a  detailed  reconciliation  of the
          sub-ledger to the general ledger;
     o    The  Company  conducted  a  detailed  reconstruction  of its  Wireless
          subsidiary accounts with respect to plant under construction;
     o    Certain  open jobs for plant  under  construction  were  reviewed  for
          compliance with the Company's  policies and procedures;
     o    The Company implemented strengthened project and capitalization review
          procedures for open wireless projects; and
     o    The  Company  performed  a  comprehensive  review  of  labor  charging
          practices in its wireless affiliate and developed detailed  timesheets
          which  required  the  employee  to  use  detailed  job  codes  in  the
          timesheets  to assure proper  categorization  of time in the Company's
          financial records.

The Company  continued to implement  and  instituted  additional  processes  and
procedures to improve internal control in the first quarter of 2004.  Subsequent
to the discovery of the unauthorized  wire  transactions in 2003, the Company in
the first quarter of 2004 implemented a number of internal controls with respect
to cash and investment activities, including:

     o    An improved  process  with  respect to bank  reconciliation  policies,
          including  secondary  reviews  performed  by  Company  personnel  with
          appropriate segregation of duties;

     o    Revised   procedures  for  the  initiation  of  modifications  to  the
          Company's instructions to its bank relating to authorizations; and

     o    Weekly  reviews of the Company's  wire transfer  activity by the Chief
          Financial Officer or Controller.

The Company  also  implemented  new  controls in the first  quarter of 2004 with
respect to its investment activities, including:

     o    Standardizing  supporting  documentation  for investment  activity and
          approvals  as  described  by  independent  legal  counsel to the Audit
          Committee as noted above;

     o    Revisions to the journal  entry process for  investment  transactions,
          and related segregation of duty modifications;

     o    The  preparation  of  investment   schedules  by  properly  segregated
          personnel; and

     o    Monthly investment compliance testing.

The Audit Committee made a number of additional recommendations to the Company's
Board of Directors  for further  review and  consideration,  which were formally
acted upon  beginning  late in the  second  quarter  of 2004,  and  contemplated
additional actions thereafter. Such initiatives relate to:

     o    An assessment to be conducted with respect to the Company's  Corporate
          Finance  Department,  which  encompasses the Company's  accounting and
          finance personnel,  including  specifically  relating to the number of
          personnel,  and  the  collective  mix  and  technical  skills  of such
          personnel,  and the addition of new  personnel,  if  necessary,  which
          resulted in the hiring of a Treasury Supervisor with a CPA license and
          more than 13 years of public and private  accounting  practice  and an
          increase in size of the Company's  fixed asset group from two to four,
          including  a  supervisor   with  more  than  16  years  of  accounting
          experience.  In addition,  the Company's new Senior Vice President and
          Chief Financial  Officer,  who has more than 20 years of experience in
          finance  and  telecommunications,  began work on October 4, 2004.  The
          assessment  and the  Chief  Financial  Officer's  report  to the Audit
          Committee were completed in February 2005;

     o    An  internal  audit  process,  with  tasks to be  performed  either by
          Company  personnel  or a third  party,  with  reporting  duties to the
          Chairman of the Company's Audit Committee  (implemented in part by the
          Company's hiring of a Senior Internal Auditor in July );

     o    A more significant  effort devoted to internal  controls  training for
          all affected personnel, and an increased emphasis on the completion of
          internal controls documentation,  including as required by Section 404
          of the Sarbanes-Oxley Act of 2002 (including the retention in May 2004
          of third-parties  to assist in performing  internal control reviews of
          all of the Company's  accounting systems,  and to assist in expediting
          the completion of the internal controls documentation, which commenced
          in the second quarter of 2004); and

     o    The preparation and implementation of a formal accounting policies and
          procedures manual or electronic  database to serve as a reference tool
          for Company  personnel  and to establish  uniformity  and  consistency
          throughout the Company.  The Accounting Policies and Procedures manual
          was  completed  in draft in October  2004,  and the Manual and certain
          additional  sections were  completed  subsequent to December 31, 2004.
          Management is currently  developing  training  programs to ensure that
          Company personnel have the adequate knowledge, experience and guidance
          to perform job duties.

