Certain statements in this annual report on Form 10-K. We make available, free of charge, access to our Annual Report on Form 10-K Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, GCI's Proxy Statement on Schedule 14A and amendments to those materials filed or furnished pursuant to Section 13(a) or 15(d)constitute forward-looking statements within the meaning of the Private Securities and ExchangeLitigation Reform Act of 1934 as soon as reasonably practicable after we electronically submit such material1995, including statements regarding the Company's business, product and marketing strategies; new service offerings; revenue growth; the recoverability of the Company's goodwill and other long-lived assets; the Company's projected sources and uses of cash; renewal of licenses; the effects of regulatory developments; the Rural Healthcare Program; the new customer billing system and the anticipated impact of certain contingent liabilities related to legal and tax proceedings and other matters arising in the SEC.

These forward-looking statements and such risks, uncertainties and other factors speak only as of the date of this Annual Report, and the Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein, to reflect any change in our expectations with regard thereto, or any other change in events, conditions or circumstances on which any such statement is based.  When considering such forward-looking statements, you should keep in mind the factors described in Item 8 — Consolidated Financial Statements1A, "Risk Factors" and Supplementary Data.”other cautionary statements contained in this Annual Report.  Such risk factors and statements describe circumstances which could cause actual results to differ materially from those contained in any forward-looking statement.

    

We serveGCI Holdings serves many rural and remote Alaska locations solely via satellite communications. Each of our satellite transponders is backed up on alternate spacecraft with multiple backup transponders. We operateIt operates a hybrid fiber optic cable and digital microwave system (“TERRA”) linking Anchorage with the Bristol Bay, Yukon-Kuskokwim, and northwest regions of the state. 

Data ServicesLiberty Broadband consists of its wholly owned subsidiary Skyhook Holding, Inc. (“Skyhook”) and Products Competition

We expect to continue to provide, at reasonable pricesCharter is the second largest cable operator in the United States and in competitive bundles, a greater variety of dataleading broadband communications services than are available through other alternative delivery sources.  Additionally, we believe we offer superior technical performance and speed, and responsive community-based customer service.  Increased competition, however, may adversely affect our market share and results of operations from our data services product offerings.

The DBS industryCompany owns an approximate 23.5% economic interest in Liberty Broadband as of December 31, 2018. Due to overlapping boards of directors and management, the Company has been deemed to have significant influence over Liberty Broadband (for accounting purposes) even though the Company does not have any voting rights (see note 7 of the Company's consolidated financial statements found in Part II of this report for additional information). The Company has elected to apply the fair value option for its investment in Liberty Broadband as it is another majorbelieved that the Company’s investors value this investment based on the trading price of Liberty Broadband.

LendingTree operates an online loan marketplace for consumers seeking loans and other credit-based offerings. LendingTree offers consumers tools and resources, including free credit scores, that facilitate comparison-shopping for mortgage loans, home equity loans, lines of credit, reverse mortgage loans, auto loans, credit cards, personal loans, deposit accounts, student loans, small business loans and other related offerings. LendingTree primarily seeks to match in-market consumers with multiple lenders on its marketplace who can provide them with competing quotes for the loans, deposits or credit-based offerings they are seeking. LendingTree also serves as a valued partner to lenders seeking an efficient, scalable and flexible source of competition for our video services.  Two major companies, AT&T-owned DIRECTV and DISH DBS Corporation, are currently offering high-power DBS servicescustomer acquisition with directly measurable benefits, by matching the consumer loan inquiries it generates with these lenders. LendingTree is headquartered in Alaska.Charlotte, North Carolina.

Competitive forces may be counteracted by offering subscribers expanded programming.  We have retransmission agreementsThe Company owns approximately 26.6% of the outstanding common stock of LendingTree as of December 31, 2018. The Company has entered into an agreement with various broadcasters and provide for the uplink/downlink of their signals into certain of our systems, and local programming for our customers.  Additionally, our ownership of television stations provides us the opportunity to create unique content for our subscribers.

The principal effect of our facilities on the environment would be in the form of construction of facilities and networks at various locations in Alaska and between Alaska, Washington, and Oregon.  Our facilities have been constructed in accordance with federal, state and local building codes and zoning regulations whenever and wherever applicable.  We obtain federal, state, and local permits, as required, for our projects and operations. We are unaware of any material violations of federal, state or local regulations or permits.

Commercial mobile radio service wireless systems are subject to Federal Aviation Administration ("FAA") and FCC regulations governing the location, lighting, construction, modification, and registration of antenna structures on which ourGCI Holdings' antennas and associated equipment are located and are also subject to regulation under federal environmental laws and the FCC’s environmental regulations, including limits on radio frequency radiation from wireless handsets and antennas.

On April 27, 2016,December 1, 2017, the FCC released a ThirdFourth Report and Order to reform and modernize the USF’s Lifeline program ("Lifeline Order").  The Lifeline program is administered by the Universal Service Administrative Company ("USAC") and is designed to ensure that quality telecommunications services are available to low-income customers at just, reasonable, and affordable rates. The current Lifeline program provides an enhanced $25 monthly subsidy to qualifying subscribers that live on tribal lands ("Enhanced Tribal Subsidy"), which includes all of Alaska. The Lifeline Order adopted several reforms, including incentivizing and sometimes requiring broadband providersbut, most significantly, it limited the Enhanced Tribal Subsidy to offer fixed and/or mobile broadband service to Lifeline subscribers. Theonly those subscribers living in "rural" tribal areas. On February 1, 2019, the United States Court of Appeals for the D.C. Circuit ("D.C. Circuit") vacated the Lifeline Order also limitedas arbitrary and capricious, remanding the number of federal programs that confer Lifeline eligibility, and made small changesmatter to the requirementFCC for annual recertification of all Lifeline subscribers. Failure to correctly judge eligibility and recertify Lifeline subscribers could materially adversely affect our Lifeline revenues and/or increase our costs in the form of FCC fines for failure to comply with Lifeline rules.a new notice-and-comment-rulemaking proceeding.

