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FORM 10-K
UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549
(X) ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
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. 0-15279
GENERAL COMMUNICATION, INC.

(Exact name of registrant as specified in its charter)
ALASKA 92-0072737

(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
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Class A common stock Class B common stock

(Title of class) (Title of class)
Indicate by check mark whether the registrant (1) 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, and (2) has been subject to such filing requirements

for the past 90 days. Yes X No .
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405

of Regulation S-K is not contained herein, and will not be contained, to the

best of registrant's knowledge, in definitive proxy or information statements

incorporated by reference in Part III of this Form 10-K or any amendment to this

Form 10-K. [X]
The aggregate market value of the voting stock held by non-affiliates of the

registrant, computed by reference to the average bid and asked prices of such

stock as of the close of trading on February 28, 2000 was approximately

$215,690,967.
The number of shares outstanding of the registrant's common stock

as of February 29, 2000, was:
Class A common stock - 47,395,894 shares; and

Class B common stock - 3,909,014 shares.
DOCUMENTS INCORPORATED BY REFERENCE

Certain portions of the registrant's definitive Proxy Statement to be filed

pursuant to Regulation 14A of the Securities Exchange Act of 1934, as amended,

in connection with the Annual Meeting of Stockholders of the registrant to be

held on June 8, 2000 are incorporated by reference into Part III of this report.

1

GENERAL COMMUNICATION, INC.

1999 ANNUAL REPORT ON FORM 10-K

TABLE OF CONTENTS
Page

----
Glossary................................................................................................................3
Cautionary statement regarding forward-looking statements...............................................................9


Part I.................................................................................................................11


Item 1. Business...................................................................................................11

General...........................................................................................................11

Financial information about industry segments.....................................................................11

Historical development of our business during the past fiscal year................................................11

Narrative description of our business.............................................................................15

Environmental regulations.........................................................................................32

Patents, trademarks, licenses, certificates of public convenience and necessity, and military franchises..........32

Regulation, franchise authorizations and tariffs..................................................................33

Financial information about our foreign and domestic operations and export sales..................................44

Seasonality.......................................................................................................44

Customer-sponsored research.......................................................................................44

Backlog of orders and inventory...................................................................................44

Geographic concentration and alaska economy.......................................................................44

Employees.........................................................................................................46

Other.............................................................................................................47



Item 2. Properties................................................................................................47



Item 3. Legal proceedings.........................................................................................49



Item 4. Submission of matters to a vote of security holders.......................................................49


Part II................................................................................................................50


Item 5. Market for the registrant's common equity and related stockholder matters..................................50



Item 6. Selected financial data....................................................................................51



Item 7. Management's discussion and analysis of financial condition and results of operations......................52



Item 7a. Quantitative and qualitative disclosures about market risk.................................................67



Item 8. Consolidated financial statements and supplementary data...................................................68



Item 9. Changes in and disagreements with accountants on accounting and financial disclosure.......................68


Part III...............................................................................................................68
Part IV...............................................................................................................101

Item 14. Exhibits, consolidated financial statement schedules, and reports on form 8-k............................101
This Annual Report on Form 10-K is for the year ending December 31, 1999. This

Annual Report modifies and supersedes documents filed prior to this Annual

Report. The SEC allows us to "incorporate by reference" information that we file

with them, which means that we can disclose important information to you by

referring you directly to those documents. Information incorporated by reference

is considered to be part of this Annual Report. In addition, information that we

file with the SEC in the future will automatically update and supersede

information contained in this Annual Report.


