David Whitehouse SVP, Finance, Treasurer Maggie Wilderotter - Chairman, CEO Don Shassian - EVP, CFO

Tom Seitz - Lehman Brothers Chris King - Stifel Nicolaus Mike McCormack - JP Morgan Ana Goshko - Banc of America Securities Jason Armstrong - Goldman Sachs Frank Louthan -, Raymond James & Associates Michael Rollins - Citigroup Investment Research

Good day, everyone and welcome to the Frontier Communications second quarter earnings results conference call. This call is being recorded. At this time, I would like to turn the call over to Mr. David Whitehouse. Please go ahead, sir.

Thank you, Rochelle. Good morning, everyone. The purpose of this call is to discuss 2008 second quarter results for Frontier Communications which were released this morning. If anyone needs a copy of the materials, please contact Lisa Lombardo at 203-614-5064. We anticipate the Form 10-Q will be filed later this week. On today's call are Maggie Wilderotter, Chairman and Chief Executive Officer, and Don Shassian, Chief Financial Officer. During this call, we will be making certain forward-looking statements, in particular on matters related to 2008 results and estimates. Please review the Safe Harbor language found in our press release and SEC filings. On this call, we will be discussing GAAP and non-GAAP financial measures as defined under SEC rules. In our earnings release and on our website, www.frontieronline.com, we have provided a reconciliation of non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP. Please refer to this material during our discussion. I will now turn the call over to Maggie.

