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

                                    FORM 10-K


          (X) ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
                 SECURITIES EXCHANGE ACT OF 1934 (Fee Required)
                   For the fiscal year ended December 31, 1995

                                       or

          ( ) TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
                     SECURITIES EXCHANGE ACT OF 1934 (No Fee Required) 

                        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)

       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  29,  1996  was  approximately
$38,439,000.

The number of shares outstanding of the registrant's common stock as of February
29, 1996, was:
                 Class A common stock - 19,681,207 shares; and
                    Class B common stock - 4,175,434 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 or after June 5, 1996 are  incorporated  by  reference  into Part III of
this report.

<PAGE>
                           GENERAL COMMUNICATION, INC.

                         1995 ANNUAL REPORT ON FORM 10-K

                                TABLE OF CONTENTS


                                                                            PAGE

PART I.........................................................................1

     Item 1.    BUSINESS.......................................................1

     Item 2.    PROPERTIES....................................................13

     Item 3.    LEGAL PROCEEDINGS.............................................14

     Item 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS...........14

PART II.......................................................................15


     Item 5.    MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED 
                STOCKHOLDER MATTERS...........................................15

     Item 6.    SELECTED FINANCIAL DATA.......................................16

     Item 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                CONDITION AND RESULTS OF OPERATIONS...........................17

     Item 8.    CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY
                DATA..........................................................22

     Item 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
                ACCOUNTING AND FINANCIAL DISCLOSURE...........................45


PART III

     Incorporated by reference from the Company's Proxy Statement for its 
     1996 Annual Shareholders' Meeting

PART IV.......................................................................46

     Item 14.   EXHIBITS, CONSOLIDATED FINANCIAL STATEMENT SCHEDULES,
                AND REPORTS ON FORM 8-K.......................................46

<PAGE>

                                     PART I


Item 1.  BUSINESS

Background and Description of Business

     General  Communication,  Inc.  ("GCI") is an Alaska-based  corporation that
supplies common-carrier  long-distance and other telecommunication  products and
services to  residential,  commercial  and government  users.  Telecommunication
services that GCI and its subsidiaries ("the Company") provides are carried over
facilities that are owned by the Company or are leased from other companies.

     GCI began  commercial  operations in November 1982 in competition  with the
former monopoly carrier,  Alascom,  Inc.  ("Alascom").  In many respects,  GCI's
entry  into the  market  parallels  that of MCI  Telecommunications  Corporation
("MCI") which,  in the contiguous  United States,  entered the market to compete
with the former  monopoly  carrier  American  Telephone  and  Telegraph  Company
("AT&T"). GCI followed in MCI's footsteps approximately a decade later.
MCI acquired an approximate 30 percent ownership interest in GCI during 1993.

Industry

    The  U.S.  telecommunication  industry  remains  in a state  of  flux,  with
companies faced with the challenges of new technologies and rapid changes in the
competitive  and regulatory  environment.  Growing  competition  has resulted in
lower prices,  which should stimulate  ongoing volume gains, even in the heavily
saturated U.S. market. The policies of President Clinton's  Administration,  the
Telecommunications  Act  of  1996,  emerging  technologies,  and a  blurring  of
distinctions  among industry sectors all portend new revenue  possibilities  for
the  industry.  Where  the  focus was once on  regulation  of a closely  guarded
monopoly, regulators are now ushering the telecommunication industry into an era
of  competition  and reduced  regulation.  Decisions made now will influence the
industry's  future in ways  difficult  to foresee,  as  technology  continues to
catapult the industry forward.

    What once was a $94 billion telephone service industry before divestiture of
the  Bell  System  in 1984  has  evolved  into an  estimated  $200  billion-plus
communications marketplace, comprised of the following:

       (1) $40 billion --  digitally  priced  long  distance  services;  
       (2) $97 billion -- analog-priced local services;
       (3) $25 billion -- analog-priced cable TV services;
       (4) $15 billion -- analog-priced cellular services;
       (5) $4 billion -- digitally priced messaging/paging services; and
       (6) $20 billion -- digital private data and value-added services.

     Industry  analysts in trade journals  estimate that long distance  revenues
received by U.S. based  interexchange  carriers for public network services will
grow to $77  billion  in the year  2000 at a 5  percent  compound  annual  rate.
International  revenues  for these  carriers  are  expected  to continue to pace
market growth,  growing more than twice as fast as the mature  domestic  market,
growing to $16.5  billion in 2000 at a better  than 10 percent  compound  annual
rate.  International revenues for these carriers are roughly divided into thirds
in terms of the region of the world from which they are  generated:  the Western
Hemisphere,  Europe and the remainder of the world, with the latter growing most
rapidly, paced by traffic with the Pacific Rim.

     Expanding  voice  markets  such  as  computer-telephony   integration,  and
wireline   and   wireless   PBXs,   are   expected   to  drive   growth  in  the
telecommunications  market in 1996. These newer market segments contributed to a
15 percent overall  increase in U.S.  telecommunications  revenues.  The revenue
growth is attributed to businesses'  greater need for communications  equipment,
software and

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<PAGE>
services.  Telecommuting,  Private Branch Exchanges ("PBXs") and internetworking
are among the market forces pushing the growth.

     Trade journal analysts predicted that sales of wireless  PBXs--systems that
interface  a wireless  controller  with an  existing  PBX--would  grow from $394
million in 1995 to $3.3 billion in 1998.  Wireless PBXs give employees  wireless
capabilities at their desktops.  Improvements in high-speed wireline networking,
such as  building  asynchronous  transfer  mode  local area  networks,  also are
allowing powerful messaging  capabilities to connect workers. Video conferencing
and unified messaging are two applications  analysts expect to become popular in
1996. Data  communications  and  internetworking  revenue increased 19.4 percent
last year as a result of added demand for enterprise networking.

     Sudden,  widespread use of the Internet  caused the modem market to grow by
50 percent, while integrated services digital network ("ISDN") lines became both
widely available and desired,  expanding 126 percent last year. Industry players
expect the Internet  phenomenon to spark growing interest in ISDN. Major vendors
now are looking at linking  voice mail  systems  through use of  internetworking
techniques  over the  Internet,  such as  standardized  protocols  and messaging
features similar to E-mail.

     Communication   sectors  not   traditionally   competitive  with  telephone
companies, such as cable and wireless services, are projected to grow an average
10.9% per year. This compares with the 3% average per year growth in revenue for
traditional  local telephone  service from 1993 to 1998.  Cable TV companies may
gain a competitive  advantage through marketing of cable modems.  Computer-based
services  likely will be a strong  market for cable TV firms.  Cable  modems may
give them the ability to offer a competitive alternative to the second telephone
line into the home,  providing  high-speed  access to data services.  Content is
expected  be the  ultimate  driver of Cable TV profits and may  determine  which
companies gain the most market share.

     The  emergence  of new  services  --  especially  digital  cellular  radio,
personal communications services ("PCS"), interactive TV, and video dial tone --
has created  opportunities for significant growth in local loop services.  These
opportunities  are also laying the foundation for a  restructuring  of the newly
competitive  local loop services market.  Not only are competitors  entering the
core business of the local telephone companies, but they are beginning to pursue
the  fast-growing  markets that previously were closed to them, such as consumer
video.   Competition   between  telephony,   cable  TV,  and  PCS  markets  will
increasingly  overlap in the 1990s. As opportunities  for new wireless and video
services  arise  and  competitors  expand  beyond  their  traditional   markets,
competition  between existing telephone  companies and these major industries is
expected to intensify.

     Future  mergers are expected  throughout  the  telecommunications  industry
aimed at creating geographic clustering and expansion of the breadth of services
offered to customers  (i.e.,  local,  long  distance,  cable and  wireless).  In
addition,  interexchange  carriers are poised to enter the local service market.
At the core of several of currently  existing  ventures are the  integration  of
wireless and wireline technology. The ventures plan to provide services in which
customers would use a phone similar to a portable  cordless device linked to the
existing wired infrastructure of the partners.  When customers leave their homes
or offices,  the phones  would become  mobile and would be serviced  through the
wireless network that would be created by the venture.  Moreover,  the venture's
local  telephone  services will be packaged with cable and multimedia  services,
long-distance  service and  entertainment  services.  Customers  will be able to
select  the mix of  services  and  products  that  fit  their  needs.  Increased
competition in 1996 may result in fewer players providing more expanded services
- -- growth by acquisition will be a key component of the survivors' strategy.

     On  September,  23, 1993,  the Federal  Communications  Commission  ("FCC")
adopted a broad set of rules for the  licensing  of PCS.  The FCC  concluded  an
auction of  spectrum to be used for the  provision  of PCS in March,  1995.  PCS
systems  are  expected  to make an  individual  carrying  a  pocket-

                                       2

<PAGE>
sized phone available at the same number, whether at home, at work or traveling.
Unlike cellular  systems,  a caller using PCS will not need to know the location
of the  person  he or she is  trying to  reach.  The  difference  in the way PCS
systems are  configured  as compared to cellular  systems means that PCS systems
could be less  costly to  operate  than  cellular  systems  and  therefore  less
expensive  for  users.  Rapid  growth of  cellular  telephone  services  and the
anticipation  of PCS services  has  generated  substantial  interest in wireless
communications.  The FCC's  efforts  are  expected  to  encourage  reduction  of
communication  prices  and put the  technology  within  financial  reach of most
American homes and businesses.

     It  is  predicted  that  PCS  will  grow  rapidly,  reaching  17.9  million
subscribers by 2005. By then, PCS services will be generating annual revenues of
nearly $8 billion. PCS's success is expected to occur even with competition from
other wireless services such as cellular, paging and enhanced specialized mobile
radio.  Increases in services are expected to be fueled by declining usage rates
and expanded coverage.

     PCS licensees  will be required to offer  service to at least  one-third of
their market population within five years or risk losing their licenses. Service
must be extended to  two-thirds  of the  population  within seven years and must
reach 90% population coverage within 10 years.

     The  Telecommunications  Act of 1996  ("Act")  was signed  into law Feb. 8,
1996.  It is  expected  to  have a  dramatic  impact  on the  telecommunications
industry,  resulting in even  greater  changes than the 1984 breakup of the Bell
System.  Bell Operating  Companies (BOCs) can immediately  begin  manufacturing,
research and development;  GTE Corp. can begin providing  interexchange services
through its telephone  companies  nationwide;  laws in 27 states that  foreclose
competition are knocked down;  co-carrier  status for competitive local exchange
carriers is ratified;  and the concept of "physical collocation" of competitors'
facilities in Local Exchange Carriers ("LECs") central offices, which an appeals
court rejected, is resurrected.

     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 principal  beneficiaries  of this  "unbundling"  are expected to be the
interexchange carriers ("IXCs"), however the new regime offers opportunities for
other service providers,  particularly  commercial mobile radio service ("CMRS")
providers. Within the local exchange market, estimated to be worth more than $90
billion  annually,  consumers  likely will be presented with an array of choices
for local telephone service.

     The new  legislation  sets up four classes of carriers,  with an increasing
number of  obligations  placed on each one. The first group,  telecommunications
carriers, includes any provider that offers subscription-based telecommunication
services.

     The second group includes LECs, which have five specific duties:
       (1)   Resale:   LECs   cannot   prohibit   or  impose   unreasonable   or
             discriminatory  conditions  or  limitations  on the resale of their
             services.
       (2)   Number  portability:  LECs must  provide to the extent  technically
             feasible number portability,  which would permit LEC subscribers to
             switch to another  carrier  without  losing  their  existing  phone
             numbers.

                                       3

<PAGE>
       (3)   Dialing  parity:  LECs must  provide  dialing  parity to  competing
             providers  so that  their  customers  can access  the  services  of
             another without special dialing requirements or delays.
       (4)   Access:  LECs must provide competing  carriers with access to their
             rights-of-way, including poles, ducts, and conduits.
       (5)   Reciprocal  compensation:  LECs must pay other carriers,  including
             CMRS providers,  the same fee to terminate calls originating on the
             LEC's  network as the  competing  carrier  has to pay to  terminate
             calls on the LEC's network.

     The next class of carriers  includes  incumbent  local  exchange  carriers,
which are tasked with six duties. These include a duty
       (1)    to negotiate interconnection agreements;
       (2)    to provide  interconnection  on request  that is at least equal in
              quality to the services it provides itself;
       (3)    to  provide  unbundled  access  to  network  elements,  so  that a
              competitor  can buy only those LEC services that it needs (such as
              unbundled access to the local loop);
       (4)    to offer its services at wholesale rates for resale;
       (5)    to provide notice of changes in its network; and
       (6)    to offer  co-location  of  competing  carriers'  equipment  in its
              switching offices.

     The final  classification  includes the BOCs,  which are given authority to
enter the intercity  market,  but only after they have  satisfied a long list of
requirements,  including a  fourteen-point  checklist  of specific  actions--all
aimed at easing the lot of the competing carrier.

     The Act is expected to require the  Federal  Communications  Commission  to
begin no fewer than 50 rulemaking  proceedings.  The  legislation  calls for the
establishment of a new federal-state  joint board on universal service within 30
days of  enactment.  That  board will have to  develop  proposals  to revamp the
universal  service subsidy system that has evolved over the years which could be
among the most far-reaching provisions of the Act.

     Enactment  of the  bill  affects  local  exchange  service  markets  almost
immediately  by requiring  states to authorize  local exchange  service  resale.
Resellers  will be able to  market  new  bundled  service  packages  to  attract
customers.  Over the long term, the  requirement  that local  exchange  carriers
unbundle access to their networks may lead to increased price competition. Local
exchange   service   competition   may  not  take   hold   immediately   because
interconnection arrangements are not in place in most areas.

General

     GCI was  incorporated  under the laws of the State of Alaska in 1979.  From
1980  to  January,   1987,  GCI  was  a  wholly-owned   subsidiary  of  WestMarc
Communications, Inc. ("WSMC"), formerly Western Tele-Communications,  Inc., then
a microwave  communication common carrier. On January 23, 1987, WSMC distributed
all of the outstanding  shares of the Class A and Class B common stock of GCI to
its   shareholders.   This  distribution  was  made  as  a  dividend  to  WSMC's
shareholders  of record at the close of business on December  29,  1986,  on the
basis of one share of GCI Class A common  stock  for each  outstanding  share of
WSMC Class A common  stock,  and one share of GCI Class B common  stock for each
outstanding  share of WSMC Class B common stock.  Following the distribution GCI
became an independent publicly-held company.

     Effective  November  30, 1990,  GCI  transferred  substantially  all of its
operating  assets  to its  wholly  owned  subsidiary,  GCI  Communication  Corp.
("GCC"),  an Alaska  corporation,  which  assumed all of GCI's  liabilities  and
became the operating company. GCI serves as a holding company and remains liable
as a  guarantor  on  certain  of  GCC's  obligations.  All  of  the  issued  and
outstanding  shares of GCC were pledged as security under GCC's credit agreement
with its senior lenders.

                                       4

<PAGE>
     The Company was authorized to and began  providing  intrastate  services on
May 15, 1991 on its own  facilities  in the areas  where it provided  interstate
service and through resale of others' services where it has no facilities.

     GCI Communication  Services,  Inc.  ("Communication  Services"),  an Alaska
corporation,  is a wholly-owned  subsidiary of GCI and was incorporated in 1992.
Communication  Services provides private network  point-to-point  data and voice
transmission  services between Alaska,  Hawaii and the western contiguous United
States. Communication Services products are marketed directly by GCC.

     GCI Leasing Co., Inc.  ("Leasing  Company"),  an Alaska  corporation,  is a
wholly-owned  subsidiary of Communication Services and was incorporated in 1992.
Leasing Company owns and leases undersea fiber optic cable capacity for carrying
a majority of the Company's  interstate  switched  message and private line long
distance services between Alaska and the remaining United States.

Products

      The  Company  offers a broad  spectrum  of  telecommunication  services to
residential,  commercial and government  customers primarily  throughout Alaska.
The Company  operates in two industry  segments and offers five primary  product
lines.  The message  and data  transmission  services  industry  segment  offers
message toll,  private line and private network  services,  and the system sales
and service  industry  segment  offers data  communication  equipment  sales and
technical services.

      The Company's message and data  transmission  services industry segment is
engaged in the  transmission of interstate and intrastate  switched message toll
service  ("MTS") and  private  line and private  network  communication  service
between the major  communities  in Alaska,  and the remaining  United States and
foreign countries.  GCI's message toll services include  intrastate,  interstate
and  international  direct  dial,  800,  calling  card,  operator  and  enhanced
conference  calling,  as well as termination of northbound toll service for MCI,
U.S. Sprint ("Sprint") and several large resellers without facilities in Alaska.
GCI also provides  origination of southbound calling card and 800 toll services.
Private line and private network  services  utilize voice and data  transmission
circuits,  dedicated  to  particular  subscribers,  which  link a device  in one
location to another in a different location.  Regulated telephone relay services
for the deaf,  hard-of-hearing  and  speech  impaired  are  provided  though the
Company's  operator  service center.  The Company offers its message services to
commercial and  residential  subscribers.  Subscribers may cancel service at any
time. Toll related  services account for  approximately  93%, 90% and 90% of the
Company's 1995, 1994 and 1993 total revenues, respectively.

      GCI  has   positioned   itself   as  the  price   leader  in  the   Alaska
telecommunication   market  and,  as  such,  rates  charged  for  the  Company's
telecommunication  services  are  designed  to be equal to or  below  those  for
comparable  services  provided by the only other  significant  competitor in the
Alaska telecommunications market, AT&T Alascom.

      In addition to providing  communication  services, GCC sells, services and
operates, on behalf of certain customers,  dedicated  communication and computer
networking equipment and provides field/depot,  third party,  technical support,
consulting  and  outsourcing  services  through  its  systems  sales and service
industry segment.

      The Company also supplies integrated voice and data communication  systems
incorporating  interstate and intrastate  digital private lines,  point-to-point
and multipoint  private  network and small earth station  services  operating at
data rates up to 1.544 mbs. In  addition,  the  Company  designs,  installs  and
maintains data  communication  systems for  commercial and government  customers
throughout Alaska.  Presently,  there are five companies in Alaska that actively
sell and maintain data and voice  communication  systems.  The Company's  unique
ability to integrate telecommunication 

                                       5

<PAGE>
networks  and data  communication  equipment  has  allowed  it to  maintain  its
dominant market position on the basis of "value added" support rather than price
competition.

      GCI has expanded its technical  services business to include  outsourcing,
onsite technical  contract services and  telecommunication  consulting.  GCI was
awarded a five year  contract,  effective  April 1, 1992,  to assume  management
responsibility for all of BP Exploration (Alaska) ("BP")  telecommunication  and
computer  networking  assets in Alaska.  BP is the largest oil company presently
operating in Alaska. GCI was awarded a five year contract, effective October 31,
1995,  to assume  management  responsibility  for all of National Bank of Alaska
telecommunication and computer networking assets in Alaska.

      Expenditures  of  approximately  $2.5 million were made in 1994 developing
new demand assigned multiple access ("DAMA") satellite communication technology.
A four-module  demonstration  system was  constructed in 1994 and was integrated
into  the  Company's  telecommunication  network  in  1995.  Existing  satellite
technology relies on fixed channel assignments to a central hub. DAMA technology
assigns satellite capacity on an as needed basis. The digital DAMA system allows
calls to be made between  remote  villages  using only one satellite hop thereby
reducing satellite delay and capacity requirements while improving quality.

      The Company obtained the necessary APUC and FCC approvals  waiving current
prohibitions  against  construction  of competitive  facilities in rural Alaska,
allowing  for  deployment  of DAMA  technology  in 56 sites in rural Alaska on a
demonstration  basis.  Construction  and  deployment  will  occur in 1996,  with
services  expected  to be  provided  during  the fourth  quarter of 1996.  Total
construction and deployment costs are expected to total $18 to $20 million.

      The FCC  concluded an auction of spectrum to be used for the  provision of
PCS in March,  1995. The Company was named by the FCC as the high bidder for one
of the two 30 megahertz  blocks of  spectrum,  with Alaska  statewide  coverage.
Acquisition  of the  license  for a cost of  $1.65  million  will  allow  GCI to
introduce new PCS services in Alaska. The Company began developing plans for PCS
deployment in 1995 with technology service trials expected to take place in 1996
and service to be offered as early as 1997 or 1998.

      Neither GCI or any of its  subsidiaries  has revenues that are  materially
affected by seasonality.  The Company has not expended  material  amounts during
the last three fiscal years on customer-sponsored research activities.

Facilities

      Currently,  GCI's  facilities  comprise  earth  stations  at Eagle  River,
Fairbanks,  Juneau, Prudhoe Bay, Valdez, Kodiak, Sitka, Ketchikan,  Unalaska and
Cordova, all in Alaska and at Issaquah,  Washington,  serving the communities in
their  vicinity.  The Eagle River and  Fairbanks  earth  stations  are linked by
digital microwave facilities to distribution centers in Anchorage and Fairbanks,
respectively.   The  Issaquah  earth  station  is  connected  with  the  Seattle
distribution  center by means of diversely routed fiber optic cable transmission
systems,  each  having  the  capability  to  restore  the  other in the event of
failure.  The Juneau earth station and distribution  center are co-located.  The
Ketchikan,   Prudhoe  Bay,   Valdez,   Kodiak,   Sitka,   Unalaska  and  Cordova
installations  consist  only of an  earth  station.  GCI  constructed  microwave
facilities  serving  the  Kenai  Peninsula  communities  and  owns a 49  percent
interest in an earth station located on Adak Island in Alaska.  GCI maintains an
operator service center in Wasilla,  Alaska.  Each of the  distribution  centers
contains electronic switches to route calls to and from local exchange companies
and, in Seattle,  to obtain access to MCI and other facilities to distribute GCI
southbound traffic to the remaining 49 states and international destinations.

      Leasing  Company  owns a portion of an  undersea  fiber  optic cable which
allows the Company to carry its Anchorage,  Eagle River, Wasilla,  Palmer, Kenai
Peninsula, Glenallen and approximately one-

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<PAGE>
half of its Fairbanks  area traffic to and from the  contiguous  lower 48 states
over a terrestrial circuit,  eliminating the one-quarter second delay associated
with a satellite  circuit.  The Company's  preferred routing for this traffic is
via the undersea fiber optic cable which makes available  satellite  capacity to
carry the Company's intrastate traffic.

     The Company employs  satellite  transmission for certain other major routes
and uses advanced digital  transmission  technology  throughout its system.  The
Company leases C-band  transponders  on AT&T's Telstar 303 satellite.  The lease
expires June 1996 and may be renewed,  at the Company's option,  through the end
of the satellite's useful life, currently projected to be 1998. The Company will
redirect  its earth  stations  toward the  Hughes  Communications  Galaxy,  Inc.
("Hughes")  Galaxy IX satellite upon its successful  delivery by Hughes expected
to occur in June 1996.

      GCI  employs  advanced  transmission  technologies  to carry as many voice
circuits as possible through a satellite  transponder  without sacrificing voice
quality.  Other  technologies such as terrestrial  microwave  systems,  metallic
cable, and fiber optics tend to be favored more for point-to-point  applications
where the volume of traffic is substantial. With a sparse population spread over
a  wide  geographic  area,  neither   terrestrial   microwave  nor  fiber  optic
transmission  technology  will be  economically  feasible in rural Alaska in the
foreseeable future.

Customers

      The Company had  approximately  85,600,  73,100 and 73,600  active  Alaska
subscribers  to its message  telephone  service at December 31,  1995,  1994 and
1993, respectively.  Approximately 9,500, 9,300 and 9,500 of these were business
users at December 31, 1995, 1994 and 1993, respectively,  and the remainder were
residential customers. MTS revenues currently amount to approximately $9,050,000
per month.

      Substantially all service areas,  except Bethel,  Alaska, in which GCI has
facilities have completed the equal access balloting process. GCI carries 33% to
49% of the  southbound  interstate  MTS traffic and 21% to 48% of the intrastate
MTS traffic originating in those service areas.

      In January, 1993 GCI entered into a five-year contract with MCI to provide
facilities for MCI's Alaska message toll and 800 service  traffic.  The contract
supplanted a previous  contract and provides for expanded  usage by MCI of GCI's
facilities  and usage by GCI of MCI's  facilities.  Revenues  attributed  to the
contract in 1995, 1994 and 1993 totaled approximately  $23,939,000,  $19,512,000
and  $16,068,000,  or approximately  18.5%,  16.7%, and 15.7% of total revenues,
respectively.  The contract was amended in March 1996  extending  its term three
years to March 31, 2001.

      Services  provided pursuant to a contract with Sprint resulted in revenues
in 1995, 1994 and 1993 of approximately $14,885,000, $12,412,000 and $10,123,000
or approximately 11.5%, 10.6%, and 9.9% of total revenues, respectively.

      Both MCI and Sprint are major  customers of the Company in its message and
data  transmission  services  industry  segment.  Loss of one or  both of  these
customers would have a significant  detrimental effect on the Company's revenues
and  contribution.  There are no other individual  customers,  the loss of which
would have a material impact on the Company's revenues or gross profit.

      The  Company  provided  private  line and  private  network  communication
products and services to approximately 566 commercial and government accounts in
1995.  Private  line and private  network  communication  products  and services
currently generate approximately $1,050,000 in monthly, revenues.

                                       7

<PAGE>

<TABLE>
     A summary of switched MTS traffic minutes follows:
<CAPTION>
                                                          Interstate Minutes
                                            -------------------------------------------------
                For                                                                   Calling           Intrastate
         Quarter Ended                      Southbound           Northbound             Card              Minutes
         -------------                      ----------           ----------             ----              -------
                                                                  (amounts in thousands)
      <S>                                     <C>                 <C>                  <C>                <C>
      March 31, 1993                           47,100              34,713               3,947             16,178
      June 30, 1993                            49,928              34,651               3,811             17,283
      September 30, 1993                       54,403              36,282               4,043             18,770
      December 31, 1993                        56,549              39,348               4,459             17,989
                                              -------             -------              ------             ------

          Total 1993                          207,980             144,994              16,260             70,220
                                              =======             =======              ======             ======

      March 31, 1994                           56,118              39,664               4,431             18,910
      June 30, 1994                            58,809              38,293               4,220             20,534
      September 30, 1994                       61,715              39,678               4,210             21,253
      December 31, 1994                        59,902              40,424               4,605             19,786
                                              -------             -------              ------             ------

          Total 1994                          236,544             158,059              17,466             80,483
                                              =======             =======              ======             ======

      March 31, 1995                           60,140              41,600               4,351             21,208
      June 30, 1995                            65,031              43,721               4,113             23,051
      September 30, 1995                       71,918              45,027               4,233             23,883
      December 31, 1995                        72,319              46,545               5,518             25,228
                                              -------             -------              ------             ------

          Total 1995                          269,408             176,893              18,215             93,370
                                              =======             =======              ======             ======
</TABLE>

     All minutes data were taken from GCC's billing statistics reports.

Markets

      The dominant  carrier and GCI's primary  competition  in the Alaska market
for   interstate  and  intrastate   MTS,   private  line  and  private   network
telecommunication services continues to be AT&T Alascom. Other carriers, such as
MCI and Sprint  can enter the market by  constructing  their own  facilities  in
Alaska.  At the present time,  however,  MCI,  Sprint and several other carriers
interconnect  with GCC in Seattle and Dallas for  delivery of their Alaska bound
interstate  traffic.  Sprint and MCI also  originate  800  services in Alaska on
GCI's facilities.

      Five  companies  in  Alaska  actively  sell and  service  data  and  voice
communication systems. Other companies can enter the market at any time.

Financial Information About Industry Segments

      For  financial  information  with  respect to  industry  segments  of GCI,
reference  is made to the  information  set  forth  in  Note 8 of the  Notes  to
Consolidated Financial Statements included in Part II of this Report, which Note
is included herein by reference.

                                       8

<PAGE>
History of Telecommunication in Alaska

      The first  telecommunication  facilities  in Alaska were  telegraph  lines
operated by the U.S. Army.  Later,  telephone  service was added, and the Alaska
Communications  System  ("the  ACS") grew to cover  much of the state.  Wherever
military  communication  was not  hampered,  the Army allowed its circuits to be
used for civilian  purposes.  Control of the ACS was transferred to the U.S. Air
Force and  eventually,  the ACS supplied long distance trunks to local exchanges
in the state's growing communities.

      As the  civilian  population  increased,  the  need  for a  transition  to
commercial operation became apparent. In 1969, ten years after Alaska statehood,
the Alaska Communications  Disposal Act ("the Act") was passed by Congress.  The
RCA Corporation  was the successful  bidder under the Act and purchased the ACS.
RCA formed a subsidiary,  RCA Alaska  Communications,  later Alascom, to own and
operate the system.

      Through  its  purchase  of the ACS,  Alascom  became  the sole long  lines
carrier in Alaska. In the lower 48 states,  Alascom interconnected with AT&T. In
Alaska, it interconnected  with the telephone companies providing local exchange
service.  Additionally,  Alascom was  required to maintain a number of thin-line
links to  remote  areas  of the  state.  Under  the  terms  of the ACS  purchase
agreement, Alascom was required to expand service to the less developed areas of
Alaska. In 1979 Alascom was acquired by Pacific Power and Light, Inc., a utility
holding  company,  which has since  transferred  Alascom to its  publicly-traded
subsidiary, Pacific Telecom, Inc. ("PTI").

      Rates  initially  charged for Alaska  telecommunication  services had been
substantially higher than interstate rates in the contiguous states. In 1972 the
FCC established a policy of rate  integration  intended to equalize all domestic
interstate  rates.  This policy was used to support a subsidy  mechanism to help
Alascom cover higher costs associated with rural operations.

      When  GCI  began  operations  in 1982,  AT&T  provided  almost  all of the
telecommunication  services in the lower 48 states and Alascom  provided  almost
all of the long distance telecommunication services in Alaska and between Alaska
and the lower 48 states,  Hawaii,  and  foreign  countries.  Although  Alascom's
business  was highly  subsidized,  GCI  competed  with  Alascom  with no subsidy
whatsoever.

      In 1983 the State of Alaska  petitioned  the FCC to initiate a rule making
to determine how to rationalize the policies of rate integration and competition
in the  Alaska  market in light of the rapid  changes  in the  telecommunication
industry  brought  on by the  AT&T  divestiture  and  changing  FCC  competition
policies.  This led the FCC to initiate a rule making  proceeding  ("the  Alaska
rule  making  proceeding")  in 1984.  Issues  involved in the Alaska rule making
proceeding, namely the harmonizing of the FCC's policies of competition and rate
integration  for  the  Alaska  market  and  the  implementation  of a  permanent
structure for that market,  were referred to a Federal-State Joint Board ("Joint
Board").   Joint  Board  activity,   including  the   consideration  of  several
alternative market  structures,  continued through the adoption of a recommended
transition  mechanism in 1993,  which was later adopted by the full FCC in 1994.
This FCC  action  led to a  negotiated  buyout of  Alascom  by AT&T,  as further
described  in Part I,  History of  Regulatory  Affairs  and Recent  Developments
below.

History of Regulatory Affairs

      The Company's activities in the telecommunication  market are regulated by
two  agencies.  The  Communications  Act of 1934 gives the FCC the  authority to
certificate  market entry and regulate rates for  interstate  telecommunication.
Intrastate  telecommunication  services  are  regulated  by  the  Alaska  Public
Utilities Commission ("APUC").

                                       9

<PAGE>
      The Company's entry into the intrastate  telecommunication market had been
hampered because the APUC had no policy on intrastate  competition.  In May 1990
the Alaska legislature passed  legislation  mandating  competition in the Alaska
intrastate  telecommunication  market. The legislature further directed the APUC
to adopt  regulations  governing a competitive  telecommunication  market and to
begin accepting  applications  for service on February 15, 1991. On February 15,
1991  GCI,  through  its  wholly-owned   operating   subsidiary  GCC,  filed  an
application to provide competitive  intrastate  telecommunication  services. The
Company was  authorized to and began  providing  intrastate  services on May 15,
1991 on its own facilities in the areas where it provided interstate service and
through resale of others' services where it has no facilities.

      In the first quarter of 1992 the APUC granted GCC a Certificate  of Public
Convenience and Necessity to provide  telephone  relay services  ("TRS") for the
deaf,  hard-of-hearing and speech impaired though the Company's operator service
center in Wasilla,  Alaska.  GCC commenced its regulated TRS  operations on June
21, 1992. Intrastate TRS operating costs, capital costs and a rate of return are
being funded through a universal  access surcharge billed by all local telephone
companies  in the state of Alaska.  Under an FCC  decision,  starting in 1993, a
portion of the TRS  operating  costs are recovered  through an  interstate  pool
administered by the National Exchange Carrier Association ("NECA").

      The FCC regulates dominant interstate carriers, such as the Company's only
interstate  competitor,  AT&T/Alascom.  Company's only  interstate  competitor,
Alascom.  Because,  under the terms of the AT&T acquisition of Alascom,  Alascom
rates and services must "mirror"  those offered by AT&T,  changes in AT&T prices
indirectly affect the rates and services of the Company. AT&T's prices, and thus
those of Alascom,  are regulated  under a price cap plan whereby  AT&T's rate of
return is no longer regulated or restricted.  AT&T is allowed to raise and lower
prices for three  groups of services  within  pre-established  floor and ceiling
levels with little regulatory oversight. These services include products offered
to: 1) small businesses or residential  customers;  2) users of 800 services and
3) large  business  customers.  Price  increases by AT&T  generally  improve the
Company's ability to raise its prices while price decreases pressure the Company
to follow.  The  Company  has,  so far,  successfully  adjusted  its pricing and
marketing strategies to respond to AT&T pricing practices.

      In 1983 the State of Alaska  petitioned  the FCC to commence a  rulemaking
proceeding to determine how to harmonize the FCC's policies of rate  integration
and  competition  in the  Alaska  market  in light of the rapid  changes  in the
telecommunications  industry brought on by the AT&T divestiture and changing FCC
competition policies. In 1984 the FCC initiated the Alaska rulemaking proceeding
in response to the State's  request.  Issues  involved in the Alaska  rulemaking
proceeding, namely the harmonizing of the FCC's policies of competition and rate
integration  for  the  Alaska  market  and  the  implementation  of a  permanent
structure for that market,  were referred to a Federal-State Joint Board ("Joint
Board"), consisting of state utility commissioners and FCC commissioners.

      On May 17, 1993 the Joint  Board  issued a  Tentative  Recommendation  and
Order Inviting  Comments.  Comments were filed by the various parties,  with the
Company supporting this Tentative Recommendation. On October 26, 1993, the Joint
Board made its Final Recommended Decision,  rejecting the market structure plans
previously  advanced  by Alascom  and AT&T and,  instead,  recommended  a market
structure based on that set forth in the Tentative Recommendation.

      The Final  Recommended  Decision  proposes to end the  AT&T/Alascom  Joint
Services  Arrangement  ("JSA") on September 1, 1995, subject to the adoption and
implementation of certain transition mechanisms. These include requiring AT&T to
provide interstate MTS/WATS between Alaska and the other 49 states at integrated
rates and under terms and conditions  applicable to AT&T's  services in the rest
of the country.  After the JSA is  terminated,  Alascom  could offer  interstate
MTS/WATS independently from AT&T, under its own tariff and with no obligation to
charge AT&T's  integrated  rates.  During a four year transition,  AT&T would be
required to purchase services from Alascom to meet its MTS/WATS obligations. For
the first one and  one-half  years AT&T would  obtain  

                                       10

<PAGE>
such services under the continued JSA. For the remaining two and one-half years,
after the termination of the JSA, AT&T would be required to purchase a declining
amount of service from Alascom,  with this  obligation  declining to zero at the
end of this second phase.

      Final FCC action on the Joint Board's  Final  Recommended  Decision,  took
place on May 19, 1994,  and is contained  in its  Memorandum  Opinion and Order,
released May 19, 1994. In the Memorandum  Opinion and Order, the FCC adopted the
provisions of the Final Recommended  Decision and set the termination of the JSA
to be  effective  January  1,  1996.  AT&T/Alascom  has  filed an  appeal of the
Memorandum Opinion and Order.

      On October 17, 1994, Pacific Telecom,  Inc. ("PTI") announced a definitive
agreement to sell the stock of Alascom to AT&T,  subject to certain  conditions,
including state and federal  regulatory  approvals.  AT&T, PTI and Alascom filed
for such  approvals  before the FCC and the APUC on December 15, 1994,  alleging
that the buyout  would  further  the Joint  Board  objectives  and  fulfill  the
provisions  of the FCC Order.  The Company  participated  fully in both transfer
proceedings.  The buyout was approved, with conditions, by the APUC on March 31,
1995 and the FCC on August 2, 1995.

      In the normal course of the Company's operations,  it is involved in legal
and regulatory  matters before the FCC and the APUC.  While  management does not
anticipate abrupt changes in the competitive  structure of the Alaska market, no
assurances  can be given that such  changes will not occur and that such changes
would not be materially adverse to the Company.

Recent Developments

      The Company  announced March 15, 1996 that it has signed letters of intent
to acquire three Alaska cable companies that offer cable  television  service to
more than 101,000  subscribers  serving 74 percent of households  throughout the
state of Alaska.  The Company  intends to acquire Prime Cable of Alaska,  Alaska
Cablevision, Inc. of Kirkland, Washington and Alaskan Cable Network. Prime Cable
operates the state's  largest  cable  television  system  including  stations in
Anchorage,  Bethel,  Kenai and Soldotna,  Alaska.  Alaska  Cablevision  owns and
operates cable stations in Petersburg, Wrangell, Cordova, Valdez, Kodiak, Homer,
Seward,  Nome and Kotzebue,  Alaska.  Alaskan Cable Network operates stations in
Fairbanks,  Juneau, Ketchikan and Sitka, Alaska. This acquisition will allow the
Company to integrate  cable services to bring more  information not only to more
customers,  but in a manner  that is  quicker,  more  efficient  and  more  cost
effective than ever before.  The purchase will facilitate  consolidation  of the
cable  operations  and will  provide a  platform  for  developing  new  customer
products and services over the next several years.

      The total  purchase  price is $280.7  million.  According  to terms of the
letters of intent, GCI will issue 16.3 million shares of Class A Common stock to
the owners of the three cable companies valued at $105.7 million. The balance of
the purchase will be provided by  approximately  $175 million of bank financing.
Additional  capital will be provided from the sale of 2 million  shares of GCI's
Class A Common Stock to MCI Telecommunications Corporation for $6.50 per share.

      Definitive  agreements are expected to be finalized in April 1996 at which
time GCI will apply to the APUC to transfer the licenses of the cable companies.
Once  all  regulatory  approvals  are  granted,  the  cable  companies  will  be
consolidated into a single organization owned by the Company.

