10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 ___________________________________________

FORM 10-K

  ___________________________________________

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2011

or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 1-34243

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tw telecom inc.

(Exact name of Registrant as specified in its charter)

 ___________________________________________

Delaware	84-1500624
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

10475 Park Meadows Drive

Littleton, CO 80124

(Address of principal executive offices)

(303) 566-1000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of exchange on which registered
Common Stock $.01 par value	Nasdaq Stock Market

Securities registered pursuant to Section 12(g) of the Act: None

 ___________________________________________

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES  x    NO  o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.YES  o    NO  x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.YES  x    NO  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).YES  x    NO  o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§232.405) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check one):

Large accelerated filer x Accelerated filer o Non-accelerated filer o Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act.)    YES  o    NO  x

As of June 30, 2011, the aggregate market value of the registrant’s voting stock held by non-affiliates was approximately $3.0 billion, based on the closing price of the registrant’s common stock on the NASDAQ Stock Market reported for such date. Shares of common stock held by each executive officer and director have been excluded since those persons may under certain circumstances be deemed to be affiliates. This determination of executive officer or affiliate status is not necessarily a conclusive determination for other purposes.

The number of shares outstanding of tw telecom inc.’s common stock as of January 31, 2012 was 150,006,831 shares.

DOCUMENTS INCORPORATED BY REFERENCE

Certain information required in Part III of this Annual Report on Form 10-K is incorporated herein by reference to our definitive proxy statement for the 2012 Annual Meeting of our stockholders, which we will file with the U.S. Securities and Exchange Commission on or before April 30 2012.

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

This document contains certain “forward-looking statements,” within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, including statements regarding, among other items, our expected financial position, expected capital expenditures, the impact of the economic downturn, activities and results, expected revenue mix, expected revenue growth, the impact of accounting changes, future tax benefits and expense, expense trends, future liquidity and capital resources, product plans, growth or stability from particular customer segments, building penetration plans, the effects of consolidation in the telecommunications industry, anticipated customer disconnections and customer and revenue churn, Modified EBITDA trends, expected network expansion and grooming, potential changes in certain accounting reserves and allowances and business and financing plans. These forward-looking statements are based on management’s current expectations and are naturally subject to risks, uncertainties, and changes in circumstances, certain of which are beyond our control. Actual results may differ materially from those expressed or implied by such forward-looking statements.

The words “believe,” “plan,” “target,” “expect,” “intend,” and “anticipate,” and expressions of similar substance identify forward-looking statements. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that those expectations will prove to be correct. Important factors that could cause actual results to differ materially from the expectations described in this report are set forth under “Risk Factors” in Item 1A and elsewhere in this report. In addition, actual results may differ from our expectations due among other things, to the timing of disconnections and service installations which may affect the extent to which those factors impact our results in a particular period, increased customer disconnections and churn, increased competition, inability to obtain rights to build networks into commercial buildings, the current or a future economic downturn which may adversely affect our revenue growth or EBITDA, delays in launching new products that our customers desire, decreased demand for our products, further declines in the prices of and revenue from our services due to competitive pressures, industry consolidation and other industry conditions, an ownership change that results in limitations on our use of net operating loss carryforwards (“NOLs”) under Section 382 of the Internal Revenue Code, increases in the prices we pay for use of facilities of incumbent local exchange carriers (“ILECs”), increased costs from healthcare reform and higher taxes or further deregulation of the ILECs that adversely affects the cost and availability of ILEC facilities that we use to reach certain customer locations, and adverse regulatory rulings or legislative developments. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

TELECOMMUNICATIONS DEFINITIONS

In order to assist the reader in understanding certain terms relating to the telecommunications business that are used in this report, a glossary is included following Part III.

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INDEX

		PAGE
PART I
Item 1.	Business	4
Item 1A.	Risk Factors	18
Item 1B.	Unresolved Staff Comments	26
Item 2.	Properties	26
Item 3.	Legal Proceedings	26
Item 4.	Mine Safety Disclosures	26
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	27
Item 6.	Selected Financial Data	29
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	52
Item 8.	Financial Statements and Supplementary Data	53
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	53
Item 9A.	Controls and Procedures	53
Item 9B.	Other Information	54
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	56
Item 11.	Executive Compensation	56
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	56
Item 13.	Certain Relationships and Related Transactions, and Director Independence	56
Item 14.	Principal Accountant Fees and Services	56
	Glossary	57
PART IV
Item 15.	Exhibits and Financial Statement Schedules	60

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PART I

Item 1. Business

Financial Information

See Part II Item 8 for our financial results and information.

Overview

tw telecom inc. (together with its wholly-owned subsidiaries, “we” or the “Company”) is a leading national provider of managed network services, specializing in business Ethernet, data networking, Converged, IP-based virtual private network or "IP VPN", Internet access, voice, including voice over Internet Protocol or "VoIP", and network security services to enterprise organizations, including public sector entities, and carriers throughout the U.S., including their global locations. Our revenue is derived from business communication services, including data, high-speed Internet access, network and voice services.

Through our subsidiaries, we serve 75 U.S. metropolitan markets with our extensive fiber facilities that are connected by our regional fiber facilities and national IP backbone. As of December 31, 2011, our fiber network spanned approximately 27,000 route miles (including approximately 21,000 metropolitan route miles), connecting to 15,438 buildings served directly by our local fiber facilities. We continue to extend our fiber footprint within our existing markets by connecting our network into additional locations. We continue to expand our data, voice, and IP networking capabilities between our markets, supporting secure end-to-end business Ethernet, IP VPN and Converged solutions for customers.

Our principal executive offices are located at 10475 Park Meadows Drive, Littleton, Colorado 80124, and our telephone number is (303) 566-1000. Our Internet address is http://www.twtelecom.com. The information contained on our website is not part of, nor is it incorporated by reference into, this Annual Report on Form 10-K. Our Annual Report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K, and amendments to these reports are available on our website free of charge, as soon as reasonably practicable after we electronically file such material with, or furnish such material to, the Securities and Exchange Commission. In addition, we intend to disclose on our website, any amendments to or waivers from our Code of Ethics applicable to our principal executive officer, principal financial officer, chief accounting officer, controller and treasurer and other persons performing similar functions within four business days following the date of such amendment or waiver.

We amended our Restated Certificate of Incorporation to change our corporate name from Time Warner Telecom Inc. to tw telecom inc. in March 2008. On July 1, 2008, we began using tw telecom inc. as our name and tw telecom as our brand.

Business Strategy

Our objective is to be the leading national provider of high quality business network solutions by making access to our services "better, faster and easier" for our customers. We leverage our integrated network, operational capabilities, dedicated people, local presence, personalized customer experience and advanced support systems to meet the complex and evolving needs of our customers and increase stockholder value. The key elements of our business strategy include the following:

Leverage Our Local Presence on a National Scale with Global Reach. We leverage our local fiber assets and our multi-purpose national IP backbone as well as integrate and manage facilities from other carriers, domestically and globally, to enable our customers to connect to their locations with our network solutions. We have a local presence in our markets with sales, sales engineering, customer support and operational resources, backed by a national organization, to provide personalized service and customized solutions for our customers. These local resources are led by market-based general managers who have accountability for the growth, management and profitability of their local markets.

We believe that our local presence, local fiber based facilities, and national IP backbone enable us to:

• Offer flexible and scalable products;

• Focus on selling services in our local markets, and providing wide area solutions on a national basis with multi-site and multi-city end-to-end solutions for our regional and national customers;

• Provide a higher quality of service than other competitors;

• Realize a competitive advantage over non-facilities based providers;

• Realize higher margins than carriers that do not operate their own local fiber facilities; and

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• Provide a reliable and diverse network.

Focus Our Service Offerings to Meet the Complex and Evolving Needs of Our Customers. We deliver secure end-to-end managed solutions to our customers with predictable and reliable service quality that we believe is industry-leading. We design and deliver scalable and efficient solutions that enable our customers’ complex and evolving business applications. These solutions emphasize our data networking service offerings, which include IP VPN and an expanding portfolio of business Ethernet data products with Class of Service (which allows customers to assign different priorities to various traffic types) and our Converged service offerings comprised of data, Internet, voice, security, remote access and managed routers. We also continue to provide a broad range of traditional services including a dedicated network service portfolio with private line, special access and private transport networks, voice services, and secure Internet access with speeds up to 10 Gigabits per second (“Gbps”).

As the complex needs of our customers evolve and more of their critical applications are divided between their private networks, third party data centers and cloud providers, we are developing our Intelligent Network and service capabilities (see “Network and Facilities-Overview”) over the near and longer term to provide our customers using our business Ethernet and IP VPN services with:

• End-to-end visibility of network performance correlated to site-specific bandwidth utilization, or Enhanced Management, which launched in 2011 for IP VPN and Converged services and plan to extend to our business Ethernet services;

• Dynamic capabilities to manage flexible amounts of bandwidth on demand or scheduled bandwidth availability as needed, initially through our customer portal and in the future by incorporating automation with application interfaces; and

• The ability to manage and prioritize their applications running on the services we provide through portals or application interfaces.

We expect to provide additional intelligent capabilities and automation in the future so that our services will continue to meet our customers' evolving needs.

Deliver a Customer Care Strategy that Differentiates Us from Our Competitors. We approach customer care from the customer’s viewpoint with:

• Our people: We seek to engage all of our employees, whether directly or indirectly, in providing the best possible customer experience. Two-thirds of our employees have customer facing responsibilities,and we have established an internal rewards and recognition program to reward employees for the positive experience they deliver.

• Customized service interaction: We use a coordinated approach that leverages both local resources and our national operating centers to deliver personalized customer service, including providing timely status updates to resolve issues in the shortest possible timeframe. Customers choose the type of service interaction that works best for them: local, national, electronic or live support. Regardless of how a customer contacts us, we leverage technology - our Customer Insight and Action tool - to capture customer feedback and route it to the appropriate place for action. In addition, customers can customize their view of our web-based customer portal to quickly locate the information that is most important to them. My Portal is our tool to enable customer knowledge and decision making about their services. Customers can navigate through account information, network services, trouble tickets, network performance information, order status, billing and payment information either through self-service or with the support of our customer service personnel. We continue to develop additional functionality and enhancements that our customers request and that support our solutions.

• Voice of the customer: We listen to our customers by capturing feedback from customer interactions, customer survey responses and live customer insight panels that provide us with information on our customers' challenges and needs and continually incorporate their feedback to deliver a better overall customer experience to them.

We believe that our ongoing customer experience initiatives have improved our customer loyalty and retention, contributed to reductions in revenue churn and increased sales to existing customers. We plan to continue to innovate to enhance our customers’ experience and ease of doing business with us.

Enhance our Multi-Channel Sales Strategy. We take a multi-pronged approach to our sales strategy, which includes:

• Our direct sales channel, consisting of highly knowledgeable and tenured sales and technical support personnel who focus on medium to large enterprise customers in our local markets. Our direct customer segment sales structure supports national enterprises, public sector entities and carriers. We continue to expand our direct sales organization and to invest in tools, training and other initiatives to maximize sales productivity;

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• Our customer relationship specialists, who focus on sales to our smaller customers and increasing customer retention, freeing our primary sales force to focus on high potential existing and new customers; and

• Our indirect sales channel that extends our sales coverage in our markets by leveraging our representatives’ customer relationships. We continue to enhance our indirect sales channel in size and scope by adding selected representatives such as value added resellers, cloud providers and system integrators, whose capabilities complement our network service offerings, and expand the portfolio of services available for sale through this channel.

Leverage the Demand for Connectivity Created by the New Information Technology (“IT”) Environment to Enable Customers' IT and Business Strategies. This environment consists of developing cloud computing, collaboration, disaster recovery and data center strategies that our enterprise customers are adopting to advance their businesses. We are able to provide secure and highly reliable network connectivity, capacity and advanced network capabilities essential to enable these strategies by providing seamless solutions across our network from customers' on-network enterprise locations to data centers, cloud providers and hosting companies. We plan to continue to further leverage these demand drivers by providing network solutions to the data centers, cloud providers, hosting companies and other participants in this environment. We believe that these areas of growing demand have been and will continue to be drivers of our growth.

Broaden Our Reach and Capabilities to Position Us for Longer-Term Growth and Operational Scale by Employing our Disciplined Capital Allocation Strategy. Our strategy is to invest for growth for the near and long-term. We maintain a disciplined approach to capital spending to maximize revenue growth while maintaining attractive rates of return on capital invested to connect customers with our network. We continue to innovate and invest in our business throughout various economic cycles in order to position us for long-term growth. These investments enable us to expand our market opportunity, extend our fiber network and increase both our operational and product capabilities to meet our customers’ growing and complex needs. Elements of our strategy include:

• Success-based investments. The majority of our investments are success-based, driven by customer sales, and include costs to expand our fiber-connected buildings and add equipment and capacity to our network, which must meet certain financial return criteria. In addition to funding current customer opportunities, these investments increase the number of fiber connected buildings that we leverage for future growth. This category of investments is intended to reach their incremental return thresholds within the short to medium term.

• Long-term strategic investments. These investments fund geographic expansions within our markets, extension of our network into targeted locations, technological advancements of our network and product capabilities for future growth and enhancements to our back office support systems to increase employee productivity and enhance the customer experience. These investments include fiber construction, equipment purchases and IT system enhancements for product advancements and automation, among others, all of which have a longer term return on investment.

Invest in our People to Drive the Execution of our Strategies. We have invested in our highly skilled, professional workforce that we believe allows us to differentiate ourselves from our competitors, innovate our services, advance our customer experience initiatives and make the necessary technological advancements to meet the complex and evolving needs of our customers. We have a multi-faceted approach to ensure our human resources are well aligned, capable and engaged in executing on our strategic business objectives. Elements of our approach include:

• Developing strategies across the organization that prioritize our people investments;

• Enhancing our organizational effectiveness through organizational design, workforce and talent planning, change management and leadership development to maximize employee productivity and engagement;

• Optimizing our talent acquisition efforts through employment marketing, sourcing and recruiting to attract the best talent;

• Developing our talent by providing technical training for sales, operations and engineering resources, leadership and management training and detailed orientation programs to assure that we have skilled employees to remain an industry leader;

• Continually improving employee job performance through various performance management techniques and aligning annual employee goals with our corporate strategies; and

• Providing performance-based compensation  designed to incent and engage employees to execute on our business objectives and to create long-term stockholder value.

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Services

We deliver a portfolio of scalable, integrated and managed network solutions serving customers’ complex network needs and IT requirements. We are enhancing our services through the launch of the first phase of our Intelligent Network initiative, Enhanced Management services, which provide unique site-to-site network performance visibility. We plan to continue to enhance our Intelligent Network capabilities to enable our customers to better plan, manage and control their services and meet their next generation needs. Our current service portfolio includes data, Internet, Converged, network, voice and intercarrier services. Our revenue by major service categories for the years ended December 31, 2011, 2010 and 2009 was as follows:

	Years Ended December 31,
	2011				2010				2009
	(amounts in thousands)
Revenue:
Data and Internet services (1)(5)(6)	$	646,682	47	%	$	547,218	43	%	$	472,647	39	%
Network services (2)(6)	350,709		26		359,169		28		370,859		31
Voice services (3)(5)	338,655		25		332,870		26		333,274		27
Intercarrier compensation (4)	30,845		2		33,914		3		34,610		3
Total revenue	$	1,366,891	100	%	$	1,273,171	100	%	$	1,211,390	100	%

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(1) See Data Services, Internet Services and Managed Internet below.

(2) See Network Services below.

(3) See Voice Services below.

(4) See Intercarrier Services below.

(5) See Converged and Integrated Services below. Revenue from the voice components of converged and integrated services is included in the Voice services revenue category and revenue from all other components is included in the Data and Internet services revenue category.

(6) See Managed Services below. Collocation services are included in the Network services revenue category above. All other Managed Services are reflected in the Data and Internet services revenue category above.

We provide solutions to enterprise customers, ranging from small businesses to Fortune 500 enterprises, city, state and federal government entities, as well as carriers and other communication service providers. We continue to expand our service portfolio to meet our customers’ future networking demands, including new enterprise software applications, data storage, cloud computing, collaboration and security needs. Our primary service offerings are:

Data Services

Our data services enable customers to connect their locations and internal local area networks together into a single managed solution. From these capabilities, customers have options to manage an array of business and communication applications, including voice, Internet and other types of connectivity. We offer the following business Ethernet and IP VPN services:

Local Solutions

• Switched NLAN. A metropolitan business Ethernet solution that connects multiple locations in speeds up to 10 Gbps. Five Class of Service options are offered that allow customers to prioritize varying types of traffic by their business importance.

• Elite NLAN. A point-to-point metropolitan business Ethernet service which provides dedicated protected Ethernet transport service between two locations at bandwidth speeds up to 10 Gbps.

• E-Line. A business Ethernet private line and virtual private line service supporting point-to-point and point-to-multipoint customer configurations, available within most of our markets with speeds up to 10 Gbps.

Wide Area Solutions

• E-LINE. A business Ethernet private line and virtual private line service supporting point-to-point and point-to-multipoint customer configurations available between most of our markets with speeds up to 10 Gbps.

• Extended NLAN. Provides business Ethernet connectivity between the vast majority of the markets we serve and

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is available in either point-to-point or multi-point configurations, generally up to 1 Gbps, and includes Class of Service options.

• Regional Ethernet. Provides point-to-point private lines between select markets with the advantage of Ethernet interfaces.

• IP VPN Services. These services connect multiple customer sites by creating a virtual network for the customer within the U.S. and to approximately 65 other countries. Class of Service functionality is available with Premium IP VPN service. Connection speeds are available up to 1 Gbps.

• Managed IP VPN. A turnkey VPN solution that provides connectivity to our secure Multi-Protocol Label Switching IP VPN network with customer premise-based routers that we procure, configure, maintain and manage. The service includes active monitoring and alarming, on-site installation and hardware maintenance.

Converged and Integrated Services

• Converged Services fully integrate any combination of communication applications including IP VPN, voice, Internet, security and managed router service into a single managed IP solution available in our 75 markets and 50 additional markets across the U.S. where we have extended our reach to support local voice calling access. This solution is scalable from 1.5 Mbps to 1 Gbps, and enables each communication application to dynamically share all subscribed bandwidth. Converged services are available with Class of Service.

• Integrated Services. Our bundled integrated offerings enable customers to purchase a full array of access options that combine lines, trunks, long distance, and Internet services to provide an integrated service offering that can dynamically allocate bandwidth for maximum network efficiency, and eliminates the customer’s need for multiple vendors.

Internet Services

Our dedicated high capacity Internet service enables customers to access the Internet and other external networks. We offer a wide range of Internet services with bandwidth speeds ranging from 1.5 Mbps to 10 Gbps transported via Ethernet or traditional Time Division Multiplexing (“TDM”) connectivity. Our Ethernet Internet services are available using Ethernet connections with offerings from 2 Mbps to 10 Gbps. Our traditional TDM-based Internet services are available via industry standard transport facilities, with DS-1 to OC-48 connectivity.

Managed Internet

Our Managed Internet service provides a turnkey Internet solution that bundles our Internet services with customer premise-based routers that we procure, configure, maintain and manage for the customer. This managed service includes active monitoring and alarming, on-site installation and hardware maintenance.

Managed Services

We offer a suite of managed services that complement our data, Internet and Converged service offerings. These services allow our customers to reduce the overall management burden of their data systems and IT staff (also see Managed IP VPN and Managed Internet above):

• Enhanced Management. This is an interactive solution that gives customers detailed, site specific visibility into the performance of their IP VPN services through our customer portal (see "Customer Care") by providing real time data with respect to latency, packet delivery, and jitter correlated to their bandwidth utilization on their network from end to end.

• Managed Security Services. This service uses security devices placed within our network to establish a firewall to prevent unauthorized traffic from entering a customer’s network. We also offer a managed security solution through equipment placed at the customer’s premises that provides a firewall, in addition to optional secure sockets protocol or SSL, IP VPN, anti-virus, anti-SPAM and content filtration.

• Collocation Services. We provide secure space with controlled climate and power where customers can locate their equipment to connect to our network in facilities equipped for enterprise IT environmental requirements.

• Distributed Denial of Service Mitigation. This service monitors, identifies and mitigates denial of service attacks that flood the target network with high volumes of unauthorized traffic in an attempt to disrupt a customer’s business critical Internet-based applications.

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Network Services

We provide a complete range of network access services with transmission speeds up to 10 Gbps to satisfy our customers’ needs for voice, data, image and video transmission. Each service uses technologically advanced fiber optics and is available as:

• Private Line. Dedicated telecommunications lines connecting various locations of a customer’s operations, suitable for transmitting voice, data and Internet traffic among customer locations.

• Special Access. Dedicated telecommunications lines linking the points of presence (“POPs”) of one or more interexchange carriers (“IXC”), or between enterprise customers and the local POPs of IXCs.

• Transport Arrangements. Dedicated transport between the local exchange carrier (“LEC”) central offices and the IXC POP for voice and data applications.

• Metropolitan and Regional Connectivity. Each transport service is available on our local fiber network and most are available between cities on our inter-city, regional networks.

These services are available in a wide variety of configurations and capacities:

• Private Network Transport Services. A premium quality, fully redundant, and diversely routed service on Synchronous Optical Network (“SONET”) standards that is dedicated to the private use of individual customers with multiple locations.

• SONET Services. Full duplex transmission of digital data on SONET standards allowing multipoint transmission of voice, data or video over protected fiber networks. Available capacities include DS-1, DS-3, STS-1, OC-3, OC-12, OC-48 and OC-192.

• Dense Wavelength Division Multiplexing Services (“DWDM”). High capacity, point-to-point transmission services allowing customers to have access to multiple full-bandwidth channels of 2.5 Gbps and 10 Gbps.

Voice Services

Our voice services provide customers with local and long distance calling capabilities. We own, manage and maintain the switches to provide the services. Our voice services can be provisioned over TDM or as Voice over Internet Protocol (“VoIP”) and include the following:

• Access Trunks. These trunks, typically DS-1, are utilized by private branch exchange (“PBX”) customers that own and operate a switch on their own premises to provide access to the local, regional, and long distance telephone networks.

• Long Distance Service. Provides the capability for customers to place a voice call from one local calling area to another, including international calling, and is offered as a bundle with other voice and converged solutions as well as package plans for various committed levels of usage.

• Local Toll Service. Provides customers with a competitive alternative to ILEC service for intraLATA toll calls.

• Local Telephone Service. Local telephone calling areas are widely defined to provide ease of use for our customers. Additional features include operator and directory assistance services and custom calling features such as call waiting and caller identification.

• Business Access Line Service. Provides customers with quality analog voice grade telephone lines.

• IP Trunks. IP trunks provide voice services over an Ethernet connection and supports IP PBX devices and local and long distance calling to the public switched telephone network (“PSTN”).

Intercarrier Services

We are interconnected with other telecommunications carriers, which enables us to originate and terminate long distance calls and terminate local calls for other carriers.

• Switched Access Service. The connection between a long distance carrier’s POP and an end-user’s premises that is provided through the switching facilities of a LEC is referred to as switched access service. Switched access service provides long distance carriers with a switched connection to their customers for the origination and termination of long distance telephone calls or provides large end-users with dedicated access to their carrier of choice. Under our tariffs, we receive per-minute terminating switched access compensation when our network is used for the origination or termination of the carriers’ traffic.

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• Local Traffic Termination Services. Pursuant to interconnection agreements with other carriers, we accept traffic that originates on another LEC’s facilities and carry that traffic over our facilities to our customers in order to complete calls. Generally, under applicable regulations, we are entitled to receive compensation—referred to as “reciprocal compensation”—from the originating LECs for those services.

Network and Facilities

Overview. Our integrated network infrastructure combines physical fiber assets and equipment with software-enabled or "logical" capabilities that provide a cost effective platform for the layering of our services and enable us to manage our customers’ needs and to scale our customer service to support our customers. Our local, regional and national network utilizes advanced architectures and technologies to deliver high capacity and scalable network services. Our local markets are interconnected through our IP backbone utilizing multiple standard protocols and operate on fully redundant routers which enable us to deliver services between markets and to the public Internet.

We have designed and constructed our integrated network infrastructure over fiber rings generally using path diversity equipped with electronics that automatically re-route service if a network impairment such as a fiber cut occurs. Our integrated network supports our customers’ application needs through business Ethernet services using state of the art Ethernet network equipment or SONET based services, using traditional SONET networking equipment.

Our VoIP services utilize our packet based soft switches and media gateways located in our local markets. This equipment is smaller and more cost effective than traditional PSTN end office switches. Our soft switches are interconnected using a VoIP enabled, private IP backbone that operates on our foundational integrated network. Our VoIP network architecture also supports complex disaster recovery services for customers having mission critical voice requirements.

Our integrated network assets and architecture provide the foundation for evolving advanced capabilities that we refer to as the “Intelligent Network,” the first phase of which, Enhanced Management, was introduced in 2011 (see "Services--Managed Services"). As these capabilities evolve, we expect to provide customers with the ability to manage their own network services using decision making tools, including network performance information obtained through Enhanced Management, and planned service offerings to enable customers real time control over the properties of their service and the prioritization of their traffic on that service, either manually through our customer portal or using automation through application program interfaces.

As we replace legacy equipment in our network in the normal course to enable new services we have installed and plan to continue to install new equipment that is cost effective and significantly more energy and space efficient as part of our multi-faceted green initiatives. This new equipment conserves energy, lowers our costs, frees up valuable space in our central offices and avoids costly central office expansions. We continually evaluate new technologies, applications and suppliers to assure that we are aligned with next generation technologies, including those that are the most energy efficient.

Local Market Technical Overview. We serve our customers from central offices that are strategically positioned throughout our local markets. The central offices house the network equipment needed to interconnect customers with each other and with other local exchange, Internet and Ethernet networks. We deploy Ethernet switches, routers, soft switches, media gateways and other electronic network devices in our central offices that are configured with redundant electronics and power supplies capable of automatically switching to backup equipment in the event of hardware impairments or failures. This redundancy provides protection to our customers and helps to prevent service interruptions. We also install and manage our electronics on our customers’ premises to interface with their communications equipment.

Our network is interconnected with multiple ILECs, competitive local exchange carriers (“CLECs”), cable companies and interexchange carriers for voice services, and our network backbone is connected directly with several external networks to increase our network reach and access. We provide IP VPN service to international locations through arrangements with international network providers and provide a converged VPN solution to our customers’ locations outside of our network through the use of facilities provided by other carriers. We have peering and transit connections with external network vendors that provide our customers exit points from our network to the public Internet.

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Fiber Lease and License Agreements. We provide a substantial portion of our services entirely on fiber network facilities that we constructed, purchased from other providers or obtained through acquisitions. We also license fiber network facilities through indefeasible rights of use agreements or other similar long term licensing or leasing arrangements (collectively “IRUs”) from other CLECs and cable companies. We typically paid for these IRUs upfront, and they generally have terms lasting over 20 years. Similarly, our Capacity License Agreements with Time Warner Cable, Comcast Corporation and Bright House Networks, LLC (collectively, the “Cable Operations”), provide us with an exclusive right to use all of the capacity of specified fiber-optic cable owned by the Cable Operations in 23 markets for a term that expires in 2028. The Capacity License Agreements do not restrict us from constructing or licensing fiber-optic capacity from other parties in the markets where we license fiber network facilities from the Cable Operations.

Network.

The following map shows our 75 markets:

Network Monitoring and Management. We provide a single point of contact for our customers and consolidate our systems support and technical expertise for management of our customer and internal networks at our two network operations centers in metropolitan locations near Denver, Colorado and St. Louis, Missouri. These two centers offer capability for redundancy and overlap coverage for our customer networks. We provide 24 hours per day, 7 days a week surveillance and monitoring of networks to achieve a high level of network reliability and performance. Network analysts monitor real-time alarm, status, and performance information for network services, which allows us to react swiftly to repair network or service trouble. We continue to enhance our capabilities and programs that focus on network health and stability and enable us to address network issues before they impact our customers.

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Information Technology Solutions. We focus our efforts on creating and deploying applications, systems and technology that optimize our business and increase operational scale through the use of automation and customer self-service portals. We have invested in applications and systems that increase our workforce productivity and decrease human touch points. This strategy has also enhanced our ability to manage our customers' experience and increased the ease of doing business with us by making information available to our customers in a unified and comprehensive way. We blend the purchase of proven, commercially available software that can be tailored to our business processes, and in-house developed applications that conform to our architectural framework. We select systems that are flexible enough to conform to a rapidly changing environment, while being scalable and easily maintained and enhanced.

We continue to evaluate and implement new technologies and applications to further enhance the integration of our enterprise applications so that data flows efficiently and accurately between applications and manual touch points are minimized. Our systems utilize open system standards and architectures, allowing interoperability with third party systems and applications.

Information Systems Infrastructure. We maintain corporate data centers in Colorado and Texas to support our corporate applications and systems and provide redundancy for our critical corporate applications and systems. Each of our data centers is equipped with state of the art computing capability, storage networks and high availability corporate voice and data services. We use advanced server technology running virtual machine software that has increased computing capacity significantly while reducing environmental and space costs. We host and operate our own corporate private clouds, which provide cost efficient and reliable software and application services for our highly distributed user community. We manage our desktop technology assets, corporate voice and data services centrally to ensure consistency and compatibility between all corporate facilities. Our infrastructure also supports employee mobility and diversity of employee access points to systems to minimize productivity loss due to weather and other potential business interruptions.

Network Development and Application Laboratory. We have a laboratory that is equipped with advanced systems and equipment, including those we use in the operation of our network. The center is designed to provide a self-contained testing and integration environment, fully compatible with our network, for the purposes of:

• Verifying the technical and operational integrity of new equipment prior to installation in the network;

• Developing new services and applications;

• Providing a realistic training environment for technicians, engineers, and others;

• Providing a network simulation environment to assist in fault isolation and recovery; and

• Providing a network simulation environment to verify network load, scale, and overlay of our products and services.

Billing Systems. We utilize a single billing system that is interfaced directly into our operational support systems and financial systems for all of our services other than intercarrier compensation. This integrated billing environment increases customer bill accuracy and customer satisfaction. The billing system software is licensed from a billing vendor that develops feature enhancements for us as needed and handles the daily support and maintenance of the system, which operates on our computing hardware. We recently deployed a new usage collection and management application that gathers network services billing events and usage while creating a real time seamless stream of information that not only provides higher precision usage measurement and revenue tracking, but also provides the foundation for the Intelligent Network services billing.

Customers, Sales and Marketing

Customers. We serve both business enterprise and carrier customers. Our enterprise customers include businesses that are data and IT intensive and are primarily in financial services, technology and scientific, health care, distribution, manufacturing and professional services industries and public sector entities. Our carrier customers include ILECs, CLECs, wireless communications companies and cable companies. As of December 31, 2011, we served approximately 27,500 customers. For the year ended December 31, 2011, enterprise customers, carriers and intercarrier compensation represented 77%, 21% and 2% of total revenue, respectively, and no customer accounted for 5% or more of total revenue. Our 10 largest customers accounted for 20% of our total revenue for the year ended December 31, 2011, and are primarily carriers. As our enterprise customer revenue continues to grow at a greater rate than our carrier customer revenue, the percentage of our total revenue represented by the carrier customers has been declining.

Sales and Marketing. Our service offerings are part of a comprehensive portfolio of services and solutions designed to support the current and next generation needs of our customers. Our sales and marketing strategy emphasizes our:

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• Targeted market strategy focused on key industry verticals and large bandwidth applications originating from medium and large enterprises in proximity to our metropolitan fiber assets;

• Comprehensive suite of multi-site large bandwidth data solutions applying IP VPN and Ethernet technology;

• Evolving Intelligent Network capabilities adding visibility to network performance and customer control to our portfolio of data and managed services;

• Flexible multi-product managed Converged solutions that include voice, usage, Internet, data and network security services and managed customer premise routers;

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• Leading coordinated customer experience strategy, including local support in the customer’s city, a responsive national customer service orientation with strong network management capabilities and customizable self-service tools; and

• Tenured sales professionals and sales engineering professionals with network design capabilities.

We engage in direct local and national sales with specialized sales teams for enterprise, carrier and public sector customers. As of December 31, 2011, we had a total of 555 sales account executives and customer relationship specialists. To expand our sales coverage we continue to hire people strategically targeted at high opportunity markets and industries, and provide tools and training to increase the productivity of our new and existing sales and sales support personnel. Commissions for our sales representatives are linked to incremental revenue from services installed. We provide additional incentives for executing service contracts with terms of greater than one year, for certain products and for sales of services provisioned on our fiber facilities. Our customer relationship specialists focus on sales to smaller existing customers and increasing customer retention, freeing our primary sales force to focus on high potential existing and new customers.

Our indirect sales channel further expands our sales coverage by leveraging our representatives’ customer relationships and has increased its contribution to our revenue growth in 2011. In 2010, we enhanced this channel, enabling us to market our entire portfolio of services through experienced representatives such as value added resellers, cloud providers and systems integrators that provide services and equipment that complement our services.

Customer Care

We strive to deliver a consistent, differentiated, valuable customer experience through local and national support. Our local account representatives and customer relationship specialists work with local operations teams, central network operations centers and customer care teams to support our customers. We process customer requests to order, upgrade or change their services through our coordinated local and national support teams, including customer project personnel who coordinate service installations. Our customer service center is available to all of our customers to answer their questions regarding billing, order status or maintenance concerns. In addition, our network operations centers provide 24 hours per day, 7 days a week trouble reporting and surveillance and monitoring of networks to maintain network reliability and performance (see “Network Monitoring and Management”).

Our online customer care self-help platform, MyPortal, offers our customers self-service capabilities that support our customer experience strategy. MyPortal enables customers to easily register and choose various on-line capabilities including the ability to view and pay their bills, view orders, create and view billing disputes, receive scheduled maintenance notifications, alert us of their internal scheduled maintenance activities, create and view trouble tickets, create and view various accounts and enter certain types of service change requests. Customers can also access their own network performance and utilization data on a site and circuit level basis for certain services. Augmenting the self service capabilities of MyPortal is Enhanced Management, the first phase of our Intelligent Network initiative, providing our customers with greater visibility through MyPortal into their network performance with end-to-end performance metrics (see "Services--Managed Services"), including easy-to-use reports that improve customers' ability to troubleshoot, plan, and fine tune their networks for peak application performance.

Competition

We believe that the principal factors affecting competition in our industry are:

• Network capabilities and reach;

• Customer service and experience;

• Network and operational quality;

• Service offerings;

• Ability to provide customer specific solutions;

• Sales strategy;

• Integration of network and IT services;

• Pricing; and

• The regulatory environment.

We compete with other carriers primarily on service offering, network capabilities, service quality and customer service. In addition, we must price our services competitively with both the local market for those services and the market for national

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solutions. In our industry, technological advances and a competitive market have caused general downward pricing pressure on bandwidth over time. We also face significant price competition across our services, especially for integrated service bundles for small customers, long distance service, inter-city point-to-point services, POP to POP, data center to data center and POP to customer premise traditional dedicated services and Internet access, where multiple carriers are present. Competition varies across local markets and products which deliver national solutions, depending on the number and type of competitors in the market, their capabilities and the customer segment. We believe that the ILECs and some CLECs continue to be aggressive in pricing competition, particularly for large enterprise carrier and data center customers that we also target.

Our primary competition is from the ILECs, CLECs and cable companies. The ILECs, primarily AT&T Inc., Verizon Communications, Inc. and CenturyLink Inc., some of the other CLECs and, for smaller business customers, some cable companies, offer services that are substantially similar to some of those we offer. We believe that the ILECs have some competitive advantages over us because of their name recognition, technical capabilities, greater financial resources, broader geographic coverage, complementary IT service offerings and potential to bundle and subsidize services of the type we offer with revenue from other services. However, we believe that customers are increasingly interested in competitive facilities-based solution providers like us because of our flexibility in providing customer-specific critical business solutions, our robust data and IP capabilities, our enhanced service and operational capabilities, our interconnection with other carriers and diversity and our disaster recovery capabilities. Cable companies compete with us primarily for business customers that are generally smaller than our target market, and selectively for larger enterprise customers for less complex single market offerings. CLEC competition for smaller customers buying lower speed solutions has increased as a result of their lower cost offerings for solutions provided over existing copper facilities rather than fiber optic facilities.

We believe that our focus on customer service and our operational execution provides us with a competitive advantage with respect to ILECs, other CLECs and cable companies. Our extensive fiber facilities connecting to multiple buildings in each of our markets and between markets also provide us with a competitive advantage over most other CLECs that have limited capabilities to serve carrier POP and data center locations.

To the extent we interconnect with and use ILEC networks to service our customers, we depend on the technology and capabilities of the ILECs to meet certain telecommunications needs of our customers and to maintain our service standards. We also use ILEC special access services, unbundled network element (“UNE”) loops, ILEC and other providers' Ethernet loops, ILEC and other carriers’ long haul and local circuits to reach certain customer locations that are not served by our network. Although regulation of ILEC performance standards exists with respect to UNE loops, there is minimal regulatory oversight of the quality of ILEC special access and Ethernet services. We believe that certain ILECs’ lack of investments in their wireline businesses has adversely affected their service delivery intervals and service quality. We also depend on large Internet Service Providers ("ISPs") for Internet peering, which is unregulated, to allow our customers to connect with certain ISPs with which we do not directly connect. We interconnect with other VoIP providers to provide voice solutions outside of our service areas and we rely on carriers with international facilities to provide IP VPN connections in certain international locations. Our ability to compete for customer locations that we do not serve directly on our network is dependent in part on the quality and timeliness of service we receive from these other carriers and our ability to obtain their services at a reasonable cost.

Regulatory environments at the state and federal level differ widely and may have considerable impacts on our costs, opportunities and resulting investment decisions. Some regulatory decisions have or may in the future have negative or positive impacts on our revenue or expense and may favor certain classes of competitors over us (see “Regulatory Environment” below).

Seasonality

Although our business is not inherently seasonal in nature, historically our revenue and expense in the first quarter of the year have been impacted by some seasonal factors that may cause fluctuations from the prior quarter. First quarter installations and the associated revenue may be impacted by the slowing of our customers’ purchasing activities at the end of the fourth quarter. Our expenses also are impacted in the first quarter by the resetting of payroll taxes.

Regulatory Environment

Overview. As a certified competitive telecommunications provider, we are subject to regulation by the Federal Communications Commission (“FCC”), state regulatory authorities and local government agencies. In most areas, we are subject to a less comprehensive set of rules designed for non-dominant or competitive providers.

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ILECs typically operate under federal and state rules designed for dominant carriers. As competition has expanded, ILECs have gained some regulatory freedoms at both the federal and state levels. Because the larger ILECs are our major suppliers for local loops and are major competitors, we continue to advocate for meaningful regulatory oversight to promote competition and protect against unreasonable price increases.

Most of the former Regional Bell Operating Companies have sought regulatory freedom from pricing and access requirements applicable to them by requesting that the FCC forebear from regulating many of the products that are used by CLECs like us. To date, the FCC has granted forbearance requests for Ethernet and OC-n high capacity services while denying forbearance requests for all products in a particular geographical area.

More recently, regulators have focused on broadband issues. The FCC delivered its National Broadband Plan (the "Plan") to Congress in March 2010. This Plan sets an ambitious agenda to encourage more private innovation and investment to ensure the universal deployment of broadband. This Plan outlines a number of initiatives that will impact the telecommunications industry including a review of competitive policies and wholesale markets, allocation and management of government controlled assets such as rights of way and poles and reforms to universal service mechanisms. While the FCC has opened proceedings for most of the initiatives identified in this Plan, most are still in process and we cannot predict their impact on us.

Federal Regulation

Special Access. We purchase a substantial amount of special access services from ILECs to expand the reach of our network and also provide special access services to our customers over our fiber facilities in competition with the ILECs. We have advocated that the FCC modify its special access pricing flexibility rules to return these services to price–cap regulation to protect against unreasonable price increases for carriers such as us. If ILEC special access prices increase, our costs may increase but we may experience less pricing pressure on the special access services we sell. If ILEC price reductions were to occur, we would likely experience downward pressure on the prices we charge our customers for special access services and reductions in the prices we pay ILECs for special access services that we purchase.

The FCC is reviewing its regulation of special access pricing in a pending proceeding commenced in 2005 that has not yet resulted in proposed rules. We cannot predict when the FCC will act on interstate special access pricing regulation or the impact of any such action.

If the special access services we buy from the ILECs were to be further deregulated, ILECs would have a greater ability to continue to increase the price and reduce the service quality of special access services they sell to us. As the prices we must pay for special access services increase, our margins may be adversely affected.

Intercarrier Compensation and Universal Service Fund. Switched access is a component of intercarrier compensation that long distance carriers are charged to originate and terminate long distance calls using our local network. We also pay switched access charges to other carriers to originate and terminate our customers’ long distance traffic and pay intercarrier compensation to other carriers for traffic that our customers terminate on their facilities. Reciprocal compensation is the other component of intercarrier compensation that represents our charges to LECs for local exchange traffic terminated on our facilities that their customers originate and charges that we pay to LECs for our customers' local exchange traffic terminated on their facilities.

We and other carriers, are required to make contributions to the federal Universal Service Fund, which provides support to promote access to telecommunications services at reasonable rates for those living in rural and high-cost areas, income-eligible consumers, rural health care facilities, schools and libraries.

The FCC has been considering intercarrier compensation and universal service reforms since 2001. The FCC released an order on November 18, 2011, which establishes a transition of all terminating intercarrier compensation rates to “Bill and Keep,” meaning that the exchange of traffic would generate no revenue or expense, by July 2018, with intermediate step-downs over this period. Intercarrier compensation revenue, comprised of switched access revenue and reciprocal compensation revenue, represented 2% of our total revenue for the year ended December 31, 2011. As a result of this order, we expect that approximately half of this intercarrier compensation revenue will be eliminated by July 2018, with approximately $2.0 million of this reduction occurring in the second half of 2012. In a Further Rulemaking Notice, the FCC sought comment on, among other issues, the future regulatory treatment of originating switched access traffic, which includes toll-free (8XX) traffic originated on a carrier's network. We cannot predict the timing or outcome of these proposals.

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Pole Attachments. In a February 1999 order, the FCC allowed for increases to commingled cable and telephony pole attachment rates beginning in February 2001 that increased the fees we must pay to attach our fiber facilities to utility companies' poles. Under the FCC’s pole attachment regulations, cable companies were permitted to pay lower cable rates for pole attachments than the rates to which we and others are subject as telecommunications carriers for the provision of some of the same services, even though cable companies were increasingly competing with telecommunications carriers for certain broadband services. In April 2011, the FCC adopted reforms to its pole attachment rules to reduce costs and streamline the process for gaining access to pole attachments controlled by utility companies. Concluding that the prior disparity in pole attachment rental rates between cable television attachments and telecommunications attachments distorted incentives to invest in broadband infrastructure, the FCC adopted cost formula changes that would set the rate for telecommunications pole attachments at or near the rate paid by cable companies. In addition, the FCC adopted timelines by which utility companies must complete their survey and make-ready work to allow for requested attachments. We believe that these new rules will have a favorable impact on our pole attachment costs, will reduce previous cost advantages that favored cable competitors and improve the timeliness of our access to pole attachments. A number of utility companies have filed legal challenges to the rules in a federal appellate court. We and other telecommunications and cable television companies have filed petitions to intervene in the proceeding to support the FCC's position. We cannot predict the extent of the potential favorable impact on our costs or the timing and likely outcome of the challenge.

State and Local Regulation

We have obtained the required authorizations to provide intrastate telecommunication services in 41 states and the District of Columbia. These authorizations cover traditional voice services, private line services as well as switched access. Additionally, where we have placed facilities in the public right-of-way, we have obtained the necessary permits, licenses and or franchises from local authorities.

Intercarrier Compensation. Most states continue to have jurisdiction over pricing of intrastate switched access. Increasingly, states have been reassessing this pricing for both ILECs and CLECs. Currently, 14 states in which we provide switched services have benchmarking rules that limit the switched access rates that we charge other carriers. The recent FCC Intercarrier Compensation Order (see "Federal Regulation--Intercarrier Compensation and Universal Service Fund”) requires all intercarrier compensation rates to transition to Bill and Keep ending July 1, 2018. States will be responsible for ensuring that LECs reduce state switched access rates in accordance with the FCC Order.

Permits Licenses and Franchises. We may be required to obtain street opening and construction permits and other rights-of-way from municipal authorities in order to install and expand our network in certain municipalities. In some cities, our fiber licensors or subcontractors already possess the requisite authorizations to construct or expand our network. Any increase in the difficulty or cost of obtaining these authorizations and permits could adversely affect us, particularly in locations where we compete with companies that already have the necessary permits.

In some of the metropolitan areas where we provide network services, we pay right-of-way or franchise fees based on a percentage of gross revenue or other measures such as fees per linear foot of fiber that we install. Municipalities that do not currently impose fees may seek to do so, and renewals of existing franchises may result in increased fees. Under the Telecommunications Act of 1996 (the “1996 Act”), municipalities are required to impose such fees on a competitively neutral and nondiscriminatory basis. Municipalities that have fee structures that favor the ILECs may or may not conform their practices in a timely manner or without legal challenges by us or other CLECs. Moreover, ILECs with which we compete may be exempted from such local franchise fee requirements by previously enacted legislation that allows the ILECs to utilize rights-of-way throughout their states without having to pay franchise fees to local governments.

We are party to various regulatory and administrative proceedings in the ordinary course of business. Subject to the discussion above, we do not believe that these proceedings will have a material adverse effect on our business.

Employees

As of December 31, 2011, we had 3,051 employees compared to 2,975 employees at December 31, 2010.

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Item 1A. Risk Factors

The economic environment in the U.S. and globally could affect our future operating results.

Beginning in late 2007 and throughout 2008 and 2009, the unfavorable economic environment had varying degrees of impact on our business, reflected primarily in longer sales cycles, decreased sales and higher customer disconnections that dampened our revenue growth. Although there have been indications of economic recovery, there is no assurance that this recent trend will continue. If the economic recovery slows or stalls due to impacts from the European sovereign debt crisis, the handling of the U.S. deficit or other negative factors, there is risk that customer disconnections and bad debt may increase, prices and new sales may decline or sales may be delayed due to decreased demand for our services, customer cash flow constraints, customer credit deteriorations and other factors. Our operating results and financial condition could be materially and adversely affected if there were to be a material adverse change in any of these factors. Our revenue, margins and cash flow are subject to fluctuations in the ordinary course of business due to the timing of sales and installations, disputes and dispute resolutions, pricing declines upon contract renewals, expense and capital expenditures and seasonality in sales and usage-based services. A return to recession or a further slowing of economic recovery could amplify the effect of those normal fluctuations on our results. A slower economic recovery or recession could also impact key vendors that supply critical equipment and software or other goods and services that we rely upon in the provision of our services. There is no assurance that we could replace critical components with alternate providers on a timely and cost efficient basis if our key vendors experience a financial crisis.

We may be unable to sustain our revenue growth and increase our cash flow despite the implementation of several initiatives designed to do so.

We must grow our business and revenue in order to generate cash flow that, together with cash on hand and funds available under our credit facility, will be sufficient to fund our capital expenditures and our debt service requirements. We have pursued several growth initiatives, including:

• Increasing network investments in existing markets to expand our network reach and increasing our network reach through acquisitions;

• Launching new products and services, especially products and services that support customers’ data and IP needs;

• Targeting customer care initiatives to improve customer retention;

• Enhancing our ability to compete for multi-location customers;

• Systems investments;

• Increasing sales force productivity; and

• Advancing our network and systems to create increased efficiencies, capabilities and customer control over their services.

Our ability to manage and achieve the intended benefits of this expansion depends on many factors, including our ability to:

• Attract new customers and sell additional services to existing customers;

• Acquire and install transmission facilities and related equipment at reasonable costs;

• Employ new technologies and remain competitive with technologies adopted by competitors;

• Remain competitive against much larger, better-funded incumbent carriers;

• Enhance our financial, operating, and information systems to achieve the benefits of increased scale;

• Manage the cost and timing of our capital expenditure programs;

• Acquire facilities from other carriers at a reasonable price with acceptable service quality to serve customers that are not directly connected to our network; and

• Obtain required permits and rights-of-way.

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There is no assurance that our growth initiatives will continue to result in improvement in our results of operations. Factors such as customer disconnections and pricing declines upon contract renewals could adversely affect our ability to sustain revenue growth unless we can sell and install growing volumes of services to outpace those impacts. Prior to 2009, we incurred net losses even during periods of increasing revenue. Although we had net income in 2009, 2010 and 2011, certain factors could cause losses to occur in future periods including, among others, economic conditions, industry consolidations, decreased demand, customers disconnecting services, competition, regulatory and contractual rate reductions, revenue disputes, significant increases in our special access costs due to adverse regulatory changes or otherwise, other cost increases, catastrophic losses, increases in federal or state tax expense, changes in accounting standards or the impact of other risk factors.

The market for our services is highly competitive, and many of our competitors have significant advantages that may adversely affect our ability to compete with them.

We operate in an increasingly competitive environment, and some companies may have competitive advantages over us. Most ILECs offer substantially the same services that we offer, in some cases at higher prices and in some cases at lower prices. ILECs may in varying degrees benefit from:

• Their name recognition;

• Greater financial and technical resources;

• Larger networks and broader network coverage;

• The ability to provide internally other services that complement the services that they offer in competition with ours;

• Their wireless service offerings;

• The ability to leverage a customers’ total expenditures with them by providing lower prices for bundled service offerings and subsidizing services that compete with ours; and

• Regulatory decisions that decrease regulatory oversight of ILECs.

Consolidations involving ILECs, CLECs and others may result in fewer, but much larger and more effective competitors. We also face competition from other CLECs and cable companies. While the cable companies are primarily competing for smaller business customers currently, if they expand their network coverage and product offerings to serve larger customers there may be additional competition for the customers that we target. Price cutting or other aggressive attempts by other carriers to retain customers in the dampened economic environment may pressure our pricing or require us to reduce prices for existing services upon contract renewals, thereby reducing our revenue and margins. In some of the markets in which we operate, we may experience intense competition for particular customers, which could adversely affect our revenue and margins.

Several customers account for a significant portion of our revenue, and some of our customers may disconnect their services due to price competition, customer consolidations, financial difficulties, or other factors.

We have substantial business relationships with a few large customers, especially other carriers. Our 10 largest customers accounted for approximately 20% of our total revenue in 2011. The highly competitive environment in the long haul carrier sector, including interexchange carriers, and changes in the local services market have challenged the financial condition and growth prospects of some of our carrier customers and the economic environment, competition and other factors have impacted some of our enterprise customers and could lead to reductions in our revenue in the future.

Our service agreements with customers that have already satisfied their initial terms are subject to termination by the customer on short notice and do not require the customer to maintain the services at current levels. After expiration of their current agreements, customers may not choose to continue to purchase the same services or level of services. Ongoing consolidation in the telecommunications industry could result in the consolidated companies disconnecting some of their services they purchase from us, subject to early termination charges, or buying fewer services from us than the pre-consolidation companies.

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Our revenue churn, defined as the average lost recurring monthly billing from customers’ partial or complete service disconnections (excluding pricing declines upon contract renewals and lost usage revenue), was 0.9%, 1.0%, and 1.3% of total monthly revenue in 2011, 2010 and 2009, respectively. We experience customer and service disconnections in the normal course of business primarily associated with price competition from other providers, industry consolidation, customer network optimization, customers moving facilities to other locations, cost cutting, business contractions and customer financial difficulties. We believe that the economic downturn contributed to an increase in churn beginning in late 2007 and higher churn levels in 2008 and 2009. While we experienced improvements in churn in 2010 and 2011, we do not know whether the favorable churn results are sustainable and cannot predict the total impact on revenue from future customer disconnections or the timing of such disconnections. Replacing this revenue with new revenue from other customers may be difficult and more costly. In addition, competitive pricing pressure on our services, as well as customers’ heightened cost cutting initiatives due to the economy, may challenge our ability to grow our revenue. Further, we expect revenue will continue to be impacted by pricing declines to current market levels for existing customers that renew services with expired terms.

If we do not adapt to rapid changes in the telecommunications industry and continue to offer services that satisfy customers’ needs, we could lose customers or market share.

The telecommunications industry continues to experience rapid and significant changes in technologies and architectures to deliver new services to customers and to deliver existing services more cost-effectively. We expect that new technologies will continue to enable advances in our customers’ IT environments that create new demand drivers. We believe that our future success will depend in part on our ability to anticipate and respond to the rapidly changing needs and demands of our customers on a timely basis and to compete with our competitors' offerings. Our failure to obtain and integrate new technologies and applications, and develop new service offerings to meet those customer needs or to keep pace with or exceed the service capabilities of our competitors could impact the breadth of our service portfolio, resulting in less competitive and compelling offerings that could impair our ability to attract and retain customers. We may be unable to keep pace with all competitive offerings without making significant additional capital investments or adversely affecting our margins.

In addition to investing in new technologies, we must replace some of the equipment that supports our traditional services as that equipment ages, even though the revenue base from those services is not growing. If we do not properly manage this process, including the migration of customers to our newer technologies, we may lose customers and market share, and our margins and returns could be adversely affected.

We use the facilities of other carriers to reach some of our customer locations, and our ability to compete for those customers could be adversely affected by the cost of those facilities or by such carriers’ service issues.

Although we provide a substantial portion of our services entirely on our own network facilities, we must use the facilities of other carriers to connect our local markets, serve customer locations within our markets not served by our network and serve customer locations in U.S. markets outside of our service areas or outside of the U.S. Many of these carriers are also our competitors and if they cause delays in provisioning services, provide poor service quality or the cost of those facilities is unreasonable, our revenue and margins could be adversely affected. We have experienced service issues with some of these carriers from time to time.

We may be adversely affected by changes in the regulation of special access services or by the FCC's failure to regulate Ethernet services offered by the ILECs as special access.

We purchase special access circuits and other services from ILECs to expand the reach of our network. We also provide special access services to our customers over our fiber facilities in competition with the ILECs. If the special access services we buy from the ILECs were to be further deregulated, ILECs would have a greater ability to continue to increase the prices and reduce the service quality of special access services they sell to us. We may not be able to pass those costs on to customers that have term contracts or due to competitive pressures. As the prices we must pay for special access services increase, our margins may be adversely affected. A change in the regulations governing special access services could also reduce the likelihood that ILECs will sell us special access on reasonable terms and conditions. If ILEC special access price reductions were to occur, we may experience downward pressure on the prices we charge our customers for special access services.

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The FCC is reviewing its regulation of special access pricing in a pending proceeding commenced in 2005 that has not yet resulted in proposed rules. We have advocated that the FCC modify its special access pricing flexibility rules to return these services to price-cap regulation to protect against unreasonable price increases. We cannot predict when the FCC will act on interstate special access pricing regulation or the impact of any such action. The FCC has also granted petitions for forbearance from regulation of certain special access services, including Ethernet services offered by ILECs as special access with the result that prices for the Ethernet and OC-n high capacity data services of the petitioning carriers are no longer regulated. We continue to pursue commercial arrangements with the ILECs for these services on acceptable terms and conditions. However, there is no assurance that we will be able to obtain reasonable pricing, terms and conditions for these services that will allow us to competitively price our services that utilize unregulated ILEC services without some regulation of ILEC access services. We expect that the ILECs will continue to advocate deregulation of all forms of special access services, and we cannot predict the outcome of the FCC’s proceedings in this regard. As a result, we cannot assure that we will continue to be able to obtain special access services at reasonable rates or on a timely basis or that the service quality we receive will be acceptable. If we experience difficulties in obtaining high-quality, reliable, and reasonably priced service from the ILECs, and are unable to obtain the same services from other carriers, we may be at a competitive disadvantage or our margins may be adversely affected.

Our substantial existing debt and debt service requirements could impair our financial condition and our ability to fulfill our obligations under our debt agreements.