Thanks, David. Good morning, everyone. We appreciate you joining us today, as we discuss the second quarter 2008 results for the newly renamed Frontier Communications Corporation. On July 31, we commemorated our official name change by ringing in our new FTR ticker symbol at the New York Stock Exchange. Frontier Communications had a solid second quarter of 2008. Revenues were $563 million with adjusted operating cash flow, or EBITDA, of $307 million. The Company generated free cash flow of $97 million for the quarter, and had a comfortable dividend payout ratio of 60% for the first six months of 2008. In addition, we repurchased another 8.1 million shares as part of our 2008 share repurchase program. As of June 30, only four months after initiation, we have completed 56% of our target $200 million program. Our continued success at Frontier is due in great part to our results-oriented corporate culture. Our employees are driven every day by quantifiable goals that we have categorized into people, product and profit objectives. Frontier's focus on profit is well documented. Our expense management and return on capital yielded world class adjusted EBITDA margins of 54.5% for the second quarter. Several high profile initiatives underway at Frontier will translate into $20 million to $25 million in cross reductions throughout 2008 and into 2009. These projects include our ongoing billing consolidations, lease cost routing programs, and a variety of process improvement projects. Furthermore, these reductions are above and beyond the $40 million of synergies we have previously outlined with respect to our Commonwealth acquisition. Our continued successful execution of cost reduction programs gives us great confidence in our ability to achieve our stated 53% to 56% EBITDA margin targets. With respect to our product initiatives, we are very pleased with our new Yahoo!/Frontier co-branded home page agreement that was announced yesterday. This agreement provides Frontier with an advertising revenue share for search activity and display advertising. Yahoo!'s velocity of advertising is much greater than our current provider, Ask.com, so we expect to see Internet service revenue growth as a result of this new partnership. With the Yahoo! implementation, search opportunities are now available and our customer portal and through the Yahoo!/Frontier customized tool bar which is available on every one of our websites. In addition to the incremental revenue opportunities, we now have expanded web content and the full suite of Yahoo! global online products to enrich our customers' Internet experience. Full deployment of the Yahoo!/Frontier home page and search will be completed by the fourth quarter. We continue to invest in and leverage our own networks and to partner with others who have top notch networks or content so we can offer a broad spectrum of products and services to our customers. As in the past, our overarching goal is to accelerate customer revenue growth and increase our market share. As you will see in our financial statements this quarter, we are providing additional disclosure of our customer revenues as well as residential and business access line composition. Don will discuss these changes in greater detail. Although important, we don't believe access lines are the perfect singular metric anymore to gauge the performance of our business. We believe access lines when analyzed in conjunction with customer revenue from other products provide a better assessment of the performance of the Company. For the first half of 2008, we have grown our total customer revenue 4.6% over the same period in 2007. Furthermore, we have grown our business revenue by 7.2% for the same period. During the quarter, our high speed data customers increased by 16,300 to 559,300 representing a 3% increase from the previous quarter and a 16.7% increase over Q2 of 2007. Our revenue per high speed customer continues to be over $40 with residential broadband penetration increasing to 35.6%. We continue to focus on our dial-up conversion program in all markets and converted approximately 7,800 dial-up customers to broadband during the quarter. Our digital sound voice product bundles continued to gain strength during the quarter. We now have over 440,000 residential customers which represents an 18.3% quarterly increase and a 31.5% penetration of primary residential lines for this bundle. In particular, our recently added digital phone essentials package, which is a voice bundle that includes an access line, two features and 100 minutes of long distance, has gained additional traction accounting for 57,000 of the voice bundles and service at the end of the second quarter. Our ability to segment the market and offer appropriate products is a particularly valuable way to retain budget sensitive customers during today's challenging economic conditions. All digital phone customers commit to a one or two-year price protection plan. Our DISH sales remain strong. Total video customers are now 107,600 with 6,200 net new video customers added in the second quarter of 2008. This represents a 6.1% increase for the quarter and a 32.7% increase year-over-year. With respect to our wireless data rollout, we are up and running in 17 municipalities with 28 anchor tenants which are colleges, universities and hotels who pay us a monthly reoccurring revenue fee for use of the network. And we ended 2008 second quarter with 73 hot spots. The final update on the product front relates to the Peace of Mind product suite that I announced last quarter. To reiterate this concept, in March 2008 Frontier introduced a new suite of products aimed at managing a customer's computer environment and protecting residential and business customers against catastrophic computer melt downs. Since inception of the product offering, we have added more than 4,200 customers to the Peace of Mind bundle at a monthly reoccurring revenue price point ranging from $4.99 to $12.99. In addition to the Peace of Mind bundles sold, we continue to provide these services in an (inaudible) fashion. We had approximately 250 individual Peace of Mind services purchased during the quarter. Improving the customer experience is a top priority at Frontier. This quarter, we expanded weekend installation and service call hours, launched Frontier's two-hour appointment windows, a first for the industry, and enhanced dedicated state call center queues where customer calls are answered by call center representatives who are assigned to a specific state. This enables reps to become part of our local market teams and develop deep expertise on the state network, local offers, competition, and nuances of that state. We have launched state queues in West Virginia, California, Arizona and New York. The balance of our markets will be in state queues by the end of the year. On the people front, we hired 11 more general and local managers during the quarter in our markets. We now have 70 market clusters with top notch local leadership who are strengthening our engagement in our communities. Frontier has very strong relationships in the cities where we do business. It is a key competitive advantage for us. For example, in June Mayor Bob Duffy of Rochester, New York declared June 20 Frontier Day and gave us the keys to the city, all in recognition of the community support we provide to Rochester schools, organizations and businesses. And it's no different in our other markets. In light of higher gas prices, we have also enabled many of our employees to work four-day work weeks or work one day at home. Not all jobs at Frontier can allow for this flexibility, but we have tried to accommodate as many employees as possible. This will continue through Labor Day. In summary, we are pleased with our results for the second quarter of 2008 regardless of the macroeconomic environment around us. We stand firmly committed at Frontier to our mission of providing a unique customer experience, which we believe translates into stronger revenue opportunities through increased customer loyalty. At the end of the day, we are totally focused on the customer as the priority for the Company. Coupled with our expense control initiatives, we will continue to deliver robust free cash flow which will enhance shareholder value through steady dividends, ongoing share buybacks and long-term share appreciation. Now, here is Don Shassian, our Chief Financial Officer, to give you the financial overview for the second quarter. Don?

