This quarterly report on Form 10-Q contains forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the statements. Statements that are not historical facts are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as "believe," "anticipate," "expect" and similar expressions are intended to identify forward-looking statements. Forward-looking statements (including oral representations) are only predictions or statements of current plans, which we review continuously. Forward-looking statements may differ from actual future results due to, but not limited to, and our future results may be materially affected by, any of the following possibilities:

* Reductions in the number of our access lines and high-speed internet subscribers;

* The effects of competition from cable, wireless and other wireline carriers (through voice over internet protocol (VOIP) or otherwise);

* The effects of greater than anticipated competition requiring new pricing, marketing strategies or new product offerings and the risk that we will not respond on a timely or profitable basis;

* The effects of general and local economic, business, industry and employment conditions on our revenues;

* Our ability to effectively manage service quality;

* Our ability to successfully introduce new product offerings, including our ability to offer bundled service packages on terms that are both profitable to us and attractive to our customers;

* Our ability to sell enhanced and data services in order to offset ongoing declines in revenue from local services, switched access services and subsidies;

* Changes in accounting policies or practices adopted voluntarily or as required by generally accepted accounting principles or regulators;

* The effects of ongoing changes in the regulation of the communications industry as a result of federal and state legislation and regulation, including potential changes in state rate of return limitations on our earnings, access charges and subsidy payments, and regulatory network upgrade and reliability requirements;

* Our ability to effectively manage our operations, operating expenses and capital expenditures, to pay dividends and to reduce or refinance our debt;

* Adverse changes in the credit markets and/or in the ratings given to our debt securities by nationally accredited ratings organizations, which could limit or restrict the availability and/or increase the cost of financing;

* The effects of bankruptcies in the telecommunications industry, which could result in potential bad debts;

* The effects of technological changes and competition on our capital expenditures and product and service offerings, including the lack of assurance that our ongoing network improvements will be sufficient to meet or exceed the capabilities and quality of competing networks;

* The effects of increased medical, retiree and pension expenses and related funding requirements;

* Changes in income tax rates, tax laws, regulations or rulings, and/or federal or state tax assessments;

* The effects of state regulatory cash management policies on our ability to transfer cash among our subsidiaries and to the parent company;

* Our ability to successfully renegotiate union contracts expiring in 2008 and thereafter;

* Our ability to pay a $1.00 per common share dividend annually, which may be affected by our cash flow from operations, amount of capital expenditures, debt service requirements, cash paid for income taxes (which will increase in the future) and our liquidity;

* The effects of significantly increased cash taxes in 2008 and future years; and

* The effects of any unfavorable outcome with respect to any of our current or future legal, governmental or regulatory proceedings, audits or disputes.

Any of the foregoing events, or other events, could cause financial information to vary from management's forward-looking statements included in this report. You should consider these important factors, as well as the risks set forth under Item 1A. "Risk Factors," in our Annual Report on Form 10-K for the year ended December 31, 2007, in evaluating any statement in this report on Form 10-Q or otherwise made by us or on our behalf. The following information is unaudited and should be read in conjunction with the consolidated financial statements and related notes included in this report. We have no obligation to update or revise these forward-looking statements.

Competition in the telecommunications industry is intense and increasing. We experience competition from many telecommunications service providers, including cable operators, wireless carriers, voice over internet protocol (VOIP) providers, long distance providers, competitive local exchange carriers, internet providers and other wireline carriers. We believe that as of June 30, 2008, approximately 58% of the households in our territories are able to be served VOIP service by cable operators. We also believe that competition will continue to intensify in 2008 and 2009 and may result in reduced revenues in those years. Our business experienced erosion in access lines and switched access minutes in the first half of 2008 primarily as a result of competition. Competition in our markets may result in reduced revenues in 2008 and 2009.

The communications industry is undergoing significant changes. The market is extremely competitive, resulting in lower prices. In addition, the slowing economic environment in 2008 may be impacting consumer behavior to reduce household expenditures by disconnecting wireline services. These trends are likely to continue and result in a challenging revenue environment. These factors could also result in more bankruptcies and, therefore, affect our ability to collect money owed to us by customers.

We employ a number of strategies to combat the competitive pressures noted above. Our strategies are focused in three areas: customer retention, upgrading and up-selling services to our existing customer base, and new product deployment.

