10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________

FORM 10-Q

_____________

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

For the Quarterly Period Ended March 31, 2008

OR

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

For the transition period from                      to

Commission file number 333-115602

_____________

Grande Communications Holdings, Inc.

(Exact name of registrant as specified in its charter)

_____________

Delaware	74-3005133
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)
401 Carlson Circle, San Marcos, TX	78666
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number including area code: (512) 878-4000

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  T    No  £

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.

Large accelerated filer  £     Accelerated filer  £     Non-accelerated filer  T     Smaller reporting company  £

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  £    No  T

The number of shares of the registrant’s Common Stock outstanding as of April 30, 2008 was 12,752,572.

GRANDE COMMUNICATIONS HOLDINGS, INC. AND SUBSIDIARY

Index

			Page No.
Part I.		Financial Information	1
	Item 1.	Financial Statements	1
		Condensed Consolidated Balance Sheets	1
		Condensed Consolidated Statements of Operations	2
		Condensed Consolidated Statements of Cash Flows	3
		Notes to Condensed Consolidated Financial Statements	4
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	7
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	15
	Item 4.	Controls and Procedures	15
Part II.		Other Information	16
	Item 1.	Legal Proceedings	16
	Item 1A.	Risk Factors	16
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	16
	Item 3.	Defaults Upon Senior Securities	16
	Item 4.	Submission of Matters to a Vote of Security Holders	16
	Item 5.	Other Information	16
	Item 6.	Exhibits	16
	Signatures		18

PART I

FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

GRANDE COMMUNICATIONS HOLDINGS, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

	December 31, 2007			March 31, 2008
				(unaudited)
Assets
Current assets:
Cash and cash equivalents, net of restricted cash of $3,129	$	48,138		$	46,487
Accounts receivable, net of allowance for doubtful accounts of $1,138 and $1,109		17,793			15,875
Prepaid expenses		1,867			2,820
Total current assets		67,798			65,182
Property, plant and equipment, net of accumulated depreciation of $313,526 and $327,498		249,310			243,131
Intangible assets, net of accumulated amortization of $1,417 and $1,478		1,398			1,337
Debt issue costs, net		4,255			3,992
Restricted cash and other assets		3,482			3,484
Total assets	$	326,243		$	317,126
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	13,809		$	13,376
Accrued liabilities		15,328			13,117
Accrued interest payable		6,755			13,510
Deferred revenue		6,996			7,313
Current portion of long-term debt		1,612			1,674
Current portion of capital lease obligations		3,548			3,175
Total current liabilities		48,048			52,165
Deferred rent		1,228			1,228
Deferred revenue		4,377			4,412
Capital lease obligations, net of current portion		13,592			13,112
Long term debt, net of current portion		189,994			189,851
Total liabilities		257,239			260,768
Stockholders’ equity:
Senior series preferred stock:
Series G preferred stock, $0.001 par value per share; 34,615,384 shares authorized, 34,615,330 shares issued and outstanding; liquidation preference of $134,999,787		35			35
Junior series preferred stock:
Series A preferred stock, $0.001 par value per share; 232,617,839 shares authorized, 232,617,838 shares issued and outstanding; liquidation preference of $232,617,838		233			233
Series B preferred stock, $0.001 par value per share; 20,833,333 shares authorized, issued and outstanding; liquidation preference of $25,000,000		21			21
Series C preferred stock, $0.001 par value per share; 30,000,000 shares authorized, 17,005,191 shares issued and outstanding; liquidation preference of $20,406,229		17			17
Series D preferred stock, $0.001 par value per share; 115,384,615 shares authorized, 114,698,442 shares issued and outstanding; liquidation preference of $149,107,975		115			115
Series E preferred stock, $0.001 par value per share; 8,000,000 shares authorized, 7,999,099 shares issued and outstanding; liquidation preference of $19,997,748		8			8
Series F preferred stock, $0.001 par value per share; 12,307,792 shares authorized, 11,758,278 shares issued and outstanding; liquidation preference of $15,285,761		12			12
Series H preferred stock, $0.001 par value per share; 30,000,000 shares authorized, no shares issued and outstanding		—			—
Common stock, $0.001 par value per share; 828,835,883 shares authorized, 13,175,940 and 13,252,572 shares issued, 12,675,940 and 12,752,572 shares outstanding, as of December 31, 2007 and March 31, 2008, respectively		13			13
Additional paid-in capital		509,312			509,430
Treasury stock, at cost		(5	)		(5	)
Accumulated deficit		(440,757	)		(453,521	)
Total stockholders’ equity		69,004			56,358
Total liabilities and stockholders’ equity	$	326,243		$	317,126

The accompanying notes are an integral part of these condensed consolidated financial statements.

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GRANDE COMMUNICATIONS HOLDINGS, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(In thousands, except per share data)

	Three Months Ended March 31,
	2007			2008
Operating revenues	$	48,395		$	49,886
Operating expenses:
Cost of revenues (excluding depreciation and amortization)		16,528			16,855
Selling, general and administrative		21,505			22,790
Provision for doubtful accounts		513			624
Depreciation and amortization		13,044			14,669
Total operating expenses		51,590			54,938
Operating loss		(3,195	)		(5,052	)
Other income (expense):
Interest income		433			329
Interest expense, net of capitalized interest		(6,669	)		(7,792	)
Gain (loss) on sale/disposal of assets		(25	)		30
Total other income (expense)		(6,261	)		(7,433	)
Loss before income tax expense		(9,456	)		(12,485	)
Income tax expense		(280	)		(279	)
Net loss	$	(9,736	)	$	(12,764	)
Basic and diluted net loss per share	$	(0.77	)	$	(1.00	)
Basic and diluted weighted average number of common shares outstanding		12,592			12,733

The accompanying notes are an integral part of these condensed consolidated financial statements.