The Company has previously taken actions that it believes have improved internal
controls, including:

     o    The  establishment  in 2003 of a  Disclosure  Committee  comprised  of
          Management  personnel  and  senior  representatives  of the  Company's
          Corporate  Finance  Department,  which  undertakes  reviews  prior  to
          significant filings with the Securities and Exchange Commission;

     o    The modification of written ethics and compliance  materials  provided
          to Company employees,  and the formal adoption of a Code of Ethics and
          Business  Conduct,  and  the  related  establishment  of  confidential
          procedures which permit Company  employees to communicate  anonymously
          in the event of  suspected  violations  of laws or  Company  standards
          (together with  mandatory  classes in the second and third quarters of
          2004 for all  Company  employees  to  review  the Code of  Ethics  and
          Business Conduct);

     o    The  implementation  in 2003 of new enterprise  resource  planning and
          accounting  software,  which likely assisted in identifying certain of
          the accounting  deficiencies  noted above relating to property,  plant
          and equipment. (The Company in the third quarter of 2004 also improved
          modules in its new  software  and  undertook  in October  2004 revised
          physical  verification  and other procedures to improve its accounting
          for property, plant and equipment);

     o    The provision of a mandatory time charging program for all supervisors
          and managers and  timekeepers in the related  departments  focusing on
          proper  time  charging  practices,  including  capitalized  labor,  in
          addition to proper review and approval procedures; and

     o    The correction in the fourth quarter of 2003 and first quarter of 2004
          of historical data converted to the new enterprise  resource  planning
          system  relating  to  plant  and  accounting   software,   and  formal
          procedures  implemented in 2004 to assure that  construction  projects
          are reviewed by project managers to consider the correct  recording of
          costs before projects are place into service.

On April 15, 2004, Michael D. Campbell,  the Company's  Executive Vice President
and Chief Financial Officer retired from the Company.  Brian H. Strom, President
and Chief  Executive  Officer of the Company,  served as interim Chief Financial
Officer,  while the  Company  undertook  the  search  for a new Chief  Financial
Officer.  Effective  October 4, 2004,  Philip A.  Grybas  joined the  Company as
Senior Vice President and Chief Financial  Officer.  Mr. Grybas has more than 20
years of finance and accounting experience in the telecommunications industry.

Under the supervision and with the  participation  of our management,  including
our Chief  Executive  Officer  and Chief  Financial  Officer,  we  conducted  an
evaluation of the effectiveness of our internal control over financial reporting
as of December 31, 2004 based on the  framework  in Internal  Control-Integrated
Framework  issued by the Committee of Sponsoring  Organizations  of the Treadway
Commission  (COSO).  Our  evaluation  identified  a  material  weakness  in  the
Company's  internal control over financial  reporting relating to the accounting
for property,  plant and equipment,  which resulted from control weaknesses that
caused the following conditions:  The Company was unable to completely reconcile
its plant in service  and plant  under  construction  subsidiary  ledgers to the
corresponding  general  ledger  balances for periods  throughout  2004 and as of
December  31, 2004.  Management  believes  these  unreconciled  differences  are
attributable  principally to  deficiencies  in the  reliability of the Company's
information system interfaces between the general ledger and the property, plant
and equipment  subsidiary  ledgers.  In addition,  during 2004,  several  errors
occurred  in  the  Company's  periodic  depreciation  and  capitalized  interest
calculations that were more than inconsequential.  Additionally,  as of December
31, 2004, the Company did not have effective  procedures with which to determine
the cost bases of property, plant and equipment that had been retired. Moreover,
certain manual  internal  controls  pertaining to property,  plant and equipment
implemented  by the Company  during the third quarter of 2004 were not operating
effectively  as of December  31,  2004.  These  matters  required the Company to
record  adjustments to both its annual and interim 2004  consolidated  financial
statements.  The  significant  accounts  affected by this material  weakness are
property,  plant and equipment and related accumulated  depreciation included in
the Company's consolidated balance sheets, and depreciation expense and interest
expense included in the Company's consolidated statements of operations.  Due to
this material  weakness,  management  believes that as of December 31, 2004, the
Company's  internal control over financial  reporting was not effective based on
the COSO criteria.

Management's  assessment  of the  effectiveness  of our  internal  control  over
financial  reporting  as of December  31, 2004 has been audited by Ernst & Young
LLP, an independent  registered public accounting firm, as stated in its report,
which is included in our 2004 Annual Report on Form 10-K.

