As filed with the Securities and Exchange Commission on August 8, 2003

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

                                    FORM 10-Q

                                   (Mark One)

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

                  For the quarterly period ended June 30, 2003

                                       OR

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

         For the transition period from            to

                           Commission File No. 0-5890

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


         STATE OF ALASKA                                         91-1820757
(State or other jurisdiction of                              (I.R.S. Employer
 incorporation or organization)                             Identification No.)

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

       Registrant's telephone number, including area code: (907) 265-5600


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

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

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

        Securities registered pursuant to Section 12(b) of the Act: None
           Securities registered pursuant to Section 12(g) of the Act:

                $180,000,000 9.75% Senior Notes due August 2007.


                                       1
<PAGE>
<TABLE>
                                    GCI, INC.
            A WHOLLY-OWNED SUBSIDIARY OF GENERAL COMMUNICATION, INC.

                                    FORM 10-Q

                       FOR THE QUARTER ENDED JUNE 30, 2003

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

PART I.  FINANCIAL INFORMATION

         Item l.    Consolidated Balance Sheets as of June 30, 2003
                       (unaudited) and December 31, 2002..................................................5

                    Consolidated Statements of Operations for the
                       three and six months ended June 30, 2003
                       (unaudited) and 2002 (unaudited)...................................................7

                    Consolidated Statements of Stockholder's Equity
                       for the six months ended June 30, 2003
                       (unaudited) and 2002 (unaudited)...................................................8

                    Consolidated Statements of Cash Flows for the six
                       months ended June 30, 2003 (unaudited)
                       and 2002 (unaudited)...............................................................9

                    Notes to Interim Condensed Consolidated Financial
                       Statements.........................................................................10

         Item 2.    Management's Discussion and Analysis of Financial
                    Condition and Results of Operations...................................................21

         Item 3.    Quantitative and Qualitative Disclosures About
                    Market Risk...........................................................................53

         Item 4.    Controls and Procedures...............................................................54

PART II.  OTHER INFORMATION

         Item 1.    Legal Proceedings.....................................................................54

         Item 6.    Exhibits and Reports on Form 8-K......................................................55

         Other items are omitted, as they are not applicable.

SIGNATURES................................................................................................56

CERTIFICATIONS............................................................................................57
</TABLE>

                                       2
<PAGE>
            Cautionary Statement Regarding Forward-Looking Statements


You should carefully review the information contained in this Quarterly Report,
but should particularly consider any risk factors that we set forth in this
Quarterly Report and in other reports or documents that we file from time to
time with the Securities and Exchange Commission ("SEC"). In this Quarterly
Report, in addition to historical information, we state our future strategies,
plans, objectives or goals and our beliefs of future events and of our future
operating results, financial position and cash flows. In some cases, you can
identify those so-called "forward-looking statements" by words such as "may,"
"will," "should," "expects," "plans," "anticipates," "believes," "estimates,"
"predicts," "potential," "project," or "continue" or the negative of those words
and other comparable words. All forward-looking statements involve known and
unknown risks, uncertainties and other important factors that may cause our
actual results, performance, achievements, plans and objectives to differ
materially from any future results, performance, achievements, plans and
objectives expressed or implied by these forward-looking statements. In
evaluating those statements, you should specifically consider various factors,
including those outlined below. Those factors may cause our actual results to
differ materially from any of our forward-looking statements. For these
statements, we claim the protection of the safe harbor for forward-looking
statements provided by the Securities Reform Act. Such risks, uncertainties and
other factors include but are not limited to those identified below and those
further described in Part I, Item 1. Factors That May Affect Our Business and
Future Results of our December 31, 2002 Form 10-K.

     o   Material adverse changes in the economic conditions in the markets we
         serve and in general economic conditions, including the continuing
         impact of the current depressed telecommunications industry due to high
         levels of competition in the long-distance market resulting in
         pressures to reduce prices, an oversupply of long-haul capacity,
         excessive debt loads; several high-profile company failures and
         potentially fraudulent accounting practices by some companies;
     o   The efficacy of laws enacted by Congress; rules and regulations to be
         adopted by the Federal Communications Commission ("FCC") and state
         public regulatory agencies to implement the provisions of the 1996
         Telecom Act; the outcome of litigation relative thereto; and the impact
         of regulatory changes relating to access reform;
     o   Our responses to competitive products, services and pricing, including
         pricing pressures, technological developments, alternative routing
         developments, and the ability to offer combined service packages that
         include long-distance, local, cable and Internet services;
     o   The extent and pace at which different competitive environments develop
         for each segment of our business;
     o   The extent and duration for which competitors from each segment of the
         telecommunication industries are able to offer combined or full service
         packages prior to our being able to do so;
     o   The degree to which we experience material competitive impacts to our
         traditional service offerings prior to achieving adequate local service
         entry;
     o   Competitor responses to our products and services and overall market
         acceptance of such products and services;
     o   The outcome of our negotiations with Incumbent Local Exchange Carriers
         ("ILECs") and state regulatory arbitrations and approvals with respect
         to interconnection agreements;
     o   Our ability to purchase network elements or wholesale services from
         ILECs at a price sufficient to permit the profitable offering of local
         telephone service at competitive rates;
     o   Success and market acceptance for new initiatives, many of which are
         untested;
     o   The level and timing of the growth and profitability of existing and
         new initiatives, particularly local telephone services expansion,
         Internet services expansion and wireless services;
     o   Start-up costs associated with entering new markets, including
         advertising and promotional efforts;


                                       3
<PAGE>
     o   Risks relating to the operations of new systems and technologies and
         applications to support new initiatives;
     o   Local conditions and obstacles;
     o   The impact on our industry and indirectly on us of oversupply of
         capacity resulting from excessive deployment of network capacity in
         certain markets we do not serve;
     o   Uncertainties inherent in new business strategies, new product launches
         and development plans, including local telephone services, Internet
         services, wireless services, digital video services, cable modem
         services, digital subscriber line services, transmission services, and
         yellow page directories, and the offering of these services in
         geographic areas with which we are unfamiliar;
     o   The risks associated with technological requirements, technology
         substitution and changes and other technological developments;
     o   Prolonged service interruptions which could affect our business;
     o   Development and financing of telecommunication, local telephone,
         wireless, Internet and cable networks and services;
     o   Future financial performance, including the availability, terms and
         deployment of capital; the impact of regulatory and competitive
         developments on capital outlays, and the ability to achieve cost
         savings and realize productivity improvements and the consequences of
         increased leverage;
     o   Availability of qualified personnel;
     o   Changes in, or failure, or inability, to comply with, government
         regulations, including, without limitation, regulations of the FCC, the
         Regulatory Commission of Alaska ("RCA"), and adverse outcomes from
         regulatory proceedings;
     o   Uncertainties in federal military spending levels and military base
         closures in markets in which we operate;
     o   The ongoing global and domestic trend towards consolidation in the
         telecommunications industry, which trend may be the effect of making
         the competitors larger and better financed and afford these competitors
         with extensive resources and greater geographic reach, allowing them to
         compete more effectively;
     o   The financial, credit and economic impacts of the MCI (previously
         "WorldCom, Inc.") bankruptcy filing on the industry in general and on
         us in particular;
     o   A conversion of MCI's bankruptcy petition to Chapter 7, a significant
         delay in MCI's emergence from bankruptcy, or a migration of MCI's
         traffic off our network without it being replaced by other common
         carriers that interconnect with our network;
     o   The effect on us of pricing pressures, new program offerings and market
         consolidation in the markets served by our major customers, MCI and
         Sprint;
     o   Under Statement of Financial Accounting Standard ("SFAS") 142, we must
         test our intangibles for impairment at least annually, which may result
         in a material, non-cash write-down of goodwill and could have a
         material adverse impact on our results of operations and shareholders'
         equity; and
     o   Other risks detailed from time to time in our periodic reports filed
         with the SEC.

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


                                       4
<PAGE>
<TABLE>
PART I.  FINANCIAL INFORMATION
ITEM 1.  CONSOLIDATED FINANCIAL STATEMENTS

                                       GCI, INC. AND SUBSIDIARIES

                                       CONSOLIDATED BALANCE SHEETS
<CAPTION>
(Amounts in thousands)                                                           (Unaudited)
                                                                                   June 30,      December 31,
                            ASSETS                                                   2003            2002
---------------------------------------------------------------------------    ---------------- ---------------
<S>                                                                           <C>                   <C>
Current assets:
    Cash and cash equivalents                                                 $     17,977           11,940
                                                                               --------------- ----------------

    Receivables:
        Trade                                                                       70,549           63,111
        Employee                                                                       320              391
        Other                                                                        2,621            3,093
                                                                               --------------- ----------------
                                                                                    73,490           66,595
        Less allowance for doubtful receivables                                     13,522           14,010
                                                                               --------------- ----------------
           Net receivables                                                          59,968           52,585
                                                                               --------------- ----------------

    Prepaid and other current assets                                                 9,938            9,171
    Deferred income taxes, net                                                       8,829            8,509
    Notes receivable with related parties                                            1,059              697
    Property held for sale                                                           1,037            1,037
    Inventories                                                                        408              400
                                                                               --------------- ----------------
           Total current assets                                                     99,216           84,339
                                                                               --------------- ----------------

Property and equipment in service, net of depreciation                             376,838          381,394
Construction in progress                                                            13,530           16,958
                                                                               --------------- ----------------
           Net property and equipment                                              390,368          398,352
                                                                               --------------- ----------------
Cable certificates, net of amortization of $26,775 and $26,884 at June
   30, 2003 and December 31, 2002, respectively                                    191,241          191,132
Goodwill, net of amortization of $7,200 at June 30, 2003 and December 31,
   2002                                                                             41,972           41,972
Other intangible assets, net of amortization of $1,327 and $1,848 at June
   30, 2003 and December 31, 2002, respectively                                      3,393            3,460
Deferred loan and senior notes costs, net of amortization of $5,999 and
   $4,110 at June 30, 2003 and December 31, 2002, respectively                      10,838            9,961
Notes receivable with related parties                                                5,060            5,142
Other assets, at cost, net of amortization of $39 and $24 at June 30, 2003
   and December 31, 2002, respectively                                               5,282            4,424
                                                                               --------------- ----------------
           Total other assets                                                      257,786          256,091
                                                                               --------------- ----------------
           Total assets                                                       $    747,370          738,782
                                                                               =============== ================
</TABLE>
See accompanying notes to interim condensed consolidated financial statements.


                                       5                             (Continued)
<PAGE>
<TABLE>
                           GCI, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                                   (Continued)
<CAPTION>
(Amounts in thousands)                                                           (Unaudited)
                                                                                  June 30,       December 31,
             LIABILITIES AND STOCKHOLDER'S EQUITY                                   2003             2002
--------------------------------------------------------------------------    ---------------- ----------------
<S>                                                                          <C>                    <C>
Current liabilities:
    Current maturities of obligations under long-term debt and capital
       leases                                                                $      22,900            1,857
    Accounts payable                                                                29,227           33,605
    Deferred revenue                                                                18,094           18,290
    Accrued payroll and payroll related obligations                                 13,933           11,821
    Accrued interest                                                                 8,000            7,938
    Accrued liabilities                                                              5,746            5,522
    Due to related party                                                             5,104            4,871
    Subscriber deposits                                                                758              889
                                                                              ---------------- ----------------
        Total current liabilities                                                  103,762           84,793

Long-term debt, excluding current maturities                                       335,000          357,700
Obligations under capital leases, excluding current maturities                      42,094           44,072
Obligations under capital leases due to related party, excluding
  current maturities                                                                   691              703
Deferred income taxes, net of deferred income tax benefit                           21,902           16,061
Other liabilities                                                                    6,807            4,956
                                                                              ---------------- ----------------
        Total liabilities                                                          510,256          508,285
                                                                              ---------------- ----------------
Stockholder's equity:
Class A common stock.  Authorized 10 shares; issued 0.01 shares at June
  30, 2003 and December 31, 2002                                                   206,622          206,622
Paid-in capital                                                                     44,147           44,904
Retained deficit                                                                   (13,128)         (20,489)
Accumulated other comprehensive loss                                                  (527)            (540)
                                                                              ---------------- ----------------
        Total stockholder's equity                                                 237,114          230,497
  Commitments and contingencies
                                                                              ---------------- ----------------
        Total liabilities and stockholder's equity                           $     747,370          738,782
                                                                              ================ ================
See accompanying notes to interim condensed consolidated financial statements.
</TABLE>

                                       6
<PAGE>
<TABLE>
                                       GCI, INC. AND SUBSIDIARIES

                                  CONSOLIDATED STATEMENTS OF OPERATIONS

                                               (Unaudited)
<CAPTION>
                                                           Three Months Ended                  Six Months Ended
                                                                 June 30,                          June 30,
                                                           2003           2002               2003            2002
                                                     -------------- --------------     --------------- --------------
                                                     (Amounts in thousands)
<S>                                                 <C>                  <C>               <C>             <C>

Revenues                                            $     95,939         92,740            188,716         180,950

Cost of sales and services                                30,071         30,861             60,319          62,098
Selling, general and administrative expenses              34,294         32,585             67,287          63,886
Bad debt expense                                             802         10,616              1,399          11,197
Depreciation, amortization and accretion expense          12,800         13,912             26,301          27,870
                                                     -------------- --------------     --------------- --------------
     Operating income                                     17,972          4,766             33,410          15,899
                                                     -------------- --------------     --------------- --------------
Other income (expense):
   Interest expense                                       (9,138)        (6,236)           (18,292)        (12,827)
   Amortization of loan and senior notes fees               (625)          (371)            (1,698)         (1,128)
   Interest income                                           165            155                331             228
                                                     -------------- --------------     --------------- --------------
     Other expense, net                                   (9,598)        (6,452)           (19,659)        (13,727)
                                                     -------------- --------------     --------------- --------------
     Net income (loss) before income taxes and
       cumulative effect of a change in
       accounting principle                                8,374         (1,686)            13,751           2,172

Income tax (expense) benefit                              (3,564)           583             (5,846)         (1,063)
                                                     -------------- --------------     --------------- --------------

     Net income (loss) before cumulative effect
       of a change in accounting principle                 4,810         (1,103)             7,905           1,109

Cumulative effect of a change in accounting
   principle, net of income tax benefit of $367              ---            ---               (544)            ---
                                                     -------------- --------------     --------------- --------------
     Net income (loss)                              $      4,810         (1,103)             7,361           1,109
                                                     ============== ==============     =============== ==============
</TABLE>
See accompanying notes to interim condensed consolidated financial statements.


                                       7
<PAGE>
<TABLE>
                                                       GCI, INC. AND SUBSIDIARIES

                                              CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY

                                                  SIX MONTHS ENDED JUNE 30, 2003 AND 2002

                                                                (Unaudited)
<CAPTION>

                                                        Shares of                                         Accumulated
                                                         Class A       Class A                                Other
                                                         Common        Common      Paid-in    Retained    Comprehensive
(Amounts in thousands, except share amounts)              Stock        Stock       Capital    Deficit     Income (Loss)     Total
                                                       -----------------------------------------------------------------------------
<S>                                                        <C>       <C>            <C>       <C>            <C>            <C>
Balances at December 31, 2001                              100       $206,622       44,902    (27,152)          8           224,380

Components of comprehensive income:
  Net income                                               ---            ---          ---      1,109         ---             1,109
  Change in fair value of cash flow hedge, net of
     change in income tax liability of $151                ---            ---          ---        ---        (232)             (232)
                                                                                                                         -----------
      Comprehensive income                                                                                                      877
Contribution from General Communication, Inc.              ---            ---         (409)       ---         ---              (409)
                                                       -----------------------------------------------------------------------------
Balances at June 30, 2002                                  100       $206,622       44,493    (26,043)       (224)          224,848
                                                       =============================================================================

Balances at December 31, 2002                              100       $206,622       44,904    (20,489)       (540)          230,497

Components of comprehensive income:
   Net income                                              ---            ---          ---      7,361         ---             7,361
   Change in fair value of cash flow hedge, net of
     change in income tax benefit of $105                  ---            ---          ---        ---          13                13
                                                                                                                         -----------
      Comprehensive income                                                                                                    7,374
Contribution from General Communication, Inc.              ---            ---         (757)       ---         ---              (757)
                                                       -----------------------------------------------------------------------------
Balances at June 30, 2003                                  100       $206,622       44,147    (13,128)       (527)          237,114
                                                       =============================================================================
</TABLE>
 See accompanying notes to interim condensed consolidated financial statements.


                                       8
<PAGE>
<TABLE>
                                          GCI, INC. AND SUBSIDIARIES

                                     CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
                                                                                            (Unaudited)
                                                                                          Six Months Ended
                                                                                               June 30,
                                                                                         2003           2002
                                                                                    -------------- --------------
        (Amounts in thousands)
        <S>                                                                        <C>                <C>
        Operating activities:
          Net income                                                               $     7,361          1,109
            Adjustments to reconcile net income to net cash provided by
              operating activities:
                Depreciation, amortization and accretion expense                        26,301         27,870
                Deferred income tax expense                                              5,846          1,158
                Amortization of loan and senior notes fees                               1,698          1,128
                Cumulative effect of a change in accounting principle, net of
                  income tax benefit of $367                                               544            ---
                Bad debt expense, net of write-offs                                       (488)         9,713
                Deferred compensation and compensatory stock options                       567            634
                Other noncash income and expense items                                    (254)            18
                Change in operating assets and liabilities                              (9,935)       (11,705)
                                                                                    -------------- --------------
                  Net cash provided by operating activities                             31,640         29,925
                                                                                    -------------- --------------

        Investing activities:
           Purchases of property and equipment                                         (17,375)       (36,192)
           Payment of deposit                                                             (721)           ---
           Notes receivable issued to related parties                                      (48)        (3,055)
           Payments received on notes receivable with related parties                       22            858
           Purchases of other assets                                                      (403)          (940)
                                                                                    -------------- --------------
                  Net cash used by investing activities                                (18,525)       (39,329)
                                                                                    -------------- --------------

        Financing activities:
          Repayments of long-term borrowings and capital lease obligations              (3,647)          (395)
          Long-term borrowings - bank debt                                                 ---          9,000
          Payment of debt issuance costs                                                (2,575)          (250)
          Cash contribution to General Communication, Inc.                                (856)        (1,091)
                                                                                    -------------- --------------
                  Net cash provided (used) by financing activities                      (7,078)         7,264
                                                                                    -------------- --------------
                  Net increase (decrease) in cash and cash equivalents                   6,037         (2,140)

                  Cash and cash equivalents at beginning of period                      11,940         11,097
                                                                                    -------------- --------------

                  Cash and cash equivalents at end of period                       $    17,977          8,957
                                                                                    ============== ==============
</TABLE>
        See accompanying notes to interim condensed consolidated financial
        statements.