Thank you, Maggie, and thank you, everybody, for joining us this morning. Despite a host of adverse economic trends that potentially impacted our customers, we delivered another solid quarter with respect to revenues, operating cash flow, or EBITDA, and free cash flow. Quarterly revenues of $563 million were down slightly, 1.2% over the previous quarter, and down 2.8%, as compared to last year's second quarter. Our operating cash flow or EBITDA margin was 54.4%, and when excluding severance charges were 54.5%, comfortably within our stated quarterly target of 53% to 56%. Our free cash flow was $97 million for the quarter, which is seasonally lower than first quarter due to, one, the catch up in the second quarter of a quarterly tax payments and, two, increased capital expenditures in the quarter. Year-to-date, the Company generated $107 million of cash in excess of dividends with a dividend payout ratio of 60%. We have also given back to our shareholders over 100% of our free cash flow year-to-date by paying our dividends and buying back our stock. Before I get into the details of our performance for the quarter, I would also like to build on Maggie's comments about our enhanced disclosure of our revenue and access lines this quarter. Based on feedback from Wall Street analysts and investors we decided to break out revenue this quarter into several additional categories, customer revenue, both residential and business, and then regulatory revenue which is essentially our switched access and subsidy revenue. We have also provided detail on our access lines by residential and business customers. Our goal in doing so is to give better insight into the overall revenue of the performance of the Company recognizing that access lines are not the best or only metric to correlate with future revenue growth. For instance, while we have been experiencing reduced access lines every year our customer revenue, defined as all revenue except switched access and subsidy revenue, has slightly up or flat for the past several years. For the past six quarters, when including Commonwealth and our operations on a pro forma basis, our customer revenue has again been slightly up or flat on a sequential basis. And more specifically, our business revenue has seen revenue growth for the six month year-to-date period 2008 versus pro forma 2007 even with a net decline of business access lines. Turning to the economy, there are positive trends to look toward including the fact that our non-paid disconnects which did increase last year during the second and third quarters has sequentially declined the past two quarters. In addition, we are not seeing any further deterioration in our California market. Now, turning to our results, we continue to experience strong growth in data and non-switch access revenues, offset by reductions in federal and state subsidies and local services revenue. Our average revenue per access line for the quarter was $79.31, which is, again, up over the first quarter of 2008 and up 4% over last year's second quarter. Most noticeable is that our customer revenue ARPU is up 6% over last year's second quarter which demonstrates our consistent growth of what we term wallet share. Our total revenue for the second quarter of 2008 was down 2.8% over last year's second quarter and essentially flat for the same six-month year-to-date period in '07. It is important to note that last year's first quarter included the favorable one-time settlement of $38.7 million from a carrier dispute which is reflected in access revenues in '07. Excluding that settlement from our first quarter '07 revenues, our revenues in the first half of '08 increased 3.2% over 2007 driven by the full quarter results from our Commonwealth and Global Valley acquisitions. Our second quarter customer revenue was essentially flat, as compared to first quarter 2008 and down just 1% compared to second quarter '07, primarily due to lower CPE sales and slightly higher uncollectibles. Our second quarter data Internet revenues of $151.7 million increased $13 million, or 9.7%, compared to last year's second quarter driven by additional sales of high speed Internet and high capacity circuits like DS1s and DS3s. We added approximately 16,300 net high speed customers in the second quarter. This number is down slightly compared to first quarter due to lower promotional spending and seasonality but still quite strong and is actually higher than last year's second quarter net adds. Local service enhanced service revenue declined $2.5 million and 1.1% compared to the first quarter of '08. Our total access lines declined by approximately 45,400 during the quarter. Residential line losses were 36,700, a 2.4% unfavorable variance, as compared