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

|   | 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      filer  x (Do not      check if a smaller reporting company) | Smaller reporting company o |

----

|                                                           |                                                      |                                                                                         |   |   | Page  No. |
|----------------------------------------------------------------|-----------------------------------------------------------|----------------------------------------------------------------------------------------------|--------|--------|-----------|
|                                                           |                                                      |                                                                                         |   |   |      |
| Cautionary      Statement Regarding Forward-Looking Statements | 3                                                         |
|                                                           |                                                      |                                                                                         |   |   |      |
| Part      I.  FINANCIAL INFORMATION                  |                                                      |
|                                                           |                                                      |                                                                                         |   |   |      |
|                                                           | Item      I.                                              | Financial      Statements                                                                    |   |   |      |
|                                                           |                                                      |                                                                                         |   |   |      |
|                                                           |                                                      | Consolidated      Balance Sheets as of September 30, 2008 (unaudited)                        |   |   |      |
|                                                           |                                                      |   and      December 31, 2007                                                       |   |   | 4         |
|                                                           |                                                      |                                                                                         |   |   |      |
|                                                           |                                                      | Consolidated      Income Statement for the three and nine months ended                       |   |   |      |
|                                                           |                                                      |   September      30, 2008 (unaudited) and 2007 (as restated, unaudited)            |   |   | 6         |
|                                                           |                                                      |                                                                                         |   |   |      |
|                                                           |                                                      | Consolidated      Statements of Cash Flows for the nine months                               |   |   |      |
|                                                           |                                                      |   ended      September 30, 2008 (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                                                   |   |   | 28        |
|                                                           |                                                      |                                                                                         |   |   |      |
|                                                           | Item      3.                                              | Quantitative      and Qualitative Disclosures About Market Risk                              |   |   | 56        |
|                                                           |                                                      |                                                                                         |   |   |      |
|                                                           | Item      4.                                              | Controls and      Procedures                                                                 |   |   | 56        |
|                                                           |                                                      |                                                                                         |   |   |      |
| Part      II.  OTHER INFORMATION                     |                                                      |                                                                                         |   |
|                                                           |                                                      |                                                                                         |   |   |      |
|                                                           | Item      1A.                                             | Risk      Factors                                                                            |   |   | 58        |
|                                                           |                                                      |                                                                                         |   |   |      |
|                                                           | Item      6.                                              | Exhibits                                                                                     |   |   | 59        |
|                                                           |                                                      |                                                                                         |   |   |      |
|                                                           | Other items      are omitted, as they are not applicable. |                                                                                         |   |
|                                                           |                                                      |                                                                                         |   |   |      |
| SIGNATURES                                                     |                                                      |                                                                                         | 60     |

----

----

| (Amounts in      thousands)                                                 |   | (Unaudited)        |      |   |              |   |
|-----------------------------------------------------------------------------|--------|--------------------|-----------|--------|-------------------|--------|
|                                                                        |   | September      30, |      |   | December      31, |   |
| ASSETS                                                                      |   | 2008               |      |   | 2007              |   |
|                                                                        |   |               |      |   |              |   |
|        Current assets:                                                 |   |               |      |   |              |   |
|         Cash and cash equivalents                                 |   | $                  | 32,408    |   |              |   | 13,074 |   |
|                                                                        |   |               |      |   |              |   |   |   |
| Receivables                                                                 |   |               | 111,166   |   |              |   | 97,913 |   |
| Less      allowance for doubtful receivables                                |   |               | 1,946     |   |              |   | 1,657 |   |
|         Net receivables                                           |   |               | 109,220   |   |              |   | 96,256 |   |
|                                                                        |   |               |      |   |              |   |   |   |
|         Deferred income taxes                                     |   |               | 6,773     |   |              |   | 5,734 |   |
|         Investment securities                                     |   |               | 5,276     |   |              |   | --- |   |
|         Inventories                                               |   |               | 5,266     |   |              |   | 2,541 |   |
|         Prepaid expenses                                          |   |               | 5,255     |   |              |   | 5,356 |   |
|         Other current assets                                      |   |               | 713       |   |              |   | 717 |   |
| Total current      assets                                                   |   |               | 164,911   |   |              |   | 123,678 |   |
|                                                                        |   |               |      |   |              |   |   |   |
|        Property and equipment in service, net of depreciation          |   |               | 738,274   |   |              |   | 504,273 |   |
|        Construction in progress                                        |   |               | 100,657   |   |              |   | 69,409 |   |
|   Net      property and equipment                                      |   |               | 838,931   |   |              |   | 573,682 |   |
|                                                                        |   |               |      |   |              |   |   |   |
| Cable      certificates                                                     |   |               | 191,565   |   |              |   | 191,565 |   |
| Goodwill                                                                    |   |               | 63,502    |   |              |   | 42,181 |   |
| Wireless      licenses                                                      |   |               | 26,007    |   |              |   | 25,757 |   |
| Other      intangible assets, net of amortization                           |   |               | 20,419    |   |              |   | 11,769 |   |
|         Deferred loan and senior notes costs, net of amortization |   |               | 6,388     |   |              |   | 6,202 |   |
| Other      assets                                                           |   |               | 11,594    |   |              |   | 9,399 |   |
| Total other      assets                                                     |   |               | 319,475   |   |              |   | 286,873 |   |
| Total      assets                                                           |   | $                  | 1,323,317 |   |              |   | 984,233 |   |

----

| (Amounts in      thousands)                                                                                                                  |   | (Unaudited)        |      |   |              |   |
|----------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|-----------|--------|-------------------|--------|
|                                                                                                                                         |   | September      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                                                          |   | $                  | 13,792    |   |              |   | 2,375 |   |
| Accounts      payable                                                                                                                        |   |               | 51,831    |   |              |   | 35,747 |   |
| Deferred      revenue                                                                                                                        |   |               | 21,181    |   |              |   | 16,600 |   |
| Accrued      payroll and payroll related obligations                                                                                         |   |               | 18,542    |   |              |   | 16,329 |   |
| Accrued      liabilities                                                                                                                     |   |               | 11,174    |   |              |   | 7,536 |   |
| Accrued      interest                                                                                                                        |   |               | 2,977     |   |              |   | 8,927 |   |
| Subscriber      deposits                                                                                                                     |   |               | 1,143     |   |              |   | 877 |   |
| Total current      liabilities                                                                                                               |   |               | 120,640   |   |              |   | 88,391 |   |
|                                                                                                                                         |   |               |      |   |              |   |   |   |
| Long-term      debt                                                                                                                          |   |               | 703,390   |   |              |   | 536,115 |   |
| Obligations      under capital leases, excluding current maturities                                                                          |   |               | 95,151    |   |              |   | 2,290 |   |
| Obligation      under capital lease due to related party, excluding current      maturity                                                    |   |               | 1,866     |   |              |   | 469 |   |
| Deferred      income taxes                                                                                                                   |   |               | 88,472    |   |              |   | 84,294 |   |
| Long-term      deferred revenue                                                                                                              |   |               | 37,117    |   |              |   | 845 |   |
| Other      liabilities                                                                                                                       |   |               | 15,579    |   |              |   | 12,396 |   |
| Total      liabilities                                                                                                                       |   |               | 1,062,215 |   |              |   | 724,800 |   |
|                                                                                                                                         |   |               |      |   |              |   |   |   |
| Minority      interest                                                                                                                       |   |               | ---       |   |              |   | 6,478 |   |
|                                                                                                                                         |   |               |      |   |              |   |   |   |
| Commitments      and contingencies                                                                                                           |   |               |      |   |              |   |   |   |
| Stockholder’s      equity:                                                                                                             |   |               |      |   |              |   |   |   |
| Class A      common stock (no par). Authorized 10 shares; issued and outstanding 0.1      shares at September 30, 2008 and December 31, 2007 |   |               | 206,622   |   |              |   | 206,622 |   |
| Paid-in      capital                                                                                                                         |   |               | 43,465    |   |              |   | 37,804 |   |
| Retained      earnings                                                                                                                       |   |               | 11,015    |   |              |   | 8,528 |   |
| Total      stockholder’s equity                                                                                                        |   |               | 261,102   |   |              |   | 252,955 |   |
| Total      liabilities, minority interest, and stockholder’s equity                                                                    |   | $                  | 1,323,317 |   |              |   | 984,233 |   |