2

GRANDE COMMUNICATIONS HOLDINGS, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(In thousands)

	Three Months Ended March 31,
	2007			2008
Cash flows from operating activities:
Net loss	$	(9,736	)	$	(12,764	)
Adjustment to reconcile net loss to net cash provided by operating activities:
Depreciation		12,981			14,608
Amortization of intangible assets		63			61
Amortization of deferred financing costs		252			263
Provision for doubtful accounts		513			624
Amortization of debt discounts/premiums		305			299
Non-cash compensation expense		117			113
Net (gain) loss on sale/disposal of assets		25			(30	)
Changes in operating assets and liabilities:
Accounts receivable		(500	)		1,294
Prepaid expenses and other assets		(877	)		(955	)
Accounts payable		(140	)		100
Accrued liabilities and interest payable		4,047			4,544
Deferred revenue		508			440
Deferred rent		(4	)		—
Net cash provided by operating activities		7,554			8,597
Cash flows from investing activities:
Purchases of property, plant and equipment		(7,978	)		(8,545	)
Proceeds from sale of assets		86			84
Proceeds from sales tax refunds		1,130			—
Net cash used in investing activities		(6,762	)		(8,461	)
Cash flows from financing activities:
Payments of long-term debt and capital lease obligations		(1,275	)		(1,259	)
Net borrowings (repayments) on zero-balance cash account		379			(533	)
Other financing activity		—			5
Net cash used in financing activities		(896	)		(1,787	)
Net change in cash and cash equivalents		(104	)		(1,651	)
Cash and cash equivalents, beginning of period		43,948			48,138
Cash and cash equivalents, end of period	$	43,844		$	46,487
Non-cash investing and financing activity:
Capital lease obligations	$	—		$	26

The accompanying notes are an integral part of these condensed consolidated financial statements.

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GRANDE COMMUNICATIONS HOLDINGS, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. Background and Basis of Presentation

The primary business of Grande Communications Holdings, Inc. and its consolidated subsidiary, Grande Communications Networks, Inc. (collectively the “Company”) is providing a bundled package of cable television (“video”), telephone (“voice”), and broadband Internet (“HSD”) and other services to residential and small and medium-sized business customers in Texas. The Company provides these services in seven markets in the state of Texas using local broadband networks that the Company constructed. In addition, the Company provides broadband transport services to medium and large enterprises and communications carriers.  The Company also provides network services by offering telecommunications and HSD products to medium and large enterprises and communications carriers within wholesale markets.

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the rules and regulations of the Securities and Exchange Commission (the “SEC”) that permit reduced disclosure for interim periods. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, these condensed consolidated financial statements contain all adjustments, consisting of normal, recurring adjustments necessary for a fair presentation of the financial position of the Company as of March 31, 2007 and 2008, and for the three months ended March 31, 2007 and 2008. Operating results for the three months ended March 31, 2008 are not necessarily indicative of the results that may be expected for the year ended December 31, 2008. The December 31, 2007 balance sheet is derived from the audited financial statements for the year ended December 31, 2007. These interim financial statements should be read in conjunction with the consolidated financial statements for the year ended December 31, 2007 and notes thereto, together with management’s discussion and analysis of financial condition and results of operations contained in the Company’s Annual Report for the year ended December 31, 2007 on Form 10-K filed with the SEC on March 31, 2008.

The consolidated financial statements include the accounts of Grande Communications Holdings, Inc.’s wholly owned subsidiary.  All inter-company transactions and balances have been eliminated. Preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying disclosures. These estimates are based on management’s best knowledge of current events and actions the Company may undertake in the future. Actual results may ultimately differ from these estimates.

Newly Adopted Accounting Pronouncements

In September 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 157, Fair Value Measurements (“SFAS 157”). SFAS 157 defines fair value, establishes a framework for measuring fair value in applying generally accepted accounting principles, and expands disclosures about fair value measurements. SFAS 157 applies whenever an entity is measuring fair value under other accounting pronouncements that require or permit fair value measurement. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, however in February 2008, the FASB issued FASB Staff Position No. 157-2, Effective Date of FASB Statement No. 157 (“FSP 157-2”). FSP 157-2 provides a one year deferral of the effective date of SFAS 157 for nonfinancial assets and nonfinancial liabilities, except for certain items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually).  SFAS 157 was effective for the Company on January 1, 2008. The adoption of SFAS 157 did not have an impact on the consolidated financial statements because the Company has no financial or nonfinancial assets or liabilities recorded at fair value on a recurring basis.

In February 2006, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities, including an amendment of FASB Statement No. 115 (“SFAS 159”). SFAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. SFAS 159 does not affect any existing accounting literature that requires certain assets and liabilities to be carried at fair value. SFAS 159 was effective for the Company on January 1, 2008. The Company did not apply the fair value option therefore; SFAS 159 did not have an impact on the consolidated financial statements.

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2. Reclassifications

Certain reclassifications have been made to the condensed consolidated statements of operations for the three months ended March 31, 2007 to conform to the classifications used in the current period. In the condensed consolidated statements of operations, for the three months ended March 31, 2007, Texas gross margin tax expense of $0.3 million and provision for doubtful accounts of $0.5 million, previously recorded in the line item “selling, general and administrative,” have been reclassified as “income tax expense” and “provision for doubtful accounts,” respectively, for such periods.

3. Accrued Liabilities

Accrued liabilities consist of the following:

	December 31, 2007		March 31, 2008
	(in thousands)
Accrued property taxes	$	4,405	$	1,289
Accrued compensation		2,801		3,403
Accrued taxes—other		2,662		3,048
Accrued programming		2,587		2,943
Accrued other		2,873		2,434
Accrued liabilities	$	15,328	$	13,117

4. Income Taxes

The Company utilizes the liability method of accounting for income taxes, as set forth in Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes. Under the liability method, deferred taxes are determined based on the difference between the financial and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse.

The Company’s effective income tax rate for the interim periods presented is based on management’s estimate of the Company’s effective tax rate for the applicable year and differs from the federal statutory income tax rate primarily due to the impact of the change in state tax law, nondeductible permanent differences, state income taxes and changes in the valuation allowance for deferred income taxes. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.

5. Long Term Debt

14% Senior Secured Notes

Long-term Debt. In March 2004, the Company completed a private placement offering for 136,000 units, each consisting of (1) $1,000 of senior notes due April 1, 2011 (“senior notes”) and (2) a warrant to purchase 100.336 shares of common stock. The senior notes accrue interest at the rate of 14% per annum with the interest payable semi-annually in cash in arrears on April 1 and October 1. The senior notes are governed by the indenture between the Company and U.S. Bank National Association, as Indenture Trustee, dated March 23, 2004 (“Indenture”).

In March 2006 and July 2007, the Company raised net proceeds of approximately $30.5 million and $25.8 million, respectively, in a private placement of an additional $32 million and $25 million, respectively, in aggregate principal amount of senior notes. These additional senior notes were issued under the Indenture and are part of the same series of senior notes as those issued in March 2004.