As of December 31, 2011 our total long-term debt and capital lease obligations were approximately $1.4 billion. Our level of debt may affect our operations and our ability to make payments on our outstanding indebtedness. Subject to certain covenants in our credit agreement and the indentures for our outstanding senior notes, we may incur significant additional indebtedness in the future. Our substantial indebtedness could, for example:

• Limit our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions or other corporate purposes;

• Make us more vulnerable to the current and future economic downturns or other adverse developments than less leveraged competitors; and

• Decrease our ability to withstand competitive pressures.

Our revolving credit facility, Term Loan B and the indenture relating to our senior notes contain restrictive covenants that may limit our flexibility, and breach of those covenants may cause us to be in default under those agreements.

The credit agreement for our revolving credit facility (“Revolver”) and Term Loan B (“Term Loan”) and the indenture relating to our senior notes limit, and in some circumstances prohibit, our ability to, among other things:

• Incur additional debt;

• Pay dividends;

• Make capital expenditures, investments or other restricted payments;

• Guarantee debts;

• Create liens;

• Sell assets;

• Repurchase our common stock; and

• Engage in mergers and acquisitions.

These restrictions could limit our ability to obtain future financing, make acquisitions or needed capital expenditures, withstand future economic downturns, conduct operations or otherwise take advantage of business opportunities that may arise. In addition, if we do not comply with these restrictions and financial covenants in our credit agreement that require us to maintain certain minimum financial ratios if we draw on our Revolver, the indebtedness outstanding under our credit agreement, and by reason of cross-acceleration or cross-default provisions, our senior notes and any other outstanding indebtedness we may then have, could become immediately due and payable. If we are unable to repay those amounts, our lenders or bondholders could initiate a bankruptcy or liquidation proceeding or the secured lenders could foreclose on the collateral granted to them to secure that indebtedness. If our lenders or bondholders were to accelerate the repayment of outstanding indebtedness, we may not have sufficient liquid assets to repay that indebtedness.

21

We will require substantial capital to expand our operations, we have significant debt maturities in 2013 and we may not be able to obtain additional financing.

The development and expansion of our network requires substantial capital investment. If this capital is not available when needed, our business could be adversely affected. Our 2011 capital expenditures were $342.7 million and our estimate of our 2012 capital expenditures is $345 million to $355 million. We also expect to have substantial capital expenditures thereafter. Based on current assumptions, we expect to generate sufficient cash from operations along with available cash on hand, including cash equivalents, investments and borrowing capacity under our Revolver to provide sufficient funds to meet our expected capital expenditure and liquidity needs to operate our business and service our debt for the foreseeable future. However, approximately $101 million in principal amount of our outstanding Term Loan matures in January 2013. In addition, holders of our outstanding $374 million principal amount of 2 ³/₈% senior convertible debentures due 2026 (the "Convertible Debentures") have the option to require us to purchase all or part of the Convertible Debentures on April 1, 2013, April 1, 2016, or April 1, 2021, or at any time prior to April 1, 2026 to convert the Convertible Debentures into shares of our common stock. Further, in order to avoid the early maturity of the Revolver if it is drawn, or the termination of the commitment for the Revolver if it is not drawn, on December 28, 2012, we must demonstrate to our revolving lenders that we have sufficient cash and cash equivalents as of November 30, 2012 to redeem or repay the Convertible Debentures in full. We may be required to seek financing in addition to the unused $80 million Revolver to refinance the maturing indebtedness or if:

• Our business plans and cost estimates are inaccurate;

• We are not able to generate sufficient cash flow from operations to service our debt, fund our capital expenditures and finance our business operations;

• We experience a significant reduction in demand for our products or an acceleration of customer disconnections;

• We decide to significantly accelerate the expansion of our business and existing network; or

• We wish to consummate acquisitions, mergers, joint ventures or other strategic transactions that require incremental capital.

Disruptions in the commercial credit market caused a tightening of credit markets in 2008 worldwide, making it more difficult and costly to obtain new lines of credit and access the equity markets. Although the debt and equity markets began to improve thereafter and we completed two refinancings in 2010, it is difficult to predict future debt market conditions and whether we will be able to obtain additional financing, if needed, on terms acceptable to us or at all. Depending upon market conditions, any additional financing we might seek could be with rates and terms significantly less favorable than those contained in our current Revolver, Term Loan or other outstanding debt instruments. Other factors, such as a rating downgrade could further impact our potential access to financing sources. The failure to raise sufficient funds if needed on reasonable terms may require us to modify or significantly curtail our business plan. This could have a material adverse impact on our growth, ability to compete and ability to service our debt.

In addition, the lenders under our Revolver could refuse to lend funds if we are not in compliance with our financial covenants, such as leverage and interest coverage ratios that are primarily derived from the financial measure that we define as M-EBITDA (see note 4 to Item 6. “Selected Financial Data”), debt levels and interest expense. A lack of revenue growth, revenue losses, pricing declines or rising costs could negatively impact our M-EBITDA margins and cause our failure to meet the minimum required ratios. Even if we meet the conditions for borrowing under the Revolver, we may be unable to draw upon the entire commitment if any of our lenders are unable to perform their obligations to advance funds due to their own financial difficulties.

We may complete a significant business combination or other transactions that could increase our shares outstanding, and may result in a change in control, and increase our debt.

We regularly evaluate potential acquisitions, mergers, joint ventures and other arrangements that would extend our geographic markets, expand our services, enlarge the capacity of our network or expand the types of services provided through our network. If we enter into a definitive agreement for any acquisition, merger, joint venture or other arrangement, we may require additional financing that could result in an increase in our debt, result in a change of control, increase the number of our outstanding shares or all of these effects. A substantial transaction may require the consent of our lenders and a change of control with a ratings decline could trigger prepayment obligations under our debt agreements. There can be no assurance that we will enter into any transaction or, if we do, on what terms. In addition, the success of any significant acquisition or business combination is dependent, in part, on our ability to successfully integrate the acquired business into ours, which also carries substantial risks.

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Our ability to use net operating loss ("NOL") carryforwards to reduce future tax payments could be negatively impacted if there is an “ownership change” as defined under Section 382 of the Internal Revenue Code, and our Section 382 stockholder rights plan has expired.

We have substantial NOLs for U.S. federal income tax purposes and, under the Internal Revenue Code, we may “carry forward” these NOLs in certain circumstances to offset any current and future taxable income and thus reduce our federal income tax liability, subject to certain requirements and restrictions. If we experience an “ownership change,” as defined in Section 382 of the Internal Revenue Code and related Treasury regulations at a time when our market capitalization is below a certain level, our ability to use the NOLs could be substantially limited. This limit could impact the timing of the usage of the NOLs, thus accelerating cash tax payments or causing NOLs to expire prior to their use, which could affect the ultimate realization of that asset.

In January 2009, we adopted a rights plan (the “Rights Plan”) that was approved by our stockholders at our 2009 annual meeting of stockholders. The Rights Plan was intended to protect our NOLs from the potential negative consequence of an ownership change as defined under Section 382 of the Internal Revenue Code. The Rights Plan was designed to deter, but would not necessarily prevent, acquisitions of our common stock that could have an impact on our NOLs due to the operation of Section 382.

The Rights Plan terminated in accordance with its terms on  January 20, 2012. We did not extend the Rights Plan because in the judgment of our Board and management after reviewing the relevant ownership changes, it was not necessary to do so at that time to protect our NOLs and therefore not in our stockholders' best interests. However, our Board may adopt another similar rights plan in the future, subject to subsequent ratification by our stockholders, if it determines that our substantial NOLs are at risk of limitation under Section 382 or that such action otherwise is in the best interests of our stockholders. There is a risk, however, that if substantial, unanticipated changes in the ownership of our shares occur at a time when our stock price is considerably lower than current levels, Section 382 could result in a limitation of our NOLs that we would be unable to prevent.

We have experienced reductions in switched access and reciprocal compensation revenue as a result of regulatory changes and expect to experience further such reduction in the future.

Over time, FCC and state regulations have resulted in reducing our switched access and reciprocal compensation revenue. For several years, the FCC has been considering proposals for an integrated intercarrier compensation regime under which all traffic exchanged between carriers would be subject to a unified rate or Bill and Keep. In November 2011, the FCC adopted an order mandating intercarrier compensation reform. The order provides for terminating intercarrier compensation rates to transition to Bill and Keep over a six year period that will decrease both our terminating intercarrier compensation revenue and our intercarrier compensation expense. Terminating intercarrier compensation represented approximately 1% of our total revenue for the year ended December 31, 2011, which will be eliminated due to the order over a six year period ending July 2018, with approximately $2.0 million of this reduction expected in the second half of 2012. In a Further Rulemaking Notice, the FCC is seeking comment on, among other issues, the future regulatory treatment of originating switched access traffic, which includes toll-free (8XX) traffic originated on a carrier's network. We cannot predict the timing or outcome of these proposals or the impact on our results.

There is no assurance that we will be able to compensate for the reduction in intercarrier compensation revenue with other revenue sources.

We may be adversely affected by the exhaustion of IP Version 4 (“IPv4”) IP addresses.

The Internet Protocol is designed to interconnect networks and transmit data back and forth over various telecommunications infrastructures by routing data packets from end-to-end across disparate networks. Routing of these packets is based on the destination IP address. IPv4 is the Internet Protocol presently in use by most providers and has space for over 4 billion unique IP addresses. Providers of Internet services and VoIP like us must assign IP addresses to customers in connection with the services they provide. The proliferation of these services with their associated endpoint devices has increased demand for IP addresses, and the North American numbering registry that manages the available IPv4 addresses has predicted that its IPv4 addresses publicly available for allocation will be exhausted by mid-2013. To offset this exhaustion and add new capacity for service expansion, the industry has developed IPv6 that provides vastly increased IP address space. The transition from IPv4 to IPv6 can be cumbersome, which could prevent customers from migrating to this new addressing format, and there is no fixed date by which it must be achieved. While we believe that we have or can obtain IPv4 addresses for the foreseeable future, depending on the length of time it takes for customers to adopt an IPv6 addressing format, we may not be able to obtain sufficient IPv4 addresses to meet our customers’ demand for our Internet access and other services that require IP addresses, which may adversely impact our ability to sell certain of our services, our revenue and other financial results.

23

We may be adversely impacted by deterioration in the financial condition of financial institutions or mutual funds that hold our investments.

As of December 31, 2011, our cash, cash equivalents and investments are held in financial institutions, U.S. Treasury money market mutual funds, certificates of deposit, commercial paper, international government securities, debt securities issued by the U.S. Treasury and other government agencies and corporate debt securities, some of which are guaranteed by the federal government’s Temporary Liquidity Guarantee Program. We are exposed to risks resulting from deterioration in the financial condition or failure of financial institutions holding our cash deposits, decisions of our investment advisers and the investment managers of the money market funds and defaults in securities underlying the funds and investments, which could adversely impact our ability to access these cash balances. We actively monitor the depository institutions and the performance and quality of our investments and the mutual funds that hold our cash and cash equivalents and adjust the cash balances in our accounts as appropriate. We prioritize safety over investment return in choosing the investment vehicles for cash and cash equivalents and investments and have diversified these investments to the extent practical to minimize our exposure to any one investment vehicle or financial institution. This strategy generally results in lower interest income from investments included in cash and cash equivalents and investments. We may change the nature of our cash, cash equivalent and short-term investments as market conditions change.

Balances in certain of our accounts with financial institutions in the U.S. exceed the FDIC insurance limit when it is impractical to spread these amounts over multiple institutions. We cannot assure that access to our cash, cash equivalents and investments will not be impacted by additional and yet unforeseeable adverse conditions in the financial markets. In 2008, we recorded an impairment charge of $7.8 million on commercial paper investments with exposure to sub-prime mortgages that were past their maturity dates.

We are increasingly dependent on automation and systems.

As we grow our business we have increased our dependency on automation and systems in order to scale our business. If our key systems become impaired for any significant period of time, our ability to service our customers at current levels or provision or bill for our services could be adversely affected.

We depend on third party vendors for information systems, equipment and other operational functions.

We have agreements with vendors that provide for the development and operation of IT systems such as billing systems and operational functions such as centralized equipment and spares management. We also rely on vendors to supply equipment and software that is critical to the provision of our services. The failure of these vendors to perform their services in a timely and effective manner at acceptable costs or to provide reliable equipment and software could have a material adverse effect on our operations and our ability to provide high quality services to our customers, monitor costs, bill customers, provision services, deploy equipment and achieve operating efficiencies.

We depend on key personnel for our current and future performance.

Our senior management team has performed effectively as a team over a considerable period of time. Our current and future performance depends to a significant degree upon the continued contributions of our senior management team and other key personnel. We have not experienced significant turnover among these employees. The loss or unavailability of members of our senior management team or key employees could cause disruption to our business. We cannot assure that we would be able to successfully implement our succession plans or identify or employ qualified replacements for senior management or key employees on acceptable terms if their services are no longer available. Unanticipated turnover may also adversely affect the performance of our senior management team or other internal organizations.

We must obtain access to rights-of-way and pole attachments on reasonable terms and conditions; IRUs of fiber and capacity that are important to our operations may not be renewed.

The development, expansion, and maintenance of our network depend, in part, on our ability to obtain rights-of-way and pole attachments as well as certain governmental authorizations and permits. In order to compete effectively, we must obtain such rights, authorizations and permits in a timely manner, at reasonable costs, and on satisfactory terms and conditions. Any increase in the difficulty or cost of obtaining these rights, authorizations or permits could adversely affect us, particularly in areas where we must compete with companies that already have the necessary permits and access.

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In certain cities and municipalities where we provide network services over our own fiber optic facilities, we pay license or franchise fees for the use of public rights-of-way. The 1996 Act permits municipalities to charge these fees only if they are competitively neutral and nondiscriminatory, but certain municipalities may not conform their practices to the requirements of the 1996 Act in a timely manner or without legal challenge. We also face the risk that other cities may start imposing new fees, existing fees will be increased or franchises will not be renewed. Some of our franchise agreements also provide for increases or renegotiation of fees at certain intervals. Increases in fees may have a negative impact on our financial condition. If any of our existing franchise or license agreements for a particular metropolitan area are terminated prior to their expiration date and we are forced to remove our fiber optic cables from the streets or abandon our network in place, even with compensation, such termination could have a material adverse effect on us.

A portion of our services are provided on network fiber facilities licensed or leased from cable companies and other CLECs through IRUs or similar arrangements. Most of the facilities under these agreements have terms of over 20 years and can be terminated earlier by the grantors if we materially breach the agreements or other events of default occur as defined in the agreements. Prior to expiration of the terms of these IRUs, we likely will have to negotiate for their renewal. We cannot assure that the parties will agree on the terms of any renewal or that the terms of any renewal will be favorable to us. If these agreements are not renewed or are terminated for default, we will have no further interest in the fiber capacity covered by those agreements and will likely need to build, lease or otherwise obtain alternative fiber network capacity.

Recently enacted health care reform legislation and state and local tax charges may increase our costs.

Congress in 2009 enacted sweeping health care reform legislation that will be implemented in stages over six years. Health care reform as mandated and implemented under the legislation and any future federal or state mandated health care reform is likely to increase the costs of our employer-sponsored medical plans either directly or as a result of providers passing through their increased costs. If the cost increase is material, our financial condition could be adversely affected or if those increased costs must be borne by employees, employee morale could be adversely affected.

Our tax burden has increased and could continue to increase, possibly to a significant degree, due to changes in state and local tax laws imposed by these jurisdictions in an attempt to reduce their budget deficits. These changes could include rate increases, removal of exemptions, suspension of the use of NOLs and other measures to raise their revenue. We cannot predict the degree to which these tax changes will affect our net income, M-EBITDA and cash flow.

Catastrophic events or other business disruptions could affect our future operating results.

Our operating results and financial condition could be materially and adversely affected if there is a catastrophic event such as a terrorist attack on the United States, cyber-attacks or other breaches of network or IT security or a major earthquake, fire, hurricane, flood or similar event that affects our central offices, corporate headquarters, network operations centers or other facilities. Although we have implemented measures that are designed to mitigate the effects of such events, we cannot predict all of the potential impacts of such events. We maintain insurance coverage for some of these events; however, the potential liabilities associated with these events could exceed the insurance coverage we maintain. Our inability to operate our networks or operate key systems as a result of such events, even for a limited period of time, may result in significant expenses or loss of customers and associated revenue. Even if our facilities are not impacted directly by a catastrophic event, potential impacts on our suppliers may result in difficulties in obtaining equipment, fiber optics or other network components that may affect our ability to provision new services to customers, expand our networks or replace obsolete equipment. In addition, breaches of network or IT security that compromises the privacy of customer or employee confidential data could result in damage to our reputation.

Our ability to offer residential and content services is limited by our Capacity License Agreements.

Our Capacity License Agreements with the Cable Operations prohibit us from using facilities licensed under those agreements until 2028 to (i) engage in the business of providing, offering, packaging, marketing, promoting, or branding (alone or jointly with or as an agent for other parties) any residential services, or (ii) produce or otherwise provide entertainment, information, or other content services. Although we do not believe that these restrictions will materially affect our business and operations in the immediate future, we cannot predict the effect of such restrictions in the rapidly changing telecommunications industry. We do not currently have plans to offer residential or content services in any of our service areas.

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We may be required to record impairment charges in the future.

Under U.S. generally accepted accounting principles, we are required to review the carrying amounts of our assets, including goodwill, to determine whether current events or circumstances warrant adjustments to those amounts. These determinations are based in part on our judgments regarding the cash flow potential of various assets, and involve projections that are inherently subject to change based on future events. If we determine in the future that the cash flow potential of any of our assets, including acquired assets, is significantly less than we believed at the time of purchase, and that conclusion is based on a long-term rather than short-term trend, we may need to record an impairment charge.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

We lease network hub sites, central office sites, other facility locations and sales and administrative offices in the cities in which we operate our network. During 2011, 2010 and 2009, rental expense for our facilities and offices totaled approximately $64.6 million, $61.0 million and $61.1 million, respectively. We believe that our properties, taken as a whole, are in good operating condition and are adequate for our business operations. We currently lease approximately 167,000 square feet of space in Littleton, Colorado, where our corporate headquarters are located, approximately 130,000 square feet of space in Greenwood Village, Colorado, where one national operations center and other administrative functions are located, and approximately 48,000 square feet of space in O’Fallon, Missouri, where another national operations center is located.

Item 3. Legal Proceedings

We are party to various claims and legal and regulatory proceedings in the ordinary course of business. We do not believe that these claims or proceedings, individually or in the aggregate, are material or are likely to have a material adverse effect on our business, financial condition, or results of operations.

Item 4. Mine Safety Disclosures

Not applicable.

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PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

Our common stock is traded on the NASDAQ Global Select Market of the NASDAQ Stock Market under the symbol “TWTC”. The following table sets forth the intraday high and low sales prices for our common stock for each of the quarters of 2010 and 2011 as reported on the NASDAQ Stock Market:

Period	High		Low
2010
First Quarter	$	18.57	$	14.36
Second Quarter	18.80		15.98
Third Quarter	19.63		16.32
Fourth Quarter	19.07		16.19
2011
First Quarter	$	19.92	$	16.70
Second Quarter	22.87		18.93
Third Quarter	21.66		16.04
Fourth Quarter	19.75		15.42

Dividends

We have never paid or declared any dividends and do not anticipate paying any dividends in the near term. The decision whether to pay dividends will be made by our Board of Directors in light of conditions then existing, including our results of operations, financial condition and requirements, business conditions, covenants under loan agreements and other contractual arrangements, and other factors. In addition, the indentures for our outstanding senior notes and the credit agreement governing our Term Loan and our unused Revolver contain covenants that may limit the amount of cash dividends that we may pay on our common stock.

Number of Stockholders

As of January 31, 2012, there were 520 holders of record of our common stock.

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Performance Graph

The following graph compares total stockholder return on our common stock since December 31, 2006, with the NASDAQ Composite Index (U.S. and foreign companies) and the NASDAQ Telecommunications Index. The graph assumes that $100 was invested in our stock at the closing price of $19.93 on December 31, 2006, and that the same amount was invested in the NASDAQ Composite Index and the NASDAQ Telecommunications Index. Our closing price on December 31, 2011 was $19.38.

Comparison of Cumulative Total Return on Investment

	Years Ended December 31,
	2006		2007		2008		2009		2010		2011
tw telecom inc.	$	100.00	$	101.81	$	42.50	$	86.05	$	85.55	$	97.24
NASDAQ Composite Index	$	100.00	$	109.81	$	65.29	$	93.95	$	109.84	$	107.86
NASDAQ Telecommunications Index	$	100.00	$	109.17	$	62.25	$	92.27	$	95.89	$	83.79

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

The following table presents our purchases of equity securities reportable during the three months ended December 31, 2011:

Period	(a) Total Number of Shares (or Units) Purchased	(b) Average Price Paid per Share (or Unit)		(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (1)	(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs (1)
October 1—October 31, 2011	—	$	—	—	$	—
November 1—November 30, 2011	239,204	17.56		239,204	295,799,745
December 1—December 31, 2011	239,936	18.53		239,936	291,353,668
Total	479,140			479,140

 ___________________

(1) On November 16, 2011, our Board of Directors authorized a multi-year repurchase program of up to an additional $300 million of our common stock from time to time using a variety of methods, including open market purchases, block trades and privately negotiated transactions. The authorization has no time limit, and may be suspended or discontinued at any time. As of December 31, 2011, approximately $291.4 million remained available under the authorization.

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Item 6. Selected Financial Data

Selected Consolidated and Combined Financial and Other Operating Data

The following table is derived in part from our audited consolidated financial statements. This information should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the audited consolidated financial statements and the notes thereto.

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	Years Ended December 31,
	2011			2010			2009			2008			2007
	(amounts in thousands, except per share and operating data amounts and  ratios)
Statements of Operations Data:
Revenue (1):
Data and Internet services	$	646,682		$	547,218		$	472,647		$	399,928		$	318,269
Network services	350,709			359,169			370,859			387,339			393,569
Voice services	338,655			332,870			333,274			334,692			327,246
Intercarrier compensation	30,845			33,914			34,610			37,060			44,595
Total revenue	1,366,891			1,273,171			1,211,390			1,159,019			1,083,679
Costs and expenses:
Operating (exclusive of depreciation, amortization and accretion shown separately below) (2)	571,461			528,965			503,960			491,375			470,038
Selling, general, and administrative (2)	325,538			308,470			297,290			291,985			296,638
Depreciation, amortization, and accretion	283,329			289,564			296,167			285,783			279,454
Total costs and expenses	1,180,328			1,126,999			1,097,417			1,069,143			1,046,130
Operating income	186,563			146,172			113,973			89,876			37,549
Interest expense, net	(87,173		)	(80,344		)	(83,641		)	(87,028		)	(88,347		)
Debt extinguishment costs	—			(17,070		)	—			—			—
Other income (loss), net	—			825			—			(7,767		)	(3,022		)
Income (loss) before income taxes	99,390			49,583			30,332			(4,919		)	(53,820		)
Income tax expense (benefit) (3)	41,479			(291,295		)	11,921			11,491			10,059
Net income (loss)	$	57,911		$	340,878		$	18,411		$	(16,410	)	$	(63,879	)
Basic income (loss) per share	$	0.39		$	2.26		$	0.12		$	(0.11	)	$	(0.44	)
Diluted income (loss) per share	$	0.38		$	2.12		$	0.12		$	(0.11	)	$	(0.44	)
Weighted average shares outstanding, basic	147,247			149,156			148,087			147,251			144,956
Weighted average shares outstanding, diluted	149,349			171,456			149,852			147,251			144,956
Other Operating Data:
Modified EBITDA (4)(5)	$	497,709		$	463,568		$	436,658		$	399,016		$	339,003
Modified EBITDA margin (1)(4)(5)(6)	36		%	36		%	36		%	34		%	31		%
Net cash provided by operating activities	$	403,588		$	385,752		$	390,478		$	305,520		$	264,207
Capital expenditures	$	342,731		$	321,844		$	274,890		$	276,857		$	259,527
Net interest coverage ratio (7)	7.8			7.9			6.8			5.8			4.7
Operating Data (as of the end of each period presented):
Operating networks	75			75			75			75			75
Fiber connected buildings, on-net (8)	15,438			13,230			11,598			9,422			8,355
Employees	3,051			2,975			2,870			2,844			2,859
Balance Sheet Data (as of the end of each period presented):
Cash and cash equivalents	$	353,394		$	356,922		$	445,907		$	352,176		$	321,531
Investments, short-term	131,525			118,672			24,865			—			—
Property, plant, and equipment, net	1,427,212			1,356,612			1,294,372			1,306,910			1,294,900
Total assets	2,708,226			2,650,954			2,328,462			2,228,822			2,207,450
Long-term debt and capital lease obligations	1,352,820			1,338,297			1,300,370			1,284,178			1,273,640
Total debt and capital lease obligations	1,360,553			1,345,499			1,307,939			1,291,399			1,280,977
Total stockholders’ equity	$	1,005,721		$	966,641		$	644,388		$	594,716		$	588,986
Leverage ratios (9):
Gross	2.8			3.0			3.1			3.4			4.1
Net	1.8			2.0			2.1			2.6			3.1

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___________________

(1) We classify certain taxes and fees billed to customers and remitted to government authorities on a gross versus net basis in revenue and expense. The total amounts classified as revenue, primarily included in voice services, associated with such taxes and fees were approximately $63.5 million, $51.3 million, $40.0 million, $36.9 million and $31.9 million for the years ended December 31, 2011, 2010, 2009, 2008 and 2007, respectively. This has no impact on Modified EBITDA or net income (loss) but is dilutive to Modified EBITDA margin.

(2) Includes the following non-cash stock-based employee compensation expense:

	Years Ended December 31,
	2011		2010		2009		2008		2007
	(amounts in thousands)
Operating	$	2,327	$	3,261	$	3,654	$	3,758	$	3,555
Selling, general, and administrative	25,490		24,571		22,864		19,599		18,445

(3) Includes a non-cash income tax benefit of $299.0 million for the year ended December 31, 2010 to recognize the value of tax assets.

(4) “Modified EBITDA” is a non-GAAP financial measure and is defined by us as net income (loss) before depreciation, amortization and accretion expense, interest expense, interest income, debt extinguishment costs, other income (loss), impairment charges, income tax expense (benefit), cumulative effect of change in accounting principle, and non-cash stock-based employee compensation expense. Modified EBITDA is not intended to replace operating income (loss), net income (loss), cash flow and other measures of financial performance and liquidity reported in accordance with accounting principles generally accepted in the United States. Rather, Modified EBITDA is a measure of operating performance and liquidity that investors may consider in addition to such measures. Other companies may define Modified EBITDA or similar terms differently. Our management believes that Modified EBITDA is a standard measure of operating performance and liquidity that is commonly reported and widely used by analysts, investors, and other interested parties in the telecommunications industry because it eliminates many differences in financial, capitalization, and tax structures, as well as non-cash and non-operating charges to earnings. We believe that Modified EBITDA trends are a valuable indicator of whether our operations are able to produce sufficient operating cash flow to fund working capital needs, service debt obligations, and fund capital expenditures. We currently use Modified EBITDA for these purposes. Modified EBITDA also is used internally by our management to assess ongoing operations and is a measure used to test compliance with certain covenants of our senior notes, our Revolver and our Term Loan. The definition of EBITDA under our Revolver, our Term Loan and our senior notes differs, but not materially, from the definition of Modified EBITDA used in this table. Modified EBITDA as used in this document may not be comparable to similarly titled measures reported by other companies due to differences in accounting and disclosure policies.

(5) The reconciliation between net income (loss) and Modified EBITDA is as follows:

	Years Ended December 31,
	2011			2010			2009			2008			2007
	(amounts in thousands)
Net income (loss)	$	57,911		$	340,878		$	18,411		$	(16,410	)	$	(63,879	)
Income tax expense (benefit)	41,479			(291,295		)	11,921			11,491			10,059
Interest income	(545		)	(608		)	(360		)	(6,308		)	(17,489		)
Interest expense	87,718			80,952			84,001			93,336			105,836
Debt extinguishment costs	—			17,070			—			—			—
Other (income) loss, net	—			(825		)	—			7,767			3,022
Depreciation, amortization and accretion	283,329			289,564			296,167			285,783			279,454
Non-cash stock-based compensation	27,817			27,832			26,518			23,357			22,000
Modified EBITDA	$	497,709		$	463,568		$	436,658		$	399,016		$	339,003

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The reconciliation between net cash provided by operations and Modified EBITDA, as a measure of liquidity, is as follows:

	Years Ended December 31,
	2011			2010			2009			2008			2007
	(amounts in thousands)
Net cash provided by operations	$	403,588		$	385,752		$	390,478		$	305,520		$	264,207
Income tax expense (benefit)	41,479			(291,295		)	11,921			11,491			10,059
Deferred income taxes	(35,756		)	293,529			(9,175		)	(9,144		)	(9,059		)
Interest income	(545		)	(608		)	(360		)	(6,308		)	(17,489		)
Interest expense	87,718			80,952			84,001			93,336			105,836
Discount on debt, amortization of deferred debt issue costs and other	(23,388		)	(21,404		)	(20,036		)	(19,580		)	(16,877		)
Changes in operating assets and liabilities	24,613			16,642			(20,171		)	23,701			2,326
Modified EBITDA	$	497,709		$	463,568		$	436,658		$	399,016		$	339,003

(6) Modified EBITDA margin represents Modified EBITDA as a percentage of revenue.

(7) Our net interest coverage ratio is calculated by dividing net cash interest expense by Modified EBITDA. We believe that our net interest coverage ratio provides a measurement of our ability to cover our interest payments on our debt and capital lease obligations. For this purpose, the net cash interest expense excludes non-cash interest expense. The reconciliation between interest expense and net cash interest expense is as follows:

	Years Ended December 31,
	2011			2010			2009			2008			2007
	(amounts in thousands)
Interest expense	$	87,718		$	80,952		$	84,001		$	93,336		$	105,836
Discount on debt and amortization of deferred debt issue costs	(23,473		)	(21,417		)	(19,418		)	(18,025		)	(16,785		)
Interest income	(545		)	(608		)	(360		)	(6,308		)	(17,489		)
Net cash interest expense	$	63,700		$	58,927		$	64,223		$	69,003		$	71,562

(8) As of the first quarter of 2011 to better reflect our reach, we modified our on-network ("on-net") building count definition to include all locations served directly by our fiber network, including previously excluded locations without electronics and ILEC local serving offices ("LSOs"). Inclusion of these locations and LSOs resulted in the addition of approximately 1,400 and 1,200 locations to our on-net buildings from those we previously reported as of December 31, 2010 and 2009, respectively. This change has only been reflected back to the period ended December 31, 2009 because this information is not available in periods prior to December 31, 2009.

(9) Our gross leverage ratio is calculated by dividing the principal amount of our total debt and capital lease obligations by Modified EBITDA. Our net leverage ratio is calculated by dividing the principal amount of our total debt and capital lease obligations less cash and cash equivalents and short-term investments by Modified EBITDA. We believe that our leverage ratios provide a measurement of our ability to cover our total debt and capital lease obligations.

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with the "Selected Financial Data" and the accompanying consolidated financial statements and related notes thereto, included elsewhere in this report. This section and other parts of this report contain forward-looking statements that involve risks and uncertainties. See "Caution Regarding Forward-Looking Statements" at the beginning of this report. Forward-looking statements are not guarantees of future performance, and our actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in the subsection entitled "Risk Factors" above. We assume no obligation to revise or update any forward-looking statements for any reason, except as required by law.

Overview

We are a leading national provider of managed network services, specializing in business Ethernet, data networking, Converged, IP VPN, Internet access, voice, including VoIP, and network security services to enterprise organizations, including public sector entities, and carriers throughout the U.S., including their global locations. Our revenue is derived from business communication services, including data, high-speed Internet access, network and voice services. Our customers include, among others, enterprise organizations in the distribution, health care, finance, service and manufacturing industries, state, local and federal government entities, system integrators, and communications service providers including ILECs, CLECs, wireless communications companies and cable companies.

Through our subsidiaries, we serve 75 metropolitan markets that are connected by our regional fiber facilities and national IP backbone. As of December 31, 2011, our fiber network spanned approximately 27,000 route miles (including approximately 21,000 metropolitan route miles) connecting to 15,438 buildings served directly by our local fiber facilities. During the first quarter of 2011, we completed an initiative to convert our fiber records into a new centralized fiber management system, which resulted in approximately 1,000 fewer route miles than previously reported as of December 31, 2010. Also as of the first quarter of 2011 to better reflect our reach, we modified our on-network ("on-net") building count definition to include all locations served directly by our fiber network, including previously excluded locations without electronics and ILEC local serving offices ("LSOs"). Inclusion of these locations and LSOs resulted in the addition of approximately 1,400 locations to our on-net buildings from those we previously reported as of December 31, 2010. We added approximately 2,200 new buildings directly connected to our network in the year ended December 31, 2011 as a result of sales to customers at these locations. We continue to extend our fiber footprint within our existing markets by connecting our network into additional locations and to expand our data, voice, and IP networking capabilities between our markets, supporting secure end-to-end business Ethernet and IP VPN connections for customers.

Our objective is to be the leading national provider of high quality business network solutions leveraging our integrated network, operational capabilities, dedicated people, local presence, personalized customer experience and advanced support systems to meet the complex and evolving needs of our customers and increase stockholder value. The key elements of our business strategy include:

• Leveraging our local fiber assets and national IP backbone and integrating and managing other carriers’ facilities to enable our customers to connect to any of their locations with our network solutions, and using our local presence and local sales, sales engineering, customer support and operational resources, backed by a national organization, to provide personalized service and customized solutions for our customers;

• Focusing our service offerings to deliver secure end-to-end solutions to our customers with a predictable, quality service experience, emphasizing business Ethernet and IP VPN services, Internet-based services and converged service offerings and developing our Intelligent Network and service capabilities, the initial phase of which was introduced in 2011, to meet the complex and evolving needs of our customers;

• Delivering a differentiated customer care strategy by engaging all of our employees and continually incorporating customer feedback to provide the best possible customer service;

• Enhancing our multi-channel sales strategy;

• Enabling enterprise cloud computing and other developing customer IT and business strategies by leveraging our fiber network, data services portfolio, Intelligent Network capabilities and the numerous third party and customer data centers connected to our network;

• Employing a disciplined capital allocation strategy to invest for growth in the near and long term to broaden our reach and capabilities and increase operational efficiencies; and

• Investing in our people to drive the execution of our strategies.

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Our revenue is derived from business communications services, including data and high-speed Internet access, voice and network services. Although we analyze revenue by customer type, we present our financial results as one segment across the U.S. because our business is centrally managed. Our revenue by customer type for each of the past three years is as follows:

	Revenue
	2011		2010		2009
Enterprise / End Users	77	%	75	%	75	%
Carrier	21	%	22	%	22	%
Intercarrier Compensation	2	%	3	%	3	%
	100	%	100	%	100	%

Revenue Trends

Total Revenue

Our revenue has grown for the past consecutive 29 quarters through December 31, 2011 including throughout the latest recession. Our revenue growth is dependent upon selling services to new and existing customers, retaining revenue from existing customers through retention programs aimed at reducing disconnections, renewing customers' contracts upon contract expiration and up-selling services to existing customers to mitigate the impact of price reductions associated with contract renewals. Although our revenue grew throughout the recession, our annual rate of revenue growth declined in 2008 and 2009 over the respective prior years primarily due to impacts of the economic environment that resulted in lower demand, disconnections and repricing of expiring customer contracts to current market levels upon renewal, among other factors. This trend began to change in 2010. In the year ended December 31, 2010, our revenue grew 5.1% over the prior year, representing an increase over the year-over-year growth rate of 4.5% for the year ended December 31, 2009. In the year ended December 31, 2011, our year-over-year revenue growth rate increased to 7.4%. This higher growth rate was due to higher demand and lower revenue churn that we believe is a result of our newer and enhanced services, our customer experience initiatives to increase customer loyalty and retention and improved economic conditions.

Revenue for data and Internet, network and the majority of our voice services is generally billed in advance on a monthly fixed-rate basis and recognized over the period the services are provided. Revenue for the majority of intercarrier compensation and certain components of voice services, such as long distance, is generally billed on a transactional basis in arrears based on a customer's actual usage; therefore, we use estimates to recognize revenue in the period earned. Due to the time required to obtain or build necessary facilities, obtain rights to install equipment in multi-tenant buildings and other factors related to service installation, some of which are not within our control, there is often a time lag between the time a sale, or "booking" (i.e., signed contract or service order) is made, and the time revenue commences. Our installation intervals are generally longer for the more complex solutions delivered to our customers. In some situations, the timing of service installations may be subject to factors that our customers control, such as their readiness for us to install equipment on their premises or the readiness of their equipment. Due to all of these factors, installation intervals may range between one month for single-site, less complex services to 6 to 12 months or longer for the more complex solutions.

Enterprise Customer Revenue

Revenue from enterprise customers has increased for the past 38 consecutive quarters through December 31, 2011 and increased 9% for the year ended December 31, 2011 as compared to the prior year primarily due to increased installations of our data and Internet services such as business Ethernet and IP-based services. Revenue from our enterprise customers represented at least 75% of our total revenue for the past 11 consecutive quarters through December 31, 2011. We expect our future revenue growth to come primarily from our enterprise customer base and to be driven in part by the increasingly web-based economy and developing IT strategies such as cloud computing, collaboration, data center connectivity and disaster recovery, all of which require the reliable connectivity and network capacity that we provide. Our national footprint and new and enhanced service capabilities enable us to serve customers with multi-point, multi-city locations.

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Carrier Customer Revenue

Our carrier revenue base, which has been relatively stable, represented 22% of total revenue for eight consecutive quarters through March 31, 2011, declined to 21% of total revenue in the three months ended June 30, 2011 and further declined to 20% of total revenue in each of the three months ended September 30 and December 31, 2011 due to the higher contribution from enterprise customer revenue. Carrier revenue increased 2% for the year ended December 31, 2011 from the year ended December 31, 2010, primarily due to installed sales of Ethernet services to wireline and wireless carrier customers to serve their end users' needs, somewhat offset by churn. In the year ended December 31, 2011, approximately 30% of carrier revenue was from wireless providers. Our carrier revenue historically has been impacted by pricing declines in connection with carrier customer contract renewals, disconnections resulting from price competition from other carriers, customer cost cutting measures and carrier consolidation. We expect these impacts on our carrier revenue to continue.

Intercarrier Compensation Revenue

Intercarrier compensation revenue, which consists of switched access and reciprocal compensation, represented 3% of our total revenue for 11 consecutive quarters through the three months ended December 31, 2010. For the year ended December 31, 2011, intercarrier compensation revenue declined to 2% of total revenue. Intercarrier compensation revenue is expected to continue to decline in the future as a percentage of total revenue due to federal and state mandated rate reductions and changes in the regulatory regime for intercarrier compensation. As a result of a recent FCC order, we believe approximately half of this revenue will be eliminated over a six year period ending July 2018 and expect approximately $2.0 million of this reduction in the second half of 2012. Intercarrier compensation revenue also may fluctuate from quarter to quarter based on variations in minutes of use originating and terminating on our network and changes in customer dispute activity.

Revenue and Customer Churn

Revenue churn, defined as the average lost recurring monthly billing for the period from a customer’s partial or complete disconnection of services (excluding pricing declines upon contract renewals and lost usage revenue) compared to reported revenue, is a measure used by management to evaluate revenue retention. Customer and service disconnections occur as part of the normal course of business and are primarily associated with price competition from other providers, customers moving facilities to other locations and customer cost cutting, business contractions, financial difficulties and consolidation, among other reasons. Beginning in late 2007 and continuing through 2009, disconnections increased, we believe due to the economic downturn, resulting in average monthly revenue churn of 1.2% and 1.3% in the years ended December 31, 2008 and 2009, respectively. Revenue churn improved in the year ended December 31, 2010 to pre-recession levels of 1.0% of monthly revenue and further improved to 0.9% for the year ended December 31, 2011. We believe that the improvement in revenue churn is a result of improved economic conditions as well as our service portfolio, measures we put in place to increase revenue retention and our customer experience initiatives. As a component of revenue churn, revenue lost from customers fully disconnecting services was 0.2% for the years ended December 31, 2011 and 2010 and 0.3% for the years ended December 31, 2009 and 2008. We cannot predict the total impact on revenue from future customer disconnections or the timing of such disconnections or whether these favorable churn trends will continue.

Customer churn, defined as the average monthly customer turnover for the period compared to the average monthly customer count for the period, was 1.0%, 1.1%, 1.3% and 1.4% for the years ended December 31, 2011, 2010, 2009 and 2008, respectively. The majority of this churn came from our smaller customers, which we expect will continue.

Pricing

We experience significant price competition across our service categories that impacts our revenue. This competition is particularly intense for traditional inter-city point-to-point services, carrier POP to POP and POP to customer premise legacy dedicated services, data center to data center dedicated services, Internet access, voice service and integrated service bundles. We also believe that technology advancements over the years in the telecommunications industry have resulted in lower unit costs for some electronics and equipment that drives customer demand for higher bandwidth at the same or lower prices.

In our industry, service agreements typically range from two to five years, with fixed pricing for the contract term. When contracts are renewed with no changes to the services, pricing may be reduced to current market levels as a renewal incentive. In addition, during the terms of agreements, customers often purchase additional services or increase or decrease the capacity of existing services, subject to applicable early termination charges, depending on their business needs. During periods of economic downturn, our customers' needs may contract, resulting in fewer service additions.

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Expenses and Modified EBITDA Trends

Pricing of Special Access Services

We provide special access services to customers over our own fiber facilities in competition with ILECs, and we also purchase special access and other services from ILECs to extend the reach of our network. The ILECs have argued before the FCC that the high capacity telecommunications services that they sell, including special access services we buy from them, should no longer be subject to regulations governing price and quality of service. We have advocated that the FCC should modify its special access pricing flexibility rules to return these services to price-cap regulation to protect against unreasonable price increases. The FCC is reviewing its regulation of special access pricing in a pending proceeding commenced in 2005 that has not yet resulted in proposed rules. We cannot predict when the FCC will act on interstate special access pricing regulation or the impact of any such action.

If the special access services we buy from the ILECs were to be further deregulated, ILECs would have a greater ability to increase the price and reduce the service quality of special access services they sell to us. As the prices we must pay for special access services increase, our margins are pressured.

In addition, the FCC has granted petitions for forbearance from regulation of certain special access services, including Ethernet services offered by the ILECs as special access with the result that prices we would pay for the Ethernet and OC-n high capacity data services of the petitioning carriers are no longer price regulated and could increase. We continue to pursue and implement commercial arrangements with the ILECs and cable companies for these services on acceptable terms and conditions.

Although we have a two year wholesale service agreement through May 31, 2012 with a large ILEC for tariffed special access and other services for end-user access that was intended to stabilize the prices we pay for these services, beginning in mid-2010, increases in its tariff pricing resulted in higher costs for some special access services subject to the agreement. In addition, another of our significant ILEC suppliers of special access service has increased its prices for special access services that we use to reach certain customer locations in its service area.

Bad Debt Expense Trends

Due to the quality of our customer base, successful collection efforts, internal controls, bad debt recoveries, and our revenue recognition policies, including recognition of contract termination charges upon cash receipt, our bad debt expense remained at less than 1% of our total revenue for the year ended December 31, 2011, comparable to the year ended December 31, 2010. We cannot assure that we will be able to maintain bad debt expense at this low level.

Growth Initiatives and Modified EBITDA trends

We have undertaken a number of initiatives to increase revenue growth, margins and cash flow that require both capital and operating investments. The operating investments in the year ended December 31, 2011 included expansion of our sales and sales support staff as well as IT and technical personnel and contract labor to support growing sales volumes and sales installations, support new product roll-outs and design and implement platforms for our network and services, some of which may be incurred in advance of anticipated revenue. We increased our capital spending in 2010 compared to 2009 to fund new service portfolio enhancements, incremental success-based expenditures related to support higher sales, including sales to wireless providers, strategic fiber expansions and corporate and IT initiatives that support the evolution of our services, enable our customer experience and drive increased scale and efficiency. We continued to invest in these types of growth initiatives in 2011. In the past two fiscal years our fiber connected buildings have increased by nearly one-third as a result of success-based opportunities to extend our network into buildings in connection with specific customer sales. Because we believe this added capacity provides for new sales opportunities with high contribution margins, we plan to increase our focus on additional sales within those fiber connected buildings through adjustments to our sales compensation incentives and promotions. We cannot predict whether these and other initiatives will be sufficient to maintain our current financial performance or increase revenue growth, margins and cash flows.

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Our Modified EBITDA (see Note 3 to the table under “Results of Operations” for a definition of Modified EBITDA) has increased for 19 consecutive quarters due to the contribution from revenue growth and the initiatives described above, among other factors. Modified EBITDA grew 7.4%, 6.2%, and 9.4% in the years ended December 31, 2011, 2010 and 2009, respectively, each compared to the respective period in the prior year. Modified EBITDA margin was 36.4%, 36.4% and 36.0% for the years ended December 31, 2011, 2010 and 2009, respectively. These margins include the absorption of higher costs associated with the expansion of our employee base for sales, sales support, IT and technical personnel, increases in access costs due to higher prices and increased volume and increases in revenue and expenses for certain taxes and fees that are reported on a gross versus net basis. See “Revenue” in Note 1 to the consolidated financial statements. We believe that margin expansion will come from increasing the network density of our less mature markets, since over the long term we have generally experienced margin improvement and increased cash flow from our less dense markets as those markets are expanded through on-net building additions, other network expansions and overall growth in our recurring revenue base. In addition, our continued cost efficiency efforts are also intended to contribute to our overall margins. This revenue and margin growth may be impacted by, among other risks, competitive pressures, higher employee costs, higher special access, fuel and energy costs and any future inflationary pressures.

Seasonality and Fluctuations

Although our business is not inherently seasonal in nature, historically our revenue and expense in the first quarter of the year has been impacted by some seasonal factors that may cause fluctuations from the prior quarter. First quarter installations and the associated revenue are frequently impacted by the slowing of our customers’ purchasing activities at the end of the fourth quarter. However, in the first quarter of 2011, we did not experience the seasonal slowing of revenue that we have historically experienced. Our historical experience with quarterly fluctuations may not necessarily be indicative of future results. Our expenses also are impacted in the first quarter by the resetting of payroll taxes.

Because we generally do not recognize revenue subject to billing disputes until the dispute is resolved, the timing of filing disputes and dispute resolutions may positively or negatively affect our revenue in a particular quarter. The timing of disconnections may also impact our results in a particular quarter, with disconnections early in the quarter generally having a greater impact. The timing of capital and other expenditures may affect our margins or cash flow. The convergence of any of these or other factors, such as fluctuations in usage, increases or decreases in certain taxes and fees or pricing declines upon contract renewals in a particular quarter may result in our revenue growing more or less than previous trends, may impact our margins and other financial results and may not be indicative of future financial performance.

Critical Accounting Policies and Estimates

We prepare our financial statements in accordance with accounting principles generally accepted in the United States, which require us to make estimates and assumptions that affect reported amounts and related disclosures. We consider an accounting estimate to be critical if:

• it requires assumptions to be made that were uncertain at the time the estimate was made; and

• changes in the estimate or different estimates that could have been selected could have a material impact on our consolidated results of operations or financial condition.

Goodwill

We perform impairment tests at least annually on all goodwill and indefinite-lived intangible assets as required by relevant accounting standards, which require goodwill to be assigned to a reporting unit and tested using a consistent measurement date. For purposes of testing goodwill for impairment, our goodwill has been assigned to our one consolidated reporting unit and our test is performed in the fourth quarter of each year or more frequently if impairment indicators arise.

Goodwill is reviewed for impairment utilizing a two-step process. The first step is to identify if a potential impairment exists by comparing the fair value of the reporting unit to its carrying amount. If the fair value of the reporting unit exceeds its carrying amount, goodwill is not considered to have a potential impairment and the second step of the impairment test is not necessary. However, if a potential impairment exists, the fair value of the reporting unit is compared to the fair value of its assets and liabilities, excluding goodwill, to estimate the implied value of the reporting unit’s goodwill. If an impairment charge is deemed necessary, a charge is recognized for any excess of the carrying amount of the reporting unit’s goodwill over the implied fair value.

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Considerable management judgment is necessary to estimate the fair value of our reporting unit and goodwill. We determine the fair value of our reporting unit based on the income approach, using a discounted projection of future cash flows which includes a five-year annual discounted cash flow (“DCF”) analysis with a terminal value to value the long-term future cash flows. This DCF analysis was used solely for the purpose of evaluating our goodwill for impairment and should not be interpreted as our prediction of future performance. The assumptions used in our DCF analysis are consistent with the assumptions we believe hypothetical marketplace participants would use. With respect to our DCF analysis, the timing and amount of future cash flows requires critical management assumptions, including estimates of expected future revenue growth rates, Modified EBITDA contributions, expected capital expenditures and an appropriate discount rate and terminal value. Our growth rate assumptions for this purpose are based on product and technology investments, fiber network expansions, changes in our underlying cost structure, market trends and historical results, among other items. In determining the fair value of our reporting unit for purposes of our assessment for the year ended December 31, 2011, we considered our five-year historical cumulative annualized growth rates for unlevered free cash flow (Modified EBITDA less capital expenditures) of 9.3%, excluding integration and branding costs that are not expected to recur. We applied a terminal multiple to estimated year five Modified EBITDA based on our long term cash flow growth expectations, which considers our expected operating performance and industry performance, to determine terminal value. The terminal value represents a significant portion of the resulting fair value of our reporting unit and therefore we compared the results to a growth model that estimates the value of future cash flow to perpetuity to assess the reasonableness. Projected cash flows were discounted to their present value using a discount rate of 10%, which represents a market-based participant weighted average cost of capital and may reflect the rate of return an outside investor would expect to earn. To corroborate the reasonableness of the resulting fair value of our reporting unit, we also considered our market capitalization at the date the test was performed.

The determination of fair value requires significant estimates and assumptions, which are subject to inherent uncertainties. Although our cash flow projections over the most recent three-year period have been reasonable compared to our actual results, actual results may vary significantly from estimates. Our methodology for our 2011 assessment was consistent with the methodology used in the prior year period. Our 2011 assessment resulted in the determination that the carrying value of our reporting unit does not exceed its fair value.

To assess the sensitivity of the assumptions used in our DCF analysis, we applied reductions of 20% to our critical estimates to test for impairment which we believe represents a reasonable change to our assumptions. When we applied a hypothetical two percentage point increase in the weighted average cost of capital, the resultant reduction in our fair value calculation would not have resulted in an impairment under our 2011 assessment. To assess the sensitivity of our future cash flow estimates including the terminal value used to derive the reporting unit’s fair value, we applied a hypothetical reduction of 20% to the estimated fair value of our reporting unit. The resultant reduction in fair value would not have resulted in an impairment under our 2011 assessment. We are not aware of any reasonably likely changes in our assumptions that would result in an impairment.

Impairment of Long-lived Assets

We periodically assess our ability to recover the carrying amount of property, plant and equipment and intangible assets, which requires an assessment of risk associated with our ability to generate sufficient future cash flows from these assets. If we determine that the future cash flows expected to be generated by a particular asset do not exceed the carrying value of that asset, we recognize a charge to write down the value of the asset to its fair value.

Estimates are used to determine whether sufficient cash flows will be generated to recover the carrying amount of our investments in long term assets. The estimates are made for each of our seven regions. Expected future cash flows are based on historical experience and management’s expectations of future performance. The assumptions used represent our best estimates including market growth rates, future pricing, market acceptance of our products and services and the future capital investments necessary.

Our 2011 assessment did not result in any impairment charges. A hypothetical 20% reduction in our projected Modified EBITDA for each region would not have resulted in an impairment as of December 31, 2011.

Regulatory and Other Contingencies

We are subject to significant government and jurisdictional regulation, some of which is uncertain due to legal challenges of existing rules. Such regulation is subject to differing interpretations and inconsistent application, and has historically resulted in disputes with other carriers, regulatory authorities, and municipalities regarding the classification of traffic, rates, minutes of use and right-of-way fees.

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Management estimates and accrues for its estimate of probable losses associated with regulatory and other contingencies. These estimates are based on assumptions and other considerations including expectations regarding regulatory rulings, historic experience and ongoing negotiations. We evaluate these reserves on an ongoing basis and make adjustments as necessary. A 10% unfavorable or favorable change in the estimates used for such reserves would have resulted in approximately a $14.1 million decrease or $9.7 million increase, respectively, in net income for the year ended December 31, 2011.

Deferred Tax Accounting

We have had a history of NOLs for tax purposes. When it is more likely than not that all or some portion of deferred tax assets may not be realized, we establish a valuation allowance for the amount that may not be realized. Each quarter we evaluate the need to retain all or a portion of the valuation allowance on our net deferred tax assets. During 2010, we determined that it is more likely than not that the vast majority of our deferred tax assets, including NOLs, will be realized, and as a result reversed $299.0 million of the valuation allowance. In making this determination, we analyzed, among other things, our recent history of earnings, cumulative earnings for the last 12 quarters, and forecasts of future earnings. The reversal of the valuation allowance recorded during 2010 resulted in an income tax benefit of $299.0 million, or $1.98 per basic share and $1.72 per diluted share, for the year ended December 31, 2010, and an increase in the current and non-current deferred tax assets on the consolidated balance sheet as of December 31, 2010.

We continue to maintain a valuation allowance against certain deferred tax assets totaling $35.4 million. We believe it is more likely than not that deferred tax assets resulting from NOLs subject to certain limitations and those that require future income of special character will not be realized. Additionally, we have certain deferred tax assets attributable to stock option deductions for which the related valuation allowance cannot be reversed due to relevant accounting guidance concerning tax benefits related to the exercise of non-qualified stock options prior to the adoption of such accounting guidance.

As of December 31, 2011, we had NOLs for federal income tax purposes of $1.0 billion. If not utilized to reduce taxable income in future periods, these NOLs generally expire in various amounts beginning in 2021 and ending in 2026. We utilized NOLs to offset income tax obligations in each of the tax returns filed for the years ended December 31, 2010, 2009, 2008 and 2007. The Tax Reform Act of 1986 contains provisions that limit the utilization of NOLs if there has been an “ownership change” as described in Section 382 of the Internal Revenue Code. In general, this would occur if certain ownership changes related to our stock that is held by 5% or greater stockholders exceeds 50 percent measured over a rolling three year period. If we experience such an ownership change, our utilization of NOLs to reduce future federal income tax obligations could be limited. In order to reduce the likelihood of an ownership change as defined by Section 382, we adopted the Rights Plan in January 2009 that was approved by our stockholders in June 2009. The Rights Plan terminated in accordance with its terms on January 20, 2012, and we did not extend the Rights Plan. However, our Board may adopt another similar rights plan in the future, subject to subsequent ratification by our stockholders, if it determines that our substantial NOLs are at risk of limitation under Section 382 or that such action otherwise is in the best interests of our stockholders.

Revenue and Receivables

Our services are complex and our tariffs and contracts may be correspondingly complex and subject to interpretations that cause disputes regarding amounts billed. In addition, changes in and interpretations of regulatory rulings create uncertainty and may cause disputes over minutes of use, rates or other provisions of our service. As such, we defer recognition of revenue until cash is collected on certain components of revenue, such as contract termination charges. We also reserve for customer billing disputes until they are resolved even if the customer has already paid the disputed amount.