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

----

|                                                                                             |   | Three Months      Ended |    |   | Nine Months      Ended  |   |
|--------------------------------------------------------------------------------------------------|--------|-------------------------|---------|--------|-------------------------|--------|
|                                                                                             |   | September      30,      |    |   | September      30,      |   |
|   (Amounts in      thousands)                                                          |   | 2008                    |    |   | (as restated)      2007 |   |   | 2008 |   |   | (as restated)      2007 |   |
| Revenues                                                                                         |   | $                       | 151,660 |   |                    |   | 134,090 |   |   |   | 428,795 |   |   |   | 389,011 |   |
|                                                                                             |   |                    |    |   |                    |   |   |   |   |   |   |   |   |   |   |   |
| Cost of goods      sold (exclusive of depreciation and amortization shown separately      below) |   |                    | 50,401  |   |                    |   | 52,213 |   |   |   | 154,160 |   |   |   | 145,782 |   |
| Selling,      general and administrative expenses                                                |   |                    | 56,410  |   |                    |   | 44,735 |   |   |   | 151,076 |   |   |   | 131,770 |   |
| Depreciation      and amortization expense                                                       |   |                    | 28,869  |   |                    |   | 21,970 |   |   |   | 83,820 |   |   |   | 64,273 |   |
| Operating      income                                                                            |   |                    | 15,980  |   |                    |   | 15,172 |   |   |   | 39,739 |   |   |   | 47,186 |   |
|                                                                                             |   |                    |    |   |                    |   |   |   |   |   |   |   |   |   |   |   |
| Other income      (expense):                                                                     |   |                    |    |   |                    |   |   |   |   |   |   |   |   |   |   |   |
| Interest      expense                                                                            |   |                    | (13,693 | )      |                    |   | (8,620 | ) |   |   | (33,277 | ) |   |   | (25,495 | ) |
| Loan and      senior note fees                                                                   |   |                    | (441    | )      |                    |   | (751 | ) |   |   | (1,543 | ) |   |   | (1,147 | ) |
| Interest      income                                                                             |   |                    | 386     |   |                    |   | 82 |   |   |   | 869 |   |   |   | 427 |   |
| Minority      interest                                                                           |   |                    | (419    | )      |                    |   | 37 |   |   |   | 1,503 |   |   |   | 26 |   |
| Other      expense, net                                                                          |   |                    | (14,167 | )      |                    |   | (9,252 | ) |   |   | (32,448 | ) |   |   | (26,189 | ) |
|                                                                                             |   |                    |    |   |                    |   |   |   |   |   |   |   |   |   |   |   |
| Income before      income tax expense                                                            |   |                    | 1,813   |   |                    |   | 5,920 |   |   |   | 7,291 |   |   |   | 20,997 |   |
|                                                                                             |   |                    |    |   |                    |   |   |   |   |   |   |   |   |   |   |   |
| Income tax      expense                                                                          |   |                    | 1,548   |   |                    |   | 2,964 |   |   |   | 4,758 |   |   |   | 9,817 |   |
|                                                                                             |   |                    |    |   |                    |   |   |   |   |   |   |   |   |   |   |   |
| Net      income                                                                                  |   | $                       | 265     |   |                    |   | 2,956 |   |   |   | 2,533 |   |   |   | 11,180 |   |
|                                                                                             |   |                    |    |   |                    |   |   |   |   |   |   |   |   |   |   |   |

----

| (Amounts in      thousands)                                                                                                             |   | 2008   |     |   | (as      restated)2007 |   |
|-----------------------------------------------------------------------------------------------------------------------------------------|--------|--------|----------|--------|------------------------|--------|
| Cash flows      from operating activities:                                                                                              |   |   |     |   |                   |   |
| Net      income                                                                                                                         |   | $      | 2,533    |   |                   |   | 11,180 |   |
| Adjustments      to reconcile net income to net cash provided  by operating      activities (net of effects of acquisitions): |   |   |     |   |                   |   |   |   |
| Depreciation      and amortization expense                                                                                              |   |   | 83,820   |   |                   |   | 64,273 |   |
| Deferred      income tax expense                                                                                                        |   |   | 3,426    |   |                   |   | 9,599 |   |
| Share-based      compensation expense                                                                                                   |   |   | 5,547    |   |                   |   | 3,490 |   |
| Other noncash      income and expense items                                                                                             |   |   | 4,764    |   |                   |   | 6,724 |   |
| Change in      operating assets and liabilities, net of effect of    acquisition                                                        |   |   | 32,993   |   |                   |   | (19,741 | ) |
| Net cash      provided by operating activities                                                                                          |   |   | 133,083  |   |                   |   | 75,525 |   |
|                                                                                                                                    |   |   |     |   |                   |   |   |   |
| Cash flows      from investing activities:                                                                                              |   |   |     |   |                   |   |   |   |
| Purchases of      property and equipment                                                                                                |   |   | (172,572 | )      |                   |   | (106,424 | ) |
| Purchase of      business, net of cash received                                                                                         |   |   | (64,945  | )      |                   |   | (19,530 | ) |
| Purchases of      other assets and intangible assets                                                                                    |   |   | (5,115   | )      |                   |   | (4,996 | ) |
| Restricted      cash                                                                                                                    |   |   | ---      |   |                   |   | --- |   |
| Other                                                                                                                                   |   |   | ---      |   |                   |   | 25 |   |
| Net cash used      in investing activities                                                                                              |   |   | (242,632 | )      |                   |   | (130,925 | ) |
|                                                                                                                                    |   |   |     |   |                   |   |   |   |
| Cash flows      from financing activities:                                                                                              |   |   |     |   |                   |   |   |   |
| Borrowing on      Senior Credit Facility                                                                                                |   |   | 132,100  |   |                   |   | 50,000 |   |
| Repayment of      debt and capital lease obligations                                                                                    |   |   | (3,996   | )      |                   |   | (26,655 | ) |
| Issuance of      long-term debt                                                                                                         |   |   | 2,161    |   |                   |   | --- |   |
| Payment of      debt issuance costs                                                                                                     |   |   | (1,662   | )      |                   |   | (402 | ) |
| Net      contribution from (distribution to) General Communication,      Inc.                                                           |   |   | 280      |   |                   |   | (245 | ) |
| Other                                                                                                                                   |   |   | ---      |   |                   |   | --- |   |
| Net cash      provided by financing activities                                                                                          |   |   | 128,883  |   |                   |   | 22,698 |   |
| Net increase      (decrease) in cash and cash equivalents                                                                               |   |   | 19,334   |   |                   |   | (32,702 | ) |
| Cash and cash      equivalents at beginning of period                                                                                   |   |   | 13,074   |   |                   |   | 57,647 |   |
|                                                                                                                                    |   |   |     |   |                   |   |   |   |
| Cash and cash      equivalents at end of period                                                                                         |   | $      | 32,408   |   |                   |   | 24,945 |   |

----

|   |  (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 rural hospitals and health clinics, and managed video      conferencing, |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

|   | · | Lease, 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) | Acquisitions |
|--------|-----|--------------|

| UUI                  |   | $ | 40,161 |   |
|----------------------|--------|---|--------|--------|
| Alaska      Wireless |   | $ | 14,311 |   |
| Alaska      DigiTel  |   | $ | 10,473 |   |

----

|                                                            |   | UUI    |   |   | Alaska      DigiTel |   |
|-----------------------------------------------------------------|--------|--------|--------|--------|---------------------|--------|
| Current      assets                                             |   | $      | 15,290 |   |                |   | --- |   |
| Property and      equipment, including construction in progress |   |   | 63,167 |   |                |   | 328 |   |
| Intangible      assets                                          |   |   | 6,472  |   |                |   | 542 |   |
| Goodwill                                                        |   |   | 5,928  |   |                |   | 4,622 |   |
| Other      assets                                               |   |   | 2,411  |   |                |   | --- |   |
| Minority      interest acquired                                 |   |   | ---    |   |                |   | 4,981 |   |
| Total assets      acquired                                      |   |   | 93,268 |   |                |   | 10,473 |   |
| Current      liabilities                                        |   |   | 4,746  |   |                |   | --- |   |
| Long-term      debt, including current portion                  |   |   | 43,614 |   |                |   | --- |   |
| Other      long-term liabilities                                |   |   | 2,653  |   |                |   | --- |   |
| Total      liabilities assumed                                  |   |   | 51,013 |   |                |   | --- |   |
| Net assets      acquired                                        |   | $      | 42,255 |   |                |   | 10,473 |   |

|                                |   | Three Months      Ended September 30, |    |   | Nine Months      Ended September 30, |   |
|-------------------------------------|--------|---------------------------------------|---------|--------|--------------------------------------|--------|
|                                |   | 2008                                  |    |   | 2007                                 |   |   | 2008 |   |   | 2007 |   |
| Pro forma      consolidated revenue |   | $                                     | 151,660 |   |                                 |   | 140,638 |   |   |   | 447,961 |   |   |   | 407,516 |   |
| Pro forma net      income           |   | $                                     | 537     |   |                                 |   | 3,483 |   |   |   | 3,608 |   |   |   | 13,397 |   |

----

|   | (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 nine months ended September 30, 2008 are not material to the      consolidated financial statements. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

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

----

| Balance at      December 31, 2006                                       |   | $      | 3,408  |   |
|-------------------------------------------------------------------------|--------|--------|--------|--------|
| Liability      incurred                                                 |   |   | 85     |   |
| Accretion      expense for the nine months endedSeptember 30,      2007 |   |   | 106    |   |
| Liability      settled                                                  |   |   | (3     | )      |
| Balance at      September 30, 2007                                      |   | $      | 3,596  |   |
|                                                                    |   |   |   |   |
| Balance at      December 31, 2007                                       |   | $      | 4,173  |   |
| Liability      incurred                                                 |   |   | 644    |   |
| Accretion      expense for the nine months endedSeptember 30,      2008 |   |   | 123    |   |
| Additions      upon acquisition of UUI, Unicom and Alaska Wireless      |   |   | 803    |   |
| Liability      settled                                                  |   |   | (165   | )      |
| Balance at      September 30, 2008                                      |   | $      | 5,578  |   |

----

|                    | Number of      Contracts |   | Notional      Value | Balance Sheet      Location |   | Fair      Value   |   |
|-------------------------|--------------------------|--------|---------------------|-----------------------------|--------|-------------------|--------|
| Interest rate      caps | 2                        |   | $                   | 180,000                     |   | Other      Assets |   | $ | 409 |   |

|                           |   | Three Months      Ended |   | Nine Months      Ended |   |
|--------------------------------|--------|-------------------------|--------|------------------------|--------|
|                           |   | September      30,      |   | September      30,     |   |
|                           |   | 2008                    |   | 2007                   |   | 2008 |   | 2007 |   |
| Surcharges      reported gross | $      | 1,070                   |   |                   | 1,068  |   | 3,081 |   |   | 3,133 |   |

|                                       |   | Three Months      Ended September 30, 2008 |   |   | Nine Months      Ended September 30, 2008 |   |
|--------------------------------------------|--------|--------------------------------------------|--------|--------|-------------------------------------------|--------|
| Depreciation      and amortization expense |   | $                                          | 402    |   |                                      |   | 667 |   |
| Operating      income                      |   |                                       | (402   | )      |                                      |   | (667 | ) |
| Net      income                            |   |                                       | (196   | )      |                                      |   | (325 | ) |

