|   | GCI,      INC.                                              |   |
|--------|-------------------------------------------------------------|--------|
|   | (Exact name      of registrant as specified in its charter) |   |

|   | State      of Alaska                 |   | 91-1820757               |   |
|--------|--------------------------------------|--------|--------------------------|--------|
|   | (State or      other jurisdiction of |   | (I.R.S      Employer     |   |
|   | incorporation      or organization)  |   | Identification      No.) |   |

|   | 2550      Denali Street                       |   |            |   |
|--------|-----------------------------------------------|--------|-----------------|--------|
|   | Suite      1000                               |   |            |   |
|   | Anchorage,      Alaska                        |   | 99503           |   |
|   | (Address of      principal executive offices) |   | (Zip      Code) |   |

----

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

----

| Glossary                                                       |                                                                                                                               |   |   | 4      |   |
|----------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|
|                                                           |                                                                                                                               |   |   |   |   |
| Cautionary      Statement Regarding Forward-Looking Statements |                                                                                                                               |   | 8      |   |
|                                                           |                                                                                                                               |   |   |   |   |
| Part      I                                                    |                                                                                                                               |   |   | 8      |   |
|                                                           |                                                                                                                               |   |   |   |   |
|                                                           | Item 1.      Business                                                                                                              |   |   | 8      |   |
|                                                           | Item 1A. Risk      Factors                                                                                                         |   |   | 38     |   |
|                                                           | Item 1B.      Unresolved Staff Comments                                                                                            |   |   | 46     |   |
|                                                           | Item 2.      Properties                                                                                                            |   |   | 46     |   |
|                                                           | Item 3. Legal      Proceedings                                                                                                     |   |   | 47     |   |
|                                                           | Item 4.      Omitted per General Instruction I(1)(a) and (b) of Form    10-K                                                       |   |   | 47     |   |
|                                                           |                                                                                                                               |   |   |   |   |
| Part      II                                                   |                                                                                                                               |   |   | 47     |   |
|                                                           | Item 5.      Market for the Registrant's Common Equity, Related Stockholder Matters and      Issuer Purchases of Equity Securities |   |   | 47     |   |
|                                                           | Item 6.      Selected Financial Data                                                                                               |   |   | 48     |   |
|                                                           | Item 7.      Management's Discussion and Analysis of Financial Condition and Results of      Operations                            |   |   | 48     |   |
|                                                           | Item 7A.      Quantitative and Qualitative Disclosures about Market Risk                                                           |   |   | 80     |   |
|                                                           | Item 8.      Consolidated Financial Statements and Supplementary Data                                                              |   |   | 80     |   |
|                                                           | Item 9.      Changes In and Disagreements With Accountants on Accounting and Financial      Disclosure                             |   |   | 80     |   |
|                                                           | Item 9A.      Controls and Procedures                                                                                              |   |   | 80     |   |
|                                                           | Item 9B.      Other Information                                                                                                    |   |   | 84     |   |
|                                                           |                                                                                                                               |   |   |   |   |
| Part      III                                                  |                                                                                                                               |   |   | 84     |   |
|                                                           | Items 10, 11,      12, 13 and 14 are omitted per General Instruction I(1)(a) and (b) of Form      10-K                             |   |   | 84     |   |
|                                                           |                                                                                                                               |   |   |   |   |
| Part      IV                                                   |                                                                                                                               |   |   | 85     |   |
|                                                           | Item 15.      Exhibits, Consolidated Financial Statement Schedules                                                                 |   |   | 85     |   |
|                                                           |                                                                                                                               |   |   |   |   |
| SIGNATURES                                                     |                                                                                                                               |   | 138    |   |

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|                            |   | Reportable      Segments |   |
|---------------------------------|--------|--------------------------|--------|
| Services and      Products      |   | Consumer                 |   |   | Network      Access |   |   | Commercial |   |   | Managed      Broadband |   |   | Regulated      Operations |   |
| Voice:                          |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Long-distance                   |   |                     | X      |   |   |   | X |   |   |   | X |   |   |   |   |   |   | X |   |
| Local      Access               |   |                     | X      |   |   |   | X |   |   |   | X |   |   |   |   |   |   | X |   |
| Directories                     |   |                     |   |   |   |   |   |   |   |   | X |   |   |   |   |   |   |   |   |
|                            |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Video                           |   |                     | X      |   |   |   |   |   |   |   | X |   |   |   |   |   |   |   |   |
|                            |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Data:                           |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Internet                        |   |                     | X      |   |   |   | X |   |   |   | X |   |   | X |   |   |   | X |   |
| Data      Networks              |   |                     |   |   |   |   | X |   |   |   | X |   |   | X |   |   |   |   |   |
| Managed      Services           |   |                     |   |   |   |   |   |   |   |   | X |   |   | X |   |   |   |   |   |
| Managed      Broadband Services |   |                     |   |   |   |   |   |   |   |   |   |   |   | X |   |   |   |   |   |
|                            |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Wireless                        |   |                     | X      |   |   |   | X |   |   |   | X |   |   |   |   |   |   | X |   |

----

|                  |    | Year      Ended December 31, |
|-----------------------|--------------|-----------------------------------|
|                  |    | 2008                              |    | 2007 |   | 2006 |
|                  |    | (in      thousands)               |
| Total      revenues 1 |    | $                                 | 255,632 |    | 223,502 |   | 178,951 |

----

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|   | · | Our Anchorage      facilities are connected to multiple Internet access points in Seattle      through multiple, diversely routednetworks; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | We use      multiple routers on each end of the circuits to control the flow of data      and to provide resiliency; and |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------|

|   | · | Our Anchorage      facility consists of routers, a bank of servers that perform support and      application functions, database servers providing authentication and user      demographic data, layer 2 gigabit switch networks for intercommunications      and broadband services (cable modem, wireless and DSL), and access servers      for dial-up users. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                        |          | Year      Ended December 31, |
|---------------------------------------------|--------------------|-----------------------------------|
|                                        |          | 2008                              |    | 2007 |   | 2006 |
| Consumer      long-distance minutes: 1 | (in      millions) |
|    Interstate                |               |                              | 100.0 |   | 105.0 |   | 109.1 |
|    Intrastate                |               |                              | 22.9 |   | 25.0 |   | 27.2 |
|    International             |               |                              | 5.7 |   | 5.8 |   | 5.6 |
|       Total   |          |                              | 128.6 |   | 135.8 |   | 141.9 |

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|                  |   |                              |    |   |   |
|-----------------------|--------|-----------------------------------|---------|--------|--------|
|                  |   | Year      Ended December 31, |    |   |
|                  |   | 2008                              |    | 2007   |   | 2006 |   |   |
|                  |   | (in      thousands)               |    |   |
| Total      revenues 1 |   | $                                 | 153,821 |   |   |   | 163,377 |   |   |   | 166,471 |   |

----

|                                              |          | Year      Ended December 31, |
|---------------------------------------------------|--------------------|-----------------------------------|
|                                              |          | 2008                              |    | 2007 |   | 2006 |
| Network      Access long-distance minutes: 1 | (in      millions) |
|    South-bound      Interstate     |               |                              | 545.9 |   | 690.2 |   | 662.0 |
|    North-bound      Interstate     |               |                              | 502.6 |   | 476.5 |   | 574.6 |
| Intrastate                                        |               |                              | 24.9 |   | 63.2 |   | 60.9 |
|    Other                           |               |                              | 20.6 |   | 20.7 |   | 19.1 |
|       Total         |          |                              | 1,094.0 |   | 1,250.6 |   | 1,316.6 |

----

|                  |   |                              |    |   |   |
|-----------------------|--------|-----------------------------------|---------|--------|--------|
|                  |   | Year      Ended December 31, |    |   |
|                  |   | 2008                              |    | 2007   |   | 2006 |   |   |
|                  |   | (in      thousands)               |    |   |
| Total      revenues 1 |   | $                                 | 114,660 |   |   |   | 104,640 |   |   |   | 105,929 |   |

----

|   | · | Anchorage,      Elmendorf Air Force Base, Fort Richardson, Bird, Girdwood, Hope, Indian,      Portage, Rainbow, Sunrise, Eagle River, Chugiak, Big Lake, Houston,      Palmer, Wasilla, Willow, Talkeetna, Anderson, Clear, Cantwell, Healy,      Denali National Park, Tyonek, Beluga, Kenai, North Kenai, Soldotna,      Kasilof, Clam Gulch, Sterling, Cooper Landing, Homer, Anchor Point,      Halibut Cove, Nanwalek, Ninilchik, Port Graham,  Seldovia; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Fairbanks,      North Pole, Eielson Air Force Base, Fort Wainwright, Delta Junction, Fort      Greeley, Nenana; and |
|--------|--------|---------------------------------------------------------------------------------------------------------------------|

|   | · | Juneau, Auke      Bay, Douglas, Lemon Creek, MendenhallValley |
|--------|--------|---------------------------------------------------------------|

----

|                                          |          | Year      Ended December 31, |
|-----------------------------------------------|--------------------|-----------------------------------|
|                                          |          | 2008                              |    | 2007 |   | 2006 |
| Commercial      long-distance minutes: 1 | (in      millions) |
|    Intrastate                  |               |                              | 78.2 |   | 79.4 |   | 79.7 |
|    Interstate                  |               |                              | 49.5 |   | 49.7 |   | 49.8 |
|    International               |               |                              | 1.8 |   | 2.2 |   | 2.3 |
|       Total     |          |                              | 129.5 |   | 131.3 |   | 131.8 |
|                                          |               |                              |   |   |   |   |   |

----

----

|                  |    | Year      Ended December 31, |
|-----------------------|--------------|-----------------------------------|
|                  |    | 2008                              |    | 2007 |   | 2006 |
|                  |    | (in      thousands)               |
| Total      revenues 1 |    | $                                 | 37,047 |    | 28,792 |   | 26,131 |

----

|   | · | In      communities where we have terrestrial interconnects or provide existing      service over regional earth stations, we have configured intermediate      distribution facilities. Schools that are within these service boundaries      are connected locally to one of those  facilities; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | In      communities where we have extended communications services via our DAMA      earth station program, SchoolAccess® is      provided via a satellite circuit to an intermediate distribution facility      at the Eagle River Earth Station;and |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | In      communities or remote locations where we have not extended communications      services, SchoolAccess® is      provided via a dedicated (usually on premise) VSAT satellite station. The      VSAT connects to an intermediate distribution facility located in      Anchorage. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | · | How radio      spectrum is used by licensees; |
|--------|--------|-----------------------------------------------|

|   | · | The nature of      the services that licensees may offer and how such services may be      offered; and |
|--------|--------|---------------------------------------------------------------------------------------------------------|

|   | · | Resolution of      issues of interference between spectrumbands. |
|--------|--------|------------------------------------------------------------------|

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|   | · | Use of a      large portion of our cash flow to pay principal and interest on our senior      notes, the senior secured credit facility and our other debt, which will      reduce the availability of our cash flow to fund working capital, capital      expenditures, research and development expenditures and other business      activities; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Increase our      vulnerability to general adverse economic and industry      conditions; |
|--------|--------|-------------------------------------------------------------------------------------------|

|   | · | Limit our      flexibility in planning for, or reacting to, changes in our business and      the industry in which we operate; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------|

|   | · | Restrict us      from making strategic acquisitions or exploiting business      opportunities; |
|--------|--------|------------------------------------------------------------------------------------------------|

|   | · | Make it more      difficult for us to satisfy our obligations with respect to the senior      notes and our other debt; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------|

|   | · | Place us at a      competitive disadvantage compared to our competitors that have less debt;      and |
|--------|--------|-------------------------------------------------------------------------------------------------------|

|   | · | Limit, along      with the financial and other restrictive covenants in our debt, among      other things, our ability to borrow additional funds, dispose of assets or      pay cash dividends. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | Incur      additional debt and issue preferredstock; |
|--------|--------|------------------------------------------------------|

|   | · | Pay dividends      or make other restricted payments; |
|--------|--------|-------------------------------------------------------|

|   | · | Make certain      investments; |
|--------|--------|--------------------------------|

|   | · | Create      liens; |
|--------|--------|--------------------|

|   | · | Allow      restrictions on the ability of certain of our subsidiaries to pay      dividends or make other payments tous; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------|

|   | · | Sell      assets; |
|--------|--------|-------------------|

|   | · | Merge or      consolidate with other entities;and |
|--------|--------|---------------------------------------------------|

|   | · | Enter into      transactions with affiliates. |
|--------|--------|-----------------------------------------------|

----

----

|                                                                                                              |   | 2008   |   |   | 2007  |   |   |
|-------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|------------|--------|--------|
| Telephone distribution      systems                                                                               |   |   | 60.1   | %      |       |   | 63.6   | % |
| Cable television distribution      systems                                                                        |   |   | 14.4   | %      |       |   | 16.2   | % |
| Support equipment                                                                                                 |   |   | 10.7   | %      |       |   | 10.8   | % |
| Property and equipment under capital      leases                                                                  |   |   | 7.6    | %      |       |   | 0.3    | % |
| Construction in progress                                                                                          |   |   | 4.0    | %      |       |   | 6.9    | % |
| Land and buildings                                                                                                |   |   | 2.4    | %      |       |   | 1.4    | % |
| Transportation equipment                                                                                          |   |   | 0.8    | %      |       |   | 0.8    | % |
|                   Total |   |   | 100.0  | %      |       |   | 100.0  | % |

----

| 2004 |   | $ | 112.6 |   |
|------|--------|---|-------|--------|
| 2005 |   | $ | 81.2  |   |
| 2006 |   | $ | 105.1 |   |
| 2007 |   | $ | 154.5 |   |
| 2008 |   | $ | 328.9 |   |

We expect our 2009 expenditures for property and equipment for ourcore operations, including construction in progress to total $115.0 million to$120.0 million, depending on available opportunities, available credit, and theamount of cash flow we generate during 2009.  We have made capital andoperating purchase commitments totaling $54.8 million at December 31, 2008. Amajority of the expenditures are expected to expand, enhance and modernize ourcurrent networks, facilities and operating systems, and to develop otherbusinesses.

----

|                                                                                                        | Years ended      December 31, |
|-------------------------------------------------------------------------------------------------------------|-------------------------------|
|                                                                                                        |                          | 2008 | 2007 | 2006 | 2005 | 2004 |
| (Amounts in      thousands except per share amounts)                                                        |
| Revenues                                                                                                    | $                             | 575,442 | 520,311 | 477,482 | 443,026 | 424,826 |
| Income (loss)      before income tax expense and cumulative effect of a change in accounting      principle |  $                       | (792) | 25,895 | 34,253 | 36,835 | 38,715 |
| Cumulative      effect of a change in accounting principal, net of income tax expense of      $44 in 2006   |  $                       | --- | --- | 64 | --- | --- |
| Net income      (loss)                                                                                      | $                             | (1,869) | 13,733 | 18,520 | 20,831 | 21,252 |
| Total      assets                                                                                           | $                             | 1,335,301 | 984,233 | 914,659 | 873,775 | 849,191 |
| Long-term      debt, including current portion and net of unamortized      discount                         | $                             | 716,831 | 538,398 | 489,462 | 475,840 | 437,137 |
| Obligations      under capital leases, including current portion                                            |  $                       | 100,329 | 2,851 | 2,857 | 672 | 39,661 |
| Total      stockholder’s equity                                                                       | $                             | 258,915 | 252,955 | 240,395 | 243,620 | 228,604 |
| Dividends      declared per common share                                                                    | $                             | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |

----

----

|                            |   | Reportable      Segments |   |
|---------------------------------|--------|--------------------------|--------|
| Services and      Products      |   | Consumer                 |   |   | Network      Access |   |   | Commercial |   |   | Managed      Broadband |   |   | Regulated      Operations |   |
| Voice:                          |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Long-distance                   |   |                     | X      |   |   |   | X |   |   |   | X |   |   |   |   |   |   | X |   |
| Local      Access               |   |                     | X      |   |   |   | X |   |   |   | X |   |   |   |   |   |   | X |   |
| Directories                     |   |                     |   |   |   |   |   |   |   |   | X |   |   |   |   |   |   |   |   |
|                            |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Video                           |   |                     | X      |   |   |   |   |   |   |   | X |   |   |   |   |   |   |   |   |
|                            |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Data:                           |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Internet                        |   |                     | X      |   |   |   | X |   |   |   | X |   |   |   | X |   |   |   | X |   |
| Data      Networks              |   |                     |   |   |   |   | X |   |   |   | X |   |   |   | X |   |   |   |   |   |
| Managed      Services           |   |                     |   |   |   |   |   |   |   |   | X |   |   |   | X |   |   |   |   |   |
| Managed      Broadband Services |   |                     |   |   |   |   |   |   |   |   |   |   |   |   | X |   |   |   |   |   |
|                            |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Wireless                        |   |                     | X      |   |   |   | X |   |   |   | X |   |   |   |   |   |   |   | X |   |

----

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----

|                                                                                                          |   |                         |   |   |   |   |   |   |   |   | Percent­age      Change      1 |   |   | Percent­age      Change      1                                                                                  |   |
|---------------------------------------------------------------------------------------------------------------|--------|------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|-------------------------------------|--------|--------|----------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                          |   |                         |   |   |   |   |   |   |   |   | 2008                                |   |   | 2007                                                                                                                 |   |
|                                                                                                          |   | Year      Ended December 31, |   |   | vs.    |   |   | vs.    |   |
| (Unaudited)                                                                                                   |   | 2008                         |   |   | 2007   |   |   | 2006   |   |   | 2007                                |   |   | 2006                                                                                                                 |   |
| Statements      of Operations Data:                                                                           |   |                         |   |   |   |   |   |   |   |   |                                |   |   |                                                                                                                 |   |
| Revenues:                                                                                                     |   |                         |   |   |   |   |   |   |   |   |                                |   |   |                                                                                                                 |   |
| Consumer      segment                                                                                         |   |                         | 44.5   | %      |   |   | 43.0   | %      |   |   | 37.5                                | %      |   |                                                                                                                 | 14.4   | % |   |   | 24.9 | % |
| Network      Access segment                                                                                   |   |                         | 26.7   | %      |   |   | 31.4   | %      |   |   | 34.9                                | %      |   |                                                                                                                 | (5.9   | %) |   |   | (1.9 | %) |
| Commercial      segment                                                                                       |   |                         | 19.9   | %      |   |   | 20.1   | %      |   |   | 22.2                                | %      |   |                                                                                                                 | 9.6    | % |   |   | (1.2 | %) |
| Managed      Broadband segment                                                                                |   |                         | 6.4    | %      |   |   | 5.5    | %      |   |   | 5.4                                 | %      |   |                                                                                                                 | 28.7   | % |   |   | 10.2 | % |
| Regulated      Operations segment                                                                             |   |                         | 2.5    | %      |   |   | 0.0    | %      |   |   | 0.0                                 | %      |   |                         NM |   |   |                        NM |   |
| Total      revenues                                                                                           |   |                         | 100.0  | %      |   |   | 100.0  | %      |   |   | 100.0                               | %      |   |                                                                                                                 | 10.6   | % |   |   | 9.0 | % |
| Selling,      general and administrative expenses                                                             |   |                         | 36.6   | %      |   |   | 33.8   | %      |   |   | 33.3                                | %      |   |                                                                                                                 | 19.7   | % |   |   | 10.6 | % |
| Depreciation      and amortization expense                                                                    |   |                         | 19.9   | %      |   |   | 16.8   | %      |   |   | 17.2                                | %      |   |                                                                                                                 | 30.5   | % |   |   | 6.7 | % |
| Operating      income                                                                                         |   |                         | 8.3    | %      |   |   | 11.8   | %      |   |   | 14.1                                | %      |   |                                                                                                                 | (22.0  | %) |   |   | (9.2 | %) |
| Other      expense, net                                                                                       |   |                         | 8.4    | %      |   |   | 6.8    | %      |   |   | 6.9                                 | %      |   |                                                                                                                 | 37.6   | % |   |   | 6.6 | % |
| Income (loss)      before income taxes and cumulative effect of a change in accounting      principle in 2006 |   |                         | (0.1   | %)     |   |   | 5.0    | %      |   |   | 7.2                                 | %      |   |                                                                                                                 | (96.9  | %) |   |   | (24.4 | %) |
| Income (loss)      before cumulative effect of a change in accounting principle in      2006                  |   |                         | (0.3   | %)     |   |   | 2.6    | %      |   |   | 3.9                                 | %      |   |                                                                                                                 | (113.6 | %) |   |   | (25.6 | %) |
| Net income      (loss)                                                                                        |   |                         | (0.3   | %)     |   |   | 2.6    | %      |   |   | 3.9                                 | %      |   |                                                                                                                 | (113.6 | %) |   |   | (25.9 | %) |

----

|                                |   |   |    |   | Percentage |   |
|-------------------------------------|--------|--------|---------|--------|------------|--------|
|                                |   | 2008   |    |   | 2007       |   |   | Change |   |
| Voice                               |   | $      | 47,042  |   |       |   | 46,212 |   |   |   | 1.8 | % |
| Video                               |   |   | 105,238 |   |       |   | 96,327 |   |   |   | 9.3 | % |
| Data                                |   |   | 42,692  |   |       |   | 34,230 |   |   |   | 24.7 | % |
| Wireless                            |   |   | 60,660  |   |       |   | 46,733 |   |   |   | 29.8 | % |
| Total      Consumer segment revenue |   | $      | 255,632 |   |       |   | 223,502 |   |   |   | 14.4 | % |

|                                           |   |   |   |   |   |   |
|------------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                           |   | 2008   |   |   | 2007   |   |   | Percentage      Change |   |
| Voice                                          |   | $      | 18,121 |   |   |   | 20,364 |   |   |   | (11.0 | %) |
| Video                                          |   |   | 40,279 |   |   |   | 34,301 |   |   |   | 17.4 | % |
| Data                                           |   |   | 6,554  |   |   |   | 5,313 |   |   |   | 23.4 | % |
| Wireless                                       |   |   | 24,899 |   |   |   | 28,721 |   |   |   | (13.3 | %) |
| Total      Consumer segment Cost of Goods Sold |   | $      | 89,853 |   |   |   | 88,699 |   |   |   | 1.3 | % |

|                                  |   |   |   |   | Percentage |   |
|---------------------------------------|--------|--------|--------|--------|------------|--------|
|                                  |   | 2008   |   |   | 2007       |   |   | Change |   |
| Consumer      segment adjusted EBITDA |   | $      | 58,949 |   |       |   | 46,808 |   |   |   | 25.9 | % |

|                                                  |   | December      31, |    |   | Percentage |   |
|-------------------------------------------------------|--------|-------------------|---------|--------|------------|--------|
|                                                  |   | 2008              |    |   | 2007       |   |   | Change |   |
| Voice:                                                |   |              |    |   |       |   |   |   |   |
| Long-distance      subscribers1                       |   |              | 88,600  |   |       |   | 89,900 |   |   |   | (1.5 | %) |
| Long-distance      minutes carried (in millions)      |   |              | 128.6   |   |       |   | 135.8 |   |   |   | (5.3 | %) |
| Total local      access lines in service2             |   |              | 80,700  |   |       |   | 74,400 |   |   |   | 8.5 | % |
| Local access      lines in service on GCI facilities2 |   |              | 68,700  |   |       |   | 50,700 |   |   |   | 35.5 | % |
|                                                  |   |              |    |   |       |   |   |   |   |   |   |   |
| Video:                                                |   |              |    |   |       |   |   |   |   |   |   |   |
| Basic      subscribers3                               |   |              | 132,500 |   |       |   | 128,000 |   |   |   | 3.5 | % |
| Digital      programming tier subscribers4            |   |              | 71,900  |   |       |   | 65,800 |   |   |   | 9.3 | % |
| HD/DVR      converter boxes5                          |   |              | 67,800  |   |       |   | 50,200 |   |   |   | 35.1 | % |
| Homes      passed                                     |   |              | 229,300 |   |       |   | 224,700 |   |   |   | 2.1 | % |
| Average      monthly gross revenue per subscriber6    |   | $                 | 67.40   |   |       | $      | 64.01 |   |   |   | 5.3 | % |
|                                                  |   |              |    |   |       |   |   |   |   |   |   |   |
| Data:                                                 |   |              |    |   |       |   |   |   |   |   |   |   |
| Cable modem      subscribers7                         |   |              | 94,400  |   |       |   | 88,000 |   |   |   | 7.3 | % |
|                                                  |   |              |    |   |       |   |   |   |   |   |   |   |
| Wireless:                                             |   |              |    |   |       |   |   |   |   |   |   |   |
| Wireless      lines in service8                       |   |              | 88,700  |   |       |   | 70,000 |   |   |   | 26.7 | % |
| Average      monthly gross revenue per subscriber9    |   | $                 | 55.23   |   |       | $      | 58.29 |   |   |   | (5.3 | %) |