                                       11

<PAGE>
Employees

      GCC and  affiliated  companies  employ  approximately  435  persons  as of
February  20, 1996 in  operations,  engineering,  marketing,  network  services,
customer  and operator  services,  data  processing,  billing,  accounting,  and
administration.  GCC and  affiliated  companies  are not  parties  to any  union
contracts with their employees.  In general,  relations with employees have been
satisfactory.

Environmental Regulations

      The Company and its subsidiaries  may undertake  activities  which,  under
certain circumstances may affect the environment.  Accordingly, they are subject
to federal,  state,  and local  regulations  designed to preserve or protect the
environment.  The FCC, the Bureau of Land  Management,  the U.S. Forest Service,
and the National Park Service are required by the National  Environmental Policy
Act of 1969 to consider the  environmental  impact prior to the  commencement of
facility construction. Management believes that compliance with such regulations
has no material effect on the Company's consolidated  operations.  The principal
effect  of  Company  facilities  on the  environment  would  be in the  form  of
construction  of  the  facilities  at  various  locations  in  Alaska.   Company
facilities have been  constructed in accordance with federal,  state,  and local
building codes and zoning regulations whenever and wherever applicable.  Some of
the facilities may be on lands which may be subject to state and federal wetland
regulation.

      Uncertainty as to the applicability of environmental regulations is caused
in major part by the federal  government's  decision to consider a change in the
definition  of wetlands,  however,  none of the  Company's  facilities  has been
constructed in areas which are subject to flooding,  tsunami's, etc. and as such
are  most  likely  to fall  outside  any new  wetland  designation.  Most of the
Company's  facilities  are on lands leased by the Company,  and, with respect to
all of these facilities, the Company is unaware of any violations of lease terms
or federal,  state or local regulations pertaining to preservation or protection
of the environment.

Foreign and Domestic Operations and Export Sales

      Although the Company has several  agreements to facilitate the origination
and termination of international toll traffic, it has neither foreign operations
nor export  sales.  The  Company  conducts  operations  throughout  the  western
contiguous United States, Alaska and Hawaii and believes that any subdivision of
its operations into distinct geographic areas would not be meaningful.  Revenues
associated  with  international  toll traffic were  $5,643,000,  $4,427,000  and
$3,734,000 for the years ended December 31, 1995, 1994 and 1993, respectively.

Backlog of Orders and Inventory

      As of December 31, 1995 and 1994, the Company's  systems sales and service
industry  segment  had a backlog  of  equipment  sales  orders of  approximately
$258,000 and $608,000,  respectively. The decrease in backlog as of December 31,
1995 can be  attributed  primarily to faster  completion  of  outstanding  sales
orders in 1995. The Company expects that all of the orders in backlog at the end
of 1995 will be delivered during 1996.

Patents, Trademarks and Licenses

      Neither GCI nor its  affiliates  hold patents,  trademarks,  franchises or
concessions.  The  Communications  Act of 1934  gives the FCC the  authority  to
license  and  regulate  the  use  of  the  electromagnetic  spectrum  for  radio
communication.  The Company through its message and data  transmission  services
industry  segment holds  licenses for its  satellite and microwave  transmission
facilities for provision of its telecommunication services. The Company acquired
a license for use of a 

                                       12

<PAGE>
30  megahertz  block of spectrum for  provision  of PCS services in Alaska.  The
Company's operations may require additional licenses in the future.

Other

      GCC has  filed  FCC  tariffs  for its  international  service,  interstate
domestic services, and domestic operator services.

      Each tariff contains the rates and other  contractual  terms applicable to
customers  who purchase the services  covered by the tariff.  In accord with the
FCC's deregulatory approach with respect to non-dominant  carriers,  tariffs and
tariff  revisions  filed by such carriers  routinely  become  effective  without
intervention by the FCC or third parties.

      The State of Alaska has the authority to regulate  telecommunications that
originate  and  terminate  within  the  state.  In 1990  the  State  legislature
introduced intrastate  competition in Alaska.  Subsequently,  the APUC developed
regulations  that allow for the  certification  of additional  carriers for such
intrastate  telecommunications  and,  to  varying  degrees,  requires  filing of
tariffs and regulation of the rates for such services.  Under the APUC's current
policy and regulations,  all certified carriers are required to file tariffs for
the  provision of  intrastate  services.  When filing for a rate  increase,  the
dominant  carrier is required to file an  accompanying  rate case.  Non-dominant
carriers are not rate regulated. Tariff revisions filed by non-dominant carriers
routinely  become effective  without  intervention by the APUC or third parties.
Tariffs can be filed or revised on 30 days notice.

      On March 15,  1996 the  Company  filed a tariff  with the APUC  requesting
approval  for   provision  of  local   services   based  on  the  terms  of  the
Telecommunications  Act of 1996 which, in part, requires local exchange carriers
to open up their networks and allow resale of their services. Once APUC approval
is obtained,  the Company intends to offer local services through its facilities
or resale of local exchange carrier facilities.

      No  material  portion  of the  businesses  of the  Company  is  subject to
renegotiation  of profits or  termination  of  contracts  at the election of the
federal government.


I
tem 2.  PROPERTIES

      The Company  leases its message and data  transmission  services  industry
segment's  executive,  corporate  and  administrative  facilities  in Anchorage,
Fairbanks and Juneau, Alaska. GCC owns a 49 percent interest in an earth station
located on Adak Island in Alaska.  GCC's message and data transmission  services
segment owns properties and facilities  including satellite earth stations,  and
distribution, transportation and office equipment. Additionally, GCC acquired in
December 1992,  access to capacity on an undersea fiber optic cable from Seward,
Alaska to Pacific City, Oregon.

      The Company's systems sales and service industry segment occupies space in
the  buildings  housing  its  executive  offices  and  operating  facilities  in
Anchorage, Fairbanks and Juneau, Alaska, and Seattle, Washington.  Facilities in
Fairbanks  and Juneau,  Alaska,  and  Seattle,  Washington  are  occupied  under
short-term operating lease agreements. The Anchorage property is leased pursuant
to a 15 year capital lease agreement.

      The undersea fiber optic cable capacity is owned subject to an outstanding
mortgage. Substantially all of the Company's properties secure its senior credit
agreement.  See Note 5 to the  Consolidated  Financial  Statements in Item 8 for
further discussion.

      The two wideband  transponders  the Company owned reached the end of their
expected useful life in August, 1994, at which time the Company leased temporary
replacement  capacity.  The  Company  leased  replacement  transponder  capacity
subsequent to a transition  period utilizing four C band  

                                       13

<PAGE>
transponders  on AT&T's Telstar 303 satellite.  The lease expires June 1996. The
Company entered into a purchase and  lease-purchase  option  agreement in August
1995  for the  acquisition  of  satellite  transponders  to meet  its  long-term
satellite capacity requirements.  The agreement provides for interim the interim
lease of  transponder  capacity  from  June 1996  through  the  delivery  of the
purchased transponders as early as the fourth quarter of 1997. The amount of the
down  payment  required in 1996 and the  balance  payable  upon  delivery of the
transponders  are  dependent  upon a number of factors  including  the number of
transponders  required  and the timing of their  delivery and  acquisition.  The
Company  does not  expect  the down  payment  to exceed  $10.1  million  and the
remaining  balance  payable  coinciding  with a staged  delivery  to exceed  $46
million.  The Company amended its existing senior credit facility and provided a
letter of credit to accommodate the payment in 1996 and expects to further amend
or refinance its credit agreement to fund its remaining commitment.

      The  Company's   operating,   executive,   corporate  and   administrative
properties are in good condition.  The Company considers its properties suitable
and adequate for its present needs and are being fully utilized.


Item 3.  LEGAL PROCEEDINGS

      Neither the Company or any if its  subsidiaries is a party to any material
pending legal proceedings. Neither the Company's property nor that of any if its
subsidiaries is subject to any material pending legal proceedings.

      The Company and its subsidiaries are a party to various claims and pending
litigation  as  part  of the  normal  course  of  business.  In the  opinion  of
management,  the disposition of these matters is not expected to have a material
adverse  effect on the  Company's  financial  statements.  Neither the Company's
property nor that of any if its  subsidiaries is subject to any material pending
legal proceedings.


Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

      No matters were submitted to a vote of  stockholders of the Company during
the fourth quarter of 1995.

                                       14

<PAGE>

                                    PART II



Item 5.     MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER 
            MATTERS

Market Information for Common Stock

<TABLE>
      Shares of the  Company's  Class A common  stock are  traded on the  Nasdaq
National  Market tier of the Nasdaq Stock Market under the symbol GNCMA.  Shares
of the Company's Class B common stock are traded on the Over-the-Counter market.
The Company's  Class B common stock is  convertible  into the Company's  Class A
common stock.  The  following  table sets forth the high and low sales price for
the above-mentioned common stock for the periods indicated.  The prices, rounded
up to the nearest  eighth,  represent  prices  between  dealers,  do not include
retail  markups,  markdowns,  or commissions,  and do not necessarily  represent
actual transactions.
<CAPTION>
                                                       Class A                               Class B
                                          -----------------------------------   -----------------------------------
                                                High               Low                High              Low
                                                ----               ---                ----              ---
<S>                                              <C>             <C>                 <C>               <C>
1994:
     First Quarter                               5 7/8           4 1/8               5 7/8             4 1/8
     Second Quarter                              4 5/8           3 1/8               4 5/8             3 1/8
     Third Quarter                               5               3 1/2               5                 3 1/2
     Fourth Quarter                              5               4 1/8               5                 4 1/8

1995:
     First Quarter                               4 5/8           3 3/4               4 5/8             3 3/4
     Second Quarter                              4 1/4           3 7/8               4 1/4             3 7/8
     Third Quarter                               4 1/8           3 1/4               4 1/8             3 1/4
     Fourth Quarter                              5 1/8           3 3/4               5 1/8             3 3/4
</TABLE>


Holders

      As of March 5, 1996 there were  approximately  1,830  holders of record of
the Company's  Class A common stock and  approximately  750 holders of record of
the  Company's  Class B common  stock  (amounts  do not  include  the  number of
shareholders  whose  shares are held of record by  brokers,  but do include  the
brokerage house as one shareholder).

Dividends

      The Company has never paid cash dividends on its Class A or Class B common
stock and has no present intention of doing so. Payment of cash dividends in the
future,  if any, will be determined by the Company's Board of Directors in light
of  the   Company's   earnings,   financial   condition   and   other   relevant
considerations.  GCC's existing bank loan  agreements  contain  provisions  that
prohibit payment of dividends,  other than stock dividends (see note 5(a) to the
financial statements included in Part II of this Report).

                                       15

<PAGE>

Item 6.     SELECTED FINANCIAL DATA

<TABLE>
      The following table presents selected historical  information  relating to
financial condition and results of operations over the past five years.
<CAPTION>
                                                                                  Years ended December 31,
                                                                 -------------------------------------------------------
                                                                      1995       1994       1993       1992       1991
                                                                      ----       ----       ----       ----       ----
                                                                       (Amounts in thousands except per share amounts)
<S>                                                               <C>         <C>        <C>         <C>       <C>
Revenues                                                          $129,279    116,981    102,213     96,499     75,522
Net earnings (loss) before income taxes                            $12,601     11,681      6,715      1,524     (1,422)
Net earnings (loss)                                                 $7,502      7,134      3,951        890     (1,092)
Earnings (loss) per share                                            $0.31       0.30       0.17       0.02      (0.12)
Total assets                                                       $84,765     74,249     71,610     72,351     70,167
Long-term debt, including current portion 1                         $9,980     12,554     20,823     37,235     24,850
Obligations under capital leases, including current portion  2      $1,047      1,297      1,522      1,720     10,975
Preferred stock 3                                                       $0          0          0      3,282      3,282
Total stockholders' equity 4                                       $43,016     35,093     27,210     14,870     13,554
Dividends declared per Common share 5                                $0.00       0.00       0.00       0.00       0.00
Dividends declared per Preferred share 6                             $0.00       0.00       0.44       1.78       1.69

<FN>
1    The Company  exercised the purchase option  described in footnote (2) below
     in December 1992 to acquire  capacity on a fiber optic  undersea cable from
     Seward, Alaska to Pacific City, Oregon. Long term debt associated with this
     purchase is recorded in  long-term  debt and current  portion of  long-term
     debt in the Consolidated  Financial  Statements included in Part II of this
     Report.
2    The Company  entered into a capital lease  agreement in May 1991 for access
     to capacity on an undersea fiber optic cable from Seward, Alaska to Pacific
     City,  Oregon. The lease term was ten years with monthly payments including
     maintenance of approximately $230,000 per month commencing August 22, 1991,
     the date the fiber  optic  cable  became  operational.  The  Company had an
     option  expiring  December  31, 1992 to purchase  the leased  capacity  for
     $10.12  million,  less the  prior six  month's  lease  payments,  excluding
     maintenance.  The lease was  capitalized in 1991 at the underlying  asset's
     fair  market  value  and  the  related   obligation  was  recorded  in  the
     Company's Consolidated Financial Statements.
3    In January,  1991, the Company sold 347,047  shares of non-voting  Series A
     15% Convertible Cumulative Preferred Stock to WestMarc Communications, Inc.
     for $9.5088 per share. The preferred stock accrued  dividends on each share
     in cash or stock at the Company's  discretion.  The accrued  dividends were
     payable  semi-annually  at the rate of 15% per  annum if paid in cash or at
     the  rate of  18.75%  if  paid in  Class B  Common  Stock.  Pursuant  to an
     agreement  with  WestMarc  Communications,  Inc.  the Company  acquired and
     retired the preferred stock in 1993.
4    The 1993 increase in  stockholders'  equity is primarily attributed to the 
     Company's  issuance of common stock to MCI.
5    The Company has never paid a cash dividend on its common stock and does not
     anticipate  paying any  dividends in the  foreseeable  future.  The Company
     intends  to  retain  its  earnings,  if  any,  for the  development  of its
     business.  Payment  of  cash  dividends  in the  future,  if  any,  will be
     determined  by the  board  of  directors  of the  Company  in  light of the
     Company's  earnings,  financial  condition,  credit  agreements  and  other
     relevant  considerations.  The  Company's  existing  bank  loan  agreements
     contain  provisions  that prohibit  payment of dividends,  other than stock
     dividends,  as further described in Note (5)(a) to the financial statements
     included in Part II of this Report.
6    The Company  declared and issued stock dividends of  approximately  304,000
     and 286,000 shares of Class B Common Stock in 1992 and 1991,  respectively,
     and paid dividends totaling $153,000 in 1993 on its non-voting Series A 15%
     Convertible Cumulative Preferred Stock.
</FN>
</TABLE>

                                       16

<PAGE>

Item 7.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
            RESULTS OF OPERATIONS

Liquidity and Capital Resources

      Year ended December 31, 1995  ("1995"),  compared with year ended December
31, 1994 ("1994"), compared with year ended December 31, 1993 ("1993").

      The Company's  liquidity  (ability to generate adequate amounts of cash to
meet  the  Company's  need for  cash)  was  affected  by a net  increase  in the
Company's cash and cash  equivalents of $2.4 million from 1994 to 1995.  Sources
of cash in 1995  included the Company's  operating  activities  which  generated
positive cash flow of $14.3 million net of changes in the  components of working
capital,  proceeds from the sale of investment securities held for sale totaling
$832,000,  repayments of notes receivable  totaling $184,000,  and proceeds from
the  issuance  of common  stock of $82,000.  Uses of cash  during 1995  included
repayment of $2.8 million of long-term borrowings and capital lease obligations,
investment of $8.9 million in distribution and support equipment, and payment of
the  final  installment  for  a  PCS  spectrum  license  totaling  approximately
$521,000.

      Net  receivables  increased  $4.8 million from 1994 to 1995 resulting from
increased  sales and receipt of a payment from a major customer in January 1996,
beyond the cutoff date for recording in the current year.

      Payments  of  approximately  $1.9  million of accrued  payroll and payroll
related obligations resulted in reduced balances at 1995 as compared to 1994.

      Working capital totaled $5.1 million and $1.8 million at December 31, 1995
and  1994,  respectively.  Working  capital  generated  by  operations  exceeded
expenditures  for property,  equipment and other assets,  repayment of long-term
borrowings and capital lease obligations,  and the additional  investment in the
PCS license  resulting  in the $3.3  million  increase  at December  31, 1995 as
compared to 1994.

      Cash flow from  operating  activities,  as  depicted  in the  Consolidated
Statements of Cash Flows,  decreased $4.2 million in 1995 as compared 1994. Cash
flow  generated  from  operating  activities  was  reduced by payment of current
obligations.  Cash flow from operating  activities increased $6.8 million during
1994 as compared to 1993  primarily as a result of revenue  growth and decreased
distribution costs as a percentage of revenues as further described below.

      The Company's  expenditures  and other additions to property and equipment
totaled $8.9 million,  $10.6  million,  and $5.7 million  during 1995,  1994 and
1993,  respectively.  Management's  capital  expenditures plan for 1996 includes
approximately  $30 to $50  million  in  capital  necessary  to pursue  strategic
initiatives,  to maintain  the network and to enhance  transmission  capacity to
meet projected traffic demands.

      The two wideband  transponders  the Company owned reached the end of their
expected  useful  life in  August,  1994,  at  which  time  the  Company  leased
replacement capacity. The cost of the leased capacity contributed to an increase
in  distribution  costs  during 1995 as compared to 1994.  The  existing  leased
capacity  is expected to meet the  Company's  requirements  until such time that
capacity  is  available  pursuant  to the  terms  of a new  long-term  agreement
described below.

      The Company entered into a purchase and lease-purchase option agreement in
August 1995 for the acquisition of satellite  transponders to meet its long-term
satellite capacity requirements. The amount of the down payment required in 1996
and the balance payable upon delivery of the transponders as early as the fourth
quarter of 1997 are dependent  upon a number of factors  including the number of
transponders  required  and the timing of their  delivery and  acquisition.  The
Company

                                       17

<PAGE>
does not  expect the down  payment to exceed  $10.1  million  and the  remaining
balance payable  coinciding  with a staged  delivery to exceed $46 million.  The
Company  amended  its  existing  senior  credit  facility to provide a letter of
credit to  accommodate  the required down payment in 1996 and expects to further
amend or refinance its credit agreement to fund its remaining commitment.

      The Company  continues to evaluate the most  effective  means to integrate
its  telecommunications  network with that of MCI. Such integration will require
capital  expenditures  by the  Company  in an amount yet to be  determined.  Any
investment in such capital expenditures is expected to be recovered by increased
revenues from expanded service  offerings and reductions in costs resulting from
integration of the networks.

      The FCC  concluded an auction of spectrum to be used for the  provision of
PCS in March,  1995. The Company was named by the FCC as the high bidder for one
of the two 30 megahertz  blocks of  spectrum,  with Alaska  statewide  coverage.
Acquisition  of the  license  for a cost of  $1.65  million  will  allow  GCI to
introduce new PCS services in Alaska. The Company began developing plans for PCS
deployment in 1995 with limited  technology  service trials planned for 1996 and
service to be offered as early as 1997 or 1998.  Expenditures for PCS deployment
could total $50 to $100 million over the next 10 year period. The estimated cost
for PCS deployment is expected to be funded  through income from  operations and
additional debt and perhaps,  equity  financing.  The Company expects to arrange
additional debt financing  capacity in 1996. The Company's ability to deploy PCS
services will be dependent on its available resources.

      Expenditures  of  approximately  $2.5 million were made in 1994 developing
new DAMA satellite communication  technology. A four-module demonstration system
was constructed in 1994 and was integrated into the Company's  telecommunication
network  in  1995.  Existing  satellite   technology  relies  on  fixed  channel
assignments to a central hub. DAMA technology  assigns satellite  capacity on an
as needed basis.  The digital DAMA system allows calls to be made between remote
villages  using only one  satellite  hop thereby  reducing  satellite  delay and
capacity requirements while improving quality.

      The Company obtained the necessary APUC and FCC approvals  waiving current
prohibitions  against  construction  of competitive  facilities in rural Alaska,
allowing  for  deployment  of DAMA  technology  in 56 sites in rural Alaska on a
demonstration  basis.  Construction  and  deployment  will  occur in 1996,  with
services expected to be provided during the fourth quarter of 1996. Construction
and deployment costs are expected to total $18 to $20 million,  and are expected
to be funded through a combination  of cash  generated from  operations and bank
financing.

      The Company  announced March 15, 1996 that it has signed letters of intent
to acquire three Alaska cable companies that offer cable  television  service to
more than 101,000  subscribers  serving 74 percent of households  throughout the
state of Alaska.  The Company  intends to acquire Prime Cable of Alaska,  Alaska
Cablevision, Inc. of Kirkland, Washington and Alaskan Cable Network. Prime Cable
operates the state's  largest  cable  television  system  including  stations in
Anchorage,  Bethel,  Kenai and Soldotna,  Alaska.  Alaska  Cablevision  owns and
operates cable stations in Petersburg, Wrangell, Cordova, Valdez, Kodiak, Homer,
Seward,  Nome and Kotzebue,  Alaska.  Alaskan Cable Network operates stations in
Fairbanks,  Juneau, Ketchikan and Sitka, Alaska. This acquisition will allow the
Company to integrate  cable services to bring more  information not only to more
customers,  but in a manner  that is  quicker,  more  efficient  and  more  cost
effective than ever before.  The purchase will facilitate  consolidation  of the
cable  operations  and will  provide a  platform  for  developing  new  customer
products and services over the next several years.

      The total  purchase  price is $280.7  million.  According  to terms of the
agreements,  GCI will issue 16.3  million  shares of Class A Common stock to the
owners of the three cable companies valued at $105.7 million. The balance of the
purchase  will be  provided by  approximately  $175  million of bank  financing.
Additional  capital will be provided from the sale of 2 million  shares of GCI's
Class A Common Stock to MCI Telecommunications Corporation for $6.50 per share.

                                       18

<PAGE>
      Definitive  agreements  are expected to be executed in April 1996 at which
time GCI will apply to the APUC to transfer the licenses of the cable companies.
Once  all  regulatory  approvals  are  granted,  the  cable  companies  will  be
consolidated into a single organization owned by the Company.

      Management  expects  that  cash  flow  generated  by the  Company  will be
sufficient  to meet no less than the  minimum  required  for  maintenance  level
capital  expenditures  and scheduled debt  repayment.  The Company's  ability to
invest in  discretionary  capital and other projects will depend upon its future
cash flows and access to additional debt and/or equity financing.

      Results of Operations

      Year ended December 31, 1995  ("1995"),  compared with year ended December
31, 1994 ("1994"), compared with year ended December 31, 1993 ("1993").

      The Company's  message data and  transmission  services  industry  segment
provides  interstate  and  intrastate  long  distance  telephone  service to all
communities  within  the  state of  Alaska  through  use of its  facilities  and
interconnect  agreements  with other  carriers.  The Company's  average rate per
minute for message  transmission  during 1995,  1994,  and 1993 was  19.1(cent),
18.6(cent),  and 18.2(cent),  respectively.  Total revenues for 1995 were $129.3
million,  an  approximate  10.5 percent  increase  over 1994  revenues of $117.0
million,  which  revenues  increased  14.4 percent over 1993  revenues of $102.2
million.  Revenue  growth is  attributed to the increase in the average rate per
minute and to four fundamental factors, as follows:

      (1)  Growth in interstate  telecommunication  services  which  resulted in
           billable minutes of traffic carried totaling 465, 415 and 365 million
           minutes in 1995, 1994 and 1993, respectively,  or 83.2, 83.9 and 83.9
           percent of total 1995, 1994 and 1993 minutes, respectively.
      (2)  Provision of intrastate  telecommunication services which resulted in
           billable  minutes of traffic  carried  totaling  93.4,  79.6 and 70.1
           million minutes in 1995, 1994 and 1993, respectively,  or 16.8, 16.1,
           and 16.1 percent of total 1995, 1994 and 1993 minutes, respectively.
      (3)  Increases  in revenues  derived from other  common  carriers  ("OCC")
           including MCI and Sprint.  OCC traffic accounted for $38.8 million or
           30.0 percent,  $31.9  million or 27.3 percent,  $26.2 million or 25.6
           percent of total revenues in 1995, 1994 and 1993, respectively.  Both
           MCI and Sprint are major  customers  of the  Company.  Loss of one or
           both of these customers would have a significant  detrimental  effect
           on  revenues  and on  contribution.  There  are no  other  individual
           customers,  the loss of which  would  have a  material  impact on the
           Company's revenues or gross profit.
      (4)  Increased  revenues  associated with private line and private network
           transmission services,  which increased 8 percent in 1995 as compared
           to 1994,  increased  6  percent  in 1994 as  compared  to  1993,  and
           increased 8 percent in 1993 as compared to 1992.

      System sales and service revenues  totaled $7.2 million,  $9.1 million and
$8.3 million in 1995, 1994 and 1993, respectively.  The decrease in system sales
and service revenues is attributed to fewer larger dollar equipment sales orders
received during 1995 as compared to 1994 as well as a reduction of the company's
outsourcing services provided to the oil field services industry.

      Transmission  access and distribution costs, which represent cost of sales
for transmission services, amounted to approximately 56.5 percent, 55.4 percent,
58.9 percent of transmission revenues during 1995, 1994 and 1993,  respectively.
The increase in distribution costs as a percentage of transmission  revenues for
1995 as compared to 1994 results  primarily from  increases in costs  associated
with the Company's lease of transponder  capacity as previously  described.  The
decrease in distribution  costs as a percentage of transmission  revenues during
1994 as compared to 1993  results  from  proportionate  increases in revenues as
compared to costs and decreases in access tariff charges  commencing  July 1993,
offset by increases in costs  associated with the Company's lease of 

                                       19

<PAGE>
replacement   transponder   capacity  as   previously   described.   Changes  in
distribution  costs as a  percentage  of  revenues  will occur as the  Company's
traffic mix changes.  The Company is unable to predict if or when access  charge
rates will change in the future and the impact of such changes on the  Company's
distribution costs.

      Sales and  service  cost of sales as a  percentage  of sales  and  service
revenues amounted to approximately  73.3 percent,  70.4 percent and 65.7 percent
during  1995,  1994  and  1993,  respectively.  Increases  in cost of sales as a
percentage of sales and service revenues result from reduced margins  associated
with equipment sales and service contracts.

      Contribution  increased 5.3 percent  during 1995 as compared to 1994,  and
increased  22.5  percent   during  1994  as  compared  to  1993.   Increases  in
distribution  costs associated with the Company's lease of transponder  capacity
as  previously  described  reduced  the rate of growth in 1995  contribution  as
compared to 1994.  Proportionate  decreases in distribution costs during 1994 as
compared to 1993 coupled  with  proportionate  increases in revenues  during the
same period resulted in the 1994 increase.

      Total  operating  costs and expenses  increased 5.7 percent during 1995 as
compared to the same period in 1994,  and increased  16.5 percent during 1994 as
compared to the same period in 1993.  1995 and 1994  increases in operating  and
engineering,  service, sales and communications,  and general and administrative
costs were necessary to support the Company's expansion efforts and the increase
in minutes of traffic carried.  During 1995 the Company  incurred  approximately
$450,000 for what is expected to be nonrecurring  costs related to breaks in the
undersea fiber optic cable and promotion of its new DAMA technology.  Additional
costs  were  incurred  during  the  fourth  quarter  of 1995  attributed  to the
promotion of the Company's calling plans. Significant marketing,  telemarketing,
and  promotional  expenditures  were  incurred in 1994 to promote the  Company's
introduction of new services and programs  resulting from its strategic alliance
with MCI,  including  MCI's  Friend's and Family  calling  plan,  1-800-COLLECT,
PhoneCash  prepaid  calling  cards,  and an Amway  distributor  resale  program.
Additional general and administrative costs were incurred in 1994 resulting from
the Company's performance based bonus and incentive compensation plans which are
funded from  incremental  operating  cash flow.  Increases in 1994 expenses were
offset  in part by  reductions  in bad debt and  depreciation  and  amortization
costs.  In general,  the Company has dedicated  additional  resources in certain
areas to pursue longer term opportunities.  It must balance the desire to pursue
such opportunities with the need to continue to improve current performance.

      Continuing legal and regulatory costs are, in large part,  associated with
regulatory matters involving the FCC, the APUC, and the Alaska Legislature.

      Interest  expense  decreased  25.5 percent during 1995 as compared to 1994
and  decreased  31.7 percent  during 1994 as compared to 1993.  The decreases in
interest  expense result  primarily from reduction in the Company's  outstanding
indebtedness.

      Income tax expense totaled $5,099,000,  $4,547,000 and $2,764,000 in 1995,
1994 and 1993, respectively,  resulting from the application of statutory income
tax rates to net earnings before income taxes

      The Company has capital loss  carryovers  totaling  approximately  $56,000
which expire in 1997. Tax benefits associated with recorded deferred tax assets,
net  of  valuation  allowances,  are  considered  to be  more  likely  than  not
realizable through taxable income earned in carryback years, future reversals of
existing taxable temporary  differences,  and future taxable income exclusive of
reversing temporary differences and carryforwards.

      The Alaska economy is supported in large part by the oil and gas industry.
ARCO  announced a 715 person  downsizing in July 1994.  Similar  downsizing  was
announced  in 1994 by other  companies  operating in the oil and gas industry in
Alaska for 1995.

                                       20

<PAGE>
      The Alaska  economy is also  supported by the United States armed services
and the United States Coast Guard which maintain bases in Anchorage,  Fairbanks,
Adak,  Kodiak,  and other  communities in Alaska.  The military  presence in the
state of Alaska provides a significant  source of revenues to the economy of the
state. The Company provides message  telephone  services in a variety of ways to
the  United  States  government  and its armed  forces  personnel.  The  Company
provides private lines for secured  point-to-point  data and voice  transmission
services and long distance services individually to military personnel.

      A reduction in federal military spending or closure of a major facility in
Alaska  would  have a  substantial  adverse  impact on the state and would  both
directly  and  indirectly  affect  the  Company.  A  reduction  in the number of
military  personnel  served by the  Company  and a  reduction  in the  number of
private  lines  required  by the  armed  forces  would  have a direct  effect on
revenues. Indirect effects would include a reduction of services provided across
the state in support of the military  community and as a result,  a reduction in
the number of customers served by the Company and volume of traffic carried.

      On July  13,  1995,  the  president  approved  and  Congress  subsequently
accepted the independent Defense Base Closure and Realignment  Commission report
to close 79 military bases and downsize 26 others. The commission  estimates its
list would save $19.3  billion  over 20 years,  at a cost  nationwide  of 43,742
military and civilian jobs and 49,823  indirect  jobs.  Since its first round of
action in 1991, the Defense Base Closure and Realignment  Commission has claimed
more than $5 billion in savings by closing or realigning military bases.

      The following  military  installations  located in Alaska were recommended
for closure or realignment in the 1995 report:  Fort Greely (realign,  estimated
loss of 438 military and 286 civilian jobs), Fort Wainwright (realign, estimated
gain of 205 military and 56 civilian jobs), NAF Adak (closure, estimated loss of
540 military and 138 civilian jobs).

      The  loss  of  jobs  and  associated  revenues  attributed  to oil and gas
industry and military  workforce  reductions  is not expected to have a material
effect on the Company's  operations.  No assurance can be given that funding for
existing  military  installations  in Alaska will not be  adversely  affected by
reprioritization  of needs for military  installations or federal budget cuts in
the future.

      In October 1994, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standard No. 119, "Disclosure about Derivative Financial
Instruments and Fair Value of Financial  Instrument"  ("SFAS No. 119"). SFAS No.
119  requires  disclosures  regarding  amount,  nature  and terms of  derivative
financial instruments,  for instance futures, forward, swap and option contracts
and other instruments with similar characteristics. The Company anticipates that
the  adoption  of SFAS No.  119 in 1996 will not have a  material  effect on its
consolidated financial statements.

      In March 1995, the Financial  Accounting  Standards Board issued Statement
of Financial  Accounting  Standard No. 121,  "Accounting  for the  Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of" ("SFAS No. 121").
This statement sets forth new standards for determining  when long-lived  assets
are impaired and requires such impaired assets to be written down to fair value.
The Company  anticipates that the adoption of SFAS No. 121 in 1996 will not have
a material effect on its consolidated financial statements.

      In October 1995, the Financial Accounting Standards Board issued Statement
of  Financial   Accounting   Standard  No.  123,   "Accounting  for  Stock-Based
Compensation"  ("SFAS No. 123"). SFAS No. 123 establishes  financial  accounting
and reporting standards for stock-based employee compensation plans. Those plans
include all  arrangements  by which  employees  receive shares of stock or other
equity  instruments  of the  employer  or the  employer  incurs  liabilities  to
employees in amounts based on the price of the employer's  stock. This statement
also applies to transactions in

                                       21

<PAGE>
which an entity issues its equity  instruments to acquire goods or services from
nonemployees.  The Company anticipates that the adoption of SFAS No. 123 in 1996
will not have a material effect on its consolidated financial statements.

      The Company generally has experienced  increased costs in recent years due
to the effect of inflation  on the cost of labor,  material  and  supplies,  and
plant and equipment.  A portion of the increased labor and material and supplies
costs directly affects income through increased maintenance and operating costs.
The cumulative impact of inflation over a number of years has resulted in higher
depreciation  expense and increased costs for current  replacement of productive
facilities.  However,  operating efficiencies have partially offset this impact,
as have price increases, although the latter have generally not been adequate to
cover  increased  costs due to inflation.  Competition  and other market factors
limit  the  Company's   ability  to  price  services  and  products  based  upon
inflation's effect on costs.



I
tem 8.     CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

      The consolidated  financial statements of the Company are filed under this
Item,  beginning on Page 23. The financial  statement  schedules  required under
Regulation S-X are filed pursuant to Item 14 of this Report.

                                       22

<PAGE>

                          INDEPENDENT AUDITORS' REPORT
                          ----------------------------



The Board of Directors and Stockholders
General Communication, Inc.:


We  have  audited  the  accompanying  consolidated  balance  sheets  of  General
Communication,  Inc. and  Subsidiaries as of December 31, 1995 and 1994, and the
related  consolidated  statements of operations,  stockholders'  equity and cash
flows for each of the years in the  three-year  period ended  December 31, 1995.
These consolidated  financial statements are the responsibility of the Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,   in  all  material   respects,   the  financial   position  of  General
Communication,  Inc. and  Subsidiaries as of December 31, 1995 and 1994, and the
results  of their  operations  and their cash flows for each of the years in the
three-year period ended December 31, 1995 in conformity with generally  accepted
accounting principles.





                                             /s/KPMG PEAT MARWICK LLP


Anchorage, Alaska
March 15, 1996


                                       23

<PAGE>

<TABLE>
                  GENERAL COMMUNICATION, INC. AND SUBSIDIARIES

                           Consolidated Balance Sheets

                           December 31, 1995 and 1994

<CAPTION>
                           ASSETS                                                                                  1995      1994
           ---------------------------------------                                                                 ----      ----
                                                                                                              (Amounts in thousands)
       <S>                                                                                                       <C>        <C>
       Current assets:
         Cash and cash equivalents ...........................................................................  $  4,017     1,649
                                                                                                                 -------    ------

         Receivables:
                 Trade .......................................................................................    21,737    17,036
                 Other .......................................................................................       253       221
                                                                                                                 -------    ------
                                                                                                                  21,990    17,257
         Less allowance for doubtful receivables .............................................................       295       409
                                                                                                                 -------    ------
                 Net receivables .............................................................................    21,695    16,848
                                                                                                                 -------    ------

         Prepaid and other current assets ....................................................................     1,566     1,344
         Deferred income taxes, net (note 6) .................................................................       746       884
         Inventory ...........................................................................................       991       674
         Notes receivable (note 3) ...........................................................................       167       200
                                                                                                                 -------    ------

                 Total current assets ........................................................................    29,182    21,599
                                                                                                                 -------    ------

       Property and equipment, at cost (notes 5, 8 and 9)
         Land ................................................................................................        73        73
         Distribution systems ................................................................................    67,434    63,272
         Support equipment ...................................................................................    11,610    10,223
         Property and equipment under capital leases .........................................................     2,030     2,030
                                                                                                                 -------    ------
                                                                                                                  81,147    75,598
         Less amortization and accumulated depreciation ......................................................    33,789    28,085
                                                                                                                 -------    ------
                 Net property and equipment in service .......................................................    47,358    47,513
         Construction in progress ............................................................................     3,096        --
                                                                                                                 -------    ------
                 Net property and equipment ..................................................................    50,454    47,513

       Notes receivable (note 3) .............................................................................       904       767
       Investment securities available for sale (note 4) .....................................................        --       785
       Other assets, at cost, net of amortization ............................................................     4,225     3,585
                                                                                                                 -------    ------

                 Total assets ................................................................................  $ 84,765    74,249
                                                                                                                 =======    ======
</TABLE>

      See accompanying notes to consolidated financial statements.