We hope to achieve our customer retention goals by bundling services around the local access line and providing exemplary customer service. Bundled services include high-speed internet, unlimited long distance calling, enhanced telephone features and video offerings. We tailor these services to the needs of our residential and business customers in the markets we serve and continually evaluate the introduction of new and complementary products and services, which can also be purchased separately. Customer retention is also enhanced by offering 1, 2 and 3 year price protection plans where customers commit to a term in exchange for predictable pricing and/or promotional offers. Additionally, we are focused on enhancing the customer experience as we believe exceptional customer service will differentiate us from our competition. Our commitment to providing exemplary customer service is demonstrated by the expansion of our customer services hours, shorter scheduling windows for in-home appointments and the implementation of call reminders and follow-up calls for service appointments. In addition, due to a recent realignment and restructuring of approximately 70 local area markets, those markets are now operated by local managers with responsibility for the customer experience in those markets as well as the financial results.

We utilize targeted and innovative promotions to upgrade and up-sell a variety of service offerings including high-speed internet, video, and enhanced long distance and feature packages in order to maximize the average revenue per access line (wallet share) paid to Frontier. We intend to continue to evaluate the need and effectiveness of offering such promotions to drive sales and may offer additional promotions during 2008.

Lastly, we are focused on introducing a number of new products that our customers desire including wireless data, internet portal advertising and the "Frontier Peace of Mind" product suite. This last category is a suite of products aimed at managing our customers' computer environment and protecting residential and business customers against loss of data as a result of computer failure. It includes one or a combination of hard drive back-up, access to an enhanced level of help desk support and inside wire maintenance. We offer our Peace of Mind services both to our customers and to other users inside and outside of our service territories. Although we are optimistic about the opportunities provided by each of these initiatives, we can provide no assurance about their long term profitability or impact on revenue.

We believe that the combination of offering multiple products and services to our customers pursuant to price protection programs, billing them on a single bill and providing superior customer service will make our customers more loyal to us, and will help us generate new, and retain existing, customer revenue.

Revenues from data and internet services such as high-speed internet continue to increase as a percentage of our total revenues and revenues from services such as local line and access charges (including federal and state subsidies) are decreasing as a percentage of our total revenues. The decreasing revenue from historical sources, along with the potential for increasing operating costs, could cause our profitability and our cash generated by operations to decrease.

As of June 30, 2008, we had cash and cash equivalents aggregating $178.9 million. Our primary source of funds continued to be cash generated from operations. For the six months ended June 30, 2008, we used cash flow from operations, incremental borrowing and cash and cash equivalents to fund capital expenditures, dividends, interest payments, debt repayments and stock repurchases.

We believe our operating cash flows, existing cash balances, and credit facility will be adequate to finance our working capital requirements, fund capital expenditures, make required debt payments through 2009, pay taxes, pay dividends to our stockholders in accordance with our dividend policy and support our short-term and long-term operating strategies. However, a number of factors, including but not limited to, increased cash taxes, losses of access lines, increases in competition and lower subsidy and access revenues are expected to reduce our cash generated by operations. Our below-investment grade credit ratings may make it more difficult and expensive to refinance our maturing debt, although we do not have any significant maturities until 2011. We have approximately $1.9 million of debt maturing during the last six months of 2008 and approximately $3.9 million and $7.2 million of debt maturing in 2009 and 2010, respectively.

We paid $49.6 million in cash taxes during the first six months of 2008 and expect to pay approximately $100 million to $110 million for the full year of 2008. Our cash tax estimate reflects the currently estimated impact of the "Economic Stimulus Act of 2008." We expect that our cash taxes will increase further in 2009.

On October 31, 2007, we completed the acquisition of Global Valley Networks, Inc. and GVN Services for a total cash consideration of $62.0 million.

For the six months ended June 30, 2007, we retired an aggregate principal amount of $935.6 million of debt, including $3.3 million of EPPICS and $17.8 million of 3.25% Commonwealth convertible notes that were converted into our common stock. On April 26, 2007, we redeemed $495.2 million principal amount of our 7.625% Senior Notes due 2008 at a price of 103.041% plus accrued and unpaid interest. During the first quarter of 2007, we temporarily borrowed and repaid $200.0 million utilized to temporarily fund the acquisition of Commonwealth, and we paid down the $35.0 million Commonwealth credit facility. Through June 30, 2007 we retired $183.3 million face amount of Commonwealth convertible notes for which we paid $165.4 million in cash and $36.7 million in common stock. We also paid down $14.2 million of industrial development revenue bonds and $3.9 million of rural utilities service loan contracts.