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| 1 A      long-distance customer is defined as a customer account that is invoiced a      monthly long-distance plan fee or has made a long-distance call during the      month.2 A      local access line in service is defined as a revenue generating circuit or      channel connecting a customer to the public switched telephone      network.3 A      basic cable subscriber is defined as one basic tier of service delivered      to an address or separate subunits thereof regardless of the number of      outlets purchased.4 A      digital programming tier subscriber is defined as one digital programming      tier of service delivered to an address or separate subunits thereof      regardless of the number of outlets or digital programming tiers      purchased. Digital programming tier subscribers are a subset of basic      subscribers.5 A high definition/digital video      recorder (“HD/DVR”) converter box is defined as one box rented by a      digital programming or basic tier subscriber. A digital programming or      basic tier subscriber is not required to rent an HD/DVR converter box to      receive service.6 Year-to-date      average monthly consumer video revenues divided by the average of consumer      video basic subscribers at the beginning and ending of the      period.7 A      cable modem subscriber is defined by the purchase of cable modem service      regardless of the level of service purchased. If one entity purchases      multiple cable modem service access points, each access point is counted      as a subscriber. Cable modem subscribers may also be video basic      subscribers though basic cable service is not required to receive cable      modem service.8 A      wireless line in service is defined as a revenue generating wireless      device.9 Year-to-date      average monthly consumer wireless revenues divided by the average of      consumer wireless subscribers at the beginning and ending of the      period. |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |

|   | · | A 7.4%      increase in programming services revenue to $84.5 million in 2008      primarily resulting from an increase in basic and digital programming tier      subscribers in 2008, and |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | A 19.1%      increase in equipment rental revenue to $19.4 million in 2008 primarily      resulting from our customers’ increased use of our HD/DVR converter      boxes. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                      |   |   |    |   | Percentage |   |
|-------------------------------------------|--------|--------|---------|--------|------------|--------|
|                                      |   | 2008   |    |   | 2007       |   |   | Change |   |
| Voice                                     |   | $      | 79,744  |   |       |   | 96,896 |   |   |   | (17.7 | %) |
| Data                                      |   |   | 71,414  |   |       |   | 61,199 |   |   |   | 16.7 | % |
| Wireless                                  |   |   | 2,663   |   |       |   | 5,282 |   |   |   | (49.6 | %) |
| Total Network      Access segment revenue |   | $      | 153,821 |   |       |   | 163,377 |   |   |   | (5.9 | %) |
|                                      |   |   |    |   |       |   |   |   |   |   |   |   |

|                                                 |   |   |   |   | Percentage |   |
|------------------------------------------------------|--------|--------|--------|--------|------------|--------|
|                                                 |   | 2008   |   |   | 2007       |   |   | Change |   |
| Voice                                                |   | $      | 27,149 |   |       |   | 31,042 |   |   |   | (12.5 | %) |
| Data                                                 |   |   | 11,539 |   |       |   | 12,081 |   |   |   | (4.5 | %) |
| Wireless                                             |   |   | 1,638  |   |       |   | 745 |   |   |   | 119.9 | % |
| Total Network      Access segment Cost of Goods Sold |   | $      | 40,326 |   |       |   | 43,868 |   |   |   | (8.1 | %) |
|                                                 |   |   |   |   |       |   |   |   |   |   |   |   |

|                                        |   |   |   |   | Percentage |   |
|---------------------------------------------|--------|--------|--------|--------|------------|--------|
|                                        |   | 2008   |   |   | 2007       |   |   | Change |   |
| Network      Access segment adjusted EBITDA |   | $      | 73,647 |   |       |   | 82,441 |   |   |   | (10.7 | %) |

----

|                                                                                                                                                                                            |   | December      31, |   |   | Percentage |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|--------|--------|------------|--------|
|                                                                                                                                                                                            |   | 2008              |   |   | 2007       |   |   | Change |   |
| Voice:                                                                                                                                                                                          |   |              |   |   |       |   |   |   |   |
| Long-distance      minutes carried (in millions)                                                                                                                                                |   |              | 1,094  |   |       |   | 1,251 |   |   |   | (12.5 | %) |
|                                                                                                                                                                                            |   |              |   |   |       |   |   |   |   |   |   |   |
| Data:                                                                                                                                                                                           |   |              |   |   |       |   |   |   |   |   |   |   |
| Total      Internet service provider access lines in service1                                                                                                                                   |   |              | 1,800  |   |       |   | 2,600 |   |   |   | (30.8 | %) |
|                                                                                                                                                                                            |   |
| 1 An      Internet service provider access line in service is defined as a revenue      generating circuit or channel connecting a customer to the public switched      telephone network. |   |
|                                                                                                                                                                                            |   |

----

|                                  |   |   |    |   | Percentage |   |
|---------------------------------------|--------|--------|---------|--------|------------|--------|
|                                  |   | 2008   |    |   | 2007       |   |   | Change |   |
| Voice                                 |   | $      | 29,398  |   |       |   | 30,761 |   |   |   | (4.4 | %) |
| Video                                 |   |   | 9,604   |   |       |   | 8,018 |   |   |   | 19.8 | % |
| Data                                  |   |   | 70,068  |   |       |   | 61,052 |   |   |   | 14.8 | % |
| Wireless                              |   |   | 5,590   |   |       |   | 4,809 |   |   |   | 16.2 | % |
| Total      Commercial segment revenue |   | $      | 114,660 |   |       |   | 104,640 |   |   |   | 9.6 | % |

|                                             |   |   |   |   |   |   |
|--------------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                             |   | 2008   |   |   | 2007   |   |   | Percentage      Change |   |
| Voice                                            |   | $      | 19,581 |   |   |   | 20,225 |   |   |   | (3.2 | %) |
| Video                                            |   |   | 1,551  |   |   |   | 1,616 |   |   |   | (4.0 | %) |
| Data                                             |   |   | 34,391 |   |   |   | 27,469 |   |   |   | 25.2 | % |
| Wireless                                         |   |   | 3,957  |   |   |   | 4,182 |   |   |   | (5.4 | %) |
| Total      Commercial segment Cost of Goods Sold |   | $      | 59,480 |   |   |   | 53,492 |   |   |   | 11.2 | % |

|                                    |   |   |   |   | Percentage |   |
|-----------------------------------------|--------|--------|--------|--------|------------|--------|
|                                    |   | 2008   |   |   | 2007       |   |   | Change |   |
| Commercial      segment adjusted EBITDA |   | $      | 20,710 |   |       |   | 16,164 |   |   |   | 28.1 | % |

|   | Selected key      performance indicators for our Commercial segment  follow: |
|--------|------------------------------------------------------------------------------|

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | December      31, |   | Percentage |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|--------|------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | 2008              |   | 2007       |   | Change |
| Voice:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |              |   |       |   |   |
| Long-distance      subscribers1                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | 9,700             |   | 10,500     |   | (7.6%) |
| Total local      access lines in service2                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | 46,200            |   | 43,100     |   | 7.2% |
| Local access      lines in service on GCI facilities      2                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | 18,700            |   | 12,500     |   | 49.6% |
| Long-distance      minutes carried (in millions)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | 129.5             |   | 131.3      |   | (1.3%) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |              |   |       |   |   |
| Data:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |              |   |       |   |   |
| Cable modem      subscribers3                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | 8,900             |   | 8,500      |   | 4.7% |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |              |   |       |   |   |
| Wireless:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |              |   |       |   |   |
| Wireless      lines in service4                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | 7,600             |   | 7,300      |   | 4.1% |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |              |   |       |   |   |
| 1  A      long-distance customer is defined as a customer account that is invoiced a      monthly long-distance plan fee or has made a long-distance call during the      month.2  A      local access line in service is defined as a revenue generating circuit or      channel connecting a customer to the public switched telephone      network.3  A      cable modem subscriber is defined by the purchase of cable modem service      regardless of the level of service purchased. If one entity purchases      multiple cable modem service access points, each access point is counted      as a subscriber. 4  A      wireless line in service is defined as a revenue generating wireless      device. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |

----

|                              |   | December      31, |   |   | Percentage |   |
|-----------------------------------|--------|-------------------|--------|--------|------------|--------|
|                              |   | 2008              |   |   | 2007       |   |   | Change |   |
| Managed      Broadband segment:   |   |              |   |   |       |   |   |   |   |
| SchoolAccess®      customers |   |              | 54     |   |       |   | 51 |   |   |   | 5.9 | % |
| Rural health      customers       |   |              | 53     |   |       |   | 21 |   |   |   | 152.4 | % |

----

|                                                                                                                                                                                                                                                                                                                                                                                           |   | December      31, |   | Percentage |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|--------|------------|
|                                                                                                                                                                                                                                                                                                                                                                                           |   | 2008              |   | 2007       |   | Change |
| Voice:                                                                                                                                                                                                                                                                                                                                                                                         |   |              |   |       |   |   |
| Long-distance      subscribers1                                                                                                                                                                                                                                                                                                                                                                |   |              | 900    |       | NA |   | NA |
| Long-distance      minutes carried (in thousands)                                                                                                                                                                                                                                                                                                                                              |   |              | 844    |       | NA |   | NA |
| Total local      access lines in service2                                                                                                                                                                                                                                                                                                                                                      |   |              | 12,100 |       | NA |   | NA |
|                                                                                                                                                                                                                                                                                                                                                                                           |   |              |   |       |   |   |   |
| 1 A      long-distance subscriber is defined as a customer account that is invoiced      a monthly long-distance plan fee or has made a long-distance call during      the month.2 A      local access line in service is defined as a revenue generating circuit or      channel connecting a customer to the public switched telephone      network.NA – Not      Applicable |

| ·   | A $15.8      million increase in labor costs, |
|--------------------|-----------------------------------------------|

| ·   | $7.5 million      in additional expense resulting from our June 1, 2008, acquisition of UUI      and Unicom, |
|--------------------|--------------------------------------------------------------------------------------------------------------|

| ·   | A $2.3      million increase in our share-based compensation  expense, |
|--------------------|------------------------------------------------------------------------|

| ·   | Upon our      acquisition of the remaining 18% of Alaska DigiTel we paid $1.8 million to      terminate the management agreement entered into in January 2007, when we      acquired 82% of the outstanding shares of Alaska  DigiTel, |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | A $1.8      million increase in our company-wide success sharing bonus accrual in      2008, |
|--------------------|----------------------------------------------------------------------------------------------|

| ·   | A $1.4      million increase in our facilities lease expense,  and |
|--------------------|--------------------------------------------------------------------|

| ·   | $1.2 million      in additional expense incurred in 2008 for the conversion of our      customers’ wireless phones to ourfacilities. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | A $13.9      million increase in interest expense to $48.3 million in 2008 due to a      $6.4 million increase in interest expense on our Senior Credit Facility to      $17.7 million resulting from additional debt from the Additional      Incremental Term Loan agreement beginning in May 2008 and the increased      interest rate on our Senior Credit Facility beginning May      2008, |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $3.9 million      in additional interest expense resulting from the Galaxy 18 capital lease      commencing in May 2008, |
|--------------------|--------------------------------------------------------------------------------------------------------------------------|

| ·   | A loss of      $921,000 relating to the fair value change on derivative instruments was      reported in interest expense, and |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------|

| ·   | $906,000 of      additional interest expense as a result of our acquisition of UUI in June      2008. |
|--------------------|-------------------------------------------------------------------------------------------------------|

----

|                                |   |   |    |   | Percentage |   |
|-------------------------------------|--------|--------|---------|--------|------------|--------|
|                                |   | 2007   |    |   | 2006       |   |   | Change |   |
| Voice                               |   | $      | 46,212  |   |       |   | 45,625 |   |   |   | 1.3 | % |
| Video                               |   |   | 96,327  |   |       |   | 90,226 |   |   |   | 6.8 | % |
| Data                                |   |   | 34,230  |   |       |   | 29,406 |   |   |   | 16.4 | % |
| Wireless                            |   |   | 46,733  |   |       |   | 13,694 |   |   |   | 241.3 | % |
| Total      Consumer segment revenue |   | $      | 223,502 |   |       |   | 178,951 |   |   |   | 24.9 | % |

|                                           |   |   |   |   |   |   |
|------------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                           |   | 2007   |   |   | 2006   |   |   | Percentage      Change |   |
| Voice                                          |   | $      | 20,364 |   |   |   | 22,165 |   |   |   | (8.1 | %) |
| Video                                          |   |   | 34,301 |   |   |   | 31,124 |   |   |   | 10.2 | % |
| Data                                           |   |   | 5,313  |   |   |   | 4,489 |   |   |   | 18.4 | % |
| Wireless                                       |   |   | 28,721 |   |   |   | 13,885 |   |   |   | 106.9 | % |
| Total      Consumer segment Cost of Goods Sold |   | $      | 88,699 |   |   |   | 71,663 |   |   |   | 23.8 | % |

|                                  |   |   |   |   | Percentage |   |
|---------------------------------------|--------|--------|--------|--------|------------|--------|
|                                  |   | 2007   |   |   | 2006       |   |   | Change |   |
| Consumer      segment adjusted EBITDA |   | $      | 46,808 |   |       |   | 32,550 |   |   |   | 43.8 | % |

|                                                  |   | December      31, |    |   | Percentage |   |
|-------------------------------------------------------|--------|-------------------|---------|--------|------------|--------|
|                                                  |   | 2007              |    |   | 2006       |   |   | Change |   |
| Voice:                                                |   |              |    |   |       |   |   |   |   |
| Long-distance      subscribers1                       |   |              | 89,900  |   |       |   | 89,800 |   |   |   | 0.1 | % |
| Long-distance      minutes carried (in millions)      |   |              | 135.8   |   |       |   | 141.9 |   |   |   | (4.3 | %) |
| Total local      access lines in service2             |   |              | 74,400  |   |       |   | 66,200 |   |   |   | 12.4 | % |
| Local access      lines in service on GCI facilities2 |   |              | 50,700  |   |       |   | 31,400 |   |   |   | 61.5 | % |
|                                                  |   |              |    |   |       |   |   |   |   |   |   |   |
| Video:                                                |   |              |    |   |       |   |   |   |   |   |   |   |
| Basic      subscribers3                               |   |              | 128,000 |   |       |   | 124,000 |   |   |   | 3.2 | % |
| Digital      programming tier subscribers4            |   |              | 65,800  |   |       |   | 58,700 |   |   |   | 12.1 | % |

----

| HD/DVR      converter boxes5                                                                                                                                                                     |   |   | 50,200  |   |   |   | 29,200  |   |   |   | 71.9   | %      |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|--------|--------|
| Homes      passed                                                                                                                                                                                |   |   | 224,700 |   |   |   | 219,900 |   |   |   | 2.2    | %      |
| Average      monthly gross revenue per subscriber6                                                                                                                                               |   | $      | 64.01   |   |   | $      | 61.57   |   |   |   | 4.0    | %      |
|                                                                                                                                                                                             |   |   |    |   |   |   |    |   |   |   |   |   |
| Data:                                                                                                                                                                                            |   |   |    |   |   |   |    |   |   |   |   |   |
| Cable modem      subscribers7                                                                                                                                                                    |   |   | 88,000  |   |   |   | 78,500  |   |   |   | 12.1   | %      |
|                                                                                                                                                                                             |   |   |    |   |   |   |    |   |   |   |   |   |
| Wireless:                                                                                                                                                                                        |   |   |    |   |   |   |    |   |   |   |   |   |
| Wireless      lines in service8                                                                                                                                                                  |   |   | 70,000  |   |   |   | 24,400  |   |   |   | 186.9  | %      |
| Average      monthly gross revenue per subscriber9                                                                                                                                               |   | $      | 58.29   |   |   | $      | 52.21   |   |   |   | 11.6   | %      |
|                                                                                                                                                                                             |   |
| All footnote      references correspond to the footnotes in the table under "Year Ended      December 31, 2008 Compared to Year Ended December 31, 2007" – Consumer      Segment Overview. |   |
|                                                                                                                                                                                             |   |

|   | · | A 22.7%      increase in equipment rental revenue to $16.3 million in 2007 primarily      resulting from our customers’ increased use of HD/DVR converter boxes,      and |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | A 4.1%      increase in programming services revenue to $78.6 million in 2007      primarily resulting from an increase in digital programming tier      subscribers in 2007 and increased rates charged for certain cable services      primarily effective in the fourth quarter of  2006. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                      |   |   |    |   | Percentage |   |
|-------------------------------------------|--------|--------|---------|--------|------------|--------|
|                                      |   | 2007   |    |   | 2006       |   |   | Change |   |
| Voice                                     |   | $      | 96,896  |   |       |   | 110,834 |   |   |   | (12.6 | %) |
| Data                                      |   |   | 61,199  |   |       |   | 55,637 |   |   |   | 10.0 | % |
| Wireless                                  |   |   | 5,282   |   |       |   | --- |   |   |                  NM |   |
| Total Network      Access segment revenue |   | $      | 163,377 |   |       |   | 166,471 |   |   |   | (1.9 | %) |
|                                      |   |   |    |   |       |   |   |   |   |   |   |   |
| NM – Not      meaningful.           |   |   |    |   |       |   |   |   |   |   |   |   |

|                                                 |   |   |   |   | Percentage |   |
|------------------------------------------------------|--------|--------|--------|--------|------------|--------|
|                                                 |   | 2007   |   |   | 2006       |   |   | Change |   |
| Voice                                                |   | $      | 31,042 |   |       |   | 30,390 |   |   |   | 2.1 | % |
| Data                                                 |   |   | 12,081 |   |       |   | 9,567 |   |   |   | 26.3 | % |
| Wireless                                             |   |   | 745    |   |       |   | --- |   |   |                       NM |   |
| Total Network      Access segment Cost of Goods Sold |   | $      | 43,868 |   |       |   | 39,957 |   |   |   | 9.8 | % |
|                                                 |   |   |   |   |       |   |   |   |   |   |   |   |
| NM – Not      meaningful.                      |   |   |   |   |       |   |   |   |   |   |   |   |

|                                        |   |   |   |   | Percentage |   |
|---------------------------------------------|--------|--------|--------|--------|------------|--------|
|                                        |   | 2007   |   |   | 2006       |   |   | Change |   |
| Network      Access segment adjusted EBITDA |   | $      | 82,441 |   |       |   | 93,450 |   |   |   | (11.8 | %) |

|                                                                                                                                                                                            |   | December      31, |   |   | Percentage |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|--------|--------|------------|--------|
|                                                                                                                                                                                            |   | 2007              |   |   | 2006       |   |   | Change |   |
| Voice:                                                                                                                                                                                          |   |              |   |   |       |   |   |   |   |
| Long-distance      minutes carried (in millions)                                                                                                                                                |   |              | 1,251  |   |       |   | 1,317 |   |   |   | (5.0 | %) |
|                                                                                                                                                                                            |   |              |   |   |       |   |   |   |   |   |   |   |
| Data:                                                                                                                                                                                           |   |              |   |   |       |   |   |   |   |   |   |   |
| Total      Internet service provider access lines in service1                                                                                                                                   |   |              | 2,600  |   |       |   | 3,100 |   |   |   | (16.1 | %) |
|                                                                                                                                                                                            |   |
| 1 An      Internet service provider access line in service is defined as a revenue      generating circuit or channel connecting a customer to the public switched      telephone network. |   |
|                                                                                                                                                                                            |   |

----

|                                  |   |   |    |   | Percentage |   |
|---------------------------------------|--------|--------|---------|--------|------------|--------|
|                                  |   | 2007   |    |   | 2006       |   |   | Change |   |
| Voice                                 |   | $      | 30,761  |   |       |   | 32,162 |   |   |   | (4.4 | %) |
| Video                                 |   |   | 8,018   |   |       |   | 7,993 |   |   |   | 0.3 | % |
| Data                                  |   |   | 61,052  |   |       |   | 63,276 |   |   |   | (3.5 | %) |
| Wireless                              |   |   | 4,809   |   |       |   | 2,498 |   |   |   | 92.5 | % |
| Total      Commercial segment revenue |   | $      | 104,640 |   |       |   | 105,929 |   |   |   | (1.2 | %) |

|                                             |   |   |   |   |   |   |
|--------------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                             |   | 2007   |   |   | 2006   |   |   | Percentage      Change |   |
| Voice                                            |   | $      | 20,225 |   |   |   | 21,640 |   |   |   | (6.6 | %) |
| Video                                            |   |   | 1,616  |   |   |   | 1,442 |   |   |   | 12.1 | % |
| Data                                             |   |   | 27,469 |   |   |   | 24,619 |   |   |   | 11.6 | % |
| Wireless                                         |   |   | 4,182  |   |   |   | 2,608 |   |   |   | 60.4 | % |
| Total      Commercial segment Cost of Goods Sold |   | $      | 53,492 |   |   |   | 50,309 |   |   |   | 6.3 | % |

|                                    |   |   |   |   | Percentage |   |
|-----------------------------------------|--------|--------|--------|--------|------------|--------|
|                                    |   | 2007   |   |   | 2006       |   |   | Change |   |
| Commercial      segment adjusted EBITDA |   | $      | 16,164 |   |       |   | 21,164 |   |   |   | (23.6 | %) |