                                       24                            (Continued)

<PAGE>


<TABLE>
                  GENERAL COMMUNICATION, INC. AND SUBSIDIARIES

                           Consolidated Balance Sheets
                                  (Continued)
<CAPTION>
        LIABILITIES AND STOCKHOLDERS' EQUITY                                                                   1995        1994
  ---------------------------------------------------                                                          ----        ----
                                                                                                            (Amounts in thousands)
  <S>                                                                                                       <C>           <C>
  Current liabilities:
    Current maturities of long-term debt (note 5) .......................................................   $  1,689       1,585
    Current maturities of obligations under
       capital leases (note 9) ..........................................................................        282         249
    Accounts payable ....................................................................................     16,861      11,841
    Accrued payroll and payroll related obligations .....................................................      2,108       4,036
    Accrued liabilities .................................................................................      1,134         711
    Accrued income taxes (note 6) .......................................................................        547         217
    Accrued interest ....................................................................................        132         101
    Deferred revenues ...................................................................................      1,317       1,097
                                                                                                            --------      ------
            Total current liabilities ...................................................................     24,070      19,837

  Long-term debt, excluding current maturities (note 5) .................................................      8,291      10,969
  Obligations under capital leases, excluding
     current maturities (note 9) ........................................................................         26         257
  Obligations under capital leases due to related parties,
     excluding current maturities (note 9) ..............................................................        739         791
  Deferred income taxes, net (note 6) ...................................................................      7,004       6,522
  Other liabilities .....................................................................................      1,619         780
                                                                                                            --------      ------
            Total liabilities ...........................................................................     41,749      39,156
                                                                                                            --------      ------

  Stockholders' equity (notes 2, 6 and 7): Common stock (no par):
            Class A.  Authorized
               50,000,000 shares; issued and
               outstanding 19,680,199 and 19,616,614
               shares at December 31, 1995 and
               1994, respectively .......................................................................     13,912      13,830
            Class B.  Authorized
               10,000,000 shares; issued and
               outstanding 4,175,434 and 4,179,019
               shares at December 31, 1995 and
               1994, respectively .......................................................................      3,432       3,432
    Less cost of 122,611 and 105,111 Class A common
       shares held in treasury at December 31, 1995
       and 1994, respectively ...........................................................................       (389)       (328)
    Paid-in capital .....................................................................................      4,041       3,641
    Retained earnings ...................................................................................     22,020      14,518
                                                                                                            --------      ------
            Total stockholders' equity ..................................................................     43,016      35,093
                                                                                                            --------      ------
  Commitments, contingencies and subsequent
     event (notes 9, 11 and 12)
            Total liabilities and stockholders' equity ..................................................   $ 84,765      74,249
                                                                                                            ========      ======
</TABLE>

  See accompanying notes to consolidated financial statements

                                       25

<PAGE>

<TABLE>
                  GENERAL COMMUNICATION, INC. AND SUBSIDIARIES

                      Consolidated Statements of Operations

                  Years ended December 31, 1995, 1994 and 1993
                                                      

<CAPTION>
                                                                                                     1995         1994         1993
                                                                                                     ----         ----         ----
                                                                                     (Amounts in thousands except per share amounts)
<S>                                                                                             <C>            <C>          <C>
Revenues (note 8):
  Transmission services .....................................................................   $ 120,005      105,789       91,838
  Systems sales and service .................................................................       7,193        9,138        8,299
  Other .....................................................................................       2,081        2,054        2,076
                                                                                                 --------      -------      -------

         Total revenues .....................................................................     129,279      116,981      102,213

Cost of sales ...............................................................................      70,221       60,896       56,437
                                                                                                 --------      -------      -------

         Contribution .......................................................................      59,058       56,085       45,776
                                                                                                 --------      -------      -------
Operating costs and expenses:
   Operating and engineering ................................................................       9,182        7,607        5,588
   Service ..................................................................................       2,793        4,751        3,798
   Sales and communications .................................................................       9,865        7,040        4,992
   General and administrative ...............................................................      14,492       14,788       13,037
   Legal and regulatory .....................................................................       1,540        1,334        1,372
   Bad debt .................................................................................       1,459          829        1,207
   Depreciation and amortization ............................................................       6,223        6,739        6,978
                                                                                                 --------      -------      -------

         Total operating costs and expenses .................................................      45,554       43,088       36,972
                                                                                                 --------      -------      -------

         Operating income (note 8) ..........................................................      13,504       12,997        8,804
                                                                                                 --------      -------      -------
Other income (expense):
   Interest expense (notes 2 and 5) .........................................................      (1,146)      (1,539)      (2,254)
   Interest income ..........................................................................         243          223          165
                                                                                                 --------      -------      -------

         Total other income (expense) .......................................................        (903)      (1,316)      (2,089)
                                                                                                 --------      -------      -------

         Earnings before income taxes ........................................................      12,601       11,681        6,715

Income tax expense (notes 2 and 6) ..........................................................      (5,099)      (4,547)      (2,764)
                                                                                                 --------      -------      -------

         Net earnings ........................................................................  $    7,502        7,134        3,951
                                                                                                 =========     ========     ========

         Net earnings per common share ......................................................   $     .31          .30          .17
                                                                                                 =========     ========     ========
</TABLE>

     See accompanying notes to consolidated financial statements.

                                       26

<PAGE>

<TABLE>
                  GENERAL COMMUNICATION, INC. AND SUBSIDIARIES

                 Consolidated Statements of Stockholders' Equity

                  Years ended December 31, 1995, 1994 and 1993
<CAPTION>
                                                            Shares of                  Class A   Class B  Class A
                                                           Common Stock     Preferred  Common    Common Shares Held Paid-in Retained
                                                         Class A    Class B    Stock    Stock     Stock in Treasury Capital Earnings
                                                       (Amounts in thousands)                     (Amounts in thousands)
<S>                                                       <C>       <C>       <C>       <C>       <C>     <C>        <C>     <C>
Balances at December 31, 1992 .........................   12,639     2,853    $3,282     2,430    1,210     (328)    4,690    3,586

Net earnings ..........................................       --        --        --        --       --       --        --    3,951
Class B shares converted to Class A ...................       15       (15)       --        --       --       --        --       --
Tax effect of excess stock compensation
  expense for tax purposes over amounts
  recognized for financial reporting purposes .........       --        --        --        --       --      514        --       --
Retirement of shares ..................................     (562)   (3,282)     (359)       --       --   (1,987)       --
Preferred stock dividend paid .........................       --        --        --        --       --       --        --     (153)
Shares issued under stock option plan .................      118        --        --       124       --       --        --       --
Shares issued and issuable under
  officer  stock option agreements ....................      539        --        --       385       --       --        35       --
Shares issued, net of associated costs ................    6,252     1,276        --    10,890    2,222       --        --       --
                                                          ------     -----     -----    ------    -----   ------     -----   ------

Balances at December 31, 1993 .........................   19,001     4,114        --    13,470    3,432     (328)    3,252    7,384
Net earnings ..........................................       --        --        --        --       --       --        --    7,134
Class B shares converted to Class A ...................        9        (9)       --        --       --       --        --       --
Tax effect of excess stock compensation
  expense for tax purposes over amounts
  recognized for financial reporting purposes .........       --        --        --        --       --      371        --       --
Shares issued under stock option plan .................       37        --        --        96       --       --        --       --
Shares issued under warrant agreement, net ............      254        --        --       185       --       --        --       --
Shares issued and issuable under
  officer stock option agreements .....................      316        74        --        79       --       --        18       --
                                                          ------     -----     -----    ------    -----   ------     -----   ------

Balances at December 31, 1994 .........................   19,617     4,179 $      --    13,830    3,432     (328)    3,641   14,518
Net earnings ..........................................       --        --        --        --       --       --        --    7,502
Class B shares converted to Class A ...................        3        (3)       --        --       --       --        --       --
Tax effect of excess stock compensation
  expense for tax purposes over amounts
  recognized for financial reporting purposes .........       --        --        --        --       --      397        --       --
Shares purchased and held in Treasury .................       --        --        --        --       --      (61)       --       --
Shares issued under stock option plan .................       40        --        --        82       --       --        --       --
Shares issued and issuable under
  officer stock option agreements .....................       20        --        --        --       --       --         3       --
                                                          ------     -----     -----    ------    -----   ------     -----   ------

Balances at December 31, 1995 .........................   19,680     4,176    $   --    13,912    3,432     (389)    4,041   22,020
                                                          ======     =====     =====    ======    =====   =======    ======  =======
</TABLE>

See accompanying notes to consolidated financial statements.

                                       27

<PAGE>

<TABLE>
                  GENERAL COMMUNICATION, INC. AND SUBSIDIARIES

                      Consolidated Statements of Cash Flows

                  Years ended December 31, 1995, 1994 and 1993

<CAPTION>
                                                                                  1995         1994       1993
                                                                                  ----         ----       ----
                                                                                      (Amounts in thousands)
                    <S>                                                        <C>          <C>          <C>
                    Cash flows from operating activities:
                      Net earnings .........................................   $  7,502       7,134       3,951
                      Adjustments to reconcile net earnings
                        to net cash provided by operating activities:
                            Depreciation and amortization ..................      6,223       6,739       6,978
                            Deferred income tax expense ....................      1,017       1,588       1,136
                            Deferred compensation and compensatory
                              stock options ................................        433         343         183
                            Disposals of property and equipment ............        170          --          --
                            Bad debt expense, net of write-offs ............       (114)       (312)         46
                            Other noncash income and expense items .........        354         (36)          7
                      Change in operating assets and
                        liabilities (note 2) ...............................     (1,307)      3,063        (591)
                                                                               --------     -------      ------
                            Net cash provided by operating activities ......     14,278      18,519      11,710
                                                                               --------     -------      ------

                    Cash flows from investing activities:
                     Purchases of property and equipment ...................     (8,938)    (10,604)     (5,744)
                     Cash received from disposal of property and equipment .         --          --         105
                      Purchases of other assets including long-term deposits       (934)     (1,110)       (303)
                      Proceeds from the sale of available for sale security         832          --          --
                      Notes receivable issued ..............................       (251)       (339)       (602)

                      Payments received on notes receivable ................        184          10         964
                      Restricted cash investments ..........................         --         684       2,268
                                                                               --------     -------      ------
                            Net cash used in investing activities ..........     (9,107)    (11,359)     (3,312)
                                                                               --------     -------      ------

                    Cash flows from financing activities:
                      Long-term borrowings .................................         --          --      10,000
                      Repayments of long-term borrowings and
                        capital lease obligations ..........................     (2,824)     (8,494)    (26,610)
                      Proceeds from common stock issuance ..................         82         360      13,641
                      Purchase of treasury stock ...........................        (61)         --          --
                      Disbursements to retire common and
                         preferred stock ...................................         --          --      (5,627)
                      Dividends paid on preferred stock ....................         --          --        (153)
                                                                               --------     -------      ------
                            Net cash used by financing activities ..........     (2,803)     (8,134)     (8,749)
                                                                               --------     -------      ------

                      Net increase (decrease) in cash and cash equivalents .      2,368        (974)       (351)

                    Cash and cash equivalents at beginning of year .........      1,649       2,623       2,974
                                                                               --------     -------      ------

                    Cash and cash equivalents at end of year ...............   $  4,017       1,649       2,623
                                                                               ========     =======      ======
</TABLE>

      See accompanying notes to consolidated financial statements.

                                       28

<PAGE>



                  GENERAL COMMUNICATION, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements


      (l)  Summary of Significant Accounting Principles

           (a)  General

           General  Communication,  Inc.  ("GCI"),  an Alaska  corporation,  was
           incorporated  in 1979. GCI  Communication  Corp.  ("GCC") , an Alaska
           corporation, is a wholly owned subsidiary of GCI and was incorporated
           in 1990. GCI Network  Systems,  Inc.  ("Network  Systems"),  formerly
           Transalaska  Network  Systems,  Inc.,  an Alaska  corporation,  was a
           wholly-owned   subsidiary  of  GCC  and  was  incorporated  in  1988.
           Effective  December 31, 1993 Network  Systems  operations were merged
           into GCC.  Both GCC and  Network  Systems  operations  continue to be
           provided by the surviving corporation, GCC, subsequent to the merger.
           GCI  Communication  Services,  Inc.  ("Communication  Services"),  an
           Alaska  corporation,  is a  wholly-owned  subsidiary  of GCI  and was
           incorporated in 1992. GCI Leasing Co., Inc. ("Leasing  Company"),  an
           Alaska  corporation,  is a wholly-owned  subsidiary of  Communication
           Services and was incorporated in 1992. GCI and GCC are engaged in the
           transmission  of interstate and intrastate  private line and switched
           message long distance telephone service between Anchorage, Fairbanks,
           Juneau,  and other  communities  in Alaska and the  remaining  United
           States and foreign countries.  GCC also provides  northbound services
           to certain common  carriers  terminating  traffic in Alaska and sells
           and services dedicated  communications systems and related equipment.
           Communication  Services provides private network  point-to-point data
           and  voice  transmission  services  between  Alaska,  Hawaii  and the
           western  contiguous  United States.  Leasing  Company owns and leases
           capacity on an undersea fiber optic cable used in the transmission of
           interstate  private line and switched message long distance  services
           between Alaska and the remaining United States and foreign countries.

           (b)  Principles of Consolidation

           The consolidated  financial  statements  include the accounts of GCI,
           its wholly-owned  subsidiaries GCC and  Communication  Services,  and
           Communication  Services wholly owned subsidiary Leasing Company.  All
           significant   intercompany   balances  and  transactions   have  been
           eliminated in consolidation.

           (c)  Net Earnings Per Common Share

<TABLE>
           Primary  earnings  per common  share are  determined  by dividing net
           earnings  (after  deducting  preferred stock dividends of $153,000 in
           1993) by the weighted number of common and common  equivalent  shares
           outstanding:
<CAPTION>
                                                   1995              1994             1993
                                                   ----              ----             ----
                                                                (in thousands)
                <S>                               <C>               <C>              <C>
                Weighted average common
                  shares outstanding              23,723            23,199           21,085
                Common equivalent shares
                  outstanding                        703               884            1,243
                                                  ------            ------           ------

                                                  24,426            24,083           22,328
                                                  ======            ======           ======
</TABLE>

           The difference  between shares for primary and fully diluted earnings
           per share was not significant in any period presented.

                                       29                           (Continued)

<PAGE>
           (d)  Cash and Cash Equivalents

           Cash  equivalents  consist of short-term,  highly liquid  investments
           which are readily convertible into cash.

           (e)  Inventory

           Inventory of merchandise  for resale and parts is stated at the lower
           of cost or market.  Cost is determined using the first-in,  first-out
           method for parts and the specific identification method for equipment
           held for resale.

           (f)  Property and Equipment

           Property  and  equipment  is  stated at cost.  Construction  costs of
           transmission  facilities are  capitalized.  Equipment  financed under
           capital  leases is recorded at the lower of fair market  value or the
           present  value of future  minimum  lease  payments.  Construction  in
           progress  represents  distribution  systems and support equipment not
           placed in service at December 31, 1995;  management  intends to place
           this equipment in service during 1996.

           Depreciation  and  amortization is computed on a straight-line  basis
           based  upon the  shorter of the lease  term or the  estimated  useful
           lives  of the  assets  ranging  from 3 to 20 years  for  distribution
           systems  and 5 to 10 years for  support  equipment.  Amortization  of
           equipment   financed   under   capitalized   leases  is  included  in
           depreciation expense.

           Repairs and maintenance  are charged to operations,  and renewals and
           additions are capitalized. Gains or losses are recognized at the time
           of ordinary retirements, sales or other dispositions of property.

           (g)  Marketable Securities

           Effective  January  1, 1994,  GCI and  subsidiaries  ("the  Company")
           adopted  Statement of Financial  Accounting  Standards No. 115 ("SFAS
           No.  115"),  Accounting  for Certain  Investments  in Debt and Equity
           Securities.  Under  SFAS No.  115,  securities  when  purchased,  are
           classified in either the trading account  securities  portfolio,  the
           securities  available for sale  portfolio,  or the securities held to
           maturity  portfolio.  Securities  are  classified as trading  account
           securities  when the  intent is profit  maximization  through  market
           appreciation  and resale.  Securities are classified as available for
           sale when management intends to hold the securities for an indefinite
           period of time. Securities are classified as held to maturity when it
           is management's intent to hold these securities until maturity.

           Unrealized  gains or  losses  on  securities  available  for sale are
           excluded  from  earnings  and  reported as a net amount in a separate
           component of stockholders'  equity. There was no cumulative effect on
           the  financial   statements  from  the  adoption  of  SFAS  No.  115.
           Securities  available  for sale are stated at fair market value which
           approximates cost.

           (h)  Other Assets

           Other  assets,  excluding  deferred  loan  costs  and  goodwill,  are
           recorded at cost and are amortized on a straight-line basis over 2 to
           15 years.  Deferred loan costs are recorded at cost and are amortized
           on a straight-line basis over the life of the associated loan.

           Goodwill totaled approximately  $1,286,000 and $1,387,000 at December
           31, 1995 and 1994, respectively, net of amortization of approximately
           $697,000 and $596,000,

                                       30                           (Continued)

<PAGE>
           respectively.  Goodwill represents the excess of cost over fair value
           of net assets  acquired  and is being  amortized  on a  straight-line
           basis over twenty years.

           (i)  Revenue From Services and Products

           Revenues generated from long distance  telecommunication services are
           recognized when the services are provided.  Revenues from the sale of
           equipment  are  recognized  at the time the equipment is delivered or
           installed.  Service  revenues are derived  primarily from maintenance
           contracts on equipment and are  recognized  on a prorated  basis over
           the term of the  contract.  Other  revenues are  recognized  when the
           service is provided.

           (j)  Interest Expense

           Interest costs incurred during the construction period of significant
           capital projects are capitalized. Interest capitalized by the Company
           totaled $112,000 during the year ended December 31, 1995.

           (k)  Income Taxes

           In February,  1992, the Financial  Accounting  Standards Board issued
           Statement of Financial Accounting Standards No. 109 ("SFAS No. 109"),
           "Accounting  for Income  Taxes".  SFAS No. 109 requires a change from
           the deferred  method of accounting for income taxes of APB Opinion 11
           to the asset and  liability  method of  accounting  for income taxes.
           Under the asset and  liability  method of SFAS No. 109,  deferred tax
           assets and liabilities are recognized for the future tax consequences
           attributable to differences  between the financial statement carrying
           amounts of existing assets and  liabilities and their  respective tax
           bases. Deferred tax assets and liabilities are measured using enacted
           tax rates expected to apply to taxable earnings in the years in which
           those temporary  differences are expected to be recovered or settled.
           Under SFAS No. 109, the effect on deferred tax assets and liabilities
           of a change in tax rates is recognized in earnings in the period that
           includes the enactment date.

           Effective  January 1, 1993,  the Company  adopted  SFAS No. 109.  The
           adjustment  required for this change in  accounting  for income taxes
           was  recorded in the first  quarter of 1993 and resulted in increases
           in  current  deferred  tax  assets  and net  long-term  deferred  tax
           liabilities,  and provision of a valuation allowance for deferred tax
           assets. No cumulative effect adjustment to the Company's consolidated
           statement of operations was required.

           (l)  Use of Estimates

           The preparation of financial  statements in conformity with generally
           accepted accounting  principles requires management to make estimates
           and  assumptions  that  affect  the  reported  amounts  of assets and
           liabilities  and 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.  Actual  results
           could differ from those estimates.

           (m)  Reclassifications

           Reclassifications  have been made to the 1994 financial statements to
           make them comparable with the 1995 presentation.

                                       31                           (Continued)

<PAGE>
(2)        Consolidated Statements of Cash Flows Supplemental Disclosures

           For  purposes of the  Statement  of Cash Flows,  the  Company's  cash
           equivalents  includes  cash and all  invested  assets  with  original
           maturities of less than three months.

<TABLE>
           Changes  in  operating   assets  and   liabilities   consist  of  (in
           thousands):
<CAPTION>
           Year ended December 31,                                     1995              1994             1993
                                                                       ----              ----             ----
           <S>                                                    <C>                   <C>             <C>
           (Increase) decrease in trade receivables               $  (4,701)               63           (2,287)
           (Increase) decrease in other receivables                     (32)              (91)             535
           (Increase) decrease in prepaid and other
              current assets                                           (222)              312             (477)
           (Increase) decrease in inventory                            (317)              (38)              70
           Decrease in income taxes receivable                          ---               ---               17
           Increase in accounts payable                               5,020             1,434              621
           Increase (decrease) in accrued liabilities                   423               195              (64)
           Increase (decrease) in accrued payroll
              and payroll related obligations                        (1,928)            1,238              857
           Increase in accrued income taxes                             330               163               54
           Increase (decrease) in accrued interest                       31                14              (43)
           Increase (decrease) in deferred revenues                     220               (90)             126
           Decrease in components of other liabilities                (131)              (137)             ---
                                                                   --------             -----           ------

                                                                  $  (1,307)            3,063             (591)
                                                                   =========            =====           ======
</TABLE>

           Income  taxes paid  totaled  $3,752,000,  $2,796,000  and  $1,558,000
           during 1995, 1994 and 1993, respectively.

           Interest  paid  totaled  approximately  $1,227,000,   $1,525,000  and
           $2,297,000 during 1995, 1994 and 1993, respectively.

           The Company  recorded  $397,000,  $371,000 and $514,000 in 1995, 1994
           and 1993,  respectively,  in paid-in  capital in  recognition  of the
           income  tax  effect  of excess  stock  compensation  expense  for tax
           purposes over amounts recognized for financial reporting purposes.


                                       32                           (Continued)

<PAGE>
(3)        Notes Receivable

<TABLE>
           A summary of notes receivable follows:
<CAPTION>
                                                                                         December 31,
                                                                                    1995              1994
                                                                                    ----              ----
                                                                                    (Amounts in thousands)
           <S>                                                                   <C>                  <C>
           Note receivable from officer bearing interest at the rate paid by the
            Company  on its senior  indebtedness,  secured by GCI Class A common
            stock,  due on the 90th day after  termination of employment or July
            30, 1998,whichever is earlier.                                       $   500               500

           Note  receivable  from officer  bearing  interest at 10%,  secured by
            Company  stock;  payable  in equal  annual  installments  of $36,513
            through August 26, 2004.                                                 224               224

           Notes  receivable from officers and others bearing  interest at 7% to
           10%,  unsecured and secured by Company common stock,  shares of other
           common stock and equipment; due September 20, 1996
           through August 26, 2004.                                                  261               194
                                                                                  ------             -----

              Total notes receivable                                                 985               918

              Less current portion                                                  (167)             (200)

              Plus long-term accrued interest                                         86                49
                                                                                  ------             -----

                                                                                 $   904               767
                                                                                  ======             =====
</TABLE>

(4)        Investment Securities Available for Sale

           As of January 1, 1994 the Company adopted SFAS No. 115.  Accordingly,
           the Company's  marketable  equity  securities have been classified as
           available for sale  securities  and are reported at fair market value
           which  approximate  cost at December  31,  1994.  The Company held no
           trading   account   investment   securities  or  available  for  sale
           securities at December 31, 1995.


                                       33                           (Continued)

<PAGE>


(5)        Long-term Debt

<TABLE>
           Long-term debt is summarized as follows:
<CAPTION>
                                                             December 31,
                                                         --------------------
                                                         1995            1994
                                                         ----            ----
                                                        (Amounts in thousands)
                    <S>                              <C>               <C>
                    Credit Agreement (a)             $  1,000           2,000

                    Undersea Fiber and Equipment
                      Loan Agreement (b)                8,271           9,500

                    Financing Obligation (c)              709           1,054
                                                      -------          ------

                                                        9,980          12,554

                    Less current maturities             1,689           1,585
                                                      -------          ------

                    Long-term debt, excluding
                      current maturities             $  8,291          10,969
                                                      =======          ======
</TABLE>

           (a)      GCI completed a refinancing  of its senior  indebtedness  on
                    May 14,  1993.  The facility was amended on October 31, 1995
                    to provide  financing  for the initial  letter of credit and
                    subsequent  down payment  required  pursuant to the terms of
                    the Company's  transponder  purchase  agreement with Hughes.
                    The facility is comprised  of two  components,  the first of
                    which is a $15,750,000  reducing revolver requiring payments
                    or reductions of $650,000 per quarter  through  December 31,
                    1996,  and $812,500  thereafter  through its  expiration  on
                    December 31, 1997.  $2.65 million of this component has been
                    used to  provide a letter of  credit  to secure  payment  of
                    certain  access  charges   associated   with  the  Company's
                    provision of telecommunications services within the state of
                    Alaska.  $4.6  million of this  portion of the  facility was
                    available  for  additional  borrowings at December 31, 1995,
                    $3.3  million  of which was drawn  down in March  1996.  The
                    other component totals $10.08 million,  and has been used to
                    provide a $9.1  million  letter of  credit  to  Hughes.  The
                    letter  of  credit is  expected  to be drawn  down by Hughes
                    after delivery of transponder  capacity scheduled for May or
                    June of 1996.  Once drawn upon,  the facility will be repaid
                    in quarterly  installments of $455,000  beginning  September
                    30, 1996,  with all remaining  outstanding  principal due on
                    December 31, 1997.

                    The  Credit  agreement   provides  for  interest  (8.18%  at
                    December 31, 1995),  among other options,  at LIBOR plus two
                    and one-quarter to two and three-quarters  percent depending
                    on the Company's leverage ratio as defined in the Agreement.
                    A fee of .50% per annum is assessed on the unused portion of
                    the facility.

                    The  credit  agreement  contains,  among  others,  covenants
                    requiring  maintenance of specific  levels of operating cash
                    flow to indebtedness, to interest expense, to fixed charges,
                    and to pro forma debt service. The credit agreement includes
                    limitations on acquisitions and additional indebtedness, and
                    prohibits payment of dividends,  other than stock dividends.
                    The  Company  was in  compliance  with all credit  agreement
                    covenants during the period commencing May 14, 1993 (date of
                    the refinancing) through December 31, 1995.

                                       34                           (Continued)

<PAGE>
                    Security for the credit  agreement  includes a pledge of the
                    stock of GCC and Communication Services, and a first lien on
                    substantially all of GCC's assets. GCI and its subsidiaries,
                    Communication  Services and Leasing  Company,  are liable as
                    guarantors.

                    In June, 1993, the Company entered into a two-year  interest
                    rate  swap  agreement  with  a  bank  whereby  the  rate  on
                    $18,200,000   of  debt  (reduced  by  $422,500  per  quarter
                    beginning  July 1,  1993)  was  fixed at 4.45  percent  plus
                    applicable  margins.  The interest  effect of the difference
                    between  the fixed rate and the  three-month  LIBOR rate was
                    either  added  to  or  served  to  reduce  interest  expense
                    depending  on the relative  interest  rates.  The  agreement
                    expired June 30, 1995.

           (b)      On  December  31,  1992,  Leasing  Company  entered  into  a
                    $12,000,000   loan   agreement,   of   which   approximately
                    $9,000,000 of the proceeds were used to acquire  capacity on
                    the undersea  fiber optic cable linking  Seward,  Alaska and
                    Pacific City, Oregon.  Concurrently,  Leasing Company leased
                    the  capacity  under a ten  year  all  events,  take or pay,
                    contract to MCI,  who  subleased  the  capacity  back to the
                    Company.  The  lease and  sublease  agreements  provide  for
                    equivalent terms of 10 years and identical  monthly payments
                    of $200,000.  The proceeds of the lease  agreement  with MCI
                    were pledged as primary security for the financing. The loan
                    agreement   provides   for  monthly   payments  of  $170,000
                    including  principal  and  interest  through  the earlier of
                    January  1,  2003,  or  until  repaid.  The  loan  agreement
                    provides  for  interest  at the prime rate plus  one-quarter
                    percent. Additional collateral includes substantially all of
                    the assets of Leasing  Company  including the fiber capacity
                    and a security interest in all of its outstanding stock. MCI
                    has a second  position  security  interest  in the assets of
                    Leasing Company.

           (c)      As consideration  for MCI's role in enabling Leasing Company
                    to finance  and  acquire  the  undersea  fiber  optic  cable
                    capacity  described  at note  5(b)  above,  Leasing  Company
                    agreed to pay MCI  $2,040,000 in sixty  monthly  payments of
                    $34,000.  For financial statement  reporting  purposes,  the
                    obligation has been recorded at its remaining present value,
                    using a discount  rate of 10% per annum.  The  agreement  is
                    secured by a second position security interest in the assets
                    of Leasing Company.

           As of December 31, 1995  maturities of long-term debt were as follows
           (in thousands):

                           Year ending
                           December 31,

                                1996                           $  1,689
                                1997                              2,882
                                1998                              1,631
                                1999                              1,780
                                2000                              1,942
                                2001 and thereafter                  56
                                                                -------
                                                               $  9,980
                                                                =======

                                       35                           (Continued)

<PAGE>


(6)        Income Taxes

<TABLE>
           Total income tax expense  (benefit) for the years ended  December 31,
           1995, 1994 and 1993 were allocated as follows (amounts in thousands):
<CAPTION>
                                                                                             Years ended December 31,
                                                                                             ------------------------
                                                                                     1995              1994              1993
                                                                                     ----              ----              ----
              <S>                                                                  <C>                <C>               <C>
              Earnings from continuing operations                                  $5,099             4,547             2,764
              Stockholders' equity, for stock option compensation
                expense for tax purposes in excess of amounts
                recognized for financial reporting purposes                          (397)             (371)             (514)
                                                                                    -----             -----             -----

                                                                                   $4,702             4,176             2,250
                                                                                    =====             =====             =====
</TABLE>


<TABLE>
           Income tax expense consists of the following:
<CAPTION>

                                               Years ended December 31,
                                               ------------------------
                                         1995             1994              1993
                                         ----             ----              ----
                                                 (Amounts in thousands)
           <S>                          <C>               <C>              <C>
           Current tax expense:
                    Federal taxes       $3,077            2,604            1,615
                    State taxes          1,005              355               13
                                         -----            -----            -----
                                         4,082            2,959            1,628
                                         -----            -----            -----

           Deferred tax expense:
                    Federal taxes          780              816              508
                    State taxes            237              772              628
                                         -----            -----            -----
                                         1,017            1,588            1,136
                                         -----            -----            -----

                                        $5,099            4,547            2,764
                                         =====            =====            =====
</TABLE>


<TABLE>
           Total  income tax expense  differed  from the  "expected"  income tax
           expense  determined by applying the statutory federal income tax rate
           of 34% as follows:
<CAPTION>
                                                                          Years ended December 31,
                                                                          ------------------------
                                                                   1995             1994              1993
                                                                   ----             ----              ----
                                                                           (Amounts in thousands)
           <S>                                                   <C>               <C>               <C> 

           "Expected" statutory tax expense                      $4,284            3,971             2,283
           State income taxes, net of federal benefit               820              742               424
           Income tax effect of goodwill
              amortization, nondeductible
              expenditures and other items, net                      (5)           (166)                57
                                                                  -----            -----             -----

                                                                 $5,099            4,547             2,764
                                                                  =====            =====             =====
</TABLE>


                                       36                           (Continued)

<PAGE>

<TABLE>
           The  tax  effects  of  temporary   differences   that  give  rise  to
           significant  portions of the  deferred  tax assets and  deferred  tax
           liabilities at December 31, 1995 and 1994 are presented below.
<CAPTION>
                                                                                                                      December 31,
                                                                                                                     1995      1994
                                                                                                                     ----      ----
                                                                                                              (Amounts in thousands)
               <S>                                                                                                <C>            <C>
               Net current deferred tax assets:
                       Accounts receivable, principally due to allowance for
                         for doubtful accounts ................................................................   $   119       199
                       Compensated absences, accrued for financial reporting purposes .........................       400       333
                       Federal and state alternative minimum tax credit carryforwards .........................        --       330
                       Workers compensation and self insurance health reserves,
                         principally due to accrual for financial reporting purposes ..........................       183       185
                       Other ..................................................................................       133        36
                                                                                                                  -------     -----
                              Total gross current deferred tax assets .........................................       835     1,083
                              Less valuation allowance ........................................................       (89)     (199)
                                                                                                                  -------     -----
                              Net current deferred tax assets .................................................   $   746       884
                                                                                                                  =======     =====
                 Net long-term deferred tax assets:
                       Deferred compensation expense for financial
                         reporting purposes in excess of amounts recognized
                         for tax purposes .....................................................................   $   587       511
                       Employee stock option compensation expense for financial
                         reporting purposes in excess of amounts recognized
                         for tax purposes .....................................................................       206       234
                       Capital loss carryforwards .............................................................        23       168
                       Other ..................................................................................       453       311
                                                                                                                  -------     -----
                              Total gross long-term deferred tax assets .......................................     1,269     1,224
                              Less valuation allowance ........................................................      (136)     (226)
                                                                                                                  -------     -----
                              Net long-term deferred tax assets ...............................................     1,133       998
                                                                                                                  -------     -----
                 Net long-term deferred tax liabilities:
                       Plant and equipment, principally due to differences in
                         depreciation .........................................................................     7,997     7,507
                       Other ..................................................................................       140        13
                                                                                                                  -------     -----
                              Total gross long-term deferred tax liabilities ..................................     8,137     7,520
                                                                                                                  -------     -----
                              Net combined long-term deferred tax liabilities .................................   $ 7,004     6,522
                                                                                                                  =======     =====
</TABLE>

           The  valuation  allowance  for  deferred  tax  assets  was  $225,000,
           $425,000  and  $425,000  as of  December  31,  1995,  1994 and  1993,
           respectively.

           Tax benefits  associated  with recorded  deferred tax assets,  net of
           valuation  allowances,  are  considered  to be more  likely  than not
           realizable  through taxable income earned in carryback years,  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.

           For income tax reporting purposes,  the Company has available capital
           loss carryovers totaling approximately $56,000 which expire in 1997.

           The  Company's  U.S.  income  tax return  for 1993 was  selected  for
           examination  by  the  Internal   Revenue  Service  during  1995.  The
           examination commenced during the fourth

                                       37                           (Continued)

<PAGE>
           quarter  of  1995.  Management  believes  this  examination  will not
           adversely affect the consolidated financial statements.

 (7)       Stockholders' Equity

           Common Stock

           GCI's Class A common stock and Class B common stock are  identical in
           all respects,  except that each share of Class A common stock has one
           vote per share and each  share of Class B common  stock has ten votes
           per  share.  In  addition,   each  share  of  Class  B  common  stock
           outstanding  is  convertible,  at the option of the holder,  into one
           share of Class A common stock.

           MCI owns a total of 6,251,509  shares of GCI's Class A and  1,275,791
           shares of GCI's Class B common stock which on a fully  diluted  basis
           represented  approximately  31  and 30  percent  of  the  issued  and
           outstanding shares of the respective class.

           Stock Warrants

           On May 18,  1994 an officer of the  Company  exercised  warrants.  In
           exchange for $114,  the Company  issued  160,297 and 74,028 shares of
           GCI Class A and Class B common stock, respectively.

           Pursuant to the terms of a stock  appreciation right granted in 1988,
           the Company  issued to its former senior  lender  warrants to acquire
           1,021,373  shares of GCI Class A common  stock for $.85669 per share.
           Warrants  to  purchase  600,000  shares of Class A common  stock were
           exercised  in  April  and  May,  1991,  an  additional  168,085  were
           exercised in September,  1991 and the remaining  warrants to purchase
           253,288 shares were exercised in September and October, 1994.

           Stock Option Plan

           In December 1986, GCI adopted a Stock Option Plan (the "Option Plan")
           in order to provide a special  incentive  to  officers,  non-employee
           directors,  and employees by offering them an  opportunity to acquire
           an equity  interest in GCI. The Option Plan provides for the grant of
           options  for a  maximum  of  3,200,000  shares  of GCI Class A common
           stock,  subject to adjustment upon the occurrence of stock dividends,
           stock  splits,  mergers,  consolidations  or certain other changes in
           corporate  structure  or  capitalization.  If an  option  expires  or
           terminates,  the shares  subject to the option will be available  for
           further  grants of options under the Option Plan.  The Option Plan is
           administered   by  GCI's  Board  of   Directors  or  a  committee  of
           disinterested persons.

           Employees of GCI  (including  officers and  directors),  employees of
           affiliated  companies and non-employee  directors of GCI are eligible
           to participate in the Option Plan.  Options  granted under the Option
           Plan must  expire not later  than ten years  after the date of grant.
           The  exercise  price may be less than,  equal to, or greater than the
           fair market value of the shares on the date of grant. Options granted
           pursuant  to the Option Plan are only  exercisable  if at the time of
           exercise the option holder is an employee or non-employee director of
           GCI.

                                       38                           (Continued)

<PAGE>

<TABLE>
      Information  for the years  1993,  1994 and 1995 with  respect to the Plan
follows:
<CAPTION>
                                                                         Shares        Option Price
                                                                         ------        ------------
           <S>                                                        <C>              <C>
           Outstanding at December 31, 1992                           1,660,677        $0.75-$3.00
                                                                      ---------
                    Granted                                             298,500        $4.00
                    Exercised                                          (129,519)       $0.75-$2.25
                    Forfeited                                            (6,000)       $4.00
                                                                      ---------

           Outstanding at December 31, 1993                           1,823,658        $0.75-$4.00
                                                                      ---------
                    Granted                                                 ---        ---
                    Exercised                                           (72,459)       $0.75-$3.00
                    Forfeited                                           (21,500)       $4.00
                                                                      ---------

           Outstanding at December 31, 1994                           1,729,699        $0.75-$4.00
                    Granted                                             610,000        $4.00
                    Exercised                                           (40,000)       $1.87-$2.25
                    Forfeited                                           (11,500)       $4.00
                                                                      ---------

           Outstanding at December 31, 1995                           2,288,199        $0.75-$4.00
                                                                      =========
           Available for grant at December 31, 1995                     349,553
                                                                      =========
           Exercisable at December 31, 1995                             986,999
                                                                      =========
</TABLE>

           The options expire at various dates through October 2005.

           Stock Options Not Pursuant to a Plan

           In June 1989,  officer  John  Lowber was  granted  options to acquire
           100,000 Class A common shares at $.75 per share.  The options  vested
           in  equal  annual  increments  over a  five-year  period  and  expire
           February, 1999.

           The Company entered into an incentive agreement in June 1989 with Mr.
           Behnke, an officer of the Company.  The incentive  agreement provides
           for the  acquisition  of  85,190  remaining  shares of Class A common
           stock of the Company for $.001 per share exercisable through June 16,
           1997. The shares under the incentive agreement vested in equal annual
           increments over a three-year period.

           Class A Common Shares Held in Treasury

           The Company  acquired  105,111  shares of its Class A common stock in
           1989 for  approximately  $328,000 to fund a deferred bonus  agreement
           with Mr. Duncan,  an officer of the Company.  The agreement  provides
           that the  balance is  payable  after the later of a)  termination  of
           employment  or  b)  six  months  after  the  effective  date  of  the
           agreement.  In September  1995,  the Company  acquired an  additional
           17,500  shares of Class A common stock for  approximately  $61,000 to
           fund  additional  deferred  compensation  agreements  for  two of its
           officers, including Mr. Duncan.

                                       39                           (Continued)

<PAGE>
           Employee Stock Purchase Plan

           In December  1986,  GCI adopted an Employee  Stock Purchase Plan (the
           "Plan")  qualified under Section 401 of the Internal  Revenue Code of
           1986 (the "Code"). The Plan provides for acquisition of the Company's
           Class A and Class B common  stock at market  value.  The Plan permits
           each employee of GCI and  affiliated  companies who has completed one
           year of  service  to  elect  to  participate  in the  Plan.  Eligible
           employees may elect to reduce their  compensation  in any even dollar
           amount up to 10  percent  of such  compensation  up to a  maximum  of
           $9,240  in  1995;  they  may  contribute  up to 10  percent  of their
           compensation with after-tax dollars,  or they may elect a combination
           of salary reductions and after-tax contributions.

           GCI may match employee salary  reductions and after tax contributions
           in any amount, elected by GCI each year, but not more than 10 percent
           of any one employee's  compensation  will be matched in any year. The
           combination of salary  reductions,  after tax  contributions  and GCI
           matching  contributions  cannot  exceed 25 percent of any  employee's
           compensation  (determined after salary reduction) for any year. GCI's
           contributions vest over six years. Prior to July 1, 1995 employee and
           GCI  contributions  were  invested in GCI common  stock and  employee
           contributions  received up to 100%  matching,  as  determined  by the
           Company  each  year,  in GCI  common  stock.  Beginning  July 1, 1995
           employee  contributions  may be  invested  in GCI common  stock,  MCI
           common  stock,  Tele-Communications,  Inc.  common  stock or  various
           mutual funds.  Beginning July 1, 1995 employee contributions invested
           in GCI common stock receive up to 100% matching, as determined by the
           Company  each  year,  in GCI  common  stock.  Employee  contributions
           invested in other than GCI common stock  receive up to 50%  matching,
           as  determined  by the Company each year,  in GCI common  stock.  The
           Company's matching  contributions  allocated to participant  accounts
           totaled approximately  $864,000,  $792,000 and $485,000 for the years
           ended December 31, 1995, 1994, and 1993, respectively.  The Plan may,
           at its  discretion,  purchase shares of common stock from the Company
           at market value or may purchase GCI common stock on the open market.