2
GLOSSARY
ACCESS CHARGES -- Expenses incurred by an IXC and paid to LECs for accessing the

local networks of the LECs in order to originate and terminate long-distance

calls and provide the customer connection for private line services.
ALASKA UNITED -- Alaska United Fiber System Partnership -- a Alaska partnership

wholly owned by The Company. Alaska United was organized to construct and

operate a new fiber optic cable connecting various locations in Alaska and the

lower 49 states and foreign countries through Seattle, Washington.
ATM -- Asynchronous Transfer Mode -- An international ISDN high-speed,

high-volume, packet switching transmission protocol standard. ATM uses short,

uniform, 53-byte cells to divide data into efficient, manageable packets for

very fast switching through a high-performance communications network. The

53-byte cells contain 5-byte destination address headers and 48 data bytes. ATM

is the first packet-switched technology designed from the ground up to support

integrated voice, video, and data communication applications. It is well suited

to high-speed WAN transmission bursts. ATM currently accommodates transmission

speeds from 64 kbps to 622 mbps. ATM may support gigabit speeds in the future.
BASIC SERVICE -- The basic service tier includes, at a minimum, all signals of

domestic television broadcast stations provided to any subscriber, any public,

educational, and governmental programming required by the franchise to be

carried on the basic tier, and any additional video programming service added to

the basic tier by the cable operator.
BOC -- BELL SYSTEM OPERATING COMPANY -- A LEC owned by any of the remaining five

Regional Bell Operating Companies, which are holding companies established

following the AT&T Divestiture Decree to serve as parent companies for the BOCs.
BACKBONE -- A centralized high-speed network that interconnects smaller,

independent networks.
BANDWIDTH -- The number of bits of information that can move through a

communications medium in a given amount of time.
BRI -- Basic Rate Interface -- An ISDN offering that allows two 64 kbps "B"

channels and one 16 kbps "D" channel to be carried over one typical single pair

of copper wires. This is the type of service that would be used to connect a

small branch or home office to a remote network. Through the use of Bonding

(bandwidth on Demand) the two 64 kbps channels can be combined to create more

bandwidth as it becomes necessary. For data services such as Internet access,

these channels can be bonded together to provide 2B+D transmission at a rate of

128 kbps. New technology increases the bandwidth of ISDN BRI connections to 230

kbps.
BROADBAND -- A high-capacity communications circuit/path, usually implying a

speed greater than 1.544 mbps.
CAP -- Competitive Access Provider -- A company that provides its customers with

an alternative to the LEC for local transport of private line and special access

telecommunications services.
CENTRAL OFFICES -- The switching centers or central switching facilities of the

LECs.
CLEC -- Competitive Local Exchange Carrier. -- A company that provides its

customers with an alternative to the ILEC for local transport of

telecommunications services, as allowed under the 1996 Telecom Act.
CO-CARRIER STATUS -- A regulatory scheme under which the incumbent LEC is

required to integrate new, competing providers of local exchange service, into

the systems of traffic exchange, inter-carrier compensation, and other

inter-carrier relationships that already exist among LECs in most jurisdictions.


3
COLLOCATION -- The ability of a CAP to connect its network to the LEC's central

offices. Physical collocation occurs when a CAP places its network connection

equipment inside the LEC's central offices. Virtual collocation is an

alternative to physical collocation pursuant to which the LEC permits a CAP to

connect its network to the LEC's central offices on comparable terms, even

though the CAP's network connection equipment is not physically located inside

the central offices.
THE COMPANY -- GCI and its direct and indirect subsidiaries, also referred to as

"we," "us" and "our."
COMPRESSION / DECOMPRESSION -- A method of encoding/decoding signals that allows

transmission (or storage) of more information than the media would otherwise be

able to support. Both compression and decompression require processing capacity,

but with many products, the time is not noticeable.
CPS -- a Cable Programming Service -- (also known as CPST, Cable Programming

Service Tier). CPS includes any video programming provided over a cable system,

regardless of service tier, including installation or rental of equipment used

for the receipt of such video programming, other than (1) video programming

carried on the basic service tier, (2) video programming offered on a

pay-per-channel or pay-per-programming basis, or (3) a combination of multiple

channels of pay-per-channel or pay-per-programming basis so long as the combined

service consists of commonly-identified video programming and is not bundled

with any regulated tier of service.
DAMA -- Demand Assigned Multiple Access -- The Company's digital satellite earth

station technology that allow calls to be made between remote villages using

only one satellite hop thereby reducing satellite delay and capacity

requirements while improving quality.
DARK FIBER -- An inactive fiber-optic strand without electronics or optronics.