----

|   | Selected key      performance indicators for our Commercial segment  follow: |
|--------|------------------------------------------------------------------------------|

|                                                                                                                                                                                               |   | December      31, |   | Percentage |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|--------|------------|
|                                                                                                                                                                                               |   | 2007              |   | 2006       |   | Change |
| Voice:                                                                                                                                                                                             |   |              |   |       |   |   |
| Long-distance      subscribers1                                                                                                                                                                    |   | 10,500            |   | 11,100     |   | (5.4%) |
| Total local      access lines in service2                                                                                                                                                          |   | 43,100            |   | 41,900     |   | 2.9% |
| Local access      lines in service on GCI facilities      2                                                                                                                                        |   | 12,500            |   | 8,400      |   | 48.8% |
| Long-distance      minutes carried (in millions)                                                                                                                                                   |   | 131.3             |   | 131.8      |   | (0.4%) |
|                                                                                                                                                                                               |   |              |   |       |   |   |
| Data:                                                                                                                                                                                              |   |              |   |       |   |   |
| Cable modem      subscribers3                                                                                                                                                                      |   | 8,500             |   | 7,800      |   | 9.0% |
|                                                                                                                                                                                               |   |              |   |       |   |   |
| Wireless:                                                                                                                                                                                          |   |              |   |       |   |   |
| Wireless      lines in service4                                                                                                                                                                    |   | 7,300             |   | 4,600      |   | 58.7% |
|                                                                                                                                                                                               |   |              |   |       |   |   |
| All footnote      references correspond to the footnotes in the table under "Year Ended      December 31, 2008 Compared to Year Ended December 31, 2007" – Commercial      Segment Overview. |
|                                                                                                                                                                                               |   |

----

|                              |   | December      31, |   |   | Percentage |   |
|-----------------------------------|--------|-------------------|--------|--------|------------|--------|
|                              |   | 2007              |   |   | 2006       |   |   | Change |   |
| Managed      Broadband segment:   |   |              |   |   |       |   |   |   |   |
| SchoolAccess®      customers |   |              | 51     |   |       |   | 48 |   |   |   | 6.3 | % |
| Rural health      customers       |   |              | 21     |   |       |   | 21 |   |   |   | 0.0 | % |

|   | · | Recognition      of $15.5 million in additional expense resulting from our January 1, 2007      acquisition of Alaska DigiTel, |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------|

|   | · | A $3.8      million increase in labor and benefits costs,  and |
|--------|--------|----------------------------------------------------------------|

|   | · | A $1.4      million increase in bad debt expense primarily due to the realization of      recoveries for certain Managed Broadband services customers and MCI, Inc.      (merged with Verizon Communications, Inc.) in 2006 through a reduction to      bad debt expense which did not recur in2007. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | A $2.2      million decrease in certain promotion expenses,  and |
|--------|--------|------------------------------------------------------------------|

|   | · | A $658,000      decrease in our company-wide success sharing bonus accrual in      2007. |
|--------|--------|------------------------------------------------------------------------------------------|

----

| ·   | A $2.5      million or 7.2% increase in interest costs due to an increase in our      average outstanding debt balance in 2007 as compared to    2006, |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | A $1.3      million or 70.5% decrease in interest income in 2007 resulting from a      decrease in our average cash and cash equivalents balance in 2007 as      compared to 2006, and |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In the third      quarter of 2007, we substantially modified our Senior Credit Facility      resulting in loan fee expense of$611,000. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------|

|                                                    |   | 2008   |    |   | 2007   |   |    | 2006   |   |
|---------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|
| Line      extensions                                    |   | $      | 35,813  |   |   |   | 62,984  |   |   |   | 24,126 |   |
| Customer      premise equipment                         |   |   | 22,821  |   |   |   | 23,554  |   |   |   | 14,771 |   |
| Scalable      infrastructure                            |   |   | 2,985   |   |   |   | 4,749   |   |   |   | 1,062 |   |
| Upgrade/rebuild                                         |   |   | 2,705   |   |   |   | 1,451   |   |   |   | 4,145 |   |
| Commercial                                              |   |   | 2,206   |   |   |   | 392     |   |   |   | 138 |   |
| Support      capital                                    |   |   | 1,277   |   |   |   | 1,317   |   |   |   | 1,146 |   |
| Sub-total                                               |   |   | 67,807  |   |   |   | 94,447  |   |   |   | 45,388 |   |
| Remaining      reportable segments capital expenditures |   |   | 261,063 |   |   |   | 64,569  |   |   |   | 59,672 |   |
|                                                    |   | $      | 328,870 |   |   |   | 159,016 |   |   |   | 105,060 |   |

----

|                                                      |   | 2008   |     |   | 2007   |   |
|-----------------------------------------------------------|--------|--------|----------|--------|--------|--------|
| Operating      activities                                 |   | $      | 175,335  |   |   |   | 110,511 |   |
| Investing      activities                                 |   |   | (290,967 | )      |   |   | (179,987 | ) |
| Financing      activities                                 |   |   | 132,251  |   |   |   | 24,903 |   |
| Net increase      (decrease) in cash and cash equivalents |   | $      | 16,619   |   |   |   | (44,573 | ) |

----

| If redeemed      during the twelve month period commencing February 1 of the year      indicated: |   | Redemption      Price |    |
|---------------------------------------------------------------------------------------------------|--------|-----------------------|---------|
| 2009                                                                                              |   |                  | 103.625 | % |
| 2010                                                                                              |   |                  | 102.417 | % |
| 2011                                                                                              |   |                  | 101.208 | % |
| 2012 and      thereafter                                                                          |   |                  | 100.000 | % |

|   | · | $250.0      million, reduced by the amount of any prepayments,  or |
|--------|--------|--------------------------------------------------------------------|

|   | · | 3.0 times      earnings before interest, taxes, depreciation and amortization for the      last four full fiscal quarters of GCI, Inc. and its      subsidiaries. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Total      Leverage Ratio (as defined) |   | Applicable      Margin |   |
|----------------------------------------|--------|------------------------|--------|
| >3.75                               |   |                   | 4.25   | % |
| >3.25 but <3.75                  |   |                   | 3.75   | % |
| >2.75 but <3.25                  |   |                   | 3.25   | % |
| <2.75                               |   |                   | 2.75   | % |

----

|   | The      commitment fee we are required to pay on the unused portion of the      commitment is 0.5%. |
|--------|------------------------------------------------------------------------------------------------------|

|   | Substantially      all of the Company's assets collateralize the Senior Credit      Facility. |
|--------|-----------------------------------------------------------------------------------------------|

----

| Years ending      December 31,                                |   |   |    |
|---------------------------------------------------------------|--------|--------|---------|
| 2009                                                          |   | $      | 8,425   |   |
| 2010                                                          |   |   | 8,657   |   |
| 2011                                                          |   |   | 188,147 |   |
| 2012                                                          |   |   | 176,323 |   |
| 2013                                                          |   |   | 4,749   |   |
| 2014 and      thereafter                                      |   |   | 335,585 |   |
|                                                          |   |   | 721,886 |   |
| Less      unamortized discount paid on Senior Notes           |   |   | 2,589   |   |
| Less      unamortized discount paid on Senior Credit Facility |   |   | 2,466   |   |
| Less current      portion of long-term debt                   |   |   | 8,425   |   |
|                                                          |   | $      | 708,406 |   |

| The Intelsat      Galaxy 18 C-band and Ku-Band transponders are being leased over an      expected term of 14 years. The present value of the lease payments,      excluding telemetry, tracking and command services and back-up protection,      is $98.6 million. We have recorded a capital lease obligation and an      addition to our Property and Equipment at December 31,    2008. |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Years ending      December 31:    |   |   |    |
|-----------------------------------|--------|--------|---------|
| 2009                              |   | $      | 11,160  |   |
| 2010                              |   |   | 11,160  |   |
| 2011                              |   |   | 11,160  |   |
| 2012                              |   |   | 11,160  |   |
| 2013                              |   |   | 11,160  |   |
| 2014 and      thereafter          |   |   | 93,930  |   |
| Total minimum      lease payments |   | $      | 149,730 |   |

----

| Years ending      December 31:    |   |   |   |
|-----------------------------------|--------|--------|--------|
| 2009                              |   | $      | 16,401 |   |
| 2010                              |   |   | 8,703  |   |
| 2011                              |   |   | 7,387  |   |
| 2012                              |   |   | 5,601  |   |
| 2013                              |   |   | 4,797  |   |
| 2014 and      thereafter          |   |   | 17,429 |   |
| Total minimum      lease payments |   | $      | 60,318 |   |

----

----

----

----

----

|   | · | 42% are      located in the Municipality ofAnchorage, |
|--------|--------|-------------------------------------------------------|

|   | · | 13% are      located in the Fairbanks North StarBorough, |
|--------|--------|----------------------------------------------------------|

|   | · | 12% are      located in the Matanuska-SusitnaBorough, |
|--------|--------|-------------------------------------------------------|

|   | · | 8% are      located in the Kenai PeninsulaBorough, |
|--------|--------|----------------------------------------------------|

|   | · | 5% are      located in the City and Borough of Juneau,and |
|--------|--------|-----------------------------------------------------------|

|                                               |   | Payments Due      by Period |      |
|----------------------------------------------------|--------|-----------------------------|-----------|
|                                               |   | Total                       |      |   | Less than 1      Year |   |   | 1 to      3Years |   |   | 4 to      5Years |   |   | More Than 5      Years |   |
|                                               |   | (Amounts in      thousands) |      |
| Long-term      debt                                |   | $                           | 721,886   |   |   |   | 8,424 |   |   |   | 196,804 |   |   |   | 181,072 |   |   |   | 335,586 |   |
| Interest on      long-term debt                    |   |                        | 195,987   |   |   |   | 44,037 |   |   |   | 87,324 |   |   |   | 53,026 |   |   |   | 11,600 |   |
| Capital lease      obligations, including interest |   |                        | 160,431   |   |   |   | 11,646 |   |   |   | 23,328 |   |   |   | 23,474 |   |   |   | 101,983 |   |
| Operating      lease commitments                   |   |                        | 60,318    |   |   |   | 16,401 |   |   |   | 16,089 |   |   |   | 10,399 |   |   |   | 17,429 |   |
| Purchase      obligations                          |   |                        | 54,826    |   |   |   | 25,134 |   |   |   | 24,412 |   |   |   | 5,280 |   |   |   | --- |   |
| Total      contractual obligations                 |   | $                           | 1,193,448 |   |   |   | 105,642 |   |   |   | 347,957 |   |   |   | 273,251 |   |   |   | 466,598 |   |

----

----

| ·   | Our      entity-level control related to the selection and application of      accounting policies in accordance with GAAP was not designed to include      policies and procedures to periodically review our accounting policies to      ensure ongoing GAAP compliance. This led to ineffective procedures for      recording depreciation expense which caused material errors in interim      financial reporting which were corrected through the restatement of our      2007 interim financial information. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The internal      control over financial reporting at Alaska DigiTel does not include      activities adequate to i) timely identify changes in financial reporting      risks, ii) monitor the continued effectiveness of controls, and iii) does      not include staff with adequate technical expertise to ensure that      policies and procedures necessary for reliable interim and annual      financial statements are selected and applied. Prior to August 18, 2008,      our control over the operations of Alaska DigiTel was limited as required      by the FCC upon their approval of our initial acquisition completed in      January 2007. These control deficiencies in our Alaska DigiTel business      represent material weaknesses in our internal control over financial      reporting and led to the failure to timely identify and respond to      triggering events which necessitated a change in useful life of      depreciable assets to ensure reporting in accordance with GAAP. These      material weaknesses led to errors in our interim financial reporting which      were corrected through the restatement of our interim financial      information for the March 31 and June 30, 2008 quarterly      periods. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | We enhanced      the design of our detective monitoring control over of the recording of      receivables and revenues by: |
|--------------------|----------------------------------------------------------------------------------------------------------------------------|

|   | 1) Performing      the monitoring at a level of precision to detect all transactions that      could aggregate to a material component of the account balances,      and |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2) Ensuring      differences identified during the monitoring process are resolved in a      timely manner. |
|--------|-------------------------------------------------------------------------------------------------------------|

| ·   | With regards      to our system development and change controls we incorporated more      thorough end-user testing of developments and changes to ensure the      outputs of transactions processed are recorded correctly in the general      ledger before the system changes are implemented,  and |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Our      management review control over unreconciled transactions recorded in      accounts receivable general ledger accounts has been designed at the level      of precision to detect and correct errors that could be material to annual      or interim financial statements. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Independently      recalculating shared-based compensation expense on a sample of options and      restricted stock awards on a quarterly basis and comparing the expense to      the amounts reported by our stock option plan administration software to      validate correct settings were entered into the software. This independent      verification is reviewed and approved on a quarterly basis,      and |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Requiring our      staff to continue to attend training related to the application of SFAS      No. 123(R), “Share-Based Payment,” and related interpretations and obtain      further training in using our stock option plan administration software as      appropriate. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | We enhanced      the design of our detective monitoring control over of the recording of      receivables and revenues by: |
|--------------------|----------------------------------------------------------------------------------------------------------------------------|

|   | 1) Performing      the monitoring at a level of precision to detect all transactions that      could aggregate to a material component of the account balances,      and |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2) Ensuring      differences identified during the monitoring process are resolved in a      timely manner. |
|--------|-------------------------------------------------------------------------------------------------------------|

| ·   | With regards      to our system development and change controls we incorporated more      thorough end-user testing of developments and changes to ensure the      outputs of transactions processed are recorded correctly in the general      ledger before the system changes are implemented,  and |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Our      management review control over unreconciled transactions recorded in      accounts receivable general ledger accounts has been designed at the level      of precision to detect and correct errors that could be material to annual      or interim financial statements. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| (l)      Consolidated Financial Statements                                                                                                                                          |   | Page No. |                |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|---------------------|
|                                                                                                                                                                                |   |     |                |
| Included in      Part II of this Report:                                                                                                                                            |   |     |                |
|                                                                                                                                                                                |   |     |                |
| Reports of      Independent Registered Public Accounting Firm                                                                                                                       |   |     | 86                  |   |
|                                                                                                                                                                                |   |     |                |   |
| Consolidated      Balance Sheets, December 31, 2008 and 2007                                                                                                                        |   |     | 87 –    88    |   |
|                                                                                                                                                                                |   |     |                |   |
| Consolidated      Statements of  Operations, years ended December 31, 2008, 2007      and 2006                                                                            |   |     | 89                  |   |
|                                                                                                                                                                                |   |     |                |   |
| Consolidated      Statements of Stockholder’s Equity, years ended December 31, 2008, 2007      and 2006                                                                       |   |     | 90                  |   |
|                                                                                                                                                                                |   |     |                |   |
| Consolidated      Statements of Cash Flows, years ended December 31, 2008, 2007 and      2006                                                                                       |   |     | 91                  |   |
|                                                                                                                                                                                |   |     |                |   |
| Notes to      Consolidated Financial Statements                                                                                                                                     |   |     | 92 –      129 |   |
|                                                                                                                                                                                |   |     |                |   |
| (2)      Consolidated Financial Statement Schedules                                                                                                                                 |   |     |                |   |
|                                                                                                                                                                                |   |     |                |   |
| Schedules are      omitted, as they are not required or are not applicable, or the required      information is shown in the applicable financial statements or notes      thereto. |   |     |                |   |
|                                                                                                                                                                                |   |     |                |   |
| (3)      Exhibits                                                                                                                                                                   |   |     | 130                 |   |

----

----

|                                                                                                                                 |   |              |      |   |   |   |
|--------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|-----------|--------|--------|--------|
| (Amounts in      thousands)                                                                                                          |   | December      31, |      |
| ASSETS                                                                                                                               |   | 2008              |      |   | 2007   |   |
|                                                                                                                                 |   |              |      |   |   |   |
| Current      assets:                                                                                                                 |   |              |      |   |   |   |
| Cash and cash      equivalents                                                                                                       |   | $                 | 29,693    |   |   |   | 13,074 |   |
|                                                                                                                                 |   |              |      |   |   |   |   |   |
| Receivables                                                                                                                          |   |              | 113,136   |   |   |   | 97,913 |   |
| Less      allowance for doubtful receivables                                                                                         |   |              | 2,582     |   |   |   | 1,657 |   |
| Net      receivables                                                                                                                 |   |              | 110,554   |   |   |   | 96,256 |   |
|                                                                                                                                 |   |              |      |   |   |   |   |   |
| Deferred      income taxes                                                                                                           |   |              | 7,843     |   |   |   | 5,734 |   |
| Inventories                                                                                                                          |   |              | 7,085     |   |   |   | 2,541 |   |
| Prepaid      expenses                                                                                                                |   |              | 5,960     |   |   |   | 5,356 |   |
| Investment      securities                                                                                                           |   |              | 1,563     |   |   |   | --- |   |
|  Other      current assets                                                                                                      |   |              | 647       |   |   |   | 717 |   |
| Total current      assets                                                                                                            |   |              | 163,345   |   |   |   | 123,678 |   |
|                                                                                                                                 |   |              |      |   |   |   |   |   |
| Property and      equipment in service, net of depreciation                                                                          |   |              | 793,051   |   |   |   | 504,273 |   |
| Construction      in progress                                                                                                        |   |              | 54,098    |   |   |   | 69,409 |   |
| Net property      and equipment                                                                                                      |   |              | 847,149   |   |   |   | 573,682 |   |
|                                                                                                                                 |   |              |      |   |   |   |   |   |
| Cable      certificates                                                                                                              |   |              | 191,565   |   |   |   | 191,565 |   |
| Goodwill                                                                                                                             |   |              | 66,868    |   |   |   | 42,181 |   |
| Wireless      licenses                                                                                                               |   |              | 25,967    |   |   |   | 25,757 |   |
| Other      intangible assets, net of amortization                                                                                    |   |              | 22,976    |   |   |   | 11,769 |   |
| Deferred loan      and senior notes costs, net of amortization of $3,900 and $2,787 at      December 31, 2008 and 2007, respectively |   |              | 6,496     |   |   |   | 6,202 |   |
| Other      assets                                                                                                                    |   |              | 10,724    |   |   |   | 9,399 |   |
| Total other      assets                                                                                                              |   |              | 324,596   |   |   |   | 286,873 |   |
| Total      assets                                                                                                                    |   | $                 | 1,335,090 |   |   |   | 984,233 |   |

----

|                                                                                                                           |   |              |      |   |   |   |
|--------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|-----------|--------|--------|--------|
| (Amounts in      thousands)                                                                                                    |   | December      31, |      |
| LIABILITIES,      MINORITY INTEREST AND STOCKHOLDER’S EQUITY                                                             |   | 2008              |      |   | 2007   |   |
|                                                                                                                           |   |              |      |   |   |   |
| Current      liabilities:                                                                                                      |   |              |      |   |   |   |
| Current      maturities of obligations under long-term debt and capital      leases                                            |   | $                 | 12,857    |   |   |   | 2,375 |   |
| Accounts      payable                                                                                                          |   |              | 40,497    |   |   |   | 35,747 |   |
| Accrued      payroll and payroll related obligations                                                                           |   |              | 22,632    |   |   |   | 16,329 |   |
| Deferred      revenue                                                                                                          |   |              | 22,095    |   |   |   | 16,600 |   |
| Accrued      liabilities                                                                                                       |   |              | 11,043    |   |   |   | 7,536 |   |
| Accrued      interest                                                                                                          |   |              | 10,224    |   |   |   | 8,927 |   |
| Subscriber      deposits                                                                                                       |   |              | 1,262     |   |   |   | 877 |   |
| Total current      liabilities                                                                                                 |   |              | 120,610   |   |   |   | 88,391 |   |
|                                                                                                                           |   |              |      |   |   |   |   |   |
| Long-term      debt                                                                                                            |   |              | 708,406   |   |   |   | 536,115 |   |
| Obligations      under capital leases, excluding current maturities                                                            |   |              | 94,029    |   |   |   | 2,290 |   |
| Obligation      under capital lease due to related party, excluding current      maturity                                      |   |              | 1,868     |   |   |   | 469 |   |
| Deferred      income taxes                                                                                                     |   |              | 86,187    |   |   |   | 84,294 |   |
| Long-term      deferred revenue                                                                                                |   |              | 49,998    |   |   |   | 845 |   |
| Other      liabilities                                                                                                         |   |              | 15,288    |   |   |   | 12,396 |   |
| Total      liabilities                                                                                                         |   |              | 1,076,386 |   |   |   | 724,800 |   |
|                                                                                                                           |   |              |      |   |   |   |   |   |
| Minority      interest                                                                                                         |   |              | ---       |   |   |   | 6,478 |   |
|                                                                                                                           |   |              |      |   |   |   |   |   |
| Commitments      and contingencies                                                                                             |   |              |      |   |   |   |   |   |
| Stockholder’s      equity:                                                                                               |   |              |      |   |   |   |   |   |
| Class A      common stock (no par). Authorized 10 shares; issued and outstanding 0.1      shares at December 31, 2008 and 2007 |   |              | 206,622   |   |   |   | 206,622 |   |
| Paid-in      capital                                                                                                           |   |              | 45,468    |   |   |   | 37,804 |   |
| Retained      earnings                                                                                                         |   |              | 6,614     |   |   |   | 8,529 |   |
| Total      stockholder’s equity                                                                                          |   |              | 258,704   |   |   |   | 252,955 |   |
| Total      liabilities, minority interest and stockholder’s equity                                                       |   | $                 | 1,335,090 |   |   |   | 984,233 |   |

|   | See      accompanying notes to consolidated financial  statements. |
|--------|--------------------------------------------------------------------|

