As filed with the Securities and Exchange Commission on May 12, 2006

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

                                   (Mark One)

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

                  For the quarterly period ended March 31, 2006

                                       OR

          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
         For the transition period from                 to

                           Commission File No. 0-5890

                                    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)

       Registrant's telephone number, including area code: (907) 868-5600

Former name, former address and former fiscal year, if changed since last report

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

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes  No X .

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and larger accelerated filer" in Rule 12b-2 of the Exchange Act. (Check
one).

Large accelerated filer [ ]   Accelerated filer [ ]   Non-accelerated filer [X]

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

                                       1
<PAGE>
<TABLE>
                                                GCI, INC.
                          A WHOLLY OWNED SUBSIDIARY OF GENERAL COMMUNICATION, INC.
                                                FORM 10-Q
                                  FOR THE QUARTER ENDED MARCH 31, 2006

                                             TABLE OF CONTENTS
<CAPTION>
                                                                                                       Page No.
                                                                                                       --------
<S>                                                                                                       <C>
Cautionary Statement Regarding Forward-Looking Statements.................................................3

PART I.  FINANCIAL INFORMATION

         Item l.    Financial Statements
                    Consolidated Balance Sheets as of March 31, 2006
                       (unaudited) and December 31, 2005..................................................4

                    Consolidated Statements of Operations for the
                       three months ended March 31, 2006 (unaudited)
                       and 2005 (unaudited)...............................................................6

                    Consolidated Statements of Stockholder's Equity
                       for the three months ended March 31, 2006
                       (unaudited) and 2005 (unaudited)...................................................7

                    Consolidated Statements of Cash Flows for the three
                       months ended March 31, 2006 (unaudited)
                       and 2005 (unaudited)...............................................................8

                    Notes to Interim Condensed Consolidated Financial
                       Statements (unaudited).............................................................9

         Item 2.    Management's Discussion and Analysis of Financial
                    Condition and Results of Operations...................................................24

         Item 3.    Quantitative and Qualitative Disclosures About
                    Market Risk...........................................................................43

         Item 4.    Controls and Procedures...............................................................43

PART II.  OTHER INFORMATION

         Item 1.    Legal Proceedings.....................................................................44

         Item 6.    Exhibits..............................................................................45

         Other items are omitted, as they are not applicable.

SIGNATURES................................................................................................46
</TABLE>
                                       2
<PAGE>
            Cautionary Statement Regarding Forward-Looking Statements


You should carefully review the information contained in this Quarterly Report,
but should particularly consider any risk factors that we set forth in this
Quarterly Report and in other reports or documents that we file from time to
time with the Securities and Exchange Commission ("SEC"). In this Quarterly
Report, in addition to historical information, we state our future strategies,
plans, objectives or goals and our beliefs of future events and of our future
operating results, financial position and cash flows. In some cases, you can
identify those so-called "forward-looking statements" by words such as "may,"
"will," "should," "expects," "plans," "anticipates," "believes," "estimates,"
"predicts," "potential," "project," or "continue" or the negative of those words
and other comparable words. All forward-looking statements involve known and
unknown risks, uncertainties and other important factors that may cause our
actual results, performance, achievements, plans and objectives to differ
materially from any future results, performance, achievements, plans and
objectives expressed or implied by these forward-looking statements. In
evaluating those statements, you should specifically consider various factors,
including those outlined below. Those factors may cause our actual results to
differ materially from any of our forward-looking statements. For these
statements, we claim the protection of the safe harbor for forward-looking
statements provided by the Private Securities Litigation Reform Act of 1995.
Such risks, uncertainties and other factors include but are not limited to those
identified under "Risk Factors" in our December 31, 2005 annual report on Form
10-K, including in conjunction with the forward-looking statements included in
this Quarterly Report.

You should not place undue reliance on any such forward-looking statements.
Further, any forward-looking statement, and such risks, uncertainties and other
factors speak only as of the date on which they were originally made and we
expressly disclaim any obligation or undertaking to disseminate any updates or
revisions to any forward-looking statement to reflect any change in our
expectations with regard to those statements or any other change in events,
conditions or circumstances on which any such statement is based, except as
required by law. New factors emerge from time to time, and it is not possible
for us to predict what factors will arise or when. In addition, we cannot assess
the impact of each factor on our business or the extent to which any factor, or
combination of factors, may cause actual results to differ materially from those
contained in any forward-looking statements.


                                       3
<PAGE>
PART I.  FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS
<TABLE>
                                                   GCI, INC. AND SUBSIDIARIES
                                                  CONSOLIDATED BALANCE SHEETS
<CAPTION>
(Amounts in thousands)                                                                             (Unaudited)
                                                                                                    March 31,       December 31,
                            ASSETS                                                                    2006              2005
------------------------------------------------------------------------------------------    ------------------- ----------------
<S>                                                                                          <C>                      <C>
Current assets:
  Cash and cash equivalents                                                                  $       40,031            44,362
                                                                                              ------------------- ----------------

  Receivables                                                                                        82,598            78,279
  Less allowance for doubtful receivables                                                             5,891             5,317
                                                                                              ------------------- ----------------
     Net receivables                                                                                 76,707            72,962

  Deferred income taxes, net                                                                         17,485            19,596
  Prepaid expenses                                                                                    6,933             8,347
  Notes receivable from related parties                                                               3,484               922
  Inventories                                                                                         3,135             1,556
  Property held for sale                                                                              2,314             2,312
  Other current assets                                                                                2,540             2,572
                                                                                              ------------------- ----------------
     Total current assets                                                                           152,629           152,629
                                                                                              ------------------- ----------------

Property and equipment in service, net of depreciation                                              440,814           453,008
Construction in progress                                                                             15,690             8,337
                                                                                              ------------------- ----------------
     Net property and equipment                                                                     456,504           461,345
                                                                                              ------------------- ----------------

Cable certificates                                                                                  191,565           191,565
Goodwill                                                                                             42,181            42,181
Other intangible assets, net of amortization                                                          6,274             6,201
Deferred loan and senior notes costs, net of amortization of $1,702 and $1,451 at March
  31, 2006 and December 31, 2005, respectively                                                        7,760             8,011
Notes receivable from related parties                                                                    90             2,544
Other assets                                                                                         11,427             9,299
                                                                                              ------------------- ----------------
     Total other assets                                                                             259,297           259,801
                                                                                              ------------------- ----------------
       Total assets                                                                          $      868,430           873,775
                                                                                              =================== ================
</TABLE>
See accompanying notes to interim condensed consolidated financial statements.

                                       4                             (Continued)
<PAGE>
<TABLE>
                                                      GCI, INC. AND SUBSIDIARIES
                                                     CONSOLIDATED BALANCE SHEETS
                                                             (Continued)

<CAPTION>
(Amounts in thousands)                                                                             (Unaudited)
                                                                                                    March 31,       December 31,
LIABILITIES AND STOCKHOLDER'S EQUITY                                                                  2006              2005
------------------------------------------------------------------------------------------    ------------------ -----------------
<S>                                                                                          <C>                      <C>
Current liabilities:
  Current maturities of obligations under long-term debt and capital leases                  $        1,774             1,769
  Accounts payable                                                                                   22,401            23,217
  Deferred revenue                                                                                   16,104            16,439
  Accrued payroll and payroll related obligations                                                    14,757            17,925
  Accrued liabilities                                                                                 7,073             6,814
  Accrued interest                                                                                    2,919             9,588
  Subscriber deposits                                                                                   373               361
                                                                                              ------------------ -----------------
    Total current liabilities                                                                        65,401            76,113

Long-term debt                                                                                      473,800           474,115
Obligation under capital lease, excluding current maturity                                            1,160               ---
Obligation under capital lease due to related party, excluding current maturity                         613               628
Deferred income taxes, net of deferred income tax benefit                                            70,925            69,753
Other liabilities                                                                                    10,876             9,546
                                                                                              ------------------ -----------------
    Total liabilities                                                                               622,775           630,155
                                                                                              ------------------ -----------------

Stockholder's equity:
  Class A common stock (no par).  Authorized 10 shares; issued .01 shares
   at March 31, 2006 and December 31, 2005                                                          206,622           206,622
  Paid-in capital                                                                                    16,111            10,840
  Retained earnings                                                                                  22,922            26,158
                                                                                              ------------------ -----------------

    Total stockholder's equity                                                                      245,655           243,620
                                                                                              ------------------ -----------------
Commitments and contingencies
    Total liabilities and stockholder's equity                                               $      868,430           873,775
                                                                                              ================== =================
</TABLE>
See accompanying notes to interim condensed consolidated financial statements.



                                       5
<PAGE>
<TABLE>
                                         GCI, INC. AND SUBSIDIARIES
                                   CONSOLIDATED STATEMENTS OF OPERATIONS
                                              (Unaudited)

<CAPTION>
                                                                                         Three Months Ended
                                                                                              March 31,
        (Amounts in thousands)                                                           2006          2005
                                                                                    ------------- -------------
        <S>                                                                        <C>               <C>
        Revenues                                                                   $   112,822       106,510

        Cost of goods sold (exclusive of depreciation and amortization shown
          separately below)                                                             36,184        35,200
        Selling, general and administrative expenses                                    39,614        37,180
        Bad debt expense (recovery)                                                        501          (353)
        Depreciation and amortization expense                                           20,161        17,705
                                                                                    ------------- -------------
             Operating income                                                           16,362        16,778
                                                                                    ------------- -------------

        Other income (expense):
           Interest expense                                                             (8,554)       (8,331)
           Amortization of loan and senior notes fees                                     (251)         (483)
           Interest income                                                                 157           179
           Other                                                                          (113)          ---
                                                                                    ------------- -------------
             Other expense, net                                                         (8,761)       (8,635)
                                                                                    ------------- -------------

             Net income before income taxes and cumulative effect of a change
               in accounting principle                                                   7,601         8,143

        Income tax expense                                                               3,679         3,480
                                                                                    ------------- -------------
             Net income before cumulative effect of a change in accounting
               principle                                                                 3,922         4,663

        Cumulative effect of a change in accounting principle, net of income
           tax benefit of $425                                                            (608)          ---
                                                                                    ------------- -------------
             Net income                                                            $     3,314         4,663
                                                                                    ============= =============
        See accompanying notes to interim condensed consolidated financial statements.
</TABLE>

                                       6
<PAGE>
<TABLE>
                                                 GCI, INC. AND SUBSIDIARIES
                                       CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
                                         THREE MONTHS ENDED MARCH 31, 2006 AND 2005
                                                         (Unaudited)
<CAPTION>
                                                        Shares of
                                                         Class A     Class A
                                                         Common      Common        Paid-in    Retained
(Amounts in thousands, except share amounts)              Stock       Stock        Capital    Earnings      Total
                                                       ------------------------------------------------------------
<S>                                                        <C>      <C>             <C>        <C>         <C>
Balances at December 31, 2004                              100      $ 206,622        5,677     16,305      228,604
Net income                                                 ---            ---          ---      4,663        4,663
Net distribution to General Communication, Inc.            ---            ---       (2,030)       ---       (2,030)
                                                       ------------------------------------------------------------
  Balances at March 31, 2005                               100      $ 206,622        3,647     20,968      231,237
                                                       ============================================================

Balances at December 31, 2005                              100      $ 206,622       10,840     26,158      243,620
Net income                                                 ---            ---          ---      3,314        3,314
Distribution to General Communication, Inc.                ---            ---          ---     (6,550)      (6,550)
Contribution from General Communication, Inc.              ---            ---        5,271        ---        5,271
                                                       ------------------------------------------------------------
   Balances at March 31, 2006                              100      $ 206,622       16,111     22,922      245,655
                                                       ============================================================
</TABLE>

                                       7
<PAGE>
<TABLE>
                                                GCI, INC. AND SUBSIDIARIES
                                           CONSOLIDATED STATEMENTS OF CASH FLOWS
                                         THREE MONTHS ENDED MARCH 31, 2006 AND 2005
                                                     (Unaudited)
<CAPTION>

(Amounts in thousands)                                                                     2006              2005
                                                                                      --------------    -------------
<S>                                                                                  <C>                   <C>
Cash flows from operating activities:
   Net income                                                                        $     3,314             4,663
   Adjustments to reconcile net income to net cash provided by operating
     activities:
     Depreciation and amortization expense                                                20,161            17,705
     Deferred income tax expense                                                           3,676             3,480
     Share-based compensation expense                                                        678                48
     Cumulative effect of a change in accounting principle, net                              608               ---
     Bad debt expense (recovery), net of write-offs                                          574              (257)
     Amortization of loan and senior notes fees                                              251               483
     Deferred compensation                                                                    85               355
     Other noncash income and expense items                                                  (69)               54
     Change in operating assets and liabilities                                          (16,449)           (6,579)
                                                                                      --------------    -------------
       Net cash provided by operating activities                                          12,829            19,952
                                                                                      --------------    -------------

Cash flows from investing activities:
   Purchases of property and equipment                                                   (13,687)          (24,414)
   Purchases of other assets and intangible assets                                        (1,231)           (1,445)
   Notes receivable issued to related parties                                                (50)              (13)
   Additions to property held for sale                                                        (2)              ---
                                                                                      --------------    -------------
       Net cash used in investing activities                                             (14,970)          (25,872)
                                                                                      --------------    -------------

Cash flows from financing activities:
   Net distribution to General Communication, Inc.                                        (1,766)           (2,140)
   Repayment of Senior Credit Facility                                                      (400)              ---
   Repayments of capital lease obligations                                                   (24)           (1,583)
   Payment of debt issuance costs                                                            ---               (43)
                                                                                      --------------    -------------
       Net cash used in financing activities                                              (2,190)           (3,766)
                                                                                      --------------    -------------
       Net decrease in cash and cash equivalents                                          (4,331)           (9,686)
       Cash and cash equivalents at beginning of period                                   44,362            31,452
                                                                                      --------------    -------------

       Cash and cash equivalents at end of period                                    $    40,031            21,766
                                                                                      ==============    =============
</TABLE>
See accompanying notes to interim condensed consolidated financial statements.