Dark fiber is not connected to transmitters, receivers and regenerators.
DBS -- Direct Broadcast Satellite -- Subscription television service obtained

from satellite transmissions using frequency bands that are internationally

allocated to the broadcast satellite services. Direct-to-home service such as

DBS has its origins in the large direct-to-home satellite antennas that were

first introduced in the 1970's for the reception of video programming

transmitted via satellite. Because these first-generation direct-to-home

satellites operated in the C-band frequencies at low power, direct-to-home

satellite antennas, or dishes, as they are also known, generally needed to be

seven to ten feet in diameter in order to receive the signals being transmitted.

More recently, licensees have been using the Ku and extended Ku-bands to provide

direct-to-home services enabling subscribers to use a receiving home satellite

dish less than one meter in diameter.
DS-3 -- A data communications circuit that is equivalent to 28 multiplexed T-1

channels capable of transmitting data at 44.736 mbps (sometimes called a T-3).
DEDICATED -- Telecommunications lines dedicated or reserved for use by

particular customers.
DIGITAL -- A method of storing, processing and transmitting information through

the use of distinct electronic or optical pulses that represent the binary

digits 0 and 1. Digital transmission and switching technologies employ a

sequence of these pulses to represent information as opposed to the continuously

variable analog signal. The precise digital numbers minimize distortion (such as

graininess or snow in the case of video transmission, or static or other

background distortion in the case of audio transmission).
DLC -- Digital Loop Carrier -- A digital transmission system designed for

subscriber loop plant. Multiplexes a plurality of circuits onto very few wires

or onto a single fiber pair.
EQUAL ACCESS -- Connection provided by a LEC permitting a customer to be

automatically connected to the IXC of the customer's choice when the customer

dials "1". Also refers to a generic concept under which the BOCs must provide

access services to AT&T's competitors that are equivalent to those provided to

AT&T.
FCC -- Federal Communications Commission -- A federal regulatory body empowered

to establish and enforce rules and regulations governing public utility

companies and others, such as the Company.


4
FRAME RELAY -- A wideband (64 kilobits per second to 1.544 mbps) packet-based

data interface standard that transmits bursts of data over WANs. Frame-relay

packets vary in length from 7 to 1024 bytes. Data oriented, it is generally not

used for voice or video.
FTC -- Federal Trade Commission -- A federal regulatory body empowered to

establish and enforce rules and regulations governing companies involved in

trade and commerce.
GCC -- GCI Communication Corp., an Alaska corporation and a wholly owned

subsidiary of Holdings.
GCI -- General Communication, Inc., an Alaska corporation and the Registrant.
GCI, Inc. -- a wholly owned subsidiary of GCI, an Alaska corporation and issuer

of $180 million of publicly traded bonds.
HOLDINGS -- a wholly owned subsidiary of GCI, Inc., an Alaska corporation and

party to The Company's Senior Holdings Loan.
HSD -- Home Satellite Dish - see DBS.
INBOUND "800" or "888" Service -- A service that assesses long-distance

telephone charges to the called party.
ILEC -- Incumbent Local Exchange Carrier -- with respect to an area, the LEC

that -- (A) on the date of enactment of the Telecommunications Act of 1996,

provided telephone exchange service in such area; and (B)(i) on such date of

enactment, was deemed to be a member of the exchange carrier association

pursuant to section 69.601(b) of the FCC's regulations (47 C.F.R. 69.601(b)); or

(ii) is a person or entity that, on or after such date of enactment, became a

successor or assign of a member described in clause (i).
INTEREXCHANGE -- Communication between two different LATAs.
ISDN -- Integrated Services Digital Network -- A set of standards for

transmission of simultaneous voice, data and video information over fewer

channels than would otherwise be needed, through the use of out-of-band

signalling. The most common ISDN system provides one data and two voice circuits

over a traditional copper wire pair, but can represent as many as 30 channels.