Grande Communications Holdings, Inc.’s subsidiary, Grande Communications Networks, Inc., (the “Subsidiary Guarantor”), has unconditionally guaranteed, jointly and severally, the payment of the principal, premium and interest (including any additional interest on the senior notes) on a senior secured basis. Grande Communications Holdings, Inc. is a holding company with no independent assets and conducts all of its operations through a subsidiary and is therefore dependent on the receipt of funds from its subsidiary to pay the interest and principal on the senior notes.  Limitations or restrictions contained in the Indenture could adversely affect the Company’s ability to make such payments on the senior notes.

The senior notes and the Subsidiary Guarantor’s guarantees thereof are secured by a first priority perfected security interest, subject to certain permitted encumbrances, in substantially all of the subsidiary’s property and assets, including substantially all of its property, plant and equipment.

5

6. Contingencies

Legal Proceedings

The Company is subject to litigation in the normal course of business. However, there are no pending proceedings that are currently anticipated to have a material adverse effect on the Company’s business, financial condition or results of operations.

Insurance

The Company carries a broad range of insurance coverage, including property, business, auto liability, general liability, directors and officers, workers’ compensation and an umbrella policy. The Company has not incurred significant claims or losses on any of these insurance policies.

The Company utilizes self-insurance with respect to employee medical coverage. Such self-insurance is provided in connection with a plan that includes certain stop-loss coverage on a per employee basis. The Company estimates the liability for claims based on Company experience. Additionally, the Company utilizes self-insurance for its distribution line equipment. Management believes that the risk of loss related to this equipment is not significant.

7. Subsequent Events

Interest Payment

In April 2008, the Company paid $13.5 million of interest due on the senior notes.

6

ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This management’s discussion and analysis includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We intend our forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in these sections. When used in this report, the words “anticipate,” “believe,” “estimate,” “expect,” “should,” “intend,” “plan” and similar expressions as they relate to Grande Communications Holdings, Inc. or our management are intended to identify these forward-looking statements. All statements by us regarding our expected future financial position and operating results, our business strategy, our financing plans, forecasted trends relating to the markets in which we operate and similar matters are forward-looking statements. We cannot assure you that our expectations expressed or implied in these forward-looking statements will turn out to be correct. Our actual results could be materially different from our expectations because of various factors, including those discussed below and under the caption “Item 1A Risk Factors” in our Annual Report on Form 10-K, filed with the SEC on March 31, 2008. Any forward-looking statements contained in this quarterly report reflect our current views with respect to future events and are subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. We have no intention, and disclaim any obligation, to update or revise any forward-looking statements, whether as a result of new information, future results or otherwise.

The following management’s discussion and analysis should be read in conjunction with our Condensed Consolidated Financial Statements and Notes thereto included herewith and with our Management’s Discussion and Analysis of Financial Condition and Results of Operation and Consolidated Financial Statements and Notes thereto for the three-year period ended December 31, 2007, included in our Annual Report on Form 10-K filed with the SEC on March 31, 2008.

Unless we indicate otherwise, references below to “we,” “us,” “our,” “the Company” and “Grande” mean Grande Communications Holdings, Inc. and our consolidated subsidiary, Grande Communications Networks, Inc., taken as a whole.

Overview

Grande’s primary business is providing a bundled package of cable television (“video”), telephone (“voice”), and broadband Internet (“HSD”) and other services to residential and small and medium-sized business customers in Texas.  We provide these services in seven markets in the state of Texas using local broadband networks that we constructed. We refer to the homes and businesses that our network is capable of providing services to as “marketable homes passed.” As of March 31, 2007 and 2008, we had the ability to market services to 338,852 and 340,554 distinct homes and businesses over our networks, respectively, and had 139,226 and 147,267 residential and business customers, respectively. Our operating revenues were $48.4 million and $49.9 million for the three months ended March 31, 2007 and 2008, respectively.

Grande was founded in October 1999 and was funded with $232 million of initial equity capital to pursue a retail strategy of constructing broadband networks in order to offer bundled video, voice, and HSD services to customers. Operating revenues from bundled services were $37.8 million and $41.1 million for the three months ended March 31, 2007 and 2008, respectively.  We have continued to grow our bundled services to commercial business customers by 22% to $5.5 million during the three months ended March 31, 2008 compared to $4.5 million during the three months ended March 31, 2007.

We believe that an important measure of our growth potential is the number of marketable homes passed by our networks and the marketable homes we are able to pass in the future in the markets in which we currently operate. Marketable homes passed are the number of residential and business units, such as single residential homes, apartments and condominium units, passed by our networks, other than those we believe are covered by exclusive arrangements with other providers of competing services. Since 2001, we have grown our marketable homes passed through the construction of our networks. The expansion of our networks has, in turn, allowed us to pursue a retail strategy of offering bundled video, voice and HSD services to residential and business customers. We have derived an increasing percentage of our revenues from our bundled services and we expect this trend to continue. Because of our local networks and existing fixed infrastructure in the markets in which we currently operate, we believe we can continue to grow our business without incurring the significant capital investment required to launch operations in new markets.

In addition, we have leveraged our retail metro network build-out with the 2003 acquisition of a long haul fiber optic network, primarily located in Texas, to allow us to provide broadband transport services to medium and large enterprises and communications carriers. Operating revenues for broadband transport services were $2.4 million and $2.6 million for the three months ended March 31, 2007 and 2008, respectively.

7

In July 2000, when our network construction was still in a very early stage, we acquired Thrifty Call, which had an established telephone and data network that served as the platform for the provisioning of residential voice and HSD services and that still provides wholesale network services to medium and large enterprises and communications carriers in the wholesale market. Operating revenues for network services were $8.2 million and $6.2 million for the three months ended March 31, 2007 and 2008, respectively.

Our network services are primarily provided using our existing infrastructure and personnel with minimal incremental operating costs and capital expenditures for maintenance. By leveraging our brand, communications infrastructure, voice and data volume, and personnel that predominately support our core retail business and its products we have gained efficiencies of scale by offering telecommunications and HSD products into wholesale markets.