                                       8
<PAGE>
                           GCI, INC. AND SUBSIDIARIES
          Notes to Interim Condensed Consolidated Financial Statements
                                   (Unaudited)

The accompanying unaudited interim condensed consolidated financial statements
include the accounts of GCI, Inc. and its subsidiaries and have been prepared in
accordance with generally accepted accounting principles for interim financial
information. Accordingly, they do not include all of the information and
footnotes required by accounting principles generally accepted in the United
States of America for complete financial statements. They should be read in
conjunction with our audited consolidated financial statements for the year
ended December 31, 2005, filed as part of our annual report on Form 10-K. In the
opinion of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. The results of
operations for interim periods are not necessarily indicative of the results
that may be expected for an entire year or any other period.

(l)    Business and Summary of Significant Accounting Principles

       In the following discussion, GCI, Inc. and its direct and indirect
       subsidiaries are referred to as "we," "us" and "our."

       Basis of Presentation
       We were incorporated in Alaska in 1997 to affect the issuance of senior
       notes. As a wholly-owned subsidiary of General Communication, Inc.
       ("GCI"), we received through our initial capitalization all ownership
       interests in subsidiaries previously held by GCI.

       (a)  Business
            We offer the following services:
             o   Long-distance telephone service between Alaska and the
                 remaining United States and foreign countries,
             o   Cable television services throughout Alaska,
             o   Facilities-based competitive local access services in
                 Anchorage, Fairbanks, and Juneau, Alaska,
             o   Internet access services,
             o   Origination and termination of traffic in Alaska for certain
                 common carriers,
             o   Private line and private network services,
             o   Managed services to certain commercial customers,
             o   Broadband services, including our SchoolAccess(R) offering to
                 rural school districts and a similar offering to rural
                 hospitals and health clinics,
             o   Sales and service of dedicated communications systems and
                 related equipment,
             o   Lease and sales of capacity on our fiber optic cable systems
                 used in the transmission of interstate and intrastate private
                 line, switched message long-distance and Internet services
                 within Alaska and between Alaska and the remaining United
                 States and foreign countries,
             o   Distribution of white and yellow pages directories to
                 residential and business customers in certain markets we serve
                 and on-line directory products, and
             o   Resale of wireless telephone services and sale of wireless
                 telephone handsets and accessories.

                                       9                             (Continued)
<PAGE>
                           GCI, INC. AND SUBSIDIARIES
          Notes to Interim Condensed Consolidated Financial Statements
                                   (Unaudited)

       (b)  Principles of Consolidation
            The consolidated financial statements include the consolidated
            accounts of GCI and its wholly owned subsidiaries with all
            significant intercompany transactions eliminated.

       (c)  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.

       (d)  Asset Retirement Obligations
            Following is a reconciliation of the beginning and ending aggregate
            carrying amount of our asset retirement obligations at March 31,
            2006 and 2005 (amounts in thousands):

                    Balance at December 31, 2004           $  2,971
                    Accretion expense for the three
                     months ended March 31, 2005                 49
                                                            --------
                         Balance at March 31, 2005         $  3,020
                                                            ========

                    Balance at December 31, 2005           $  3,210
                    Accretion expense for the three
                     months ended March 31, 2006                 43
                    Liability settled                            (2)
                                                            --------
                         Balance at March 31, 2006         $  3,251
                                                            ========

            Our asset retirement obligations are included in Other Liabilities.

       (e)  Share-based Payment Arrangements
            Effective January 1, 2006, we adopted the provisions of SFAS No.
            123(R), Share-Based Payment, and related interpretations, to account
            for share-based compensation using the modified prospective
            transition method and therefore will not restate our prior period
            results. SFAS 123(R) supersedes Accounting Principles Board ("APB")
            Opinion No. 25, Accounting for Stock Issued to Employees and revises
            guidance in SFAS 123, Accounting for Stock-Based Compensation. Among
            other things, SFAS 123(R) requires that compensation expense be
            recognized in the financial statements for share-based awards based
            on the grant date fair value of those awards. The modified
            prospective transition method applies to (a) unvested stock options
            under our 1986 Stock Option Plan ("Option Plan") and unvested stock
            options not issued pursuant to a plan that were outstanding as of
            December 31, 2005 based on the grant date fair value estimated in
            accordance with the pro forma provisions of SFAS 123, and (b) any
            new share-based awards granted subsequent to December 31, 2005,
            based on the grant-date fair value estimated in accordance with the
            provisions of SFAS 123(R). Additionally, share-based compensation
            expense includes an estimate for pre-vesting forfeitures and is
            recognized over the requisite service periods of the awards on a
            straight-line basis, which is generally commensurate with the
            vesting term. We have recorded $678,000 of share-based compensation
            expense, net of estimated forfeitures, during the first quarter of
            2006 as a result of our adoption of SFAS 123(R). See note 4 for
            information on the assumptions we used to calculate the fair value
            of share-based compensation.

                                      10                             (Continued)
<PAGE>
                           GCI, INC. AND SUBSIDIARIES
          Notes to Interim Condensed Consolidated Financial Statements
                                   (Unaudited)

            Prior to January 1, 2006, we accounted for all of our stock option
            agreements in accordance with APB No. 25 and related
            interpretations. Accordingly, compensation expense for a stock
            option grant was recognized only if the exercise price was less than
            the market value of GCI's common stock on the grant date. Prior to
            our adoption of SFAS 123(R), as required under the disclosure
            provisions of SFAS 123, as amended, we provided pro forma net income
            for each period as if we had applied the fair value method to
            measure share-based compensation expense.

            SFAS 123(R) requires the benefits associated with tax deductions in
            excess of recognized compensation cost to be reported as a financing
            cash flow rather than as an operating cash flow as previously
            required. For the three months ended March 31, 2006, we did not
            record any excess tax benefit generated from stock option exercises
            since we are in a net operating loss position and the income tax
            deduction will not yet reduce income taxes payable.

            The table below shows the effect of adopting SFAS No. 123(R) on
            selected items and what those items would have been under previous
            guidance under APB No. 25 and SFAS No. 123 for the three months
            ended March 31, 2006 (in thousands):
<TABLE>
<CAPTION>
                                                                                               Under APB          Under
                                                                              As Reported        No. 25          SFAS 123
                                                                            --------------- ---------------- ---------------
             <S>                                                           <C>                   <C>              <C>
             Operating income                                              $     16,362          16,983           16,362
             Net income before income taxes and cumulative effect of a
               change in accounting principle                                     7,601           8,222            7,601
             Cumulative effect of a change in accounting principle,
               net of income tax benefit of $425                                   (608)            ---              ---
             Net income                                                           3,314           4,288            3,922
             Cash flow from operating activities (1)                             12,829          12,829           12,829
             Cash flow from financing activities (1)                                810             810              810

<FN>
             ----------------
             (1) For the three months ended March 31, 2006, we did not record
                 any excess tax benefit generated from stock option exercises
                 since we are in a net operating loss position and the income tax
                 deduction will not yet reduce income taxes payable.
             ----------------
</FN>
</TABLE>
            The table below summarizes the impact on our results of operations
            for the three months ended March 31, 2006 of outstanding stock
            options recognized under the provisions of SFAS 123(R) (in
            thousands):
<TABLE>
<CAPTION>
                                                                                      2006
                                                                                   ---------
                <S>                                                               <C>
                Share-based employee compensation expense                         $    678
                Income tax benefit                                                     279
                                                                                   ---------
                   Net decrease in income                                         $    399
                                                                                   =========
</TABLE>
                                      11                             (Continued)
<PAGE>
                           GCI, INC. AND SUBSIDIARIES
          Notes to Interim Condensed Consolidated Financial Statements
                                   (Unaudited)

             The following illustrates the effect on net income for the three
             months ended March 31, 2005 as if we had applied the fair value
             method to measure stock-based compensation, as required under the
             disclosure provisions of SFAS No. 123 (in thousands):
<TABLE>
<CAPTION>
                                                                                      2005
                                                                                   ---------
                <S>                                                               <C>
                Net income, as reported                                           $  4,663
                 Total share-based employee compensation expense included in
                   reported net income, net of related tax effects                      27
                 Less share-based employee compensation expense determined
                   under the SFAS 123 fair value method, net of related tax
                   effects                                                            (511)
                                                                                   ---------
                     Pro forma net income                                         $  4,179
                                                                                   =========
</TABLE>
       (f)  Income Taxes
            GCI, Inc., as a wholly-owned subsidiary and member of the GCI
            controlled group of corporations, files its income tax returns as
            part of the consolidated group of corporations under GCI.
            Accordingly, all discussions regarding income taxes reflect the
            consolidated group's activity.

       (g)  Exchanges of Nonmonetary Assets
            The cost of a nonmonetary asset or service acquired in exchange for
            another nonmonetary asset or service is based upon the fair value of
            the asset surrendered to obtain it unless the fair value is not
            determinable, the exchange of a product or property held for sale in
            the ordinary course of business for a product or property to be sold
            in the same line of business to facilitate sales to customers other
            than the parties to the exchange, or the exchange lacks commercial
            substance. If the exceptions apply we value the transaction using
            the recorded amount (after reduction, if appropriate, for an
            indicated impairment of value) of the nonmonetary asset or service
            relinquished. A gain or loss may be recognized on the exchange.

       (h)  Rental Costs Incurred During a Construction Period
            We recognize rental costs associated with ground or building
            operating leases that are incurred during a construction period as
            rental expense in income from continuing operations.

       (i)  Reporting of Accounting Changes and Error Corrections
            On January 1, 2006, we adopted SFAS 154, "Accounting Changes and
            Error Corrections--a replacement of APB Opinion No. 20 and FASB
            Statement No. 3." SFAS 154 replaces APB Opinion No. 20, "Accounting
            Changes," and FASB Statement No. 3, "Reporting Accounting Changes in
            Interim Financial Statements," and changes the requirements for the
            accounting for and reporting of a change in accounting principle.
            SFAS 154 applies to all voluntary changes in accounting principle.
            It also applies to changes required by an accounting pronouncement
            in the unusual instance that the pronouncement does not include
            specific transition provisions. When a pronouncement includes
            specific transition provisions, those provisions should be followed.

                                      12                             (Continued)
<PAGE>
                           GCI, INC. AND SUBSIDIARIES
          Notes to Interim Condensed Consolidated Financial Statements
                                   (Unaudited)

        (j) Reclassifications
            Reclassifications have been made to the 2005 financial statements to
            make them comparable with the 2006 presentation.

(2)    Consolidated Statements of Cash Flows Supplemental Disclosures
       Changes in operating assets and liabilities consist of (amounts in
       thousands):
<TABLE>
<CAPTION>
             Three month periods ended March 31,                               2006           2005
                                                                           ------------   ------------
              <S>                                                         <C>                <C>
              (Increase) decrease in accounts receivable                  $   (4,319)         1,814
              (Increase) decrease in prepaid expenses                            (31)           144
              (Increase) decrease in inventories                              (1,579)           191
              Decrease in other current assets                                   177            693
              Decrease in accounts payable                                      (816)          (270)
              Decrease in deferred revenues                                     (335)          (373)
              Decrease in accrued payroll and payroll related
                 obligations                                                  (3,168)          (175)
              Decrease in due to related party                                   ---         (2,941)
              Increase (decrease) in accrued liabilities                         259           (306)
              Decrease in accrued interest                                    (6,669)        (5,847)
              Increase (decrease) in subscriber deposits                          12            (28)
              Increase in components of other long-term liabilities               20            519
                                                                           ------------   ------------
                                                                          $  (16,449)        (6,579)
                                                                           ============   ============
</TABLE>
       We paid interest totaling approximately $15.2 million and $14.1 million
       during the three months ended March 31, 2006 and 2005, respectively.