Broadband ISDN extends the ISDN capabilities to services in the Gigabit range.

(See BRI and PRI)
ISP -- Internet Service Provider -- a company providing retail and/or wholesale

Internet services.
INTERNET -- A global collection of interconnected computer networks which use

TCP/IP, a common communications protocol.
IXC -- Interexchange Carrier -- A long-distance carrier providing services

between local exchanges.
LAN -- Local Area Network -- The interconnection of computers for the purpose of

sharing files, programs and various devices such as printers and high-speed

modems. LANs may include dedicated computers or file servers that provide a

centralized source of shared files and programs.
LATA -- Local Access And Transport Area -- The approximately 200 geographic

areas defined pursuant to the AT&T Divestiture Decree. The BOCs are generally

prohibited from providing long-distance service between the LATA in which they

provide local exchange services, and any other LATA.
LEC -- Local Exchange Carrier -- A company providing local telephone services.

Each BOC is a LEC.
LINE COSTS -- Primarily includes the sum of access charges and transport

charges.
LMDS -- Local Multipoint Distribution System -- LMDS uses microwave signals

(millimeterwave signals) in the 28 GHz spectrum to transmit voice, video, and

data signals within small cells 3-10 miles in diame-

5
ter. LMDS allows license holders to control up to 1.3 GHz of wireless spectrum

in the 28 GHz Ka-band. The 1.3 GHz can be used to carry digital data at speeds

in excess of one gigabit per second. LMDS uses a specific band in the microwave

spectrum, known as millimeter waves or the 28 GHz "Ka-band." More tangibly, if

LMDS were used on a point-to-point basis the beam would be about as wide as a

pencil lead (about a millimeter) and would have a frequency of approximately 28

billion cycles per second. The extremely high frequency used and the need for

point to multipoint transmissions limits the distance that a receiver can be

from a transmitter. This means that LMDS will be a "cellular" technology, based

on multiple, contiguous, or overlapping cells. LMDS is expected to provide

customers with multichannel video programming, telephony, video communications,

and two-way data services. Incumbent LECs and cable companies may not obtain the

in-region 1150 MHz license for three years. Within 10 years, licenses will be

required to provide 'substantial service' in their service regions.
LOCAL EXCHANGE -- A geographic area generally determined by a PUC, in which

calls generally are transmitted without toll charges to the calling or called

party.
LOCAL NUMBER PORTABILITY -- The ability of an end user to change Local Exchange

Carriers while retaining the same telephone number.
LOWER 48 STATES or LOWER 48 -- refers to the 48 contiguous states south of or

below Alaska.
LOWER 49 STATES OR LOWER 49 -- refers to Hawaii and the 48 contiguous states

south of or below Alaska.
MAN -- Metropolitan Area Network -- LANs interconnected within roughly a 50-mile

radius. MANs typically use fiber optic cable to connect various wire LANs.

Transmission speeds may vary from 2 to 100 Mbps.
MDU -- Multiple Dwelling Unit -- MDUs include multiple-family buildings, such as

apartment and condominium complexes.
MMDS -- Multichannel Multipoint Distribution Service - also known as wireless

cable. The FCC established the Multipoint Distribution Service (MDS) in 1972.