We have incurred net losses for the past five years and expect to continue to incur net losses in the future. However, we had positive Adjusted EBITDA during the past five years as well as for each of the three months ended March 31, 2007 and 2008. See “Non-GAAP Financial Measures” below for a discussion of this non-GAAP measure of our operating performance as well as our use of Adjusted EBITDA.

Our financial results depend upon many factors that significantly affect our results of operations including, without limitation:

• the availability of, and our ability to obtain additional funding, if necessary,

• our ability to obtain enough customers for our services to offset the costs of operating our networks, and

• increasing programming and other costs.

Recent Developments

On January 18, 2008, we issued a press release announcing that our board of directors has authorized the Company to explore all of its strategic alternatives to enhance shareholder value.  The board of directors will work with the Company’s management team and its legal and financial advisors to evaluate the Company’s available alternatives.  We have engaged Waller Capital Partners LLC to assist us in exploring strategic alternatives.  There can be no assurance that the exploration of strategic alternatives will result in the Company adopting or approving any strategic alternative.  We undertake no obligation to make any further announcements regarding the exploration of strategic alternatives unless and until a final decision is made.

Availability of Capital

As described more fully under “Liquidity and Capital Resources” below, our current principal sources of capital going forward will primarily be cash on hand and cash flow from operations. If we do not continue to increase the number of customers and the average prices received for our services, cash flow from operations will be adversely effected and cash on hand will decline.

Marketable Homes Passed, Customers and Connections

We report marketable homes passed as the number of residential and business units, such as single family residence homes, apartments and condominium units, passed by our networks other than those we believe are covered by exclusive arrangements with other providers of competing services. As of March 31, 2007 and 2008, our networks passed 338,852 and 340,554 marketable homes, respectively, and we had 139,226 and 147,267 residential and business customers, respectively.

Because we deliver multiple services to our customers, we report our total number of connections for video, voice, HSD and other services in addition to our total number of customers. We count each video, voice, HSD and other service purchase as a separate connection. For example, a single customer who purchases video, voice and HSD service would count as three connections. Similarly, a single customer who purchases our HSD service and our voice service would count as two connections. We do not record the purchase of long distance telephone service by a local telephone customer or digital cable services by an analog cable customer as additional connections. However, we do record each purchase of an additional telephone line by a local telephone customer as an additional connection. As of March 31, 2007 and 2008, we had 300,790 and 315,483 connections, respectively.

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Operating Data —Bundled Services

	Quarter Ended
	March 31, 2007		June 30, 2007		September 30, 2007		December 31, 2007		March 31, 2008
Operating Data:
Marketable homes passed		338,852		340,000		339,678		340,058		340,554
Customers		139,226		139,558		144,889		145,675		147,267
Number of connections:
Video		95,585		96,582		98,047		99,453		101,481
Voice		116,679		116,204		114,670		114,303		115,635
HSD and other		88,526		90,731		93,353		95,125		98,367
Total connections		300,790		303,517		306,070		308,881		315,483
Average monthly revenue per:
Customer – bundled services	$	91.07	$	92.80	$	91.12	$	90.64	$	93.49
Video connection		54.56		55.98		54.80		55.78		57.81
Voice connection		40.04		40.48		40.88		40.34		40.60
HSD and other connection		31.95		31.73		31.58		32.27		33.31

Results of Operations

The following table sets forth financial data as a percentage of operating revenues.

	Three Months Ended March 31,
	2007			2008
Consolidated Financial Data:
Operating revenues:
Video		32	%		35	%
Voice		29			28
HSD and other		17			19
Bundled services		78			82
Broadband transport services		5			5
Network services		17			13
Total operating revenues		100			100
Operating expenses:
Cost of revenues (excluding depreciation and amortization)		34			34
Selling, general and administrative and provision for doubtful accounts		45			47
Depreciation and amortization		27			29
Total operating expenses		106			110
Operating loss		(6	)		(10	)
Other income (expense):
Interest income		1			1
Interest expense, net of capitalized interest		(14	)		(16	)
Total other expense		(13	)		(15	)
Loss before income tax expense		(19	)		(25	)
Income tax expense		(1	)		(1	)
Net loss		(20	)%		(26	)%

Three Months Ended March 31, 2007 Compared to Three Months Ended March 31, 2008

Operating Revenues. Our operating revenues for the three months ended March 31, 2007 and 2008 were $48.4 million and $49.9 million, respectively, an increase of $1.5 million, or 3%. This increase was driven primarily by a $3.3 million increase in bundled services revenue and a $0.2 million increase in broadband transport services revenue, partially offset by a $2.0 million decrease in our revenues from network services.

9

Operating revenues for our bundled services for the three months ended March 31, 2007 and 2008 were $37.8 million and $41.1 million, respectively, an increase of $3.3 million, or 9%. The increased revenues from bundled services were primarily due to a 5% growth in the number of connections, from 300,790 as of March 31, 2007 to 315,483 as of March 31, 2008, and, to a lesser extent, from the cable rate increases described below.  The additional connections and revenues resulted primarily from the continued increase in penetration of existing marketable homes and businesses and to a lesser extent, sales to new marketable homes built during the period from April 1, 2007 through March 31, 2008.

Operating revenues for our video services for the three months ended March 31, 2007 and 2008 were $15.5 million and $17.4 million, respectively, an increase of $1.9 million, or 12%. Approximately 22% of the $1.9 million increase in video revenues was due to our annual rate increase, which occurred in January 2008, with the remainder due to increased connections and an increased number of customers adding premium services and advanced services, such as HD and DVR. Video services to our commercial business customers increased $0.1 million, or 50%, to $0.3 million during the three months ended March 31, 2008 compared to $0.2 million during the three months ended March 31, 2007.

Operating revenues for our voice services for the three months ended March 31, 2007 and 2008 were flat at $14.0 million.  While we have experienced a decrease in residential voice services due to competitive pressures and changing consumer preferences, as more customers choose to adopt VoIP products or use their wireless phones as their primary phone line, our voice services to commercial business customers have increased $0.3 million, or 9%, to $3.6 million during the three months ended March 31, 2008 compared to $3.3 million during the three months ended March 31, 2007.

Operating revenues for our HSD and other services for the three months ended March 31, 2007 and 2008 were $8.3 million and $9.7 million, respectively, an increase of $1.4 million, or 17%, primarily due to an 11% increase in the number of connections as well as a 4% increase in average monthly revenue per connection as customers choose higher speed service offerings.  HSD services to our commercial business customers increased $0.6 million, or 60%, to $1.6 million during the three months ended March 31, 2008 compared to $1.0 million during the three months ended March 31, 2007.