                                       40                           (Continued)

<PAGE>
(8)        Industry Segments Data

<TABLE>
           The Company is engaged in the design,  development,  sale and service
           of   telecommunication   services  and  products  in  two   principal
           industries:  (1)  message  and  data  transmission  services  and (2)
           telecommunication systems sales and service.
<CAPTION>
                                                                          1995              1994             1993
                                                                          ----              ----             ----
                                                                                  (Amounts in thousands)
           <S>                                                          <C>               <C>               <C>
           Net sales
                    Message and data transmission svcs.                 $122,086          107,843            93,914
                    Systems sales and service                              7,193            9,138             8,299
                                                                         -------          -------           -------
                             Total net sales                            $129,279          116,981           102,213
                                                                         =======          =======           =======

           Operating income
                    Message and data transmission svcs.                 $ 25,183           24,952            18,707
                    System sales and service                               1,847            2,112               428
                    Corporate                                            (13,526)         (14,067)          (10,331)
                                                                         -------          -------           -------
                             Total operating income                     $ 13,504           12,997             8,804
                                                                         =======          =======           =======

           Identifiable assets
                    Message and data transmission svcs.                 $ 69,715           60,335            59,277
                    Systems sales and service                              2,554            2,838             4,306
                    Corporate                                             12,496           11,076             8,027
                                                                         -------          -------           -------
                             Total identifiable assets                  $ 84,765           74,249            71,610
                                                                         =======          =======           =======

           Capital expenditures
                    Message and data transmission svcs.                 $  5,946           10,003             4,457
                    Systems sales and service                                ---              ---               369
                    Corporate                                              2,992              601               918
                                                                         -------          -------           -------
                             Total capital expenditures                 $  8,938           10,604             5,744
                                                                         =======          =======           =======

           Depreciation and amortization expense
                    Message and data transmission svcs.                 $  5,385            6,194             6,572
                    Systems sales and service                                 84              103               132
                    Corporate                                                754              442               274
                                                                         -------          -------           -------
                             Total depreciation and
                               amortization expense                     $  6,223            6,739             6,978
                                                                         =======          =======           =======
</TABLE>

           Intersegment  sales  approximate  market  and  are  not  significant.
           Identifiable  assets are assets  associated with a specific  industry
           segment.   General   corporate  assets  consist  primarily  of  cash,
           temporary cash investments and other assets and investments which are
           not  specific  to an  industry  segment.  Goodwill  and  the  related
           amortization  associated  with the  acquisition of Network Systems is
           allocated  to  the  message  and  data  telephone  services  segment.
           Goodwill and the related  amortization  related to the acquisition of
           the Transalaska Data Systems, Inc. assets is allocated to the systems
           sales and service segment.  Revenues derived from leasing  operations
           are allocated to the message and data transmission services segment.

           The Company  provides  message  telephone  service to MCI and Sprint,
           major  customers.  Pursuant to the terms of a contract  with MCI, the
           Company earned revenues of approximately $23,939,000, $19,512,000 and
           $16,068,000  for the years ended  December 31,  1995,  1994 and 1993,
           respectively. Amounts receivable from MCI totaled $4,256,000

                                       41                           (Continued)

<PAGE>
           and  $3,257,000  at  December  31, 1995 and 1994,  respectively.  The
           Company earned  revenues  pursuant to a contract with Sprint totaling
           approximately $14,885,000,  $12,412,000 and $10,123,000 for the years
           ended  December  31,  1995,  1994  and  1993  respectively.   Amounts
           receivable  from Sprint  totaled  $2,362,000 and $981,000 at December
           31, 1995 and 1994, respectively.

(9)        Leases

           The Company  leases  business  offices,  has entered  into site lease
           agreements  and uses  certain  equipment  and  satellite  transponder
           capacity pursuant to operating lease arrangements. Rental costs under
           such arrangements  amounted to approximately  $4,353,000,  $4,258,000
           and $4,029,000 for the years ended December 31, 1995,  1994 and 1993,
           respectively.

<TABLE>
           A summary  of future  minimum  lease  payments  for all  leases as of
           December 31, 1995 follows:
<CAPTION>
           Year ending December 31:                                     Operating          Capital
           ------------------------                                     ---------          -------
                                                                         (Amounts in thousands)
                    <S>                                                 <C>               <C>
                    1996                                                $  6,343              435
                    1997                                                   7,493              221
                    1998                                                   1,441              202
                    1999                                                   1,343              204
                    2000                                                   1,247              211
                    2001 and thereafter                                      778            1,301
                                                                         -------           ------
                    Total minimum lease payments                        $ 18,645            2,574
                                                                         =======
                    Less amount representing interest                                      (1,527)
                    Less current maturities of obligations
                      under capital leases                                                   (282)
                    Subtotal - long-term obligations under capital
                      leases                                                                  765
                    Less long-term obligations under capital leases due
                      to related parties,  excluding current maturities                      (739)
                                                                                           ------
                    Long-term obligations under capital leases,
                      excluding current maturities                                        $    26
                                                                                           ======
</TABLE>

           The Company entered into a long-term  capital lease agreement in 1991
           with the wife of the Company's president for property occupied by the
           Company. The lease term is 15 years with monthly payments of $14,400,
           increasing  in $800  increments at each two year  anniversary  of the
           lease.  Monthly lease costs  increased to $15,200  effective  October
           1993 and $16,000  effective  October  1995.  Monthly lease costs will
           increase to $16,800 in October  1997. If the owner sells the premises
           prior to the end of the  tenth  year of the  lease,  the  owner  will
           rebate to the Company  one-half  of the net sales  price  received in
           excess of  $900,000.  If the  property is not sold prior to the tenth
           year of the lease,  the owner  will pay the  Company  the  greater of
           one-half of the appreciated  value of the property over $900,000,  or
           $500,000.  The leased  asset was  capitalized  in 1991 at the owner's
           cost of  $900,000  and the  related  obligation  was  recorded in the
           accompanying financial statements.

           The  leases  generally  provide  that  the  Company  pay  the  taxes,
           insurance and maintenance expenses related to the leased assets.

           It is expected  that in the normal  course of  business,  leases that
           expire will be renewed or replaced by leases on other properties.

                                       42                           (Continued)

<PAGE>
(10)       Disclosure about Fair Value of Financial Instruments

           Statement of Financial  Standards  No. 107,  "Disclosures  about Fair
           Value of Financial  Instruments" ("SFAS No. 107") requires disclosure
           of  the  fair  value  of  financial   instruments  for  which  it  is
           practicable  to  estimate  that  value.  SFAS  No.  107  specifically
           excludes  certain items from its  disclosure  requirements.  The fair
           value of a financial instrument is the amount at which the instrument
           could be exchanged in a current  transaction between willing parties,
           other than in a forced sale or liquidation.  The carrying  amounts at
           December  31,  1995  for  the   Company's   assets  and   liabilities
           approximate their fair values.

(11)       Commitments and Contingencies

           During 1995, the Company adopted a non-qualified,  unfunded  deferred
           compensation  plan to provide a means by which certain  employees may
           elect to defer receipt of designated  percentages or amounts of their
           compensation  and to provide a means for certain  other  deferrals of
           compensation. The Company may, at its discretion, contribute matching
           deferrals  equal to the rate of  matching  selected  by the  Company.
           Participants  immediately  vest  in all  elective  deferrals  and all
           income and gain attributable thereto.  Matching contributions and all
           income and gain  attributable  thereto  vest over a six-year  period.
           Participants may elect to be paid in either a single lump sum payment
           or annual  installments over a period not to exceed 10 years.  Vested
           balances  are payable  upon  termination  of  employment,  unforeseen
           emergencies,  death and total  disability.  Participants  are general
           creditors of the Company with respect to deferred  compensation  plan
           benefits. Compensation deferred pursuant to the plan totaled $340,000
           as of December 31, 1995.

           The  Company  entered  into  a  purchase  and  lease-purchase  option
           agreement   in  August  1995  for  the   acquisition   of   satellite
           transponders to meet its long-term  satellite capacity  requirements.
           The  amount  of the down  payment  required  in 1996 and the  balance
           payable  upon  delivery  of the  transponders  as early as the fourth
           quarter of 1997 are dependent  upon a number of factors.  The Company
           does not expect  the down  payment to exceed  $10.1  million  and the
           remaining balance payable at delivery to exceed $46 million.

           In the normal course of the Company's  operations,  it is involved in
           various  legal and  regulatory  matters  before the FCC and the APUC.
           While the Company does not anticipate  that the ultimate  disposition
           of such  matters  will  result in abrupt  changes in the  competitive
           structure of the Alaska market or of the business of the Company,  no
           assurances  can be given  that such  changes  will not occur and that
           such changes would not be materially adverse to the Company.

(12)       Subsequent Event

           Subsequent  to  year-end,  the Company  announced  that it has signed
           letters of intent to acquire three Alaska cable  companies that offer
           cable television service to more than 101,000  subscribers serving 74
           percent of  households  throughout  the state of Alaska.  The Company
           intends to acquire Prime Cable of Alaska, Alaska Cablevision, Inc. of
           Kirkland,  Washington and Alaskan Cable Network. Prime Cable operates
           the state's largest cable  television  system  including  stations in
           Anchorage,  Bethel,  Kenai and Soldotna,  Alaska.  Alaska Cablevision
           owns and operates cable stations in  Petersburg,  Wrangell,  Cordova,
           Valdez,  Kodiak,  Homer, Seward, Nome and Kotzebue,  Alaska.  Alaskan
           Cable Network operates stations in Fairbanks,  Juneau,  Ketchikan and
           Sitka,  Alaska.  This acquisition will allow the Company to integrate
           cable services to bring more  information not only to more customers,
           but in a  manner  that is  quicker,  more  efficient  and  more  cost
           effective   than  ever   before.   The   purchase   

                                       43                           (Continued)

<PAGE>
           will  facilitate  consolidation  of the  cable  operations  and  will
           provide a platform for developing new customer  products and services
           over the next several years. Upon closing and after all approvals are
           obtained,  the cable  companies  will be  consolidated  into a single
           organization owned by the Company.

           The total purchase price is $280.7 million. According to terms of the
           letters of intent,  GCI will  issue  16.3  million  shares of Class A
           Common  stock to the owners of the three  cable  companies  valued at
           $105.7  million.  The  balance of the  purchase  will be  provided by
           approximately $175 million of bank financing. Additional capital will
           be provided from the sale of 2 million shares of GCI's Class A Common
           Stock to MCI Telecommunications Corporation for $6.50 per share.

           The more  significant  contingencies  which must be resolved  include
           negotiation and execution of definitive agreements with the owners of
           the  cable  companies  and  MCI,  approval  of the  transactions  and
           transfer  of licenses  by the APUC and the FCC,  and  approval of the
           transactions by the Company's  shareholders and senior lender and the
           cable companies' shareholders, partners and lenders.

           Management is confident that once the contingencies are resolved, the
           transactions  will be financed through  modification or assumption of
           an existing or negotiation of a new bank credit  agreement  facility.
           Although  the  Company has held  discussions  with  existing  lenders
           regarding such a facility, no agreement exists concerning the amounts
           or terms of such a facility.

(13)       Selected Quarterly Information (Unaudited)

<TABLE>
<CAPTION>
                                                         Three months ended
                                    -------------------------------------------------------------
                                    Dec. 31, 1995  Sept. 30, 1995   June 30, 1995   Mar. 31, 1995
                                    -------------   --------------  -------------   -------------
                                           (Amounts in thousands, except per share amounts)
           <S>                         <C>              <C>             <C>             <C>
           Total revenues              $34,363          33,363          31,860          29,693
           Contribution                $15,808          15,548          14,026          13,676
           Net earnings                 $1,807           2,252           1,836           1,607
           Net earnings per share         $.07             .09             .08             .07
</TABLE>


<TABLE>
<CAPTION>
                                                         Three months ended
                                    -------------------------------------------------------------
                                    Dec. 31, 1994  Sept. 30, 1994   June 30, 1994   Mar. 31, 1994
                                    -------------  --------------   -------------   -------------
                                           (Amounts in thousands, except per share amounts)
           <S>                         <C>              <C>             <C>             <C>
           Total revenues              $29,143          30,685          28,962          28,191
           Contribution                $14,061          14,740          14,387          12,897
           Net earnings                 $1,320           1,994           2,122           1,698
           Net earnings per share         $.06             .08             .09             .07
</TABLE>


                                       44                           (Continued)

<PAGE>

I
tem       9. CHANGES IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS ON ACCOUNTING AND
           FINANCIAL DISCLOSURE.

          None.

                                       45

<PAGE>

                                     PART IV




Item 14. EXHIBITS, CONSOLIDATED FINANCIAL STATEMENT SCHEDULES, AND REPORTS
         ON FORM 8-K.

      (a)(l)  Consolidated Financial Statements                         Page No.

           Included in Part II of this Report:

                  Independent Auditors' Report ...............................23

                  Consolidated Balance Sheets, December 31, 1995 
                  and 1994 .............................................24 -- 25

                  Consolidated Statements of Operations,
                     Years ended December 31, 1995, 1994 and 1993 ............26

                  Consolidated Statements of Stockholders' Equity,
                     Years ended December 31, 1995, 1994 and 1993 ............27

                  Consolidated Statements of Cash Flows,
                     Years ended December 31, 1995, 1994 and 1993 ............28

                  Notes to Consolidated Financial Statements ...........29 -- 44

      (a)(2)  Consolidated Financial Statement Schedules

           Included in Part IV of this Report:

                  Independent Auditors' Report................................51

                  Schedule VIII - Valuation and Qualifying Accounts,
                     Years ended December 31, 1995, 1994 and 1993 ............52

      Other  schedules  are  omitted  as  they  are  not  required  or  are  not
      applicable,  or the  required  information  is  shown  in  the  applicable
      financial statements or notes thereto.

                                       46

<PAGE>
      (b)  Exhibits

           Listed  below  are the  exhibits  which  are  filed as a part of this
      Report (according to the number assigned to them in Item 601 of Regulation
      S-K):

               3 -  Articles of Incorporation and By-laws:

                    Restated Articles of Incorporation of General Communication,
                       Inc. dated August 16, 1993.
                    Incorporated herein by reference to the Company's  Quarterly
                            Report on Form 10-Q for the period  ended  March 31,
                            1994

                    Bylaws  of  General  Communication,  Inc.,  as  amended  and
                       restated dated March 24, 1993
                    Incorporated herein by reference to the Company's  Quarterly
                            Report on Form 10-Q for the period  ended  March 31,
                            1994

               4 -  Instruments defining the rights of security holders:

                    Registration Rights Agreement, dated as of January 18, 1991,
                       between   General   Communication,   Inc.   and  WestMarc
                       Communications, Inc.
                    Incorporated  herein by  reference to the  Company's  Annual
                       Report on Form 10-K for the year ended December 31, 1990.
                    Employee  stock  option  agreements  issued  to  individuals
                       Spradling, O'Hara, Strid, Behnke, Lewkowski and Snyder.
                    Incorporated  herein by  reference to the  Company's  Annual
                       Report on Form 10-K for the year ended December 31, 1991.
                    Lease agreement between GCI Communication Services, Inc. and
                       National Bank of Alaska Leasing Corporation dated January
                       15, 1992.
                    Incorporated  herein by  reference to the  Company's  Annual
                       Report on Form 10-K for the year ended December 31, 1992.
                    Stock  Purchase  Agreement  between  MCI  Telecommunications
                       Corporation and General  Communication,  Inc. dated March
                       31, 1993.
                    Incorporated  herein by reference to the  Company's  Current
                       Report on Form 8-K dated June 4, 1993.
                    Voting  Agreement  by  and  between  MCI  Telecommunications
                       Corporation,  Ronald  A.  Duncan,  Robert  M.  Walp,  and
                       WestMarc Communications, Inc., dated March 31, 1993.
                    Incorporated herein by reference to the Company's  Quarterly
                       Report on Form 10-Q for the period ended March 31, 1994

                                       47

<PAGE>
               10 - Material Contracts:

                    Denali Towers Lease
                    MCI Telecommunications Corporation Carrier Agreement
                    Westin Building Lease
                    All the  above  incorporated  herein  by  reference  to  the
                       Company's  Registration  Statement  on Form 10 (File  No.
                       0-15279),   mailed  to  the   Securities   and   Exchange
                       Commission on December 30, 1986.
                    Denali Towers Lease, Suites 1000 and 1105
                    Denali Towers Lease, Suites 910 and 1110
                    Denali Towers Lease, Suite 400
                    Hughes Transponder Lease Agreement
                    Duncan and Hughes Deferred Bonus Agreements
                    All of the  above  incorporated  herein by reference  to the
                       Company's  Annual  Report on Form 10-K for the year ended
                       December 31, 1989.
                    Service  Agreement  dated  January 1, 1990  between  General
                       Communication,  Inc. and US Sprint Communications Company
                       Limited Partnership of Delaware
                    Incorporated  herein by  reference to the  Company's  Annual
                       Report on Form 10-K dated December 31, 1990.
                    Order  approving  Application  for a  Certificate  of Public
                       Convenience    and    Necessity    to    operate   as   a
                       Telecommunications   (Intrastate  Interexchange  Carrier)
                       Public Utility within Alaska.
                    Incorporated  herein by  reference to the  Company's  Annual
                       Report on Form 10-K dated December 31, 1991.
                    1986 Stock Option Plan, as amended
                    Loan  agreement  between  National  Bank of  Alaska  and GCI
                       Leasing Co., Inc. dated December 31, 1992.
                    Pledge  and  Security  Agreement  between  National  Bank of
                       Alaska  and  GCI  Communication   Services,   Inc.  dated
                       December 31, 1992.
                    Lease Agreement between MCI  Telecommunications  Corporation
                       and GCI Leasing Co., Inc. dated December 31, 1992.
                    Sublease    Agreement    between   MCI    Telecommunications
                       Corporation   and  General   Communication,   Inc.  dated
                       December 31, 1992.
                    Financial      Assistance      Agreement     between     MCI
                       Telecommunications  Corporation and GCI Leasing Co., Inc.
                       dated December 31, 1992.
                    All of the  above  incorporated herein by  reference  to the
                       Company's  Annual  Report on Form 10-K for the year ended
                       December 31, 1992.
                    Letter of intent between MCI Telecommunications  Corporation
                       and General Communication, Inc. dated December 31, 1992.
                    Incorporated  herein by reference to the  Company's  Current
                        Report on Form 8-K dated January 13, 1993.
                    MCI Carrier  Agreement   between   MCI    Telecommunications
                       Corporation and General Communication, Inc. dated January
                       1, 1993.
                    Contract for Alaska Access  Services  Agreement  between MCI
                       Telecommunications Corporation and General Communication,
                       Inc. dated January 1, 1993.
                    All of the above  incorporated  herein by  reference  to the
                        Company's Current Report on Form 8-K dated June 4, 1993.
                    Promissory Note  Agreement  between  General  Communication,
                       Inc. and Ronald A. Duncan, dated August 13, 1993.
                    Deferred    Compensation     Agreement    between    General
                       Communication,  Inc. and Ronald A.  Duncan,  dated August
                       13, 1993.
                    Pledge Agreement  between  General  Communication,  Inc. and
                       Ronald A. Duncan, dated August 13, 1993.

                                       48

<PAGE>
                    Amended  and  Restated  Credit  Agreement   between  General
                       Communication, Inc. and Nationsbank of Texas, N.A., dated
                       April 30, 1993.
                    All of the  above incorporated  herein by  reference  to the
                       Company's  Annual  Report on Form 10-K for the year ended
                       December 31, 1993.
                    Revised  Qualified  Employee  Stock Purchase Plan of General
                       Communication, Inc.
                    Summary Plan Description pertaining to the Revised Qualified
                       Employee  Stock  Purchase Plan of General  Communication,
                       Inc.
                    All of the above  incorporated  herein by  reference  to the
                       Company's  Annual  Report on Form 10-K for the year ended
                       December 31, 1994.
                    Company's  press  release on the  letters  of intent,  dated
                       March 15, 1996
                    Amendments to Contract for Alaska Access, effective April 1,
                       1996
                    Amendments to MCI Carrier Agreement:
                         Sixth Amendment,  effective April 1, 1996 (there was no
                         fifth amendment as of the date of this report)
                         Fourth Amendment, dated September 24, 1995
                         Third Amendment, dated October 1, 1994
                         MCI  Carrier   Addendum  MCI  800  DAL  Service  (First
                         Amendment), dated April 20, 1994
                    All of the  above  incorporated  herein by reference  to the
                       Company's  Current  Report  on Form 8-K  dated  March 14,
                       1996, filed March 28, 1996.

               10.1 -  The GCI Special Non-Qualified Deferred Compensation Plan
               10.2 -  Second  Amendment  to the Amended and  Restated  Credit
                       Agreement   between  General   Communication,   Inc.  and
                       Nationsbank of Texas, N.A., dated October 31, 1995.
               10.3 -  Equipment  Purchase Agreement between GCI Communication
                       Corporation and Scientific-Atlanta, Inc.

               Licenses:

                214 Authorization
                International Resale Authorization
                Digital Electronic Message Service Authorization
                Fairbanks Earth Station License
                Fairbanks (Esro) Construction Permit for P-T-P Microwave Service
                Fairbanks  (Polaris)  Construction  Permit  for P-T-P  Microwave
                Service 
                Anchorage Earth Station  Construction Permit 
                License for Eagle River P-T-P  Microwave  Service  
                License for Juneau Earth Station 
                Issaquah Earth Station Construction Permit 
                All the above incorporated  herein by reference to the Company's
                Registration Statement on Form 10 (File No. 0-15279),  mailed to
                the Securities and Exchange Commission on December 30, 1986.

                                       49

<PAGE>
               21 - Subsidiary of Registrant:
                    GCI Communication Corp.
                    State of Incorporation:  Alaska

                    Subsidiary of Registrant:
                    GCI Communication Services, Inc.
                    State of Incorporation:  Alaska

                    Subsidiary of Subsidiary of Registrant:
                    GCI Leasing Co., Inc.
                    State of Incorporation:  Alaska

               27 - Financial Data Schedule

               28 - Additional Exhibits:
                    The Articles of Incorporation of GCI Communication Corp.
                    The By-laws of GCI Communication Corp.
                    All of the above  incorporated  herein by  reference  to the
                       Company's Annual Report on Form 10-K for the period ended
                       December 31, 1990
                    The By-laws of GCI Communication Services, Inc.
                    The Articles of Incorporation of GCI Communication Services,
                       Inc.
                    The By-laws of GCI Leasing Co., Inc.
                    The Articles of Incorporation of GCI Leasing Co., Inc.
                    All of the above  incorporated  herein by  reference  to the
                       Company's  Annual  Report on Form 10-K for the year ended
                       December 31, 1992.

      (c)  Reports on Form 8-K

           None filed during the quarter ended December 31, 1995.

                                       50

<PAGE>

                          INDEPENDENT AUDITORS' REPORT
                          ----------------------------



The Board of Directors and Stockholders
General Communication, Inc.:


Under date of March 15, 1996, we reported on the consolidated  balance sheets of
General Communication, Inc. and Subsidiaries ("Company") as of December 31, 1995
and 1994 and the related  consolidated  statements of operations,  stockholders'
equity  and cash  flows for each of the  years in the  three-year  period  ended
December 31, 1995,  which are included in the  Company's  1995 Annual  Report on
Form 10-K.  In  connection  with our audits of the  aforementioned  consolidated
financial  statements,  we  also  audited  the  related  consolidated  financial
statement schedule in the consolidated financial statements,  which is listed in
the index in Item  14(a)(2) of the  Company's  1995 Annual  Report on Form 10-K.
This  consolidated  financial  statement  schedule is the  responsibility of the
Company's  management.  Our  responsibility  is to  express  an  opinion on this
consolidated financial statement schedule based on our audits.

In our opinion this consolidated  financial statement schedule,  when considered
in relation to the basic  consolidated  financial  statements  taken as a whole,
presents fairly, in all material respects the information set forth therein.




                                              /s/KPMG PEAT MARWICK LLP





Anchorage, Alaska
March 15, 1996


                                       51

<PAGE>


<TABLE>
                                  Schedule VIII
                                  -------------

                  GENERAL COMMUNICATION, INC. AND SUBSIDIARIES

                        Valuation and Qualifying Accounts

                  Years ended December 31, 1995, 1994 and 1993


<CAPTION>
                                                                             Additions         Deductions
                                                                       --------------------    -----------
                                                         Balance at     Charged                 Write-offs      Balance
                                                          beginning    to profit                  net of        at end
             Description                                   of year     and loss       Other     recoveries      of year
- ----------------------------------------                 ----------    ---------      -----     ----------      -------             
                                                                             (Amounts in thousands)
<S>                                                        <C>           <C>           <C>           <C>           <C>
Year ended December 31, 1995:
 Allowance for doubtful
  receivables                                              $  409        1,459         ---           1,573         295
                                                            =====        =====         ===           =====         ===

Year ended December 31, 1994:
 Allowance for doubtful
  receivables                                              $  721          829         ---           1,141         409
                                                            =====        =====         ===           =====         ===

Year ended December 31, 1993:
 Allowance for doubtful
  receivables                                              $  675        1,207         ---           1,161         721
                                                            =====        =====         ===           =====         ===
</TABLE>


                                       52

<PAGE>



                                   SIGNATURES



Pursuant to the  requirements of Section 13 or 15(d) 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.

                                         GENERAL COMMUNICATION, INC.


                                         By:    /s/ Ronald A. Duncan
                                                Ronald A. Duncan, President
                                                (Chief Executive Officer)

      Date:  March 15, 1996

      Pursuant to the requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
registrant and in the capacities and on the date indicated.

                Signature                    Title                    Date
      ----------------------         -------------------------    --------------
      /s/ Carter F. Page             Chairman of Board            March 15, 1996
      Carter F. Page                 and Director

      /s/ Robert M. Walp             Vice Chairman of Board and   March 15, 1996
      Robert M. Walp                 Director

      /s/ Ronald A. Duncan           President and Director,      March 15, 1996
      Ronald A. Duncan               (Chief Executive Officer)

      /s/ Donne F. Fisher            Director                     March 15, 1996
      Donne F. Fisher

      /s/ John W. Gerdelman          Director                     March 15, 1996
      John W. Gerdelman

      /s/ Larry E. Romrell           Director                     March 15, 1996
      Larry E. Romrell

      /s/ James M. Schneider         Director                     March 15, 1996
      James M. Schneider

      /s/ John M. Lowber             Senior Vice President,       March 15, 1996
      John M. Lowber                 Chief Financial Officer,
                                     Secretary and Treasurer

      /s/ Alfred J. Walker           Vice President and Chief     March 15, 1996
      Alfred J. Walker               Accounting Officer


                                       53






                          THE GCI SPECIAL NON-QUALIFIED
                           DEFERRED COMPENSATION PLAN


ARTICLE 1 - INTRODUCTION

1.1      Purpose of Plan

The  Employer  has adopted the Plan set forth herein to provide a means by which
certain  employees  may elect to defer  receipt  of  designated  percentages  or
amounts of their Compensation and to provide a means for certain other deferrals
of compensation.

1.2      Status of Plan

The Plan is  intended to be "a plan which is unfunded  and is  maintained  by an
employer  primarily  for the purpose of providing  deferred  compensation  for a
select group of management or highly  compensated  employees" within the meaning
of Sections 201(2) and 301(a)(3) of the Employee  Retirement Income Security Act
of 1974  ("ERISA"),  and shall be  interpreted  and  administered  to the extent
possible in a manner consistent with that intent.

ARTICLE 2 - DEFINITIONS

Wherever  used herein,  the  following  terms have the meanings set forth below,
unless a different meaning is clearly required by the context:

2.1 Account means for each Participant,  the account  established for his or her
benefit under Section 5.1.

2.2 Adoption Agreement means the GCI Special Non-Qualified Deferred Compensation
Plan for Select Employees Adoption Agreement signed by the Employer
 to establish
the Plan and  containing all the options  selected by the Employer,  as the same
may be amended from time to time.

2.3 Change of Control means (a) the purchase or other acquisition in one or more
transactions other than from the Employer, by any individual, entity or group of
persons,  within  the  meaning of section  13(d)(3)  or 14(d) of the  Securities
Exchange  Act of 1934 or any  comparable  successor  provisions,  of  beneficial
ownership (within the meaning of Rule 13d-3 of Securities  Exchange Act of 1934)
of 50.01 percent or more of either the outstanding shares of common stock or the
combined  voting power of the  Employer's  then  outstanding  voting  securities
entitled  to vote  generally,  or (b) the  approval by the  stockholders  of the
Employer of a  reorganization,  merger,  or  consolidation,  in each case,  with
respect to which persons who were stockholders of the Employer immediately prior
to such  reorganization,  merger or consolidation do not immediately  thereafter
own more than 50 percent of the combined voting power of the reorganized, merged
or consolidated Employer's then outstanding securities that are entitled to vote
generally in the election of directors or (c) the sale of  substantially  all of
the Employer's assets.

2.4 Code means the Internal  Revenue Code of 1986, as amended from time to time.
Reference to any section or  subsection  of the Code  includes  reference to any
comparable or succeeding provisions of any legislation which amends, supplements
or replaces such section or subsection.

2.5  Compensation  has the  meaning  elected  by the  Employer  in the  Adoption
Agreement.

2.6 Effective  Date means the date chosen in the Adoption  Agreement as of which
the Plan first becomes effective.

2.7  Election  Form  means  the  participation  election  form as  approved  and
prescribed by the Plan Administrator.

2.8 Elective  Deferral means the portion of Compensation  which is deferred by a
Participant under Section 4.1.

2.9  Eligible  Employee  means,  on the  Effective  Date  or on any  Entry  Date
thereafter, each employee of the Employer who satisfies the criteria established
in the Adoption Agreement.

2.10 Employer means the corporation  referred to in the Adoption Agreement,  any
successor to all or a major portion of the  Employer's  assets or business which
assumes  the  obligations  of the  Employer,  and  each  other  entity  that  is
affiliated  with the  Employer  which  adopts  the Plan with the  consent of the
Employer,  provided  that the Employer that signs the Adoption  Agreement  shall
have the sole power to amend this plan and shall be the Plan Administrator if no
other person or entity is so serving at any time.

2.11 ERISA means the Employee Retirement Income Security Act of 1974, as amended
from time to time.  Reference  to any section or  subsection  of ERISA  includes
reference to any comparable or succeeding  provisions of any  legislation  which
amends, supplements or replaces such section or subsection.

2.12 Incentive Contribution means a discretionary  additional  contribution made
by the Employer as described in Section 4.3.

2.13 Insolvent  means either (i) the Employer is unable to pay its debts as they
become due, or (ii) the Employer is subject to a pending  proceeding as a debtor
under the United States Bankruptcy Code.

2.14  Matching  Deferral  means a deferral for the benefit of a  Participant  as
described in Section 4.2.

2.15 Participant means any individual who participates in the Plan in accordance
with Article 3.

2.16 Plan means the Employer's plan in the form of the GCI Special Non-Qualified
Deferred  Compensation Plan for Select Employees and the Adoption  Agreement and
all amendments thereto.

2.17 Plan  Administrator  means the person,  persons or entity designated by the
Employer in the Adoption  Agreement to  administer  the Plan and to serve as the
agent  for the  "Company"  with  respect  to the  Trust as  contemplated  by the
agreement  establishing  the Trust. If no such person or entity is so serving at
any time, the Employer shall be the Plan Administrator.

2.18 Plan Year means the 12-month period chosen in the Adoption Agreement.

2.19 Total and Permanent  Disability  means the  inability of a  Participant  to
engage  in  any  substantial   gainful  activity  by  reason  of  any  medically
determinable  physical or mental  impairment  which can be expected to result in
death or which has lasted or can be expected to last for a continuous  period of
not less  that 12  months,  and the  permanence  and  degree  of which  shall be
supported by medical evidence satisfactory to the Plan Administrator.

2.20 Trust means the trust  established by the Employer that identifies the Plan
as a plan with respect to which assets are to be held by the Trustee.

2.21 Trustee means the trustee or trustees under the Trust.

2.22 Year of  Service  means the  computation  period  and  service  requirement
elected in the Adoption Agreement.

ARTICLE 3 - PARTICIPATION

3.1      Commencement of Participation

Any individual who elects to defer part of his or her Compensation in accordance
with  Section  4.1 shall  become a  Participant  in the Plan as of the date such
deferrals  commence in accordance  with Section 4.1. Any  individual  who is not
already  a  Participant   and  whose  Account  is  credited  with  an  incentive
Contribution shall become a Participant as of the date such amount is credited.

3.2      Continued Participation

A  Participant  in the Plan shall  continue to be a  Participant  so long as any
amount remains credited to his or her Account.

ARTICLE 4 - ELECTIVE AND MATCHING DEFERRALS

4.1      Elective Deferrals

An  individual  who is an  Eligible  Employee  on the  Effective  Date  may,  by
completing an Elections Form and filing it with the Plan Administrator within 30
days following the Effective Date,  elect to defer a percentage or dollar amount
of one or more payments of Compensation, on such terms as the Plan Administrator
may  permit,  which are payable to the  Participant  after the date on which the
individual  files the  Election  form.  Any  individual  who becomes an Eligible
Employee after the Effective Date may, by completing an Election Form and filing
it with the Plan  Administrator  within 30 days  following the date on which the
Plan  Administrator  gives such individual written notice that the individual is
an Eligible  Employee,  elect to defer a percentage  or dollar  amount of one or
more  payments  of  Compensation,  on such terms as the Plan  Administrator  may
permit,  which  are  payable  to the  Participant  after  the date on which  the
individual files the Election Form. Any Eligible  Employee who has not otherwise
initially  elected to defer  Compensation  in accordance with this paragraph 4.1
may elect to defer a  percentage  of dollar  amount of one or more  payments  of
Compensation,  on such terms as the Plan  Administrator  may permit,  commencing
with  Compensation  paid in the next  succeeding  Plan Year,  by  completing  an
Election form prior to the first day of such  succeeding Plan Year. In addition,
a  Participant  may defer all or part of the amount of any elective  deferral or
matching  contribution  made on his or her behalf to the Employer's  401(k) plan
for the prior  Plan year but  treated  as an excess  contribution  or  otherwise
limited by the application of the limitations of sections 401(k), 401(m), 415 or
402(q) of the Code, so long as the Participant so indicates on an Election Form.
A Participant's  Compensation  shall be reduced in accordance with Participant's
election  hereunder and amounts deferred hereunder shall be paid by the Employer
to  the  Trust  as  soon  as  administratively  feasible  and  credited  to  the
Participant's Account as of the date the amounts are received by the Trustee.

An election to defer a percentage or dollar amount of Compensation  for any Plan
Year  shall  apply for  subsequent  Plan years  unless  changed  or  revoked.  A
Participant  may change or revoke his or her  deferral  election as of the first
day of any Plan Year by giving written notice to the Plan  Administrator  before
such  first  day  (or  any  such  earlier  date as the  Plan  Administrator  man
prescribe).

4.2      Matching Deferrals

After each payroll period,  monthly,  quarterly,  or annually, at the Employer's
discretion,  the Employer shall contribute to the Trust Matching Deferrals equal
to the rate of Matching  Contribution  selected  by the  Employer,  if any,  and
multiplied by the amount of the Elective Deferrals credited to the Participants'
Accounts  for such period under  Section 4.1.  Each  Matching  Deferral  will be
credited,  as of the later of the date it is received by the Trustee or the date
The  Trustee  receives  from the Plan  Administrator  such  instructions  as the
Trustee may reasonably  require to allocate the amount  received among the asset
accounts  maintained by the Trustee,  to the  Paricipants'  Accounts pro rata in
accordance with the amount of Elective  Deferrals of each Participant  which are
taken into account in calculating the Matching Deferral.

4.3      Incentive  Contributions

In addition to other  contributions  provided  for under the Plan,  the Employer
may, in its sole discretion, select one or more Eligible Employees to receive an
Incentive Contribution to his or her Account on such terms as the Employer shall
specify at the time it makes the  contribution.  For  example,  the Employer may
contribute  an amount to a  Participant's  Account and  condition the payment of
that amount and accrued earnings thereon upon the Participant remaining employed
by the Employer for an additional  specified period of time. The terms specified
by the  Employer  shall  supersede  any other  provision of this Plan as regards
Incentive Contributions and earnings with respect thereto,  provided that if the
Employer does not specify a method of distribution,  the Incentive  Contribution
shall be distributed in a manner  consistent  with the election last made by the
particular  Participant prior to the year in which the Incentive Contribution is
made. The Employer, in its discretion, may permit the Participant to designate a
distribution schedule for a particular Incentive Contribution provided that such
designation is made prior to the time that the Employer finally  determines that
the Participant will receive the Incentive Contribution.

ARTICLE 5 - ACCOUNTS

5.1      Accounts

The  plan  Administrator   shall  establish  an  Account  for  each  Participant
reflecting  Elective Deferrals,  Matching Deferrals and Incentive  Contributions
made for the  Participant's  benefit  together with any  adjustments for income,
gain or loss and any payments from the Account. The Plan Administrator may cause
the Trustee to maintain and invest separate asset accounts corresponding to each
Participant's  Account. The Plan Administrator shall establish  sub-accounts for
each Participant that has more than one election in effect under Section 7.1 and
such other  sub-accounts as are necessary for the proper  administration  of the
Plan.  As  of  the  last  business  day  of  each  calendar  quarter,  the  Plan
Administrator  shall  provide the  Participant  with a  statement  of his or her
Account  reflecting  the income,  gains and losses  (realized  and  unrealized),
amounts  of  deferrals,  and  distributions  of such  Account  since  the  prior
statement.

5.2      Investments

The assets of the Trust  shall be invested  in such  investments  as the Trustee
shall  determine.  The  Trustee  may  (but  is not  required  to)  consider  the
Employer's or a Participant's  investment  preferences when investing the assets
attributable to a Participant's Account.

ARTICLE 6 - VESTING

6.1      General

A Participant shall be immediately  vested in, i.e., shall have a nonforfeitable
right to, all Elective Deferrals,  and all income and gain attributable thereto,
credited to his or her Account. A Participant shall become vested in the portion
of his or her Account  attributable  to Matching  Deferrals  and income and gain
attributable thereto in accordance with the schedule selected by the Employer in
the Adoption  Agreement,  subject to earlier vesting in accordance with Sections
6.3, 6.4, and 6.5.