We may from time to time repurchase our debt in the open market, through tender offers, exchanges of debt securities, by exercising rights to call or in privately negotiated transactions. We may also exchange existing debt for newly issued debt obligations.

On March 23, 2007, we issued in a private placement an aggregate $300.0 million principal amount of 6.625% Senior Notes due 2015 and $450.0 million principal amount of 7.125% Senior Notes due 2019. Proceeds from the sale were used to pay down $200.0 million principal amount of indebtedness incurred on March 8, 2007 under a bridge loan facility in connection with the acquisition of Commonwealth and redeem, on April 26, 2007, $495.2 million principal amount of our 7.625% Senior Notes due 2008 at a price of 103.041% plus accrued and unpaid interest. In the second quarter of 2007, we completed an exchange offer (to publicly register the debt) for the $750.0 million in total of private placement notes described above, in addition to the $400.0 million principal amount of 7.875% Senior Notes due 2027 issued in a private placement on December 22, 2006, for registered notes.

The notional amounts of fixed-rate indebtedness hedged as of December 31, 2007 were $400.0 million. Such contracts required us to pay variable rates of interest (estimated average pay rates of approximately 8.54% as of December 31, 2007) and receive fixed rates of interest (average receive rate of 8.50% as of December 31, 2007). All swaps were accounted for under SFAS No. 133 (as amended) as fair value hedges. For the six months ended June 30, 2007, the interest expense resulting from these interest rate swaps totaled approximately $2.0 million.

On January 15, 2008, we terminated all of our interest rate swap agreements representing $400.0 million notional amount of indebtedness associated with our Senior Notes due in 2011 and 2013. Cash proceeds on the swap terminations of approximately $15.5 million were received in January 2008. The related gain has been deferred on the consolidated balance sheet and is being amortized into interest expense over the term of the associated debt.

Our $200.0 million term loan facility with the Rural Telephone Finance Cooperative (RTFC), that matures in 2011, contains a maximum leverage ratio covenant. Under the leverage ratio covenant, we are required to maintain a ratio of (i) total indebtedness minus cash and cash equivalents in excess of $50.0 million to (ii) consolidated adjusted EBITDA (as defined in the agreement) over the last four quarters no greater than 4.00 to 1.

Our $250.0 million credit facility, and our $150.0 million and $135.0 million senior unsecured term loans, each contain a maximum leverage ratio covenant. Under the leverage ratio covenant, we are required to maintain a ratio of (i) total indebtedness minus cash and cash equivalents in excess of $50.0 million to
(ii) consolidated adjusted EBITDA (as defined in the agreements) over the last four quarters no greater than 4.50 to 1. Although all of these facilities are unsecured, they will be equally and ratably secured by certain liens and equally and ratably guaranteed by certain of our subsidiaries if we issue debt that is secured or guaranteed.

Our credit facilities and certain indentures for our senior unsecured debt obligations limit our ability to create liens or merge or consolidate with other companies and our subsidiaries' ability to borrow funds, subject to important exceptions and qualifications.

We are in compliance with all of our debt and credit facility covenants.

In February 2007, our Board of Directors authorized us to repurchase up to $250.0 million of our common stock in public or private transactions over the following twelve month period. This share repurchase program commenced on March 19, 2007 and was completed on October 15, 2007. During 2007, we repurchased 17,279,600 shares of our common stock at an aggregate cost of $250.0 million.

Management has discussed the development and selection of these critical accounting estimates with the Audit Committee of our Board of Directors and our Audit Committee has reviewed our disclosures relating to such estimates.

There have been no material changes to our critical accounting policies and estimates from the information provided in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our Annual Report on Form 10-K for the year ended December 31, 2007.

The following new accounting standards were adopted by the Company in the first quarter of 2008 without any material financial statement impact. All of these standards are more fully described in Note 2 to the consolidated financial statements.

The following new accounting standards that will be adopted by the Company in 2008 and 2009 are currently being evaluated by the Company.

REVENUE

Revenue is generated primarily through the provision of local, network access, long distance, and data and internet services. Such services are provided through either a monthly recurring fee or a fee based on usage at a tariffed rate and revenue recognition is not dependent upon significant judgments by management, with the exception of a determination of a provision for uncollectible amounts.