to the first quarter of '08. Our business line losses increased slightly to 8,700 for the same period due to a continuation of disconnects by the same three businesses we discussed in our last earnings call that began to downsize services and/or migrate to alternative communications services in the first quarter. Long distance, directory and other revenue was down $3.1 million compared to first quarter and down $5.6 million compared to last year's second quarter, primarily due to lower CPE sales and slightly higher uncollectibles. Access service revenue was down 6.3% over first quarter driven by our seasonal second quarter local switching support subsidy negative true up of $4.9 million. Access service revenues were down 11% over last year's second quarter due primarily to lower switch minutes of use and higher negative subsidy true up. Although, we spent less on promotions this quarter compared to the previous two quarters we, nonetheless, achieved solid results from our marketing activities. Results for the quarter were as follows, 16,300 new net high speed customers, our residential broadband penetration is 35.6% of residential customers, 6,200 new net video customers resulting in a penetration of 7.7% of residential customers with approximately 108,000 subscribers. 68,100 new digital phone voice bundles, which includes our national or state calling plans and our new digital phone essential bundles, resulting penetration is 31.5% of residential access lines, up from 26% in the prior quarter. On the expense side, we continue to demonstrate effective cost management. Reported operating cash flow EBITDA margin for the second quarter is 54.4% and after excluding $0.5 million charge for severance, our operating cash flow, or EBITDA margin was 54.5%. We continue to make great strides in controlling our expenses while increasing operational excellence. As I have discussed previously, Frontier is in the process of a major billing system consolidation project. At the time we closed Commonwealth in March of last year, we were operating with four separate billing systems. To say managing four building systems was rife with cost redundancies would be an understatement. With the four distinct systems, we had four IT groups supporting them, four sets of financial reports and four different call center customer service protocols to train our people on, just to name a few of the key overlaps. At September 2008, we will have the entire Frontier Company on one single billing platform. This milestone accomplishment will bring not only cost savings over the next 12 months, but most important we will gain competitive customer service enhancements through increased speed to market with new products, services and promotions, improve billing statements, and streamline customer service capabilities. Our capital expenditures in the second quarter were $75.7 million. Looking forward to the remainder of 2008, we do not see any increased upward pressure on our capital spending levels and reiterate our estimate for the year at $300 million to $310 million. Switching to our capital structure, our net debt to EBITDA ratio at quarter end was 3.7 times. We have no material debt maturities until 2011, and we will continue to explore opportunities to refinance the 2011 notes prior to maturity. We would also like to give you an update on the $200 million share repurchase program that we announced in February. During the second quarter, we repurchased 8.1 million shares for approximately $88 million. Since inception of the program, we have repurchased 10.4 million shares at a cost of approximately $113 million or 56% of our stated goal. Based on current market conditions, we anticipate this program will be completed well before year end 2008. I would like to reaffirm our free cash flow estimate for 2008 to be between $470 million and $495 million. In summary, we are very pleased with our performance during the second quarter. We also know that we must strive to do even better in light of the tough economic and competitive environment keeping our head down and focusing on long core strategy of retaining customers and growing customer revenue, our key as we advance through these challenging economic conditions for our customers. We will continue to prove our ability to increase high speed penetration and revenues through enhanced customer segmentation and promotions. We will continue to deliver best-in-class margins through laser sharp focus on expense management. We will continue to generate strong free cash flow to comfortably support our dividend and other return of capital initiatives, such as our share buyback program. With that, let me pass it back to Rochelle and ask her to open the call up to questions.