Operating revenues for our network services for the three months ended March 31, 2007 and 2008 were $8.2 million and $6.2 million, respectively, a decrease of $2.0 million, or 24%.  The decrease was primarily related to a decrease in volume from transmission services to carriers and other telecommunications companies.  Common carrier traffic routed to us for termination is largely dependent on traffic routed to our common carrier customers by their customers. Competitive pricing pressures, business consolidations, and changing consumer preferences for voice services continue to evolve in the markets served by our other common carrier customers. If, as a result, our customers’ traffic is reduced, or if their competitors’ costs to terminate or originate traffic are reduced, our traffic will also likely be reduced.

Cost of Revenues. Our cost of revenues for the three months ended March 31, 2007 and 2008 were $16.5 million and $16.9 million, respectively, an increase of $0.4 million, or 2%. Cost of revenues as a percentage of revenues was flat at 34% for each of the three months ended March 31, 2007 and 2008.  Cost of revenues related to video services increased approximately $1.3 million while access fees and other fees that we pay to other carriers to carry calls outside our networks as well as national directory assistance fees decreased approximately $1.0 million.  The increase in direct costs of video services is primarily due to programming costs increases, which have been increasing on an aggregate basis due to an increase in connections and on a per connection basis due to an increase in costs per channel.  We expect this trend to continue and may not be able to pass these higher costs on to customers because of competitive factors, which could adversely affect our operations.  The decrease in access and other carrier fees related to costs that are variable usage-based costs that decrease as customer usage decreases.

Selling, General and Administrative Expense. Our selling, general and administrative expense for the three months ended March 31, 2007 and 2008 was $21.5 million and $22.8 million, respectively, an increase of $1.3 million, or 6%. Selling, general and administrative expense increased as a percentage of revenues from 45% to 47%. Increases related to employee benefits, primarily healthcare costs, network repairs and maintenance, utilities, software licensing fees, and other miscellaneous expenses that totaled approximately $1.9 million but such increases were partially offset by decreases in property tax and employee compensation, reductions in contract labor charges and other miscellaneous expenses that totaled approximately $0.6 million. For the year ending December 31, 2008, we expect our selling, general and administrative expense to decrease as compared to the year ended December 31, 2007 as we continue to focus on cost reductions and gain efficiencies.

Depreciation and Amortization Expense. Our depreciation and amortization expense for the three months ended March 31, 2007 and 2008 was $13.0 million and $14.7 million, respectively, an increase of $1.7 million, or 13%. The increase was partially due to a 2007 sales tax refund of $0.7 million that was applied as a reduction to depreciation expense during the three months ended March 31, 2007.  The remaining increase is related to property, plant and equipment additions during the period from April 1, 2007 through March 31, 2008, primarily for customer premise equipment, long haul fiber optic network upgrades and capitalized labor expenses.  Partially offsetting the increase related to these additions were decreases in depreciation expense related to sales and dispositions as well as certain assets that became fully depreciated during the period from April 1, 2007 through March 31, 2008.

10

Interest Expense. For the three months ended March 31, 2007 and 2008, our interest expense, which includes interest incurred net of capitalized interest, was $6.7 million and $7.8 million, respectively, an increase of  $1.1 million, or 16%. Our interest expense increased primarily due to the private placement of an additional $25.0 million of senior notes in the third quarter of 2007.

Non-GAAP Financial Measures

We measure our operating performance on earnings before interest income, interest expense, income taxes, depreciation and amortization, referred to as “EBITDA.” EBITDA is not a measure of financial performance under GAAP. We believe EBITDA is often a useful measure of a company’s operating performance and is a significant basis used by our management to measure the operating performance of our business.

Because we have funded the build-out of our networks by raising and expending large amounts of capital, our results of operations reflect significant charges for depreciation, amortization, and interest expense. EBITDA, which excludes this information, provides helpful information about the operating performance of our business, apart from the expenses associated with our physical plant or capital structure. A limitation of this measure, however, is that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in our businesses. We manage all areas of our business to generate positive EBITDA, and when we have choices about the market or area in which to best deploy our resources we generally direct our resources towards the network construction that is expected to generate the most EBITDA. EBITDA is frequently used as a basis for comparing businesses in our industry, although our measure of EBITDA may not be comparable to similarly titled measures of other companies. EBITDA does not purport to represent operating loss or cash flow from operating activities, as those terms are defined under GAAP, and should not be considered as an alternative to those measurements as an indicator of our performance.

The Company believes non-cash stock-based compensation is similar to amortization and interest expense, in that it is more useful to report EBITDA net of this amount to better measure operating performance in comparison to prior periods. However, because of the nature of these charges, the Company is referring to EBITDA, net of non-cash stock-based compensation charges as “Adjusted EBITDA.”

Adjusted EBITDA was $9.5 million and $9.8 million during the three months ended March 31, 2007 and 2008, respectively, an increase of $0.3 million, or 3%. The increase was primarily due to a $1.5 million increase in revenues partially offset by a $1.0 million combined increase in provision for doubtful accounts and selling, general and administrative expenses, excluding stock-based compensation and franchise tax benefit, and a $0.3 million increase in costs of revenues.

Because a significant portion of our cost of revenues and overhead expenses are generally fixed in nature, increasing revenue should result in further increases in EBITDA/Adjusted EBITDA and in EBITDA/Adjusted EBITDA as a percentage of revenues. To the extent the increased revenues are the result of adding residential and business customers for our bundled services, which have higher gross margins than network services, EBITDA/Adjusted EBITDA should increase more quickly on a percentage basis.

The reconciliation of EBITDA/Adjusted EBITDA to net loss is as follows:

	Three Months Ended March 31,
	2007			2008
	(in thousands)
Net loss, as reported	$	(9,736	)	$	(12,764	)
Add back non-EBITDA/Adjusted EBITDA items included in net loss:
Interest income		(433	)		(329	)
Interest expense, net of capitalized interest		6,669			7,792
Income tax expense		280			279
Franchise tax benefit		(411	)		—
Depreciation and amortization		13,044			14,669
EBITDA		9,413			9,647
Stock-based compensation expense		117			113
Adjusted EBITDA	$	9,530		$	9,760

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Liquidity and Capital Resources

Sources and Uses of Funds

Since inception, we have been funded primarily with private equity investments and issuances of debt securities. Our current primary sources of liquidity are cash on hand and cash flows from operating activities.