Consolidated revenue for the three months ended June 30, 2008 decreased $16.3 million, or 3%, as compared with the prior year period. Consolidated revenue for the six months ended June 30, 2008 decreased $3.2 million as compared with the prior year period. Excluding the additional revenue due to the CTE and GVN acquisitions, revenue decreased $63.7 million during the first half of 2008, or 6%, as compared with the prior period. During the first quarter of 2007, we had a significant favorable settlement of a carrier dispute that resulted in a favorable one-time impact to our revenue of $38.7 million. Excluding the additional revenue due to the one-time favorable settlement in the first quarter of 2007 and the additional revenue due to the CTE and GVN acquisitions, our revenue for the six months ended June 30, 2008 would have declined $25.0 million, or 3%, as compared to the first six months of 2007. This decline is a result of lower local services revenue, subsidy revenue and switched access revenue, partially offset by a $22.6 million increase in data and internet services revenue.

Change in the number of our access lines is one factor that is important to our revenue and profitability. We have lost access lines primarily because of competition, changing consumer behavior, economic conditions, changing technology and by some customers disconnecting second lines when they add high-speed internet or cable modem service. We lost approximately 88,400 access lines during the six months ended June 30, 2008, but added approximately 36,500 high-speed internet subscribers during this same period. The loss of lines during the first six months of 2008 was primarily among residential customers throughout our markets. The non-residential line losses were principally in our eastern and central regions and Rochester, New York.

While access lines is an important metric to gauge some revenue trends, it is not necessarily the best or only measure to evaluate the business. Management believes that understanding the different components of revenue is most important. For this reason, presented on page 26 is a revenue breakdown that categorizes revenue into customer revenue and regulatory revenue (switched and subsidy revenue). Despite the decline in access lines, our customer revenue, which is all revenue except switched access and subsidy, has remained relatively flat overall. The average monthly customer revenue per access line has improved and resulted in an increased wallet share, primarily from residential customers. We expect to continue to lose access lines but to increase high-speed internet subscribers during the remainder of 2008. A continued loss of access lines, combined with increased competition and the other factors discussed herein may cause our revenues, profitability and cash flows to decrease in the second half of 2008.

Our historical results include the results of operations of Commonwealth from the date of its acquisition on March 8, 2007 and of GVN from the date of its acquisition on October 31, 2007. The financial tables below include a comparative analysis of our results of operations on a historical basis for the three and six months ended June 30, 2008 and 2007, including the results of our acquisitions.

                                                         REVENUE


                            For the three months ended June 30,             For the six months ended June 30,
                         ------------------------------------------  -------------------------------------------------
($ in thousands)
----------------           2008       2007     $ Change    % Change      2008         2007        $ Change   % Change
                         ---------- --------- ----------- ---------  ------------- -----------   ---------  ----------
Local services           $ 214,703  $226,363   $ (11,660)      -5%    $   431,861  $  430,807    $  1,054          0%
Data and internet
  services                 151,655   138,243      13,412       10%        297,637     256,267      41,370         16%
Access services            101,003   113,429     (12,426)     -11%        208,821     252,453     (43,632)       -17%
Long distance services      46,912    47,053        (141)       0%         93,365      87,481       5,884          7%
Directory services          29,070    28,664         406        1%         57,698      57,334         364          1%
Other                       19,207    25,074      (5,867)     -23%         42,373      50,631      (8,258)       -16%
                         ---------- --------- -----------            ------------- -----------   ---------
                         $ 562,550  $578,826   $ (16,276)      -3%    $ 1,131,755  $1,134,973    $ (3,218)         0%
                         ========== ========= ===========            ============= ===========   =========

Local Services
Local services revenue for the three months ended June 30, 2008 decreased $11.7 million, or 5%, as compared with the prior year period. The loss of access lines accounted for $8.7 million of the decline in local services revenue.

Local services revenue for the six months ended June 30, 2008 increased $1.1 million, as compared with the prior year period. Local services revenue increased $21.7 million as a result of the CTE and GVN acquisitions and decreased $18.4 million for our legacy Frontier operations, primarily due to the continued loss of access lines. Enhanced services revenue decreased $2.2 million, as compared with the prior year period, primarily due to a decline in access lines and a shift in customers purchasing our unlimited voice communications packages.

Economic conditions and/or increasing competition could make it more difficult to sell our packages and bundles and cause us to increase our promotions and/or lower our prices for those products and services, which would adversely affect our revenues, profitability and cash flow.