See “Description“Narrative Description of Our Business by Reportable Segment — RegulationRegulatory Matters — Wireline Voice Services and Products — Regulatory Regime Applicable to IP-based Networks” for more information.

In addition, the Communications Act does not expressly preempt the states from regulating the “terms and conditions” of wireless service. Several states have invoked this “terms and conditions” authority to impose or propose various consumer protection regulations on the wireless industry. State attorneys general have also become more active in enforcing state consumer protection laws against sales practices and services of wireless carriers. States also may impose their own universal service support requirements on wireless and other communications carriers, similar to the contribution requirements that have been established by the FCC.

States have become more active in attempting to impose new taxes and fees on wireless carriers, such as gross receipts taxes. Where successful, these taxes and fees are generally passed through to customers and result in higher costs to customers.

At the local level, wireless facilities typically are subject to zoning and land use regulation. Neither local nor state governments may categorically prohibit the construction of wireless facilities in any community or take actions, such as indefinite moratoria, which have the effect of prohibiting construction. Pursuant to Section 6409(a) of the Middle Class Tax Relief Act of 2012, state and local governments are further constrained in their regulation of changes to existing wireless infrastructure. Nonetheless, securing state and local government approvals for new antenna structures has been and is likely to continue to be difficult, lengthy and costly.

The vast majority of users connect to the Internet over facilities of existing communications carriers. Those communications carriers are subject to varying levels of regulation at both the federal and state level. Thus, non-Internet-specific regulatory decisions exercise a significant influence over the economics of the Internet market.

Many aspects of the coordination and regulation of Internet activities and the underlying networks over which those activities are conducted are evolving. Internet-specific and non-Internet-specific changes in the regulatory environment, including changes that affect communications costs or increase competition from ILECs or other communications services providers, could adversely affect our costs and the prices at which we sellGCI Holdings sells Internet-based services.

On February 26, 2015, the FCC adopted an order reclassifying Internet service as a telecommunications service under Title II of the Communications Act. This order prohibitsprohibited broadband providers from blocking or throttling most lawful public Internet traffic, and from engaging in paid prioritization of that traffic.traffic, and from unreasonably interfering with or disadvantaging end users' and edge providers’ ability to send traffic to, from, and among each other. The order also strengthens itsstrengthened the FCC’s transparency rules, which require accurate and truthful service disclosures, sufficient for consumers to make

On March 15, 2018, USAC announced that the funding requests will for the firstyear that runs July 1, 2017 through June 30, 2018 exceeded the funding available for the RHC Program. Since that time, either meet or exceedon June 25, 2018, the program’sFCC issued an order resulting in an increase of the annual RHC Program funding cap from $400 million annual cap. We cannot predictto $571 million and applied it to the impactfunding year that ended on June 30, 2018. The FCC also determined that it would annually adjust the RHC Program funding cap for inflation, beginning with the funding year ending on June 30, 2019 and carry-forward unused funds from past funding years for use in future funding years. As a result, aggregate funding was available to pay in full the approved funding under the RHC program for the funding year ended on June 30, 2018.

In addition, on March 23, 2018, GCI Holdings received a separate letter of inquiry and request for information from the Enforcement Bureau of the FCC, to which it is in the process of responding. This inquiry into the rates charged by GCI Holdings is still pending, and presently it is unable to assess the ultimate resolution of this changematter. The ongoing uncertainty in program funding could have an adverse effect on its business, financial position, results of operations or liquidity.

The FCC has adopted rules to require cable operators to carry the digital programming streams of broadcast television stations. Further, the FCC has declined to require any cable operator to carry multiple digital programming streams from a single broadcast television station, but should the FCC change this policy, weGCI Holdings would be required to devote additional cable capacity to carrying broadcast television programming streams, a step that could require the removal of other programming services.

We haveGCI Holdings has completed negotiation and/or arbitration of the necessary interconnection provisions and the RCA has approved current wireline Interconnection Agreements between GCI Holdings and all of the major ILECs. We haveGCI Holdings has entered all of the major Alaskan markets with local access services.

See “Description“Narrative Description of Our Business by Reportable Segment — Wireline — Competition — Voice Services and Products Competition” for more information.

GCI Holdings undertakes activities that may, under certain circumstances, affect the environment. Accordingly, they may be subject to federal, state, and Domestic Operationslocal laws designed to preserve or protect the environment, including the Clean Water Act and Export Salesthe Emergency Planning and Community Right-to-Know Act.  The FCC, Bureau of Land Management, U.S. Forest

The principal effect of GCI Holdings' facilities on the environment would be in the form of construction of facilities and networks at various locations in Alaska and believe thatbetween Alaska, Washington, and Oregon.  GCI Holdings' facilities have been constructed in accordance with federal, state and local building codes and zoning regulations whenever and wherever applicable.  GCI Holdings obtains federal, state, and local permits, as required, for its projects and operations. GCI Holdings is unaware of any subdivisionmaterial violations of our operations into distinct geographic areas would not be meaningful.federal, state or local regulations or permits.