Remediation Steps Related to Material Weakness

As noted in Management's  Report on Internal  Control over Financial  Reporting,
which is included in our 2004 Annual Report on Form 10-K, the material  weakness
relating to the  accounting  for  property,  plant and  equipment  resulted from
control weaknesses that caused the following conditions:

     o    The Company was unable to  completely  reconcile  its plant in service
          and plant under  construction  subsidiary ledgers to the corresponding
          general ledger balances for periods throughout 2004 and as of December
          31, 2004. At December 31, 2004, the  unreconciled  difference was less
          than  1%  of  the  Company's  consolidated  net  property,  plant  and
          equipment balance.  Management believes these unreconciled differences
          are attributable principally to deficiencies in the reliability of the
          Company's information system interfaces between the general ledger and
          the property, plant and equipment subsidiary ledgers. Manual controls,
          put in place in the third  quarter  of 2004 as noted in the  Company's
          Form 10-Q for the quarter ended  September 30, 2004, were not adequate
          to resolve to a reasonable level the various data errors.

     o    Depreciation  and capitalized  interest  calculations by the Company's
          enterprise  resource  planning system have been  inconsistent and have
          required  various manual  adjustments to properly record  depreciation
          expense and related interest costs in the proper period.

     o    Monthly reviews of plant under construction balances for propriety and
          correct  classification,  a manual  control  implemented  in the third
          quarter of 2004, were not performed at the appropriate level or at the
          appropriate  time to  provide  reasonable  assurance  that  costs  are
          properly reflected in the property, plant and equipment sub-modules.

     o    As of December 31, 2004, the Company did not have effective procedures
          with  which  to  determine  the  cost  bases of  property,  plant  and
          equipment that had been retired.

The Company has or will implement the following remediation steps to address the
material weakness discussed above:

     o    Enhancements  to  the  Company's   enterprise  resource  planning  and
          accounting software, for which implementation  commenced in the second
          quarter of 2004, is ongoing.

     o    The performance of additional detailed reviews, on a monthly basis, of
          all open construction  projects by the appropriate  project manager to
          validate the results generated by the Company's systems.

     o    The review of systematic  routines,  which  generate and transfer data
          between modules within the enterprise  resource  planning  system,  as
          necessary  to  determine  if  the  routines  are  generating  accurate
          reports.

     o    Timely detailed reviews by management will occur to provide reasonable
          assurance that manual controls are operating effectively.

The Company believes that it is reasonably  likely the material weakness related
to property, plant and equipment will be remediated and tested in 2005.

Other Internal Control Matters

Management of the Company,  during its  assessment of the  effectiveness  of the
Company's  internal  control over  financial  reporting as of December 31, 2004,
identified the following other internal control deficiencies:

     Information Technology

     o    The  Company  has  identified  certain  deficiencies  related  to  its
          Information  Technology general and application  controls. In response
          to these  deficiencies,  during the third quarter of 2004, the Company
          engaged an outside  consulting firm to design and implement changes to
          the controls in an effort to remediate  the  identified  deficiencies.
          Although  the Company has made  progress in its  remediation  efforts,
          these  efforts were not  completed  by December 31, 2004.  The Company
          believes  that it is  reasonably  likely that this control  deficiency
          will be remediated and tested in 2005.

     Accounting Personnel, Policies and Procedures

     o    In the third quarter of 2004, the Company expected that the assessment
          of the Corporate Finance  Department by management,  including the new
          Senior  Vice  President  and Chief  Financial  Officer  who joined the
          Company  on  October 4,  2004,  and the  implementation  of a training
          program and the hiring of new  personnel as  necessary,  to assure the
          proper mix of technical  skills and the relevant  personnel,  would be
          completed by December 31,  2004.  This review and the Chief  Financial
          Officer's  report to the Audit  Committee  were  completed in February
          2005.

     o    On September  30,  2004,  the Company  issued in draft its  Accounting
          Policies  and  Procedure  Manual.  The manual and  certain  additional
          sections were completed subsequent to December 31, 2004.

     o    During management's assessment of internal controls, it was noted that
          the  quality of  evidence  was not  consistent  across  the  Company's
          controls.  Management put into place various  remediation steps during
          the third and fourth quarters of 2004, which it believed would improve
          the overall quality of the control documentation.  During management's
          testing  of  internal  controls  in 2005,  we will  determine  if such
          remediation  was effective in improving the Company's  overall quality
          of control documentation.

