|   |   |   |   |   |
|--------|--------|--------|--------|--------|

|   | x QUARTERLY      REPORT PURSUANT TO SECTION 13 OR 15(d) OF  THE |
|--------|-----------------------------------------------------------------|

|   | SECURITIES      EXCHANGE ACT OF 1934 |
|--------|--------------------------------------|

|   | oTRANSITION      REPORT PURSUANT TO SECTION 13 OR 15(d) OF  THE |
|--------|-----------------------------------------------------------------|

|   | SECURITIES      EXCHANGE ACT OF 1934 |
|--------|--------------------------------------|

|   | 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 |
|--------|------------------------------------------------------------------------------------|

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

----

| ·   | Correct the      Company's consolidated financial statements under Part I, Item I contained      in this Form 10-Q/A for an error in depreciation expense due to failure to      make a change to the estimated useful life of certain assets that were      expected to be decommissioned at or near the end of 2008.  The      error increased depreciation expense $4.0 million and $8.5 million for the      three and six months ended June 30, 2008, respectively, decreased minority      interest expense $920,000 and $1.9 million for the three and six months      ended June 30, 2008, respectively, and decreased income tax expense $1.4      million and $2.8 million for the three and six months ended June 30, 2008,      respectively.  The error also decreased property and equipment      in service $8.5 million, decreased minority interest $1.9 million and      decreased deferred income tax liability $2.8 million as of June 30,      2008.  Note 1(m) to the consolidated financial statements is      added to describe the error correction,and |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Correct the      Company’s disclosure under Part I, Item 4(b) to include the Company’s      evaluation of this error on its internal control over financial      reporting. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                           |                                                      |                                                                                                             |   |   | Page  No. |
|----------------------------------------------------------------|-----------------------------------------------------------|------------------------------------------------------------------------------------------------------------------|--------|--------|-----------|
|                                                           |                                                      |                                                                                                             |   |   |      |
| Cautionary      Statement Regarding Forward-Looking Statements | 3                                                         |
|                                                           |                                                      |                                                                                                             |   |   |      |
| Part      I.  FINANCIAL INFORMATION                  |                                                      |
|                                                           |                                                      |                                                                                                             |   |   |      |
|                                                           | Item      I.                                              | Financial      Statements                                                                                        |   |   |      |
|                                                           |                                                      |                                                                                                             |   |   |      |
|                                                           |                                                      | Consolidated      Balance Sheets as of June 30, 2008 (as restated,unaudited)                                     |   |   |      |
|                                                           |                                                      |   and      December 31, 2007                                                                           |   |   | 4         |
|                                                           |                                                      |                                                                                                             |   |   |      |
|                                                           |                                                      | Consolidated      Income Statement for the three and six months ended                                            |   |   |      |
|                                                           |                                                      |   June      30, 2008 (as restated, unaudited) and 2007 (as restated,      unaudited)                   |   |   | 6         |
|                                                           |                                                      |                                                                                                             |   |   |      |
|                                                           |                                                      | Consolidated      Statements of Cash Flows for the six months                                                    |   |   |      |
|                                                           |                                                      |   ended      June 30, 2008 (as restated, unaudited) and 2007 (as restated,        unaudited) |   |   | 7         |
|                                                           |                                                      |                                                                                                             |   |   |      |
|                                                           |                                                      | Notes to      Interim Consolidated Financial Statements (unaudited)                                              |   |   | 8         |
|                                                           |                                                      |                                                                                                             |   |   |      |
|                                                           | Item      2.                                              | Management’s      Discussion and Analysis of Financial Condition                                           |   |   |      |
|                                                           |                                                      |   and      Results of Operations                                                                       |   |   | 26        |
|                                                           |                                                      |                                                                                                             |   |   |      |
|                                                           | Item      3.                                              | Quantitative      and Qualitative Disclosures About Market Risk                                                  |   |   | 54        |
|                                                           |                                                      |                                                                                                             |   |   |      |
|                                                           | Item      4.                                              | Controls and      Procedures                                                                                     |   |   | 54        |
|                                                           |                                                      |                                                                                                             |   |   |      |
| Part      II.  OTHER INFORMATION                     |                                                      |                                                                                                             |   |
|                                                           |                                                      |                                                                                                             |   |   |      |
|                                                           | Item      1A.                                             | Risk      Factors                                                                                                |   |   | 56        |
|                                                           |                                                      |                                                                                                             |   |   |      |
|                                                           | Item      6.                                              | Exhibits                                                                                                         |   |   | 57        |
|                                                           |                                                      |                                                                                                             |   |   |      |
|                                                           | Other items      are omitted, as they are not applicable. |                                                                                                             |   |
|                                                           |                                                      |                                                                                                             |   |   |      |
| SIGNATURES                                                     |                                                      |                                                                                                             | 58     |

----

----

| (Amounts in      thousands)                                             |   | (as restated,      unaudited) |      |   |              |   |
|-------------------------------------------------------------------------|--------|-------------------------------|-----------|--------|-------------------|--------|
|                                                                    |   | June      30,                 |      |   | December      31, |   |
| ASSETS                                                                  |   | 2008                          |      |   | 2007              |   |
|                                                                    |   |                          |      |   |              |   |
|        Current assets:                                             |   |                          |      |   |              |   |
|         Cash and cash equivalents                             |   | $                             | 95,703    |   |              |   | 13,074 |   |
|                                                                    |   |                          |      |   |              |   |   |   |
| Receivables                                                             |   |                          | 107,502   |   |              |   | 97,913 |   |
| Less      allowance for doubtful receivables                            |   |                          | 1,864     |   |              |   | 1,657 |   |
|          Net receivables                                 |   |                          | 105,638   |   |              |   | 96,256 |   |
|                                                                    |   |                          |      |   |              |   |   |   |
|         Deferred income taxes                                 |   |                          | 6,448     |   |              |   | 5,734 |   |
|         Prepaid expenses                                      |   |                          | 6,246     |   |              |   | 5,356 |   |
|         Inventories                                           |   |                          | 5,390     |   |              |   | 2,541 |   |
|         Investment securities                                 |   |                          | 5,230     |   |              |   | --- |   |
|         Other current assets                                  |   |                          | 558       |   |              |   | 717 |   |
|  Total      current assets                                         |   |                          | 225,213   |   |              |   | 123,678 |   |
|                                                                    |   |                          |      |   |              |   |   |   |
|   Property      and equipment in service, net of depreciation |   |                          | 684,099   |   |              |   | 504,273 |   |
|        Construction in progress                                    |   |                          | 115,809   |   |              |   | 69,409 |   |
|          Net property and equipment                      |   |                          | 799,908   |   |              |   | 573,682 |   |
|                                                                    |   |                          |      |   |              |   |   |   |
| Cable      certificates                                                 |   |                          | 191,565   |   |              |   | 191,565 |   |
| Goodwill                                                                |   |                          | 48,211    |   |              |   | 42,181 |   |
| Wireless      licenses                                                  |   |                          | 25,907    |   |              |   | 25,757 |   |
| Other      intangible assets, net of amortization                       |   |                          | 18,080    |   |              |   | 11,769 |   |
|        Deferred loan and senior notes costs, net of amortization   |   |                          | 6,726     |   |              |   | 6,202 |   |
| Other      assets                                                       |   |                          | 10,685    |   |              |   | 9,399 |   |
|  Total      other assets                                           |   |                          | 301,174   |   |              |   | 286,873 |   |
|  Total      assets                                                 |   | $                             | 1,326,295 |   |              |   | 984,233 |   |

----

| (Amounts in      thousands)                                                                                                             |   | (as restated,      unaudited) |      |   |              |   |
|-----------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------|-----------|--------|-------------------|--------|
|                                                                                                                                    |   | June      30,                 |      |   | December      31, |   |
| LIABILITIES,      MINORITY INTEREST, AND STOCKHOLDER'S EQUITY                                                                           |   | 2008                          |      |   | 2007              |   |
|                                                                                                                                    |   |                          |      |   |              |   |
| Current      liabilities:                                                                                                               |   |                          |      |   |              |   |
| Current      maturities of obligations under long-term debt and capital      leases                                                     |   | $                             | 13,830    |   |              |   | 2,375 |   |
| Accounts      payable                                                                                                                   |   |                          | 46,094    |   |              |   | 35,747 |   |
| Deferred      revenue                                                                                                                   |   |                          | 20,886    |   |              |   | 16,600 |   |
| Accrued      payroll and payroll related obligations                                                                                    |   |                          | 17,401    |   |              |   | 16,329 |   |
| Accrued      interest                                                                                                                   |   |                          | 9,322     |   |              |   | 8,927 |   |
| Accrued      liabilities                                                                                                                |   |                          | 9,219     |   |              |   | 7,536 |   |
| Subscriber      deposits                                                                                                                |   |                          | 1,020     |   |              |   | 877 |   |
| Total current      liabilities                                                                                                          |   |                          | 117,772   |   |              |   | 88,391 |   |
|                                                                                                                                    |   |                          |      |   |              |   |   |   |
| Long-term      debt                                                                                                                     |   |                          | 702,952   |   |              |   | 536,115 |   |
| Obligations      under capital leases, excluding current maturities                                                                     |   |                          | 96,254    |   |              |   | 2,290 |   |
| Obligation      under capital lease due to related party, excluding current      maturity                                               |   |                          | 1,864     |   |              |   | 469 |   |
| Deferred      income taxes                                                                                                              |   |                          | 86,565    |   |              |   | 84,294 |   |
| Long-term      deferred revenue                                                                                                         |   |                          | 37,738    |   |              |   | 845 |   |
| Other      liabilities                                                                                                                  |   |                          | 19,766    |   |              |   | 12,396 |   |
| Total      liabilities                                                                                                                  |   |                          | 1,062,911 |   |              |   | 724,800 |   |
|                                                                                                                                    |   |                          |      |   |              |   |   |   |
| Minority      interest                                                                                                                  |   |                          | 4,556     |   |              |   | 6,478 |   |
|                                                                                                                                    |   |                          |      |   |              |   |   |   |
| Commitments      and contingencies                                                                                                      |   |                          |      |   |              |   |   |   |
| Stockholder's      equity:                                                                                                              |   |                          |      |   |              |   |   |   |
| Class A      common stock (no par). Authorized 10 shares; issued and outstanding 0.1      shares at June 30, 2008 and December 31, 2007 |   |                          | 206,622   |   |              |   | 206,622 |   |
| Paid-in      capital                                                                                                                    |   |                          | 41,456    |   |              |   | 37,804 |   |
| Retained      earnings                                                                                                                  |   |                          | 10,750    |   |              |   | 8,529 |   |
| Total      stockholder's equity                                                                                                         |   |                          | 258,828   |   |              |   | 252,955 |   |
| Total      liabilities, minority interest, and stockholder's equity                                                                     |   | $                             | 1,326,295 |   |              |   | 984,233 |   |

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

----

|                                                                                             |   | Three Months      Ended |    |   | Six Months      Ended   |   |
|--------------------------------------------------------------------------------------------------|--------|-------------------------|---------|--------|-------------------------|--------|
|                                                                                             |   | June      30,           |    |   | June      30,           |   |
|   (Amounts in      thousands)                                                          |   | (as restated)      2008 |    |   | (as restated)      2007 |   |   | (as restated)      2008 |   |   | (as restated)      2007 |   |
| Revenues                                                                                         |   | $                       | 142,461 |   |                    |   | 129,890 |   |   |   | 277,135 |   |   |   | 254,921 |   |
|                                                                                             |   |                    |    |   |                    |   |   |   |   |   |   |   |   |   |   |   |
| Cost of goods      sold (exclusive of depreciation and amortization shown separately      below) |   |                    | 52,448  |   |                    |   | 45,579 |   |   |   | 103,759 |   |   |   | 93,569 |   |
| Selling,      general and administrative expenses                                                |   |                    | 48,260  |   |                    |   | 43,430 |   |   |   | 94,666 |   |   |   | 87,035 |   |
| Depreciation      and amortization expense                                                       |   |                    | 27,708  |   |                    |   | 21,437 |   |   |   | 54,951 |   |   |   | 42,303 |   |
| Operating      income                                                                            |   |                    | 14,045  |   |                    |   | 19,444 |   |   |   | 23,759 |   |   |   | 32,014 |   |
|                                                                                             |   |                    |    |   |                    |   |   |   |   |   |   |   |   |   |   |   |
| Other income      (expense):                                                                     |   |                    |    |   |                    |   |   |   |   |   |   |   |   |   |   |   |
| Interest      expense                                                                            |   |                    | (10,899 | )      |                    |   | (8,557 | ) |   |   | (19,584 | ) |   |   | (16,875 | ) |
| Loan and      senior note fees                                                                   |   |                    | (879    | )      |                    |   | (216 | ) |   |   | (1,102 | ) |   |   | (396 | ) |
| Interest      income                                                                             |   |                    | 402     |   |                    |   | 161 |   |   |   | 483 |   |   |   | 345 |   |
| Minority      interest                                                                           |   |                    | 946     |   |                    |   | (24 | ) |   |   | 1,922 |   |   |   | (11 | ) |
| Other      expense, net                                                                          |   |                    | (10,430 | )      |                    |   | (8,636 | ) |   |   | (18,281 | ) |   |   | (16,937 | ) |
|                                                                                             |   |                    |    |   |                    |   |   |   |   |   |   |   |   |   |   |   |
| Income before      income tax expense                                                            |   |                    | 3,615   |   |                    |   | 10,808 |   |   |   | 5,478 |   |   |   | 15,077 |   |
|                                                                                             |   |                    |    |   |                    |   |   |   |   |   |   |   |   |   |   |   |
| Income tax      expense                                                                          |   |                    | 1,783   |   |                    |   | 4,890 |   |   |   | 3,210 |   |   |   | 6,853 |   |
|                                                                                             |   |                    |    |   |                    |   |   |   |   |   |   |   |   |   |   |   |
| Net      income                                                                                  |   | $                       | 1,832   |   |                    |   | 5,918 |   |   |   | 2,268 |   |   |   | 8,224 |   |