       Income tax refunds received totaled $0 and $202,000 during the three
       months ended March 31, 2006 and 2005, respectively. We paid no income
       taxes during the three months ended March 31, 2006 and 2005.

       We recorded a net cumulative effect adjustment (expense) of $672,000
       during the three months ended March 31, 2006 to recognize the effect of
       initially measuring share-based compensation liability instruments at
       fair value. We recorded a net cumulative effect adjustment (benefit) of
       $64,000 during the three months ended March 31, 2006 for share-based
       compensation instruments outstanding at December 31, 2005 for which the
       requisite service is not expected to be rendered.

       During the three months ended March 31, 2006 we financed a $1.2 million
       acquisition of a building through a capital lease obligation.

                                      13                             (Continued)
<PAGE>
                           GCI, INC. AND SUBSIDIARIES
          Notes to Interim Condensed Consolidated Financial Statements
                                   (Unaudited)

(3)    Intangible Assets
       There have been no events or circumstances that indicate the
       recoverability of the carrying amounts of indefinite-lived and
       definite-lived intangible assets has changed as of March 31, 2006. The
       remaining useful lives of our cable certificates and goodwill were
       evaluated as of March 31, 2006 and events and circumstances continue to
       support an indefinite useful life. We reviewed the useful lives assigned
       to our definite-lived intangible assets and believe the lives continue to
       be appropriate as of March 31, 2006.

       Cable certificates and goodwill are not allocated to a reportable segment
       but are included in the All Other category of our segment assets.

       Amortization expense for amortizable intangible assets was $388,000 and
       $292,000 during the three months ended March 31, 2006 and 2005,
       respectively.

       Amortization expense for amortizable intangible assets for each of the
       five succeeding fiscal years is estimated to be (amounts in thousands):

                 Years Ending
                 December 31,
                --------------
                   2006       $ 1,284
                   2007         1,175
                   2008           946
                   2009           659
                   2010           149

(4)    Share-Based Compensation
       GCI's 1986 Stock Option Plan, as amended, provides for the grant of
       options for a maximum of 13.2 million shares of GCI Class A common stock,
       subject to adjustment upon the occurrence of stock dividends, stock
       splits, mergers, consolidations or certain other changes in corporate
       structure or capitalization. If an option expires or terminates, the
       shares subject to the option will be available for further grants of
       options under the Option Plan. Substantially all stock options granted
       vest in equal installments over a period of five years, and expire ten
       years from the date of grant. New shares are issued when stock option
       agreements are exercised, unless the stock option agreements are settled
       in cash. Our share repurchase program on behalf of GCI as described in
       Part I, Item 2 below may include the purchase of shares issued pursuant
       to stock option agreement exercise transactions. We are unable to
       estimate the number of such shares we may purchase during the annual
       period beginning April 1, 2006.

       We use a Black-Scholes-Merton option pricing model to estimate the fair
       value of share-based awards under SFAS 123(R), which is the same
       valuation technique we previously used for pro forma disclosures under
       SFAS 123. The Black-Scholes-Merton option pricing model incorporates
       various and highly subjective assumptions, including expected term and
       expected volatility. We have reviewed our historical pattern of option
       exercises and have determined that meaningful differences in option
       exercise activity existed among employee job categories. Therefore, for
       all stock options granted after January 1, 2006, we have categorized
       these awards into two groups of

                                      14                             (Continued)
<PAGE>
                           GCI, INC. AND SUBSIDIARIES
          Notes to Interim Condensed Consolidated Financial Statements
                                   (Unaudited)

       employees for valuation purposes, which is the same technique we
       previously used for pro forma disclosures under SFAS 123.

       We estimated the expected term of options granted by evaluating the
       vesting period of stock option awards, employee's past exercise and
       post-vesting employment departure behavior, and expected volatility of
       the price of the underlying shares.

       We estimated the expected volatility of GCI's common stock at the grant
       date using the historical volatility of its common stock over the most
       recent period equal to the expected stock option term and evaluated the
       extent to which available information indicated that future volatility
       may differ from historical volatility.

       Our risk-free interest rate assumption was determined using the Federal
       Reserve nominal rates for U.S. Treasury zero-coupon bonds with maturities
       similar to those of the expected term of the award being valued. GCI has
       never paid any cash dividends on its common stock and does not anticipate
       paying any cash dividends in the foreseeable future. Therefore, we
       assumed an expected dividend yield of zero.

       The following table shows our assumptions used to compute the share-based
       compensation expense and pro forma information for stock options granted
       during the three months ended March 31, 2006 and 2005:

                                                  2006              2005
                                             ---------------- -----------------
            Expected term (years)               4.6 - 5.5         4.7 - 5.1
            Volatility                            55.6%             45.5%
            Risk-free interest rate                4.8%              4.2%

       SFAS 123(R) requires us to measure share-based compensation liability
       instruments at fair value as of January 1, 2006. Previously, we measured
       those liability instruments at their intrinsic value determined as of
       their grant date. The transition impact of adopting SFAS No. 123(R)
       attributed to measuring such liability instruments at fair value totaled
       $1.1 million, net of income tax benefit of $469,000 and is reported as a
       component of the cumulative effect of change in accounting principle in
       the accompanying March 31, 2006 Consolidated Statement of Operations.

       Additionally, 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, net of income tax expense of
       $44,000 and is reported as a component of the cumulative effect of change
       in accounting principle in the accompanying March 31, 2006 Consolidated
       Statement of Operations.

                                      15                             (Continued)
<PAGE>
                           GCI, INC. AND SUBSIDIARIES
          Notes to Interim Condensed Consolidated Financial Statements
                                   (Unaudited)

       The weighted average grant date fair value of options granted during the
       first quarter of 2006 and 2005 was $6.26 per share and $4.81 per share,
       respectively. The total fair value of options vesting during the first
       quarter of 2006 and 2005 was approximately $1.8 million and $2.4 million,
       respectively.

       Unrecognized share-based compensation expense was approximately $7.7
       million as of March 31, 2006, relating to a total of 2.4 million unvested
       stock options. We expect to recognize this share-based compensation
       expense over a weighted average period of approximately 2.8 years.

       The following is a summary of our 1986 Stock Option Plan activity for the
       three months ended March 31, 2006:
<TABLE>
<CAPTION>
                                                                                         Weighted Average
                                                                         Shares           Exercise Price
                                                                    ----------------    -----------------
               <S>                                                     <C>                    <C>
                 Outstanding at December 31, 2005                      6,550,777

               Granted                                                    65,000              $10.94
               Exercised                                                (735,706)              $6.51
               Forfeited                                                 (45,300)              $9.03
                                                                    ----------------
                 Outstanding at March 31, 2006                         5,834,771               $7.39
                                                                    ================

                 Available for grant at March 31, 2006                 1,054,746
                                                                    ================
</TABLE>
        The following is a summary of activity for stock options granted not
        pursuant to the 1986 Stock Option Plan for the three months ended March
        31, 2006:
<TABLE>
<CAPTION>
                                                                                        Weighted Average
                                                                         Shares          Exercise Price
                                                                    ----------------    -----------------
                 <S>                                                     <C>                   <C>
                 Outstanding at December 31, 2005 and March 31,
                    2006                                                 250,000               $6.50
                                                                    ================

                 Available for grant at March 31, 2006                       ---
                                                                    ================
</TABLE>
                                      16                             (Continued)
<PAGE>
                           GCI, INC. AND SUBSIDIARIES
          Notes to Interim Condensed Consolidated Financial Statements
                                   (Unaudited)

       The following is a summary of all outstanding stock options at March 31,
2006:
<TABLE>
<CAPTION>
                                                 Options Outstanding
          ---------------------------------------------------------------------------------------------------
                                                   Weighted Average
                                                      Remaining                                Aggregate
                Range of                           Contractual Life     Weighted Average    Intrinsic Value
            Exercise Prices           Shares           (years)           Exercise Price       (thousands)
          ---------------------------------------------------------------------------------------------------
              <S>                   <C>                 <C>                 <C>                 <C>
               $3.11-$5.99            430,990            4.29                $4.74               $3,142
               $6.00-$6.04            645,830            5.62                $6.00               $3,894
               $6.05-$6.49             52,000            4.78                $6.13                 $307
               $6.50-$6.94          1,450,889            4.22                $6.50               $8,074
               $6.95-$7.24            314,634            3.00                $7.00               $1,532
               $7.25-$7.39          1,175,000            5.94                $7.25               $5,617
               $7.40-$8.49            723,108            6.11                $8.00               $2,912
               $8.50-$9.99            788,520            8.58                $9.40               $2,077
              $10.00-$11.94           502,800            9.12               $10.29                 $851
                 $11.95                 1,000           10.00               $11.95                  $23
          ---------------------------------------------------------------------------------------------------
              $3.11-$11.95          6,084,771            5.84                $7.36              $28,429
          ===================================================================================================
</TABLE>
<TABLE>
<CAPTION>
                                                    Options Vested
          ---------------------------------------------------------------------------------------------------
                                                   Weighted Average
                                                      Remaining                                Aggregate
                Range of                           Contractual Life     Weighted Average    Intrinsic Value
            Exercise Prices           Shares           (years)           Exercise Price       (thousands)
          ---------------------------------------------------------------------------------------------------
             <S>                    <C>                  <C>                <C>                 <C>
              $3.11-$5.99             378,990            3.99                $4.67               $2,789
              $6.00-$6.04             347,930            4.67                $6.00               $2,098
              $6.05-$6.49              51,000            4.74                $6.13                 $301
              $6.50-$6.94           1,291,289            3.86                $6.50               $7,192
              $6.95-$7.24             314,234            3.03                $7.00               $1,530
              $7.25-$7.39             599,995            5.89                $7.25               $2,868
              $7.40-$8.49             473,408            5.03                $7.80               $2,001
              $8.50-$9.99             132,733            6.94                $9.04                 $397
             $10.00-$11.94             55,100            7.30               $10.83                  $48
                 $11.95                   ---            5.25                 $---                  $19
          ---------------------------------------------------------------------------------------------------
              $3.11-$11.95          3,644,679            4.53                $6.75              $19,243
          ===================================================================================================
</TABLE>
       The total intrinsic value, determined as of the date of exercise, of
       options exercised in the first quarter of 2006 and 2005 were $3.4 million
       and $0.2 million, respectively. We received $5.8 million and $262,000 in
       cash from stock option exercises in the first quarter of 2006 and 2005,
       respectively. We used cash to settle stock option agreements of $1.6
       million and $0 in the first quarter of 2006 and 2005, respectively.

                                      17                             (Continued)
<PAGE>
                           GCI, INC. AND SUBSIDIARIES
          Notes to Interim Condensed Consolidated Financial Statements
                                   (Unaudited)

(5)    Industry Segments Data
       Our reportable segments are business units that offer different products.
       The reportable segments are each managed separately and serve distinct
       types of customers.

       In the fourth quarter of 2005 we committed to a reorganization plan to
       more efficiently meet the demands of technological and product
       convergence by realigning along customer lines rather than product lines.
       Beginning January 1, 2006 our four reportable segments became Consumer,
       Network Access, Commercial and Managed Broadband, replacing the
       Long-distance, Cable, Local Access and Internet services segments.

       Reportable segment data and All Other Category data for the first quarter
       of 2005 have been reclassified for comparability purposes, as follows:

       o   First quarter of 2005 revenue and cost of goods sold (exclusive of
           depreciation and amortization expense) ("Cost of Goods Sold") were
           reclassified to conform to the new segment organizational structure.
           A combination of specific identification and general allocations were
           employed to reclassify first quarter of 2005 balances. Allocated
           amounts were generally determined using segment revenue or customer
           counts derived from first quarter of 2006 segment data. We believe
           the first quarter of 2006 division of revenue and customers by
           segment is representative of the first quarter of 2005 customer
           composition for purposes of reclassifying first quarter of 2005
           revenue and Cost of Goods Sold balances.

       o   First quarter 2005 selling, general and administrative ("SG&A")
           expenses were reclassified to conform to the new segment
           organizational structure. A combination of specific and general
           allocations were employed to reclassify first quarter 2005 balances,
           as follows:

           o   Certain SG&A expenses were directly charged to each new
               reportable segment during the first quarter of 2006. The amount
               of comparable SG&A directly charged to each segment during the
               first quarter of 2005 based upon our new organizational structure
               is not practicable to calculate. We believe the 2006 amounts are
               representative of the amounts allocable during the same period of
               2005, and therefore allocated such amounts to each reportable
               segment in the first quarter of 2005.

           o   The remaining SG&A expenses, consisting of corporate related
               expenses further described below, were allocated to each segment
               using the percentage of each segment's margin for the year ended
               December 31, 2004 to total margin for the same period.

       o   First quarter 2005 bad debt recovery was reclassified to conform to
           the new segment organizational structure. A combination of specific
           identification and general allocations based upon segment revenue for
           the year ended December 31, 2005 were employed to reclassify first
           quarter 2005 bad debt recovery.