----

| (n)   |    Recently Issued Accounting      Pronouncements |
|-----------------|------------------------------------------------------------------|

|         (o) | Restatement,      Immaterial Error Correction and      Reclassification |
|-----------------------|------------------------------------------------------------------------------|

|   | · | We decreased      depreciation expense by approximately $1.2 million and $2.6 million for      the three and nine months ended September 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 by approximately $422,000 and $1.2 million for the three      and nine months ended September 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 $966,000 for the three and nine months      ended September 30, 2007, respectively, due to the recognition of      depreciation on additional capitalizedinterest; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | We increased      revenue $141,000 and $633,000 for the three and nine months ended      September 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 $85,000 and $343,000 for the three and nine months ended September      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 increased      share-based compensation expense $114,000 for the three months ended      September 30, 2007 and decreased share-based compensation expense $643,000      for the nine months ended September 30, 2007 to correct expense      recognition timing for options that did not vest in equal increments over      the vesting period; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | We decreased      depreciation expense $38,000 and $113,000 for the three and nine months      ended September 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 $658,000 and $2.1 million for the three and nine months      ended September 30, 2007, respectively, to record the income tax effect of      the corrections described above. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                             |   | Three Months      Ended September 30, 2007 |    |
|--------------------------------------------------------------------------------------------------|--------|--------------------------------------------|---------|
|                                                                                             |   | As previously reported1                    |    |   | Adjustments |   |   | Reclassification |   |   | As      restated |   |
| Revenues                                                                                         |   | $                                          | 133,864 |   |   |   | 226 |   |   |   | --- |   |   |   | 134,090 |   |
|                                                                                             |   |                                       |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost of goods      sold (exclusive of depreciation and amortization shown separately      below) |   |                                       | 47,878  |   |   |   | --- |   |   |   | 4,335 |   |   |   | 52,213 |   |
| Selling,      general and administrative expenses                                                |   |                                       | 48,956  |   |   |   | 114 |   |   |   | (4,335 | ) |   |   | 44,735 |   |
| Depreciation      and amortization expense                                                       |   |                                       | 22,837  |   |   |   | (867 | ) |   |   | --- |   |   |   | 21,970 |   |
| Operating      income                                                                            |   |                                       | 14,193  |   |   |   | 979 |   |   |   | --- |   |   |   | 15,172 |   |

----

|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|-------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Other income      (expense):                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      expense                                                         |   |   | (9,042 | )      |   |   | 422    |   |   |   | ---    |   |   |   | (8,620 | )      |
| Loan and      senior note fees                                                |   |   | (751   | )      |   |   | ---    |   |   |   | ---    |   |   |   | (751   | )      |
| Interest      income                                                          |   |   | 82     |   |   |   | ---    |   |   |   | ---    |   |   |   | 82     |   |
| Minority      interest                                                        |   |   | 37     |   |   |   | ---    |   |   |   | ---    |   |   |   | 37     |   |
| Other      expense, net                                                       |   |   | (9,674 | )      |   |   | 422    |   |   |   | ---    |   |   |   | (9,252 | )      |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income before      income tax expense                                         |   |   | 4,519  |   |   |   | 1,401  |   |   |   | ---    |   |   |   | 5,920  |   |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income tax      expense                                                       |   |   | 2,306  |   |   |   | 658    |   |   |   | ---    |   |   |   | 2,964  |   |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      income                                                               |   | $      | 2,213  |   |   |   | 743    |   |   |   | ---    |   |   |   | 2,956  |   |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 1      As reported on Form 10-Q for the quarter ended September 30,      2007 |   |

|                                                                                             |   | Nine Months      Ended September 30, 2007 |     |
|--------------------------------------------------------------------------------------------------|--------|-------------------------------------------|----------|
|                                                                                             |   | As previously reported1                   |     |   | Adjustments |   |   | Reclassification |   |   | As      restated |   |
| Revenues                                                                                         |   | $                                         | 388,035  |   |   |   | 976 |   |   |   | --- |   |   |   | 389,011 |   |
|                                                                                             |   |                                      |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost of goods      sold (exclusive of depreciation and amortization shown separately      below) |   |                                      | 133,229  |   |   |   | --- |   |   |   | 12,553 |   |   |   | 145,782 |   |
| Selling,      general and administrative expenses                                                |   |                                      | 144,966  |   |   |   | (643 | ) |   |   | (12,553 | ) |   |   | 131,770 |   |
| Depreciation      and amortization expense                                                       |   |                                      | 66,033   |   |   |   | (1,760 | ) |   |   | --- |   |   |   | 64,273 |   |
| Operating      income                                                                            |   |                                      | 43,807   |   |   |   | 3,379 |   |   |   | --- |   |   |   | 47,186 |   |
|                                                                                             |   |                                      |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other income      (expense):                                                                     |   |                                      |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      expense                                                                            |   |                                      | (26,683  | ) |   |   | 1,188 |   |   |   | --- |   |   |   | (25,495 | ) |
| Loan and      senior note fees                                                                   |   |                                      | (1,147   | ) |   |   | --- |   |   |   | --- |   |   |   | (1,147 | ) |
| Interest      income                                                                             |   |                                      | 427      |   |   |   | --- |   |   |   | --- |   |   |   | 427 |   |
| Minority      interest                                                                           |   |                                      | 26       |   |   |   | --- |   |   |   | --- |   |   |   | 26 |   |
| Other      expense, net                                                                          |   |                                      | (27,377  | ) |   |   | 1,188 |   |   |   | --- |   |   |   | (26,189 | ) |
|                                                                                             |   |                                      |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income before      income tax expense                                                            |   |                                      | 16,430   |   |   |   | 4,567 |   |   |   | --- |   |   |   | 20,997 |   |
|                                                                                             |   |                                      |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income tax      expense                                                                          |   |                                      | 7,672    |   |   |   | 2,145 |   |   |   | --- |   |   |   | 9,817 |   |
|                                                                                             |   |                                      |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      income                                                                                  |   | $                                         | 8,758    |   |   |   | 2,422 |   |   |   | --- |   |   |   | 11,180 |   |
|                                                                                             |   |                                      |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                             |   |                                      |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash provided      by operating activities                                                       |   | $                                         | 74,337   |   |   |   | 1,188 |   |   |   | --- |   |   |   | 75,525 |   |
| Cash used in      investing activities                                                           |   |                                      | (129,737 | ) |   |   | (1,188 | ) |   |   | --- |   |   |   | (130,925 | )  ) |
| Cash provided      by financing activities                                                       |   |                                      | 22,698   |   |   |   | --- |   |   |   | --- |   |   |   | 22,698 |   |
|                                                                                             |   |                                      |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 1      As reported on Form 10-Q for the nine months ended September 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): |
|--------|-------------------------------------------------------------------------------------------------------------------------|

| Nine month      period ended September 30,                                     |   | 2008   |   |   | 2007(as      restated) |   |
|--------------------------------------------------------------------------------|--------|--------|--------|--------|------------------------|--------|
| Increase in      accounts receivable                                           |   | $      | (3,014 | )      |                   |   | (13,454 | ) |
| Decrease in      prepaid expenses                                              |   |   | 1,026  |   |                   |   | 1,393 |   |
| Increase in      inventories                                                   |   |   | (1,759 | )      |                   |   | (314 | ) |
| Net sale of      investment securities                                         |   |   | 800    |   |                   |   | --- |   |
| (Increase)      decrease in other current assets                               |   |   | (118   | )      |                   |   | 960 |   |
| Increase      (decrease) in accounts payable                                   |   |   | (1,484 | )      |                   |   | 1,041 |   |
| Increase      (decrease) in deferred revenues                                  |   |   | 3,668  |   |                   |   | (2,705 | ) |
| Increase      (decrease) in accrued payroll and payroll related    obligations |   |   | 1,191  |   |                   |   | (1,388 | ) |
| Increase      (decrease) in accrued liabilities                                |   |   | 3,209  |   |                   |   | (548 | ) |
| Decrease in      accrued interest                                              |   |   | (6,021 | )      |                   |   | (5,700 | ) |
| Increase      (decrease) in subscriber deposits                                |   |   | (35    | )      |                   |   | 83 |   |
| Increase in      long-term deferred revenue                                    |   |   | 36,272 |   |                   |   | --- |   |
| Increase      (decrease) in components of other long-term liabilities          |   |   | (742   | )      |                   |   | 891 |   |
|                                                                           |   | $      | 32,993 |   |                   |   | (19,741 | ) |

----

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

|                      |   | Three Months      Ended |   | Nine Months      Ended |   |
|---------------------------|--------|-------------------------|--------|------------------------|--------|
|                      |   | September      30,      |   | September      30,     |   |
|                      |   | 2008                    |   | 2007                   |   | 2008 |   | 2007 |   |
| Amortization      expense | $      | 1,749                   |   |                   | 908    |   | 3,829 |   |   | 2,666 |   |

| Years Ending      December 31, |   |   |   |
|--------------------------------|--------|--------|--------|
| 2008                           |   | $      | 5,459  |   |
| 2009                           |   |   | 6,264  |   |
| 2010                           |   |   | 5,344  |   |
| 2011                           |   |   | 2,329  |   |
| 2012                           |   |   | 1,590  |   |

| (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                     |   | $                                       | 240,000 |   |
| 2009                     |   | $                                       | 125,000 |   |
| 2010                     |   | $                                       | 125,000 |   |
| 2011 and      thereafter |   | $                                       | 100,000 |   |