----

| (Amounts in      thousands)                                                                                                            |   | (as restated)      2008 |     | (as      restated)2007 |   |
|----------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------|----------|------------------------|--------|
| Cash flows      from operating activities:                                                                                             |   |                    |     |                   |   |   |
| Net      income                                                                                                                        |   | $                       | 2,268    |                   |   |   | 8,224 |   |
| Adjustments      to reconcile net income to net cash provided  by operating      activities (net of effects of acquisition): |   |                    |     |                   |   |   |   |   |
| Depreciation      and amortization expense                                                                                             |   |                    | 54,951   |                   |   |   | 42,303 |   |
| Deferred      income tax expense                                                                                                       |   |                    | 2,470    |                   |   |   | 6,663 |   |
| Share-based      compensation expense                                                                                                  |   |                    | 2,853    |                   |   |   | 1,748 |   |
| Other noncash      income and expense items                                                                                            |   |                    | 2,142    |                   |   |   | 3,312 |   |
| Change in      operating assets and liabilities, net of effect of    acquisition                                                       |   |                    | 44,773   |                   |   |   | (6,727 | )  |
| Net cash      provided by operating activities                                                                                         |   |                    | 109,457  |                   |   |   | 55,523 |   |
|                                                                                                                                   |   |                    |     |                   |   |   |   |   |
| Cash flows      from investing activities:                                                                                             |   |                    |     |                   |   |   |   |   |
| Purchases of      property and equipment                                                                                               |   |                    | (113,491 | )                      |   |   | (68,455 | )  |
| Purchase of      business, net of cash received                                                                                        |   |                    | (40,161  | )                      |   |   | (19,530 | )  |
| Purchases of      other assets and intangible assets                                                                                   |   |                    | (2,324   | )                      |   |   | (4,733 | )  |
| Other                                                                                                                                  |   |                    | ---      |                   |   |   | 25 |   |
| Net cash used      in investing activities                                                                                             |   |                    | (155,976 | )                      |   |   | (92,693 | )  |
|                                                                                                                                   |   |                    |     |                   |   |   |   |   |
| Cash flows      from financing activities:                                                                                             |   |                    |     |                   |   |   |   |   |
| Borrowing on      Senior Credit Facility                                                                                               |   |                    | 132,100  |                   |   |   | 15,000 |   |
| Repayment of      debt and capital lease obligations                                                                                   |   |                    | (1,999   | )                      |   |   | (26,126 | )  |
| Payment of      debt issuance costs                                                                                                    |   |                    | (1,626   | )                      |   |   | --- |   |
| Issuance of      long-term debt                                                                                                        |   |                    | 614      |                   |   |   | --- |   |
| Net      contribution from (distribution to) General Communication,      Inc.                                                          |   |                    | 59       |                   |   |   | (1,013 | )  |
| Other                                                                                                                                  |   |                    | ---      |                   |   |   | (1 | )  |
| Net cash      provided by (used in) financing activities                                                                               |   |                    | 129,148  |                   |   |   | (12,140 | )  |
| Net increase      (decrease) in cash and cash equivalents                                                                              |   |                    | 82,629   |                   |   |   | (49,310 | )  |
| Cash and cash      equivalents at beginning of period                                                                                  |   |                    | 13,074   |                   |   |   | 57,647 |   |
|                                                                                                                                   |   |                    |     |                   |   |   |   |   |
| Cash and cash      equivalents at end of period                                                                                        |   | $                       | 95,703   |                   |   |   | 8,337 |   |

----

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

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

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

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

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

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

|   | · | Resale and      sale of postpaid and sale of prepaid wireless telephone services and sale      of wireless telephone handsets andaccessories, |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------|

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

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

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

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

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

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

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

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

----

|   | (c) | United      Utilities, Inc. and Unicom, Inc.      Acquisition |
|--------|-----|---------------------------------------------------------------|

|                                                            |   | At June 30,      2008 |   |
|-----------------------------------------------------------------|--------|-----------------------|--------|
| Current      assets                                             |   | $                     | 14,460 |   |
| Property and      equipment, including construction in progress |   |                  | 68,149 |   |
| Intangible      assets                                          |   |                  | 6,549  |   |
| Goodwill                                                        |   |                  | 6,030  |   |
| Other      assets                                               |   |                  | 2,411  |   |
| Total assets      acquired                                      |   |                  | 97,599 |   |
| Current      liabilities                                        |   |                  | 4,452  |   |
| Long-term      debt, including current portion                  |   |                  | 42,704 |   |
| Other      long-term liabilities                                |   |                  | 8,188  |   |
| Total      liabilities assumed                                  |   |                  | 55,344 |   |
| Net assets      acquired                                        |   | $                     | 42,255 |   |

----

|                                |   | Three Months      Ended June 30, |    |   | Six Months      Ended June 30, |   |
|-------------------------------------|--------|----------------------------------|---------|--------|--------------------------------|--------|
|                                |   | 2008 (as      restated)          |    |   | 2007                           |   |   | 2008 (as      restated) |   |   | 2007 |   |
| Pro forma      consolidated revenue |   | $                                | 146,824 |   |                           |   | 136,223 |   |   |   | 288,185 |   |   |   | 267,764 |   |
| Pro forma net      income           |   | $                                | 3,038   |   |                           |   | 6,138 |   |   |   | 2,651 |   |   |   | 8,713 |   |

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

|   | We account      for our regulated operations in accordance with the accounting principles      for regulated enterprises prescribed by SFAS No. 71.  This      accounting recognizes the economic effects of rate regulation by recording      cost and a return on investment as such amounts are recovered through      rates authorized by regulatory authorities.  Accordingly, under      SFAS No. 71, plant and equipment is depreciated over lives approved by      regulators and certain costs and obligations are deferred based upon      approvals received from regulators to permit recovery of such amounts in      future years.  Our cost studies and depreciation rates for our      regulated operations are subject to periodic audits that could result in      reductions of revenues.  Based upon the preliminary purchase      price allocation described in note 1(c), the effects of regulation for the      three and six months ended June 30, 2008 are not material to the      consolidated financial statements. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (e) | Revenue      Recognition |
|--------|-----|--------------------------|

|        (f) | Earnings      per Share |
|-----------------|-------------------------|

|        (g) | Investment      Securities |
|-----------------|----------------------------|

----

|   | (h)            Asset      RetirementObligations |
|--------|-------------------------------------------------------------------------------------------------------------|

| Balance at      December 31, 2006                                 |   | $      | 3,408  |   |
|-------------------------------------------------------------------|--------|--------|--------|--------|
| Liability      incurred                                           |   |   | 85     |   |
| Accretion      expense for the six months endedJune 30,      2007 |   |   | 71     |   |
| Liability      settled                                            |   |   | (2     | )      |
| Balance at      June 30, 2007                                     |   | $      | 3,562  |   |
|                                                              |   |   |   |   |
| Balance at      December 31, 2007                                 |   | $      | 4,173  |   |
| Liability      incurred                                           |   |   | 18     |   |
| Accretion      expense for the six months endedJune 30,      2008 |   |   | 124    |   |
| Additions      upon acquisition of UUI and Unicom                 |   |   | 6,211  |   |
| Liability      settled                                            |   |   | (40    | )      |
| Balance at      June 30, 2008                                     |   | $      | 10,486 |   |

|                           |   | Three Months      Ended |   | Six Months      Ended |
|--------------------------------|--------|-------------------------|--------|-----------------------|
|                           |   | June      30,           |   | June      30,         |
|                           |   | 2008                    |   | 2007                  |   | 2008 |   | 2007 |
| Surcharges      reported gross |   |                    | 1,062  |                  | 1,097 |   |   | 2,012 |   | 2,065 |

----

|                                                 |   | Three Months      Ended June 30, 2008 |   |   | Six Months      Ended June 30, 2008 |   |
|------------------------------------------------------|--------|---------------------------------------|--------|--------|-------------------------------------|--------|
| Increased      depreciation and amortization expense |   | $                                     | 419    |   |                                |   | 562 |   |
| Decreased      operating income                      |   |                                  | 419    |   |                                |   | 562 |   |
| Decreased net      income                            |   |                                  | 222    |   |                                |   | 289 |   |

| (m) | Restatements,      Immaterial Error Correction and      Reclassification |
|-----|-------------------------------------------------------------------------------|

| ·   | We increased      depreciation expense $4.0 million and $8.5 million for the three and six      months ended June 30, 2008, respectively, to correct depreciation expense      for a failure to change the estimated useful life of certain assets that      were expected to be decommissioned at or near the end of      2008.  The assets should have been depreciated over the      remaining period they were expected to beused; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We decreased      minority interest expense $920,000 and $1.9 million for the three and six      months ended June 30, 2008, respectively, to record the minority interest      portion of the correction described above,and; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We decreased      income tax expense $1.4 million and $2.8 million for the three and six      months ended June 30, 2008, respectively, to record the income tax effect      of the corrections described above. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                        |   | June 30,      2008      |      |
|-------------------------------------------------------------|--------|-------------------------|-----------|
| Consolidated      Condensed Balance Sheet                   |   | As previously reported1 |      |   | Adjustments |   |   | As      restated |   |
| Assets                                                      |   |                    |      |   |   |   |   |   |   |
| Total current      assets                                   |   | $                       | 225,213   |   |   |   | --- |   |   |   | 225,213 |   |
|                                                        |   |                    |      |   |   |   |   |   |   |   |   |   |
| Property and      equipment in service, net of depreciation |   |                    | 692,561   |   |   |   | (8,462 | ) |   |   | 684,099 |   |
| Construction      in progress                               |   |                    | 115,809   |   |   |   | --- |   |   |   | 115,809 |   |
| Net property      and equipment                             |   |                    | 808,370   |   |   |   | (8,462 | ) |   |   | 799,908 |   |
|                                                        |   |                    |      |   |   |   |   |   |   |   |   |   |
| Total other      assets                                     |   |                    | 301,174   |   |   |   | --- |   |   |   | 301,174 |   |
| Total      assets                                           |   | $                       | 1,334,757 |   |   |   | (8,462 | ) |   |   | 1,326,295 |   |

----

|                                                                                      |   |   |      |   |   |   |   |   |   |   |      |   |
|-------------------------------------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|--------|--------|--------|--------|-----------|--------|
| Liabilities,      Minority Interest, and Stockholder's Equity                             |   |   |      |   |   |   |   |   |   |   |      |   |
| Total current      liabilities                                                            |   |   | 117,772   |   |   |   | ---    |   |   |   | 117,772   |   |
|                                                                                      |   |   |      |   |   |   |   |   |   |   |      |   |
| Long-term      debt                                                                       |   |   | 702,952   |   |   |   | ---    |   |   |   | 702,952   |   |
| Obligations      under capital leases, excluding current maturities                       |   |   | 96,254    |   |   |   | ---    |   |   |   | 96,254    |   |
| Obligation      under capital lease due to related party, excluding current      maturity |   |   | 1,864     |   |   |   | ---    |   |   |   | 1,864     |   |
| Deferred      income taxes                                                                |   |   | 89,315    |   |   |   | (2,750 | )      |   |   | 86,565    |   |
| Long-term      deferred revenue                                                           |   |   | 37,738    |   |   |   | ---    |   |   |   | 37,738    |   |
| Other      liabilities                                                                    |   |   | 19,766    |   |   |   | ---    |   |   |   | 19,766    |   |
| Total      liabilities                                                                    |   |   | 1,065,661 |   |   |   | (2,750 | )      |   |   | 1,062,911 |   |
|                                                                                      |   |   |      |   |   |   |   |   |   |   |      |   |
| Minority      interest                                                                    |   |   | 6,502     |   |   |   | (1,946 | )      |   |   | 4,556     |   |
|                                                                                      |   |   |      |   |   |   |   |   |   |   |      |   |
| Stockholder's      equity:                                                                |   |   |      |   |   |   |   |   |   |   |      |   |
| Class A      common stock (no par)                                                        |   |   | 206,622   |   |   |   | ---    |   |   |   | 206,622   |   |
| Paid-in      capital                                                                      |   |   | 41,456    |   |   |   | ---    |   |   |   | 41,456    |   |
| Retained      earnings                                                                    |   |   | 14,516    |   |   |   | (3,766 | )      |   |   | 10,750    |   |
| Total      stockholder's equity                                                           |   |   | 262,594   |   |   |   | (3,766 | )      |   |   | 258,828   |   |
| Total      liabilities, minority interest, and stockholder's equity                       |   |   | 1,334,757 |   |   |   | (8,462 | )      |   |   | 1,326,295 |   |
|                                                                                      |   |   |      |   |   |   |   |   |   |   |      |   |
| 1      As reported on Form 10-Q for the quarter ended June 30,      2008                  |   |