Thank you. (Operator Instructions) And our first question today will come from Tom Seitz with Lehman Brothers. Tom Seitz - Lehman Brothers: Hi. Good morning. Thanks for taking the question. Can you give us an update on your various video strategies? The DISH integrated box along with some of the other things you talked about previously? And then, secondly, can you talk a little bit more about small business? Don, you mentioned that the access line weakness in business was related primarily to the three larger customers. Some the other carriers have talked about weakness in [SMEE] and I just would like your take in general on the small business effort right now? Thanks.

Hi, Tom, it's Maggie. I will start and Don can pile on. On the video strategy front, we continue to focus on our DISH bundles and selling DISH also (inaudible) with our product sets as our primary video strategy at this point in time. We also see, though, from an Internet perspective the opportunity to offer video content in the future in packages. One of the things that we have been waiting for is what's called the combination box from the DISH Network. I had the opportunity to see a demonstration of that box just in the last 60 days. It's coming along and the goal is, from DISH to deliver that box in the first quarter of '09 for distribution into our markets. And we were pretty excited about that because the box provides IP as well as satellite television. So for the customer it's one user interface. It is an ability to access on the television set both your television content as well as any content that you want to watch on that TV coming from the Internet. So we can also customize that user interface from a Frontier perspective and brand certain content on that box Frontier. So it also gives us the opportunity to bring in local video content. I think as many of you recall, we have got a relationship with ESPN360 and over the last couple of years we have been videotaping different football games in our markets called Game On where our customers, through this 360 product, can actually watch those videos on their PCs. We think that is another great example of what we can deliver on the television set with this type of combo box. With regard to small business, we have 170,000 small businesses in our footprint. So we only had 8,000 medium and enterprise businesses. So it is the lion's share of our business customers. We have continued to see growth in the small business category. It grew again in the second quarter. And we have also really strengthened our engagement and the focus on small business. So we not only have telephone account management that interfaces with our small business customers, but we have launched across the country small business account executives for sort of the larger small businesses. We categorize the small businesses anywhere from two to 20 employees. So for that five to 20-employee category for higher growth small businesses, we are actually calling on those customers personally to help them get the right kind of product sets from Frontier for them running, managing and growing their business. So we feel very good about the engagement we have. We think it is an upside opportunity for us, and we have continued to see growth in that category.

And just to add on, Tom, on the small and SOHO side, particularly on the revenue side, we have seen growth in that revenue category the past six quarters. While there has been some increased competition, we are feeling very good about how we are dealing with our customers, bringing new products to market. Tom Seitz - Lehman Brothers: Great. Thank you very much.

And we will move on to Chris King with Stifel Nicolaus. Chris King - Stifel Nicolaus: Good morning. Quick question for you in terms of the regulatory revenue line item. In the first half of the year, it looks like you guys were down about 17% on that number while minutes of use were down only roughly 3% or so. I know you mentioned you had some one-time true-ups affecting that number. Just was wondering if there was anything else we should think about going into the second half of the year? Thanks.

Chris. The, specifically, even if you are looking sequentially, it is a decrease in minutes used, but there was a true-up of $4.9 million, as I mentioned in my comments. We have a local switching support true-up that occurs on the second quarter of every year. It was a little bit larger this year than it was last year. And there is no other fundamental there of any other issues for the most part. But there is a decrease of minutes use also impacting that. Chris King - Stifel Nicolaus: Has there been a step down at any particular state level in terms of access charges on a permanent of use basis that could account for the difference then?

We have got pressures and discussions in a number of states with some carriers who are challenging interstate access rates as all the carriers in this industry have. But there is nothing real fundamental that significantly impacted the quarter. Chris King - Stifel Nicolaus: Okay. Thank you.

Or that we see on a go-forward basis. Chris King - Stifel Nicolaus: Okay. Thank you very much.

(Operator Instructions) And we will move on to Mike McCormack with JP Morgan. Mike McCormack - JP Morgan: Thanks, guys. On DSL, you guys actually put up sort of a good quarter versus the other telecarriers that had trouble this quarter. Could you give us a sense for whether or not cable was perhaps less competitive or maybe an update on your promotional activities during the quarter? And, secondly, on D&A, just a technicality, I guess, but it was up a little bit sequentially, we weren't expecting that, Don. If you could just give us some color on that it would be great.

Hey, Mike. With regard to the high-speed Internet adds, of course, we are more competitive than cable and they are less competitive than we are. But we didn't really run any major promotions in the second quarter. We actually had one promotion where we partnered with NetFlix in certain segments where we offered some free NetFlix if you signed up for high speed in one of our bundles. But we also launched a high-speed light product set in the second quarter. In anticipation that we do have customers that are economically challenged, we wanted to keep them on high speed. So we did provide a 768K product at $19.99 for customers. And we did see very good take rate on that product set. Not necessarily customers downgrading to that product, but for new customers that were simply phone customers of ours coming on to that product just sort of an entree product. And I do think a lot of the growth has to do with the fact that we are very careful on the segmentation. We are very targeted in terms of what we are doing on high speed and we still see that there is pretty good growth opportunity in the markets.

On the depreciation, Mike, during the quarter there was an accelerated depreciation on one group of assets, a one-time increase in depreciation about $3.5 million. That will not reoccur. You will still see our depreciation in the ensuing quarters in the year will come back down to about $94 million, $95 million. And total for the year will be about $380 million approximately. Mike McCormack – JP Morgan: Great. Thanks, guys.