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

The accompanying unaudited interim condensed consolidated financial statements
include the accounts of GCI, Inc. and its subsidiaries and have been prepared in
accordance with generally accepted accounting principles for interim financial
information. Accordingly, they do not include all of the information and
footnotes required by accounting principles generally accepted in the United
States of America for complete financial statements. They should be read in
conjunction with our audited consolidated financial statements for the year
ended December 31, 2002, filed as part of our annual report on Form 10-K. In the
opinion of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. The results of
operations for interim periods are not necessarily indicative of the results
that may be expected for an entire year or any other period.

(l)     Business and Summary of Significant Accounting Principles

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

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

        (a)  Business
             We offer the following services:
             o   Long-distance telephone service between Anchorage, Fairbanks,
                 Juneau, and other communities in Alaska and the remaining
                 United States and foreign countries
             o   Cable television services throughout Alaska
             o   Facilities-based competitive local access services in
                 Anchorage, Fairbanks and Juneau, Alaska
             o   Internet access services
             o   Termination of traffic in Alaska for certain common carriers
             o   Private line and private network services
             o   Managed services to certain commercial customers
             o   Broadband services, including our SchoolAccess(TM) offering to
                 rural school districts and a similar offering to rural
                 hospitals and health clinics
             o   Sales and service of dedicated communications systems and
                 related equipment
             o   Lease and sales of capacity on two undersea fiber optic cables
                 used in the transmission of interstate and intrastate private
                 line, switched message long-distance and Internet services
                 between Alaska and the remaining United States and foreign
                 countries

        (b)  Principles of Consolidation
             The consolidated financial statements include the accounts of GCI,
             Inc., GCI, Inc.'s subsidiary GCI Holdings, Inc., GCI Holdings,
             Inc.'s subsidiaries GCI Communication Corp., GCI Cable, Inc., GCI
             Transport Co., Inc., GCI Fiber Communication Co., Inc., GCI Fiber
             Co., Inc. and Fiber Hold Co., Inc. and GCI Fiber Co., Inc.'s and
             Fiber Hold Co., Inc.'s partnership Alaska United Fiber System
             Partnership, GCI Communication Corp.'s subsidiaries Potter View
             Development Co., Inc., Wok 1, Inc. and Wok 2, Inc. and GCI
             Transport Co., Inc.'s subsidiary GCI Satellite Co., Inc. All
             subsidiaries are wholly-owned at June 30, 2003.

             The consolidated financial statements include the consolidated
             accounts of GCI, Inc. and its wholly owned subsidiaries with all
             significant intercompany transactions eliminated.


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

        (c)  Earnings per Share and Common Stock
             We are a wholly owned subsidiary of GCI and, accordingly, we are
             not required to present earnings per share. Our common stock is not
             publicly traded.

        (d)  Asset Retirement Obligations
             On January 1, 2003 we adopted SFAS No. 143, "Accounting for Asset
             Retirement Obligations". SFAS No. 143 provides accounting and
             reporting standards for costs associated with the retirement of
             long-lived assets. This statement requires entities to record the
             fair value of a liability for an asset retirement obligation in the
             period in which it is incurred. When the liability is initially
             recorded, the entity capitalizes a cost by increasing the carrying
             amount of the related long-lived asset. Over time, the liability is
             accreted to its present value each period, and the capitalized cost
             is depreciated over the useful life of the related asset. Upon
             settlement of the liability, an entity either settles the
             obligation for its recorded amount or incurs a gain or loss upon
             settlement. Upon adoption, we recorded the cumulative effect of
             accretion and depreciation expense as a cumulative effect of a
             change in accounting principle of approximately $544,000, net of
             income tax benefit of $367,000.

             Following is a reconciliation of the beginning and ending aggregate
             carrying amount of our asset retirement obligations at June 30,
             2003 (amounts in thousands):

                    Balance at December 31, 2002                   $     ---
                    Liability recognized upon adoption of SFAS
                      No. 143                                          1,565
                    Accretion expense for the six months
                      ended June 30, 2003                                 64
                                                                    ----------
                         Balance at June 30, 2003                  $   1,629
                                                                    ==========

             Following is the amount of the liability for asset retirement
             obligations as if SFAS No. 143 had been applied at December 31,
             2001 (amounts in thousands):

                    Balance at December 31, 2001                   $   1,350
                                                                    ==========
                    Balance at June 30, 2002                       $   1,457
                                                                    ==========
                    Balance at June 30, 2003                       $   1,629
                                                                    ==========

        (e)  Payments Received from Suppliers
             On March 20, 2003 the Financial Accounting Standards Board issued
             Emerging Issues Task Force ("EITF") Issue No. 02-16, "Accounting by
             a Reseller for Cash Consideration Received from a Vendor" ("EITF
             No. 02-16"). We have applied EITF No. 02-16 prospectively for
             arrangements entered into or modified after December 31, 2002. Our
             cable services segment occasionally receives reimbursements for
             costs to promote suppliers' services, called cooperative
             advertising arrangements. The supplier payment is classified as a
             reduction of selling, general and administrative expenses if it
             reimburses specific, incremental and identifiable costs incurred to
             resell the suppliers' services. Excess consideration, if any, is
             classified as a reduction of cost of sales and services.

             Occasionally our cable services segment enters into a binding
             arrangement with a supplier in which we receive a rebate dependent
             upon us meeting a specified goal. We recognize the rebate as a
             reduction of cost of sales and services systematically as we make
             progress toward the


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

             specified goal, provided the amounts are probable and reasonably
             estimable. If earning the rebate is not probable and reasonably
             estimable, it is recognized only when the goal is met.

        (f)  Costs Associated with Exit or Disposal Activities
             On January 1, 2003 we adopted SFAS No. 146, "Accounting for Costs
             Associated with Exit or Disposal Activities". Upon adoption of SFAS
             No. 146, enterprises may only record exit or disposal costs when
             they are incurred and can be measured at fair value. The recorded
             liability will be subsequently adjusted for changes in estimated
             cash flows. SFAS 146 revises accounting for specified employee and
             contract terminations that are part of restructuring activities.
             Adoption of SFAS No. 146 did not have a material effect on our
             results of operations, financial position and cash flows.

        (g)  Stock Option Plan
             At June 30, 2003, we had one stock-based employee compensation
             plan. We account for this plan under the recognition and
             measurement principles of Accounting Principles Board ("APB")
             Opinion No. 25, "Accounting for Stock Issued to Employees," and
             related interpretations. We use the intrinsic-value method and
             compensation expense is recorded on the date of grant only if the
             current market price of the underlying stock exceeds the exercise
             price. We have adopted SFAS No. 123, "Accounting for Stock-Based
             Compensation," which permits entities to recognize as expense over
             the vesting period the fair value of all stock-based awards on the
             date of grant. Alternatively, SFAS No. 123 also allows entities to
             continue to apply the provisions of APB Opinion No. 25.

             We have adopted SFAS No. 148, "Accounting for Stock-Based
             Compensation-Transition and Disclosure". This Statement amends SFAS
             No. 123 to provide alternative methods of transition for a
             voluntary change to the fair value based method of accounting for
             stock-based employee compensation. In addition, this Statement
             amends the disclosure requirements of SFAS No. 123 to require
             prominent disclosures in both annual and interim financial
             statements about the method of accounting for stock-based employee
             compensation and the effect of the method used on reported results.
             We have elected to continue to apply the provisions of APB Opinion
             No. 25 and provide the pro forma disclosure as required by SFAS No.
             148.


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

             Stock-based employee compensation cost is reflected over the
             options' vesting period of generally five years and compensation
             cost for options granted prior to January 1, 1996 is not
             considered. The following table illustrates the effect on net
             income (loss) for the three and six months ended June 30, 2003 and
             2002, if we had applied the fair-value recognition provisions of
             SFAS No. 123 to stock-based employee compensation (amounts in
             thousands):
<TABLE>
<CAPTION>
                                                            Three Months Ended          Six Months Ended
                                                                 June 30,                   June 30,
                                                        -----------    ----------    ---------    -----------
                                                           2003           2002          2003          2002
                                                        -----------    ----------    ---------    -----------
                <S>                                    <C>               <C>            <C>           <C>
                Net income (loss), as reported         $   4,810         (1,103)        7,361         1,109
                Total stock-based employee
                 compensation expense included in
                 reported net income, net of related
                 tax effects                                  91             83           159           142
                Total stock-based employee
                 compensation expense under the
                 fair-value based method for all
                 awards, net of related tax effects         (451)          (488)         (925)       (1,063)
                                                        -----------    ----------    ---------    -----------
                   Pro forma net income (loss)         $   4,450         (1,508)        6,595           188
                                                        ===========    ==========    =========    ===========
</TABLE>
             The calculation of total stock-based employee compensation expense
             under the fair-value based method includes weighted-average
             assumptions of a risk-free interest rate, volatility and an
             expected life.

        (h)  Concentrations of Credit Risk
             Financial instruments that potentially subject us to concentrations
             of credit risk are primarily cash and cash equivalents and accounts
             receivable. Excess cash is invested in high quality short-term
             liquid money instruments issued by highly rated financial
             institutions. At June 30, 2003 and December 31, 2002, substantially
             all of our cash and cash equivalents were invested in short-term
             liquid money instruments at one highly rated financial institution.

             We have two major customers, MCI and Sprint Corporation. There is
             increased risk associated with these customers' accounts receivable
             balances. Our remaining customers are located primarily throughout
             Alaska. Because of this geographic concentration, our growth and
             operations depend upon economic conditions in Alaska. The economy
             of Alaska is dependent upon the natural resources industries, and
             in particular oil production, as well as tourism, government, and
             United States military spending. Though limited to one geographical
             area and except for MCI and Sprint, the concentration of credit
             risk with respect to our receivables is minimized due to the large
             number of customers, individually small balances, and short payment
             terms.

        (i)  Guarantor's Accounting and Disclosure Requirements for Guarantees,
             Including Indirect Guarantees of Indebtedness of  Others
             On January 1, 2003 we adopted FASB Interpretation ("FIN") No. 45,
             "Guarantor's Accounting and Disclosure Requirements for Guarantees,
             Including Indirect Guarantees of Indebtedness of Others". This
             Interpretation elaborates on the disclosures to be made by a
             guarantor in its interim and annual financial statements about its
             obligations under certain guarantees that it has issued. It also
             clarifies that a guarantor is required to recognize, at the
             inception of a guarantee, a


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

             liability for the fair value of the obligation undertaken in
             issuing the guarantee. This Interpretation does not prescribe a
             specific approach for subsequently measuring the guarantor's
             recognized liability over the term of the related guarantee. This
             Interpretation also incorporates, without change, the guidance in
             FIN No. 34, "Disclosure of Indirect Guarantees of Indebtedness of
             Others", which is being superseded. Adoption of FIN No. 45 did not
             have a material effect on our results of operations, financial
             position and cash flows.

        (j)  Reclassifications
             Reclassifications have been made to the 2002 financial statements
             to make them comparable with the 2003 presentation.

(2)    Consolidated Statements of Cash Flows Supplemental Disclosures
<TABLE>
       Changes in operating assets and liabilities consist of (amounts in
       thousands):
<CAPTION>
             Six month periods ended June 30,                                  2003           2002
                                                                           ------------   ------------
              <S>                                                         <C>                <C>
              Increase in accounts receivable                             $   (6,894)        (7,819)
              Increase in inventories                                             (8)          (820)
              (Increase) decrease in prepaid and other current assets           (767)           455
              Decrease in accounts payable                                    (4,379)        (1,124)
              Decrease in deferred revenues                                     (196)          (162)
              Increase (decrease) in accrued payroll and payroll
               related obligations                                             2,112         (4,783)
              Increase in accrued interest                                        62            196
              Increase in accrued liabilities                                    224          1,258
              Increase (decrease) in subscriber deposits                        (130)           202
              Increase in components of other long-term liabilities               41            892
                                                                           ------------   ------------
                                                                          $   (9,935)       (11,705)
                                                                           ============   ============
</TABLE>
       We paid interest totaling approximately $18,230,000 and $12,631,000
       during the six months ended June 30, 2003 and 2002, respectively.

       Effective March 31, 2001 we acquired the assets and customer base of G.C.
       Cablevision, Inc. Upon acquisition the seller received shares of GCI
       Class A common stock with a future payment in additional shares
       contingent upon the market price of our common stock on March 31, 2003.
       At March 31, 2003 the market price condition was not met and GCI issued
       approximately 222,600 shares of its Class A common stock.

(3)    Intangible Assets
       Cable certificates are allocated to our cable services segment. Goodwill
       is primarily allocated to the cable services segment and the remaining
       amount is not allocated to a reportable segment, but is included in the
       All Other category in note 5.


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

<TABLE>
       Amortization expense for amortizable intangible assets was as follows:
<CAPTION>
                                                  Three Months Ended        Six Months Ended
                                                       June 30,                  June 30,
                                                   2003        2002           2003     2002
                                               ----------- -----------    ---------- ---------
             <S>                              <C>               <C>           <C>       <C>
             Amortization expense             $     132         181           332       387
                                               =========== ===========    ========== =========
</TABLE>
       Amortization expense for amortizable intangible assets for each of the
       five succeeding fiscal years is estimated to be (amounts in thousands):

          Years ending
          December 31,
            2003         $ 526
            2004         $ 470
            2005         $ 338
            2006         $ 334
            2007         $ 273

       No intangible assets have been impaired based upon impairment testing
       performed as of December 31, 2002 and no indicators of impairment have
       occurred since the impairment testing was performed.

(4)    Long-term Debt
       On April 22, 2003 we amended our $225.0 million Senior Facility. The
       amendment provides for the followings changes:

           o    The final maturity date has been extended to October 31, 2007,
           o    We may fund capital expenditures, including construction or
                acquisition of additional fiber optic cable system capacity,
                through our own cash flow or by draws on the revolving credit
                facility of the Senior Facility not to exceed $25.0 million, and
           o    The definition of Excess Cash Flow has been changed to the
                amount by which earnings before interest, taxes, depreciation,
                and amortization exceeds certain fixed charges as defined in the
                Senior Facility agreement plus one-time fiber sales to the
                extent such fiber sales are not included in earnings before
                interest, taxes, depreciation, and amortization,

       The amendment requires us to prepay the term loan as follows (amounts in
       thousands):

                             Date                         Amount
           ------------------------------------------    --------
           Quarterly from September 30, 2003 to
             December 31, 2004                          $  5,000
           Quarterly from March 31, 2005 to December
             31, 2005                                   $  6,000
           Quarterly from March 31, 2006 to December
             31, 2006                                   $  8,000
           Quarterly from March 31, 2007 to September
             30, 2007                                   $ 10,000

       The remaining balance of the term loan will be payable in full on October
       31, 2007.


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

       Under the amended Senior Facility capital expenditures, other than those
       incurred to build or acquire additional fiber optic cable system
       capacity, in any of the years ended December 31, 2003, 2004, 2005 and
       2006 may not exceed:

           o    $25.0 million, plus
           o    100% of any Excess Cash Flow during the applicable period less
                certain permitted investments of up to $5.0 million during the
                applicable period.

       Under the amended Senior Facility we must either have repaid in full or
       successfully refinanced our Senior Notes by February 1, 2007.

       In connection with the amendment of the Senior Facility, we paid bank
       fees and other expenses of approximately $2,379,000 during the six months
       ended June 30, 2003 which will be amortized over the life of the amended
       agreement.

(5)    Industry Segments Data
       Our reportable segments are business units that offer different products.
       The reportable segments are each managed separately and offer distinct
       products with different production and delivery processes.

       We have four reportable segments as follows:

         Long-distance services. We offer a full range of common carrier
         long-distance services to commercial, government, other
         telecommunications companies and residential customers, through our
         networks of fiber optic cables, digital microwave, and fixed and
         transportable satellite earth stations and our SchoolAccess(TM)
         offering to rural school districts and a similar offering to rural
         hospitals and health clinics.

         Cable services. We provide cable television services to residential,
         commercial and government users in the State of Alaska. Our cable
         systems serve 33 communities and areas in Alaska, including the state's
         four largest urban areas, Anchorage, Fairbanks, the Matanuska-Susitna
         Valley and Juneau. We offer digital cable television services in
         Anchorage, the Matanuska-Susitna Valley, Fairbanks, Juneau, Kenai and
         Soldotna and retail cable modem service (through our Internet services
         segment) in all of our locations in Alaska except Kotzebue. We plan to
         continue to expand our product offerings as plant upgrades are
         completed in other communities in Alaska.

         Local access services. We offer facilities based competitive local
         exchange services in Anchorage, Fairbanks and Juneau and plan to
         provide similar competitive local exchange services in other locations
         pending regulatory approval and subject to availability of capital.

         Internet services. We offer wholesale and retail Internet services to
         both consumer and commercial customers. We offer cable modem service as
         further described under Cable services above. Our undersea fiber optic
         cable allows us to offer enhanced services with high-bandwidth
         requirements.