|                                                                                             |   | Three Months      Ended June 30, 2008 |    |
|--------------------------------------------------------------------------------------------------|--------|---------------------------------------|---------|
|                                                                                             |   | As previously reported1               |    |   | Adjustments |   |   | As      restated |   |
| Revenues                                                                                         |   | $                                     | 142,461 |   |   |   | --- |   |   |   | 142,461 |   |
|                                                                                             |   |                                  |    |   |   |   |   |   |   |   |   |   |
| Cost of goods      sold (exclusive of depreciation and amortization shown separately      below) |   |                                  | 52,448  |   |   |   | --- |   |   |   | 52,448 |   |
| Selling,      general and administrative expenses                                                |   |                                  | 48,260  |   |   |   | --- |   |   |   | 48,260 |   |
| Depreciation      and amortization expense                                                       |   |                                  | 23,707  |   |   |   | 4,001 |   |   |   | 27,708 |   |
| Operating      income                                                                            |   |                                  | 18,046  |   |   |   | (4,001 | ) |   |   | 14,045 |   |
|                                                                                             |   |                                  |    |   |   |   |   |   |   |   |   |   |
| Other income      (expense):                                                                     |   |                                  |    |   |   |   |   |   |   |   |   |   |
| Interest      expense                                                                            |   |                                  | (10,899 | ) |   |   | --- |   |   |   | (10,899 | ) |
| Loan and      senior note fees                                                                   |   |                                  | (879    | ) |   |   | --- |   |   |   | (879 | ) |
| Interest      income                                                                             |   |                                  | 402     |   |   |   | --- |   |   |   | 402 |   |
| Minority      interest                                                                           |   |                                  | 26      |   |   |   | 920 |   |   |   | 946 |   |
| Other      expense, net                                                                          |   |                                  | (11,350 | ) |   |   | 920 |   |   |   | (10,430 | ) |
|                                                                                             |   |                                  |    |   |   |   |   |   |   |   |   |   |
| Income before      income tax expense                                                            |   |                                  | 6,696   |   |   |   | (3,081 | ) |   |   | 3,615 |   |
|                                                                                             |   |                                  |    |   |   |   |   |   |   |   |   |   |
| Income tax      expense                                                                          |   |                                  | 3,191   |   |   |   | (1,408 | ) |   |   | 1,783 |   |

----

|                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |
|--------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Net      income                                                          |   | $      | 3,505  |   |   |   | (1,673 | )      |   |   | 1,832  |   |
|                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |
| 1      As reported on Form 10-Q for the quarter ended June 30,      2008 |   |

|                                                                                             |   | Six Months      Ended June 30, 2008 |     |
|--------------------------------------------------------------------------------------------------|--------|-------------------------------------|----------|
|                                                                                             |   | As previously reported1             |     |   | Adjustments |   |   | As      restated |   |
| Revenues                                                                                         |   | $                                   | 277,135  |   |   |   | --- |   |   |   | 277,135 |   |
|                                                                                             |   |                                |     |   |   |   |   |   |   |   |   |   |
| Cost of goods      sold (exclusive of depreciation and amortization shown separately      below) |   |                                | 103,759  |   |   |   | --- |   |   |   | 103,759 |   |
| Selling,      general and administrative expenses                                                |   |                                | 94,666   |   |   |   | --- |   |   |   | 94,666 |   |
| Depreciation      and amortization expense                                                       |   |                                | 46,489   |   |   |   | 8,462 |   |   |   | 54,951 |   |
| Operating      income                                                                            |   |                                | 32,221   |   |   |   | (8,462 | ) |   |   | 23,759 |   |
|                                                                                             |   |                                |     |   |   |   |   |   |   |   |   |   |
| Other income      (expense):                                                                     |   |                                |     |   |   |   |   |   |   |   |   |   |
| Interest      expense                                                                            |   |                                | (19,584  | ) |   |   | --- |   |   |   | (19,584 | ) |
| Loan and      senior note fees                                                                   |   |                                | (1,102   | ) |   |   | --- |   |   |   | (1,102 | ) |
| Interest      income                                                                             |   |                                | 483      |   |   |   | --- |   |   |   | 483 |   |
| Minority      interest                                                                           |   |                                | (24      | ) |   |   | 1,946 |   |   |   | 1,922 |   |
| Other      expense, net                                                                          |   |                                | (20,227  | ) |   |   | 1,946 |   |   |   | (18,281 | ) |
|                                                                                             |   |                                |     |   |   |   |   |   |   |   |   |   |
| Income before      income tax expense                                                            |   |                                | 11,994   |   |   |   | (6,516 | ) |   |   | 5,478 |   |
|                                                                                             |   |                                |     |   |   |   |   |   |   |   |   |   |
| Income tax      expense                                                                          |   |                                | 5,960    |   |   |   | (2,750 | ) |   |   | 3,210 |   |
|                                                                                             |   |                                |     |   |   |   |   |   |   |   |   |   |
| Net      income                                                                                  |   | $                                   | 6,034    |   |   |   | (3,766 | ) |   |   | 2,268 |   |
|                                                                                             |   |                                |     |   |   |   |   |   |   |   |   |   |
| Cash provided      by operating activities                                                       |   | $                                   | 109,457  |   |   |   | --- |   |   |   | 109,457 |   |
| Cash used in      investing activities                                                           |   |                                | (155,977 | ) |   |   | --- |   |   |   | (155,977 | ) |
| Cash used in      financing activities                                                           |   |                                | 129,149  |   |   |   | --- |   |   |   | 129,149 |   |
|                                                                                             |   |                                |     |   |   |   |   |   |   |   |   |   |
| 1      As reported on Form 10-Q for the quarter ended June 30,      2008                         |   |

| ·   | We decreased      depreciation expense $590,000 and $1.5 million for the three and six      months ended June 30, 2007, respectively, to correct an error in      calculating depreciation in the initial year an asset is placed in      service.  We originally recorded our estimated depreciation      expense evenly throughout the year with periodic adjustments based upon      improved estimates or actual results.  In accordance with GAAP      we now initially record depreciation expense in the month an asset is      placed in service.  Depreciation was improperly allocated among      quarters, but the year-end total was correct.  Therefore the      restatement impacts the quarterly results but not the December 31, 2007      year-end results. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | We decreased      interest expense $384,000 and $766,000 for the three and six months ended      June 30, 2007, respectively, to correct an interest capitalization error      on certain assets.  Our capitalized interest policy was too      restrictive and resulted in no interest capitalization on certain      qualifying capital expenditures.  Our capitalized interest      policy now conforms to GAAP; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We increased      depreciation expense $322,000 and $644,000 for the three and six months      ended June 30, 2007, respectively, due to the recognition of depreciation      on additional capitalized interest; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We increased      revenue $173,000 and $492,000 for the three and six months ended June 30,      2007, respectively, to correct understated revenue resulting from a      configuration error in the automated interface between our unified billing      system and our general ledger; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We increased      revenue $125,000 and $258,000 for the three and six months ended June 30,      2007, respectively, to correct revenue recognition for a majority      noncontrolling interest in a subsidiary that was recognizing a certain      type of revenue on a cash basis rather than an accrual    basis; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We decreased      share-based compensation expense $715,000 and $757,000 for the three and      six months ended June 30, 2007, respectively, to correct expense      recognition timing for options that did not vest in equal increments over      the vesting period; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We decreased      depreciation expense $37,000 and $75,000 for the three and six months      ended June 30, 2007, respectively, due to a revision of the purchase price      allocation of our purchase of Alaska DigiTel, LLC ("Alaska DigiTel") on      January 1, 2007; and |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We increased      income tax expense $799,000 and $1.5 million for the three and six months      ended June 30, 2007, respectively, to record the income tax effect of the      corrections described above. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                             |   | Three Months      Ended June 30, 2007 |    |
|--------------------------------------------------------------------------------------------------|--------|---------------------------------------|---------|
|                                                                                             |   | As previously reported1               |    |   | Adjustments |   |   | Reclassification |   |   | As      restated |   |
| Revenues                                                                                         |   | $                                     | 129,592 |   |   |   | 298 |   |   |   | --- |   |   |   | 129,890 |   |
|                                                                                             |   |                                  |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost of goods      sold (exclusive of depreciation and amortization shown separately      below) |   |                                  | 42,238  |   |   |   | --- |   |   |   | 3,341 |   |   |   | 45,579 |   |
| Selling,      general and administrative expenses                                                |   |                                  | 47,486  |   |   |   | (715 | ) |   |   | (3,341 | ) |   |   | 43,430 |   |
| Depreciation      and amortization expense                                                       |   |                                  | 21,742  |   |   |   | (305 | ) |   |   | --- |   |   |   | 21,437 |   |
| Operating      income                                                                            |   |                                  | 18,126  |   |   |   | 1,318 |   |   |   | --- |   |   |   | 19,444 |   |
|                                                                                             |   |                                  |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other income      (expense):                                                                     |   |                                  |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      expense                                                                            |   |                                  | (8,941  | ) |   |   | 384 |   |   |   | --- |   |   |   | (8,557 | ) |
| Loan and      senior note fees                                                                   |   |                                  | (216    | ) |   |   | --- |   |   |   | --- |   |   |   | (216 | ) |
| Interest      income                                                                             |   |                                  | 161     |   |   |   | --- |   |   |   | --- |   |   |   | 161 |   |
| Minority      interest                                                                           |   |                                  | (24     | ) |   |   | --- |   |   |   | --- |   |   |   | (24 | ) |
| Other      expense, net                                                                          |   |                                  | (9,020  | ) |   |   | 384 |   |   |   | --- |   |   |   | (8,636 | ) |

----

|                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|--------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Income before      income tax expense                                    |   |   | 9,106  |   |   |   | 1,702  |   |   |   | ---    |   |   |   | 10,808 |   |
|                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income tax      expense                                                  |   |   | 4,091  |   |   |   | 799    |   |   |   | ---    |   |   |   | 4,890  |   |
|                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      income                                                          |   | $      | 5,015  |   |   |   | 903    |   |   |   | ---    |   |   |   | 5,918  |   |
|                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 1      As reported on Form 10-Q for the quarter ended June 30,      2007 |   |

|                                                                                             |   | Six Months      Ended June 30, 2007 |    |
|--------------------------------------------------------------------------------------------------|--------|-------------------------------------|---------|
|                                                                                             |   | As previously reported1             |    |   | Adjustments |   |   | Reclassification |   |   | As      restated |   |
| Revenues                                                                                         |   | $                                   | 254,171 |   |   |   | 750 |   |   |   | --- |   |   |   | 254,921 |   |
|                                                                                             |   |                                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost of goods      sold (exclusive of depreciation and amortization shown separately      below) |   |                                | 85,351  |   |   |   | --- |   |   |   | 8,218 |   |   |   | 93,569 |   |
| Selling,      general and administrative expenses                                                |   |                                | 96,010  |   |   |   | (757 | ) |   |   | (8,218 | ) |   |   | 87,035 |   |
| Depreciation      and amortization expense                                                       |   |                                | 43,196  |   |   |   | (893 | ) |   |   | --- |   |   |   | 42,303 |   |
| Operating      income                                                                            |   |                                | 29,614  |   |   |   | 2,400 |   |   |   | --- |   |   |   | 32,014 |   |
|                                                                                             |   |                                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other income      (expense):                                                                     |   |                                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      expense                                                                            |   |                                | (17,641 | ) |   |   | 766 |   |   |   | --- |   |   |   | (16,875 | ) |
| Loan and      senior note fees                                                                   |   |                                | (396    | ) |   |   | --- |   |   |   | --- |   |   |   | (396 | ) |
| Interest      income                                                                             |   |                                | 345     |   |   |   | --- |   |   |   | --- |   |   |   | 345 |   |
| Minority      interest                                                                           |   |                                | (11     | ) |   |   | --- |   |   |   | --- |   |   |   | (11 | ) |
| Other      expense, net                                                                          |   |                                | (17,703 | ) |   |   | 766 |   |   |   | --- |   |   |   | (16,937 | ) |
|                                                                                             |   |                                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income before      income tax expense                                                            |   |                                | 11,911  |   |   |   | 3,166 |   |   |   | --- |   |   |   | 15,077 |   |
|                                                                                             |   |                                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income tax      expense                                                                          |   |                                | 5,366   |   |   |   | 1,487 |   |   |   | --- |   |   |   | 6,853 |   |
|                                                                                             |   |                                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      income                                                                                  |   | $                                   | 6,545   |   |   |   | 1,679 |   |   |   | --- |   |   |   | 8,224 |   |
|                                                                                             |   |                                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash provided      by operating activities                                                       |   | $                                   | 54,469  |   |   |   | 766 |   |   |   | --- |   |   |   | 55,235 |   |
| Cash used in      investing activities                                                           |   |                                | (87,027 | ) |   |   | (766 | ) |   |   | --- |   |   |   | (87,793 | ) |
| Cash used in      financing activities                                                           |   |                                | (16,752 | ) |   |   | --- |   |   |   | --- |   |   |   | (16,752 | ) |
|                                                                                             |   |                                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 1      As reported on Form 10-Q for the six months ended June 30,      2007                      |   |