                                      18                             (Continued)
<PAGE>
                           GCI, INC. AND SUBSIDIARIES
          Notes to Interim Condensed Consolidated Financial Statements
                                   (Unaudited)

       Depreciation and amortization expense for the three months ended March
       31, 2005 is no longer allocated to reportable segments as our Chief
       Operating Decision Maker now evaluates each segments' performance based
       upon its earnings from operations before depreciation, amortization, net
       interest expense and income tax expense.

       A description of our four reportable segments follows:

          Consumer. We offer a full range of voice, video, data and wireless
          services to residential customers.

          Network Access. We offer a full range of voice and data services to
          common carrier customers.

          Commercial. We offer a full range of voice, video, data and wireless
          services to business and governmental customers.

          Managed Broadband. We offer data services to rural school districts,
          rural hospitals and health clinics through our SchoolAccess(R) and
          Rural Health initiatives.

       Corporate related expenses including engineering, operations and
       maintenance of our core network, information technology, accounting,
       legal and regulatory, human resources, and other general and
       administrative expenses for the first quarter of 2006 are allocated to
       our segments using segment margin for the year ended December 31, 2005.
       Bad debt expense for the first quarter of 2006 is allocated to our
       segments using a combination of specific identification and allocations
       based upon segment revenue for the quarter ended March 31, 2006.

       We evaluate performance and allocate resources based on earnings from
       operations before depreciation and amortization expense, net interest
       expense and income tax expense. The accounting policies of the reportable
       segments are the same as those described in the summary of significant
       accounting policies in note 1 in the "Notes to Consolidated Financial
       Statements" included in Part II of our December 31, 2005 annual report on
       Form 10-K. Intersegment sales are recorded at cost plus an agreed upon
       intercompany profit.

       We earn all revenues through sales of services and products within the
       United States. All of our long-lived assets are located within the United
       States of America, except approximately 82% of our undersea fiber optic
       cable systems which transit international waters and all of our satellite
       transponders.

                                      19                             (Continued)
<PAGE>
                           GCI, INC. AND SUBSIDIARIES
          Notes to Interim Condensed Consolidated Financial Statements
                                   (Unaudited)

       Summarized financial information for our reportable segments for the
       three months ended March 31, 2006 and 2005 follows (amounts in
       thousands):
<TABLE>
<CAPTION>
                                                                     Reportable Segments
                                             --------------------------------------------------------------------
                                                                                                        Total
                                                              Network       Commer-      Managed      Reportable
                                                  Consumer     Access         cial      Broadband      Segments
                                             --------------------------------------------------------------------
       <S>                                   <C>                <C>          <C>          <C>          <C>
       2006
       ----
       Revenues:
         Intersegment                        $        ---          ---        1,338         ---          1,338
         External                                  42,663       37,823       26,128       6,208        112,822
                                             --------------------------------------------------------------------
            Total revenues                   $     42,663       37,823       27,466       6,208        114,160
                                             ====================================================================

       Earnings from operations before
         depreciation, amortization, net
         interest expense and income taxes   $      8,077       19,869        6,656       1,808         36,410
                                             ====================================================================

       2005
       ----
       Revenues:
         Intersegment                        $         14        1,832        5,823         ---          7,669
         External                                  40,192       34,144       25,359       6,815        106,510
                                             --------------------------------------------------------------------
            Total revenues                   $     40,206       35,976       31,182       6,815        114,179
                                             ====================================================================

       Earnings from operations before
         depreciation, amortization, net
         interest expense and income taxes   $      7,953       18,280        5,664       2,586         34,483
                                             ====================================================================
</TABLE>
       A reconciliation of reportable segment revenues to consolidated revenues
       follows (amounts in thousands):
<TABLE>
<CAPTION>
         Three months ended March 31,                                             2006            2005
                                                                            --------------- ---------------
         <S>                                                               <C>                  <C>
         Reportable segment revenues                                       $    114,160         114,179
         Less intersegment revenues eliminated in consolidation                   1,338           7,669
                                                                            --------------- ---------------
              Consolidated revenues                                        $    112,822         106,510
                                                                            =============== ===============
</TABLE>
                                      20                             (Continued)
<PAGE>
                           GCI, INC. AND SUBSIDIARIES
          Notes to Interim Condensed Consolidated Financial Statements
                                   (Unaudited)

       A reconciliation of reportable segment earnings from operations before
       depreciation and amortization expense, net interest expense and income
       taxes to consolidated net income before income taxes and cumulative
       effect of a change in accounting principle follows (amounts in
       thousands):
<TABLE>
<CAPTION>
         Three months ended March 31,                                            2006            2005
                                                                            -------------- ----------------
         <S>                                                               <C>                  <C>
         Reportable segment earnings from operations before
           depreciation and amortization expense, net interest expense
           and income taxes                                                $    36,410          34,483
         Less depreciation and amortization expense                             20,161          17,705
         Add other expense                                                         113             ---
                                                                            -------------- ----------------
              Consolidated operating income                                     16,362          16,778
         Less other expense, net                                                 8,761           8,635
                                                                            -------------- ----------------
              Consolidated net income before income taxes and
                cumulative effect of a change in accounting principle      $     7,601           8,143
                                                                            ============== ================
</TABLE>
(6)    Commitments and Contingencies

       Litigation, Disputes, and Regulatory Matters
       We are involved in various other lawsuits, billing disputes, legal
       proceedings, and regulatory matters that have arisen from time to time in
       the normal course of business. While the ultimate results of these items
       cannot be predicted with certainty we do not expect at this time the
       resolution of them to have a material adverse effect on our financial
       position, results of operations or liquidity.

       Capital Lease Obligation
       On March 31, 2006, through our subsidiary GCI Communication Corp. ("GCC")
       we entered into an agreement to lease transponder capacity on PanAmSat
       Corporation's ("PanAmSat") Galaxy 18 Spacecraft that is expected to be
       launched during 2007. We will also lease capacity on the Horizons 1
       Satellite, which is owned jointly by PanAmSat and JSAT International,
       Inc. The leased capacity is expected to replace our existing transponder
       capacity on PanAmSat's Galaxy 10R satellite when it reaches its end of
       life.

       We will lease, subject to a termination option, C-band and Ku-Band
       transponders over an expected term of approximately 14 years once the
       satellite is placed into commercial operation in its assigned orbital
       location, and the transponders meet specific performance specifications
       and are made available for our use. The present value of the lease
       payments, excluding telemetry, tracking and command services and back-up
       protection, is expected to total $77.0 million to $82.0 million. We will
       record the capital lease obligation and the addition to our Property and
       Equipment when the satellite is made available for our use which is
       expected to occur approximately one month after the expected July 2007
       launch.

                                      21                             (Continued)
<PAGE>
                           GCI, INC. AND SUBSIDIARIES
          Notes to Interim Condensed Consolidated Financial Statements
                                   (Unaudited)

       A summary of estimated future minimum lease payments for this lease
       follows (amounts in thousands):

           Years ending December 31:
             2006                                     $     ---
             2007                                         4,584
             2008                                         9,168
             2009                                         9,168
             2010                                         9,168
             2011 and thereafter                         97,028
                                                       ----------
                  Total minimum lease payments        $ 129,116
                                                       ==========

       Upon payment of a monthly fee we have the option to terminate the lease
       of the C-band transponders through June 1, 2007. We may forfeit our
       termination option at which time we would no longer be obligated to
       continue paying the monthly fee. If we elect to terminate our C-band
       transponder lease we must return the transponders and pay a termination
       fee.

       Telecommunication Services Agreement
       We lease a portion of our 800-mile fiber optic system capacity that
       extends from Prudhoe Bay to Valdez via Fairbanks, and provide management
       and maintenance services for this capacity to a significant customer. The
       telecommunications service agreement is for fifteen years and may be
       extended for up to two successive three-year periods and, upon expiration
       of the extensions, one additional year with a total outstanding
       commitment of $138.1 million at December 31, 2005. On March 24, 2005, the
       lessee announced that it had signed a contract with a competitor to build
       a microwave system to run parallel with our fiber optic cable system. The
       lessee may utilize the microwave system in place of or in addition to our
       fiber optic cable system. We have received notice from the lessee of
       their intent to amend our agreement. We have agreed with the lessee that
       the agreement may be canceled by the lessee with 60 days written notice.

       Anchorage Unbundled Network Elements Arbitration
       On June 25, 2004, the Regulatory Commission of Alaska ("RCA") issued a
       comprehensive decision setting forth new rates for unbundled network
       elements ("UNE"), resale, and terms and conditions for interconnection in
       the Anchorage arbitration. Significantly, the RCA raised the loop rate in
       Anchorage to $19.15 but subsequently reduced the loop rate on
       reconsideration to $18.64. The RCA also issued other various arbitration
       rulings adverse to us, including adopting Alaska Communications Systems
       Group, Inc.'s ("ACS") non-recurring and collocation cost models. On
       December 7, 2004, the Commission issued a final order approving an
       interconnection agreement. We have appealed various Commission
       arbitration rulings.

       On September 30, 2005, the ACS subsidiary serving Anchorage filed a
       petition with the FCC, seeking forbearance from the requirement that it
       provide access to UNEs, and that to the extent it voluntarily did so,
       that the pricing provisions of the Act would not apply. We filed our
       opposition on January 9, 2006 and our reply on February 23, 2006. The FCC
       is required under statute to issue a decision by September 30, 2006, or
       on its own motion, in an additional 90 days. If a decision is not issued
       within the required timeframe, the petition is deemed granted. The
       ability to obtain UNEs is an important element of our local exchange and
       exchange access services business, and the outcome of this proceeding
       could result in a change in our ability to access

                                      22                             (Continued)
<PAGE>
                           GCI, INC. AND SUBSIDIARIES
          Notes to Interim Condensed Consolidated Financial Statements
                                   (Unaudited)
                                                              23
       segments of the Anchorage market via the facilities of the ILEC and the
       cost of doing so. We cannot predict at this time the outcome of this
       proceeding or its impact on us; however, our net cost of providing local
       telephone services in Anchorage could be materially adversely affected by
       an adverse decision.

       Alaska DigiTel, LLC ("Alaska DigiTel") Investment
       We agreed to invest approximately $29.5 million in exchange for a
       majority equity interest in Alaska DigiTel, a small Alaska Personal
       Communication Services ("PCS") provider. The existing owners will retain
       a minority ownership interest and voting control of Alaska DigiTel. The
       exact percentage and dollar amounts for our interest in Alaska DigiTel
       will vary in proportion to the amount the existing owners elect to
       retain, but we expect to own between 75% and 85% after completion of the
       transaction. The transaction is based on a post closing enterprise
       valuation of $37.0 million for Alaska DigiTel. We will fund the
       transaction from cash on hand, by drawing down additional debt, or a
       combination of the two. Matanuska Telephone Association filed a petition
       with the FCC against our application in February 2006. The Alaska DigiTel
       transaction requires certain regulatory approvals and we are uncertain
       when it will close.

       We have provided a $3.0 million bank depository account as collateral for
       an Alaska DigiTel term loan. The amount is classified as Cash and Cash
       Equivalents on our March 31, 2006 Consolidated Balance Sheet.

                                       23
<PAGE>
PART I.
ITEM 2.

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS

In the following discussion, GCI, Inc. and its direct and indirect subsidiaries
are referred to as "we," "us" and "our."

Management's Discussion and Analysis of Financial Condition and Results of
Operations discusses our consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States of America. The preparation of these financial statements requires
us to make estimates and assumptions that affect the reported amounts of assets
and liabilities and the disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. On an on-going basis, we evaluate our
estimates and judgments, including those related to unbilled revenues, Cost of
Goods Sold accruals, allowance for doubtful accounts, share-based compensation
expense, depreciation, amortization and accretion periods, intangible assets,
income taxes, and contingencies and litigation. We base our estimates and
judgments on historical experience and on various other factors that are
believed to be reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results may differ from
these estimates under different assumptions or conditions. See also our
"Cautionary Statement Regarding Forward-Looking Statements."

GCI, Inc. was incorporated under the laws of the State of Alaska in 1997 to
affect the issuance of senior notes. GCI, Inc., a wholly-owned subsidiary of
GCI, received through its initial capitalization all ownership interests in
subsidiaries previously held by GCI. Shares of GCI's Class A common stock are
traded on the Nasdaq National Market tier of the Nasdaq Stock Market under the
symbol GNCMA. Shares of GCI's Class B common stock are traded on the
Over-the-Counter market. Shares of GCI, Inc.'s common stock are not publicly
traded.