We estimate the ability to collect our receivables by performing ongoing credit evaluations of our customers’ financial condition, and provide an allowance for doubtful accounts based on expected collection of our receivables. Our estimates are based on assumptions and other considerations, including payment history, credit ratings, customer financial performance, industry financial performance and aging analysis. As a result of an improvement in our collection activities, our overall receivables management and an improving economy, our allowance for doubtful accounts as a percentage of gross receivables has improved from 11% at December 31, 2009 to 9% at December 31, 2010 to 8% at December 31, 2011. A 10% change in the estimates used for our allowance for doubtful accounts would not have resulted in a material change in net income for the year ended December 31, 2011.

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Stock-Based Compensation

We recognize the cost of stock-based payments as compensation expense over the requisite service period, which is generally the vesting period of the award. The fair value of restricted stock awards and restricted stock units granted is determined based on the market price of our common stock at the date of grant. We use the Black-Scholes pricing model to estimate the fair value of options as of the grant date. The Black-Scholes model by its design is dependent upon key data inputs estimated by management such as expected volatility, expected term and expected dividend yield. See Note 1 and Note 10 to the consolidated financial statements for a further discussion of our stock-based compensation plans.

Other Estimates

There are other accounting estimates reflected in our consolidated financial statements, including contingent loss accruals, compensation accruals, unpaid claims for medical and other self-insured plans, property and other tax exposures and asset retirement obligations that require judgment but are not deemed critical in nature.

We believe that the current assumptions and other considerations used to estimate amounts reflected in the consolidated financial statements are appropriate. However, if actual experience differs from the assumptions and other considerations used in estimating amounts reflected in the consolidated financial statements, the resulting changes could have a material adverse effect on our results of operations and, in certain situations, on our financial condition.

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Results of Operations

The following table sets forth certain data from our consolidated financial statements presented in thousands of dollars and expressed as a percentage of total revenue. This table should be read together with our audited consolidated financial statements, including the notes thereto, appearing elsewhere in this report:

	Years Ended December 31,
	2011					2010					2009
	(amounts in thousands, except per share amounts)
Statements of Operations Data:
Revenue (1):
Data and Internet services	$	646,682		47	%	$	547,218		43	%	$	472,647		39	%
Network services	350,709			26		359,169			28		370,859			31
Voice services	338,655			25		332,870			26		333,274			27
Intercarrier compensation	30,845			2		33,914			3		34,610			3
Total revenue	1,366,891			100		1,273,171			100		1,211,390			100
Costs and expenses:
Operating (exclusive of depreciation, amortization, and accretion shown separately below) (2)	571,461			42		528,965			42		503,960			42
Selling, general, and administrative (2)	325,538			24		308,470			24		297,290			25
Depreciation, amortization, and accretion	283,329			21		289,564			23		296,167			24
Total costs and expenses	1,180,328			86		1,126,999			89		1,097,417			91
Operating income	186,563			14		146,172			11		113,973			9
Interest expense	(87,718		)	(6	)	(80,952		)	(6	)	(84,001		)	(7	)
Debt extinguishment costs	—			—		(17,070		)	(1	)	—			—
Interest income	545			—		608			—		360			—
Other income	—			—		825			—		—			—
Income before income taxes	99,390			7		49,583			4		30,332			2
Income tax (benefit) expense	41,479			3		(291,295		)	23		11,921			(1	)
Net income	$	57,911		4	%	$	340,878		27	%	$	18,411		2	%
Basic income per common share	$	0.39				$	2.26				$	0.12
Diluted income per common share	$	0.38				$	2.12				$	0.12
Weighted average shares outstanding, basic	147,247					149,156					148,087
Weighted average shares outstanding, diluted	149,349					171,456					149,852
Modified EBITDA and Modified EBITDA margin (1)(3)(4)	$	497,709		36	%	$	463,568		36	%	$	436,658		36	%
Net cash provided by operating activities	403,588					385,752					390,478
Net cash used in investing activities	(352,799		)			(418,049		)			(290,589		)
Net cash used in financing activities	(54,317		)			(56,688		)			(6,158		)

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___________________

(1) We classify certain taxes and fees billed to customers and remitted to government authorities on a gross versus net basis in revenue and expense. The total amounts classified as revenue, primarily included in voice services, associated with such taxes and fees were approximately $63.5 million, $51.3 million and $40.0 million for the years ended December 31, 2011, 2010 and 2009, respectively. This has no impact on Modified EBITDA or net income (loss) but is dilutive to Modified EBITDA margin.

(2) Includes the following non-cash stock-based employee compensation expense:

	Years Ended December 31,
	2011		2010		2009
	(amounts in thousands)
Operating	$	2,327	$	3,261	$	3,654
Selling, general, and administrative	25,490		24,571		22,864

(3) See Note 4 and 5 in “Item 6. Selected Financial Data” for a definition of “Modified EBITDA” and for reconciliations of Modified EBITDA to net income (loss), the most comparable GAAP measure for operating performance, and Modified EBITDA, as a measure of liquidity, to net cash provided by operating activities.

(4) Modified EBITDA margin represents Modified EBITDA as a percentage of revenue.

Year Ended December 31, 2011 Compared to Year Ended December 31, 2010

Revenue. Total revenue increased $93.7 million, or 7%, to $1.37 billion for the year ended December 31, 2011 from $1.27 billion for the year ended December 31, 2010. The primary driver of this growth in revenue was increased data and Internet services revenue from installed services to enterprise customers.

Data and Internet services revenue increased $99.5 million, or 18%, to $646.7 million for the year ended December 31, 2011 from $547.2 million for the year ended December 31, 2010. The increase in data and Internet services revenue primarily resulted from installed Ethernet and IP-based product sales to enterprise customers.

Revenue from network services decreased $8.5 million, or 2%, to $350.7 million for the year ended December 31, 2011 from $359.2 million for the year ended December 31, 2010. The decrease in network services revenue was primarily from disconnections and repricing of renewed customer contracts largely in transport services partially offset by growth primarily in high capacity and collocation services revenue.

Voice services revenue increased $5.8 million, or 2%, to $338.7 million for the year ended December 31, 2011 from $332.9 million for the year ended December 31, 2010. The increase in voice services revenue resulted primarily from increases in both rates and volume of certain taxes and fees remitted to government authorities that we classify on a gross versus net basis in revenue and expense. Installed sales of Converged and other voice solutions were more than offset by service disconnections and a reduction in usage-based services. Revenue based on the minutes of service used by customers included in voice services was 3% and 4% of our total revenue for the years ended December 31, 2011 and 2010, respectively.

Intercarrier compensation revenue, including switched access and reciprocal compensation, decreased $3.1 million, or 9%, to $30.8 million for the year ended December 31, 2011 from $33.9 million for the year ended December 31, 2010. The decrease was primarily due to fluctuations in dispute settlements and rate reductions somewhat offset by an increase in minutes of use terminated on our network. As a result of a recent FCC order, we expect that approximately half of this revenue will be eliminated over a six year period ending July 2018 with approximately $2.0 million of this reduction occurring in the second half of 2012.

Operating Expenses. Our operating expenses consist of costs directly related to the operation and maintenance of our network and the provisioning of our services. These costs, which are net of costs capitalized for labor and overhead on capital projects, include the salaries and related expenses of customer care, provisioning, network maintenance, technical field and network operations and engineering personnel, costs to repair and maintain our network, and costs paid to other carriers for access to their facilities, interconnection, and facilities leased and associated utilities. We carry a significant portion of our traffic on our own fiber infrastructure, which enhances our ability to minimize and control access costs, consisting of the costs to purchase network services from other carriers. Operating expenses increased $42.5 million, or 8%, to $571.5 million for the year ended December 31, 2011 from $529.0 million for the year ended December 31, 2010. The increase in operating expenses is primarily due to increased network access costs, certain taxes and fees and employee costs to support higher revenue growth. Operating expenses represented 42% of total revenue for each of the years ended December 31, 2011 and 2010.

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Selling, General, and Administrative Expenses. Selling, general, and administrative expenses consist of salaries and related costs for employees and other expenses related to sales and marketing, bad debt, IT, billing, regulatory, administrative and legal functions. Selling, general, and administrative expenses increased $17.1 million, or 6%, to $325.5 million for the year ended December 31, 2011 from $308.5 million for the year ended December 31, 2010. The increase was primarily due to higher employee costs and property taxes. The higher employee costs resulted from incentive-based compensation for sales employees due to increased customer installations of service, expansion of our sales and sales support personnel, annual merit-based salary increases, and other employee-related costs. Selling, general, and administrative expenses represented 24% of total revenue for each of the years ended December 31, 2011 and 2010.

Depreciation, Amortization, and Accretion Expense. Depreciation, amortization, and accretion expense decreased $6.2 million, or 2%, to $283.3 million for the year ended December 31, 2011 from $289.6 million for the year ended December 31, 2010. The decrease was primarily attributable to fully depreciated and retired assets partially offset by additions to property, plant and equipment in 2011 and 2010.

Interest Expense. Interest expense increased $6.8 million, or 8%, to $87.7 million for the year ended December 31, 2011 from $81.0 million for the year ended December 31, 2010. The increase is primarily due to higher effective interest rates on the variable rate Term Loan and as a result of a debt refinancing in the fourth quarter of 2010 that extended the term of a portion of that loan and an increase in non-cash interest expense associated with our Convertible Debentures.

Debt Extinguishment Costs. Debt extinguishment costs were $17.1 million for the year ended December 31, 2010, which resulted from the early retirement of $400 million principal amount of our 9 ¹/₄% Senior Notes due February 2014 (the “2014 Notes”) and primarily consisted of $13.7 million in cash paid for call premiums and $3.6 million in non-cash write offs of deferred debt issuance costs. There were no such costs for the year ended December 31, 2011.

Other Income. During the year ended December 31, 2010, we recognized a gain of $0.8 million related to proceeds received upon liquidation of previously impaired commercial paper. There was no such gain during the year ended December 31, 2011. See Note 3 to our consolidated financial statements.

Income Before Income Taxes. Income before income taxes was $99.4 million for the year ended December 31, 2011 compared to $49.6 million for the year ended December 31, 2010. The increase in income before income taxes of $49.8 million primarily resulted from debt extinguishment costs in 2010 that did not recur, an increase in Modified EBITDA and lower depreciation, amortization and accretion, partially offset by an increase in interest expense.

Income Tax Expense (Benefit). Income tax expense was $41.5 million for the year ended December 31, 2011 compared to income tax benefit of $291.3 million for the the year ended December 31, 2010. This change primarily related to a $299.0 million non-cash income tax benefit recognized during the three months ended June 30, 2010 resulting from the recognition of the value of deferred tax assets that we believe are realizable (see Note 9 to the consolidated financial statements), as well as a higher effective tax rate in 2011 and an increase in income before income taxes for the year ended December 31, 2011. Our effective tax rate in 2011 was 42% and we expect our 2012 effective tax rate to be similar to 2011.

Net Income and Modified EBITDA. Net income was $57.9 million for the year ended December 31, 2011 compared to $340.9 million for the year ended December 31, 2010. The decrease in net income of $283.0 million resulted from the income tax expense (benefit) described above, partially offset by the increase in income before income tax expense. Modified EBITDA increased $34.1 million to $497.7 million, or 36% of total revenue for the year ended December 31, 2011, from $463.6 million, or 36% of total revenue in 2010. The increase in Modified EBITDA was primarily the result of the contribution from revenue growth partially offset by an increase in employee and field related costs. Modified EBITDA margins include the absorption of higher costs associated with the expansion of our employee base for sales, sales support, IT and technical personnel, increases in access costs due to higher prices and increased volume and increases in revenue and expenses for certain taxes and fees. For the years ended December 31, 2011 and 2010, Modified EBITDA has been sufficient to cover our capital expenditures and service our debt, and we expect to generate sufficient Modified EBITDA in the foreseeable future to cover our expected capital expenditures and debt service requirements along with cash on hand. See “Item 6. Selected Financial Data” Note 4 for a definition of Modified EBITDA and Note 5 for reconciliations of Modified EBITDA to net income (loss), which is the most comparable GAAP measure for operating performance, and Modified EBITDA to net cash provided by operations, which is the most comparable GAAP measure for liquidity.

Year Ended December 31, 2010 Compared to Year Ended December 31, 2009

Revenue. Total revenue increased $61.8 million, or 5%, to $1.27 billion for the year ended December 31, 2010 from $1.21 billion for the year ended December 31, 2009. The primary driver of this growth in revenue was increased data and Internet services revenue from installed services to enterprise customers.

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Data and Internet services revenue increased $74.6 million, or 16%, to $547.2 million for the year ended December 31, 2010 from $472.6 million for the year ended December 31, 2009. The increase in data and Internet services revenue primarily resulted from installed Ethernet and IP-based product sales to enterprise customers slightly offset by disconnections.

Revenue from network services decreased $11.7 million, or 3%, to $359.2 million for the year ended December 31, 2010 from $370.9 million for the year ended December 31, 2009. The decrease in network services revenue was primarily from disconnections and repricing of renewing customer contracts partially offset by growth primarily in high capacity and collocation services revenue as well as increased installations of transport services to wireless providers.

Voice services revenue decreased $0.4 million, to $332.9 million for the year ended December 31, 2010 from $333.3 million for the year ended December 31, 2009. The decrease in voice services revenue resulted primarily from service disconnections including a reduction in usage-based services offset by growth in new installed sales and certain taxes and fees remitted to government authorities that we classify on a gross versus net basis in revenue and expense. Revenue based on the minutes of service used by customers included in voice services was 4% of our total revenue for each of the years ended December 31, 2010 and 2009.

Intercarrier compensation revenue, including switched access and reciprocal compensation, decreased $0.7 million, or 2%, to $33.9 million for the year ended December 31, 2010 from $34.6 million for the year ended December 31, 2009. The decrease was primarily due to fluctuations in dispute settlements and a decline in minutes of use terminated on our network.

Operating Expenses. Operating expenses increased $25.0 million, or 5%, to $529.0 million for the year ended December 31, 2010 from $504.0 million for the year ended December 31, 2009. The increase in operating expenses is primarily due to higher network access costs associated with higher revenue, increased field related and employee costs, and an increase in certain taxes and fees partially offset by network cost efficiencies. Higher field related costs primarily resulted from maintenance, lease costs, and utilities. Operating expenses represented 42% of total revenue for each of the years ended December 31, 2010 and 2009.

Selling, General, and Administrative Expenses. Selling, general, and administrative expenses increased $11.2 million, or 4%, to $308.5 million for the year ended December 31, 2010 from $297.3 million for the year ended December 31, 2009. The increase was primarily due to higher employee costs partially offset by lower bad debt expense. Higher employee costs primarily resulted from an expansion of our sales force, annual merit-based salary increases, and higher non-cash stock-based compensation. Selling, general, and administrative expenses represented 24% and 25% of total revenue for the years ended December 31, 2010 and 2009, respectively.

Depreciation, Amortization, and Accretion Expense. Depreciation, amortization, and accretion expense decreased $6.6 million, or 2%, to $289.6 million for the year ended December 31, 2010 from $296.2 million for the year ended December 31, 2009. The decrease was primarily attributable to fully depreciated and retired assets partially offset by additions to property, plant and equipment in 2010 and 2009.

Interest Expense. Interest expense decreased $3.0 million, or 4%, to $81.0 million for the year ended December 31, 2010 from $84.0 million for the year ended December 31, 2009. The decrease is primarily due to lower effective interest rates on the variable rate Term Loan and as a result of a debt refinancing of senior notes that we completed in the first quarter of 2010 partially offset by an increase in non-cash interest expense associated with our Convertible Debentures.

Debt Extinguishment Costs. Debt extinguishment costs were $17.1 million for the year ended December 31, 2010, which resulted from the early retirement of $400 million principal amount of the 2014 Notes and primarily consisted of $13.7 million in cash paid for call premiums and $3.6 million in non-cash write offs of deferred debt issuance costs.

Other Income. During the year ended December 31, 2010, we recognized a gain of $0.8 million related to proceeds received upon liquidation of previously impaired commercial paper. There was no such gain during the year ended December 31, 2009. See Note 3 to our consolidated financial statements.

Income Tax Expense (Benefit). Income tax benefit was $291.3 million for the year ended December 31, 2010 compared to income tax expense of $11.9 million for the year ended December 31, 2009. This change primarily related to a $299.0 million non-cash income tax benefit recognized during the three months ended June 30, 2010 resulting from the recognition of the value of deferred tax assets that we believe are realizable (see Note 9 to the consolidated financial statements).

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Net Income and Modified EBITDA. Net income was $340.9 million for the year ended December 31, 2010 compared to $18.4 million for the year ended December 31, 2009. The increase in net income of $322.5 million resulted from the non-cash income tax benefit of $299.0 million, an increase in Modified EBITDA, a decrease in depreciation, amortization and accretion, and lower interest expense partially offset by $17.1 million in debt extinguishment costs as described above. Modified EBITDA increased $26.9 million to $463.6 million, or 36% of total revenue for the year ended December 31, 2010, from $436.7 million, or 36% of total revenue in 2009. The increase in Modified EBITDA was primarily the result of the contribution from revenue growth, network cost efficiencies, and lower bad debt expense, partially offset by an increase in employee and field related costs. For the years ended December 31, 2010 and 2009, Modified EBITDA has been sufficient to cover our capital expenditures and service our debt, and we expect to generate sufficient Modified EBITDA in the foreseeable future to cover our expected capital expenditures and interest expense. See “Item 6. Selected Financial Data” Note 4 for a definition of Modified EBITDA and Note 5 for reconciliations of Modified EBITDA to net income (loss), which is the most comparable GAAP measure for operating performance, and Modified EBITDA to net cash provided by operations, which is the most comparable GAAP measure for liquidity.

Liquidity and Capital Resources

Historically, we have generated cash flow from operations consisting primarily of payments received from customers for the provision of business communications services offset by payments to other telecommunications carriers, payments to employees, and payments for interest and other operating, selling, general, and administrative costs. We have also generated cash from debt and equity financing activities and have used funds to service or repay our debt obligations, make capital expenditures to expand our network and fund acquisitions. In 2010 and 2011, we also used cash to repurchase our common stock and may do so in the future. In November 2011, our Board of Directors authorized a multi-year repurchase program of up to an additional $300 million of our common stock, of which approximately $8.6 million was repurchased as of December 31, 2011.

At December 31, 2011, we had approximately $1.4 billion of total debt and capital lease obligations and $484.9 million of cash, cash equivalents and short-term investments compared to approximately $1.3 billion of total debt and capital lease obligations and $475.6 million of cash, cash equivalents and short-term investments at December 31, 2010. Net debt of $875.6 million (defined as total debt and capital lease obligations less cash, cash equivalents and short-term investments) increased $5.7 million primarily due to a net increase in our total debt resulting from accretion of the discount on our Convertible Debentures, capital expenditures and repurchases of our common stock, partially offset by cash provided by operating activities resulting from higher Modified EBITDA and net proceeds from stock option exercises.

Working capital, defined as current assets less current liabilities, was $371.5 million as of December 31, 2011, an increase of $58.7 million from December 31, 2010. Our working capital ratio, defined as current assets divided by current liabilities, was 2.27 as of December 31, 2011 as compared to 2.04 as of December 31, 2010. The increase in working capital is primarily a result of cash provided by operating activities resulting from higher Modified EBITDA and an increase in current deferred income tax assets.

Cash Flow Activity

Cash and cash equivalents were $353.4 million and $356.9 million as of December 31, 2011 and 2010, respectively. In addition, we had investments of $131.5 and $118.7 million as of December 31, 2011 and 2010, respectively, which were short-term in nature and generally available to fund our operations. The change in cash and cash equivalents during the periods presented were as follows:

	Years ended December 31,
	2011			2010			2009
	(amounts in thousands)
Cash provided by operating activities	$	403,588		$	385,752		$	390,478
Cash used in investing activities	(352,799		)	(418,049		)	(290,589		)
Cash used in financing activities	(54,317		)	(56,688		)	(6,158		)
(Decrease) increase in cash and cash equivalents	$	(3,528	)	$	(88,985	)	$	93,731

Operations. Cash provided by operating activities was $403.6 million for the year ended December 31, 2011 compared to $385.8 million for the year ended December 31, 2010. This increase in cash provided by operating activities primarily related to higher Modified EBITDA somewhat offset by changes in working capital and other non-current assets and liabilities, which were largely due to the timing of payments to vendors and employees and the collection of receivables.

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Cash provided by operating activities was $385.8 million for the year ended December 31, 2010 compared to $390.5 million for the year ended December 31, 2009. This decrease in cash provided by operating activities primarily related to changes in working capital, which were largely due to the timing of payments to vendors and employees and the collection of receivables, and were somewhat offset by higher Modified EBITDA.

Investing. Cash used in investing activities was $352.8 million for the year ended December 31, 2011 compared to $418.0 million for the year ended December 31, 2010. The change is primarily a result of the net decrease in cash used for the purchase and sale of investments in 2011 somewhat offset by an increase in capital expenditures. Our balances of cash, cash equivalents and investments fluctuate over time based on our cash requirements and market interest yields. Cash used for capital expenditures for the year ended December 31, 2011 was $340.7 million, the majority of which was success-based spending initiatives (see "Capital Expenditures and Requirements" below), compared to $321.8 million for the year ended December 31, 2010.

Cash used in investing activities was $418.0 million for the year ended December 31, 2010 compared to $290.6 million for the year ended December 31, 2009. The change is primarily a result of purchases of investments in 2010 and capital expenditures. Our balances of cash, cash equivalents and investments fluctuate over time based on our cash requirements and market interest yields. Cash used for capital expenditures for the year ended December 31, 2010 was $321.8 million, the majority of which was used to reach new customer buildings and for longer term strategic investments including new service enhancements and corporate and IT initiatives, compared to $267.0 million for the year ended December 31, 2009.

Financing. Cash used in financing activities was $54.3 million for the year ended December 31, 2011, primarily consisting of repurchases of $58.6 million of our common stock. Cash used in financing activities was $56.7 million for the year ended December 31, 2010, primarily consisting of repurchases of $49.9 million of our common stock and payments of $7.2 million on the Term Loan and capital lease obligations. Cash used in financing activities was $6.2 million for the year ended December 31, 2009, primarily for payments on the Term Loan and capital lease obligations, somewhat offset by proceeds from the exercise of stock options.

In March 2010, we completed a private offering of the 2018 Notes at an offering price of 99.284% of the principal amount. The purpose of the 2018 Notes offering was to extend our debt maturities and reduce interest rates. The net proceeds from the offering were used to fund extinguishment of the 2014 Notes, of which $366.5 million principal amount were purchased at a price of 103.45% of the principal amount in a concurrent tender offer. Notes representing the remaining $33.5 million principal amount of the 2014 Notes were either tendered or redeemed at a price of 103.083% of the principal amount. For a description of the significant terms of the 2018 Notes, see Note 6 to the consolidated financial statements.

In December 2010, we amended and restated our 2006 Credit Agreement to extend $474.1 million of the total $577.5 million outstanding principal amount of our Term Loan at that date from January 2013 to December 2016 (the “extended tranche”). The January 2013 maturity of the remaining $103.4 million of outstanding principal was unchanged (the “January 2013 tranche”). The term of our undrawn Revolver was extended from October 2011 to December 2014. The interest rates on the two Term Loan tranches and the Revolver, if drawn, are as follows:

• Interest on the extended tranche of the Term Loan is computed based on a specified Eurodollar rate plus 3.25% and will be reset periodically and payable at least quarterly.

• Interest on the January 2013 tranche of the Term Loan remains at a specified Eurodollar rate plus 1.75%-2.0%, of which 1.75% was in effect at December 31, 2011, and will be reset periodically and payable at least quarterly.

• Interest on outstanding amounts of the Revolver, if any, will be computed based on a specified Eurodollar rate plus 2.5% to 3.5% and will be reset periodically and payable at least quarterly.

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As of December 31, 2011, we had the following instruments and principal amounts outstanding:

Instrument	Principal amount outstanding		Aggregate annual estimated interest payments
	(amounts in thousands)
8% Senior Notes due 2018	$	430,000	$	34,400
2  3/8% Convertible Senior Debentures due 2026 (1)	373,744		8,876
Term Loan, Eurodollar rate + 3.25% due 2016 (2)	467,946		16,547
Term Loan, Eurodollar rate + 1.75%-2.0% due 2013 (3)	102,055		2,084
Undrawn $80 million Revolver expires 2014	—		—

___________________

⁽¹⁾  The Convertible Debentures are redeemable in whole or in part at our option at any time on or after April 6, 2013 at a redemption price equal to 100% of the principal amount of the debentures to be redeemed, plus accrued and unpaid interest. Holders of the Convertible Debentures have the option to require us to purchase all or part of the Convertible Debentures on April 1, 2013, April 1, 2016, or April 1, 2021, or at any time prior to April 1, 2026 to convert the debentures into shares of our common stock. Upon conversion, we will have the right to deliver, in lieu of shares of common stock, cash or a combination of cash and shares of common stock.

⁽²⁾  The aggregate annual estimated interest payments are based on the effective interest rate of 3.55% at December 31, 2011.

⁽³⁾  As of December 31, 2011, a spread of 1.75% over the Eurodollar rate was in effect. The aggregate annual estimated interest payments are based on the effective interest rate of 2.05% at December 31, 2011.

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The following diagram summarizes our corporate structure in relation to our outstanding indebtedness and credit facility as of December 31, 2011. The diagram does not depict all aspects of the ownership structure among the operating and holding entities, but rather summarizes the significant elements relative to our debt in order to provide a basic overview.

a TWTC and substantially all of these subsidiaries guarantee the 2018 Notes on an unsecured basis and the Revolver and Term Loan on a secured basis.

b The assets and equity interests of these subsidiaries are pledged to secure the Revolver and the Term Loan.

c The Term Loan matures in two separate tranches: As of December 31, 2011, approximately $467.9 million matures in December 2016 and approximately $102.1 million matures in January 2013. Such principal amounts are reduced by quarterly principal payments over the respective terms of the two tranches.

d The Convertible Debentures are redeemable in whole or in part at our option at any time on or after April 6, 2013 at a redemption price equal to 100% of the principal amount of the debentures to be redeemed, plus accrued and unpaid interest. Holders of the Convertible Debentures have the option to require us to purchase all or part of the Convertible Debentures on April 1, 2013, April 1, 2016, or April 1, 2021, or at any time prior to April 1, 2026 to convert the debentures into shares of our common stock.

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Capital Expenditures and Requirements

Our total capital expenditures were $342.7 million for the year ended December 31, 2011 compared to $321.8 million for the year ended December 31, 2010, with the majority of capital in each period for success-based initiatives. In each of the full years ended 2005 through 2011, over 75% of our total annual capital expenditures, excluding capital expenditures for integration and branding, were for success-based opportunities that were directly linked to new installations and capacity requirements. Success-based spending consists of short-to-medium length capital projects, in terms of anticipated time between capital spending and return on investment, driven by customer opportunities. This includes costs to connect to new customer locations with our fiber network and increase capacity in our network, IP backbone enhancements, collocation facility expansion and central office infrastructure to serve growing customer demands. These types of expenditures can fluctuate as our volume of sales and service installations increases or decreases.

For 2012, we expect capital expenditures of approximately $345 million to $355 million (see “Capital Resources” below for discussion on anticipated funding sources), the majority of which we expect to be for new sales opportunities. Included in our expected capital expenditures are amounts we must spend to replace older network components, especially electronics, that we expect will continue to grow over time. We expect quarterly fluctuations in our capital spending due to the timing of large projects and other external factors such as customer readiness, permitting and weather. We generally do not make long-term commitments for capital expenditures and have the ability to adjust our capital expenditures if our cash from operations is lower than anticipated or in response to a change in demand.

Capital Resources

Based on current assumptions, we expect to generate sufficient cash from operations along with available cash on hand, including cash equivalents, investments, and borrowing capacity under our undrawn Revolver, to provide sufficient funds to meet our expected capital expenditure and liquidity needs to operate our business and service our debt for the foreseeable future. We believe that as of December 31, 2011, the extension of a significant portion of our Term Loan from January 2013 to December 2016, the replacement of our 2014 Notes with the 2018 Notes, the absence of financial maintenance covenants in our Term Loan, $353.4 million in cash and cash equivalents, $131.5 million in short-term investments and an $80 million undrawn Revolver, provide us flexibility to make investments that we deem appropriate for ongoing operations. However, if our assumptions prove incorrect or if there are other factors that negatively affect our cash position such as material unanticipated losses, a significant reduction in demand for our services, an acceleration of customer disconnections or other adverse factors or if we make acquisitions or enter into joint ventures, we may need to seek additional sources of funds through financing or other means. There is no assurance that other sources of financing on acceptable terms will be available in the future.

Our ability to draw upon the available commitments under our Revolver is subject to compliance with all of the covenants contained in the credit agreement and our continued ability to make certain representations and warranties. In the case of the Revolver, the covenants include financial covenants, such as leverage and interest coverage ratios and limitations on capital expenditures that are primarily derived from Modified EBITDA and debt levels. We are required to comply with these ratios as a condition to any borrowing under the Revolver and for as long as any loans are outstanding under the Revolver. The representations and warranties include the absence of liens on our properties other than certain permitted liens, the absence of litigation or other developments that have or could reasonably be expected to have a material adverse effect on us and our subsidiaries as a whole, and continued effectiveness of the documents granting security for the loans.

A lack of revenue growth or an inability to control costs could negatively impact Modified EBITDA and cause our failure to meet the required minimum ratios under the Revolver if we have loans outstanding under the Revolver or wish to draw on it. Although we currently believe that we will continue to be in compliance with the covenants, various factors, including deterioration of the economy, increased competition and pricing pressure and loss of revenue from significant customers, an acceleration of customer disconnections, a significant reduction in demand for our products without adequate reductions in capital expenditures and operating expenses, or an uninsured catastrophic loss of physical assets or other risk factors could cause us to fail to meet our covenants. If our revenue growth is not sufficient to sustain the Modified EBITDA performance required to meet the debt covenants described above, and we have loans outstanding under the Revolver or wish to draw on it, we would have to consider cost cutting or other measures to maintain required Modified EBITDA levels or to enhance liquidity.

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The Revolver, Term Loan and 2018 Notes limit our ability to declare cash dividends, incur indebtedness, incur liens on property and undertake acquisitions, among other things. The Revolver, Term Loan and 2018 Notes also include cross default provisions under which we are deemed to be in default if we default under any of the other material outstanding obligations. If we are in default under any of the covenants under the Term Loan and Revolver, we also could potentially be subject to an acceleration of the repayment date of the Term Loan and the Revolver if we have borrowed under that facility. Covenant defaults under the Revolver and Term Loan agreements also may constitute an event of default under the indenture for the 2018 Notes. In addition, the lenders under the Revolver may require prepayment of outstanding revolving loans if a change of control and ratings decline occurs as defined in the Revolver agreement. We are required to offer to prepay the 2018 Notes and the Term Loans on an individual basis if a change of control and a debt rating decline occurs as defined in the indenture for the 2018 Notes and the Term Loan agreement. If we do not comply with the covenants under the Revolver, we would not be able to draw funds under the Revolver, outstanding revolving loans could be accelerated or the lenders could cancel the Revolver unless the respective lenders agree to further modify the covenants. Although we believe our relationships with our lenders are good, there is no assurance that we would be able to obtain the necessary covenant modifications on acceptable terms or at all. As of December 31, 2011, we were in compliance with all of our debt covenants. If our plans or assumptions change or prove to be inaccurate, or the foregoing sources of funds prove to be insufficient to fund our growth and operations, or if we consummate acquisitions or joint ventures, we would be required to seek additional capital. Additional sources of financing may include public or private debt, equity financing by us or our subsidiaries or other financing arrangements. There is no assurance that we would be able to obtain additional financing on terms acceptable to us or at all. Other risks, such as a rating downgrade on our debt, could further impact our potential access to financing sources.

Our revenue and costs are partially dependent upon factors that are outside our control, including, among other factors, general economic conditions, regulatory changes, adverse changes in customers’ financial condition, changes in technology, and increased competition. As a result, our actual revenue and costs may vary from expected amounts, possibly to a material degree, and these variations would likely affect the level of our future capital expenditures and expansion plans.

Possible Future Uses of Cash. Our financial performance and cash, cash equivalent and short-term investments of $484.9 million allow us flexibility to make strategic choices in the use of our cash. In order to reduce future cash interest payments, as well as future amounts due at maturity or mandatory redemption and reduce our leverage, we or our affiliates may, from time to time, enter into interest rate swap agreements or purchase or redeem our outstanding 2018 Notes or Convertible Debentures for cash or equity securities in the open market or privately negotiated transactions or engage in other transactions to reduce the principal amount of outstanding 2018 Notes or Convertible Debentures. We also may seek to refinance or otherwise replace or prepay all or a portion of our Term Loan and Revolver or may seek to refinance or otherwise replace our Convertible Debentures. We will evaluate various options for refinancing the $101.0 million of our Term Loan that matures in January 2013 and could use cash to pay or prepay that indebtedness in whole or in part. In addition, holders of our outstanding Convertible Debentures have the option to require us to purchase all or part of the Convertible Debentures on April 1, 2013, April 1, 2016, or April 1, 2021, or at any time prior to April 1, 2026 to convert the debentures into shares of our common stock. Further, in order to avoid the early maturity of the Revolver if it is drawn, we must demonstrate to our revolving lenders that we have sufficient cash and cash equivalents as of November 30, 2012 to redeem or repay the Convertible Debentures in full. Under the terms of our Revolver, which is more restrictive than our Term Loan and the indenture for the 2018 Notes, we currently may repurchase a portion of our 2018 Notes or Convertible Debentures if we have a minimum of $225 million in cash and equivalents after giving effect to the repurchase and meet certain other conditions, which we met as of December 31, 2011, and do not use the Revolver proceeds for this purpose.

During the year ended December 31, 2011, we completed the repurchase of $50 million of our common stock that our Board of Directors authorized on February 4, 2011. On November 16, 2011, our Board of Directors authorized a multi-year repurchase program of up to an additional $300 million of our common stock, of which approximately $8.6 million was repurchased as of December 31, 2011. This authorization does not have an expiration date, but can be withdrawn by the Board at any time. See Part II, Item 2, “Unregistered Shares of Equity Securities and Use of Proceeds” for repurchases through December 31, 2011. Our Revolver was amended on November 9, 2011 to increase the permissible amount of repurchases of our common stock from $50 million to up to $150 million annually in the aggregate if after the transaction we have a minimum of $225 million in cash and cash equivalents, have not used that basket for other permissible purposes, including dividend payments, and meet certain other conditions, which conditions we met as of December 31, 2011. Up to $50 million of this permitted amount that remains unused in any fiscal year may be carried over and used in the immediately succeeding calendar year for permissible purposes. This test under the Revolver is also more restrictive than our other debt agreements. We may consider repurchasing additional shares of our common stock in public or private transactions or may consider paying dividends to the extent permitted by our debt covenants. Additionally, we may consider merger and acquisition opportunities that could impact our cash usage. We will evaluate any such transactions in light of market conditions, taking into account our liquidity and prospects for access to capital, benefits to us of any such transaction and contractual constraints.

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Risk Management. As of December 31, 2011, our cash, cash equivalents and short-term investments were held in financial institutions, U.S. Treasury money market mutual funds, certificates of deposit, commercial paper, international government securities, debt securities issued by the U.S. Treasury and other U.S. government agencies, and corporate debt securities, some of which are guaranteed by the federal government’s Temporary Liquidity Guarantee Program. Although we actively monitor the depository institutions and the performance and quality of our investments and the mutual funds that hold our cash and cash equivalents, we are exposed to risks resulting from deterioration in the financial condition or failure of financial institutions holding our cash deposits, decisions of our investment advisors and the investment managers of the money market funds and defaults in securities underlying the funds and investments. We prioritize safety over investment return in choosing the investment vehicles for cash, cash equivalents and investments and have diversified these investments to the extent practical in an effort to minimize our exposure to any one investment vehicle or financial institution. We may change the nature of our cash, cash equivalent and short-term investments as market conditions change.

Off-Balance Sheet Arrangements. As of December 31, 2011, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.

Commitments. The following table summarizes our long-term commitments as of December 31, 2011, including commitments pursuant to debt agreements, lease obligations, fixed maintenance contracts, and other purchase obligations.

Contractual Obligations	Total		2012		2013		2014		2015		2016		Thereafter
	(amounts in thousands)
Principal payments on long-term debt:
Term Loan B (January 2013 tranche) due 2013	$	102,055	$	1,074	$	100,981	$	—	$	—	$	—	$	—
Term Loan B (extended tranche) due 2016	467,946		4,926		4,926		4,926		4,926		448,242		—
8% Senior Notes due 2018	430,000		—		—		—		—		—		430,000
2 3/8% Convertible Senior Debentures due 2026 (1)	373,744		—		373,744		—		—		—		—
Total principal payments	$	1,373,745	$	6,000	$	479,651	$	4,926	$	4,926	$	448,242	$	430,000
Interest payments on long-term debt (2)	322,531		62,313		56,133		51,003		50,828		50,654		51,600
Capital lease obligations including interest (3)	23,624		2,937		2,625		2,403		2,103		1,978		11,578
Operating lease obligations	297,454		52,302		47,470		42,214		35,325		26,725		93,418
Fixed maintenance obligations	42,459		3,013		3,013		3,013		3,013		3,013		27,394
Purchase obligations
Purchase orders (4)	45,114		45,114		—		—		—		—		—
Network costs (5)	233,255		75,021		66,392		52,524		30,616		8,022		680
Total	$	2,338,182	$	246,700	$	655,284	$	156,083	$	126,811	$	538,634	$	614,670

___________________

(1) Holders of the Convertible Debentures have the option to require us to purchase all or part of the Convertible Debentures on April 1, 2013, April 1, 2016, or April 1, 2021 at a purchase price equal to 100% of the principal amount plus accrued and unpaid interest, or at any time prior to April 1, 2026 to convert the debentures into shares of our common stock (see Note 6 to the consolidated financial statements); therefore, the repayment obligation is presented in full at the earliest maturity date. The amount presented in the table above assumes that the repayment obligation is repaid at par value. If the price of our common stock exceeds $18.64 per share when the Convertible Debentures are converted, then for every $1,000 in principal amount of the Convertible Debentures surrendered for conversion, the holder will receive (i) $1,000 for the principal value of the Convertible Debentures, and (ii) the amount by which the conversion value (calculated as the product of the initial conversion rate and the average closing price of our common stock as described in the indenture) exceeds $1,000. Upon conversion, we have the right to deliver, in lieu of common stock, cash or a combination of cash and shares of common stock.

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If any Convertible Debentures are converted, we will consider all alternatives available to us to settle our obligations under the Convertible Debentures. The examples illustrated below are hypothetical only and should not be construed to mean that we will consider only the combinations of cash and shares of our common stock demonstrated in the examples. The table shown below illustrates two hypothetical examples of settlement scenarios upon conversion for stock prices ranging from $18.64-$43.64 whereby (i) the principal amount of the notes, $373.7 million, is paid in cash and the incremental value is delivered in shares of our common stock, or (ii) both the principal value of the notes and the incremental value is delivered in shares of our common stock:

Per Share Price		Obligation		Incremental Value Over Par Value		Hypothetical Settlement Scenarios
						Scenario 1			Scenario 2
						Principal amount paid in cash		Incremental value settled in shares	Principal amount and incremental value settled in  shares
						Cash		No. of Shares	No. of Shares
(amounts in thousands except per share price)
$	18.64	$	373,744	$	—	$	373,744	—	20,050
23.64		473,984		100,240		373,744		4,240	20,050
28.64		574,235		200,491		373,744		7,000	20,050
33.64		674,485		300,741		373,744		8,940	20,050
38.64		774,736		400,992		373,744		10,377	20,050
43.64		874,986		501,242		373,744		11,486	20,050

(2) Interest payments on the Term Loan are calculated using the rates in effect as of December 31, 2011.

(3) Includes amounts representing interest of $7.4 million.

(4) Includes outstanding purchase orders initiated in the ordinary course of business for operating and capital expenditures.

(5) Includes services purchased from other carriers to transport a portion of our traffic to the end-user, to interconnect with the ILECs, to lease our IP backbone, or to provide other ancillary services under contracts that can vary from month-to-month up to 60 months. Some services are purchased under volume plans that require us to maintain certain commitment levels to obtain favorable pricing. Some services are purchased under contracts that are subject to contract termination costs or penalties if services are disconnected before the end of the term.

Effects of Inflation

Historically, inflation has not had a material effect on us.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Our interest income is sensitive to changes in the general level of interest rates. In this regard, changes in interest rates can affect the interest earned on our cash, cash equivalents and short-term investments. Based on our cash, cash equivalents and short-term investments of approximately $484.9 million at December 31, 2011, a one percent increase in the interest rate would change our annual interest earned by $4.8 million. At December 31, 2011, investments included in cash, cash equivalents and short-term investments were primarily comprised of U.S. Treasury money market funds, certificates of deposit, commercial paper, international government securities, debt securities issued by the U.S. Treasury and government agencies, and corporate debt securities, some of which are guaranteed by the federal government’s Temporary Liquidity Guarantee Program. We prioritize safety over investment return in choosing the investment vehicles for cash, cash equivalents and short-term investments, and have diversified these investments to the extent practical in an effort to minimize our exposure to any one investment vehicle or financial institution. We may change the nature of our cash, cash equivalents and short-term investments as market conditions change.

We have fixed and variable rate debt. Our exposure to variable rate debt is from changes in the Eurodollar rate as interest on the Term Loan varies based on a specified Eurodollar rate. Variable rate debt instruments represented approximately 41% and 34% of our total debt at December 31, 2011 and 2010, respectively. As of December 31, 2011, based on the $570 million outstanding balance on the Term Loan, a one percent change in the applicable rate would change the annual amount of interest we pay by $5.7 million.

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At December 31, 2011, the fair values of our Term Loan, 2018 Notes, and Convertible Debentures were $566.1 million, $460.1 million, and $444.3 million, respectively, as compared to carrying values of $570.0 million, $427.6 million and $346.7 million, respectively. These notes and debentures are not listed on any securities exchange or inter-dealer automated quotation systems, and we have estimated the market value based on indicative pricing published by certain investment banks. While we believe these approximations to be reasonably accurate at the time published, indicative pricing can vary widely depending on volume traded by any given investment bank and other factors.

Item 8. Financial Statements and Supplementary Data

See “Index to Consolidated Financial Statements” on page F-1.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None

Item 9A. Controls and Procedures

Disclosure Controls and Procedures

Our management, with the participation of the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 as of December 31, 2011. Management recognizes that any disclosure controls and procedures no matter how well designed and operated, can only provide reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that as of December 31, 2011 our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

Changes in Internal ControlOver Financial Reporting

In our 2010 Annual Report on Form 10-K/A, management reported a material weakness in the internal control over tax planning strategies in connection with our deferred tax assets. A material weakness in internal control over financial reporting is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis by the Company’s internal controls. In the quarter ended December 31, 2011, we implemented certain internal controls designed to strengthen the control environment and remediate the material weakness. Specifically, we have established a formal process to routinely evaluate the necessity for third party tax specialists' advice or assistance and utilize such advice or assistance as deemed appropriate when dealing with material and complex tax accounting matters in the preparation of its financial statements, including tax planning strategies related to its valuation allowance. During the quarter ended December 31, 2011, management performed an evaluation of the effectiveness of the aforementioned internal controls, and concluded that the control enhancements described above sufficiently remediate the material weakness previously reported.

Other than the changes noted above, there were no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2011 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15(d)-15(f) under the Securities Exchange Act of 1934. Our internal control structure is designed to provide reasonable assurance to our management and the Board of Directors regarding the reliability of financial reporting and the preparation and fair presentation of our financial statements prepared for external purposes in accordance with U.S. generally accepted accounting principles.

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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management, including our Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of our internal control over financial reporting as of December 31, 2011 using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework. Our management has concluded that our assessment provides reasonable assurance that, as of December 31, 2011, our internal control over financial reporting was effective.

Our independent registered public accounting firm, Ernst & Young LLP, has issued an attestation report on our internal control over financial reporting as of December 31, 2011.

Item 9B. Other Information

None

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders of tw telecom inc.

We have audited tw telecom inc.’s internal control over financial reporting as of December 31, 2011, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). tw telecom inc.’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, tw telecom inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2011, based on the COSO criteria.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of tw telecom inc. as of December 31, 2011 and 2010 and the related consolidated statements of operations, cash flows and changes in stockholders' equity for each of the three years in the period ended December 31, 2011 of tw telecom inc. and our report dated February 21, 2012 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Denver, Colorado

February 21, 2012

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PART III

Item 10. Directors, Executive Officers and Corporate Governance

The information with respect to directors if required by this Item will appear under the heading “Proposal 1: Election of Directors” and “Board Information” and the information with respect to executive officers, Section 16(a) Beneficial Ownership Reporting Compliance, material changes to procedures by which security holders may recommend nominees to the board of directors, and audit committee and financial experts required by this item will appear in our definitive proxy statement for the 2012 Annual Meeting of Stockholders to be filed with the SEC no later than April 30, 2012 (the “Proxy Statement”) pursuant to Regulation 14A of the General Rules and Regulations under the Securities Exchange Act of 1934. These portions of the Proxy Statement are incorporated by reference.

Code of Ethics

We have adopted a Code of Ethics for directors and officers (including our principal executive officer, principal financial officer, chief accounting officer, controller and treasurer) which is available at our website at www.twtelecom.com under “Investors.” Stockholders also may request a free copy of the Code of Ethics from:

tw telecom inc.

Attn: Legal Department

10475 Park Meadows Drive

Littleton, CO 80124

Item 11. Executive Compensation

The information required by this item will appear in our Proxy Statement under the heading “Executive Compensation”. This portion of our Proxy Statement is incorporated by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by this item will appear under the headings “tw telecom Share Ownership” and “Securities Authorized for Issuance under Equity Compensation Plans” in our Proxy Statement. These portions of the Proxy Statement are incorporated by reference.

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information required by this item will appear under the headings “Certain Relationships and Related Transactions” and “Corporate Governance” in our Proxy Statement. These portions of the Proxy Statement are incorporated by reference.

Item 14. Principal Accountant Fees and Services

Information regarding our principal auditor fees and services will appear under “Ratification of Appointment of Independent Auditors” in our Proxy Statement. These portions of the Proxy Statement are incorporated by reference.

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GLOSSARY

Access Charges. The fees paid by long distance carriers for the local connections between the long distance carriers’ networks and the long distance carriers’ customers.

Central Offices. A telecommunications center where switches and other telecommunications facilities are housed. CLECs may connect with ILEC networks either at this location or through a remote location.

Class of Service. A method of managing traffic on a network that allows customers to group types of traffic and assign each type a different priority level.

Collaboration. An application, platform or device which generally leverages verbal, video media (e.g., telepresence, multimedia web conferencing) and data or presentation files which are designed to help people with a common task achieve a business objective. Collaboration usually involves network services including voice conferencing, video conferencing, local, metro or wide area data networks and the Internet.

Collocation. The ability of a telecommunications carrier to interconnect its network to the ILEC’s network by extending its facilities to the ILEC’s central office. Collocation with an ILEC can be physical where the interconnecting carrier places its network equipment within the ILEC’s central offices or virtual where the ILEC permits a carrier to interconnect its network to the ILEC’s network in a manner which is technically, operationally, and economically comparable to physical collocation, but without physically locating equipment within the central offices. Telecommunication carriers also allow customers to interconnect with their networks by placing equipment in space adjacent to the carrier’s central office.

CLEC (Competitive Local Exchange Carrier). A company that provides local exchange services, including dedicated service, in competition with the ILEC.

Cloud Computing. A style of computing where scalable and elastic IT enabled capabilities are provided as a service to external customers using Internet Protocol technologies.

Converged Services. A service offering that fully integrates any combination of communications services including IP VPN, voice, Internet, data, security and managed router service into a single managed IP solution.

Dedicated. Telecommunications lines dedicated to, or reserved for use by, a particular customer along predetermined routes (in contrast to links which are temporarily established).

Dedicated Transmission. The sending of electronic signals carrying information over a Dedicated Transport facility.

Dedicated Transport. A non-switched point-to-point telecommunications facility leased from a telecommunications provider by an end-user and used exclusively by that end-user.

Digital. A means of storing, processing and transmitting information by using distinct electronic or optical pulses that represent the binary digits 0 and 1. Digital transmission and switching technologies use a sequence of these pulses to represent information as opposed to the continuously variable analog signal. The precise digital numbers preclude distortion (such as graininess or snow in the case of video transmission, or static or other background distortion in the case of audio transmission).

DS-0, DS-1, DS-3. Standard North American telecommunications industry digital signal formats, which are distinguishable by bit rate (the number of binary digits (0 and 1) transmitted per second). DS-0 service has a bit rate of 64 kilobits per second. DS-1 service has a bit rate of 1.544 megabits per second and DS-3 service has a bit rate of 44.736 megabits per second. A DS-0 can transmit a single uncompressed voice conversation.

Ethernet. A network configuration in which data is separated into “frames” for transmission. Ethernet equipment scans the network to find the least-congested route for frames to travel from Point A to Point B, thus resulting in greater speed and fewer errors in frame transmission.

Fiber Optics. Fiber optic technology involves sending laser light pulses across glass strands in order to transmit digital information. Fiber optic cable is the medium of choice for the telecommunications and cable industries. Fiber is immune to electrical interference and environmental factors that affect copper wiring and satellite transmission.

Gbps (Gigabits per second). One billion bits of information. The information-carrying capacity (i.e., bandwidth) of a circuit may be measured in “billions of bits per second.”

Grooming. The rearrangement or replacement of circuits used in a telecommunication provider’s network to reach end-users or to constitute the network backbone to create lower cost, increased capacity or better network performance.

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Hub. Collocation centers located centrally in an area where telecommunications traffic can be aggregated for transport and distribution.

ILECs (Incumbent Local Exchange Carriers). The local phone companies, including regional bell operating companies and independent operating companies (such as Cincinnati Bell), which provide local exchange services.

Intelligent Network. Developing network capabilities that provide our customers end-to-end visibility to the performance of certain services we provide and which we plan to enable customers to control flexible amounts of bandwidth and prioritization of their applications through our customer portal or application program interfaces.

Internet. The name used to describe the global open network of computers that permits a person with access to the Internet to exchange information with any other computer connected to the network.

Internet Protocol (IP). The method or protocol by which data is sent from one computer or network to another on the Internet. Each computer or network has at least one IP address that uniquely identifies it from all other computers and networks that are connected to the Internet.

IntraLATA. A call that originates and terminates within the same LATA.

IXC (Interexchange Carrier). A long distance carrier.

LATA (Local Access and Transport Area). The geographical areas within which a local telephone company may offer telecommunications services, as defined in the divestiture order known as the Modified Final Judgment unless and until refined by the FCC pursuant to the Telecommunications Act of 1996.

LEC (Local Exchange Carrier). A telecommunications company that provides local telephone service in a geographic area. LECs included both ILECs and CLECs.

Local Exchange. A geographic area defined by the appropriate state regulatory authority in which telephone calls generally are transmitted without toll charges to the calling or called party.

Local Exchange Service/Local Exchange Telephone Service. Basic local telephone service, including the provision of telephone numbers, dial tone and calling within the local exchange area.

Long Distance Carriers (Interexchange Carriers or IXC). Long distance carriers providing services between LATAs, on an interstate or intrastate basis. A long distance carrier may be facilities-based or offer service by reselling the services of a facilities-based carrier.

Managed Service. Those services delivered by us where the interface provided to the customer requires no further protocol conversion and we monitor and manage the equipment providing the service and control the network administration.

Mbps (Megabits per second). Megabit means one million bits of information. The information carrying capacity (i.e., bandwidth) of a circuit may be measured in “millions of bits per second.”

Multiplexing. An electronic or optical process that combines a number of lower speed transmission signals into one higher speed signal. There are various techniques for multiplexing, including frequency division (splitting the total available frequency bandwidth into smaller frequency slices), time division (slicing a channel into timeslots and placing each signal into its assigned timeslot), and statistical (wherein multiplexed signals share the same channel and each transmits only when it has data to send).

NLAN (Native Local Area Network). Interconnection of computers for the purpose of sharing files that does not require protocol conversion between the networks.

Node. A point of connection into a fiber optic network.

OC-n. Optical carrier levels ranging from OC-1 (51.84 Mbps) to OC-192 (9.9 Gbps).

POPs (Points of Presence). Locations where an IXC has installed transmission equipment in a service area that serves as, or relays telephone calls to, a network switching center of the same IXC.

Private Line. A private, dedicated telecommunications link between different customer locations (excluding IXC POPs).

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PSTN (Public Switched Telephone Network). The switched network available to all users generally on a shared basis (i.e., not dedicated to a particular user). The local exchange telephone service networks operated by ILECs are the largest and often the only public switched networks in a given locality.

Reciprocal Compensation. An arrangement in which two local exchange carriers agree to terminate traffic originating on each other’s networks in exchange for a negotiated level of compensation.

Redundant Electronics. A telecommunications facility that uses two separate electronic devices to transmit a telecommunications signal so that if one device malfunctions, the signal may continue without interruption.

Route Mile. The number of miles along which fiber optic cables are installed.

SONET (Synchronous Optical Network). A set of standards for optical communications transmission systems that define the optical rates and formats, signal characteristics, performance, management and maintenance information to be embedded within the signals and the multiplexing techniques to be employed in optical communications transmission systems. SONET facilitates the interoperability of dissimilar vendor's equipment. SONET benefits business customers by minimizing the equipment necessary for various telecommunications applications and supports networking diagnostic and maintenance features.

Special Access Services. The lease of private, dedicated telecommunications lines or circuits on an ILEC’s or a CLECs’ network, which run to or from another carrier’s POPs. Special access services do not require the use of switches. Examples of special access services are telecommunications circuits running between POPs of a single carrier, from one carrier’s POP to another carrier’s POP or from an end-user to a carrier’s POP.

STS-1. This dedicated transmission service is carried over high-capacity channels for full duplex, synchronous optical transmission of digital data on SONET standards. This service eliminates the need to maintain and pay for multiple dedicated lines.

Switch. A mechanical or electronic device that opens or closes circuits or selects the paths or circuits to be used for the transmission of information. Switching is a process of linking different circuits to create a temporary transmission path between users. Within this document, switches generally refer to voice grade telecommunications switches unless specifically stated otherwise.

Switched Access Services. The connection between an IXC’s POP and an end-user’s premises through the switching facilities of a local exchange carrier.

Switched Services. Telecommunications services that support the connection of one calling party with another calling party via use of a telephone switch (i.e., an electronic device that opens or closes circuits, completes or breaks an electrical path or selects paths or circuits).

SSL (Secure Sockets Layer). Cryptographic protocols that provide communication security over the Internet.

TDM (Time Division Multiplexing). A type of multiplexing that combines data streams by assigning each stream a different time slot in a set. TDM repeatedly transmits a fixed sequence of time slots over a single transmission channel.

Value Added Resellers. Companies that add features or services to an existing product, then resell it (usually to end-users) as an integrated product or “turn-key” solution. For example, the value added can come from professional services such as integrating, customizing, consulting, training and implementation or by developing a specific application for the product designed for the customer’s needs which is then resold as a combined product or service.

VoIP (Voice over Internet Protocol). The technology used to transmit voice conversations over a data network using the Internet Protocol.

VPN (Virtual Private Network). A private network that operates securely within a public network (such as the Internet) by means of encrypting transmissions.

59

PART IV

Item 15. Exhibits and Financial Statement Schedules

(a) (1), (2) The Financial Statements and Schedule II—Valuation and Qualifying Accounts listed on the index on page F-1 following are included herein by reference. All other schedules are omitted, either because they are not applicable or because the required information is shown in the financial statements or the notes thereto.

(3) Exhibits: The Exhibit Index at the end of this report lists the exhibits filed with this report or incorporated herein by reference.