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

|   | Change in      operating assets and liabilities, net of effect of acquisition, consists      of (amounts in thousands): |
|--------|-------------------------------------------------------------------------------------------------------------------------|

| Six month      period ended June 30,            |   | 2008   |   |   | 2007(as      restated) |   |
|-------------------------------------------------|--------|--------|--------|--------|------------------------|--------|
| (Increase)      decrease in accounts receivable |   | $      | 7,001  |   |                   |   | (5,726 | ) |
| Decrease in      prepaid expenses               |   |   | 114    |   |                   |   | 6 |   |
| Increase in      inventories                    |   |   | (2,030 | )      |                   |   | (53 | ) |
| Net sale of      investment securities          |   |   | 800    |   |                   |   | --- |   |
| Decrease in      other current assets           |   |   | 89     |   |                   |   | 1,238 |   |
| Increase in      accounts payable               |   |   | 1,979  |   |                   |   | 811 |   |

----

| Increase      (decrease) in deferred revenues                         |   |   | 3,159  |   |   |   | (3,251 | )      |
|-----------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|
| Decrease in      accrued payroll and payroll related obligations      |   |   | (41    | )      |   |   | (757   | )      |
| Increase in      accrued liabilities                                  |   |   | 1,314  |   |   |   | 408    |   |
| Increase in      accrued interest                                     |   |   | 324    |   |   |   | 49     |   |
| Increase in      subscriber deposits                                  |   |   | 115    |   |   |   | 78     |   |
| Increase in      long-term deferred revenue                           |   |   | 36,893 |   |   |   | ---    |   |
| Increase      (decrease) in components of other long-term liabilities |   |   | (4,944 | )      |   |   | 470    |   |
|                                                                  |   | $      | 44,773 |   |   |   | (6,727 | )      |

|   | We paid      $478,000 and $0 income taxes during the six months ended June 30, 2008 and      2007, respectively.  We received no income tax refunds during      the six months ended June 30, 2008 and2007. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | During the      six months ended June 30, 2008 and 2007, we capitalized interest of $2.1      million and $514,000, respectively. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------|

|   | During the      six months ended June 30, 2008, we financed $98.6 million for the use of      satellite transponders through a capital lease obligation.  We      also financed $1.3 million in capital expenditures through the extension      of a previously existing capitallease. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | We received      net cash of $110.6 million from the $145.0 million term loan that we      obtained in May 2008. We used $30.0 million of the term loan to repay the      revolver portion of our Senior Credit Facility and our loan proceeds were      reduced by $2.9 million for an original issue discount and $1.5 million      for bank and legal fees associated with the new term  loan. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | In June 2008      the Galaxy XR satellite was taken out of service resulting in the removal      of the remaining $8.8 million net book value and the recognition of an      $8.8 million warranty receivable. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | We had $6.3      million and $5.7 million in non-cash additions to property and equipment      due to unpaid purchases as of June 30, 2008 and 2007,      respectively. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | In February      2007, our President and Chief Executive Officer ("CEO") tendered 112,000      shares of his GCI Class A common stock to us at $15.50 per share for a      total value of $1.7 million.  The stock tender was in lieu of a      cash payment on his note receivable with a related party and a note      receivable with a related party issued upon stock option exercise, both of      which originated in 2002. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Intangible      Assets |
|-----|------------------------|

----

|                      |   | Three Months      Ended | Six Months      Ended |   |
|---------------------------|--------|-------------------------|-----------------------|--------|
|                      |   | June      30,           | June      30,         |   |
|                      |   | 2008                    | 2007                  | 2008   |   | 2007 |   |
| Amortization      expense | $      | 1,165                   | 937                   | 2,080  |   |   | 1,758 |   |

| Years Ending      December 31, |   |   |   |
|--------------------------------|--------|--------|--------|
| 2008                           |   | $      | 4,814  |   |
| 2009                           |   |   | 5,486  |   |
| 2010                           |   |   | 4,580  |   |
| 2011                           |   |   | 1,527  |   |
| 2012                           |   |   | 962    |   |

| (4) | Long-term      Debt |
|-----|---------------------|

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

----

| Year      Ended:         |   | Maximum      Capital Expenditure Amount |    |
|--------------------------|--------|-----------------------------------------|---------|
| 2008                     |   | $                                       | 225,000 |   |
| 2009                     |   | $                                       | 125,000 |   |
| 2010                     |   | $                                       | 125,000 |   |
| 2011 and      thereafter |   | $                                       | 100,000 |   |

| Years ending      December 31,                                    |   |   |    |
|-------------------------------------------------------------------|--------|--------|---------|
| 2008 (balance      of the year)                                   |   | $      | 4,975   |   |
| 2009                                                              |   |   | 8,495   |   |
| 2010                                                              |   |   | 8,738   |   |
| 2011                                                              |   |   | 178,255 |   |
| 2011                                                              |   |   | 176,485 |   |
| 2013 and      thereafter                                          |   |   | 340,786 |   |
|                                                              |   |   | 717,734 |   |
| Less      unamortized discount paid on the Senior Notes           |   |   | 2,794   |   |
| Less      unamortized discount paid on the Senior Credit Facility |   |   | 2,777   |   |
| Less current      portion of long-term debt                       |   |   | 9,211   |   |
|                                                              |   | $      | 702,952 |   |

----

----

|                                      |   | Shares(in      thousands) |   |   | WeightedAverageExercise      Price |   |
|-------------------------------------------|--------|---------------------------|--------|--------|------------------------------------|--------|
| Outstanding      at December 31, 2007     |   |                      | 6,751  |   |                               | $      | 9.37 |   |
|                                      |   |                      |   |   |                               |   |   |   |
| Options      granted                      |   |                      | 331    |   |                               | $      | 7.94 |   |
| Restricted      stock awards granted      |   |                      | 43     |   |                               | $      | 6.94 |   |
| Exercised                                 |   |                      | (18    | )      |                               | $      | 6.02 |   |
| Restricted      stock awards vested       |   |                      | (131   | )      |                               | $      | 12.05 |   |
| Forfeited                                 |   |                      | (95    | )      |                               | $      | 9.51 |   |
| Outstanding      at June 30, 2008         |   |                      | 6,881  |   |                               | $      | 9.23 |   |
|                                      |   |                      |   |   |                               |   |   |   |
| Available for      grant at June 30, 2008 |   |                      | 1,305  |   |                               |   |   |   |

|                                                         |   | Shares(in      thousands) |   |   | WeightedAverageExercise      Price |   |
|--------------------------------------------------------------|--------|---------------------------|--------|--------|------------------------------------|--------|
| Outstanding      at December 31, 2007 and June 30, 2008 |   |                      | 150    |   |                               | $      | 6.50 |   |
|                                                         |   |                      |   |   |                               |   |   |   |
| Available for      grant at June 30, 2008                    |   |                      | ---    |   |                               |   |   |   |

| (6) | Industry      Segments Data |
|-----|-----------------------------|

----

| Three months      ended June 30, |   | Consumer |   |   | Network      Access |   |   | Commercial |   |   | Managed      Broadband |   |   | Regulated      Operations |   |   | Total      Reportable Segments |   |
|----------------------------------|--------|----------|--------|--------|---------------------|--------|--------|------------|--------|--------|------------------------|--------|--------|---------------------------|--------|--------|--------------------------------|--------|
| 2008 (as      restated)          |   |     |   |   |                |   |   |       |   |   |                   |   |   |                      |   |   |                           |   |
| Revenues:                        |   |     |   |   |                |   |   |       |   |   |                   |   |   |                      |   |   |                           |   |
| Intersegment                     |   | $        | 17     |   |                |   | 167    |       |   |   | 1,569                  |   |   |                      | ---    |   |                           |   | 116 |   |   |   | 1,869 |   |
| External                         |   |     | 62,113 |   |                |   | 41,891 |       |   |   | 27,444                 |   |   |                      | 9,134  |   |                           |   | 1,879 |   |   |   | 142,461 |   |
| Total      revenues              |   | $        | 62,130 |   |                |   | 42,058 |       |   |   | 29,013                 |   |   |                      | 9,134  |   |                           |   | 1,995 |   |   |   | 144,330 |   |
| EBITDAS                          |   | $        | 13,423 |   |                |   | 21,676 |       |   |   | 5,696                  |   |   |                      | 3,138  |   |                           |   | 359 |   |   |   | 44,292 |   |
|                             |   |     |   |   |                |   |   |       |   |   |                   |   |   |                      |   |   |                           |   |   |   |   |   |   |   |
| 2007 (as      restated)          |   |     |   |   |                |   |   |       |   |   |                   |   |   |                      |   |   |                           |   |   |   |   |   |   |   |
| Revenues:                        |   |     |   |   |                |   |   |       |   |   |                   |   |   |                      |   |   |                           |   |   |   |   |   |   |   |
| Intersegment                     |   | $        | ---    |   |                |   | 1,092  |       |   |   | 1,004                  |   |   |                      | ---    |   |                           |   | --- |   |   |   | 2,096 |   |
| External                         |   |     | 55,128 |   |                |   | 41,616 |       |   |   | 26,193                 |   |   |                      | 6,953  |   |                           |   | --- |   |   |   | 129,890 |   |
| Total      revenues              |   | $        | 55,128 |   |                |   | 42,708 |       |   |   | 27,197                 |   |   |                      | 6,953  |   |                           |   | --- |   |   |   | 131,986 |   |
| EBITDAS                          |   | $        | 10,965 |   |                |   | 23,543 |       |   |   | 4,996                  |   |   |                      | 2,116  |   |                           |   | --- |   |   |   | 41,620 |   |

----

| Six months      ended June 30, |   | Consumer |    |   | Network      Access |   |   | Commercial |   |   | Managed      Broadband |   |   | Regulated      Operations |   |   | Total      Reportable Segments |   |
|--------------------------------|--------|----------|---------|--------|---------------------|--------|--------|------------|--------|--------|------------------------|--------|--------|---------------------------|--------|--------|--------------------------------|--------|
| 2008 (as      restated)        |   |     |    |   |                |   |   |       |   |   |                   |   |   |                      |   |   |                           |   |
| Revenues:                      |   |     |    |   |                |   |   |       |   |   |                   |   |   |                      |   |   |                           |   |
| Intersegment                   |   | $        | 17      |   |                |   | 468    |       |   |   | 2,918                  |   |   |                      | ---    |   |                           |   | 116 |   |   |   | 3,519 |   |
| External                       |   |     | 123,496 |   |                |   | 81,065 |       |   |   | 54,035                 |   |   |                      | 16,660 |   |                           |   | 1,879 |   |   |   | 277,135 |   |
| Total      revenues            |   | $        | 123,513 |   |                |   | 81,533 |       |   |   | 56,953                 |   |   |                      | 16,660 |   |                           |   | 1,995 |   |   |   | 280,654 |   |
| EBITDAS                        |   | $        | 25,677  |   |                |   | 41,813 |       |   |   | 10,021                 |   |   |                      | 5,615  |   |                           |   | 359 |   |   |   | 83,485 |   |
|                           |   |     |    |   |                |   |   |       |   |   |                   |   |   |                      |   |   |                           |   |   |   |   |   |   |   |
| 2007 (as      restated)        |   |     |    |   |                |   |   |       |   |   |                   |   |   |                      |   |   |                           |   |   |   |   |   |   |   |
| Revenues:                      |   |     |    |   |                |   |   |       |   |   |                   |   |   |                      |   |   |                           |   |   |   |   |   |   |   |
| Intersegment                   |   | $        | ---     |   |                |   | 1,363  |       |   |   | 2,629                  |   |   |                      | ---    |   |                           |   | --- |   |   |   | 3,992 |   |
| External                       |   |     | 108,731 |   |                |   | 81,942 |       |   |   | 50,374                 |   |   |                      | 13,874 |   |                           |   | --- |   |   |   | 254,921 |   |
| Total      revenues            |   | $        | 108,731 |   |                |   | 83,305 |       |   |   | 53,003                 |   |   |                      | 13,874 |   |                           |   | --- |   |   |   | 258,913 |   |
| EBITDAS                        |   | $        | 20,923  |   |                |   | 43,308 |       |   |   | 8,075                  |   |   |                      | 3,748  |   |                           |   | --- |   |   |   | 76,054 |   |

|                                                        |   | Three Months      Ended |    |   | Six Months      Ended   |   |
|-------------------------------------------------------------|--------|-------------------------|---------|--------|-------------------------|--------|
|                                                        |   | June      30,           |    |   | June      30,           |   |
|                                                        |   | 2008                    |    |   | 2007 (as      restated) |   |   | 2008 |   |   | 2007 (as      restated) |   |
| Reportable      segment revenues                            |   | $                       | 144,330 |   |                    |   | 131,986 |   |   |   | 280,654 |   |   |   | 258,913 |   |
| Less      intersegment revenues eliminated in consolidation |   |                    | 1,869   |   |                    |   | 2,096 |   |   |   | 3,519 |   |   |   | 3,992 |   |
| Consolidated      revenues                                  |   | $                       | 142,461 |   |                    |   | 129,890 |   |   |   | 277,135 |   |   |   | 254,921 |   |

|                                               |   | Three Months      Ended |   |   | Six Months      Ended   |   |
|----------------------------------------------------|--------|-------------------------|--------|--------|-------------------------|--------|
|                                               |   | June      30,           |   |   | June      30,           |   |
|                                               |   | 2008 (as      restated) |   |   | 2007 (as      restated) |   |   | 2008 (as      restated) |   |   | 2007 (as      restated) |   |
| Reportable      segment EBITDAS                    |   | $                       | 44,292 |   |                    |   | 41,620 |   |   |   | 83,485 |   |   |   | 76,054 |   |
| Less      depreciation and amortization expense    |   |                    | 27,708 |   |                    |   | 21,437 |   |   |   | 54,951 |   |   |   | 42,303 |   |
| Less      share-based compensation expense         |   |                    | 1,593  |   |                    |   | 763 |   |   |   | 2,853 |   |   |   | 1,748 |   |
| Less (plus)      minority interest                 |   |                    | 946    |   |                    |   | (24 | ) |   |   | 1,922 |   |   |   | (11 | ) |
| Consolidated      operating income                 |   |                    | 14,045 |   |                    |   | 19,444 |   |   |   | 23,759 |   |   |   | 32,014 |   |
| Less other      expense, net                       |   |                    | 10,430 |   |                    |   | 8,636 |   |   |   | 18,281 |   |   |   | 16,937 |   |
| Consolidated      income before income tax expense |   | $                       | 3,615  |   |                    |   | 10,808 |   |   |   | 5,478 |   |   |   | 15,077 |   |