General Overview

Through our focus on long-term results, acquisitions, and strategic capital
investments, we strive to consistently grow our revenues and expand our margins.
We have historically met our cash needs for operations, regular capital
expenditures and maintenance capital expenditures through our cash flows from
operating activities. Historically, cash requirements for significant
acquisitions and major capital expenditures have been provided largely through
our financing activities.

As of January 1, 2006 we are reorganized under Consumer, Network Access,
Commercial and Managed Broadband reportable segments, replacing the
Long-distance, Cable, Local Access and Internet services reportable segments.
The realignment along customer lines rather than product lines allows us to more
efficiently meet the demands of technological and product convergence.

Segment and All Other category data for the first quarter of 2005 have been
reclassified to reflect the organizational changes for comparability purposes. A
combination of specific identification and general allocations were employed to
reclassify first quarter of 2005 balances. Allocated amounts were generally
determined using segment revenue or customer counts derived from first quarter
of 2006

                                       24
<PAGE>
segment data. We believe the first quarter of 2006 division of revenue
and customers by segment is representative of the first quarter of 2005 customer
composition for purposes of reclassifying first quarter of 2005 revenue and Cost
of Goods Sold balances.

The Network Access segment provides services to other common carrier customers
and the Managed Broadband segment provides services to rural school districts
and rural hospitals and health clinics. Following are our segments and the
services and products each offers to its customers:
<TABLE>
<CAPTION>
                                                            Reportable Segments
                                         ---------------------------------------------------------
                                                                                       Managed
            Services and Products           Consumer   Network Access    Commercial   Broadband
    ------------------------------------ ------------- -------------- -------------- -------------
    <S>                                        <C>            <C>            <C>           <C>
    Voice                                      X              X              X
    ------------------------------------ ------------- -------------- -------------- -------------
    Video                                      X                             X
    ------------------------------------ ------------- -------------- -------------- -------------
    Data                                       X              X              X             X
    ------------------------------------ ------------- -------------- -------------- -------------
    Wireless                                   X                             X
    ------------------------------------ ------------- -------------- -------------- -------------
</TABLE>
An overview of our services and products follows.

Voice Services and Products
Long-distance Services
We generate long-distance services revenues from monthly plan fees and usage
charges.

Factors that have the greatest impact on year-to-year changes in long-distance
services revenues include the rate per minute charged to customers and usage
volumes expressed as minutes of use.

Common carrier traffic routed to us for termination in Alaska is largely
dependent on traffic routed to our common carrier customers by their customers.
Pricing pressures, new program offerings, business failures, and market and
business consolidations continue to evolve in the markets served by our other
common carrier customers. If, as a result, their traffic is reduced, or if their
competitors' costs to terminate or originate traffic in Alaska are reduced, our
traffic will also likely be reduced, and our pricing may be reduced to respond
to competitive pressures, consistent with federal law. Additionally, disruption
in the economy resulting from terrorist attacks and other attacks or acts of war
could affect our carrier customers. We are unable to predict the effect on us of
such changes. However, given the materiality of other common carrier revenues to
us, a significant reduction in traffic or pricing could have a material adverse
effect on our financial position, results of operations and liquidity.

Due in large part to the favorable synergistic effects of our bundling strategy
focused on consumer and commercial customers, long-distance services continues
to be a significant contributor to our overall performance, although the
migration of traffic from voice to data and from fixed to mobile wireless
continues.

Our long-distance service faces significant competition from AT&T Alascom,
long-distance resellers, and local telephone companies that have entered the
long-distance market. We believe our approach to developing, pricing, and
providing long-distance services and bundling different business segment
services will continue to allow us to be competitive in providing those
services.

                                       25
<PAGE>
Local Access Services
We generate local access services revenues from three primary sources: (1) basic
dial tone services; (2) private line and special access services; and (3)
features and other charges, including voice mail, caller ID, distinctive ring,
inside wiring and subscriber line charges.

The primary factors that contribute to year-to-year changes in local access
services revenues include the average number of subscribers to our services
during a given reporting period, the average monthly rates charged for
non-traffic sensitive services, the number and type of additional premium
features selected, the traffic sensitive access rates charged to carriers and
the Universal Service Program.

We estimate that our March 31, 2006 and 2005 total lines in service represent a
statewide market share of approximately 26% and 24%, respectively. At March 31,
2006 and 2005 approximately 86% and 85%, respectively, of our lines are provided
on our own facilities and leased local loops. At March 31, 2006 and 2005
approximately 5% and 6%, respectively, of our lines are provided using the UNE
platform delivery method.

Our local access service faces significant competition in Anchorage, Fairbanks,
and Juneau from ACS, which is the largest incumbent local exchange carrier
("ILEC") in Alaska, and from AT&T Alascom, Inc. ("Alascom") in Anchorage for
Consumer services. Alascom has received certification from the Regulatory
Commission of Alaska to provide local access services in Fairbanks and Juneau.
We believe our approach to developing, pricing, and providing local access
services and bundling different services will allow us to be competitive in
providing those services.

We plan to deploy 20,000 additional digital local phone service ("DLPS") lines
which utilize our Anchorage coaxial cable facilities during the year ended
December 31, 2006. This service delivery method allows us to utilize our own
cable facilities to provide local access service to our customers and avoid
paying local loop charges to the ILEC.

Directory Advertising
We sell advertising in our yellow pages directories to commercial customers and
distribute white and yellow pages directories to customers in certain markets we
serve. We also sell on-line directory products.

Video Services and Products
We generate cable services revenues from three primary sources: (1) digital and
analog programming services, including monthly basic and premium subscriptions,
pay-per-view movies and one-time events, such as sporting events; (2) equipment
rentals and installation; and (3) advertising sales.

Our cable systems serve 40 communities and areas in Alaska, including the
state's four largest population centers, Anchorage, Fairbanks, the
Matanuska-Susitna Valley and the Kenai Peninsula.

The primary factors that contribute to period-to-period changes in cable
services revenues include average monthly subscription rates and pay-per-view
buys, the mix among basic, premium and digital tier services, the average number
of cable television subscribers during a given reporting period, set-top box
utilization and related rates, revenues generated from new product offerings,
and sales of cable advertising services.

                                       26
<PAGE>
We increased rates charged for certain cable services in eleven communities,
including three of the state's four largest population centers, Anchorage, the
Matanuska-Susitna Valley, and Fairbanks. The rate increases were primarily
effective in January 2006 and increased approximately 5% for those customers who
experienced an adjustment.

Data Services and Products
Internet Services
We generate Internet services revenues from two primary sources: (1) access
product services, including cable modem and dial-up access; and (2) network
management services.

The primary factors that contribute to year-to-year changes in Internet services
revenues include the average number of subscribers to our services during a
given reporting period, the average monthly subscription rates, the amount of
bandwidth purchased by large commercial customers, and the number and type of
additional premium features selected.

Marketing campaigns continue to be deployed featuring bundled products. Our
Internet offerings are bundled with various combinations of our long-distance,
cable, and local access services and provide free or discounted basic or premium
Internet services. Value-added premium Internet features are available for
additional charges.

We compete with a number of Internet service providers in our markets. We
believe our approach to developing, pricing, and providing Internet services
allows us to be competitive in providing those services.

Private Line and Private Network Services
We generate private line and private network services revenue from two primary
sources: (1) leasing capacity on our facilities that utilize voice and data
transmission circuits, dedicated to particular subscribers, which link a device
in one location to another in a different location and (2) through the sale of
Internet Protocol based data services on a secured shared network to businesses
linking multiple enterprise locations. The factor that has the greatest impact
on year-to-year changes in private line and private network services revenues is
the number of private lines and private networks in use. We compete against
Alascom, ACS and other local telecommunication service providers.

Managed Services
We design, sell, install, service and operate, on behalf of certain customers,
communications and computer networking equipment and provide field/depot, third
party, technical support, communications consulting and outsourcing services
through our Network Solutions business. We also supply integrated voice and data
communications systems incorporating interstate and intrastate digital private
lines, point-to-point and multipoint private network and small earth station
services. Presently, there are a number of competing companies in Alaska that
actively sell and maintain data and voice communications systems.

Our ability to integrate communications networks and data communications
equipment has allowed us to maintain our market position based on "value added"
support services rather than price competition. These services are blended with
other transport products into unique customer solutions, including managed
services and outsourcing.

                                       27
<PAGE>
Broadband Services
We generate broadband services revenue through our SchoolAccess(R) and Rural
Health initiatives. Our customers may purchase end-to-end broadband services
solutions blended with other transport and software products such as video
conferencing and unique web content services. Presently, there are several
competing companies in Alaska that actively sell broadband services.

Our ability to provide end-to-end broadband services solutions has allowed us to
maintain our market position based on "value added" products and services rather
than solely based on price competition. These services are blended with other
transport and software products into unique customer solutions, including
SchoolAccess(R) and Rural Health applications such as video conferencing and
unique web content services.

Wireless Services and Products
We generate wireless services and equipment revenues from four primary sources:
(1) monthly plan fees; (2) usage and roaming charges; (3) wireless Internet
access; and (4) handset and accessory sales.

We offer wireless services by reselling Dobson Communications Corporation's
("Dobson") services. We provide limited wireless local access and Internet
services using our own facilities. We compete against Dobson, ACS, Alaska
DigiTel, and resellers of those services in Anchorage and other markets.

We have 20,100 and 9,600 combined Consumer and Commercial wireless lines in
service at March 31, 2006 and 2005, respectively. A wireless line in service is
defined as a revenue generating wireless device. Our average wireless revenue
per combined Consumer and Commercial subscriber is $49.01 during the three
months ended March 31, 2006, calculated by dividing our combined Consumer and
Commercial usage revenues by our combined Consumer and Commercial subscriber
count.

We have reached a definitive agreement to invest $29.5 million in Alaska
DigiTel. In exchange for the investment, we will receive a majority equity
interest in Alaska DigiTel but will not own voting control of the venture. We
view our investment as an incremental way to participate in future growth of the
wireless industry in Alaska. Our existing distribution agreement with Dobson
remains in full effect and our existing cellular products will continue to
compete with Alaska DigiTel in the Alaska market. The transaction is subject to
customary closing conditions, including documentation and regulatory approvals.
Matanuska Telephone Association filed a petition with the FCC against our
application in February 2006. We are not able to determine at this time when the
transaction will close.

                                       28
<PAGE>
Results of Operations

The following table sets forth selected Statements of Operations data as a
percentage of total revenues for the periods indicated (underlying data rounded
to the nearest thousands):
<TABLE>
<CAPTION>
                                                                                            Percentage
                                                                                            Change (1)
                                                                   Three Months Ended          2006
                                                                        March 31,               vs.
    (Unaudited)                                                    2006         2005           2005
                                                                   ----         ----           ----
    <S>                                                           <C>          <C>            <C>
    Statements of Operations Data:
      Revenues:
        Consumer services segment                                  37.8%        37.7%           6.1%
        Network Access services segment                            33.5%        32.1%          10.8%
        Commercial services segment                                23.2%        23.8%           3.0%
        Managed broadband services segment                          5.5%         6.4%          (8.9%)
                                                                ----------------------------------------
          Total revenues                                          100.0%       100.0%           5.9%
      Selling, general and administrative expenses                 35.1%        34.9%           6.6%
      Bad debt expense (recovery)                                   0.4%        (0.3%)        241.9%
      Depreciation and amortization expense                        17.9%        16.6%          13.9%
      Operating income                                             14.5%        15.8%          (2.5%)
      Net income before income taxes and cumulative effect of a
        change in accounting principle                              6.7%         7.6%          (6.7%)
      Net income before cumulative effect of a change in
        accounting principle                                        3.5%         4.4%         (15.9%)
      Net income                                                    2.9%         4.4%         (28.9%)
<FN>

   --------------------------
   (1)Percentage change in underlying data.
   --------------------------
</FN>
</TABLE>
Three Months Ended March 31, 2006 Compared To Three Months Ended March 31, 2005

Overview of Revenues and Cost of Goods Sold
Total revenues increased 5.9% from $106.5 million in the first quarter of 2005
to $112.8 million in the first quarter of 2006. Revenue increases in our
Consumer, Network Access and Commercial segments were partially off-set by
decreased revenue in our Managed Broadband segment. See the discussion below for
more information by segment.

Total Cost of Goods Sold increased 2.8% from $35.2 million in the first quarter
of 2005 to $36.2 million in the first quarter of 2006. Increases in the Consumer
and Network Access segments' Cost of Goods Sold were partially off-set by
decreased Cost of Goods Sold in our Commercial and Managed Broadband segments.
See the discussion below for more information by segment.