60

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on February 21, 2012.

tw telecom inc.
By:	/s/     MARK A. PETERS
	Mark A. Peters
	Executive Vice President and
	Chief Financial Officer

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

Signature	Title	Date
(i) Principal Executive Officer
/s/    LARISSA L. HERDA	Chairman, President and Chief Executive Officer	February 21, 2012
Larissa L. Herda
(ii) Principal Financial Officer
/s/    MARK A. PETERS	Executive Vice President and Chief Financial Officer	February 21, 2012
Mark A. Peters
(iii) Principal Accounting Officer
/s/    JILL R. STUART	Senior Vice President, Accounting and Finance and Chief Accounting Officer	February 21, 2012
Jill R. Stuart
(iv) Directors
/s/    GREGORY J. ATTORRI	Director	February 21, 2012
Gregory J. Attorri
/s/    SPENCER B. HAYS	Director	February 21, 2012
Spencer B. Hays
/s/    LARISSA L. HERDA	Director	February 21, 2012
Larissa L. Herda
/s/    KEVIN W. MOONEY	Director	February 21, 2012
Kevin W. Mooney
/s/    KIRBY G. PICKLE	Director	February 21, 2012
Kirby G. Pickle
/s/    ROSCOE C. YOUNG, II	Director	February 21, 2012
Roscoe C. Young, II

61

tw telecom inc.

Index to Consolidated Financial Statements

	PAGE
Audited Financial Statements:
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets at December 31, 2011 and 2010	F-3
Consolidated Statements of Operations for each of the years in the three year period ended December  31, 2011	F-4
Consolidated Statements of Cash Flows for each of the years in the three year period ended December  31, 2011	F-5
Consolidated Statements of Changes in Stockholders’ Equity for each of the years in the three year period ended December 31, 2011	F-6
Notes to Consolidated Financial Statements	F-7
Schedule II—Valuation and Qualifying Accounts	F-36

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders of tw telecom inc.

We have audited the accompanying consolidated balance sheets of tw telecom inc. (the “Company”) as of December 31, 2011 and 2010, and the related consolidated statements of operations, cash flows and changes in stockholders’ equity for each of the three years in the period ended December 31, 2011. Our audits also included the financial statement schedule listed at page F-1. These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company at December 31, 2011 and 2010, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2011, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), tw telecom inc.’s internal control over financial reporting as of December 31, 2011, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 21, 2012 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Denver, Colorado

February 21, 2012

F-2

tw telecom inc.

CONSOLIDATED BALANCE SHEETS

December 31, 2011 and 2010

	2011			2010
	(amounts in thousands, except per share amounts)
ASSETS
Current assets:
Cash and cash equivalents	$	353,394		$	356,922
Investments	131,525			118,672
Receivables, less allowances of $8,192 and $7,898, respectively	96,182			81,598
Prepaid expenses and other current assets	17,340			16,935
Deferred income taxes	65,008			40,428
Total current assets	663,449			614,555
Property, plant and equipment	4,026,134			3,732,050
Less accumulated depreciation	(2,598,922		)	(2,375,438		)
	1,427,212			1,356,612
Deferred income taxes	162,535			224,795
Goodwill	412,694			412,694
Intangible assets, net of accumulated amortization	17,742			24,444
Other assets, net	24,594			17,854
Total assets	$	2,708,226		$	2,650,954
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	52,739		$	53,436
Deferred revenue	42,253			37,888
Accrued taxes, franchise and other fees	66,880			68,663
Accrued interest	13,934			15,208
Accrued payroll and benefits	44,284			41,772
Accrued carrier costs	32,760			35,049
Current portion debt and capital lease obligations	7,733			7,202
Other current liabilities	31,361			42,570
Total current liabilities	291,944			301,788
Long-term debt and capital lease obligations, net	1,352,820			1,338,297
Long-term deferred revenue	22,296			14,864
Other long-term liabilities	35,445			29,364
Commitments and contingencies (Note 11)
Stockholders’ equity:
Preferred stock, $0.01 par value, 20,000 shares authorized, no shares issued and outstanding	—			—
Common stock, $0.01 par value, 439,800 shares authorized, 151,953 shares issued	1,520			1,520
Additional paid-in capital	1,823,856			1,802,946
Treasury stock, 2,909 and 2,707 shares, at cost, respectively	(53,156		)	(45,821		)
Accumulated deficit	(766,518		)	(790,175		)
Accumulated other comprehensive income (loss)	19			(1,829		)
Total stockholders’ equity	1,005,721			966,641
Total liabilities and stockholders’ equity	$	2,708,226		$	2,650,954

See accompanying notes to the consolidated financial statements.

F-3

tw telecom inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

Years Ended December 31, 2011, 2010 and 2009

	2011			2010			2009
	(amounts in thousands, except per share amounts)
Revenue:
Data and Internet services	$	646,682		$	547,218		$	472,647
Network services	350,709			359,169			370,859
Voice services	338,655			332,870			333,274
Intercarrier compensation	30,845			33,914			34,610
Total revenue	1,366,891			1,273,171			1,211,390
Costs and expenses (a):
Operating (exclusive of depreciation, amortization, and accretion shown separately below)	571,461			528,965			503,960
Selling, general and administrative	325,538			308,470			297,290
Depreciation, amortization, and accretion	283,329			289,564			296,167
Total costs and expenses	1,180,328			1,126,999			1,097,417
Operating income	186,563			146,172			113,973
Interest expense	(87,718		)	(80,952		)	(84,001		)
Debt extinguishment costs	—			(17,070		)	—
Interest income	545			608			360
Other income	—			825			—
Income before income taxes	99,390			49,583			30,332
Income tax expense (benefit)	41,479			(291,295		)	11,921
Net income	$	57,911		$	340,878		$	18,411
Earnings per share:
Basic	$	0.39		$	2.26		$	0.12
Diluted	$	0.38		$	2.12		$	0.12
Weighted average shares outstanding:
Basic	147,247			149,156			148,087
Diluted	149,349			171,456			149,852

(a)    Includes non-cash stock-based employee compensation expense (Note 1):

Operating	$	2,327	$	3,261	$	3,654
Selling, general and administrative	$	25,490	$	24,571	$	22,864

See accompanying notes to the consolidated financial statements.

F-4

tw telecom inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended December 31, 2011, 2010 and 2009

	2011			2010			2009
	(amounts in thousands)
Cash flows from operating activities:
Net income	$	57,911		$	340,878		$	18,411
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization, and accretion	283,329			289,564			296,167
Deferred income taxes	35,756			(293,529		)	9,175
Stock-based compensation	27,817			27,832			26,518
Loss on debt extinguishment	—			17,070			—
Discount on debt, amortization of deferred debt issue costs and other	23,388			20,579			20,036
Changes in operating assets and liabilities:
Receivables and other assets	(22,211		)	(5,264		)	1,972
Accounts payable	(6,338		)	(12,482		)	4,689
Accrued interest	(1,261		)	(1,039		)	(1,082		)
Accrued payroll and benefits	2,566			(817		)	4,344
Other liabilities	2,631			2,960			10,248
Net cash provided by operating activities	403,588			385,752			390,478
Cash flows from investing activities:
Capital expenditures	(340,731		)	(321,844		)	(266,997		)
Purchases of investments	(223,638		)	(246,575		)	(24,892		)
Proceeds from sale of investments	208,340			154,786			—
Proceeds from sale of assets and other investing activities, net	3,230			(4,416		)	1,300
Net cash used in investing activities	(352,799		)	(418,049		)	(290,589		)
Cash flows from financing activities:
Proceeds from issuance of common stock upon exercise of stock options	16,973			5,145			4,618
Taxes paid related to net share settlement of equity awards	(7,007		)	(4,100		)	(2,784		)
Purchases of treasury stock	(58,562		)	(49,911		)	—
Excess tax benefits from stock-based compensation	1,385			—			—
Retirement of debt obligations	—			(413,683		)	—
Net proceeds from issuance of debt	—			413,069			—
Payment of debt and capital lease obligations	(7,106		)	(7,208		)	(7,992		)
Net cash used in financing activities	(54,317		)	(56,688		)	(6,158		)
(Decrease) increase in cash and cash equivalents	(3,528		)	(88,985		)	93,731
Cash and cash equivalents at beginning of period	356,922			445,907			352,176
Cash and cash equivalents at end of period	$	353,394		$	356,922		$	445,907
Supplemental disclosures of cash flow information:
Cash paid for interest	$	67,566		$	63,169		$	68,049
Cash paid for debt extinguishment costs	$	—		$	13,677		$	—
Cash paid for income taxes, net of refunds	$	3,231		$	4,653		$	3,001
Addition of capital lease obligation	$	2,000		$	—		$	7,893

See accompanying notes to the consolidated financial statements.

F-5

tw telecom inc.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER’S EQUITY

Years Ended December 31, 2011, 2010 and 2009

	Common Stock			Treasury Stock					Additional paid-in capital			Accumulated deficit			Accumulated other comprehensive income (loss)			Total stockholders’ equity
	Shares	Amount		Shares		Amount
	(amounts in thousands)
Balance at December 31, 2008	147,774	$	1,478	—		$	—		$	1,746,224		$	(1,145,839	)	$	(7,147	)	$	594,716
Net income	—	—		—		—			—			18,411			—			18,411
Unrealized gain on cash flow hedging activities, net of tax	—	—		—		—			—			—			2,909			2,909
Total comprehensive income																		21,320
Exercise of stock options net of withholdings to satisfy employee tax obligations upon vesting of stock awards	705	7		—		—			1,827			—			—			1,834
Stock-based compensation	1,644	16		—		—			26,502			—			—			26,518
Balance at December 31, 2009	150,123	1,501		—		—			1,774,553			(1,127,428		)	(4,238		)	644,388
Net income	—	—		—		—			—			340,878			—			340,878
Unrealized gain on cash flow hedging activities, net of tax of $703	—	—		—		—			—			—			2,421			2,421
Unrealized loss on available-for-sale securities, net of tax of $0	—	—		—		—			—			—			(12		)	(12		)
Total comprehensive income																		343,287
Purchases of treasury stock	—	—		(2,946	)	(49,911		)	—			—			—			(49,911		)
Exercise of stock options net of withholdings to satisfy employee tax obligations upon vesting of stock awards	638	7		239		4,090			573			(3,625		)	—			1,045
Stock-based compensation	1,192	12		—		—			27,820			—			—			27,832
Balance at December 31, 2010	151,953	1,520		(2,707	)	(45,821		)	1,802,946			(790,175		)	(1,829		)	966,641
Net income	—	—		—		—			—			57,911			—			57,911
Unrealized gain on cash flow hedging activities, net of tax of $929	—	—		—		—			—			—			1,816			1,816
Unrealized gain on available-for-sale securities, net of tax of $20	—	—		—		—			—			—			32			32
Total comprehensive income																		59,759
Excess tax benefit from stock-based compensation	—	—		—		—			100			—			—			100
Purchases of treasury stock	—	—		(3,172	)	(58,562		)	—			—			—			(58,562		)
Exercise of stock options net of withholdings to satisfy employee tax obligations upon vesting of stock awards	—	—		1,458		25,527			(7,901		)	(7,660		)	—			9,966
Stock-based compensation	—	—		1,512		25,700			28,711			(26,594		)	—			27,817
Balance at December 31, 2011	151,953	$	1,520	(2,909	)	$	(53,156	)	$	1,823,856		$	(766,518	)	$	19		$	1,005,721

See accompanying notes to the consolidated financial statements.

F-6

tw telecom inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Summary of Significant Accounting Policies

Description of Business and Capital Structure

tw telecom inc. (the “Company”), a Delaware corporation, is a leading national provider of managed network services, specializing in business Ethernet, data networking, Converged, IP based virtual private network or "IP VPN", Internet access, voice, including voice over Internet Protocol or "VoIP", and network security services to enterprise organizations, including public sector entities, and carriers throughout the United States, including their global locations.

The Company has one class of common stock outstanding with one vote per share. The Company also is authorized to issue shares of preferred stock. The Company’s Board of Directors has the authority to establish voting powers, preferences, and special rights for the preferred stock. No shares of preferred stock have been issued.

Basis of Consolidation

The consolidated financial statements include the accounts of the Company and all entities in which the Company has a controlling voting interest (“subsidiaries”). Significant intercompany accounts and transactions have been eliminated.

Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Areas that require significant management judgments include income and transactional taxes, revenue and receivables, stock-based compensation, long-lived assets, regulatory fees, asset retirement obligations, evaluation of impairment of goodwill and long-lived assets, and carrier liabilities.

Segment Reporting

Because its business is centrally managed, the Company operates in one segment across the United States.

Cash Equivalents and Investments

The Company considers all highly liquid debt instruments with an original maturity of three months or less, when purchased, to be cash equivalents. The appropriate classification of securities is determined at the time of purchase and is reevaluated as of the end of each period. Debt securities are classified as held-to-maturity when the Company has the positive intent and ability to hold the securities to maturity and are carried at amortized cost. Debt securities not classified as held-to-maturity are classified as available-for-sale. Available-for-sale securities are carried at fair value, with the unrealized gains and losses, net of tax, reported in other comprehensive income or loss. Gains and losses on investments are calculated using the specific identification method and are recognized during the period the investment is sold. See Note 3 for further information.

At December 31, 2011 and 2010, the Company had restricted funds held at financial institutions of $1.9 million and $2.1 million, respectively. These amounts were included in other current assets and are restricted because they primarily secure outstanding surety bonds.

Receivables

The Company generally bills in advance for the majority of the services it provides and does not require significant collateral from its customers. The Company evaluates whether receivables are reasonably assured of collection by evaluation of certain factors, including ongoing credit evaluations of significant customers’ financial condition, and provides an allowance for doubtful accounts based on the expected collectability of all receivables. The allowance for doubtful accounts was $8.2 million, or 8% of gross receivables, at December 31, 2011, and $7.9 million, or 9% of gross receivables, at December 31, 2010.

F-7

tw telecom inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Property, Plant and Equipment

Property, plant and equipment are recorded at cost except for assets acquired through acquisition of businesses, which are recorded at fair value. Construction costs, labor and applicable overhead related to the development, installation and expansion of the Company’s network, and interest costs related to construction are capitalized. Capitalized labor and applicable overhead was $71.6 million, $64.0 million and $61.0 million for the years ended December 31, 2011, 2010 and 2009, respectively. Capitalized interest was $2.1 million, $2.8 million and $2.4 million for the years ended December 31, 2011, 2010 and 2009, respectively. Repairs and maintenance costs are charged to expense when incurred. The Company disposes of assets that are no longer in use. Losses on such disposals are included as a component of depreciation expense and were $1.4 million, $1.2 million and $3.0 million for the years ended December 31, 2011, 2010 and 2009, respectively.

The Company licenses the right to use fiber optic capacity from Time Warner Cable, Inc. in 16 markets, Comcast Corporation (as successor to Time Warner Cable) in three markets and an affiliate of Bright House Networks, LLC in four markets. The Company pays and records as a component of property, plant and equipment its allocable share of the cost of fiber and construction incurred by Time Warner Cable, Inc., Comcast Corporation and the Bright House Networks, LLC affiliate on routes where the parties are in joint construction.

Depreciation is calculated on the straight-line method over estimated useful lives as follows:

Buildings and improvements	10-20 years or lease term, if shorter
Communications network equipment	5-15 years
Vehicles and other equipment	3-10 years
Fiber and right to use	20 years or lease term, if shorter

Income Taxes

Deferred income taxes are provided for temporary differences between the carrying amounts of assets and liabilities and the amounts used for tax purposes. The impact of a tax position is recognized in the financial statements if that position is more likely than not to be sustained on audit, based on technical merits of the position. The Company does not record a valuation allowance against net deferred tax assets when it is more likely than not that the net deferred tax asset will be realized.

Goodwill

The Company performs impairment tests at least annually on all goodwill and indefinite-lived intangible assets pursuant to relevant accounting standards which require goodwill to be assigned to a reporting unit and tested using a consistent measurement date. For purposes of testing goodwill for impairment, the Company’s goodwill has been assigned to the Company’s one consolidated reporting unit and is tested in the fourth quarter of each year or more frequently if impairment indicators arise. Potential impairment is indicated when the book value of a reporting unit, including goodwill, exceeds its fair value. If a potential impairment exists, the fair value of the reporting unit is compared to the fair value of its assets and liabilities, excluding goodwill, to estimate the implied value of the reporting unit’s goodwill. If an impairment charge is deemed necessary, a charge is recognized for any excess of the carrying amount of the reporting unit’s goodwill over the implied fair value. Considerable management judgment is necessary to estimate the fair value of assets; accordingly, actual results could vary significantly from estimates. There were no goodwill impairment charges during the years ended December 31, 2011, 2010 or 2009.

Other Assets

Other assets primarily include deferred debt issuance costs, which are amortized to interest expense over the life of the respective debt agreements, and long-term prepaid service contracts that are amortized over the service period.

F-8

tw telecom inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Impairment of Long-Lived Assets

The Company periodically reviews the carrying amounts of property, plant, and equipment and its identifiable intangible assets whenever current events or circumstances indicate the carrying amounts may not be recoverable. An impairment is required when the net book value of an asset exceeds the expected future undiscounted cash flows to be generated by that asset or group of assets and theloss is measured by the amount that the carrying value of the assets exceeds their fair value. Considerable management judgment is necessary to estimate the fair value of assets; accordingly, actual results could vary from estimates. Assets to be disposed of are carried at the lower of their carrying amount or fair value less costs to sell. The Company’s asset impairment tests did not result in any impairment charges during the years ended December 31, 2011, 2010 or 2009.

Asset Retirement Obligations

The Company records the estimated fair value of an asset retirement obligation when incurred. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset and depreciated over the asset’s estimated useful life. The Company has asset retirement obligations related to decommissioning of electronics in leased facilities and the removal of certain fiber and conduit systems. Considerable management judgment is required in estimating these obligations. Important assumptions include estimates of retirement costs, the timing of the future retirement activities and the likelihood of retirement provisions being enforced. Changes in these assumptions based on future information could result in adjustments to estimated liabilities.

Derivative Financial Instruments

The Company has utilized derivative financial instruments, specifically interest rate swap agreements, to mitigate interest rate risk. These instruments have been executed with financial institutions deemed creditworthy, and the Company monitors its exposure to these counterparties. All derivatives are recognized in the Company’s consolidated balance sheets at fair value.

Historically, the Company’s interest rate swaps have been designated as cash flow hedges. In an interest rate swap, a borrower of variable interest debt agrees with another party to make fixed payments equivalent to paying fixed rate interest on debt in exchange for receiving payments from the other party equivalent to receiving variable rate interest on debt, the effect of which is to eliminate some portion of the variability in the borrower’s overall cash flows.

If certain correlation and risk reduction criteria are met, the derivative is deemed to be highly effective in offsetting the changes in cash flows of the hedged item on a retrospective and prospective basis, and may be specifically designated as a hedge of exposure to changes in cash flow. For derivative instruments that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative instrument is reported as a component of other comprehensive income or loss. Amounts excluded from the assessment of hedge effectiveness, if any, as well as the ineffective portion of the gain or loss, are reported in results of operations immediately. The Company performs a quarterly assessment to determine whether each derivative instrument is highly effective in offsetting changes in cash flows of the hedged item. If the derivative instrument is determined to be not highly effective as a hedge, or if a derivative instrument ceases to be a highly effective hedge, hedge accounting is discontinued prospectively with respect to that derivative instrument.

Regulation and Other Contingencies

The Company is subject to significant government and jurisdictional regulation, some of which is uncertain due to legal challenges of existing rules. Such regulation is subject to differing interpretations, inconsistent application and has resulted in disputes with carriers and municipalities regarding the classification of traffic, rights-of-way, rates and minutes of use.

Management estimates and accrues for its estimate of probable losses associated with government and jurisdictional regulation and other carrier contingencies. These estimates are based on assumptions and other considerations including studies of traffic patterns, expectations regarding regulatory rulings, historic experience and ongoing negotiations. The Company evaluates these reserves on an ongoing basis and makes adjustments as necessary.

Revenue

The Company’s revenue is derived primarily from metropolitan and wide area business communications services:

•Data and Internet services include services that enable customers to connect their internal computer networks and to access external networks, including Internet access at high speeds using Ethernet protocol, metropolitan and wide area business Ethernet, and IP VPN solutions.

F-9

tw telecom inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

•Voice services include traditional and next generation voice capabilities, including voice services from stand alone and bundled products, long distance, toll free services, and VoIP.

•Network services are point-to-point services that transmit voice, data and images as well as enable transmission for storage using state-of-the-art fiber optics, and collocation services that provide secure space with controlled climate and power where customers can locate their equipment to connect to the Company's network in facilities equipped for enterprise information technology environmental requirements.

•The Company also provides converged services, which fully integrate a combination of certain communication applications including IP VPN, voice, Internet, security and managed router service into a single managed IP solution. The various components of converged services are classified into the pertinent service categories in the consolidated statements of operations.

Intercarrier compensation is comprised of switched access services and reciprocal compensation. Switched access represents the compensation from another carrier for the delivery of traffic from a long distance carrier’s point of presence to an end-user’s premises provided through the Company’s switching facilities. The Federal Communications Commission and state public utility commissions regulate switched access rates in their respective jurisdictions. Reciprocal compensation represents compensation from local exchange carriers (“LECs”) for local exchange traffic originated on another LEC’s facilities and terminated on the Company’s facilities.

The Company’s customers include, among others, enterprise organizations in the distribution, health care, finance, service and manufacturing industries, state, local and federal government entities, system integrators, and communication service providers, including incumbent local exchange carriers, competitive local exchange carriers, wireless communications companies and cable companies.

Revenue for network, data and Internet, and the majority of voice services is generally billed in advance on a monthly fixed rate basis and recognized over the period the services are provided. Revenue for the majority of intercarrier compensation and certain components of voice services, such as long distance, is generally billed on a transactional basis in arrears based on a customer’s actual usage; therefore, estimates are used to recognize revenue in the period earned.

The Company evaluates whether receivables are reasonably assured of collection based on certain factors, including the likelihood of billing being disputed by customers. If there is a billing dispute with a customer, revenue generally is not recognized until the dispute is resolved. The Company does not recognize revenue associated with contract termination charges until cash is received.

The Company classifies certain taxes and fees billed to customers and remitted to government authorities on a gross versus net basis in revenue and expense. In making this determination, the Company assesses, among other things, whether the Company is the primary obligor or principal taxpayer for the taxes and fees assessed in each jurisdiction where the Company does business. In jurisdictions where the Company determines that it is the principal taxpayer, the Company records the taxes and fees on a gross basis, including the taxes and fees in revenue and expense. In jurisdictions where the Company determines that it is merely a collection agent for the government authority, the Company records the taxes on a net basis. The total amounts classified as revenue, primarily included in voice services, associated with such taxes and fees were approximately $63.5 million, $51.3 million and $40.0 million for the years ended December 31, 2011, 2010 and 2009, respectively.

Operating Expenses

Operating expenses consist of costs directly related to the operation and maintenance of the Company’s network and the provisioning of services, but exclude depreciation, amortization and accretion, which is reported separately. These costs, which are net of costs capitalized for labor and overhead (see “Property, Plant, and Equipment” above), include the salaries and related expenses, including stock-based compensation, of customer care, provisioning, network maintenance, technical field and network operations and engineering personnel, costs to repair and maintain the Company’s network, and costs paid to other carriers to carry a portion of the Company’s traffic and to interconnect the Company’s network and costs for facility leases.

F-10

tw telecom inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Significant Customers

The Company has substantial business relationships with a few large customers, including major telecommunications carriers. The Company’s 10 largest customers accounted for an aggregate of 20%, 20% and 21% of the Company’s total revenue for the years ended December 31, 2011, 2010 and 2009, respectively. No customer accounted for 10% or more of total revenue in 2011, 2010 and 2009. The Company's largest customer (AT&T Inc., a carrier) represented 4% of the Company's total revenue in each of the years ended December 31, 2011 and 2010 and 5% in the year ended December 31, 2009.

Stock-Based Compensation

The Company recognizes the cost of share-based employee compensation payments as expense over the requisite service period, which is generally the vesting period of the award. The fair value of restricted stock awards and restricted stock units granted is determined based on the market price of the Company’s common stock at the date of grant. The fair value of options is estimated at the date of grant using a Black-Scholes option pricing model. For purposes of the actual expense recognized in the years ended December 31, 2011, 2010 and 2009, the estimated fair value of the share-based payments is generally amortized to expense on a straight-line basis (net of estimated forfeitures) over the award’s vesting period.

Expected volatilities are based on the historical volatility of the Company’s common stock over a period generally commensurate with the expected term of the option. The risk-free rate for stock options granted during the period is determined by using the U.S. Treasury rate for the nearest period that coincides with the expected term. The expected term of stock options represents the weighted-average period the stock options are expected to remain outstanding and is based on historical data.

Recently Adopted Accounting Pronouncements

Effective January 1, 2011, the Company adopted the accounting standard update regarding revenue recognition for multiple deliverable arrangements. In an arrangement that includes elements with stand-alone value for which neither vendor-specific, objective evidence nor third party evidence of selling price exists, the new standard requires an entity to allocate revenue using its best estimate of selling price for each element. The adoption of this standard update did not have a material effect on the Company's consolidated balance sheets or statements of operations for the year ended December 31, 2011.

Recently Issued Accounting Pronouncements

In June 2011, the Financial Accounting Standards Board (the “FASB”) issued an accounting standard update that eliminates the current option to report other comprehensive income and its components in the statement of stockholders' equity. Instead, an entity will be required to present items of net income and other comprehensive income in one continuous statement or in two separate but consecutive statements. The standard is effective for fiscal years beginning after December 15, 2011. The Company will adopt this accounting standard update in the three months ended March 31, 2012. This update affects presentation and disclosure, and therefore adoption will not affect the Company's consolidated financial position, results of operations or cash flows.

In September 2011, the FASB issued an accounting standard update intended to simplify goodwill impairment testing. Entities will have the option to perform a qualitative assessment on goodwill impairment to determine if a quantitative assessment is necessary. The accounting standard update is effective for fiscal years beginning after December 15, 2011. The Company adopted the new guidance effective January 1, 2012. This update affects testing steps only and therefore adoption will not affect the Company's consolidated financial position, results of operations or cash flows.

2. Earnings Per Common Share and Potential Common Share

Basic earnings per common share ("EPS") is measured as the income allocated to common stockholders divided by the weighted average outstanding common shares for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential common shares (such as convertible securities and stock options) as if they had been converted to shares at the beginning of the period presented. Potential common shares that have an anti-dilutive effect (e.g., those that increase income per share) are excluded from diluted EPS.

F-11

tw telecom inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following is a reconciliation of the numerators and denominators used in the basic and diluted earnings per common share computations:

	Years ended December 31,
	2011			2010			2009
	(amounts in thousands, except per share amounts)
Numerator
Net income	$	57,911		$	340,878		$	18,411
Allocation of net income to unvested restricted stock awards	(1,093		)	(4,471		)	(126		)
Net income allocated to common stockholders, basic	56,818			336,407			18,285
Adjustment for assumed dilution:
Interest expense on convertible debentures, net of tax	—			26,443			—
Net income allocated to common stockholders, diluted	$	56,818		$	362,850		$	18,285
Denominator
Basic weighted average shares outstanding	147,247			149,156			148,087
Dilutive potential common shares:
Shares from assumed conversion of convertible debentures	—			20,050			—
Stock options	1,495			1,694			883
Unvested restricted stock	607			556			882
Diluted weighted average shares outstanding	149,349			171,456			149,852
Basic earnings per share	$	0.39		$	2.26		$	0.12
Diluted earnings per share	$	0.38		$	2.12		$	0.12

Options to purchase shares of the Company’s common stock, restricted stock awards and restricted stock units to be settled in common stock upon vesting and shares of common stock subject to issuance upon conversion of the Company’s convertible debentures, which were excluded from the computation of diluted weighted average shares outstanding if their inclusion would be anti-dilutive, totaled 26.1 million shares, 8.4 million shares and 29.9 million shares at December 31, 2011, 2010 and 2009, respectively.

F-12

tw telecom inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

3. Investments

The Company’s investments at December 31, 2011 and 2010 are summarized as follows:

	December 31,
	2011		2010
	(amounts in thousands)
Cash equivalents:
U.S. Treasury money market mutual funds	$	291,746	$	323,206
Commercial paper	8,497		29,984
Certificates of deposit	5,201		—
International government securities	1,401		—
Corporate debt securities	—		511
Total cash equivalents	306,845		353,701
Investments:
Corporate debt securities	99,132		88,471
Debt securities issued by U.S. Government agencies	27,885		30,201
Debt securities issued by the U.S. Treasury	3,008		—
Commercial paper	$	1,500	$	—
Total investments	$	131,525	$	118,672
Total cash equivalents and investments	$	438,370	$	472,373

At December 31, 2011 and December 31, 2010, the carrying values of investments included in cash and cash equivalents approximated fair value. The aggregate fair value of available-for-sale securities by major security type is included in Note 8. The amortized cost basis of the available-for-sale securities was not materially different from the aggregate fair value. The contractual maturities of the Company’s available-for-sale securities are all within one year.

Proceeds from the sale and maturity of available-for-sale securities during the year ended December 31, 2011 and 2010 were $208.3 million and $154.8 million, respectively. The Company recognized no material unrealized or realized net gains or losses from available-for-sale securities during the years ended December 31, 2011 and 2010.

During the year ended December 31, 2010, the Company’s investments were transferred from the held-to-maturity classification to the available-for-sale classification as a result of management’s decision to make the investments available to be sold prior to their maturity dates to purchase investments with a higher yield. At the date of transfer, the net carrying amount was $71.5 million and the Company recognized an immaterial amount of unrealized gain.

During the year ended December 31, 2010, the Company received $3.8 million in proceeds from liquidation of previously impaired commercial paper, resulting in an $0.8 million realized gain recorded in other income.

F-13

tw telecom inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

4. Property, Plant and Equipment

Property, plant and equipment consists of:

	December 31,
	2011		2010
	(amounts in thousands)
Communications network equipment	2,738,618		2,530,428
Fiber and right to use	1,014,952		947,937
Vehicles and other equipment	206,466		187,804
Land, buildings and improvements	66,098		65,881
	4,026,134		3,732,050
Less accumulated depreciation	(2,598,922	)	(2,375,438	)
Total	1,427,212		1,356,612

Depreciation expense was $274.5 million, $279.9 million and $285.6 million for the years ended December 31, 2011, 2010 and 2009, respectively.

The Company’s asset retirement obligations are included as a component of other long-term liabilities in the consolidated balance sheets. The following table provides asset retirement obligation liability activity for the years ended December 31, 2011, 2010 and 2009:

	Years ended December 31,
	2011			2010			2009
	(amounts in thousands)
Asset retirement obligations:
Balance at January 1	$	23,141		$	20,377		$	18,701
Accretion expense	2,085			1,876			1,718
Liabilities incurred	—			977			—
Liabilities settled	(88		)	(89		)	(42		)
Balance at December 31	$	25,138		$	23,141		$	20,377

F-14

5. Intangible Assets

Goodwill

The Company had goodwill of $412.7 million at both December 31, 2011 and 2010.

Definite Life Intangibles

Definite life intangibles consist primarily of acquired customer relationships. Definite life intangible assets are amortized using methods that correlate to the pattern in which the economic benefits are expected to be realized. Customer relationships are amortized using the sum of the years digits method over an estimated life of 10 years. Other intangible assets, primarily acquired intangible assets, are amortized on a straight-line basis using expected lives of 10 years. Definite life intangible assets subject to amortization were as follows:

	December 31, 2011							December 31, 2010
	Gross Carrying Value		Accumulated Amortization			Net Carrying Value		Gross Carrying Value		Accumulated Amortization			Net Carrying Value
	(amounts in thousands)
Customer relationships	$	59,086	$	(43,867	)	$	15,219	$	59,086	$	(37,600	)	$	21,486
Other	6,363		(3,840		)	2,523		6,363		(3,405		)	2,958
	$	65,449	$	(47,707	)	$	17,742	$	65,449	$	(41,005	)	$	24,444

Intangible asset amortization expense was $6.7 million, $7.8 million and $8.9 million for the years ended December 31, 2011, 2010 and 2009, respectively.

The amortization expense related to intangible assets recorded as of December 31, 2011 for each of the five succeeding years is estimated to be the following: 2012—$5.6 million; 2013—$4.5 million; 2014—$3.4 million; 2015—$2.3 million and 2016—$1.2 million.

F-15

tw telecom inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

6. Long-Term Debt

	December 31,
	2011			2010
	(amounts in thousands)
Term Loan B—January 2013 tranche, due 2013	$	102,055		$	103,130
Term Loan B—extended tranche, due 2016	467,946			472,870
8% Senior Notes, due 2018	430,000			430,000
2  3/8% Convertible Senior Debentures, due 2026	373,744			373,744
Total debt	1,373,745			1,379,744
Unamortized discounts	(29,443		)	(49,505		)
Current portion	(6,000		)	(6,000		)
Total long-term debt	$	1,338,302		$	1,324,239

The schedule of principal payments on long-term debt as of December 31, 2011 is as follows (amounts in thousands):

2012	6,000
2013	479,651
2014	4,926
2015	4,926
2016	448,242
Thereafter	430,000
Total payments	$	1,373,745

8% Senior Notes due 2018

In March 2010, the Company’s wholly owned subsidiary, tw telecom holdings inc. (“Holdings”) completed a private offering of $430 million aggregate principal amount of 8% Senior Notes due 2018 (the “2018 Notes”) at an offering price of 99.284% of the principal amount. The net proceeds from the offering were used to fund Holdings’ extinguishment of its 9¼% Senior Notes due February 2014. The 2018 Notes are unsecured obligations of Holdings and are guaranteed by the Company and substantially all of Holdings’ subsidiaries. Interest is payable semi-annually on September 1 and March 1. The 2018 Notes are redeemable in whole or in part, at Holdings’ option, at any time on or after March 1, 2014, 2015 and 2016 at redemption prices of 104%, 102% and 100%, respectively. In addition, prior to March 1, 2013, at Holdings’ option, Holdings may redeem up to 35% of the aggregate principal amount of the 2018 Notes with the net proceeds from one or more equity offerings by the Company at a redemption price of 108% of their principal amount, plus accrued and unpaid interest, if any. Offering costs of $9.5 million related to the 2018 Notes were deferred and are being amortized to interest expense over the term of the 2018 Notes. Interest expense, including amortization of deferred debt issuance costs and discount relating to the 2018 Notes, was $36.0 million and $28.4 million for the years ended December 31, 2011 and 2010, respectively.

F-16

tw telecom inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

2 ³/₈% Convertible Senior Debentures due 2026

As of December 31, 2011, the Company had outstanding $373.7 million principal amount 2 ³/₈% Convertible Senior Debentures due April 1, 2026 (the “Convertible Debentures”). The Convertible Debentures are general, unsecured obligations of the Company. Interest is payable semi-annually on April 1 and October 1. The Convertible Debentures are redeemable in whole or in part at the Company’s option at any time on or after April 6, 2013 at a redemption price equal to 100% of the principal amount of the debentures to be redeemed, plus accrued and unpaid interest. Holders of the debentures have the option to require the Company to purchase all or part of the Convertible Debentures on April 1, 2013, April 1, 2016 or April 1, 2021 at 100% of the principal and unpaid interest, or at any time prior to April 1, 2026, to convert the debentures into shares of the Company’s common stock at a conversion rate of 53.6466 per $1,000 principal amount of debentures, representing a conversion price of $18.64 per share. Upon conversion, the Company will have the right to deliver, in lieu of shares of common stock, cash or a combination of cash and shares of common stock. As of December 31, 2011, an immaterial amount of Convertible Debentures had been converted and the Company delivered cash in lieu of common stock in connection with that conversion. As of December 31, 2011, the if-converted value of the Convertible Debentures exceeded the principal amount by $14.8 million.

In accordance with authoritative guidance issued by the FASB for convertible debt instruments, the Company separated the Convertible Debentures into debt and equity components at issuance and has assigned a value to each. The value assigned to the equity component was $120.5 million, net of an allocable portion of deferred debt issuance costs, as of December 31, 2011 and 2010, and is included as a component of additional paid in capital. The value assigned to the debt component was $253.3 million and represents the estimated fair value, as of the issuance date (March 29, 2006), of a similar instrument without the conversion feature. The unamortized discount is amortized to interest expense using the interest rate method through March 31, 2013. The following table reflects the principal and discount included in the consolidated balance sheets as of December 31, 2011 and 2010:

	December 31,
	2011			2010
	(amounts in thousands)
Principal amount of Convertible Debentures	$	373,744		$	373,744
Unamortized discount	(27,057		)	(46,732		)
Net carrying amount of Convertible Debentures	$	346,687		$	327,012

The Company recognized the following amounts to interest expense related to the Convertible Debentures for the years ended December 31, 2011, 2010 and 2009:

	Years ended December 31,
	2011			2010			2009
	(amounts in thousands)
Interest expense, contractual amount at 2   3/8%	$	8,876		$	8,875		$	8,877
Interest expense, amortization of discount	19,675			18,077			16,609
Interest expense, amortization of deferred debt issuance costs	1,098			1,098			1,098
Total interest expense for Convertible Debentures	$	29,649		$	28,050		$	26,584
Effective interest rate on liability component	8.5		%	8.5		%	8.5		%

Term Loan B

As of December 31, 2011, Holdings had a $680 million senior secured credit facility (the “Credit Facility”) consisting of a $600 million Term Loan B (“Term Loan”) and an undrawn $80 million revolving credit facility (the “Revolver”). On December 2, 2010, Holdings amended and restated the Credit Facility agreement to extend from January 2013 to December 2016 the maturity of approximately $474.1 million (the “extended tranche”) of the $577.5 million in principal amount of the Term Loan then outstanding. The January 2013 maturity date of the remaining $103.4 million in principal amount (the “January 2013 tranche”) was unchanged. The term of Holdings’ undrawn Revolver was extended from October 2011 to December 2014. As of December 31, 2011, Holdings had outstanding $467.9 million principal amount of the extended tranche and $102.1 million of the January 2013 tranche. Components of the Credit Facility, as amended, and related financing are detailed below:

F-17

tw telecom inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

• The Term Loan is a secured obligation, on a first lien basis, of Holdings. The Term Loan is guaranteed by the Company and Holdings’ subsidiaries. Repayments of the Term Loan are due quarterly in an amount equal to ¼ of 1% of the aggregate principal amount on the last day of each quarter. Interest on the January 2013 tranche is computed based on a specified Eurodollar rate plus 1.75% to 2.0%, of which 1.75% was in effect at December 31, 2011. Interest on the extended tranche is computed based on a specified Eurodollar rate plus 3.25%. Interest is reset periodically and payable at least quarterly. Based on the Eurodollar rate in effect at December 31, 2011, the weighted average effective interest rate was 3.3%. In accordance with applicable accounting guidance, the amended and restated Term Loan agreement was accounted for as a modification of the existing debt. The fees paid to the holders of the extended tranche of $3.8 million were added to the allocable share of existing debt issuance costs and will be amortized over the term of the extended tranche. Interest expense, including amortization of deferred debt issuance costs, the effect of interest rate swap agreements and commitment fees, was $22.3 million, $17.0 million and $20.3 million for the years ended December 31, 2011, 2010 and 2009, respectively.

• The Revolver is secured and guaranteed in the same manner as the Term Loan. Interest on outstanding amounts, if any, will be computed based on a specified Eurodollar rate plus 2.5% to 3.5% and will be reset periodically and payable at least quarterly. The Company is required to pay a commitment fee on the undrawn commitment amounts on a quarterly basis of 0.5% per annum. If the Revolver were drawn, certain restrictive financial covenants would apply. The fees paid to the lenders of $0.5 million were added to the existing debt issuance costs and will be amortized through the expiration date. Commitment fee expense and amortization of deferred debt issuance costs relating to the Revolver was $0.5 million, $0.5 million and $0.5 million for the years ended December 31, 2011, 2010 and 2009, respectively.

The Term Loan negative covenants were amended so that the amended Term Loan agreement contains similar restrictions to those contained in the indenture for the 2018 Notes. The Revolver covenants, which also were amended, contain additional restrictions, as well as certain financial covenants that the Company, Holdings and its subsidiaries must comply with if Holdings draws on the Revolver.

As of December 31, 2011, the Company and Holdings were in compliance with all of their covenants under the 2018 Notes, the Term Loan and the Revolver.

7. Derivative Financial Instruments

The variable rate Term Loan exposes the Company to variability in interest payments due to changes in interest rates. In order to mitigate interest rate fluctuations on the Term Loan, Holdings has entered into derivative instruments, specifically interest rate swap agreements. The interest rate swap agreements effectively convert a portion of Holdings’ floating-rate debt to a fixed-rate basis for the term of the agreement to reduce the impact of interest rate changes on future interest expense. The Company has designated its interest rate swap agreements as cash flow hedges. During the year ended December 31, 2011, the Company's remaining interest rate swap agreement expired.

The following table summarizes the fair value of derivatives reported in the consolidated balance sheets at December 31, 2011 and 2010:

	Liability Derivatives
Derivatives- cash flow hedges	Balance Sheet Location	December 31,
		2011		2010
		(amounts in thousands)
Interest rate swap agreements	Other current liabilities	$	—	$	2,412
Total fair value of derivatives designated as cash flow hedges		$	—	$	2,412

The unrecognized losses for the interest rate swap agreements included in accumulated other comprehensive loss at December 31, 2010 and 2009 were $2.4 million and $4.2 million, respectively. There were no unrecognized losses for the interest rate swap agreements included in accumulated other comprehensive loss at December 31, 2011. The effect of the interest rate swaps on the consolidated statements of operations was as follows for the years ended December 31, 2011, 2010 and 2009:

F-18

tw telecom inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

	Years Ended December 31,
	2011			2010			2009
	(amounts in thousands)
Loss recognized in other comprehensive income/(loss) (effective portion)	$	(118	)	$	(1,891	)	$	(2,653	)
Loss reclassified from accumulated other comprehensive income (loss) into interest expense (effective portion)	$	(2,530	)	$	(3,717	)	$	(5,562	)
Gain/(loss) recognized in income (ineffective portion and amount excluded from effectiveness testing)	$	—		$	—		$	—

8. Fair Value Measurements

Fair value, as defined by relevant accounting standards, is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at fair value, the Company considers the principal or most advantageous market in which it would complete a transaction and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance.

Fair Value Hierarchy

Relevant accounting standards set forth a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Relevant accounting standards establish three levels of inputs that may be used to measure fair value:

• Level 1—Quoted prices in active markets for identical assets or liabilities. Level 1 assets that are measured at fair value on a recurring basis consist of the Company’s investments in U.S. Treasury money market mutual funds that are traded in an active market with sufficient volume and frequency of transactions, and are included as a component of cash and cash equivalents in the consolidated balance sheets.

• Level 2—Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities. Level 2 assets that are measured at fair value on a recurring basis consist of the Company’s investments in certificates of deposit, commercial paper, corporate debt securities, international government securities, and debt securities issued by the U.S. Treasury and government agencies using observable inputs in less active markets and are included as components of cash and cash equivalents and investments in the consolidated balance sheets. Level 2 liabilities that are measured at fair value on a recurring basis include the Company’s interest rate swap agreement, which expired in the year ended December 31, 2011, priced using discounted cash flow techniques that use observable market inputs, such as LIBOR-based yield curves, forward rates, and credit ratings and are included as a component of other current liabilities in the consolidated balance sheets.

• Level 3—Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities. The Company did not have any Level 3 assets or liabilities that were measured at fair value at December 31, 2011 and 2010.

F-19

tw telecom inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following tables reflect assets and liabilities that are measured and carried at fair value on a recurring basis as of December 31, 2011 and 2010:

	Fair Value Measurements At December 31, 2011						Assets/Liabilities at Fair Value
	Level 1		Level 2		Level 3
	(amounts in thousands)
Assets
U.S. Treasury money market mutual funds	$	291,746	$	—	$	—	$	291,746
Commercial paper	—		8,497		—		8,497
Certificates of deposit	—		5,201		—		5,201
International government securities	—		1,401		—		1,401
Investments included in cash and cash equivalents	$	291,746	$	15,099	$	—	$	306,845
Corporate debt securities	—		99,132		—		99,132
Debt securities issued by U.S. Government agencies	—		27,885		—		27,885
Debt securities issued by the U.S. Treasury	—		3,008		—		3,008
Commercial paper	$	—	$	1,500	$	—	$	1,500
Short-term investments	$	—	$	131,525	$	—	$	131,525
Total assets	$	291,746	$	146,624	$	—	$	438,370

	Fair Value Measurements At December 31, 2010						Assets/Liabilities at Fair Value
	Level 1		Level 2		Level 3
	(amounts in thousands)
Assets
U.S. Treasury money market mutual funds	$	323,206	$	—	$	—	$	323,206
Commercial paper	—		29,984		—		29,984
Corporate debt securities	—		511		—		511
Investments included in cash and cash equivalents	$	323,206	$	30,495	$	—	$	353,701
Corporate debt securities	—		88,471		—		88,471
Debt securities issued by U.S. Government agencies	—		30,201		—		30,201
Short-term investments	$	—	$	118,672	$	—	$	118,672
Total assets	$	323,206	$	149,167	$	—	$	472,373
Liabilities
Interest rate swap agreement	$	—	$	2,412	$	—	$	2,412
Total liabilities	$	—	$	2,412	$	—	$	2,412

F-20

tw telecom inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Although the Company’s long-term debt has not been listed on any securities exchange or inter-dealer automated quotation system, the Company has estimated the fair value of its long-term debt based on indicative pricing published by certain investment banks. While the Company believes these approximations to be reasonably accurate at the time published, indicative pricing can vary widely depending on volume traded by any given investment bank and other factors. The following table summarizes the carrying amounts and estimated fair values of the Company’s long-term debt, including the current portion:

	December 31, 2011				December 31, 2010
	Carrying Value		Fair Value		Carrying Value		Fair Value
	(amounts in thousands)
Term Loan B—January 2013 tranche	$	102,055	$	101,673	$	103,130	$	101,841
Term Loan B—Extended tranche, due 2016	467,946		464,435		472,870		472,870
8% Senior Notes, net of discount	427,614		460,100		427,227		459,025
2 3/8% Convertible Senior Debentures, net of discount	346,687		444,288		327,012		412,987
Total debt	$	1,344,302	$	1,470,496	$	1,330,239	$	1,446,723

9. Income Taxes

Income tax expense (benefit) for the years ended December 31, 2011, 2010 and 2009 was as follows:

	Years ended December 31,
	2011			2010			2009
	(amounts in thousands)
Current:
Federal	$	1,317		$	269		$	389
State	4,406			1,965			2,357
	5,723			2,234			2,746
Deferred:
Federal	34,800			20,873			—
State	1,826			651			—
	36,626			21,524			—
Income tax (benefit) expense of change in valuation allowance (1)	(870		)	(315,053		)	9,175
Income tax expense (benefit)	$	41,479		$	(291,295	)	$	11,921

 ___________________

(1) For the year ended December 31, 2011, the deferred income tax benefit related to the decrease in the valuation allowance primarily resulted from a change in tax legislation. For the year ended December 31, 2010, the deferred income tax benefit related to the decrease in the valuation allowance is comprised of (i) the portion related to future year’s earnings, which resulted in a reversal of $299.0 million in the valuation allowance in 2010 (see below), and (ii) the portion related to current year earnings. For the year ended December 31, 2009, the income tax expense related to the increase in the valuation allowance is the result of increases in the deferred tax liability for the amortization of indefinite lived intangibles which is not available for consideration in the assessment of the realization of the Company’s deferred tax assets.

F-21

tw telecom inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Total income tax expense (benefit) differed from the amounts computed by applying the federal statutory income tax rate of 35% to income before income taxes as a result of the following items for the years ended December 31, 2011, 2010 and 2009:

	Years ended December 31,
	2011		2010		2009
Federal statutory income tax expense	35.0	%	35.0	%	35.0	%
State income tax expense, net of federal income tax benefit	4.7		5.3		7.0
Compensation limitation	2.1		5.0		5.2
Change in valuation allowance	(0.9	)	(635.3	)	(9.7	)
Other	0.8		2.6		1.8
Income tax expense (benefit)	41.7	%	(587.4	)%	39.3	%

The tax effects of temporary differences that give rise to significant components of the Company’s deferred tax assets and liabilities at December 31, 2011 and 2010 are as follows:

	December 31,
	2011			2010
	(amounts in thousands)
Deferred tax assets:
Net operating loss carryforwards	$	328,168		$	359,773
Accrued liabilities	31,646			33,983
Stock options	18,600			18,184
Deferred revenue	8,409			6,377
Allowance for doubtful accounts	3,133			3,041
Other	8,740			8,058
Total deferred tax assets	398,696			429,416
Deferred tax liabilities:
Depreciation and amortization	(126,097		)	(109,581		)
Discount on Convertible Debentures	(7,672		)	(15,502		)
Prepaid expenses	(2,022		)	(2,878		)
Total deferred tax liabilities	(135,791		)	(127,961		)
Less: Valuation allowance	(35,362		)	(36,232		)
Total deferred tax asset, net	$	227,543		$	265,223
Balance sheet classification of deferred taxes:
Deferred income tax asset, net - current	$	65,008		$	40,428
Deferred income tax asset, net - non-current	162,535			224,795
Total deferred tax asset, net	$	227,543		$	265,223

Prior to 2009, the Company had a history of losses and, as a result, recognized a valuation allowance for net deferred tax assets, excluding consideration of the deferred tax liability for the amortization of indefinite lived intangibles. Each quarter, the Company evaluates the need to retain all or a portion of the valuation allowance on its net deferred tax assets. During 2010, the Company determined that it was more likely than not that the vast majority of its deferred tax assets, including net operating loss carryforwards (“NOLs”), will be realized, and as a result reversed $299.0 million of the valuation allowance. In making this determination, the Company analyzed, among other things, its recent history of earnings, its cumulative earnings for the last 12 quarters, and forecasts of future earnings. The reversal of the valuation allowance resulted in an income tax benefit of $299.0 million, or $1.98 per basic share and $1.72 per diluted share for the year ended December 31, 2010, and an increase in the current and non-current deferred tax assets on the consolidated balance sheet as of December 31, 2010.

F-22

tw telecom inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company continues to maintain a valuation allowance against certain deferred tax assets totaling $35.4 million. The Company believes it is more likely than not that certain deferred tax assets, including those resulting from NOLs subject to certain limitations and those that require future income of special character, will not be realized. Additionally, the Company has certain deferred tax assets attributable to stock option deductions for which the related valuation allowance cannot be reversed due to relevant accounting guidance concerning tax benefits related to the exercise of non-qualified stock options prior to the adoption of such accounting guidance. At December 31, 2011, $21.1 million of the valuation allowance related to stock compensation for which subsequently recognized tax benefits will be allocated directly to additional paid in capital.

As a result of certain realization requirements of applicable accounting guidance, the table of deferred tax assets and liabilities shown above does not include certain deferred tax assets that arose directly from (or the use of which was postponed by) tax deductions related to equity compensation in excess of compensation recognized for financial reporting. Equity will be increased by $49.2 million if and when such deferred tax assets are ultimately realized. The Company uses the ordering rules prescribed by relevant accounting guidance for purposes of determining when the excess tax benefits have been realized. The Company has $18.6 million in deferred tax assets related to stock-based compensation. If the actual future tax deductions are less than the deferred tax asset recorded, this may result in an increase to income tax expense.

At December 31, 2011, the Company had NOLs for federal income tax purposes of $1.0 billion. The Company’s NOLs, if not utilized to reduce taxable income in future periods, generally expire in various amounts beginning in 2021 and ending in 2026. The Company utilized NOLs to offset income tax obligations in each of the tax returns filed for the years ended December 31, 2010, 2009 and 2008. The Tax Reform Act of 1986 contains provisions that limit the utilization of NOLs if there has been an “ownership change” as described in Section 382 of the Internal Revenue Code. In general, this would occur if certain ownership changes related to the Company’s common stock that are held by 5 percent or greater stockholders exceeds 50 percent measured over a rolling three year period. If the Company experienced such an ownership change at a time when its market capitalization is below a certain level, the utilization of its NOLs to reduce future federal income tax obligations could be limited. In an effort to reduce the likelihood of an ownership change as defined by Section 382, the Company adopted a stockholder rights plan in January 2009 that was ratified by the Company’s stockholders in June 2009. The stockholder rights plan terminated in accordance with its terms on January 20, 2012, and the Company did not extend the stockholder rights plan.

As of December 31, 2011, the Company had no material uncertain tax positions.

10. Stock-Based Compensation

tw telecom1998 Employee Stock Option Plan

The Company maintains the tw telecom 1998 Employee Stock Option Plan that reserved 9.0 million shares of common stock to be issued to officers and eligible employees under terms and conditions to be set by the Company’s Board of Directors. As of December 31, 2011, approximately 1.8 million shares of common stock were reserved for issuance upon exercise of outstanding options under that plan. Generally, the options vest over periods of up to four years and expire seven or ten years from the date of issuance. These options have been granted to employees of the Company with an exercise price equal to market value at the date of grant. The tw telecom 1998 Employee Stock Option Plan expired in August 2008 and no additional awards may be granted under this plan.

tw telecom2000 Employee Stock Plan

The Company maintains the tw telecom 2000 Employee Stock Plan (as amended in June 2009) that permits up to 39.0 million shares of common stock to be issued pursuant to stock options and stock awards granted to officers, directors, and eligible employees under terms and conditions to be set by the Company’s Board of Directors. As of December 31, 2011, approximately 6.2 million shares of common stock were reserved for issuance upon exercise of outstanding options and vesting of stock awards and approximately 14.4 million shares of common stock were available for grant under the plan. Generally, the options and awards vest over periods of up to four years and options expire either seven or ten years from the date of issuance.

F-23

tw telecom inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The options have been granted to employees of the Company with an exercise price equal to market value of the underlying stock at the date of grant. The fair value of the restricted stock awards and restricted stock units granted was measured based on the market value of the shares on the date of grant and the resulting expense related to these awards is recorded over their vesting periods, generally up to four years. The weighted-average fair value of options granted was $8.44, $7.61 and $3.56 for the years ended December 31, 2011, 2010 and 2009, respectively, with the following weighted-average assumptions:

	Years ended December 31,
	2011		2010		2009
Expected volatility	52	%	53	%	56	%
Risk-free interest rate	2.2	%	2.5	%	1.7	%
Dividend yield	0	%	0	%	0	%
Expected term	5	years	5.2	years	4	years

The table below summarizes the Company’s stock option activity and related information for the year ended December 31, 2011:

	Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value
					(in years)	(thousands)
Options outstanding at January 1, 2011	9,153,677		$	16.72
Granted	3,000		18.02
Exercised	(1,908,830	)	12.47
Forfeited	(30,385	)	14.50
Expired	(543,915	)	46.25
Options outstanding at December 31, 2011	6,673,547		$	15.54	3.88	$	30,212
Vested and expected to vest at December 31, 2011	6,619,268		$	15.57	3.84	$	29,772
Exercisable at December 31, 2011	4,973,992		$	16.65	3.01	$	18,142

The total intrinsic value of stock options exercised during the years ended December 31, 2011, 2010 and 2009 was $13.4 million, $7.1 million and $4.8 million, respectively. As of December 31, 2011, there was $4.8 million of total unrecognized compensation expense related to unvested stock options, which is expected to be recognized over a weighted-average period of 1.1 years.

The table below summarizes the Company’s restricted stock and restricted stock units and related information for the year ended December 31, 2011:

	Shares		Weighted Average Grant Date Fair Value
Nonvested at January 1, 2011	3,161,558		$	12.65
Granted	2,073,532		16.97
Vested	(1,010,329	)	12.06
Forfeited	(43,249	)	13.52
Nonvested at December 31, 2011	4,181,512		$	17.92

F-24

tw telecom inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The total fair value of restricted stock and restricted stock units vested during the years ended December 31, 2011, 2010 and 2009 was $17.7 million, $12.8 million and $10.2 million, respectively. As of December 31, 2011, there was $43.9 million of total unrecognized compensation expense related to non-vested restricted stock awards and restricted stock units, which is expected to be recognized over a weighted-average period of 1.2 years.