----

| (7) | Indefeasible      Right to Use (“IRU”) CapacitySale |
|-----|-----------------------------------------------------------------|

|   | We entered      into various IRU sales agreements for which we received cash of $33.9      million and $37.1 million during the three and six months ended June 30,      2008, respectively.  These transactions are being accounted for      as operating leases with deferred revenue to be recognized over the      estimated life of the IRU agreement.  We had long-term deferred      revenue of $34.7 million related to these IRU transactions at June 30,      2008. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (8) | Commitments      and Contingencies |
|-----|------------------------------------|

----

| Years ending      December 31:    |   |   |    |
|-----------------------------------|--------|--------|---------|
| 2008                              |   | $      | 6,510   |   |
| 2009                              |   |   | 11,160  |   |
| 2010                              |   |   | 11,160  |   |
| 2011                              |   |   | 11,160  |   |
| 2012                              |   |   | 11,160  |   |
| 2013 and      thereafter          |   |   | 105,090 |   |
| Total minimum      lease payments |   | $      | 156,240 |   |

|   | On April 8,      2008, we signed an amendment to a long-term capital lease agreement with      our President and CEO and his wife for property we occupy.  The      amended lease terminates on September 30, 2026.    We      increased our existing capital lease asset and liability by $1.3 million      at June 30, 2008 to record the extension of this capital      lease. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | A summary of      future minimum lease payments for this lease follows (amount in      thousands): |
|--------|----------------------------------------------------------------------------------------------------|

| Years ending      December 31:    |   |   |   |
|-----------------------------------|--------|--------|--------|
| 2008                              |   | $      | 194    |   |
| 2009                              |   |   | 258    |   |
| 2010                              |   |   | 258    |   |
| 2011                              |   |   | 261    |   |
| 2012                              |   |   | 270    |   |
| 2013 and      thereafter          |   |   | 4,691  |   |
| Total minimum      lease payments |   | $      | 5,932  |   |

| (9) | Subsequent      Event |
|-----|-----------------------|

----

| ·   | We increased      depreciation expense $4.0 million and $8.5 million for the three and six      months ended June 30, 2008, respectively, to correct depreciation expense      for a failure to change the estimated useful life of certain assets that      were expected to be decommissioned at or near the end of      2008.  The assets should have been depreciated over the      remaining period they were expected to beused; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We decreased      minority interest expense $920,000 and $1.9 million for the three and six      months ended June 30, 2008, respectively, to record the minority interest      portion of the correction described above,and; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We decreased      income tax expense $1.4 million and $2.8 million for the three and six      months ended June 30, 2008, respectively, to record the income tax effect      of the corrections described above. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                        |   | June 30,      2008      |    |
|-------------------------------------------------------------|--------|-------------------------|---------|
| Consolidated      Condensed Balance Sheet                   |   | As previously reported1 |    |   | Adjustments |   |   | As      restated |   |
| Assets                                                      |   |                    |    |   |   |   |   |   |   |
| Total current      assets                                   |   | $                       | 225,213 |   |   |   | --- |   |   |   | 225,213 |   |
|                                                        |   |                    |    |   |   |   |   |   |   |   |   |   |
| Property and      equipment in service, net of depreciation |   |                    | 692,561 |   |   |   | (8,462 | ) |   |   | 684,099 |   |
| Construction      in progress                               |   |                    | 115,809 |   |   |   | --- |   |   |   | 115,809 |   |
| Net property      and equipment                             |   |                    | 808,370 |   |   |   | (8,462 | ) |   |   | 799,908 |   |

----

|                                                                                      |   |   |      |   |   |   |   |   |   |   |      |   |
|-------------------------------------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|--------|--------|--------|--------|-----------|--------|
| Total other      assets                                                                   |   |   | 301,174   |   |   |   | ---    |   |   |   | 301,174   |   |
| Total      assets                                                                         |   | $      | 1,334,757 |   |   |   | (8,462 | )      |   |   | 1,326,295 |   |
|                                                                                      |   |   |      |   |   |   |   |   |   |   |      |   |
| Liabilities,      Minority Interest, and Stockholder's Equity                             |   |   |      |   |   |   |   |   |   |   |      |   |
| Total current      liabilities                                                            |   |   | 117,772   |   |   |   | ---    |   |   |   | 117,772   |   |
|                                                                                      |   |   |      |   |   |   |   |   |   |   |      |   |
| Long-term      debt                                                                       |   |   | 702,952   |   |   |   | ---    |   |   |   | 702,952   |   |
| Obligations      under capital leases, excluding current maturities                       |   |   | 96,254    |   |   |   | ---    |   |   |   | 96,254    |   |
| Obligation      under capital lease due to related party, excluding current      maturity |   |   | 1,864     |   |   |   | ---    |   |   |   | 1,864     |   |
| Deferred      income taxes                                                                |   |   | 89,315    |   |   |   | (2,750 | )      |   |   | 86,565    |   |
| Long-term      deferred revenue                                                           |   |   | 37,738    |   |   |   | ---    |   |   |   | 37,738    |   |
| Other      liabilities                                                                    |   |   | 19,766    |   |   |   | ---    |   |   |   | 19,766    |   |
| Total      liabilities                                                                    |   |   | 1,065,661 |   |   |   | (2,750 | )      |   |   | 1,062,911 |   |
|                                                                                      |   |   |      |   |   |   |   |   |   |   |      |   |
| Minority      interest                                                                    |   |   | 6,502     |   |   |   | (1,946 | )      |   |   | 4,556     |   |
|                                                                                      |   |   |      |   |   |   |   |   |   |   |      |   |
| Stockholder's      equity:                                                                |   |   |      |   |   |   |   |   |   |   |      |   |
| Class A      common stock (no par)                                                        |   |   | 206,622   |   |   |   | ---    |   |   |   | 206,622   |   |
| Paid-in      capital                                                                      |   |   | 41,456    |   |   |   | ---    |   |   |   | 41,456    |   |
| Retained      earnings                                                                    |   |   | 14,516    |   |   |   | (3,766 | )      |   |   | 10,750    |   |
| Total      stockholder's equity                                                           |   |   | 262,594   |   |   |   | (3,766 | )      |   |   | 258,828   |   |
| Total      liabilities, minority interest, and stockholder's equity                       |   |   | 1,334,757 |   |   |   | (8,462 | )      |   |   | 1,326,295 |   |
|                                                                                      |   |   |      |   |   |   |   |   |   |   |      |   |
| 1      As reported on Form 10-Q for the quarter ended June 30,      2008                  |   |

|                                                                                             |   | Three Months      Ended June 30, 2008 |    |
|--------------------------------------------------------------------------------------------------|--------|---------------------------------------|---------|
|                                                                                             |   | As previously reported1               |    |   | Adjustments |   |   | As      restated |   |
| Revenues                                                                                         |   | $                                     | 142,461 |   |   |   | --- |   |   |   | 142,461 |   |
|                                                                                             |   |                                  |    |   |   |   |   |   |   |   |   |   |
| Cost of goods      sold (exclusive of depreciation and amortization shown separately      below) |   |                                  | 52,448  |   |   |   | --- |   |   |   | 52,448 |   |
| Selling,      general and administrative expenses                                                |   |                                  | 48,260  |   |   |   | --- |   |   |   | 48,260 |   |
| Depreciation      and amortization expense                                                       |   |                                  | 23,707  |   |   |   | 4,001 |   |   |   | 27,708 |   |
| Operating      income                                                                            |   |                                  | 18,046  |   |   |   | (4,001 | ) |   |   | 14,045 |   |
|                                                                                             |   |                                  |    |   |   |   |   |   |   |   |   |   |
| Other income      (expense):                                                                     |   |                                  |    |   |   |   |   |   |   |   |   |   |
| Interest      expense                                                                            |   |                                  | (10,899 | ) |   |   | --- |   |   |   | (10,899 | ) |
| Loan and      senior note fees                                                                   |   |                                  | (879    | ) |   |   | --- |   |   |   | (879 | ) |
| Interest      income                                                                             |   |                                  | 402     |   |   |   | --- |   |   |   | 402 |   |
| Minority      interest                                                                           |   |                                  | 26      |   |   |   | 920 |   |   |   | 946 |   |
| Other      expense, net                                                                          |   |                                  | (11,350 | ) |   |   | 920 |   |   |   | (10,430 | ) |
|                                                                                             |   |                                  |    |   |   |   |   |   |   |   |   |   |
| Income before      income tax expense                                                            |   |                                  | 6,696   |   |   |   | (3,081 | ) |   |   | 3,615 |   |

----

|                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |
|--------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Income tax      expense                                                  |   |   | 3,191  |   |   |   | (1,408 | )      |   |   | 1,783  |   |
|                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      income                                                          |   | $      | 3,505  |   |   |   | (1,673 | )      |   |   | 1,832  |   |
|                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |
| 1      As reported on Form 10-Q for the quarter ended June 30,      2008 |   |

|                                                                                             |   | Six Months      Ended June 30, 2008 |     |
|--------------------------------------------------------------------------------------------------|--------|-------------------------------------|----------|
|                                                                                             |   | As previously reported1             |     |   | Adjustments |   |   | As      restated |   |
| Revenues                                                                                         |   | $                                   | 277,135  |   |   |   | --- |   |   |   | 277,135 |   |
|                                                                                             |   |                                |     |   |   |   |   |   |   |   |   |   |
| Cost of goods      sold (exclusive of depreciation and amortization shown separately      below) |   |                                | 103,759  |   |   |   | --- |   |   |   | 103,759 |   |
| Selling,      general and administrative expenses                                                |   |                                | 94,666   |   |   |   | --- |   |   |   | 94,666 |   |
| Depreciation      and amortization expense                                                       |   |                                | 46,489   |   |   |   | 8,462 |   |   |   | 54,951 |   |
| Operating      income                                                                            |   |                                | 32,221   |   |   |   | (8,462 | ) |   |   | 23,759 |   |
|                                                                                             |   |                                |     |   |   |   |   |   |   |   |   |   |
| Other income      (expense):                                                                     |   |                                |     |   |   |   |   |   |   |   |   |   |
| Interest      expense                                                                            |   |                                | (19,584  | ) |   |   | --- |   |   |   | (19,584 | ) |
| Loan and      senior note fees                                                                   |   |                                | (1,102   | ) |   |   | --- |   |   |   | (1,102 | ) |
| Interest      income                                                                             |   |                                | 483      |   |   |   | --- |   |   |   | 483 |   |
| Minority      interest                                                                           |   |                                | (24      | ) |   |   | 1,946 |   |   |   | 1,922 |   |
| Other      expense, net                                                                          |   |                                | (20,227  | ) |   |   | 1,946 |   |   |   | (18,281 | ) |
|                                                                                             |   |                                |     |   |   |   |   |   |   |   |   |   |
| Income before      income tax expense                                                            |   |                                | 11,994   |   |   |   | (6,516 | ) |   |   | 5,478 |   |
|                                                                                             |   |                                |     |   |   |   |   |   |   |   |   |   |
| Income tax      expense                                                                          |   |                                | 5,960    |   |   |   | (2,750 | ) |   |   | 3,210 |   |
|                                                                                             |   |                                |     |   |   |   |   |   |   |   |   |   |
| Net      income                                                                                  |   | $                                   | 6,034    |   |   |   | (3,766 | ) |   |   | 2,268 |   |
|                                                                                             |   |                                |     |   |   |   |   |   |   |   |   |   |
| Cash provided      by operating activities                                                       |   | $                                   | 109,457  |   |   |   | --- |   |   |   | 109,457 |   |
| Cash used in      investing activities                                                           |   |                                | (155,977 | ) |   |   | --- |   |   |   | (155,977 | ) |
| Cash used in      financing activities                                                           |   |                                | 129,149  |   |   |   | --- |   |   |   | 129,149 |   |
|                                                                                             |   |                                |     |   |   |   |   |   |   |   |   |   |
| 1      As reported on Form 10-Q for the quarter ended June 30,      2008                         |   |