Data and Internet Services
Data and internet services revenue for the three months ended June 30, 2008 increased $13.4 million, or 10%, as compared with the prior year period, primarily due to growth in data and high-speed internet services.

Data and internet services revenue for the six months ended June 30, 2008 increased $41.4 million, or 16%, as compared with the prior year period. Data and internet services revenue increased $18.8 million as a result of the CTE and GVN acquisitions and another $15.6 million due to the overall growth in data and high-speed internet customers. The number of the Company's high-speed internet subscribers has increased by more than 80,000, or 17%, since June 30, 2007. Data and internet services also includes revenue from data transmission services to other carriers and high-volume commercial customers with dedicated high-capacity circuits like DS-1's and DS-3's. Revenue from these dedicated high-capacity circuits increased $8.5 million, as compared with the prior year period, primarily due to growth in the number of those circuits.

Access Services
Access services revenue for the three months ended June 30, 2008 decreased $12.4 million, or 11%, as compared with the prior year period. Switched access revenue of $72.7 million decreased $10.1 million, as compared with the prior year period, primarily due to the impact of a decline in minutes of use related to access line losses. Access services revenue includes subsidy payments we receive from federal and state agencies. Subsidy revenue of $28.3 million decreased $2.3 million, primarily due to lower receipts under the Federal High Cost Fund program resulting from our reduced cost structure and an increase in the program's National Average Cost per Local Loop (NACPL).

Access services revenue for the six months ended June 30, 2008 decreased $43.6 million, or 17%, as compared with the prior year period. Access services revenue increased $11.3 million as a result of the CTE and GVN acquisitions. Switched access revenue, excluding the impact of the CTE and GVN acquisitions, of $116.7 million decreased $45.6 million, primarily due to the first quarter 2007 settlement of a carrier dispute resulting in a favorable impact on our revenue of $38.7 million (a one-time event) and the impact of a decline in minutes of use related to access line losses. Excluding the impact of that one-time favorable settlement in the first six months of 2007, our switched access revenue for the first half of 2008 would have declined by $6.9 million, or 6%, from the comparable period in 2007. Subsidy revenue, excluding the impact of the CTE and GVN acquisitions, of $52.5 million decreased $9.3 million, primarily due to lower receipts under the Federal High Cost Fund program resulting from our reduced cost structure and an increase in the program's NACPL.

Many factors may lead to further increases in the NACPL, thereby resulting in decreases in our federal subsidy revenue in the future. The Federal Communications Commission (FCC) and state regulators are currently considering a number of proposals for changing the manner in which eligibility for federal subsidies is determined as well as the amounts of such subsidies. On May 1, 2008 the FCC issued an order to cap Competitive Eligible Telecommunications Companies (CETC) receipts from the high cost Federal Universal Service Fund. While this order will have no impact on our current receipt levels, we believe this is a positive first step to limit the rapid growth of the fund. The CETC cap will remain in place until the FCC takes additional steps towards needed reform. The FCC is also reviewing the mechanism by which subsidies are funded. Additionally, the FCC and certain states have open proceedings to address reform to access charges and other intercarrier compensation. We cannot predict when or how these matters will be decided nor the effect on our subsidy or access revenues. In addition, we have been approached by, and/or are involved in formal state proceedings with, various carriers seeking reductions in intrastate access rates in certain states. Future reductions in our subsidy and access revenues will directly affect our profitability and cash flows as those regulatory revenues do not have associated variable expenses.

Long Distance Services
Long distance services revenue for the three months ended June 30, 2008 was relatively unchanged as compared with the prior year period.

Long distance services revenue for the six months ended June 30, 2008 increased $5.9 million, or 7%, as compared with the prior year period, as a result of $6.9 million in additional long distance services revenue from the CTE and GVN acquisitions. We have actively marketed a package of unlimited long distance minutes with our digital phone and state unlimited bundled service offerings. The sale of our digital phone and state unlimited products, and its associated unlimited minutes, has resulted in an increase in long distance customers, and the minutes used by these customers. This has lowered our overall average rate per minute billed.

Our long distance minutes of use increased by 23% during the six months ended June 30, 2008 compared to the six months of 2007. Our long distance services revenues have remained relatively unchanged, but may decrease in the future due to lower rates and/or minutes of use. Competing services such as wireless, VOIP, and cable telephony are resulting in a loss of customers, minutes of use and further declines in the rates we charge our customers. We expect these factors will continue to adversely affect our long distance revenues during the remainder of 2008.