Effective October 1, 2004, the Company adopted the tw telecom 2004 Qualified Stock Purchase Plan (the “2004 Stock Purchase Plan”). Employees who met certain eligibility requirements could elect to designate up to 15% of their eligible compensation, up to an annual limit of $25,000, to purchase shares of the Company’s common stock at a 15% discount to fair market value. Stock purchases occurred semi-annually, with the price per share equaling the lower of 85% of the market price at the beginning or end of the offering period. The Company is authorized to issue a total of 600,000 shares of the Company’s common stock to participants in the 2004 Stock Purchase Plan. In September 2007, the 2004 Stock Purchase Plan was amended to authorize an additional 600,000 shares for issuance under the 2004 Stock Purchase Plan. During the years ended December 31, 2011, 2010 and 2009, no shares were issued under the amended 2004 Stock Purchase Plan because the Company has not made any offerings under the amended plan.

11. Commitments and Contingencies

Leases and Fixed Obligations

The Company leases office space and furniture, facilities housing telecommunications equipment, and fiber optic use rights. Certain of the leases contain renewal clauses. The Company also enters into fixed price maintenance agreements for maintenance of its network.

At December 31, 2011, commitments under capital and non-cancelable operating leases and maintenance agreements with terms in excess of one year were as follows:

	Capital Leases			Operating Leases		Fixed Maintenance Obligations
	(amounts in thousands)
Year ended December 31:
2012	$	2,937		$	52,302	$	3,013
2013	2,625			47,470		3,013
2014	2,403			42,214		3,013
2015	2,103			35,325		3,013
2016	1,978			26,725		3,013
Thereafter	11,578			93,418		27,394
Total minimum lease payments	$	23,624		$	297,454	$	42,459
Less amount representing interest	(7,373		)
Present value of obligations under capital leases	16,251
Less current portion of obligations under capital leases	(1,733		)
Obligations under capital leases, excluding current portion	$	14,518

As of December 31, 2011 and 2010, assets under capital lease obligations, which primarily consist of fiber optic network components, were $19.3 million and $17.9 million, respectively, with related accumulated depreciation of $6.1 million and $5.4 million, respectively. Depreciation expense related to assets under capital lease obligations was $1.2 million, $1.4 million and $1.4 million for years ended December 31, 2011, 2010 and 2009, respectively. The obligations under capital leases have been discounted at an average imputed interest rate of 7.6%. Rental expense under operating leases aggregated $76.8 million, $73.9 million and $72.3 million for the years ended December 31, 2011, 2010 and 2009, respectively.

F-25

tw telecom inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Other Contingencies

Management routinely reviews the Company’s exposure to liabilities incurred in the normal course of its business operations. The Company is subject to significant government and jurisdictional regulation, some of which is uncertain due to legal challenges of existing rules. Such regulation is subject to differing interpretations and inconsistent application, and has historically resulted in disputes with other carriers, regulatory authorities and municipalities regarding the classification of traffic, rates, minutes of use and right-of-way fees. Where a probable contingency exists and the amount of the loss can be reasonably estimated, the Company records the estimated liability. Considerable judgment is required in analyzing and recording such liabilities and actual results may vary from the estimates.

The Company’s pending legal proceedings are limited to litigation incidental to its business. In the opinion of management, the ultimate resolution of these matters will not have a material adverse effect on the Company’s financial statements.

12. Employee Benefit Plans

Effective January 1, 1999, the Company adopted the tw telecom 401(k) Plan (the “401(k) Plan”). Employees who meet certain eligibility requirements may contribute up to 60% of their eligible compensation, subject to statutory limitations, to a trust for investment in several diversified investment choices, as directed by the employee. The Company makes a matching contribution of 100% of each employee’s contribution up to a maximum of 5% of the employee’s eligible compensation. The Company’s contributions to the 401(k) Plan aggregated $11.6 million, $10.7 million and $10.3 million for the years ended December 31, 2011, 2010 and 2009, respectively.

13. Quarterly Results of Operations (Unaudited)

The following summarizes the Company’s unaudited quarterly results of operations for 2011 and 2010:

	Three Months Ended
	March 31			June 30		September 30		December 31
	(amounts in thousands, except per share amounts)
Year Ended December 31, 2011
Total revenue	$	332,542		$	338,386	$	344,456	$	351,507
Operating income	44,262			46,270		47,270		48,761
Net income	12,619			14,307		14,593		16,392
Basic income per common share	$	0.08		$	0.09	$	0.10	$	0.11
Diluted income per common share	$	0.08		$	0.09	$	0.10	$	0.11
Year Ended December 31, 2010
Total revenue	$	311,211		$	316,849	$	320,294	$	324,817
Operating income	33,867			35,689		36,993		39,623
Net income (loss)(1)	(6,779		)	314,084		16,079		17,494
Basic income (loss) per common share	$	(0.05	)	$	2.07	$	0.11	$	0.12
Diluted income (loss) per common share	$	(0.05	)	$	1.84	$	0.10	$	0.11

  ___________________

(1) Includes a non-cash income tax benefit of $299.0 million in the three months ended June 30, 2010 to recognize the value of tax assets (see Note 9).

The total net income per share for the 2011 and 2010 quarters do not equal net income per share for the respective years because the per share amounts for each quarter and for each year are computed based on their respective discrete periods.

F-26

14. Supplemental Guarantor Information

In March 2010, Holdings (“Issuer”) issued its 2018 Notes with a principal amount of $430 million. The 2018 Notes are unsecured obligations of the Issuer and are guaranteed by the Company (“Parent Guarantor”) and substantially all of the Issuer’s subsidiaries (“Combined Subsidiary Guarantors”). The guarantees are joint and several. A significant amount of the Issuer’s cash flow is generated by the Combined Subsidiary Guarantors. As a result, funds necessary to meet the Issuer’s debt service obligations are provided in large part by distributions or advances from the Combined Subsidiary Guarantors. The 2018 Notes are governed by an indenture that contains certain restrictive covenants. These restrictions affect, and in many respects significantly limit or prohibit, among other things, the ability of the Parent Guarantor, the Issuer and its subsidiaries to incur indebtedness, make prepayments of certain indebtedness, pay dividends, make investments, engage in transactions with stockholders and affiliates, issue capital stock of subsidiaries, create liens, sell assets, and engage in mergers and consolidations.

The following information sets forth the Company’s Condensed Consolidating Balance Sheets as of December 31, 2011 and 2010, Condensed Consolidating Statements of Operations for the years ended December 31, 2011, 2010 and 2009 and Condensed Consolidating Statements of Cash Flows for the years ended December 31, 2011, 2010 and 2009.

F-27

tw telecom inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

tw telecom inc.

CONDENSED CONSOLIDATING BALANCE SHEET

December 31, 2011

	Parent Guarantor			Issuer			Combined Subsidiary Guarantors			Eliminations			Consolidated
	(amounts in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	24,543		$	328,851		$	—		$	—		$	353,394
Investments	—			131,525			—			—			131,525
Receivables, net	—			—			96,182			—			96,182
Prepaid expenses and other current assets	—			10,265			7,075			—			17,340
Deferred income taxes	—			64,988			20			—			65,008
Total current assets	24,543			535,629			103,277			—			663,449
Property, plant and equipment, net	—			54,798			1,372,414			—			1,427,212
Deferred income taxes	—			162,050			485			—			162,535
Goodwill	—			—			412,694			—			412,694
Intangible and other assets, net	1,373			13,282			27,681			—			42,336
Total assets	$	25,916		$	765,759		$	1,916,551		$	—		$	2,708,226
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	—		$	8,708		$	44,031		$	—		$	52,739
Other current liabilities	2,219			61,477			175,509			—			239,205
Intercompany payable (receivable)	(1,836,254		)	(599,828		)	2,436,082			—			—
Total current liabilities	(1,834,035		)	(529,643		)	2,655,622			—			291,944
Losses in subsidiary in excess of investment	507,643			971,457			—			(1,479,100		)	—
Long-term debt and capital lease obligations, net	346,687			992,490			13,643			—			1,352,820
Long-term deferred revenue	—			—			22,296			—			22,296
Other long-term liabilities	—			7,179			28,266			—			35,445
Stockholders’ equity (deficit)	1,005,621			(675,724		)	(803,276		)	1,479,100			1,005,721
Total liabilities and stockholders’ equity (deficit)	$	25,916		$	765,759		$	1,916,551		$	—		$	2,708,226

F-28

tw telecom inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

tw telecom inc.

CONDENSED CONSOLIDATING BALANCE SHEET

December 31, 2010

	Parent Guarantor			Issuer			Combined Subsidiary Guarantors			Eliminations			Consolidated
	(amounts in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	24,542		$	332,380		$	—		$	—		$	356,922
Investments	—			118,672			—			—			118,672
Receivables, net	—			—			81,598			—			81,598
Prepaid expenses and other current assets	—			10,002			6,933			—			16,935
Deferred income taxes	—			40,408			20			—			40,428
Total current assets	24,542			501,462			88,551			—			614,555
Property, plant and equipment, net	—			42,063			1,314,549			—			1,356,612
Deferred income taxes	—			224,290			505			—			224,795
Goodwill	—			—			412,694			—			412,694
Intangible and other assets, net	2,471			15,326			24,501			—			42,298
Total assets	$	27,013		$	783,141		$	1,840,800		$	—		$	2,650,954
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	—		$	6,179		$	47,257		$	—		$	53,436
Other current liabilities	2,219			65,719			180,414			—			248,352
Intercompany payable (receivable)	(1,850,975		)	(609,054		)	2,460,029			—			—
Total current liabilities	(1,848,756		)	(537,156		)	2,687,700			—			301,788
Losses in subsidiary in excess of investment	582,116			1,054,580			—			(1,636,696		)	—
Long-term debt and capital lease obligations, net	327,012			997,227			14,058			—			1,338,297
Long-term deferred revenue	—			—			14,864			—			14,864
Other long-term liabilities	—			4,073			25,291			—			29,364
Stockholders’ equity (deficit)	966,641			(735,583		)	(901,113		)	1,636,696			966,641
Total liabilities and stockholders’ equity (deficit)	$	27,013		$	783,141		$	1,840,800		$	—		$	2,650,954

F-29

tw telecom inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

tw telecom inc.

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

Year Ended December 31, 2011

	Parent Guarantor			Issuer			Combined Subsidiary Guarantors			Eliminations			Consolidated
	(amounts in thousands)
Total revenue	$	—		$	—		$	1,366,891		$	—		$	1,366,891
Costs and expenses:
Operating, selling, general and administrative	—			193,457			703,542			—			896,999
Depreciation, amortization and accretion	—			21,304			262,025			—			283,329
Corporate expense allocation	—			(214,761		)	214,761			—			—
Total costs and expenses	—			—			1,180,328			—			1,180,328
Operating income	—			—			186,563			—			186,563
Interest expense, net	(29,648		)	(45,337		)	(12,188		)	—			(87,173		)
Interest expense allocation	29,648			45,337			(74,985		)	—			—
Income before income taxes and equity in undistributed earnings of subsidiaries	—			—			99,390			—			99,390
Income tax expense	—			39,927			1,552			—			41,479
Net income before equity in undistributed earnings of subsidiaries	—			(39,927		)	97,838			—			57,911
Equity in undistributed earnings of subsidiaries	57,911			97,838			—			(155,749		)	—
Net income	$	57,911		$	57,911		$	97,838		$	(155,749	)	$	57,911

F-30

tw telecom inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

tw telecom inc.

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

Year Ended December 31, 2010

	Parent Guarantor			Issuer			Combined Subsidiary Guarantors			Eliminations			Consolidated
	(amounts in thousands)
Total revenue	$	—		$	—		$	1,273,171		$	—		$	1,273,171
Costs and expenses:
Operating, selling, general and administrative	—			185,465			651,970			—			837,435
Depreciation, amortization and accretion	—			19,510			270,054			—			289,564
Corporate expense allocation	—			(204,975		)	204,975			—			—
Total costs and expenses	—			—			1,126,999			—			1,126,999
Operating income	—			—			146,172			—			146,172
Interest expense, net	(28,049		)	(39,884		)	(12,411		)	—			(80,344		)
Debt extinguishment costs	—			(17,070		)	—			—			(17,070		)
Other income	—			825			—			—			825
Interest expense and other income allocation	28,049			56,129			(84,178		)	—			—
Income before income taxes and equity in undistributed earnings of subsidiaries	—			—			49,583			—			49,583
Income tax benefit	—			(289,865		)	(1,430		)	—			(291,295		)
Net income before equity in undistributed earnings of subsidiaries	—			289,865			51,013			—			340,878
Equity in undistributed earnings of subsidiaries	340,878			51,013			—			(391,891		)	—
Net income	$	340,878		$	340,878		$	51,013		$	(391,891	)	$	340,878

F-31

tw telecom inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

tw telecom inc.

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

Year Ended December 31, 2009

	Parent Guarantor			Issuer			Combined Subsidiary Guarantors			Eliminations			Consolidated
	(amounts in thousands)
Total revenue	$	—		$	—		$	1,211,390		$	—		$	1,211,390
Costs and expenses:
Operating, selling, general and administrative	—			174,416			626,834			—			801,250
Depreciation, amortization and accretion	—			16,641			279,526			—			296,167
Corporate expense allocation	—			(191,057		)	191,057			—			—
Total costs and expenses	—			—			1,097,417			—			1,097,417
Operating income	—			—			113,973			—			113,973
Interest expense, net	(26,576		)	(45,080		)	(11,985		)	—			(83,641		)
Interest expense allocation	26,576			45,080			(71,656		)	—			—
Income before income taxes and equity in undistributed earnings of subsidiaries	—			—			30,332			—			30,332
Income tax expense	—			9,175			2,746			—			11,921
Net income before equity in undistributed earnings of subsidiaries	—			(9,175		)	27,586			—			18,411
Equity in undistributed earnings of subsidiaries	18,411			27,586			—			(45,997		)	—
Net income	$	18,411		$	18,411		$	27,586		$	(45,997	)	$	18,411

F-32

tw telecom inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

tw telecom inc.

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Year Ended December 31, 2011

	Parent Guarantor			Issuer			Combined Subsidiary Guarantors			Eliminations			Consolidated
	(amounts in thousands)
Cash flows from operating activities:
Net income	$	57,911		$	57,911		$	97,838		$	(155,749	)	$	57,911
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization, and accretion	—			21,304			262,025			—			283,329
Deferred income taxes	—			35,736			20			—			35,756
Intercompany and equity investment changes	(30,087		)	(73,897		)	(51,765		)	155,749			—
Amortization of discount on debt and deferred debt issue costs and other	20,773			2,615			—			—			23,388
Stock-based compensation	—			—			27,817			—			27,817
Changes in operating assets and liabilities	—			5,602			(30,215		)	—			(24,613		)
Net cash provided by operating activities	48,597			49,271			305,720			—			403,588
Cash flows from investing activities:
Capital expenditures	—			(37,754		)	(302,977		)	—			(340,731		)
Purchases of investments	—			(223,638		)	—			—			(223,638		)
Proceeds from sale of investments	—			208,340			—			—			208,340
Proceeds from sale of assets and other investing activities, net	—			5,183			(1,953		)	—			3,230
Net cash used in investing activities	—			(47,869		)	(304,930		)	—			(352,799		)
Cash flows from financing activities:
Net proceeds (tax withholdings) from issuance of common stock upon exercise of stock options and vesting of restricted stock awards and units	9,966			—			—			—			9,966
Purchases of treasury stock	(58,562		)	—			—			—			(58,562		)
Excess tax benefits from stock-based compensation	—			1,385			—			—			1,385
Payment of debt and capital lease obligations	—			(6,316		)	(790		)	—			(7,106		)
Net cash used in financing activities	(48,596		)	(4,931		)	(790		)	—			(54,317		)
Increase (decrease) in cash and cash equivalents	1			(3,529		)	—			—			(3,528		)
Cash and cash equivalents at beginning of period	24,542			332,380			—			—			356,922
Cash and cash equivalents at end of period	$	24,543		$	328,851		$	—		$	—		$	353,394

F-33

tw telecom inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

tw telecom inc.

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Year Ended December 31, 2010

	Parent Guarantor			Issuer			Combined Subsidiary Guarantors			Eliminations			Consolidated
	(amounts in thousands)
Cash flows from operating activities:
Net income	$	340,878		$	340,878		$	51,013		$	(391,891	)	$	340,878
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization, and accretion	—			19,510			270,054			—			289,564
Deferred income taxes	—			(293,004		)	(525		)	—			(293,529		)
Intercompany and equity investment changes	(311,178		)	(51,814		)	(28,899		)	391,891			—
Stock-based compensation	—			—			27,832			—			27,832
Extinguishment costs, amortization of discount on debt and debt issue costs and other	19,174			18,475			—			—			37,649
Changes in operating assets and liabilities	—			(1,468		)	(15,174		)	—			(16,642		)
Net cash provided by operating activities	48,874			32,577			304,301			—			385,752
Cash flows from investing activities:
Capital expenditures	—			(23,237		)	(298,607		)	—			(321,844		)
Purchases of investments	—			(246,575		)	—			—			(246,575		)
Proceeds from sale of investments	—			154,786			—			—			154,786
Proceeds from sale of assets and other investing activities, net	—			862			(5,278		)	—			(4,416		)
Net cash used in investing activities	—			(114,164		)	(303,885		)	—			(418,049		)
Cash flows from financing activities:
Net proceeds (tax withholdings) from issuance of common stock upon exercise of stock options and vesting of restricted stock awards and units	1,045			—			—			—			1,045
Purchases of treasury stock	(49,911		)	—			—			—			(49,911		)
Retirement of debt obligations	(6		)	(413,677		)	—			—			(413,683		)
Net proceeds from issuance of debt	—			413,069			—			—			413,069
Payment of debt and capital lease obligations	—			(6,792		)	(416		)	—			(7,208		)
Net cash used in financing activities	(48,872		)	(7,400		)	(416		)	—			(56,688		)
Increase (decrease) in cash and cash equivalents	2			(88,987		)	—			—			(88,985		)
Cash and cash equivalents at beginning of period	24,540			421,367			—			—			445,907
Cash and cash equivalents at end of period	$	24,542		$	332,380		$	—		$	—		$	356,922

F-34

tw telecom inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

tw telecom inc.

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Year Ended December 31, 2009

	Parent Guarantor			Issuer			Combined Subsidiary Guarantors			Eliminations			Consolidated
	(amounts in thousands)
Cash flows from operating activities:
Net income	$	18,411		$	18,411		$	27,586		$	(45,997	)	$	18,411
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization, and accretion	—			16,641			279,526			—			296,167
Deferred income taxes	—			9,175			—			—			9,175
Intercompany and equity investment changes	(34,445		)	99,979			(111,531		)	45,997			—
Stock-based compensation	—			—			26,518			—			26,518
Amortization of discount on debt and debt issue costs and other	17,707			1,799			530			—			20,036
Changes in operating assets and liabilities	—			(6,048		)	26,219			—			20,171
Net cash provided by operating activities	1,673			139,957			248,848			—			390,478
Cash flows from investing activities:
Capital expenditures	—			(31,508		)	(235,489		)	—			(266,997		)
Purchases of investments	—			(24,892		)	—			—			(24,892		)
Proceeds from sales of assets and other investing activities, net	—			13,882			(12,582		)	—			1,300
Net cash used in investing activities	—			(42,518		)	(248,071		)	—			(290,589		)
Cash flows from financing activities:
Net proceeds (tax withholdings) from issuance of common stock upon exercise of stock options and vesting of restricted stock awards and units	1,834			—			—			—			1,834
Payment of debt and capital lease obligations	—			(7,215		)	(777		)	—			(7,992		)
Net cash provided by (used in) financing activities	1,834			(7,215		)	(777		)	—			(6,158		)
Increase in cash and cash equivalents	3,507			90,224			—			—			93,731
Cash and cash equivalents at beginning of period	21,033			331,143			—			—			352,176
Cash and cash equivalents at end of period	$	24,540		$	421,367		$	—		$	—		$	445,907

F-35

tw telecom inc.

SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS

Years Ended December 31, 2011, 2010 and 2009

	Balance at Beginning of Period		Additions/ Charges to Costs and Expenses, net	Deductions		Balance at End of Period
	(amounts in thousands)
For the Year ended December 31, 2011:
Allowance for doubtful accounts receivable	$	7,898	3,142	(2,848	)	$	8,192
For the Year ended December 31, 2010:
Allowance for doubtful accounts receivable	$	9,449	1,820	(3,371	)	$	7,898
For the Year ended December 31, 2009:
Allowance for doubtful accounts receivable	$	11,271	6,595	(8,417	)	$	9,449

F-36

EXHIBIT INDEX

Exhibit Number		Description of Exhibit
2.1	—	Agreement and Plan of Merger, by and among Time Warner Telecom Inc., XPD Acquisition, LLC, Xspedius Communications, LLC, Xspedius Management Co., LLC and Xspedius Holding Corp., dated as of July 27, 2006 (filed as Exhibit 2.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006).*
3.1	—	Restated Certificate of Incorporation of the Company (filed as Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2007).*
3.2	—	Amended By-laws of Time Warner Telecom Inc. (filed as Exhibit 99.1 to the Company’s Current Report on Form 8-K dated September 17, 2007).*
3.3	—	Certificate of Amendment to Restated Certificate of Incorporation (filed as Exhibit 3.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008).*
4.1	—	Indenture, dated as of March 29, 2006, between Time Warner Telecom Inc. and Wells Fargo Bank, National Association, as trustee (filed as Exhibit 4.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2006).*
4.2	—	First Supplemental Indenture, dated as of March 29, 2006, between Time Warner Telecom Inc. and Wells Fargo Bank, National Association, as trustee, creating 2.375% Convertible Senior Debentures due 2026 (filed as Exhibit 4.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2006).*
4.3	—	Indenture, dated March 17, 2010, among tw telecom holdings inc., the Company, Subsidiary Guarantors parties thereto and Wells Fargo Bank, National Association, as Trustee, for 8 % Senior Notes due 2018 (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K dated March 17, 2010).*
4.4	—	Certificate of Designations of Series A Junior Participating Preferred Stock (filed as Exhibit 4.6 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2009).*
10.1	—	Lease, dated November 1, 2004, between Carr America Realty, L.P. and Time Warner Telecom Holdings Inc. (filed as Exhibit 10.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004).*
**10.2	—	Time Warner Telecom Inc. 1998 Stock Option Plan as amended December 8, 1999 (filed as Exhibit 10.4 to the Company’s Registration Statement on Form S-1/A (Registration No. 333-49439)).*
**10.3	—	Employment Agreement, dated November 4, 2009, between the Company and Larissa L. Herda (filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2009).*
**10.4	—	Amended and Restated Employment Agreement, dated December 12, 2008, between the Company and Paul B. Jones (filed as Exhibit 10.4 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2010).*
**10.5	—	Amended and Restated Employment Agreement, dated December 12, 2008, between the Company and Jill R. Stuart (filed as Exhibit 10.5 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2010).*
**10.6	—	Amended and Restated Employment Agreement, dated December 12, 2008, between the Company and John T. Blount(filed as Exhibit 10.6 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2010).*
**10.7	—	Amended and Restated Employment Agreement, dated December 12, 2008, between the Company and Mark Peters (filed as Exhibit 10.7 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2010).*
**10.8	—	Amended and Restated Change of Control Employment Agreement, dated December 12, 2008, between the Company and Paul B. Jones (filed as Exhibit 10.8 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2010).*
**10.9	—	Amended and Restated Change of Control Employment Agreement, dated December 12, 2008, between the Company and Jill R. Stuart (filed as Exhibit 10.9 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2010).*

F-37

**10.10	—	Amended and Restated Change of Control Employment Agreement, dated December 12, 2008, between the Company and Mark Peters (filed as Exhibit 10.10 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2010).*
**10.11	—	Amended and Restated Change of Control Employment Agreement, dated December 12, 2008, between the Company and John T. Blount (filed as Exhibit 10.11 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2010).*
**10.12	—	Change of Control Employment Agreement, dated November 4, 2009, between the Company and Larissa L. Herda (filed as Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2009).*
**10.13	—	Amendment Number 1, dated August 6, 2010, to Amended and Restated Employment Agreement between tw telecom holdings inc. and John Blount (filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2010).*
**10.14	—	Amendment Number 2, dated August 6, 2010, to Amended and Restated Change of Control Employment Agreement between the Company and John Blount (filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2010).*
**10.15	—	Amendment Number 1, dated August 6, 2010, to Amended and Restated Employment Agreement between tw telecom holdings inc. and Mark Peters (filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2010).*
**10.16	—	Amendment Number 2, dated August 6, 2010, to Amended and Restated Change of Control Employment Agreement between the Company and Mark Peters (filed as Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2010).*
**10.17	—	Amendment Number 1, dated August 6, 2010, to Amended and Restated Employment Agreement between tw telecom holdings inc. and Paul Jones (filed as Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2010).*
**10.18	—	Amendment Number 2, dated August 6, 2010, to Amended and Restated Change of Control Employment Agreement between the Company and Paul Jones (filed as Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2010).*
**10.19	—	Amendment Number 1, dated August 6, 2010, to Amended and Restated Employment Agreement between tw telecom holdings inc. and Jill Stuart (filed as Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2010).*
**10.20	—	Amendment Number 1, dated August 6, 2010, to Amended and Restated Change of Control Employment Agreement between the Company and Jill Stuart (filed as Exhibit 10.8 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2010).*
**10.21	—	Amendment Number 1, dated November 4, 2009, to Amended and Restated Change of Control Employment Agreement between the Company and John Blount (filed as Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2009).*
**10.22	—	Amendment Number 1, dated November 4, 2009, to Amended and Restated Change of Control Employment Agreement between the Company and Mark Peters (filed as Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2009).*
**10.23	—	Amendment Number 1, dated November 4, 2009, to Amended and Restated Change of Control Employment Agreement between the Company and Paul Jones (filed as Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2009).*
10.24	—	Capacity License Agreement (filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1998).*
†10.25	—	Office Lease, dated October 25, 2010, between LBA Realty Fund III-Company II LLC and tw telecom holdings inc. (filed as Exhibit 10.25 to the Company’s Annual Report on Form 10-K/A (Amendment No. 1) for the year ended December 31, 2010 dated May 4, 2011).*
**10.26	—	Amended and Restated 2000 Employee Stock Plan (filed as Annex A to the Company’s Schedule 14A Definitive Proxy Statement filed April 27, 2009).*
**10.27	—	Summary of compensation arrangements for independent directors of tw telecom inc., revised as of December 15, 2010 (filed as Exhibit 10.27 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2010).*

F-38

10.28	—	Form of Amended and Restated Indemnification Agreement (filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2009).*
10.29	—	Form of Indemnification Agreement (filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2009).*
10.30	—	Amendment and Restatement Agreement (including the Amended and Restated Credit Agreement), dated as of December 2, 2010, among the Company, tw telecom holdings inc., the Subsidiary Guarantors parties thereto, the Consenting Lenders and Wells Fargo Bank, National Association, as administrative agent and collateral agent (filed as Exhibit 99.1 to the Company’s Current Report on Form 8-K dated December 2, 2010).*
10.31	—	First Amendment to Amended and Restated CreditAgreement dated as of November 9, 2011 among the Company, tw telecom holdingsinc., the Subsidiary Guarantors parties thereto, each Revolving Lender party thereto and Wells Fargo Bank, National Association, as administrative agent.
21	—	Subsidiaries of the registrant (filed as Exhibit 21 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2010).*
23.1	—	Consent of Independent Registered Public Accounting Firm.
31.1	—	Certification of Chief Executive Officer pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	—	Certification of Chief Financial Officer pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	—	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	—	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	—	XBRL Instance Document***
101.SCH	—	XBRL Taxonomy Extension Schema Document***
101.CAL	—	XBRL Taxonomy Extension Calculation Linkbase Document***
101.DEF	—	XBRL Taxonomy Extension Definition Linkbase Document***
101.LAB	—	XBRL Taxonomy Extension Label Linkbase Document***
101.PRE	—	XBRL Taxonomy Extension Presentation Linkbase Document***

_________________

* Incorporated by reference.

** Management contract or compensation plan or arrangement.

*** Pursuant to Rule 406T of Regulation S-T, these Interactive Data Files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to the liability under these sections.

† Portions of this exhibit have been redacted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

F-39

EX-10.31

Exhibit 10.31

FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT

THIS FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this “Amendment”) is dated as of November 9, 2011, by and among tw telecom inc., a Delaware corporation (“TWTC”), tw telecom holdings inc., a Delaware corporation (formerly known as Time Warner Telecom Holdings Inc.) (the “Borrower”), the Subsidiary Guarantors party hereto, each Revolving Lender party hereto, and WELLS FARGO BANK, NATIONAL ASSOCIATION (“Wells Fargo”), as administrative agent for the Lenders (in such capacity, the “Administrative Agent”), and as collateral agent (in such capacity, the “Collateral Agent”).

Statement of Purpose

The Borrower is party to that certain Amended and Restated Credit Agreement dated as of December 2, 2010 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by and among TWTC, the Borrower, each bank and other financial institution or entity party thereto as a lender (collectively, the “Lenders” and, each individually, a “Lender”) and the Administrative Agent.

The Borrower has requested, and the Administrative Agent and the Revolving Lenders party hereto have agreed, subject to the terms and conditions set forth herein, to amend the Credit Agreement as specifically set forth herein.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:

1.    Capitalized Terms. All capitalized undefined terms used in this Amendment (including, without limitation, in the Statement of Purpose hereto) shall have the meanings assigned thereto in the Credit Agreement. This Agreement shall be a “Loan Document” for all purposes of the Credit Agreement and the other Loan Documents.

2.    Amendments. Subject to and in accordance with the terms and conditions set forth herein, the parties hereto hereby agree that the Credit Agreement is amended as follows:

(a)    Section 7.6 of the Credit Agreement is hereby amended by inserting the words “intercompany” after the words “any” and before the words “advance” in the initial paragraph contained therein.

(b)    Section 7.6(h) of the Credit Agreement is hereby amended by:

(i)    deleting the words “scheduled amortization payments (if any) of” contained therein and replacing them with “payments on”;

(ii)    deleting the reference to “$50,000,000” contained therein and replacing it with “$150,000,000”; and

(iii)    deleting the last proviso contained therein and replacing it with the following:

“providedfurther that, if not so expended in the fiscal year for which it is permitted, an amount not to exceed $50,000,000 may be carried over to make Restricted Payments in the immediately succeeding fiscal year.”

(c)    The last paragraph of Section 7.9 of the Credit Agreement is hereby amended by deleting such paragraph in its entirety and replacing it with the following:

“Notwithstanding the foregoing:

(i) TWTC and the Borrower may redeem or repurchase any of the High Yield Notes (or any refinancing Indebtedness thereof); provided that (A) no Revolving Default or Revolving Event of Default has occurred and is continuing or would result therefrom, (B) no Revolving Loans shall be outstanding at the time of such repurchase or redemption or after giving effect thereto and (C) immediately after giving effect thereto (and to the payment of any amounts required to be paid in connection therewith), (x) TWTC shall be in proforma compliance with the covenants contained in Section 7.1 to the extent such covenants are then in effect and (y) after giving effect to such redemption or repurchase, the sum of the aggregate amount of cash and Cash Equivalents that would be reflected on a consolidated balance sheet of TWTC and its Subsidiaries prepared as of such date in accordance with GAAP shall not be less than $225,000,000; and

(ii) TWTC may make payments in respect of any Indebtedness of TWTC with amounts received from the Borrower or any of its Subsidiaries pursuant to Section 7.6(h).”

3.    Effectiveness. This Amendment shall become effective on the date (the “First Amendment Effective Date”) when the Administrative Agent shall have received:

(a)    (i) counterparts of this Amendment executed by TWTC, the Borrower, the Subsidiary Guarantors, the Administrative Agent and the Required Revolving Lenders and (ii) such other instruments, documents and certificates as the Administrative Agent shall reasonably request in connection with the execution of this Agreement;

(b)    for the account (pro rata) of each Revolving Lender (including Wells Fargo) that delivers an executed signature page to this Amendment to the Administrative Agent (or its counsel) on or prior to 5:00 p.m. (Eastern Time) on November 9, 2011, a consent fee in an amount equal to 10basis points times such Revolving Lender’s Revolving Commitment as of the First Amendment Effective Date; and

(c)    all fees and expenses in accordance with Section 7 of this Amendment.

4.    Limited Effect. Except as expressly provided herein, the Credit Agreement and the other Loan Documents shall remain unmodified and in full force and effect. This Amendment shall not be deemed (a) to be a waiver of, or consent to, or a modification or amendment of, any other term or condition of the Credit Agreement or any other Loan Document, (b) to prejudice any right or rights which the Administrative

Agent or the Lenders may now have or may have in the future under or in connection with the Credit Agreement or the other Loan Documents or any of the instruments or agreements referred to therein, as the same may be amended, restated, supplemented or modified from time to time, or (c) to be a commitment or any other undertaking or expression of any willingness to engage in any further discussion with TWTC, the Borrower, any of its Subsidiaries or any other Person with respect to any waiver, amendment, modification or any other change to the Credit Agreement or the Loan Documents or any rights or remedies arising in favor of the Lenders or the Administrative Agent, or any of them, under or with respect to any such documents. References in the Credit Agreement to “this Agreement” (and indirect references such as “hereunder”, “hereby”, “herein”, “hereof” or other words of like import) and in any Loan Document to the “Credit Agreement” shall be deemed to be references to the Credit Agreement as modified hereby.

5.    Representations and Warranties. By its execution hereof, each Loan Party hereby represents and warrants as follows:

(a)    such Loan Party has the right, power and authority and has taken all necessary corporate and other action to authorize the execution, delivery and performance of this Amendment and each other document executed in connection herewith to which it is a party in accordance with their respective terms;

(b)     this Amendment and each other document executed in connection herewith has been duly executed and delivered by its duly authorized officers, and each such document constitutes the legal, valid and binding obligation of such Loan Party, enforceable in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar state or federal debtor relief laws from time to time in effect which affect the enforcement of creditors’ rights in general and the availability of equitable remedies;

(c)     each representation and warranty contained in the Credit Agreement and the other Loan Documents is true, correct and complete in all material respects as of the First Amendment Effective Date as if fully set forth herein, other than any such representations or warranties that, by their express terms, refer to an earlier date, in which case they shall have been true and correct in all material respects on and as of such earlier date; and

(d)     no Default has occurred and is continuing as of the First Amendment Effective Date or would result after giving effect hereto.

6.    Acknowledgement and Reaffirmation. By their execution hereof, each Loan Party hereby expressly (a) consents to this Amendment and (b) acknowledges that such Loan Party’s covenants, representations, warranties and other obligations set forth in the Credit Agreement, the Notes, the Security Documents and the other Loan Documents to which such Loan Party is a party remains in full force and effect.

7.    Costs, Expenses and Taxes.    The Borrower agrees to pay in accordance with Section 12.5 of the Credit Agreement all reasonable costs and expenses of the Administrative Agent in connection with the preparation, execution, delivery, administration of this Amendment and the other instruments and documents to be delivered hereunder, including, without limitation, the reasonable fees and out-of-pocket expenses of one firm of primary counsel to the Administrative Agent and the Collateral Agent with respect thereto and with respect to advising the Administrative Agent and the Collateral Agent as to its rights and responsibilities hereunder and thereunder.

8.    Execution in Counterparts. This Amendment may be executed by one or more of the parties to this Amendment on any number of separate counterparts, and all of said counterparts taken together shall

be deemed to constitute one and the same instrument. Delivery of an executed signature page of this Amendment by facsimile transmission shall be effective as delivery of a manually executed counterpart hereof.

9.    Governing Law. This Amendment and the rights and obligations of the parties under this Amendment shall be governed by, and construed and interpreted in accordance with, the law of the state of New York.

10.    Entire Agreement. This Amendment is the entire agreement, and supersedes any prior agreements and contemporaneous oral agreements, of the parties concerning its subject matter.

11.    Successors and Assigns. This Amendment shall be binding on and insure to the benefit of the parties and their heirs, beneficiaries, successors and permitted assigns.

[Signature Pages Follow]

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed under seal by their duly authorized officers, all as of the day and year first written above.

BORROWER:    tw telecom holdings inc.

By:	/s/ Mark A. Peters
	Name:	Mark A. Peters
	Title:	Executive Vice President and Chief Financial Officer

First Amendment to Amended and Restated Credit Agreement

tw telecom holdings inc.

Signature Page

GUARANTORS:         tw telecom inc.

By:	/s/ Mark A. Peters
	Name:	Mark A. Peters
	Title:	Executive Vice President and Chief Financial Officer

tw telecom holdings II llc

tw telecom of arizona llc

tw telecom of colorado llc

tw telecom of idaho llc

tw telecom of illinois llc

tw telecom of minnesota llc

tw telecom of new mexico llc

tw telecom of ohio llc

tw telecom of oregon llc

tw telecom of south carolina llc

tw telecom of tennessee llc

tw telecom of texas llc

tw telecom of utah llc

tw telecom of washington llc

tw telecom management co. llc

tw telecom data services llc

By: tw telecom holdings inc., the sole member of each

By:	/s/ Mark A. Peters
	Name:	Mark A. Peters
	Title:	Executive Vice President and Chief Financial Officer

First Amendment to Amended and Restated Credit Agreement

tw telecom holdings inc.

Signature Page

GUARANTORS: tw telecom of alabama llc

tw telecom of arkansas llc

tw telecom of d.c. llc

tw telecom of kansas city llc

tw telecom of kentucky llc

tw telecom of louisiana llc

tw telecom of maryland llc

tw telecom of mississippi llc

tw telecom of nevada llc

tw telecom of oklahoma llc

tw telecom of virginia llc

By: tw telecom management co. llc, the sole member of each

By: tw telecom holdings inc., the sole member of tw telecom management co. llc

By:	/s/ Mark A. Peters
	Name:	Mark A. Peters
	Title:	Executive Vice President and Chief Financial Officer

First Amendment to Amended and Restated Credit Agreement

tw telecom holdings inc.

Signature Page

GUARANTORS: tw telecom of california l.p.

tw telecom of florida l.p.

tw telecom of georgia l.p.

tw telecom of hawaii l.p.

tw telecom of indiana l.p.

tw telecom of new jersey l.p.

tw telecom of new york l.p.

tw telecom of north carolina l.p.

tw telecom of wisconsin l.p.

tw telecom l.p.

By: tw telecom holdings inc., the general partner of each

By:	/s/ Mark A. Peters
	Name:	Mark A. Peters
	Title:	Executive Vice President and Chief Financial Officer

First Amendment to Amended and Restated Credit Agreement

tw telecom holdings inc.

Signature Page

ADMINISTRATIVE AGENT: WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Administrative Agent on behalf of itself and as a Lender

By:	/s/ Kyle R. Holtz
	Name:	Kyle R. Holtz
	Title:	Director

First Amendment to Amended and Restated Credit Agreement

tw telecom holdings inc.

Signature Page

LENDERS: CITIBANK, N.A., as a Lender

By:	/s/ Laura Fogarty
	Name:	Laura Fogarty
	Title:	Vice President

First Amendment to Amended and Restated Credit Agreement

tw telecom holdings inc.

Signature Page

LENDERS: MORGAN STANLEY BANK N.A. as a Lender

By:	/s/ Allen Chang
	Name:	Allen Chang
	Title:	Authorized Signatory

First Amendment to Amended and Restated Credit Agreement

tw telecom holdings inc.

Signature Page

LENDERS: SUNTRUST BANK as a Lender

By:	/s/ Andrew Cozewith
	Name:	Andrew Cozewith
	Title:	Director

First Amendment to Amended and Restated Credit Agreement

tw telecom holdings inc.

Signature Page

LENDERS: CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, as a Lender

By:	/s/ Judith E. Smith
	Name:	Judith E. Smith
	Title:	Managing Director

By:	/s/ Sanja Gazahi
	Name:	Sanja Gazahi
	Title:	Associate

First Amendment to Amended and Restated Credit Agreement

tw telecom holdings inc.

Signature Page

LENDERS: UBS LOAN FINANCE LLC, as a Lender

By:	/s/ Irja R. Otsa
	Name:	Irja R. Otsa
	Title:	Associate Director

By:	/s/ Joselin Fernandes
	Name:	Joselin Fernandes
	Title:	Associate Director

First Amendment to Amended and Restated Credit Agreement

tw telecom holdings inc.

Signature Page

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-117757, 333-117754, 333-48084, 333-83995, 333-164318) of our reports dated February 21, 2012, with respect to the consolidated financial statements and schedule of tw telecom inc., and the effectiveness of internal control over financial reporting of tw telecom inc., included in this Annual Report (Form 10-K) for the year ended December 31, 2011.

/s/ Ernst & Young LLP

Denver, Colorado

February 21, 2012

EX-31.1

Exhibit 31.1

Certification

I, Larissa L. Herda, certify that:

1 I have reviewed this annual report on Form 10-K of tw telecom inc.;

2 Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3 Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4 The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5 The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: February 21, 2012

By:	/s/ Larissa L. Herda
	Chairman, President and
	Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification

I, Mark A. Peters, certify that:

1 I have reviewed this annual report on Form 10-K of tw telecom inc.;

2 Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3 Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4 The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5 The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: February 21, 2012

By:	/s/ Mark A. Peters
	Mark A. Peters
	Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification of Chief Executive Officer

Pursuant to 18 U.S.C. 1350

(as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)

In connection with the Annual Report of tw telecom inc. (the “Company”) on Form 10-K for the fiscal year ended December 31, 2011 filed with the Securities and Exchange Commission (the “Report”), I, Larissa L. Herda, Chairman, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. Section 78m or 78o(d)); and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the period covered by the Report.

/s/ Larissa L. Herda
Name: Larissa L. Herda
Date:	February 21, 2012

EX-32.2

Exhibit 32.2

Certification of Chief Financial Officer

Pursuant to 18 U.S.C. 1350

(as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)

In connection with the Annual Report of tw telecom inc. (the “Company”) on Form 10-K for the fiscal year ended December 31, 2011 filed with the Securities and Exchange Commission (the “Report”), I, Mark A. Peters, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. Section 78m or 78o(d)); and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the period covered by the Report.

/s/ Mark A. Peters
Name: Mark A. Peters
Date:	February 21, 2012

XML

Organization And Summary of Significant Accounting Policies (Estimated Useful Lives) (Details)	12 Months Ended
	Dec. 31, 2011 years
Building improvements
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life, Minimum	10
Property, Plant and Equipment, Useful Life, Maximum	20
Communications network equipment
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life, Minimum	5
Property, Plant and Equipment, Useful Life, Maximum	15
Vehicles and other equipment
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life, Minimum	3
Property, Plant and Equipment, Useful Life, Maximum	10
Fiber and right to use
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life, Maximum	20

XML

Derivative Financial Instruments (Schedule Of Fair Value Of Derivatives In Consolidated Balance Sheets) (Details) (Interest rate swap agreements [Member], USD $) In Thousands, unless otherwise specified	Dec. 31, 2011	Dec. 31, 2010
Derivatives, Fair Value [Line Items]
Total fair value of derivatives designated as cash flow hedges	$ 0	$ 2,412
Other current liabilities [Member]
Derivatives, Fair Value [Line Items]
Derivatives designated as cash flow hedges - interest rate swap agreement	$ 0	$ 2,412

XML

Long-Term Debt (Summary Of Long-Term Debt) (Details) (USD $) In Thousands, unless otherwise specified			12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2011 Term Loan B - January 2013 Tranche, Due 2013 [Member]	Dec. 31, 2011 Term Loan B - Extended Tranche, Due 2016 [Member]	Dec. 31, 2011 8% Senior Notes, Due 2018 [Member]	Dec. 31, 2011 2 3/8% Convertible Senior Debentures, Due 2026 [Member]	Dec. 31, 2011 Term Loan [Member] Term Loan B - January 2013 Tranche, Due 2013 [Member]	Dec. 31, 2010 Term Loan [Member] Term Loan B - January 2013 Tranche, Due 2013 [Member]	Dec. 31, 2011 Term Loan [Member] Term Loan B - Extended Tranche, Due 2016 [Member]	Dec. 31, 2010 Term Loan [Member] Term Loan B - Extended Tranche, Due 2016 [Member]	Dec. 31, 2011 Senior Notes [Member] 8% Senior Notes, Due 2018 [Member]	Dec. 31, 2010 Senior Notes [Member] 8% Senior Notes, Due 2018 [Member]	Dec. 31, 2011 Convertible and Unsecured Debenture [Member]	Dec. 31, 2010 Convertible and Unsecured Debenture [Member]	Dec. 31, 2011 Convertible and Unsecured Debenture [Member] 2 3/8% Convertible Senior Debentures, Due 2026 [Member]	Dec. 31, 2010 Convertible and Unsecured Debenture [Member] 2 3/8% Convertible Senior Debentures, Due 2026 [Member]
Debt Instrument [Line Items]
Total debt	$ 1,373,745	$ 1,379,744					$ 102,055	$ 103,130	$ 467,946	$ 472,870	$ 430,000	$ 430,000			$ 373,744	$ 373,744
Unamortized discounts	(29,443)	(49,505)											(27,057)	(46,732)
Current portion	(6,000)	(6,000)
Total long-term debt	$ 1,338,302	$ 1,324,239
Interest rate percentage					8.00%	2.375%
Debt instruments maturity date			2013	2016	2018	2026

XML

Supplemental Guarantor Information (Condensed Consolidating Balance Sheet) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009	Dec. 31, 2008
Current assets:
Cash and cash equivalents	$ 353,394	$ 356,922	$ 445,907	$ 352,176
Investments	131,525	118,672
Receivables, net	96,182	81,598
Prepaid expenses and other current assets	17,340	16,935
Deferred income taxes	65,008	40,428
Total current assets	663,449	614,555
Property, plant and equipment, net	1,427,212	1,356,612
Deferred income taxes	162,535	224,795
Goodwill	412,694	412,694
Intangible and other assets, net	42,336	42,298
Total assets	2,708,226	2,650,954
Current liabilities:
Accounts payable	52,739	53,436
Other current liabilities	239,205	248,352
Intercompany payable (receivable)	0	0
Total current liabilities	291,944	301,788
Losses in subsidiary in excess of investment	0	0
Long-term debt and capital lease obligations, net	1,352,820	1,338,297
Long-term deferred revenue	22,296	14,864
Other long-term liabilities	35,445	29,364
Stockholders' equity (deficit)	1,005,721	966,641	644,388	594,716
Total liabilities and stockholders' equity (deficit)	2,708,226	2,650,954
Parent Guarantor [Member]
Current assets:
Cash and cash equivalents	24,543	24,542	24,540	21,033
Investments	0	0
Receivables, net	0	0
Prepaid expenses and other current assets	0	0
Deferred income taxes	0	0
Total current assets	24,543	24,542
Property, plant and equipment, net	0	0
Deferred income taxes	0	0
Goodwill	0	0
Intangible and other assets, net	1,373	2,471
Total assets	25,916	27,013
Current liabilities:
Accounts payable	0	0
Other current liabilities	2,219	2,219
Intercompany payable (receivable)	(1,836,254)	(1,850,975)
Total current liabilities	(1,834,035)	(1,848,756)
Losses in subsidiary in excess of investment	507,643	582,116
Long-term debt and capital lease obligations, net	346,687	327,012
Long-term deferred revenue	0	0
Other long-term liabilities	0	0
Stockholders' equity (deficit)	1,005,621	966,641
Total liabilities and stockholders' equity (deficit)	25,916	27,013
Issuer [Member]
Current assets:
Cash and cash equivalents	328,851	332,380	421,367	331,143
Investments	131,525	118,672
Receivables, net	0	0
Prepaid expenses and other current assets	10,265	10,002
Deferred income taxes	64,988	40,408
Total current assets	535,629	501,462
Property, plant and equipment, net	54,798	42,063
Deferred income taxes	162,050	224,290
Goodwill	0	0
Intangible and other assets, net	13,282	15,326
Total assets	765,759	783,141
Current liabilities:
Accounts payable	8,708	6,179
Other current liabilities	61,477	65,719
Intercompany payable (receivable)	(599,828)	(609,054)
Total current liabilities	(529,643)	(537,156)
Losses in subsidiary in excess of investment	971,457	1,054,580
Long-term debt and capital lease obligations, net	992,490	997,227
Long-term deferred revenue	0	0
Other long-term liabilities	7,179	4,073
Stockholders' equity (deficit)	(675,724)	(735,583)
Total liabilities and stockholders' equity (deficit)	765,759	783,141
Combined Subsidiary Guarantors [Member]
Current assets:
Cash and cash equivalents	0	0	0	0
Investments	0	0
Receivables, net	96,182	81,598
Prepaid expenses and other current assets	7,075	6,933
Deferred income taxes	20	20
Total current assets	103,277	88,551
Property, plant and equipment, net	1,372,414	1,314,549
Deferred income taxes	485	505
Goodwill	412,694	412,694
Intangible and other assets, net	27,681	24,501
Total assets	1,916,551	1,840,800
Current liabilities:
Accounts payable	44,031	47,257
Other current liabilities	175,509	180,414
Intercompany payable (receivable)	2,436,082	2,460,029
Total current liabilities	2,655,622	2,687,700
Losses in subsidiary in excess of investment	0	0
Long-term debt and capital lease obligations, net	13,643	14,058
Long-term deferred revenue	22,296	14,864
Other long-term liabilities	28,266	25,291
Stockholders' equity (deficit)	(803,276)	(901,113)
Total liabilities and stockholders' equity (deficit)	1,916,551	1,840,800
Eliminations [Member]
Current assets:
Cash and cash equivalents	0	0	0	0
Investments	0	0
Receivables, net	0	0
Prepaid expenses and other current assets	0	0
Deferred income taxes	0	0
Total current assets	0	0
Property, plant and equipment, net	0	0
Deferred income taxes	0	0
Goodwill	0	0
Intangible and other assets, net	0	0
Total assets	0	0
Current liabilities:
Accounts payable	0	0
Other current liabilities	0	0
Intercompany payable (receivable)	0	0
Total current liabilities	0	0
Losses in subsidiary in excess of investment	(1,479,100)	(1,636,696)
Long-term debt and capital lease obligations, net	0	0
Long-term deferred revenue	0	0
Other long-term liabilities	0	0
Stockholders' equity (deficit)	1,479,100	1,636,696
Total liabilities and stockholders' equity (deficit)	$ 0	$ 0

XML

Derivative Financial Instruments (Effect Of The Interest Rate Swaps) (Details) (Interest Rate Swap [Member], USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Interest Rate Swap [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Loss recognized in other comprehensive income/(loss) (effective portion)	$ (118)	$ (1,891)	$ (2,653)
Loss reclassified from accumulated other comprehensive income (loss) into interest expense (effective portion)	(2,530)	(3,717)	(5,562)
Gain/(loss) recognized in income (ineffective portion and amount excluded from effectiveness testing)	$ 0	$ 0	$ 0

XML

Intangible Assets (Narrative) (Details) (USD $)	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Finite-Lived Intangible Assets [Abstract]
Intangible asset amortization expense	$ 6,700,000	$ 7,800,000	$ 8,900,000
Finite-Lived Intangible Assets, Future Amortization Expense [Abstract]
2012	5,600,000
2013	4,500,000
2014	3,400,000
2015	2,300,000
2016	1,200,000
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill	$ 412,694,000	$ 412,694,000

XML

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2011

Income Tax Disclosure [Abstract]

Schedule of Components of Income Tax Expense (Benefit)

Income tax expense (benefit) for the years ended December 31, 2011, 2010 and 2009 was as follows:

	Years ended December 31,
	2011			2010			2009
	(amounts in thousands)
Current:
Federal	$	1,317		$	269		$	389
State	4,406			1,965			2,357
	5,723			2,234			2,746
Deferred:
Federal	34,800			20,873			—
State	1,826			651			—
	36,626			21,524			—
Income tax (benefit) expense of change in valuation allowance (1)	(870		)	(315,053		)	9,175
Income tax expense (benefit)	$	41,479		$	(291,295	)	$	11,921

 ___________________

(1) For the year ended December 31, 2011, the deferred income tax benefit related to the decrease in the valuation allowance primarily resulted from a change in tax legislation. For the year ended December 31, 2010, the deferred income tax benefit related to the decrease in the valuation allowance is comprised of (i) the portion related to future year’s earnings, which resulted in a reversal of $299.0 million in the valuation allowance in 2010 (see below), and (ii) the portion related to current year earnings. For the year ended December 31, 2009, the income tax expense related to the increase in the valuation allowance is the result of increases in the deferred tax liability for the amortization of indefinite lived intangibles which is not available for consideration in the assessment of the realization of the Company’s deferred tax assets.