       Included in the "All Other" category in the tables that follow are our
       managed services, product sales and cellular telephone services. None of
       these business units has ever met the quantitative thresholds for
       determining reportable segments. Also included in the All Other category
       are corporate related expenses including information technology,
       accounting, legal and regulatory, human resources and other general and
       administrative expenses. Operating expenses for the preparation of our
       new phone directory are included in the All Other category. The revenue
       and costs of sales and service for our new phone directory will be
       included in the All Other category upon their recognition.


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

       We evaluate performance and allocate resources based on (1) earnings or
       loss from operations before depreciation, amortization and accretion
       expense, net other expense and income taxes, and (2) operating income or
       loss. The accounting policies of the reportable segments are the same as
       those described in the summary of significant accounting policies in note
       1. Intersegment sales are recorded at cost plus an agreed upon
       intercompany profit.

       We earn all revenues through sales of services and products within the
       United States of America. All of our long-lived assets are located within
       the United States of America, except approximately 72% of our undersea
       fiber optic cable system which transits international waters.
<TABLE>
       Summarized financial information for our reportable segments for the six
       months ended June 30, 2003 and 2002 follows (amounts in thousands):
<CAPTION>
                                                      Reportable Segments
                                     --------------------------------------------------------
                                         Long-                Local                  Total
                                       Distance    Cable      Access    Internet   Reportable      All
                                       Services   Services   Services   Services    Segments      Other     Total
                                     ------------------------------------------------------------------------------
       <S>                           <C>           <C>        <C>        <C>         <C>         <C>       <C>
                   2003
                   ----
       Revenues:
         Intersegment                $   7,251      1,258      5,015      6,382       19,906         372    20,278
         External                      100,056     47,310     17,671      9,380      174,417      14,299   188,716
                                     ------------------------------------------------------------------------------
            Total revenues           $ 107,307     48,568     22,686     15,762      194,323      14,671   208,994
                                     ==============================================================================

       Earnings (loss) from
         operations before
         depreciation,
         amortization, net interest
         expense and income taxes    $  53,239     22,806      1,607      1,339       78,991     (18,049)   60,942
                                     ==============================================================================

       Operating income (loss)       $  43,482     13,744       (129)      (361)      56,736     (22,095)   34,641
                                     ==============================================================================

                   2002
                   ----
       Revenues:
         Intersegment                $  10,847      1,017      5,490      4,548       21,902         372    22,274
         External                      102,442     43,265     15,414      7,485      168,606      12,344   180,950
                                     ------------------------------------------------------------------------------
            Total revenues           $ 113,289     44,282     20,904     12,033      190,508      12,716   203,224
                                     ==============================================================================

       Earnings (loss) from
         operations before
         depreciation,
         amortization, net interest
         expense and income taxes    $  43,212     20,351      2,127     (5,658)      60,032     (15,806)   44,226
                                     ==============================================================================

       Operating income (loss)       $  30,953     12,085        459     (7,432)      36,065     (19,709)   16,356
                                     ==============================================================================
</TABLE>

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

<TABLE>
       A reconciliation of reportable segment revenues to consolidated revenues
       follows (amounts in thousands):
<CAPTION>
         Six months ended June 30,                                               2003             2002
                                                                            --------------- ---------------
         <S>                                                               <C>                  <C>
         Reportable segment revenues                                       $    194,323         190,508
         Plus All Other revenues                                                 14,671          12,716
         Less intersegment revenues eliminated in consolidation                  20,278          22,274
                                                                            --------------- ---------------
              Consolidated revenues                                        $    188,716         180,950
                                                                            =============== ===============
</TABLE>
<TABLE>
       A reconciliation of reportable segment earnings from operations before
       depreciation, amortization and accretion expense, net other expense and
       income taxes to consolidated net income before income taxes and
       cumulative effect of a change in accounting principle follows (amounts in
       thousands):
<CAPTION>
         Six months ended June 30,                                               2003             2002
                                                                            -------------- ----------------
         <S>                                                               <C>                   <C>
         Reportable segment earnings from operations before
           depreciation, amortization and accretion expense, net other
           expense and income taxes                                        $     78,991          60,032
         Less All Other loss from operations before depreciation,
           amortization and accretion expense, net other expense and
           income taxes                                                          18,049          15,806
         Less intersegment contribution eliminated in consolidation               1,231             457
                                                                            -------------- ----------------
              Consolidated earnings from operations before
                depreciation, amortization and accretion expense, net
                other expense and income taxes                                   59,711          43,769
         Less depreciation, amortization and accretion expense                   26,301          27,870
                                                                            -------------- ----------------
              Consolidated operating income                                      33,410          15,899
         Less other expense, net                                                 19,659          13,727
                                                                            -------------- ----------------
              Consolidated net income before income taxes and cumulative
                effect of a change in accounting principle                 $     13,751           2,172
                                                                            ============== ================
</TABLE>
<TABLE>
       A reconciliation of reportable segment operating income to consolidated
       net income before income taxes and cumulative effect of a change in
       accounting principle follows (amounts in thousands):
<CAPTION>
         Six months ended June 30,                                               2003             2002
                                                                            --------------- ---------------
         <S>                                                               <C>                   <C>
         Reportable segment operating income                               $     56,736          36,065
         Less All Other operating loss                                           22,095          19,709
         Less intersegment contribution eliminated in consolidation               1,231             457
                                                                            --------------- ---------------
              Consolidated operating income                                      33,410          15,899
         Less other expense, net                                                 19,659          13,727
                                                                            --------------- ---------------
              Consolidated net income before income taxes and cumulative
                effect of a change in accounting principle                 $     13,751           2,172
                                                                            =============== ===============
</TABLE>

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

(6)    Commitments and Contingencies

       Litigation and Disputes
       We are routinely involved in various lawsuits, billing disputes, legal
       proceedings and regulatory matters that have arisen in the normal course
       of business.

       On July 1, 1999, the Alaska Public Utilities Commission ("APUC") ruled
       that the rural exemptions from local competition for the ILECs operating
       in Juneau, Fairbanks and North Pole would not be continued, which allowed
       us to negotiate for unbundled elements for the provision of competitive
       local service. Alaska Communications Systems, Inc. ("ACS") requested
       reconsideration of this decision and on October 11, 1999, the RCA issued
       an order terminating rural exemptions for the ILECs operating in the
       Fairbanks and Juneau markets. ACS has appealed these decisions. The
       appeal presently is before the Alaska Supreme Court. On February 11,
       2003, the Alaska Supreme Court heard oral argument. One of the principal
       issues in dispute concerns the assignment of the burden of proof. In
       accordance with instructions from the Alaska Superior Court, the APUC
       assigned the burden to ACS at the remand proceeding. At the oral
       argument, several Justices expressed concern with the assignment of the
       burden. At this time, we cannot reasonably predict what the outcome of
       the case will be or even what relief the Court might order if it were to
       find that the burden of proof was improperly assigned to ACS. An adverse
       decision from the Court, however, has the potential to disrupt our
       ability to provide service to our Fairbanks and Juneau customers over our
       facilities. We are unable to predict when the Court will issue their
       decision.

       While the ultimate results of these items cannot be predicted with
       certainty, we do not expect at this time the resolution of them, except
       for the rural exemption proceedings described above, to have a material
       adverse effect on our financial position, results of operations or
       liquidity.

       Fiber Optic Cable System Construction Commitment
       In June 2003 we began work on the construction of a fiber optic cable
       system connecting Seward, Alaska and Warrenton, Oregon, with leased
       backhaul facilities to connect it to our switching and distribution
       centers in Anchorage, Alaska and Seattle, Washington. A consortium of
       companies has been selected to design, engineer, manufacture and install
       the undersea fiber optic cable system and a contract has been signed at a
       total cost to us of $35.2 million. We expect to fund construction of the
       fiber optic cable system through our operating cash flows and, to the
       extent necessary, with draws on our Senior Facility.

(7)    Subsequent Events
       On July 21, 2002 MCI and substantially all of its active U.S.
       subsidiaries filed voluntary petitions for reorganization under Chapter
       11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court.
       Chapter 11 allows a company to continue operating in the ordinary course
       of business in order to maximize recovery for the company's creditors and
       shareholders. During the six months ended June 30, 2002 we recognized
       $9.7 million in bad debt expense for uncollected amounts due from MCI.
       During the three months ended September 30, 2002 we recognized an
       additional $1.2 million in bad debt expense. At June 30, 2003 we had
       total pre-petition amounts due from MCI of $12.9 million. At June 30,
       2003 the bad debt reserve for uncollected amounts due from MCI ("MCI
       reserve") totaled $11.6 million and consisted of all billings for
       services rendered prior to July 21, 2002 that were not paid or deemed
       recoverable as of June 30, 2003. The MCI reserve includes approximately
       $0.7 million in reserves recognized prior to the bankruptcy in addition
       to the bad debt expense previously discussed.

       On July 22, 2003, the United States Bankruptcy Court approved the
       settlement of pre-petition amounts owed to us by MCI and affirmed all of
       our existing contracts with MCI. The settlement settles unpaid


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

       balances due from MCI for services rendered prior to their bankruptcy
       filing date, settles billing disputes between us, and establishes a right
       to set-off certain of our pre-petition accounts payable to MCI. Under the
       terms of the settlement:

           o    We will reduce our pre-petition accounts receivable from MCI by
                approximately $800,000, and
           o    We may set-off approximately $1.0 million of our pre-petition
                accounts payable to MCI. The $1.0 million in amounts due from
                MCI which will be off-set by an equal amount of pre-petition
                accounts payable was not included in the MCI reserve.

       The remaining pre-petition accounts receivable balance owed by MCI to us
       after these adjustments is $11.1 million which we will use as a credit
       against amounts payable for future services purchased from MCI. We expect
       to reduce the MCI reserve as we utilize credits for services otherwise
       payable to MCI in the future. We expect to evaluate the likelihood that
       we will receive full credit offset for our remaining pre-petition
       accounts receivable balance when MCI exits bankruptcy proceedings and may
       change our recognition method at that time.

       On July 24, 2003, our contract to provide interstate and intrastate
       long-distance services to MCI was extended for a minimum of five years to
       July 2008. The agreement sets the terms and conditions under which we
       originate and terminate certain types of long distance and data services
       in Alaska on MCI's behalf. In exchange for extending the term of this
       exclusive contract, MCI will receive a series of rate reductions
       implemented in phases over the life of the contract.


                                       20
<PAGE>
PART I.
ITEM 2.

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS
                                   (Unaudited)

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

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

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

General Overview
We have experienced significant growth in recent years through strategic
acquisitions, deploying new business lines and expansion of our existing
businesses. We have historically met our cash needs for operations, regular
capital expenditures and maintenance capital expenditures through our cash flows
from operating activities. Historically, cash requirements for significant
acquisitions and major capital expenditures have been provided largely through
our financing activities. We expect to fund the construction of a new fiber
optic cable system through our operating cash flows and, to the extent
necessary, with draws on our Senior Facility, as further discussed in Liquidity
and Capital Resources included in Part I, Item 2 of this report.

Consolidated revenues increased by more than $3 million during the second
quarter of 2003 ("2003") as compared to the second quarter in 2002 ("2002"). Our
operating income increased by more than $13 million in 2003. Our net income
before income tax and cumulative effect of a change in accounting principle
increased by more than $10 million and our net income increased by almost $6
million. Three of our reportable business segments experienced growth in
external revenues from 2002 to 2003 as we continued to strengthen our position
in the markets we serve. The long-distance services segment experienced a
decrease in revenue in 2003 as compared to 2002. The long-distance services,
cable services and Internet services segments improved their operating results
in 2003. The operating results for the local access services segment decreased
in 2003.


                                       21
<PAGE>
Long-Distance Services Overview
Second quarter 2003 long-distance services revenue represented 53.8% of
consolidated revenues. Our provision of interstate and intrastate long-distance
services, private line and leased dedicated capacity services, and broadband
services accounted for 94.6% of our total long-distance services revenues during
the second quarter of 2003.

Factors that have the greatest impact on year-to-year changes in long-distance
services revenues may include the rate per minute charged to customers, usage
volumes expressed as minutes of use, and the number of private line, leased
dedicated service and broadband products in use.

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

Our contract to provide interstate and intrastate long-distance services to
Sprint was replaced in March 2002 extending its term to March 2007 with two
one-year automatic extensions to March 2009. Beginning in April 2002 the new
contract reduced the rate to be charged by us for certain Sprint traffic over
the extended term of the contract. Additional contractual rate reductions occur
annually through the end of the initial term of the contract.

On July 21, 2002 MCI and substantially all of its active U.S. subsidiaries filed
voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy
Code in the United States Bankruptcy Court. Chapter 11 allows a company to
continue operating in the ordinary course of business in order to maximize
recovery for the company's creditors and shareholders. During the six months
ended June 30, 2002 we recognized $9.7 million in bad debt expense for
uncollected amounts due from MCI. During the three months ended September 30,
2002 we recognized an additional $1.2 million in bad debt expense. At June 30,
2003 we had total pre-petition amounts due from MCI of $12.9 million. At June
30, 2003 the bad debt reserve for uncollected amounts due from MCI ("MCI
reserve") totaled $11.6 million and consisted of all billings for services
rendered prior to July 21, 2002 that were not paid or deemed recoverable as of
June 30, 2003. The MCI reserve includes approximately $0.7 million in reserves
recognized prior to the bankruptcy in addition to the bad debt expense
previously discussed.

On July 22, 2003, the United States Bankruptcy Court approved the settlement of
pre-petition amounts owed to us by MCI and affirmed all of our existing
contracts with MCI. The settlement settles unpaid balances due from MCI for
services rendered prior to their bankruptcy filing date, settles billing
disputes between us, and establishes a right to set-off certain of our
pre-petition accounts payable to MCI. Under the terms of the settlement:

     o   We will reduce our pre-petition accounts receivable from MCI by
         approximately $800,000, and
     o   We may set-off approximately $1.0 million of our pre-petition accounts
         payable to MCI. The $1.0 million in amounts due from MCI which will be
         off-set by an equal amount of pre-petition accounts payable was not
         included in the MCI reserve.

The remaining pre-petition accounts receivable balance owed by MCI to us after
these adjustments is $11.1 million which we will use as a credit against amounts
payable for future services purchased from MCI. We expect to reduce the MCI
reserve as we utilize credits for services otherwise payable to MCI in the
future. We expect to evaluate the likelihood that we will receive full credit
offset for our remaining pre-petition accounts receivable balance when MCI exits
bankruptcy proceedings and may change our recognition method at that time.


                                       22
<PAGE>
On July 24, 2003, our contract to provide interstate and intrastate
long-distance services to MCI was extended for a minimum of five years to July
2008. The agreement sets the terms and conditions under which we originate and
terminate certain types of long distance and data services in Alaska on MCI's
behalf. In exchange for extending the term of this exclusive contract, MCI will
receive a series of rate reductions implemented in phases over the life of the
contract.

We believe that MCI may ultimately exit bankruptcy with their business intact.
We cannot predict how long it may take MCI to complete the bankruptcy process or
what effect the process or the economy may have on their traffic levels and
ultimately, their requirements for service to and from Alaska.

Recent announcements, hearings and media coverage reflect a political movement
that may be attempting to deny MCI from continuing to provide services to
government agencies. We estimate that 25% of our MCI revenues are attributed to
their provision of service to government agencies. Our MCI revenues could be
significantly reduced if MCI's government contract traffic moves from their
network to other carriers' networks for which we do not provide service to.

Other common carrier traffic routed to us for termination in Alaska is largely
dependent on traffic routed to MCI and Sprint by their customers. Pricing
pressures, general economic deterioration, new program offerings, business
failures, and market consolidation continue to evolve in the markets served by
MCI and Sprint. If, as a result, their traffic is reduced, or if their
competitors' costs to terminate or originate traffic in Alaska are reduced, our
traffic will also likely be reduced, and our pricing may be reduced to respond
to competitive pressures. We are unable to predict the effect on us of such
changes, however given the materiality of other common carrier revenues to us, a
significant reduction in traffic or pricing could have a material adverse effect
on our financial position, results of operations and liquidity.

Due in large part to the favorable synergistic effects of our integrated
approach, the long-distance services segment continues to be a significant
contributor to our overall performance, although the migration of traffic from
voice to data continues.

Cable Services Overview
Second quarter 2003 cable television revenues represented 24.9% of consolidated
revenues. Our cable systems serve 33 communities and areas in Alaska, including
the state's four largest population centers, Anchorage, Fairbanks, the
Matanuska-Susitna Valley and Juneau.

We generate cable services revenues from four primary sources: (1) digital and
analog programming services, including monthly basic and premium subscriptions,
pay-per-view movies and other one-time events, such as sporting events; (2)
equipment rentals and installation; (3) cable modem services (shared with our
Internet services segment); and (4) advertising sales. During the second quarter
of 2003 programming services generated 77.6% of total cable services revenues,
cable services' allocable share of cable modem services accounted for 11.4% of
such revenues, equipment rental and installation fees accounted for 7.0% of such
revenues, advertising sales accounted for 3.2% of such revenues, and other
services accounted for the remaining 0.8% of total cable services revenues.

Effective February 2003, we increased rates charged for certain cable services
and premium packages in six communities, including three of the state's four
largest population centers, Anchorage, Fairbanks and Juneau. Rates increased
approximately 4% for those customers who experienced an adjustment.

The primary factors that contribute to year-to-year changes in cable services
revenues may include average monthly subscription and pay-per-view rates, the
mix among basic, premium and pay-per-view services and digital and analog
services, the average number of cable television and cable modem subscribers
during a given reporting period, and revenues generated from new product
offerings.


                                       23
<PAGE>
Our cable services segment faces competition from alternative methods of
receiving and distributing television signals, including but not limited to
direct broadcast satellite and, expected to begin in the third quarter of 2003,
digital video service over telephone lines, and from other sources of news,
information and entertainment. Several ILECs in the lower-48 states have
announced marketing arrangements to provide direct broadcast satellite services
along with local telephone and other services. Similar arrangements could be
extended to ILECs in the markets we serve in Alaska. We believe our cable
television services will continue to be competitive by providing, at reasonable
prices, a greater variety of communication services than are available off-air
or through other alternative delivery sources. Additionally, we believe we offer
superior technical performance and responsive community-based customer service.