----

|   | GCI,      INC. AND SUBSIDIARIES |
|--------|---------------------------------|

|   | CONSOLIDATED      STATEMENTS OF OPERATIONS |
|--------|--------------------------------------------|

|   | YEARS      ENDED DECEMBER 31, 2008, 2007 AND2006 |
|--------|--------------------------------------------------|

| (Amounts in      thousands)                                                                                 |   | 2008   |    |   | 2007   |   |    | 2006   |   |
|-------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|
| Revenues                                                                                                    |   | $      | 575,442 |   |   |   | 520,311 |   |   |   | 477,482 |   |
|                                                                                                        |   |   |    |   |   |   |    |   |   |   |   |   |
| Cost of goods      sold (exclusive of depreciation and amortization shown separately      below)            |   |   | 203,058 |   |   |   | 195,799 |   |   |   | 169,107 |   |
| Selling,      general and administrative expenses                                                           |   |   | 210,306 |   |   |   | 175,752 |   |   |   | 158,950 |   |
| Depreciation      and amortization expense                                                                  |   |   | 114,369 |   |   |   | 87,615  |   |   |   | 82,099 |   |
| Operating      income                                                                                       |   |   | 47,709  |   |   |   | 61,145  |   |   |   | 67,326 |   |
|                                                                                                        |   |   |    |   |   |   |    |   |   |   |   |   |
| Other income      (expense):                                                                                |   |   |    |   |   |   |    |   |   |   |   |   |
| Interest      expense                                                                                       |   |   | (48,303 | )      |   |   | (34,407 | )      |   |   | (34,413 | ) |
| Interest and      investment income                                                                         |   |   | 576     |   |   |   | 544     |   |   |   | 1,841 |   |
| Amortization      and write-off of loan fees                                                                |   |   | (2,060  | )      |   |   | (1,423  | )      |   |   | (964 | ) |
| Minority      interest                                                                                      |   |   | 1,503   |   |   |   | 36      |   |   |   | 463 |   |
| Other                                                                                                       |   |   | (217    | )      |   |   | ---     |   |   |   | --- |   |
| Other      expense, net                                                                                     |   |   | (48,501 | )      |   |   | (35,250 | )      |   |   | (33,073 | ) |
| Income (loss)      before income tax expense and cumulative effect of a change in accounting      principle |   |   | (792    | )      |   |   | 25,895  |   |   |   | 34,253 |   |
| Income tax      expense                                                                                     |   |   | 1,077   |   |   |   | 12,162  |   |   |   | 15,797 |   |
| Income (loss)      before cumulative effect of a change in accounting    principle                          |   |   | (1,869  | )      |   |   | 13,733  |   |   |   | 18,456 |   |
| Cumulative      effect of a change in accounting principle, net of income tax expense      of $44      |   |   | ---     |   |   |   | ---     |   |   |   | 64 |   |
| Net income      (loss)                                                                                      |   | $      | (1,869  | )      |   |   | 13,733  |   |   |   | 18,520 |   |

----

|     (Amounts in      thousands, except share amounts) |   | Shares of      Class A Common Stock |   |   | Class A      Common Stock |   |    | Paid-in      Capital |   |   | Retained      Earnings |   |   | Total  |    |
|---------------------------------------------------------------------------|--------|-------------------------------------|--------|--------|---------------------------|--------|---------|----------------------|--------|--------|------------------------|--------|--------|--------|---------|
| Balances at      January 1, 2006                                          |   |                                | 100    |   |                      | $      | 206,622 |                 |   |   | 10,840                 |   |   |   | 26,963  |   |   |   | 244,425 |   |
| Net      income                                                           |   |                                | ---    |   |                      |   | ---     |                 |   |   | ---                    |   |   |   | 18,520  |   |   |   | 18,520 |   |
| SAB 108      cumulative adjustment, net of income tax expense             |   |                                | ---    |   |                      |   | ---     |                 |   |   | ---                    |   |   |   | 1,104   |   |   |   | 1,104 |   |
| Distribution      to General Communication, Inc.                          |   |                                | ---    |   |                      |   | ---     |                 |   |   | ---                    |   |   |   | (39,753 | ) |   |   | (39,753 | )  |
| Contribution      from General Communication, Inc.                        |   |                                | ---    |   |                      |   | ---     |                 |   |   | 16,904                 |   |   |   | ---     |   |   |   | 16,904 |   |
| Balances at      December 31, 2006                                        |   |                                | 100    |   |                      |   | 206,622 |                 |   |   | 27,744                 |   |   |   | 6,834   |   |   |   | 241,200 |   |
| Net      income                                                           |   |                                | ---    |   |                      |   | ---     |                 |   |   | ---                    |   |   |   | 13,733  |   |   |   | 13,733 |   |
| Distribution      to General Communication, Inc.                          |   |                                | ---    |   |                      |   | ---     |                 |   |   | ---                    |   |   |   | (12,038 | ) |   |   | (12,038 | ) |
| Contribution      from General Communication, Inc.                        |   |                                | ---    |   |                      |   | ---     |                 |   |   | 10,060                 |   |   |   | ---     |   |   |   | 10,060 |   |
| Balances at      December 31, 2007                                        |   |                                | 100    |   |                      |   | 206,622 |                 |   |   | 37,804                 |   |   |   | 8,529   |   |   |   | 252,955 |   |
| Net      loss                                                             |   |                                | ---    |   |                      |   | ---     |                 |   |   | ---                    |   |   |   | (1,869  | ) |   |   | (1,869 | ) |
| Distribution      to General Communication, Inc.                          |   |                                | ---    |   |                      |   | ---     |                 |   |   | ---                    |   |   |   | (46     | ) |   |   | (46 | ) |
| Contribution      from General Communication, Inc.                        |   |                                | ---    |   |                      |   | ---     |                 |   |   | 7,664                  |   |   |   | ---     |   |   |   | 7,664 |   |
| Balances at      December 31, 2008                                        |   |                                | 100    |   |                      | $      | 206,622 |                 |   |   | 45,468                 |   |   |   | 6,614   |   |   |   | 258,704 |   |

----

| (Amounts in      thousands)                                                                                                                  |   |   | 2008     |   | 2007     |   | 2006    |   |
|----------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|----------|--------|----------|--------|---------|--------|
| Cash flows      from operating activities:                                                                                                   |   |   |     |   |     |   |    |   |
| Net income      (loss)                                                                                                                       |   | $      | (1,869   | )      | 13,733   |   | 18,520  |   |
| Adjustments      to reconcile net income (loss) to net cash provided  by      operating activities, net of effect of acquisitions: |   |   |     |   |     |   |    |   |
| Depreciation      and amortization expense                                                                                                   |   |   | 114,369  |   | 87,615   |   | 82,099  |   |
| Deferred      income tax expense                                                                                                             |   |   | 1,077    |   | 11,649   |   | 15,384  |   |
| Other noncash      income and expense items                                                                                                  |   |   | 7,393    |   | 7,615    |   | 4,941   |   |
| Share-based      compensation expense                                                                                                        |   |   | 7,278    |   | 4,944    |   | 6,365   |   |
| Change in      operating assets and liabilities, net of effect of      acquisitions                                                          |   |   | 47,087   |   | (15,045  | )      | (4,510  | )      |
| Net cash      provided by operating activities                                                                                               |   |   | 175,335  |   | 110,511  |   | 122,799 |   |
|                                                                                                                                         |   |   |     |   |     |   |    |   |
| Cash flows      from investing activities:                                                                                                   |   |   |     |   |     |   |    |   |
| Purchases of      property and equipment, including construction period    interest                                                          |   |   | (221,458 | )      | (153,030 | )      | (95,998 | )      |
| Purchase of      businesses and minority interest, net of cash received                                                                      |   |   | (65,335  | )      | (19,530  | )      | ---     |   |
| Purchase of      software licenses and other assets                                                                                          |   |   | (8,974   | )      | (7,471   | )      | (4,285  | )      |
| Sale of      marketable securities                                                                                                           |   |   | 4,800    |   | ---      |   | ---     |   |
| Other                                                                                                                                        |   |   | ---      |   | 44       |   | 3,326   |   |
| Net cash used      in investing activities                                                                                                   |   |   | (290,967 | )      | (179,987 | )      | (96,957 | )      |
|                                                                                                                                         |   |   |     |   |     |   |    |   |
| Cash flows      from financing activities:                                                                                                   |   |   |     |   |     |   |    |   |
| Borrowing on      long-term debt                                                                                                             |   |   | 114,486  |   | 10,000   |   | ---     |   |
| Borrowing on      revolving credit facility, net                                                                                             |   |   | 30,000   |   | 50,000   |   | 15,000  |   |
| Payment of      debt                                                                                                                         |   |   | (10,248  | )      | (27,152  | )      | (1,725  | )      |
| Payment of      debt issuance costs                                                                                                          |   |   | (2,118   | )      | (527     | )      | (44     | )      |
| Net      contribution (distribution) to General Communication, Inc.                                                                          |   |   | 157      |   | (7,349   | )      | (25,745 | )      |
| Other                                                                                                                                        |   |   | (26      | )      | (69      | )      | 43      |   |
| Net cash      provided by (used in) financing activities                                                                                     |   |   | 132,251  |   | 24,903   |   | (12,557 | )      |
| Net increase      (decrease) in cash and cash equivalents                                                                                    |   |   | 16,619   |   | (44,573  | )      | 13,285  |   |
| Cash and cash      equivalents at beginning of period                                                                                        |   |   | 13,074   |   | 57,647   |   | 44,362  |   |
|                                                                                                                                         |   |   |     |   |     |   |    |   |
| Cash and cash      equivalents at end of period                                                                                              |   | $      | 29,693   |   | 13,074   |   | 57,647  |   |

----

|   | (a) | Business |
|--------|-----|----------|

|   | · | Origination      and termination of traffic in Alaska for certain common      carriers, |
|--------|--------|-----------------------------------------------------------------------------------------|

|   | · | Cable      television services throughoutAlaska, |
|--------|--------|--------------------------------------------------|

|   | · | Competitive      local access services in Anchorage, Fairbanks, Juneau, Wasilla, Eagle      River, Kodiak, Palmer, Kenai, Soldotna, Seward, Chugiak, Sitka, Valdez,      Ketchikan, Nome, and Homer, Alaska as of December 31, 2008 with on-going      expansion into additional Alaskacommunities, |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Incumbent      local access services in ruralAlaska, |
|--------|--------|------------------------------------------------------|

|   | · | Long-distance      telephone service between Alaska and the remaining United States and      foreign countries, |
|--------|--------|-----------------------------------------------------------------------------------------------------------------|

|   | · | Sale and      resale of postpaid and sale of prepaid wireless telephone services and      sale of wireless telephone handsets and  accessories, |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Data network      services, |
|--------|--------|-----------------------------|

|   | · | Internet      access services, |
|--------|--------|--------------------------------|

|   | · | Broadband      services, including our SchoolAccess®      offering to rural school districts, our ConnectMD®      offering to rural hospitals and health clinics, and managed video      conferencing, |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Managed      services to certain commercialcustomers, |
|--------|--------|-------------------------------------------------------|

|   | · | Sales and      service of dedicated communications systems and related      equipment, |
|--------|--------|----------------------------------------------------------------------------------------|

|   | · | Lease service      arrangements and maintenance of capacity on our fiber optic cable systems      used in the transmission of interstate and intrastate data, switched      message long-distance and Internet services within Alaska and between      Alaska and the remaining United States and foreign countries,      and |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Distribution      of white and yellow pages directories to residential and business      customers in certain markets we serve and on-line directory      products. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) | Principles of      Consolidation |
|--------|-----|----------------------------------|

|   | The      consolidated financial statements include the consolidated accounts of GCI      and its wholly-owned subsidiaries, as well as a variable interest entity      in which we were the primary beneficiary as defined by Financial      Accounting Standards Board ("FASB") Interpretation ("FIN") No. 46R,      “Consolidation of Variable Interest Entities, an interpretation of ARB No.      51” through August 17, 2008.  We purchased the minority interest      of the variable interest entity on August 18, 2008 as further described in      note 1(c).  All significant intercompany transactions between      non-regulated affiliates of our company are      eliminated.  Statement of Financial Accounting Standard ("SFAS")      No. 71, "Accounting for the Effects of Certain Types of Regulation"      requires intercompany revenue and expenses generated between regulated and      non-regulated affiliates of the company not be eliminated on      consolidation.  Intercompany revenue and expenses with      affiliates not subject to SFAS 71 have been  eliminated. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (c) | Acquisitions |
|--------|-----|--------------|

|   | Effective      June 1, 2008, we closed on our purchase of 100% of the outstanding stock      of UUI and Unicom, which were subsidiaries of UCI.  UUI,      together with its subsidiary, United-KUC, provides local telephone service      to 60 rural communities in the Bethel, Alaska area.  Unicom      operates DeltaNet, a long-haul broadband microwave network ringing the      Yukon-Kuskokwim Delta.  We view this investment as an      opportunity to expand our Managed Broadband services in rural      Alaska.  The UUI and Unicom acquisitions were stock purchases      but we elected to treat them as an asset purchase for income tax purposes,      resulting in goodwill being deductible for tax  purposes. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Effective      July 1, 2008, we closed on our purchase of 100% of the ownership interests      of Alaska Wireless, which provides wireless and Internet services in the      Dutch Harbor, Sand Point, Akutan, and Adak, Alaska areas.  Such      purchase was treated as an asset purchase for income tax      purposes.  We view this investment as an opportunity to expand      our wireless services in the Aleutian Chain region of rural      Alaska.  We consider this business combination to be immaterial      to our consolidated financialstatements. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | On August 18,      2008, we exercised our option to acquire the remaining 18.1% of the equity      interest and voting control of Alaska DigiTel for $10.4      million.  Prior to August 18, 2008, our ability to control the      operations      of Alaska DigiTel was limited as required by the FCC upon their approval      of our initial acquisition of 81.9% of the noncontrolling equity interest      obtained in January 2007.  Subsequent to the acquisition of the      minority interest, we own 100% of the outstanding common ownership units      and voting control of Alaska DigiTel.  Such purchase was treated      as an asset purchase for income tax purposes.  We purchased      Alaska DigiTel as a way to participate in the future growth of the Alaska      wireless industry.  We consolidated 100% of Alaska DigiTel's      assets and liabilities at fair value beginning on January 1, 2007, when we      determined that Alaska DigiTel was a variable interest entity of which we      were the primary beneficiary.  Upon our acquisition of the      minority interest in Alaska DigiTel on August 18, 2008, we recorded 18.1%      of the change in fair value between the assets and liabilities on January      1, 2007 and the fair value of the assets and liabilities on August 18,      2008. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | On the      closing date of the acquisition of UUI and Unicom, $8.0 million of the      purchase price was deposited in an escrow account to compensate us for any      indemnification claims we may have after the acquisition and      was included in the purchase price.  At this time, we are not      aware of any indemnification claims and expect the portion of the purchase      price in the escrow account to be paid to the seller in the      future. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | We have      agreed to make additional payments for UUI and Unicom in each of the years      2009 through 2013 that are contingent on sequential year-over-year revenue      growth for specified customers.  We have agreed to make an      additional payment for Alaska Wireless in 2010 that is contingent on      meeting certain financial conditions.  The amount of the 2009      UUI and Unicom contingent payment is not expected to be significant and we      are unable to reasonably estimate the remaining contingent consideration      amounts that may be paid for either acquisition, but do not believe any      amount paid will be significant. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | We recorded      our business acquisitions and the acquisition of the minority interest in      Alaska DigiTel based on the provisions of SFAS No. 141, "Business      Combinations," and accordingly, the purchase price has been allocated      based on the fair values of the assets acquired and liabilities      assumed.  In addition, the acquired companies' results of      operations are included since the effective date of each      acquisition. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The purchase      prices for our 2008 acquisitions, net of cash received of approximately      $1.7 million from UUI and Unicom, are as follows (amounts in      thousands): |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| UUI and      Unicom  |   | $ | 40,575 |   |
|----------------------|--------|---|--------|--------|
| Alaska      Wireless |   | $ | 14,508 |   |
| Alaska      DigiTel  |   | $ | 10,434 |   |

|   | We are in the      process of determining the fair value of goodwill and certain tax      liabilities for UUI and Unicom, therefore, the purchase price allocations      for UUI and Unicom have not been finalized at December 31, 2008 and the      goodwill and the tax liabilities associated with UUI and Unicom are      subject to refinement.  The purchase price for all acquisitions      except for UUI and Unicom have been finalized and allocated as of December      31, 2008 as follows (amounts inthousands): |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                |   | UUI and      Unicom |   |   | Alaska      DigiTel |   |
|---------------------|--------|---------------------|--------|--------|---------------------|--------|
| Current      assets |   | $                   | 15,008 |   |                |   | 2,220 |   |

----

| Property and      equipment, including construction in progress |   |   | 59,629 |   |   |   | 6,015  |   |
|-----------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|
| Intangible      assets                                          |   |   | 8,175  |   |   |   | 1,468  |   |
| Wireless      licenses                                          |   |   | 100    |   |   |   | 4,396  |   |
| Goodwill                                                        |   |   | 9,102  |   |   |   | 4,534  |   |
| Other      assets                                               |   |   | 3,106  |   |   |   | 1      |   |
| Total assets      acquired                                      |   |   | 95,120 |   |   |   | 18,634 |   |
| Current      liabilities                                        |   |   | 4,916  |   |   |   | 2,588  |   |
| Long-term      debt, including current portion                  |   |   | 43,614 |   |   |   | 5,515  |   |
| Other      long-term liabilities                                |   |   | 4,335  |   |   |   | 97     |   |
| Total      liabilities assumed                                  |   |   | 52,865 |   |   |   | 8,200  |   |
| Net assets      acquired                                        |   | $      | 42,255 |   |   |   | 10,434 |   |

|   | We modified      the initial preliminary UUI and Unicom purchase price allocation during      the third and fourth quarters of 2008 by increasing current assets      $548,000, decreasing property and equipment $8.5 million, increasing      intangible assets $1.7 million, increasing goodwill $3.1 million,      increasing other assets $695,000, increasing current liabilities $464,000,      increasing long-term debt $910,000, and decreasing other long-term      liabilities $3.9 million for adjustments due to the refinement of the      estimated fair value. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | We modified      the initial preliminary Alaska DigiTel purchase price allocation for the      purchase of the minority interest during the fourth quarter of 2008 by      decreasing property and equipment $202,000, increasing intangible assets      $503,000, decreasing goodwill $88,000, and increasing liabilities $253,000      for adjustments to the fair value of the fixed assets and intangibles due      to refinement of the valuation.  An adjustment to the fair value      of the liabilities was due to refinement of the estimated fair      value. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | All of our      2008 acquisitions resulted in goodwill which is deductible over 15 years      for income tax purposes. |
|--------|------------------------------------------------------------------------------------------------------------------------|

|   | Revenues from      the date of acquisition, net of intercompany revenue, for our acquisitions      of UUI, Unicom and Alaska Wireless are allocated to our Consumer, Network      Access, Managed Broadband, and Regulated Operations      segments.  As a result of the acquisition of UUI and Unicom, we      have a new operating segment for our regulated  activities. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | UUI and      Unicom had outstanding debt of $38.9 million at December 31, 2008 that is      collateralized by substantially all of UUI's and Unicom's      assets.  UUI and Unicom's creditors do not have recourse to      GCI's assets. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The following      unaudited pro forma financial information is presented as if we had      acquired the companies as of the beginning of the periods      presented.  The pro forma results of operations as if the      acquisitions occurred on January 1, 2007 or 2008 for the years ended      December 31 are as follows (amounts in  thousands): |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                |   | (unaudited) |    |
|-------------------------------------|--------|-------------|---------|
|                                |   | 2008        |    |   | 2007 |   |
| Pro forma      consolidated revenue |   | $           | 588,691 |   |   |   | 546,728 |   |
| Pro forma net      income (loss)    |   | $           | (2,932  | ) |   |   | 12,773 |   |

|   | (d) | Regulatory Accounting      and Regulation |
|--------|-----|-------------------------------------------|

|   | We account      for our regulated operations in accordance with the accounting principles      for regulated enterprises prescribed by SFAS No. 71.  This      accounting recognizes the economic effects of rate regulation by recording      cost and a return on investment as such amounts are recovered through      rates authorized by regulatory authorities.  Accordingly, under      SFAS No. 71, plant and equipment is depreciated over lives approved by      regulators and certain costs and obligations are deferred based upon      approvals received from regulators to permit recovery of such amounts in      future years.  Our cost studies and depreciation rates for our      regulated operations are subject to periodic audits that could result in      reductions of revenues.  Based upon the purchase price      allocation described in note 1(c), the effects of regulation for the year      ended December 31, 2008 are not material to the consolidated financial      statements. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | (e)  Earnings per Common      Share |
|--------|-----------------------------------------------|

|   | We are a      wholly-owned subsidiary of GCI and, accordingly, are not required to      present earnings per share.  Our common stock is not publicly      traded. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (f) | Investment      Securities |
|--------|-----|----------------------------|

|   | We have      investment securities of $1.6 million at December 31, 2008 that are      classified as trading under SFAS No. 115, "Accounting for Certain      Investments in Debt and Equity Securities."  Our investments      consist primarily of money market funds and U.S. government      securities.  Trading securities are recorded at fair value with      unrealized holding gains and losses included in net income      (loss).  In 2008, the change in net unrealized holding      gains/losses in the trading portfolio included in earnings was a net gain      of $43,000. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (g)          Cash      Equivalents |
|--------|--------------------------------------------------------|

|   | Cash      equivalents consist of overnight sweep investments and certificates of      deposit which have an original maturity of three months or less at the      date acquired and are readily convertible into  cash. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (h)  Accounts Receivable      and Allowance for DoubtfulReceivables |
|--------|-------------------------------------------------------------------------------|

|   | Trade      accounts receivable are recorded at the invoiced amount and do not bear      interest. The allowance for doubtful accounts is our best estimate of the      amount of probable credit losses in our existing accounts receivable. We      base our estimates on the aging of our accounts receivable balances,      financial health of specific customers, regional economic data, changes in      our collections process, regulatory requirements, and our customers’      compliance with USAC rules. We review our allowance for doubtful accounts      methodology at least annually. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Depending      upon the type of account receivable our allowance is calculated using a      pooled basis with an allowance for all accounts greater than 120 days past      due, a specific identification method, or a combination of the two      methods. When a specific identification method is used past due balances      over 90 days old and balances less than 90 days old but potentially      uncollectible due to bankruptcy or other issues are reviewed individually      for collectability. Account balances are charged off against the allowance      when we feel it is probable the receivable will not be recovered. We do      not have any off-balance-sheet credit exposure related to our      customers. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (i)            Inventories |
|--------|----------------------------------------------------------|

|   | Wireless      handset inventories are stated at the lower of cost or market (net      realizable value). Cost is determined using the average cost method.      Handset costs in excess of the revenues generated from handset sales, or      handset subsidies, are expensed at the time of sale. We do not recognize      the expected handset subsidies prior to the time of sale because the      promotional discount decision is made at the point of sale and/or because      we expect to recover the handset subsidies through service      revenue. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Inventories      of other merchandise for resale and parts are stated at the lower of cost      or market. Cost is determined using the average cost    method. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | (j)            Property and      Equipment |
|--------|--------------------------------------------------------------------------|

|   | Property and      equipment is stated at cost. Construction costs of facilities are      capitalized. Equipment financed under capital leases is recorded at the      lower of fair market value or the present value of future minimum lease      payments at inception of the lease. Construction in progress represents      distribution equipment and systems and support equipment and systems not      placed in service on December 31, 2008 that management intends to place in      service during 2009. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Depreciation      is computed using the straight-line method based upon the shorter of the      estimated useful lives of the assets or the lease term, if applicable, in      the following ranges: |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Asset      Category                                      | Asset      Lives |
|----------------------------------------------------------|------------------|
| Telephony      distribution equipment                    | 12      years    |
| Fiber optic      cable systems                           | 12-30      years |
| Cable      television distribution equipment and systems | 10      years    |
| Support      equipment and systems                       | 3-5      years   |
| Transportation      equipment                            | 3      years     |
| Property and      equipment under capital leases         | 12-20      years |
| Buildings                                                | 20      years    |

|   | Amortization      of property and equipment under capital leases is included in Depreciation      and Amortization Expense on the Consolidated Statements of      Operations. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Repairs and      maintenance are charged to expense as incurred. Expenditures for major      renewals and betterments are capitalized. Accumulated depreciation is      removed and gains or losses are recognized at the time of retirements,      sales or other dispositions of property and  equipment. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (k)           Long-lived      Assets to be Disposed of |
|--------|---------------------------------------------------------------------------------|

|   | Long-lived      assets to be disposed of, including those of discontinued operations, if      any, are measured at the lower of carrying amount or fair value less cost      to sell, if applicable. We classify a long-lived asset to be disposed of      other than by sale as held and used until it is disposed of. We classify a      long-lived asset to be sold as held for sale in the period in which the      criteria established by SFAS No. 144, “Accounting for the Impairment or      Disposal of Long-lived Assets” are met. We do not depreciate or amortize      long-lived assets to be sold. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | A loss is      recognized for any initial or subsequent write-down to fair value less      cost to sell. A gain is recognized for any subsequent increase in fair      value less cost to sell, but not in excess of the cumulative loss      previously recognized (for a write-down to fair value less cost to sell).      The loss or gain adjusts only the carrying amount of a long-lived asset,      whether classified as held for sale individually or as part of a disposal      group. A gain or loss not previously recognized that results from the sale      of a long-lived asset (disposal group) is recognized at the date of      sale. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (l)            Intangible      Assets      and Goodwill |
|--------|---------------------------------------------------------------------------------------|

|   | Goodwill,      cable certificates (certificates of convenience and public necessity) and      wireless licenses are not amortized. Cable certificates represent certain      perpetual operating rights to provide cable services. Wireless licenses      represent the right to utilize certain radio frequency spectrum to provide      wireless communications services.  Goodwill represents the      excess of cost over fair value of net assets acquired in connection with a      business acquisition. Goodwill is not allocated to our segments as our      Chief Operating Decision Maker does not review a balance sheet by segment      to make decisions about resource allocation or evaluate segment      performance. Goodwill is allocated to all reporting segments for the sole      purpose of the annual impairmenttest. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | All other      amortizable intangible assets are being amortized over 1 to 20 year      periods using the straight-linemethod. |
|--------|--------------------------------------------------------------------------------------------------------------------------------|