During the quarter  ended June 30, 2004,  the Company  performed  the  following
actions  which  could  have a  material  effect  on  internal  control:  (i) the
retirement of the Company's Chief Financial Officer;  (ii) the implementation of
project and  capitalization  review  procedures  and labor  charging  practices,
including   time  card   training;   (iii)  the   verification   that  the  bank
reconciliation  controls  worked  as  designed  and  (iv)  the  commencement  of
modifications  to the fixed asset and project  accounting  information  systems.
With the  exception  of the items noted  above,  there has been no change in the
Company's internal control over financial reporting during the period covered by
the report that has  materially  affected or is reasonably  likely to materially
affect the Company's internal control over financial reporting.



<PAGE>



PART II

ITEM 1. LEGAL PROCEEDINGS (Amounts in Thousands)

Except for the  proceedings  described  below,  the  Company is not aware of any
material  pending  legal  proceedings,  other than ordinary  routine  litigation
incidental  to its  business,  to which  it is a party  or to  which  any of its
property is subject.

In 1996, the California Public Utilities  Commission  ("CPUC") issued a decision
in  connection  with  SureWest   Telephone's  general  rate  proceeding,   which
authorized  SureWest  Telephone to implement a New Regulatory  Framework ("NRF")
for services  furnished  within  SureWest  Telephone's  service area in order to
accommodate  market and  regulatory  movement  toward  competition  and  greater
pricing  flexibility.  Under the NRF,  SureWest  Telephone is subject to ongoing
monitoring and reporting  requirements,  including a sharing  mechanism  whereby
SureWest  Telephone  is  required to share  earnings  with  customers  through a
reduction  of  revenues  if  its  earned  annual  rate-of-return   exceeds  that
authorized by the CPUC.

In accordance  with the  requirements  of its general rate case order,  SureWest
Telephone filed an application for review of its NRF in 1999. In connection with
this proceeding,  the CPUC's Office of Ratepayer  Advocates  ("ORA") undertook a
verification  audit  of  SureWest   Telephone's   non-regulated  and  affiliated
transactions  pursuant to the general rate case and other CPUC  orders.  In June
2001,  the CPUC  adopted  its  decision in this  matter  (the  "Decision").  The
Decision  did not suspend  the  sharing  mechanism  as  SureWest  Telephone  had
requested,  and further provided that SureWest  Telephone must change the method
used to  allocate  costs for  services  provided by  SureWest  Telephone  to its
affiliates,  the  treatment of certain  directory  revenues and the treatment of
internal-use software costs. Additionally,  in accordance with the provisions of
the  Decision,  the Company  recorded  certain  liabilities  and  reductions  of
revenues relating to estimated intrastate shareable earnings obligations.

The Company has been  involved in a proceeding  at the CPUC that has  considered
the  continued  need  for  certain   sharing   requirements  in  the  intrastate
jurisdiction, and in connection with that review, has also considered the issues
of whether the  Company  overearned  in the  intrastate  jurisdiction  in recent
monitoring  periods,  and if so, the amount of such  overearnings that should be
shared with  customers.  On July 27, 2004, the Company entered into a settlement
agreement  with the other  parties in the  proceeding,  the ORA and The  Utility
Reform  Network  ("TURN"),  which is  intended  to  resolve  all  issues  in the
proceeding.  Among other  things,  the  settlement  agreement  would address and
resolve all earnings issues for the monitoring periods 2000-2004, put into place
a  surcredit  mechanism  for the  amount  of the  settlement,  and  suspend  the
requirement for any intrastate sharing for later monitoring periods from January
1, 2005 through at least December 31, 2010. This settlement agreement is subject
to approval by the CPUC. When this settlement agreement is approved by the CPUC,
the  Company  will  reassess  its  estimated   intrastate   shareable   earnings
obligations.

Prior to January 1, 2002,  SureWest  Telephone  billed SBC  various  charges for
certain local service and network  access  service  revenues in accordance  with
certain  agreements  as described  below.  In 1999,  SBC  expressed  interest in
withdrawing  from the designated  carrier plan ("DCP") for SureWest  Telephone's
toll traffic. The DCP was a compensation  arrangement between SureWest Telephone
and SBC for certain intrastate toll services.  SureWest Telephone and SBC agreed
to allow the DCP arrangement to expire in December 2001.