Thank you.

Thanks.

And next we'll move on to Ana Goshko with Banc of America Securities. Ana Goshko - Banc of America Securities: Hi. Thanks very much for taking the question. I have a couple. The first one is, I just wanted an update on the state of cable competition, where you are now in terms of the voice telephony rollout in terms of your footprint? What you might see or expect to see coming on in the next few quarters? And then more anecdotally, in your markets where the cable competition is kind of the most mature that, I guess, in Rochester and other areas it's been in place for a couple of years, do you see a decline in the pace of actually the churn that you are seeing? Is there a fatigue do you find on the part of your customers after watching the cable commercial for a couple of years that really it continues to taper off in terms of the losses?

Hi, Ana. Yes, with regard to cable competition, I think we have mentioned this on the last couple earnings calls that we were in the high 50% and we saw over the next 18 months or so going to about 65% competition. We are hovering right around 60% now from a competitive perspective where we have a voice cable competitor in our markets. And again, I think we are going to continue to see that inch up a bit based upon some of the secondary cable operators continuing to launch voice products, companies like Charter or Mediacom as examples. In the markets where we do have more mature cable competition, we have seen this as a pattern where when a cable operator first launches, there is pressure, of course, on our business. And then after probably about six months we see that taper off substantially. We actually start to see win backs, customers coming back on our service. And I think Rochester is a good example of that. It is a very stable environment. As a matter of fact, our net access line losses in that market have continued to decline over time. So, I do think that there is some level of fatigue with regard to people just switching for the sake of switching. I think in every marketplace you probably have about a 10% customer base that is more sensitive to the switching for promotion versus the rest of the base. Ana Goshko - Banc of America Securities: Okay. Great. And then the second question is for Don. It is on the leverage, so you are at 3.7. That's been pretty consistent for a couple of quarters now. And I know in the past you have said that ideally you would like to be at 3.2, 3.3. But there is a pretty clear trend among the [RLECs] that the equity multiples move in line with the leverage of multiples so those that as some of the [RLECs] have taken steps to increase their leverage the equity has responded. Would you say you are pretty comfortable now at the 3.7 level, 3.8 level and that is where we should expect to see you kind of remain given of the trade-offs with the equity? And then as a second part of that, you have both side you are willing to be opportunistic with regard to M&A. So I am wondering how comfortable you'd feel pushing the leverage if the right opportunity on the M&A front came up?

Ana, first of all, the leverage, we are at 3.7, exactly where we said we would be after Commonwealth. We would like to be a little bit lower. But as we looked at use of our free cash flow and look at where our stock price is and the cost of that, the dividends versus the after-tax costs of our interest, utilizing the excess residual free cash flow for buying back stock makes a lot more sense than buying back debt at this point in time. As markets would change, we would certainly re-evaluate that. But we want to be mindful of our balance sheet so we can use our balance sheet for acquisitions and be very careful about choices we make.

And the M&A opportunity?

M&A, I think we would -- would we lever up? I think, from our standpoint, we have a got a very strict qualitative and quantitative criteria to evaluate acquisitions. If we find the right acquisitions that we think help us improve our free cash flow per share, and we can finance it in a way that does not put a significant amount of risk on the balance sheet we are very aggressively going after those. If that would mean we would slightly increase our leverage up to four times we would certainly go ahead and do that knowing we have got a very, very strong probability of driving that back down as we integrate it and we use the cash to pay back that, and bring back that debt.

I would just echo what Don said. We will be opportunistic if it is the right transaction for us to do and it is accretive and we can get the synergies out of the business. We can lever up and then pay it down. Ana Goshko - Banc of America Securities: Great. Thank you very much.

And next we will move on to Jason Armstrong with Goldman Sachs. Jason Armstrong - Goldman Sachs: Thanks, good morning. Just maybe following up on the M&A question. We have heard some of the others this quarter talking about potentially going after the larger deals. Just saying that the process and the approval timing and public utility commission requirements are basically the same for a small and a large deal, hence, given all that you'd go after the large deal at this point. I was just wondering if you guys are sort of thinking about it the same way? And then lot of the comments that in answer to the prior question were sort of positioning you as the buyer, I am wondering if that is appropriate here for sort of sitting in the middle as potentially a buyer or potentially a seller? If you could just give us your perspective on that?