----

|   | (m)     Impairment of      Intangibles, Goodwill, and Long-lived  Assets |
|--------|---------------------------------------------------------------------------------------------------|

|   | Cable      certificate assets and wireless licenses are tested annually for      impairment, and are tested for impairment more frequently if events and      circumstances indicate that the asset might be impaired. The impairment      test consists of a comparison of the fair value of the asset with its      carrying amount. If the carrying amount of the assets exceeds its fair      value, an impairment loss is recognized in an amount equal to that excess.      After an impairment loss is recognized, the adjusted carrying amount of      the asset becomes its new accounting basis. Impairment testing of our      cable certificate assets and wireless licenses as of December 31, 2008 and      2007 used a direct value method. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Our goodwill      assets are tested annually for impairment, and are tested for impairment      more frequently if events and circumstances indicate that the assets might      be impaired. An impairment loss is recognized to the extent that the      carrying amount exceeds the asset’s fair value. This determination is made      at the reporting unit level and consists of two steps. First, we determine      the fair value of a reporting unit and compare it to its carrying amount.      Second, if the carrying amount of a reporting unit exceeds its fair value,      an impairment loss is recognized for any excess of the carrying amount of      the reporting unit’s goodwill asset over the implied fair value of that      asset. The implied fair value of goodwill is determined by allocating the      fair value of the reporting unit in a manner similar to a purchase price      allocation, in accordance with SFAS No. 141, “Business      Combinations.” |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | For the      period from January 1, 2008 to December 31, 2008, the U.S. financial      markets have been impacted by continued deterioration in economic      conditions. Should economic conditions in the State of Alaska and other      indicators deteriorate such that they impact our ability to achieve levels      of forecasted operating results and cash flows, GCI's stock price and      market capitalization decline below its book value for a sustained period      of time, or should other events occur indicating the goodwill and carrying      value of goodwill and intangible assets might be impaired, we would test      our intangible assets for impairment and may recognize an impairment loss      to the extent that the carrying amount exceeds such asset’s fair      value.  Any future impairment charges could have a material      adverse effect on our results ofoperations. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (n)           Amortization and      Write-off of Loan Fees |
|--------|-------------------------------------------------------------------------------------|

|   | Debt issuance      costs are deferred and amortized using the effective interest method. If a      refinancing or amendment of a debt instrument is a substantial      modification, all or a portion of the applicable debt issuance costs are      written off.  If a debt instrument is repaid prior to the      maturity date we will write-off a proportional amount of debt issuance      costs. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (o)      Other      Assets |
|--------|----------------------------------------------------------|

|   | Other Assets      primarily include long-term deposits, prepayments, and non-trade accounts      receivable. |
|--------|--------------------------------------------------------------------------------------------------------------|

|   | (p)           Asset Retirement      Obligations |
|--------|--------------------------------------------------------------------------|

|   | We record the      fair value of a liability for an asset retirement obligation in the period      in which it is incurred in Other Liabilities on the Consolidated Balance      Sheets. Additionally, a conditional asset retirement obligation is      recognized as a liability if the fair value of the liability can be      reasonably estimated. When the liability is initially recorded, we      capitalize a cost by increasing the carrying amount of the related      long-lived asset. Over time, the liability is accreted to its present      value each period, and the capitalized cost is depreciated over the useful      life of the related asset. Upon settlement of the liability, we either      settle the obligation for its recorded amount or incur a gain or loss upon      settlement. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | The majority      of our asset retirement obligation is the estimated cost to remove      telephony distribution equipment and support equipment from leased      property. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Following is      a reconciliation of the beginning and ending aggregate carrying amount of      our liability for asset retirement obligation (amounts in      thousands): |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Balance at      December 31, 2006                                                       |   | $      | 3,408 |   |
|-----------------------------------------------------------------------------------------|--------|--------|-------|--------|
| Liability      incurred                                                                 |   |   | 260   |   |
| Additions      upon consolidation of Alaska DigiTel                                     |   |   | 365   |   |
| Accretion      expense                                                                  |   |   | 144   |   |
| Liability      settled                                                                  |   |   | (4    | )      |
| Balance at      December 31, 2007                                                       |   |   | 4,173 |   |
| Liability      incurred                                                                 |   |   | 1,408 |   |
| Additions      upon acquisition of UUI, Unicom, Alaska Wireless and Alaska      DigiTel |   |   | 803   |   |
| Accretion      expense                                                                  |   |   | 396   |   |
| Liability      settled                                                                  |   |   | (601  | )      |
| Balance at      December 31, 2008                                                       |   | $      | 6,179 |   |

|   | (q) | Derivatives |
|--------|-----|-------------|

|   | We enter into      derivative contracts to manage exposure to variability in cash flows from      floating-rate financial instruments, particularly on our long-term debt      instruments and credit facilities.  We do not apply hedge      accounting to our derivative instruments and therefore treat these      instruments as “economic hedges.”   Consistent with the      guidance in SFAS No. 133, “Accounting for Derivative Instruments and      Hedging Activities,” derivative instruments are accounted for at fair      value as either assets or liabilities on the balance      sheet.  Changes in the fair value of derivatives are recognized      in earnings each reporting period. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Derivative      financial instruments are subject to credit risk and market      risk.  Credit risk is the failure of the counterparty to perform      under the terms of the derivative contract.  We minimize the      credit risk in derivative instruments by entering into transactions with      high-quality counterparties. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Market risk      is the adverse effect on the value of a derivative instrument that results      from a change in interest rates or other market variables.  The      market risk associated with interest-rate contracts is managed by      establishing and monitoring parameters that limit the types and degree of      market risk that may be undertaken. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | In the third      quarter of 2008, we entered into two interest rate caps with a combined      notional value of $180.0 million that mature on July 1,      2010.  The initial cost of the caps was      $928,000.  These derivative instruments are being used to manage      the interest rate risk on our Senior Credit Facility, which is indexed to      the London Interbank Offered Rate ("LIBOR").  In prior reporting      periods, we did not own any derivative  instruments. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | The following      is a summary of the derivative contracts outstanding in the balance sheet      at December 31, 2008 (dollar amounts in  thousands): |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

|                    | Number of      Contracts |   | Notional      Value | Balance Sheet      Location |   | Fair      Value   |   |
|-------------------------|--------------------------|--------|---------------------|-----------------------------|--------|-------------------|--------|
| Interest rate      caps | 2                        |   | $                   | 180,000                     |   | Other      Assets |   | $ | 7 |   |

|   | (r)            Revenue      Recognition |
|--------|-----------------------------------------------------------------------|

|   | · | Revenues      generated from long-distance service usage and plan fees, Internet service      excess usage, and managed services are recognized when the services are      provided, |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | We recognize      unbilled revenues when the service is provided based upon minutes of use      processed, and/or established rates, net of credits and      adjustments, |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Cable      television service package fees, local access and Internet service plan      fees, and private line telecommunication revenues are billed in advance,      recorded as Deferred Revenue on the balance sheet, and are recognized as      the associated service is provided, |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Certain of      our wireless services offerings have been determined to be revenue      arrangements with multiple deliverables. Revenues are recognized as each      element is earned based on objective evidence regarding the relative fair      value of each element and when there are no undelivered elements that are      essential to the functionality of the delivered elements. Revenues      generated from wireless service usage and plan fees are recognized when      the services are provided. Revenues generated from the sale of wireless      handsets and accessories are recognized when title to the handset and      accessories passes to the customer. As the non-refundable, up-front      activation fee charged to the customer does not meet the criteria as a      separate unit of accounting, we allocate the additional arrangement      consideration received from the activation fee to the handset (the      delivered item) to the extent that the aggregate handset and activation      fee proceeds do not exceed the fair value of the handset. Any activation      fees not allocated to the handset would be deferred upon activation and      recognized as service revenue on a straight-line basis over the expected      customer relationship period, |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The majority      of our equipment sale transactions involve the sale of communications      equipment with no other services involved. Such equipment is subject to      standard manufacturer warranties and we do not manufacture any of the      equipment we sell. In such instances the customer takes title to the      equipment generally upon delivery. We recognize revenue for such      transactions when title passes to the customer and the revenue is earned      and realizable pursuant to the provisions of SAB 104. On certain occasions      we enter into agreements to sell and satisfactorily install or integrate      telecommunications equipment for a fixed fee. Customers may have refund      rights if the installed equipment does not meet certain performance      criteria. We defer revenue recognition until we have received customer      acceptance per the contract or agreement, and all other required revenue      recognition elements have been achieved. Revenues from contracts with      multiple element arrangements, such as those including installation and      integration services, are recognized as each element is earned based on      objective evidence regarding the relative fair value of each element and      when there are no undelivered elements that are essential to the      functionality of the deliveredelements, |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Technical      services revenues are derived primarily from maintenance contracts on      equipment and are recognized on a prorated basis over the term of the      contracts, |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|    | · | Revenues from      white and yellow page directories are recognized ratably during the period      following publication, which typically begins with distribution and is      complete in the month prior to publication of the next      directory, |
|--------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|    | · | We account      for fiber capacity IRU agreements as an operating lease or service      arrangement and we defer the revenue and recognize it ratably over the      life of the IRU or as services arerendered, |
|--------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Access      revenue is recognized when earned.  We participate in access      revenue pools with other telephone companies.  Such pools are      funded by toll revenue and/or access charges regulated by the RCA within      the intrastate jurisdiction and the FCC within the interstate      jurisdiction. Much of the interstate access revenue is initially recorded      based on estimates. These estimates are derived from interim financial      information, available separation studies and the most recent information      available about achieved rates of return. These estimates are subject to      adjustment in future accounting periods as additional information becomes      available. To the extent that a dispute arises over revenue settlements,      our policy is to defer revenue collected until the dispute is      resolved, |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | As an      ETC, we receive subsidies from the USF to support the provision of      local access service in high-cost areas.  We accrue estimated      program revenue quarterly based on current line counts, the most current      rates paid to us, our assessment of the impact of current FCC regulations,      and our assessment of the potential outcome of FCC      proceedings.  Our estimated accrued revenue is subject to our      judgment regarding the outcome of many variables and is subject to upward      or downward adjustment in subsequent periods.  Our ability to      collect our accrued USF subsidies is contingent upon continuation of the      USF program and upon our eligibility to participate in that program, which      is subject to change by future regulatory, legislative or judicial      actions.  We adjust revenue and the account receivable in the      period the FCC makes a program change or we assess the likelihood that      such a change has increased or decreased revenue.  The payment      from the USF is generally received approximately nine months subsequent to      the services being performed.  At December 31, 2008 we have $8.7      million in accounts receivable related to the USF high-cost area      program, |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | We receive refunds from time to      time from Incumbent      Local Exchange Carriers (“ILECs”), with which we do business in      respect of their earnings that exceed regulatory requirements. Telephone      companies that are rate regulated by the FCC using the rate of return      method are required by the FCC to refund earnings from interstate access      charges assessed to long-distance carriers when their earnings exceed      their authorized rate of return. Such refunds are computed based on the      regulated carrier’s earnings in several access categories. Uncertainties      exist with respect to the amount of their earnings, the refunds (if any),      their timing, and their realization. We account for such refundable      amounts as gain contingencies, and, accordingly, do not recognize them      until realization is a certainty upon receipt,  and |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Other      revenues are recognized when the service is  provided. |
|--------|--------|-------------------------------------------------------------------|

|   | (s)           Payments      Received from Suppliers |
|--------|------------------------------------------------------------------------------|

----

|   | (t)            Advertising      Expense |
|--------|-----------------------------------------------------------------------|

|   | (u)            Leases |
|--------|-----------------------------------------------------|

|   | (v)            Interest      Expense |
|--------|--------------------------------------------------------------------|

|   | (w)           Income      Taxes |
|--------|----------------------------------------------------------|

----

|   | We recognize      accrued interest on unrecognized tax benefits in interest expense and      penalties in selling, general and administrative expenses.  We      did not have any unrecognized tax benefits as of December 31, 2008, 2007      and 2006, and, accordingly, we did not recognize any interest      expense.  Additionally, we recorded $0 in penalties during the      years ended December 31, 2008, 2007 and 2006,  respectively. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (x)           Share-based      Payment Arrangements |
|--------|------------------------------------------------------------------------------|

|   | (y) | Stock Options and      Stock Warrants Issued for Non-employee  Services |
|--------|-----|-------------------------------------------------------------------------|

|   | (z) | Use of      Estimates |
|--------|-----|-----------------------|

|   | (aa) | Concentrations of      Credit Risk |
|--------|------|------------------------------------|

----

|   |  (ab) | Software      Capitalization Policy |
|--------|------------|-------------------------------------|

|   | (ac) | Guarantees |
|--------|------|------------|

|   | (ad) | Classification of      Taxes Collected fromCustomers |
|--------|------|------------------------------------------------------|

|   | (ae) | Changes in Accounting      Policy |
|--------|------|-----------------------------------|

| Year Ended      December 31,               |   | 2008   |   |
|--------------------------------------------|--------|--------|--------|
| Depreciation      and amortization expense |   | $      | (521   | ) |
| Operating      income                      |   |   | 521    |   |
| Net      loss                              |   |   | 214    |   |

|   | (af) | Recently Issued      AccountingPronouncements |
|--------|------|-----------------------------------------------|

----

----

|   | (ag) | SAB No.      108 |
|--------|------|------------------|

|   | (ah) | Reclassifications |
|--------|------|-------------------|

| (2) | Consolidated      Statements of Cash Flows Supplemental  Disclosures |
|-----|----------------------------------------------------------------------|

| Year ended      December 31,                                                   |   | 2008   |   |   | 2007   |   |    | 2006   |   |
|--------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|---------|--------|--------|
| Increase in      accounts receivable                                           |   | $      | (5,209 | )      |   |   | (19,713 | )      |   |   | (5,649 | ) |
| Decrease in      prepaid expenses                                              |   |   | 488    |   |   |   | 949     |   |   |   | 863 |   |
| (Increase)      decrease in inventories                                        |   |   | (3,336 | )      |   |   | 1,455   |   |   |   | (1,732 | ) |
| (Increase)      decrease in other current assets                               |   |   | (69    | )      |   |   | 1,089   |   |   |   | 1,965 |   |
| Increase      (decrease) in accounts payable                                   |   |   | (4,198 | )      |   |   | 2,738   |   |   |   | 3,790 |   |
| Increase      (decrease) in accrued payroll and payroll related    obligations |   |   | 5,437  |   |   |   | 620     |   |   |   | (3,397 | ) |
| Increase      (decrease) in deferred revenue                                   |   |   | 4,543  |   |   |   | (2,000  | )      |   |   | (998 | ) |
| Increase      (decrease) in accrued interest                                   |   |   | 1,226  |   |   |   | 217     |   |   |   | (878 | ) |
| Increase      (decrease) in accrued liabilities                                |   |   | 2,695  |   |   |   | (1,120  | )      |   |   | 804 |   |
| Increase in      subscriber deposits                                           |   |   | 84     |   |   |   | 194     |   |   |   | 128 |   |
| Increase in      long-term deferred revenue                                    |   |   | 49,153 |   |   |   | ---     |   |   |   | --- |   |
| Increase      (decrease) in components of other long-term liabilities          |   |   | (3,727 | )      |   |   | 526     |   |   |   | 594 |   |
|                                                                           |   | $      | 47,087 |   |   |   | (15,045 | )      |   |   | (4,510 | ) |

----

----

| (3) | Receivables and      Allowance for DoubtfulReceivables |
|-----|--------------------------------------------------------|

|                   |   | 2008   |    |   | 2007   |   |
|------------------------|--------|--------|---------|--------|--------|--------|
| Trade                  |   | $      | 109,835 |   |   |   | 95,941 |   |
| Employee               |   |   | 243     |   |   |   | 198 |   |
| Other                  |   |   | 3,058   |   |   |   | 1,774 |   |
| Total      Receivables |   | $      | 113,136 |   |   |   | 97,913 |   |

|                   |   |                              |   |   | Additions                          |   |   | Deductions                     |   |   |                              |   |
|------------------------|--------|-----------------------------------|--------|--------|------------------------------------|--------|--------|--------------------------------|--------|--------|-----------------------------------|--------|
| Description            |   | Balance at      beginning of year |   |   | Charged to      costs and expenses |   |   | Charged to      Other Accounts |   |   | Write-offs      net of recoveries |   |   | Balance at      end of year |   |
| December 31,      2008 |   | $                                 | 1,657  |   |                               |   | 3,471  |                           |   |   | ---                               |   |   |   | 2,546 |   |   |   | 2,582 |   |
|                   |   |                              |   |   |                               |   |   |                           |   |   |                              |   |   |   |   |   |   |   |   |   |
| December 31,      2007 |   | $                                 | 2,922  |   |                               |   | 4,822  |                           |   |   | ---                               |   |   |   | 6,087 |   |   |   | 1,657 |   |
|                   |   |                              |   |   |                               |   |   |                           |   |   |                              |   |   |   |   |   |   |   |   |   |
| December 31,      2006 |   | $                                 | 5,317  |   |                               |   | 3,057  |                           |   |   | ---                               |   |   |   | 5,452 |   |   |   | 2,922 |   |

----

| (4) | Net Property and      Equipment in Service |
|-----|--------------------------------------------|

|                                             |   | 2008   |      |   | 2007   |   |
|--------------------------------------------------|--------|--------|-----------|--------|--------|--------|
| Land and      buildings                          |   | $      | 32,134    |   |   |   | 14,424 |   |
| Telephony      distribution systems              |   |   | 809,356   |   |   |   | 640,001 |   |
| Cable      television distribution systems       |   |   | 194,616   |   |   |   | 161,934 |   |
| Support      equipment                           |   |   | 144,457   |   |   |   | 110,619 |   |
| Transportation      equipment                    |   |   | 10,550    |   |   |   | 8,102 |   |
| Property and      equipment under capital leases |   |   | 102,972   |   |   |   | 3,086 |   |
|                                             |   |   | 1,294,085 |   |   |   | 938,166 |   |
| Less      accumulated depreciation               |   |   | 495,953   |   |   |   | 432,829 |   |
| Less      amortization                           |   |   | 5,081     |   |   |   | 1,064 |   |
| Net property      and equipment in service       |   | $      | 793,051   |   |   |   | 504,273 |   |

| (5) | Intangible Assets and      Goodwill |
|-----|-------------------------------------|

|                             |   | 2008   |   |   | 2007   |   |
|----------------------------------|--------|--------|--------|--------|--------|--------|
| Software      license fees       |   | $      | 18,377 |   |   |   | 12,094 |   |
| Customer      relationships      |   |   | 11,467 |   |   |   | 4,528 |   |
| Customer      contracts          |   |   | 3,538  |   |   |   | --- |   |
| Right-of-way                     |   |   | 783    |   |   |   | 783 |   |
| Other                            |   |   | 803    |   |   |   | 261 |   |
|                             |   |   | 34,968 |   |   |   | 17,666 |   |
| Less      amortization           |   |   | 11,992 |   |   |   | 5,897 |   |
| Net other      intangible assets |   | $      | 22,976 |   |   |   | 11,769 |   |

----

| Balance at      December 31, 2006                                                                                       |   | $      | 7,011  |   |
|-------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|
| Asset      additions upon consolidation of Alaska DigiTel                                                               |   |   | 4,469  |   |
| Asset      additions                                                                                                    |   |   | 3,738  |   |
| Less      amortization expense                                                                                          |   |   | 3,332  |   |
| Less asset      write-off                                                                                               |   |   | 117    |   |
| Balance at      December 31, 2007                                                                                       |   |   | 11,769 |   |
| Asset      additions upon acquisition of UUI, Unicom, Alaska Wireless, and the      minority interest in Alaska DigiTel |   |   | 10,861 |   |
| Asset      additions                                                                                                    |   |   | 6,303  |   |
| Less      amortization expense                                                                                          |   |   | 5,948  |   |
| Less asset      write-off                                                                                               |   |   | 9      |   |
| Balance at      December 31, 2008                                                                                       |   | $      | 22,976 |   |

|                                                         |   | Years Ended      December 31, |   |
|--------------------------------------------------------------|--------|-------------------------------|--------|
|                                                         |   | 2008                          |   | 2007 |   | 2006 |   |
| .Amortization      expense for amortizable intangible assets | $      | 5,948                         |   | 3,332 |   |   | 1,804 |   |

| Years Ending      December 31, |   |   |   |
|--------------------------------|--------|--------|--------|
| 2009                           |   | $      | 7,364  |   |
| 2010                           |   |   | 5,494  |   |
| 2011                           |   |   | 3,422  |   |
| 2012                           |   |   | 2,421  |   |
| 2013                           |   |   | 1,092  |   |