6.2      Vesting Service

For  purposes of applying  the vesting  schedule in the  Adoption  Agreement,  a
Participant  shall be  considered  to have  completed a Year of Service for each
complete year of full-time  service with the Employer of an Affiliate,  measured
from the Participant's  first date of such employment,  unless the Employer also
maintains a 401(k) plan that is qualified  under section  401(a) of the Internal
Revenue  Code in which the  Participant  participates,  in which  case the rules
governing  vesting service under that plan shall also be controlling  under this
Plan.

6.3      Change of Control

A Participant shall become fully vested in his or her Account  immediately prior
to a Change of Control of the Employer.

6.4      Death or Disability

A Participant shall become fully vested in his or her Account  immediately prior
to termination of the  Participant's  employment by reason of the  Participant's
death or Total and Permanent Disability.  Whether a Participant's termination of
employment  is by reason of the  Participant's  Total and  Permanent  Disability
shall be determined by the Plan Administrator in its sole discretion.

6.5      Insolvency

A Participant shall become fully vested in his or her Account  immediately prior
to the Employer becoming insolvent,  in which case the Participant will have the
same rights as a general  creditor of the  Employer  with  respect to his or her
Account balance.

ARTICLE 7 - PAYMENTS

7.1      Election  as to Time and Form of Payment

A  Participant  shall  elect  (on the  Election  Form  used to  elect  to  defer
Compensation  under  Section 4.1) the date at which the Elective  Deferrals  and
vested Matching  Deferrals  (including any earnings  attributable  thereto) will
commence to be paid to the Participant.
The Participant shall also elect thereon for payments to be paid in either:

a.       a single lump-sum payment; or

b.       annual  installments  over a period elected by the Participant up to 10
         years,  the amount of each  installment  to equal the balance of his or
         her Account  immediately prior to the installment divided by the number
         of installments remaining to be paid.

Each such  election will be effective for the Plan Year for which it is made and
succeeding  Plan Years,  unless changed by the  Participant.  Any change will be
effective only for Elective  Deferrals and Matching Deferrals made for the first
Plan Year  beginning  after the date on which the Election Form  containing  the
change is filed with the Plan Administrator. Except as provided in Sections 7.2,
7.3, 7.4, or 7.5, payment of a Participant's Account shall be made in accordance
with the Participant's elections under this Section 7.1.

7.2      Change of Control

As soon as  possible  following  a  Change  of  Control  of the  Employer,  each
Participant  shall be paid his or her  entire  Account  balance  (including  any
amount vested pursuant to Section 6.3) in a single lump sum.

7.3      Termination of Employment

Upon  termination of a Participant's  employment for any reason other than death
and prior to the  attainment  of the  Retirement  Age  specified in the Adoption
Agreement,  the  vested  portion of the  Participant's  Account  (including  any
portion  vested  pursuant to Section 6.4 as a consequence  of the  Participant's
Total and Permanent  Disability)  shall be paid to the  Participant  in a single
lump  sum as soon  as  practicable  following  the  date  of  such  termination;
provided,  however, that the Plan Administrator in its sole discretion,  may pay
out a Participant's  Account balance in annual installments if the Participant's
employment  terminates  by  reason  of the  Participant's  Total  and  Permanent
Disability.

7.4      Death

If a Participant dies prior to the complete  distribution of his or her Account,
the  balance  of the  Account  shall  be  paid as  soon  as  practicable  to the
Participant's  designated  beneficiary or beneficiaries,  in the form elected by
the Participant under either of the following options:

a.       a single lump-sum payment; or

b.       annual  installments  over a period elected by the Participant up to 10
         years,  the  amount of each  installment  to equal the  balance  of the
         Account  immediately prior to the installment  divided by the number of
         installments remaining to be paid.

Any designation of beneficiary and form of payment to such beneficiary  shall be
made by the  Participant  on an Election Form filed with the Plan  Administrator
and may be changed by the  Participant  at any time by filing  another  Election
Form containing the revised instructions.  If no beneficiary is designated or no
designated  beneficiary  survives the Participant,  payment shall be made to the
Participant's surviving spouse, or, if none, to his or her issue per stirpes, in
a single payment. If no spouse or issue survives the Participant,  payment shall
be made in a single lump sum to the Participant's estate.

7.5      Unforeseen Emergency

If a Participant  suffers an unforeseen  emergency,  as defined herein, the Plan
Administrator,  in its sole  discretion,  may pay to the  Participant  only that
portion,  if any,  of the vested  portion of his or her  Account  which the Plan
Administrator  determines is necessary to satisfy the emergency need,  including
any amounts necessary to pay any federal, state or local income taxes reasonably
anticipated  to  result  from the  distribution.  A  Participant  requesting  an
emergency  payment  shall apply for the payment in writing in a form approved by
the Plan Administrator and shall provide such additional information as the Plan
Administrator  may  require.   For  purposes  of  this  paragraph,   "unforeseen
emergency" means an immediate and heavy financial need resulting from any of the
following:

a.       expenses  which are not covered by insurance and which the  Participant
         or his or  spouse  or  dependent  has  incurred  as a result  of, or is
         required to incur in order to receive, medical care;

b.       the need to prevent eviction of a Participant from his or her principal
         residence or foreclosure on the mortgage of the Participant's principal
         residence; or

c.       any other  circumstance that is determined by the Plan Administrator in
         its sole discretion to constitute an unforeseen  emergency which is not
         covered by  insurance  and which cannot  reasonably  be relieved by the
         liquidation of the Participant's assets.

7.6      Forfeiture of Non-vested Amounts

To the extent  that any  amounts  credited  to a  Participant's  Account are not
vested at the time such amounts are otherwise payable under Sections 7.1 or 7.3,
such  amounts  shall be  forfeited  and shall be used to satisfy the  Employer's
obligation to make contributions to the Trust under the Plan.

7.7      Taxes

All federal,  state or local taxes that the Plan  Administrator  determines  are
required to be withheld  from any payments made pursuant to this Article 7 shall
be withheld.

7.8      Limitation on Distributions

The total amount of  distributions  from the Plan to any  individual  during any
Plan  year  when  added  to all  other  taxable  compensation  received  by that
individual  from the Company during that Plan year shall be limited so the total
amount of  compensation  for that  individual  can be deducted by the Company as
compensation  expense  during that same period for Federal  Income Tax reporting
purposes.

ARTICLE 8 - PLAN ADMINISTRATOR

8.1      Plan Administration and Interpretation

The Plan  Administrator  shall oversee the  administration of the Plan. The Plan
Administrator  shall have complete control and authority to determine the rights
and benefits and all claims,  demands and actions  arising out of the provisions
of the Plan of any  Participant,  beneficiary,  deceased  Participant,  or other
person  having  or  claiming  to have any  interest  under  the  Plan.  The Plan
Administrator shall have complete discretion to interpret the Plan and to decide
all matters under the Plan.  Such  interpretation  and decision  shall be final,
conclusive  and binding on all  Participants  and any person  claiming  under or
through any  Participant,  in the absence of clear and convincing  evidence that
the Plan  Administrator  acted arbitrarily and  capriciously.  Any individual(s)
serving as Plan  Administrator  who is a Participant will not vote or act on any
matter  relating solely to himself or herself.  When making a  determination  or
calculation,  the Plan  Administrator  shall be entitled to rely on  information
furnished by a Participant, a beneficiary, the Employer or the Trustee. The Plan
Administrator shall have the responsibility for complying with any reporting and
disclosure requirements of ERISA.

8.2      Powers, Duties, Procedures, Etc.

The Plan  Administrator  shall have such powers and duties, may adopt such rules
and  tables,  may act in  accordance  with such  procedures,  may  appoint  such
officers  or agents,  may  delegate  such powers and  duties,  may receive  such
reimbursements  and  compensation,  and shall  follow  such  claims  and  appeal
procedures with respect to the Plan as it may establish.

8.3      Information

To enable the Plan  Administrator  to perform its functions,  the Employer shall
supply  full and timely  information  to the Plan  Administrator  on all matters
relating to the  compensation of  Participants,  their  employment,  retirement,
death,  termination of employment,  and such other  pertinent  facts as the Plan
Administrator may require.

8.4      Indemnification of Plan Administrator

The Employer  agrees to indemnify and to defend to the fullest extent  permitted
by law any officer(s) or employee(s) who serve as Plan Administrator  (including
any such  individual  who  formerly  served as Plan  Administrator)  against all
liabilities,  damages, costs and expenses (including attorney's fees and amounts
paid in settlement of any claims approved by the Employer) occasioned by any act
or omission to act in  connection  with the Plan,  if such act or omission is in
good faith.

ARTICLE 9 - AMENDMENTS AND TERMINATION

9.1      Amendments

The Employer  shall have the right to amend the Plan from time to time,  subject
to Section  9.3,  by an  instrument  in writing  which has been  executed on the
Employer's behalf by its duly authorized officer.

9.2      Termination of Plan

This Plan is strictly a voluntary  undertaking  on the part of the  Employer and
shall not be deemed to  constitute  a  contract  between  the  Employer  and any
Eligible  Employee  (or  any  other  employee)  or a  consideration  for,  or an
inducement or condition of employment  for, the  performance  of the services by
any Eligible  Employee (or other employee).  The Employer  reserves the right to
terminate  the Plan at any time,  subject to Section  9.3, by an  instrument  in
writing which has been executed on the Employer's  behalf by its duly authorized
officer.  Upon  termination,  the Employer may (a) elect to continue to maintain
the Trust to pay  benefits  hereunder  as they become due as if the Plan had not
terminated or (b) direct the Trustee to pay promptly to  Participants  (or their
beneficiaries)  the  vested  balance  of their  Accounts.  For  purposes  of the
preceding  sentence,  in the event the Employer chooses to implement clause (b),
the Account  balances of all  Participants who are in the employ of the Employer
at the time the Trustee is  directed to pay such  balances  shall  become  fully
vested and  nonforfeitable.  After Participants and their beneficiaries are paid
all Plan benefits to which they are entitled,  all remaining assets of the Trust
attributable to Participants  who terminated  employment with the Employer prior
to termination of the Plan and who were not fully vested in their Accounts under
Article 6 at that time shall be returned to the Employer.

9.3      Existing Rights

No amendment or termination of the Plan shall adversely affect the rights of any
Participant  with  respect  to  amounts  that have been  credited  to his or her
Account prior to the date of such amendment or termination.

ARTICLE 10 - MISCELLANEOUS

10.1     No Funding

The  Plan  constitutes  a mere  promise  by the  Employer  to make  payments  in
accordance with the terms of the Plan and Participants and  beneficiaries  shall
have the status of general unsecured  creditors of the Employer.  Nothing in the
Plan will be construed  to give any  employee or any other person  rights to any
specific assets of the Employer or of any other person. In all events, it is the
intent of the Employer that the Plan be treated as unfunded for tax purposes and
for purposes of Title I of ERISA.

10.2     Non-assignability

None of the  benefits,  payments,  proceeds  or  claims  of any  Participant  or
beneficiary  shall be subject to any claim of any creditor of any Participant or
beneficiary  and, in particular,  the same shall not be subject to attachment or
garnishment  or other  legal  process by any  creditor  of such  Participant  or
beneficiary,  nor  shall  any  Participant  or  beneficiary  have  any  right to
alienate, anticipate, commute, pledge, encumber or assign any of the benefits or
payments or  proceeds  which he or she may expect to  receive,  contingently  or
otherwise, under the Plan.

10.3     Limitation of Participants' Rights

Nothing  contained  in the  Plan  shall  confer  upon  any  person a right to be
employed or to continue in the employ of the  Employer,  or interfere in any way
with the right of the Employer to terminate the  employment of a Participant  in
the Plan at any time, with or without cause.

10.4     Participants Bound

Any  action  with  respect to the Plan  taken by the Plan  Administrator  or the
Employer or the Trustee or any action authorized by or taken at the direction of
the Plan Administrator, the Employer or the Trustee shall be conclusive upon all
Participants and beneficiaries entitled to benefits under the Plan.

10.5     Receipt and Release

Any payment to any  Participant or beneficiary in accordance with the provisions
of the Plan shall, to the extent thereof,  be in full satisfaction of all claims
against the Employer, the Plan Administrator and the Trustee under the Plan, and
the Plan  Administrator  may  require  such  Participant  or  beneficiary,  as a
condition  precedent to such  payment,  to execute a receipt and release to such
effect.   If  any   Participant   or  beneficiary  is  determined  by  the  Plan
Administrator  to be  incompetent  by reason of  Physical  or mental  disability
(including minority) to give a valid receipt and release, the Plan Administrator
may cause the  payment or  payments  becoming  due to such  person to be made to
another person for his or her benefit without  responsibility on the part of the
Plan  Administrator,  the Employer or the Trustee to follow the  application  of
such funds.

10.6     Governing Law

The Plan shall be construed,  administered,  and governed in all respects  under
and by the laws of the state in which the Employer  maintains  its primary place
of business. If any provision shall be held by a court of competent jurisdiction
to be invalid or unenforceable,  the remaining  provisions hereof shall continue
to be fully effective.

10.7     Headings and Subheadings

Headings and subheadings in this Plan are inserted for convenience  only and are
not to be considered in the construction of the provisions hereof.


               THE GCI SPECIAL NON-QUALIFIED DEFERRED COMPENSATION
                             PLAN ADOPTION AGREEMENT



1.       EMPLOYER INFORMATION


A.       Name of Plan: The GCI Special Non-Qualified Deferred Compensation Plan


B.       Name and  Address  of  employer  sponsoring  the Plan.  Please  provide
         employer's business name.

         General Communication, Inc.
         Business Name

         2550 Denali Street, Suite 1000
         Address

         Anchorage
         City

         Alaska            99503
         State             Zip Code

C.       Provide employer's primary contact for the Plan and telephone and FAX
         numbers.  Also include the employer's Tax Identification Number.

         John M. Lowber
         Primary Contact

         Sr. V.P. & CFO
         Title

         907-265-5628
         Telephone

         907-265-5676
         FAX

         92-0072737
         Employer Tax Identification Number

D.       Give the first day of the 12-month  period for which the employer  pays
         taxes: January 1

2.       PLAN INFORMATION

A.       What is the effective date of the Plan?
         February 9, 1995

B.       Plan Years Ends.  Your "Plan Year" is the 12  consecutive-month  period
         for which you credit  elective  and  matching  deferrals  and keep Plan
         records. Enter the last day of your Plan Year. December 31

3.       ELIGIBLE EMPLOYEES

         Those  key  employees  of the  Company  selected  by  the  Compensation
         Committee of the Board of Directors.

4.       COMPENSATION

         Compensation  is used to determine  the amount of Elective  Deferrals a
         Participant  can elect.  Compensation  under the Plan is defined as the
         Participant's wages, salaries, fees for professional services and other
         amounts received (without regard to whether or not an amount is paid in
         cash)  for  personal  services  actually  rendered  in  the  course  of
         employment  with the  Employer or an  Affiliate  to the extent that the
         amounts are  includable in gross  income,  including but not limited to
         commissions  paid to  salespersons,  compensation  for  services on the
         basis of a percentage of profits and bonuses,  but not including  those
         items excludable from the definition of compensation  under Treas. Reg.
         section 1.415-2(d)(3).  For purposes of the Plan,  Compensation will be
         determined before giving effect to Elective  Deferrals and other salary
         reduction  amounts  which are not included in the  Participant's  gross
         income under Code section 125, 401(k), 402(h) or 403(b).

5.       CONTRIBUTIONS

A.       Elective Deferrals. Participants may elect to reduce their Compensation
         and to have Elective  Deferrals credited to their Accounts by making an
         election  under the Plan (which may be changed each year for later Plan
         Years as described in the plan), but no Participant may defer more than
         100% of his or her Compensation for a Plan Year.

B.       Matching Deferrals.  The Employer will decide from year to year whether
         Matching Deferrals will be made and will notify  Participants  annually
         of the manner in which Matching  Deferrals,  if any, will be calculated
         for the subsequent year.

C.       Discretionary   Incentive    Contributions.  The  Employer   may   make
         Discretionary  Incentive  Contributions  in any  amounts  the  Employer
         selects.  These  contributions  will be subject to the vesting schedule
         selected in Item 6C.

6.       VESTING OF MATCHING DEFERRALS AND DISCRETIONARY INCENTIVE CONTRIBUTIONS

A.       Vesting Schedule for Matching Deferrals.  Matching Deferrals shall vest
         on a case by case basis as specified by the Employer.

B.       Vesting  Service.  Service  with a  predecessor  employer  will  not be
         considered.

C.       Vesting   Schedule   for   Discretionary    Incentive    Contributions.
         Discretionary   Incentive  Contributions  vest  in  accordance  with  a
         schedule adopted by the Employer on a case by case basis.

7.       ACCOUNTS

         The Trustee can either invest each  Participant's  Account balance as a
         separate  account (in which case the Trustee,  could,  but would not be
         required to, take into consideration the investment  preferences of the
         Participants)  or invest the Account  balances of all Participants as a
         single fund (in which case the Trustee could, but would not be required
         to, take into consideration the investment  preference of the Employer)
         Account balances are to be invested separately.

8.       RETIREMENT AGE

         The Retirement Age under the Plan is age 60.

9.       WITHDRAWALS WHILE WORKING

         Withdrawals for Unforeseen Emergency. Participants may make withdrawals
         while working in the event they encounter an unforeseen emergency. They
         generally can withdraw the vested portions of their Accounts.

         NOTE:  Withdrawals  are  strictly  limited as described in Plan Section
         7.5. It is the Plan  Administrator's  responsibility to ensure that the
         limits are being followed. Excess withdrawals may result in loss of the
         tax deferral on all amounts  credited under the Plan for the benefit of
         all Participants.

         Withdrawals  of the  vested  portion  of a  Participant's  Account  for
         unforeseen emergencies are permitted to the full extent allowable under
         the plan.

10.      ADMINISTRATION

         Plan  Administrator.  The Plan Administrator is legally responsible for
         the operation of the Plan, including:

         - Keeping track of which  employees are eligible to  participate in the
         Plan and the date each employee becomes eligible to participate.

         -  Maintaining  Participants'  Accounts,   including  all  sub-accounts
         required for different  contribution types and payment  elections,  and
         keeping track of all elections made by Participants  under the Plan and
         any other relevant information.

         -  Transmitting  important  communications  to  the  Participants,  and
         obtaining  relevant  information from  Participants  such as changes in
         investment selections:

         - Filing  important  reports  required to be submitted to  governmental
         agencies.

         The Plan Administrator will be the person identified below:

         John M. Lowber
         Name

         Sr. Vice President & Chief Financial Officer
         Title


11.      SIGNATURES

         After reviewing the Adoption Agreement, enter the name of the Employer.
         The  signature of the Employer or person  signing for the Employer must
         be witnessed.

         General Communication, Inc.
         Name of Employer



         By:

         /s/ Ronald A. Duncan
         Authorized Signature

         Ronald A. Duncan, President
         Print Name and Title

         WITNESS:

         /s/ John M. Lowber
         John M. Lowber, SVP & CFO
         Print Name and Title






                      SECOND AMENDMENT TO CREDIT AGREEMENT
                      ------------------------------------
 
         THIS SECOND  AMENDMENT TO AMENDED AND RESTATED  CREDIT  AGREEMENT (this
"Amendment")  is dated as of the 31st day of October,  1995,  and  entered  into
among GCI Communication Corp., an Alaskan corporation (herein, together with its
successors  and  assigns,  called the  "Company"),  the Banks (as defined in the
Credit  Agreement  as defined  below),  NATIONSBANK  OF TEXAS,  N.A., a national
banking  association,  as  Administrative  Agent for  itself  and the Banks (the
"Administrative Agent").

                                   WITNESSETH:
                                   ---------- 

         WHEREAS,  the Company,  the Banks, and the Administrative Agent entered
  into an Amended  and  Restated  Credit  Agreement,  dated April 30,  1993,  as
  amended by that  certain  First  Amendment  to Credit  Agreement,  dated as of
  October 3, 1994 (as further amended,  restated or otherwise modified from time
  to time, the "Credit Agreement");

         WHEREAS, the Company has requested that the Credit Agreement be amended
to provide  for an  increase  and  changes  in the letter of credit  provisions,
changes in certain financial covenants and certain other changes;

         WHEREAS,  the Banks,  the  Administrative  Agent and the  Company  have
  agreed to modify the Credit  Agreement upon the terms and conditions set forth
  below;

         NOW, THEREFORE,  for valuable
  consideration hereby  acknowledged,  the
  Company, the Banks and the Administrative Agent agree as follows:

          SECTION 1. Definitions.

         (a)  In  General.  Unless  specifically  defined  or  redefined  below,
  capitalized  terms used herein shall have the meanings ascribed thereto in the
  Credit Agreement.

         (b)  Definition of Aggregate  Commitment . The definition of "Aggregate
  Commitment"  on page 2 of the Credit  Agreement is hereby amended and restated
  in its entirety as follows:

                "Aggregate Commitment" means the aggregate of the Commitments of
         all the Banks  hereunder,  as such Aggregate  Commitment may be reduced
         pursuant to Section 2.1(f) of this Agreement.

         (c) Definition of Commitment.  The definition of "Commitment" on page 5
  of the Credit  Agreement  is hereby  amended and  restated in its  entirety as
  follows:

                "Commitment" means, for each Bank, the obligation of the Bank to
          make Loans and issue Facility  Letters of Credit not exceeding its pro
          rata part of $15,750,000,  as such amount may be modified from time to
          time,  as specified  and set forth in any  Assignment  and  Acceptance
          Agreement, or any amendment to this Agreement.

         (d) Definition of Facility Letter of Credit Commitment . The definition
  of "Facility Letter of Credit Commitment" on page 7 of the Credit Agreement is
  hereby amended and restated in its entirety as follows:

                "Facility Letter of Credit  Commitment" means an amount equal to
           $3,000,000, as such amount may be reduced by the Company from time to
           time.

         (e) Definition of Fixed Charges.  The definition of "Fixed  Charges" on
  page 8 of the Credit  Agreement is hereby amended and restated in its entirety
  as follows:

                "Fixed Charges" means,  for any period,  the sum of (A) interest
          expense  on all  Indebtedness  of the  Parent,  the  Company  and  the
          Subsidiaries,  (B) scheduled principal payments on all Indebtedness of
          the  Parent,  the  Company  and its  Subsidiaries,  plus  (C)  Capital
          Expenditures  paid by the  Company or any  Subsidiary,  minus the cash
          balance in the Company and its Subsidiaries as of any such quarter end
          upon which such determination is made.

         (f) Definition of Loan Documents. The definition of "Loan Documents" on
  page 11 of the Credit Agreement is hereby amended and restated in its entirety
  as follows:

                "Loan  Documents"  means this Agreement,  the Notes,  the Second
          Facility  Loan Notes,  the Pledge and Security  Agreement,  the Parent
          Pledge Agreement,  the Assignment and Security  Agreement  executed by
          the Company,  any Guaranties of the Obligations,  the Fee Letter, Rate
          Hedging  Agreements  executed by the Company with any Bank,  any other
          fee letter, the Facility Letters of Credit, the Second Facility Letter
          of Credit and all Applications  and other  agreements  relating to the
          Facility  Letters of Credit and the Second  Facility Letter of Credit,
          notes, instruments, documents and other items executed or delivered by
          any Person in connection herewith, as any such documents, instruments,
          notes or items may be  amended,  substituted,  modified,  replaced  or
          extended from time to time.

         (g) Definition of Obligations.  The definition of "Obligations" on page
  12 of the Credit  Agreement is hereby  amended and restated in its entirety as
  follows:

                    "Obligations"  means all unpaid principal of and accrued and
          unpaid  interest  on  the  Notes,  all  obligations   under  the  Loan
          Documents, including, without limitation, all accrued and unpaid fees,
          all  Reimbursement  Obligations,   Second  Reimbursement  Obligations,
          Facility  Letter  of Credit  Obligations,  Second  Facility  Letter of
          Credit  Obligations  and all other  obligations  of the  Company,  the
          Parent  and  the  Subsidiaries  to the  Banks  or to any  Bank  or the
          Administrative  Agent arising under or in connection with the Facility
          Letters  of  Credit,   the  Second  Facility  Letter  of  Credit,  the
          Applications,   the  Notes,  the  Second  Facility  Loan  Notes,  this
          Agreement,  any Guaranties of the Obligations,  the Loan Documents and
          Rate Hedging Obligations which are owed to any Bank, including without
          limitation,  interest,  fees and other  charges  that would  accrue or
          become  owing  both  prior  to and  subsequent  to  and  but  for  the
          commencement of any proceeding against or with respect to the Company,
          the  Parent,  or any of their  Subsidiaries  under any  chapter of the
          Bankruptcy  Code of 1978, 11 U.S.C.  Sec. 101 et. seq whether or not a
          claim is  allowed  for the same in any such  proceeding  to the extent
          permitted by law.

         (h)  Definition of Note. The definition of "Note" on pages 11 and 12 of
  the Credit  Agreement  is hereby  amended  and  restated  in its  entirety  as
  follows:

                "Note" means (a) a promissory note in substantially  the form of
          Exhibit "A" hereto,  duly executed and delivered to the Administrative
          Agent by the  Company and payable to the order of a Bank in the amount
          of its  Commitment,  or (b) any Second Facility Loan Note, or both, as
          applicable  in the context,  including  any  amendment,  modification,
          extension, renewal or replacement of all of such promissory notes.

         (i) Definition of Required Banks. The definition of "Required Banks" on
  page 14 of the Credit Agreement is hereby amended and restated in its entirety
  as follows:

            "Required  Banks"  means  Banks in the  aggregate  holding  at least
          66-2/3% of the sum of (a) the aggregate unpaid principal amount of the
          outstanding  Advances  and  (b) the  aggregate  unpaid  amount  of the
          Reimbursement  Obligations plus the Second Reimbursement  Obligations,
          or, if no  Advances,  Facility  Letter of  Credit  Obligations  or the
          Second  Facility  Letter  of  Credit  are  outstanding,  Banks  in the
          aggregate having least 66-2/3% of the Aggregate Commitment.

         (j)  Definition of Second  Facility  Letter of Credit  Commitment.  The
  definition of "Second Facility Letter of Credit  Commitment" shall be added in
  its  entirety  to page 14 of the Credit  Agreement  in  alphabetical  order as
  follows:

                "Second  Facility Letter of Credit  Commitment"  means an amount
           equal to  $10,080,000,  as such  amount may be reduced by the Company
           from time to time.

         (k) Definition of Second Facility  Letter of Credit.  The definition of
  "Second  Facility  Letter of Credit" shall be added in its entirety to page 14
  of the Credit Agreement in alphabetical order as follows:

                    "Second  Facility  Letter  of  Credit"  means  that  certain
          irrevocable  stand-by  NationsBank  of  Texas,  N.A.  Letter of Credit
          issued  or to be  issued  for the  benefit  of  Hughes  Communications
          Galaxy,  Inc. for the account of the Company,  in the original maximum
          face amount of $9,100,000.

         (1) Definition of Second  Facility  Letter of Credit  Obligations.  The
  definition of "Second Facility Letter of Credit Obligations" shall be added in
  its  entirety  to page 14 of the Credit  Agreement  in  alphabetical  order as
  follows:

                 "Second Facility Letter of Credit Obligations" means, as at the
          time of  determination  thereof,  all  liabilities,  whether actual or
          contingent,  of the  Company  to  the  Banks  with  respect  to  their
          interests  in the  Second  Facility  Letter  of  Credit  as  Issuer or
          participant,  including  the sum of (a)  unpaid  Second  Reimbursement
          Obligations  and  (b)  the  aggregate   undrawn  face  amount  of  the
          outstanding Second Facility Letter of Credit.

         (m)  Definition  of Second  Facility  Loan.  The  definition of "Second
  Facility  Loan"  shall  be  added  in its  entirety  to page 14 of the  Credit
  Agreement in alphabetical order as follows:

                "Second  Facility  Loan" has the  meaning  ascribed  thereto  in
          Section 2.1(a)(ii) of this Agreement.

         (n) Definition of Second  Facility Loan Note. The definition of "Second
  Facility  Loan Note"  shall be added in its  entirety to page 14 of the Credit
  Agreement in alphabetical order as follows:

                "Second  Facility  Loan  Note"  means  promissory  notes in form
          acceptable to the Administrative  Agent evidencing the Second Facility
          Loan, duly executed and delivered to the Administrative Agent and each
          Bank in the amount of each  Bank's pro rata  percentage  of the Second
          Facility  Loan,  including  any  amendment,  modification,  extension,
          renewal or replacement of any of such promissory notes.

         (o) Definition of Second Reimbursement  Obligations.  The definition of
  "Second  Reimbursement  Obligations" shall be added in its entirety to page 14
  of the Credit Agreement in alphabetical order as follows:

                "Second  Reimbursement  Obligations"  means,  at any  time,  the
          aggregate of the obligations of the Company to the Banks in respect of
          all unreimbursed  payments or disbursements made by the Banks under or
          pursuant to the Second Facility Letter of Credit.

          SECTION 2.  Heading on Page 1. The  number  $15,000,000  on the top of
  page 1 of the Credit  Agreement is hereby amended and restated in its entirety
  to read $25,830,000.

         SECTION 3. Sections  2.1,  2.2.,  2.3, 2.4 and 2.5.  Sections 2.1, 2.2,
  2.3,  2.4 and 2.5 on pages 15 through 22 of the  Credit  Agreement  are hereby
  amended and restated in their entirety to read as follow:

          2.1. Loans.

          (a) (i) Loans Prior to Maturity  Date.  From and including the date of
          this  Agreement and prior to the Maturity  Date,  each Bank  severally
          agrees,  subject  to the  terms  and  conditions  set  forth  in  this
          Agreement,  to make Loans to the Company  from time to time in amounts
          not to exceed in the aggregate at any one time  outstanding the amount
          of its Available  Commitment.  Subject to the terms of this Agreement,
          the  Company may  borrow,  repay and  reborrow up to the amount of the
          Aggregate Available Commitment at any time prior to the Maturity Date.

          (ii) Loans Upon Draws Under the Second Facility  Letter of Credit.  So
          long as (A) there  exists no Unmatured  Default or Default  under this
          Agreement both before and immediately  after giving effect to any such
          loan, (B) the Second  Facility  Letter of Credit has been  terminated,
          (C) there has been a draw under the Second  Facility Letter of Credit,
          and (D) each Bank has received a duly  completed  and executed  Second
          Facility Loan Note, and subject to the terms of this  Agreement,  each
          Bank severally  agrees to make a term Loan to the Company in an amount
          not to exceed in the  aggregate,  the draw under the  Second  Facility
          Letter of Credit (the "Second Facility  Loan").  Amounts repaid by the
          Company  under  the  Second  Facility  Loan  are  not  entitled  to be
          reborrowed by the Company.

         (b) Ratable Loans.  Each Advance  hereunder shall consist of Loans made
  from  the  several  Banks  ratably  in  proportion  to the  ratio  that  their
  respective Commitments bear to the Aggregate Commitment.

         (c) Rate Options;  Interest  Period  Payments.  Each Advance shall bear
  interest  at either the  Floating  Rate,  the Fixed CD Rate or the  Eurodollar
  Rate, as the Company may select in accordance with the terms of Section 2.l(h)
  of this  Agreement.  Each Advance  shall be paid in full by the Company on the
  last day of the Interest Period applicable thereto.

          (d) Interest Recapture. If at any time the applicable rate of interest
  under the Agreement on any portion of the Obligations (the "Designated  Rate")
  exceeds the Highest  Lawful Rate, the rate of interest on any Advance shall be
  limited to the Highest  Lawful  Rate,  but any  subsequent  reductions  in the
  Designated  Rate  shall not  reduce  the rate of  interest  thereon  below the
  Highest  Lawful  Rate  until the total  amount of  interest  paid and  accrued
  thereon equals the amount of interest which would have accrued  thereon if the
  Designated Rate had at all times been in effect. In the event that at maturity
  (stated  or  by  acceleration  or  otherwise),  or at  final  payment  of  the
  Obligations,  the total  amount of interest  paid and accrued is less than the
  amount of interest which would have accrued if the Designated  Rate had at all
  times been in effect,  then, at such time and to the extent  permitted by law,
  the Company shall pay to the Banks an amount equal to the  difference  between
  (i) the  lesser of the amount of  interest  which  would  have  accrued if the
  Designated  Rate had at all times been in effect  and the  amount of  interest
  which would have  accrued if the Highest  Lawful Rate had at all times been in
  effect, and (ii) the amount of interest actually paid on the Obligations.

          (e) Mandatory Principal Payments.

                (i) If the  Company  shall grant or  implement a material  price
           decrease in MTS Service and the Company shall fail to  demonstrate to
           the  satisfaction  of the Required  Banks,  by projections  employing
           revised revenue  forecasts based upon such price decrease that, after
           giving effect  thereto,  the Company will be in  compliance  with the
           provisions of Section 7.4 for the remaining  term of this  Agreement,
           then the Company shall either (i) make a mandatory  prepayment on the
           Advances  outstanding in such amount as the Required Banks shall deem
           necessary to accomplish compliance with the provisions of Section 7.4
           or (ii) furnish the Banks with cash  collateral in such amount as the
           Required  Banks  shall deem  satisfactory.  Mandatory  payments  made
           pursuant to this Section 2.1.(e)(i) may not be reborrowed.

                (ii)  Upon  any  reduction  in  the   Aggregate   Commitment  in
           accordance with the terms of Section 2.1(f) below,  the Company shall
           immediately  pay any  amount  necessary  to  reduce  the  outstanding
           Obligations  to an  amount  equal  to or  less  than  the  sum of the
           Aggregate  Available  Commitment  plus the Second  Facility Letter of
           Credit or Second  Reimbursement  Obligations,  together with interest
           and fees accrued through such date on such amount repaid.

                (iii) All  outstanding  Obligations  shall be due and payable in
           full on the Maturity Date.

                (iv)  The  Company  may from  time to time  pay all  outstanding
           Floating  Rate  Advances,  or,  in  a  minimum  aggregate  amount  of
           $100,000,  or any  integral  multiple  thereof,  any  portion  of the
           outstanding  Floating  Rate  Advances  upon one Business  Day's prior
           notice  to the  Administrative  Agent  without  penalty  or  premium.
           Subject to the terms of Section  4.3,  the  Company  may from time to
           time pay all Fixed Rate Advances,  or, in a minimum  aggregate amount
           of  $1,000,000,  or any  integral  multiple  of  $100,000  in  excess
           thereof,  any portion of the  outstanding  Fixed Rate  Advances  upon
           three Business Days' prior written notice.

                (v)  All  Reimbursement  Obligations  and  Second  Reimbursement
           Obligations  shall  be due  and  payable  on the  earlier  of (A) the
           Maturity Date or (B) demand by the Administrative Agent.

                (vi) If at any time the Company or any  Subsidiary  sells assets
           or properties not in the ordinary  course of business,  which, in the
           aggregate  for any fiscal year of the Company,  exceeds a gross sales
           price of $500,000, the Company shall immediately make a prepayment on
           the Second Facility Loan (or, if the Second Facility Letter of Credit
           shall not have been drawn upon,  the Company  shall  establish a cash
           collateral  account  with the  Administrative  Agent to secure a draw
           against the Second  Facility  Loan) in an amount equal to 100% of the
           net  proceeds  of each such sale until the Second  Facility  Loan has
           been repaid in full (or is 100% cash collateralized).

         (f) Reduction of Commitment

           (i)  Optional.  The  Company  may  permanently  reduce the  Aggregate
         Commitment in whole,  or in part ratably  among the Banks,  in integral
         multiples of $500,000,  upon at least ten Business Days' written notice
         to the Administrative Agent, which shall specify the amount of any such
         reduction,   provided,  however,  that  the  amount  of  the  Aggregate
         Commitment may not be reduced below the outstanding principal amount of
         the Advances  outstanding  thereunder.  No  reduction in the  Aggregate
         Commitment shall reduce the Facility Letter of Credit Commitment unless
         (A) there are no outstanding Facility Letters of Credit and (B) (I) the
         Company shall designate such Aggregate  Commitment reduction in writing
         to  apply to the  Facility  Letter  of  Credit  Commitment  or (II) the
         Facility  Letter  of  Credit  Commitment  shall be the only part of the
         Aggregate  Commitment  that has not been  reduced to zero.  All accrued
         fees shall be payable on the effective  date of any  termination of the
         Aggregate Commitment.

           (ii) Mandatory.

                (A) Scheduled Reduction.  Notwithstanding any other provision of
         this  Agreement   reducing  the  Aggregate   Commitment  or  otherwise,
         commencing  June 30,  1993 and on each  Payment  Date  thereafter,  the
         Aggregate  Commitment  shall be  permanently  reduced by the amount set
         forth  opposite the  applicable  Payment Date below until the Aggregate
         Commitment is reduced to zero. the Aggregate  Commitment shall never be
         less  than  zero.  Once  reduced,  the  Aggregate  Commitment  (or  the
         Commitment of any Bank) may not be reinstated.

                                                           Amount of Commitment 
          Payment Dates                                             Reduction 

          June 30, 1993                                              $650,000
          September 30, 1993                                         $650,000
          December 31, 1993                                          $650,000
          March 31, 1994                                             $650,000
          June 30, 1994                                              $650,000
          September 30, 1994                                         $650,000
          December 31, 1994                                          $650,000
          March 31, 1995                                             $650,000
          June 30, 1995                                              $650,000
          September 30, 1995                                         $650,000
          December 31, 1995                                          $650,000
          March 31, 1996                                             S650,000
          June 30, 1996                                              $650,000
          September 30, 1996                                         $650,000
          December 31, 1996                                          $650,000
          March 31, 1997                                             $812,500
          June 30, 1997                                              $812,500
          September 30, 1997                                         $812,500
          December 31, 1997                            All remaining amounts in
                                                       excess of zero

                    (B) Asset Sales. After the Second Facility Loan is repaid in
          full,  if at any time the Company or any  Subsidiary  sells  assets or
          properties  not in the  ordinary  course of  business,  which,  in the
          aggregate  for any fiscal year of the  Company,  exceeds a gross sales
          price of  $500,000,  the  Aggregate  Commitment  shall be  immediately
          reduced by an amount  equal to 100% of the net  proceeds  of each such
          sale until the Aggregate Commitment is zero.

                    (C) Expiration of Facility  Letters of Credit.  At such time
          as the  Company  permits  all of the  Facility  Letters  of  Credit to
          terminate according to their terms (or such Facility Letters of Credit
          are  replaced  or  substituted  by  Letters  of  Credit  issued  by an
          institution other than  Administrative  Agent), the Facility Letter of
          Credit Commitment shall be reduced to zero.

                    (D) Maturity  Date. The Aggregate  Commitment,  the Facility
          Letter  of  Credit  Commitment  and each  Bank's  Commitment  shall be
          reduced immediately to zero on the Maturity Date.

                    (E)  Expiration  of Second  Facility  Letter of Credit.  The
          Second  Facility  Letter of  Credit  Commitment  shall be  immediately
          reduced to zero on June 30, 1996.