Originally the Commission thought MDS would be used primarily to transmit

business data. However, the service became increasingly popular in transmitting

entertainment programming. Unlike conventional broadcast stations whose

transmissions are received universally, MDS programming is designed to reach

only a subscriber based audience. In 1983 the Commission reassigned eight

channels from the Instructional Television Fixed Service (ITFS) to MDS. These

eight channels make up the MMDS. Frequently, MDS and MMDS channels are used in

combination with ITFS channels to provide video entertainment programming to

subscribers.
NARROWBAND -- A voice grade low-capacity communications circuit/path. It usually

implies a speed of 56 kilobits per second or less.
NETWORK SWITCHING CENTER -- A location where installed switching equipment

routes long-distance calls and records information with respect to calls such as

the length of the call and the telephone numbers of the calling and called

parties.
NETWORK SYSTEMS INTEGRATION -- Involves the creation of turnkey

telecommunications networks and systems including: (i) route and site selection;

(ii) rights of way and legal authorizations and/or acquisition; (iii) design and

engineering of the system, including technology and vendor assessment and

selection, determining fiber optic circuit capacity, and establishing

reliability/flexibility standards; and (iv) project and construction management,

including contract negotiations, purchasing and logistics, installation as well

as testing.
NPT -- a New Product Tier -- a cable programming service tier offered to

subscribers at prices set by the cable operator.
OCC -- Other Common Carrier -- A long-distance carrier other than the Company.


6
PCS -- Personal Communication Services -- PCS encompasses a range of advanced

wireless mobile technologies and services. It promises to permit communications

to anyone, anyplace and anytime while on the move. The Cellular

Telecommunications Industry Association (CTIA) defines PCS as a "wide range of

wireless mobile technologies, chiefly cellular, paging, cordless, voice,

personal communications networks, mobile data, wireless PBX, specialized mobile

radio, and satellite-based systems." The FCC defines PCS as a "family of mobile

or portable radio communications services that encompasses mobile and ancillary

fixed communications services to individuals and businesses and can be

integrated with a variety of competing networks."
PBX -- Private Branch Exchange -- A customer premise communication switch used

to connect customer telephones (and related equipment) to LEC central office

lines (trunks), and to switch internal calls within the customer's telephone

system. Modern PBXs offer numerous software-controlled features such as call

forwarding and call pickup. A PBX uses technology similar to that used by a

central office switch (on a smaller scale). (The acronym PBX originally stood

for "Plug Board Exchange.")
POP -- Point of Presence -- The physical access location interface between a LEC

and a IXC network. The point to which the telephone company terminates a

subscriber's circuit for long-distance service or leased line communications.
PRI -- Primary Rate Interface -- An ISDN circuit transmitting at T1 (DS-1) speed

(equivalent to 24 voice-grade channels). One of the channels ("D") is used for

signaling, leaving 23 ("B") channels for data and voice communication.
PRIVATE LINE -- Uses dedicated circuits to connect customer's equipment at both

ends of the line. Does not provide any switching capability (unless supported by

customer premise equipment). Usually includes two local loops and an IXC

circuit.
PRIVATE NETWORK -- A communications network with restricted (controlled) access

usually made up of private lines (with some PBX switching).
PUBLIC SWITCHED NETWORK -- That portion of a LEC's network available to all

users generally on a shared basis (i.e., not dedicated to a particular user).

Traffic along the public switched network is generally switched at the LEC's

central offices.
RBOC -- Regional Bell Operating Company -- Any of the remaining five regional

Bell holding companies which the AT&T Divestiture Decree established to serve as

parent companies for the BOCs.
RCA -- REGULATORY COMMISSION OF ALASKA -- A state regulatory body empowered to

establish and enforce rules and regulations governing public utility companies

and others, such as The Company, within the state of Alaska (sometimes referred

to as Public Service Commissions, or PSCs, or Public Utility Commissions, or

PUCs). Previously known as the Alaska Public Utilities Commission (APUC).
RECIPROCAL COMPENSATION -- The same compensation of a new CLEC for termination

of a local call by the BOC on its network, as the new competitor pays the BOC

for termination of local calls on the BOC network.
SCHOOLACCESS(TM) -- The Company's Internet and related services offering to

schools in Alaska. The federal mandate through the 1996 Telecom Act to provide

universal service resulted in schools across Alaska qualifying for varying

levels of discounts to support the provision of Internet services. The Universal

Service Administrative Company through its Schools and Libraries Division

administers this federal program.
SDN -- Software Defined Network -- A switched long-distance service for very

large users with multiple locations. Instead of putting together their own

network, large users can get special usage rates for calls carried on regular

switched long-distance lines.
SECURITIES REFORM ACT - The Private Securities Litigation Reform Act of 1995.