----

| (6) | Long-term      Debt |
|-----|---------------------|

|                                                          |   | December      31, |    |
|---------------------------------------------------------------|--------|-------------------|---------|
|                                                          |   | 2008              |    |   | 2007 |   |
| Senior Credit      Facility (a)                               |   |  $           | 362,529 |   |   |   | 220,760 |   |
| Senior Notes      (b)                                         |   |              | 320,000 |   |   |   | 320,000 |   |
| Rural      Utilities Services Debt (c)                        |   |              | 35,328  |   |   |   | -- |   |
| CoBank      Mortgage Note Payable (c)                         |   |              | 3,539   |   |   |   | -- |   |
| Mortgage                                                      |   |              | 490     |   |   |   | 529 |   |
| Note      Payable                                             |   |              | --      |   |   |   | 100 |   |
| Debt                                                          |   |              | 721,886 |   |   |   | 541,389 |   |
| Less      unamortized discount paid on the Senior Notes       |   |              | 2,589   |   |   |   | 2,991 |   |
| Less      unamortized discount paid on Senior Credit Facility |   |              | 2,466   |   |   |   | --- |   |
| Less current      portion of long-term debt                   |   |              | 8,425   |   |   |   | 2,283 |   |
| Long-term      debt, net of unamortized discount              |   | $                 | 708,406 |   |   |   | 536,115 |   |

|   | (a) | The Senior      Credit Facility includes a $360.0 million term loan, including the      Additional Incremental Term Loan discussed below, and a $100.0 million      revolving credit facility with a $25.0 million sublimit for letters of      credit. Our term loan is fully drawn and becomes due in stages between      2011 and 2012. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Total      Leverage Ratio (as defined) |   | Applicable      Margin |   |
|----------------------------------------|--------|------------------------|--------|
| >3.75                               |   |                   | 4.25   | % |
| >3.25 but <3.75                  |   |                   | 3.75   | % |
| >2.75 but <3.25                  |   |                   | 3.25   | % |
| <2.75                               |   |                   | 2.75   | % |

----

| Year      Ended:         |   | Maximum      Capital Expenditure Amount |    |
|--------------------------|--------|-----------------------------------------|---------|
| 2008                     |   | $                                       | 240,000 |   |
| 2009                     |   | $                                       | 125,000 |   |
| 2010                     |   | $                                       | 125,000 |   |
| 2011 and      thereafter |   | $                                       | 100,000 |   |

----

|   | (b) | We pay      interest of 7.25% on Senior Notes that are due in 2014. The Senior Notes      are an unsecured senior obligation of GCI, Inc. The Senior Notes are      carried on our Consolidated Balance Sheet net of the unamortized portion      of the discount based on an effective interest rate of 7.50%, which is      being amortized to Interest Expense over the term of the Senior Notes      using the effective interestmethod. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| If redeemed      during the twelve month period commencing February 1 of the year      indicated: |   | Redemption      Price |    |
|---------------------------------------------------------------------------------------------------|--------|-----------------------|---------|
| 2009                                                                                              |   |                  | 103.625 | % |
| 2010                                                                                              |   |                  | 102.417 | % |
| 2011                                                                                              |   |                  | 101.208 | % |
| 2012 and      thereafter                                                                          |   |                  | 100.000 | % |

|   | · | $250.0      million, reduced by the amount of any prepayments,  or |
|--------|--------|--------------------------------------------------------------------|

|   | · | 3.0 times      earnings before interest, taxes, depreciation and amortization for the      last four full fiscal quarters of GCI, Inc. and its      subsidiaries. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|               (c) | We acquired      long-term debt of $43.6 million upon our acquisition of UUI and Unicom      effective June 1, 2008.  As of December 31, 2008, the long-term      debt consists of $35.3 million from the Rural Utility Services (“RUS”) and      $3.5 million mortgage note payable due to CoBank.  The long-term      debt is due in monthly installments of principal based on a fixed rate      amortization schedule.  The interest rates on the various loans      to which this debt relates range from 2.0% to 6.76%.  Through      UUI and Unicom, we have $9.9 million available for borrowing for specific      capital expenditures under existing borrowing arrangements.Substantially      all of the assets of our subsidiaries, UUI and Unicom are collateral for      the amounts due to RUS and CoBank. |
|-----------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Years ending      December 31,                                |   |   |    |
|---------------------------------------------------------------|--------|--------|---------|
| 2009                                                          |   | $      | 8,425   |   |
| 2010                                                          |   |   | 8,657   |   |
| 2011                                                          |   |   | 188,147 |   |
| 2012                                                          |   |   | 176,323 |   |
| 2013                                                          |   |   | 4,749   |   |
| 2014 and      thereafter                                      |   |   | 335,585 |   |
|                                                          |   |   | 721,886 |   |
| Less      unamortized discount paid on Senior Notes           |   |   | 2,589   |   |
| Less      unamortized discount paid on Senior Credit Facility |   |   | 2,466   |   |
| Less current      portion of long-term debt                   |   |   | 8,425   |   |
|                                                          |   | $      | 708,406 |   |

| (7) | Comprehensive Income      (Loss) |
|-----|----------------------------------|

| (8) | Income      Taxes |
|-----|-------------------|

|                                                                               |   | Years ended      December 31, |   |
|------------------------------------------------------------------------------------|--------|-------------------------------|--------|
|                                                                               |   | 2008                          |   | 2007 |   | 2006 |   |
| Income (loss)      before cumulative effect of a change in accounting    principle | $      | (792                          | )      | 12,162 |   |   | 15,797 |   |
| SAB 108      cumulative adjustment                                                 |   | ---                           |   | --- |   |   | 772 |   |
| Cumulative      effect of a change in accounting principle                         |   | ---                           |   | --- |   |   | 44 |   |
| Net income      (loss)                                                             | $      | (792                          | )      | 12,162 |   |   | 16,613 |   |

|                                |   | Years ended      December 31, |   |
|-------------------------------------|--------|-------------------------------|--------|
|                                |   | 2008                          |   | 2007 |   | 2006 |   |
| Current tax      expense (benefit): |   |                          |   |   |   |   |   |   |
| Federal      taxes                  | $      | ---                           |   | 436 |   |   | (278 | ) |
| State      taxes                    |   | ---                           |   | 77 |   |   | (81 | ) |
|                                |   | ---                           |   | 513 |   |   | (359 | ) |

----

|                       |   |   |   |   |   |   |   |   |
|----------------------------|--------|--------|--------|--------|--------|--------|--------|--------|
| Deferred tax      expense: |   |   |   |   |   |   |   |   |
| Federal      taxes         |   | 922    |   | 9,785  |   |   | 12,514 |   |
| State      taxes           |   | 155    |   | 1,864  |   |   | 3,642  |   |
|                       |   | 1,077  |   | 11,649 |   |   | 16,156 |   |
|                       | $      | 1,077  |   | 12,162 |   |   | 15,797 |   |

|                                                                          |   | Years ended      December 31, |   |
|-------------------------------------------------------------------------------|--------|-------------------------------|--------|
|                                                                          |   | 2008                          |   |   | 2007 |   |   | 2006 |   |
| “Expected”      statutory tax expense (benefit)                   |   | $                             | (277   | ) |   |   | 9,063 |   |   |   | 11,988 |   |
| State income      taxes, net of federal expense (benefit)                     |   |                          | (48    | ) |   |   | 1,585 |   |   |   | 2,529 |   |
| Income tax      effect of nondeductible entertainment expenses                |   |                          | 725    |   |   |   | 569 |   |   |   | 423 |   |
| Income tax      effect of nondeductible lobbying expenses                     |   |                          | 424    |   |   |   | 468 |   |   |   | 409 |   |
| Income tax      effect of nondeductible expenditures and otheritems,      net |   |                          | 247    |   |   |   | 500 |   |   |   | 60 |   |
| Other,      net                                                               |   |                          | 6      |   |   |   | (23 | ) |   |   | 388 |   |
|                                                                          |   | $                             | 1,077  |   |   |   | 12,162 |   |   |   | 15,797 |   |

|                                                                                                                           |   | 2008   |   |   | 2007   |   |
|--------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Current      deferred tax assets, net of current deferred taxliability:                                                        |   |   |   |   |   |   |
| Compensated      absences, accrued for financial reporting purposes                                                            |   | $      | 2,771  |   |   |   | 2,196 |   |
| Net operating      loss carryforwards                                                                                          |   |   | ---    |   |   |   | 2,033 |   |
| Workers      compensation and self insurance health reserves, principally due to      accrual for financial reporting purposes |   |   | 869    |   |   |   | 694 |   |
| Accounts      receivable, principally due to allowance for doubtful    accounts                                                |   |   | 980    |   |   |   | 629 |   |
| Deferred      compensation expense for tax purposes in excess of amounts recognized for      financial reporting purposes      |   |   | 966    |   |   |   | (401 | ) |
| Other                                                                                                                          |   |   | 2,257  |   |   |   | 583 |   |
| Total current      deferred tax assets                                                                                         |   | $      | 7,843  |   |   |   | 5,734 |   |

----

|                                                                                                                         |   | 2008   |    |   | 2007   |   |
|------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
| Long-term      deferred tax assets:                                                                                          |   |   |    |   |   |   |
| Net operating      loss carryforwards                                                                                        |   | $      | 65,890  |   |   |   | 45,518 |   |
| IRU revenue      deferred for financial reporting purposes                                                                   |   |   | 20,658  |   |   |   | --- |   |
| Alternative      minimum tax credits                                                                                         |   |   | 3,055   |   |   |   | 3,160 |   |
| Deferred      compensation expense for financial reporting purposes in excess of amounts      recognized for tax purposes    |   |   | 1,274   |   |   |   | 2,690 |   |
| Asset      retirement obligations in excess of amounts recognized for tax      purposes                                      |   |   | 1,812   |   |   |   | 1,444 |   |
| Share-based      compensation expense for financial reporting purposes in excess of amounts      recognized for tax purposes |   |   | 2,079   |   |   |   | --- |   |
| Other                                                                                                                        |   |   | 115     |   |   |   | 222 |   |
| Total      long-term deferred tax assets                                                                                     |   |   | 94,883  |   |   |   | 53,034 |   |
|                                                                                                                         |   |   |    |   |   |   |   |   |
| Long-term      deferred tax liabilities                                                                                      |   |   |    |   |   |   |   |   |
| Plant and      equipment, principally due to differences in depreciation                                                     |   |   | 108,015 |   |   |   | 68,278 |   |
| Intangible      assets                                                                                                       |   |   | 73,000  |   |   |   | 68,588 |   |
| Other                                                                                                                        |   |   | 55      |   |   |   | 462 |   |
| Total      long-term deferred tax liabilities                                                                                |   |   | 181,070 |   |   |   | 137,328 |   |
| Net long-term      deferred tax liabilities                                                                                  |   | $      | 86,187  |   |   |   | 84,294 |   |

| Years ending      December 31,                  |   | Federal |    | State  |    |
|-------------------------------------------------|--------|---------|---------|--------|---------|
| 2011                                            | $      |    | 759     |   | 759     |   |
| 2019                                            |   |    | 25,942  |   | 25,552  |   |
| 2020                                            |   |    | 44,744  |   | 43,797  |   |
| 2021                                            |   |    | 29,614  |   | 28,987  |   |
| 2022                                            |   |    | 14,081  |   | 13,788  |   |
| 2023                                            |   |    | 3,968   |   | 3,903   |   |
| 2024                                            |   |    | 544     |   | ---     |   |
| 2025                                            |   |    | 1,342   |   | ---     |   |
| 2026                                            |   |    | 337     |   | ---     |   |
| 2027                                            |   |    | 116     |   | ---     |   |
|    2028                          |   |    | 39,400  |   | 43,663  |   |
| Total tax net      operating loss carryforwards | $      |    | 160,847 |   | 160,449 |   |

----

| (9) | Stockholder’s      Equity |
|-----|---------------------------------|

----

|                         |   | 2008   |                    |   | 2007   |   |                    | 2006   |   |
|------------------------------|--------|--------|-------------------------|--------|--------|--------|-------------------------|--------|--------|
| Expected term      (years)   |   |   | 5.2 –      6.8    |   |   |   | 5.2 –      6.8    |   |   |   | 5.4 –      8.0 |   |
| Volatility                   |   |   | 47.6% –      55.4 | %      |   |   | 41.5% –      54.3 | %      |   |   | 43.3% –      61.4 | % |
| Risk-free      interest rate |   |   | 1.6% –      3.4   | %      |   |   | 3.5% –      4.7   | %      |   |   | 4.7% –      5.0 | % |

|   | SFAS 123(R)      requires us to estimate pre-vesting option forfeitures at the time of      grant and periodically revise those estimates in subsequent periods if      actual forfeitures differ from those estimates. We record share-based      compensation expense only for those awards expected to vest using an      estimated forfeiture rate based on our historical pre-vesting forfeiture      data. Previously, we accounted for forfeitures as they occurred under the      pro forma disclosure provisions of SFAS 123 for periods prior to 2006. The      transition impact of adopting SFAS No. 123(R), attributed to accruing for      expected forfeitures on outstanding share-based awards, totaled $108,000,      which was reduced by income tax expense of $44,000 and is reported as      cumulative effect of a change in accounting principle in the accompanying      Consolidated Statement of Operations for the year ended December 31,      2006. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                          |   | Shares |   |   | WeightedAverageExercise      Price |   |
|-----------------------------------------------|--------|--------|--------|--------|------------------------------------|--------|
| Outstanding      at December 31, 2005         |   |   | 6,543  |   |                               | $      | 7.27 |   |
|                                          |   |   |   |   |                               |   |   |   |
| Options      granted                          |   |   | 1,003  |   |                               | $      | 12.11 |   |
| Options      exercised                        |   |   | (1,606 | )      |                               | $      | 6.74 |   |
| Options      forfeited and retired            |   |   | (73    | )      |                               | $      | 8.83 |   |
| Outstanding      at December 31, 2006         |   |   | 5,867  |   |                               | $      | 8.22 |   |
|                                          |   |   |   |   |                               |   |   |   |
| Options      granted                          |   |   | 983    |   |                               | $      | 12.85 |   |
| Restricted      stock awards granted          |   |   | 499    |   |                               | $      | 13.04 |   |
| Options      exercised                        |   |   | (477   | )      |                               | $      | 6.93 |   |
| Restricted      stock awards vested           |   |   | (23    | )      |                               | $      | 13.34 |   |
| Options      forfeited and retired            |   |   | (98    | )      |                               | $      | 9.69 |   |
| Outstanding      at December 31, 2007         |   |   | 6,751  |   |                               | $      | 9.37 |   |
|                                          |   |   |   |   |                               |   |   |   |
| Options      granted                          |   |   | 751    |   |                               | $      | 7.80 |   |
| Restricted      stock awards granted          |   |   | 45     |   |                               | $      | 7.36 |   |
| Options      exercised                        |   |   | (71    | )      |                               | $      | 5.77 |   |
| Restricted      stock awards vested           |   |   | (131   | )      |                               | $      | 12.05 |   |
| Options      forfeited and retired            |   |   | (140   | )      |                               | $      | 9.57 |   |
| Outstanding      at December 31, 2008         |   |   | 7,205  |   |                               | $      | 9.08 |   |
|                                          |   |   |   |   |                               |   |   |   |
| Available for      grant at December 31, 2008 |   |   | 918    |   |                               |   |   |   |

|                                                  |   | Shares |   |   | WeightedAverageExercise      Price |   |
|-------------------------------------------------------|--------|--------|--------|--------|------------------------------------|--------|
| Outstanding      at December 31, 2006, 2007, and 2008 |   |   | 150    |   |                               | $      | 6.50 |   |
|                                                  |   |   |   |   |                               |   |   |   |
| Available for      grant at December 31, 2008         |   |   | ---    |   |                               |   |   |   |

----

| Options      Outstanding |         |
|--------------------------|--------------|
|                     |         |   |   |   |   | Weighted      Average |   |   |   |   |   |   |   |
|                     |         |   |   |   |   | Remaining |   |   |   |   |   | Aggregate |   |
| Range      of            |         |   | Shares |   |   | Contractual      Life |   |   | Weighted      Average |   |   | Intrinsic      Value |   |
| Exercise      Prices     |         |   | (thousands) |   |   | (years) |   |   | Exercise      Price |   |   | (thousands) |   |
| $                        | 3.11-$6.00   |   |   |   | 664 |   |   |   | 3.40 |   |   | $ | 5.50 |   |   | $ | 1,721 |   |
| $                        | 6.01-$6.35   |   |   |   | 41 |   |   |   | 2.01 |   |   | $ | 6.12 |   |   | $ | 81 |   |
| $                        | 6.36-$6.50   |   |   |   | 747 |   |   |   | 1.85 |   |   | $ | 6.50 |   |   | $ | 1,188 |   |
| $                        | 6.51-$7.12   |   |   |   | 108 |   |   |   | 2.08 |   |   | $ | 7.09 |   |   | $ | 108 |   |
| $                        | 7.13-$7.25   |   |   |   | 1,050 |   |   |   | 3.10 |   |   | $ | 7.25 |   |   | $ | 882 |   |
| $                        | 7.26-$8.40   |   |   |   | 1,422 |   |   |   | 7.29 |   |   | $ | 8.04 |   |   | $ | 189 |   |
| $                        | 8.41-$9.86   |   |   |   | 705 |   |   |   | 5.65 |   |   | $ | 9.54 |   |   | $ | --- |   |
| $                        | 9.87-$12.99  |   |   |   | 1,680 |   |   |   | 7.90 |   |   | $ | 11.91 |   |   | $ | --- |   |
| $                        | 13.00-$15.31 |   |   |   | 394 |   |   |   | 7.47 |   |   | $ | 13.21 |   |   | $ | --- |   |
| $                        | 15.32-$15.48 |   |   |   | 1 |   |   |   | 8.08 |   |   | $ | 15.48 |   |   | $ | --- |   |
| $                        | 3.11-$15.48  |   |   |   | 6,812 |   |   |   | 5.54 |   |   | $ | 8.88 |   |   | $ | 4,169 |   |

| Options      Exercisable |         |
|--------------------------|--------------|
|                     |         |   |   |   |   | Weighted      Average |   |   |   |   |   |   |   |
|                     |         |   |   |   |   | Remaining |   |   |   |   |   | Aggregate |   |
| Range      of            |         |   | Shares |   |   | Contractual      Life |   |   | Weighted      Average |   |   | Intrinsic      Value |   |
| Exercise      Prices     |         |   | (thousands) |   |   | (years) |   |   | Exercise      Price |   |   | (thousands) |   |
| $                        | 3.11-$6.00   |   |   |   | 664 |   |   |   | 3.40 |   |   | $ | 5.50 |   |   | $ | 1,721 |   |
| $                        | 6.01-$6.35   |   |   |   | 41 |   |   |   | 2.01 |   |   | $ | 6.12 |   |   | $ | 81 |   |
| $                        | 6.36-$6.50   |   |   |   | 747 |   |   |   | 1.85 |   |   | $ | 6.50 |   |   | $ | 1,188 |   |
| $                        | 6.51-$7.12   |   |   |   | 108 |   |   |   | 2.08 |   |   | $ | 7.09 |   |   | $ | 108 |   |
| $                        | 7.13-$7.25   |   |   |   | 1,008 |   |   |   | 3.10 |   |   | $ | 7.25 |   |   | $ | 847 |   |
| $                        | 7.26-$8.40   |   |   |   | 518 |   |   |   | 4.65 |   |   | $ | 8.17 |   |   | $ | 70 |   |
| $                        | 8.41-$9.86   |   |   |   | 501 |   |   |   | 5.36 |   |   | $ | 9.48 |   |   | $ | --- |   |
| $                        | 9.87-$12.99  |   |   |   | 525 |   |   |   | 7.34 |   |   | $ | 11.48 |   |   | $ | --- |   |
| $                        | 13.00-$15.31 |   |   |   | 163 |   |   |   | 7.48 |   |   | $ | 13.24 |   |   | $ | --- |   |
| $                        | 15.32-$15.48 |   |   |   | 0 |   |   |   | 8.08 |   |   | $ | 15.48 |   |   | $ | --- |   |
| $                        | 3.11-$15.48  |   |   |   | 4,275 |   |   |   | 4.03 |   |   | $ | 7.95 |   |   | $ | 4,015 |   |

----

| (10) | Industry Segments      Data |
|------|-----------------------------|

----

|                          |   | Consumer |    |   | Network      Access |   |    | Commercial |   |   | Managed      Broadband |   |   | Regulated      Operations |   |   | Total      Reportable Segments |   |
|-------------------------------|--------|----------|---------|--------|---------------------|--------|---------|------------|--------|--------|------------------------|--------|--------|---------------------------|--------|--------|--------------------------------|--------|
| 2008                          |   |     |    |   |                |   |    |       |   |   |                   |   |   |                      |   |   |                           |   |
| Revenues:                     |   |     |    |   |                |   |    |       |   |   |                   |   |   |                      |   |   |                           |   |
| Intersegment                  |   | $        | 84      |   |                |   | 916     |       |   |   | 5,808                  |   |   |                      | ---    |   |                           |   | 157 |   |   |   | 6,965 |   |
| External                      |   |     | 255,632 |   |                |   | 153,821 |       |   |   | 114,660                |   |   |                      | 37,047 |   |                           |   | 14,282 |   |   |   | 575,442 |   |
| Total      revenues           |   |     | 255,716 |   |                |   | 154,737 |       |   |   | 120,468                |   |   |                      | 37,047 |   |                           |   | 14,439 |   |   |   | 582,407 |   |
| Cost of Goods      Sold:      |   |     |    |   |                |   |    |       |   |   |                   |   |   |                      |   |   |                           |   |   |   |   |   |   |   |
| Intersegment                  |   |     | 656     |   |                |   | 685     |       |   |   | 2,821                  |   |   |                      | 125    |   |                           |   | 97 |   |   |   | 4,384 |   |
| External                      |   |     | 89,853  |   |                |   | 40,326  |       |   |   | 59,480                 |   |   |                      | 10,265 |   |                           |   | 3,134 |   |   |   | 203,058 |   |
| Total Cost of      Goods Sold |   |     | 90,509  |   |                |   | 41,011  |       |   |   | 62,301                 |   |   |                      | 10,390 |   |                           |   | 3,231 |   |   |   | 207,442 |   |
| Contribution:                 |   |     |    |   |                |   |    |       |   |   |                   |   |   |                      |   |   |                           |   |   |   |   |   |   |   |
| Intersegment                  |   |     | (572    | )      |                |   | 231     |       |   |   | 2,987                  |   |   |                      | (125   | )      |                           |   | 60 |   |   |   | 2,581 |   |
| External                      |   |     | 165,779 |   |                |   | 113,495 |       |   |   | 55,180                 |   |   |                      | 26,782 |   |                           |   | 11,148 |   |   |   | 372,384 |   |
| Total      contribution       |   |     | 165,207 |   |                |   | 113,726 |       |   |   | 58,167                 |   |   |                      | 26,657 |   |                           |   | 11,208 |   |   |   | 374,965 |   |