In  1999,  SBC  also  expressed  interest  in  entering  into a  new,  permanent
compensation  arrangement for extended area service  ("EAS").  At that time, SBC
had  been  paying  SureWest  Telephone  approximately  $11,500  per year for EAS
pursuant  to a  Settlement  Transition  Agreement.  In November  2000,  the CPUC
authorized  SBC to  terminate  its annual EAS  payments  to  SureWest  Telephone
effective November 30, 2000. The CPUC authorized replacement funding to SureWest
Telephone on an interim  basis using funds from the CHCF.  The CHCF is a program
designed by the CPUC to establish a fair and equitable  local rate structure and
to reduce any  disparity  in the rates  charged by telephone  companies  serving
high-cost  areas.  This interim funding is currently due to expire on January 1,
2005.  However,  there  is  an  amendment  pending,   SB1276,  to  the  existing
legislation,  which would extend the  expiration  date to January 1, 2009.  This
bill has passed the California Senate and awaits action by the Assembly.  Action
on this matter is expected  during  2004.  In the event this pending bill is not
enacted,  the Company  would file for  emergent  relief  under its  existing NRF
mechanism or other regulatory mechanisms.  In addition, the CPUC opened an Order
Instituting  Investigation ("OII") for the purpose of determining whether future
recovery of all, none, or a portion of the  approximate  $11,500 annual payments
previously received from SBC should come from SureWest Telephone's ratepayers or
other regulatory recovery mechanisms. This proceeding began in 2001, evidentiary
hearings were held during 2002,  and briefing was completed in February 2003. In
this  proceeding,  the  ORA  recommended  that  the  CPUC  discontinue  SureWest
Telephone's  present  interim  EAS  funding  from the CHCF  without  replacement
revenues from ratepayers.  The CPUC's decision in this matter is expected during
2004.  The CPUC has made no  indication  as to  what,  if any,  changes  will be
forthcoming relating to EAS revenues. The results of these proceedings and their
potential effects on SureWest Telephone cannot yet be determined.

SureWest Telephone's  operations may also be impacted by the  Telecommunications
Act  of  1996  (the  "Act").  The  Act  significantly   changed  the  regulatory
environment  for  telecommunications  companies.  Beginning in 1996, the Federal
Communications  Commission  ("FCC")  conducted  proceedings  and adopted  orders
implementing the Act's  provisions to open local exchange service markets,  such
as the market of SureWest  Telephone,  to  competition.  These  proceedings  and
orders address interconnection, access charges and universal service.

Given the ongoing  activities of the FCC to promulgate  rules and regulations on
interconnection,  access charges,  and universal service reform, and the various
on-going legal  challenges  considering the validity of these FCC orders,  it is
not yet  possible  to  determine  fully the  impact of the Act and  related  FCC
regulations on SureWest Telephone's operations.

There are a number of other regulatory  proceedings occurring at the federal and
state  levels  that may have a  material  impact on  SureWest  Telephone.  These
regulatory proceedings include, but are not limited to, consideration of changes
to the  jurisdictional  separations  process,  the interstate  universal service
fund,  access charge reform and the regulation of local exchange  carriers.  The
outcomes and impact on SureWest Telephone's  operations of these proceedings and
related court matters cannot be determined at this time.

The regulatory  proceedings  occurring at the state and federal levels described
above may also broaden the scope of  competition  in the  provision of regulated
services  and  change  the  rates  and rate  structure  for  regulated  services
furnished  by SureWest  Telephone,  the  effects of which on SureWest  Telephone
cannot yet be determined.





<PAGE>



ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

On June 11, 2004, the Company held its Annual Meeting of Shareholders,  at which
the shareholders elected a Board of seven (7) Directors.

The seven nominees to serve as directors,  which constituted the entire Board of
Directors as of the meeting  date,  were all  reelected to serve as directors by
the following votes (out of 14,570,117).
<TABLE>
<CAPTION>
                                                                                              Broker
                                                                                            Non-Votes
          Director                                  Votes For          Votes Withheld     and Abstentions
-----------------------------------------------  ------------------  -----------------  -----------------
        <S>                                             <C>                  <C>               <C>
     Kirk C. Doyle                                  12,014,689             272,513            15,006
     Brian H. Strom                                 11,933,629             353,573            15,006
     John R. Roberts III                            11,914,033             373,169            15,006
     Neil J. Doerhoff                               11,880,404             406,798            15,006
     Timothy D. Taron                               11,885,814             401,388            15,006
     Guy R. Gibson                                  12,002,800             284,402            15,006
     Steven C. Oldham                               11,850,635             436,567            15,006
</TABLE>



<PAGE>



ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

     a)   See Index to Exhibits.

     b)   Reports on Form 8-K:

          The Company  filed a report on Form 8-K on April 15,  2004  announcing
          the  retirement of its Executive  Vice  President and Chief  Financial
          Officer.