Local Access Services Overview
We generate local access services revenues from three primary sources: (1)
business and residential basic dial tone services; (2) business private line and
special access services; and (3) business and residential features and other
charges, including voice mail, caller ID, distinctive ring, inside wiring and
subscriber line charges. During the second quarter of 2003 local access services
revenues represented 9.6% of consolidated revenues.

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

Our local access services segment faces significant competition in Anchorage,
Fairbanks, and Juneau from the ILEC ACS and from AT&T Alascom, Inc. We began
providing service in the Juneau market in the first quarter of 2002. We believe
our approach to developing, pricing, and providing local access services and
bundling different business segment services will allow us to be competitive in
providing those services.

Internet Services Overview
We generate Internet services revenues from three primary sources: (1) access
product services, including commercial, Internet service provider, and retail
dial-up access; (2) network management services; and (3) Internet services'
allocable share of cable modem services (a portion of cable modem revenue is
also recognized by our cable services segment). During the second quarter of
2003 Internet services segment revenues represented 5.0% of consolidated
revenues.

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

Marketing campaigns continue to be deployed targeting residential and commercial
customers featuring bundled Internet products. Our Internet offerings are
coupled with our long-distance and local access services offerings and provide
free basic Internet services or discounted premium Internet services if certain
long-distance or local access services plans are selected. Value-added premium
Internet features are available for additional charges.

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


                                       24
<PAGE>
All Other Services Overview
Revenues reported in the All Other category as described in note 5 in the
accompanying Notes to Interim Condensed Consolidated Financial Statements
include our managed services, product sales, and cellular telephone services.

Revenues included in the All Other category represented 6.7% of total revenues
in the second quarter of 2003 and include managed services revenues totaling
$5.3 million, cellular telephone services revenues totaling $905,000 and product
sales revenues totaling $215,000.


                                       25
<PAGE>
                              RESULTS OF OPERATIONS

<TABLE>
The following table sets forth selected Statement of Operations data as a
percentage of total revenues for the periods indicated (unaudited, underlying
data rounded to the nearest thousands):
<CAPTION>
                                                         Three Months Ended                   Six Months Ended
                                                              June 30,                            June 30,
                                                                         Percent-                            Percent-
                                                                            age                                 age
                                                                         Change (1)                          Change (1)
                                                                          2003 vs.                            2003 vs.
                                                    2003       2002         2002        2003       2002        2002
                                                    ----       ----         ----        ----       ----        ----
      <S>                                          <C>        <C>        <C>           <C>        <C>       <C>
      Statement of Operations Data:
      Revenues
          Long-distance services                    53.8%      56.5%       (1.5%)       53.0%      56.6%      (2.3%)
          Cable services                            24.9%      23.6%        8.9%        25.1%      23.9%       9.3%
          Local access services                      9.6%       8.8%       14.1%         9.4%       8.5%      14.6%
          Internet services                          5.0%       4.2%       22.4%         5.0%       4.2%      25.3%
          All Other services                         6.7%       6.9%        0.5%         7.5%       6.8%      15.8%
                                                 -----------------------------------------------------------------------
             Total revenues                        100.0%     100.0%        3.4%       100.0%     100.0%       4.3%
      Cost of sales and services                    31.3%      33.3%       (2.6%)       32.0%      34.3%      (2.9%)
      Selling, general and administrative
        expenses                                    35.8%      35.1%        5.2%        35.7%      35.3%       5.3%
      Bad debt expense                               0.8%      11.5%      (92.4%)        0.7%       6.2%     (87.5%)
      Depreciation, amortization and accretion
        expense                                     13.3%      15.0%       (8.0%)       13.9%      15.4%      (5.6%)
                                                 -----------------------------------------------------------------------
             Operating income                       18.8%       5.1%      277.1%        17.7%       8.8%     110.1%
             Net income (loss) before income
               taxes and cumulative effect of a
               change in accounting principle        8.7%      (1.8%)     596.7%         7.3%       1.2%     533.1%
             Net income (loss) before
             cumulative effect of a change in
             accounting principle                    5.0%      (1.2%)     536.1%         4.2%       0.6%     612.8%
             Net income (loss)                       5.0%      (1.2%)     536.1%         3.9%       0.6%     563.8%

      Other Operating Data:
      Long-distance services operating income (2)   45.2%      23.5%       89.8%        43.5%      30.2%      40.5%
      Cable services operating income (3)           30.5%      29.1%       14.4%        29.1%      27.9%      13.7%
      Local access services operating (loss)
        income (4)                                  (5.4%)      5.2%     (218.2%)       (0.7%)      3.0%    (128.1%)
      Internet services operating income (loss) (5)  1.4%     (92.2%)     101.9%        (3.8%)    (99.3%)     95.1%
<FN>
--------------------------
1 Percentage change in underlying data.
2 Computed as a percentage of total external long-distance services revenues.
3 Computed as a percentage of total external cable services revenues.
4 Computed as a percentage of total external local access services revenues.
5 Computed as a percentage of total external Internet services revenues.
--------------------------
</FN>
</TABLE>
                                       26
<PAGE>
Three Months Ended June 30, 2003 ("2003") Compared To Three Months Ended
June 30, 2002 ("2002").

Overview of Revenues and Cost of Sales and Services

Total revenues increased 3.4% from $92.7 million in 2002 to $95.9 million in
2003. The cable services, local access services and Internet services segments
and All Other Services contributed to the increase in total revenues, partially
off-set by a decrease in revenues in the long-distance services segment. See the
discussion below for more information by segment.

Total cost of sales and services decreased 2.6% to $30.1 million in 2003. As a
percentage of total revenues, total cost of sales and services decreased from
33.3% in 2002 to 31.3% in 2003. The long-distance services segment contributed
to the decrease in total cost of sales and services, partially off-set by
increases in cost of sales and services in the cable services, local access
services and Internet services segments and All Other Services. See the
discussion below for more information by segment.

Long-distance Services Segment Revenues
Total long-distance services segment revenues decreased 1.5% to $51.6 million in
2003.

Message Telephone Service Revenue from Common Carrier Customers
Message telephone service revenues from other common carriers (principally MCI
and Sprint) decreased 9.8% to $23.0 million in 2003 resulting from a 4.2%
decrease in wholesale minutes carried to 208.5 million minutes, a 1.8% decrease
in the average rate per minute on minutes carried for other common carriers, and
a re-rating of certain other common carrier minutes in 2002 that did not recur
in 2003.

The economic stagnation in the lower 48 states appears to have dampened demand
for services provided by our large common carrier customers. To the extent that
these customers experience reduced demand for traffic destined for and
originating in Alaska, it could adversely affect our common carrier traffic. A
protracted economic malaise in the lower 48 states or a further disruption in
the economy resulting from renewed terrorist activity could affect our carrier
customers which, in turn, could affect our revenues and cash flows.

Message Telephone Service Revenue from Residential, Commercial and Governmental
Customers
Message telephone service revenues from residential, commercial, and
governmental customers decreased 14.5% to $10.2 million in 2003 primarily due to
the following:

     o   A 8.2% decrease in minutes carried for these customers to 72.4 million
         minutes. The decrease is primarily due to the loss of approximately 1.0
         million to 1.5 million minutes earned from a certain retail customer in
         2002 but not earned in 2003 and the effect of customers substituting
         cellular phone and prepaid calling card usage for direct dial minutes,
     o   A 9.0% decrease in the average rate per minute to $0.091 per minute
         paid by these customers due to our promotion of and customers'
         enrollment in calling plans offering a certain number of minutes for a
         flat monthly fee, and
     o   A 2.0% decrease in the number of active residential, commercial, and
         governmental customers billed to 88,300 at June 30, 2003.

Revenue from Private Line and Private Network Customers
Private line and private network transmission services revenues increased 2.6%
to $9.4 million in 2003.


                                       27
<PAGE>
Revenue from Broadband Customers
Revenues from our packaged telecommunications offering to rural hospital and
health clinic service and our SchoolAccess(TM) offering to rural school
districts increased 37.6% to $6.3 million in 2003. The increase is primarily due
to the following:

     o   Our new SchoolAccess(TM) offering called Distance Learning that started
         in late 2002. Distance Learning is a video-conference based service and
         is used by six school districts in Alaska,
     o   An increased number of circuits sold to rural hospitals and health
         clinics, and o Equipment sales to one customer.

Long-distance Services Segment Cost of Sales and Services
Long-distance services segment cost of sales and services decreased 13.8% to
$13.0 million in 2003. Long-distance services segment cost of sales and services
as a percentage of long-distance services segment revenues decreased from 28.9%
in 2002 to 25.3% in 2003 primarily due to the following:

     o   Reductions in access costs due to distribution and termination of our
         traffic on our own local access services network instead of paying
         other carriers to distribute and terminate our traffic. The statewide
         average cost savings is approximately $.014 and $.051 per minute for
         interstate and intrastate traffic, respectively. We expect cost savings
         to continue to occur as long-distance traffic originated, carried, and
         terminated on our own facilities grows,
     o   The FCC Multi-Association Group ("MAG") reform order reducing the
         interstate access rates paid by interexchange carriers to Local
         Exchange Carriers ("LECs") beginning July 2002,
     o   A $861,000 refund in 2003 from an intrastate access cost pool that
         previously overcharged us for access services, and
     o   In the course of business we estimate unbilled long-distance services
         cost of sales and services based upon minutes of use processed through
         our network and established rates. Such estimates are revised when
         subsequent billings are received, payments are made, billing matters
         are researched and resolved, tariffed billing periods lapse, or when
         disputed charges are resolved. In 2003 and 2002, we had favorable
         adjustments of $749,000 and $1.8 million, respectively. Excluding the
         adjustments, long-distance services cost of sales and services as a
         percentage of long-distance services revenues was 26.7% and 32.3% in
         2003 and 2002, respectively.

The decrease in the long-distance services segment cost of sales and services as
a percentage of long-distance services segment revenues is partially off-set by
increased costs associated with additional transponder and network back-up
capacity in 2003 as compared to 2002.

Cable Services Segment Revenues and Cost of Sales and Services
Total cable services segment revenues increased 8.9% to $23.9 million and
average gross revenue per average basic subscriber per month increased $3.11 or
5.6% in 2003. Programming services revenues increased 9.7% to $18.5 million in
2003 resulting from the following:

     o   Basic subscribers served increased approximately 2,100 to approximately
         137,200 at June 30, 2003 as compared to June 30, 2002,
     o   New facility construction efforts in 2002 and 2003 resulted in
         approximately 5,600 additional homes passed, a 2.9% increase from June
         30, 2002. New facility construction efforts in 2003 resulted in
         approximately 4,600 additional homes passed and a review of homes
         passed in the system acquired from Rogers American Cablesystems, Inc.
         resulted in approximately 1,000 additional homes passed,
     o   Digital subscriber counts increased 16.3% to approximately 30,700 at
         June 30, 2003 as compared to June 30, 2002, and
     o   Effective February 2003, we increased rates charged for certain cable
         services and premium packages in six communities, including three of
         the state's four largest population centers Anchorage,


                                       28
<PAGE>
         Fairbanks and Juneau. Rates increased approximately 4% for those
         customers who experienced an adjustment.

The cable services segment's share of cable modem revenue (offered through our
Internet services segment) increased $750,000 to $2.7 million in 2003 due to an
increased number of cable modems deployed. Approximately 99% of our cable homes
passed are able to subscribe to our cable modem service. In the second quarter
of 2003 we completed our upgrade of the Ketchikan cable system. Customers in
this system are now able to subscribe to cable modem service.

We now offer digital programming service in Anchorage, the Matanuska-Susitna
Valley, Fairbanks, Juneau, Kenai, and Soldotna, representing approximately 85%
of our total homes passed at June 30, 2003. We expect that number will increase
to approximately 89% when digital programming service is launched in the
Ketchikan cable system during the third quarter of 2003.

In the second quarter of 2002 we signed new seven-year retransmission agreements
with the five local Anchorage broadcasters and began up-linking and distributing
the local Anchorage programming to all of our cable systems. This was done to
provide additional value to our cable subscribers and to allow us to
differentiate our programming from that of our DBS competitors.

Cable services cost of sales and services increased 5.8% to $6.4 million in 2003
due to programming cost increases for most of our cable programming services
offerings. Cable services cost of sales and services as a percentage of cable
services revenues, which is less as a percentage of revenues than are local
access and Internet services cost of sales and services, decreased from 27.5% in
2002 to 26.7% in 2003. The decrease is primarily due to a $182,000 favorable
adjustment to cable services cost of sales and services after completion of
audits by certain cable programming service vendors, and increasing amounts of
cable modem services sold that generally have higher margins than do cable
programming services.

Local Access Services Segment Revenues and Cost of Sales and Services
Local access services segment revenues increased 14.1% in 2003 to $9.2 million
primarily due to growth in the average number of customers served. At June 30,
2003 an estimated 101,900 lines were in service as compared to approximately
95,800 lines in service at June 30, 2002. We estimate that our 2003 lines in
service total represents a statewide market share of approximately 21%. At June
30, 2003 approximately 1,000 additional lines were awaiting connection. The
increase in local access services segment revenues is also caused by a change in
how we provision local access lines in Fairbanks and Juneau. In 2002 we
primarily resold service purchased from ACS. In 2003 we are benefiting from our
facilities build-out with an increased number of access lines provisioned on our
own facilities, unbundled network element ("UNE") loop and UNE platform which
allows us to collect interstate and intrastate access revenues. The increase in
local access services revenues described above was partially off-set by the
following:

     o   The FCC MAG reform order reducing the interstate access rates paid by
         interexchange carriers to LECs beginning July 2002, and
     o   A reduction in July 2002 in interstate access rates charged by us to
         interexchange carriers in response to an FCC order forcing a competitor
         to reduce their interstate access rates.

Local access services segment cost of sales and services increased 19.1% to $5.9
million in 2003. Local access services segment cost of sales and services as a
percentage of local access services segment revenues increased from 60.8% in
2002 to 63.4% in 2003, primarily due to the following:

     o   Decreased network access services revenues from other carriers as the
         number of customers purchasing both long-distance and local access
         services from us increases, and


                                       29
<PAGE>
     o   The effect of the revenue decreases from interstate access rates
         described above with no corresponding decrease in the cost of sales and
         services.

Partially offsetting the items described above are reductions in access costs
attributed to our conversion of service provided on a wholesale basis to service
provided through our own facilities.

Our access line mix at June 30, 2003 follows:

         o Residential lines represent approximately 57% of our lines,
         o Business customers represent approximately 35% of our lines, and
         o Internet access customers represent approximately 8% of our lines.

Approximately 87% of our lines are provided on our own facilities and leased
local loops. Approximately 5% of our lines are provided using UNE platform.

The local access services segment operating results are negatively affected by
the allocation of the benefit of access cost savings to the long-distance
services segment. If the local access services segment received credit for the
access charge reductions recorded by the long distance services segment, the
local access services segment operating results would have improved by
approximately $1.7 million and the long distance services segment operating
results would have been reduced by an equal amount in the second quarter of
2003. Avoided access charges totaled approximately $1.7 million during the
second quarter of 2003 as compared to $2.1 in the same period of 2002. The
decrease in the avoided access charge in the second quarter of 2003 is due to
the FCC MAG reform order reducing the interstate access rates paid by
interexchange carriers to LECs beginning July 2002 and a reduction in July 2002
in interstate access rates charged by us to interexchange carriers in response
to an FCC order forcing a competitor to reduce their interstate access rates.
The local access services segment operating results are affected by our
continued evaluation and testing of digital local phone service and Internet
protocol-based technology to deliver phone service through our cable facilities.

Internet Services Segment Revenues and Cost of Sales and Services
Total Internet services segment revenues increased 22.4% to $4.8 million in 2003
primarily due to a 34.7% increase in its allocable share of cable modem revenues
to $2.2 million in 2003 as compared to 2002. The increase in cable modem
revenues is primarily due to growth in the number of cable modems deployed.
Cable modem subscribers increased from approximately 31,300 at June 30, 2002 to
approximately 40,500 at June 30, 2003.

At June 30, 2003 we had 92,200 total Internet subscribers, which includes 51,700
dial-up subscribers who do not have any form of cable modem service and 24,900
dial-up subscribers who also have cable modem service. At June 30, 2003
approximately 6,300 of the dial-up subscribers who also have cable modem service
have not activated their dial-up service. Our total dial-up Internet subscribers
decreased 1,100 to 70,300 subscribers at June 30, 2003 as compared to June 30,
2002 as more customers continue to migrate to cable modems.

We reported a total of 71,400 Internet subscribers at June 30, 2002. This
subscriber count was based upon the total number of active dial-up subscribers
at June 30, 2002. As discussed above, not all cable modem subscribers paying for
a dial-up plan have activated their dial-up service. When we first started
selling cable modem service it was packaged in a way that almost all cable modem
subscribers were also dial up subscribers. As we introduced new packages and
plans and started promoting our new cable modem LiteSpeed service the number of
cable modem subscribers without a dial up plan increased substantially. An
internal review during the second quarter of 2003 revealed that these subscriber
counts had risen


                                       30
<PAGE>
substantially enough that they should be reported separately. In future quarters
we will report Internet subscribers in the format described above.

The Internet services segment does not share in plan fee revenues associated
with our bundled Internet and long-distance service package. Estimated plan fees
related to this service offering are approximately $1.0 million per quarter and
those revenues are included in the long-distance services segment.

Internet services cost of sales and services increased 23.5% to $1.4 million in
2003, and as a percentage of Internet services revenues, totaled 29.7% and 29.4%
in 2003 and 2002, respectively. The 2003 increase as a percentage of Internet
services revenues is primarily due to increased labor costs. The increase is
partially off-set by a $571,000 increase in Internet's portion of cable modem
revenue to $2.2 million that generally has higher margins than do other Internet
services products. As Internet services revenues increase, economies of scale
and more efficient network utilization continue to result in reduced Internet
cost of sales and services as a percentage of revenues.

