Positive first results for Surewest Advanced Digital TV

ROSEVILLE, Calif. — SureWest Communications (Nasdaq: SURW) today announced operating results for the first quarter ended March 31, 2010.

In late January, SureWest launched the new Advanced Digital TV (ADTV) powered by Microsoft Mediaroom platform throughout the Sacramento market. The company initiated a soft launch to test the product’s performance in the field, and then rolled out an aggressive sales and marketing campaign mid-quarter to very positive results. At quarter-end, over 3,200 Advanced Digital TV video RGUs were added, representing 14% of overall video RGUs in the Sacramento market, with all new video customers receiving the product since its launch. Compared to the previous video platform, monthly recurring revenues for Advanced Digital TV were 12% higher, premium network take rate for channels like HBO, Showtime and Starz was 37% higher and high definition TV take rate was 33% higher. Notably, 71% of all Advanced Digital TV customers subscribed to SureWest’s HD package. New Advanced Digital TV subscribers, including current customer conversions, require a new 12-month agreement.

The expectation is for positive growth in video RGUs in coming quarters and average revenue per user (ARPU) increases as the promotional periods phase out.

Broadband – Residential Video:

                    3/31/2010  3/31/2009      Chg  Chg %  12/31/2009     Chg  Chg %
                    ---------  ---------  -------  -----  ----------  ------  -----
Marketable Homes*     261,900    236,500   25,400    11%     240,500  21,400     9%
RGUs                   58,600     60,000  (1,400)    -2%      59,100   (500)    -1%
Penetration*            22.4%      24.4%    -2.0%    -8%       23.7%   -1.3%    -5%
ARPU                      $69        $65       $4     7%         $68      $1     2%

* Marketable Homes – Prior to Q110, video marketable homes and penetration rate included serviceable homes in Sacramento and Kansas City fiber and hybrid fiber coax (HFC) networks only. With launch of ADTV in Q110, certain copper homes became video serviceable and 3-play capable and are included in marketable home counts. Penetration rates prior to Q110 were not adjusted for small number of video customers on copper network prior to ADTV.

During the quarter, SureWest extended its ability to provide video service to 21,300 existing voice and data homes over its copper network in the Sacramento region. By the end of the second quarter, another 4,000 will be video serviceable. Together with the 22,000 fiber-to-the-home marketable passings in the ILEC, these copper network video upgrades now offer the company an opportunity to provide a superior triple-play bundle to over 50% of its ILEC market.

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