          The Company  filed a report on Form 8-K on April 16, 2004  relating to
          the board implementation of its Audit Committee's recommendations.

          The Company  filed a report on Form 8-K on April 26,  2004  announcing
          that its Board of  Directors  declared a  quarterly  cash  dividend of
          $.025 per share payable June 15, 2004, to its  shareholders  of record
          at the close of business on May 28,  2004.  In  addition,  the Company
          announced  its annual  shareholder  meeting was scheduled for June 11,
          2004.

          The Company  filed a report on Form 8-K on May 10, 2004 related to the
          announcement of first quarter 2004 financial results.


<PAGE>




                                              SUREWEST COMMUNICATIONS
                                                 INDEX TO EXHIBITS
                                                   (Item 6 (a))
<TABLE>
<CAPTION>

                                                                                          Method
    Exhibit No.                               Description                                of Filing
        <S>                              <C>                                            <C>
        3.1           Articles of Incorporation of Registrant, together with          Incorporated by
                      Certificate of Amendment of Articles of Incorporation dated        reference
                      January 25, 1996 and Certificate of Amendment of Articles
                      of Incorporation dated June 21, 1996 (Filed as Exhibit 3(a)
                      to Form 10-Q Quarterly Report for the quarter ended
                      September 30, 1996)

        3.2           Certificate of Amendment of Articles of Incorporation dated     Incorporated by
                      May 18, 2001 (Filed as Exhibit 3(b) to Form 10-Q Quarterly         reference
                      Report for the quarter ended June 30, 2001)

        3.3           Bylaws of Registrant (Filed as Exhibit 3(b)to Form 10-K         Incorporated by
                      Annual Report of the Registrant for the year ended December        reference
                      31, 2000)

        4.1           Shareholder Rights Plan(Filed as Exhibit 2.1 to Form 8-A        Incorporated by
                      Registration Statement under the Securities Act of 1934)           reference

        10.1          Credit Agreement of SureWest Telephone Company with Bank of     Incorporated by
                      America National Trust and Savings Association, dated              reference
                      January 4, 1994 (Filed as Exhibit 10(c) to Form 10-K Annual
                      Report of Registrant for the year ended December 31, 1993)

        10.2          Note Purchase Agreement for Series A Senior Notes in the        Incorporated by
                      aggregate amount of $40,000,000 dated December 9, 1998             reference
                      (Filed as Exhibit 10(b) to Form 10-K Annual Report of
                      Registrant for the year ended December 31, 1998)

        10.3          Supplement to Note Purchase Agreement for Series B Senior       Incorporated by
                      Notes in the aggregate amount of $60,000,000 dated March           reference
                      13, 2003 (Filed as Exhibit 99.1 to the Form 8-K filed March
                      13, 2003)
</TABLE>

<PAGE>







                                              SUREWEST COMMUNICATIONS
                                                 INDEX TO EXHIBITS
                                                   (Item 6 (a))
<TABLE>
<CAPTION>
                                                                                          Method
    Exhibit No.                               Description                                of Filing
         <S>                              <C>                                            <C>
        10.4          Business Loan Agreement of Registrant with Bank of America,     Incorporated by
                      dated March 15, 2000, as amended by Amendment No. 1 dated          reference
                      as of April 10, 2000 (Filed as Exhibit 10(f) to Form 10-Q
                      Quarterly Report of Registrant for the quarter ended March
                      31, 2000), as amended by Amendment No. 2 dated as of
                      September 15, 2000, Amendment No. 3 dated as of July 17,
                      2001, and Amendment No. 4 dated as of June 26, 2002 (Filed
                      as Exhibit 10(l) to Form 10-Q Quarterly Report of
                      Registrant for the Quarter ended June 30, 2002)

        10.5          Amendment No. 5 to Business Loan Agreement dated February       Incorporated by
                      26, 2003 (Filed as Exhibit 10(e) to Form 10-K Annual Report        reference
                      of Registrant for the year ended December 31, 2002)