The national wireless carriers with whom the Company competes, AT&T and Verizon, have resources that are greater than the Company's resources.  These companies have significantly greater capital, financial, marketing, human capital, distribution and other resources than the Company.  Specifically, as a regional wireless carrier the Company may not expended material amounts duringhave immediate access to some wireless handsets that are available to these national wireless carriers. 

The Company competes for customers based principally upon price, service bundles, the last three fiscal yearsservices and enhancements offered, network quality, customer service, billing services, statewide network coverage and capacity, the type of wireless handsets offered, and perceived quality, reliability and availability.  The Company's ability to compete successfully will depend, in part, on company-sponsored research activities.its marketing efforts and its ability to anticipate and respond to various competitive factors affecting the industry.

GCI, LLC currently does not have any corporate employees. Liberty Media Corporation ("Liberty Media") provides GCI, LLC with certain management services pursuant to a services agreement between Liberty Media and GCI Liberty and certain of Liberty Media’s corporate employees and executive officers provide services to GCI, LLC for a determined fee. As of December 31, 2016,2018, the Company's consolidated subsidiaries had an aggregate of approximately 2,270 full and we arepart-time employees and the Company is not subjectparty to any collective bargaining agreementsunion contracts with ourits employees. We believe our future success will depend upon our continued ability to attract and retain highly skilled and qualified employees. We believeThe Company believes that its employee relations with our employees are satisfactory.good.

Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially and adversely affect ourthe business operations.operations of GCI Holdings, which we refer to as "GCI" in the following risk factors relating to the business of GCI Holdings.  Any of the following risks could materially and adversely affect our business, financial position, results of operations or liquidity.

There is substantial competition in the telecommunications and entertainment industries.  Through mergers, and various service integration strategies, and business alliances, major providers are striving to provide integrated communications services offerings within and across geographic markets.  We facestrengthen their competitive positions. GCI faces increased wireless services competition from national carriers in the Alaska market and increasing video services competition from DBS providers and over-the-top content providers who are often able to offer more flexible subscription packages and exclusive content.

We expect competition to increase as a result of the rapid development of new technologies, services and products.  We cannot predict which of many possible future technologies, products or services will be important to maintain ourGCI’s competitive position or what expenditures will be required to develop and provide these technologies, products or services.  OurGCI’s ability to compete successfully will depend on marketing and on ourits ability to anticipate

OurGCI’s wholesale customers including ourits major roaming customers may construct facilities in locations where they contract with usGCI to use ourits network to provide service on their behalf. We would experience a decline in revenue and net income if any of ourGCI’s wholesale customers constructed or expanded their existing networks in places where service is provided on ourGCI’s network. Some of ourGCI’s wholesale customers have greater access to financial, technical, and other resources than we do. We expectit does. GCI expects to continue to offer competitive alternatives to such customers in order to retain significant traffic on ourits network. We cannot predict whether such negotiations will be successful. OurGCI’s inability to negotiate such contracts could have a material adverse effect on our business, financial condition and results of operations.

We areGCI is in the business of selling communications and entertainment services to subscribers, and ourits economic success is based on ourits ability to retain current subscribers and attract new subscribers. If we areGCI is unable to retain and attract subscribers, its and our financial performance will be impaired.  OurGCI’s rates of subscriber acquisition and turnover are affected by a number of competitive factors including the size of ourits service areas, network performance and reliability issues, ourits device and service offerings, subscribers’ perceptions of ourits services, and customer care quality. Managing these factors and subscribers’ expectations is essential in attracting and retaining subscribers. Although we haveGCI has implemented programs to attract new subscribers and address subscriber turnover, we cannot assure you that these programs or ourGCI’s strategies to address subscriber acquisition and turnover will be successful. A high rate of turnover or low or negative rate of new subscriber acquisition would reduce revenuesrevenue and increase the total marketing expenditures required to attract the minimum number of subscribers required to sustain ourGCI’s business plan which, in turn, could have a material adverse effect on our business, financial condition and results of operations.

Some of ourGCI’s competitors have national networks whichthat enable them to offer nationwide coverage to their subscribers at a lower cost than weGCI can offer. The networks we operateGCI operates do not, by themselves, provide national coverage and weGCI must pay fees to other carriers who provide roaming services to us. Weit. GCI currently relyrelies on roaming agreements with several carriers for the majority of ourits roaming services.

The FCC requires commercial mobile radio service providers to provide roaming, upon request, for voice and SMS text messaging services on just, reasonable and non-discriminatory terms.  The FCC also requires carriers to offer data roaming services. The rules do not provide or mandate any specific mechanism for determining the reasonableness of roaming rates for voice, SMS text messaging or data services and require that roaming complaints be resolved on a case-by-case basis, based on a non-exclusive list of factors that can be taken into account in determining the reasonableness of particular conduct or rates.  If weGCI were to lose the benefit of one or more key roaming or wholesale agreements unexpectedly, weit may be unable to obtain similar replacement agreements and as a result may be unable to continue providing nationwide voice and data roaming services for ourits customers or may be unable to provide such services on a cost-effective basis.  OurGCI’s inability to obtain new or replacement roaming services on a cost-effective basis may limit ourits ability to compete effectively for wireless customers, which

Although the Communications Act of 1934, as amended, preempts state and local regulation of market entry and the rates charged by commercial mobile radio service providers, states may exercise authority over such things as certain billing practices and consumer-related issues.  These regulations could increase the costs of ourGCI’s wireless operations.  The FCC grants wireless licenses for terms of generally ten years that are subject to renewal and revocation. FCC rules require all wireless licensees to meet certain build-out requirements and substantially comply with applicable FCC rules and policies and the Communications Act of 1934, as amended, in order to retain their licenses.  Failure to comply with FCC requirements in a given license area could result in revocation of the license for that license area.  There is no guarantee that ourGCI’s licenses will be renewed.