As of March 31, 2008, we had total cash and cash equivalents of $46.5 million and $203.0 million of long-term debt and capital lease obligations outstanding, net of current portion, and net of discounts and premiums of $4.7 million. In April 2008, we paid $13.5 million of interest due on our senior notes.

As of March 31, 2008, we had net working capital of $13.0 million, compared to net working capital of $19.8 million as of December 31, 2007.  The $6.8 million decrease in working capital resulted primarily from a $6.8 million increase in accrued interest payable as well as a $2.6 million decrease in current assets partially offset by a $2.6 million net decrease in other current liabilities.

Provided that we meet our cash flow projections in our current business plan, we expect that our available cash and cash equivalents and cash generated from operations will be sufficient to fund our existing operations, planned capital spending and other commitments over the next twelve months. We believe that we will not require additional financing and that we will manage our cash position above $20 million in accordance with the covenant set forth in the Indenture over the next twelve months. This covenant prohibits our making capital expenditures relating to the build-out of new or additional parts of our network if such expenditures would result in us having less than $20 million in cash and cash equivalents. Our business plan is based on estimates regarding expected future costs and expected revenues. Our costs may exceed or our revenues may fall short of our estimates, our estimates may change, and future developments may affect our estimates. Any of these factors may increase our need for funds, which would require us to seek additional financing.

We may need additional financing to fund our operations or to undertake initiatives not contemplated by our business plan or obtain additional cushion against possible shortfalls. We also may pursue additional financing as opportunities arise. Future financings may include a range of different sizes or types of financing, including the sale of additional debt or equity securities. However, we may not be able to raise additional funds on favorable terms or at all. Our ability to obtain additional financing depends on several factors, including future market conditions; our success or lack of success in penetrating our markets and growing our overall income; our future creditworthiness; and restrictions contained in agreements with our investors or lenders, including the restrictions contained in the Indenture. These financings could increase our level of indebtedness or result in dilution to our equity holders. Additionally, we can call our existing senior notes at any time giving us the near term ability to refinance our bonds in the event better pricing and terms were available to us in the market.

Cash Flows from Operating Activities

Net cash provided by operating activities totaled $7.6 million and $8.6 million for the three months ended March 31, 2007 and 2008, respectively. The $1.0 million increase in net cash provided by operating activities primarily reflects a $3.2 million increase in cash collected from customers partially offset by a $2.3 million increase in payments to vendors and employees. The net cash flow activity related to operations consisted primarily of our operating results adjusted by changes in operating assets and liabilities and non-cash transactions including:

• depreciation, amortization and accretion expense;

• non-cash compensation expense;

• non-cash interest expense;

• provision for doubtful accounts; and

• (gain) loss on sale/disposal of assets.

Depreciation and amortization for the three months ended March 31, 2007 and 2008 was $13.0 million and $14.7 million, respectively. Other non-cash charges for the three months ended March 31, 2007 and 2008 were $1.2 million and $1.3 million, respectively.

As of March 31, 2008, we had $13.5 million in accrued interest payable related to the interest due on our senior notes, which was subsequently paid on April 1, 2008.

Cash Flows from Investing Activities

Our net cash used in investing activities for the three months ended March 31, 2007 and 2008 was $6.8 million and $8.5 million, respectively. Cash flows used in investing activities for the three months ended March 31, 2007 and 2008 consisted primarily of $8.0 million and $8.5 million in property, plant and equipment purchases, respectively, discussed below partially offset by $1.1 million proceeds from sales tax refunds during the three months ended March 31, 2007 and $0.1 million proceeds from sale of assets during both the three months ended March 31, 2007 and 2008.

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Cash Flows from Financing Activities

Our net cash used in financing activities for the three months ended March 31, 2007 and 2008 was $0.9 million and $1.8 million, respectively. Cash flows from financing activities for the three months ended March 31, 2007 and 2008 consisted of $1.3 million in payments on long-term debt and capital leases as well as $0.4 million net borrowings and $0.5 million net repayments, respectively, on zero-balance bank cash accounts.

Capital Expenditures

We had capital expenditures of approximately $8.0 million and $8.5 million, including capitalized interest, during the three months ended March 31, 2007 and 2008, respectively. These capital expenditures relate to: network construction; initial installation costs; the purchase of customer premise equipment, such as cable set-top boxes and cable modems; corporate and network equipment, such as switching and transport equipment; and billing and information systems.  The Indenture governing our senior notes prohibits us from making capital expenditures when the aggregate amount of cash and cash equivalents held by us (after giving effect to such planned capital expenditure) would be less than $20 million.

During the year ending December 31, 2008, the Company intends to manage its capital expenditures in accordance with the covenant set forth in the Indenture to ensure that cash is not less than $20 million.

Contractual Obligations and Commercial Commitments

During the three months ended March 31, 2008, our aggregate contractual obligations decreased approximately $2.6 million compared to those previously described in Part II, Item 7 included in Grande’s Annual Report on Form 10-K for the year ended December 31, 2007, primarily as a result of $3.2 million in payments on equipment financing, capital and operating leases and maintenance and purchase obligations partially offset by increases in obligations of $0.6 million in new vehicle and office equipment operating leases and computer capital leases.

We are obligated to make payments under a variety of contracts and other commercial arrangements, including the following:

Long-term Debt and Equipment Financing. In March 2004, the Company completed a private placement offering for 136,000 units, with each unit consisting of (1) $1,000 of senior notes and (2) a warrant to purchase 100.336 shares of common stock. The senior notes mature on April 1, 2011 and accrue interest at the rate of 14% per annum with the interest payable semi-annually in cash in arrears on April 1 and October 1.  In March 2006 and July 2007, we raised net proceeds of approximately $30.5 million and $25.8 million, respectively, in a private placement of an additional $32 million and $25 million, respectively, in aggregate principal amount of senior notes. These additional senior notes were issued under the Indenture and are part of the same series of senior notes as those issued in March 2004.

Our subsidiary, Grande Communications Networks, Inc., (the “Subsidiary Guarantor”), has unconditionally guaranteed, jointly and severally, the payment of the principal, premium and interest (including any additional interest on the senior notes) on a senior secured basis.