Schedule of Effective Income Tax Rate Reconciliation

Total income tax expense (benefit) differed from the amounts computed by applying the federal statutory income tax rate of 35% to income before income taxes as a result of the following items for the years ended December 31, 2011, 2010 and 2009:

	Years ended December 31,
	2011		2010		2009
Federal statutory income tax expense	35.0	%	35.0	%	35.0	%
State income tax expense, net of federal income tax benefit	4.7		5.3		7.0
Compensation limitation	2.1		5.0		5.2
Change in valuation allowance	(0.9	)	(635.3	)	(9.7	)
Other	0.8		2.6		1.8
Income tax expense (benefit)	41.7	%	(587.4	)%	39.3	%

Schedule of Deferred Tax Assets and Liabilities

The tax effects of temporary differences that give rise to significant components of the Company’s deferred tax assets and liabilities at December 31, 2011 and 2010 are as follows:

	December 31,
	2011			2010
	(amounts in thousands)
Deferred tax assets:
Net operating loss carryforwards	$	328,168		$	359,773
Accrued liabilities	31,646			33,983
Stock options	18,600			18,184
Deferred revenue	8,409			6,377
Allowance for doubtful accounts	3,133			3,041
Other	8,740			8,058
Total deferred tax assets	398,696			429,416
Deferred tax liabilities:
Depreciation and amortization	(126,097		)	(109,581		)
Discount on Convertible Debentures	(7,672		)	(15,502		)
Prepaid expenses	(2,022		)	(2,878		)
Total deferred tax liabilities	(135,791		)	(127,961		)
Less: Valuation allowance	(35,362		)	(36,232		)
Total deferred tax asset, net	$	227,543		$	265,223
Balance sheet classification of deferred taxes:
Deferred income tax asset, net - current	$	65,008		$	40,428
Deferred income tax asset, net - non-current	162,535			224,795
Total deferred tax asset, net	$	227,543		$	265,223

XML

Schedule II - Valuation and Qualifying Accounts (Details) (Allowance for Doubtful Accounts Receivable [Member], USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Allowance for Doubtful Accounts Receivable [Member]
Valuation and Qualifying Accounts Disclosure [Line Items]
Balance at Beginning of Period	$ 7,898	$ 9,449	$ 11,271
Additions/Charges to Cost and Expenses, net	3,142	1,820	6,595
Deductions	(2,848)	(3,371)	(8,417)
Balance at End of Period	$ 8,192	$ 7,898	$ 9,449

XML

Fair Value Measurements (Summary Of Carrying Amounts And Fair Values Of Long-Term Debt, Including Current Portion) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2011 Term Loan B - January 2013 tranche [Member]	Dec. 31, 2011 Term Loan B - Extended tranche, due 2016 [Member]	Dec. 31, 2011 8% Senior Notes, net of discount	Dec. 31, 2011 2 3/8% Convertible Senior Debentures, net of discount	Dec. 31, 2011 Carrying Value [Member]	Dec. 31, 2010 Carrying Value [Member]	Dec. 31, 2011 Carrying Value [Member] Term Loan B - January 2013 tranche [Member]	Dec. 31, 2010 Carrying Value [Member] Term Loan B - January 2013 tranche [Member]	Dec. 31, 2011 Carrying Value [Member] Term Loan B - Extended tranche, due 2016 [Member]	Dec. 31, 2010 Carrying Value [Member] Term Loan B - Extended tranche, due 2016 [Member]	Dec. 31, 2011 Carrying Value [Member] 8% Senior Notes, net of discount	Dec. 31, 2010 Carrying Value [Member] 8% Senior Notes, net of discount	Dec. 31, 2011 Carrying Value [Member] 2 3/8% Convertible Senior Debentures, net of discount	Dec. 31, 2010 Carrying Value [Member] 2 3/8% Convertible Senior Debentures, net of discount	Dec. 31, 2011 Fair Value [Member]	Dec. 31, 2010 Fair Value [Member]	Dec. 31, 2011 Fair Value [Member] Term Loan B - January 2013 tranche [Member]	Dec. 31, 2010 Fair Value [Member] Term Loan B - January 2013 tranche [Member]	Dec. 31, 2011 Fair Value [Member] Term Loan B - Extended tranche, due 2016 [Member]	Dec. 31, 2010 Fair Value [Member] Term Loan B - Extended tranche, due 2016 [Member]	Dec. 31, 2011 Fair Value [Member] 8% Senior Notes, net of discount	Dec. 31, 2010 Fair Value [Member] 8% Senior Notes, net of discount	Dec. 31, 2011 Fair Value [Member] 2 3/8% Convertible Senior Debentures, net of discount	Dec. 31, 2010 Fair Value [Member] 2 3/8% Convertible Senior Debentures, net of discount
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term Debt, Carrying Value					$ 1,344,302	$ 1,330,239	$ 102,055	$ 103,130	$ 467,946	$ 472,870	$ 427,614	$ 427,227	$ 346,687	$ 327,012
Long-term Debt, Fair Value															$ 1,470,496	$ 1,446,723	$ 101,673	$ 101,841	$ 464,435	$ 472,870	$ 460,100	$ 459,025	$ 444,288	$ 412,987
Interest rate percentage			8.00%	2.375%
Debt instruments maturity date	2013	2016	2018	2026

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Supplemental Guarantor Information (Condensed Consolidating Statement Of Operations) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended									12 Months Ended
	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2010	Sep. 30, 2010	Jun. 30, 2010		Mar. 31, 2010	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Condensed Financial Statements Captions [Line Items]
Total revenue	$ 351,507	$ 344,456	$ 338,386	$ 332,542	$ 324,817	$ 320,294	$ 316,849		$ 311,211	$ 1,366,891	$ 1,273,171	$ 1,211,390
Costs and expenses:
Operating, selling, general and administrative										896,999	837,435	801,250
Depreciation, amortization and accretion										283,329	289,564	296,167
Corporate expense allocation										0	0	0
Total costs and expenses										1,180,328	1,126,999	1,097,417
Operating income	48,761	47,270	46,270	44,262	39,623	36,993	35,689		33,867	186,563	146,172	113,973
Interest expense, net										(87,173)	(80,344)	(83,641)
Debt extinguishment costs										0	(17,070)	0
Other income										0	825	0
Interest expense and other income allocation										0	0	0
Income before income taxes and equity in undistributed earnings of subsidiaries										99,390	49,583	30,332
Income tax expense (benefit)										41,479	(291,295)	11,921
Net income before equity in undistributed earnings of subsidiaries										57,911	340,878	18,411
Equity in undistributed earnings of subsidiaries										0	0	0
Net income	16,392	14,593	14,307	12,619	17,494	16,079	314,084	[1]	(6,779)	57,911	340,878	18,411
Parent Guarantor [Member]
Condensed Financial Statements Captions [Line Items]
Total revenue										0	0	0
Costs and expenses:
Operating, selling, general and administrative										0	0	0
Depreciation, amortization and accretion										0	0	0
Corporate expense allocation										0	0	0
Total costs and expenses										0	0	0
Operating income										0	0	0
Interest expense, net										(29,648)	(28,049)	(26,576)
Debt extinguishment costs											0
Other income											0
Interest expense and other income allocation										29,648	28,049	26,576
Income before income taxes and equity in undistributed earnings of subsidiaries										0	0	0
Income tax expense (benefit)										0	0	0
Net income before equity in undistributed earnings of subsidiaries										0	0	0
Equity in undistributed earnings of subsidiaries										57,911	340,878	18,411
Net income										57,911	340,878	18,411
Issuer [Member]
Condensed Financial Statements Captions [Line Items]
Total revenue										0	0	0
Costs and expenses:
Operating, selling, general and administrative										193,457	185,465	174,416
Depreciation, amortization and accretion										21,304	19,510	16,641
Corporate expense allocation										(214,761)	(204,975)	(191,057)
Total costs and expenses										0	0	0
Operating income										0	0	0
Interest expense, net										(45,337)	(39,884)	(45,080)
Debt extinguishment costs											(17,070)
Other income											825
Interest expense and other income allocation										45,337	56,129	45,080
Income before income taxes and equity in undistributed earnings of subsidiaries										0	0	0
Income tax expense (benefit)										39,927	(289,865)	9,175
Net income before equity in undistributed earnings of subsidiaries										(39,927)	289,865	(9,175)
Equity in undistributed earnings of subsidiaries										97,838	51,013	27,586
Net income										57,911	340,878	18,411
Combined Subsidiary Guarantors [Member]
Condensed Financial Statements Captions [Line Items]
Total revenue										1,366,891	1,273,171	1,211,390
Costs and expenses:
Operating, selling, general and administrative										703,542	651,970	626,834
Depreciation, amortization and accretion										262,025	270,054	279,526
Corporate expense allocation										214,761	204,975	191,057
Total costs and expenses										1,180,328	1,126,999	1,097,417
Operating income										186,563	146,172	113,973
Interest expense, net										(12,188)	(12,411)	(11,985)
Debt extinguishment costs											0
Other income											0
Interest expense and other income allocation										(74,985)	(84,178)	(71,656)
Income before income taxes and equity in undistributed earnings of subsidiaries										99,390	49,583	30,332
Income tax expense (benefit)										1,552	(1,430)	2,746
Net income before equity in undistributed earnings of subsidiaries										97,838	51,013	27,586
Equity in undistributed earnings of subsidiaries										0	0	0
Net income										97,838	51,013	27,586
Eliminations [Member]
Condensed Financial Statements Captions [Line Items]
Total revenue										0	0	0
Costs and expenses:
Operating, selling, general and administrative										0	0	0
Depreciation, amortization and accretion										0	0	0
Corporate expense allocation										0	0	0
Total costs and expenses										0	0	0
Operating income										0	0	0
Interest expense, net										0	0	0
Debt extinguishment costs											0
Other income											0
Interest expense and other income allocation										0	0	0
Income before income taxes and equity in undistributed earnings of subsidiaries										0	0	0
Income tax expense (benefit)										0	0	0
Net income before equity in undistributed earnings of subsidiaries										0	0	0
Equity in undistributed earnings of subsidiaries										(155,749)	(391,891)	(45,997)
Net income										$ (155,749)	$ (391,891)	$ (45,997)

[1] Includes a non-cash income tax benefit of $299.0 million in the three months ended June 30, 2010 to recognize the value of tax assets (see Note 9).

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Organization And Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2011

Organization And Summary Of Significant Accounting Policies [Abstract]

Property, Plant and Equipment Estimated Useful Lives

Depreciation is calculated on the straight-line method over estimated useful lives as follows:

Buildings and improvements	10-20 years or lease term, if shorter
Communications network equipment	5-15 years
Vehicles and other equipment	3-10 years
Fiber and right to use	20 years or lease term, if shorter

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Long-Term Debt (Textuals) (Details) (USD $)	12 Months Ended		12 Months Ended					12 Months Ended		12 Months Ended												12 Months Ended											12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2011 8% Senior Notes, Due 2018 [Member]	Dec. 31, 2011 9 1/4% Senior Notes, Due 2014 [Member]	Dec. 31, 2011 2 3/8% Convertible Senior Debentures, Due 2026 [Member]	Dec. 31, 2011 Term Loan B - Extended Tranche, Due 2016 [Member]	Dec. 02, 2010 Term Loan B - Extended Tranche, Due 2016 [Member]	Dec. 31, 2011 Term Loan B - January 2013 Tranche, Due 2013 [Member]	Dec. 02, 2010 Term Loan B - January 2013 Tranche, Due 2013 [Member]	Dec. 31, 2011 Credit Facility Revolver [Member]	Dec. 31, 2010 Credit Facility Revolver [Member]	Dec. 31, 2009 Credit Facility Revolver [Member]	Dec. 31, 2011 Term Loan B [Member]	Dec. 31, 2010 Term Loan B [Member]	Dec. 31, 2009 Term Loan B [Member]	Dec. 02, 2010 Term Loan B [Member]	Dec. 31, 2011 Senior Notes [Member] 8% Senior Notes, Due 2018 [Member]	Dec. 31, 2010 Senior Notes [Member] 8% Senior Notes, Due 2018 [Member]	Dec. 31, 2011 Convertible and Unsecured Debenture [Member]	Dec. 31, 2010 Convertible and Unsecured Debenture [Member]	Dec. 31, 2011 Convertible and Unsecured Debenture [Member] 9 1/4% Senior Notes, Due 2014 [Member]	Dec. 31, 2011 Convertible and Unsecured Debenture [Member] 2 3/8% Convertible Senior Debentures, Due 2026 [Member]	Dec. 31, 2010 Convertible and Unsecured Debenture [Member] 2 3/8% Convertible Senior Debentures, Due 2026 [Member]	Mar. 29, 2006 Convertible and Unsecured Debenture [Member] 2 3/8% Convertible Senior Debentures, Due 2026 [Member]	Dec. 31, 2011 Term Loan [Member] Term Loan B - Extended Tranche, Due 2016 [Member]	Dec. 31, 2010 Term Loan [Member] Term Loan B - Extended Tranche, Due 2016 [Member]	Dec. 31, 2011 Term Loan [Member] Term Loan B - January 2013 Tranche, Due 2013 [Member]	Dec. 31, 2010 Term Loan [Member] Term Loan B - January 2013 Tranche, Due 2013 [Member]	Dec. 31, 2011 Minimum [Member] Term Loan B - January 2013 Tranche, Due 2013 [Member]	Dec. 31, 2011 Minimum [Member] Credit Facility Revolver [Member]	Dec. 31, 2011 Maximum [Member] Term Loan B - January 2013 Tranche, Due 2013 [Member]	Dec. 31, 2011 Maximum [Member] Credit Facility Revolver [Member]	Dec. 31, 2011 Subsidiaries [Member] Senior Notes [Member] 8% Senior Notes, Due 2018 [Member]	Dec. 31, 2010 Subsidiaries [Member] Senior Notes [Member] 8% Senior Notes, Due 2018 [Member]	Mar. 31, 2010 Subsidiaries [Member] Senior Notes [Member] 8% Senior Notes, Due 2018 [Member]
Debt Instrument [Line Items]
Debt Instrument Principal													$ 600,000,000						$ 373,744,000	$ 373,744,000															$ 430,000,000
Interest rate percentage			8.00%		2.375%																9.25%
Debt instruments maturity date			2018	2014	2026	2016		2013
Offering Price As Percentage of Principal Amount																																			99.284%
Debt Instrument Redemption Percentage Price March 1, 2014																																	104.00%
Debt Instrument Redemption Percentage Price March 1, 2015																																	102.00%
Debt Instrument Redemption Percentage Price March 1, 2016																																	100.00%
Maximum principal amount that may be redeemed at 108% of principal with proceeds from equity offerings																																	35.00%
Debt Instrument Redemption Percentage Price March 1, 2013																																	108.00%
Deferred Offering Costs																																			9,500,000
Interest Expense													22,300,000	17,000,000	20,300,000																		36,000,000	28,400,000
Long-Term Debt Carrying Amount	1,373,745,000	1,379,744,000															430,000,000	430,000,000				373,744,000	373,744,000		467,946,000	472,870,000	102,055,000	103,130,000
Redemption Price On Or After April Six Two Thousand Thirteen For Convertible Debentures																						100.00%
Debt instrument redemption price																						100.00%
Convertible Debenture Conversion Ratio																						53.6466
Convertible Debenture Principal Used For Conversion Ratio																						1,000
Convertible Debenture Conversion Price																						$ 18.64
Convertible, If-converted Value in Excess of Principal																						14,800,000
Convertible Debenture, Carrying Amount of Equity Component																						120,500,000	120,500,000
Convertible Debenture, Carrying Amount of Liability Component																								253,300,000
Line of Credit Facility, Maximum Borrowing Capacity	680,000,000									80,000,000
Debt, Long-term and Short-term, Combined Amount							474,100,000		103,400,000							577,500,000
Quarterly Repayment Percentage of Principal													0.0025%
Basis spread on variable rate						3.25%		1.75%																					1.75%	2.50%	2.00%	3.50%
Weighted Average Interest Rate													3.30%
Deferred Finance Costs, Gross						3,800,000				500,000
Line of Credit Facility, Commitment Fee Percentage										0.50%
Line of Credit Facility, Commitment Fee Amount										$ 500,000	$ 500,000	$ 500,000
Debt Instrument, Covenant Compliance	As of December 31, 2011, the Company and Holdings were in compliance with all of their covenants under the 2018 Notes, the Term Loan and the Revolver.

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Investments (Investments Schedule) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2011	Dec. 31, 2010
Schedule of Investments [Line Items]
Cash equivalents	$ 306,845	$ 353,701
Investments	131,525	118,672
Total cash equivalents and investments	438,370	472,373
U.S. Treasury money market mutual funds [Member]
Schedule of Investments [Line Items]
Cash equivalents	291,746	323,206
Commercial paper [Member]
Schedule of Investments [Line Items]
Cash equivalents	8,497	29,984
Investments	1,500	0
Certificates of deposit [Member]
Schedule of Investments [Line Items]
Cash equivalents	5,201	0
International government securities [Member]
Schedule of Investments [Line Items]
Cash equivalents	1,401	0
Corporate debt securities [Member]
Schedule of Investments [Line Items]
Cash equivalents	0	511
Investments	99,132	88,471
Debt securities issued by U.S. Government Agencies [Member]
Schedule of Investments [Line Items]
Investments	27,885	30,201
Debt Securities issued by U.S. Treasury [Member]
Schedule of Investments [Line Items]
Investments	$ 3,008	$ 0

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Supplemental Guarantor Information (Tables)

12 Months Ended

Dec. 31, 2011

Supplemental Guarantor Information [Abstract]

Condensed Consolidating Balance Sheet

tw telecom inc.

CONDENSED CONSOLIDATING BALANCE SHEET

December 31, 2011

	Parent Guarantor			Issuer			Combined Subsidiary Guarantors			Eliminations			Consolidated
	(amounts in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	24,543		$	328,851		$	—		$	—		$	353,394
Investments	—			131,525			—			—			131,525
Receivables, net	—			—			96,182			—			96,182
Prepaid expenses and other current assets	—			10,265			7,075			—			17,340
Deferred income taxes	—			64,988			20			—			65,008
Total current assets	24,543			535,629			103,277			—			663,449
Property, plant and equipment, net	—			54,798			1,372,414			—			1,427,212
Deferred income taxes	—			162,050			485			—			162,535
Goodwill	—			—			412,694			—			412,694
Intangible and other assets, net	1,373			13,282			27,681			—			42,336
Total assets	$	25,916		$	765,759		$	1,916,551		$	—		$	2,708,226
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	—		$	8,708		$	44,031		$	—		$	52,739
Other current liabilities	2,219			61,477			175,509			—			239,205
Intercompany payable (receivable)	(1,836,254		)	(599,828		)	2,436,082			—			—
Total current liabilities	(1,834,035		)	(529,643		)	2,655,622			—			291,944
Losses in subsidiary in excess of investment	507,643			971,457			—			(1,479,100		)	—
Long-term debt and capital lease obligations, net	346,687			992,490			13,643			—			1,352,820
Long-term deferred revenue	—			—			22,296			—			22,296
Other long-term liabilities	—			7,179			28,266			—			35,445
Stockholders’ equity (deficit)	1,005,621			(675,724		)	(803,276		)	1,479,100			1,005,721
Total liabilities and stockholders’ equity (deficit)	$	25,916		$	765,759		$	1,916,551		$	—		$	2,708,226

tw telecom inc.

CONDENSED CONSOLIDATING BALANCE SHEET

December 31, 2010

	Parent Guarantor			Issuer			Combined Subsidiary Guarantors			Eliminations			Consolidated
	(amounts in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	24,542		$	332,380		$	—		$	—		$	356,922
Investments	—			118,672			—			—			118,672
Receivables, net	—			—			81,598			—			81,598
Prepaid expenses and other current assets	—			10,002			6,933			—			16,935
Deferred income taxes	—			40,408			20			—			40,428
Total current assets	24,542			501,462			88,551			—			614,555
Property, plant and equipment, net	—			42,063			1,314,549			—			1,356,612
Deferred income taxes	—			224,290			505			—			224,795
Goodwill	—			—			412,694			—			412,694
Intangible and other assets, net	2,471			15,326			24,501			—			42,298
Total assets	$	27,013		$	783,141		$	1,840,800		$	—		$	2,650,954
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	—		$	6,179		$	47,257		$	—		$	53,436
Other current liabilities	2,219			65,719			180,414			—			248,352
Intercompany payable (receivable)	(1,850,975		)	(609,054		)	2,460,029			—			—
Total current liabilities	(1,848,756		)	(537,156		)	2,687,700			—			301,788
Losses in subsidiary in excess of investment	582,116			1,054,580			—			(1,636,696		)	—
Long-term debt and capital lease obligations, net	327,012			997,227			14,058			—			1,338,297
Long-term deferred revenue	—			—			14,864			—			14,864
Other long-term liabilities	—			4,073			25,291			—			29,364
Stockholders’ equity (deficit)	966,641			(735,583		)	(901,113		)	1,636,696			966,641
Total liabilities and stockholders’ equity (deficit)	$	27,013		$	783,141		$	1,840,800		$	—		$	2,650,954

Condensed Consolidating Statement Of Operations

tw telecom inc.

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

Year Ended December 31, 2011

	Parent Guarantor			Issuer			Combined Subsidiary Guarantors			Eliminations			Consolidated
	(amounts in thousands)
Total revenue	$	—		$	—		$	1,366,891		$	—		$	1,366,891
Costs and expenses:
Operating, selling, general and administrative	—			193,457			703,542			—			896,999
Depreciation, amortization and accretion	—			21,304			262,025			—			283,329
Corporate expense allocation	—			(214,761		)	214,761			—			—
Total costs and expenses	—			—			1,180,328			—			1,180,328
Operating income	—			—			186,563			—			186,563
Interest expense, net	(29,648		)	(45,337		)	(12,188		)	—			(87,173		)
Interest expense allocation	29,648			45,337			(74,985		)	—			—
Income before income taxes and equity in undistributed earnings of subsidiaries	—			—			99,390			—			99,390
Income tax expense	—			39,927			1,552			—			41,479
Net income before equity in undistributed earnings of subsidiaries	—			(39,927		)	97,838			—			57,911
Equity in undistributed earnings of subsidiaries	57,911			97,838			—			(155,749		)	—
Net income	$	57,911		$	57,911		$	97,838		$	(155,749	)	$	57,911

tw telecom inc.

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

Year Ended December 31, 2010

	Parent Guarantor			Issuer			Combined Subsidiary Guarantors			Eliminations			Consolidated
	(amounts in thousands)
Total revenue	$	—		$	—		$	1,273,171		$	—		$	1,273,171
Costs and expenses:
Operating, selling, general and administrative	—			185,465			651,970			—			837,435
Depreciation, amortization and accretion	—			19,510			270,054			—			289,564
Corporate expense allocation	—			(204,975		)	204,975			—			—
Total costs and expenses	—			—			1,126,999			—			1,126,999
Operating income	—			—			146,172			—			146,172
Interest expense, net	(28,049		)	(39,884		)	(12,411		)	—			(80,344		)
Debt extinguishment costs	—			(17,070		)	—			—			(17,070		)
Other income	—			825			—			—			825
Interest expense and other income allocation	28,049			56,129			(84,178		)	—			—
Income before income taxes and equity in undistributed earnings of subsidiaries	—			—			49,583			—			49,583
Income tax benefit	—			(289,865		)	(1,430		)	—			(291,295		)
Net income before equity in undistributed earnings of subsidiaries	—			289,865			51,013			—			340,878
Equity in undistributed earnings of subsidiaries	340,878			51,013			—			(391,891		)	—
Net income	$	340,878		$	340,878		$	51,013		$	(391,891	)	$	340,878

tw telecom inc.

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

Year Ended December 31, 2009

	Parent Guarantor			Issuer			Combined Subsidiary Guarantors			Eliminations			Consolidated
	(amounts in thousands)
Total revenue	$	—		$	—		$	1,211,390		$	—		$	1,211,390
Costs and expenses:
Operating, selling, general and administrative	—			174,416			626,834			—			801,250
Depreciation, amortization and accretion	—			16,641			279,526			—			296,167
Corporate expense allocation	—			(191,057		)	191,057			—			—
Total costs and expenses	—			—			1,097,417			—			1,097,417
Operating income	—			—			113,973			—			113,973
Interest expense, net	(26,576		)	(45,080		)	(11,985		)	—			(83,641		)
Interest expense allocation	26,576			45,080			(71,656		)	—			—
Income before income taxes and equity in undistributed earnings of subsidiaries	—			—			30,332			—			30,332
Income tax expense	—			9,175			2,746			—			11,921
Net income before equity in undistributed earnings of subsidiaries	—			(9,175		)	27,586			—			18,411
Equity in undistributed earnings of subsidiaries	18,411			27,586			—			(45,997		)	—
Net income	$	18,411		$	18,411		$	27,586		$	(45,997	)	$	18,411

Condensed Consolidating Statement Of Cash Flows

tw telecom inc.

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Year Ended December 31, 2011

	Parent Guarantor			Issuer			Combined Subsidiary Guarantors			Eliminations			Consolidated
	(amounts in thousands)
Cash flows from operating activities:
Net income	$	57,911		$	57,911		$	97,838		$	(155,749	)	$	57,911
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization, and accretion	—			21,304			262,025			—			283,329
Deferred income taxes	—			35,736			20			—			35,756
Intercompany and equity investment changes	(30,087		)	(73,897		)	(51,765		)	155,749			—
Amortization of discount on debt and deferred debt issue costs and other	20,773			2,615			—			—			23,388
Stock-based compensation	—			—			27,817			—			27,817
Changes in operating assets and liabilities	—			5,602			(30,215		)	—			(24,613		)
Net cash provided by operating activities	48,597			49,271			305,720			—			403,588
Cash flows from investing activities:
Capital expenditures	—			(37,754		)	(302,977		)	—			(340,731		)
Purchases of investments	—			(223,638		)	—			—			(223,638		)
Proceeds from sale of investments	—			208,340			—			—			208,340
Proceeds from sale of assets and other investing activities, net	—			5,183			(1,953		)	—			3,230
Net cash used in investing activities	—			(47,869		)	(304,930		)	—			(352,799		)
Cash flows from financing activities:
Net proceeds (tax withholdings) from issuance of common stock upon exercise of stock options and vesting of restricted stock awards and units	9,966			—			—			—			9,966
Purchases of treasury stock	(58,562		)	—			—			—			(58,562		)
Excess tax benefits from stock-based compensation	—			1,385			—			—			1,385
Payment of debt and capital lease obligations	—			(6,316		)	(790		)	—			(7,106		)
Net cash used in financing activities	(48,596		)	(4,931		)	(790		)	—			(54,317		)
Increase (decrease) in cash and cash equivalents	1			(3,529		)	—			—			(3,528		)
Cash and cash equivalents at beginning of period	24,542			332,380			—			—			356,922
Cash and cash equivalents at end of period	$	24,543		$	328,851		$	—		$	—		$	353,394

tw telecom inc.

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Year Ended December 31, 2010

	Parent Guarantor			Issuer			Combined Subsidiary Guarantors			Eliminations			Consolidated
	(amounts in thousands)
Cash flows from operating activities:
Net income	$	340,878		$	340,878		$	51,013		$	(391,891	)	$	340,878
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization, and accretion	—			19,510			270,054			—			289,564
Deferred income taxes	—			(293,004		)	(525		)	—			(293,529		)
Intercompany and equity investment changes	(311,178		)	(51,814		)	(28,899		)	391,891			—
Stock-based compensation	—			—			27,832			—			27,832
Extinguishment costs, amortization of discount on debt and debt issue costs and other	19,174			18,475			—			—			37,649
Changes in operating assets and liabilities	—			(1,468		)	(15,174		)	—			(16,642		)
Net cash provided by operating activities	48,874			32,577			304,301			—			385,752
Cash flows from investing activities:
Capital expenditures	—			(23,237		)	(298,607		)	—			(321,844		)
Purchases of investments	—			(246,575		)	—			—			(246,575		)
Proceeds from sale of investments	—			154,786			—			—			154,786
Proceeds from sale of assets and other investing activities, net	—			862			(5,278		)	—			(4,416		)
Net cash used in investing activities	—			(114,164		)	(303,885		)	—			(418,049		)
Cash flows from financing activities:
Net proceeds (tax withholdings) from issuance of common stock upon exercise of stock options and vesting of restricted stock awards and units	1,045			—			—			—			1,045
Purchases of treasury stock	(49,911		)	—			—			—			(49,911		)
Retirement of debt obligations	(6		)	(413,677		)	—			—			(413,683		)
Net proceeds from issuance of debt	—			413,069			—			—			413,069
Payment of debt and capital lease obligations	—			(6,792		)	(416		)	—			(7,208		)
Net cash used in financing activities	(48,872		)	(7,400		)	(416		)	—			(56,688		)
Increase (decrease) in cash and cash equivalents	2			(88,987		)	—			—			(88,985		)
Cash and cash equivalents at beginning of period	24,540			421,367			—			—			445,907
Cash and cash equivalents at end of period	$	24,542		$	332,380		$	—		$	—		$	356,922

tw telecom inc.

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Year Ended December 31, 2009

	Parent Guarantor			Issuer			Combined Subsidiary Guarantors			Eliminations			Consolidated
	(amounts in thousands)
Cash flows from operating activities:
Net income	$	18,411		$	18,411		$	27,586		$	(45,997	)	$	18,411
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization, and accretion	—			16,641			279,526			—			296,167
Deferred income taxes	—			9,175			—			—			9,175
Intercompany and equity investment changes	(34,445		)	99,979			(111,531		)	45,997			—
Stock-based compensation	—			—			26,518			—			26,518
Amortization of discount on debt and debt issue costs and other	17,707			1,799			530			—			20,036
Changes in operating assets and liabilities	—			(6,048		)	26,219			—			20,171
Net cash provided by operating activities	1,673			139,957			248,848			—			390,478
Cash flows from investing activities:
Capital expenditures	—			(31,508		)	(235,489		)	—			(266,997		)
Purchases of investments	—			(24,892		)	—			—			(24,892		)
Proceeds from sales of assets and other investing activities, net	—			13,882			(12,582		)	—			1,300
Net cash used in investing activities	—			(42,518		)	(248,071		)	—			(290,589		)
Cash flows from financing activities:
Net proceeds (tax withholdings) from issuance of common stock upon exercise of stock options and vesting of restricted stock awards and units	1,834			—			—			—			1,834
Payment of debt and capital lease obligations	—			(7,215		)	(777		)	—			(7,992		)
Net cash provided by (used in) financing activities	1,834			(7,215		)	(777		)	—			(6,158		)
Increase in cash and cash equivalents	3,507			90,224			—			—			93,731
Cash and cash equivalents at beginning of period	21,033			331,143			—			—			352,176
Cash and cash equivalents at end of period	$	24,540		$	421,367		$	—		$	—		$	445,907

XML

Long-Term Debt (Interest Expense On Convertible Debentures) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Debt Instrument [Line Items]
Effective interest rate on liability component	8.50%	8.50%	8.50%
2 3/8% Convertible Senior Debentures, Due 2026 [Member]
Debt Instrument [Line Items]
Interest expense, contractual amount at 2 3/8%	8,876	8,875	8,877
Interest expense, amortization of discount	19,675	18,077	16,609
Interest expense, amortization of deferred debt issuance costs	1,098	1,098	1,098
Total interest expense for Convertible Debentures	29,649	28,050	26,584

XML

Employee Benefit Plans (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Compensation and Retirement Disclosure [Abstract]
Percentage of eligible compensation employees may contribute to the plan annually	60.00%
Employer Matching Contribution of Employee Contribution	100.00%
Maximum percentage of employee's eligible compensation that the company may contribute to the plan	5.00%
Defined Contribution Plan, Cost Recognized	$ 11.6	$ 10.7	$ 10.3

XML

Income Taxes (Narrative) (Details) (USD $)	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010
Reversal of valuation allowance		$ 299,000,000
Earnings Per Share, Basic Due To Valuation Allowance Adjustment		$ 1.98
Earnings Per Share, Diluted Due to Valuation Allowance Adjustment		$ 1.72
Deferred Tax Assets, Valuation Allowance	35,362,000	36,232,000
Increase In Equity As A Result Of Recognition Of Deferred Tax Assets In Compensation	49,200,000
Stock options	18,600,000	18,184,000
Federal Operating Loss Carryforwards	1,000,000,000
Section 382 minimum ownership interest by shareholders	5.00%
Increase In Five Percent Or Greater Stockholders Interest In A Three Year Period	50.00%
Section 382 ownership change measurement period	3 years
Stock Compensation Plan [Member]
Deferred Taxes, Valuation Allowance Related To Share Based Payments To Be Allocated to APIC	$ 21,100,000

XML

Intangible Assets (Definite Life Intangibles) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2011 years	Dec. 31, 2010
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Value	$ 65,449	$ 65,449
Accumulated Amortization	(47,707)	(41,005)
Net Carrying Value	17,742	24,444
Customer relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Useful Life	10
Gross Carrying Value	59,086	59,086
Accumulated Amortization	(43,867)	(37,600)
Net Carrying Value	15,219	21,486
Other [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Useful Life	10
Gross Carrying Value	6,363	6,363
Accumulated Amortization	(3,840)	(3,405)
Net Carrying Value	$ 2,523	$ 2,958

XML

Organization And Summary Of Significant Accounting Policies

12 Months Ended

Dec. 31, 2011

Organization And Summary Of Significant Accounting Policies [Abstract]

Organization And Summary Of Significant Accounting Policies

Organization and Summary of Significant Accounting Policies

Description of Business and Capital Structure

tw telecom inc. (the “Company”), a Delaware corporation, is a leading national provider of managed network services, specializing in business Ethernet, data networking, Converged, IP based virtual private network or "IP VPN", Internet access, voice, including voice over Internet Protocol or "VoIP", and network security services to enterprise organizations, including public sector entities, and carriers throughout the United States, including their global locations.

The Company has one class of common stock outstanding with one vote per share. The Company also is authorized to issue shares of preferred stock. The Company’s Board of Directors has the authority to establish voting powers, preferences, and special rights for the preferred stock. No shares of preferred stock have been issued.

Basis of Consolidation

The consolidated financial statements include the accounts of the Company and all entities in which the Company has a controlling voting interest (“subsidiaries”). Significant intercompany accounts and transactions have been eliminated.

Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Areas that require significant management judgments include income and transactional taxes, revenue and receivables, stock-based compensation, long-lived assets, regulatory fees, asset retirement obligations, evaluation of impairment of goodwill and long-lived assets, and carrier liabilities.

Segment Reporting

Because its business is centrally managed, the Company operates in one segment across the United States.

Cash Equivalents and Investments

The Company considers all highly liquid debt instruments with an original maturity of three months or less, when purchased, to be cash equivalents. The appropriate classification of securities is determined at the time of purchase and is reevaluated as of the end of each period. Debt securities are classified as held-to-maturity when the Company has the positive intent and ability to hold the securities to maturity and are carried at amortized cost. Debt securities not classified as held-to-maturity are classified as available-for-sale. Available-for-sale securities are carried at fair value, with the unrealized gains and losses, net of tax, reported in other comprehensive income or loss. Gains and losses on investments are calculated using the specific identification method and are recognized during the period the investment is sold. See Note 3 for further information.

At December 31, 2011 and 2010, the Company had restricted funds held at financial institutions of $1.9 million and $2.1 million, respectively. These amounts were included in other current assets and are restricted because they primarily secure outstanding surety bonds.

Receivables

The Company generally bills in advance for the majority of the services it provides and does not require significant collateral from its customers. The Company evaluates whether receivables are reasonably assured of collection by evaluation of certain factors, including ongoing credit evaluations of significant customers’ financial condition, and provides an allowance for doubtful accounts based on the expected collectability of all receivables. The allowance for doubtful accounts was $8.2 million, or 8% of gross receivables, at December 31, 2011, and $7.9 million, or 9% of gross receivables, at December 31, 2010.

Property, Plant and Equipment

Property, plant and equipment are recorded at cost except for assets acquired through acquisition of businesses, which are recorded at fair value. Construction costs, labor and applicable overhead related to the development, installation and expansion of the Company’s network, and interest costs related to construction are capitalized. Capitalized labor and applicable overhead was $71.6 million, $64.0 million and $61.0 million for the years ended December 31, 2011, 2010 and 2009, respectively. Capitalized interest was $2.1 million, $2.8 million and $2.4 million for the years ended December 31, 2011, 2010 and 2009, respectively. Repairs and maintenance costs are charged to expense when incurred. The Company disposes of assets that are no longer in use. Losses on such disposals are included as a component of depreciation expense and were $1.4 million, $1.2 million and $3.0 million for the years ended December 31, 2011, 2010 and 2009, respectively.

The Company licenses the right to use fiber optic capacity from Time Warner Cable, Inc. in 16 markets, Comcast Corporation (as successor to Time Warner Cable) in three markets and an affiliate of Bright House Networks, LLC in four markets. The Company pays and records as a component of property, plant and equipment its allocable share of the cost of fiber and construction incurred by Time Warner Cable, Inc., Comcast Corporation and the Bright House Networks, LLC affiliate on routes where the parties are in joint construction.

Depreciation is calculated on the straight-line method over estimated useful lives as follows:

Buildings and improvements	10-20 years or lease term, if shorter
Communications network equipment	5-15 years
Vehicles and other equipment	3-10 years
Fiber and right to use	20 years or lease term, if shorter

Income Taxes

Deferred income taxes are provided for temporary differences between the carrying amounts of assets and liabilities and the amounts used for tax purposes. The impact of a tax position is recognized in the financial statements if that position is more likely than not to be sustained on audit, based on technical merits of the position. The Company does not record a valuation allowance against net deferred tax assets when it is more likely than not that the net deferred tax asset will be realized.

Goodwill

The Company performs impairment tests at least annually on all goodwill and indefinite-lived intangible assets pursuant to relevant accounting standards which require goodwill to be assigned to a reporting unit and tested using a consistent measurement date. For purposes of testing goodwill for impairment, the Company’s goodwill has been assigned to the Company’s one consolidated reporting unit and is tested in the fourth quarter of each year or more frequently if impairment indicators arise. Potential impairment is indicated when the book value of a reporting unit, including goodwill, exceeds its fair value. If a potential impairment exists, the fair value of the reporting unit is compared to the fair value of its assets and liabilities, excluding goodwill, to estimate the implied value of the reporting unit’s goodwill. If an impairment charge is deemed necessary, a charge is recognized for any excess of the carrying amount of the reporting unit’s goodwill over the implied fair value. Considerable management judgment is necessary to estimate the fair value of assets; accordingly, actual results could vary significantly from estimates. There were no goodwill impairment charges during the years ended December 31, 2011, 2010 or 2009.

Other Assets

Other assets primarily include deferred debt issuance costs, which are amortized to interest expense over the life of the respective debt agreements, and long-term prepaid service contracts that are amortized over the service period.

Impairment of Long-Lived Assets

The Company periodically reviews the carrying amounts of property, plant, and equipment and its identifiable intangible assets whenever current events or circumstances indicate the carrying amounts may not be recoverable. An impairment is required when the net book value of an asset exceeds the expected future undiscounted cash flows to be generated by that asset or group of assets and theloss is measured by the amount that the carrying value of the assets exceeds their fair value. Considerable management judgment is necessary to estimate the fair value of assets; accordingly, actual results could vary from estimates. Assets to be disposed of are carried at the lower of their carrying amount or fair value less costs to sell. The Company’s asset impairment tests did not result in any impairment charges during the years ended December 31, 2011, 2010 or 2009.

Asset Retirement Obligations

The Company records the estimated fair value of an asset retirement obligation when incurred. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset and depreciated over the asset’s estimated useful life. The Company has asset retirement obligations related to decommissioning of electronics in leased facilities and the removal of certain fiber and conduit systems. Considerable management judgment is required in estimating these obligations. Important assumptions include estimates of retirement costs, the timing of the future retirement activities and the likelihood of retirement provisions being enforced. Changes in these assumptions based on future information could result in adjustments to estimated liabilities.

Derivative Financial Instruments

The Company has utilized derivative financial instruments, specifically interest rate swap agreements, to mitigate interest rate risk. These instruments have been executed with financial institutions deemed creditworthy, and the Company monitors its exposure to these counterparties. All derivatives are recognized in the Company’s consolidated balance sheets at fair value.

Historically, the Company’s interest rate swaps have been designated as cash flow hedges. In an interest rate swap, a borrower of variable interest debt agrees with another party to make fixed payments equivalent to paying fixed rate interest on debt in exchange for receiving payments from the other party equivalent to receiving variable rate interest on debt, the effect of which is to eliminate some portion of the variability in the borrower’s overall cash flows.

If certain correlation and risk reduction criteria are met, the derivative is deemed to be highly effective in offsetting the changes in cash flows of the hedged item on a retrospective and prospective basis, and may be specifically designated as a hedge of exposure to changes in cash flow. For derivative instruments that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative instrument is reported as a component of other comprehensive income or loss. Amounts excluded from the assessment of hedge effectiveness, if any, as well as the ineffective portion of the gain or loss, are reported in results of operations immediately. The Company performs a quarterly assessment to determine whether each derivative instrument is highly effective in offsetting changes in cash flows of the hedged item. If the derivative instrument is determined to be not highly effective as a hedge, or if a derivative instrument ceases to be a highly effective hedge, hedge accounting is discontinued prospectively with respect to that derivative instrument.

Regulation and Other Contingencies

The Company is subject to significant government and jurisdictional regulation, some of which is uncertain due to legal challenges of existing rules. Such regulation is subject to differing interpretations, inconsistent application and has resulted in disputes with carriers and municipalities regarding the classification of traffic, rights-of-way, rates and minutes of use.

Management estimates and accrues for its estimate of probable losses associated with government and jurisdictional regulation and other carrier contingencies. These estimates are based on assumptions and other considerations including studies of traffic patterns, expectations regarding regulatory rulings, historic experience and ongoing negotiations. The Company evaluates these reserves on an ongoing basis and makes adjustments as necessary.

Revenue

The Company’s revenue is derived primarily from metropolitan and wide area business communications services:

•Data and Internet services include services that enable customers to connect their internal computer networks and to access external networks, including Internet access at high speeds using Ethernet protocol, metropolitan and wide area business Ethernet, and IP VPN solutions.

•Voice services include traditional and next generation voice capabilities, including voice services from stand alone and bundled products, long distance, toll free services, and VoIP.

•Network services are point-to-point services that transmit voice, data and images as well as enable transmission for storage using state-of-the-art fiber optics, and collocation services that provide secure space with controlled climate and power where customers can locate their equipment to connect to the Company's network in facilities equipped for enterprise information technology environmental requirements.

•The Company also provides converged services, which fully integrate a combination of certain communication applications including IP VPN, voice, Internet, security and managed router service into a single managed IP solution. The various components of converged services are classified into the pertinent service categories in the consolidated statements of operations.

Intercarrier compensation is comprised of switched access services and reciprocal compensation. Switched access represents the compensation from another carrier for the delivery of traffic from a long distance carrier’s point of presence to an end-user’s premises provided through the Company’s switching facilities. The Federal Communications Commission and state public utility commissions regulate switched access rates in their respective jurisdictions. Reciprocal compensation represents compensation from local exchange carriers (“LECs”) for local exchange traffic originated on another LEC’s facilities and terminated on the Company’s facilities.

The Company’s customers include, among others, enterprise organizations in the distribution, health care, finance, service and manufacturing industries, state, local and federal government entities, system integrators, and communication service providers, including incumbent local exchange carriers, competitive local exchange carriers, wireless communications companies and cable companies.

Revenue for network, data and Internet, and the majority of voice services is generally billed in advance on a monthly fixed rate basis and recognized over the period the services are provided. Revenue for the majority of intercarrier compensation and certain components of voice services, such as long distance, is generally billed on a transactional basis in arrears based on a customer’s actual usage; therefore, estimates are used to recognize revenue in the period earned.

The Company evaluates whether receivables are reasonably assured of collection based on certain factors, including the likelihood of billing being disputed by customers. If there is a billing dispute with a customer, revenue generally is not recognized until the dispute is resolved. The Company does not recognize revenue associated with contract termination charges until cash is received.

The Company classifies certain taxes and fees billed to customers and remitted to government authorities on a gross versus net basis in revenue and expense. In making this determination, the Company assesses, among other things, whether the Company is the primary obligor or principal taxpayer for the taxes and fees assessed in each jurisdiction where the Company does business. In jurisdictions where the Company determines that it is the principal taxpayer, the Company records the taxes and fees on a gross basis, including the taxes and fees in revenue and expense. In jurisdictions where the Company determines that it is merely a collection agent for the government authority, the Company records the taxes on a net basis. The total amounts classified as revenue, primarily included in voice services, associated with such taxes and fees were approximately $63.5 million, $51.3 million and $40.0 million for the years ended December 31, 2011, 2010 and 2009, respectively.

Operating Expenses

Operating expenses consist of costs directly related to the operation and maintenance of the Company’s network and the provisioning of services, but exclude depreciation, amortization and accretion, which is reported separately. These costs, which are net of costs capitalized for labor and overhead (see “Property, Plant, and Equipment” above), include the salaries and related expenses, including stock-based compensation, of customer care, provisioning, network maintenance, technical field and network operations and engineering personnel, costs to repair and maintain the Company’s network, and costs paid to other carriers to carry a portion of the Company’s traffic and to interconnect the Company’s network and costs for facility leases.

Significant Customers

The Company has substantial business relationships with a few large customers, including major telecommunications carriers. The Company’s 10 largest customers accounted for an aggregate of 20%, 20% and 21% of the Company’s total revenue for the years ended December 31, 2011, 2010 and 2009, respectively. No customer accounted for 10% or more of total revenue in 2011, 2010 and 2009. The Company's largest customer (AT&T Inc., a carrier) represented 4% of the Company's total revenue in each of the years ended December 31, 2011 and 2010 and 5% in the year ended December 31, 2009.

Stock-Based Compensation

The Company recognizes the cost of share-based employee compensation payments as expense over the requisite service period, which is generally the vesting period of the award. The fair value of restricted stock awards and restricted stock units granted is determined based on the market price of the Company’s common stock at the date of grant. The fair value of options is estimated at the date of grant using a Black-Scholes option pricing model. For purposes of the actual expense recognized in the years ended December 31, 2011, 2010 and 2009, the estimated fair value of the share-based payments is generally amortized to expense on a straight-line basis (net of estimated forfeitures) over the award’s vesting period.

Expected volatilities are based on the historical volatility of the Company’s common stock over a period generally commensurate with the expected term of the option. The risk-free rate for stock options granted during the period is determined by using the U.S. Treasury rate for the nearest period that coincides with the expected term. The expected term of stock options represents the weighted-average period the stock options are expected to remain outstanding and is based on historical data.

Recently Adopted Accounting Pronouncements

Effective January 1, 2011, the Company adopted the accounting standard update regarding revenue recognition for multiple deliverable arrangements. In an arrangement that includes elements with stand-alone value for which neither vendor-specific, objective evidence nor third party evidence of selling price exists, the new standard requires an entity to allocate revenue using its best estimate of selling price for each element. The adoption of this standard update did not have a material effect on the Company's consolidated balance sheets or statements of operations for the year ended December 31, 2011.

Recently Issued Accounting Pronouncements

In June 2011, the Financial Accounting Standards Board (the “FASB”) issued an accounting standard update that eliminates the current option to report other comprehensive income and its components in the statement of stockholders' equity. Instead, an entity will be required to present items of net income and other comprehensive income in one continuous statement or in two separate but consecutive statements. The standard is effective for fiscal years beginning after December 15, 2011. The Company will adopt this accounting standard update in the three months ended March 31, 2012. This update affects presentation and disclosure, and therefore adoption will not affect the Company's consolidated financial position, results of operations or cash flows.

In September 2011, the FASB issued an accounting standard update intended to simplify goodwill impairment testing. Entities will have the option to perform a qualitative assessment on goodwill impairment to determine if a quantitative assessment is necessary. The accounting standard update is effective for fiscal years beginning after December 15, 2011. The Company adopted the new guidance effective January 1, 2012. This update affects testing steps only and therefore adoption will not affect the Company's consolidated financial position, results of operations or cash flows.

XML

Stock-Based Compensation (Details) (USD $)	0 Months Ended	1 Months Ended	12 Months Ended
	Oct. 01, 2004	Sep. 30, 2007	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Fair value of stock options granted (in dollars per share)			$ 8.44	$ 7.61	$ 3.56
Intrinsic value for stock options exercised			$ 13,400,000	$ 7,100,000	$ 4,800,000
Eligible Employee Stock Purchase Plan maximum payroll deduction			15.00%
Eligible Employee Stock Purchase Plan employee maximum contribution			25,000
Eligible Employee Stock Purchase Plan discount from market price			15.00%
Eligible Employee Stock Purchase price as percentage of market price			85.00%
Shares authorized under Employee Stock Purchase Plan (in shares)	600,000	600,000
Number of shares issued in connection with Employee Stock Purchase Plan			0	0	0
Employee Stock Option Plan 1998 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares authorized (in shares)			9,000,000
Shares reserved for issuance (in shares)			1,800,000
Vesting period (in years)			4 years
Employee Stock Plan 2000 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares authorized (in shares)			39,000,000
Shares reserved for issuance (in shares)			6,200,000
Vesting period (in years)			4 years
Shares available for grant (in shares)			14,400,000
Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation expense			4,800,000
Weighted-average recognition period (in years)			1.1
Restricted Stock Awards And Units Member
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period (in years)			4 years
Unrecognized compensation expense			43,900,000
Fair value of restricted stock vested			$ 17,700,000	$ 12,800,000	$ 10,200,000
Weighted-average recognition period (in years)			1.2
Minimum [Member] | Employee Stock Option Plan 1998 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expiration period of stock options (in years)			7 years
Minimum [Member] | Employee Stock Plan 2000 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expiration period of stock options (in years)			7 years
Maximum [Member] | Employee Stock Option Plan 1998 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expiration period of stock options (in years)			10 years
Maximum [Member] | Employee Stock Plan 2000 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expiration period of stock options (in years)			10 years

XML

Investments (Narrative) (Details) (USD $)	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Schedule of Investments [Line Items]
Available-for-sale Securities maturity period	1 year
Proceeds from the sale and maturity of available-for-sale securities	$ 208,340,000	$ 154,786,000	$ 0
Realized net gains or losses on sale of investments	0	0
Unrealized net gains or losses on investments	0	0
Carrying value of transferred held-to-maturity securities		71,500,000
Realized gain on the liquidation of impaired commercial paper		800,000
Impaired Commercial Paper [Member]
Schedule of Investments [Line Items]
Proceeds for the liquidation of impaired commercial paper		$ 3,800,000

XML

Intangible Assets Intangible Assets (Tables)

12 Months Ended

Dec. 31, 2011

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Finite-Lived Intangible Assets by Major Class

Definite life intangible assets subject to amortization were as follows:

	December 31, 2011							December 31, 2010
	Gross Carrying Value		Accumulated Amortization			Net Carrying Value		Gross Carrying Value		Accumulated Amortization			Net Carrying Value
	(amounts in thousands)
Customer relationships	$	59,086	$	(43,867	)	$	15,219	$	59,086	$	(37,600	)	$	21,486
Other	6,363		(3,840		)	2,523		6,363		(3,405		)	2,958
	$	65,449	$	(47,707	)	$	17,742	$	65,449	$	(41,005	)	$	24,444

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Property, Plant and Equipment (Tables)

12 Months Ended

Dec. 31, 2011

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

Property, plant and equipment consists of:

	December 31,
	2011		2010
	(amounts in thousands)
Communications network equipment	2,738,618		2,530,428
Fiber and right to use	1,014,952		947,937
Vehicles and other equipment	206,466		187,804
Land, buildings and improvements	66,098		65,881
	4,026,134		3,732,050
Less accumulated depreciation	(2,598,922	)	(2,375,438	)
Total	1,427,212		1,356,612

Schedule of Asset Retirement Obligations

The following table provides asset retirement obligation liability activity for the years ended December 31, 2011, 2010 and 2009:

	Years ended December 31,
	2011			2010			2009
	(amounts in thousands)
Asset retirement obligations:
Balance at January 1	$	23,141		$	20,377		$	18,701
Accretion expense	2,085			1,876			1,718
Liabilities incurred	—			977			—
Liabilities settled	(88		)	(89		)	(42		)
Balance at December 31	$	25,138		$	23,141		$	20,377

XML

Fair Value Measurements (Schedule Of Assets And Liabilities Measured And Carried At Fair Value On Recurring Basis) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2011	Dec. 31, 2010
Fair Value, Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investments included in cash and cash equivalents	$ 306,845	$ 353,701
Short-term investments	131,525	118,672
Fair Value, Measurements, Recurring [Member]
Fair Value, Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investments included in cash and cash equivalents	306,845	353,701
Short-term investments	131,525	118,672
Total assets	438,370	472,373
Total liabilities		2,412
Fair Value, Measurements, Recurring [Member] | Fair Value Measurements, Level 1 [Member]
Fair Value, Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investments included in cash and cash equivalents	291,746	323,206
Short-term investments	0	0
Total assets	291,746	323,206
Total liabilities		0
Fair Value, Measurements, Recurring [Member] | Fair Value Measurements, Level 2 [Member]
Fair Value, Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investments included in cash and cash equivalents	15,099	30,495
Short-term investments	131,525	118,672
Total assets	146,624	149,167
Total liabilities		2,412
Fair Value, Measurements, Recurring [Member] | Fair Value Measurements, Level 3 [Member]
Fair Value, Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investments included in cash and cash equivalents	0	0
Short-term investments	0	0
Total assets	0	0
Total liabilities		0
Fair Value, Measurements, Recurring [Member] | U.S. Treasury money market mutual funds [Member]
Fair Value, Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investments included in cash and cash equivalents	291,746	323,206
Fair Value, Measurements, Recurring [Member] | U.S. Treasury money market mutual funds [Member] | Fair Value Measurements, Level 1 [Member]
Fair Value, Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investments included in cash and cash equivalents	291,746	323,206
Fair Value, Measurements, Recurring [Member] | U.S. Treasury money market mutual funds [Member] | Fair Value Measurements, Level 2 [Member]
Fair Value, Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investments included in cash and cash equivalents	0	0
Fair Value, Measurements, Recurring [Member] | U.S. Treasury money market mutual funds [Member] | Fair Value Measurements, Level 3 [Member]
Fair Value, Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investments included in cash and cash equivalents	0	0
Fair Value, Measurements, Recurring [Member] | Commercial Paper [Member]
Fair Value, Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investments included in cash and cash equivalents	8,497	29,984
Short-term investments	1,500
Fair Value, Measurements, Recurring [Member] | Commercial Paper [Member] | Fair Value Measurements, Level 1 [Member]
Fair Value, Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investments included in cash and cash equivalents	0	0
Short-term investments	0
Fair Value, Measurements, Recurring [Member] | Commercial Paper [Member] | Fair Value Measurements, Level 2 [Member]
Fair Value, Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investments included in cash and cash equivalents	8,497	29,984
Short-term investments	1,500
Fair Value, Measurements, Recurring [Member] | Commercial Paper [Member] | Fair Value Measurements, Level 3 [Member]
Fair Value, Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investments included in cash and cash equivalents	0	0
Short-term investments	0
Fair Value, Measurements, Recurring [Member] | Certificates of deposit [Member]
Fair Value, Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investments included in cash and cash equivalents	5,201
Fair Value, Measurements, Recurring [Member] | Certificates of deposit [Member] | Fair Value Measurements, Level 1 [Member]
Fair Value, Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investments included in cash and cash equivalents	0
Fair Value, Measurements, Recurring [Member] | Certificates of deposit [Member] | Fair Value Measurements, Level 2 [Member]
Fair Value, Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investments included in cash and cash equivalents	5,201
Fair Value, Measurements, Recurring [Member] | Certificates of deposit [Member] | Fair Value Measurements, Level 3 [Member]
Fair Value, Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investments included in cash and cash equivalents	0
Fair Value, Measurements, Recurring [Member] | International government securities [Member]
Fair Value, Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investments included in cash and cash equivalents	1,401
Fair Value, Measurements, Recurring [Member] | International government securities [Member] | Fair Value Measurements, Level 1 [Member]
Fair Value, Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investments included in cash and cash equivalents	0
Fair Value, Measurements, Recurring [Member] | International government securities [Member] | Fair Value Measurements, Level 2 [Member]
Fair Value, Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investments included in cash and cash equivalents	1,401
Fair Value, Measurements, Recurring [Member] | International government securities [Member] | Fair Value Measurements, Level 3 [Member]
Fair Value, Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investments included in cash and cash equivalents	0
Fair Value, Measurements, Recurring [Member] | Corporate debt securities [Member]
Fair Value, Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investments included in cash and cash equivalents		511
Short-term investments	99,132	88,471
Fair Value, Measurements, Recurring [Member] | Corporate debt securities [Member] | Fair Value Measurements, Level 1 [Member]
Fair Value, Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investments included in cash and cash equivalents		0
Short-term investments	0	0
Fair Value, Measurements, Recurring [Member] | Corporate debt securities [Member] | Fair Value Measurements, Level 2 [Member]
Fair Value, Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investments included in cash and cash equivalents		511
Short-term investments	99,132	88,471
Fair Value, Measurements, Recurring [Member] | Corporate debt securities [Member] | Fair Value Measurements, Level 3 [Member]
Fair Value, Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investments included in cash and cash equivalents		0
Short-term investments	0	0
Fair Value, Measurements, Recurring [Member] | Debt securities issued by U.S. Government agencies [Member]
Fair Value, Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Short-term investments	27,885	30,201
Fair Value, Measurements, Recurring [Member] | Debt securities issued by U.S. Government agencies [Member] | Fair Value Measurements, Level 1 [Member]
Fair Value, Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Short-term investments	0	0
Fair Value, Measurements, Recurring [Member] | Debt securities issued by U.S. Government agencies [Member] | Fair Value Measurements, Level 2 [Member]
Fair Value, Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Short-term investments	27,885	30,201
Fair Value, Measurements, Recurring [Member] | Debt securities issued by U.S. Government agencies [Member] | Fair Value Measurements, Level 3 [Member]
Fair Value, Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Short-term investments	0	0
Fair Value, Measurements, Recurring [Member] | Debt Securities issued by U.S. Treasury [Member]
Fair Value, Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Short-term investments	3,008
Fair Value, Measurements, Recurring [Member] | Debt Securities issued by U.S. Treasury [Member] | Fair Value Measurements, Level 1 [Member]
Fair Value, Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Short-term investments	0
Fair Value, Measurements, Recurring [Member] | Debt Securities issued by U.S. Treasury [Member] | Fair Value Measurements, Level 2 [Member]
Fair Value, Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Short-term investments	3,008
Fair Value, Measurements, Recurring [Member] | Debt Securities issued by U.S. Treasury [Member] | Fair Value Measurements, Level 3 [Member]
Fair Value, Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Short-term investments	0
Fair Value, Measurements, Recurring [Member] | Interest Rate Swap Agreement [Member]
Fair Value, Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Interest rate swap agreement		2,412
Fair Value, Measurements, Recurring [Member] | Interest Rate Swap Agreement [Member] | Fair Value Measurements, Level 1 [Member]
Fair Value, Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Interest rate swap agreement		0
Fair Value, Measurements, Recurring [Member] | Interest Rate Swap Agreement [Member] | Fair Value Measurements, Level 2 [Member]
Fair Value, Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Interest rate swap agreement		2,412
Fair Value, Measurements, Recurring [Member] | Interest Rate Swap Agreement [Member] | Fair Value Measurements, Level 3 [Member]
Fair Value, Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Interest rate swap agreement		$ 0