----

| Less      SG&A                      |   |   | 110,364 |   |   |   | 43,057  |   |   |   | 36,191  |   |   |   | 13,132 |   |   |   | 7,562  |   |   |   | 210,306 |   |
|-----------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|---------|--------|
| Plus      share-based compensation      |   |   | 2,891   |   |   |   | 2,443   |   |   |   | 1,392   |   |   |   | 552    |   |   |   | ---    |   |   |   | 7,278   |   |
| Plus non-cash      contribution expense |   |   | 199     |   |   |   | 177     |   |   |   | 76      |   |   |   | 28     |   |   |   | ---    |   |   |   | 480     |   |
| Plus minority      interest             |   |   | 661     |   |   |   | 589     |   |   |   | 253     |   |   |   | ---    |   |   |   | ---    |   |   |   | 1,503   |   |
| Plus other      expense                 |   |   | (217    | )      |   |   | ---     |   |   |   | ---     |   |   |   | ---    |   |   |   | ---    |   |   |   | (217    | )      |
| Adjusted      EBITDA                    |   | $      | 58,949  |   |   |   | 73,647  |   |   |   | 20,710  |   |   |   | 14,230 |   |   |   | 3,586  |   |   |   | 171,122 |   |
|                                    |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |    |   |
| 2007                                    |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |    |   |
| Revenues:                               |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |    |   |
| Intersegment                            |   | $      | ---     |   |   |   | 2,978   |   |   |   | 5,471   |   |   |   | ---    |   |   |   | ---    |   |   |   | 8,449   |   |
| External                                |   |   | 223,502 |   |   |   | 163,377 |   |   |   | 104,640 |   |   |   | 28,792 |   |   |   | ---    |   |   |   | 520,311 |   |
| Total      revenues                     |   |   | 223,502 |   |   |   | 166,355 |   |   |   | 110,111 |   |   |   | 28,792 |   |   |   | ---    |   |   |   | 528,760 |   |
| Cost of Goods      Sold:                |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |    |   |
| Intersegment                            |   |   | 2,067   |   |   |   | 1,303   |   |   |   | 2,487   |   |   |   | ---    |   |   |   | ---    |   |   |   | 5,857   |   |
| External                                |   |   | 88,699  |   |   |   | 43,868  |   |   |   | 53,492  |   |   |   | 9,740  |   |   |   | ---    |   |   |   | 195,799 |   |
| Total Cost of      Goods Sold           |   |   | 90,766  |   |   |   | 45,171  |   |   |   | 55,979  |   |   |   | 9,740  |   |   |   | ---    |   |   |   | 201,656 |   |
| Contribution:                           |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |    |   |
| Intersegment                            |   |   | (2,067  | )      |   |   | 1,675   |   |   |   | 2,984   |   |   |   | ---    |   |   |   | ---    |   |   |   | 2,592   |   |
| External                                |   |   | 134,803 |   |   |   | 119,509 |   |   |   | 51,148  |   |   |   | 19,052 |   |   |   | ---    |   |   |   | 324,512 |   |
| Total      contribution                 |   |   | 132,736 |   |   |   | 121,184 |   |   |   | 54,132  |   |   |   | 19,052 |   |   |   | ---    |   |   |   | 327,104 |   |
| Less      SG&A                      |   |   | 89,723  |   |   |   | 38,859  |   |   |   | 36,060  |   |   |   | 11,110 |   |   |   | ---    |   |   |   | 175,752 |   |
| Plus      share-based compensation      |   |   | 1,715   |   |   |   | 1,775   |   |   |   | 1,069   |   |   |   | 385    |   |   |   | ---    |   |   |   | 4,944   |   |
| Plus other      income                  |   |   | 13      |   |   |   | 16      |   |   |   | 7       |   |   |   | ---    |   |   |   | ---    |   |   |   | 36      |   |
| Adjusted      EBITDA                    |   | $      | 46,808  |   |   |   | 82,441  |   |   |   | 16,164  |   |   |   | 8,327  |   |   |   | ---    |   |   |   | 153,740 |   |
|                                    |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |    |   |
| 2006                                    |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |    |   |
| Revenues:                               |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |    |   |
| Intersegment                            |   | $      | ---     |   |   |   | ---     |   |   |   | 5,335   |   |   |   | ---    |   |   |   | ---    |   |   |   | 5,335   |   |
| External                                |   |   | 178,951 |   |   |   | 166,471 |   |   |   | 105,929 |   |   |   | 26,131 |   |   |   | ---    |   |   |   | 477,482 |   |
| Total      revenues                     |   |   | 178,951 |   |   |   | 166,471 |   |   |   | 111,264 |   |   |   | 26,131 |   |   |   | ---    |   |   |   | 482,817 |   |
| Cost of Goods      Sold:                |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |    |   |
| Intersegment                            |   |   | ---     |   |   |   | 636     |   |   |   | 2,353   |   |   |   | ---    |   |   |   | ---    |   |   |   | 2,989   |   |
| External                                |   |   | 71,663  |   |   |   | 39,957  |   |   |   | 50,309  |   |   |   | 7,178  |   |   |   | ---    |   |   |   | 169,107 |   |
| Total Cost of      Goods Sold           |   |   | 71,663  |   |   |   | 40,593  |   |   |   | 52,662  |   |   |   | 7,178  |   |   |   | ---    |   |   |   | 172,096 |   |
| Contribution:                           |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |    |   |
| Intersegment                            |   |   | ---     |   |   |   | (636    | )      |   |   | 2,982   |   |   |   | ---    |   |   |   | ---    |   |   |   | 2,346   |   |
| External                                |   |   | 107,288 |   |   |   | 126,514 |   |   |   | 55,620  |   |   |   | 18,953 |   |   |   | ---    |   |   |   | 308,375 |   |
| Total      contribution                 |   |   | 107,288 |   |   |   | 125,878 |   |   |   | 58,602  |   |   |   | 18,953 |   |   |   | ---    |   |   |   | 310,721 |   |
| Less      SG&A                      |   |   | 76,819  |   |   |   | 35,542  |   |   |   | 35,793  |   |   |   | 10,796 |   |   |   | ---    |   |   |   | 158,950 |   |
| Plus      share-based compensation      |   |   | 2,081   |   |   |   | 2,478   |   |   |   | 1,337   |   |   |   | 469    |   |   |   | ---    |   |   |   | 6,365   |   |
| Plus other      income                  |   |   | ---     |   |   |   | ---     |   |   |   | ---     |   |   |   | 463    |   |   |   | ---    |   |   |   | 463     |   |
| Adjusted      EBITDA                    |   | $      | 32,550  |   |   |   | 93,450  |   |   |   | 21,164  |   |   |   | 9,089  |   |   |   | ---    |   |   |   | 156,253 |   |

----

| Years ended      December 31,                               |   | 2008   |    |   | 2007   |   |    | 2006   |   |
|-------------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|
| Reportable      segment revenues                            |   | $      | 582,407 |   |   |   | 528,760 |   |   |   | 482,817 |   |
| Less      intersegment revenues eliminated in consolidation |   |   | 6,965   |   |   |   | 8,449   |   |   |   | 5,335 |   |
| Consolidated      revenues                                  |   | $      | 575,442 |   |   |   | 520,311 |   |   |   | 477,482 |   |

| Years ended      December 31,                                                                                      |   | 2008   |    |   | 2007   |   |    | 2006   |   |
|--------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|
| Reportable      segment adjusted EBITDA                                                                            |   | $      | 171,122 |   |   |   | 153,740 |   |   |   | 156,253 |   |
| Less      depreciation and amortization expense                                                                    |   |   | 114,369 |   |   |   | 87,615  |   |   |   | 82,099 |   |
| Less      share-based compensation expense                                                                         |   |   | 7,278   |   |   |   | 4,944   |   |   |   | 6,365 |   |
| Less non-cash      contribution expense                                                                            |   |   | 480     |   |   |   | ---     |   |   |   | --- |   |
| Less other      income                                                                                             |   |   | 1,503   |   |   |   | 36      |   |   |   | 463 |   |
| Plus other      expense                                                                                            |   |   | 217     |   |   |   | ---     |   |   |   | --- |   |
| Consolidated      operating income                                                                                 |   |   | 47,709  |   |   |   | 61,145  |   |   |   | 67,326 |   |
| Less other      expense, net                                                                                       |   |   | 48,501  |   |   |   | 35,250  |   |   |   | 33,073 |   |
| Consolidated      income (loss) before income taxes and cumulative effect of a change in      accounting principle |   | $      | (792    | )      |   |   | 25,895  |   |   |   | 34,253 |   |

| (11) | Financial      Instruments |
|------|----------------------------|

----

|                                                          |   | 2008                 |   | 2007            |    |
|---------------------------------------------------------------|--------|----------------------|--------|-----------------|---------|
|                                                          |   | Carrying      Amount |   | Fair      Value |    | Carrying      Amount |   | Fair      Value |   |
| Current and      long-term debt and capital lease obligations | $      | 817,160              |   |            | 723,403 |   | 541,249 |   |   | 512,853 |   |
| Other      liabilities                                        |   | 63,867               |   |            | 63,727  |   | 11,596 |   |   | 11,380 |   |

|   | Current and      long-term debt and capital lease obligations:  The fair value of      our Senior Notes is estimated based on the quoted market price for the      same issue. The fair value of our Senior Credit Facility is estimated to      approximate the carrying value because these instruments are subject to      variable interest rates. The fair value of the Rural Utilities Services      Debt and CoBank Mortgage Note Payable are valued at the discounted amount      of future cash flows using our current incremental rate of borrowing on      our Senior Credit Facility.  The fair value of our capital      leases and capital leases due to related party are estimated based upon      the discounted amount of future cash flows using our current incremental      rate of borrowing on our Senior CreditFacility. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Other      Liabilities:  Deferred compensation liabilities have no defined      maturity dates therefore the fair value is the amount payable on demand as      of the balance sheet date. Asset retirement obligations are recorded at      their fair value and, over time, the liability is accreted to its present      value each period. Lease escalation liabilities are valued at the      discounted amount of future cash flows using the Senior Credit Facility      interest rate at December 31, 2008. Our non-employee share-based      compensation awards are reported at their fair value at each reporting      period. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                   |   | Observable      Inputs Level 1 |   |   | Other      Observable Inputs Level 2 |   |   | Unobservable      Inputs Level 3 |   |   | Total  |   |
|--------------------------------------------------------|--------|--------------------------------|--------|--------|--------------------------------------|--------|--------|----------------------------------|--------|--------|--------|--------|
| Assets                                                 |   |                           |   |   |                                 |   |   |                             |   |   |   |   |
| Money market      funds and U.S. government securities |   | $                              | 1,563  |   |                                 |   | ---    |                             |   |   | ---    |   |   |   | 1,563 |   |
| Derivative      financial instruments                  |   |                           | ---    |   |                                 |   | 7      |                             |   |   | ---    |   |   |   | 7 |   |
| Total assets      at fair value                        |   | $                              | 1,563  |   |                                 |   | 7      |                             |   |   | ---    |   |   |   | 1,570 |   |

| (12) | Related Party      Transactions |
|------|---------------------------------|

| (13) | Commitments and      Contingencies |
|------|------------------------------------|

----

|   | The Intelsat      Galaxy 18 C-band and Ku-Band transponders are being leased over an      expected term of 14 years. The present value of the lease payments,      excluding telemetry, tracking and command services and back-up protection,      is $98.6 million. We have recorded a capital lease obligation and an      addition to our Property and Equipment at December 31,    2008. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Years ending      December 31:                                                 |   | Operating |   |   | Capital |   |
|--------------------------------------------------------------------------------|--------|-----------|--------|--------|---------|--------|
| 2009                                                                           |   | $         | 16,401 |   |    |   | 11,646 |   |
| 2010                                                                           |   |      | 8,703  |   |    |   | 11,656 |   |
| 2011                                                                           |   |      | 7,387  |   |    |   | 11,672 |   |
| 2012                                                                           |   |      | 5,601  |   |    |   | 11,732 |   |
| 2013                                                                           |   |      | 4,797  |   |    |   | 11,742 |   |
| 2014 and      thereafter                                                       |   |      | 17,429 |   |    |   | 101,983 |   |
| Total minimum      lease payments                                              |   | $         | 60,318 |   |    |   | 160,431 |   |
| Less amount      representing interest                                         |   |      |   |   |    |   | 60,102 |   |
| Less current      maturity of obligations under capital leases                 |   |      |   |   |    |   | 4,432 |   |
| Long-term      obligations under capital leases, excluding current    maturity |   |      |   |   |    | $      | 95,897 |   |

----

| Years ending      December 31,             |   |   |   |
|--------------------------------------------|--------|--------|--------|
| 2009                                       |   | $      | 18,902 |   |
| 2010                                       |   |   | 7,356  |   |
| 2011                                       |   |   | 5,399  |   |
| 2012                                       |   |   | 4,940  |   |
| 2013                                       |   |   | 4,936  |   |
| 2014 and      thereafter                   |   |   | 46,586 |   |
| Total minimum      future service revenues |   | $      | 88,119 |   |

|   | · | $3.4 million      to secure payment of certain access charges associated with our provision      of telecommunications services within the State of  Alaska, |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $529,000 to      meet obligations associated with our insurance arrangements,      and |
|--------|--------|----------------------------------------------------------------------------------------|

|   | · | $100,000 to      secure right of way access. |
|--------|--------|----------------------------------------------|

----

----

|   | (14)  Fluctuations in Fourth      Quarter Results of Operations(Unaudited) |
|--------|--------------------------------------------------------------------------------------|

|                   |   | FirstQuarter |    |   | Second      Quarter |   |    | ThirdQuarter |   |   | FourthQuarter |   |
|------------------------|--------|--------------|---------|--------|---------------------|--------|---------|--------------|--------|--------|---------------|--------|
| 2008                   |   |         |    |   |                |   |    |         |   |   |          |   |
| Total      revenues    |   | $            | 134,674 |   |                |   | 142,461 |         |   |   | 151,660       |   |   |   | 146,647 |   |
| Operating      income  |   | $            | 9,714   |   |                |   | 14,045  |         |   |   | 15,980        |   |   |   | 7,970 |   |
| Net income      (loss) |   | $            | 436     |   |                |   | 1,832   |         |   |   | 265           |   |   |   | (4,402 | ) |
|                   |   |         |    |   |                |   |    |         |   |   |          |   |   |   |   |   |
| 2007                   |   |         |    |   |                |   |    |         |   |   |          |   |   |   |   |   |
| Total      revenues    |   | $            | 125,031 |   |                |   | 129,890 |         |   |   | 134,090       |   |   |   | 131,300 |   |
| Operating      income  |   | $            | 12,570  |   |                |   | 19,444  |         |   |   | 15,172        |   |   |   | 13,959 |   |
| Net      income        |   | $            | 2,306   |   |                |   | 5,918   |         |   |   | 2,956         |   |   |   | 2,553 |   |

----

| Exhibit      No. | Description                                                                                                                                                                                             |
|------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.1              | Restated      Articles of Incorporation of General Communication, Inc. dated August 20,      2007 (37)                                                                                                  |
| 3.2              | Amended and      Restated Bylaws of General Communication, Inc. dated August 20, 2007      (36)                                                                                                         |
| 4.1              | Certified      copy of the General Communication, Inc. Amendment No. 1, dated as of June      25, 2007, to the Amended and Restated 1986 Stock Option Plan      (33)                                    |
| 10.3             | Westin      Building Lease (3)                                                                                                                                                                          |
| 10.4             | Duncan and      Hughes Deferred Bonus Agreements (4)                                                                                                                                                    |
| 10.5             | Compensation      Agreement between General Communication, Inc. and William C. Behnke dated      January 1, 1997 (13)                                                                                   |
| 10.6             | Order      approving Application for a Certificate of Public Convenience and      Necessity to operate as a Telecommunications (Intrastate Interexchange      Carrier) Public Utility within Alaska (2) |
| 10.13            | MCI Carrier      Agreement between MCI Telecommunications Corporation and General      Communication, Inc. dated January 1, 1993 (5)                                                                    |
| 10.14            | Contract for      Alaska Access Services Agreement between MCI Telecommunications      Corporation and General Communication, Inc. dated January 1, 1993      (5)                                       |
| 10.15            | Promissory      Note Agreement between General Communication, Inc. and Ronald A. Duncan,      dated August 13, 1993 (6)                                                                                 |
| 10.16            | Deferred      Compensation Agreement between General Communication, Inc. and Ronald A.      Duncan, dated August 13, 1993 (6)                                                                           |
| 10.17            | Pledge      Agreement between General Communication, Inc. and Ronald A. Duncan, dated      August 13, 1993 (6)                                                                                          |
| 10.20            | The GCI      Special Non-Qualified Deferred Compensation Plan (7)                                                                                                                                       |
| 10.21            | Transponder      Purchase Agreement for Galaxy X between Hughes Communications Galaxy, Inc.      and GCI Communication Corp. (7)                                                                        |
| 10.25            | Licenses:      (3)                                                                                                                                                                                      |
| 10.25.1          | 214      Authorization                                                                                                                                                                                  |
| 10.25.2          | International      Resale Authorization                                                                                                                                                                 |
| 10.25.3          | Digital      Electronic Message Service Authorization                                                                                                                                                   |
| 10.25.11         | Certificate      of Convenience and Public Necessity – Telecommunications Service (Local      Exchange) dated July 7, 2000  (29)                                                        |
| 10.26            | ATU      Interconnection Agreement between GCI Communication Corp. and Municipality      of Anchorage, executed January 15, 1997 (12)                                                                   |
| 10.29            | Asset      Purchase Agreement, dated April 15, 1996, among General Communication,      Inc., ACNFI, ACNJI and ACNKSI (8)                                                                                |
| 10.30            | Asset      Purchase Agreement, dated May 10, 1996, among General Communication, Inc.,      and Alaska Cablevision, Inc. (8)                                                                             |
| 10.31            | Asset      Purchase Agreement, dated May 10, 1996, among General Communication, Inc.,      and McCaw/Rock Homer Cable System, J.V. (8)                                                                  |
| 10.32            | Asset      Purchase Agreement, dated May 10, 1996, between General Communication,      Inc., and McCaw/Rock Seward Cable System, J.V. (8)                                                               |
| 10.33            | Amendment No.      1 to Securities Purchase and Sale Agreement, dated October 31, 1996, among      General Communication, Inc., and the Prime Sellers Agent    (9)                                      |
| 10.34            | First      Amendment to Asset Purchase Agreement, dated October 30, 1996, among      General Communication, Inc., ACNFI, ACNJI and ACNKSI(9)                                                            |
| 10.36            | Order      Approving Arbitrated Interconnection Agreement as Resolved and Modified by      Order U-96-89(5) dated January 14, 1997 (12)                                                                 |
| 10.37            | Amendment to      the MCI Carrier Agreement executed April 20, 1994 (12)                                                                                                                                |
| 10.38            | Amendment No.      1 to MCI Carrier Agreement executed July 26, 1994  (11)                                                                                                                              |

----

| 10.39 | MCI Carrier      Addendum—MCI 800 DAL Service effective February 1, 1994    (11)                                                                                                                                                                                                                  |
|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.40 | Third      Amendment to MCI Carrier Agreement dated as of October 1, 1994      (11)                                                                                                                                                                                                                     |
| 10.41 | Fourth      Amendment to MCI Carrier Agreement dated as of September 25, 1995      (11)                                                                                                                                                                                                                 |
| 10.42 | Fifth      Amendment to the MCI Carrier Agreement executed April 19, 1996      (12)                                                                                                                                                                                                                     |
| 10.43 | Sixth      Amendment to MCI Carrier Agreement dated as of March 1, 1996      (11)                                                                                                                                                                                                                       |
| 10.44 | Seventh      Amendment to MCI Carrier Agreement dated November 27, 1996      (14)                                                                                                                                                                                                                       |
| 10.45 | First      Amendment to Contract for Alaska Access Services between General      Communication, Inc. and MCI Telecommunications Corporation dated April 1,      1996 (14)                                                                                                                               |
| 10.46 | Service Mark      License Agreement between MCI Communications Corporation and General      Communication, Inc. dated April 13, 1994 (13)                                                                                                                                                               |
| 10.47 | Radio Station      Authorization (Personal Communications Service License), Issue Date June      23, 1995 (13)                                                                                                                                                                                          |
| 10.50 | Contract No.      92MR067A Telecommunications Services between BP Exploration (Alaska), Inc.      and GCI Network Systems dated April 1, 1992 (14)                                                                                                                                                      |
| 10.51 | Amendment No.      03 to BP Exploration (Alaska) Inc. Contract No. 92MRO67A effective August      1, 1996 (14)                                                                                                                                                                                          |
| 10.52 | Lease      Agreement dated September 30, 1991 between RDB Company and General      Communication, Inc. (2)                                                                                                                                                                                              |
| 10.54 | Order      Approving Transfer Upon Closing, Subject to Conditions, and Requiring      Filings dated September 23, 1996 (13)                                                                                                                                                                             |
| 10.55 | Order      Granting Extension of Time and Clarifying Order dated October 21, 1996      (13)                                                                                                                                                                                                             |
| 10.58 | Employment      and Deferred Compensation Agreement between General Communication, Inc.      and John M. Lowber dated July 1992 (13)                                                                                                                                                                    |
| 10.59 | Deferred      Compensation Agreement between GCI Communication Corp. and Dana L. Tindall      dated August 15, 1994 (13)                                                                                                                                                                                |
| 10.60 | Transponder      Lease Agreement between General Communication Incorporated and Hughes      Communications Satellite Services, Inc., executed August 8, 1989      (6)                                                                                                                                   |
| 10.61 | Addendum to      Galaxy X Transponder Purchase Agreement between GCI Communication Corp.      and Hughes Communications Galaxy, Inc. dated August 24, 1995      (13)                                                                                                                                    |
| 10.62 | Order      Approving Application, Subject to Conditions; Requiring Filing; and      Approving Proposed Tariff on an Inception Basis, dated February 4, 1997      (13)                                                                                                                                   |
| 10.66 | Supply      Contract Between Submarine Systems International Ltd. And GCI      Communication Corp. dated as of July 11, 1997. (15)                                                                                                                                                                      |
| 10.67 | Supply      Contract Between Tyco Submarine Systems Ltd. And Alaska United Fiber      System Partnership Contract Variation No. 1 dated as of December 1, 1997.      (15)                                                                                                                               |
| 10.71 | Third      Amendment to Contract for Alaska Access Services between General      Communication, Inc. and MCI Telecommunications Corporation dated February      27, 1998 (16)                                                                                                                           |
| 10.80 | Fourth      Amendment to Contract for Alaska Access Services between General      Communication, Inc. and its wholly owned subsidiary GCI Communication      Corp., and MCI WorldCom. (17)                                                                                                              |
| 10.89 | Fifth      Amendment to Contract for Alaska Access Services between General      Communication, Inc. and its wholly owned subsidiary GCI Communication      Corp., and MCI WorldCom Network Services, Inc., formerly known as MCI      Telecommunications Corporation dated August 7, 2000 #  (18)      |
| 10.90 | Sixth      Amendment to Contract for Alaska Access Services between General      Communication, Inc. and its wholly owned subsidiary GCI Communication      Corp., and MCI WorldCom Network Services, Inc., formerly known as MCI      Telecommunications Corporation dated February 14, 2001 #    (18) |