Commercial mobile radio service providers must implement E911 capabilities in accordance with FCC rules.  While we believe that we are currently in compliance with such FCC rules, the failure to deploy E911 service consistent with FCC requirements could subject us to significant fines.

GCI uses tower facilities for the provision of its wireless services. The FCC, together with the Federal Aviation Administration,FAA, also regulates tower marking and lighting. In addition, tower construction is affected by federal, state and local statutes addressing zoning, environmental protection and historic preservation.  The FCC requires local notice in any community in which itan applicant is seeking FCC Antenna Structure Registrationantenna structure registration to build a tower.  Local notice provides members of the community with an opportunity to comment on or challenge the tower construction for environmental reasons.  This rule could cause delay for certain tower construction projects.

On January 4, 2018, the FCC released an order that returned to a Title I classification of Internet service and eliminated many of the requirements described above. There are various efforts in Congress, through the federal courts of appeal, and through state legislation to re-impose net neutrality requirements or some variation thereof. For example, on September 30, 2018, California enacted the California Internet Consumer Protection and Net Neutrality Act of 2018, which establishes many of the requirements adopted by the FCC in 2015. California has agreed not to enforce the new law pending the resolution of a petition for review of the FCC’s January 4, 2018 order in the D.C. Circuit, and any subsequent proceedings before the U.S. Supreme Court. We cannot predict howwhether the FCC or Congress will interpretre-impose the 2015 rules or apply its new rules.  In addition, although the FCC forbore from many of the provisions of Title II, we cannot predict how the FCC will interpret or apply the statutory provisions and regulations from which it did not forbear.some variation thereof. It is possible that the FCC could interpret or apply its newany re-imposed rules or “Title II” statutory provisions or regulations in a way that has a material adverse effect on ourGCI’s business, financial position, results of operations, or liquidity.  There also is a risk class action lawsuits arising under the provisions of Title II from which the FCC did not forbear could have similar negative impacts. 

Other existing federal regulations, currently the subject of judicial, legislative, and administrative review, could

The USF pays support to ETCs to support the provision of facilities-based wireline and wireless telephone service in high cost areas.  If weGCI were to lose ourits ETC status in any of the study areas where we areit is currently an authorized ETC whether due to legislative or regulatory reform or ourits failure to comply with applicable laws and regulations, weGCI would be ineligible to receive USF support for providing service in that area.  Loss of our ETC status could have an adverse effect on our business, financial position, results of operations or liquidity.

We receiveGCI receives support from each of the various USF programs: high cost, low income, rural health care, and schools and libraries.  This support was 24%, 19%, and 19%23% of ourthe Company's revenue for the years endedperiod following the date of the Transactions through December 31, 2016, 2015 and 2014, respectively.  We2018.  The support received by pre-Transaction GCI during prior years was comparable. GCI had USF net receivables of $92.0 million and $98.1$91 million at December 31, 2016 and 2015, respectively.2018.  The USF programs are subject to change by regulatory actions taken by the FCC, interpretations of or compliance with USF program rules, or legislative actions.  Changes to any of the USF programs that we participateGCI participates in could result in a material decrease in revenue and accounts receivable, which could have an adverse effect on GCI's business and the Company's financial position, results of operations or liquidity.

In November 2017, USAC requested further information in support of the rural rates charged to a number of our RHC customers in connection with the funding requests for the year that runs July 1, 2017 through June 30, 2018. On October 10, 2018, GCI received a letter from the Bureau notifying it of the Bureau’s decision to reduce the rural rates charged to RHC customers for the funding year that ended on June 30, 2018 by approximately 26% resulting in a reduction of total support payments of $27.8 million. The FCC also informed GCI that the same cost methodology used for the funding year that ended on June 30, 2018 would be applied to rates charged to RHC customers in subsequent funding years. In response to the letter from the Bureau, GCI filed an Application for Review of the Bureau’s decision with the FCC. In the third quarter of 2018, GCI recorded a $19.1 million reduction in its receivables balance as part of its acquisition accounting and recorded a reduction in revenue in the current period for the funding year that ended on June 30, 2018 of approximately $8.6 million. GCI expects to reduce future RHC program revenue by a similar rate as to the funding year that ended on June 30, 2018, which based on a current run rate would approximate $7 million per quarter until it can reach a final resolution with the FCC regarding the funding amounts.

As an ETC, we receiveGCI receives support from the USF to support the provision of wireline local access and wireless service in high cost areas. On August 31, 2016, the FCC published the Alaska High Cost Order which requires usGCI to submit to the FCC a performance plan with five-year and ten-year commitments.  If we areGCI is unable to meet the final performance plan milestones approved by the FCC weit will be required to repay 1.89 times the average amount of support per location received over the ten-year term for the relevant number of locations that weGCI failed to deploy to, plus ten percent of ourits total Alaska High Cost Order support received over the ten-year term. Inability to meet ourGCI’s performance plan milestones could have an adverse effect on ourits business, financial position, results of operations or liquidity.