        10.6          Amendment No. 6 to Business Loan Agreement dated as of          Incorporated by
                      January 13, 2004 (Originally filed  as Exhibit 10.6 to Form        reference
                      10-K Annual Report of Registrant for year ended December
                      31, 2003 filed on March 30, 2004)

        10.7          Amendment No. 7 to Business Loan Agreement dated as of          Incorporated by
                      March 25, 2004 (Originally filed as Exhibit 10.7 to Form           reference
                      10-K Annual Report of Registrant for year ended December
                      31, 2003)

        10.8          1999 Restricted Stock Bonus Plan (Filed as Exhibit 10(d) to     Incorporated by
                      Form 10-K Annual Report of Registrant for the year ended           reference
                      December 31, 1998)

        10.9          2000 Equity Incentive Plan, as amended (Originally filed as      Incorporated
                      Exhibit 10.9 to Form 10-K Annual Report of Registrant for        by reference
                      the year ended December 31, 2003 filed on March 30, 2004)

       10.10          SureWest KSOP (Filed as Exhibit 4.1 to Registration             Incorporated by
                      Statement on Form S-8 [No. 333-87222])                             reference

       10.11          Letter agreement dated January 16, 2001                         Incorporated by
                      between Registrant and Brian H. Strom (Filed as Exhibit 10         reference
                      (g) to Form 10-K Annual Report of Registrant for the year
                      ended December 31, 2000)

       10.12          Letter agreement dated January 16, 2001                         Incorporated by
                      between Registrant and Michael D. Campbell (Filed as               reference
                      Exhibit 10 (h) to Form 10-K Annual Report of Registrant for
                      the year ended December 31, 2000)

</TABLE>


<PAGE>




                                        SUREWEST COMMUNICATIONS
                                           INDEX TO EXHIBITS
                                              (Item 6 (a))
<TABLE>
<CAPTION>

                                                                                          Method
    Exhibit No.                               Description                                of Filing
        <S>                              <C>                                            <C>
       10.13          Letter agreement dated January 16, 2001                         Incorporated by
                      between Registrant and Jay B. Kinder (Filed as Exhibit 10          reference
                      (i) to Form 10-K Annual Report of Registrant for the year
                      ended December 31, 2000)

       10.14          Letter agreement dated January 16, 2001                         Incorporated by
                      between Registrant and Bill M. DeMuth (Originally filed as         reference
                      Exhibit 10.14 to Form 10-K Annual Report of Registrant for
                      the year ended December 31, 2003 filed on March 30, 2004)

       10.15          Letter agreement dated January 16, 2001                         Incorporated by
                      between Registrant and Fred A. Arcuri (Filed as Exhibit            reference
                      10.15 to Form 10-K Annual Report of Registrant for the year
                      ended December 31, 2003)

       31.1           Certification of Brian H. Strom, President and Chief            Filed herewith
                      Executive Officer, as adopted pursuant to Section 302 of
                      the Sarbanes-Oxley Act of 2002

       31.2           Certification of Philip A. Grybas, Senior Vice President        Filed herewith
                      and Chief Financial Officer, as adopted pursuant to
                      Section 302 of the Sarbanes-Oxley Act of 2002

       32.1           Certification of Brian H. Strom, President and Chief            Filed herewith
                      Executive Officer, pursuant to 18 U.S.C. Section 1350, as
                      adopted pursuant to Section 906 of the Sarbanes-Oxley Act
                      of 2002

       32.2           Certification of Philip A. Grybas, Senior Vice President        Filed herewith
                      and Chief Financial Officer, pursuant to 18 U.S.C.Section
                      1350, as adopted pursuant to Section 906 of the
                      Sarbanes-Oxley Act of 2002


</TABLE>

<PAGE>



                                   SIGNATURES

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

                             SUREWEST COMMUNICATIONS
                                  (Registrant)



                             By:      /s/ BRIAN H. STROM
                                     -----------------------------------------
                                         Brian H. Strom,
                                       President and Chief
                                        Executive Officer


                             By:      /s/ PHILIP A. GRYBAS
                                     -----------------------------------------
                                           Philip A. Grybas,
                                       Senior Vice President and
                                        Chief Financial Officer


Date: March 10, 2005


<PAGE>