----

| Years ending      December 31,                                    |   |   |    |
|-------------------------------------------------------------------|--------|--------|---------|
| 2008      (remainder of the year)                                 |   | $      | 3,100   |   |
| 2009                                                              |   |   | 8,581   |   |
| 2010                                                              |   |   | 8,839   |   |
| 2011                                                              |   |   | 178,377 |   |
| 2012                                                              |   |   | 176,599 |   |
| 2013 and      thereafter                                          |   |   | 341,786 |   |
|                                                              |   |   | 717,282 |   |
| Less      unamortized discount paid on the Senior Notes           |   |   | 2,631   |   |
| Less      unamortized discount paid on the Senior Credit Facility |   |   | 2,692   |   |
| Less current      portion of long-term debt                       |   |   | 9,438   |   |
| Adjustment to      record debt acquired from UUI at fair value    |   |   | 869     |   |
|                                                              |   | $      | 703,390 |   |

----

|                                  |   | Observable      Inputs Level 1 |   |   | Other      Observable Inputs Level 2 |   |   | Unobservable      Inputs Level 3 |   |   | Total  |   |
|---------------------------------------|--------|-------------------------------------|--------|--------|--------------------------------------|--------|--------|----------------------------------|--------|--------|--------|--------|
| Assets                                |   |                                |   |   |                                 |   |   |                             |   |   |   |   |
| Derivative      financial instruments |   | $                                   | ---    |   |                                 |   | 409    |                             |   |   | ---    |   |   |   | 409 |   |
| Total assets      at fair value       |   | $                                   | ---    |   |                                 |   | 409    |                             |   |   | ---    |   |   |   | 409 |   |

----

|                                           |   | Shares(in      thousands) |   |   | WeightedAverageExercise      Price |   |
|------------------------------------------------|--------|---------------------------|--------|--------|------------------------------------|--------|
| Outstanding      at December 31, 2007          |   |                      | 6,751  |   |                               | $      | 9.37 |   |
|                                           |   |                      |   |   |                               |   |   |   |
| Options      granted                           |   |                      | 720    |   |                               | $      | 8.11 |   |
| Restricted      stock awards granted           |   |                      | 43     |   |                               | $      | 6.94 |   |
| Exercised                                      |   |                      | (53    | )      |                               | $      | 6.22 |   |
| Restricted      stock awards vested            |   |                      | (131   | )      |                               | $      | 12.05 |   |
| Forfeited                                      |   |                      | (125   | )      |                               | $      | 10.86 |   |
| Outstanding      at September 30, 2008         |   |                      | 7,205  |   |                               | $      | 9.08 |   |
|                                           |   |                      |   |   |                               |   |   |   |
| Available for      grant at September 30, 2008 |   |                      | 946    |   |                               |   |   |   |

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

| (7) | Industry      Segments Data |
|-----|-----------------------------|

----

----

| Three months      ended  September      30, |   | Consumer |   |   | Network      Access |   |   | Commercial |   |   | Managed      Broadband |   |   | Regulated      Operations |   |   | Total      Reportable Segments |   |
|-------------------------------------------------------|--------|----------|--------|--------|---------------------|--------|--------|------------|--------|--------|------------------------|--------|--------|---------------------------|--------|--------|--------------------------------|--------|
| 2008                                                  |   |     |   |   |                |   |   |       |   |   |                   |   |   |                      |   |   |                           |   |
| Revenues:                                             |   |     |   |   |                |   |   |       |   |   |                   |   |   |                      |   |   |                           |   |
| Intersegment                                          |   | $        | 33     |   |                |   | 336    |       |   |   | 1,428                  |   |   |                      | ---    |   |                           |   | --- |   |   |   | 1,797 |   |
| External                                              |   |     | 66,485 |   |                |   | 38,778 |       |   |   | 30,166                 |   |   |                      | 10,293 |   |                           |   | 5,938 |   |   |   | 151,660 |   |
| Total      revenues                                   |   | $        | 66,518 |   |                |   | 39,114 |       |   |   | 31,594                 |   |   |                      | 10,293 |   |                           |   | 5,938 |   |   |   | 153,457 |   |
| EBITDAS                                               |   | $        | 18,008 |   |                |   | 17,635 |       |   |   | 5,944                  |   |   |                      | 4,217  |   |                           |   | 1,320 |   |   |   | 47,124 |   |
|                                                  |   |     |   |   |                |   |   |       |   |   |                   |   |   |                      |   |   |                           |   |   |   |   |   |   |   |
| 2007 (as      restated)                               |   |     |   |   |                |   |   |       |   |   |                   |   |   |                      |   |   |                           |   |   |   |   |   |   |   |
| Revenues:                                             |   |     |   |   |                |   |   |       |   |   |                   |   |   |                      |   |   |                           |   |   |   |   |   |   |   |
| Intersegment                                          |   | $        | ---    |   |                |   | 831    |       |   |   | 1,343                  |   |   |                      | ---    |   |                           |   | --- |   |   |   | 2,174 |   |
| External                                              |   |     | 56,795 |   |                |   | 42,657 |       |   |   | 27,269                 |   |   |                      | 7,369  |   |                           |   | --- |   |   |   | 134,090 |   |
| Total      revenues                                   |   | $        | 56,795 |   |                |   | 43,488 |       |   |   | 28,612                 |   |   |                      | 7,369  |   |                           |   | --- |   |   |   | 136,264 |   |
| EBITDAS                                               |   | $        | 11,137 |   |                |   | 21,356 |       |   |   | 4,494                  |   |   |                      | 1,934  |   |                           |   | --- |   |   |   | 38,921 |   |

| Nine months      ended  September      30, |   | Consumer |    |   | Network      Access |   |    | Commercial |   |   | Managed      Broadband |   |   | Regulated      Operations |   |   | Total      Reportable Segments |   |
|------------------------------------------------------|--------|----------|---------|--------|---------------------|--------|---------|------------|--------|--------|------------------------|--------|--------|---------------------------|--------|--------|--------------------------------|--------|
| 2008                                                 |   |     |    |   |                |   |    |       |   |   |                   |   |   |                      |   |   |                           |   |
| Revenues:                                            |   |     |    |   |                |   |    |       |   |   |                   |   |   |                      |   |   |                           |   |
| Intersegment                                         |   | $        | 50      |   |                |   | 804     |       |   |   | 4,346                  |   |   |                      | ---    |   |                           |   | 116 |   |   |   | 5,316 |   |
| External                                             |   |     | 189,981 |   |                |   | 119,843 |       |   |   | 84,201                 |   |   |                      | 26,953 |   |                           |   | 7,817 |   |   |   | 428,795 |   |
| Total      revenues                                  |   | $        | 190,031 |   |                |   | 120,647 |       |   |   | 88,547                 |   |   |                      | 26,953 |   |                           |   | 7,933 |   |   |   | 434,111 |   |
| EBITDAS                                              |   | $        | 43,685  |   |                |   | 59,448  |       |   |   | 15,965                 |   |   |                      | 9,832  |   |                           |   | 1,679 |   |   |   | 130,609 |   |
|                                                 |   |     |    |   |                |   |    |       |   |   |                   |   |   |                      |   |   |                           |   |   |   |   |   |   |   |
| 2007 (as      restated)                              |   |     |    |   |                |   |    |       |   |   |                   |   |   |                      |   |   |                           |   |   |   |   |   |   |   |
| Revenues:                                            |   |     |    |   |                |   |    |       |   |   |                   |   |   |                      |   |   |                           |   |   |   |   |   |   |   |
| Intersegment                                         |   | $        | ---     |   |                |   | 2,194   |       |   |   | 3,972                  |   |   |                      | ---    |   |                           |   | --- |   |   |   | 6,166 |   |
| External                                             |   |     | 165,526 |   |                |   | 124,599 |       |   |   | 77,643                 |   |   |                      | 21,243 |   |                           |   | --- |   |   |   | 389,011 |   |
| Total      revenues                                  |   | $        | 165,526 |   |                |   | 126,793 |       |   |   | 81,615                 |   |   |                      | 21,243 |   |                           |   | --- |   |   |   | 395,177 |   |
| EBITDAS                                              |   | $        | 32,060  |   |                |   | 64,664  |       |   |   | 12,569                 |   |   |                      | 5,682  |   |                           |   | --- |   |   |   | 114,975 |   |

|                                                        |   | Three Months      Ended |    |   | Nine Months      Ended  |   |
|-------------------------------------------------------------|--------|-------------------------|---------|--------|-------------------------|--------|
|                                                        |   | September      30,      |    |   | September      30,      |   |
|                                                        |   | 2008                    |    |   | 2007 (as      restated) |   |   | 2008 |   |   | 2007 (as      restated) |   |
| Reportable      segment revenues                            |   | $                       | 153,457 |   |                    |   | 136,264 |   |   |   | 434,111 |   |   |   | 395,177 |   |
| Less      intersegment revenues eliminated in consolidation |   |                    | 1,797   |   |                    |   | 2,174 |   |   |   | 5,316 |   |   |   | 6,166 |   |
| Consolidated      revenues                                  |   | $                       | 151,660 |   |                    |   | 134,090 |   |   |   | 428,795 |   |   |   | 389,011 |   |