Under the Alaska High Cost Order, the FCC adopted a process for revisiting after five years whether and to what extent there is duplicative support for 4G LTE service in rural Alaska and to take steps to eliminate such duplicative

We expect programming expenses for ourGCI’s video services to continue to increase in the foreseeable future.  The multichannel video provider industry has continued to experience an increase in the cost of programming, especially sports programming and costs to retransmit local broadcast stations. As ourGCI’s contracts with content providers expire, there can be no assurance that they will be renewed on acceptable terms or that they will be renewed at all, in which case weGCI may be unable to provide such content as part of ourits video services and our business could be adversely affected. If we addGCI adds programming to ourits video services or if we chooseGCI chooses to distribute existing programming to ourits customers through additional delivery platforms, weGCI may incur increased programming expenses.  If we areGCI is unable to raise ourits customers’ rates or offset such programming cost increases through the sale of additional services, the increasing cost of programming could have an adverse impact on our business, financial condition, or results of operations.

We expect our WirelineGCI’s voice services’ results of operations, which include long-distance and local access services, will continue to decline.  As competition from wireless carriers, such as ourselves,GCI, increases we expect ourGCI’s long-distance and local access services' subscribers and revenuesrevenue will continue to decline and the rate of decline may accelerate.

In 2011 and 2012 weGCI has entered into three separateseveral arrangements under the NMTC program with US Bancorp to help fund various phases of our TERRA-NWits TERRA project. In connection with the NMTC transactions weGCI received proceeds which were restricted for use on TERRA-NW.TERRA. The NMTCs are subject to 100% recapture of the tax credit for a period of seven years as provided in the Internal Revenue Code. We are required to be in compliance with various regulations and contractual provisions that apply to the NMTC arrangements.  We have agreed to indemnify US Bancorp for any loss or recapture of its $56.0$35.1 million in NMTCs plus interest and penalties until such time as our obligation to deliver tax benefits is relieved. Our obligation to deliver tax benefits is relieved in various stages from October 2019 through December 2019.2024. Non-compliance with applicable requirements could result in projected tax benefits not being realized by US Bancorp and could have an adverse effect on our financial position, results of operations or liquidity.

We testGCI tests and deploydeploys various new technologies and support systems intended to enhance ourits competitiveness by both supporting new services and featuresincrease the utility of its services. As GCI’s operations grow in size and reducingscope, it must continuously improve and upgrade its systems and infrastructure while maintaining or improving the costs associated with providing thosereliability and integrity of its systems and infrastructure. The emergence of alternative platforms such as mobile or tablet computing devices and the emergence of niche competitors who may be able to optimize products, services or features.  Successful implementation ofstrategies for such platforms will require new technologies and support systems depend,investment in part, on the willingness of third parties to develop new applications in a timely manner.  Wetechnology. GCI may not successfully complete the rollout of new technology and related features or services in a timely manner, and they may not be widely accepted by ourGCI’s customers or may not be profitable, in which case weGCI could not recover ourits investment in the technology.  There can be no assurance that GCI will be able to compete with advancing technology or introduce new technologies and systems as quickly as it would like or in a cost effective manner. Deployment of technology supporting new service offerings may also adversely affect the performance or reliability of ourits networks with respect to both the new and existing services.  Any resulting customer dissatisfaction could affect ourGCI’s ability to retain customers and may have an adverse effect on our financial position, results of operations, or liquidity. In addition to introducing new technologies and offerings, weGCI must phase out outdated and unprofitable technologies and services.  If we areGCI is unable to do so on a cost-effective basis, weGCI could experience reduced profits.

We offerGCI offers products and services to customers primarily throughout Alaska. Because of this geographic concentration, growth of ourGCI’s business and operations depends upon economic conditions in Alaska.  The economy of Alaska is dependent upon the oil industry, state government spending, United States military spending, investment earnings and tourism. Prolonged periods of low oil prices will adversely impactimpacts the Alaska economy, which in turn could have an adverse impact on the demand for ourGCI’s products and services and on our results of operations and financial condition.  OilLow oil prices have continued to remain low which has put significant pressure on the Alaska state government budget since the majority of its revenuesrevenue come from the oil industry. While the Alaska state government has significant reserves that we believe willcould help fund the state government, for the next couple of years, major structural budgetary reforms will need to be implemented in order to offset the impact of declininglower oil prices. The State of Alaska failed to pass a workable long-term fiscal plan during the 2016 legislative session. As a result, we plan to reduce our 2017 Alaska capital expenditure budget by 20% to 25% of the 2016 target of $210.0 million due substantially to the continued uncertainty of the ability of the State of Alaska to adopt and implement a workable long-term fiscal plan.

The Alaska economy is officially in a recession. If the recession continues, it could negatively affect our business including our financial position, results of operations, or liquidity, as well as our ability to service debt, pay other obligations and enhance shareholder returns.that started in late 2015. While it is difficult for us to predict the future impact of the continuing recession on ourGCI’s business, these conditions have had an adverse impact on GCI’s business and could continue to adversely affect the affordability of and demand for some of ourits products and services and could cause customers to shift to lower priced products and services or to delay or forgo purchases of ourits products and services.  One or more of these circumstances could cause our revenue to decline.  Also, ourAdditionally, its customers may not be able to obtain adequate access to credit, which could affect their ability to make timely payments to us.GCI.  If that were to occur, we could be required to increase our allowance for doubtful accounts, and the number of days outstanding for our accounts receivable could increase. If the recession continues, it could continue to negatively affect GCI’s business including our financial position, results of operations, or liquidity, as well as our ability to service debt and pay other obligations.

Additionally, theThe customer base in Alaska is limited and we haveGCI has already achieved significant market penetration with respect to our its

OurGCI’s technical infrastructure (including our communications network infrastructure and ancillary functions supporting ourits network such as service activation, billing and customer care) is vulnerable to damage or interruption from technology failures, power surges or outages, natural disasters, fires, human error, terrorism, intentional wrongdoing or similar events. As a communications provider, there is an increased risk that ourGCI’s technological infrastructure may be targeted in connection with terrorism or cyberattacks, either as a primary target, or as a means of facilitating additional attacks on other targets.