| ·   | We decreased      depreciation expense $590,000 and $1.5 million for the three and six      months ended June 30, 2007, respectively, to correct an error in      calculating depreciation in the initial year an asset is placed in      service.  We originally recorded our estimated depreciation      expense evenly throughout the year with periodic adjustments based upon      improved estimates or actual results.  In accordance with GAAP      we now initially record depreciation expense in the month an asset is      placed in service.  Depreciation was improperly allocated among      quarters, but the year-end total was correct.  Therefore the      restatement impacts the quarterly results but not the December 31, 2007      year-end results. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | We decreased      interest expense $384,000 and $766,000 for the three and six months ended      June 30, 2007, respectively, to correct an interest capitalization error      on certain assets.  Our capitalized interest policy was too      restrictive and resulted in no interest capitalization on certain      qualifying capital expenditures.  Our capitalized interest      policy now conforms to GAAP; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We increased      depreciation expense $322,000 and $644,000 for the three and six months      ended June 30, 2007, respectively, due to the recognition of depreciation      on additional capitalized interest; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We increased      revenue $173,000 and $492,000 for the three and six months ended June 30,      2007, respectively, to correct understated revenue resulting from      a  configuration error in the automated interface between our      unified billing system and our generalledger; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We increased      revenue $125,000 and $258,000 for the three and six months ended June 30,      2007, respectively, to correct revenue recognition for a majority      noncontrolling interest in a subsidiary that was recognizing a certain      type of revenue on a cash basis rather than an accrual    basis; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We decreased      share-based compensation expense $715,000 and $757,000 for the three and      six months ended June 30, 2007, respectively, to correct expense      recognition timing for options that did not vest in equal increments over      the vesting period; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We decreased      depreciation expense $37,000 and $75,000 for the three and six months      ended June 30, 2007, respectively, due to a revision of the purchase price      allocation of our purchase of Alaska DigiTel on January 1, 2007;      and |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We increased      income tax expense $799,000 and $1.5 million for the three and six months      ended June 30, 2007, respectively, to record the income tax effect of the      corrections described above. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                             |   | Three Months      Ended June 30, 2007 |    |
|--------------------------------------------------------------------------------------------------|--------|---------------------------------------|---------|
|                                                                                             |   | As previously reported1               |    |   | Adjustments |   |   | Reclassification |   |   | As      restated |   |
| Revenues                                                                                         |   | $                                     | 129,592 |   |   |   | 298 |   |   |   | --- |   |   |   | 129,890 |   |
|                                                                                             |   |                                  |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost of goods      sold (exclusive of depreciation and amortization shown separately      below) |   |                                  | 42,238  |   |   |   | --- |   |   |   | 3,341 |   |   |   | 45,579 |   |
| Selling,      general and administrative expenses                                                |   |                                  | 47,486  |   |   |   | (715 | ) |   |   | (3,341 | ) |   |   | 43,430 |   |
| Depreciation      and amortization expense                                                       |   |                                  | 21,742  |   |   |   | (305 | ) |   |   | --- |   |   |   | 21,437 |   |
| Operating      income                                                                            |   |                                  | 18,126  |   |   |   | 1,318 |   |   |   | --- |   |   |   | 19,444 |   |
|                                                                                             |   |                                  |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other income      (expense):                                                                     |   |                                  |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      expense                                                                            |   |                                  | (8,941  | ) |   |   | 384 |   |   |   | --- |   |   |   | (8,557 | ) |
| Loan and      senior note fees                                                                   |   |                                  | (216    | ) |   |   | --- |   |   |   | --- |   |   |   | (216 | ) |
| Interest      income                                                                             |   |                                  | 161     |   |   |   | --- |   |   |   | --- |   |   |   | 161 |   |
| Minority      interest                                                                           |   |                                  | (24     | ) |   |   | --- |   |   |   | --- |   |   |   | (24 | ) |
| Other      expense, net                                                                          |   |                                  | (9,020  | ) |   |   | 384 |   |   |   | --- |   |   |   | (8,636 | ) |
|                                                                                             |   |                                  |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income before      income tax expense                                                            |   |                                  | 9,106   |   |   |   | 1,702 |   |   |   | --- |   |   |   | 10,808 |   |
|                                                                                             |   |                                  |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income tax      expense                                                                          |   |                                  | 4,091   |   |   |   | 799 |   |   |   | --- |   |   |   | 4,890 |   |
|                                                                                             |   |                                  |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      income                                                                                  |   | $                                     | 5,015   |   |   |   | 903 |   |   |   | --- |   |   |   | 5,918 |   |
|                                                                                             |   |                                  |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 1      As reported on Form 10-Q for the quarter ended June 30,      2007                         |   |

----

|                                                                                             |   | Six Months      Ended June 30, 2007 |    |
|--------------------------------------------------------------------------------------------------|--------|-------------------------------------|---------|
|                                                                                             |   | As previously reported1             |    |   | Adjustments |   |   | Reclassification |   |   | As      restated |   |
| Revenues                                                                                         |   | $                                   | 254,171 |   |   |   | 750 |   |   |   | --- |   |   |   | 254,921 |   |
|                                                                                             |   |                                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost of goods      sold (exclusive of depreciation and amortization shown separately      below) |   |                                | 85,351  |   |   |   | --- |   |   |   | 8,218 |   |   |   | 93,569 |   |
| Selling,      general and administrative expenses                                                |   |                                | 96,010  |   |   |   | (757 | ) |   |   | (8,218 | ) |   |   | 87,035 |   |
| Depreciation      and amortization expense                                                       |   |                                | 43,196  |   |   |   | (893 | ) |   |   | --- |   |   |   | 42,303 |   |
| Operating      income                                                                            |   |                                | 29,614  |   |   |   | 2,400 |   |   |   | --- |   |   |   | 32,014 |   |
|                                                                                             |   |                                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other income      (expense):                                                                     |   |                                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      expense                                                                            |   |                                | (17,641 | ) |   |   | 766 |   |   |   | --- |   |   |   | (16,875 | ) |
| Loan and      senior note fees                                                                   |   |                                | (396    | ) |   |   | --- |   |   |   | --- |   |   |   | (396 | ) |
| Interest      income                                                                             |   |                                | 345     |   |   |   | --- |   |   |   | --- |   |   |   | 345 |   |
| Minority      interest                                                                           |   |                                | (11     | ) |   |   | --- |   |   |   | --- |   |   |   | (11 | ) |
| Other      expense, net                                                                          |   |                                | (17,703 | ) |   |   | 766 |   |   |   | --- |   |   |   | (16,937 | ) |
|                                                                                             |   |                                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income before      income tax expense                                                            |   |                                | 11,911  |   |   |   | 3,166 |   |   |   | --- |   |   |   | 15,077 |   |
|                                                                                             |   |                                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income tax      expense                                                                          |   |                                | 5,366   |   |   |   | 1,487 |   |   |   | --- |   |   |   | 6,853 |   |
|                                                                                             |   |                                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      income                                                                                  |   | $                                   | 6,545   |   |   |   | 1,679 |   |   |   | --- |   |   |   | 8,224 |   |
|                                                                                             |   |                                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash provided      by operating activities                                                       |   | $                                   | 54,469  |   |   |   | 766 |   |   |   | --- |   |   |   | 55,235 |   |
| Cash used in      investing activities                                                           |   |                                | (87,027 | ) |   |   | (766 | ) |   |   | --- |   |   |   | (87,793 | ) |
| Cash used in      financing activities                                                           |   |                                | (16,752 | ) |   |   | --- |   |   |   | --- |   |   |   | (16,752 | ) |
|                                                                                             |   |                                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 1      As reported on Form 10-Q for the six months ended June 30,      2007                      |   |

----

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

----

----

----

----

----

|                                              |   |                    |   |   | Percent­age |   |   |                  |                                                                                                                                                                       |   |          |   |   | Percent­age |   |
|---------------------------------------------------|--------|-------------------------|--------|--------|------------------|--------|--------|-----------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|--------|--------|------------------|--------|
|                                              |   | Three      Months Ended |   |   | Change 1    |   |   | Six      Months Ended |                                                                                                                                                                       |   | Change 1 |   |
|                                              |   | June      30,           |   |   | 2008             |   |   | June      30,         |                                                                                                                                                                       |   | 2008          |   |
|                                              |   | 2008                    |   |   | 2007             |   |   | vs.      2007         |                                                                                                                                                                       |   | 2008          |   |   | 2007             |   |   | vs. 2007 |   |
| (Unaudited)                                       |   |                    |   |   |             |   |   |                  |                                                                                                                                                                       |   |          |   |   |             |   |   |   |   |
| Statements      of Operations Data:               |   |                    |   |   |             |   |   |                  |                                                                                                                                                                       |   |          |   |   |             |   |   |   |   |
| Revenues:                                         |   |                    |   |   |             |   |   |                  |                                                                                                                                                                       |   |          |   |   |             |   |   |   |   |
| Consumer      segment                             |   |                    | 43.6   | %      |             |   | 42.4   | %                     |                                                                                                                                                                       |   | 12.7          | %      |   |             | 44.5   | % |   |   | 42.7 | % |   |   | 13.6 | % |
| Network      Access segment                       |   |                    | 29.4   | %      |             |   | 32.0   | %                     |                                                                                                                                                                       |   | 0.7           | %      |   |             | 29.3   | % |   |   | 32.1 | % |   |   | (0.7 | %) |
| Commercial      segment                           |   |                    | 19.3   | %      |             |   | 20.2   | %                     |                                                                                                                                                                       |   | 4.8           | %      |   |             | 19.5   | % |   |   | 19.8 | % |   |   | 7.3 | % |
| Managed      Broadband segment                    |   |                    | 6.4    | %      |             |   | 5.4    | %                     |                                                                                                                                                                       |   | 31.4          | %      |   |             | 6.0    | % |   |   | 5.4 | % |   |   | 20.0 | % |
| Regulated      Operations segment                 |   |                    | 1.3    | %      |             | NA     |   |                  |                                  NA |   |          |   | 0.7    | %                |   | NA |   |   |                                   NA |   |
| Total      revenues                               |   |                    | 100.0  | %      |             |   | 100.0  | %                     |                                                                                                                                                                       |   | 9.7           | %      |   |             | 100.0  | % |   |   | 100.0 | % |   |   | 8.7 | % |
| Selling,      general and administrative expenses |   |                    | 33.9   | %      |             |   | 33.4   | %                     |                                                                                                                                                                       |   | 11.1          | %      |   |             | 34.2   | % |   |   | 34.1 | % |   |   | 8.8 | % |
| Depreciation      and amortization expense        |   |                    | 19.5   | %      |             |   | 16.5   | %                     |                                                                                                                                                                       |   | 29.3          | %      |   |             | 19.8   | % |   |   | 16.6 | % |   |   | 29.9 | % |
| Operating      income                             |   |                    | 9.9    | %      |             |   | 15.0   | %                     |                                                                                                                                                                       |   | (27.8         | %)     |   |             | 8.6    | % |   |   | 12.6 | % |   |   | (25.8 | %) |
| Other      expense, net                           |   |                    | 7.3    | %      |             |   | 6.7    | %                     |                                                                                                                                                                       |   | 20.8          | %      |   |             | 6.6    | % |   |   | 6.6 | % |   |   | 7.9 | % |
| Income before      income taxes                   |   |                    | 2.5    | %      |             |   | 8.3    | %                     |                                                                                                                                                                       |   | (66.6         | %)     |   |             | 2.0    | % |   |   | 5.9 | % |   |   | (63.7 | %) |
| Net      income                                   |   |                    | 1.3    | %      |             |   | 4.6    | %                     |                                                                                                                                                                       |   | (69.0         | %)     |   |             | 0.8    | % |   |   | 3.2 | % |   |   | (72.4 | %) |

| 1  Percentage      change in underlying data. |   |   |   |
|---------------------------------------------------------|--------|--------|--------|
| NA – Not      Applicable                          |   |   |   |

|                                |   | Second      Quarter of |   |   | Percentage |   |
|-------------------------------------|--------|------------------------|--------|--------|------------|--------|
|                                |   | 2008                   |   |   | 2007       |   |   | Change |   |
| Voice                               |   | $                      | 12,117 |   |       |   | 11,608 |   |   |   | 4.4 | % |
| Video                               |   |                   | 25,668 |   |       |   | 23,907 |   |   |   | 7.4 | % |
| Data                                |   |                   | 10,386 |   |       |   | 8,269 |   |   |   | 25.6 | % |
| Wireless                            |   |                   | 13,942 |   |       |   | 11,344 |   |   |   | 22.9 | % |
| Total      Consumer segment revenue |   | $                      | 62,113 |   |       |   | 55,128 |   |   |   | 12.7 | % |