Directory Services
Directory services revenue for the three and six months ended June 30, 2008 was relatively unchanged as compared with the prior year periods.

Other
Other revenue for the three and six months ended June 30, 2008 decreased $5.9 million, or 23%, and $8.3 million, or 16%, as compared with the prior year periods, primarily due to higher bad debt expenses, fewer equipment sales and decreased "bill and collect" fee revenue.

                                As of                 As of                %
                            June 30, 2008         June 30, 2007         Change
                            -----------------   ------------------   -----------
Access lines:
   Residential                     1,516,402            1,654,854        -8%
   Business                          825,345              848,864        -3%
                            -----------------   ------------------
Total access lines                 2,341,747            2,503,718        -6%
                            -----------------   ------------------

High-speed internet (HSI)
  subscribers                        559,345              479,317        17%
Video subscribers                    107,596               81,092        33%

                                   For the three months ended June 30,                 For the six months ended June 30,
                            -------------------------------------------------- -----------------------------------------------------

                                2008           2007     $ Change    % Change       2008           2007       $ Change      % Change
                            -------------------------------------------------- -----------------------------------------------------
Revenue:
   Residential                 $ 239,633     $ 248,550   $  (8,917)      -4%     $  480,995    $  470,328       $ 10,667       2%
   Business                      221,914       216,847       5,067        2%        441,939       412,192         29,747       7%
                            -------------   ----------- -----------            ------------- -------------   ------------
Total customer revenue           461,547       465,397      (3,850)      -1%        922,934       882,520         40,414       5%
                            -------------   ----------- -----------            ------------- -------------   ------------

   Regulatory (Access
     Services)                   101,003       113,429     (12,426)     -11%        208,821       252,453        (43,632)    -17%
                            -------------   ----------- -----------            ------------- -------------   ------------
Total revenue                  $ 562,550     $ 578,826   $ (16,276)      -3%     $1,131,755    $1,134,973       $ (3,218)      0%
                            -------------   ----------- -----------            ------------- -------------   ------------

Switched access minutes
   of use (in millions)            2,538         2,748                   -8%          5,141         5,276                     -3%
Average monthly total
   revenue per access line     $   79.31     $   76.53                    4%     $    79.04    $    78.75 (1)                  0%
Average monthly customer
   revenue per access line     $   65.07     $   61.53                    6%     $    64.46    $    64.04 (2)                  1%

(1) For the six months ended June 30, 2007, the calculation excludes CTE and GVN data and excludes the $38.7 million favorable one-time impact from the first quarter 2007 settlement of a switched access dispute. The amount is $81.82 with the $38.7 million favorable one-time impact from the settlement.

(2) For the six months ended June 30, 2007, the calculation excludes CTE and GVN data.

                                  NETWORK ACCESS EXPENSES

                             For the three months ended June 30,              For the six months ended June 30,
                         -------------------------------------------  ---------------------------------------------------
      ($ in thousands)
      ----------------     2008       2007     $ Change    % Change      2008         2007        $ Change    % Change
                         ---------- --------- ----------- ----------  ------------ ------------  ----------  ------------
      Network access     $ 53,998   $ 53,678      $ 320        1%      $ 114,547    $ 105,075     $ 9,472          9%


Network access  expenses for the three months ended June 30, 2008 increased $0.3
million, or 1%, as compared with the prior year period.

Network  access  expenses for the six months ended June 30, 2008  increased $9.5
million,  or 9%, as  compared  with the prior year  period,  as a result of $9.8
million  in  additional   network  access  expenses  due  to  the  CTE  and  GVN
acquisitions.

                            OTHER OPERATING EXPENSES


                                  For the three months ended June 30,                     For the six months ended June 30,
                           -----------------------------------------------------  --------------------------------------------------
($ in thousands)
----------------               2008          2007       $ Change      % Change       2008         2007      $ Change     % Change
                           ------------  ------------  -------------  ----------  ------------ -----------  -----------  -----------
Wage and benefit expenses     $ 95,317      $100,500      $  (5,183)        -5%     $195,463     $200,328     $ (4,865)        -2%
Severance and early
  retirement costs                 480         1,594         (1,114)       -70%        3,371        1,776        1,595         90%
Stock based compensation         3,145         2,038          1,107         54%        6,164        5,445          719         13%
All other operating
  expenses                     103,391       109,256         (5,865)        -5%      200,599      195,106        5,493          3%
                           ------------  ------------  -------------              ------------ -----------  -----------
                              $202,333      $213,388      $ (11,055)        -5%     $405,597     $402,655     $  2,942          1%
                           ============  ============  =============              ============ ===========  ===========

Wage and benefit expenses
Wage and benefit expenses for the three months ended June 30, 2008 decreased $5.2 million, or 5%, as compared to the prior year period, primarily due to headcount reductions and associated decreases in compensation and benefit expenses attributable to the integration of the back office, customer service and administrative support functions of the CTE and GVN operations acquired in 2007.