In addition, earthquakes, floods, fires and other unforeseen natural disasters or events could materially disrupt ourGCI’s business operations or ourits provision of service in one or more markets.  Specifically, the majority of GCI’s facilities are located in areas with known significant seismic activity. Costs we incurGCI incurs to restore, repair or replace ourits network or technical infrastructure, as well as costs associated with detecting, monitoring or reducing the incidence of unauthorized use, may be substantial and increase ourGCI’s cost of providing service. AnyMany of the areas in which GCI operates have limited emergency response services and may be difficult to reach in an emergency situation. Should a natural disaster or other event occur, it could be weeks or longer before remediation efforts could be implemented, if they could be implemented at all. Further, any failure in or interruption of systems that weGCI or third parties maintain to support ancillary functions, such as billing, point of sale, inventory management, customer care and financial reporting, could materially impact ourGCI’s ability to timely and accurately record, process and report information important to our business.  If any of the above events were to occur, weGCI could experience higher churn, reduced revenuesrevenue and increased costs, any of which could harm ourits reputation and have a material adverse effect on our business, financial condition or results of operations.

Additionally, our insurance may not be adequate to cover the costs associated with a natural disaster or terrorist attack.

Cyberattacks against ourGCI’s technological infrastructure or breaches of network information technology may cause equipment failures, disruption of ourits operations, and potentially unauthorized access to confidential customer data. Cyberattacks, which include the use of malware, computer viruses, and other means for service disruption or unauthorized access to confidential customer data, have increased in frequency, scope, and potential harm for businesses in recent years. It is possible for such cyberattacks to go undetected for an extended period of time, increasing the potential harm to ourGCI’s customers, our assets, and our reputation.

Some of the most significant risks to ourGCI’s information technology systems, networks, and infrastructure include:

If hackers or cyberthieves gain improper access to ourGCI’s technology systems, networks, or infrastructure, they may be able to access, steal, publish, delete, misappropriate, modify or otherwise disrupt access to confidential customer data. Moreover, additional harm to customers could be perpetrated by third parties who are given access to the confidential customer data. A network disruption (including one resulting from a cyberattack) could cause an interruption or degradation of service as well as permit access, theft, publishing, deletion, misappropriation, or modification to or of confidential customer data. Due to the evolving techniques used in cyberattacks to disrupt or gain unauthorized access to technology networks, weGCI may not be able to anticipate or prevent such disruption or unauthorized access.

The costs imposed on us as a result of a cyberattack or network disruption could be significant. Among others, such costs could include increased expenditures on cyber security measures, litigation, fines, and sanctions, lost revenuesrevenue from business interruption, and damage to the public’s perception regarding our ability to provide a secure service. As a result, a cyberattack or network disruption could have a material adverse effect on our business, financial condition, and operating results.

Video streaming services and peer-to-peer file sharing applications use significantly more bandwidth than traditional Internet activity such as web browsing and email. As use of these newer services continues to grow, ourGCI’s customers will likely use more bandwidth than in the past. Additionally, new wireless handsets and devices may place a higher demand for data on ourGCI’s wireless network. If this occurs, weGCI could be required to make significant capital expenditures to increase network capacity in order to avoid service disruptions, service degradation or slower transmission speeds for ourits customers. Alternatively, weGCI could choose to implement network management practices to reduce the network capacity available to bandwidth-intensive activities during certain times in market areas experiencing congestion, which could negatively affect ourits ability to retain and attract customers in affected areas. While we believe demand for these services may drive customers to pay for faster speeds, competitive or regulatory

We relyGCI relies heavily on ourits network equipment, communications providers, data and software to support all of ourits functions.  We relyGCI relies on ourits networks and the networks of others for substantially all of our revenues. We areits revenue. GCI is able to deliver services and serve ourits customers only to the extent that weit can protect ourits network systems against damage from power or communication failures, computer viruses, natural disasters, unauthorized access and other disruptions.  While we endeavorGCI endeavors to provide for failures in the network by providing back-up systems and procedures, weGCI cannot guarantee that these back-up systems and procedures will operate satisfactorily in an emergency.  Disruption to ourits billing systems due to a failure of existing hardware and backup protocols could have an adverse effect on our revenue and cash flow. Should weGCI experience a prolonged failure, it could seriously jeopardize ourits ability to continue operations.  In particular, should a significant service interruption occur, ourGCI’s ongoing customers may choose a different provider, and ourits reputation may be damaged, reducing ourits attractiveness to new customers.

OurGCI’s communications facilities include undersea fiber optic cable systems that carry a large portion of ourits traffic to and from the contiguous lower 48 states, one of which provides an alternative geographically diverse backup communication facility to the other.  OurGCI’s facilities also include TERRA and its extensions some of which are unringed, operating in a remote environment and are at times difficult to access for repairs.  If a failure of both sides of the ring of our undersea fiber optic facilities or of our unringed TERRA facility and its extensions occurs and we are not able to secure alternative facilities, some of the communications services we offer to our customers could be interrupted which could have a material adverse effect on our business, financial position, results of operations or liquidity.  Damage to an undersea fiber optic cable system or TERRA and its extensions could result in significant unplanned expenseexpense. If a failure of both sides of the ring of GCI’s undersea fiber optic facilities or GCI’s ringed TERRA facility and its unringed extensions occurs and GCI is not able to secure alternative facilities, some of the communications services GCI offers to its customers could be interrupted, which could have a material adverse effect on our business, financial position, results of operations or liquidity.