Hi, Jason. I would say a good example last year when we did the Commonwealth acquisition we also did the Global Valley acquisition. So I think if it's the right kind of acquisition, and we can make it work for our business and they can be tuck-in acquisitions, and we can get some good synergies out of those acquisitions or revenue growth, we will continue to look at small deals as well as large deals. We got approval in the State of California within 90 days. So we didn't really consider it a big overhead. We have great relationships in the states where we do business. Of course, larger deals are always better to do because you get more for the same process. But the larger deals have to be available. So, again, we will be opportunistic in looking at acquisitions. With regard to whether we are a buyer or a seller, I think from our perspective it is all about shareholder value. It is all about doing what is right for our shareholders and we would evaluate transactions either way. Jason Armstrong - Goldman Sachs: And, Maggie, on the smaller deals, is it -- similar to what you mentioned in the prior precedent from last year, it is sort of a key criteria just a very concentrated access line footprint where you only have to go through maybe one or two PUC approvals?

Absolutely. Absolutely. That would make the most sense. And again, it is about all of our criteria on acquisitions. I think Global Valley was a great example of a niche area in California where access lines were still growing. Actually, they are still growing today even with some of the challenges in California. That specific area has been very good from a revenue growth perspective. Jason Armstrong - Goldman Sachs: Okay. That's great. Maybe, second, totally unrelated question. You guys have done a good job offsetting the access line declines through creative upselling of existing customers. You talked this quarter about peace of mind and you talked yesterday about the Yahoo! front page. Can you help us think through the margin profile of this type of customer relative to your base? And is this something we should be thinking about, higher ARPU but lower margins as we think about longer term modeling of this company?

Jason, I don't think -- I think we've got revenue upside, the margins on these are still very, very healthy. The wireless data, the peace of mind. These are all nice supplemental incremental revenues that our customers can see buying the products from us. They look at us at being a reliable and independent and being expert on these things. So there is very, very handsome margins. Most of this is -- we are not looking at any significant reseller operations here which would result in significantly decreased margins. So, right now things we are looking at are still quite handsome on the margin side.

Yes, a good example. On the Yahoo! partnership which is a revenue share to us, we basically provide the right-of-way into the customer home through the portal, Jason. And Yahoo! pays us money. So it is all margin, if you look at it from that perspective. In addition, on the wireless data side, Don has mentioned this in the past, it is about a 70% margin for us on that type of a business. Peace of mind has very strong margins. So we are not just creative in terms of trying to address the customer need, but I think we can do it and add value and customers are willing to pay for that and it keeps us in the margin range that has been our target. That is really part of the discipline in terms of how we look at the business. Jason Armstrong - Goldman Sachs: That's great. Thanks, guys.

Thanks.

And next we will move on to Frank Louthan with Raymond James. Frank Louthan -, Raymond James & Associates: Great. Thank you. A couple of things. Can you give us an idea on the costs that you are taking out? Can you give us an idea where, some more ideas where specifically you are taking the costs out? What exactly do you think the impact is going to be from the billing system, which I suppose we will start to see on a quarterly basis, is that going to ramp up over the next 12 months or we will start to see that pretty immediately in the fourth quarter? And you mentioned some lease cost routing and I was just curious what that opportunity is? And then on the video side, was this, just wanted to see what your thoughts were as far as being able to sell video? Is this is a more difficult quarter to sell? Obviously, we saw DISH having some struggles. I am not trying to get a read-through on them, but just was curious, is the product more difficult to sell, what your experience was and how do you think that is going to be for the rest of the year as you try and get more customers on that bundle? Thanks.