Wage and benefit expenses for the six months ended June 30, 2008 decreased $4.9 million, or 2%, as compared with the prior year period. Wage and benefit expenses increased $1.9 million as a result of the CTE and GVN acquisitions. All other wage and benefit expenses decreased $6.8 million for the six months ended June 30, 2008, as compared with the prior year period, primarily due to headcount reductions and associated decreases in compensation and benefit expenses from the integration of functions, as described above.

Included in wage and benefit expenses is pension and other postretirement benefit expenses. These costs for the six months ended June 30, 2008 and 2007 were approximately $3.2 million and $6.6 million, respectively. Based on current assumptions and plan asset values, we estimate that our 2008 pension and other postretirement benefit expenses will be approximately $5.0 million to $10.0 million and that no contribution will be made by us to our pension plan in 2008. In future periods, if the value of our pension plan assets decline and/or projected pension and/or postretirement benefit costs increase, we may have increased pension and/or other postretirement benefit expenses.

Severance and early retirement costs
Severance and early retirement costs for the three months ended June 30, 2008 decreased $1.1 million as compared with the prior year period, primarily due to CTE related charges recorded in the second quarter of 2007.

Severance and early retirement costs for the six months ended June 30, 2008 increased $1.6 million as compared with the prior year period, primarily due to charges recorded in the first half of 2008 related to employee early retirements and terminations for 42 Rochester, New York employees.

Stock based compensation
Stock based compensation for the three months ended June 30, 2008 increased $1.1 million, or 54%, as compared with the prior year period, due to costs associated with the recently adopted long-term incentive program.

Stock based compensation for the six months ended June 30, 2008 increased $0.7 million, or 13%, as compared with the prior year period, due to costs associated with the recently adopted long-term incentive program, partially offset by reduced costs associated with stock units and stock options, since we have fewer stock option grants that remain unvested compared to the prior year period.

All other operating expenses
All other operating expenses for the three months ended June 30, 2008 decreased $5.9 million, or 5%, as compared with the prior year period, primarily due to the expense savings realized by our acquisitions of Commonwealth and Global Valley. All other operating expenses for the six months ended June 30, 2008 increased $5.5 million, or 3%, as compared with the prior year period, primarily due to the additional expenses of $10.5 million resulting from the CTE and GVN acquisitions, as 2008 includes six months of expenses for CTE and GVN while 2007 includes approximately four months for CTE and no costs for GVN.

                                        DEPRECIATION AND AMORTIZATION EXPENSE


                           For the three months ended June 30,                For the six months ended June 30,
                         ------------------------------------------  -------------------------------------------------
      ($ in thousands)
      ----------------      2008      2007     $ Change    % Change      2008         2007        $ Change   % Change
                         ---------- --------- ----------- ---------  ------------- -----------   ---------  ----------
   Depreciation expense   $ 98,367  $ 93,286     $ 5,081        5%      $ 193,512   $ 179,933    $ 13,579          8%
   Amortization expense     45,883    47,176      (1,293)      -3%         91,818      82,710       9,108         11%
                         ---------- --------- -----------            ------------- -----------   ---------
                          $144,250  $140,462     $ 3,788        3%      $ 285,330   $ 262,643    $ 22,687          9%
                         ========== ========= ===========            ============= ===========   =========