----

|                                               |   | Three Months      Ended |   |   | Nine Months      Ended  |   |
|----------------------------------------------------|--------|-------------------------|--------|--------|-------------------------|--------|
|                                               |   | September      30,      |   |   | September      30,      |   |
|                                               |   | 2008                    |   |   | 2007 (as      restated) |   |   | 2008 |   |   | 2007 (as      restated) |   |
| Reportable      segment EBITDAS                    |   | $                       | 47,124 |   |                    |   | 38,921 |   |   |   | 130,609 |   |   |   | 114,975 |   |
| Less      depreciation and amortization expense    |   |                    | 28,869 |   |                    |   | 21,970 |   |   |   | 83,820 |   |   |   | 64,273 |   |
| Less      share-based compensation expense         |   |                    | 2,694  |   |                    |   | 1,742 |   |   |   | 5,547 |   |   |   | 3,490 |   |
| Less (plus)      minority interest                 |   |                    | (419   | )      |                    |   | 37 |   |   |   | 1,503 |   |   |   | 26 |   |
| Consolidated      operating income                 |   |                    | 15,980 |   |                    |   | 15,172 |   |   |   | 39,739 |   |   |   | 47,186 |   |
| Less other      expense, net                       |   |                    | 14,167 |   |                    |   | 9,252 |   |   |   | 32,448 |   |   |   | 26,189 |   |
| Consolidated      income before income tax expense |   | $                       | 1,813  |   |                    |   | 5,920 |   |   |   | 7,291 |   |   |   | 20,997 |   |

| (8) | 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 nine months ended September      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 $36.6 million related to these IRU transactions at September      30, 2008. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (9) | 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      have increased our existing capital lease asset and liability by $1.3      million 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  |   |

----

| · | We decreased      depreciation expense by approximately $1.2 million and $2.6 million for      the three and nine months ended September 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 by approximately $422,000 and $1.2 million for the three      and nine months ended September 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 $966,000 for the three and nine months      ended September 30, 2007, respectively, due to the recognition of      depreciation on additional capitalizedinterest; |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | We increased      revenue $141,000 and $633,000 for the three and nine months ended      September 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 $85,000 and $343,000 for the three and nine months ended September      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 increased      share-based compensation expense $114,000 for the three months ended      September 30, 2007 and decreased share-based compensation expense $643,000      for the nine months ended September 30, 2007 to correct expense      recognition timing for options that did not vest in equal increments over      the vesting period; |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | We decreased      depreciation expense $38,000 and $113,000 for the three and nine months      ended September 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 $658,000 and $2.1 million for the three and nine months      ended September 30, 2007, respectively, to record the income tax effect of      the corrections described above. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                             |   | Three Months      Ended September 30, 2007 |    |
|--------------------------------------------------------------------------------------------------|--------|--------------------------------------------|---------|
|                                                                                             |   | As previously reported1                    |    |   | Adjustments |   |   | Reclassification |   |   | As      restated |   |
| Revenues                                                                                         |   | $                                          | 133,864 |   |   |   | 226 |   |   |   | --- |   |   |   | 134,090 |   |
|                                                                                             |   |                                       |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost of goods      sold (exclusive of depreciation and amortization shown separately      below) |   |                                       | 47,878  |   |   |   | --- |   |   |   | 4,335 |   |   |   | 52,213 |   |
| Selling,      general and administrative expenses                                                |   |                                       | 48,956  |   |   |   | 114 |   |   |   | (4,335 | ) |   |   | 44,735 |   |
| Depreciation      and amortization expense                                                       |   |                                       | 22,837  |   |   |   | (867 | ) |   |   | --- |   |   |   | 21,970 |   |
| Operating      income                                                                            |   |                                       | 14,193  |   |   |   | 979 |   |   |   | --- |   |   |   | 15,172 |   |
|                                                                                             |   |                                       |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other income      (expense):                                                                     |   |                                       |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      expense                                                                            |   |                                       | (9,042  | ) |   |   | 422 |   |   |   | --- |   |   |   | (8,620 | ) |
| Loan and      senior note fees                                                                   |   |                                       | (751    | ) |   |   | --- |   |   |   | --- |   |   |   | (751 | ) |
| Interest      income                                                                             |   |                                       | 82      |   |   |   | --- |   |   |   | --- |   |   |   | 82 |   |
| Minority      interest                                                                           |   |                                       | 37      |   |   |   | --- |   |   |   | --- |   |   |   | 37 |   |
| Other      expense, net                                                                          |   |                                       | (9,674  | ) |   |   | 422 |   |   |   | --- |   |   |   | (9,252 | ) |
|                                                                                             |   |                                       |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income before      income tax expense                                                            |   |                                       | 4,519   |   |   |   | 1,401 |   |   |   | --- |   |   |   | 5,920 |   |
|                                                                                             |   |                                       |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income tax      expense                                                                          |   |                                       | 2,306   |   |   |   | 658 |   |   |   | --- |   |   |   | 2,964 |   |
|                                                                                             |   |                                       |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      income                                                                                  |   | $                                          | 2,213   |   |   |   | 743 |   |   |   | --- |   |   |   | 2,956 |   |
|                                                                                             |   |                                       |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                             |   |                                       |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 1      As reported on Form 10-Q for the quarter ended September 30,      2007                    |   |

|                                                                                             |   | Nine Months      Ended September 30, 2007 |    |
|--------------------------------------------------------------------------------------------------|--------|-------------------------------------------|---------|
|                                                                                             |   | As previously reported1                   |    |   | Adjustments |   |   | Reclassification |   |   | As      restated |   |
| Revenues                                                                                         |   | $                                         | 388,035 |   |   |   | 976 |   |   |   | --- |   |   |   | 389,011 |   |
|                                                                                             |   |                                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost of goods      sold (exclusive of depreciation and amortization shown separately      below) |   |                                      | 133,229 |   |   |   | --- |   |   |   | 12,553 |   |   |   | 145,782 |   |

----

| Selling,      general and administrative expenses                                 |   |   | 144,966  |   |   |   | (643   | )      |   |   | (12,553 | )      |   |   | 131,770  |   |
|-----------------------------------------------------------------------------------|--------|--------|----------|--------|--------|--------|--------|--------|--------|--------|---------|--------|--------|--------|----------|--------|
| Depreciation      and amortization expense                                        |   |   | 66,033   |   |   |   | (1,760 | )      |   |   | ---     |   |   |   | 64,273   |   |
| Operating      income                                                             |   |   | 43,807   |   |   |   | 3,379  |   |   |   | ---     |   |   |   | 47,186   |   |
|                                                                              |   |   |     |   |   |   |   |   |   |   |    |   |   |   |     |   |
| Other income      (expense):                                                      |   |   |     |   |   |   |   |   |   |   |    |   |   |   |     |   |
| Interest      expense                                                             |   |   | (26,683  | )      |   |   | 1,188  |   |   |   | ---     |   |   |   | (25,495  | )      |
| Loan and      senior note fees                                                    |   |   | (1,147   | )      |   |   | ---    |   |   |   | ---     |   |   |   | (1,147   | )      |
| Interest      income                                                              |   |   | 427      |   |   |   | ---    |   |   |   | ---     |   |   |   | 427      |   |
| Minority      interest                                                            |   |   | 26       |   |   |   | ---    |   |   |   | ---     |   |   |   | 26       |   |
| Other      expense, net                                                           |   |   | (27,377  | )      |   |   | 1,188  |   |   |   | ---     |   |   |   | (26,189  | )      |
|                                                                              |   |   |     |   |   |   |   |   |   |   |    |   |   |   |     |   |
| Income before      income tax expense                                             |   |   | 16,430   |   |   |   | 4,567  |   |   |   | ---     |   |   |   | 20,997   |   |
|                                                                              |   |   |     |   |   |   |   |   |   |   |    |   |   |   |     |   |
| Income tax      expense                                                           |   |   | 7,672    |   |   |   | 2,145  |   |   |   | ---     |   |   |   | 9,817    |   |
|                                                                              |   |   |     |   |   |   |   |   |   |   |    |   |   |   |     |   |
| Net      income                                                                   |   | $      | 8,758    |   |   |   | 2,422  |   |   |   | ---     |   |   |   | 11,180   |   |
|                                                                              |   |   |     |   |   |   |   |   |   |   |    |   |   |   |     |   |
|                                                                              |   |   |     |   |   |   |   |   |   |   |    |   |   |   |     |   |
| Cash provided      by operating activities                                        |   | $      | 74,337   |   |   |   | 1,188  |   |   |   | ---     |   |   |   | 75,525   |   |
| Cash used in      investing activities                                            |   |   | (129,737 | )      |   |   | (1,188 | )      |   |   | ---     |   |   |   | (130,925 | )      |
| Cash provided      by financing activities                                        |   |   | 22,698   |   |   |   | ---    |   |   |   | ---     |   |   |   | 22,698   |   |
|                                                                              |   |   |     |   |   |   |   |   |   |   |    |   |   |   |     |   |
| 1      As reported on Form 10-Q for the nine months ended September 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      Change 1 |                                                                                                                                                                       |   |                   |                                                                                                                                                           |   |   |   |   | Percent­age      Change 1 |   |
|---------------------------------------------------|--------|-------------------------|--------|--------|-------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|-------------------------------------|--------|
|                                              |   | Three      Months Ended |   |   | 2008                                |                                                                                                                                                                       |   | Nine      Months Ended |                                                                                                                                                           |   | 2008   |   |
|                                              |   | September      30,      |   |   | vs.                                 |                                                                                                                                                                       |   | September      30,     |                                                                                                                                                           |   | vs.    |   |
|                                              |   | 2008                    |   |   | 2007                                |                                                                                                                                                                       |   | 2007                   |                                                                                                                                                           |   | 2008   |   |   | 2007                                |   |   | 2007 |   |
| (Unaudited)                                       |   |                    |   |   |                                |                                                                                                                                                                       |   |                   |                                                                                                                                                           |   |   |   |   |                                |   |   |   |   |
| Statements      of Operations Data:               |   |                    |   |   |                                |                                                                                                                                                                       |   |                   |                                                                                                                                                           |   |   |   |   |                                |   |   |   |   |
| Revenues:                                         |   |                    |   |   |                                |                                                                                                                                                                       |   |                   |                                                                                                                                                           |   |   |   |   |                                |   |   |   |   |
| Consumer      segment                             |   |                    | 43.8   | %      |                                |                                                                                                                                                                       | 42.4   | %                      |                                                                                                                                                           |   | 17.1   | %      |   |                                | 44.3   | % |   |   | 42.6 | % |   |   | 14.8 | % |
| Network      Access segment                       |   |                    | 25.6   | %      |                                |                                                                                                                                                                       | 31.8   | %                      |                                                                                                                                                           |   | (9.1   | % )    |   |                                | 28.0   | % |   |   | 32.0 | % |   |   | (3.8 | %) |
| Commercial      segment                           |   |                    | 19.9   | %      |                                |                                                                                                                                                                       | 20.3   | %                      |                                                                                                                                                           |   | 10.6   | %      |   |                                | 19.6   | % |   |   | 20.0 | % |   |   | 8.5 | % |
| Managed      Broadband segment                    |   |                    | 6.8    | %      |                                |                                                                                                                                                                       | 5.5    | %                      |                                                                                                                                                           |   | 39.7   | %      |   |                                | 6.3    | % |   |   | 5.4 | % |   |   | 26.9 | % |
| Regulated      Operations segment                 |   |                    | 3.9    | %      |                                |                                  NA |   |                   |                                NA |   |   |   | 1.8    | %                                   |   |                              NA |   |   |                                   NA |   |
| Total      revenues                               |   |                    | 100.0  | %      |                                |                                                                                                                                                                       | 100.0  | %                      |                                                                                                                                                           |   | 13.1   | %      |   |                                | 100.0  | % |   |   | 100.0 | % |   |   | 10.2 | % |
| Selling,      general and administrative expenses |   |                    | 37.2   | %      |                                |                                                                                                                                                                       | 33.4   | %                      |                                                                                                                                                           |   | 26.1   | %      |   |                                | 35.2   | % |   |   | 33.9 | % |   |   | 14.7 | % |
| Depreciation      and amortization expense        |   |                    | 19.0   | %      |                                |                                                                                                                                                                       | 16.4   | %                      |                                                                                                                                                           |   | 31.4   | %      |   |                                | 19.6   | % |   |   | 16.5 | % |   |   | 30.4 | % |
| Operating      income                             |   |                    | 10.5   | %      |                                |                                                                                                                                                                       | 11.3   | %                      |                                                                                                                                                           |   | 5.3    | %      |   |                                | 9.3    | % |   |   | 12.1 | % |   |   | (15.8 | %) |
| Other      expense, net                           |   |                    | 9.3    | %      |                                |                                                                                                                                                                       | 6.9    | %                      |                                                                                                                                                           |   | 53.1   | %      |   |                                | 7.6    | % |   |   | 6.7 | % |   |   | 23.9 | % |
| Income before      income taxes                   |   |                    | 1.2    | %      |                                |                                                                                                                                                                       | 4.4    | %                      |                                                                                                                                                           |   | (69.4  | %)     |   |                                | 1.7    | % |   |   | 5.4 | % |   |   | (65.3 | %) |
| Net      income                                   |   | 0.2                     | %      |   |                                | 2.2                                                                                                                                                                        | %      |                   |                                                                                                                                                           | (91.0  | %)     |   |   | 0.6                                 | %      |   |   | 2.9 | % |   |   | (77.3 | %) |