          (g)  Method of  Borrowing.  Not later  than noon  Dallas  time on each
  Borrowing  Date,  each Bank  shall make  available  its Loan or Loans in funds
  immediately  available in Dallas, to the  Administrative  Agent at its address
  specified  on  the   signature   pages  or  to  such  other   address  as  the
  Administrative  Agent requests in writing.  The Administrative Agent will make
  the  funds  so  received  from  the  Banks  available  to the  Company  at the
  Administrative   Agent's   address   set  forth  in   Section   11.18   below.
  Notwithstanding the foregoing provisions of this Section, to the extent that a
  Loan made by a Bank matures on the Borrowing  Date of a requested  Loan,  such
  Bank shall apply the  proceeds of the Loan it is then making to the  repayment
  of the maturing Loan.

          (h) Method of Selecting Rate Options and Interest Periods. The Company
  shall select the Rate Option and Interest  Period  applicable  to each Advance
  from time to time. The Company shall give the Administrative Agent irrevocable
  notice (a  "Borrowing  Notice") to Ms.  Linda  Brown,  telephone  number (214)
  508-3044  (facsimile number (214) 508-2020),  not later than 10:00 a.m. Dallas
  time at least one Business Day before the Borrowing Date of each Floating Rate
  Advance,  two Business  Days before the  Borrowing  Date of each Fixed CD Rate
  Advance and three Business Days before the Borrowing  Date of each  Eurodollar
  Advance, specifying:

           (i) the  Borrowing  Date,  which  shall be a  Business  Day,  of such
               Advance,

           (ii)the aggregate  amount of such Advance and whether such Advance is
               made under the Aggregate Commitment or the Second Facility Loan,

           (iii) the Rate Option selected for such Advance, and

           (iv)in the case of each  Fixed  Rate  Advance,  the  Interest  Period
               applicable thereto.

  Each Fixed Rate Advance  shall bear  interest from and including the first day
  of the Interest Period applicable  thereto to (but not including) the last day
  of such Interest  Period at the interest rate determined as applicable to such
  Fixed Rate Advance.  The Company may not select a Fixed Rate for an Advance if
  there exists a Default or Unmatured Default. The Company shall select Interest
  Periods with respect to Fixed Rate Advances so that it is not necessary to pay
  a Fixed Rate Advance prior to the last day of the applicable  Interest  Period
  in order to repay Advances  because of a mandatory  reduction of the Aggregate
  Commitment pursuant to Section 2.1(f) of this Agreement, or a repayment of the
  Second Facility Loan as provided in Section 2.l(n) hereof.

           (i) Minimum Amount of Each Advance.  Each Fixed Rate Advance shall be
  in the minimum amount of $1,000,000 (and in multiples of $100,000 if in excess
  thereof),  and each Floating  Rate Advance  shall be in the minimum  amount of
  $100,000  (and in  multiples  of  $100,000  if in excess  thereof),  provided,
  however,  that any  Floating  Rate  Advance may be in the amount of the unused
  Aggregate Available Commitment.

           (j) Rate after  Default.  Except as  provided  in the next  sentence,
  after the occurrence and during the  continuance of any Default,  all Advances
  outstanding  hereunder  shall bear  interest  until paid in full at a rate per
  annum equal to the lesser of (i) the  Highest  Lawful Rate and (ii) the sum of
  the  Eurodollar  Rate,  the  Fixed  CD Rate  or the  Floating  Rate  otherwise
  applicable  thereto,  plus two percent per annum. No Fixed Rate Advance may be
  selected by the Company after the occurrence and during the continuance of any
  Default.  In the  case of a Fixed  Rate  Advance  the  maturity  of  which  is
  accelerated,  such Fixed Rate Advance shall bear interest for the remainder of
  the applicable  Interest Period,  at the lesser of (i) the Highest Lawful Rate
  and (ii) the higher of (A) the sum of the rate  otherwise  applicable  to such
  Interest Period plus two percent per annum or (B) the Floating Rate plus three
  percent per annum.

           (k) Notes;  Telephonic  Notices.  Each Bank is hereby  authorized  to
  record the  principal  amount of each of its Loans and each  repayment  on the
  schedule attached to its Note provided, however, that the failure to so record
  shall not affect the Company's obligations under such Note. The Company hereby
  authorizes  the Banks and the  Administrative  Agent to  extend  Advances  and
  effect Rate Option  selections based on telephonic  notices made by any person
  or persons the  Administrative  Agent or any Bank in good faith believes to be
  an Authorized  Officer acting on behalf of the Company.  The Company agrees to
  deliver promptly to the  Administrative  Agent a written  confirmation of each
  telephonic notice signed by an Authorized Officer. If the written confirmation
  differs in any material  respect  from the action taken by the  Administrative
  Agent and the Banks,  the  records of the  Administrative  Agent and the Banks
  shall govern absent manifest error.

          (l) Interest Payment Dates;  Interest Basis.  Interest accrued on each
  Advance shall be payable on the last day of its applicable Interest Period and
  on any date on which the Advance is prepaid,  whether due to  acceleration  or
  otherwise.  Interest  accrued on each Fixed Rate  Advance  having an  Interest
  Period  longer than three months shall also be payable on the last day of each
  three-month  interval during such Interest  Period.  Interest on Floating Rate
  Advances shall be calculated for actual days elapsed on the basis of a 365, or
  when appropriate 366, day year; interest on Fixed Rate Advances and fees shall
  be calculated for actual days elapsed on the basis of a 360-day year. Interest
  shall be  payable  for the day an  Advance  is made but not for the day of any
  payment on the amount paid if payment is received  prior to noon (Dallas time)
  at the place of  payment.  If any  payment of  principal  of or interest on an
  Advance  shall become due on a day which is not a Business  Day,  such payment
  shall  be made on the  next  succeeding  Business  Day  and,  in the case of a
  principal  payment,  such  extension  of time shall be included  in  computing
  interest in connection  with such payment,  provided  that, if any  Eurodollar
  Loan extension shall be payable in the next calendar month,  then such payment
  shall be made on the next preceding Business Day.

           (m)  Notification  of  Advances,   Interest  Rates,  Prepayments  and
  Commitment  Reductions.  Promptly after receipt  thereof,  the  Administrative
  Agent will  notify  each Bank of the  contents  of each  Aggregate  Commitment
  reduction  notice,  Borrowing  Notice  and  repayment  notice  received  by it
  hereunder. The Administrative Agent will notify each Bank of the interest rate
  applicable  to each Fixed Rate Advance  promptly  upon  determination  of such
  interest  rate and will  give each Bank  prompt  notice of each  change in the
  Corporate Base Rate.

          (n) Repayment of the Second  Facility Loan.  The Second  Facility Loan
  shall be repaid in  installments  on the  following  dates in the  amounts set
  forth opposite such dates:

                  Date                                 Amount Due
                  ----                                 ----------
           September 30, 1996                5% of Initial Amount of Second
                                                Facility Loan
           December 31, 1996                 5% of Initial Amount of Second
                                                Facility Loan
           March 31, 1997                    5% of Initial Amount of Second
                                                Facility Loan
           June 30, 1997                     5% of Initial Amount of Second
                                                Facility Loan
           September 30, 1997                5% of Initial Amount of Second
                                                Facility Loan
           December 31, 1997                75% of Initial Amount of Second 
                                                Facility Loan and all other 
                                                Obligations

          (o) Lending Installations. Each Bank may book its Loans at any Lending
  Installation  selected  by such Bank and may change its  Lending  Installation
  from time to time. All terms of this Agreement shall apply to any such Lending
  Installation  and the Notes  shall be deemed held by each Bank for the benefit
  of such Lending  Installation.  Each Bank may, by written,  telex, or telecopy
  notice  to the  Administrative  Agent  and the  Company,  designate  a Lending
  Installation through which Loans will be made by it and for whose account Loan
  payments are to be made.

                   2.2.  Participation  in Facility Letters of Credit and Second
          Facility Letter of Credit.  Each Bank severally  agrees,  on the terms
          and conditions set forth in this Agreement and pursuant to Article III
          hereof,  to  purchase  on the date  hereof  (or on the date  such Bank
          became  a party  to this  Agreement)  participations  in the  Facility
          Letter of Credit  Commitment and the Second Facility Letters of Credit
          Commitment and in each of the Facility  Letters of Credit,  the Second
          Facility  Letters  of  Credit,  Reimbursement  Obligations  and Second
          Reimbursement  Obligations  in an  aggregate  amount not to exceed its
          ratable portion (based upon the ratio such Bank's  Commitment bears to
          the Aggregate Commitment) of the aggregate undrawn face amount of each
          of the  Facility  Letters  of Credit  and  Second  Facility  Letter of
          Credit.

                   2.3. Fees.  The Company  agrees to pay to the  Administrative
          Agent the following fees:

                  (a) subject to Section 11.17  hereof,  for the account of each
                      Bank, a commitment fee equal to 1/2 of 1% per annum on the
                      daily unused  portion of such Bank's  Commitment  from the
                      date hereof to and  including the Maturity  Date,  payable
                      hereafter as it accrues on each Payment Date hereafter and
                      on the Maturity Date;

                  (b) subject to Section 11.17 hereof,  for the ratable  account
                      of each Bank, a per annum fee on each  Facility  Letter of
                      Credit  equal to 2% of the face  amount  of each  Facility
                      Letter of Credit,  payable in accordance  with Section 3.2
                      below;

                  (c) subject to Section  11.17 hereof,  for the  Administrative
                      Agent's  own  account,  such other fees as the Company and
                      the Administrative Agent shall have heretofore agreed upon
                      in writing, dated the date hereof (the "Fee Letter"), and

                  (d) subject to Section 11.17 hereof,  for the ratable  account
                      of each  Bank,  a per  annum  fee on the  Second  Facility
                      Letter  of  Credit  equal to 2% of the face  amount of the
                      Second  Facility  Letter of Credit,  payable in accordance
                      with Section 3.2 below.

                   2.4. Method of Payment. All payments of principal,  interest,
          and fees hereunder shall be made in immediately available funds to the
          Administrative  Agent at the  Administrative  Agent's  address  on the
          signature pages hereto or as otherwise  specified  pursuant to Section
          11.18   hereof  or  at  any   other   Lending   Installation   of  the
          Administrative  Agent specified in writing by the Administrative Agent
          to the Company,  by noon (Dallas  time) on the date when due and shall
          be made  ratably  among  the  Banks.  Each  payment  delivered  to the
          Administrative  Agent for the  account of any Bank shall be  delivered
          promptly by the Administrative  Agent to such Bank in the same type of
          funds which the Administrative Agent received at its address specified
          pursuant  to  Section  11.18  hereof  or at any  Lending  Installation
          specified in a notice received by the  Administrative  Agent from such
          Bank.  The  Administrative  Agent is hereby  authorized  to charge the
          account of the Company maintained with NationsBank for each payment of
          principal, interest and fees as it becomes due hereunder.

                   2.5 Non-Receipt of Funds by the Administrative  Agent. Unless
          the Company or a Bank, as the case may be, notifies the Administrative
          Agent prior to the date on which it is  scheduled  to make  payment to
          the Administrative Agent of (a) in the case of a Bank, the proceeds of
          a Loan or (b) in the case of the  Company,  a  payment  of  principal,
          interest  or fees to the  Administrative  Agent for the account of the
          Banks,   that  it  does  not   intend  to  make  such   payment,   the
          Administrative  Agent may assume that such payment has been made.  The
          Administrative  Agent  may,  but  shall not be  obligated  to make the
          amount of such payment available to the intended recipient in reliance
          upon such assumption. If such Bank or the Company, as the case may be,
          has not in fact made such  payment to the  Administrative  Agent,  the
          recipient  of such  payment  shall,  on demand  by the  Administrative
          Agent, repay to the Administrative  Agent the amount so made available
          together  with  interest  thereon  in  respect  of each day during the
          period commencing on the date such amount was so made available by the
          Administrative  Agent until the date the Administrative Agent recovers
          such amount at a rate per annum equal to (a) in the case of payment by
          a Bank,  the  federal  funds rate for such day (as  determined  by the
          Administrative  Agent) or (b) in the case of payment  by the  Company,
          the interest rate applicable to the relevant Loan.

         SECTION  4.  ARTICLE  III.  ARTICLE  III on pages 23  through 27 of the
  Credit  Agreement  is hereby  amended and  restated in its entirety to read as
  follows:

         3.1. Issuance of Letters of Credit

         (a) Issuance of Facility Letters of Credit.  The Company shall give the
  Issuer not less than three Business Days prior written notice of a request for
  the issuance of a Facility  Letter of Credit.  Until the Maturity  Date,  upon
  receipt of the Company's properly completed and duly executed Applications and
  subject to the terms of such  Applications and to the terms of this Agreement,
  the Issuer agrees to issue Facility Letters of Credit on behalf of the Company
  in an  aggregate  face  amount  not in  excess  of  Facility  Letter of Credit
  Commitment  at any one time  outstanding.  No Facility  Letter of Credit shall
  have a maturity  extending  beyond the earliest of (i) the Maturity  Date,  or
  (ii) such earlier date as may be required to enable the Company to satisfy its
  repayment  obligations  under Section 2.1(e) hereof.  Subject to such maturity
  limitations and so long as no Default or Unmatured Default has occurred and is
  continuing  or would  result from the renewal of a Facility  Letter of Credit,
  the Facility Letters of Credit may be renewed by the Issuer in its discretion.
  The Banks shall  participate  in any liability  under the Facility  Letters of
  Credit and in any unpaid Reimbursement Obligations of the Company with respect
  to any Facility  Letter of Credit ratably  according to the  percentage  their
  Commitment  bears to the  Aggregate  Commitment.  The  amount of the  Facility
  Letters  of  Credit  issued  and  outstanding  and  the  unpaid  Reimbursement
  Obligations  of the Company for such  Facility  Letters of Credit shall reduce
  the amount of  Aggregate  Commitment  available,  so that at no time shall the
  aggregate   outstanding  Advances  together  with  the  sum  of  Reimbursement
  Obligations plus the face amount of all outstanding Facility Letters of Credit
  exceed an amount equal to the Aggregate  Commitment,  and at no time shall the
  sum of all Loans by any Bank,  plus its ratable share of amounts  available to
  be drawn under the  Facility  Letters of Credit and its  ratable  share of the
  unpaid  Reimbursement  Obligations  of the Company in respect of such Facility
  Letters of Credit, exceed its ratable percentage of the Aggregate Commitment.

         (b) Issuance of Second  Facility  Letter of Credit.  The Company  shall
  give the Issuer not less than three  Business Days prior  written  notice of a
  request  for the  issuance  of the  Second  Facility  Letter  of Credit or any
  increase  thereto.  Until  October 31,  1995,  upon  receipt of the  Company's
  properly  completed and duly executed  Application and subject to the terms of
  such  Application  and to the terms of this  Agreement,  the Issuer  agrees to
  issue the  Second  Facility  Letter of Credit on behalf of the  Company  in an
  aggregate face amount not in excess of $9,100,000 at any one time outstanding.
  Until June 20, 1996, upon receipt of the Company's properly completed and duly
  executed  Application and subject to the terms of such  Application and to the
  terms of this  Agreement,  the  Issuer  agrees to  replace or amend the Second
  Facility Letter of Credit on behalf of the Company to an aggregate face amount
  not in excess of Second Facility  Letter of Credit  Commitment at any one time
  outstanding.  The Second  Facility  Letter of Credit shall not have a maturity
  extending  beyond  June  30,  1996 and may not be  renewed.  The  Banks  shall
  participate in any liability under the Second Facility Letter of Credit and in
  any unpaid Second Reimbursement Obligations of the Company with respect to the
  Second  Facility  Letter of Credit ratably  according to the percentage  their
  Commitment bears to the Aggregate Commitment.

         3.2. Letter of Credit Fee.

         (a) Facility Letter of Credit Fees. In  consideration  for the issuance
  of each Facility Letter of Credit and any renewal  thereof,  the Company shall
  pay to the  Administrative  Agent for the account of the Issuer and the Banks,
  ratably in accordance with the percentage that their  Commitment  bears to the
  Aggregate  Commitment,  a letter of credit fee as set forth in Section  2.3(b)
  hereof.  The letter of credit fee shall  accrue  from the date of  issuance of
  each  Facility  Letter of Credit and shall be payable  quarterly in arrears on
  each Payment Date and on the date of  termination  of such Facility  Letter of
  Credit, and upon the Issuer's demand pursuant to Section 3.3 hereof.

         (b) Second  Facility  Letter of Credit  Fee. In  consideration  for the
  issuance of the Second Facility Letter of Credit and any renewal thereof,  the
  Company  shall pay to the  Administrative  Agent for the account of the Issuer
  and the Banks, ratably in accordance with the percentage that their Commitment
  bears to the  Aggregate  Commitment,  a letter of  credit  fee as set forth in
  Section 2.3(d) hereof.  The letter of credit fee shall accrue from the date of
  issuance  of the  Second  Facility  Letter  of  Credit  and  shall be  payable
  quarterly in arrears on each Payment  Date and on the date of  termination  of
  the Second Facility Letter of Credit, and upon the Issuer's demand pursuant to
  Section 3.3 hereof.

          3.3.  Reimbursement   Obligations  and  Second  Reimbursement
          Obligations.

         (a) The Company hereby agrees to reimburse the Issuer, immediately upon
 demand by the Issuer,  and in immediately  available  funds, for any payment or
 disbursement  made by the  Issuer  under any  Facility  Letter of Credit or the
 Second  Facility  Letter of Credit.  Payment  shall be made by the Company with
 interest on the amount so paid or  disbursed  by the Issuer from and  including
 the date  payment  is made  under any  Facility  Letter of Credit or the Second
 Facility Letter of Credit to and including the date of payment, at the Floating
 Rate in effect  from time to time  plus  three  percent  per  annum;  provided,
 however, that (a) with respect to any draw under any Facility Letter of Credit,
 if the  Company  would be  permitted  under the terms of Section  2.1 to borrow
 Advances  in  amounts  at least  equal to its  reimbursement  obligation  for a
 drawing under any Facility Letter of Credit, a Floating Rate Loan by each Bank,
 ratably in an amount equal to the percentage that such Bank's  Commitment bears
 to the Aggregate Commitment,  shall automatically be deemed made on the date of
 any such  payment  or  disbursement  made by the  Issuer in the  amount of such
 obligation and subject to the terms of this Agreement,  and (b) with respect to
 any draw under the Second  Facility  Letter of Credit,  subject to the terms of
 this  Agreement,  the Company  may be  entitled to borrow a term-loan  from the
 Banks in the form of a Second  Facility  Loan in  accordance  with the terms of
 this Agreement.

          (b) The Company  hereby also agrees to pay to the Issuer,  immediately
  upon demand by the Issuer and in immediately  available funds, as security for
  its reimbursement obligations in respect of the Facility Letters of Credit and
  Second  Facility  Letter of Credit under  Section  3.3(a) hereof and any other
  amounts  payable  hereunder and under the Notes, an amount equal to the sum of
  the aggregate  amount  available to be drawn under Facility  Letters of Credit
  and  the  Second  Facility  Letter  of  Credit  then   outstanding   plus  any
  Reimbursement Obligations and Second Reimbursement  Obligations,  irrespective
  of whether any of the Facility Letters of Credit or the Second Facility Letter
  of Credit has been drawn upon,  at the  occurrence  of a Default or  Unmatured
  Default. Any such payments shall be deposited in a separate account designated
  "GCIC Special  Account" or such other  designation  as the Issuer shall elect.
  All such amounts  deposited with the Issuer shall be and shall remain funds of
  the  Company on deposit  with the Issuer and may be  invested by the Issuer as
  the Issuer shall determine.  Such amounts may not be used by the Issuer to pay
  the  drawings  under the  Facility  Letters of Credit and the Second  Facility
  Letter  of  Credit;  however,  such  amounts  may be  used  by the  Issuer  as
  reimbursement  for  Facility  Letter of Credit  or Second  Facility  Letter of
  Credit  drawings which the Issuer has paid.  During the existence of a Default
  or an Unmatured  Default but after the expiry of any Facility Letter of Credit
  or Second  Facility  Letter of Credit that was not drawn upon, the Company may
  direct  the  Administrative  Agent  to use any  cash  collateral  for any such
  expired Facility Letter of Credit or Second Facility Letter of Credit, if any,
  to prepay  Advances in accordance  with Section 2.1. Any amounts  remaining in
  the GCIC Special Account after the date of the expiry of all Facility  Letters
  of Credit and the Second  Facility  Letter of Credit and after all Obligations
  have been paid in full,  shall be repaid to the  Company  promptly  after such
  expiry and such payment in full.

         (c) The obligations of the Company under this Section 3.3 will continue
  until all Facility  Letters of Credit and the Second Facility Letter of Credit
  have  expired  and all  Reimbursement  Obligations  and  Second  Reimbursement
  Obligations  with  respect  thereto  have been paid in full by the Company and
  until all of the other Obligations shall have been paid in full.

         (d) The Company  shall be obligated to reimburse the Issuer upon demand
  for all amounts paid under the Facility  Letters of Credit and Second Facility
  Letter of Credit as set forth in Section 3.3(a) hereof; provided,  however, if
  the Company for any reason fails to reimburse  the Issuer in full upon demand,
  whether by borrowing  Advances to pay such Reimbursement  Obligations,  Second
  Reimbursement  Obligations or otherwise,  the Banks shall reimburse the Issuer
  ratably in accordance with  percentage that each Bank's ratable  percentage of
  the Commitment bears to the Aggregate  Commitment,  for amounts due and unpaid
  from the Company as set forth in Section 3.4 hereof;  provided,  however, that
  no  such  reimbursement  made  by the  Banks  shall  discharge  the  Company's
  obligations to reimburse the Issuer.

         (e) The Company shall  indemnify  and hold the Issuer or any Bank,  its
  officers, directors,  representatives and employees harmless from loss for any
  claim,  demand or liability  which may be asserted  against the Issuer or such
  indemnified  party in connection with actions taken under the Facility Letters
  of Credit or the Second  Facility  Letter of  Credit,  or in  connection  with
  either thereof  (including  losses resulting from the negligence of the Issuer
  or such  indemnified  party),  and shall pay the Issuer for reasonable fees of
  attorneys  (who may be  employees  of the  Issuer)  and  legal  costs  paid or
  incurred by the Issuer in connection  with any matter  related to the Facility
  Letters of Credit or the Second Facility  Letter of Credit,  except for losses
  and liabilities incurred as a direct result of the gross negligence or willful
  misconduct  of the Issuer or such  indemnified  party.  If the Company for any
  reason fails to indemnify or pay the Issuer or such  indemnified  party as set
  forth  herein in full,  the Banks  shall  indemnify  and pay the  Issuer  upon
  demand,  ratably in  accordance  with each Bank's  percentage of the Aggregate
  Commitment,  such amounts due and unpaid from the Company.  The  provisions of
  this Section 3.3(e) shall survive the termination of this Agreement.

         3.4.  Banks'  Obligations.   Each  Bank  agrees,   unconditionally  and
         irrevocably  to  reimburse  the Issuer (to the extent the Issuer is not
         otherwise  reimbursed by the Company in accordance  with Section 3.3(a)
         hereof) on demand for such Bank's ratable  percentage  according to the
         percentage  that  such  Bank's   Commitment   bears  to  the  Aggregate
         Commitment of each draw paid by the Issuer under any Facility Letter of
         Credit or the Second Facility Letter of Credit.  All amounts payable by
         any Bank under this subsection  shall include  interest  thereon at the
         Federal Funds  Effective  Rate, from the date of the applicable draw to
         the date of reimbursement by such Bank. No Bank shall be liable for the
         performance  or  nonperformance  of the  obligations  of any other Bank
         under this  Section.  The  obligations  of the Banks under this Section
         shall continue after the Maturity Date and shall survive termination of
         any Loan Documents.

         3.5. The Issuer's Obligations.

         (a) The Issuer  makes no  representation  or  warranty,  and assumes no
   responsibility  with  respect  to  the  validity,  legality,  sufficiency  or
   enforceability of any Application or any document relative thereto, or to the
   collectibility  thereunder.  The  Issuer  assumes no  responsibility  for the
   financial  condition of the Company or for the  performance of any obligation
   of the Company.  The Issuer may use its discretion with respect to exercising
   or refraining from exercising any rights, or taking or refraining from taking
   any action  which may be vested in it or which it may '  entitled  to take or
   assert with respect to any  Facility  Letter of Credit,  the Second  Facility
   Letter of Credit or any Application.

         (b) The Issuer shall be under no liability to any Bank, with respect to
   anything  the Bank  may do or  refrain  from  doing  in the  exercise  of its
   judgment, the sole liability and responsibility of the Issuer being to handle
   each Bank's share on as favorable a basis as the Issuer handles its own share
   and to  promptly  remit to each  Bank its share of any sums  received  by the
   Issuer   under  any   Application.   The  Issuer  shall  have  no  duties  or
   responsibilities except those expressly set forth herein and those duties and
   liabilities shall be subject to the limitations and  qualifications set forth
   herein.

         (c) Neither the Issuer nor any of its directors, officers, or employees
   shall be liable for any action  taken or omitted  (whether or not such action
   taken or omitted is expressly set forth herein,  is negligent,  or otherwise)
   under or in  connection  herewith  or any other  instrument  or  document  in
   connection herewith,  except for gross negligence or willful misconduct.  The
   Issuer shall incur no liability to any Bank or the Company in acting upon any
   notice, document,  order, consent,  certificate,  warrant or other instrument
   believed  by the Issuer to be genuine  or  authentic  and to be signed by the
   proper party.

         SECTION 5.  Section  5.2.  Section 5.2 on pages 32 and 33 of the Credit
  Agreement is hereby amended and restated in its entirety to read as follows:

                   5.2.  Each Advance or the Issuance of any Facility  Letter of
          Credit or the Second Facility Letter of Credit. The Banks shall not be
          required to make any Advance, and the Issuer shall not be obligated to
          issue any Facility  Letter of Credit or the Second  Facility Letter of
          Credit,  unless  on the  applicable  Borrowing  Date  or the  date  of
          issuance of such Facility  Letter of Credit or Second  Facility Letter
          of Credit:

                   (a) There exists no Default or Unmatured Default.

                   (b) The representations  and warranties  contained in Article
                       VI and in any  Application and Loan Document are true and
                       correct as of such Borrowing Date.

                   (c) In the event the Company shall have theretofore  granted,
                       implemented  or given  notice  of its  intent to grant or
                       implement a material price  decrease in MTS Service,  the
                       Company  shall  demonstrate  to the  satisfaction  of the
                       Required  Banks that the Company  shall be in  compliance
                       with the provisions of Section 7.4.

                   (d) A duly completed and executed  Application  acceptable to
                       the Issuer for each and every  Facility  Letter of Credit
                       or  for  the  Second  Facility   Letter  of  Credit,   as
                       applicable.

                   (e) All legal matters  incident to the making of such Advance
                       shall be satisfactory  to the Banks and their  respective
                       counsel.

                   Each Borrowing Notice with respect to each such Advance shall
          constitute  a  representation  and  warranty by the  Company  that the
          conditions   contained  in  Sections   5.2(a)  and  5.2(b)  have  been
          satisfied.   Any  Bank  may  require  a  duly   completed   Compliance
          Certificate as a condition to making an Advance.

         SECTION  6.  Section  7.4(a).  Section  7.4(a) on page 41 of the Credit
  Agreement is hereby amended and restated in its entirety to read as follows:

                   (a) Leverage  Ratio.  The Company will  maintain at all times
                       during the time periods set forth below, a Leverage Ratio
                       not greater than the ratio set forth below  opposite each
                       such period:

                        Period                             Ratio
                        ------                             -----
         Date hereof through and including 6/29/93      3.50 to 1.00
         6/30/93 through and including 9/29/93          3.20 to 1.00
         9/30/93 through and including 12/30/93         2.75 to 1.00
         12/31/93 through and including 6/30/94         2.40 to 1.00
         7/01/94 through and including 9/30/96          2.00 to 1.00
         10/01/96 and thereafter                        1.50 to 1.00

         SECTION  7.  Section  7.4(c).  Section  7.4(c) on page 41 of the Credit
  Agreement is hereby amended and restated in its entirety to read as follows:

                   (c) Fixed  Charge  Coverage.  At all  times  during  the time
                       periods set forth below,  the Company will not permit the
                       ratio of (i) Annualized Operating Cash Flow to (ii) Fixed
                       Charges for the four fiscal  quarters  then most recently
                       ended  for  the  Company  and  the   Subsidiaries   on  a
                       consolidated  basis, to be less than the following ratios
                       set forth below opposite each such period:

                        Period                             Ratio
                        ------                             -----
         Date hereof through and including 6/30/94      1.00 to 1.00
         7/01/94 through and including 6/30/95          1.10 to 1.00
         7/01/9S through and including 12/31/95         1.20 to 1.00
         1/01/96 and thereafter                         1.00 to 1.00

         SECTION  8.  Section  7.4(d).  Section  7.4(d) on page 41 of the Credit
  Agreement is hereby amended and restated in its entirety to read as follows:

                   (d) Pro Forma Debt Service  Coverage Ratio.  The Company will
                       not permit  the ratio of (i)  Annualized  Operating  Cash
                       Flow to (ii) Pro Forma Debt  Service  for the Company and
                       the Subsidiaries on a consolidated basis, to be less than
                       the following  ratios set forth below  opposite each such
                       period:

                        Period                             Ratio
                        ------                             -----
         Date hereof through and including 6/30/96      1.50 to 1.00
         7/01/96 and thereafter                         1.15 to 1.00

         SECTION  9.  Section  7.12.  Section  7.12  on  page  43 of the  Credit
  Agreement is hereby amended and restated in its entirety to read as follows:

               7.12.  Dividends  and Stock  Repurchases.  The  Company  will not
          declare or pay (or set aside any funds or  establish  any sinking fund
          for such  purpose)  any  dividends  on its capital  stock  (other than
          dividends payable in its own capital stock), and the Company will not,
          nor will it permit any Subsidiary to, redeem,  repurchase or otherwise
          acquire or retire any of its  capital  stock at any time  outstanding,
          provided  that,  so long as (a) both before and after giving effect to
          such repurchase,  there exists no Default or any event or circumstance
          which, with the giving of notice or the passing of time could become a
          Default,  (b) such  repurchase is prior to December 31, 1997,  and (c)
          the Company  may  declare or pay (or set aside any funds or  establish
          any sinking fund for such  purpose) any dividends on its capital stock
          to the Parent to enable the Parent to repurchase  its capital stock up
          to the lesser of (i) 1,000,000  shares or (ii) an amount of shares for
          which the purchase  price is less than or equal to  $5,000,000  in the
          aggregate.  No  Subsidiary  may  declare or pay any  dividends  on its
          capital stock (other than dividends payable in its own capital stock),
          except that Wholly-Owned Subsidiaries may declare or pay any dividend.

         SECTION  10.  Section  7.21.  Section  7.21 on  page  46 of the  Credit
  Agreement is hereby amended and restated in its entirety to read as follows:

               7.21. Letters of Credit. The Company will not, nor will it permit
          any  Subsidiary  to,  apply for or become  liable  upon any  Letter of
          Credit except the Facility  Letters of Credit and the Second  Facility
          Letter of Credit.

         SECTION  11.  Section  8.12.  Section  8.12 on  page  51 of the  Credit
  Agreement is hereby amended and restated in its entirety to read as follows:

               8.12.  Nonpayment by the Parent, the Company or any Subsidiary of
          any Reimbursement Obligations or Second Reimbursement Obligations when
          due,  or the  occurrence  of any  "default"  as  defined  in any  Loan
          Document  (other than this  Agreement or the Notes),  or the breach of
          any term or provision in any  Application  for any Facility  Letter of
          Credit or Second  Facility  Letter of Credit,  or the breach of any of
          the  terms  or  provisions  of any  Loan  Document  (other  than  this
          Agreement or the Notes),  which default or breach continues beyond any
          period of grace therein provided.

         SECTION 12.  Section 9.1.  Section 9.1 on pages 52 and 53 of the Credit
  Agreement is hereby amended and restated in its entirety to read as follows:

               9.1. Acceleration and Other Remedies. If any Default described in
          Section 8.6 or 8.7 occurs,  the obligations of the Banks to make Loans
          hereunder  shall  automatically  terminate and the  Obligations  shall
          immediately  become due and payable  without any election or action on
          the part of the Administrative Agent or any Bank. If any other Default
          occurs,  Fixed Rate Loans shall no longer be  available to the Company
          and the Required Banks may, and at the direction of the Required Banks
          the   Administrative   Agent  shall,  (a)  terminate  or  suspend  the
          obligations of the Banks to make Loans hereunder, terminate any or all
          of the  Facility  Letter of Credit  Commitment,  the  Second  Facility
          Letter  of  Credit  Commitment,   the  Aggregate   Commitment  or  any
          Commitment,  or  declare  the  Obligations  to  be  due  and  payable,
          whereupon the  Obligations  shall become  immediately due and payable,
          without  presentment,  demand,  protest or notice of any kind,  all of
          which the  Company  hereby  expressly  waives,  and (b) demand and the
          Company  shall  pay to the  Issuer,  immediately  upon  demand  and in
          immediately  available funds, the amount equal to the aggregate amount
          of the sum of the Facility  Letters of Credit plus the Second Facility
          Letter  of Credit  then  outstanding,  irrespective  of  whether  such
          Facility  Letters of Credit or Second  Facility  Letter of Credit have
          been drawn upon, all as set forth and in accordance  with the terms of
          provisions of Article III hereof. The Issuer shall promptly advise the
          Company of any such  declaration  or demand but failure to do so shall
          not   impair   the  effect  of  such   declaration   or  demand.   The
          Administrative   Agent  and  the  Banks  may   exercise   all  of  the
          post-default  rights granted to them under the Loan Documents or under
          Applicable  Law. The rights and remedies of the  Administrative  Agent
          and the Banks hereunder shall be cumulative, and not exclusive.

         SECTION  13.  Section  11.18.  Section  11.18 on pages 62 and 63 of the
  Credit  Agreement  is hereby  amended and  restated in its entirety to read as
  follows:

               11.18.  Giving  Notice.  Any notice  required or  permitted to be
          given  under this  Agreement  may be, and shall be deemed,  given when
          deposited in the United States mail, postage prepaid,  or by facsimile
          when transmitted to the Company, the Banks or the Administrative Agent
          at the addresses  indicated  below,  or at such other addresses as any
          party shall request by notice to the other parties:

         If to the Administrative Agent:

                  NationsBank of Texas, N.A.
                  901 Main Street
                  64th Floor
                  Dallas, Texas 75202

                  Attn:             W. Hutchinson McClendon, IV
                                    Whitney L. Busse
                                    Telephone: (214) 508-0996 (Mr. McClendon)
                                               (214) 508-0950 (Ms. Busse)
                                    Telecopy:  (214) 508-9390
         With a copy to:

                  Donohoe, Jameson & Carroll, P.C.
                  3400 Renaissance Tower
                  1201 Elm Street
                  Dallas, Texas 75270

                  Attn:             Melissa Ruman Stewart, Esq.
                                    Telephone: (214) 698-3814
                                    Telecopy: (214) 744-0231

         If to the Company:

                  GCI Communication Corp.
                  2550 Denali Street, Suite 1000
                  Anchorage, Alaska 99503-2781

                  Attn: Mr. John M. Lowber
                  Telephone: (907) 265-5600
                  Telecopy: (907) 265-5676

         With a copy to:

                  Hartig, Rhodes, Norman, Mahoney & Edwards
                  717 K Street
                  Anchorage, Alaska

                  Attn: Robert B. Flint, Esq.
                  Telephone: (907) 276-1592
                  Telecopy: (907) 277-4352

         SECTION 14. Conditions Precedent. This Amendment shall not be effective
  until the  Administrative  Agent shall have  determined in its sole discretion
  that all  proceedings  of the Company taken in connection  with this Amendment
  and the  transactions  contemplated  hereby shall be  satisfactory in form and
  substance to the Administrative Agent:

               (a) a loan  certificate  of the Company  certifying (i) as to the
          accuracy of its representations and warranties set forth in Article VI
          of the Credit Agreement, as amended by this Amendment,  the other Loan
          Documents and in this Amendment, (ii) that there exists no Default, or
          event  which but for the  giving of notice or  passage of time or both
          would   constitute  a  Default,   and  the  execution,   delivery  and
          performance  of this Amendment will not cause a Default or event which
          but for  the  giving  of  notice  or  passage  of  time or both  would
          constitute a Default, (iii) as to resolutions  authorizing the Company
          to execute,  deliver and perform this Amendment and all Loan Documents
          and  other  documents  and   instruments   delivered  or  executed  in
          connection with this Amendment, and (iv) that it has complied with all
          agreements  and  conditions to be complied with by it under the Credit
          Agreement,  the other Loan  Documents  and this  Amendment by the date
          hereof;

               (b)  an  opinion  of  counsel  of  Company   acceptable   to  the
          Administrative  Agent with  respect to this Second  Amendment  and all
          other Loan  Documents  executed  in  connection  herewith,  including,
          without  limitation,  an  opinion  with  respect to the  validity  and
          enforceability of the Loan Documents before and after giving effect to
          this  Second  Amendment   (including  with  respect  to  all  security
          interests and liens securing the increased Obligations";

               (c) the  Company  shall  have paid in full to the  Administrative
          Agent for the account of the Banks,  a one-time  facility  fee for the
          increase in the loan facility provided to the Company in the amount of
          $81,225;

               (d) new Notes for each Bank;

               (e)  the  Company  shall  have  executed  and  delivered  to  the
          Administrative  Agent that certain  Assignment and Security  Agreement
          dated  the date  hereof,  and the  Administrative  Agent and the Banks
          shall have a valid first perfected  security interest in all rights of
          the Company in and to that certain Transponder  Purchase Agreement for
          Galaxy X, dated August 24, 1995, by and between the Company and Hughes
          Communications  Galaxy, Inc. (and Hughes  Communications  Galaxy, Inc.
          shall have  consented  thereto in form and substance  satisfactory  to
          Administrative Agent);

               (f) a new  compliance  certificate  executed and completed  after
          giving effect to the facility increases and covenant changes set forth
          herein; and

               (g) such other documents,  instruments, and certificates, in form
          and  substance  satisfactory  to  the  Administrative  Agent,  as  the
          Administrative Agent shall deem necessary or appropriate in connection
          with this Amendment and the transactions contemplated hereby.