----

|                                           |   | Second      Quarter of |   |   | Percentage |   |
|------------------------------------------------|--------|------------------------|--------|--------|------------|--------|
|                                           |   | 2008                   |   |   | 2007       |   |   | Change |   |
| Voice                                          |   | $                      | 4,682  |   |       |   | 5,112 |   |   |   | (8.4 | %) |
| Video                                          |   |                   | 9,936  |   |       |   | 8,931 |   |   |   | 11.3 | % |
| Data                                           |   |                   | 1,877  |   |       |   | 1,282 |   |   |   | 46.4 | % |
| Wireless                                       |   |                   | 7,194  |   |       |   | 7,050 |   |   |   | 2.0 | % |
| Total      Consumer segment Cost of Goods Sold |   | $                      | 23,689 |   |       |   | 22,375 |   |   |   | 5.9 | % |

|                          |   | Second      Quarter of |   |   | Percentage |   |
|-------------------------------|--------|------------------------|--------|--------|------------|--------|
|                          |   | 2008                   |   |   | 2007       |   |   | Change |   |
| Consumer      segment EBITDAS |   | $                      | 13,423 |   |       |   | 10,965 |   |   |   | 22.4 | % |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | June      30, |    |   | Percentage |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|---------|--------|------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | 2008          |    |   | 2007       |   |   | Change |   |
| Voice:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |          |    |   |       |   |   |   |   |
| Long-distance subscribers1                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |          | 89,800  |   |       |   | 90,500 |   |   |   | (0.8 | %) |
| Long-distance      minutes carried (in millions)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |          | 32.0    |   |       |   | 33.6 |   |   |   | (4.8 | %) |
| Total local access lines in service2                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |          | 78,100  |   |       |   | 68,400 |   |   |   | 14.2 | % |
| Local access lines in service on GCI      facilities2                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |          | 60,500  |   |       |   | 41,800 |   |   |   | 44.7 | % |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |          |    |   |       |   |   |   |   |   |   |   |
| Video:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |          |    |   |       |   |   |   |   |   |   |   |
| Basic subscribers3                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |          | 130,300 |   |       |   | 124,700 |   |   |   | 4.5 | % |
| Digital programming tier subscribers4                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |          | 68,200  |   |       |   | 61,000 |   |   |   | 11.8 | % |
| HD/DVR converter boxes5                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |          | 56,900  |   |       |   | 40,200 |   |   |   | 41.5 | % |
| Homes      passed                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |          | 226,900 |   |       |   | 221,100 |   |   |   | 2.6 | % |
| Average monthly gross revenue per      subscriber6                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | $             | 65.86   |   |       | $      | 63.79 |   |   |   | 3.2 | % |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |          |    |   |       |   |   |   |   |   |   |   |
| Data:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |          |    |   |       |   |   |   |   |   |   |   |
| Cable modem subscribers7                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |          | 91,000  |   |       |   | 82,600 |   |   |   | 10.2 | % |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |          |    |   |       |   |   |   |   |   |   |   |
| Wireless:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |          |    |   |       |   |   |   |   |   |   |   |
| Wireless lines in service8                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |          | 77,000  |   |       |   | 62,900 |   |   |   | 22.4 | % |
| Average monthly gross revenue per      subscriber9                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | $             | 57.39   |   |       | $      | 55.25 |   |   |   | 3.9 | % |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |
| 1 A      long-distance subscriber is defined as a customer account that is invoiced      a monthly long-distance plan fee or has made a long-distance call during      the month.2 A      local access line in service is defined as a revenue generating circuit or      channel connecting a customer to the public switched telephone      network.3 A      basic cable subscriber is defined as one basic tier of service delivered      to an address or separate subunits thereof regardless of the number of      outlets purchased.4 A      digital programming tier subscriber is defined as one digital programming      tier of service delivered to an address or separate subunits thereof      regardless of the number of outlets or digital programming tiers      purchased. Digital programming tier subscribers are a subset of basic      subscribers.5 A      high definition/digital video recorder ("HD/DVR") converter box is defined      as one box rented by a digital programming or basic tier subscriber. A      digital programming or basic tier subscriber is not required to rent an      HD/DVR converter box to receive service.6 Quarter-to-date      average monthly consumer video revenues divided by the average of consumer      video basic subscribers at the beginning and ending of the      period.7 A      cable modem subscriber is defined by the purchase of cable modem service      regardless of the level of service purchased. If one entity purchases      multiple cable modem service access points, each access point is counted      as a subscriber. Cable modem subscribers may also be video basic      subscribers though basic cable service is not required to receive cable      modem service.8 A      wireless line in service is defined as a revenue generating wireless      device.9 Quarter-to-date      average monthly consumer wireless revenues divided by the average of      consumer wireless subscribers at the beginning and ending of the      period. |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |

----

|   | · | A 5.0%      increase in programming services revenue to $20.6 million primarily      resulting from an increase in basic and digital programming tier      subscribers, and |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | A 19.5%      increase in equipment rental revenue to $4.7 million primarily resulting      from our customers’ increased use of digital distribution      technology. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                      |   | Second      Quarter of |   |   | Percentage |   |
|-------------------------------------------|--------|------------------------|--------|--------|------------|--------|
|                                      |   | 2008                   |   |   | 2007       |   |   | Change |   |
| Voice                                     |   | $                      | 23,213 |   |       |   | 24,577 |   |   |   | (5.5 | %) |
| Data                                      |   |                   | 17,988 |   |       |   | 15,469 |   |   |   | 17.8 | % |
| Wireless                                  |   |                   | 690    |   |       |   | 1,570 |   |   |   | (56.1 | %) |
| Total Network      Access segment revenue |   | $                      | 41,891 |   |       |   | 41,616 |   |   |   | 0.7 | % |

|                                                 |   | Second      Quarter of |   |   | Percentage |   |
|------------------------------------------------------|--------|------------------------|--------|--------|------------|--------|
|                                                 |   | 2008                   |   |   | 2007       |   |   | Change |   |
| Voice                                                |   | $                      | 8,226  |   |       |   | 6,363 |   |   |   | 29.3 | % |
| Data                                                 |   |                   | 2,830  |   |       |   | 2,185 |   |   |   | 29.5 | % |
| Wireless                                             |   |                   | 473    |   |       |   | 174 |   |   |   | 171.8 | %  |
| Total Network      Access segment Cost of Goods Sold |   | $                      | 11,529 |   |       |   | 8,722 |   |   |   | 32.2 | %  |

|                                |   | Second      Quarter of |   |   | Percentage |   |
|-------------------------------------|--------|------------------------|--------|--------|------------|--------|
|                                |   | 2008                   |   |   | 2007       |   |   | Change |   |
| Network      Access segment EBITDAS |   | $                      | 21,676 |   |       |   | 23,543 |   |   |   | (7.9 | %) |

|                                                                                                                                                                                            |   | June      30, |   |   | Percentage |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|--------|--------|------------|--------|
|                                                                                                                                                                                            |   | 2008          |   |   | 2007       |   |   | Change |   |
| Voice:                                                                                                                                                                                          |   |          |   |   |       |   |   |   |   |
| Long-distance      minutes carried (in millions)                                                                                                                                                |   |          | 326.2  |   |       |   | 317.7 |   |   |   | 2.7 | % |
|                                                                                                                                                                                            |   |          |   |   |       |   |   |   |   |   |   |   |
| Data:                                                                                                                                                                                           |   |          |   |   |       |   |   |   |   |   |   |   |
| Internet service provider access lines in      service1                                                                                                                                         |   |          | 2,000  |   |       |   | 2,600 |   |   |   | (23.1 | %) |
|                                                                                                                                                                                            |   |
| 1 An      Internet service provider access line in service is defined as a revenue      generating circuit or channel connecting a customer to the public switched      telephone network. |   |
|                                                                                                                                                                                            |   |

----

|                                  |   | Second      Quarter of |   |   | Percentage |   |
|---------------------------------------|--------|------------------------|--------|--------|------------|--------|
|                                  |   | 2008                   |   |   | 2007       |   |   | Change |   |
| Voice                                 |   | $                      | 7,280  |   |       |   | 8,045 |   |   |   | (9.4 | %) |
| Video                                 |   |                   | 2,149  |   |       |   | 2,004 |   |   |   | 7.2 | % |
| Data                                  |   |                   | 16,584 |   |       |   | 14,561 |   |   |   | 13.9 | % |
| Wireless                              |   |                   | 1,431  |   |       |   | 1,583 |   |   |   | (9.6 | %) |
| Total      Commercial segment revenue |   | $                      | 27,444 |   |       |   | 26,193 |   |   |   | 4.8 | % |

|                                             |   | Second      Quarter of |   |   | Percentage |   |
|--------------------------------------------------|--------|------------------------|--------|--------|------------|--------|
|                                             |   | 2008                   |   |   | 2007       |   |   | Change |   |
| Voice                                            |   | $                      | 4,809  |   |       |   | 4,823 |   |   |   | (0.3 | %) |
| Video                                            |   |                   | 382    |   |       |   | 421 |   |   |   | (9.3 | %) |
| Data                                             |   |                   | 7,481  |   |       |   | 5,972 |   |   |   | 25.3 | % |
| Wireless                                         |   |                   | 1,240  |   |       |   | 1,041 |   |   |   | 19.1 | % |
| Total      Commercial segment Cost of Goods Sold |   | $                      | 13,912 |   |       |   | 12,257 |   |   |   | 13.5 | % |

|                            |   | Second      Quarter of |   |   | Percentage |   |
|---------------------------------|--------|------------------------|--------|--------|------------|--------|
|                            |   | 2008                   |   |   | 2007       |   |   | Change |   |
| Commercial      segment EBITDAS |   | $                      | 5,696  |   |       |   | 4,996 |   |   |   | 14.0 | % |

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | June      30, |   |   | Percentage |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|--------|--------|------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | 2008          |   |   | 2007       |   |   | Change |   |
| Voice:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |          |   |   |       |   |   |   |   |
| Long-distance subscribers1                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |          | 10,400 |   |       |   | 11,100 |   |   |   | (6.3 | %) |
| Long-distance      minutes carried (in millions)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |          | 32.9   |   |       |   | 34.1 |   |   |   | (3.5 | %) |
| Total local access lines in service2                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |          | 45,400 |   |       |   | 42,900 |   |   |   | 5.8 | % |
| Local access lines in service on GCI      facilities      2                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |          | 16,600 |   |       |   | 10,700 |   |   |   | 55.1 | % |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |          |   |   |       |   |   |   |   |   |   |   |
| Data:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |          |   |   |       |   |   |   |   |   |   |   |
| Cable modem subscribers3                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |          | 9,000  |   |       |   | 8,100 |   |   |   | 11.1 | % |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |          |   |   |       |   |   |   |   |   |   |   |
| Wireless:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |          |   |   |       |   |   |   |   |   |   |   |
| Wireless lines in service4                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |          | 7,100  |   |       |   | 6,700 |   |   |   | 6.0 | % |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |          |   |   |       |   |   |   |   |   |   |   |
| 1 A      long-distance subscriber is defined as a customer account that is invoiced      a monthly long-distance plan fee or has made a long-distance call during      the month.2 A      local access line in service is defined as a revenue generating circuit or      channel connecting a customer to the public switched telephone      network.3 A      cable modem subscriber is defined by the purchase of cable modem service      regardless of the level of service purchased. If one entity purchases      multiple cable modem service access points, each access point is counted      as a subscriber.4 A      wireless line in service is defined as a revenue generating wireless      device. |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |

|                              |   | June      30, |   |   | Percentage |   |
|-----------------------------------|--------|---------------|--------|--------|------------|--------|
|                              |   | 2008          |   |   | 2007       |   |   | Change |   |
| Managed      Broadband segment:   |   |          |   |   |       |   |   |   |   |
| SchoolAccess®      customers |   |          | 51     |   |       |   | 48 |   |   |   | 6.3 | % |
| Rural health      customers       |   |          | 39     |   |       |   | 21 |   |   |   | 85.7 | % |

----

|                                                                                                                                                                                                                                                                                                                                                                                           |   | June      30, | Percentage |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|------------|
|                                                                                                                                                                                                                                                                                                                                                                                           |   | 2008          |       | 2007 | Change |
| Voice:                                                                                                                                                                                                                                                                                                                                                                                         |   |          |       |   |   |
| Long-distance subscribers1                                                                                                                                                                                                                                                                                                                                                                     |   |          | 900        |   | NA | NA |
| Long-distance      minutes carried (in millions)                                                                                                                                                                                                                                                                                                                                               |   |          | 0.1        |   | NA | NA |
| Total local access lines in service2                                                                                                                                                                                                                                                                                                                                                           |   |          | 12,200     |   | NA | NA |
|                                                                                                                                                                                                                                                                                                                                                                                           |   |          |       |   |   |   |
| 1 A      long-distance subscriber is defined as a customer account that is invoiced      a monthly long-distance plan fee or has made a long-distance call during      the month.2 A      local access line in service is defined as a revenue generating circuit or      channel connecting a customer to the public switched telephone      network.NA – Not      Applicable |

----

| ·   | Our total      interest expense increased $2.2 million to $10.9 million in the second      quarter of 2008 due to a $1.9 million increase in interest expense on our      Senior Credit Facility to $4.9 million resulting from additional debt from      the Additional Incremental Term Loan agreement beginning in May 2008, the      increased interest rate on our Senior Credit Facility beginning May 2008,      and $587,000 in additional interest expense resulting from the Galaxy 18      capital lease commencing in the second quarter of 2008 partially offset by      a $302,000 increase in capitalized interest to $993,000 due to increased      capital expenditures subject to capitalized interest,  and |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In the second      quarter of 2008, we modified our existing Senior Credit Facility resulting      in $1.2 million of other third party costs and bank fees      incurred. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                |   | 2008   |    |   | 2007   |   |    | Percentage      Change |   |
|-------------------------------------|--------|--------|---------|--------|--------|--------|---------|------------------------|--------|
| Voice                               |   | $      | 23,978  |   |   |   | 22,961  |                   |   |   | 4.4 | % |
| Video                               |   |   | 51,315  |   |   |   | 47,538  |                   |   |   | 8.0 | % |
| Data                                |   |   | 20,482  |   |   |   | 16,216  |                   |   |   | 26.3 | % |
| Wireless                            |   |   | 27,721  |   |   |   | 22,016  |                   |   |   | 25.9 | % |
| Total      Consumer segment revenue |   | $      | 123,496 |   |   |   | 108,731 |                   |   |   | 13.6 | % |

|                                           |   | 2008   |   |   | 2007   |   |   | Percentage      Change |   |
|------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|------------------------|--------|
| Voice                                          |   | $      | 9,735  |   |   |   | 10,176 |                   |   |   | (4.3 | %) |
| Video                                          |   |   | 19,866 |   |   |   | 17,790 |                   |   |   | 11.7 | % |
| Data                                           |   |   | 3,703  |   |   |   | 2,551  |                   |   |   | 45.2 | % |
| Wireless                                       |   |   | 15,087 |   |   |   | 13,815 |                   |   |   | 9.2 | % |
| Total      Consumer segment Cost of Goods Sold |   | $      | 48,391 |   |   |   | 44,332 |                   |   |   | 9.2 | % |

|                          |   | 2008 |   |   | 2007   |   |   | Percentage      Change |   |
|-------------------------------|--------|------|--------|--------|--------|--------|--------|------------------------|--------|
| Consumer      segment EBITDAS |   | $    | 25,677 |   |   |   | 20,923 |                   |   |   | 22.7 | % |