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

|                                |   | Third Quarter      of |   |   | Percentage |   |
|-------------------------------------|--------|-----------------------|--------|--------|------------|--------|
|                                |   | 2008                  |   |   | 2007       |   |   | Change |   |
| Voice                               |   | $                     | 11,582 |   |       |   | 11,750 |   |   |   | (1.4 | %) |
| Video                               |   |                  | 26,241 |   |       |   | 23,834 |   |   |   | 10.1 | % |
| Data                                |   |                  | 10,745 |   |       |   | 8,736 |   |   |   | 23.0 | % |
| Wireless                            |   |                  | 17,917 |   |       |   | 12,475 |   |   |   | 43.6 | % |
| Total      Consumer segment revenue |   | $                     | 66,485 |   |       |   | 56,795 |   |   |   | 17.1 | % |

----

|                                           |   | Third Quarter      of |   |   | Percentage |   |
|------------------------------------------------|--------|-----------------------|--------|--------|------------|--------|
|                                           |   | 2008                  |   |   | 2007       |   |   | Change |   |
| Voice                                          |   | $                     | 4,357  |   |       |   | 5,258 |   |   |   | (17.9 | %) |
| Video                                          |   |                  | 10,094 |   |       |   | 8,931 |   |   |   | 13.0 | % |
| Data                                           |   |                  | 1,598  |   |       |   | 1,337 |   |   |   | 19.5 | % |
| Wireless                                       |   |                  | 4,525  |   |       |   | 7,553 |   |   |   | (40.1 | %) |
| Total      Consumer segment Cost of Goods Sold |   | $                     | 20,574 |   |       |   | 23,079 |   |   |   | (11.0 | %) |

|                          |   | Third Quarter      of |   | Percentage |
|-------------------------------|--------|-----------------------|--------|------------|
|                          |   | 2008                  |   |       | 2007 |   | Change |
| Consumer      segment EBITDAS |   | $                     | 18,008 |       |   |   | 11,137 |   |                                                                     61.7% |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | September      30, |    |   | Percentage |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|---------|--------|------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | 2008               |    |   | 2007       |   |   | Change |   |
| Voice:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |               |    |   |       |   |   |   |   |
| Long-distance subscribers1                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |               | 89,300  |   |       |   | 89,700 |   |   |   | (0.4 | %) |
| Long-distance      minutes carried (in millions)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |               | 31.2    |   |       |   | 33.2 |   |   |   | (6.0 | %) |
| Total local access lines in service2                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |               | 79,200  |   |       |   | 69,500 |   |   |   | 14.0 | % |
| Local access lines in service on GCI      facilities2                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |               | 64,300  |   |       |   | 45,900 |   |   |   | 40.1 | % |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |               |    |   |       |   |   |   |   |   |   |   |
| Video:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |               |    |   |       |   |   |   |   |   |   |   |
| Basic subscribers3                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |               | 131,200 |   |       |   | 125,600 |   |   |   | 4.5 | % |
| Digital programming tier subscribers4                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |               | 70,100  |   |       |   | 62,600 |   |   |   | 12.0 | % |
| HD/DVR converter boxes5                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |               | 62,900  |   |       |   | 43,600 |   |   |   | 44.3 | % |
| Homes      passed                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |               | 227,400 |   |       |   | 222,100 |   |   |   | 2.4 | % |
| Average monthly gross revenue per      subscriber6                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | $                  | 67.00   |   |       | $      | 63.44 |   |   |   | 5.6 | % |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |               |    |   |       |   |   |   |   |   |   |   |
| Data:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |               |    |   |       |   |   |   |   |   |   |   |
| Cable modem subscribers7                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |               | 92,100  |   |       |   | 84,100 |   |   |   | 9.5 | % |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |               |    |   |       |   |   |   |   |   |   |   |
| Wireless:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |               |    |   |       |   |   |   |   |   |   |   |
| Wireless lines in service8                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |               | 81,200  |   |       |   | 66,100 |   |   |   | 25.1 | % |
| Average monthly gross revenue per      subscriber9                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | $                  | 55.21   |   |       | $      | 55.87 |   |   |   | (1.2 | %) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |
| 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 8.8%      increase in programming services revenue to $21.1 million primarily      resulting from an increase in basic and digital programming tier      subscribers, and |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | A 19.8%      increase in equipment rental revenue to $4.9 million primarily resulting      from our customers’ increased use of digital distribution      technology. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                      |   | Third Quarter      of |   |   | Percentage |   |
|-------------------------------------------|--------|-----------------------|--------|--------|------------|--------|
|                                      |   | 2008                  |   |   | 2007       |   |   | Change |   |
| Voice                                     |   | $                     | 19,671 |   |       |   | 25,856 |   |   |   | (23.9 | %) |
| Data                                      |   |                  | 18,148 |   |       |   | 14,920 |   |   |   | 21.6 | % |
| Wireless                                  |   |                  | 959    |   |       |   | 1,881 |   |   |   | (49.0 | %) |
| Total Network      Access segment revenue |   | $                     | 38,778 |   |       |   | 42,657 |   |   |   | (9.1 | %) |

|                                                 |   | Third Quarter      of |   |   | Percentage |   |
|------------------------------------------------------|--------|-----------------------|--------|--------|------------|--------|
|                                                 |   | 2008                  |   |   | 2007       |   |   | Change |   |
| Voice                                                |   | $                     | 6,529  |   |       |   | 8,710 |   |   |   | (24.7 | %) |
| Data                                                 |   |                  | 3,456  |   |       |   | 3,503 |   |   |   | (1.3 | %) |
| Wireless                                             |   |                  | 516    |   |       |   | 193 |   |   |   | 167.4 | % |
| Total Network      Access segment Cost of Goods Sold |   | $                     | 10,501 |   |       |   | 12,406 |   |   |   | (15.1 | %)  |

|                                |   |   |   | Third Quarter      of |   |   | Percentage |   |
|-------------------------------------|--------|--------|--------|-----------------------|--------|--------|------------|--------|
|                                |   |   |   | 2008                  |   | 2007   |       |   | Change |   |
| Network      Access segment EBITDAS |   |   |   |  $               | 17,635 |   |       | 21,356 |   |   |   | (17.4 | %) |

|                                                                                                                                                                                            |   | September      30, |   |   | Percentage |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|--------|--------|------------|--------|
|                                                                                                                                                                                            |   | 2008               |   |   | 2007       |   |   | Change |   |
| Voice:                                                                                                                                                                                          |   |               |   |   |       |   |   |   |   |
| Long-distance      minutes carried (in millions)                                                                                                                                                |   |               | 255.8  |   |       |   | 321.4 |   |   |   | (20.4 | %) |
|                                                                                                                                                                                            |   |               |   |   |       |   |   |   |   |   |   |   |
| Data:                                                                                                                                                                                           |   |               |   |   |       |   |   |   |   |   |   |   |
| Internet service provider access lines in      service1                                                                                                                                         |   |               | 1,800  |   |       |   | 2,600 |   |   |   | (30.8 | %) |
|                                                                                                                                                                                            |   |
| 1 An      Internet service provider access line in service is defined as a revenue      generating circuit or channel connecting a customer to the public switched      telephone network. |   |
|                                                                                                                                                                                            |   |