On the cost side, there is many initiatives. The larger ones that we have talked about has been this billing system consolidation, lease cost routing. We also got some location streamlining of some processes in-house, and we saw some benefit from some of those in the second quarter. And now we will see those continuing in third quarter, fourth quarter into next year. There is about, from where we are today on second quarter's earnings and looking forward, there is approximately $15 million of expense activities that are to be implemented that will reduce our annual expenses on an incremental basis looking at second quarter numbers. Some of those, a little bit will happen in the third quarter. The billing system consolidation will be more fourth quarter and, I think, starting to see next year. But we are going to continue to implement these, as well as, a host of many others that a number of people in our organization are working on. But I think the best number I can give you at this juncture is about $15 million.

With regard to the video question, Frank, I think we had a solid strong quarter with the DISH Network in the second quarter. I think part of that is the product really hasn't changed. It is how you sell it. It is how you market it. It is how you bundle it. And I think for our customers, because we are the frontline and first line of defense for them from a service perspective, as well as, from a sales perspective and it is on our bill we are comfortable continuing to sell that product integrated with the rest of our products. So we really didn't see any issues even though we know DISH is struggling with some of their other initiatives. We also think the fact that they have just launched another satellite that was successful about 30 days ago, which will enable them to continue to be the leader in delivering high-definition in the market that is going to bode well for us. We also think because the results were soft, they are going to be aggressive on the promotion side, and we are going to take maximum advantage of every promotion they have because part of our deal is we get to launch those promotions at no cost to us in every one of our markets. So we still think it is a great product set. It is at the right price point for our customers, and we are going to leverage as much as we can on this contract. Frank Louthan -, Raymond James & Associates: Okay. Great. Thank you.

And next we will hear from Michael Rollins with Citi Investment Research. Michael Rollins - Citigroup Investment Research: Hi, good morning. I was wondering if you could give us an update on the USF front with a few respects? First, what your exposure as a percent of revenue currently? Secondly, what you are expecting on your regulatory front over the last few months of this year and heading into next year? And then third, can you tell us if you have been the subject of any of these inquiries that have been in some of the press reports and some of your peers' filings, and if you are, what your take is and what you expect will happen along those lines? Thanks.

Mike, first on all subsidy revenues for us is about 4.5% of our revenue, and that is both Federal and that is State and has a variety of components in there. The portion that we receive on a high-cost fund is substantially below that. I think it is about 2%, 2.5%. I will take a look at that in a second and verify it. But it is a relatively small amount that we have exposure to.

Hi, Michael. On the inquiry front, we did get a letter from a Congressional committee that's looking into USF. I think it has been in Washington, a lot of rhetoric was about USF, both at the Federal Communications Commission and on the Hill. Whether we are going to see anything come out of Congress on this, I am really not sure that is the case. It could be just pressure being put on the FCC. Part of the discussion is about do you shift funding over, or make funding available for broadband expansion in rural America. That is one of the issues that is being looked at. But the inquiry that we have gotten, it is about 10 questions on how much USF do we get and what is the level? What do we do with it? How do we spend the money-type questions. The answers are due at the end of August and, of course, we will comply with that and respond to the questions from the congressional inquiry.

High cost fund, Michael, is less than 1% for us. Michael Rollins - Citigroup Investment Research: And do you have any thoughts just in terms of where regulation could go separate from the inquiry, but where regulation for USF could go, whether there will be any resolution? I know there has been some proposals for reform in the past, and I would be curious for your latest update on that front?

We continue to follow what is happening in Washington, specifically at the FCC. That is where most of the dialogue has taken place in the past. We actually believe that any changes that happen to the USF structure would be positive for us. We don't really see anything that has been proposed as being negative for us. I think, as Don mentioned, we have less reliance on USF than a lot of other of our peers. But the system is broken in terms of how money gets taken out, in terms of how it is distributed, in terms of being the provider of last resort. So, we think any of the tightening that they actually do on the rules will benefit us, not hurt us. Michael Rollins - Citigroup Investment Research: Thanks for those details.

Yes.

And at this time there are no further questions. I will turn the call back over to your speaker for any additional or closing remark.

Thanks very much, Michelle. Thank you all for joining us. As we mentioned, we feel very good about the second quarter. We have got our heads down as we head into the third quarter and we look forward to speaking with all of you again after the third quarter as we do our earnings. Enjoy your summer.

And that will conclude today's call. We thank you for your participation.