                                       29
<PAGE>
Consumer Services Segment Overview
Consumer services segment revenue in the first quarter of 2006 represented 38.0%
of consolidated revenues. The components of Consumer services segment revenue
are as follow (amounts in thousands):
<TABLE>
<CAPTION>
                                                                            First Quarter                Percentage
                                                                        2006              2005             Change
                                                                   --------------    -------------    ----------------
   <S>                                                            <C>                    <C>               <C>
   Voice                                                          $    11,311            11,997             (5.7%)
   Video                                                               22,003            20,994              4.8%
   Data                                                                 6,961             6,245             11.5%
   Wireless                                                             2,388               956            149.8%
                                                                   --------------    -------------    ----------------
     Total Consumer services segment revenue                      $    42,663            40,192              6.1%
                                                                   ==============    =============    ================
</TABLE>
Selected key performance indicators for our Consumer services segment follow:
<TABLE>
<CAPTION>
                                                                               March 31,                Percentage
                                                                        2006              2005            Change
                                                                   --------------    -------------    ----------------
   <S>                                                                <C>               <C>                <C>
   Voice:
     Total local access lines in service(1)                            68,600            69,000             (0.6%)
     DLPS local access lines in service(1)                             24,100            10,400            131.7%

   Video:
     Basic subscribers(2)                                             122,100           122,000              0.0%
     Digital programming tier subscribers(3)                           54,900            48,000             14.4%
     HD/DVR converter boxes(4)                                         16,200             6,700            141.8%
     Homes passed                                                     216,000           209,600              3.1%

   Data:
     Cable modem subscribers(5)                                        74,000            63,300             16.9%
<FN>
   ----------------
   1 A local access line in service is defined as a revenue generating circuit
     or channel connecting a customer to the public switched telephone network.
   2 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.
   3 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 sub-set of basic subscribers.
   4 An 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.
   5 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 basic
     subscribers though basic cable service is not required to receive cable
     modem service.
   ----------------
</FN>
</TABLE>

                                       30
<PAGE>
<TABLE>
<CAPTION>
                                                                            First Quarter               Percentage
                                                                        2006              2005            Change
                                                                   --------------    -------------    ----------------
   <S>                                                                 <C>               <C>              <C>
   Voice:
     Long-distance minutes carried (in millions)                        36.9              40.8            (9.6%)

   Video:
     Average gross revenue per subscriber(1)                           $63.87            $59.25            7.8%
<FN>
   ----------------
   1  Consumer video revenues divided by consumer video basic subscribers.
   ----------------
</FN>
</TABLE>
Consumer Services Segment Revenues

The 5.7% decrease in voice revenue is primarily due to the decrease in
long-distance minutes carried for these customers and a $660,000 decrease in
support from the Universal Service Program.

The decrease in active long-distance customers is primarily due to a decrease in
the total number of long-distance services subscribers in the market resulting
from customers substituting wireless phone, prepaid calling card, VoIP, and
email usage for direct dial minutes and non-revenue affecting adjustments to our
customer database resulting from the implementation of a new customer service
and provisioning information system in September 2005.

The 4.8% increase in video revenue is primarily due to an increase in digital
programming tier subscribers in the first quarter of 2006, the rate increases
previously described, and a 20.3% increase in equipment rental and installation
fee revenue to $3.3 million in the first quarter of 2006. The increase in
equipment rental and installation fees revenue is primarily caused by the
increased use of digital distribution technology.

The 11.5% increase in data revenue is primarily due to a 12.5% increase in cable
modem revenue to $5.9 million in the first quarter of 2006 as compared to the
first quarter of 2005. The increase in cable modem revenue is primarily due to
the increase in subscribers.

The 149.8% increase in wireless revenue is primarily due to the increase in
wireless subscribers.

Consumer Services Segment Cost of Goods Sold

Consumer services segment Cost of Goods Sold increased 6.5% to $15.9 million
from the first quarter of 2005 to the first quarter of 2006 primarily due to
increased video and wireless Cost of Goods Sold resulting from increased
revenue. The increase in Cost of Goods Sold is partially off-set by decreased
voice Cost of Goods Sold primarily due to cost savings resulting from the
increased deployment of DLPS lines in the last nine months of 2005 and the first
quarter of 2006.

                                       31
<PAGE>
Network Access Services Segment Overview
Network access services segment revenue in the first quarter of 2006 represented
33.5% of consolidated revenues. The components of Network Access services
segment revenue are as follows (amounts in thousands):
<TABLE>
<CAPTION>
                                                                             First Quarter               Percentage
                                                                        2006              2005             Change
                                                                   --------------    -------------    ----------------
   <S>                                                            <C>                    <C>                <C>
   Voice                                                          $    24,485            20,969             16.8%
   Data                                                                13,338            13,175              1.2%
                                                                   --------------    -------------    ----------------
     Total Network Access services segment revenue                $    37,823            34,144             10.8%
                                                                   ==============    =============    ================
</TABLE>
Selected key performance indicators for our Network Access services segment
follow:
<TABLE>
<CAPTION>
                                                                             First Quarter              Percentage
                                                                        2006              2005            Change
                                                                   --------------    -------------    ----------------
   <S>                                                                 <C>               <C>               <C>
   Voice:
     Long-distance minutes carried (in millions)                       288.0             226.6             27.1%
</TABLE>
Network Access Services Segment Revenues

The 16.8% increase in voice revenue is primarily due to the increase in minutes
carried for our other common carrier customers partially off-set by a 4.4%
decrease in our rate per minute on minutes carried for other common carriers.
The average rate per minute decrease is primarily due to the annual 3.0% rate
decrease mandated by the Consolidated Appropriations Act for Fiscal Year 2005
effective January 2005 which will result in rate decreases of 3.0% per year
through 2010 and a change in the composition of traffic carried for other common
carriers.

Network Access Services Segment Cost of Goods Sold

Network Access services segment Cost of Goods Sold increased 12.7% to $8.8
million from the first quarter of 2005 to the first quarter of 2006 primarily
due to increased voice revenue and minutes carried.

Commercial Services Segment Overview
Commercial services segment revenue in the first quarter of 2006 represented
23.2% of consolidated revenues. The components of Commercial services segment
revenue are as follow (amounts in thousands):
<TABLE>
<CAPTION>
                                                                             First Quarter               Percentage
                                                                        2006              2005             Change
                                                                   --------------    -------------    ----------------
   <S>                                                            <C>                    <C>               <C>
   Voice                                                          $     8,023             8,782             (8.6%)
   Video                                                                1,726             1,644              5.0%
   Data                                                                15,910            14,746              7.9%
   Wireless                                                               469               187            150.8%
                                                                   --------------    -------------    ----------------
     Total Commercial services segment revenue                    $    26,128            25,359              3.0%
                                                                   ==============    =============    ================
</TABLE>
                                       32
<PAGE>
Selected key performance indicators for our Commercial services segment follow:
<TABLE>
<CAPTION>
                                                                               March 31,                Percentage
                                                                        2006              2005            Change
                                                                   --------------    -------------    ----------------
   <S>                                                                 <C>               <C>               <C>
   Voice:
     Total local access lines in service(1)                            40,600            39,900              1.8%
     DLPS local access lines in service(1)                              1,000               400            150.0%

   Data:
     Cable modem subscribers(2)                                         6,900             6,000             15.0%
<FN>
   ----------------
   1 A local access line in service is defined as a revenue generating circuit
     or channel connecting a customer to the public switched telephone network.
   2 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.
   ----------------
</FN>
</TABLE>
<TABLE>
<CAPTION>
                                                                             First Quarter              Percentage
                                                                        2006              2005            Change
                                                                   --------------    -------------    ----------------
   <S>                                                                  <C>               <C>              <C>
   Voice:
     Long-distance minutes carried (in millions)                        35.1              35.1             0.0%
</TABLE>
Commercial Services Segment Revenues

The 8.6% decrease in voice revenue is primarily due a $200,000 decrease in
support from the Universal Service Program.

The 7.9% increase in data revenue is primarily due to a 19.7% or $625,000
increase in managed services special projects for certain customers.

Commercial Services Segment Cost of Goods Sold

Commercial services segment Cost of Goods Sold decreased 8.4% to $10.4 million
from the first quarter of 2005 to the first quarter of 2006 primarily due to
decreased voice revenue. The overall Cost of Goods Sold decrease is partially
off-set by increased managed services Cost of Goods Sold primarily due to
increased managed services revenue in the first quarter of 2006 as compared to
2005.

Managed Broadband Services Segment Overview
Managed broadband services segment revenue in the first quarter of 2006
represented 5.5% of consolidated revenues. Managed broadband services segment
revenue, which includes data products only, decreased $607,000 in the first
quarter of 2006 as compared to the first quarter of 2005.

                                       33
<PAGE>
Selected key performance indicators for our Commercial services segment follow:
<TABLE>
<CAPTION>
                                                                              March 31,                 Percentage
                                                                        2006              2005            Change
                                                                   --------------    -------------    ----------------
   <S>                                                                   <C>               <C>             <C>
   Managed broadband services:
     SchoolAccess(R) customers                                           47                43              9.3%
     Rural health customers                                              21                21              0.0%
</TABLE>
Managed Broadband Services Segment Revenues

The decrease in Managed Broadband services segment revenue is primarily due to a
decrease in our multi-site SchoolAccess(R) customers in the first quarter of
2006 as compared to 2005 and a decrease in the rate charged for certain circuits
purchased by our rural health customers. The decrease in multi-site
SchoolAccess(R) customers was off-set by an increase in single-site
SchoolAccess(R) customers from which we generate less revenue.

Managed Broadband Services Segment Cost of Goods Sold

Managed broadband services segment Cost of Goods Sold decreased $16,000 to $1.1
million from the first quarter of 2005 to the first quarter of 2006.

Selling, General and Administrative Expenses
Selling, general and administrative expenses increased 6.6% to $39.6 million in
the first quarter of 2006 primarily due to the following:

     o   A $1.5 million increase in health insurance costs primarily resulting
         from a decrease in our reserve for incurred but not reported health
         insurance claims in the first quarter of 2005 in order to reflect
         historical experience that was not repeated in the first quarter of
         2006 and an increase in our medical claims in the first quarter of
         2006, and
     o   A $637,000 increase in our share-based compensation expense primarily
         due to our adoption of SFAS No. 123(R) on January 1, 2006. Upon our
         adoption of SFAS No. 123(R) we recognized $678,000 in share-based
         compensation expense which was allocated to our reportable segments as
         follows (amounts in thousands):
<TABLE>
<CAPTION>
                                                                   Reportable Segments
                                            ------------------------------------------------------------------
                                                             Network                      Managed
                                               Consumer      Access       Commercial     Broadband    Total
                                            ------------- ------------ --------------- ------------ ----------
         <S>                                <C>                <C>           <C>            <C>         <C>
         Share-based compensation expense   $    262           206           161            49          678
                                            ============= ============ =============== ============ ==========
</TABLE>
As a percentage of total revenues, selling, general and administrative expenses
increased to 35.1% in the first quarter of 2006 from 34.9% in the first quarter
of 2005, primarily due to an increase in selling, general and administrative
expenses without a proportional increase in revenues.

                                       34
<PAGE>
Bad Debt Expense (Recovery)
Bad debt expense (recovery) increased approximately $854,000 to a net expense of
$501,000 in the first quarter of 2006. The increase is primarily due to a
decrease in the realization of a recovery from MCI, Inc. (merged with Verizon
Communications Inc. ("Verizon") in January 2006) through a reduction to bad debt
expense in the first quarter of 2006 as compared to the first quarter of 2005.

Depreciation and Amortization Expense
Depreciation and amortization expense increased 13.9% to $20.2 million in the
first quarter of 2006. The increase is primarily due to our $95.3 million
investment in equipment and facilities placed into service during 2005 for which
a full year of depreciation will be recorded in 2006 and the $7.6 million
investment in equipment and facilities placed into service during the first
quarter of 2006 for which a partial year of depreciation will be recorded in
2006.

Income Tax Expense
GCI, Inc., as a wholly-owned subsidiary and member of the GCI controlled group
of corporations, files its income tax returns as part of the consolidated group
of corporations under GCI. Accordingly, all discussions regarding income taxes
reflect the consolidated group's activity.

Income tax expense totaled $3.7 million in the first quarter of 2006 and $3.5
million in the first quarter of 2005. Our effective income tax rate increased
from 42.7% in the first quarter of 2005 to 48.4% in the first quarter of 2006
due primarily to adjustments to deferred tax assets and liabilities balances in
the first quarter of 2006.

At March 31, 2006, we have (1) tax net operating loss carryforwards of
approximately $160.5 million that will begin expiring in 2009 if not utilized,
and (2) alternative minimum tax credit carryforwards of approximately $2.1
million available to offset regular income taxes payable in future years. We
estimate that we will utilize net operating loss carryforwards of $29.0 million
to $34.0 million during the year ended December 31, 2006. Our utilization of
certain net operating loss carryforwards is subject to limitations pursuant to
Internal Revenue Code section 382.