         SECTION 15. Representations and Warranties.  The Company represents and
  warrants  to the Banks and the  Administrative  Agent  that (a) the  Aggregate
  Commitment  under the Credit  Agreement as of the date hereof,  as  previously
  reduced  and after  giving  effect to this  Amendment,  is  $9,250,000  (which
  includes  the  $3,000,000  Facility  Letter  of Credit  Commitment),  (b) this
  Amendment constitutes its legal, valid, and binding obligation, enforceable in
  accordance with the terms hereof (subject as to enforcement of remedies to any
  applicable bankruptcy, reorganization, moratorium, or other laws or principles
  of equity affecting the enforcement of creditors' rights generally), (c) there
  exists no  Default  or event  which but for the giving of notice or passage of
  time or both would constitute a Default,  under the Credit Agreement,  (d) its
  representations  and  warranties  set forth in the Credit  Agreement and other
  Loan  Documents  are true and correct on the date hereof,  (e) it has complied
  with all  agreements and conditions to be complied with by it under the Credit
  Agreement and the other Loan Documents by the date hereof,  and (f) the Credit
  Agreement,  as amended  hereby,  and the other Loan  Documents  remain in full
  force and effect.

         SECTION 16. Entire  Agreement;  Ratification.  THE CREDIT AGREEMENT AND
  THE LOAN DOCUMENTS  REPRESENT THE FINAL AGREEMENT  BETWEEN THE PARTIES AND MAY
  NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,  CONTEMPORANEOUS  OR SUBSEQUENT ORAL
  AGREEMENT OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS  BETWEEN THE
  PARTIES. EXCEPT AS MODIFIED OR SUPPLEMENTED HEREBY, THE CREDIT AGREEMENT,  THE
  OTHER LOAN  DOCUMENTS  AND ALL OTHER  DOCUMENTS  AND  AGREEMENTS  EXECUTED  IN
  CONNECTION THEREWITH SHALL CONTINUE IN FULL FORCE AND EFFECT.

         SECTION 17. Counterparts.  This Amendment may be executed in any number
  of counterparts, all of which taken together shall constitute one and the same
  instrument.  In making proof  hereof,  it shall not be necessary to produce or
  account for any  counterpart  other than one signed by the party against which
  enforcement is sought.

         SECTION  18.  GOVERNING  LAW.  THIS  AMENDMENT  SHALL BE  CONSTRUED  IN
  ACCORDANCE  WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE
  OF TEXAS, BUT GIVING EFFECT TO FEDERAL LAWS.

         SECTION 19. CONSENT TO  JURISDICTION.  THE COMPANY  HEREBY  IRREVOCABLY
  SUBMITS TO THE  NON-EXCLUSIVE  JURISDICTION  OF ANY UNITED  STATES  FEDERAL OR
  TEXAS STATE COURT SITTING IN DALLAS IN ANY ACTION OR PROCEEDING ARISING OUT OF
  OR RELATING TO ANY LOAN DOCUMENTS AND THE COMPANY  IRREVOCABLY AGREES THAT ALL
  CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING  MAY BE HEARD AND DETERMINED IN
  ANY SUCH COURT AND  IRREVOCABLY  WAIVES ANY  OBJECTION IT MAY NOW OR HEREAFTER
  HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING  BROUGHT IN SUCH A
  COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM.  NOTHING HEREIN SHALL LIMIT
  THE RIGHT OF THE ADMINISTRATIVE AGENT OR ANY BANK TO BRING PROCEEDINGS AGAINST
  THE COMPANY IN THE COURTS OF ANY OTHER  JURISDICTION.  ANY JUDICIAL PROCEEDING
  BY THE COMPANY AGAINST THE  ADMINISTRATIVE  AGENT OR ANY BANK OR ANY AFFILIATE
  OF THE ADMINISTRATIVE AGENT OR ANY BANK INVOLVING, DIRECTLY OR INDIRECTLY, ANY
  MATTER IN ANY WAY  ARISING  OUT OF,  RELATED  TO, OR  CONNECTED  WITH ANY LOAN
  DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN DALLAS, TEXAS.

         SECTION 20. WAIVER OF JURY TRIAL. THE COMPANY, THE ADMINISTRATIVE AGENT
  AND  EACH  BANK  HEREBY  WAIVES  TRIAL  BY  JURY  IN ANY  JUDICIAL  PROCEEDING
  INVOLVING,  DIRECTLY  OR  INDIRECTLY,  ANY MATTER  (WHETHER  SOUNDING IN TORT,
  CONTRACT OR  OTHERWISE)  IN ANY WAY ARISING OUT OF,  RELATED TO, OR  CONNECTED
  WITH ANY LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER.

  IN WITNESS  WHEREOF,  this Second Amendment to Credit Agreement is executed as
of the date first set forth above.

                                   GCI COMMUNICATION CORP.

                                   /s/ John M. Lowber
                                   By:
                                   Its:SVP & CAO



                                   NATIONSBANK OF TEXAS, N.A.,
                                   Individually and as Administrative Agent

                                   /s/ Whitney L. Busse
                                   By:Whitney L. Busse
                                   Its:Vice President


<PAGE>


                                    EXHIBIT A

                                      NOTE

                                  Dallas, Texas
$
 -------------                                                   --------------

     GCI Communication  Corp., an Alaskan corporation  ("Company"),  promises to
pay to the  order of  NationsBank  of Texas,  N.A.  ("Bank")  the  lesser of the
principal  sum  of  NO\ONE-HUNDREDTHS  DOLLARS  ($ )  or  the  aggregate  unpaid
principal  amount of all Loans made by Bank to Company  pursuant  to Section 2.1
(a)(i) of the Agreement (as hereinafter defined) in immediately  available funds
at the principal office of NationsBank of Texas, N.A., as Administrative  Agent,
together with interest on the unpaid principal amount hereof at the rates and on
the dates set forth in the Agreement. The Company shall pay each Loan in full on
the last day of such  Loan's  applicable  Interest  Period  and shall  make such
mandatory payments and prepayments as are required to be made under the terms of
Article II of the Agreement.

     The Bank  shall,  and is  hereby  authorized  to,  record  on the  schedule
attached  hereto,  or to otherwise record in accordance with its usual practice,
the date and  amount  of each  Loan and the date and  amount  of each  principal
payment hereunder.

     THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE  WITH THE INTERNAL LAWS (AND NOT
THE LAW OF  CONFLICTS)  OF THE STATE OF TEXAS BUT GIVING  EFFECT TO THE  FEDERAL
LAWS APPLICABLE TO NATIONAL BANKS.

     This Note is one of the Notes  issued  pursuant  to, and is entitled to the
benefits of, the Amended and Restated  Credit  Agreement,  dated as of April 30,
1993 (as amended or modified and in effect from time to time, the  "Agreement"),
among  Company,  the banks named  therein and  NationsBank  of Texas,  N.A.,  as
Administrative  Agent,  to  which  Agreement  reference  is  hereby  made  for a
statement  of the terms and  conditions  under which this Note may be prepaid or
its maturity date  accelerated.  This Note is secured pursuant to certain pledge
and security  agreements,  all as more specifically  described in the Agreement,
and  reference  is made  thereto  for a  statement  of the terms and  provisions
thereof. Capitalized terms used herein and not otherwise defined herein are used
with the meanings attributed to them in the Agreement.

     This  Note is a  renewal,  extension,  increase  and  modification  of that
certain Note dated May 14, 1993 (the  "Original  Note")  executed by the Company
and made payable to the Administrative Agent.

                                                       GCI COMMUNICATION CORP.

                                                       By:



                               EQUIPMENT PURCHASE

                                    AGREEMENT


                                     between


                          GCI Communication Corporation

                                       and


                            Scientific-Atlanta, Inc.


<PAGE>



                          EQUIPMENT PURCHASE AGREEMENT

                                TABLE OF CONTENTS

    SECTION 1                  DEFINITIONS
    SECTION 2                  SCOPE OF THE AGREEMENT
    SECTION 3                  PRICE AND PAYMENT
    SECTION 4                  DELIVERY SCHEDULE
    SECTION 5                  TITLE AND RISK OF LOSS
    SECTION 6                  INTERNATIONAL SALES
    SECTION 7                  REPRESENTATIONS
    SECTION 8                  INSPECTION, TEST AND ACCEPTANCE
    SECTION 9                  WARRANTY
    SECTION 10                 TERM AND TERMINATION
    SECTION 11                 LICENSED SOFTWARE
    SECTION 12                 NO RIGHTS IN TRADEMARKS
    SECTION 13                 OTHER INTELLECTUAL PROPERTY
    SECTION 14                 INJUNCTION
    SECTION 15                 PROPRIETARY RIGHTS INDEMNIFICATION
    SECTION 16                 INDEMNIFICATION AND LIMITATION OF LIABILITY
    SECTION 17                 FORCE MAJEURE
    SECTION 18                 NOTICES
    SECTION 19                 AMENDMENTS AND CHANGES
    SECTION 20                 ASSIGNMENT AND SUBCONTRACTING
    SECTION 21                 INDEPENDENT CONTRACTOR
    SECTION 22                 PUBLIC RELEASE OF INFORMATION
    SECTION 23                 MISCELLANEOUS
    SECTION 24                 ARBITRATION

  EXHIBITS

   EXHIBIT A                   PRICES
   EXHIBIT B                   SCHEDULE
   EXHIBIT C                   SOFTWARE LICENSE
   EXHIBIT D                   FEATURE GROUP B/1 800 950 XXX SPECIFICATION



<PAGE>


                          EQUIPMENT PURCHASE AGREEMENT

This Equipment Purchase  Agreement (the  "Agreement"),  effective as of the 20th
day of December,  1995(the "Agreement
 Date"), is entered into by and between GCI
Communication  Corporation,  a corporation organized and existing under the laws
of Alaska (hereinafter referred to as "GCI' or "Buyer"), and Scientific-Atlanta,
Inc.,  a  corporation  organized  and  existing  under  the laws of the State of
Georgia (hereinafter referred to as "S-A").

                                   WITNESSETH:

     WHEREAS,  S-A is  engaged  in  the  design  and  manufacture  of  satellite
communication equipment and the related software which resides therein; and

     WHEREAS,  Buyer  is a  financially  responsible  and  independent  business
organization  engaged in the sale,  installation and service of products similar
to those  manufactured  by S-A, and desires to purchase  from S-A the  satellite
communication  equipment and license from S-A the related software which resides
therein; and

     WHEREAS, S-A is willing to sell such equipment and deliver such software to
Buyer under the terms and conditions of this Agreement.

     NOW,  THEREFORE,  in consideration of the foregoing premises and the mutual
covenants  set  forth  in  this  Agreement  and  for  other  good  and  valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

1. Definitions

       "Acceptance" is defined as the  satisfactory  resolution  of all hardware
           and software Specification  deficiencies by S-A as identified by GCI.
           GCI shall notify S-A of any  deficiencies  within thirty (30) days of
           receipt of the last contract deliverable. Satisfaction of the list of
           deficiencies  will be the  sole  determinant  of final  payment.  Not
           withstanding  any other remedies for latent defects,  this list maybe
           amended by mutual agreement of both parties.

       "Agreement Date" is used as defined in the preamble.

       "Equipment" means the items set forth on Exhibit A hereto,  but expressly
           excluding the Licensed software.

       "Extreme  Environment  Mount" is defined as Model No. 8009AE.  This mount
           constitutes  S-A's standard 11 Meter Mount and Actuators when used in
           conjunction with S-A's standard 9.15 Meter Reflector.

       "Licensed Software" is used herein as defined in the Software License.

       "Remote Terminals" shall mean,  collectively and as a combined operation,
           the Equipment  purchased by the Buyer and the Licensed  software used
           thereon, functioning as a DAMA satellite communications terminal.

       "Proprietary  Documentation" means any user manuals,  training materials,
           installation,  repair or maintenance manuals, drawings, schematics or
           any related documents provided by S-A to the Buyer.

       "Prices"  means  the  prices  applicable  to the  Equipment  set forth in
           Exhibit  A as  adjusted  from  time to time in  accordance  with this
           Agreement.

       "Proprietary Information" shall mean any and all information,  whether or
           not in tangible form, of a confidential, proprietary or secret nature
           belonging  to, or  licensed  by S-A which is  material to S-A and not
           generally known by the public, other than Trade Secrets.

       "Software License" means a Software License  substantially in the form of
           Exhibit C hereto.

       "Specifications"  shall  mean the  specifications  as defined in the "GCI
           ALASKA  RURAL  DEMONSTRATION  PROJECT  EQUIPMENT  SUPPLY AND SERVICES
           AGREEMENT ", dated June 21, 1994.

       "Term" is used as defined in Section 10.1.

       "Trademarks" shall mean the trademarks, trade names and logotypes used by
           S-A to  identify or in  connection  with the  Equipment  from time to
           time,   including  without   limitation,   "Scientific-Atlanta"   and
           "SkyRelay (TM)".

       "Trade  Secrets"  shall mean any and all  information,  whether or not in
           tangible form, belonging to S-A or licensed by it including,  but not
           limited to,  technical or  non-technical  data,  formulae,  patterns,
           compilations,   programs,  devices,  methods,  techniques,  drawings,
           processes,  financial data, financial plans, product plans, marketing
           plans, and lists of actual or potential  customers or suppliers which
           derive economic value, actual or potential,  from not being generally
           known to, and not being  readily  ascertainable  by proper  means by,
           other persons who can obtain economic value from their  disclosure or
           use and are the  subjects of efforts  that are  reasonable  under the
           circumstances to maintain their secrecy. Specifically included in the
           definition of Trade Secrets,  but not by way of  limitation,  are (a)
           marketing  information  obtained or derived during the term hereof on
           existing and anticipated markets of S-A; (b) pricing,  product costs,
           product cost  structures  (ie.,,  breakdown of cost among  materials,
           labor  and   overhead),   and  bills  of  materials  for  current  or
           anticipated  product;  (c)  information on S-A's program  strategies,
           product  features  and  performance  for  products  under  design  or
           anticipated  for design;  and (d) specific  limitations and actual or
           perceived   deficiencies   in  existing  or  planned   products   and
           technologies of S-A

       "DAMA" shall mean "demand assigned multiple access."

2. Scope of the Agreement

The  equipment  specified  in Exhibit A will be  delivered  in  accordance  with
Section 4 "Delivery  Schedule".  During the first  thirty (30) days of the Term,
the Buyer may adjust the equipment  quantities down by not more than ten percent
(10%). During the Term, the Buyer may order additional Equipment by submitting a
purchase  order to S-A  requesting  delivery  not sooner than ninety 90 days nor
longer than one hundred  eighty  (180) days from the date thereof or as mutually
agreed to by S-A and GCI. S-A will sell and deliver such  Equipment on or before
the requested  delivery  date.  S-A shall convey the Equipment free and clear of
all liens, claims and encumbrances.

     Any terms, conditions or provisions in any purchase order received from the
Buyer  inconsistent  with this Agreement shall be deemed null and void unless an
authorized  representative  of S-A signs a document that contains such different
or  additional  provisions  and  conspicuously  states an intention to amend the
terms and conditions of this Agreement.

     Any Licensed Software  residing in Equipment  delivered to Buyer is subject
to the Software  License as set forth in Section 11. S-A shall place into escrow
all source code for all  software  and  firmware  supplied to GCI as part of the
DAMA  network;  to include all future  revisions.  All initial  escrow costs and
maintenance costs will be the responsibility of GCI.

     The  performance  of each of S-A and the Buyer under this  Agreement  shall
comply  with all  applicable  federal,  state and local  laws,  regulations  and
ordinances.

     Buyer agrees that it shall not purchase any equipment which, in the opinion
of S-A, are  competitive  with the Equipment  during the term of this  Agreement
unless prior written consent of the S-A is first obtained.

     The equipment described in Exhibit A comprises two projects, a DAMA network
expansion and the purchase and installation of six, 9.15M antennas.  Termination
of one project will not automatically imply termination of the other.

3. Price and Payment

     The  prices for the  Equipment  and  Services  are listed in Exhibit A. The
total price for all  Equipment  and Services is:  $7,688,447  (Contract  Price),
increased or decreased by any amendment or change order made in accordance  with
the Terms of this contract.

     .1 The price shall be paid in United Stated  Dollar  currency in accordance
Section 3.2 below:

     .2 Payment milestones are mutually agreed to be as follows:

         Upon Contract Signature                                    $1,013,603

         Each subsequent calendar month for six months              $984,813
         (due upon the day of the month this agreement
         is signed)

         At successful completion of 9.15M install
         and testing.                                               $106,417

         Final payment upon Acceptance                              $659,549*

* - When S-A meets  each of the seven  equipment  delivery  milestones,  for the
months of February through July, 1996 for (equipment excluding the 9.15M antenna
systems), as set forth in Exhibit B, Buyer agrees to pay an incentive of $47,111
for each monthly milestone met. This amount would be added to the subsequent mid
month  payment.  Each time such  payment is made the final  payment of  $659,549
shown above  would be reduced by the  corresponding  amount.  If; at the time of
delivery  compliance with a milestone,  the previous  months' delivery has still
not been met, the incentive payment will not be applicable.

     .3 Any amounts not paid when due shall bear  interest at the rate of 1-1/2%
per month from the date such payment was due until the date payment is received.

     .4  The  Prices  include  all  costs  for  the  performance  by  S-A of its
responsibilities  in accordance with the provisions of this Agreement but do not
include any amounts for duties, customs, shipping, federal, state or local taxes
imposed on the sale or use of such items or on the basis of the amounts  paid or
the value of the items or  services  delivered  or located  at the  installation
sites or on the basis of gross receipts (collectively, the "Shipping Charges and
Taxes"). The Buyer shall reimburse S-A for any of the Shipping Charges and Taxes
that S-A is required to pay.  The Buyer  shall not be  responsible  for taxes on
S-A's income or gross receipts from its overall business activities.

     .5 The  Statement  of Work  (SOW) for the  installation  of the 9.15  Meter
antenna installation at GCI's sites located at Barrow, Bethel, Dillingham,  King
Salmon, Kotzebue, and Nome, Alaska is outlined below.

GCI will be responsible for providing the following:

         Design and installation of the  foundations.  
         Staging of antenna at the build site.  
         Provide forklift and crane as necessary. 
         Provide power to the  outdoor  antenna  controller.  
         Provide a shelter and power for the indoor controller.  
         Provide test equipment for performing Antenna Tests
         Install the RF.

S-A will be responsible for providing the following:

         Provide 2  installation  teams,  
         Will  install the antennas and mounts.
         Provide a list of required test equipment.
         Perform antenna  patterns to demonstrate that the antenna patterns meet
         Code of Federal  Regulations  47, Part 25 ss.  25.209,  dated,  October
         1995.

Installation  Sites and Schedule:- The installation  window for a given site may
be changed by mutual agreement

         Site               Earliest Start Date           Latest Start Date
1        Barrow             June 12th, 1996               July 3rd, 1996
2        Bethel             June 24th, 1996               July 24th, 1996
3        Dillingham         July 3rd, 1996                August 14th, 1996
4        King Salmon        June 12th, 1996               July 3rd, 1996
5        Kotzebue           June 24th, 1996               July 24th, 1996
6        Nome               July 3rd, 1996                August 14th, 1996

4. Delivery Schedule

              The Buyer and S-A mutually agree to delivery  schedule  milestones
         for equipment.  The delivery  schedule is attached to this Agreement as
         Exhibit B.

              Feature Group B/1800950  software  specification are as defined in
         Exhibit D.

5. Title and Risk of Loss

              Title and risk of loss to all Equipment  sold by S-A shall pass to
         the Buyer upon delivery by S-A to a common  carrier for shipment to the
         Buyer.

6. International Sales

              In no event shall the Buyer export any Equipment without the prior
         written  consent of S-A.  If Buyer  exports any  Equipment  outside the
         United  States,  or  such  Equipment  is  re-exported  from  a  foreign
         destination,   the  Buyer  shall  insure  that  the   distribution  and
         export/re-export  of the  Equipment  is in  compliance  with all  laws,
         regulations,   orders,  or  other   restrictions  of  the  U.S.  Export
         Administration   regulations.   Neither  the  Buyer,  nor  any  of  its
         subsidiaries,  will export or re-export  any technical  data,  process,
         product, or service,  directly or indirectly,  to any country for which
         the United States  government or any agency thereof  requires an export
         license or other  governmental  approval  without first  obtaining such
         license or approval.

7. Representations

         .1 The Buyer  represents and warrants to S-A that (a) all  information,
         technical  drawings,  blueprints  summaries  and  data  of  every  kind
         provided by the Buyer and its agents to S-A is in all material respects
         accurate and correct as of the Agreement  Date,  and (b) no information
         is known to the Buyer which, if disclosed to S-A, would have a material
         impact on the technical requirements of and Specifications  relating to
         the Equipment and the Licensed Software.

         .2  The  Buyer  covenants  and  agrees  to  cooperate  with  S-A by (i)
         providing  S-A access to the  Buyer's  premises,  (ii)  making  Buyer's
         technical personnel available to S-A on a timely basis, (iii) providing
         additional  information to S-A from time to time at S-A's request,  and
         (iv)  taking  such  further  actions as S-A may  reasonably  request in
         connection  with the  efforts of S-A to fulfill its  obligations  under
         this Agreement.

         .3 The Buyer  acknowledges  and agrees that in order to preserve  S-A's
         image for high quality Equipment and thereby enhance its own sales, and
         in consideration  for S-A's making available to the Buyer the Equipment
         at favorable  prices,  the Buyer agrees that it shall not engage in any
         activities  or sell or  offer  for  sale  any  product  which  in S-A's
         reasonable  opinion would be  competitive  with the  Equipment  without
         S-A's former written approval.

8. Inspection, Test and Acceptance

         .1 S-A shall  test and  inspect  the  Equipment  during  production  in
         accordance with S-A's standard procedures.

         .2 GCI shall notify S-A of any Specification deficiencies within thirty
         (30) days of receipt of the last  deliverable  milestone  as defined in
         Exhibit B. Satisfactory resolution of the list of hardware and software
         deficiencies  will be the sole determinant of final payment.  S-A shall
         investigate  such claims  within  fifteen (15) days of S-A's receipt of
         the  Buyer's  written  explanation  and  remedy  any  failure  of  such
         Equipment to comply with the Specifications  within thirty (30) days of
         the completion of S-A's  investigation.  If the Buyer does not,  within
         ten  (10)  days of the  expiration  of the  foregoing  thirty  (30) day
         period,  indicate in writing  that it believes the  Equipment  does not
         comply  with the  Specifications,  the  Buyer  shall be  deemed to have
         Accepted  the  applicable  Equipment.  Any dispute  between the parties
         shall be resolved either by (i) mutual  agreement or (ii) in accordance
         with the arbitration procedures set forth in this Agreement.

9. Warranty

         .1 Not  withstanding  the Acceptance  terms stated above,  S-A warrants
         that the  Equipment  will comply with the  Specifications,  and will be
         free from defects in materials and  workmanship for a period of one (1)
         year after date of Acceptance (the "Warranty Period").

         .2  Except  as  provided  in  the  Software  License,  S-A  extends  no
         representations or warranties with respect to the Licensed Software.

         .3 With respect to the Equipment, during the Warranty Period, S-A will,
         following  written notice of any breach of warranty from the Buyer,  at
         S-A's option, either (i) repair or replace any nonconforming  Equipment
         at Buyer's site or at the site where the Equipment is otherwise located
         or (ii) request the Buyer to ship any  nonconforming  Equipment to S-A,
         and S-A will  either  repair or  replace  and  return to the Buyer such
         nonconforming Equipment. Title to nonconforming Equipment being shipped
         to S-A shall pass to S-A when  delivered to the shipping  carrier,  and
         title to the repaired or replacement  Equipment shall pass to the Buyer
         when delivered by S-A to the shipping  carrier for return to the Buyer.
         If any Equipment is shipped to S-A or S-A dispatches its personnel to a
         Buyer's  site and the  applicable  Equipment  is  determined  either to
         comply with the Specifications or to have been damaged or misused other
         than through the fault of S-A, the Buyer shall pay S-A's normal charges
         in connection therewith.

         .4 S-A MAKES NO  WARRANTIES  OTHER THAN THE EXPRESS  WARRANTIES IN THIS
         SECTION AND IN THE SOFTWARE LICENSE AND NONE SHALL BE IMPLIED. THERE IS
         NO WARRANTY OF  MERCHANTABlLlTY,  FITNESS FOR A  PARTICULAR  PURPOSE OR
         NONINFRINGEMENT  PROVIDED  HEREUNDER.  THE ENTIRE OBLIGATION OF S-A FOR
         EQUIPMENT OR LICENSED SOFTWARE MALFUNCTIONS OR DEFECTIVE  INSTALLATIONS
         AFTER  ACCEPTANCE  IS AS  EXPRESSLY  STATED IN THIS  SECTION  OR IN THE
         SOFTWARE LICENSE.

10. Terms and Termination

         .1 The "Term" of this Agreement  shall commence on the Agreement  Date,
         and, unless sooner terminated  pursuant to Sections 10.2 or 10.3 below,
         shall end upon completion of obligations of the parties.

         .2 The  non-defaulting  party may terminate this Agreement  immediately
         upon written notice of the occurrence of any of the following events:

              a. Either party shall  default in any of its material  obligations
              hereunder and fail to cure the default  within  fifteen (15) days,
              or as mutually agreed to by both parties, after the non defaulting
              party has given written notice of such default,  such  termination
              to be effective as of the day of such  notice.  Written  notice of
              cure shall be delivered  to  non-defaulting  party within  fifteen
              (15) days of notice of default: or

              b. Either party shall become insolvent or shall seek protection in
              bankruptcy  or the  appointment  of a receiver  or a  petition  in
              bankruptcy or seeking the appointment of a receiver shall be filed
              against such party and such petition shall not be dismissed within
              thirty  (30)  days  of  its  filing,  such  termination  shall  be
              effective as of the date of such notice.

         .3 The Buyer shall further have the right to terminate  this  Agreement
         for convenience,  through March 1, 1996. The parties agree that S-A has
         no means to  determine  actual  cost impact and  therefore  the parties
         agree that the costs  associated with this  termination for convenience
         shall be liquidated as follows:

                  December 1st, 1995                        10%
                  January 1st, 1996                         20%
                  February 1st, 1996                        30%
                  March 1st, 1996                           40%

         where % is  defined  as the  percentage  of the  price of the  canceled
         portion of the agreement.

              The liquidated  termination  costs shall be due S-A within 30 days
         of date of notice of termination by the Buyer.

              In the event of  Termination  of the  agreement and payment of the
         appropriate  liquidation  costs detailed above, GCI would  subsequently
         have the right to repurchase some or all of the canceled  equipment.  A
         percentage of the liquidated  costs  previously paid by GCI as a result
         of termination would be credited to GCI as follows:

                  If reordered by:

                  March 31st, 1996                                     50%
                  April 1st - May 31st, 1996                           35%
                  June 1st - July 31st, 1996                           30%
                  August lst- Sept. 30th, 1996                         25%
                  Oct. 1st - Dec. 31st, 1996                           20%

         Said credit will be applied to the  repurchased  products on a prorated
         basis.

         .4 Except as set  forth in  subsection  10.3,  immediately  above,  the
         termination  or expiration of this  Agreement by either party shall not
         affect the rights and obligations of the parties that have vested prior
         to the  effective  date of such  termination  with  respect  to  orders
         accepted by S-A. Final  settlement for such orders shall be on the same
         basis as though the Agreement were  continuing,  and any obligations of
         one party to the other with respect to such orders shall remain in full
         force and effect  until  fully paid or  discharged.  In addition to the
         foregoing,  the provisions of Sections 6, 7, 9, 10, 11, 12, 13, 14, 15,
         21, 22 and 23 shall survive the termination of this Agreement.

11. Licensed Software

              All copies of the  Licensed  Software  residing  in the  Equipment
         purchased by the Buyer under this  Agreement  shall remain the property
         of S-A and Buyer shall be required to execute the Software License, the
         terms and conditions of which are incorporated  herein by reference and
         made a part hereof. In the event, however, that terms of this Agreement
         conflict  with  terms  of the  Software  License,  the  terms  of  this
         Agreement shall prevail over the Software License.

                a. S-A  grants  to Buyer  during  the Term of this  Agreement  a
                royalty-free,  non-exclusive  license to use the  Trademarks  in
                connection  with  the  promotion  and sale of the  Equipment  as
                provided  for  herein.  Buyer shall not use or  incorporate  the
                Trademarks  on any  other  products  or in or as part of a trade
                name,  corporate name, or business name. Buyer acknowledges that
                considerable  time and money  has been  expended  to create  the
                goodwill associated with the Trademarks.  Buyer shall always act
                in a  manner  that  would  maintain  the  quality  and  goodwill
                associated with the Trademarks.  Nothing  contained herein shall
                give Buyer any interest or right in the Trademarks, except as is
                expressly granted herein.

                b. Buyer further agrees that it will not in any manner represent
                that it has  ownership  of the  Trademarks  and that it will not
                register or attempt to register any Trademarks under the laws of
                any  jurisdiction,  and will not at any time do,  or cause to be
                done,  any act or thing  contesting,  or in any way impairing or
                tending to impair, any part of S-A's right,  title, and interest
                in the  Trademarks,  whether or not they are  registered  in the
                jurisdictions  in  which  Buyer  is  located  or does  business;
                provided,  however,  that Buyer may  register  Trademarks  where
                expressly   required   by  law,   solely  for  the   purpose  of
                establishing its  distributorship  status.  Buyer shall promptly
                notify  S-A of any  unauthorized  use or  infringement  of S-A's
                Trademarks, licenses or rights thereto.

                c. Buyer agrees not to obscure, alter, modify or remove from the
                Equipment any of the Trademarks or other product identification.

12. No Rights in Trademarks

              S-A  grants  to  Buyer  during  the  Term  of  this   Agreement  a
         royalty-free, non-exclusive license to use the Trademarks in connection
         with the  promotion  and sale of the  Equipment as provided for herein.
         Buyer shall not use or incorporate the Trademarks on any other products
         or in or as part of a trade name,  corporate  name,  or business  name.
         Buyer  acknowledges  that considerable time and money has been expended
         to create  the  goodwill  associated  with the  Trademarks.  Buyer will
         always act in a manna that would  maintain  the  quality  and  goodwill
         associated with the  Trademarks.  Nothing  contained  herein shall give
         Buyer any interest or right in the  Trademarks,  except as is expressly
         granted herein.

              Buyer further agrees that it will not in any manner represent that
         it has  ownership  of the  Trademarks  and that it will not register or
         attempt to register any Trademarks under the laws of any  jurisdiction,
         and  will not at any  time  do,  or cause to be done,  any act or thing
         contesting,  or in any way impairing or tending to impair,  any part of
         S-A's right, title, and interest in the Trademarks, whether or not they
         are registered in the  jurisdictions  in which Buyer is located or does
         business;  provided,  however, that Buyer may register Trademarks where
         expressly  required by law, solely for the purpose of establishing  its
         distributorship   status.  Buyer  shall  promptly  notify  S-A  of  any
         unauthorized  use or  infringement  of S-A's  Trademarks,  licenses  or
         rights thereto.

              Buyer  agrees not to  obscure,  alter,  modify or remove  from the
         Equipment any of the Trademarks or other product identification..

13. Other Intellectual Property

         .1 The Buyer  acknowledges  that as an integral part of S-A's business,
         S-A has developed,  at a  considerable  investment of time and expense,
         Trade Secrets and Proprietary  Information,  and acknowledges  that S-A
         has a legitimate  business interest in protecting the Trade Secrets and
         Proprietary  Information.  Buyer acknowledges that it and its employees
         will be entrusted with such Trade Secrets and Proprietary  Information.
         Pursuant  therewith,  the  Buyer  agrees  to  that  it  will  treat  as
         confidential  and will not,  without the prior written approval of S-A,
         use (other than in the performance of its duties  hereunder),  publish,
         disclose,  copyright or authorize anyone else to use, publish, disclose
         or copyright, (a) any information that constitutes Trade Secrets either
         during the term hereof or subsequent  thereto;  or (b) any  information
         that constitutes  Proprietary Information either during the term hereof
         or for two (2) years after  expiration or termination,  with or without
         cause.

         .2 All  records,  notes,  files,  drawings,  documents,  plans and like
         items, and all copies thereof,  relating to or containing or disclosing
         Trade Secrets or Proprietary  Information of S-A which are made or kept
         by the Buyer or which are  disclosed to or come into the  possession of
         the Buyer,  shall be and remain the sole and exclusive  property of S-A
         and shall be returned to S-A upon  expiration  or  termination  of this
         Agreement.

         .3  The  Buyer  further  agrees  that  it  will  require  each  of  its
         shareholders,  officers,  directors and employees who act on its behalf
         with respect to this Agreement to be bound by the  requirements of this
         Agreement  and  that,  upon  request  of S-A,  the Buyer  will  provide
         evidence of such requirement to S-A.

14. Injunction

              The Buyer agrees that its (or anyone acting on its behalf)  actual
         or threatened  breach of the  provisions of Sections 10, 11 or 12 shall
         constitute  irreparable  harm to S-A, and S-A, in addition to all other
         rights,  shall be entitled to seek an injunction  restraining the Buyer
         or  such  person  therefrom.  Nothing  herein  shall  be  construed  as
         prohibiting  S-A from  pursuing  any other  available  remedy  for such
         breach or threatened breach, including the recovery of damages from the
         Buyer or such  person.  This  provision  shall remain in full force and
         effect  in the event the Buyer or such  person  should  claim  that S A
         violated any of the terms of this Agreement.  In such event,  the Buyer
         or such person agrees to pursue such claim against S-A independently of
         the covenants set forth in this section.

15. Proprietary Rights Indemnification

         .1  Indemnification.  S-A shall settle, at its sole cost, or defend and
         pay costs and damages  finally awarded in any suit against the Buyer to
         the extent based upon a finding that the design, construction or use of
         the Equipment,  including  Licensed  Software (either  separately or in
         combination),  furnished under this Agreement, as furnished and used in
         accordance  with  S-A  instructions,  infringes  a  patent,  trademark,
         copyright or other intellectual property right of a third party (except
         infringement  which is  directly  caused by  incorporating  a  specific
         design or modification at the Buyer's request). S-A shall not indemnify
         the  Buyer's  for that  portion  of any  final  award  that is based on
         revenue  derived from use of the Equipment and that is in excess of the
         maximum liability of S-A provided in Section 15.5 below.

         .2 Procedures.  In the event of any allegation of  infringement  of the
         type  described in Section  15.1 or a claim or suit based  thereon (the
         "Allegation"),  the Buyer shall promptly  notify S-A of such Allegation
         in writing.  S-A shall promptly commence efforts to settle or to defend
         against such Allegation and the Buyer shall  reasonably  cooperate with
         S-A at the expense of S-A in such settlement or defense.

         .3  Injunction.  In the event that the use of the  Equipment  delivered
         under this  Agreement  is  enjoined  or, in the  discretion  of S-A, is
         likely to be enjoined,  S-A shall do one or more of the  following,  at
         S-A's option:

              (a) obtain for the Buyer the right to use the  infringing  item at
              no cost to the Buyer;

              (b) modify the  infringing  item so that it becomes  noninfringing
              while  remaining  in  compliance  with the  Specifications  in all
              material respects;

              (c)  replace  the  item  with a  noninfringing  item  which  is in
              compliance with the Specifications in all material respects; or

              (d) if (a), (b) or (c) cannot be effected by S-A's  reasonable and
              diligent  efforts,  and  further  subject  to the Notice of Refund
              Option,  below,  refund  the  amount  paid  by the  Buyer  for the
              applicable   Equipment,   less   depreciation   calculated   on  a
              straight-line basis over a five (5) year period, provided that the
              payment of any such  refund  shall not become due until  return by
              the Buyer of the applicable Equipment.

              (e)  Notice of  Refund  Option.  In the  event S-A shall  elect to
              exercise the provisions of subsection  15.3(d),  above,  S-A shall
              give Buyer 90 days written  notice of such  election.  Buyer shall
              have the option,  during such 90 day period,  to  negotiate on its
              own behalf a license or other agreement with the Plaintiff so that
              such  item  is  no  longer  infringing.  In  the  event  Buyer  is
              successful,  S-A shall under Section 15.1 above,  pay on behalf of
              Buyer any royalties  and other costs  related to such  settlement,
              including  attorney's  fees, up to the amount set forth in Section
              15.5, below.

         .4 Combinations and Modifications.  Notwithstanding any other provision
         of this  section,  S-A shall  have no  liability  for any  infringement
         arising  from (i) use of  delivered  items in  combination  with  other
         items, unless S-A sold, made or specifically  recommended them all as a
         combination, or the specific combination would be necessary for the use
         in the normal  course of events in connection  with the Equipment  sold
         hereunder,  or (ii)  modification of items after  delivery,  unless S-A
         made or specifically recommended the modification,  or the modification
         constitutes  normal  repair,   replacement  or  implementation  of  S-A
         provided options and enhancements for the Equipment sold hereunder.

         .5 Limitation. Notwithstanding any other provision of this Agreement to
         the  contrary,  this Section 15 states the entire  liability of S-A and
         the sole and exclusive remedy of the Buyer for any alleged infringement
         of a third party's intellectual  property right arising out of the sale
         or use of the  Equipment  supplied  under this  Agreement  or a process
         practiced by such item,  and S-A shall not be liable under this Section
         15 in the  aggregate  for any amount  exceeding  the total price of the
         Equipment purchased hereunder.

16. Indemnification and Limitation of Liability

         .1 The  Buyer  agrees  to  indemnify  and  hold  S-A and its  officers,
         directors and employees harmless from any loss,  damage,  liability and
         expense on account of bodily  injuries or  physical  damage to tangible
         property,  including the property of S-A,  arising from any  occurrence
         caused by a  negligent  or willful  act or omission of the Buyer or any
         employee or agent of the Buyer (other than S-A),  or of an  independent
         contractor of the Buyer (other than S-A), which indemnity shall survive
         this Agreement.

         .2 S-A  agrees  to  indemnify  and hold  the  Buyer  and its  officers,
         directors and employees harmless from any loss,  damage,  liability and
         expense on account of bodily  injuries or  physical  damage to tangible
         property,  including  the  property  of the  Buyer,  arising  from  any
         occurrence  caused by a negligent or willful act or omission of S-A, or
         any  employee or agent of S-A or of any  subcontractor  or  independent
         contractor of S-A, which indemnity shall survive this Agreement.

         .3  UNDER NO  CIRCUMSTANCES  SHALL  S-A BE  RESPONSIBLE  FOR  INDIRECT,
         SPECIAL,  INCIDENTAL,  CONSEQUENTIAL,  PUNITIVE,  OR EXEMPLARY  DAMAGES
         ARISING  OUT OF OR IN  CONNECTION  WITH  THIS  AGREEMENT  OR ANY  OTHER
         RELATED  AGREEMENTS  OR ANY ACTS OR OMISSIONS  ASSOCIATED  THEREWITH OR
         RELATING  TO THE USE OF ANY  EQUIPMENT,  LICENSED  SOFTWARE OR SERVICES
         FURNISHED, WHETHER SUCH CLAIM IS BASED ON BREACH OF WARRANTY, CONTRACT,
         TORT OR OTHER LEGAL THEORY AND REGARDLESS OF THE CAUSES OF SUCH LOSS OR
         DAMAGES OR WHETHER ANY OTHER REMEDY  PROVIDED  HEREIN FAILS,  NOR SHALL
         S-A'S  TOTAL  LIABILITY  EXCEED AN AMOUNT  EQUAL TO THE TOTAL  PURCHASE
         PRICE PAID BY THE BUYER TO S-A UNDER THIS AGREEMENT, MEASURED AS OF THE
         DATE SUCH LIABILITY OF S-A SHALL FIRST EXIST.