The senior notes and the Subsidiary Guarantor’s guarantees thereof are secured by a first priority perfected security interest, subject to certain permitted encumbrances, in substantially all of our subsidiary’s property and assets, including substantially all of its property, plant and equipment.

The senior notes may be redeemed, at our election, as a whole or from time to time in part at any time upon not less than 10 nor more than 60 days’ notice to each holder of senior notes to be redeemed, subject to the conditions and at the redemption prices (expressed as percentages of principal amount) set forth below, together with accrued and unpaid interest and Liquidating Damages (as defined in the Indenture), if any, to the applicable redemption date.

Year	Percentage
2008		107.00	%
2009		103.50	%
2010 and thereafter		100.00	%

If we experience specific kinds of change of control events, each holder of senior notes may require us to repurchase all or any portion of such holder’s senior notes at a purchase price equal to 101% of the principal amount of the senior notes, plus accrued and unpaid interest to the date of repurchase.

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The Indenture contains covenants that, among other things, limit our ability to:

• incur additional indebtedness, issue disqualified capital stock (as defined in the Indenture) and, in the case of our restricted subsidiaries, issue preferred stock;

• create liens on our assets;

• pay dividends on, redeem or repurchase our capital stock or make other restricted payments;

• make investments in other companies;

• enter into transactions with affiliates;

• enter into sale and leaseback transactions;

• sell or make dispositions of assets;

• place restrictions on the ability of our restricted subsidiaries to pay dividends or make other payments to us; and

• engage in certain business activities.

In addition, the Indenture contains a covenant restricting our capital expenditures relating to the build-out of new or additional parts of our network if such expenditures would result in us having less than $20 million in cash and cash equivalents.

The Indenture also contains customary events of default, including nonpayment of principal or interest, violations of covenants, cross default and cross acceleration to certain other indebtedness and material judgments and liabilities.

During 2007, we completed equipment financing of $4.1 million with a term of 24 months, which was utilized for the purchase of network equipment.  The financing is secured by the network equipment purchased with the proceeds of the borrowing and bears interest at an effective annual rate of approximately 15.3% with monthly payments equal to 4.2% multiplied by the total amount borrowed.  This financing is permitted under the Indenture governing the senior notes.

Capital Leases. We lease office and facilities space under leasing arrangements. We also have certain capital leases for customer premise equipment, telecom switching equipment, software, computers and office equipment.

Operating Leases. We lease office space, vehicles and other assets for varying periods. Leases that expire are generally expected to be renewed or replaced by other leases.

Maintenance Agreements. We have numerous agreements for the maintenance of leased fiber optic capacity.

Purchase Commitments: During January 2005, we entered into a minimum purchase agreement with a vendor for the purchase of fiber optic equipment and installation and maintenance services through January 2008. During March 2008, we entered into Amendment No. 1 to the minimum purchase agreement extending the term of the purchase commitment through December 31, 2008. If we do not make the minimum purchases through the expiration or termination of this agreement, we will be required to pay a fee of 30% of the remaining unfulfilled amount.

Our plans with respect to network construction and other capital expenditures are discussed above under the caption “Capital Expenditures.” We believe those planned expenditures do not constitute contractual obligations or binding commitments because, in general, we have the ability to accelerate or postpone construction of our networks depending upon cash availability, subject to the need to eventually complete the network in accordance with our single-family residential development agreements.

We have also entered into several employment agreements with key executives of the Company. For a discussion surrounding the terms of these agreements, please refer to “Executive Compensation” under the caption “Employment Agreements, Severance Benefits and Change in Control Provisions” included in Grande’s Annual Report on Form 10-K for the year ended December 31, 2007.

Critical Accounting Policies and Estimates

Our consolidated financial statements are prepared in accordance with accounting principles that are generally accepted in the United States. To prepare these financial statements, we must make estimates, judgments and assumptions that we believe are reasonable based upon the information available. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses as well as the disclosure of contingent assets and liabilities. We periodically evaluate our estimates and assumptions and base our estimates and assumptions on our best knowledge of current events and actions we may undertake in the future. Actual results may ultimately differ from these estimates.

There have been no material changes to the critical accounting policies and estimates previously described in Part II, Item 7 included in Grande’s Annual Report on Form 10-K for the year ended December 31, 2007.

14

Recent Accounting Pronouncements

Refer to “Recent Accounting Pronouncements” included in Management’s Discussion and Analysis of Financial Condition and Results of Operation in our Annual Report on Form 10-K for the year ended December 31, 2007.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our exposure to market risk relates primarily to changes in interest rates on our investment portfolio. Our marketable investments consist primarily of short-term fixed income securities. We invest only with high credit quality issuers and we do not use derivative financial instruments in our investment portfolio. We do not believe that a significant increase or decrease in interest rates would have a material impact on the fair value of our investment portfolio.

ITEM 4. CONTROLS AND PROCEDURES

Our management, with the participation of our Chief Executive Officer, who is our principal executive officer, and our Chief Financial Officer, who is our principal financial officer, have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) or Rule 15d-15(e), as applicable, under the Securities Exchange Act of 1934) as of March 31, 2008. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that as of March 31, 2008, our disclosure controls and procedures are effective in timely alerting them to material information relating to Grande, including its consolidated subsidiary, required to be included in this report and the other reports that we file or submit under the Securities Exchange Act of 1934.

During the three months ended March 31, 2008, there were no changes in our internal control over financial reporting that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

In designing and evaluating the disclosure controls and procedures and internal controls over financial reporting, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

15

PART II

OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are subject to litigation in the normal course of our business. However, there are no pending proceedings that are currently anticipated to have a material adverse effect on our business, financial condition or results of operations.

ITEM 1A. RISK FACTORS

There have been no material changes to the risk factors previously described in Part I, Item 1A included in Grande’s Annual Report on Form 10-K for the year ended December 31, 2007.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the three months ended March 31, 2008, we issued 76,632 shares of common stock in connection with the exercise of options with a weighted average exercise price of $0.05 per share and awarded options to purchase 529,000 shares of common stock with an exercise price of $0.05 per share. We relied on the exemption set forth in Section 4(2) of the Securities Act of 1933 in issuing these securities.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no matters submitted to a vote of security holders of Grande during the three months ended March 31, 2008.