XML

Property, Plant and Equipment (Schedule of Property) (Details) (USD $)	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Property, Plant and Equipment [Line Items]
Property, plant and equipment	$ 4,026,134,000	$ 3,732,050,000
Less accumulated depreciation	(2,598,922,000)	(2,375,438,000)
Property, plant and equipment, net, total	1,427,212,000	1,356,612,000
Depreciation	274,500,000	279,900,000	285,600,000
Communications network equipment
Property, Plant and Equipment [Line Items]
Property, plant and equipment	2,738,618,000	2,530,428,000
Fiber and right to use
Property, Plant and Equipment [Line Items]
Property, plant and equipment	1,014,952,000	947,937,000
Vehicles and other equipment
Property, Plant and Equipment [Line Items]
Property, plant and equipment	206,466,000	187,804,000
Land, buildings and improvements
Property, Plant and Equipment [Line Items]
Property, plant and equipment	$ 66,098,000	$ 65,881,000

XML

Long-Term Debt (Tables)

12 Months Ended

Dec. 31, 2011

Debt Disclosure [Abstract]

Summary Of Long-Term Debt

	December 31,
	2011			2010
	(amounts in thousands)
Term Loan B—January 2013 tranche, due 2013	$	102,055		$	103,130
Term Loan B—extended tranche, due 2016	467,946			472,870
8% Senior Notes, due 2018	430,000			430,000
2  3/8% Convertible Senior Debentures, due 2026	373,744			373,744
Total debt	1,373,745			1,379,744
Unamortized discounts	(29,443		)	(49,505		)
Current portion	(6,000		)	(6,000		)
Total long-term debt	$	1,338,302		$	1,324,239

Schedule of Maturities of Long-term Debt

The schedule of principal payments on long-term debt as of December 31, 2011 is as follows (amounts in thousands):

2012	6,000
2013	479,651
2014	4,926
2015	4,926
2016	448,242
Thereafter	430,000
Total payments	$	1,373,745

Schedule of Convertible Debt Principal and Discounts

The following table reflects the principal and discount included in the consolidated balance sheets as of December 31, 2011 and 2010:

	December 31,
	2011			2010
	(amounts in thousands)
Principal amount of Convertible Debentures	$	373,744		$	373,744
Unamortized discount	(27,057		)	(46,732		)
Net carrying amount of Convertible Debentures	$	346,687		$	327,012

Schedule of Interest Expense Related to Convertible Debentures

The Company recognized the following amounts to interest expense related to the Convertible Debentures for the years ended December 31, 2011, 2010 and 2009:

	Years ended December 31,
	2011			2010			2009
	(amounts in thousands)
Interest expense, contractual amount at 2   3/8%	$	8,876		$	8,875		$	8,877
Interest expense, amortization of discount	19,675			18,077			16,609
Interest expense, amortization of deferred debt issuance costs	1,098			1,098			1,098
Total interest expense for Convertible Debentures	$	29,649		$	28,050		$	26,584
Effective interest rate on liability component	8.5		%	8.5		%	8.5		%

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Derivative Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2011

Summary of Derivative Instruments [Abstract]

Schedule Of Fair Value Of Derivatives In Condensed Consolidated Balance Sheets

The following table summarizes the fair value of derivatives reported in the consolidated balance sheets at December 31, 2011 and 2010:

	Liability Derivatives
Derivatives- cash flow hedges	Balance Sheet Location	December 31,
		2011		2010
		(amounts in thousands)
Interest rate swap agreements	Other current liabilities	$	—	$	2,412
Total fair value of derivatives designated as cash flow hedges		$	—	$	2,412

Effect Of Interest Rate Swaps On The Condensed Consolidated Statements Of Operations

The effect of the interest rate swaps on the consolidated statements of operations was as follows for the years ended December 31, 2011, 2010 and 2009:

	Years Ended December 31,
	2011			2010			2009
	(amounts in thousands)
Loss recognized in other comprehensive income/(loss) (effective portion)	$	(118	)	$	(1,891	)	$	(2,653	)
Loss reclassified from accumulated other comprehensive income (loss) into interest expense (effective portion)	$	(2,530	)	$	(3,717	)	$	(5,562	)
Gain/(loss) recognized in income (ineffective portion and amount excluded from effectiveness testing)	$	—		$	—		$	—

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Consolidated Statement Of Changes In Stockholders' Equity (Parenthetical) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010
Statement of Stockholders' Equity [Abstract]
Unrealized gain on cash flow hedging activities, tax	$ 929	$ 703
Other Comprehensive Income (Loss), Available-for-sale Securities, Tax	$ 20	$ 0

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Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2011

Fair Value Disclosures [Abstract]

Schedule Of Assets And Liabilities Measured And Carried At Fair Value On Recurring Basis

The following tables reflect assets and liabilities that are measured and carried at fair value on a recurring basis as of December 31, 2011 and 2010:

	Fair Value Measurements At December 31, 2011						Assets/Liabilities at Fair Value
	Level 1		Level 2		Level 3
	(amounts in thousands)
Assets
U.S. Treasury money market mutual funds	$	291,746	$	—	$	—	$	291,746
Commercial paper	—		8,497		—		8,497
Certificates of deposit	—		5,201		—		5,201
International government securities	—		1,401		—		1,401
Investments included in cash and cash equivalents	$	291,746	$	15,099	$	—	$	306,845
Corporate debt securities	—		99,132		—		99,132
Debt securities issued by U.S. Government agencies	—		27,885		—		27,885
Debt securities issued by the U.S. Treasury	—		3,008		—		3,008
Commercial paper	$	—	$	1,500	$	—	$	1,500
Short-term investments	$	—	$	131,525	$	—	$	131,525
Total assets	$	291,746	$	146,624	$	—	$	438,370

	Fair Value Measurements At December 31, 2010						Assets/Liabilities at Fair Value
	Level 1		Level 2		Level 3
	(amounts in thousands)
Assets
U.S. Treasury money market mutual funds	$	323,206	$	—	$	—	$	323,206
Commercial paper	—		29,984		—		29,984
Corporate debt securities	—		511		—		511
Investments included in cash and cash equivalents	$	323,206	$	30,495	$	—	$	353,701
Corporate debt securities	—		88,471		—		88,471
Debt securities issued by U.S. Government agencies	—		30,201		—		30,201
Short-term investments	$	—	$	118,672	$	—	$	118,672
Total assets	$	323,206	$	149,167	$	—	$	472,373
Liabilities
Interest rate swap agreement	$	—	$	2,412	$	—	$	2,412
Total liabilities	$	—	$	2,412	$	—	$	2,412

Summary Of Carrying Amounts And Fair Values Of Long-Term Debt, Including Current Portion

The following table summarizes the carrying amounts and estimated fair values of the Company’s long-term debt, including the current portion:

	December 31, 2011				December 31, 2010
	Carrying Value		Fair Value		Carrying Value		Fair Value
	(amounts in thousands)
Term Loan B—January 2013 tranche	$	102,055	$	101,673	$	103,130	$	101,841
Term Loan B—Extended tranche, due 2016	467,946		464,435		472,870		472,870
8% Senior Notes, net of discount	427,614		460,100		427,227		459,025
2 3/8% Convertible Senior Debentures, net of discount	346,687		444,288		327,012		412,987
Total debt	$	1,344,302	$	1,470,496	$	1,330,239	$	1,446,723

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Earnings Per Common Share and Potential Common Share (Schedule Of Earnings Per Share Reconciliation) (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended									12 Months Ended
	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2010	Sep. 30, 2010	Jun. 30, 2010		Mar. 31, 2010	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Earnings Per Share [Abstract]
Net income	$ 16,392	$ 14,593	$ 14,307	$ 12,619	$ 17,494	$ 16,079	$ 314,084	[1]	$ (6,779)	$ 57,911	$ 340,878	$ 18,411
Allocation of net income to unvested restricted stock awards										(1,093)	(4,471)	(126)
Net income allocated to common stockholders, basic										56,818	336,407	18,285
Interest expense on convertible debentures, net of tax										0	26,443	0
Net income allocated to common stockholders, diluted										$ 56,818	$ 362,850	$ 18,285
Basic weighted average shares outstanding (in shares)										147,247	149,156	148,087
Shares from assumed conversion of convertible debentures (in shares)										0	20,050	0
Stock options (in shares)										1,495	1,694	883
Unvested restricted stock (in shares)										607	556	882
Diluted weighted average shares outstanding (in shares)										149,349	171,456	149,852
Basic earnings per share (in dollars per share)	$ 0.11	$ 0.10	$ 0.09	$ 0.08	$ 0.12	$ 0.11	$ 2.07		$ (0.05)	$ 0.39	$ 2.26	$ 0.12
Diluted earnings per share (in dollars per share)	$ 0.11	$ 0.10	$ 0.09	$ 0.08	$ 0.11	$ 0.10	$ 1.84		$ (0.05)	$ 0.38	$ 2.12	$ 0.12

[1] Includes a non-cash income tax benefit of $299.0 million in the three months ended June 30, 2010 to recognize the value of tax assets (see Note 9).

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Derivative Financial Instruments (Narrative) (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Summary of Derivative Instruments [Abstract]
Unrecognized losses for the interest rate swap agreements included in accumulated other comprehensive loss	$ 0	$ 2.4	$ 4.2

XML

Supplemental Guarantor Information (Condensed Consolidating Statement Of Cash Flows) (Details) (USD $)	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Cash flows from operating activities:
Net income	$ 57,911,000	$ 340,878,000	$ 18,411,000
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization, and accretion	283,329,000	289,564,000	296,167,000
Deferred income taxes	35,756,000	(293,529,000)	9,175,000
Intercompany and equity investment changes	0	0	0
Amortization of discount on debt and deferred debt issue costs and other	23,388,000	20,579,000	20,036,000
Stock-based compensation	27,817,000	27,832,000	26,518,000
Extinguishment costs, amortization of discount on debt and debt issue costs and other		37,649,000
Changes in operating assets and liabilities	(24,613,000)	(16,642,000)	20,171,000
Net cash provided by operating activities	403,588,000	385,752,000	390,478,000
Cash flows from investing activities:
Capital expenditures	(340,731,000)	(321,844,000)	(266,997,000)
Purchases of investments	(223,638,000)	(246,575,000)	(24,892,000)
Proceeds from sale of investments	208,340,000	154,786,000	0
Proceeds from sale of assets and other investing activities, net	3,230,000	(4,416,000)	1,300,000
Net cash used in investing activities	(352,799,000)	(418,049,000)	(290,589,000)
Cash flows from financing activities:
Net proceeds (tax withholdings) from issuance of common stock upon exercise of stock options and vesting of restricted stock awards and units	9,966,000	1,045,000	1,834,000
Purchases of treasury stock	(58,562,000)	(49,911,000)	0
Excess tax benefits from stock-based compensation	1,385,000	0	0
Retirement of debt obligations	0	(413,683,000)	0
Net proceeds from issuance of debt	0	413,069,000	0
Payment of debt and capital lease obligations	(7,106,000)	(7,208,000)	(7,992,000)
Net cash used in financing activities	(54,317,000)	(56,688,000)	(6,158,000)
Increase (decrease) in cash and cash equivalents	(3,528,000)	(88,985,000)	93,731,000
Cash and cash equivalents at beginning of period	356,922,000	445,907,000	352,176,000
Cash and cash equivalents at end of period	353,394,000	356,922,000	445,907,000
Parent Guarantor [Member]
Cash flows from operating activities:
Net income	57,911,000	340,878,000	18,411,000
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization, and accretion	0	0	0
Deferred income taxes	0	0	0
Intercompany and equity investment changes	(30,087,000)	(311,178,000)	(34,445,000)
Amortization of discount on debt and deferred debt issue costs and other	20,773,000		17,707,000
Stock-based compensation	0	0	0
Extinguishment costs, amortization of discount on debt and debt issue costs and other		19,174,000
Changes in operating assets and liabilities	0	0	0
Net cash provided by operating activities	48,597,000	48,874,000	1,673,000
Cash flows from investing activities:
Capital expenditures	0	0	0
Purchases of investments	0	0	0
Proceeds from sale of investments	0	0
Proceeds from sale of assets and other investing activities, net	0	0	0
Net cash used in investing activities	0	0	0
Cash flows from financing activities:
Net proceeds (tax withholdings) from issuance of common stock upon exercise of stock options and vesting of restricted stock awards and units	9,966,000	1,045,000	1,834,000
Purchases of treasury stock	(58,562,000)	(49,911,000)
Excess tax benefits from stock-based compensation	0
Retirement of debt obligations		(6,000)
Net proceeds from issuance of debt		0
Payment of debt and capital lease obligations	0	0	0
Net cash used in financing activities	(48,596,000)	(48,872,000)	1,834,000
Increase (decrease) in cash and cash equivalents	1,000	2,000	3,507,000
Cash and cash equivalents at beginning of period	24,542,000	24,540,000	21,033,000
Cash and cash equivalents at end of period	24,543,000	24,542,000	24,540,000
Issuer [Member]
Cash flows from operating activities:
Net income	57,911,000	340,878,000	18,411,000
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization, and accretion	21,304,000	19,510,000	16,641,000
Deferred income taxes	35,736,000	(293,004,000)	9,175,000
Intercompany and equity investment changes	(73,897,000)	(51,814,000)	99,979,000
Amortization of discount on debt and deferred debt issue costs and other	2,615,000		1,799,000
Stock-based compensation	0	0	0
Extinguishment costs, amortization of discount on debt and debt issue costs and other		18,475,000
Changes in operating assets and liabilities	5,602,000	(1,468,000)	(6,048,000)
Net cash provided by operating activities	49,271,000	32,577,000	139,957,000
Cash flows from investing activities:
Capital expenditures	(37,754,000)	(23,237,000)	(31,508,000)
Purchases of investments	(223,638,000)	(246,575,000)	(24,892,000)
Proceeds from sale of investments	208,340,000	154,786,000
Proceeds from sale of assets and other investing activities, net	5,183,000	862,000	13,882,000
Net cash used in investing activities	(47,869,000)	(114,164,000)	(42,518,000)
Cash flows from financing activities:
Net proceeds (tax withholdings) from issuance of common stock upon exercise of stock options and vesting of restricted stock awards and units	0	0	0
Purchases of treasury stock	0	0
Excess tax benefits from stock-based compensation	1,385,000
Retirement of debt obligations		(413,677,000)
Net proceeds from issuance of debt		413,069,000
Payment of debt and capital lease obligations	(6,316,000)	(6,792,000)	(7,215,000)
Net cash used in financing activities	(4,931,000)	(7,400,000)	(7,215,000)
Increase (decrease) in cash and cash equivalents	(3,529,000)	(88,987,000)	90,224,000
Cash and cash equivalents at beginning of period	332,380,000	421,367,000	331,143,000
Cash and cash equivalents at end of period	328,851,000	332,380,000	421,367,000
Combined Subsidiary Guarantors [Member]
Cash flows from operating activities:
Net income	97,838,000	51,013,000	27,586,000
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization, and accretion	262,025,000	270,054,000	279,526,000
Deferred income taxes	20,000	(525,000)	0
Intercompany and equity investment changes	(51,765,000)	(28,899,000)	(111,531,000)
Amortization of discount on debt and deferred debt issue costs and other	0		530,000
Stock-based compensation	27,817,000	27,832,000	26,518,000
Extinguishment costs, amortization of discount on debt and debt issue costs and other		0
Changes in operating assets and liabilities	(30,215,000)	(15,174,000)	26,219,000
Net cash provided by operating activities	305,720,000	304,301,000	248,848,000
Cash flows from investing activities:
Capital expenditures	(302,977,000)	(298,607,000)	(235,489,000)
Purchases of investments	0	0	0
Proceeds from sale of investments	0	0
Proceeds from sale of assets and other investing activities, net	(1,953,000)	(5,278,000)	(12,582,000)
Net cash used in investing activities	(304,930,000)	(303,885,000)	(248,071,000)
Cash flows from financing activities:
Net proceeds (tax withholdings) from issuance of common stock upon exercise of stock options and vesting of restricted stock awards and units	0	0	0
Purchases of treasury stock	0	0
Excess tax benefits from stock-based compensation	0
Retirement of debt obligations		0
Net proceeds from issuance of debt		0
Payment of debt and capital lease obligations	(790,000)	(416,000)	(777,000)
Net cash used in financing activities	(790,000)	(416,000)	(777,000)
Increase (decrease) in cash and cash equivalents	0	0	0
Cash and cash equivalents at beginning of period	0	0	0
Cash and cash equivalents at end of period	0	0	0
Eliminations [Member]
Cash flows from operating activities:
Net income	(155,749,000)	(391,891,000)	(45,997,000)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization, and accretion	0	0	0
Deferred income taxes	0	0	0
Intercompany and equity investment changes	155,749,000	391,891,000	45,997,000
Amortization of discount on debt and deferred debt issue costs and other	0		0
Stock-based compensation	0	0	0
Extinguishment costs, amortization of discount on debt and debt issue costs and other		0
Changes in operating assets and liabilities	0	0	0
Net cash provided by operating activities	0	0	0
Cash flows from investing activities:
Capital expenditures	0	0	0
Purchases of investments	0	0	0
Proceeds from sale of investments	0	0
Proceeds from sale of assets and other investing activities, net	0	0	0
Net cash used in investing activities	0	0	0
Cash flows from financing activities:
Net proceeds (tax withholdings) from issuance of common stock upon exercise of stock options and vesting of restricted stock awards and units	0	0	0
Purchases of treasury stock	0	0
Excess tax benefits from stock-based compensation	0
Retirement of debt obligations		0
Net proceeds from issuance of debt		0
Payment of debt and capital lease obligations	0	0	0
Net cash used in financing activities	0	0	0
Increase (decrease) in cash and cash equivalents	0	0	0
Cash and cash equivalents at beginning of period	0	0	0
Cash and cash equivalents at end of period	$ 0	$ 0	$ 0

XML

Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Dec. 31, 2011	Dec. 31, 2010
Current assets:
Cash and cash equivalents	$ 353,394	$ 356,922
Investments	131,525	118,672
Receivables, less allowances of $8,192 and $7,898, respectively	96,182	81,598
Prepaid expenses and other current assets	17,340	16,935
Deferred income taxes	65,008	40,428
Total current assets	663,449	614,555
Property, plant and equipment	4,026,134	3,732,050
Less accumulated depreciation	(2,598,922)	(2,375,438)
Property, plant and equipment, net, total	1,427,212	1,356,612
Deferred income taxes	162,535	224,795
Goodwill	412,694	412,694
Intangible assets, net of accumulated amortization	17,742	24,444
Other assets, net	24,594	17,854
Total assets	2,708,226	2,650,954
Current liabilities:
Accounts payable	52,739	53,436
Deferred revenue	42,253	37,888
Accrued taxes, franchise and other fees	66,880	68,663
Accrued interest	13,934	15,208
Accrued payroll and benefits	44,284	41,772
Accrued carrier costs	32,760	35,049
Current portion debt and capital lease obligations	7,733	7,202
Other current liabilities	31,361	42,570
Total current liabilities	291,944	301,788
Long-term debt and capital lease obligations, net	1,352,820	1,338,297
Long-term deferred revenue	22,296	14,864
Other long-term liabilities	35,445	29,364
Commitments and contingencies (Note 11)
Stockholders' equity:
Preferred stock, $0.01 par value, 20,000 shares authorized, no shares issued and outstanding	0	0
Common stock, $0.01 par value, 439,800 shares authorized and 151,953 shares issued	1,520	1,520
Additional paid-in capital	1,823,856	1,802,946
Treasury stock, 2,909 and 2,707 shares, at cost, respectively	(53,156)	(45,821)
Accumulated deficit	(766,518)	(790,175)
Accumulated other comprehensive income (loss)	19	(1,829)
Total stockholders' equity	1,005,721	966,641
Total liabilities and stockholders' equity (deficit)	$ 2,708,226	$ 2,650,954

XML

Property, Plant and Equipment (Asset Retirement Obligations) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Asset Retirement Obligation, Roll Forward Analysis [Roll Forward]
Balance at January 1	$ 23,141	$ 20,377	$ 18,701
Accretion expense	2,085	1,876	1,718
Liabilities incurred	0	977	0
Liabilities settled	(88)	(89)	(42)
Balance at December 31	$ 25,138	$ 23,141	$ 20,377

XML

Consolidated Statements Of Cash Flows (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Cash flows from operating activities:
Net income	$ 57,911	$ 340,878	$ 18,411
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization, and accretion	283,329	289,564	296,167
Deferred income taxes	35,756	(293,529)	9,175
Stock-based compensation	27,817	27,832	26,518
Loss on debt extinguishment	0	17,070	0
Discount on debt, amortization of deferred debt issue costs and other	23,388	20,579	20,036
Changes in operating assets and liabilities:
Receivables and other assets	(22,211)	(5,264)	1,972
Accounts payable	(6,338)	(12,482)	4,689
Accrued interest	(1,261)	(1,039)	(1,082)
Accrued payroll and benefits	2,566	(817)	4,344
Other liabilities	2,631	2,960	10,248
Net cash provided by operating activities	403,588	385,752	390,478
Cash flows from investing activities:
Capital expenditures	(340,731)	(321,844)	(266,997)
Purchases of investments	(223,638)	(246,575)	(24,892)
Proceeds from sale of investments	208,340	154,786	0
Proceeds from sale of assets and other investing activities, net	3,230	(4,416)	1,300
Net cash used in investing activities	(352,799)	(418,049)	(290,589)
Cash flows from financing activities:
Proceeds from issuance of common stock upon exercise of stock options	16,973	5,145	4,618
Taxes paid related to net share settlement of equity awards	(7,007)	(4,100)	(2,784)
Purchases of treasury stock	(58,562)	(49,911)	0
Excess tax benefits from stock-based compensation	1,385	0	0
Retirement of debt obligations	0	(413,683)	0
Net proceeds from issuance of debt	0	413,069	0
Payment of debt and capital lease obligations	(7,106)	(7,208)	(7,992)
Net cash used in financing activities	(54,317)	(56,688)	(6,158)
(Decrease) increase in cash and cash equivalents	(3,528)	(88,985)	93,731
Cash and cash equivalents at beginning of period	356,922	445,907	352,176
Cash and cash equivalents at end of period	353,394	356,922	445,907
Supplemental disclosures of cash flow information:
Cash paid for interest	67,566	63,169	68,049
Cash paid for debt extinguishment costs	0	13,677	0
Cash paid for income taxes, net of refunds	3,231	4,653	3,001
Addition of capital lease obligation	$ 2,000	$ 0	$ 7,893

XML

Income Taxes (Effective Income Tax Reconciliation) (Details)	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Income Tax Disclosure [Abstract]
Federal statutory income tax expense	35.00%	35.00%	35.00%
State income tax expense, net of federal income tax benefit	4.70%	5.30%	7.00%
Compensation limitation	2.10%	5.00%	5.20%
Change in valuation allowance	(0.90%)	(635.30%)	(9.70%)
Other	0.80%	2.60%	1.80%
Income tax expense (benefit)	41.70%	(587.40%)	39.30%

XML

Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2011

Commitments and Contingencies Disclosure [Abstract]

Schedule of Capital and Operating Leases and Maintenance Agreements

At December 31, 2011, commitments under capital and non-cancelable operating leases and maintenance agreements with terms in excess of one year were as follows:

	Capital Leases			Operating Leases		Fixed Maintenance Obligations
	(amounts in thousands)
Year ended December 31:
2012	$	2,937		$	52,302	$	3,013
2013	2,625			47,470		3,013
2014	2,403			42,214		3,013
2015	2,103			35,325		3,013
2016	1,978			26,725		3,013
Thereafter	11,578			93,418		27,394
Total minimum lease payments	$	23,624		$	297,454	$	42,459
Less amount representing interest	(7,373		)
Present value of obligations under capital leases	16,251
Less current portion of obligations under capital leases	(1,733		)
Obligations under capital leases, excluding current portion	$	14,518

XML

Stock-Based Compensation (Restricted Stock and Restricted Unit Activity) (Details) (Restricted Stock Awards And Units Member, USD $)	12 Months Ended
	Dec. 31, 2011
Restricted Stock Awards And Units Member
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested [Roll Forward]
Nonvested (shares)	3,161,558
Nonvested weighted average grant date fair value	$ 12.65
Granted (shares)	2,073,532
Granted weighted average grant date fair value	$ 16.97
Vested (shares)	(1,010,329)
Vested weighted average grant date fair value	$ 12.06
Forfeited (shares)	(43,249)
Forfeited weighted average grant date fair value	$ 13.52
Nonvested (shares)	4,181,512
Nonvested weighted average grant date fair value	$ 17.92

XML

Supplemental Guarantor Information

12 Months Ended

Dec. 31, 2011

Supplemental Guarantor Information [Abstract]

Supplemental Guarantor Information

Supplemental Guarantor Information

In March 2010, Holdings (“Issuer”) issued its 2018 Notes with a principal amount of $430 million. The 2018 Notes are unsecured obligations of the Issuer and are guaranteed by the Company (“Parent Guarantor”) and substantially all of the Issuer’s subsidiaries (“Combined Subsidiary Guarantors”). The guarantees are joint and several. A significant amount of the Issuer’s cash flow is generated by the Combined Subsidiary Guarantors. As a result, funds necessary to meet the Issuer’s debt service obligations are provided in large part by distributions or advances from the Combined Subsidiary Guarantors. The 2018 Notes are governed by an indenture that contains certain restrictive covenants. These restrictions affect, and in many respects significantly limit or prohibit, among other things, the ability of the Parent Guarantor, the Issuer and its subsidiaries to incur indebtedness, make prepayments of certain indebtedness, pay dividends, make investments, engage in transactions with stockholders and affiliates, issue capital stock of subsidiaries, create liens, sell assets, and engage in mergers and consolidations.

The following information sets forth the Company’s Condensed Consolidating Balance Sheets as of December 31, 2011 and 2010, Condensed Consolidating Statements of Operations for the years ended December 31, 2011, 2010 and 2009 and Condensed Consolidating Statements of Cash Flows for the years ended December 31, 2011, 2010 and 2009.

tw telecom inc.

CONDENSED CONSOLIDATING BALANCE SHEET

December 31, 2011

	Parent Guarantor			Issuer			Combined Subsidiary Guarantors			Eliminations			Consolidated
	(amounts in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	24,543		$	328,851		$	—		$	—		$	353,394
Investments	—			131,525			—			—			131,525
Receivables, net	—			—			96,182			—			96,182
Prepaid expenses and other current assets	—			10,265			7,075			—			17,340
Deferred income taxes	—			64,988			20			—			65,008
Total current assets	24,543			535,629			103,277			—			663,449
Property, plant and equipment, net	—			54,798			1,372,414			—			1,427,212
Deferred income taxes	—			162,050			485			—			162,535
Goodwill	—			—			412,694			—			412,694
Intangible and other assets, net	1,373			13,282			27,681			—			42,336
Total assets	$	25,916		$	765,759		$	1,916,551		$	—		$	2,708,226
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	—		$	8,708		$	44,031		$	—		$	52,739
Other current liabilities	2,219			61,477			175,509			—			239,205
Intercompany payable (receivable)	(1,836,254		)	(599,828		)	2,436,082			—			—
Total current liabilities	(1,834,035		)	(529,643		)	2,655,622			—			291,944
Losses in subsidiary in excess of investment	507,643			971,457			—			(1,479,100		)	—
Long-term debt and capital lease obligations, net	346,687			992,490			13,643			—			1,352,820
Long-term deferred revenue	—			—			22,296			—			22,296
Other long-term liabilities	—			7,179			28,266			—			35,445
Stockholders’ equity (deficit)	1,005,621			(675,724		)	(803,276		)	1,479,100			1,005,721
Total liabilities and stockholders’ equity (deficit)	$	25,916		$	765,759		$	1,916,551		$	—		$	2,708,226

tw telecom inc.

CONDENSED CONSOLIDATING BALANCE SHEET

December 31, 2010

	Parent Guarantor			Issuer			Combined Subsidiary Guarantors			Eliminations			Consolidated
	(amounts in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	24,542		$	332,380		$	—		$	—		$	356,922
Investments	—			118,672			—			—			118,672
Receivables, net	—			—			81,598			—			81,598
Prepaid expenses and other current assets	—			10,002			6,933			—			16,935
Deferred income taxes	—			40,408			20			—			40,428
Total current assets	24,542			501,462			88,551			—			614,555
Property, plant and equipment, net	—			42,063			1,314,549			—			1,356,612
Deferred income taxes	—			224,290			505			—			224,795
Goodwill	—			—			412,694			—			412,694
Intangible and other assets, net	2,471			15,326			24,501			—			42,298
Total assets	$	27,013		$	783,141		$	1,840,800		$	—		$	2,650,954
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	—		$	6,179		$	47,257		$	—		$	53,436
Other current liabilities	2,219			65,719			180,414			—			248,352
Intercompany payable (receivable)	(1,850,975		)	(609,054		)	2,460,029			—			—
Total current liabilities	(1,848,756		)	(537,156		)	2,687,700			—			301,788
Losses in subsidiary in excess of investment	582,116			1,054,580			—			(1,636,696		)	—
Long-term debt and capital lease obligations, net	327,012			997,227			14,058			—			1,338,297
Long-term deferred revenue	—			—			14,864			—			14,864
Other long-term liabilities	—			4,073			25,291			—			29,364
Stockholders’ equity (deficit)	966,641			(735,583		)	(901,113		)	1,636,696			966,641
Total liabilities and stockholders’ equity (deficit)	$	27,013		$	783,141		$	1,840,800		$	—		$	2,650,954

tw telecom inc.

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

Year Ended December 31, 2011

	Parent Guarantor			Issuer			Combined Subsidiary Guarantors			Eliminations			Consolidated
	(amounts in thousands)
Total revenue	$	—		$	—		$	1,366,891		$	—		$	1,366,891
Costs and expenses:
Operating, selling, general and administrative	—			193,457			703,542			—			896,999
Depreciation, amortization and accretion	—			21,304			262,025			—			283,329
Corporate expense allocation	—			(214,761		)	214,761			—			—
Total costs and expenses	—			—			1,180,328			—			1,180,328
Operating income	—			—			186,563			—			186,563
Interest expense, net	(29,648		)	(45,337		)	(12,188		)	—			(87,173		)
Interest expense allocation	29,648			45,337			(74,985		)	—			—
Income before income taxes and equity in undistributed earnings of subsidiaries	—			—			99,390			—			99,390
Income tax expense	—			39,927			1,552			—			41,479
Net income before equity in undistributed earnings of subsidiaries	—			(39,927		)	97,838			—			57,911
Equity in undistributed earnings of subsidiaries	57,911			97,838			—			(155,749		)	—
Net income	$	57,911		$	57,911		$	97,838		$	(155,749	)	$	57,911

tw telecom inc.

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

Year Ended December 31, 2010

	Parent Guarantor			Issuer			Combined Subsidiary Guarantors			Eliminations			Consolidated
	(amounts in thousands)
Total revenue	$	—		$	—		$	1,273,171		$	—		$	1,273,171
Costs and expenses:
Operating, selling, general and administrative	—			185,465			651,970			—			837,435
Depreciation, amortization and accretion	—			19,510			270,054			—			289,564
Corporate expense allocation	—			(204,975		)	204,975			—			—
Total costs and expenses	—			—			1,126,999			—			1,126,999
Operating income	—			—			146,172			—			146,172
Interest expense, net	(28,049		)	(39,884		)	(12,411		)	—			(80,344		)
Debt extinguishment costs	—			(17,070		)	—			—			(17,070		)
Other income	—			825			—			—			825
Interest expense and other income allocation	28,049			56,129			(84,178		)	—			—
Income before income taxes and equity in undistributed earnings of subsidiaries	—			—			49,583			—			49,583
Income tax benefit	—			(289,865		)	(1,430		)	—			(291,295		)
Net income before equity in undistributed earnings of subsidiaries	—			289,865			51,013			—			340,878
Equity in undistributed earnings of subsidiaries	340,878			51,013			—			(391,891		)	—
Net income	$	340,878		$	340,878		$	51,013		$	(391,891	)	$	340,878

tw telecom inc.

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

Year Ended December 31, 2009

	Parent Guarantor			Issuer			Combined Subsidiary Guarantors			Eliminations			Consolidated
	(amounts in thousands)
Total revenue	$	—		$	—		$	1,211,390		$	—		$	1,211,390
Costs and expenses:
Operating, selling, general and administrative	—			174,416			626,834			—			801,250
Depreciation, amortization and accretion	—			16,641			279,526			—			296,167
Corporate expense allocation	—			(191,057		)	191,057			—			—
Total costs and expenses	—			—			1,097,417			—			1,097,417
Operating income	—			—			113,973			—			113,973
Interest expense, net	(26,576		)	(45,080		)	(11,985		)	—			(83,641		)
Interest expense allocation	26,576			45,080			(71,656		)	—			—
Income before income taxes and equity in undistributed earnings of subsidiaries	—			—			30,332			—			30,332
Income tax expense	—			9,175			2,746			—			11,921
Net income before equity in undistributed earnings of subsidiaries	—			(9,175		)	27,586			—			18,411
Equity in undistributed earnings of subsidiaries	18,411			27,586			—			(45,997		)	—
Net income	$	18,411		$	18,411		$	27,586		$	(45,997	)	$	18,411

tw telecom inc.

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Year Ended December 31, 2011

	Parent Guarantor			Issuer			Combined Subsidiary Guarantors			Eliminations			Consolidated
	(amounts in thousands)
Cash flows from operating activities:
Net income	$	57,911		$	57,911		$	97,838		$	(155,749	)	$	57,911
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization, and accretion	—			21,304			262,025			—			283,329
Deferred income taxes	—			35,736			20			—			35,756
Intercompany and equity investment changes	(30,087		)	(73,897		)	(51,765		)	155,749			—
Amortization of discount on debt and deferred debt issue costs and other	20,773			2,615			—			—			23,388
Stock-based compensation	—			—			27,817			—			27,817
Changes in operating assets and liabilities	—			5,602			(30,215		)	—			(24,613		)
Net cash provided by operating activities	48,597			49,271			305,720			—			403,588
Cash flows from investing activities:
Capital expenditures	—			(37,754		)	(302,977		)	—			(340,731		)
Purchases of investments	—			(223,638		)	—			—			(223,638		)
Proceeds from sale of investments	—			208,340			—			—			208,340
Proceeds from sale of assets and other investing activities, net	—			5,183			(1,953		)	—			3,230
Net cash used in investing activities	—			(47,869		)	(304,930		)	—			(352,799		)
Cash flows from financing activities:
Net proceeds (tax withholdings) from issuance of common stock upon exercise of stock options and vesting of restricted stock awards and units	9,966			—			—			—			9,966
Purchases of treasury stock	(58,562		)	—			—			—			(58,562		)
Excess tax benefits from stock-based compensation	—			1,385			—			—			1,385
Payment of debt and capital lease obligations	—			(6,316		)	(790		)	—			(7,106		)
Net cash used in financing activities	(48,596		)	(4,931		)	(790		)	—			(54,317		)
Increase (decrease) in cash and cash equivalents	1			(3,529		)	—			—			(3,528		)
Cash and cash equivalents at beginning of period	24,542			332,380			—			—			356,922
Cash and cash equivalents at end of period	$	24,543		$	328,851		$	—		$	—		$	353,394

tw telecom inc.

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Year Ended December 31, 2010

	Parent Guarantor			Issuer			Combined Subsidiary Guarantors			Eliminations			Consolidated
	(amounts in thousands)
Cash flows from operating activities:
Net income	$	340,878		$	340,878		$	51,013		$	(391,891	)	$	340,878
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization, and accretion	—			19,510			270,054			—			289,564
Deferred income taxes	—			(293,004		)	(525		)	—			(293,529		)
Intercompany and equity investment changes	(311,178		)	(51,814		)	(28,899		)	391,891			—
Stock-based compensation	—			—			27,832			—			27,832
Extinguishment costs, amortization of discount on debt and debt issue costs and other	19,174			18,475			—			—			37,649
Changes in operating assets and liabilities	—			(1,468		)	(15,174		)	—			(16,642		)
Net cash provided by operating activities	48,874			32,577			304,301			—			385,752
Cash flows from investing activities:
Capital expenditures	—			(23,237		)	(298,607		)	—			(321,844		)
Purchases of investments	—			(246,575		)	—			—			(246,575		)
Proceeds from sale of investments	—			154,786			—			—			154,786
Proceeds from sale of assets and other investing activities, net	—			862			(5,278		)	—			(4,416		)
Net cash used in investing activities	—			(114,164		)	(303,885		)	—			(418,049		)
Cash flows from financing activities:
Net proceeds (tax withholdings) from issuance of common stock upon exercise of stock options and vesting of restricted stock awards and units	1,045			—			—			—			1,045
Purchases of treasury stock	(49,911		)	—			—			—			(49,911		)
Retirement of debt obligations	(6		)	(413,677		)	—			—			(413,683		)
Net proceeds from issuance of debt	—			413,069			—			—			413,069
Payment of debt and capital lease obligations	—			(6,792		)	(416		)	—			(7,208		)
Net cash used in financing activities	(48,872		)	(7,400		)	(416		)	—			(56,688		)
Increase (decrease) in cash and cash equivalents	2			(88,987		)	—			—			(88,985		)
Cash and cash equivalents at beginning of period	24,540			421,367			—			—			445,907
Cash and cash equivalents at end of period	$	24,542		$	332,380		$	—		$	—		$	356,922

tw telecom inc.

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Year Ended December 31, 2009

	Parent Guarantor			Issuer			Combined Subsidiary Guarantors			Eliminations			Consolidated
	(amounts in thousands)
Cash flows from operating activities:
Net income	$	18,411		$	18,411		$	27,586		$	(45,997	)	$	18,411
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization, and accretion	—			16,641			279,526			—			296,167
Deferred income taxes	—			9,175			—			—			9,175
Intercompany and equity investment changes	(34,445		)	99,979			(111,531		)	45,997			—
Stock-based compensation	—			—			26,518			—			26,518
Amortization of discount on debt and debt issue costs and other	17,707			1,799			530			—			20,036
Changes in operating assets and liabilities	—			(6,048		)	26,219			—			20,171
Net cash provided by operating activities	1,673			139,957			248,848			—			390,478
Cash flows from investing activities:
Capital expenditures	—			(31,508		)	(235,489		)	—			(266,997		)
Purchases of investments	—			(24,892		)	—			—			(24,892		)
Proceeds from sales of assets and other investing activities, net	—			13,882			(12,582		)	—			1,300
Net cash used in investing activities	—			(42,518		)	(248,071		)	—			(290,589		)
Cash flows from financing activities:
Net proceeds (tax withholdings) from issuance of common stock upon exercise of stock options and vesting of restricted stock awards and units	1,834			—			—			—			1,834
Payment of debt and capital lease obligations	—			(7,215		)	(777		)	—			(7,992		)
Net cash provided by (used in) financing activities	1,834			(7,215		)	(777		)	—			(6,158		)
Increase in cash and cash equivalents	3,507			90,224			—			—			93,731
Cash and cash equivalents at beginning of period	21,033			331,143			—			—			352,176
Cash and cash equivalents at end of period	$	24,540		$	421,367		$	—		$	—		$	445,907

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Quarterly Results of Operations (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2011

Quarterly Financial Information Disclosure [Abstract]

Schedule of Quarterly Financial Information

The following summarizes the Company’s unaudited quarterly results of operations for 2011 and 2010:

	Three Months Ended
	March 31			June 30		September 30		December 31
	(amounts in thousands, except per share amounts)
Year Ended December 31, 2011
Total revenue	$	332,542		$	338,386	$	344,456	$	351,507
Operating income	44,262			46,270		47,270		48,761
Net income	12,619			14,307		14,593		16,392
Basic income per common share	$	0.08		$	0.09	$	0.10	$	0.11
Diluted income per common share	$	0.08		$	0.09	$	0.10	$	0.11
Year Ended December 31, 2010
Total revenue	$	311,211		$	316,849	$	320,294	$	324,817
Operating income	33,867			35,689		36,993		39,623
Net income (loss)(1)	(6,779		)	314,084		16,079		17,494
Basic income (loss) per common share	$	(0.05	)	$	2.07	$	0.11	$	0.12
Diluted income (loss) per common share	$	(0.05	)	$	1.84	$	0.10	$	0.11

  ___________________

(1) Includes a non-cash income tax benefit of $299.0 million in the three months ended June 30, 2010 to recognize the value of tax assets (see Note 9).

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Organization And Summary Of Significant Accounting Policies (Policy)

12 Months Ended

Dec. 31, 2011

Organization And Summary Of Significant Accounting Policies [Abstract]

Description Of Business And Capital Structure

Description of Business and Capital Structure

tw telecom inc. (the “Company”), a Delaware corporation, is a leading national provider of managed network services, specializing in business Ethernet, data networking, Converged, IP based virtual private network or "IP VPN", Internet access, voice, including voice over Internet Protocol or "VoIP", and network security services to enterprise organizations, including public sector entities, and carriers throughout the United States, including their global locations.

The Company has one class of common stock outstanding with one vote per share. The Company also is authorized to issue shares of preferred stock. The Company’s Board of Directors has the authority to establish voting powers, preferences, and special rights for the preferred stock. No shares of preferred stock have been issued.

Basis Of Consolidation

Basis of Consolidation

The consolidated financial statements include the accounts of the Company and all entities in which the Company has a controlling voting interest (“subsidiaries”). Significant intercompany accounts and transactions have been eliminated.

Estimates

Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Areas that require significant management judgments include income and transactional taxes, revenue and receivables, stock-based compensation, long-lived assets, regulatory fees, asset retirement obligations, evaluation of impairment of goodwill and long-lived assets, and carrier liabilities.

Segment Reporting

Segment Reporting

Because its business is centrally managed, the Company operates in one segment across the United States.

Cash Equivalents and Investments

Cash Equivalents and Investments

The Company considers all highly liquid debt instruments with an original maturity of three months or less, when purchased, to be cash equivalents. The appropriate classification of securities is determined at the time of purchase and is reevaluated as of the end of each period. Debt securities are classified as held-to-maturity when the Company has the positive intent and ability to hold the securities to maturity and are carried at amortized cost. Debt securities not classified as held-to-maturity are classified as available-for-sale. Available-for-sale securities are carried at fair value, with the unrealized gains and losses, net of tax, reported in other comprehensive income or loss. Gains and losses on investments are calculated using the specific identification method and are recognized during the period the investment is sold.

Receivables

Receivables

The Company generally bills in advance for the majority of the services it provides and does not require significant collateral from its customers. The Company evaluates whether receivables are reasonably assured of collection by evaluation of certain factors, including ongoing credit evaluations of significant customers’ financial condition, and provides an allowance for doubtful accounts based on the expected collectability of all receivables.

Property, Plant and Equipment

Property, Plant and Equipment

Property, plant and equipment are recorded at cost except for assets acquired through acquisition of businesses, which are recorded at fair value. Construction costs, labor and applicable overhead related to the development, installation and expansion of the Company’s network, and interest costs related to construction are capitalized. Capitalized labor and applicable overhead was $71.6 million, $64.0 million and $61.0 million for the years ended December 31, 2011, 2010 and 2009, respectively. Capitalized interest was $2.1 million, $2.8 million and $2.4 million for the years ended December 31, 2011, 2010 and 2009, respectively. Repairs and maintenance costs are charged to expense when incurred. The Company disposes of assets that are no longer in use. Losses on such disposals are included as a component of depreciation expense and were $1.4 million, $1.2 million and $3.0 million for the years ended December 31, 2011, 2010 and 2009, respectively.

The Company licenses the right to use fiber optic capacity from Time Warner Cable, Inc. in 16 markets, Comcast Corporation (as successor to Time Warner Cable) in three markets and an affiliate of Bright House Networks, LLC in four markets. The Company pays and records as a component of property, plant and equipment its allocable share of the cost of fiber and construction incurred by Time Warner Cable, Inc., Comcast Corporation and the Bright House Networks, LLC affiliate on routes where the parties are in joint construction.

Depreciation is calculated on the straight-line method over estimated useful lives as follows:

Buildings and improvements	10-20 years or lease term, if shorter
Communications network equipment	5-15 years
Vehicles and other equipment	3-10 years
Fiber and right to use	20 years or lease term, if shorter

Income Taxes

Income Taxes

Deferred income taxes are provided for temporary differences between the carrying amounts of assets and liabilities and the amounts used for tax purposes. The impact of a tax position is recognized in the financial statements if that position is more likely than not to be sustained on audit, based on technical merits of the position. The Company does not record a valuation allowance against net deferred tax assets when it is more likely than not that the net deferred tax asset will be realized.

Goodwill

Goodwill

The Company performs impairment tests at least annually on all goodwill and indefinite-lived intangible assets pursuant to relevant accounting standards which require goodwill to be assigned to a reporting unit and tested using a consistent measurement date. For purposes of testing goodwill for impairment, the Company’s goodwill has been assigned to the Company’s one consolidated reporting unit and is tested in the fourth quarter of each year or more frequently if impairment indicators arise. Potential impairment is indicated when the book value of a reporting unit, including goodwill, exceeds its fair value. If a potential impairment exists, the fair value of the reporting unit is compared to the fair value of its assets and liabilities, excluding goodwill, to estimate the implied value of the reporting unit’s goodwill. If an impairment charge is deemed necessary, a charge is recognized for any excess of the carrying amount of the reporting unit’s goodwill over the implied fair value. Considerable management judgment is necessary to estimate the fair value of assets; accordingly, actual results could vary significantly from estimates.

Other Assets

Other Assets

Other assets primarily include deferred debt issuance costs, which are amortized to interest expense over the life of the respective debt agreements, and long-term prepaid service contracts that are amortized over the service period.

Impairment of Long-Lived Assets

Impairment of Long-Lived Assets

The Company periodically reviews the carrying amounts of property, plant, and equipment and its identifiable intangible assets whenever current events or circumstances indicate the carrying amounts may not be recoverable. An impairment is required when the net book value of an asset exceeds the expected future undiscounted cash flows to be generated by that asset or group of assets and theloss is measured by the amount that the carrying value of the assets exceeds their fair value. Considerable management judgment is necessary to estimate the fair value of assets; accordingly, actual results could vary from estimates. Assets to be disposed of are carried at the lower of their carrying amount or fair value less costs to sell.

Asset Retirement Obligations

Asset Retirement Obligations

The Company records the estimated fair value of an asset retirement obligation when incurred. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset and depreciated over the asset’s estimated useful life. The Company has asset retirement obligations related to decommissioning of electronics in leased facilities and the removal of certain fiber and conduit systems. Considerable management judgment is required in estimating these obligations. Important assumptions include estimates of retirement costs, the timing of the future retirement activities and the likelihood of retirement provisions being enforced. Changes in these assumptions based on future information could result in adjustments to estimated liabilities.

Derivative Financial Instruments

Derivative Financial Instruments

The Company has utilized derivative financial instruments, specifically interest rate swap agreements, to mitigate interest rate risk. These instruments have been executed with financial institutions deemed creditworthy, and the Company monitors its exposure to these counterparties. All derivatives are recognized in the Company’s consolidated balance sheets at fair value.

Historically, the Company’s interest rate swaps have been designated as cash flow hedges. In an interest rate swap, a borrower of variable interest debt agrees with another party to make fixed payments equivalent to paying fixed rate interest on debt in exchange for receiving payments from the other party equivalent to receiving variable rate interest on debt, the effect of which is to eliminate some portion of the variability in the borrower’s overall cash flows.

If certain correlation and risk reduction criteria are met, the derivative is deemed to be highly effective in offsetting the changes in cash flows of the hedged item on a retrospective and prospective basis, and may be specifically designated as a hedge of exposure to changes in cash flow. For derivative instruments that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative instrument is reported as a component of other comprehensive income or loss. Amounts excluded from the assessment of hedge effectiveness, if any, as well as the ineffective portion of the gain or loss, are reported in results of operations immediately. The Company performs a quarterly assessment to determine whether each derivative instrument is highly effective in offsetting changes in cash flows of the hedged item. If the derivative instrument is determined to be not highly effective as a hedge, or if a derivative instrument ceases to be a highly effective hedge, hedge accounting is discontinued prospectively with respect to that derivative instrument.

Regulation and Other Contingencies

Regulation and Other Contingencies

The Company is subject to significant government and jurisdictional regulation, some of which is uncertain due to legal challenges of existing rules. Such regulation is subject to differing interpretations, inconsistent application and has resulted in disputes with carriers and municipalities regarding the classification of traffic, rights-of-way, rates and minutes of use.

Management estimates and accrues for its estimate of probable losses associated with government and jurisdictional regulation and other carrier contingencies. These estimates are based on assumptions and other considerations including studies of traffic patterns, expectations regarding regulatory rulings, historic experience and ongoing negotiations. The Company evaluates these reserves on an ongoing basis and makes adjustments as necessary.

Revenue

Revenue

The Company’s revenue is derived primarily from metropolitan and wide area business communications services:

•Data and Internet services include services that enable customers to connect their internal computer networks and to access external networks, including Internet access at high speeds using Ethernet protocol, metropolitan and wide area business Ethernet, and IP VPN solutions.

•Voice services include traditional and next generation voice capabilities, including voice services from stand alone and bundled products, long distance, toll free services, and VoIP.

•Network services are point-to-point services that transmit voice, data and images as well as enable transmission for storage using state-of-the-art fiber optics, and collocation services that provide secure space with controlled climate and power where customers can locate their equipment to connect to the Company's network in facilities equipped for enterprise information technology environmental requirements.

•The Company also provides converged services, which fully integrate a combination of certain communication applications including IP VPN, voice, Internet, security and managed router service into a single managed IP solution. The various components of converged services are classified into the pertinent service categories in the consolidated statements of operations.

Intercarrier compensation is comprised of switched access services and reciprocal compensation. Switched access represents the compensation from another carrier for the delivery of traffic from a long distance carrier’s point of presence to an end-user’s premises provided through the Company’s switching facilities. The Federal Communications Commission and state public utility commissions regulate switched access rates in their respective jurisdictions. Reciprocal compensation represents compensation from local exchange carriers (“LECs”) for local exchange traffic originated on another LEC’s facilities and terminated on the Company’s facilities.

The Company’s customers include, among others, enterprise organizations in the distribution, health care, finance, service and manufacturing industries, state, local and federal government entities, system integrators, and communication service providers, including incumbent local exchange carriers, competitive local exchange carriers, wireless communications companies and cable companies.

Revenue for network, data and Internet, and the majority of voice services is generally billed in advance on a monthly fixed rate basis and recognized over the period the services are provided. Revenue for the majority of intercarrier compensation and certain components of voice services, such as long distance, is generally billed on a transactional basis in arrears based on a customer’s actual usage; therefore, estimates are used to recognize revenue in the period earned.

The Company evaluates whether receivables are reasonably assured of collection based on certain factors, including the likelihood of billing being disputed by customers. If there is a billing dispute with a customer, revenue generally is not recognized until the dispute is resolved. The Company does not recognize revenue associated with contract termination charges until cash is received.

The Company classifies certain taxes and fees billed to customers and remitted to government authorities on a gross versus net basis in revenue and expense. In making this determination, the Company assesses, among other things, whether the Company is the primary obligor or principal taxpayer for the taxes and fees assessed in each jurisdiction where the Company does business. In jurisdictions where the Company determines that it is the principal taxpayer, the Company records the taxes and fees on a gross basis, including the taxes and fees in revenue and expense. In jurisdictions where the Company determines that it is merely a collection agent for the government authority, the Company records the taxes on a net basis.

Operating Expenses

Operating Expenses

Operating expenses consist of costs directly related to the operation and maintenance of the Company’s network and the provisioning of services, but exclude depreciation, amortization and accretion, which is reported separately. These costs, which are net of costs capitalized for labor and overhead (see “Property, Plant, and Equipment” above), include the salaries and related expenses, including stock-based compensation, of customer care, provisioning, network maintenance, technical field and network operations and engineering personnel, costs to repair and maintain the Company’s network, and costs paid to other carriers to carry a portion of the Company’s traffic and to interconnect the Company’s network and costs for facility leases.

Significant Customers

Significant Customers

The Company has substantial business relationships with a few large customers, including major telecommunications carriers. The Company’s 10 largest customers accounted for an aggregate of 20%, 20% and 21% of the Company’s total revenue for the years ended December 31, 2011, 2010 and 2009, respectively. No customer accounted for 10% or more of total revenue in 2011, 2010 and 2009. The Company's largest customer (AT&T Inc., a carrier) represented 4% of the Company's total revenue in each of the years ended December 31, 2011 and 2010 and 5% in the year ended December 31, 2009.

Stock-Based Compensation

Stock-Based Compensation

The Company recognizes the cost of share-based employee compensation payments as expense over the requisite service period, which is generally the vesting period of the award. The fair value of restricted stock awards and restricted stock units granted is determined based on the market price of the Company’s common stock at the date of grant. The fair value of options is estimated at the date of grant using a Black-Scholes option pricing model. For purposes of the actual expense recognized in the years ended December 31, 2011, 2010 and 2009, the estimated fair value of the share-based payments is generally amortized to expense on a straight-line basis (net of estimated forfeitures) over the award’s vesting period.

Expected volatilities are based on the historical volatility of the Company’s common stock over a period generally commensurate with the expected term of the option. The risk-free rate for stock options granted during the period is determined by using the U.S. Treasury rate for the nearest period that coincides with the expected term. The expected term of stock options represents the weighted-average period the stock options are expected to remain outstanding and is based on historical data.

Earnings Per Share and Potential Common Share

Basic earnings per common share ("EPS") is measured as the income allocated to common stockholders divided by the weighted average outstanding common shares for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential common shares (such as convertible securities and stock options) as if they had been converted to shares at the beginning of the period presented. Potential common shares that have an anti-dilutive effect (e.g., those that increase income per share) are excluded from diluted EPS.

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Quarterly Results of Operations (Unaudited) (Details) (USD $)	3 Months Ended									12 Months Ended
	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2010	Sep. 30, 2010	Jun. 30, 2010		Mar. 31, 2010	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Quarterly Financial Information Disclosure [Abstract]
Total revenue	$ 351,507,000	$ 344,456,000	$ 338,386,000	$ 332,542,000	$ 324,817,000	$ 320,294,000	$ 316,849,000		$ 311,211,000	$ 1,366,891,000	$ 1,273,171,000	$ 1,211,390,000
Operating income	48,761,000	47,270,000	46,270,000	44,262,000	39,623,000	36,993,000	35,689,000		33,867,000	186,563,000	146,172,000	113,973,000
Net income	16,392,000	14,593,000	14,307,000	12,619,000	17,494,000	16,079,000	314,084,000	[1]	(6,779,000)	57,911,000	340,878,000	18,411,000
Basic earnings per share (in dollars per share)	$ 0.11	$ 0.10	$ 0.09	$ 0.08	$ 0.12	$ 0.11	$ 2.07		$ (0.05)	$ 0.39	$ 2.26	$ 0.12
Diluted earnings per share (in dollars per share)	$ 0.11	$ 0.10	$ 0.09	$ 0.08	$ 0.11	$ 0.10	$ 1.84		$ (0.05)	$ 0.38	$ 2.12	$ 0.12
Reversal of valuation allowance											$ 299,000,000

[1] Includes a non-cash income tax benefit of $299.0 million in the three months ended June 30, 2010 to recognize the value of tax assets (see Note 9).