7
SENIOR HOLDINGS LOAN -- Holding's $150,000,000 and $50,000,000 credit

facilities. You should see note 5(b) to the accompanying Notes to Consolidated

Financial Statements included in Part II of this Report for more information.
SETTLEMENT RATES -- The rates paid to foreign carriers by United States

international carriers to terminate outbound (from the United States) switched

traffic and by foreign carriers to United States international carriers to

terminate inbound (to the United States) switched traffic.
SLC -- Subscriber Line Charge -- A charge for the telephone line that connects a

local telephone company to the subscriber's telephone system or medium.
SMATV -- Satellite Master Antenna Television -- (also known as "private cable

systems") are multichannel video programming distribution systems that serve

residential, multiple-dwelling units ("MDUs"), and various other buildings and

complexes. A SMATV system typically offers the same type of programming as a

cable system, and the operation of a SMATV system largely resembles that of a

cable system -- a satellite dish receives the programming signals, equipment

processes the signals, and wires distribute the programming to individual

dwelling units. The primary difference between the two is that a SMATV system

typically is an unfranchised, stand-alone system that serves a single building

or complex, or a small number of buildings or complexes in relatively close

proximity to each other.
SONET -- Synchronous Optical Network -- A 1984 standard for optical fiber

transmission on the public network. 52 mbps to 13.22 Gigabits per second,

effective for ISDN services including ATM.
TCP/IP -- Transmission Control Protocol/Internet Protocol -- A suite of network

protocols that allows computers with different architectures and operating

system software to communicate with other computers on the Internet.
T-1 -- A data communications circuit capable of transmitting data at 1.5 mbps.
TARIFF -- The schedule of rates and regulations set by communications common

carriers and filed with the appropriate federal and state regulatory agencies;

the published official list of charges, terms and conditions governing provision

of a specific communications service or facility, which functions in lieu of a

contract between the subscriber or user and the supplier or carrier.
TOKEN RING -- A local area network technology used to interconnect personal

computers, file servers, printers, and other devices. Token Ring LANs typically

operate at either 4 mbps or 16 mbps.
TRANSPORT CHARGES -- Expenses paid to facilities-based carriers for transmission

between or within LATAs.
TRS SERVICES -- Telecommunications Relay Services -- Enables telephone

conversations between people with and without hearing or speech disabilities.

TRS relies on communications assistants ("CA") to relay the content of calls

between users of text telephones ("TTYs") and users of traditional handsets

(voice users). For example, a TTY user may telephone a voice user by calling a

TRS provider where a CA will place the call to the voice user and relay the

conversation by transcribing spoken content for the TTY user and reading text

aloud for the voice user.
WAN -- Wide Area Network - A remote computer communications system. WANs allow

file sharing among geographically distributed workgroups (typically at higher

cost and slower speed than LANs or MANs). WANs typically use common carriers'

circuits and networks. WANs may serve as a customized communication backbone

that interconnects all of an organization's local networks with communications

trunks that are designed to be appropriate for anticipated communication rates

and volumes between nodes.
WORLD WIDE WEB or WEB -- A collection of computer systems supporting a

communications protocol that permits multi-media presentation of information

over the Internet.
1984 CABLE ACT -- The Cable Communications Policy Act of 1984.