OurGCI’s communications facilities include satellite transponders that we useGCI uses to serve many rural and remote Alaska

We dependGCI depends on a limited number of third-party vendors to supply wireless, Internet, video and other telephony-related equipment.  If ourGCI’s providers of this equipment are unable to timely supply the equipment necessary to meet ourGCI’s needs or provide them at an acceptable cost, weGCI may not be able to satisfy demand for ourits services and competitors may fulfill this demand.  Due to the unique characteristics of the Alaska communications markets (i.e., remote locations, rural, satellite-served, low density populations, and our leading edge services and products), in many situations we deployGCI deploys and utilizeutilizes specialized, advanced technology and equipment that may not have a large market or demand.  OurGCI’s vendors may not succeed in developing sufficient market penetration to sustain continuing production and may fail.  Vendor bankruptcy, or acquisition without continuing product support by the acquiring company, may require usGCI to replace technology before its otherwise useful end of life due to lack of on-going vendor support and product development.

The suppliers and vendors on which we relyGCI relies may also be subject to litigation with respect to technology on which we depend,GCI depends, including litigation involving claims of patent infringement.  Such claims have been growing rapidly in the

As is typical in the communications industry, we areGCI is self-insured for damage or loss to certain of ourits transmission facilities, including ourits buried, undersea and above-ground fiber optic cable systems.  If we becomeGCI becomes subject to substantial uninsured liabilities due to damage or loss to such facilities, our financial position, results of operations or liquidity may be adversely affected.

We are currently implementingGCI recently implemented a new customer billing system, which involvesinvolved moving to a new third-party billing services vendor and platform in 2018. TheBecause the implementation was effected recently, the implementation may cause unforeseen major system or business disruptions or we may fail to implement the new billing system in a timely or effective manner.disruptions. In addition, the third-party billing services vendor may experience errors, cyber-attacks or other operational disruptions that could negatively impact usGCI and over which weGCI may have limited control. Interruptions and/or failure of this new billing services system could disrupt ourGCI’s operations and impact ourits ability to provide or bill for ourits services, retain customers, or attract new customers, and negatively impact overall customer experience. Any occurrence of the foregoing could cause material adverse effects on our operations and financial condition, material weaknesses in our internal control over financial reporting and reputational damage.

We have and will continue to have a significant amount of debt and lease obligations including capital, operating, and the tower obligationobligations (see Note 2 includednote 14 of the Company's consolidated financial statements found in "PartPart II - Item 8 - Consolidated Financial Statements and Supplementary Data"of this report for additional information). Our high level of debt and lease obligations could have important consequences, including the following:

We will continue to require a significant amount of cash to satisfy our debt service requirements and to meet other obligations.  As of December 31, 2018, we have outstanding approximately $2.4 billion of indebtedness. Our ability to make payments on and to refinance our debt and to fund planned capital expenditures and acquisitions will depend on our ability to generate cash and to arrange additional financing in the future.  These abilities are subject to, among other factors, our credit rating, our financial performance, general economic conditions, prevailing market conditions, the state of competition in our market, the outcome of certain legislative and regulatory issues and other factors that may be beyond our control.  Our business may not generate sufficient cash flow from operations and future borrowings may not be available to us in an amount sufficient to enable us to pay our debt or to fund our other liquidity needs.  We may need to refinance all or a portion of our debt on or before maturity.  We may not be able to refinance any of our debt on commercially reasonable terms or at all.

The indentures governing our Senior Notes and/or the credit agreements governing our Senior Credit Facility and other loans contain various covenants that could materially and adversely affect our ability to finance our future operations or capital needs and to engage in other business activities that may be in our best interest. For example, as of December 31, 2018, GCI, LLC exceeded the maximum leverage threshold, as measured by the terms of the Senior Notes, and therefore does not have access to any additional funding under the revolving portion of the Senior Credit Facility.

All ofThis restriction, along with these other covenants, may restrict our ability to expand or to pursue our business strategies.  Our ability to comply with these covenants may be affected by events beyond our control, such as prevailing economic conditions and changes in regulations, and if such events occur, we cannot be sure that we will be able to comply.  A breach of these covenants could result in a default under the indentures and/or the credit agreements.  If there were an event of default under the indentures and/or the credit agreements, holders of such defaulted debt could cause all amounts borrowed under these instruments to be due and payable immediately.  Additionally, if we fail to repay the debt under the Senior Credit Facility when it becomes due, the lenders under the Senior Credit Facility could proceed against certain of our assets and capital stock of our subsidiaries that we have pledged to them as security.  Our assets or cash flow may not be sufficient to repay borrowings under our outstanding debt instruments in the event of a default thereunder.

When our Senior Credit Facility and Senior Notes mature, we will likely need to refinance them and may not be able to do so on favorable terms or at all. In addition, if the 6.75% senior notes due 2021 are not refinanced prior to December 3, 2020, the full principal revolving credit facility included in the Senior Credit Facility will mature on that date. If we are able to refinance maturing indebtedness, the terms of any refinancing or alternate credit arrangements may contain terms and covenants that restrict our financial and operating flexibility.

Our borrowings under our Senior Credit Facility are at variable rates of interest and expose us to interest rate risk. If interest rates increase, our debt service obligations on the variable rate indebtedness could increase even though the amount borrowed remained the same, and our net income and cash flow could decrease.