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Consolidated Statement Of Changes In Stockholders' Equity (USD $) In Thousands	Total	Common Stock [Member]	Treasury Stock [Member]	Additional paid-in capital [Member]	Accumulated deficit [Member]	Accumulated other comprehensive income (loss) [Member]
Balance at Dec. 31, 2008	$ 594,716	$ 1,478		$ 1,746,224	$ (1,145,839)	$ (7,147)
Balance (in shares) at Dec. 31, 2008		147,774
Net income	18,411				18,411
Unrealized gain on cash flow hedging activities, net of tax	2,909					2,909
Total comprehensive income	21,320
Exercise of stock options net of withholdings to satisfy employee tax obligations upon vesting of stock awards (in shares)		705
Exercise of stock options net of withholdings to satisfy employee tax obligations upon vesting of stock awards	1,834	7		1,827
Stock-based compensation (in shares)		1,644
Stock-based compensation	26,518	16		26,502
Balance at Dec. 31, 2009	644,388	1,501		1,774,553	(1,127,428)	(4,238)
Balance (in shares) at Dec. 31, 2009		150,123
Net income	340,878				340,878
Unrealized gain on cash flow hedging activities, net of tax	2,421					2,421
Unrealized gain (loss) on available-for-sale securities, net of tax	(12)					(12)
Total comprehensive income	343,287
Purchases of treasury stock (in shares)			(2,946)
Purchases of treasury stock	(49,911)		(49,911)
Exercise of stock options net of withholdings to satisfy employee tax obligations upon vesting of stock awards (in shares)		638	239
Exercise of stock options net of withholdings to satisfy employee tax obligations upon vesting of stock awards	1,045	7	4,090	573	(3,625)
Stock-based compensation (in shares)		1,192
Stock-based compensation	27,832	12		27,820
Balance at Dec. 31, 2010	966,641	1,520	(45,821)	1,802,946	(790,175)	(1,829)
Balance (in shares) at Dec. 31, 2010		151,953	(2,707)
Net income	57,911				57,911
Unrealized gain on cash flow hedging activities, net of tax	1,816					1,816
Unrealized gain (loss) on available-for-sale securities, net of tax	32					32
Total comprehensive income	59,759
Excess tax benefit from stock-based compensation	100			100
Purchases of treasury stock (in shares)			(3,172)
Purchases of treasury stock	(58,562)		(58,562)
Exercise of stock options net of withholdings to satisfy employee tax obligations upon vesting of stock awards (in shares)		0	1,458
Exercise of stock options net of withholdings to satisfy employee tax obligations upon vesting of stock awards	9,966	0	25,527	(7,901)	(7,660)
Stock-based compensation (in shares)		0	1,512
Stock-based compensation	27,817	0	25,700	28,711	(26,594)
Balance at Dec. 31, 2011	$ 1,005,721	$ 1,520	$ (53,156)	$ 1,823,856	$ (766,518)	$ 19
Balance (in shares) at Dec. 31, 2011		151,953	(2,909)

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Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Per Share data, unless otherwise specified	Dec. 31, 2011	Dec. 31, 2010
Statement of Financial Position [Abstract]
Receivables, allowances	$ 8,192	$ 7,898
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	20,000	20,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares (in shares)	439,800	439,800
Common stock, shares issued (in shares)	151,953	151,953
Treasury stock, shares (in shares)	2,909	2,707

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Income Taxes

12 Months Ended

Dec. 31, 2011

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Income tax expense (benefit) for the years ended December 31, 2011, 2010 and 2009 was as follows:

	Years ended December 31,
	2011			2010			2009
	(amounts in thousands)
Current:
Federal	$	1,317		$	269		$	389
State	4,406			1,965			2,357
	5,723			2,234			2,746
Deferred:
Federal	34,800			20,873			—
State	1,826			651			—
	36,626			21,524			—
Income tax (benefit) expense of change in valuation allowance (1)	(870		)	(315,053		)	9,175
Income tax expense (benefit)	$	41,479		$	(291,295	)	$	11,921

 ___________________

(1) For the year ended December 31, 2011, the deferred income tax benefit related to the decrease in the valuation allowance primarily resulted from a change in tax legislation. For the year ended December 31, 2010, the deferred income tax benefit related to the decrease in the valuation allowance is comprised of (i) the portion related to future year’s earnings, which resulted in a reversal of $299.0 million in the valuation allowance in 2010 (see below), and (ii) the portion related to current year earnings. For the year ended December 31, 2009, the income tax expense related to the increase in the valuation allowance is the result of increases in the deferred tax liability for the amortization of indefinite lived intangibles which is not available for consideration in the assessment of the realization of the Company’s deferred tax assets.

Total income tax expense (benefit) differed from the amounts computed by applying the federal statutory income tax rate of 35% to income before income taxes as a result of the following items for the years ended December 31, 2011, 2010 and 2009:

	Years ended December 31,
	2011		2010		2009
Federal statutory income tax expense	35.0	%	35.0	%	35.0	%
State income tax expense, net of federal income tax benefit	4.7		5.3		7.0
Compensation limitation	2.1		5.0		5.2
Change in valuation allowance	(0.9	)	(635.3	)	(9.7	)
Other	0.8		2.6		1.8
Income tax expense (benefit)	41.7	%	(587.4	)%	39.3	%

The tax effects of temporary differences that give rise to significant components of the Company’s deferred tax assets and liabilities at December 31, 2011 and 2010 are as follows:

	December 31,
	2011			2010
	(amounts in thousands)
Deferred tax assets:
Net operating loss carryforwards	$	328,168		$	359,773
Accrued liabilities	31,646			33,983
Stock options	18,600			18,184
Deferred revenue	8,409			6,377
Allowance for doubtful accounts	3,133			3,041
Other	8,740			8,058
Total deferred tax assets	398,696			429,416
Deferred tax liabilities:
Depreciation and amortization	(126,097		)	(109,581		)
Discount on Convertible Debentures	(7,672		)	(15,502		)
Prepaid expenses	(2,022		)	(2,878		)
Total deferred tax liabilities	(135,791		)	(127,961		)
Less: Valuation allowance	(35,362		)	(36,232		)
Total deferred tax asset, net	$	227,543		$	265,223
Balance sheet classification of deferred taxes:
Deferred income tax asset, net - current	$	65,008		$	40,428
Deferred income tax asset, net - non-current	162,535			224,795
Total deferred tax asset, net	$	227,543		$	265,223

Prior to 2009, the Company had a history of losses and, as a result, recognized a valuation allowance for net deferred tax assets, excluding consideration of the deferred tax liability for the amortization of indefinite lived intangibles. Each quarter, the Company evaluates the need to retain all or a portion of the valuation allowance on its net deferred tax assets. During 2010, the Company determined that it was more likely than not that the vast majority of its deferred tax assets, including net operating loss carryforwards (“NOLs”), will be realized, and as a result reversed $299.0 million of the valuation allowance. In making this determination, the Company analyzed, among other things, its recent history of earnings, its cumulative earnings for the last 12 quarters, and forecasts of future earnings. The reversal of the valuation allowance resulted in an income tax benefit of $299.0 million, or $1.98 per basic share and $1.72 per diluted share for the year ended December 31, 2010, and an increase in the current and non-current deferred tax assets on the consolidated balance sheet as of December 31, 2010.

The Company continues to maintain a valuation allowance against certain deferred tax assets totaling $35.4 million. The Company believes it is more likely than not that certain deferred tax assets, including those resulting from NOLs subject to certain limitations and those that require future income of special character, will not be realized. Additionally, the Company has certain deferred tax assets attributable to stock option deductions for which the related valuation allowance cannot be reversed due to relevant accounting guidance concerning tax benefits related to the exercise of non-qualified stock options prior to the adoption of such accounting guidance. At December 31, 2011, $21.1 million of the valuation allowance related to stock compensation for which subsequently recognized tax benefits will be allocated directly to additional paid in capital.

As a result of certain realization requirements of applicable accounting guidance, the table of deferred tax assets and liabilities shown above does not include certain deferred tax assets that arose directly from (or the use of which was postponed by) tax deductions related to equity compensation in excess of compensation recognized for financial reporting. Equity will be increased by $49.2 million if and when such deferred tax assets are ultimately realized. The Company uses the ordering rules prescribed by relevant accounting guidance for purposes of determining when the excess tax benefits have been realized. The Company has $18.6 million in deferred tax assets related to stock-based compensation. If the actual future tax deductions are less than the deferred tax asset recorded, this may result in an increase to income tax expense.

At December 31, 2011, the Company had NOLs for federal income tax purposes of $1.0 billion. The Company’s NOLs, if not utilized to reduce taxable income in future periods, generally expire in various amounts beginning in 2021 and ending in 2026. The Company utilized NOLs to offset income tax obligations in each of the tax returns filed for the years ended December 31, 2010, 2009 and 2008. The Tax Reform Act of 1986 contains provisions that limit the utilization of NOLs if there has been an “ownership change” as described in Section 382 of the Internal Revenue Code. In general, this would occur if certain ownership changes related to the Company’s common stock that are held by 5 percent or greater stockholders exceeds 50 percent measured over a rolling three year period. If the Company experienced such an ownership change at a time when its market capitalization is below a certain level, the utilization of its NOLs to reduce future federal income tax obligations could be limited. In an effort to reduce the likelihood of an ownership change as defined by Section 382, the Company adopted a stockholder rights plan in January 2009 that was ratified by the Company’s stockholders in June 2009. The stockholder rights plan terminated in accordance with its terms on January 20, 2012, and the Company did not extend the stockholder rights plan.

As of December 31, 2011, the Company had no material uncertain tax positions.

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Document And Entity Information (USD $) In Billions, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Jan. 31, 2012	Jun. 30, 2011
Document And Entity Information [Abstract]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2011
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	FY
Trading Symbol	twtc
Entity Registrant Name	tw telecom inc.
Entity Central Index Key	0001057758
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		150,006,831
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Public Float			$ 3.0

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Stock-Based Compensation

12 Months Ended

Dec. 31, 2011

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

Stock-Based Compensation

tw telecom1998 Employee Stock Option Plan

The Company maintains the tw telecom 1998 Employee Stock Option Plan that reserved 9.0 million shares of common stock to be issued to officers and eligible employees under terms and conditions to be set by the Company’s Board of Directors. As of December 31, 2011, approximately 1.8 million shares of common stock were reserved for issuance upon exercise of outstanding options under that plan. Generally, the options vest over periods of up to four years and expire seven or ten years from the date of issuance. These options have been granted to employees of the Company with an exercise price equal to market value at the date of grant. The tw telecom 1998 Employee Stock Option Plan expired in August 2008 and no additional awards may be granted under this plan.

tw telecom2000 Employee Stock Plan

The Company maintains the tw telecom 2000 Employee Stock Plan (as amended in June 2009) that permits up to 39.0 million shares of common stock to be issued pursuant to stock options and stock awards granted to officers, directors, and eligible employees under terms and conditions to be set by the Company’s Board of Directors. As of December 31, 2011, approximately 6.2 million shares of common stock were reserved for issuance upon exercise of outstanding options and vesting of stock awards and approximately 14.4 million shares of common stock were available for grant under the plan. Generally, the options and awards vest over periods of up to four years and options expire either seven or ten years from the date of issuance.

The options have been granted to employees of the Company with an exercise price equal to market value of the underlying stock at the date of grant. The fair value of the restricted stock awards and restricted stock units granted was measured based on the market value of the shares on the date of grant and the resulting expense related to these awards is recorded over their vesting periods, generally up to four years. The weighted-average fair value of options granted was $8.44, $7.61 and $3.56 for the years ended December 31, 2011, 2010 and 2009, respectively, with the following weighted-average assumptions:

	Years ended December 31,
	2011		2010		2009
Expected volatility	52	%	53	%	56	%
Risk-free interest rate	2.2	%	2.5	%	1.7	%
Dividend yield	0	%	0	%	0	%
Expected term	5	years	5.2	years	4	years

The table below summarizes the Company’s stock option activity and related information for the year ended December 31, 2011:

	Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value
					(in years)	(thousands)
Options outstanding at January 1, 2011	9,153,677		$	16.72
Granted	3,000		18.02
Exercised	(1,908,830	)	12.47
Forfeited	(30,385	)	14.50
Expired	(543,915	)	46.25
Options outstanding at December 31, 2011	6,673,547		$	15.54	3.88	$	30,212
Vested and expected to vest at December 31, 2011	6,619,268		$	15.57	3.84	$	29,772
Exercisable at December 31, 2011	4,973,992		$	16.65	3.01	$	18,142

The total intrinsic value of stock options exercised during the years ended December 31, 2011, 2010 and 2009 was $13.4 million, $7.1 million and $4.8 million, respectively. As of December 31, 2011, there was $4.8 million of total unrecognized compensation expense related to unvested stock options, which is expected to be recognized over a weighted-average period of 1.1 years.

The table below summarizes the Company’s restricted stock and restricted stock units and related information for the year ended December 31, 2011:

	Shares		Weighted Average Grant Date Fair Value
Nonvested at January 1, 2011	3,161,558		$	12.65
Granted	2,073,532		16.97
Vested	(1,010,329	)	12.06
Forfeited	(43,249	)	13.52
Nonvested at December 31, 2011	4,181,512		$	17.92

The total fair value of restricted stock and restricted stock units vested during the years ended December 31, 2011, 2010 and 2009 was $17.7 million, $12.8 million and $10.2 million, respectively. As of December 31, 2011, there was $43.9 million of total unrecognized compensation expense related to non-vested restricted stock awards and restricted stock units, which is expected to be recognized over a weighted-average period of 1.2 years.

Effective October 1, 2004, the Company adopted the tw telecom 2004 Qualified Stock Purchase Plan (the “2004 Stock Purchase Plan”). Employees who met certain eligibility requirements could elect to designate up to 15% of their eligible compensation, up to an annual limit of $25,000, to purchase shares of the Company’s common stock at a 15% discount to fair market value. Stock purchases occurred semi-annually, with the price per share equaling the lower of 85% of the market price at the beginning or end of the offering period. The Company is authorized to issue a total of 600,000 shares of the Company’s common stock to participants in the 2004 Stock Purchase Plan. In September 2007, the 2004 Stock Purchase Plan was amended to authorize an additional 600,000 shares for issuance under the 2004 Stock Purchase Plan. During the years ended December 31, 2011, 2010 and 2009, no shares were issued under the amended 2004 Stock Purchase Plan because the Company has not made any offerings under the amended plan.

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Consolidated Statements Of Operations (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2011		Dec. 31, 2010		Dec. 31, 2009
Revenue:
Data and Internet services	$ 646,682		$ 547,218		$ 472,647
Network services	350,709		359,169		370,859
Voice services	338,655		332,870		333,274
Intercarrier compensation	30,845		33,914		34,610
Total revenue	1,366,891		1,273,171		1,211,390
Costs and expenses (a):
Operating (exclusive of depreciation, amortization, and accretion shown separately below)	571,461	[1]	528,965	[1]	503,960	[1]
Selling, general and administrative	325,538	[1]	308,470	[1]	297,290	[1]
Depreciation, amortization, and accretion	283,329		289,564		296,167
Total costs and expenses	1,180,328		1,126,999		1,097,417
Operating income	186,563		146,172		113,973
Interest expense	(87,718)		(80,952)		(84,001)
Debt extinguishment costs	0		(17,070)		0
Interest income	545		608		360
Other income	0		825		0
Income before income taxes	99,390		49,583		30,332
Income tax expense (benefit)	41,479		(291,295)		11,921
Net income	$ 57,911		$ 340,878		$ 18,411
Earnings per share:
Basic (in dollars per share)	$ 0.39		$ 2.26		$ 0.12
Diluted (in dollars per share)	$ 0.38		$ 2.12		$ 0.12
Weighted average shares outstanding:
Basic (in shares)	147,247		149,156		148,087
Diluted (in shares)	149,349		171,456		149,852

[1] Includes non-cash stock-based employee compensation expense (Note 1):Operating$2,327 $3,261 $3,654Selling, general and administrative$25,490 $24,571 $22,864

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Property, Plant and Equipment

12 Months Ended

Dec. 31, 2011

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

Property, Plant and Equipment

Property, plant and equipment consists of:

	December 31,
	2011		2010
	(amounts in thousands)
Communications network equipment	2,738,618		2,530,428
Fiber and right to use	1,014,952		947,937
Vehicles and other equipment	206,466		187,804
Land, buildings and improvements	66,098		65,881
	4,026,134		3,732,050
Less accumulated depreciation	(2,598,922	)	(2,375,438	)
Total	1,427,212		1,356,612

Depreciation expense was $274.5 million, $279.9 million and $285.6 million for the years ended December 31, 2011, 2010 and 2009, respectively.

The Company’s asset retirement obligations are included as a component of other long-term liabilities in the consolidated balance sheets. The following table provides asset retirement obligation liability activity for the years ended December 31, 2011, 2010 and 2009:

	Years ended December 31,
	2011			2010			2009
	(amounts in thousands)
Asset retirement obligations:
Balance at January 1	$	23,141		$	20,377		$	18,701
Accretion expense	2,085			1,876			1,718
Liabilities incurred	—			977			—
Liabilities settled	(88		)	(89		)	(42		)
Balance at December 31	$	25,138		$	23,141		$	20,377

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Investments

12 Months Ended

Dec. 31, 2011

Investments [Abstract]

Investments

Investments

The Company’s investments at December 31, 2011 and 2010 are summarized as follows:

	December 31,
	2011		2010
	(amounts in thousands)
Cash equivalents:
U.S. Treasury money market mutual funds	$	291,746	$	323,206
Commercial paper	8,497		29,984
Certificates of deposit	5,201		—
International government securities	1,401		—
Corporate debt securities	—		511
Total cash equivalents	306,845		353,701
Investments:
Corporate debt securities	99,132		88,471
Debt securities issued by U.S. Government agencies	27,885		30,201
Debt securities issued by the U.S. Treasury	3,008		—
Commercial paper	$	1,500	$	—
Total investments	$	131,525	$	118,672
Total cash equivalents and investments	$	438,370	$	472,373

At December 31, 2011 and December 31, 2010, the carrying values of investments included in cash and cash equivalents approximated fair value. The aggregate fair value of available-for-sale securities by major security type is included in Note 8. The amortized cost basis of the available-for-sale securities was not materially different from the aggregate fair value. The contractual maturities of the Company’s available-for-sale securities are all within one year.

Proceeds from the sale and maturity of available-for-sale securities during the year ended December 31, 2011 and 2010 were $208.3 million and $154.8 million, respectively. The Company recognized no material unrealized or realized net gains or losses from available-for-sale securities during the years ended December 31, 2011 and 2010.

During the year ended December 31, 2010, the Company’s investments were transferred from the held-to-maturity classification to the available-for-sale classification as a result of management’s decision to make the investments available to be sold prior to their maturity dates to purchase investments with a higher yield. At the date of transfer, the net carrying amount was $71.5 million and the Company recognized an immaterial amount of unrealized gain.

During the year ended December 31, 2010, the Company received $3.8 million in proceeds from liquidation of previously impaired commercial paper, resulting in an $0.8 million realized gain recorded in other income.

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Schedule II - Valuation and Qualifying Accounts

12 Months Ended

Dec. 31, 2011

Valuation and Qualifying Accounts [Abstract]

Schedule II - Valuation and Qualifying Accounts

tw telecom inc.

SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS

Years Ended December 31, 2011, 2010 and 2009

	Balance at Beginning of Period		Additions/ Charges to Costs and Expenses, net	Deductions		Balance at End of Period
	(amounts in thousands)
For the Year ended December 31, 2011:
Allowance for doubtful accounts receivable	$	7,898	3,142	(2,848	)	$	8,192
For the Year ended December 31, 2010:
Allowance for doubtful accounts receivable	$	9,449	1,820	(3,371	)	$	7,898
For the Year ended December 31, 2009:
Allowance for doubtful accounts receivable	$	11,271	6,595	(8,417	)	$	9,449

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Commitments and Contingencies

12 Months Ended

Dec. 31, 2011

Commitments and Contingencies Disclosure [Abstract]

Commitments And Contingencies

Commitments and Contingencies

Leases and Fixed Obligations

The Company leases office space and furniture, facilities housing telecommunications equipment, and fiber optic use rights. Certain of the leases contain renewal clauses. The Company also enters into fixed price maintenance agreements for maintenance of its network.

At December 31, 2011, commitments under capital and non-cancelable operating leases and maintenance agreements with terms in excess of one year were as follows:

	Capital Leases			Operating Leases		Fixed Maintenance Obligations
	(amounts in thousands)
Year ended December 31:
2012	$	2,937		$	52,302	$	3,013
2013	2,625			47,470		3,013
2014	2,403			42,214		3,013
2015	2,103			35,325		3,013
2016	1,978			26,725		3,013
Thereafter	11,578			93,418		27,394
Total minimum lease payments	$	23,624		$	297,454	$	42,459
Less amount representing interest	(7,373		)
Present value of obligations under capital leases	16,251
Less current portion of obligations under capital leases	(1,733		)
Obligations under capital leases, excluding current portion	$	14,518

As of December 31, 2011 and 2010, assets under capital lease obligations, which primarily consist of fiber optic network components, were $19.3 million and $17.9 million, respectively, with related accumulated depreciation of $6.1 million and $5.4 million, respectively. Depreciation expense related to assets under capital lease obligations was $1.2 million, $1.4 million and $1.4 million for years ended December 31, 2011, 2010 and 2009, respectively. The obligations under capital leases have been discounted at an average imputed interest rate of 7.6%. Rental expense under operating leases aggregated $76.8 million, $73.9 million and $72.3 million for the years ended December 31, 2011, 2010 and 2009, respectively.

Other Contingencies

Management routinely reviews the Company’s exposure to liabilities incurred in the normal course of its business operations. The Company is subject to significant government and jurisdictional regulation, some of which is uncertain due to legal challenges of existing rules. Such regulation is subject to differing interpretations and inconsistent application, and has historically resulted in disputes with other carriers, regulatory authorities and municipalities regarding the classification of traffic, rates, minutes of use and right-of-way fees. Where a probable contingency exists and the amount of the loss can be reasonably estimated, the Company records the estimated liability. Considerable judgment is required in analyzing and recording such liabilities and actual results may vary from the estimates.

The Company’s pending legal proceedings are limited to litigation incidental to its business. In the opinion of management, the ultimate resolution of these matters will not have a material adverse effect on the Company’s financial statements.

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Derivative Financial Instruments

12 Months Ended

Dec. 31, 2011

Summary of Derivative Instruments [Abstract]

Derivative Financial Instruments

Derivative Financial Instruments

The variable rate Term Loan exposes the Company to variability in interest payments due to changes in interest rates. In order to mitigate interest rate fluctuations on the Term Loan, Holdings has entered into derivative instruments, specifically interest rate swap agreements. The interest rate swap agreements effectively convert a portion of Holdings’ floating-rate debt to a fixed-rate basis for the term of the agreement to reduce the impact of interest rate changes on future interest expense. The Company has designated its interest rate swap agreements as cash flow hedges. During the year ended December 31, 2011, the Company's remaining interest rate swap agreement expired.

The following table summarizes the fair value of derivatives reported in the consolidated balance sheets at December 31, 2011 and 2010:

	Liability Derivatives
Derivatives- cash flow hedges	Balance Sheet Location	December 31,
		2011		2010
		(amounts in thousands)
Interest rate swap agreements	Other current liabilities	$	—	$	2,412
Total fair value of derivatives designated as cash flow hedges		$	—	$	2,412

The unrecognized losses for the interest rate swap agreements included in accumulated other comprehensive loss at December 31, 2010 and 2009 were $2.4 million and $4.2 million, respectively. There were no unrecognized losses for the interest rate swap agreements included in accumulated other comprehensive loss at December 31, 2011. The effect of the interest rate swaps on the consolidated statements of operations was as follows for the years ended December 31, 2011, 2010 and 2009:

	Years Ended December 31,
	2011			2010			2009
	(amounts in thousands)
Loss recognized in other comprehensive income/(loss) (effective portion)	$	(118	)	$	(1,891	)	$	(2,653	)
Loss reclassified from accumulated other comprehensive income (loss) into interest expense (effective portion)	$	(2,530	)	$	(3,717	)	$	(5,562	)
Gain/(loss) recognized in income (ineffective portion and amount excluded from effectiveness testing)	$	—		$	—		$	—

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Income Taxes (Components of Deferred Tax Assets and Liabilities) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2011	Dec. 31, 2010
Deferred tax assets:
Net operating loss carryforwards	$ 328,168	$ 359,773
Accrued liabilities	31,646	33,983
Stock options	18,600	18,184
Deferred revenue	8,409	6,377
Allowance for doubtful accounts	3,133	3,041
Other	8,740	8,058
Total deferred tax assets	398,696	429,416
Deferred tax liabilities:
Depreciation and amortization	(126,097)	(109,581)
Discount on Convertible Debentures	(7,672)	(15,502)
Prepaid expenses	(2,022)	(2,878)
Total deferred tax liabilities	(135,791)	(127,961)
Less: Valuation allowance	(35,362)	(36,232)
Total deferred tax asset, net	227,543	265,223
Balance sheet classification of deferred taxes:
Deferred income tax asset, net - current	65,008	40,428
Deferred income tax asset, net - non-current	162,535	224,795
Total deferred tax asset, net	$ 227,543	$ 265,223

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Intangible Assets

12 Months Ended

Dec. 31, 2011

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets

Intangible Assets

Goodwill

The Company had goodwill of $412.7 million at both December 31, 2011 and 2010.

Definite Life Intangibles

Definite life intangibles consist primarily of acquired customer relationships. Definite life intangible assets are amortized using methods that correlate to the pattern in which the economic benefits are expected to be realized. Customer relationships are amortized using the sum of the years digits method over an estimated life of 10 years. Other intangible assets, primarily acquired intangible assets, are amortized on a straight-line basis using expected lives of 10 years. Definite life intangible assets subject to amortization were as follows:

	December 31, 2011							December 31, 2010
	Gross Carrying Value		Accumulated Amortization			Net Carrying Value		Gross Carrying Value		Accumulated Amortization			Net Carrying Value
	(amounts in thousands)
Customer relationships	$	59,086	$	(43,867	)	$	15,219	$	59,086	$	(37,600	)	$	21,486
Other	6,363		(3,840		)	2,523		6,363		(3,405		)	2,958
	$	65,449	$	(47,707	)	$	17,742	$	65,449	$	(41,005	)	$	24,444

Intangible asset amortization expense was $6.7 million, $7.8 million and $8.9 million for the years ended December 31, 2011, 2010 and 2009, respectively.

The amortization expense related to intangible assets recorded as of December 31, 2011 for each of the five succeeding years is estimated to be the following: 2012—$5.6 million; 2013—$4.5 million; 2014—$3.4 million; 2015—$2.3 million and 2016—$1.2 million.

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Long-Term Debt

12 Months Ended

Dec. 31, 2011

Debt Disclosure [Abstract]

Long-Term Debt

Long-Term Debt

	December 31,
	2011			2010
	(amounts in thousands)
Term Loan B—January 2013 tranche, due 2013	$	102,055		$	103,130
Term Loan B—extended tranche, due 2016	467,946			472,870
8% Senior Notes, due 2018	430,000			430,000
2  3/8% Convertible Senior Debentures, due 2026	373,744			373,744
Total debt	1,373,745			1,379,744
Unamortized discounts	(29,443		)	(49,505		)
Current portion	(6,000		)	(6,000		)
Total long-term debt	$	1,338,302		$	1,324,239

The schedule of principal payments on long-term debt as of December 31, 2011 is as follows (amounts in thousands):

2012	6,000
2013	479,651
2014	4,926
2015	4,926
2016	448,242
Thereafter	430,000
Total payments	$	1,373,745

8% Senior Notes due 2018

In March 2010, the Company’s wholly owned subsidiary, tw telecom holdings inc. (“Holdings”) completed a private offering of $430 million aggregate principal amount of 8% Senior Notes due 2018 (the “2018 Notes”) at an offering price of 99.284% of the principal amount. The net proceeds from the offering were used to fund Holdings’ extinguishment of its 9¼% Senior Notes due February 2014. The 2018 Notes are unsecured obligations of Holdings and are guaranteed by the Company and substantially all of Holdings’ subsidiaries. Interest is payable semi-annually on September 1 and March 1. The 2018 Notes are redeemable in whole or in part, at Holdings’ option, at any time on or after March 1, 2014, 2015 and 2016 at redemption prices of 104%, 102% and 100%, respectively. In addition, prior to March 1, 2013, at Holdings’ option, Holdings may redeem up to 35% of the aggregate principal amount of the 2018 Notes with the net proceeds from one or more equity offerings by the Company at a redemption price of 108% of their principal amount, plus accrued and unpaid interest, if any. Offering costs of $9.5 million related to the 2018 Notes were deferred and are being amortized to interest expense over the term of the 2018 Notes. Interest expense, including amortization of deferred debt issuance costs and discount relating to the 2018 Notes, was $36.0 million and $28.4 million for the years ended December 31, 2011 and 2010, respectively.

2 ³/₈% Convertible Senior Debentures due 2026

As of December 31, 2011, the Company had outstanding $373.7 million principal amount 2 ³/₈% Convertible Senior Debentures due April 1, 2026 (the “Convertible Debentures”). The Convertible Debentures are general, unsecured obligations of the Company. Interest is payable semi-annually on April 1 and October 1. The Convertible Debentures are redeemable in whole or in part at the Company’s option at any time on or after April 6, 2013 at a redemption price equal to 100% of the principal amount of the debentures to be redeemed, plus accrued and unpaid interest. Holders of the debentures have the option to require the Company to purchase all or part of the Convertible Debentures on April 1, 2013, April 1, 2016 or April 1, 2021 at 100% of the principal and unpaid interest, or at any time prior to April 1, 2026, to convert the debentures into shares of the Company’s common stock at a conversion rate of 53.6466 per $1,000 principal amount of debentures, representing a conversion price of $18.64 per share. Upon conversion, the Company will have the right to deliver, in lieu of shares of common stock, cash or a combination of cash and shares of common stock. As of December 31, 2011, an immaterial amount of Convertible Debentures had been converted and the Company delivered cash in lieu of common stock in connection with that conversion. As of December 31, 2011, the if-converted value of the Convertible Debentures exceeded the principal amount by $14.8 million.

In accordance with authoritative guidance issued by the FASB for convertible debt instruments, the Company separated the Convertible Debentures into debt and equity components at issuance and has assigned a value to each. The value assigned to the equity component was $120.5 million, net of an allocable portion of deferred debt issuance costs, as of December 31, 2011 and 2010, and is included as a component of additional paid in capital. The value assigned to the debt component was $253.3 million and represents the estimated fair value, as of the issuance date (March 29, 2006), of a similar instrument without the conversion feature. The unamortized discount is amortized to interest expense using the interest rate method through March 31, 2013. The following table reflects the principal and discount included in the consolidated balance sheets as of December 31, 2011 and 2010:

	December 31,
	2011			2010
	(amounts in thousands)
Principal amount of Convertible Debentures	$	373,744		$	373,744
Unamortized discount	(27,057		)	(46,732		)
Net carrying amount of Convertible Debentures	$	346,687		$	327,012

The Company recognized the following amounts to interest expense related to the Convertible Debentures for the years ended December 31, 2011, 2010 and 2009:

	Years ended December 31,
	2011			2010			2009
	(amounts in thousands)
Interest expense, contractual amount at 2   3/8%	$	8,876		$	8,875		$	8,877
Interest expense, amortization of discount	19,675			18,077			16,609
Interest expense, amortization of deferred debt issuance costs	1,098			1,098			1,098
Total interest expense for Convertible Debentures	$	29,649		$	28,050		$	26,584
Effective interest rate on liability component	8.5		%	8.5		%	8.5		%

Term Loan B

As of December 31, 2011, Holdings had a $680 million senior secured credit facility (the “Credit Facility”) consisting of a $600 million Term Loan B (“Term Loan”) and an undrawn $80 million revolving credit facility (the “Revolver”). On December 2, 2010, Holdings amended and restated the Credit Facility agreement to extend from January 2013 to December 2016 the maturity of approximately $474.1 million (the “extended tranche”) of the $577.5 million in principal amount of the Term Loan then outstanding. The January 2013 maturity date of the remaining $103.4 million in principal amount (the “January 2013 tranche”) was unchanged. The term of Holdings’ undrawn Revolver was extended from October 2011 to December 2014. As of December 31, 2011, Holdings had outstanding $467.9 million principal amount of the extended tranche and $102.1 million of the January 2013 tranche. Components of the Credit Facility, as amended, and related financing are detailed below:

• The Term Loan is a secured obligation, on a first lien basis, of Holdings. The Term Loan is guaranteed by the Company and Holdings’ subsidiaries. Repayments of the Term Loan are due quarterly in an amount equal to ¼ of 1% of the aggregate principal amount on the last day of each quarter. Interest on the January 2013 tranche is computed based on a specified Eurodollar rate plus 1.75% to 2.0%, of which 1.75% was in effect at December 31, 2011. Interest on the extended tranche is computed based on a specified Eurodollar rate plus 3.25%. Interest is reset periodically and payable at least quarterly. Based on the Eurodollar rate in effect at December 31, 2011, the weighted average effective interest rate was 3.3%. In accordance with applicable accounting guidance, the amended and restated Term Loan agreement was accounted for as a modification of the existing debt. The fees paid to the holders of the extended tranche of $3.8 million were added to the allocable share of existing debt issuance costs and will be amortized over the term of the extended tranche. Interest expense, including amortization of deferred debt issuance costs, the effect of interest rate swap agreements and commitment fees, was $22.3 million, $17.0 million and $20.3 million for the years ended December 31, 2011, 2010 and 2009, respectively.

• The Revolver is secured and guaranteed in the same manner as the Term Loan. Interest on outstanding amounts, if any, will be computed based on a specified Eurodollar rate plus 2.5% to 3.5% and will be reset periodically and payable at least quarterly. The Company is required to pay a commitment fee on the undrawn commitment amounts on a quarterly basis of 0.5% per annum. If the Revolver were drawn, certain restrictive financial covenants would apply. The fees paid to the lenders of $0.5 million were added to the existing debt issuance costs and will be amortized through the expiration date. Commitment fee expense and amortization of deferred debt issuance costs relating to the Revolver was $0.5 million, $0.5 million and $0.5 million for the years ended December 31, 2011, 2010 and 2009, respectively.

The Term Loan negative covenants were amended so that the amended Term Loan agreement contains similar restrictions to those contained in the indenture for the 2018 Notes. The Revolver covenants, which also were amended, contain additional restrictions, as well as certain financial covenants that the Company, Holdings and its subsidiaries must comply with if Holdings draws on the Revolver.

As of December 31, 2011, the Company and Holdings were in compliance with all of their covenants under the 2018 Notes, the Term Loan and the Revolver.

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Fair Value Measurements

12 Months Ended

Dec. 31, 2011

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

Fair value, as defined by relevant accounting standards, is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at fair value, the Company considers the principal or most advantageous market in which it would complete a transaction and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance.

Fair Value Hierarchy

Relevant accounting standards set forth a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Relevant accounting standards establish three levels of inputs that may be used to measure fair value:

• Level 1—Quoted prices in active markets for identical assets or liabilities. Level 1 assets that are measured at fair value on a recurring basis consist of the Company’s investments in U.S. Treasury money market mutual funds that are traded in an active market with sufficient volume and frequency of transactions, and are included as a component of cash and cash equivalents in the consolidated balance sheets.

• Level 2—Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities. Level 2 assets that are measured at fair value on a recurring basis consist of the Company’s investments in certificates of deposit, commercial paper, corporate debt securities, international government securities, and debt securities issued by the U.S. Treasury and government agencies using observable inputs in less active markets and are included as components of cash and cash equivalents and investments in the consolidated balance sheets. Level 2 liabilities that are measured at fair value on a recurring basis include the Company’s interest rate swap agreement, which expired in the year ended December 31, 2011, priced using discounted cash flow techniques that use observable market inputs, such as LIBOR-based yield curves, forward rates, and credit ratings and are included as a component of other current liabilities in the consolidated balance sheets.

• Level 3—Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities. The Company did not have any Level 3 assets or liabilities that were measured at fair value at December 31, 2011 and 2010.

The following tables reflect assets and liabilities that are measured and carried at fair value on a recurring basis as of December 31, 2011 and 2010:

	Fair Value Measurements At December 31, 2011						Assets/Liabilities at Fair Value
	Level 1		Level 2		Level 3
	(amounts in thousands)
Assets
U.S. Treasury money market mutual funds	$	291,746	$	—	$	—	$	291,746
Commercial paper	—		8,497		—		8,497
Certificates of deposit	—		5,201		—		5,201
International government securities	—		1,401		—		1,401
Investments included in cash and cash equivalents	$	291,746	$	15,099	$	—	$	306,845
Corporate debt securities	—		99,132		—		99,132
Debt securities issued by U.S. Government agencies	—		27,885		—		27,885
Debt securities issued by the U.S. Treasury	—		3,008		—		3,008
Commercial paper	$	—	$	1,500	$	—	$	1,500
Short-term investments	$	—	$	131,525	$	—	$	131,525
Total assets	$	291,746	$	146,624	$	—	$	438,370

	Fair Value Measurements At December 31, 2010						Assets/Liabilities at Fair Value
	Level 1		Level 2		Level 3
	(amounts in thousands)
Assets
U.S. Treasury money market mutual funds	$	323,206	$	—	$	—	$	323,206
Commercial paper	—		29,984		—		29,984
Corporate debt securities	—		511		—		511
Investments included in cash and cash equivalents	$	323,206	$	30,495	$	—	$	353,701
Corporate debt securities	—		88,471		—		88,471
Debt securities issued by U.S. Government agencies	—		30,201		—		30,201
Short-term investments	$	—	$	118,672	$	—	$	118,672
Total assets	$	323,206	$	149,167	$	—	$	472,373
Liabilities
Interest rate swap agreement	$	—	$	2,412	$	—	$	2,412
Total liabilities	$	—	$	2,412	$	—	$	2,412

Although the Company’s long-term debt has not been listed on any securities exchange or inter-dealer automated quotation system, the Company has estimated the fair value of its long-term debt based on indicative pricing published by certain investment banks. While the Company believes these approximations to be reasonably accurate at the time published, indicative pricing can vary widely depending on volume traded by any given investment bank and other factors. The following table summarizes the carrying amounts and estimated fair values of the Company’s long-term debt, including the current portion:

	December 31, 2011				December 31, 2010
	Carrying Value		Fair Value		Carrying Value		Fair Value
	(amounts in thousands)
Term Loan B—January 2013 tranche	$	102,055	$	101,673	$	103,130	$	101,841
Term Loan B—Extended tranche, due 2016	467,946		464,435		472,870		472,870
8% Senior Notes, net of discount	427,614		460,100		427,227		459,025
2 3/8% Convertible Senior Debentures, net of discount	346,687		444,288		327,012		412,987
Total debt	$	1,344,302	$	1,470,496	$	1,330,239	$	1,446,723

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Stock-Based Compensation (Stock Option Activity) (Details) (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2011 years
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Options outstanding (shares)	9,153,677
Options outstanding weighted average exercise price (in dollars per share)	$ 16.72
Granted (shares)	3,000
Options granted weighted average exercise price (in dollars per share)	$ 18.02
Exercised (shares)	(1,908,830)
Options exercised weighted average exercise price (in dollars per share)	$ 12.47
Forfeited (shares)	(30,385)
Options forfeited weighted average exercise price (in dollars per share)	$ 14.50
Expired (shares)	(543,915)
Options expired weighted average exercise price (in dollars per share)	$ 46.25
Options outstanding (shares)	6,673,547
Options outstanding weighted average exercise price (in dollars per share)	$ 15.54
Options outstanding remaining contractual term (years)	3.88
Options outstanding intrinsic value	$ 30,212
Vested and expected to vest (shares)	6,619,268
Vested and expected to vest weighted average exercise price	$ 15.57
Vested and expected to vest remaining contractual term (years)	3.84
Vested and expected to vest aggregate intrinsic value	29,772
Exercisable (shares)	4,973,992
Exercisable weighted average exercise price (in dollars per share)	$ 16.65
Exercisable remaining contractual term (years)	3.01
Exercisable intrinsic value	$ 18,142

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Commitments and Contingencies (Details) (USD $)	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Commitments and Contingencies [Abstract]
Capital Leases, Future Minimum Payments Due, 2012	$ 2,937,000
Capital Leases, Future Minimum Payments Due in 2013	2,625,000
Capital Leases, Future Minimum Payments Due in 2014	2,403,000
Capital Leases, Future Minimum Payments Due in 2015	2,103,000
Capital Leases, Future Minimum Payments Due in 2016	1,978,000
Capital Leases, Future Minimum Payments Due Thereafter	11,578,000
Capital Leases, Total minimum lease payments	23,624,000
Capital Leases, Less amount representing interest	(7,373,000)
Capital Leases, Present value of obligations under capital leases	16,251,000
Capital Leases, Less current portion of obligations under capital leases	(1,733,000)
Capital Leases, Obligations under capital leases, excluding current portion	14,518,000
Operating Leases, Future Minimum Payments Due, 2012	52,302,000
Operating Leases, Future Minimum Payments, Due in 2013	47,470,000
Operating Leases, Future Minimum Payments, Due in 2014	42,214,000
Operating Leases, Future Minimum Payments, Due in 2015	35,325,000
Operating Leases, Future Minimum Payments, Due in 2016	26,725,000
Operating Leases, Future Minimum Payments, Due Thereafter	93,418,000
Operating Leases, Total minimum lease payments	297,454,000
Fixed Maintenance Obligations, Future Minimum Payments Due, 2012	3,013,000
Fixed Maintenance Obligations, Future Minimum Payments, Due in 2013	3,013,000
Fixed Maintenance Obligations, Future Minimum Payments, Due in 2014	3,013,000
Fixed Maintenance Obligations, Future Minimum Payments, Due in 2015	3,013,000
Fixed Maintenance Obligations, Future Minimum Payments, Due in 2016	3,013,000
Fixed Maintenance Obligations, Future Minimum Payments, Due Thereafter	27,394,000
Fixed Maintenance Obligations, Total minimum lease payments	42,459,000
Capital Leased Assets, Gross	19,300,000	17,900,000
Capital Leased Assets, Accumulated Depreciation	6,100,000	5,400,000
Capital Leased Assets, Depreciation Expense	1,200,000	1,400,000	1,400,000
Average Capital Lease Obligation Discount Rate	7.60%
Operating Leases, Rent Expense, Net	$ 76,800,000	$ 73,900,000	$ 72,300,000

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Stock-Based Compensation (Weighted Average Assumptions) (Details) (Stock Options Granted [Member])	12 Months Ended
	Dec. 31, 2011 years	Dec. 31, 2010 years	Dec. 31, 2009 years
Stock Options Granted [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected volatility	52.00%	53.00%	56.00%
Risk-free interest rate	2.20%	2.50%	1.70%
Dividend yield	0.00%	0.00%	0.00%
Expected term	5	5.2	4

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Stock-Based Compensation (Tables)

12 Months Ended

Dec. 31, 2011

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions

The weighted-average fair value of options granted was $8.44, $7.61 and $3.56 for the years ended December 31, 2011, 2010 and 2009, respectively, with the following weighted-average assumptions:

	Years ended December 31,
	2011		2010		2009
Expected volatility	52	%	53	%	56	%
Risk-free interest rate	2.2	%	2.5	%	1.7	%
Dividend yield	0	%	0	%	0	%
Expected term	5	years	5.2	years	4	years

Schedule of Share-based Compensation, Stock Options, Activity

The table below summarizes the Company’s stock option activity and related information for the year ended December 31, 2011:

	Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value
					(in years)	(thousands)
Options outstanding at January 1, 2011	9,153,677		$	16.72
Granted	3,000		18.02
Exercised	(1,908,830	)	12.47
Forfeited	(30,385	)	14.50
Expired	(543,915	)	46.25
Options outstanding at December 31, 2011	6,673,547		$	15.54	3.88	$	30,212
Vested and expected to vest at December 31, 2011	6,619,268		$	15.57	3.84	$	29,772
Exercisable at December 31, 2011	4,973,992		$	16.65	3.01	$	18,142

Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity

The table below summarizes the Company’s restricted stock and restricted stock units and related information for the year ended December 31, 2011:

	Shares		Weighted Average Grant Date Fair Value
Nonvested at January 1, 2011	3,161,558		$	12.65
Granted	2,073,532		16.97
Vested	(1,010,329	)	12.06
Forfeited	(43,249	)	13.52
Nonvested at December 31, 2011	4,181,512		$	17.92

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Long-Term Debt (Debt Principal and Discounts) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2011	Dec. 31, 2010
Debt Instrument [Line Items]
Unamortized discounts	$ (29,443)	$ (49,505)
Convertible and Unsecured Debenture [Member]
Debt Instrument [Line Items]
Principal amount of Convertible Debentures	373,744	373,744
Unamortized discounts	(27,057)	(46,732)
Net carrying amount of Convertible Debentures	$ 346,687	$ 327,012

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Quarterly Results of Operations (Unaudited)

12 Months Ended

Dec. 31, 2011

Quarterly Financial Information Disclosure [Abstract]

Quarterly Results of Operations (Unaudited)

Quarterly Results of Operations (Unaudited)

The following summarizes the Company’s unaudited quarterly results of operations for 2011 and 2010:

	Three Months Ended
	March 31			June 30		September 30		December 31
	(amounts in thousands, except per share amounts)
Year Ended December 31, 2011
Total revenue	$	332,542		$	338,386	$	344,456	$	351,507
Operating income	44,262			46,270		47,270		48,761
Net income	12,619			14,307		14,593		16,392
Basic income per common share	$	0.08		$	0.09	$	0.10	$	0.11
Diluted income per common share	$	0.08		$	0.09	$	0.10	$	0.11
Year Ended December 31, 2010
Total revenue	$	311,211		$	316,849	$	320,294	$	324,817
Operating income	33,867			35,689		36,993		39,623
Net income (loss)(1)	(6,779		)	314,084		16,079		17,494
Basic income (loss) per common share	$	(0.05	)	$	2.07	$	0.11	$	0.12
Diluted income (loss) per common share	$	(0.05	)	$	1.84	$	0.10	$	0.11

  ___________________

(1) Includes a non-cash income tax benefit of $299.0 million in the three months ended June 30, 2010 to recognize the value of tax assets (see Note 9).

The total net income per share for the 2011 and 2010 quarters do not equal net income per share for the respective years because the per share amounts for each quarter and for each year are computed based on their respective discrete periods.

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Earnings Per Common Share and Potential Common Share (Tables)

12 Months Ended

Dec. 31, 2011

Earnings Per Share [Abstract]

Schedule Of Earnings Per Share Reconciliation

The following is a reconciliation of the numerators and denominators used in the basic and diluted earnings per common share computations:

	Years ended December 31,
	2011			2010			2009
	(amounts in thousands, except per share amounts)
Numerator
Net income	$	57,911		$	340,878		$	18,411
Allocation of net income to unvested restricted stock awards	(1,093		)	(4,471		)	(126		)
Net income allocated to common stockholders, basic	56,818			336,407			18,285
Adjustment for assumed dilution:
Interest expense on convertible debentures, net of tax	—			26,443			—
Net income allocated to common stockholders, diluted	$	56,818		$	362,850		$	18,285
Denominator
Basic weighted average shares outstanding	147,247			149,156			148,087
Dilutive potential common shares:
Shares from assumed conversion of convertible debentures	—			20,050			—
Stock options	1,495			1,694			883
Unvested restricted stock	607			556			882
Diluted weighted average shares outstanding	149,349			171,456			149,852
Basic earnings per share	$	0.39		$	2.26		$	0.12
Diluted earnings per share	$	0.38		$	2.12		$	0.12

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Long-Term Debt (Principal Payments) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2011	Dec. 31, 2010
Debt Disclosure [Abstract]
2012	$ 6,000
2013	479,651
2014	4,926
2015	4,926
2016	448,242
Thereafter	430,000
Total debt	$ 1,373,745	$ 1,379,744

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Earnings Per Common Share and Potential Common Share (Narrative) (Details) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Earnings Per Share [Abstract]
Potentially anti-dilutive shares outstanding	26.1	8.4	29.9

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Consolidated Statements Of Operations (Parenthetical) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Operating
Allocated share-based compensation expense	$ 2,327	$ 3,261	$ 3,654
Selling, general and administrative
Allocated share-based compensation expense	$ 25,490	$ 24,571	$ 22,864

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Earnings Per Common Share and Potential Common Share

12 Months Ended

Dec. 31, 2011

Earnings Per Share [Abstract]

Earnings Per Common Share And Potential Common Share

Earnings Per Common Share and Potential Common Share

Basic earnings per common share ("EPS") is measured as the income allocated to common stockholders divided by the weighted average outstanding common shares for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential common shares (such as convertible securities and stock options) as if they had been converted to shares at the beginning of the period presented. Potential common shares that have an anti-dilutive effect (e.g., those that increase income per share) are excluded from diluted EPS.

The following is a reconciliation of the numerators and denominators used in the basic and diluted earnings per common share computations:

	Years ended December 31,
	2011			2010			2009
	(amounts in thousands, except per share amounts)
Numerator
Net income	$	57,911		$	340,878		$	18,411
Allocation of net income to unvested restricted stock awards	(1,093		)	(4,471		)	(126		)
Net income allocated to common stockholders, basic	56,818			336,407			18,285
Adjustment for assumed dilution:
Interest expense on convertible debentures, net of tax	—			26,443			—
Net income allocated to common stockholders, diluted	$	56,818		$	362,850		$	18,285
Denominator
Basic weighted average shares outstanding	147,247			149,156			148,087
Dilutive potential common shares:
Shares from assumed conversion of convertible debentures	—			20,050			—
Stock options	1,495			1,694			883
Unvested restricted stock	607			556			882
Diluted weighted average shares outstanding	149,349			171,456			149,852
Basic earnings per share	$	0.39		$	2.26		$	0.12
Diluted earnings per share	$	0.38		$	2.12		$	0.12

Options to purchase shares of the Company’s common stock, restricted stock awards and restricted stock units to be settled in common stock upon vesting and shares of common stock subject to issuance upon conversion of the Company’s convertible debentures, which were excluded from the computation of diluted weighted average shares outstanding if their inclusion would be anti-dilutive, totaled 26.1 million shares, 8.4 million shares and 29.9 million shares at December 31, 2011, 2010 and 2009, respectively.

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Income Taxes (Components of Income Tax Expense (Benefit)) (Details) (USD $)	12 Months Ended
	Dec. 31, 2011		Dec. 31, 2010		Dec. 31, 2009
Current:
Federal	$ 1,317,000		$ 269,000		$ 389,000
State	4,406,000		1,965,000		2,357,000
Current Income Tax Expense (Benefit)	5,723,000		2,234,000		2,746,000
Deferred:
Federal	34,800,000		20,873,000		0
State	1,826,000		651,000		0
Deferred Income Tax Expense (Benefit)	36,626,000		21,524,000		0
Income tax (benefit) expense change in valuation allowance (1)	(870,000)	[1]	(315,053,000)	[1]	9,175,000	[1]
Income tax expense (benefit)	41,479,000		(291,295,000)		11,921,000
Reversal of valuation allowance			$ 299,000,000

[1] For the year ended December 31, 2011, the deferred income tax benefit related to the decrease in the valuation allowance primarily resulted from a change in tax legislation. For the year ended December 31, 2010, the deferred income tax benefit related to the decrease in the valuation allowance is comprised of (i) the portion related to future year’s earnings, which resulted in a reversal of $299.0 million in the valuation allowance in 2010 (see below), and (ii) the portion related to current year earnings. For the year ended December 31, 2009, the income tax expense related to the increase in the valuation allowance is the result of increases in the deferred tax liability for the amortization of indefinite lived intangibles which is not available for consideration in the assessment of the realization of the Company’s deferred tax assets.

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Supplemental Guarantor Information (Narrative) (Details) (8% Senior Notes, Due 2018 [Member], USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2011
Debt Instrument [Line Items]
Debt instruments maturity date	2018
Senior Notes [Member]
Debt Instrument [Line Items]
Long-term Debt	430,000

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Investments (Tables)

12 Months Ended

Dec. 31, 2011

Investments [Abstract]

Investments Schedule

The Company’s investments at December 31, 2011 and 2010 are summarized as follows:

	December 31,
	2011		2010
	(amounts in thousands)
Cash equivalents:
U.S. Treasury money market mutual funds	$	291,746	$	323,206
Commercial paper	8,497		29,984
Certificates of deposit	5,201		—
International government securities	1,401		—
Corporate debt securities	—		511
Total cash equivalents	306,845		353,701
Investments:
Corporate debt securities	99,132		88,471
Debt securities issued by U.S. Government agencies	27,885		30,201
Debt securities issued by the U.S. Treasury	3,008		—
Commercial paper	$	1,500	$	—
Total investments	$	131,525	$	118,672
Total cash equivalents and investments	$	438,370	$	472,373

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Organization And Summary Of Significant Accounting Policies (Details) (USD $) Share data in Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2011 segment classes votes	Dec. 31, 2010	Dec. 31, 2009
Significant Accounting Policies [Line Items]
Number of Classes of Common Shares	1
Number of Votes Per Share	1
Preferred stock, shares issued (in shares)	0	0
Operating Segments	1
Restricted cash and cash equivalents	$ 1,900,000	$ 2,100,000
Allowance for doubtful accounts receivable	8,192,000	7,898,000
Allowance for doubtful accounts receivable percentage of gross receivables	8.00%	9.00%
Capitalized labor and overhead costs	71,600,000	64,000,000	61,000,000
Capitalized interest	2,100,000	2,800,000	2,400,000
Loss on disposal of assets	1,400,000	1,200,000	(3,000,000)
Revenue associated with certain taxes and fees	$ 63,500,000	$ 51,300,000	$ 40,000,000
Ten largest customers aggregate percentage of the Company's total revenue	20.00%	20.00%	21.00%
Number of customers that account for greater than ten percent of revenue	0	0	0
Time Warner Cable [Member]
Significant Accounting Policies [Line Items]
Number of markets with licenses for the right to use fiber optic capacity	16
Comcast Corporation [Member]
Significant Accounting Policies [Line Items]
Number of markets with licenses for the right to use fiber optic capacity	3
Bright House Networks [Member]
Significant Accounting Policies [Line Items]
Number of markets with licenses for the right to use fiber optic capacity	4
Maximum [Member]
Significant Accounting Policies [Line Items]
Cash Equivalents, Maturity Period	3 months
Customer Concentration Risk [Member]
Significant Accounting Policies [Line Items]
Largest customer percentage of total revenue	4.00%	4.00%	5.00%

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Employee Benefit Plans

12 Months Ended

Dec. 31, 2011

Compensation and Retirement Disclosure [Abstract]

Employee Benefit Plans

Employee Benefit Plans

Effective January 1, 1999, the Company adopted the tw telecom 401(k) Plan (the “401(k) Plan”). Employees who meet certain eligibility requirements may contribute up to 60% of their eligible compensation, subject to statutory limitations, to a trust for investment in several diversified investment choices, as directed by the employee. The Company makes a matching contribution of 100% of each employee’s contribution up to a maximum of 5% of the employee’s eligible compensation. The Company’s contributions to the 401(k) Plan aggregated $11.6 million, $10.7 million and $10.3 million for the years ended December 31, 2011, 2010 and 2009, respectively.