----

|                                  |   | Third Quarter      of |   |   | Percentage |   |
|---------------------------------------|--------|-----------------------|--------|--------|------------|--------|
|                                  |   | 2008                  |   |   | 2007       |   |   | Change |   |
| Voice                                 |   | $                     | 7,597  |   |       |   | 7,838 |   |   |   | (3.1 | %) |
| Video                                 |   |                  | 2,999  |   |       |   | 2,148 |   |   |   | 39.6 | % |
| Data                                  |   |                  | 18,140 |   |       |   | 15,961 |   |   |   | 13.7 | % |
| Wireless                              |   |                  | 1,430  |   |       |   | 1,322 |   |   |   | 8.2 | % |
| Total      Commercial segment revenue |   | $                     | 30,166 |   |       |   | 27,269 |   |   |   | 10.6 | % |

|                                             |   | Third Quarter      of |   |   | Percentage |   |
|--------------------------------------------------|--------|-----------------------|--------|--------|------------|--------|
|                                             |   | 2008                  |   |   | 2007       |   |   | Change |   |
| Voice                                            |   | $                     | 4,771  |   |       |   | 5,255 |   |   |   | (9.1 | %) |
| Video                                            |   |                  | 432    |   |       |   | 419 |   |   |   | 3.1 | % |
| Data                                             |   |                  | 9,357  |   |       |   | 7,279 |   |   |   | 28.6 | % |
| Wireless                                         |   |                  | 723    |   |       |   | 1,163 |   |   |   | (37.8 | %) |
| Total      Commercial segment Cost of Goods Sold |   | $                     | 15,283 |   |       |   | 14,116 |   |   |   | 8.3 | % |

|                            |   |   |   | Third Quarter      of |   |   | Percentage |   |
|---------------------------------|--------|--------|--------|-----------------------|--------|--------|------------|--------|
|                            |   |   |   | 2008                  |   | 2007   |       |   | Change |   |
| Commercial      segment EBITDAS |   |   |   |  $               | 5,944  |   |       | 4,494  |   |   |   | 32.3 | % |

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | September      30, |   |   | Percentage |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|--------|--------|------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | 2008               |   |   | 2007       |   |   | Change |   |
| Voice:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |               |   |   |       |   |   |   |   |
| Long-distance subscribers1                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |               | 10,200 |   |       |   | 10,800 |   |   |   | (5.6 | %) |
| Long-distance      minutes carried (in millions)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |               | 33.3   |   |       |   | 33.5 |   |   |   | (0.6 | %) |
| Total local access lines in service2                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |               | 46,200 |   |       |   | 42,700 |   |   |   | 8.2 | % |
| Local access lines in service on GCI      facilities      2                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |               | 17,900 |   |       |   | 11,900 |   |   |   | 50.4 | % |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |               |   |   |       |   |   |   |   |   |   |   |
| Data:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |               |   |   |       |   |   |   |   |   |   |   |
| Cable modem subscribers3                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |               | 9,000  |   |       |   | 8,300 |   |   |   | 8.4 | % |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |               |   |   |       |   |   |   |   |   |   |   |
| Wireless:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |               |   |   |       |   |   |   |   |   |   |   |
| Wireless lines in service4                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |               | 6,900  |   |       |   | 7,200 |   |   |   | (4.2 | %) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |               |   |   |       |   |   |   |   |   |   |   |
| 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. |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |

----

|                              |   | September      30, |   |   | Percentage |   |
|-----------------------------------|--------|--------------------|--------|--------|------------|--------|
|                              |   | 2008               |   |   | 2007       |   |   | Change |   |
| Managed      Broadband segment:   |   |               |   |   |       |   |   |   |   |
| SchoolAccess®      customers |   |               | 54     |   |       |   | 51 |   |   |   | 5.9 | % |
| Rural health      customers       |   |               | 52     |   |       |   | 21 |   |   |   | 147.6 | % |

|                                                                                                                                                                                                                                                                                                                                                                                           |   | September      30, | Percentage |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|------------|
|                                                                                                                                                                                                                                                                                                                                                                                           |   | 2008               |       | 2007 | Change |
| Voice:                                                                                                                                                                                                                                                                                                                                                                                         |   |               |       |   |   |
| Long-distance subscribers1                                                                                                                                                                                                                                                                                                                                                                     |   |               | 900        |   | NA | NA |
| Long-distance      minutes carried (in millions)                                                                                                                                                                                                                                                                                                                                               |   |               | 0.4        |   | NA | NA |
| Total local access lines in service2                                                                                                                                                                                                                                                                                                                                                           |   |               | 12,300     |   | NA | NA |
|                                                                                                                                                                                                                                                                                                                                                                                           |   |               |       |   |   |   |
| 1 A      long-distance subscriber is defined as a customer account that is invoiced      a monthly long-distance plan fee or has made a long-distance call during      the month.2 A      local access line in service is defined as a revenue generating circuit or      channel connecting a customer to the public switched telephone      network.NA – Not      Applicable |

----

| ·   | A $4.8      million increase in labor costs, |
|--------------------|----------------------------------------------|

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

| ·   | $1.6 million      in additional expense resulting from our June 1, 2008, acquisition of UUI      and Unicom, and |
|--------------------|------------------------------------------------------------------------------------------------------------------|

| ·   | A $960,000      contribution expense recognized upon the gift of an IRU to the University      of Alaska. |
|--------------------|-----------------------------------------------------------------------------------------------------------|

----

----

|                                |   | 2008   |    |   | 2007   |   |    | Percentage      Change |   |
|-------------------------------------|--------|--------|---------|--------|--------|--------|---------|------------------------|--------|
| Voice                               |   | $      | 35,560  |   |   |   | 34,711  |                   |   |   | 2.5 | % |
| Video                               |   |   | 77,556  |   |   |   | 71,372  |                   |   |   | 8.7 | % |
| Data                                |   |   | 31,227  |   |   |   | 24,953  |                   |   |   | 25.1 | % |
| Wireless                            |   |   | 45,638  |   |   |   | 34,490  |                   |   |   | 32.3 | % |
| Total      Consumer segment revenue |   | $      | 189,981 |   |   |   | 165,526 |                   |   |   | 14.8 | % |

|                                           |   | 2008   |   |   | 2007   |   |   | Percentage      Change |   |
|------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|------------------------|--------|
| Voice                                          |   | $      | 14,084 |   |   |   | 15,434 |                   |   |   | (8.7 | %) |
| Video                                          |   |   | 29,960 |   |   |   | 26,721 |                   |   |   | 12.1 | % |
| Data                                           |   |   | 5,301  |   |   |   | 3,887  |                   |   |   | 36.4 | % |
| Wireless                                       |   |   | 19,619 |   |   |   | 21,368 |                   |   |   | (8.2 | %) |
| Total      Consumer segment Cost of Goods Sold |   | $      | 68,964 |   |   |   | 67,410 |                   |   |   | 2.3 | % |

|                          |   | 2008 |   |   | 2007   |   |   | Percentage      Change |   |
|-------------------------------|--------|------|--------|--------|--------|--------|--------|------------------------|--------|
| Consumer      segment EBITDAS |   | $    | 43,685 |   |   |   | 32,060 |                   |   |   | 36.3 | % |

|                                                                                                                                                                                                                                                                                                                                                             |   | September      30, |   |   | Percentage |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|--------|--------|------------|--------|
|                                                                                                                                                                                                                                                                                                                                                             |   | 2008               |   |   | 2007       |   |   | Change |   |
| Voice:                                                                                                                                                                                                                                                                                                                                                           |   |               |   |   |       |   |   |   |   |
| Long-distance      minutes carried (in millions)                                                                                                                                                                                                                                                                                                                 |   |               | 96.8   |   |       |   | 101.0 |   |   |   | (4.2 | %) |
|                                                                                                                                                                                                                                                                                                                                                             |   |               |   |   |       |   |   |   |   |   |   |   |
| Video:                                                                                                                                                                                                                                                                                                                                                           |   |               |   |   |       |   |   |   |   |   |   |   |
| Average monthly gross revenue per      subscriber1                                                                                                                                                                                                                                                                                                               |   | $                  | 66.58  |   |       | $      | 63.54 |   |   |   | 4.8 | % |
|                                                                                                                                                                                                                                                                                                                                                             |   |               |   |   |       |   |   |   |   |   |   |   |
| Wireless:                                                                                                                                                                                                                                                                                                                                                        |   |               |   |   |       |   |   |   |   |   |   |   |
| Average monthly gross revenue per      subscriber2                                                                                                                                                                                                                                                                                                               |   | $                  | 56.37  |   |       | $      | 55.87 |   |   |   | 0.9 | % |
|                                                                                                                                                                                                                                                                                                                                                             |   |
| 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 6.8%      increase in programming services revenue to $62.4 million primarily      resulting from an increase in basic and digital programming tier      subscribers, and |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | A 19.5%      increase in equipment rental revenue to $14.2 million primarily resulting      from our customers’ increased use of digital distribution      technology. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                      |   | 2008   |    |   | 2007   |   |    | PercentageChange |   |
|-------------------------------------------|--------|--------|---------|--------|--------|--------|---------|------------------|--------|
| Voice                                     |   | $      | 64,826  |   |   |   | 74,704  |             |   |   | (13.2 | %) |
| Data                                      |   |   | 52,975  |   |   |   | 45,317  |             |   |   | 16.9 | % |
| Wireless                                  |   |   | 2,042   |   |   |   | 4,578   |             |   |   | (55.4 | %) |
| Total Network      Access segment revenue |   | $      | 119,843 |   |   |   | 124,599 |             |   |   | (3.8 | %) |