We enhanced the value of our Internet offerings throughout 2002 through the
addition of electronic billing and presentment capabilities and the rollout of a
product called eMail Guard, which filters out e-mail spam and viruses. We
upgraded the download speeds of all of our cable modem Internet service
offerings. These new services and enhancements have proven to be popular with
our customers which we believe is helping to further solidify our customer
relationships.

All Other Revenues and Costs of Sales and Services
All Other revenues increased 0.5% to $6.5 million in 2003.

Revenues from our GCI Fiber system that runs along the oil pipeline corridor are
continuing to increase and we expect the annual recurring revenue run rate to
increase by an additional two to three million dollars per year by the end of
2003. Additionally, we expect to recognize approximately seven million dollars
in special project revenue in the fourth quarter of 2003.

All Other costs of sales and services decreased 7.2% to $3.4 million in 2003,
and as a percentage of All Other revenues, totaled 52.5% and 56.8% in 2003 and
2002, respectively. The decrease in All Other costs of sales and services as a
percentage of All Other revenues is primarily due to a $140,000 favorable
adjustment due to a revision of an estimate of a previously unbilled cost of
sales and service upon receipt of the invoice.

Selling, General and Administrative Expenses
Selling, general and administrative expenses increased 5.2% to $34.3 million in
2003 and, as a percentage of total revenues, increased to 35.8% in 2003 from
35.1% in 2002. The 2003 increase in selling, general and administrative expenses
is primarily due to an increased accrual for company-wide success sharing bonus
costs and increased labor costs. The 2003 increase is off-set by costs incurred
in 2002 for our unsuccessful bid to purchase certain assets of WCI Cable, Inc.
and its subsidiaries.

Marketing and advertising expenses as a percentage of total revenues decreased
from 2.6% in 2002 to 2.3% in 2003.

Bad Debt Expense
Bad debt expense decreased 92.4% to $802,000 in 2003 and, as a percentage of
total revenues, decreased to 0.8% in 2003 from 11.5% in 2002. The 2003 decrease
is primarily due to the provision of a $9.7 million bad debt reserve for
uncollected amounts due from MCI resulting from substantially all of its active
U.S. subsidiaries filing voluntary petitions for reorganization under Chapter 11
of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the
Southern District of New York on July 21, 2002. For a


                                       31
<PAGE>
discussion of the settlement of the uncollected amounts due from MCI, see Long
Distance Service Overview included in Part I, Item 2 of this report.

Depreciation, Amortization and Accretion Expense
Depreciation, amortization and accretion expense decreased 8.0% to $12.8 million
in 2003. The decrease is primarily attributed to a reduction in the value of
Property and Equipment due to an adjustment of $18.5 million which was recorded
in 2002 associated with the Kanas Telecom, Inc acquisition.

The decrease in depreciation, amortization and accretion expense described above
was partially off-set by an increase in depreciation expense due to our $59.2
million investment in equipment and facilities placed into service during 2002
for which a full year of depreciation will be recorded in 2003, and the $20.8
million investment in equipment and facilities placed into service during 2003
for which a partial year of depreciation will be recorded in 2003.

Other Expense, Net
Other expense, net of other income, increased 48.8% to $9.6 million in 2003. The
increase is primarily due to the following:

     o   Increased interest expense due to the increased interest rate paid on
         our amended Senior Facility,
     o   Increased deferred loan fee expense due to increased deferred loan fees
         associated with the amended Senior Facility, and
     o   A $961,000 interest benefit earned in 2002 from an interest rate swap
         agreement which was called at no cost and terminated on August 1, 2002.

Partially offsetting these increases was a decrease in the average outstanding
indebtedness in 2003.

Income Tax (Expense) Benefit
GCI, Inc., as a wholly owned subsidiary and member of the GCI controlled group
of corporations, files its income tax returns as part of the consolidated group
of corporations under GCI. Accordingly, the following discussions of net
operating loss carryforwards and income tax (expense) benefit reflect the
consolidated group's activity and balances.

Income tax (expense) benefit was ($3.6) million in 2003 and $583,000 in 2002.
The change was due to increased net income before income taxes and cumulative
effect of a change in accounting principle in 2003 as compared to 2002. Our
effective income tax rate changed from 34.6% in 2002 to 42.6% in 2003 due to the
effect of items that are nondeductible for income tax purposes.

At June 30, 2003, we have (1) tax net operating loss carryforwards of
approximately $196.6 million that will begin expiring in 2005 if not utilized,
and (2) alternative minimum tax credit carryforwards of approximately $1.9
million available to offset regular income taxes payable in future years. Our
utilization of certain net operating loss carryforwards is subject to
limitations pursuant to Internal Revenue Code section 382.

Tax benefits associated with recorded deferred tax assets are considered to be
more likely than not realizable through future reversals of existing taxable
temporary differences and future taxable income exclusive of reversing temporary
differences and carryforwards. The amount of deferred tax asset considered
realizable, however, could be reduced in the near term if estimates of future
taxable income during the carryforward period are reduced which would result in
additional income tax expense. We estimate that our effective income tax rate
for financial statement purposes will be 42% to 45% in 2003.


                                       32
<PAGE>
Six Months Ended June 30, 2003 ("2003") Compared To Six Months Ended June 30,
2002 ("2002").

Overview of Revenues and Cost of Sales and Services

Total revenues increased 4.3% from $181.0 million in 2002 to $188.7 million in
2003. The cable services, local access services and Internet services segments
and All Other Services contributed to the increase in total revenues, partially
off-set by a decrease in revenues in the long-distance services segment. See the
discussion below for more information by segment.

Total cost of sales and services decreased 2.9% to $60.3 million in 2003. As a
percentage of total revenues, total cost of sales and services decreased from
34.3% in 2002 to 32.0% in 2003. The long-distance services segment contributed
to the decrease in total cost of sales and services, partially off-set by
increases in costs of sales and services in the cable services, local access
services and Internet services segments and All Other Services. See the
discussion below for more information by segment.

Long-distance Services Segment Revenues
Total long-distance services segment revenues decreased 2.3% to $100.1 million
in 2003.

Message Telephone Service Revenue from Common Carrier Customers
Message telephone service revenues from other common carriers (principally MCI
and Sprint) decreased 8.6% to $44.0 million in 2003 resulting from a 2.4%
decrease in wholesale minutes carried to 395.7 million minutes and a 6.3%
decrease in the average rate per minute on minutes carried for other common
carriers. The average rate per minute decrease is primarily due to a reduced
rate charged by us for certain Sprint traffic due to a new contract commencing
April 2002.

The economic stagnation in the lower 48 states appears to have dampened demand
for services provided by our large common carrier customers. To the extent that
these customers experience reduced demand for traffic destined for and
originating in Alaska, it could adversely affect our common carrier traffic. A
protracted economic malaise in the lower 48 states or a further disruption in
the economy resulting from renewed terrorist activity could affect our carrier
customers which, in turn, could affect our revenues and cash flows.

Message Telephone Service Revenue from Residential, Commercial and Governmental
Customers
Message telephone service revenues from residential, commercial, and
governmental customers decreased 15.0% to $20.4 million in 2003 primarily due to
the following:

     o   A 9.6% decrease in minutes carried for these customers to 144.4 million
         minutes. The decrease is primarily due to the loss of approximately 4.0
         million to 4.5 million minutes earned from a certain retail customer in
         2002 but not earned in 2003 and the effect of customers substituting
         cellular phone and prepaid calling card usage for direct dial minutes,
     o   A 7.9% decrease in the average rate per minute to $0.093 per minute
         paid by these customers due to our promotion of and customers'
         enrollment in calling plans offering a certain number of minutes for a
         flat monthly fee, and
     o   A 2.0% decrease in the number of active residential, commercial, and
         governmental customers billed to 88,300 at June 30, 2003.

Revenue from Private Line and Private Network Customers
Private line and private network transmission services revenues increased 1.3%
to $18.2 million in 2003.


                                       33
<PAGE>
Revenue from Broadband Customers
Revenues from our packaged telecommunications offering to rural hospital and
health clinic service and our SchoolAccess(TM) offering to rural school
districts increased 33.6% to $12.0 million in 2003. The increase is primarily
due to the following:

     o   Our new SchoolAccess(TM) offering called Distance Learning that started
         in late 2002. Distance Learning is a video-conference based service and
         is used by six school districts in Alaska,
     o   An increased number of circuits sold to rural hospitals and health
         clinics, and
     o   Equipment sales to one customer.

Long-distance Services Segment Cost of Sales and Services
Long-distance services segment cost of sales and services decreased 19.9% to
$25.1 million in 2003. Long-distance services segment cost of sales and services
as a percentage of long-distance services segment revenues decreased from 30.6%
in 2002 to 25.1% in 2003 primarily due to the following:

     o   Reductions in access costs due to distribution and termination of our
         traffic on our own local access services network instead of paying
         other carriers to distribute and terminate our traffic. The statewide
         average cost savings is approximately $.014 and $.051 per minute for
         interstate and intrastate traffic, respectively. We expect cost savings
         to continue to occur as long-distance traffic originated, carried, and
         terminated on our own facilities grows,
     o   The FCC MAG reform order reducing the interstate access rates paid by
         interexchange carriers to LECs beginning July 2002,
     o   A $2.3 million refund ($1.9 million after deducting certain direct
         costs) in 2003 from a local exchange carrier in respect of its earnings
         that exceeded regulatory requirements,
     o   A $861,000 refund in 2003 from an intrastate access cost pool that
         previously overcharged us for access services, and
     o   In the course of business we estimate unbilled long-distance services
         cost of sales and services based upon minutes of use processed through
         our network and established rates. Such estimates are revised when
         subsequent billings are received, payments are made, billing matters
         are researched and resolved, tariffed billing periods lapse, or when
         disputed charges are resolved. In 2003 and 2002, we had favorable
         adjustments of $749,000 and $2.5 million, respectively. Excluding the
         adjustments, long-distance services cost of sales and services as a
         percentage of long-distance services revenues was 25.8% and 33.0% in
         2003 and 2002, respectively.

The decrease in the long-distance services segment cost of sales and services as
a percentage of long-distance services segment revenues is partially off-set by
increased costs associated with additional transponder and network back-up
capacity in 2003 as compared to 2002.

Cable Services Segment Revenues and Cost of Sales and Services
Total cable services segment revenues increased 9.3% to $47.3 million and
average gross revenue per average basic subscriber per month increased $4.27 or
7.8% in 2003. Programming services revenues increased 9.7% to $36.8 million in
2003 resulting from the following:

     o   Basic subscribers served increased approximately 2,100 to approximately
         137,200 at June 30, 2003 as compared to June 30, 2002,
     o   New facility construction efforts in 2002 and 2003 resulted in
         approximately 5,600 additional homes passed, a 2.9% increase from June
         30, 2002. New facility construction efforts in 2003 resulted in
         approximately 4,600 additional homes passed and a review of homes
         passed in the system acquired from Rogers American Cablesystems, Inc.
         resulted in approximately 1,000 additional homes passed,
     o   Digital subscriber counts increased 16.3% to approximately 30,700 at
         June 30, 2003 as compared to June 30, 2002, and


                                       34
<PAGE>
     o   Effective February 2003, we increased rates charged for certain cable
         services and premium packages in six communities, including three of
         the state's four largest population centers Anchorage, Fairbanks and
         Juneau. Rates increased approximately 4% for those customers who
         experienced an adjustment.

The cable services segment's share of cable modem revenue (offered through our
Internet services segment) increased 44.0% to $5.2 million in 2003 due to an
increased number of cable modems deployed. Approximately 99% of our cable homes
passed are able to subscribe to our cable modem service. In the second quarter
of 2003 we completed our upgrade of the Ketchikan cable system. Customers in
this system are now able to subscribe to cable modem service.

We now offer digital programming service in Anchorage, the Matanuska-Susitna
Valley, Fairbanks, Juneau, Kenai, and Soldotna, representing approximately 85%
of our total homes passed at June 30, 2003. We expect that number will increase
to approximately 89% when digital programming service is launched in the
Ketchikan cable system during the third quarter of 2003.

In the second quarter of 2002 we signed new seven-year retransmission agreements
with the five local Anchorage broadcasters and began up-linking and distributing
the local Anchorage programming to all of our cable systems. This was done to
provide additional value to our cable subscribers and to allow us to
differentiate our programming from that of our DBS competitors.

Cable services cost of sales and services increased 7.1% to $12.8 million in
2003 due to programming cost increases for most of our cable programming
services offerings. Cable services cost of sales and services as a percentage of
cable services revenues, which is less as a percentage of revenues than are
local access and Internet services cost of sales and services, decreased from
27.7% in 2002 to 27.1% in 2003. The decrease is primarily due to the following:

     o   A $182,000 favorable adjustment to cable services cost of sales and
         services after completion of audits by certain cable programming
         service vendors,
     o   Increased revenue resulting from increased rates charged for certain
         cable services and premium packages as described above, and
     o   Increasing amounts of cable modem services sold that generally have
         higher margins than do cable programming services.

In October 2002 we, along with the other largest publicly traded multiple system
operators ("MSOs") signed a pledge to support and adhere to new voluntary
reporting guidelines on common operating statistics to provide investors and
others with a better understanding of our operations. Our operating statistics
include capital expenditures and customer information from our cable services,
local access services and Internet services segments.

Our capital expenditures by standard reporting category for the six months
ending June 30, 2003 and 2002 follows (amounts in thousands):

                                                        2003         2002
                                                     ---------    ---------
    Customer premise equipment ("CPE")              $  3,830        3,233
    Commercial                                           171          325
    Scalable infrastructure                              459        2,199
    Line extensions                                      243          242
    Upgrade/rebuild                                      963        2,533
    Support capital                                      263        4,118
                                                     ---------    ---------
                                                    $  5,929       12,650
                                                     =========    =========


                                       35
<PAGE>
During the six months ending June 30, 2003 we decreased our capital expenditures
for all of our reportable segments as compared to the same period in 2002. The
decrease was due, in part, to capital expenditure limitations required by our
Senior Facility, which we closed on November 1, 2002. In April 2003 we amended
our Senior Facility agreement which, among other items, increases the amount we
may incur for capital expenditures. For a discussion of the Senior Facility
amendment, see Liquidity and Capital Resources included in Part I, Item 2 of
this report.

The standardized definition of a customer relationship is the number of
customers that receive at least one level of service, encompassing voice, video,
and data services, without regard to which services customers purchase. At June
30, 2003 and 2002 we have 124,318 and 123,257 customer relationships,
respectively.

The standardized definition of a revenue generating unit is the sum of all
primary analog video, digital video, high-speed data, and telephony customers,
not counting additional outlets. At June 30, 2003 and 2002 we have 177,793 and
166,432 revenue generating units, respectively. The increase in the revenue
generating units of 4,512 and 3,852 from March 31, 2003 and 2002, respectively,
is due to an increase in the number of hotels which subscribe to cable
television services for their summer tourist season. Each hotel room is
considered to be a revenue generating unit.

Local Access Services Segment Revenues and Cost of Sales and Services
Local access services segment revenues increased 14.6% in 2003 to $17.7 million
primarily due to growth in the average number of customers served. At June 30,
2003 an estimated 101,900 lines were in service as compared to approximately
95,800 lines in service at June 30, 2002. We estimate that our 2003 lines in
service total represents a statewide market share of approximately 21%. At June
30, 2003 approximately 1,000 additional lines were awaiting connection. The
increase in local access services segment revenues is also caused by a change in
how we provision local access lines in Fairbanks and Juneau. In 2002 we
primarily resold service purchased from ACS. In 2003 we are benefiting from our
facilities build-out with an increased number of access lines provisioned on our
own facilities, unbundled network element ("UNE") loop and UNE platform which
allows us to collect interstate and intrastate access revenues. The increase in
local access services revenues described above was partially off-set by the
following:

     o   The FCC MAG reform order reducing the interstate access rates paid by
         interexchange carriers to LECs beginning July 2002, and
     o   A reduction in July 2002 in interstate access rates charged by us to
         interexchange carriers in response to an FCC order forcing a competitor
         to reduce their interstate access rates.

Local access services segment cost of sales and services increased 19.5% to
$11.5 million in 2003. Local access services segment cost of sales and services
as a percentage of local access services segment revenues increased from 62.5%
in 2002 to 65.2% in 2003, primarily due to the following:

     o   Decreased network access services revenues from other carriers as the
         number of customers purchasing both long-distance and local access
         services from us increases, and
     o   The effect of the revenue decreases from interstate access rates
         described above with no corresponding decrease in the cost of sales and
         services.

Partially offsetting the items described above are reductions in access costs
attributed to our conversion of service provided on a wholesale basis to service
provided through our own facilities.


                                       36
<PAGE>
Our access line mix at June 30, 2003 follows:

     o   Residential lines represent approximately 57% of our lines,
     o   Business customers represent approximately 35% of our lines, and
     o   Internet access customers represent approximately 8% of our lines.

Approximately 87% of our lines are provided on our own facilities and leased
local loops. Approximately 5% of our lines are provided using UNE platform.

The local access services segment operating results are negatively affected by
the allocation of the benefit of access cost savings to the long-distance
services segment. If the local access services segment received credit for the
access charge reductions recorded by the long distance services segment, the
local access services segment operating results would have improved by
approximately $3.5 million and the long distance services segment operating
results would have been reduced by an equal amount in 2003. Avoided access
charges totaled approximately $3.5 million during 2003 as compared to $4.1 in
2002. The decrease in the avoided access charge in 2003 is due to the FCC MAG
reform order reducing the interstate access rates paid by interexchange carriers
to LECs beginning July 2002 and a reduction in July 2002 in interstate access
rates charged by us to interexchange carriers in response to an FCC order
forcing a competitor to reduce their interstate access rates. The local access
services segment operating results are affected by our continued evaluation and
testing of digital local phone service and Internet protocol-based technology to
deliver phone service through our cable facilities.