In order to manage our exposure to interest rate risk, in the future, we may enter into derivative financial instruments, typically interest rate swaps and caps, involving the exchange of floating for fixed rate interest payments. If we are unable to enter into interest rate swaps, it may adversely affect our cash flow and may impact our ability to make required principal and interest payments on our indebtedness.

We had $526.3 million$1.4 billion of indefinite-lived intangible assets at December 31, 2016,2018, consisting of goodwill of $239.3$844.2 million, cable certificates of $191.6$305.0 million, wireless licenses of $92.3$190.0 million and broadcast licensesother intangibles of $3.1

If we make changes in our business strategy or if market or other conditions adversely affect our operations, we may be forced to record an impairment charge, which would lead to a decrease in our assets and a reduction in our net operating performance. Our indefinite-lived intangible assets are tested annually for impairment during the fourth quarter and at any time upon the occurrence of certain events or substantive changes in circumstances that indicate the assets might be impaired. If the testing performed indicates that impairment has occurred, we are required to record an impairment charge for the difference between the carrying value and the fair value of the goodwill and/or the indefinite-lived intangible assets, as appropriate, in the period in which the determination is made. The testing of goodwill and indefinite-lived intangible assets for impairment requires us to make significant estimates about our future performance and cash flows, as well as other assumptions. These estimates can be affected by numerous factors, including changes in economic, industry or market conditions, changes in underlying business operations, future operating performance, changes in competition, or changes in technologies. Any changes to key assumptions, or actual performance compared with those assumptions, about our business and its future prospects or other assumptions could affect the fair value, resulting in an impairment charge.

Implementing any further changes to GCI Holdings’ internal controls may distract its officers and employees and entail material costs to implement new processes and/or modify its existing processes. Moreover, these changes do not manufacture devices or other equipment sold by us, and we depend on our suppliers to provide defect-free and safe equipment. Suppliers are required by applicable law to manufacture their devices to meet certain governmentally imposed safety criteria. However, even if the devices we sell meet the regulatory safety criteria, we could be held liable with the equipment manufacturers and suppliers for any harm caused by products we sell if such products are later found to have design or manufacturing defects. We cannot guarantee that we will be fully protected against all losses associated witheffective in maintaining the adequacy of GCI Holdings’ internal controls, and any failure to maintain that adequacy, or consequent inability to produce accurate financial statements on a product that is found to be defective.timely basis, could harm our business.

Additionally, there are safety risks associated withFederal legislation, including the useSarbanes-Oxley Act of wireless devices while operating vehicles or equipment. Concerns over any2002, encourages the adoption of various corporate governance measures designed to promote the integrity of corporate management and the securities markets. Some of these risks and the effect of any legislation, rules or regulations thatmeasures have been and may be adopted in response to legal requirements. Others have been adopted by companies in response to the requirements of national securities exchanges on which their securities are listed. Among the corporate governance measures that are required under the rules of national securities exchanges are those that address board of directors' independence and audit committee oversight.

We are a limited liability company under Delaware law and our sole member, GCI Liberty, rather than a board of directors, manages our business. Meaning that we do not have any independent governing body. In addition, we have not adopted corporate governance measures such as the implementation of an audit committee or other independent governing body. It is possible that if we were to appoint a board of directors and include one or more independent directors and adopt some or all of these risks could limitcorporate governance measures, there may be somewhat greater assurances that internal corporate decisions were being made by disinterested directors and that policies had been implemented to define responsible conduct. However, our sole member has the ability to sellmake decisions regarding transactions with related parties and corporate actions that could involve conflicts of interest. In addition, our wireless services.Chief Executive Officer and President, Gregory B. Maffei, is the Chief Executive Officer and President and a director of GCI Liberty. Investors should bear in mind our current lack of independent directors, the positions with GCI Liberty that are held by Mr. Maffei and corporate governance measures in formulating their investment decisions.

GCI Holdings' properties do not lend themselves to description by location of principal units.  The majority of ourGCI Holdings' properties are located in Alaska.  

We leaseGCI Holdings leases most of ourits executive, corporate and administrative facilities and business offices. OurGCI Holdings' operating, executive, corporate and administrative properties are in good condition. We consider ourGCI Holdings considers its properties suitable and adequate for ourits present needs and they are being fully utilized.

Our Wireline and Wireless segments haveGCI Holdings' properties that consist primarily of undersea and terrestrial fiber optic cable networks, switching equipment, satellite transponders and earth stations, microwave radio, cable and wire facilities, cable head-end equipment, wireless towers and equipment, coaxial distribution networks, connecting lines (aerial, underground and buried cable), routers, servers, transportation equipment, computer equipment, general office equipment, land, land improvements, landing stations and other buildings.  See Note 5 includednote 2 of the Company's consolidated financial statements found in “PartPart II — Item 8 — Consolidated Financial Statements and Supplementary Data”of this report for moreadditional information on ourits properties. Substantial amounts of ourGCI Holdings' properties are located on or in leased real property or facilities.  Substantially all of ourGCI Holdings' properties secure ourthe Senior Credit Facility.  See Note 7 includednote 9 of the Company's consolidated financial statements found in “PartPart II — Item 8 — Consolidated Financial Statements and Supplementary Data”of this report for moreadditional information on ourthe Senior Credit Facility.

The Company is involved in various lawsuits, billing disputes, legal proceedings, and regulatory matters that have arisen from time to time in the normal course of business.  Management believes there are no proceedings from asserted and unasserted claims which if determined adversely would have a material adverse effect on ourthe Company's financial position, results of operations or liquidity.

Not Applicable.