Depreciation and  amortization  expense for the three months ended June 30, 2008
increased  $3.8  million,   or  3%,  as  compared  to  the  prior  year  period.
Depreciation  and  amortization  expense for the six months  ended June 30, 2008
increased  $22.7  million,  or 9%,  as  compared  with the  prior  year  period.
Depreciation  and  amortization  expense for the six months  ended June 30, 2008
increased $25.3 million as a result of our 2007  acquisitions of CTE and GVN and
includes  amortization  expense related to the customer base acquired in the CTE
and  GVN  acquisitions  and  the  Commonwealth  trade  name.   Depreciation  and
amortization  expense  for the six months  ended June 30,  2008  decreased  $2.6
million,  as compared  with the prior year period,  primarily due to a declining
net asset base for our legacy Frontier  properties,  partially offset by changes
in the remaining useful lives of certain assets.  An independent  study updating
the estimated  remaining useful lives of our plant assets is performed annually.
We adopted  the lives  proposed  in the study  effective  October  1, 2007.  Our
"composite  depreciation  rate" increased from 5.25% to 5.45% as a result of the
study. We anticipate  depreciation  expense of  approximately  $375.0 million to
$385.0 million and amortization  expense of $180.0 million to $185.0 million for
2008.

  INVESTMENT AND OTHER INCOME (LOSS), NET/INTEREST EXPENSE/INCOME TAX EXPENSE

                              For the three months ended June 30,            For the six months ended June 30,
                          ------------------------------------------  -------------------------------------------------
($ in thousands)
----------------             2008      2007     $ Change    % Change      2008        2007         $ Change  % Change
                          --------- ---------- ----------- ---------  ------------- ----------    ---------  ----------
Investment and
 other income (loss), net $  6,393   $ (6,517)   $ 12,910      198%      $   5,158   $   3,500     $   1,658        47%
Interest expense          $ 90,710   $ 98,649    $ (7,939)      -8%      $ 181,570   $ 192,613     $ (11,043)       -6%
Income tax expense        $ 21,874   $ 25,573    $ (3,699)     -14%      $  48,502   $  67,261     $ (18,759)      -28%

Investment and other income (loss), net
Investment and other income (loss), net for the three months ended June 30, 2008 increased $12.9 million, or 198%, as compared with the prior year period, primarily due to the loss on retirement of debt of $17.1 million during the second quarter of 2007, partially offset by a decrease of $7.0 million in income from short-term investments of cash.

Investment and other income (loss), net for the six months ended June 30, 2008 increased $1.7 million, or 47%, as compared with the prior year period, primarily due to a reduction in the loss on retirement of debt of $11.9 million and the $4.0 million expense of a bridge loan fee recorded during the first quarter of 2007, partially offset by a decrease of $16.4 million in income from short-term investments of cash.

Our average cash balance was $211.0 million and $832.3 million for the six months ended June 30, 2008 and 2007, respectively.

Interest expense
Interest expense for the three months ended June 30, 2008 decreased $7.9 million, or 8%, as compared with the prior year period, primarily due to the amortization of the deferred gain associated with the termination of our interest rate swap agreements and lower average debt levels. Our average debt outstanding was $4,757.9 million and $5,064.5 million for the three months ended June 30, 2008 and 2007, respectively.

Interest expense for the six months ended June 30, 2008 decreased $11.0 million, or 6%, as compared with the prior year period, primarily due to the amortization of the deferred gain associated with the termination of our interest rate swap agreements and retirement of related debt during the first quarter of 2008, along with slightly lower average debt levels. Our average debt outstanding was $4,758.8 million and $4,887.3 million for the six months ended June 30, 2008 and 2007, respectively. Our composite average borrowing rate as of June 30, 2008 as compared with the prior year was 31 basis points lower, decreasing from 7.94% to 7.63%.

Income tax expense
Income tax expense for the three and six months ended June 30, 2008 decreased $3.7 million, or 14%, and $18.8 million, or 28%, respectively, as compared with the prior year periods, primarily due to changes in taxable income and the reduction in income tax expense of $7.5 million recorded in the second quarter of 2008 that resulted from the expiration of certain statute of limitations on April 15, 2008. The effective tax rate for the first six months of 2008 was 32.4% as compared with 38.3% for the first six months of 2007. Our cash taxes paid for the six months ended June 30, 2008 were $49.6 million, an increase of $2.2 million from the first six months of 2007. We expect to pay approximately $100 million to $110 million for the full year of 2008. Our 2008 cash tax estimate reflects the currently estimated impact of the "Economic Stimulus Act of 2008."

As a result of the expiration of certain statute of limitations on April 15, 2008, the liabilities on our books as of December 31, 2007 related to uncertain tax positions recorded under FASB Interpretation No. (FIN) 48 were reduced by $16.2 million in the second quarter of 2008. This reduction lowered income tax expense by $7.5 million, goodwill by $3.0 million and deferred income tax assets by $5.7 million during the second quarter of 2008.