Internet Services Segment Revenues and Cost of Sales and Services
Total Internet services segment revenues increased 25.3% to $9.4 million in 2003
primarily due to the $1.3 million increase in its allocable share of cable modem
revenues to $4.3 million in 2003 as compared to 2002. The increase in cable
modem revenues is primarily due to growth in the number of cable modems
deployed. Approximately 40,500 of the total Internet subscribers are cable modem
subscribers at June 30, 2003 as compared to approximately 31,300 at June 30,
2002.

At June 30, 2003 we had 92,200 total Internet subscribers, which includes 51,700
dial-up subscribers who do not have any form of cable modem service and 24,900
dial-up subscribers who also have cable modem service. At June 30, 2003
approximately 6,300 of the dial-up subscribers who also have cable modem service
have not activated their dial-up service. Our total dial-up Internet subscribers
decreased 1,100 to 70,300 subscribers at June 30, 2003 as compared to June 30,
2002 as more customers continue to migrate to cable modems. .

We reported a total of 71,400 Internet subscribers at June 30, 2002. This
subscriber count was based upon the total number of active dial-up subscribers
at June 30, 2002. As discussed above, not all cable modem subscribers paying for
a dial-up plan have activated their dial-up service. When we first started
selling cable modem service it was packaged in a way that almost all cable modem
subscribers were also dial up subscribers. As we introduced new packages and
plans and started promoting our new cable modem LiteSpeed service the number of
cable modem subscribers without a dial up plan increased substantially. An
internal review during the second quarter of 2003 revealed that these subscriber
counts had risen substantially enough that they should be reported separately.
In future quarters we will report Internet subscribers in the format described
above.

The Internet services segment does not share in plan fee revenues associated
with our bundled Internet and long-distance service package. Estimated plan fees
related to this service offering are approximately $1.0 million per quarter and
those revenues are included in the long-distance services segment.


                                       37
<PAGE>
Internet services cost of sales and services increased 20.5% to $2.8 million in
2003, and as a percentage of Internet services revenues, totaled 30.1% and 31.3%
in 2003 and 2002, respectively. The 2003 decrease as a percentage of Internet
services revenues is primarily due to a $1.3 million increase in Internet's
portion of cable modem revenue that generally has higher margins than do other
Internet services products. As Internet services revenues increase, economies of
scale and more efficient network utilization continue to result in reduced
Internet cost of sales and services as a percentage of revenues.

We enhanced the value of our Internet offerings throughout 2002 through the
addition of electronic billing and presentment capabilities and the rollout of a
product called eMail Guard, which filters out e-mail spam and viruses. We
upgraded the download speeds of all of our cable modem Internet service
offerings. These new services and enhancements have proven to be popular with
our customers which we believe is helping to further solidify our customer
relationships.

All Other Revenues and Costs of Sales and Services
All Other revenues increased 15.8% to $14.3 million in 2003. The increase in
revenues is primarily due to the following:

     o   A $1.3 million increase in product sales to $1.8 million due to sales
         of product to two customers in 2003, and
     o   A $508,000 increase in managed services revenue to $10.8 million in
         2003 primarily due to a one-time payment of $327,000 from a customer to
         acknowledge our ability to maintain certain costs below a stated
         budget.

Revenues from our GCI Fiber system that runs along the oil pipeline corridor are
continuing to increase and we expect the annual recurring revenue run rate to
increase by an additional two to three million dollars per year by the end of
2003. Additionally, we expect to recognize approximately seven million dollars
in special project revenue in the fourth quarter of 2003.

All Other costs of sales and services increased 18.0% to $8.1 million in 2003,
and as a percentage of All Other revenues, totaled 56.3% and 55.3% in 2003 and
2002, respectively. The increase in All Other costs of sales and services as a
percentage of All Other revenues is primarily due to the sales of product to two
customers in 2003 which have a higher costs of sales as a percentage of revenues
than do managed services. The increase in All Other costs of sales and services
as a percentage of All Other revenues is partially off-set by a $140,000
favorable adjustment due to a revision of an estimate of a previously unbilled
cost of sales and service upon receipt of the invoice.

Selling, General and Administrative Expenses
Selling, general and administrative expenses increased 5.3% to $67.3 million in
2003 and, as a percentage of total revenues, increased to 35.7% in 2003 from
35.3% in 2002. The 2003 increase in selling, general and administrative expenses
is primarily due to an increased accrual for company-wide success sharing bonus
costs, increased labor costs and costs associated with State of Alaska
regulatory affairs.

Marketing and advertising expenses as a percentage of total revenues decreased
from 3.4% in 2002 to 2.5% in 2003.

Bad Debt Expense
Bad debt expense decreased 87.5% to $1.4 million in 2003 and, as a percentage of
total revenues, decreased to 0.7% in 2003 from 6.2% in 2002. The 2003 decrease
is primarily due to the provision of a $9.7 million bad debt reserve for
uncollected amounts due from MCI resulting from substantially all of its active
U.S. subsidiaries filing voluntary petitions for reorganization under Chapter 11
of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the
Southern District of New York on July 21, 2002. For a


                                       38
<PAGE>
discussion of the settlement of the uncollected amounts due from MCI, see Long
Distance Service Overview included in Part I, Item 2 of this report.

Depreciation, Amortization and Accretion Expense
Depreciation, amortization and accretion expense decreased 5.6% to $26.3 million
in 2003. The decrease is primarily attributed to a reduction in the value of
Property and Equipment due to an adjustment of $18.5 million which was recorded
in 2002 associated with the Kanas Telecom, Inc. acquisition.

The decrease in depreciation, amortization and accretion expense described above
was partially off-set by an increase in depreciation expense due to our $59.2
million investment in equipment and facilities placed into service during 2002
for which a full year of depreciation will be recorded in 2003, and the $20.8
million investment in equipment and facilities placed into service during 2003
for which a partial year of depreciation will be recorded in 2003.

Other Expense, Net
Other expense, net of other income, increased 43.2% to $19.7 million in 2003.
The increase is primarily due to the following:

     o   Increased interest expense due to the increased interest rate paid on
         our amended Senior Facility,
     o   Increased deferred loan fee expense due to the increased deferred loan
         fees associated with the amended Senior Facility, and
     o   A $1.4 million interest benefit earned in 2002 from an interest rate
         swap agreement which was called at no cost and terminated on August 1,
         2002.

Partially offsetting these increases was a decrease in the average outstanding
indebtedness in 2003.

Income Tax Expense
GCI, Inc., as a wholly owned subsidiary and member of the GCI controlled group
of corporations, files its income tax returns as part of the consolidated group
of corporations under GCI. Accordingly, the following discussion reflects the
consolidated group's activity.

Income tax expense was $5.8 million in 2003 and $1.1 million in 2002. The change
was due to increased net income before income taxes and cumulative effect of a
change in accounting principle in 2003 as compared to 2002. Our effective income
tax rate decreased from 48.9% in 2002 to 42.5% in 2003 due to the effect of
items that are nondeductible for income tax purposes.


                                       39
<PAGE>
                 FLUCTUATIONS IN QUARTERLY RESULTS OF OPERATIONS

<TABLE>
The following chart provides selected unaudited statement of operations data
from our quarterly results of operations during 2003 and 2002:
<CAPTION>
                                                                          (Amounts in thousands)
                                                      ---------------------------------------------------------
                                                        First      Second       Third      Fourth
                                                       Quarter     Quarter     Quarter     Quarter       Total
                                                      ---------------------------------------------------------
     <S>                                             <C>            <C>         <C>         <C>         <C>
     2003
     ----
     Revenues:
       Long-distance services                        $  48,486      51,570                              100,056
       Cable services                                $  23,438      23,872                               47,310
       Local access services                         $   8,426       9,245                               17,671
       Internet services                             $   4,590       4,790                                9,380
       All Other services                            $   7,837       6,462                               14,299
                                                      ------------------------                        ---------
          Total revenues                             $  92,777      95,939                              188,716
     Operating income                                $  15,438      17,972                               33,410
     Net income before income taxes and
       cumulative effect of a change in
       accounting principle                          $   5,377       8,374                               13,751
     Net income before cumulative effect of a
       change in accounting principle                $   3,095       4,810                                7,905
     Net income                                      $   2,551       4,810                                7,361
                                                      ========================                        =========
     2002
     ----
     Revenues:
       Long-distance services                        $  50,068      52,375      53,778      48,711      204,932
       Cable services                                $  21,346      21,919      22,057      23,366       88,688
       Local access services                         $   7,308       8,106       8,096       8,561       32,071
       Internet services                             $   3,573       3,912       3,927       4,172       15,584
       All Other services                            $   5,915       6,428       6,692       7,532       26,567
                                                      ---------------------------------------------------------
          Total revenues                             $  88,210      92,740      94,550      92,342      367,842
     Operating income (1)                            $  11,133       4,766      16,353      13,473       45,725
     Net income (loss) before income taxes (1)       $   3,858      (1,686)      8,662       1,488       12,322
     Net income (loss) (1)                           $   2,212      (1,103)      5,063         491        6,663
                                                      =========================================================
<FN>
     -------------------
     1  The second and third quarters of 2002 include the provision of $9.7
        million and $1.2 million, respectively, of bad debt expense for
        estimated uncollectible accounts due from MCI.
     -------------------
</FN>
</TABLE>
Overview of Revenues and Cost of Sales and Services
Total revenues for the quarter ended June 30, 2003 ("second quarter") were $95.9
million, representing a 3.4% increase from $92.8 million for the quarter ended
March 31, 2003 ("first quarter"). The long-distance services, cable services,
local services and Internet services segments contributed to the increase in
total revenues, partially off-set by a decrease in revenues from All Other
Services.

Cost of sales and services decreased from $30.2 million in the first quarter to
$30.1 million in the second quarter. As a percentage of revenues, first and
second quarter cost of sales and services totaled 32.6% and 31.3%, respectively.
The cable services segment and All Other Services contributed to the decrease in
total cost of sales and services, partially off-set by increases in cost of
sales and services in the long-distance, local access and Internet services
segments.


                                       40
<PAGE>
Long-distance Services Segment Revenues and Cost of Sales and Services
Second quarter long-distance services segment revenues increased 6.4% to $51.6
million as compared to the first quarter. The increase resulted primarily from
increased revenues from other common carrier customers and increased private
line and broadband revenues, off-set by a decrease in revenues from residential,
commercial, and governmental customers.

Revenues from other common carrier customers increased 9.0% to $23.0 million in
the second quarter as compared to the first quarter. Minutes carried for other
common carriers increased 11.4% to 208.5 million minutes. The increased revenues
from other common carrier customers was partially off-set by a 2.2% decrease in
the average rate per minute on minutes carried for other common carriers in the
second quarter as compared to the first quarter.

Revenues from residential, commercial, and governmental customers decreased 0.1%
to $10.2 million in the second quarter primarily due to a 3.2% decrease in the
average rate per minute to $0.091 per minute paid by residential, commercial and
governmental customers.

The decrease described above is partially off-set by the following:

     o   A 1.1% increase in the number of active residential, commercial, and
         governmental customers billed to 88,300 at June 30, 2003, and
     o   A 0.7% increase in retail minutes carried for residential, commercial
         and governmental customers to 72.4 million minutes.

Private line and private network transmission services revenues increased 6.1%
to $9.4 million in second quarter as compared to first quarter. The increase is
primarily due to an increased number of leased circuits in service and
approximately $175,000 in credits given to customers in the first quarter.

Long-distance revenues have historically been highest in the summer months
because of temporary population increases attributable to tourism and increased
seasonal economic activity such as construction, commercial fishing, and oil and
gas activities.

Revenues from our packaged telecommunications offering to rural hospital and
health clinic service and our SchoolAccess(TM) offering to rural school
districts increased 9.1% to $6.3 million in the second quarter. The increase is
primarily due to the following:

     o   Our new SchoolAccess(TM) offering called Distance Learning that started
         in late 2002. Distance Learning is a video-conference based service and
         is used by six school districts in Alaska,
     o   An increased number of circuits sold to rural hospitals and health
         clinics, and
     o   Equipment sales to one customer.

Long-distance services cost of sales and services increased 7.8% to $13.0
million in the second quarter. Long-distance services cost of sales and services
as a percentage of long-distance services revenues increased from 24.9% in the
first quarter to 25.3% in the second quarter primarily due to a $2.3 million
refund in the first quarter from a local exchange carrier in respect of its
earnings that exceeded regulatory requirements.

Partially off-setting the increased long-distance services cost of sales and
services as a percentage of long-distance services revenues in the second
quarter as compared to the first quarter were the following:

     o   A $861,000 refund in the second quarter from an intrastate access cost
         pool that previously overcharged us for access services, and


                                       41
<PAGE>
     o   A favorable adjustment of $749,000 in the second quarter. In the course
         of business we estimate unbilled long-distance services cost of sales
         and services based upon minutes of use processed through our network
         and established rates. Such estimates are revised when subsequent
         billings are received, payments are made, billing matters are
         researched and resolved, tariffed billing periods lapse, or when
         disputed charges are resolved. We had no significant favorable or
         unfavorable adjustments in the first quarter.

Cable Services Segment Revenues and Cost of Sales and Services
Cable services segment revenues increased 1.9% to $23.9 million and average
gross revenue per average basic subscriber per month remained steady in the
second quarter as compared to the first quarter. Programming services revenues
increased 1.6% to $18.5 million in second quarter resulting from the following:

     o   Basic subscribers served increased approximately 900 to approximately
         137,200 at June 30, 2003 as compared to March 31, 2003,
     o   Homes passed increased approximately 2,000, a 1.0% increase from March
         31, 2003. New facility construction efforts in second quarter 2003
         resulted in approximately 1,000 additional homes passed and a review of
         homes passed in the system acquired from Rogers American Cablesystems,
         Inc. resulted in approximately 1,000 additional homes passed,
     o   Effective February 2003, we increased rates charged for certain cable
         services and premium packages in six communities, including three of
         the state's four largest population centers Anchorage, Fairbanks and
         Juneau. Rates increased approximately 4% for those customers who
         experienced an adjustment, and
     o   Digital subscriber counts increased 1.7% to approximately 30,700 at
         June 30, 2003 as compared to March 31, 2003.

Cable programming services revenues have historically been highest in the winter
months because consumers spend more time at home and tend to watch more
television during these months.

The cable services segment's share of cable modem revenue (offered through our
Internet services segment) increased $215,000 to $2.7 million in second quarter
due to an increased number of cable modems deployed.

Cable services cost of sales and services decreased 1.3% to $6.4 million in the
second quarter as compared to the first quarter. Cable services cost of sales
and services as a percentage of cable services segment revenues, which is less
as a percentage of revenues than are local access and Internet services cost of
sales and services, decreased from 27.6% in the first quarter to 26.7% in the
second quarter. The decrease is primarily due to a $182,000 favorable adjustment
to cable services cost of sales and services after completion of audits by
certain cable programming service vendors.

Local Access Services Segment Revenues and Cost of Sales and Services
Local access services segment revenues increased 9.7% in the second quarter to
$9.2 million primarily due to increased lines in service in the second quarter
and a adjustment to an intrastate carrier common line customer account in the
first quarter. At June 30, 2003 an estimated 101,900 lines were in service as
compared to approximately 98,900 lines in service at March 31, 2003.


                                       42
<PAGE>
Local access services segment cost of sales and services increased $214,000 to
$5.9 million in the second quarter. Local access services segment cost of sales
and services as a percentage of local access services segment revenues decreased
from 67.0% in the first quarter to 63.4% in the second quarter. The decrease in
cost of sales and services as a percentage of local access services segment
revenues is due to the following:

     o   The build-out of our facilities resulting in an increased number of
         access lines provisioned on our own facilities, UNE loop and UNE
         platform has resulted in decreased cost of sales and services and
         increased interstate and intrastate access revenue, and
     o   Further economies of scale and more efficient network utilization as
         the number of local access services subscribers and resulting revenues
         increase.

The decrease is partially off-set by decreased network access services revenues
from other carriers as the number of customers purchasing both long-distance and
local access services from us increases.

The local access services segment operating results are negatively effected by
the allocation of the benefit of access cost savings to the long-distance
services segment. If the local access services segment received credit for the
access charge reductions recorded by the long distance services segment, the
local access services segment operating results would have improved by
approximately $1.7 million and the long distance services segment operating
results would have been reduced by an equal amount in the second quarter.
Avoided access charges totaled approximately $1.8 million in the first quarter.

Internet Services Segment Revenues and Cost of Sales and Services
Total Internet services segment revenues increased $200,000 to $4.8 million in
the second quarter primarily due to the $172,000 increase in Internet services
segment's allocable share of cable modem revenues to $2.2 million in the second
quarter as compared to the first quarter. The increase in cable modem revenues
is primarily due to growth in the number of cable modems deployed. Cable modem
subscribers increased from approximately 38,600 at March 31, 2003 to
approximately 40,500 at June 30, 2003.

We reported a total of 71,600 Internet subscribers at March 31, 2003. This
subscriber count was based upon the total number of active dial-up subscribers
at March 31, 2003. As discussed above, not all cable modem subscribers paying
for a dial-up plan have activated their dial-up service. When we first started
selling cable modem service it was packaged in a way that almost all cable modem
subscribers were also dial up subscribers. As we introduced new packages and
plans and started promoting our new cable modem LiteSpeed service the number of
cable modem subscribers without a dial up plan increased substantially. An
internal review during the second quarter of 2003 revealed that these subscriber
counts had risen substantially enough that they should be reported separately.
In future quarters we will report Internet subscribers in the format described
above.

Internet services cost of sales and services increased $18,000 in the second
quarter to $1.4 million, and as a percentage of Internet services revenues,
totaled 29.7% and 30.6% in the second and first quarters, respectively.