Tax benefits associated with recorded deferred tax assets are considered to be
more likely than not realizable through future reversals of existing taxable
temporary differences and future taxable income exclusive of reversing temporary
differences and carryforwards. The amount of deferred tax asset considered
realizable, however, could be reduced in the near term if estimates of future
taxable income during the carryforward period are reduced which would result in
additional income tax expense. We estimate that our effective annual income tax
rate for financial statement purposes will be 43% to 45% in the year ended
December 31, 2006.

Cumulative Effect of a Change in Accounting Principle
On January 1, 2006 we adopted SFAS No. 123(R), "Share-Based Payment." SFAS
123(R) requires us to measure share-based compensation liability instruments at
fair value as of January 1, 2006. Previously, we measured those liability
instruments at their intrinsic value determined as of their grant date. The
transition impact (expense) of adopting SFAS No. 123(R) attributed to measuring
such liability instruments at fair value totaled $1.1 million, net of income tax
benefit of $469,000 and is reported as a component of the cumulative effect of
change in accounting principle in the accompanying March 31, 2006 Consolidated
Statement of Operations.

                                       35
<PAGE>
Additionally, 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
(benefit) of adopting SFAS No. 123(R) attributed to accruing for expected
forfeitures on outstanding share-based awards totaled $108,000, net of income
tax expense of $44,000 and is reported as a component of the cumulative effect
of change in accounting principle in the accompanying March 31, 2006
Consolidated Statement of Operations.

Multiple System Operator ("MSO") Operating Statistics
Our operating statistics include capital expenditures and customer information
from our Consumer and Commercial services segments which offer services
utilizing our cable services' facilities.

Our capital expenditures by standard reporting category for the three months
ended March 31, 2006 and 2005 follows (amounts in thousands):
<TABLE>
<CAPTION>
                                                             2006             2005
                                                        ------------      -----------
    <S>                                                <C>                  <C>
    Customer premise equipment                         $    4,005            3,558
    Line extensions                                         1,753               44
    Scalable infrastructure                                   211              552
    Upgrade/rebuild                                           144            4,057
    Support capital                                           122               69
    Commercial                                                  3               97
                                                        ------------      -----------
    Sub-total                                               6,238            8,377

    Remaining reportable segments capital
      expenditures                                          7,449           16,037
                                                        ------------      -----------
                                                       $   13,687           24,414
                                                        ============      ===========
</TABLE>
The standardized definition of a customer relationship is the number of
customers that receive at least one level of service utilizing our cable
services segment's facilities, encompassing voice, video, and data services,
without regard to which services customers purchase. At March 31, 2006 and 2005
we had 124,100 and 124,200 customer relationships, respectively.

The standardized definition of a revenue generating unit is the sum of all
primary analog video, digital video, high-speed data, and telephony customers,
not counting additional outlets. At March 31, 2006 and 2005 we had 243,500 and
215,800 revenue generating units, respectively.


Liquidity and Capital Resources

Cash flows from operating activities totaled $12.8 million for the three months
ended March 31, 2006 as compared to $20.0 million for the three months ended
March 31, 2005. The 2006 decrease is primarily due to a $3.7 million increase in
net accounts receivable as further described below and a $2.8 million payment of
our company-wide success sharing bonus in 2006.

                                       36
<PAGE>
Other sources of cash during the three months ended March 31, 2006 included $4.8
million from the GCI's issuance of its Class A common stock. Other uses of cash
during the three months ended March 31, 2006 included expenditures of $13.7
million for property and equipment, including construction in progress, the
purchase on GCI's behalf of $3.6 million of common stock to be retired, and the
establishment of a $3.0 million bank depository account on behalf of GCI as
collateral for an Alaska DigiTel term loan.

Working capital totaled $87.2 million at March 31, 2006, a $10.7 million
increase as compared to $76.5 million at December 31, 2005. The increase is
primarily due to our $11.6 million Senior Notes interest payment and our $2.8
million payment of our company-wide success sharing bonus primarily using cash
generated from operating activities during the three months ended March 31, 2006
rather than decreasing our Cash and Cash Equivalents balance, the $3.7 million
increase in net receivables as further described below, and a $2.6 million
reclassification of the current portion of Notes Receivable from Related Parties
from non-current assets. The increase is partially off-set by a $2.1 million
decrease in the current deferred tax asset for the net operating loss
carryforward we expect to utilize during the year ended December 31, 2006.

Net receivables increased $3.7 million from December 31, 2005 to March 31, 2006
primarily due to the net effect of the timing of payments on trade receivables
from several large customers at March 31, 2006.

Senior Notes
We were in compliance with all Senior Notes loan covenants at March 31, 2006.

Senior Credit Facility
We were in compliance with all Senior Credit Facility loan covenants at March
31, 2006.

Capital Lease Obligation
On March 31, 2006, through our subsidiary GCC we entered into an agreement to
lease transponder capacity on the PanAmSat Galaxy 18 Spacecraft that is expected
to be launched during 2007. We will also lease capacity on the Horizons 1
Satellite, which is owned jointly by PanAmSat and JSAT International, Inc. The
leased capacity is expected to replace our existing transponder capacity on
PanAmSat's Galaxy 10R satellite when it reaches its end of life.

We will lease, subject to a termination option, C-band and Ku-Band transponders
over an expected term of approximately 14 years once the satellite is placed
into commercial operation in its assigned orbital location, and the transponders
meet specific performance specifications and are made available for our use. The
present value of the lease payments, excluding telemetry, tracking and command
services and back-up protection, is expected to total $77.0 million to $82.0
million. We will record the capital lease obligation and the addition to our
Property and Equipment when the satellite is made available for our use which is
expected to occur approximately one month after the expected July 2007 launch.

                                       37
<PAGE>
A summary of estimated future minimum lease payments for this lease follows
(amounts in thousands):

           Years ending December 31:
             2006                              $      ---
             2007                                   4,584
             2008                                   9,168
             2009                                   9,168
             2010                                   9,168
             2011 and thereafter                   97,028
                                                ----------
               Total minimum lease payments    $  129,116
                                                ==========

Upon payment of a monthly fee, we have the option to terminate the lease of the
C-band transponders through June 1, 2007. We may forfeit our termination option
at which time we would no longer be obligated to continue paying the monthly
fee. If we elect to terminate our C-band transponder lease we must return the
transponders and pay a termination fee.

Capital Expenditures
Our expenditures for property and equipment, including construction in progress,
totaled $13.7 million and $24.4 million during the three months ended March 31,
2006 and 2005, respectively. Our capital expenditures requirements in excess of
approximately $25.0 million per year are largely success driven and are a result
of the progress we are making in the marketplace. We expect our 2006
expenditures for property and equipment for our core operations, including
construction in progress, to total $80.0 million to $90.0 million, depending on
available opportunities and the amount of cash flow we generate during 2006.

Share Repurchases
GCI's Board of Directors has authorized a common stock buyback program for the
repurchase of GCI's Class A and Class B common stock in order to reduce their
outstanding shares of Class A and Class B common stock. We pay for the stock
repurchases on GCI's behalf. GCI's Board of Directors authorized us and we
obtained permission from our lenders for up to $45.0 million of repurchases
through March 31, 2006. We are authorized to continue the stock repurchases of
up to $5.0 million per quarter indefinitely and to use stock option exercise
proceeds to repurchase additional shares. If stock repurchases are less than the
total approved quarterly amount the difference may be carried forward and
applied against future stock repurchases. During the three months ended March
31, 2006 we repurchased 316,949 shares of GCI's Class A common stock at a cost
of approximately $3.6 million. We expect to continue the repurchases for an
indefinite period subject to the availability of free cash flow, availability
under our credit facilities, and the price of GCI's Class A and Class B common
stock. The repurchases have and will continue to comply with the restrictions of
SEC Rule 10b-18.

Other Expenditures
GCI agreed to invest approximately $29.5 million in exchange for a majority
equity interest in Alaska DigiTel, a small Alaska PCS provider. The existing
owners will retain a minority ownership interest and voting control of Alaska
DigiTel. The exact percentage and dollar amounts for GCI's interest in Alaska
DigiTel will vary in proportion to the amount the existing owners elect to
retain, but GCI expects to own between 75% and 85% after completion of the
transaction. The transaction is based on a post closing enterprise valuation of
$37.0 million for Alaska DigiTel. We will fund the transaction on GCI's behalf
from cash on hand, by drawing down additional debt, or a combination of the two.
Matanuska

                                       38
<PAGE>
Telephone Association filed a petition with the FCC against our
application in February 2006. The Alaska DigiTel transaction requires certain
regulatory approvals and we are uncertain when it will close.

We have provided on GCI's behalf a $3.0 million bank depository account as
collateral for an Alaska DigiTel term loan. The amount is classified as Cash and
Cash Equivalents on our March 31, 2006 Consolidated Balance Sheet.

The long-distance, local access, cable, Internet and wireless services
industries continue to experience substantial competition, regulatory
uncertainty, and continuing technological changes. Our future results of
operations will be affected by our ability to react to changes in the
competitive and regulatory environment and by our ability to fund and implement
new or enhanced technologies. We are unable to determine how competition,
economic conditions, and regulatory and technological changes will affect our
ability to obtain financing under acceptable terms and conditions.

We believe that we will be able to meet our liquidity and capital requirements,
and fixed charges during the upcoming year through our cash flows from operating
activities, existing cash, cash equivalents, short-term investments, credit
facilities, and other external financing and equity sources. Should cash flows
be insufficient to support additional borrowings and principal payments
scheduled under our existing credit facilities, capital expenditures will likely
be reduced.

Schedule of Certain Known Contractual Obligations

The following table details future projected payments associated with certain
known contractual obligations as of December 31, 2005, the date of our most
recent fiscal year-end balance sheet. Our schedule of certain known contractual
obligations has been updated to reflect our transponder capacity capital lease
obligation discussed above.
<TABLE>
<CAPTION>
                                                                    Payments Due by Period
                                               ----------------------------------------------------------------
                                                             Less than 1     1 to 3      4 to 5    More Than 5
                                                   Total         Year        Years       Years        Years
                                               ------------- ----------- ------------ ------------ ------------
                                                                    (Amounts in thousands)
   <S>                                        <C>               <C>          <C>         <C>         <C>
   Long-term debt                             $   479,550        1,725        3,425       3,200      471,200
   Interest on long-term debt                     197,200       23,200       46,400      46,400       81,200
   Capital lease obligations, including
     interest                                     130,594          252       14,268      18,852       97,222
   Operating lease commitments                     79,532       19,359       24,254      15,875       20,044
   Purchase obligations                            26,322       15,753       10,569         ---          ---
    Other                                          29,500       29,500          ---         ---          ---
                                               ------------- ----------- ------------ ------------ ------------
     Total contractual obligations            $   942,698       89,789       98,916      84,327      669,666
                                               ============= =========== ============ ============ ============
</TABLE>
For long-term debt included in the above table, we have included principal
payments on our Senior Credit Facility and on our Senior Notes. Interest on
amounts outstanding under our Senior Credit Facility is based on variable rates
and therefore the amount is not determinable. Our Senior Notes require
semi-annual interest payments of $11.6 million through August 2014. For a
discussion of our Senior Notes see note 7 in the "Notes to Consolidated
Financial Statements" included in Part II of our December 31, 2005 annual report
on Form 10-K. For discussion of our Senior Credit Facility see note 7

                                       39
<PAGE>
in the "Notes to Consolidated Financial Statements" included in Part II of our
December 31, 2005 annual report on Form 10-K.

For a discussion of our capital and operating leases, see note 16 in the "Notes
to Consolidated Financial Statements" included in Part II of our December 31,
2005 annual report on Form 10-K and note 6 in the accompanying "Notes to Interim
Condensed Consolidated Financial Statements."

Purchase obligations include a remaining commitment to purchase a certain number
of outdoor, network powered multi-media adapters, indoor multi-media adapters,
cable modems, and cable modem termination systems of $6.9 million and a
remaining $10.8 million commitment for our Alaska Airlines agreement as further
described in note 16 in the "Notes to Consolidated Financial Statements"
included in Part II of our December 31, 2005 annual report on Form 10-K. The
contracts associated with these commitments are non-cancelable. Purchase
obligations also include open purchase orders for goods and services for capital
projects and normal operations totaling $8.6 million which are not included in
our Consolidated Balance Sheets at December 31, 2005, because the goods had not
been received or the services had not been performed at December 31, 2005. The
open purchase orders are cancelable.

Other consists of GCI's commitment to acquire a substantial equity interest in
Alaska DigiTel for approximately $29.5 million as further described above.