----

|                                                                                                                                                                                                                                                                                                                                                             |   | June      30, |   |   | Percentage |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|--------|--------|------------|--------|
|                                                                                                                                                                                                                                                                                                                                                             |   | 2008          |   |   | 2007       |   |   | Change |   |
| Voice:                                                                                                                                                                                                                                                                                                                                                           |   |          |   |   |       |   |   |   |   |
| Long-distance      minutes carried (in millions)                                                                                                                                                                                                                                                                                                                 |   |          | 65.6   |   |       |   | 67.8 |   |   |   | (3.2 | %) |
|                                                                                                                                                                                                                                                                                                                                                             |   |          |   |   |       |   |   |   |   |   |   |   |
| Video:                                                                                                                                                                                                                                                                                                                                                           |   |          |   |   |       |   |   |   |   |   |   |   |
| Average monthly gross revenue per      subscriber1                                                                                                                                                                                                                                                                                                               |   | $             | 66.19  |   |       | $      | 63.76 |   |   |   | 3.8 | % |
|                                                                                                                                                                                                                                                                                                                                                             |   |          |   |   |       |   |   |   |   |   |   |   |
| Wireless:                                                                                                                                                                                                                                                                                                                                                        |   |          |   |   |       |   |   |   |   |   |   |   |
| Average monthly gross revenue per      subscriber2                                                                                                                                                                                                                                                                                                               |   | $             | 58.25  |   |       | $      | 54.59 |   |   |   | 6.7 | % |
|                                                                                                                                                                                                                                                                                                                                                             |   |
| 1 Year-to-date      average monthly consumer video revenues divided by the average of consumer      video basic subscribers at the beginning and ending of the      period.2 Year-to-date      average monthly consumer wireless revenues divided by the average of      consumer wireless subscribers at the beginning and ending of the      period. |   |

|   | · | A 5.7%      increase in programming services revenue to $41.2 million primarily      resulting from an increase in basic and digital programming tier      subscribers, and |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | A 19.3%      increase in equipment rental revenue to $9.3 million primarily resulting      from our customers’ increased use of digital distribution      technology. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                      |   | 2008   |   |   | 2007   |   |   | PercentageChange |   |
|-------------------------------------------|--------|--------|--------|--------|--------|--------|--------|------------------|--------|
| Voice                                     |   | $      | 45,155 |   |   |   | 48,848 |             |   |   | (7.6 | %) |
| Data                                      |   |   | 34,827 |   |   |   | 30,397 |             |   |   | 14.6 | % |
| Wireless                                  |   |   | 1,083  |   |   |   | 2,697  |             |   |   | (59.8 | %) |
| Total Network      Access segment revenue |   | $      | 81,065 |   |   |   | 81,942 |             |   |   | (0.7 | %) |

|                                                 |   | 2008   |   |   | 2007   |   |   | Percentage      Change |   |
|------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|------------------------|--------|
| Voice                                                |   | $      | 15,533 |   |   |   | 13,953 |                   |   |   | 11.3 | %  |
| Data                                                 |   |   | 5,556  |   |   |   | 5,615  |                   |   |   | (1.0 | %) |
| Wireless                                             |   |   | 694    |   |   |   | 393    |                   |   |   | 76.6 | %  |
| Total Network      Access segment Cost of Goods Sold |   | $      | 21,783 |   |   |   | 19,961 |                   |   |   | 8.9 | %  |

|                                |   | 2008 |   |   | 2007   |   |   | Percentage      Change |   |
|-------------------------------------|--------|------|--------|--------|--------|--------|--------|------------------------|--------|
| Network      Access segment EBITDAS |   | $    | 41,813 |   |   |   | 43,308 |                   |   |   | (3.5 | %) |

|                                             |   |   |   |   | Percentage |   |
|--------------------------------------------------|--------|--------|--------|--------|------------|--------|
|                                             |   | 2008   |   |   | 2007       |   |   | Change |   |
| Voice:                                           |   |   |   |   |       |   |   |   |   |
| Long-distance      minutes carried (in millions) |   |   | 640.8  |   |       |   | 633.5 |   |   |   | 1.2 | % |

----

|                                  |   | 2008   |   |   | 2007   |   |   | Percentage      Change |   |
|---------------------------------------|--------|--------|--------|--------|--------|--------|--------|------------------------|--------|
| Voice                                 |   | $      | 14,494 |   |   |   | 15,902 |                   |   |   | (8.9 | %) |
| Video                                 |   |   | 3,969  |   |   |   | 3,770  |                   |   |   | 5.3 | % |
| Data                                  |   |   | 32,793 |   |   |   | 28,515 |                   |   |   | 15.0 | % |
| Wireless                              |   |   | 2,779  |   |   |   | 2,187  |                   |   |   | 27.1 | % |
| Total      Commercial segment revenue |   | $      | 54,035 |   |   |   | 50,374 |                   |   |   | 7.3 | % |

|                                             |   |   |   |   |   |   |
|--------------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                             |   | 2008   |   |   | 2007   |   |   | Percentage      Change |   |
| Voice                                            |   | $      | 9,738  |   |   |   | 9,746 |   |   |   | (0.2 | %) |
| Video                                            |   |   | 770    |   |   |   | 824 |   |   |   | (6.6 | %) |
| Data                                             |   |   | 15,061 |   |   |   | 12,011 |   |   |   | 25.4 | % |
| Wireless                                         |   |   | 2,414  |   |   |   | 1,944 |   |   |   | 24.2 | % |
| Total      Commercial segment Cost of Goods Sold |   | $      | 27,983 |   |   |   | 24,525 |   |   |   | 14.1 | % |

|                            |   | 2008 |   |   | 2007   |   |   | Percentage      Change |   |
|---------------------------------|--------|------|--------|--------|--------|--------|--------|------------------------|--------|
| Commercial      segment EBITDAS |   | $    | 10,021 |   |   |   | 8,075  |                   |   |   | 24.1 | % |

|                                             |   |   |   |   | Percentage |   |
|--------------------------------------------------|--------|--------|--------|--------|------------|--------|
|                                             |   | 2008   |   |   | 2007       |   |   | Change |   |
| Voice:                                           |   |   |   |   |       |   |   |   |   |
| Long-distance      minutes carried (in millions) |   |   | 65.7   |   |       |   | 67.1 |   |   |   | (2.1 | %) |

----

----

| ·   | A $2.9      million increase in labor costs, |
|--------------------|----------------------------------------------|

| ·   | A $818,000      increase in our facilities leases primarily related to our wireless      facilities expansion, |
|--------------------|----------------------------------------------------------------------------------------------------------------|

| ·   | A $752,000      increase in our share-based compensation expense partially off-set by      changes in the fair value of our share-based liability in      2008, |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $715,000 in      additional expense resulting from our June 1, 2008, acquisition of UUI and      Unicom, and |
|--------------------|--------------------------------------------------------------------------------------------------------------|

| ·   | A $622,000      increase in our company-wide success sharing bonus  accrual. |
|--------------------|------------------------------------------------------------------------------|

| ·   | Our total      interest expense increased $2.7 million to $19.6 million in 2008 primarily      due to a $2.6 million increase in our senior credit facility interest      expense to $8.3 million resulting from additional debt from the Additional      Incremental Term Loan agreement beginning May 2008, the increased interest      rate on our Senior Credit Facility in May 2008, and $587,000 in additional      interest expense resulting from the Galaxy 18 capital lease commencing in      2008 partially offset by a $583,000 increase in capitalized interest to      $1.9 million due to increased capital expenditures subject to capitalized      interest, and |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In 2008 we      modified our existing Senior Credit Facility resulting in $1.2 million of      other third party costs and bank feesincurred. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                    |   | 2008   |    |   | 2007   |   |
|---------------------------------------------------------|--------|--------|---------|--------|--------|--------|
| Line      extensions                                    |   | $      | 9,706   |   |   |   | 18,730 |   |
| Customer      premise equipment                         |   |   | 4,897   |   |   |   | 4,286 |   |
| Scalable      infrastructure                            |   |   | 580     |   |   |   | 1,042 |   |
| Support      capital                                    |   |   | 304     |   |   |   | 599 |   |
| Upgrade/rebuild                                         |   |   | 747     |   |   |   | 264 |   |
| Commercial                                              |   |   | 80      |   |   |   | 99 |   |
| Sub-total                                               |   |   | 16,314  |   |   |   | 25,020 |   |
| Remaining      reportable segments capital expenditures |   |   | 97,177  |   |   |   | 43,435 |   |
|                                                    |   | $      | 113,491 |   |   |   | 68,455 |   |

----

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

----

| Years ending      December 31,  |   |   |    |
|---------------------------------|--------|--------|---------|
| 2008 (balance      of the year) |   | $      | 4,975   |   |
| 2009                            |   |   | 8,495   |   |
| 2010                            |   |   | 8,738   |   |
| 2011                            |   |   | 178,255 |   |
| 2011                            |   |   | 176,485 |   |
| 2013 and      thereafter        |   |   | 340,786 |   |
|                            |   | $      | 717,734 |   |

----

|                                               |   | Payments Due      by Period |      |
|----------------------------------------------------|--------|-----------------------------|-----------|
|                                               |   | Total                       |      |   | Less than 1      Year |   |   | 1 to      3Years |   |   | 4 to      5Years |   |   | More Than 5      Years |   |
|                                               |   | (Amounts in      thousands) |      |
| Long-term      debt                                |   | $                           | 719,704   |   |   |   | 6,584 |   |   |   | 17,240 |   |   |   | 355,094 |   |   |   | 340,786 |   |
| Interest on      long-term debt                    |   |                        | 251,125   |   |   |   | 45,020 |   |   |   | 93,776 |   |   |   | 77,529 |   |   |   | 34,800 |   |
| Capital lease      obligations, including interest |   |                        | 167,401   |   |   |   | 6,947 |   |   |   | 23,300 |   |   |   | 23,400 |   |   |   | 113,754 |   |
| Operating      lease commitments                   |   |                        | 55,429    |   |   |   | 10,979 |   |   |   | 15,535 |   |   |   | 10,600 |   |   |   | 18,315 |   |
| Purchase      obligations                          |   |                        | 74,828    |   |   |   | 60,028 |   |   |   | 14,800 |   |   |   | --- |   |   |   | --- |   |
| Other                                              |   |                        | 66,500    |   |   |   | 63,500 |   |   |   | 3,000 |   |   |   | --- |   |   |   | --- |   |
| Total      contractual obligations                 |   | $                           | 1,334,987 |   |   |   | 193,058 |   |   |   | 167,651 |   |   |   | 466,623 |   |   |   | 507,655 |   |

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|   | • | Expanding our      accounting policy documentation and implementing policies and procedures      to periodically review our accounting policies to ensure ongoing GAAP      compliance. |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | With regards      to our policies and procedures for the recording of depreciation expense      during interim reporting periods, we will continue to revise our      accounting policies and implement procedures to ensure depreciation is      recorded consistent with GAAP for interim and annual reporting      periods. |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| ·   | Revenues      from access charges may be reduced or lost.  We expect to      recognize $13.0 million to $14.0 million for the year ended December 31,      2008 from local exchange network access charges.  The amount of      revenue that we receive from these access charges is calculated in      accordance with requirements set by the FCC and the RCA.  Any      change in these requirements may reduce our revenues and      earnings.  The FCC has actively reviewed new mechanisms for      intercarrier compensation that, in some cases, could eliminate access      charges entirely.  Elimination of access charges would likely      have an adverse effect on our revenue and earnings.  In any      event, we believe that new mechanisms for intercarrier compensation would      more likely than not reduce this source of revenue.  Similarly,      the RCA has adopted regulations modifying intrastate access charges that      may reduce our revenue. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| Exhibit      No. | Description                                                                                                                                                                                                          |
|------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 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 andTreasurer  |

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| Signature                           |   | Title                                             |   | Date                          |
|-------------------------------------|--------|---------------------------------------------------|--------|-------------------------------|
|                                |   |                                              |   |                          |
|                                |   |                                              |   |                          |
|   /s/      Ronald A. Duncan    |   | President and      Director                       |   |        November 20, 2008 |
| Ronald A.      Duncan               |   | (Principal      Executive Officer)                |   |                          |
|                                |   |                                              |   |                          |
|   /s/ G.      Wilson Hughes    |   | Vice      President and Director                  |   |        November 20, 2008 |
| G. Wilson      Hughes               |   |                                              |   |                          |
|                                |   |                                              |   |                          |
|  /s/      John M. Lowber  |   | Secretary,      Treasurer and Director            |   |        November 20, 2008 |
| John M.      Lowber                 |   | (Principal      Financial and Accounting Officer) |   |                          |

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