All Other Revenues and Costs of Sales and Services
All Other revenues decreased $1.4 million to $6.5 million in the second quarter
primarily due to sales of product to two customers in the first quarter.


                                       43
<PAGE>
All Other costs of sales decreased $1.3 million to $3.4 million in the second
quarter, and as a percentage of All Other revenues, totaled 52.5% and 59.5% in
the second and first quarters, respectively. The decrease in All Other costs of
sales and services as a percentage of All Other revenues is primarily due to the
following:

     o   A $140,000 favorable adjustment in the second quarter due to a revision
         of an estimate of a previously unbilled cost of sales and service upon
         receipt of the invoice, and
     o   Sales of product to two customers in first quarter which have a higher
         costs of sales as a percentage of revenues than do managed services.

Selling, General and Administrative Expenses
Selling, general and administrative expenses increased 3.9% to $34.3 million in
the second quarter as compared to the first quarter. As a percentage of
revenues, selling, general and administrative expenses were 35.8% and 35.6% in
the second and first quarters, respectively.

Bad Debt Expense
Bad debt expense increased $205,000 to $802,000 in the second quarter as
compared to the first quarter. As a percentage of total revenues, second and
first quarter bad expense was 0.8% and 0.6%, respectively.

Depreciation, Amortization and Accretion Expense
Depreciation, amortization and accretion expense decreased 5.2% to $12.8 million
in second quarter as compared to first quarter due to several individually
insignificant decreases in depreciation and amortization expense.

Other Expense, Net
Other expense, net of other income, decreased $463,000 in the second quarter to
$9.6 million due to the amendment of our Senior Facility in April 2003 which
extended the final maturity date from two years to five years. The extension
resulted in an increased amortization period for deferred loan costs on our
amended Senior Facility which began in the second quarter.

Net Income
We reported net income of $4.8 million for the second quarter as compared to net
income of $2.6 million for the first quarter. The increase is primarily due to
increased revenues without a corresponding increase in cost of sales and
services due to a refund in the long distance services segment and favorable
cost of sales and services adjustments in the long distance and cable services
segments and All Other Services in second quarter, as previously described.

The increased net income in second quarter as compared to first quarter is
partially off-set by a $2.3 million refund in the first quarter as previously
described. Additionally, first quarter net income was decreased by the
implementation of SFAS No. 143 on January 1, 2003 resulting in a cumulative
effect of an accounting change, net of income tax benefit of $367,000, of
$544,000.

Liquidity and Capital Resources
Cash flows from operating activities totaled $31.6 million in 2003 as compared
to $29.9 million in 2002. The increase in 2003 is primarily due to increased
cash flow in 2003 from some of our segments, a $2.3 million refund from a local
exchange carrier in respect of its earnings that exceeded regulatory
requirements, and a $861,000 refund from an intrastate access cost pool that
previously overcharged us for access services. Uses of cash during 2003 included
$17.4 million of expenditures for property and equipment, including construction
in progress, principal payments on long-term debt and capital lease obligations
of $3.6 million, payment of $2.6 million in fees associated with the original
and amended Senior Facility and payment of a $721,000 deposit on a workers'
compensation stop-loss policy.


                                       44
<PAGE>
Net receivables increased $7.4 million from December 31, 2002 to June 30, 2003
primarily due to an increase in:

     o   Trade receivables for broadband services provided to hospitals and
         health clinics, and
     o   Trade receivables for telecommunication services provided to certain
         customers. The accounts receivable for these customers were
         subsequently paid in July 2003.

Working capital totaled $317,000 at June 30, 2003, a $3.9 million decrease as
compared to $4.2 million at December 31, 2002. The decrease is primarily
attributed to classification of $20.0 million of our Senior Facility as current
maturities of long-term debt as of June 30, 2003, upon the April 22, 2003
amendment described below.

The decrease in working capital was partially off-set by:

     o   A $6.0 million increase in our cash balance at June 30, 2003 and a $4.4
         million decrease in accounts payable at June 30, 2003 as compared to
         December 31, 2002, primarily due to decreased capital expenditures
         during the six months ended June 30, 2003, and
     o   A $7.4 million increase in net receivables at June 30, 2003 as compared
         to December 31, 2002 as previously described.

On April 22, 2003 we amended our $225.0 million Senior Facility. The amendment
provides for the followings changes:

     o   The final maturity date has been extended to October 31, 2007,
     o   We may fund capital expenditures, including construction or acquisition
         of additional fiber optic cable system capacity, through our own cash
         flow or by draws on the revolving credit facility of the Senior
         Facility not to exceed $25.0 million, and
     o   The definition of Excess Cash Flow has been changed to the amount by
         which earnings before interest, taxes, depreciation, and amortization
         exceeds certain fixed charges as defined in the Senior Facility
         agreement plus one-time fiber sales to the extent such fiber sales are
         not included in earnings before interest, taxes, depreciation, and
         amortization.

The amendment requires us to prepay the term loan as follows (amounts in
thousands):

                             Date                         Amount
           ------------------------------------------    --------
           Quarterly from September 30, 2003 to
             December 31, 2004                          $   5,000
           Quarterly from March 31, 2005 to December
             31, 2005                                   $   6,000
           Quarterly from March 31, 2006 to December
             31, 2006                                   $   8,000
           Quarterly from March 31, 2007 to September
             30, 2007                                   $  10,000

The remaining balance of the term loan will be payable in full on October 31,
2007.


                                       45
<PAGE>
Under the amended Senior Facility capital expenditures, other than those
incurred to build or acquire additional fiber optic cable system capacity, in
any of the years ended December 31, 2003, 2004, 2005 and 2006 may not exceed:

     o   $25.0 million, plus
     o   100% of any Excess Cash Flow during the applicable period less certain
         permitted investments of up to $5.0 million during the applicable
         period.

Under the amended Senior Facility we may not allow the ratio of total
indebtedness to annualized operating cash flow to be greater than:

                              Period                               Ratio
     ---------------------------------------------------------    -------
     April 22, 2003 through December 30, 2003                     4.25:1
     December 31, 2003 through December 30, 2004                  4.00:1
     December 31, 2004 through December 30, 2005                  3.75:1
     December 31, 2005 through June 29, 2006                      3.50:1
     June 30, 2006 through June 29, 2007                          3.25:1
     June 30, 2007 through September 29, 2007                     3.00:1
     September 30, 2007 through October 31, 2007                  2.75:1

Under the amended Senior Facility we may not allow the ratio of senior secured
indebtedness to annualized operating cash flow to be greater than:

                              Period                               Ratio
     ---------------------------------------------------------    -------
     April 22, 2003 through December 30, 2004                     2.00:1
     December 31, 2004 through September 29, 2006                 1.75:1
     September 30, 2006 through June 29, 2007                     1.50:1
     June 30, 2007 through September 29, 2007                     1.25:1
     September 30, 2007 through October 31, 2007                  1.00:1

Under the amended Senior Facility we must either have repaid in full or
successfully refinanced our Senior Notes by February 1, 2007.

In connection with the amendment of the Senior Facility, we paid bank fees and
other expenses of approximately $2,379,000 during the six months ended June 30,
2003 which will be charged to Amortization of Loan and Senior Notes Fees over
the life of the amended agreement.

The term loan is fully drawn and we have a $3.0 million letter of credit, which
leaves $47.0 million available at June 30, 2003 to draw under the revolving
credit facility if needed. In April 2003, we made a $2.7 million principal
payment on the revolving credit facility.

We were in compliance with all loan covenants at June 30, 2003.

Our semi-annual Senior Notes interest payment of $8.8 million was paid in
February 2003 out of existing cash balances. Our next Senior Notes interest
payment of $8.8 million is due August 1, 2003 and will be paid out of existing
cash balances.

Our expenditures for property and equipment, including construction in progress,
totaled $17.4 million and $36.2 million during the six months ended June 30,
2003 and 2002, respectively. Our capital expenditures requirements are largely
success driven and are a result of the progress we are making in the
marketplace. We expect our 2003 expenditures for property and equipment for our
core operations, including construction


                                       46
<PAGE>
in progress and excluding the new fiber system construction costs described
below, to total $40 million to $55 million, depending on available opportunities
and the amount of cash flow we generate during 2003.

We have begun work on the construction of a $50 million fiber optic cable system
connecting Seward, Alaska and Warrenton, Oregon, with leased backhaul facilities
to connect it to our switching and distribution centers in Anchorage, Alaska and
Seattle, Washington. The 1,544-statute mile cable has a total design capacity of
960 Gigabits per second access speed and is planned to be operational by May
2004. The cable will complement our existing fiber optic cable between Whittier,
Alaska and Seattle, Washington. The two cables will provide physically diverse
backup to each other in the event of an outage. We expect to fund construction
of the fiber optic cable system through our operating cash flows and, to the
extent necessary, with draws on our Senior Facility.

Planned capital expenditures over the next five years include those necessary
for continued expansion of our long-distance, local exchange and Internet
facilities, supplementation of our existing network backup facilities,
continuing development of our Personal Communication Services, or PCS, network,
digital local phone service, and upgrades to our cable television plant.

The financial, credit and economic impacts of MCI's July 2002 bankruptcy filing
on the industry in general and on us in particular are not yet fully understood
and are not predictable. See Long Distance Overview for a discussion of the
settlement of the uncollected amounts due from MCI.

We believe that payment for services provided to MCI subsequent to their
bankruptcy filing date will continue to be made timely, consistent with our
status in MCI's filing as a key service provider or utility to MCI.

A conversion of MCI's bankruptcy petition to Chapter 7, or a migration of MCI's
traffic off our network without it being replaced by other common carriers that
interconnect with our network, could have a materially adverse impact on our
financial position, results of operations and liquidity.

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

The telecommunications industry in general is depressed due to high levels of
competition in the long-distance market resulting in pressures to reduce prices,
an oversupply of long-haul capacity, excessive debt loads, several high-profile
company failures and potentially fraudulent accounting practices by some
companies. Our ability to obtain new debt under acceptable terms and conditions
in the future may be diminished as a result.

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

New Accounting Standards
In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities". SFAS No. 149 amends and
clarifies financial accounting and reporting for


                                       47
<PAGE>
derivative instruments, including certain derivative instruments embedded in
other contracts (collectively referred to as derivatives) and for hedging
activities under SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities". SFAS No. 149 is effective for contracts entered into or
modified after June 30, 2003, except for certain provisions that relate to SFAS
No. 133 Implementation Issues which should continue to be applied in accordance
with their respective effective dates, and for hedging relationships designated
after June 30, 2003. We do not expect implementation of SFAS No. 149 to have a
material effect on our results of operations, financial position and cash flows.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity". SFAS No. 150
establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. It
requires that an issuer classify a financial instrument that is within its scope
as a liability (or an asset in some circumstances). Many of those instruments
were previously classified as equity. Some of the provisions of this SFAS No.
150 are consistent with the current definition of liabilities in FASB Concepts
Statement No. 6, "Elements of Financial Statements". The remaining provisions of
SFAS No. 150 are consistent with the FASB's proposal to revise the current
definition of liabilities to encompass certain obligations that a reporting
entity can or must settle by issuing its own equity shares, depending on the
nature of the relationship established between the holder and the issuer. We do
not expect implementation of SFAS No. 150 to have a material effect on our
results of operations, financial position and cash flows.

In January 2003 the FASB issued FIN No. 46, "Consolidation of Variable Interest
Entities". This Interpretation of Accounting Research Bulletin No. 51,
"Consolidated Financial Statements", addresses consolidation by business
enterprises of variable interest entities, which have one or both of the
following characteristics:

         1.  The equity investment at risk is not sufficient to permit the
             entity to finance its activities without additional subordinated
             financial support from other parties, which is provided through
             other interests that will absorb some or all of the expected losses
             of the entity.
         2.  The equity investors lack one or more of the following essential
             characteristics of a controlling financial interest:
             a. The direct or indirect ability to make decisions about the
                entity's activities through voting rights or similar rights
             b. The obligation to absorb the expected losses of the entity if
                they occur, which makes it possible for the entity to finance
                its activities
             c. The right to receive the expected residual returns of the entity
                if they occur, which is the compensation for the risk of
                absorbing the expected losses.

We do not expect implementation of FIN No. 46 to have a material effect on our
results of operations, financial position and cash flows.

Critical Accounting Policies
Our accounting and reporting policies comply with accounting principles
generally accepted in the United States of America. The preparation of financial
statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions. The financial position and results
of operations can be affected by these estimates and assumptions, which are
integral to understanding reported results. Critical accounting policies are
those policies that management believes are the most important to the portrayal
of the Company's financial condition and results, and require management to make
estimates that are difficult, subjective or complex. Most accounting policies
are not considered by management to be critical accounting policies. Several
factors are considered in determining whether or not a policy is critical in the
preparation of financial statements. These factors include, among other things,
whether the estimates are significant to the financial statements, the nature of
the estimates, the ability to readily validate the


                                       48
<PAGE>
estimates with other information including third parties or available prices,
and sensitivity of the estimates to changes in economic conditions and whether
alternative accounting methods may be utilized under accounting principles
generally accepted in the United States of America. For all of these policies,
management cautions that future events rarely develop exactly as forecast, and
the best estimates routinely require adjustment. Management has discussed the
development and the selection of critical accounting policies with the Company's
Audit Committee.

Those policies considered to be critical accounting policies for the three and
six months ended June 30, 2003 are described below.

     o   We maintain allowances for doubtful accounts for estimated losses
         resulting from the inability of our customers to make required
         payments. We base our estimates on the aging of our accounts receivable
         balances, financial health of specific customers, and our historical
         write-off experience, net of recoveries. If the financial condition of
         our customers were to deteriorate or if they are unable to emerge from
         reorganization proceedings, resulting in an impairment of their ability
         to make payments, additional allowances may be required. If their
         financial condition improves or they emerge successfully from
         reorganization proceedings, allowances may be reduced. Such allowance
         changes could have a material effect on our consolidated financial
         condition and results of operations.

     o   We record all assets and liabilities acquired in purchase acquisitions,
         including goodwill and other intangibles, at fair value as required by
         SFAS 141. Goodwill and indefinite-lived assets such as our cable
         segment franchise agreements are no longer amortized but are subject,
         at a minimum, to annual tests for impairment. Other intangible assets
         are amortized over their estimated useful lives using the straight-line
         method, and are subject to impairment if events or circumstances
         indicate a possible inability to realize the carrying amount. The
         initial goodwill and other intangibles recorded and subsequent
         impairment analysis requires management to make subjective judgments
         concerning estimates of how the acquired asset will perform in the
         future using a discounted cash flow analysis. Additionally, estimated
         cash flows may extend beyond ten years and, by their nature, are
         difficult to determine over an extended timeframe. Events and factors
         that may significantly affect the estimates include, among others,
         competitive forces, customer behaviors and attrition, changes in
         revenue growth trends, cost structures and technology, and changes in
         discount rates, performance compared to peers, material and ongoing
         negative economic trends, and specific industry or market sector
         conditions. In determining the reasonableness of cash flow estimates,
         we review historical performance of the underlying asset or similar
         assets in an effort to improve assumptions utilized in our estimates.
         In assessing the fair value of reportable operating segments, we may
         consider other information to validate the reasonableness of our
         valuations including public market comparables, multiples of recent
         mergers and acquisitions of similar businesses and third-party
         assessments. These evaluations could result in a change in useful lives
         in future periods and could result in write-down of the value of
         intangible assets. Because of the significance of the identified
         intangible assets and goodwill to our consolidated balance sheet, the
         annual impairment analysis will be critical. Any changes in key
         assumptions about the business and its prospects, or changes in market
         conditions or other externalities, could result in an impairment charge
         and such a charge could have a material adverse effect on our
         consolidated financial condition and results of operations. Refer to
         Note 3 in the accompanying Notes to Interim Condensed Consolidated
         Financial Statements for additional information regarding intangible
         assets.

     o   We estimate unbilled long-distance segment cost of sales based upon
         minutes of use carried through our network and established rates. We
         estimate unbilled costs for new circuits and services, and when network
         changes occur that result in traffic routing changes or a change in
         carriers. Carriers that provide service to us regularly change their
         networks which can lead to new, revised or corrected


                                       49
<PAGE>
         billings. Such estimates are revised or removed when subsequent
         billings are received, payments are made, billing matters are
         researched and resolved, tariffed billing periods lapse, or when
         disputed charges are resolved. Revisions to previous estimates could
         either increase or decrease costs in the year in which the estimate is
         revised which could have a material effect on our consolidated
         financial condition and results of operations.

     o   GCI, Inc., as a wholly owned subsidiary and member of the GCI
         controlled group of corporations, files its income tax returns as part
         of the consolidated group of corporations under GCI. Accordingly, the
         following discussion reflects the consolidated group's activity and
         balances. Our income tax policy provides for deferred income taxes to
         show the effect of temporary differences between the recognition of
         revenue and expenses for financial and income tax reporting purposes
         and between the tax basis of assets and liabilities and their reported
         amounts in the financial statements in accordance with SFAS No. 109,
         "Accounting for Income Taxes." We have recorded deferred tax assets of
         approximately $79.0 million associated with income tax net operating
         losses that were generated from 1990 to 2003, and that expire from 2005
         to 2023. Pre-acquisition income tax net operating losses associated
         with acquired companies are subject to additional deductibility limits.
         We have recorded deferred tax assets of approximately $1.9 million
         associated with alternative minimum tax credits that do not expire.
         Significant management judgment is required in developing our provision
         for income taxes, including the determination of deferred tax assets
         and liabilities and any valuation allowances that may be required
         against the deferred tax assets. In conjunction with certain 1996
         acquisitions, we determined that approximately $20 million of the
         acquired net operating losses would not be utilized for income tax
         purposes, and elected with our December 31, 1996 income tax returns to
         forego utilization of such acquired losses. Deferred tax assets were
         not recorded associated with the foregone losses and, accordingly, no
         valuation allowance was provided. We have not recorded a valuation
         allowance on the deferred tax assets as of June 30, 2003 based on
         management's belief that future reversals of existing taxable temporary
         differences and estimated future taxable income exclusive of reversing
         temporary differences and carryforwards, will, more likely than not, be
         sufficient to realize the benefit of these assets over time. In the
         event that actual results differ from these estimates or if our
         historical trends change, we may be required to record a valuation
         allowance on deferred tax assets, which could have a material adverse
         effect on our consolidated financial condition and results of
         operations.