New Accounting Standards

There are no new currently issued accounting standards that will affect our
results of operations, financial position or cash flows after March 31, 2006.

Critical Accounting Policies

Our accounting and reporting policies comply with accounting principles
generally accepted in the United States of America. The preparation of financial
statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions. The financial position and results
of operations can be affected by these estimates and assumptions, which are
integral to understanding reported results. Critical accounting policies are
those policies that management believes are the most important to the portrayal
of our financial condition and results, and require management to make estimates
that are difficult, subjective or complex. Most accounting policies are not
considered by management to be critical accounting policies. Several factors are
considered in determining whether or not a policy is critical in the preparation
of financial statements. These factors include, among other things, whether the
estimates are significant to the financial statements, the nature of the
estimates, the ability to readily validate the estimates with other information
including third parties or available prices, and sensitivity of the estimates to
changes in economic conditions and whether alternative accounting methods may be
utilized under accounting principles generally accepted in the United States of
America. For all of these policies, management cautions that future events
rarely develop exactly as forecast, and the best estimates routinely require
adjustment. Management has discussed the development and the selection of
critical accounting policies with GCI's Audit Committee.

                                       40
<PAGE>
Those policies considered to be critical accounting policies for the three
months ended March 31, 2006 are described below.

     o   We maintain allowances for doubtful accounts for estimated losses
         resulting from the inability of our customers to make required
         payments. We also maintain an allowance for doubtful accounts based on
         our assessment of the likelihood that our customers will satisfactorily
         comply with rules necessary to obtain supplemental funding from the
         Universal Service Administrative Company ("USAC") for services provided
         by us under our packaged communications offerings to rural hospitals,
         health clinics and school districts. 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.
         If the financial condition of our customers were to deteriorate or if
         they are unable to emerge from reorganization proceedings, resulting in
         an impairment of their ability to make payments, additional allowances
         may be required. If their financial condition improves or they emerge
         successfully from reorganization proceedings, allowances may be
         reduced. Such allowance changes could have a material effect on our
         consolidated financial condition and results of operations.

     o   We record all assets and liabilities acquired in purchase acquisitions,
         including goodwill and other intangibles, at fair value as required by
         SFAS No. 141, "Business Combinations." Goodwill and indefinite-lived
         assets such as our cable certificates are not amortized but are
         subject, at a minimum, to annual tests for impairment and quarterly
         evaluations of whether events and circumstances continue to support an
         indefinite useful life as required by SFAS No. 142, "Goodwill and Other
         Intangible Assets." Other intangible assets are amortized over their
         estimated useful lives using the straight-line method, and are subject
         to impairment if events or circumstances indicate a possible inability
         to realize the carrying amount as required by SFAS No. 142. The initial
         goodwill and other intangibles recorded and subsequent impairment
         analysis requires management to make subjective judgments concerning
         estimates of the applicability of quoted market prices in active
         markets and, if quoted market prices are not available and/or are not
         applicable, how the acquired asset will perform in the future using a
         discounted cash flow analysis. Estimated cash flows may extend beyond
         ten years and, by their nature, are difficult to determine over an
         extended timeframe. Events and factors that may significantly affect
         the estimates include, among others, competitive forces, customer
         behaviors and attrition, changes in revenue growth trends, cost
         structures and technology, and changes in discount rates, performance
         compared to peers, material and ongoing negative economic trends, and
         specific industry or market sector conditions. In determining the
         reasonableness of cash flow estimates, we review historical performance
         of the underlying asset or similar assets in an effort to improve
         assumptions utilized in our estimates. In assessing the fair value of
         goodwill and other intangibles, we may consider other information to
         validate the reasonableness of our valuations including third-party
         assessments. These evaluations could result in a change in useful lives
         in future periods and could result in write-down of the value of
         intangible assets. Our cable certificate and goodwill assets are our
         only indefinite-lived intangible assets and because of the significance
         of our cable certificate and goodwill assets to our consolidated
         balance sheet, our annual and quarterly impairment analyses and
         quarterly evaluations of remaining useful lives are critical. Any
         changes in key assumptions about the business and its prospects,
         changes in market conditions or other externalities, or recognition of
         previously unrecognized intangible assets for impairment testing
         purposes could result in an

                                       41
<PAGE>
         impairment charge and such a charge could have a material adverse
         effect on our consolidated results of operations.

     o   We estimate unbilled long-distance services Cost of Goods Sold based
         upon minutes of use carried through our network and established rates.
         We estimate unbilled costs for new circuits and services, and network
         changes that result in traffic routing changes or a change in carriers.
         Carriers that provide service to us regularly make network changes that
         can lead to new, revised or corrected billings. Such estimates are
         revised or removed when subsequent billings are received, payments are
         made, billing matters are researched and resolved, tariffed billing
         periods lapse, or when disputed charges are resolved. Revisions to
         previous estimates could either increase or decrease costs in the year
         in which the estimate is revised which could have a material effect on
         our consolidated financial condition and results of operations.

     o   Our income tax policy provides for deferred income taxes to show the
         effect of temporary differences between the recognition of revenue and
         expenses for financial and income tax reporting purposes and between
         the tax basis of assets and liabilities and their reported amounts in
         the financial statements in accordance with SFAS No. 109, "Accounting
         for Income Taxes." We have recorded deferred tax assets of
         approximately $65.5 million associated with income tax net operating
         losses that were generated from 1992 to 2003, and that expire from 2009
         to 2025. Pre-acquisition income tax net operating losses associated
         with acquired companies are subject to additional deductibility limits.
         We have recorded deferred tax assets of approximately $2.1 million
         associated with alternative minimum tax credits that do not expire.
         Significant management judgment is required in developing our provision
         for income taxes, including the determination of deferred tax assets
         and liabilities and any valuation allowances that may be required
         against the deferred tax assets. In conjunction with certain 1996
         acquisitions, we determined that approximately $20.0 million of the
         acquired net operating losses would not be utilized for income tax
         purposes, and elected with our December 31, 1996 income tax returns to
         forego utilization of such acquired losses. Deferred tax assets were
         not recorded associated with the foregone losses and, accordingly, no
         valuation allowance was provided. We have not recorded a valuation
         allowance on the deferred tax assets as of March 31, 2006 based on
         management's belief that future reversals of existing taxable temporary
         differences and estimated future taxable income exclusive of reversing
         temporary differences and carryforwards, will, more likely than not, be
         sufficient to realize the benefit of these assets over time. In the
         event that actual results differ from these estimates or if our
         historical trends change, we may be required to record a valuation
         allowance on deferred tax assets, which could have a material adverse
         effect on our consolidated financial position or results of operations.

Other significant accounting policies, not involving the same level of
measurement uncertainties as those discussed above, are nevertheless important
to an understanding of the financial statements. Policies related to revenue
recognition, share-based payments, and financial instruments require difficult
judgments on complex matters that are often subject to multiple sources of
authoritative guidance. Certain of these matters are among topics currently
under reexamination by accounting standards setters and regulators. No specific
conclusions reached by these standard setters appear likely to cause a material
change in our accounting policies, although outcomes cannot be predicted with
confidence. A complete discussion of our significant accounting policies can be
found in note 1 in "Notes to Consolidated Financial Statements" included in Part
II of our December 31, 2005 annual report on Form 10-K.

                                       42
<PAGE>
Geographic Concentration and the Alaska Economy

We have one major customer, Verizon. Our remaining customers are located
primarily throughout Alaska. Because of this geographic concentration, our
growth and operations depend upon economic conditions in Alaska. The economy of
Alaska is dependent upon the natural resources industries, and in particular oil
production, as well as tourism, government, and United States military spending.
Any deterioration in these markets could have an adverse impact on us. All of
the federal funding and the majority of investment revenues are dedicated for
specific purposes, leaving oil revenues as the primary source of general
operating revenues. Tourism, air cargo, and service sectors have helped offset
the prevailing pattern of oil industry downsizing that has occurred during much
of the last several years.

No assurance can be given that the driving forces in the Alaska economy, and in
particular, oil production, will continue at appropriate levels to provide an
environment for expanded economic activity.

No assurance can be given that oil companies doing business in Alaska will be
successful in discovering new fields or further developing existing fields which
are economic to develop and produce oil with access to the pipeline or other
means of transport to market, even with a reduced level of royalties. We are not
able to predict the effect of changes in the price and production volumes of
North Slope oil on Alaska's economy or on us.


PART I.
ITEM 3.
           Quantitative and Qualitative Disclosures About Market Risk

We are exposed to various types of market risk in the normal course of business,
including the impact of interest rate changes. We do not hold derivatives for
trading purposes.

Our Senior Credit Facility carries interest rate risk. Amounts borrowed under
this Agreement bear interest at LIBOR plus 1.50% or less depending upon our
Total Leverage Ratio (as defined). Should the LIBOR rate change, our interest
expense will increase or decrease accordingly. As of March 31, 2006, we have
borrowed $158.8 million subject to interest rate risk. On this amount, each 1%
increase in the LIBOR interest rate would result in $1,588,000 of additional
gross interest cost on an annualized basis.


PART I.
ITEM 4.
                             Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this Quarterly Report on Form 10-Q, we
carried out an evaluation of the effectiveness of the design and operation of
our "disclosure controls and procedures" (as defined in the Securities Exchange
Act of 1934 ("Exchange Act") Rules 13a - 15(e)) under the supervision and with
the participation of our management, including our Chief Executive Officer and
our Chief Financial Officer. Based upon that evaluation, our Chief Executive
Officer and our Chief Financial Officer concluded that our disclosure controls
and procedures are effective.

                                       43
<PAGE>
Disclosure controls and procedures are controls and other procedures that are
designed to ensure that information required to be disclosed in our reports
filed or submitted under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the SEC's rules and forms.
Disclosure controls and procedures include, without limitation, controls and
procedures designed to ensure that information required to be disclosed in our
reports filed under the Exchange Act is accumulated and communicated to
management to allow timely decisions regarding required disclosure.


(b) Changes in Internal Controls

During the first quarter of 2006 we corrected certain configuration settings in
our new customer billing system so that credits and other adjustments are
properly recorded. We will continue to monitor vigorously the effectiveness of
these processes, procedures and controls, and will make any further changes as
management determines appropriate.

Other than as expressly noted in the paragraph above, there were no changes in
our internal control over financial reporting identified in connection with the
evaluation of our controls performed during the quarter ended March 31, 2006
that have materially affected, or are reasonably likely to materially affect,
our internal control over financial reporting.

We may enhance, modify, and supplement internal controls and disclosure controls
and procedures based on experience.

Internal controls are a system designed to provide reasonable assurance to the
Company's management and board of directors regarding the preparation and fair
presentation of its financial statements. All internal control systems, no
matter how well designed, have inherent limitations. Therefore, even those
systems determined to be effective can provide only reasonable assurance with
respect to financial statement preparation and presentation. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk
that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate.


PART II.
ITEM 1.

                                LEGAL PROCEEDINGS

Information regarding material pending legal proceedings to which we are a party
is included in note 6 to the accompanying "Notes to Interim Condensed
Consolidated Financial Statements" and is incorporated herein by reference.

                                       44
<PAGE>
PART II.
ITEM 6.
                                    EXHIBITS
<TABLE>
<CAPTION>
          Exhibit No.                                        Description
        --------------------------------------------------------------------------------------------------------
            <S>          <C>
            10.134       Full-time Transponder Capacity Agreement with PanAmSat Corporation dated March 31,
                           2006 *
            31.1         Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302
                           of the Sarbanes-Oxley Act of 2002 by our President and Director
            31.2         Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302
                           of the Sarbanes-Oxley Act of 2002 by our Senior Vice President, Chief Financial
                           Officer, Secretary and Treasurer
            32.1         Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906
                           of the Sarbanes-Oxley Act of 2002 by our President and Director
            32.2         Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906
                           of the Sarbanes-Oxley Act of 2002 by our Senior Vice President, Chief Financial
                           Officer, Secretary and Treasurer
</TABLE>
         -------------------------
         * 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 four asterisks.

          -------------------------

                                       45
<PAGE>
                                   SIGNATURES


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



                                    GCI, INC.

<TABLE>
<CAPTION>
                Signature                                        Title                                 Date
-------------------------------------       ------------------------------------------       -------------------
<S>                                         <C>                                                  <C>
/s/ Ronald A. Duncan                        President and Director                               May 8, 2006
-------------------------------------       (Principal Executive Officer)                    -------------------
Ronald A. Duncan

/s/ G. Wilson Hughes                        Vice President and Director                          May 8, 2006
-------------------------------------                                                        -------------------
G. Wilson Hughes

/s/ John M. Lowber                          Secretary, Treasurer and Director                    May 8, 2006
-------------------------------------       (Principal Financial and Accounting              -------------------
John M. Lowber                              Officer)
</TABLE>

                                       46