----

| 10.91  | Seventh      Amendment to Contract for Alaska Access Services between General      Communication, Inc. and its wholly owned subsidiary GCI Communication      Corp., and MCI WorldCom Network Services, Inc., formerly known as MCI      Telecommunications Corporation dated March 8, 2001 #  (18)                                                     |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.100 | Contract for      Alaska Access Services between Sprint Communications Company L.P. and      General Communication, Inc. and its wholly owned subsidiary GCI      Communication Corp. dated March 12, 2002 # (21)                                                                                                                                       |
| 10.102 | First      Amendment to Lease Agreement dated as of September 2002 between RDB      Company and GCI Communication Corp. as successor in interest to General      Communication, Inc. (22)                                                                                                                                                               |
| 10.103 | Agreement and      plan of merger of GCI American Cablesystems, Inc. a Delaware corporation      and GCI Cablesystems of Alaska, Inc. an Alaska corporation each with and      into GCI Cable, Inc. an Alaska corporation, adopted as of December 10,      2002  (22)                                                                         |
| 10.104 | Articles of      merger between GCI Cablesystems of Alaska, Inc. and GCI Cable, Inc.,      adopted as of December 10, 2002  (22)                                                                                                                                                                                                              |
| 10.105 | Aircraft      lease agreement between GCI Communication Corp., and Alaska corporation      and 560 Company, Inc., an Alaska corporation, dated as of January 22, 2001      (22)                                                                                                                                                                         |
| 10.106 | First      amendment to aircraft lease agreement between GCI Communication Corp., and      Alaska corporation and 560 Company, Inc., an Alaska corporation, dated as      of February 8, 2002  (22)                                                                                                                                           |
| 10.108 | Bonus      Agreement between General Communication, Inc. and Wilson Hughes      (23)                                                                                                                                                                                                                                                                    |
| 10.109 | Eighth      Amendment to Contract for Alaska Access Services between General      Communication, Inc. and its wholly owned subsidiary GCI Communication      Corp., and MCI WorldCom Network Services, Inc. # (23)                                                                                                                                      |
| 10.110 | Settlement      and Release Agreement between General Communication, Inc. and WorldCom,      Inc. (23)                                                                                                                                                                                                                                                  |
| 10.112 | Waiver letter      agreement dated as of February 13, 2004 for Credit, Guaranty, Security and      Pledge Agreement  (24)                                                                                                                                                                                                                     |
| 10.113 | Indenture      dated as of February 17, 2004 between GCI, Inc. and The Bank of New York,      as trustee  (24)                                                                                                                                                                                                                                |
| 10.114 | Registration      Rights Agreement dated as of February 17, 2004, among GCI,      Inc.,  and Deutsche Bank Securities Inc., Jefferies &      Company, Inc., Credit Lyonnais Securities (USA), Inc., Blaylock &      Partners, L.P., Ferris, Baker Watts, Incorporated, and TD Securities      (USA), Inc., as Initial Purchasers (24) |
| 10.121 | First      amendment to contract for Alaska Access Services between Sprint      Communications Company L.P. and General Communication, Inc. and its wholly      owned subsidiary GCI Communication Corp. dated July 24, 2002      # (26)                                                                                                           |
| 10.122 | Second      amendment to contract for Alaska Access Services between Sprint      Communications Company L.P. and General Communication, Inc. and its wholly      owned subsidiary GCI Communication Corp. dated December 31, 2003      (26)                                                                                                             |
| 10.123 | Third      amendment to contract for Alaska Access Services between Sprint      Communications Company L.P. and General Communication, Inc. and its wholly      owned subsidiary GCI Communication Corp. dated February 19, 2004      # (26)                                                                                                       |
| 10.124 | Fourth      amendment to contract for Alaska Access Services between Sprint      Communications Company L.P. and General Communication, Inc. and its wholly      owned subsidiary GCI Communication Corp. dated June 30, 2004      # (26)                                                                                                          |   |
| 10.126 | Audit      Committee Charter (as revised by the board of directors of General      Communication, Inc. effective as of February 3,      2005)  (27)                                                                                                                                                                                           |   |
| 10.127 | Nominating      and Corporate Governance Committee Charter (as revised by the board of      directors of General Communication, Inc. effective as of February 3,      2005)  (27)                                                                                                                                                             |   |
| 10.128 | Fifth      amendment to contract for Alaska Access Services between Sprint      Communications Company L.P. and General Communication, Inc. and its wholly      owned subsidiary GCI Communication Corp. dated January 22, 2005      # (27)                                                                                                        |   |
| 10.129 | Ninth      Amendment to Contract for Alaska Access Services between General      Communication, Inc. and its wholly owned subsidiary GCI Communication      Corp., and MCI WorldCom Network Services, Inc. # (28)                                                                                                                                  |   |

----

| 10.130 | Amended and      Restated Credit Agreement among GCI Holdings, Inc. and Calyon New York      Branch as Administrative Agent, Sole Lead Arranger, and Co-Bookrunner, The      Initial Lenders and Initial Issuing Bank Named Herein as Initial Lenders      and Initial Issuing Bank, General Electric Capital Corporation as      Syndication Agent, and Union Bank of California, N.A., CoBank, ACB, CIT      Lending Services Corporation and Wells Fargo Bank, N.A. as      Co-Documentation Agents, dated as of August 31, 2005       (28) |   |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| 10.131 | Amended and      Restated 1986 Stock Option Plan of General Communication, Inc. as of June      7, 2005  (28)                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |
| 10.132 | Amendment No.      1 to $150 Million EBITDA Incentive Program dated December 30, 2005      (29)                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |
| 10.134 | Full-time      Transponder Capacity Agreement with PanAmSat Corporation dated March 31,      2006 #  (30)                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |
| 10.135 | Tenth      Amendment to Contract for Alaska Access Services between General      Communication, Inc. and its wholly owned subsidiary GCI Communication      Corp., and MCI Communications Services, Inc. d/b/a Verizon Business      Services (successor-in-interest to MCI Network Services, Inc., which was      formerly known as MCI WorldCom Network Services)      #  (31)                                                                                                                                                          |   |
| 10.136 | Reorganization      Agreement among General Communication, Inc., Alaska DigiTel, LLC, The      Members of Alaska DigiTel, LLC, AKD Holdings, LLC and The Members of      Denali PCS, LLC dated as of June 16, 2006 (Nonmaterial schedules and      exhibits to the Reorganization Agreement have been omitted pursuant to      Item 601b.2 of Regulation S-K. We agree to furnish supplementally to the      Commission upon request a copy of any omitted schedule or exhibit.)      #  (32)                                             |   |
| 10.137 | Second      Amended and Restated Operating Agreement of Alaska DigiTel, LLC dated as      of January 1, 2007 (We agree to furnish supplementally to the Commission      upon request a copy of any omitted schedule or exhibit.)      #  (32)                                                                                                                                                                                                                                                                                             |   |
| 10.138 | Sixth      amendment to contract for Alaska Access Services between Sprint      Communications Company L.P. and General Communication, Inc. and its wholly      owned subsidiary GCI Communication Corp. dated September 20, 2006      (33)                                                                                                                                                                                                                                                                                                         |   |
| 10.139 | Seventh      amendment to contract for Alaska Access Services between Sprint      Communications Company L.P. and General Communication, Inc. and its wholly      owned subsidiary GCI Communication Corp. dated January 17, 2007 #      (33)                                                                                                                                                                                                                                                                                                       |   |
| 10.140 | General      Communication, Inc. Director Compensation Plan dated June 29, 2006      (33)                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |
| 10.141 | Eleventh      Amendment to Contract for Alaska Access Services between General      Communication, Inc. and its wholly owned subsidiary GCI Communication      Corp., and MCI Communications Services, Inc. d/b/a Verizon Business      Services (successor-in-interest to MCI Network Services, Inc., which was      formerly known as MCI WorldCom Network Services) # (35)                                                                                                                                                                       |   |
| 10.142 | Third      Amendment to the Amended and Restated Credit Agreement among GCI Holdings,      Inc., GCI Communication Corp., GCI Cable, Inc., GCI Fiber Communication      Co., Potter View Development Co., Inc., and Alaska United Fiber System      Partnership, GCI, Inc., the banks, financial institutions, and other      lenders party hereto and Calyon New York Branch as Administrative Agent,      dated as of September 14, 2007 (36)                                                                                                     |   |
| 10.143 | Joinder      Agreement dated as of September 28, 2007 among BNP Paribas, U.S. Bank      National Association, GCI Holdings, Inc., GCI Communication Corp., GCI      Cable, Inc., GCI Fiber Communication Co., Potter View Development Co.,      Inc., and Alaska United Fiber System Partnership, GCI, Inc., and Calyon      New York Branch as Administrative Agent (36)                                                                                                                                                                           |   |
| 10.144 | Strategic      Roaming Agreement dated as of October 30, 2007 between Alaska DigiTel,      LLC. And WirelessCo L.P. # (37)                                                                                                                                                                                                                                                                                                                                                                                                                          |   |
| 10.145 | CDMA      Build-out Agreement dated as of October 30, 2007 between Alaska DigiTel,      LLC. and WirelessCo L.P. (Nonmaterial schedules and exhibits to the      Reorganization Agreement have been omitted pursuant to Item 601b.2 of      Regulation S-K. We agree to furnish supplementally to the Commission upon      request a copy of any omitted schedule or exhibit.) # (37)                                                                                                                                                               |   |

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| 10.146 | Long-term de      Facto Transfer Spectrum Leasing agreement between Alaska DigiTel,      LLC. and SprintCom, Inc. # (37)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| 10.147 | Twelfth      Amendment to Contract for Alaska Access Services between General      Communication, Inc. and its wholly owned subsidiary GCI Communication      Corp., and MCI Communications Services, Inc. d/b/a Verizon Business      Services (successor-in-interest to MCI Network Services, Inc., which was      formerly known as MCI WorldCom Network Services) dated November 19, 2007      (Nonmaterial schedules and exhibits to the Reorganization Agreement have      been omitted pursuant to Item 601b.2 of Regulation S-K. We agree to      furnish supplementally to the Commission upon request a copy of any      omitted schedule or exhibit.) # (37) |   |
| 10.148 | Stock      Purchase Agreement dated as of October 12, 2007 among GCI Communication      Corp., United Companies, Inc., Sea Lion Corporation and Togiak Natives      LTD. (Nonmaterial schedules and exhibits to the Reorganization Agreement      have been omitted pursuant to Item 601b.2 of Regulation S-K. We agree to      furnish supplementally to the Commission upon request a copy of any      omitted schedule or exhibit.) (37)                                                                                                                                                                                                                             |   |
| 10.149 | Fourth      Amendment to the Amended and Restated Credit Agreement dated as of May 2,      2008 by and among GCI Holdings, Inc., the other parties thereto and Calyon      New York Branch, as administrative agent, and the other Lenders party      thereto (38)                                                                                                                                                                                                                                                                                                                                                                                                      |   |
| 10.150 | Second      Amendment to Lease Agreement dated as of April 8, 2008 between RDB Company      and GCI Communication Corp. as successor in interest to General      Communication, Inc. (39)                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |
| 10.151 | Audit      Committee Charter (as revised by the board of directors of General      Communication, Inc. effective as of April 27, 2007) (39)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |
| 10.152 | Nominating      and Corporate Governance Committee Charter (as revised by the board of      directors of General Communication, Inc. effective as of April 27, 2007)      (39)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |
| 10.153 | Thirteenth      Amendment to Contract for Alaska Access Services between General      Communication, Inc. and its wholly owned subsidiary GCI Communication      Corp., and MCI Communications Services, Inc. d/b/a Verizon Business      Services (successor-in-interest to MCI Network Services, Inc., which was      formally known as MCI WorldCom Network Services) dated January 16, 2008 #      (39)                                                                                                                                                                                                                                                             |   |
| 10.154 | Fourteenth      Amendment to Contract for Alaska Access Services between General      Communication, Inc. and its wholly owned subsidiary GCI Communication      Corp., and MCI Communications Services, Inc. d/b/a Verizon Business      Services (successor-in-interest to MCI Network Services, Inc., which was      formally known as MCI WorldCom Network Services) dated May 15, 2008      (40)                                                                                                                                                                                                                                                                   |   |
| 10.155 | Contract for      Alaska Access Services between the Company and Verizon, dated January 1,      1993 (41)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |
| 10.156 | Third      Amendment to Contract for Alaska Access Services between the Company and      Verizon, dated February 27, 1998 (41)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |
| 10.157 | Fourth      Amendment to Contract for Alaska Access Services between the Company and      Verizon, dated January 1, 1999 (41)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |
| 10.158 | Fifth      Amendment to the Amended and Restated Credit Agreement dated as of October      17, 2008 by and among Holdings, Inc. the other parties thereto and Calyon      New York Branch, as administrative agent, and the other Lenders party      thereto (42)                                                                                                                                                                                                                                                                                                                                                                                                       |   |
| 10.159 | Amendment to      Deferred Bonus Agreement dated December 31, 2008 by and among the Company,      the Employer and Mr. Duncan (43)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |
| 10.160 | Amendment to      Deferred Compensation Agreement dated December 31, 2008 by and among the      Company, the Employer and Mr. Duncan (43)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |
| 14     | Code Of      Business Conduct and Ethics (originally reported as exhibit 10.118)      (25)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| 18.1   | Letter      regarding change in accounting principle (39)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |
| 21.1   | Subsidiaries      of the Registrant  *                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |
| 31     | Certifications      Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |
| 32     | Certifications      Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of      the Sarbanes-Oxley Act of 2002 *                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |

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|   | 99    | Additional      Exhibits:                                                    |   |
|--------|-------|------------------------------------------------------------------------------|--------|
|   | 99.1  | The Articles      of Incorporation of GCI Communication Corp. (1)            |   |
|   | 99.2  | The Bylaws of      GCI Communication Corp. (1)                               |   |
|   | 99.7  | The Bylaws of      GCI Cable, Inc. (10)                                      |   |
|   | 99.8  | The Articles      of Incorporation of GCI Cable, Inc. (10)                   |   |
|   | 99.15 | The Bylaws of      GCI Holdings, Inc. (13)                                   |   |
|   | 99.16 | The Articles      of Incorporation of GCI Holdings, Inc. (13)                |   |
|   | 99.17 | The Articles      of Incorporation of GCI, Inc. (12)                         |   |
|   | 99.18 | The Bylaws of      GCI, Inc. (12)                                            |   |
|   | 99.27 | The      Partnership Agreement of Alaska United Fiber System (15)            |   |
|   | 99.28 | The Bylaws of      Potter View Development Co., Inc. (19)                    |   |
|   | 99.29 | The Articles      of Incorporation of Potter View Development Co., Inc. (19) |   |
|   | 99.34 | The Bylaws of      GCI Fiber Communication, Co., Inc. (20)                   |   |
|   | 99.35 | The Articles      of Incorporation of GCI Fiber Communication, Co., Inc.(20) |   |

| ________________ |
|------------------|
| #                | CONFIDENTIAL      PORTION has been omitted pursuant to a request for confidential treatment      by us to, and the material has been separately filed with, the Securities      and Exchange Commission.  Each omitted Confidential Portion is      marked by three asterisks. |
|  *          | Filed      herewith. |
|             |   |
| ________________ |

| Exhibit      Reference | Description                                                                                                                                                                         |
|------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 1                      | Incorporated      by reference to GCI’s Annual Report on Form 10-K for the year ended      December 31, 1990                                                                  |
| 2                      | Incorporated      by reference to GCI’s Annual Report on Form 10-K for the year ended      December 31, 1991                                                                  |
| 3                      | Incorporated      by reference to GCI’s Registration Statement on Form 10 (File No.      0-15279), mailed to the Securities and Exchange Commission on December 30,      1986 |
| 4                      | Incorporated      by reference to GCI’s Annual Report on Form 10-K for the year ended      December 31, 1989.                                                                 |
| 5                      | Incorporated      by reference to GCI’s Current Report on Form 8-K dated June 4,      1993.                                                                                   |
| 6                      | Incorporated      by reference to GCI’s Annual Report on Form 10-K for the year ended      December 31, 1993.                                                                 |
| 7                      | Incorporated      by reference to GCI’s Annual Report on Form 10-K for the year ended      December 31, 1995.                                                                 |
| 8                      | Incorporated      by reference to GCI’s Form S-4 Registration Statement dated October 4,      1996.                                                                           |
| 9                      | Incorporated      by reference to GCI’s Current Report on Form 8-K dated November 13,      1996.                                                                              |
| 10                     | Incorporated      by reference to GCI’s Annual Report on Form 10-K for the year ended      December 31, 1996.                                                                 |
| 11                     | Incorporated      by reference to GCI’s Current Report on Form 8-K dated March 14, 1996,      filed March 28, 1996.                                                           |
| 12                     | Incorporated      by reference to GCI’s Form S-3 Registration Statement (File No. 333-28001)      dated May 29, 1997.                                                         |
| 13                     | Incorporated      by reference to GCI’s Amendment No. 1 to Form S-3/A Registration Statement      (File No. 333-28001) dated July 8, 1997.                                    |
| 14                     | Incorporated      by reference to GCI’s Amendment No. 2 to Form S-3/A Registration Statement      (File No. 333-28001) dated July 21, 1997.                                   |
| 15                     | Incorporated      by reference to The Company’s Annual Report on Form 10-K for the year      ended December 31, 1997.                                                         |

----

| 16 | Incorporated      by reference to The Company’s Annual Report on Form 10-K for the year      ended December 31, 1998.                      |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------|
| 17 | Incorporated      by reference to The Company’s Quarterly Report on Form 10-Q for the period      ended June 30, 1999.                     |
| 18 | Incorporated      by reference to The Company’s Quarterly Report on Form 10-Q for the period      ended March 31, 2001.                    |
| 19 | Incorporated      by reference to The Company’s Quarterly Report on Form 10-Q for the period      ended June 30, 2001.                     |
| 20 | Incorporated      by reference to The Company’s Annual Report on Form 10-K for the year      ended December 31, 2001.                      |
| 21 | Incorporated      by reference to The Company’s Quarterly Report on Form 10-Q for the period      ended June 30, 2002.                     |
| 22 | Incorporated      by reference to The Company’s Annual Report on Form 10-K for the year      ended December 31, 2002.                      |
| 23 | Incorporated      by reference to The Company’s Quarterly Report on Form 10-Q for the period      ended June 30, 2003.                     |
| 24 | Incorporated      by reference to The Company’s Annual Report on Form 10-K for the year      ended December 31, 2003.                      |
| 25 | Incorporated      by reference to The Company’s Quarterly Report on Form 10-Q for the period      ended March 31, 2004.                    |
| 26 | Incorporated      by reference to The Company’s Quarterly Report on Form 10-Q for the period      ended June 30, 2004.                     |
| 27 | Incorporated      by reference to The Company’s Quarterly Report on Form 10-Q for the period      ended March 31, 2005.                    |
| 28 | Incorporated      by reference to The Company’s Quarterly Report on Form 10-Q for the period      ended September 30, 2005.                |
| 29 | Incorporated      by reference to The Company’s Annual Report on Form 10-K for the year      ended December 31, 2005 filed March 16, 2006. |
| 30 | Incorporated      by reference to The Company’s Quarterly Report on Form 10-Q for the period      ended March 31, 2006.                    |
| 31 | Incorporated      by reference to The Company’s Quarterly Report on Form 10-Q for the period      ended June 30, 2006.                     |
| 32 | Incorporated      by reference to The Company’s Annual Report on Form 10-K for the year      ended December 31, 2006 filed March 19, 2007. |
| 33 | Incorporated      by reference to The Company’s Quarterly Report on Form 10-Q for the period      ended March 31, 2007.                    |
| 34 | Incorporated      by reference to The Company’s Form S-8 filed with the SEC on July 27,      2007.                                         |
| 35 | Incorporated      by reference to The Company’s Quarterly Report on Form 10-Q for the period      ended June 30, 2007.                     |
| 36 | Incorporated      by reference to The Company’s Quarterly Report on Form 10-Q for the period      ended September 30, 2007.                |
| 37 | Incorporated      by reference to The Company’s Annual Report on Form 10-K for the year      ended December 31, 2007 filed March 7, 2008.  |
| 38 | Incorporated      by reference to the Company's Report on Form 8-K for the period May 2,      2008 filed May 8, 2008.                            |
| 39 | Incorporated      by reference to The Company’s Quarterly Report on Form 10-Q for the period      ended March 31, 2008.                    |
| 40 | Incorporated      by reference to The Company’s Quarterly Report on Form 10-Q for the period      ended June 30, 2008.                     |
| 41 | Incorporated      by reference to The Company's Report on Form 8-K for the period September      19, 2008 filed on September 22, 2008.           |
| 42 | Incorporated      by reference to The Company’s Quarterly Report on Form 10-Q for the period      ended September 30, 2008.                |

----

| 43 | Incorporated      by reference to The Company's Report on Form 8-K for the period December      31, 2008 filed January 6, 2009. |
|----|---------------------------------------------------------------------------------------------------------------------------------|

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|   | By:    | /s/ Ronald A.      Duncan        |   |
|--------|--------|----------------------------------|--------|
|   |   | Ronald A.      Duncan, President |   |
|   |   | (Chief      Executive Officer)   |   |

| Date: | March 20,      2009 |   |
|-------|---------------------|--------|

| Signature                 |   | Title                                             |   | Date                |
|---------------------------|--------|---------------------------------------------------|--------|---------------------|
|                      |   |                                              |   |                |
| /s/ Ronald A.      Duncan |   | President and      Director                       |   | March 20,      2009 |
| Ronald A.      Duncan     |   | (Principal      Executive Officer)                |   |                |
|                      |   |                                              |   |                |
| /s/ G. Wilson      Hughes |   | Vice      President and Director                  |   | March 20,      2009 |
| G. Wilson      Hughes     |   |                                              |   |                |
|                      |   |                                              |   |                |
| /s/ John M.      Lowber   |   | Secretary,      Treasurer and Director            |   | March 20,      2009 |
| John M.      Lowber       |   | (Principal      Financial and Accounting Officer) |   |                |

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