8
1992 CABLE ACT -- The Cable Television Consumer Protection and Competition Act

of 1992.
1996 TELECOM ACT -- The Telecommunications Act of 1996 - The 1996 Telecom Act

was signed into law February 8, 1996. Under its provisions, BOCs were allowed to

immediately begin manufacturing, research and development; GTE Corp. could begin

providing interexchange services through its telephone companies nationwide;

laws in 27 states that foreclosed competition were knocked down; co-carrier

status for CLECs was ratified; and the physical collocation of competitors'

facilities in LECs central offices was allowed.
The legislation breaks down the old barriers that prevented three groups of

companies, the LECs, including the BOCs, the long-distance carriers, and the

cable TV operators, from competing head-to-head with each other. The Act

requires LECs to let new competitors into their business. It also requires the

LECs to open up their networks to ensure that new market entrants have a fair

chance of competing. The bulk of the legislation is devoted to establishing the

terms under which the LECs, and more specifically the BOCs, must open up their

networks.
The 1996 Telecom Act substantially changed the competitive and regulatory

environment for telecommunications providers by significantly amending the

Communications Act including certain of the rate regulation provisions

previously imposed by the Cable Television Consumer Protection and Competition

Act of 1992 (the "1992 Cable Act"). The 1996 Telecom Act eliminated rate

regulation of the cable programming service tier in 1999. Further, the

regulatory environment will continue to change pending, among other things, the

outcome of legal challenges and FCC rulemaking and enforcement activity in

respect of the 1992 Cable Act and the completion of a significant number of FCC

rulemakings under the 1996 Telecom Act.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
You should carefully review the information contained in this Annual Report, but

should particularly consider any risk factors that we set forth in this Annual

Report and in other reports or documents that we file from time to time with the

SEC. In this Annual Report, in addition to historical information, we state 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," or "continue"

or the negative of those words and other comparable words. You should be aware

that those statements are only our predictions and are subject to risks and

uncertainties. Actual events or results may differ materially. 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.
- Material adverse changes in the economic conditions in the markets we

serve;

- The efficacy of the rules and regulations to be adopted by the 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;

- 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 local, cable and Internet services; the extent and pace at which

different competitive environments develop for each segment of our

business; the extent and duration for which competitors from each segment

of the telecommunications industry are able to offer combined or full

service packages prior to our being able to do so; the degree to which we

experience material competitive impacts to our traditional service

offerings prior to achieving adequate local service entry; and competitor

responses to our products and services and overall market acceptance of

such products and services;

- The outcome of our negotiations with ILECs and state regulatory

arbitrations and approvals with respect to interconnection agreements; and

our ability to purchase unbundled network

9
elements or wholesale services from ILECs at a price sufficient to permit

the profitable offering of local exchange service at competitive rates;

- Success and market acceptance for new initiatives, many of which are

untested; the level and timing of the growth and profitability of new

initiatives, particularly local access services, Internet (consumer and

business) services and wireless services; start-up costs associated with

entering new markets, including advertising and promotional efforts;

successful deployment of new systems and applications to support new

initiatives; and local conditions and obstacles;

- Uncertainties inherent in new business strategies, new product launches

and development plans, including local access services, Internet services,

wireless services, digital video services, cable modem services, and

transmission services;

- Rapid technological changes;

- Development and financing of telecommunication, local access, wireless,

Internet and cable networks and services;

- 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;

- Availability of qualified personnel;

- Changes in, or failure, or inability, to comply with, government

regulations, including, without limitation, regulations of the FCC, the

RCA, and adverse outcomes from regulatory proceedings;

- The remaining cost of our year 2000 compliance efforts;

- Uncertainties in federal military spending levels and military base

closures in markets in which we operate;

- Other risks detailed from time to time in our periodic reports filed with

the Securities and Exchange Commission.
These forward-looking statements (and such risks, uncertainties and other

factors) are made only as of the date of this report and we expressly disclaim

any obligation or undertaking to disseminate any updates or revisions to any

forward-looking statement contained in this document 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. Readers are

cautioned not to put undue reliance on such forward-looking statements.

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