----

|                                                 |   | 2008   |   |   | 2007   |   |   | Percentage      Change |   |
|------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|------------------------|--------|
| Voice                                                |   | $      | 22,096 |   |   |   | 22,664 |                   |   |   | (2.5 | %)  |
| Data                                                 |   |   | 8,979  |   |   |   | 9,118  |                   |   |   | (1.5 | %) |
| Wireless                                             |   |   | 1,210  |   |   |   | 586    |                   |   |   | 106.5 | %  |
| Total Network      Access segment Cost of Goods Sold |   | $      | 32,285 |   |   |   | 32,368 |                   |   |   | (0.3 | %)  |

|                                |   | 2008 |   |   | 2007   |   |   | Percentage      Change |   |
|-------------------------------------|--------|------|--------|--------|--------|--------|--------|------------------------|--------|
| Network      Access segment EBITDAS |   | $    | 59,448 |   |   |   | 64,664 |                   |   |   | (8.1 | %) |

|                                             |   |   |   |   | Percentage |   |
|--------------------------------------------------|--------|--------|--------|--------|------------|--------|
|                                             |   | 2008   |   |   | 2007       |   |   | Change |   |
| Voice:                                           |   |   |   |   |       |   |   |   |   |
| Long-distance      minutes carried (in millions) |   |   | 896.6  |   |       |   | 954.9 |   |   |   | (6.1 | %) |

----

|                                  |   | 2008   |   |   | 2007   |   |   | Percentage      Change |   |
|---------------------------------------|--------|--------|--------|--------|--------|--------|--------|------------------------|--------|
| Voice                                 |   | $      | 22,091 |   |   |   | 23,740 |                   |   |   | (7.0 | %) |
| Video                                 |   |   | 6,968  |   |   |   | 5,918  |                   |   |   | 17.7 | % |
| Data                                  |   |   | 50,933 |   |   |   | 44,476 |                   |   |   | 14.5 | % |
| Wireless                              |   |   | 4,209  |   |   |   | 3,509  |                   |   |   | 20.0 | % |
| Total      Commercial segment revenue |   | $      | 84,201 |   |   |   | 77,643 |                   |   |   | 8.5 | % |

|                                             |   | 2008   |   |   | 2007   |   |   | Percentage      Change |   |
|--------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|------------------------|--------|
| Voice                                            |   | $      | 14,509 |   |   |   | 15,000 |                   |   |   | (3.3 | %) |
| Video                                            |   |   | 1,202  |   |   |   | 1,242  |                   |   |   | (3.2 | %) |
| Data                                             |   |   | 24,418 |   |   |   | 19,291 |                   |   |   | 26.6 | % |
| Wireless                                         |   |   | 3,137  |   |   |   | 3,107  |                   |   |   | 1.0 | % |
| Total      Commercial segment Cost of Goods Sold |   | $      | 43,266 |   |   |   | 38,640 |                   |   |   | 12.0 | % |

|                            |   | 2008 |   |   | 2007   |   |   | Percentage      Change |   |
|---------------------------------|--------|------|--------|--------|--------|--------|--------|------------------------|--------|
| Commercial      segment EBITDAS |   | $    | 15,965 |   |   |   | 12,569 |                   |   |   | 27.0 | % |

|                                             |   |   |   |   | Percentage |   |
|--------------------------------------------------|--------|--------|--------|--------|------------|--------|
|                                             |   | 2008   |   |   | 2007       |   |   | Change |   |
| Voice:                                           |   |   |   |   |       |   |   |   |   |
| Long-distance      minutes carried (in millions) |   |   | 99.1   |   |       |   | 100.6 |   |   |   | (1.5 | %) |

----

----

| ·   | A $7.7      million increase in labor costs, |
|--------------------|----------------------------------------------|

| ·   | $2.4 million      in additional expense resulting from our June 1, 2008, acquisition of UUI      and Unicom, |
|--------------------|--------------------------------------------------------------------------------------------------------------|

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

| ·   | A $1.2      million increase in our share-based compensation  expense, |
|--------------------|------------------------------------------------------------------------|

| ·   | A $1.3      million increase in our company-wide success sharing bonus      accrual, |
|--------------------|--------------------------------------------------------------------------------------|

| ·   | A $1.0      million increase in our facilities leases primarily related to our      wireless facilities expansion, and |
|--------------------|------------------------------------------------------------------------------------------------------------------------|

| ·   | A $960,000      contribution expense recognized upon the gift of an IRU to the University      of Alaska. |
|--------------------|-----------------------------------------------------------------------------------------------------------|

| ·   | Our total      interest expense increased $7.8 million to $33.3 million in 2008 primarily      due to a $5.4 million increase in our senior credit facility interest      expense to $14.5 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, $2.3      million in additional interest expense resulting from the Galaxy 18      capital lease commencing in 2008, and a loss of $519,000 relating to the      fair value change on derivative instruments reported in interest expense,      and |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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|                                                    |   |    | 2008    |    |   | 2007   |    |
|---------------------------------------------------------|--------|---------|---------|---------|--------|--------|---------|
| Line      extensions                                    |   |    | $       | 27,887  |   |   |    | 46,775 |   |
| Customer      premise equipment                         |   |    |    | 18,068  |   |   |    | 16,289 |   |
| Scalable      infrastructure                            |   |    |    | 2,318   |   |   |    | 3,404 |   |
| Upgrade/rebuild                                         |   |    |    | 2,195   |   |   |    | 897 |   |
| Commercial                                              |   |    |    | 1,106   |   |   |    | 181 |   |
| Support      capital                                    |   |    |    | 896     |   |   |    | 1,092 |   |
| Sub-total                                               |   |    |    | 52,469  |   |   |    | 68,638 |   |
| Remaining      reportable segments capital expenditures |   |    |    | 120,103 |   |   |    | 37,786 |   |
|                                                    |   | $  | 172,572 |    |   |   | 106,424 |   |

----

|                                                                   |   | 2008   |     |   | 2007   |   |
|------------------------------------------------------------------------|--------|--------|----------|--------|--------|--------|
|         Operating activities                                 |   | $      | 133,083  |   |   |   | 75,525 |   |
|         Investing activities                                 |   |   | (242,632 | )      |   |   | (130,925 | ) |
| Financing      activities                                              |   |   | 128,883  |   |   |   | 22,698 |   |
|         Net increase (decrease) in cash and cash equivalents |   | $      | 19,334   |   |   |   | (32,702 | ) |

| 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      (remainder of the year)                                 |   | $      | 3,100   |   |
| 2009                                                              |   |   | 8,581   |   |
| 2010                                                              |   |   | 8,839   |   |
| 2011                                                              |   |   | 178,377 |   |
| 2012                                                              |   |   | 176,599 |   |
| 2013 and      thereafter                                          |   |   | 341,786 |   |
|                                                              |   |   | 717,282 |   |
| Less      unamortized discount paid on the Senior Notes           |   |   | 2,631   |   |
| Less      unamortized discount paid on the Senior Credit Facility |   |   | 2,692   |   |
| Less current      portion of long-term debt                       |   |   | 9,438   |   |
| Adjustment to      record debt acquired from UUI at fair value    |   |   | 869     |   |
|                                                              |   | $      | 703,390 |   |

----

----

|                                               |   | Payments Due      by Period |      |
|----------------------------------------------------|--------|-----------------------------|-----------|
|                                               |   | Total                       |      |   | Less than 1      Year |   |   | 1 to      3Years |   |   | 4 to      5Years |   |   | More Than 5      Years |   |
|                                               |   | (Amounts in      thousands) |      |
| Long-term      debt                                |   | $                           | 721,127   |   |   |   | 6,584 |   |   |   | 17,427 |   |   |   | 355,330 |   |   |   | 341,786 |   |
| Interest on      long-term debt                    |   |                        | 251,632   |   |   |   | 45,057 |   |   |   | 94,060 |   |   |   | 77,715 |   |   |   | 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                 |   | $                           | 1,336,917 |   |   |   | 193,095 |   |   |   | 168,122 |   |   |   | 467,045 |   |   |   | 508,655 |   |

----

----

|   | • | 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. |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | Revenues      from universal service and access charges may be reduced or      lost.  We expect to recognize $18.0 million to $19.0 million      for the year ended December 31, 2008 from local exchange network access      charges. We expect to recognize $14.0 million to $15.0 million for the      year ended December 31, 2008 from subsidies from the USF to support the      provision of local access service in high-cost areas.   The      USF pays subsidies to ETCs to support the provision of local access      service in high-cost areas. Under FCC regulations, we have qualified as a      competitive ETC in the Anchorage, Fairbanks, Juneau, MTA, Mukluk,      Ketchikan, Ft. Wainwright/Eielson, and Glacier State study areas. Without      ETC status, we would not qualify for USF subsidies in these areas or other      rural areas where we propose to offer local access services, and our      revenue for providing local access services in these areas would be      materially adverselyaffected. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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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 and Treasurer                                         |
| 10.158           | Fifth      Amendment to the Amended and Restated Credit Agreement dated as of October      17, 2008 by and among Holdings, Inc. the other parties thereto and Calyon      New York Branch, as administrative agent, and the other Lenders party      thereto |

----

| 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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