17. Force Majeure

              S-A shall  not be  responsible  for  delays  caused by  conditions
         beyond the reasonable control of S-A, including without limitation such
         conditions as acts of God, civil insurrections,  wars, sabotage, fires,
         floods, sun outages,  atmospherics and externally caused  interference,
         accidents,   labor  disputes,  acts  or  requirements  of  governmental
         authorities or governmental  laws,  ordinances,  rules and regulations,
         transportation  delays,  unusually severe weather,  or other similar or
         different  conditions  beyond the reasonable  control of S-A including,
         without  limitation,  limitations  and  restrictions  imposed  by third
         parties.  In  the  event  of  delay  due  to any  such  condition,  any
         performance  obligation  shall be  adjusted  equitably.  Any  orders in
         purchase  orders  to the  Buyer  which  contains  a  penalty  clause or
         liquidated  damage  clause  accepted  by the  Buyer  shall be wholly at
         Buyer's risk unless S-A has given prior written consent to such clause.

18. Notices

              All notices given pursuant to this  Agreement  shall be in writing
         and  either  delivered  in person or by  telegram,  telex or  facsimile
         transmission  or mailed by certified  mail,  return receipt  requested,
         postage prepaid,  to each party at the following  address or such other
         address as such party may direct by similar notice to the other:

      To S-A:              Scientific-Atlanta, Inc.
                           4356 Communications Drive
                           Norcross, GA 30093
                           ATTN: Bob Roseman
                           Telephone: (770) 903 6684
                           Facsimile: (770) 903 5524

      To Buyer:
                           GCI Communication Corp.
                           2550 Denali Street Suite 1000
                           Anchorage AK USA 99503
                           ATTN: Jimmy R Sipes
                           Telephone: (907) 265-5557
                           Facsimile: (907) 265-5673

      Any notice given pursuant to this  Agreement  shall be deemed to have been
given upon receipt.

19. Amendments and Changes

              This  Agreement  may not be  amended,  modified  or  waived in any
         material  respect  except in a written  amendment  signed by authorized
         representatives of both parties.

20. Assignment and Subcontracting

         .1 This Agreement  will be bring upon,  inure to the benefit of, and be
         enforceable  by,  the  parties  hereto  and  their   respective   legal
         representatives,   successors  and  assigns;  provided,  however,  that
         neither  this  Agreement  nor any rights  hereunder  may be assigned by
         either  party  without the prior  written  consent of the other  party,
         except that this  Agreement  may be assigned to a parent or  associated
         corporation or to an entity that acquires all or  substantially  all of
         the capital stock,  business, or assets of a party hereto and agrees in
         writing to assume the rights and obligations.

         .2 S-A may engage one or more  subcontractors  to perform any or all of
         the obligations of S-A hereunder. Any such assignment or subcontracting
         shall not,  unless the  parties  otherwise  agree in  writing,  relieve
         either party hereto from any obligations hereunder.

21. Independent Contractor

     Each party hereto is an independent  contractor and shall not be deemed the
agent or employee of the other party  hereto.  The Buyer  acknowledges  that the
Specifications  and the other matters set forth herein are the only  limitations
and  restrictions  on the  source  quality  and  performance  of  the  Equipment
hereunder.

22. Public Release of Information

     Neither party may issue any press release or circular or otherwise disclose
the existence or terms of this Agreement or the relationship contemplated hereby
without the prior  written  approval of the other  party  unless  required by an
APUC, FCC or other governmental reporting requirement.

23. Miscellaneous

         .1 This  Agreement  expresses the entire  understanding  of the parties
         with reference to the subject  matter hereof,  and supersedes any prior
         or  contemporaneous  representations,  understandings  and  agreements,
         whether oral or written, and no representations or agreements modifying
         or  supplementing  the terms of this Agreement shall be valid unless in
         writing and signed by the parties hereto.

         .2 This Agreement  shall be interpreted in accordance with and governed
         by the laws of the State of Georgia,  excluding its rules or principles
         regarding conflicts of law.

         .3 Except as set forth in Sections 10.3 and 24, the enumeration  herein
         of the  rights  and  remedies  of the  parties  is not  intended  to be
         exclusive,  and such rights and  remedies are in addition to and not by
         way of limitation of any other rights or remedies that either party may
         have under applicable law.

         .4 No act,  failure or delay by either party hereto shall  constitute a
         waiver of any of such party's rights and remedies. No single or partial
         waiver by either party hereto of any provision of this Agreement, or of
         any breach or default  hereunder,  or of any right or remedy which such
         party  may have,  shall  operate  as a waiver  of any other  provision,
         breach,  default,  right or  remedy or of the same  provision,  breach,
         default, right or remedy on a future occasion.

         .5 If any  provision of this  Agreement  shall be prohibited or invalid
         under  applicable  law,  such  provision  shall be invalid only to such
         extent, without invalidating the remainder of this Agreement.

         .6 This Agreement may be executed in any number of counterparts, and by
         S-A and the Buyer in separate  counterparts,  each of which shall be an
         original,  but all of which shall together  constitute one and the same
         Agreement.

         .7 The captions  contained in this Agreement are for convenience  only,
         are without  substantive meaning and should not be construed to modify,
         enlarge, or restrict any provision.

24. Arbitration

         .1  Except  as  otherwise   provided  in  the  Software  License,   any
         controversy  or claim  between or among the parties,  including but not
         limited to those  arising out of or relating to this  Agreement  or any
         agreements or  instruments  relating  hereto or delivered in connection
         herewith and any claim based on or arising from an alleged tort,  shall
         if  incapable  of  resolution  by mutual  agreement  in good faith,  be
         determined by arbitration as provided in this Section 24.

         .2 The  arbitration  shall be conducted in  accordance  with the United
         States  Arbitration  Act  (Title 9, U. S.  Code),  notwithstanding  any
         choice of law  provision in this  Agreement,  and under the  Commercial
         Arbitration Rules of the American Arbitration  Association ("AAA"). The
         arbitration shall be conducted in the City of Seattle, Washington . The
         arbitrator  shall give effect to statutes of limitation in  determining
         any claim.  Any controversy  concerning  whether an issue is arbitrable
         shall be determined by the  arbitrator.  The decision of the arbitrator
         shall  be  final  and  binding  on  the  parties.   Judgment  upon  the
         arbitration award may be entered in any court having  jurisdiction.  In
         rendering any decision or making findings of fact the arbitrator  shall
         apply the express intentions of the parties set forth in this Agreement
         and the laws of the State of Georgia,  including without limitation any
         applicable  statutes,  regulations and binding judicial  decisions,  as
         such would be  applied  by the  courts of the State of Georgia  and the
         United States District Court for the Northern District of Georgia.

         .3 In connection with any  arbitration  having an amount in controversy
         of less than  $1,000,000,  such  arbitration  shall be  conducted  by a
         single  arbitrator,  chosen by the AAA.  The AAA shall be guided by any
         applicable  rules with  respect to the  choosing of an  arbitrator  for
         arbitrations  conducted pursuant to the Commercial Arbitration Rules of
         the AAA,  and,  in  addition,  thereto,  (i) the AAA shall  attempt  to
         appoint an arbitrator having a technical  background,  where available,
         consistent  with the  technical  issues  and  procedures  which are the
         subject  matter  of this  Agreement  and (ii) the AAA  shall  prefer an
         arbitrator who is an attorney in good standing and licensed to practice
         law within the State of Georgia.  In  connection  with any  arbitration
         where the amount in controversy is equal to or greater than $1,000,000,
         the  arbitration  shall be  conducted  of a panel of three  (3) or more
         arbitrators  chosen  by the AAA,  giving  preference  to those  factors
         identified in subsections (i) and (ii) in the foregoing sentence.

         4 Notwithstanding any of the foregoing provisions, nothing contained in
         this Section 24 shall  prohibit  either  party from seeking  injunctive
         relief in any court having jurisdiction thereof and each party consents
         to such jurisdiction.

IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be duly
executed and delivered by their respective authorized  representatives as of the
date first above written.

GCI Communication Corp:                         Scientific-Atlanta, Inc.:



By: /s/ Ron Duncan                              By:/s/ David A. Berger

Ron Duncan                                      David A. Berger
(Typed Name)                                    (Typed Name)

President                                       President-Networks Division
(Title)                                         (Title)

December 20, 1995                               December 28, 1995
(Date)                                          (Date)



<PAGE>


<TABLE>
                               Exhibit A - Prices
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
                  GCI
                  C-BAND 3.6 METER ANTENNA REMOTE
                  DAMA STATIONS                                                         MFR OR            PRICE
ITEM                       DESCRIPTION                                          QTY     EQUIV.            (U.S.$)
- -----------------------------------------------------------------------------------------------------------------
<S>                        <C>                                                  <C>     <C>             <C>

I.                         EQUIPTMENT

                           This quote is excluding the following items:
                           1- ISDN Interface and Equipment
                           2- Single unit LNB
                           3- Shipping
                           4- Integration
                           5- Transceiver IFL

1.                         3.6-Meter Non-Deiced Antenna (51 Sites) 
                           consisting of:

a.                         Non-motorizable mount                                1       S-A
b.                         Non heated panels                                    1       S-A
c.                         Spars and feed boom                                  1       S-A
d.                         GCI Mount pipe                                       1       S-A
e.                         Cross-pol heated feed                                1       S-A
f.                         Raven protection kit                                 1       S-A
g.                         Feed boom electric deice kit                         1       S-A


                           3.6-Meter Non-Deiced Antenna Unit Price                                      $10,561

                           3.6-Meter Non-Deiced Antenna Total Price  (Qty-51)                           $538,611


2.                         Model 7890B Tranceiver subsystem (55 Sites) 
                           consisting of:

                           Note: Excludes IFL & Mounting Hardware

a.                         Model 7890 C-Band 20 watt Outdoor RF Unit            1       S-A
                           (5.85-6.425 GHz)
b.                         Model CLNA-35-60-N Low Noise Amplifier               1       EF DATA
c.                         Model 7792B Tranceiver Indoor Unit, -48VDC           1       S-A
d.                         Block Downconverter (3.625-4.2 GHz)                  1       S-A
e.                         Temperature Sensor Remote Assy. (P/N 482439)         1       S-A

                           Model 7890B Tranceiver Unit Price                                            $20,572

                           Model 7890B Tranceiver Unit Price (Qty-55)                                   $1,131,460


3.                         Baseband Equipment consisting of:

a.                         Model 7800 DAMA Eight channel chassis                86      S-A             $688,000
                           -48 VDC Multi Transponder IF Input/Output
b.                         Model 7802 Channel Unit, Voice and Data, 128kbps     550     S-A             $2,722,500
                           Fax Relay option, Switchless
c.                         Remote Signaling Channel Unit, Switchless            56      S-A             $252,000
d.                         Remote Signaling Channel Unit, Switchless
                           System Spares                                        6       S-A
e.                         DAMA Standby Power Supply for 7800 Chassis,          62      S-A             $458,986
                           -48 VDC, Panel Mount

                           Subtotal:                                                                    $5,791,557


4.                         Monitor & Control Subsystem consisting of:

a.                         Alarm/Status Sense inputs (28 points)                53      S-A
b.                         Outdoor Temperature Meter                            53      S-A
c.                         Indoor Temperature Meter                             53      S-A
d.                         Power Module Temperature Meter                       53      S-A
e.                         DC Current Meter                                     53      S-A
f.                         DC Voltage Meter                                     53      S-A
g.                         (3) Temperature Probes                               53      S-A
h.                         RSCU/Modern/PMT Port enhancement                     53      S-A
i.                         Modem addition to 4.h                                53      S-A

                           Subtotal;                                                                    $426,650


5.                         Optional 2 ft. Mount Pipe Extension                  51      S-A             $ 42,330
6.                         Optional Elevation Drill Drive Adapter               3       S-A             $  6,905

                           FOB ATLANTA PRICE:                                                           $6,267,442

II.                        SERVICES

1.                         Freight and Insurance (Customer Responsibility)      0       Lot
2.                         Site Survey                                          0       Lot
3.                         Civil Works (Customer Responsibility)                0       Lot
4.                         Installation, Test & Commissioning                   0       Lot
5.                         Training Programs                                    0       Lot
6.                         Progrm Management & Engineering Services             1       Lot             $218,047
7.                         Feature Group B, 1800950 Development                 1       Lot             $25,000
8.                         64Kbps PCM Development                               1       Lot             $85,000

                           TOTAL DAMA EXPANSION NETWORK                                                 $6,595,489


                           9 METER ANTENNA PROJECT


1.                         Model 8009A 9.15 M Antenna                           6

                           Reflector,  motorized  polarization,  non  deiced S-A
                           Extreme Mount,  galvanized and painted S-A Foundation
                           Kit,  120  deg.  S-A 4 port  C-Band  Linear  Feed S-A
                           Extreme Environment  Radome/Raven  Protection Kit S-A
                           Motorized Single Speed actuators, 120* Azimuth S-A
                                Travel, 208 VAC
                           Transmit Waveguide Kit                                       S-A
                           Lightning Protection Kit                                     S-A
                           Work Platform and Ladder Kit                                 S-A

2.                         Antenna Controls Subsystem:                          6

                           Model 8861 Antenna Motor  Controller S-A Model 8860-2
                           Adaptrack  Indoor  Unit S-A AZ/EI  Kits,  208 VAC S-A
                           Feed Kits 208 VAC/60 HZ Phase 3 S-A Installation Kits
                           S-A

                           Deice Control System                                 5       S-A
                           Main Reflector, Feed and Sub-Reflector               5       S-A
                                Electric De-Ice

                           Hardware Subtotal:                                                           $856,258


3.                         Installation                                         6                       $236,700
                           Note:
                           i) GCI to provide test equipment
                           ii) GCI to install the RF system prior to antenna 
                               testing

                           TOTAL 9M ANTENNA PROJECT                                                     $1,092,958

                           TOTAL CONTRACT
                           DAMA EXPANSION AND 9M ANTENNA PROJECTS                                       $7,688,447

</TABLE>


<PAGE>

<TABLE>
<CAPTION>

 I.EQUIPMENT                                           QTY  1-Jan  1-Feb  1-Mar  1-Apr  1-May  15-May  1-Jun  15-Jun  1-Jul  1-Aug
                                                             -96    -96    -96    -96    -96     -96    -96     -96    -96    -96

  <S>                                                   <C>           <C>    <C>    <C>   <C>     <C>    <C>            <C>

  1 3.6 Meter non-Deiced Antenna, consisting of:        51            1                   18             18             14
    a. Non-motorized mount
    b. Non heated panels
    c. Spars and feed boom
    d. GCI mount pipe
    e. Cross-pol heated feed
    f. Raven protection
    g. Feed boom electric deice kit


  2 Model 7890B Transceiver Subsystem, consisting of:   55                          19    18             18
    a. Model 6610 C-band 20 W ORU
    b. Model CLNA-35-60-N LNA
    c. Model 7792B Transceiver IDU, -48 VDC
    d. Block Downconverter
    e. IFL and Hardware including
       - ORU  TX and RX  Coaxial  Cabling,  40' - 
         ORU  power  and  Control
       Cabling,  40' - OD  Temp  Sensor  Cabling,  
       25'  -  ORU/LNA/LNB/Feed Cabling - Mounting 
       Hardware


  3 Baseband Equipment, consisting of:
    a. Model 7800 DAMA Eight channel chassis, -48 VDC   86            8      8      19    18      17     16
       Multi Transponder IF Input/Output
    b. Model 7802 Channel Unit, Voice and Data, 128     550           30     30     140   150            100            100
       kb/s,Fax Relay option, Switchless
    c. Remote Signaling Channel Unit, Switchless        62            4      4      20    18             16
    d. DAMA Standby Power Supply for 7800 chassis,      62            4      3      19    18             18
       -48 VDC, Panel Mount
</TABLE>


<TABLE>
<CAPTION>


 I. EQUIPMENT                                           QTY  1-Jan  1-Feb  1-Mar  1-Apr  1-May  15-May  1-Jun  15-Jun  1-Jul  1-Aug
                                                              -96    -96    -96     -96    -96    -96    -96     -96    -96    -96
  <S>                                                   <C>           <C>    <C>    <C>   <C>     <C>    <C>      <C>
  4 Monitor & Control Subsystem consisting of:          53                          19    18             16       
    a. Alarm/Status Sense Inputs (28 points)
    b. Outdoor Temperature Meter
    c. Indoor Temperature Meter
    d. Power Module Temperature Meter
    e. DC Current Meter
    f. DC Voltage
    g. (3) Temperature Probes


  5 Feature Group-B Software/Hardware                                                     lot


  6 1-800-950-XXXX Software/Hardware                                                      lot


  7 9.15 Meter Antenna                                  6
    a. Reflector, motorized polarization, non-deiced                                              2      2        2
    b. Extreme Mount, 120 azimuth, galvanized and                                                 2      2        2
       painted
    c. Foundation Kit, 120                                                                        2      2        2
    d. 4 port C-band Linear Feed                                                                  2      2        2
    e. Motorized Single Speed Actuators                                                          2      2        2
       120 Azimuth travel, 208 VAC, 60 Hz
    f. Model 8861 Antenna Motor Controller                                                        2      2        2
    g. Model 8860-2 Adaptrack Indoor Unit, -48 VDC                    2      2      2
       primary input power
    h. Antenna Control Cable and Installation Kits                                                2      2        2
    i. Lightning Protection Kit                                                                   2      2        2
    j. Work Platform and Ladder Kit                                                               2      2        2
    k. Transmit Waveguide Interface Kit                                                           2      2        2
    l. Feed Deice                                                                                 2      2        2
    m. Extreme Environment Radome/Raven Protection Kit                                            2      2        2
</TABLE>


<PAGE>


                          Exhibit C - Software License

                           SOFTWARE LICENSE AGREEMENT

                               SCIENTIFIC-ATLANTA

                   END USER SOFTWARE LICENSE AGREEMENT FOR USE
                            WITH DESIGNATED EQUIPMENT

Customer:         GCI Communication Corporation
Address:          2550 Denali St, Anchorage. AK. 99503-2781

Scientific-Atlanta,  Inc. ("S-A") by its acceptance agrees to grant to Customer,
and  Customer  accepts on the  following  terms and  conditions a license to the
identified Licensed Software for use only with the Designated  Equipment set out
below.

This  Agreement  covers all  Software  provided by S-A to GCI for the purpose of
operating the S-A DAMA Network equipment, purchased by GCI from S-A pursuant the
Equipment Purchase Agreement of even date.

1.LICENSE GRANT

   1.1   "Licensed   Software"   means  a  computer   program,   including   any
         modifications,  updates or  additions  which may be  supplied by S-A to
         Customer,  in object code or  executable  form in any  medium,  such as
         magnetic tape,  disks, or optical media; and related  materials such as
         flow charts, logic diagrams, manuals, and other documentation which are
         provided to Customer  by S-A with or for use in  Designated  Equipment.
         Licensed Software may reside within Designated Equipment at the time of
         delivery  to Customer in which case  identification  of such  equipment
         shall also constitute  identification of the corresponding software; or
         it may be provided separately for installation on Designated Equipment.

   1.2   Subject to these terms and conditions,  S-A grants to Customer, subject
         to the limitations  herein, a personal,  nonexclusive,  nontransferable
         license to use Licensed  Software in and for the  Designated  Equipment
         and not  otherwise.  This  license  may be  assigned  to any bona  fide
         successor  in  interest to  Designated  Equipment  who first  agrees in
         writing to be bound by the terms of this Agreement. Should the Licensed
         Software  include  a unique  implementation  of a  security  algorithm,
         Customer  shall have the  exclusive  right to use such unique  Customer
         security  algorithm  implementation  in and for use with the Designated
         Equipment and not otherwise.

   1.3   Customer may make one (1) copy of Licensed  Software (but not including
         read-only  memories or similar devices) for archival  purposes only and
         shall  reproduce  and attach all  copyright  and  proprietary  notices.
         Customer  shall  not  otherwise  copy or  allow to be  copied  Licensed
         Software  except  to  install  Licensed   Software  on  the  Designated
         Equipment.  Customer  agrees  that S-A shall  have the right to have an
         independent  accounting  firm conduct an audit at  Customer's  premises
         during normal business hours to verify the number of copies of Licensed
         Software in use by Customer.

   1.4   Customer  shall not make any  modifications  to  Licensed  Software  or
         remove any  proprietary  notices of S-A or third parties found in or on
         the  Licensed  Software.  Customer  agrees  not  to  reverse  engineer,
         decompile,  or reverse assemble  Licensed Software except to the extent
         that such prohibition may be unenforceable under applicable law.

   1.5   Licensed Software is and shall remain the exclusive property of S-A. No
         license  other  than that  specifically  stated  herein is  granted  to
         Customer,  and  Customer  shall  have no right to  sublicense  Licensed
         Software nor any right under any patent,  trademark,  copyright,  trade
         secret or other intellectual property of S-A other than that granted by
         this Agreement.

2.   PROTECTION AND SECURITY

   2.1   Customer agrees not to disclose, release, or make available in any form
         any portion of Licensed  Software to any person  other than  Customer's
         own employees or  contractors.  Customer  represents that its employees
         and  contractors  having  access to Licensed  Software  are or shall be
         party to written agreements  acknowledging a duty to protect Customer's
         confidential materials, including the Licensed Software.

   2.2   Customer shall keep Licensed  Software  (including  archival copies, if
         any),  in a secure  environment  and shall  take all  steps  reasonably
         necessary  to  protect  Licensed  Software  or any  part  thereof  from
         unauthorized disclosure or release. Customer may not export or reexport
         the  Licensed  Software  in any  form  except  in  compliance  with all
         applicable laws and regulations.

   2.3   Customer  expressly  agrees that a breach of this  Agreement will cause
         irreparable  harm to S-A and that S-A  shall  have the  right to obtain
         injunctive relief against any unauthorized use, disclosure,  copying or
         transfer  of any  part of  Licensed  Software.  Licensed  Software  may
         contain  software from third parties who are intended to be third party
         beneficiaries of this Agreement.

3.  WARRANTY AND LIABILITY

   3.1   S-A warrants that Licensed Software, as provided,  shall conform to the
         Specifications  as  that  term is  defined  in the  Equipment  Purchase
         Agreement  of even date or if not  covered by such  Specification,  the
         published specification of S-A. During the first one (1) year after the
         date of  delivery  of  Licensed  Software,  S-A  shall  use  reasonable
         commercial  efforts to correct  errors  detected in  Licensed  Software
         after  receiving  notification  of  such  errors  from  Customer.  This
         paragraph  sets  forth the  entire  obligation  of S-A with  respect to
         Licensed  Software  and in no event shall S-A be liable to Customer for
         loss of profit, indirect, special, or consequential damages arising out
         of its  provision  of the  Licensed  Software to  Customer  under tort,
         contract,  or any other legal  theory.  In no event shall S-A be liable
         to Customer  for any damages,  however based, in excess of ten thousand
         United States dollars (US$10,000.00).

   S-A MAKES NO OTHER WARRANTIES, WHETHER EXPRESS OR IMPLIED WITH RESPECT TO ANY
   PRODUCTS OR SERVICES PROVIDED UNDER THIS AGREEMENT  INCLUDING BUT NOT LIMITED
   TO ANY  WARRANTIES  OF  MERCHANTABILITY  OR FITNESS FOR A PARTICULAR  PURPOSE
   OTHER THAN COMPLIANCE WITH THE  SPECIFICATIONS  S-A DOES NOT WARRANT THAT THE
   FUNCTIONS   CONTAINED  IN  Licensed   Software   WILL  MEET  THE   CUSTOMER'S
   REQUIREMENTS,   OR  THAT  THE   OPERATION  OF  Licensed   Software   WILL  BE
   UNINTERRUPTED  OR  ERROR-FREE.  S-A MAKES NO  WARRANTY  OF  NONINFRINGEMENT,
   EXPRESS OR IMPLIED. ANY THIRD PARTY SOFTWARE SUPPLIED WITH OR INCORPORATED IN
   Licensed Software IS PROVIDED "AS-IS" WITHOUT  WARRANTIES OF ANY KIND. IF ANY
   ADDITIONAL  WARRANTIES ARE SUPPLIED BY A THIRD PARTY, SUCH WARRANTIES WILL BE
   OFFERED DIRECTLY BY SUCH THIRD PARTY TO Customer.

   3.3   Customer  acknowledges its responsibility to use all reasonable methods
         to prove out and  thoroughly  test the  operation  of and  output  from
         Licensed Software prior to its use in Customer's operations.

   3.4   Unless otherwise  provided in a separate  writing,  and subject only to
         the warranty of this  Section,  S-A is under no  obligation  to provide
         Customer  with any  modifications,  updates,  additions or revisions to
         Licensed Software, nor to maintain Licensed Software in any manner.

   3.5   In the event that any modifications are made to Licensed Software,  any
         and all warranty and other  obligations of S-A shall  immediately cease
         with respect to such software.

4.INDEMNIFICATION

   4.1 S-A shall provide defense and indemnification to the Customer under terms
       set forth in Section 15 of the Equipment  Purchase Agreement of even date
       herewith.

5. TERM AND TERMINATION

   This Agreement shall continue  indefinitely  unless  terminated by one of the
   parties.  This Agreement may be terminated by Customer upon thirty (30) days'
   notice  to S-A and by S-A upon  breach of any term of this  Agreement,  which
   breach is not cured  within  thirty (30) days after  notice by S-A, or should
   Customer be adjudged a bankrupt or become a party to a similar proceeding for
   the benefit of its creditors.  Immediately after such  termination,  Customer
   will  deliver  to  S-A   Licensed   Software  and  any  and  all  copies  and
   modifications  thereof  (except  copies  which reside  within the  Designated
   Equipment and which shall be erased) and will, if requested, provide S-A with
   its written certification that it has retained no copies.

6. TAXES

   Except for taxes based on S-A's income,  S-A shall not be responsible for any
   federal,  state or local taxes based upon Customer's purchase,  possession or
   use of Licensed  Software or upon any charges  payable or services  performed
   hereunder.

7. APPLICABLE LAW, INTEGRATION AND MODIFICATION

   7.1   This Agreement  shall be construed and enforced in accordance  with the
         laws of the State of Georgia,  United States of America,  not including
         any  conflicts  of  laws  provisions  thereof.  The  UN  Convention  on
         Contracts for the Sale of Goods shall not apply.

   7.2   This Agreement comprises the full and final  understanding  between S-A
         and Customer,  and merges and supersedes any and all other  agreements,
         understandings or representations, written or oral, with respect to the
         subject  matter  hereof.  It may not be  modified  except  by a writing
         signed by  authorized  representatives  of both S-A and  Customer,  and
         referring specifically to this Agreement.

   7.3   Any attempt by Customer to assign this  Agreement  shall be void unless
         the assignment is incidental to the sale of the Designated Equipment.

   7.4   Waiver by any party of the breach of a provision  of this  Agreement by
         the other party shall not be construed  as a continuing  waiver of such
         provision or waiver of any other breach of any other  provision of this
         Agreement.

AGREED:                                              ACCEPTED AND APPROVED:

CUSTOMER                                             SCIENTIFIC-ATLANTA, INC.
/s/Ron Duncan                                       /s/Gregory Taylor
By                                                   By

Ron Duncan                                           Greg Taylor
Printed Name                                         Printed Name

President                                            VP Operations, 
                                                     Systems Integ
Title                                                Title

December 20, 1995                                    December 28, 1995
Date                                                 Date


<PAGE>


            Exhibit D - Feature Group B/ 1 800 950 XXX Specification

                            S-A DAMA Features for FGB
                                and 800 950 1077
                              Dec. 12, 1995, Rev. 4

FGB (Feature Group B)

     FGB is a trunk class offered by a Local Exchange  Carrier (LEC) to an Inter
Exchange  Carrier  (IXC)  before the  advent of FGD equal  access  trunking  was
available.  In such a non equal access LEC office FGC signaling  also exists but
historically  is only  grandfathered  to AT&T as they were the original and only
IXC. (There have been exceptions in Alaska where GCI has received FGC from a LEC
for payphone access and 800 number  lookup).  FGB can coexist with FGD when that
service is available. There are two types of FGB signaling; one with ANI and one
without. FGB with ANI is a NECA offering without any additional charges over and
above FGB without ANI. The following  will be a description  of how it functions
and what S-A will have to incorporate  into the DAMA product to provide this FGB
requirement for GCI.  Drawings are also included showing the signaling  protocol
exchanges for both types.

     S-A shall  design  the DAMA  product  for the  following  two FGB  trunking
signaling  protocol.  GCI's FGB Carrier  Identification  Code (CIC) is 1077. FGB
access NXX is 950 so the access number is 950 1077.  There will be a new file to
be downloaded to the CUs called the "Parameter  File". The CIC will be placed in
the new downloadable  file.  Format of the new file is TBD. FGB with ANI and FGB
without ANI will be selectable from the same field in the parameter screen where
FGC, FGD, IMT, and PBX are  currently  selected.  The new entries will be FGBANI
and  FGBNOANI.  FGB with ANI and FGB without ANI and IMT  protocols  will reside
within the same state machine FGB###.BIN The first described is FGB with ANI.

       FGB with ANI

       Customer phone number is 907 265 5650
       Customer dials GCI FGB Access number 950 1077
       Customer wants to call 1+213+554+1212

       LEC                                        DAMA
       Seize -------------------------------------

         -----------------------------------------Wink

       KP+950+1077+ST --------------------------

         -----------------------------------------Off hook seizure
                                                  ANI Request

       KP+0+265+5650+ST -------------------------

         -----------------------------------------400 Hz Dial tone

       -------------------------------------------
       Customer then enters the called number as 1+213+554+1212  from their DTMF
       phone. (No MF tones or rotary phones)

     The  customer  with local LEC line will dial 950 1077.  The LEC, at the LEC
GCI FGB trunk,  will then send an off hook seizure to the DAMA channel unit. The
DAMA channel unit will then send an approximate  200 ms off hook wink to the LEC
when the DAMA is ready to receive  digits in MF. The LEC will spill  KP9501077ST
important  digression  -- In most all cases the LEC when asked will suppress all
digits of the called number and just spill KP ST. This shortens post dial delay.
The DAMA must be able to just  recognize  KP ST for this trunk  type).  The DAMA
then  returns an off hook  seizure to the LEC.  The LEC  recognizes  this as the
request  for ANI and then  sends the ANI as KP 0 2655650  ST.  This ends the LEC
trunking  signalling   protocol,   (with  the  exception  of  ultimate  on  hook
disconnect). The DAMA then shall return a single frequency 400 Hz dial tone. (If
it hasn't been  observed  already this  signalling  protocol is identical to FGC
originating  previously  designed for DAMA). The similarity ends however at this
point where the DAMA returns  dial tone.  The  originator  of the call who first
dialed 950 1077 to access GCI DAMA (who will continue the signalling addressing)
must now at the DAMA dial tone enter the 1+10 digit called number. This 10 digit
destination number must replace the previous called number 9501077,  if spilled,
with  the new 10  digit  called  number  for the  purpose  of call  routing  and
completion.  The ANI will be used for  billing.  The DAMA channel unit must have
the filed 907 NPA for purpose of  completing  the ANI with the  prefacing of the
907 to the seven digit ANI spill.  Presently the DAMA NMS has ANI  validation to
the extent that if an ANI is to be turned off for non payment it is entered into
the system to be blocked.  If an ANI is to route normal it is not  entered.  S-A
shall provide the  capability to reverse this based on a CU basis so that an ANI
must be  entered to be allowed to route and that if no ANI is present in the NMS
database then it will block the call and go to recording.

     Next will be described the second scenario of FGB without ANI.

       FGB without ANI

       Customer  phone  number is 907 265 5650  Customer  dials  GCI FGB  Access
       number 950 1077 Customer  wants to call  1+213+554+1212  Customer has GCI
       authorization code number 123456

       LEC                                    DAMA

       Seize --------------------------------
         -------------------------------------Wink
       KP+950+1077+ST-------------------------
         --------------------------------------Off hook seizure
                                               400 Hz Dial tone

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

       Customer then enters a 6 digit  authorization  code and the called number
       as 123456  +1+213+554+1212  from their DTMF phone. (No MF tones or rotary
       phones)

     The  customer  with local LEC line will dial 950 1077.  The LEC, at the LEC
GCI FGB trunk,  will then send an off hook seizure to the DAMA channel unit. The
DAMA channel unit will then send an approximate  200 ms off hook wink to the LEC
when the DAMA is ready to receive  digits in MF. The LEC will spill  KP9501077ST
Important  digression  -- In most all cases the LEC when asked will suppress all
digits of the called number and just spill KP ST. This shortens post dial delay.
The DAMA must be able to just  recognize  KP ST for this trunk  type).  The DAMA
then returns an off hook seizure to the LEC along with single  frequency 400 Hz.
dial tone. This ends the LEC trunking signalling  protocol,  (with the exception
of  ultimate  on hook  disconnect).  The  user,  in  continuing  the  addressing
signalling, must enter at the tone a 6 digit authorization code and then the 1 +
10 digit  called  number  from their DTMF  phone.  The  authorization  code will
replace the ANI for billing  purposes  only but will not replace the ANI for any
other  purpose such as FGD repeat.  Where FGB does not provide an actual ANI the
NS will use the telephone number entered in the routing table of the originating
CU as the ANI for FGC and FGD  repeat.  This  scheme is the same as what FGC and
FGD do for an IMT originating  call which has no ANI. If no telephone  number is
used an ANI of KP+ST will be output by the FGC or FGD repeat  terminating trunk.
This 6 digit  authcode  (Called the Hometown  authcode  feature by GCI Mktg when
going to non equal access areas) must be validated in the NMS in a database of 6
digit authcodes  stored.  S-A shall provide memory for up to 20 thousand 6 digit
authorization codes.

Bellcore standards documents are available for FGB signalling and function.

Compatibility  Information  for  Feature  Group  B  Switched  Access  Service  -
TR-NPL-000175 Issue 1, July 1985 $16.50.

Feature Group B FSD 20-24-0300 -- TR-TSY-000698  Issue 1, June 1989 $30.00;  Rev
1, July 1990

$N/A.

800 950 1077

     This feature can be best  described  as 800 950 1077 "peel out".  S-A shall
provide  the  following  set of  feature  requirements.  In the  case  where  an
originating  DAMA FGC or FGD channel unit  receives the GCI 800 950 1077 number,
regardless  of whether the channel  unit trunk group is an 800 query or route as
is one,  the DAMA NMS or channel  unit will  recognize  this number and "peel it
out"  and  keep it  temporarily  within  the  originating  channel  unit for the
following  additional  call  processing.  All LEC  trunking  signalling  to DAMA
channel  unit has  already  taken  place once the 800 950 1077 and ANI have been
received.  Once the 800 950 1077 number is  received  and  recognized  S-A shall
design the DAMA product so that the channel unit will return a single  frequency
400Hz.  dial  tone.  Then the user,  from a DTMF  phone,  will dial a 0+10 digit
destination  number. Then the DAMA channel unit will return a "Bong tone" to the
user followed by a recording that says "Enter your GCI calling card number now".
Then the customer,  from their DTMF phone,  will enter a 14 digit GCI Big Dipper
calling  card  number.  The 14 digit GCI Big Dipper  calling  card  number  will
replace the ANI sent to the NS for billing  purposes.  Then the return link will
send all this information to the NMS. The NMS will validate the 14 digit number.
If validated  then the call will route and  terminate to a  destination  channel
unit based on the 0+10 digit called number.  At the same time a recording to the
originator  will say "Thank you for using GCI".  S-A shall provide memory for up
to  100,000 14 digit  calling  card  numbers.  In the event  where the  customer
originated the call from a rotary phone S-A shall provide for the following.  At
the point where the DAMA channel unit has returned the single  frequency 400 Hz.
dial tone and the  customer  cannot  enter the DTMF 0+10 number as they are at a
rotary phone there needs to be incorporated a default timer value where the call
can be routed to the operator  trunking should no DTMF digits be received before
the  expiration  of the timer.  This timer needs to be  programmable  within the
range of 1 second to 15  seconds.  If no DTMF  digits  are  received  within the
programmed default range then the call will be routed as a 0- FGD repeat call to
the terminating  channel unit designated for 0- operator calls.  That is the FGD
repeat trunk group will repeat the  originating  ANI and insert 0- as the called
number. This will allow an operator to handle the call verbally.


<PAGE>



<TABLE> <S> <C>


<ARTICLE>                     5
<LEGEND>
      THIS SCHEDULE  CONTAINS SUMMARY FINANCIAL  INFORMATION  EXTRACTED FROM THE
      CONSOLIDATED  STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 30, 1995
      AND  THE  CONSOLIDATED  BALANCE  SHEET  AS OF  DECEMBER  30,  1995  AND IS
      QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK>                                          0000808461              
<NAME>                                         GENERAL COMMUNICATION, INC.
<MULTIPLIER>                                   1,000
       
<S>                                            <C>
<PERIOD-TYPE>                                  YEAR
<FISCAL-YEAR-END>                              DEC-31-1995
<PERIOD-START>                                 JAN-01-1995
<PERIOD-END>                                   DEC-31-1995
<CASH>                                         4,017
<SECURITIES>                                   0
<RECEIVABLES>                                  21,737
<ALLOWANCES>                                   295
<INVENTORY>                                    991
<CURRENT-ASSETS>                               29,182
<PP&E>                                         84,243
<DEPRECIATION>                                 33,789
<TOTAL-ASSETS>                                 84,765
<CURRENT-LIABILITIES>                          24,070
<BONDS>                                        9,056
<PREFERRED-MANDATORY>                          0
<PREFERRED>                                    0
<COMMON>                                       16,955
<OTHER-SE>                                     26,061
<TOTAL-LIABILITY-AND-EQUITY>                   84,765
<SALES>                                        0
<TOTAL-REVENUES>                               129,279
<CGS>                                          0
<TOTAL-COSTS>                                  70,221
<OTHER-EXPENSES>                               19,738
<LOSS-PROVISION>                               1,459
<INTEREST-EXPENSE>                             1,146
<INCOME-PRETAX>                                12,601
<INCOME-TAX>                                   5,099
<INCOME-CONTINUING>                            7,502
<DISCONTINUED>                                 0
<EXTRAORDINARY>                                0
<CHANGES>                                      0
<NET-INCOME>                                   7,502
<EPS-PRIMARY>                                  .31
<EPS-DILUTED>                                  .31
        


</TABLE>