Other significant accounting policies, not involving the same level of
measurement uncertainties as those discussed above, are nevertheless important
to an understanding of the financial statements. Polices related to revenue
recognition and financial instruments require difficult judgments on complex
matters that are often subject to multiple sources of authoritative guidance.
Certain of these matters, including but not limited to the requirement to
account for the market value of stock options as compensation expense, are among
topics currently under reexamination by accounting standards setters and
regulators. Although no specific conclusions reached by these standard setters
appear likely to cause a material change in our accounting policies, outcomes
cannot be predicted with confidence. A complete discussion of our significant
accounting policies can be found in Note 1 in the Notes to Consolidated
Financial Statements included in our December 31, 2002 Form 10-K. A condensed
discussion of our significant accounting policies can be found in Note 1 in the
accompanying Notes to Interim Condensed Consolidated Financial Statements.

Geographic Concentration and the Alaska Economy
We offer voice and data telecommunication and video services to customers
primarily throughout Alaska. Because of this geographic concentration, growth of
our business and of our operations depends upon economic conditions in Alaska.
The economy of Alaska is dependent upon the natural resource industries, and in
particular oil production, as well as investment earnings, tourism, government,
and United States military spending. Any deterioration in these markets could
have an adverse impact on us. In fiscal 2002 the State's actual results indicate
that Alaska's oil revenues and federal funding supplied 47% and 43%,


                                       50
<PAGE>
respectively, of the state's total revenues. All of the federal funding is
dedicated for specific purposes, leaving oil revenues as the primary funding
source of general operating expenditures. In fiscal 2003 state economists
forecast that Alaska's federal funding and oil revenues will supply 51% and 44%,
respectively, of the state's total projected revenues.

The volume of oil transported by the TransAlaska Oil Pipeline System over the
past 20 years has been as high as 2.0 million barrels per day in fiscal 1988.
Production has been declining over the last several years with an average of
1.003 million barrels produced per day in fiscal 2002. The state forecasts the
production of 0.994 million barrels per day in fiscal 2003, and a production
rate slightly above 1.0 million barrels per day starting in fiscal 2009. The
state attributes the production rate increase to future development of recent
discoveries in the National Petroleum Reserve Alaska and other new fields.

Market prices for North Slope oil averaged $21.78 in fiscal 2002 and are
forecasted to average $28.14 in fiscal 2003. State economists forecast the
average price of North Slope oil to decline to $25.28 in fiscal 2004. The
closing price per barrel was $30.31 on July 21, 2003. To the extent that actual
oil prices vary materially from the state's projected prices the state's
projected revenues and deficits will change. Every $1 change in the price of oil
results in a $50.0 to $60.0 million change in the state's revenue. The
production policy of the Organization of Petroleum Exporting Countries and its
ability to continue to act in concert represents a key uncertainty in the
state's revenue forecast.

The State of Alaska maintains the Constitutional Budget Reserve Fund that is
intended to fund budgetary shortfalls. If the state's current projections are
realized, the Constitutional Budget Reserve Fund will be depleted in 2006. The
date the Constitutional Budget Reserve Fund is depleted is highly influenced by
the price of oil. If the fund is depleted, aggressive state action will be
necessary to increase revenues and reduce spending in order to balance the
budget. The governor of the State of Alaska and the Alaska legislature continue
to pursue cost cutting and revenue enhancing measures. Through a combination of
revenue enhancements and reductions in spending the governor of the State of
Alaska and the State legislature approved a fiscal 2004 budget which is
projected to spend approximately $380 million of the Constitutional Budget
Reserve Fund.

In 2003 the Alaska Legislature passed and the Governor signed legislation that
extended the life of the RCA until 2007.

Tourism, air cargo, and service sectors have helped offset the prevailing
pattern of oil industry downsizing that has occurred during much of the last
several years. Funds from federal sources totaling $2.4 billion are expected to
be distributed to the State of Alaska for highways and other federally supported
projects in fiscal 2003.

Should new oil discoveries or developments not materialize or the price of oil
become depressed, the long term trend of continued decline in oil production
from the Prudhoe Bay area is inevitable with a corresponding adverse impact on
the economy of the state, in general, and on demand for telecommunications and
cable television services, and, therefore, on us, in particular. In the past
year, there has been a renewed effort to allow exploration and development in
the Arctic National Wildlife Refuge ("ANWR"). The U.S. Energy Information Agency
estimates it could take nine years to begin oil field drilling after approval of
ANWR exploration.

Deployment of a natural gas pipeline from the State of Alaska's North Slope to
the Lower 48 states has been proposed to supplement natural gas supplies. A
competing natural gas pipeline through Canada has also been proposed. The
economic viability of a natural gas pipeline depends upon the price of and
demand for natural gas. Either project could have a positive impact on the State
of Alaska's revenues and the Alaska economy. According to their public comments,
neither Exxon Mobil, BP nor Conoco Phillips, Alaska's large


                                       51
<PAGE>
natural gas owners, believe either natural gas pipeline makes financial sense
based upon their preliminary analysis, though BP and Conoco Phillips have
proposed certain federal income tax incentives that would take effect if the
price for Alaska natural gas goes below a certain level. The governor of the
State of Alaska and certain natural gas transportation companies continue to
support a natural gas pipeline from Alaska's North Slope by trying to reduce the
project's costs and by advocating for federal tax incentives to further reduce
the project's costs.

Development of the ballistic missile defense system project may have a
significant impact on Alaskan telecommunication requirements and the Alaska
economy. The proposed system would be a fixed, land-based, non-nuclear missile
defense system with a land and space based detection system capable of
responding to limited strategic ballistic missile threats to the United States.
The preferred alternative is deployment of a system with up to 100 ground-based
interceptor silos and battle management command and control facilities at Fort
Greely, Alaska.

The U.S. Army Corps of Engineers awarded a construction contract in 2002 for
test bed facilities. The contract is reported to contain basic requirements and
various options that could amount to $250 million in construction, or possibly
more, if all items are executed. Site preparation has been underway at Fort
Greely since August of 2001 and construction began on the Fort Greely test bed
shortly after the June 15, 2002 groundbreaking. The test bed is due to be
operational by September 30, 2004.

We have, since our entry into the telecommunication marketplace, aggressively
marketed our services to seek a larger share of the available market. The
customer base in Alaska is limited, however, with a population of approximately
644,000 people. The State of Alaska's population is distributed as follows:

     o   42% are located in the Municipality of Anchorage,
     o   13% are located in the Fairbanks North Star Borough,
     o   10% are located in the Matanuska-Susitna Borough,
     o   5% are located in the City and Borough of Juneau, and
     o   The remaining 30% are located in other communities across the State of
         Alaska.

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

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

Seasonality
Long-distance revenues (primarily those derived from our other common carrier
customers) have historically been highest in the summer months because of
temporary population increases attributable to tourism and increased seasonal
economic activity such as construction, commercial fishing, and oil and gas
activities. Cable television revenues, on the other hand, are higher in the
winter months because consumers spend more time at home and tend to watch more
television during these months. Local access and Internet services are not
expected to exhibit significant seasonality. Our ability to implement
construction projects is also hampered during the winter months because of cold
temperatures, snow and short daylight hours.

Inflation
We do not believe that inflation has a significant effect on our operations.


                                       52
<PAGE>
Schedule of Certain Known Contractual Obligations
The following table details future projected payments associated with our
certain known contractual obligations as of December 31, 2002, the date of our
most recent fiscal year-end balance sheet. Our schedule of certain known
contractual obligations has been updated to reflect the April 22, 2003 amendment
of our Senior Facility and to include certain purchase obligations.
<TABLE>
<CAPTION>
                                                               Payments Due by Period

                                                         Less than 1   1 to 3     4 to 5    More Than 5
                                                Total        Year       Years      Years       Years
                                            ------------ ----------- ---------- ----------- ------------
                                                               (Amounts in thousands)
   <S>                                     <C>              <C>        <C>         <C>         <C>
   Long-term debt                          $   357,700      15,000      47,000     295,700        ---
   Interest on long-term debt                   87,750      17,550      35,100      35,100        ---
   Capital lease obligations, including
     interest                                   68,943       5,115      19,845      18,536     25,447
   Operating lease commitments                  67,673      11,780      18,607      12,878     24,408
   Purchase obligations                         39,136      21,549      17,587         ---        ---
                                            ------------ ----------- ---------- ----------- ------------
     Total contractual obligations         $   621,202      70,994     138,139     362,214     49,855
                                            ============ =========== ========== =========== ============
</TABLE>
Purchase obligations include our fiber optic cable system construction
commitment of $35.4 million as further described in note 6 to the Notes to
Interim Condensed Consolidated Financial Statements included in Part I, Item 1
of this report. The contract associated with this commitment is non-cancelable.

For long-term debt included in the above table, we have included principal
payments on our Senior Facility and on our Senior Notes. Interest on amounts
outstanding under our Senior Facility is based on variable rates and therefore
the amount is not determinable. Our Senior Notes require semi-annual interest
payments of approximately $8.78 million through 2007. For a discussion of our
long-term debt, see note 6 to the Notes to Consolidated Financial Statements
included in Part II of our December 31, 2002 Form 10-K.

For a discussion of our capital and operating leases, see note 12 to the Notes
to Consolidated Financial Statements included in Part II of our December 31,
2002 Form 10-K.

Audit Committee
GCI's Audit Committee, composed entirely of independent directors, meets
periodically with our independent auditors and management to review the
Company's financial statements and the results of audit activities. The Audit
Committee, in turn, reports to the GCI Board of Directors on the results of its
review and recommends the selection of independent auditors.

The Audit Committee has approved the independent auditor to provide the
following services:

     o   Audit (audit of financial statements filed with the SEC, quarterly
         reviews, comfort letters, consents, review of registration statements,
         accounting consultations); and

     o   Audit-related (employee benefit plan audits and accounting consultation
         on proposed transactions).


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

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


                                       53
<PAGE>
Our Senior Facility carries interest rate risk. Amounts borrowed under this
Agreement bear interest at Libor plus 6.5%. Should the Libor rate change, our
interest expense will increase or decrease accordingly. On September 21, 2001,
we entered into an interest rate swap agreement to convert $25.0 million of
variable interest rate debt to 3.98% fixed rate debt plus applicable margin. As
of June 30, 2003, we have borrowed $175.0 million of which $150.0 million is
subject to interest rate risk. On this amount, a 1% increase in the interest
rate would cost us $1,500,000 in additional gross interest cost on an annualized
basis.

Our Satellite Transponder Capital Lease carries interest rate risk. Amounts
borrowed under this Agreement bear interest at Libor plus 3.25%. Should the
Libor rate change, our interest expense will increase or decrease accordingly.
As of June 30, 2003, we have borrowed $44.2 million subject to interest rate
risk. On this amount, a 1% increase in the interest rate would cost us $442,000
in additional gross interest cost on an annualized basis.

PART I.
ITEM 4.
                             Controls and Procedures

Evaluation of disclosure controls and procedures
Within the 90 days prior to the date of this report, we carried out an
evaluation of the effectiveness of the design and operation of our "disclosure
controls and procedures" (as defined in the Securities Exchange Act of 1934
("Exchange Act") Rules 13a-14(c) and 15d-14(c)) under the supervision and with
the participation of our management, including our Chief Executive Officer and
our Chief Financial Officer. Based upon that evaluation, our Chief Executive
Officer and our Chief Financial Officer concluded that our disclosure controls
and procedures are effective.

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

Changes in Internal Controls
There were no significant changes in our internal controls or, to our knowledge,
in other factors that could significantly affect our disclosure controls and
procedures subsequent to the date we carried out this evaluation.

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

PART II.   OTHER INFORMATION
ITEM 1.    LEGAL PROCEEDINGS

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


                                       54
<PAGE>
PART II.
ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K

           (a) Exhibits -
<TABLE>
<CAPTION>
                       Exhibit No.                                        Description
                    --------------------------------------------------------------------------------------------------------
                        <S>           <C>
                        10.108        Bonus Agreement between General Communication, Inc. and Wilson Hughes
                        10.109        Eighth Amendment to Contract for Alaska Access Services between General
                                        Communication, Inc. and its wholly owned subsidiary GCI Communication Corp., and
                                        MCI WorldCom Network Services, Inc. *
                        10.110        Settlement and Release Agreement between General Communication, Inc. and WorldCom,
                                        Inc.
                        99.36         Certifications Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section
                                        906 of the Sarbanes-Oxley Act of 2002
                     -------------------------
                          *           Certain information has been redacted from
                                        this document which we desire to keep
                                        undisclosed.
                      -------------------------
</TABLE>

           (b) Reports on Form 8-K filed during the quarter ended June 30,
               2003 - None


                                       55
<PAGE>
                                   SIGNATURES


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



                                            GCI, INC.

<TABLE>
<CAPTION>
                 Signature                                     Title                              Date
--------------------------------------      ----------------------------------------      ----------------------
<S>                                         <C>                                               <C>
/s/ Ronald A. Duncan                        President and Director                            August 6, 2003
--------------------------------------      (Principal Executive Officer)                 ----------------------
Ronald A. Duncan

/s/ G. Wilson Hughes                        Vice President and Director                       August 6, 2003
--------------------------------------                                                    ----------------------
G. Wilson Hughes

/s/ John M. Lowber                          Secretary, Treasurer and Director                 August 6, 2003
--------------------------------------      (Principal Financial and Accounting           ----------------------
John M. Lowber                              Officer)
</TABLE>


                                       56
<PAGE>
                            SECTION 302 CERTIFICATION

I, Ronald A. Duncan, certify that:

1.  I have reviewed this report on Form 10-Q of GCI, Inc.;

2.  Based on my knowledge, this report does not contain any untrue statement of
    a material fact or omit to state a material fact necessary to make the
    statements made, in light of the circumstances under which such statements
    were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial
    information included in this quarterly report, fairly present in all
    material respects the financial condition, results of operations and cash
    flows of the registrant as of, and for, the periods presented in this
    report;

4.  The registrant's other certifying officer and I are responsible for
    establishing and maintaining disclosure controls and procedures (as defined
    in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we
    have:

         a)  Designed such disclosure controls and procedures, or caused such
             disclosure controls and procedures to be designed under our
             supervision, to ensure that material information relating to the
             registrant, including its consolidated subsidiaries, is made known
             to us by others within those entities, particularly during the
             period in which this report is being prepared;

         b)  Evaluated the effectiveness of the registrant's disclosure controls
             and procedures and presented in this report our conclusions about
             the effectiveness of the disclosure controls and procedures, as of
             the end of the period covered by this report based on such
             evaluation; and

         c)  Disclosed in this report any change in the registrant's internal
             control over financial reporting that occurred during the
             registrant's most recent fiscal quarter that has materially
             affected, or is reasonably likely to materially affect, the
             registrant's internal control over financial reporting; and

5.  The Registrant's other certifying officer and I have disclosed, based on our
    most recent evaluation of internal control over financial reporting, to the
    registrant's auditors and the audit committee of the registrant's board of
    directors (or persons performing the equivalent functions):

         a)  All significant deficiencies and material weaknesses in the design
             or operation of internal control over financial reporting which are
             reasonably likely to adversely affect the registrant's ability to
             record, process, summarize and report financial information; and

         b)  Any fraud, whether or not material, that involves management or
             other employees who have a significant role in the registrant's
             internal control over financial reporting.


Date:  August 6, 2003                  /s/ Ronald A. Duncan
                                       Ronald A. Duncan
                                       President and Director
                                       (Chief Executive Officer)


                                       57
<PAGE>
I, John M. Lowber, certify that:

1.  I have reviewed this report on Form 10-Q of GCI, Inc.;

2.  Based on my knowledge, this report does not contain any untrue statement of
    a material fact or omit to state a material fact necessary to make the
    statements made, in light of the circumstances under which such statements
    were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial
    information included in this quarterly report, fairly present in all
    material respects the financial condition, results of operations and cash
    flows of the registrant as of, and for, the periods presented in this
    report;

4.  The registrant's other certifying officer and I are responsible for
    establishing and maintaining disclosure controls and procedures (as defined
    in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we
    have:

         a)  Designed such disclosure controls and procedures, or caused such
             disclosure controls and procedures to be designed under our
             supervision, to ensure that material information relating to the
             registrant, including its consolidated subsidiaries, is made known
             to us by others within those entities, particularly during the
             period in which this report is being prepared;

         b)  Evaluated the effectiveness of the registrant's disclosure controls
             and procedures and presented in this report our conclusions about
             the effectiveness of the disclosure controls and procedures, as of
             the end of the period covered by this report based on such
             evaluation; and

         c)  Disclosed in this report any change in the registrant's internal
             control over financial reporting that occurred during the
             registrant's most recent fiscal quarter that has materially
             affected, or is reasonably likely to materially affect, the
             registrant's internal control over financial reporting; and

5.  The Registrant's other certifying officer and I have disclosed, based on our
    most recent evaluation of internal control over financial reporting, to the
    registrant's auditors and the audit committee of the registrant's board of
    directors (or persons performing the equivalent functions):

         a)  All significant deficiencies and material weaknesses in the design
             or operation of internal control over financial reporting which are
             reasonably likely to adversely affect the registrant's ability to
             record, process, summarize and report financial information; and

         b)  Any fraud, whether or not material, that involves management or
             other employees who have a significant role in the registrant's
             internal control over financial reporting.


Date:  August 6, 2003                  /s/ John M. Lowber
                                       John M. Lowber
                                       Secretary, Treasurer and Director
                                       (Principal Financial Officer)


                                       58