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS

Unless designated by an asterisk indicating that such document has been filed herewith, the Exhibits listed below have been heretofore filed by the Company pursuant to Section 13 or 15(d) of the Exchange Act and are hereby incorporated herein by reference to the pertinent prior filing.

ExhibitNo.	Description
3.1	Restated Certificate of Incorporation of Grande Communications Holdings, Inc. (previously filed as exhibit 3.1 to Form 10-K dated March 31, 2006).
3.2	Bylaws of Grande Communications Holdings, Inc. (previously filed as exhibit 3.2 to Form S-1 dated May 18, 2004).
3.3	Amendment No. 1 to Bylaws of Grande Communications Holdings, Inc. (previously filed as exhibit 3.3 to Form 10-Q dated November 5, 2004).
3.4	Amendment No. 2 to Bylaws of Grande Communications Holdings, Inc. (previously filed as exhibit 3.4 to Form 10-K dated March 30, 2006).
4.1	Indenture, dated as of March 23, 2004, by and among Grande Communications Holdings, Inc., the Guarantors named therein and U.S. Bank National Association (previously filed as exhibit 4.1 to Form S-1 dated May 18, 2004).
4.2	Registration Rights Agreement, dated as of March 23, 2004, by and among Grande Communications Holdings, Inc., the Guarantors named therein, Bear, Stearns & Co. Inc. and Deutsche Bank Securities Inc. (previously filed as exhibit 4.2 to Form S-1 dated May 18, 2004).
4.3	Form of 14% Senior Secured Note due 2011 issued in connection with March 2004 offering (previously filed as exhibit 4.3 to Form S-1 dated May 18, 2004).

16

ExhibitNo.	Description
4.4	Pledge and Security Agreement, dated March 23, 2004, by and among Grande Communications Holdings, Inc., Grande Communications Networks, Inc., Grande Communications ClearSource, Inc., Grande Communications, Inc., Grande Communications Houston, Inc., Denton Telecom Holdings I, L.L.C., Denton Telecom Investors I, L.L.C, Denton Telecom Partners I, L.P., and U.S. Bank National Association (previously filed as exhibit 4.4 to Form S-1 dated May 18, 2004).
4.5	Form of 14% Senior Secured Notes due 2011 issued in connection with March 2006 private placement (previously filed as exhibit 4.5 to Form 10-K dated March 31, 2006).
4.6	Supplemental Indenture, dated as of July 18, 2007, by and among Grande Communications Holdings, Inc., the Guarantor named therein and U.S. Bank National Association (previously filed as exhibit 10.1 to Form 8-K dated July 18, 2007).
10.1*	Purchase and License Agreement by and between Grande Communications Networks, Inc. and Nortel Networks, Inc., dated as of January 24, 2005, as amended.
10.2*	Amendment to Purchase and License Agreement by and between Grande Communications Networks, Inc. and Nortel Networks, Inc., dated as of January 24, 2008.
31.1*	Certification pursuant to Section 302 of the Sabanes-Oxley Act of 2002 (18 U.S.C. Section 1350).
31.2*	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350).
32.1*	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350).

______________________________

* Filed herewith.

17

SIGNATURES

Pursuant to the requirements 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.

		Grande Communications Holdings, Inc.
		(Registrant)
Date: May 9, 2008	By:	/s/    MICHAEL L. WILFLEY
		Michael L. Wilfley
		Chief Financial Officer
		(Duly Authorized Officer and Principal Financial Officer)

18

EX-10.1

Exhibit 10.1

PURCHASE AND LICENSE AGREEMENT

This Purchase and License Agreement ("Purchase and License Agreement") is between Nortel Networks Inc. ("Nortel Networks") and Grande Communications Networks, Inc. ("Customer"), effective as of the last date signed and continuing for a period of three (3) years therefrom ("Term"). Additional terms related to Customer's purchase or license of Products or Services may be added by written agreements ("Supplements") referencing the Purchase and License Agreement, collectively referred to as the "Agreement". The Services Supplement is attached hereto and incorporated by reference.

1.   Definitions

a)   "Furnish-only" means Products, which Customer is responsible for installing.

b)   "Hardware" means a Nortel Networks machine or components.

c)   "Products" means any Hardware, Software or Third Party Vendor Items provided under this Agreement.

d)   "Services" mean the activities to be undertaken by Nortel Networks pursuant to an Order, including, but not limited to, engineering, maintenance and installation, implementation, design, consulting, business planning, network planning and analysis.

e)   "Software" means computer programs in object code form or firmware which is owned or licensed by Nortel Networks, its parent or one of its subsidiaries or affiliates, and is copyrighted and licensed, not sold. Software consists of machine-readable instructions, its components, data, audio-visual content (such as images, text, recordings or pictures) and related licensed materials including all whole or partial copies.

f)   "Statement of Work" is a document prepared by Nortel Networks and accepted by Customer via a signed Order, describing the deliverables, estimated timelines, assumptions, responsibilities and other relevant terms specific to a project and an Order. A Statement of Work shall be governed by the terms and conditions of, and constitute a part of, this Agreement.

g)   "Third Party Vendor Item" includes "Third Party Hardware" and "Third Party Software" and means any non-Nortel Networks hardware and/or software supplied to Customer under this Agreement.

2.   Orders/Volume Commitments

a)   Customer may acquire Products or Services by issuing a written purchase order signed by an authorized representative or, if Customer is enrolled in any then current Nortel Networks electronic commerce program, by submitting electronic orders (collectively, "Orders"). All Orders shall reference this Agreement and specify the quantity, price, Nortel Networks quotation number, billing instructions, identification of any Services being ordered, installation location, requested delivery dates, requested commencement date for Services, any Statement of Work, and any other special instructions. All Orders will be governed by and cannot alter the terms and conditions of this Agreement. Nortel Networks' written or electronic communication accepting the Order, shipment of Products or commencement of Services will be Nortel Networks' acceptance of Customer's Order. Orders not rejected by Nortel Networks within fifteen (15) days from Order receipt shall be deemed accepted.

b)   If Customer cancels an Order, Customer will be invoiced in accordance with the following:  (i) cancellations that occur between sixty (60) up to thirty-six (36) days prior to the earliest scheduled Product ship date will result in a cancellation fee of ten percent (10%) of the total price of such Order; (ii) cancellations that occur between thirty-five (35) up to fourteen (14) days prior to the earliest scheduled Product ship date will result in a cancellation fee of fifteen percent (15%) of the total price of such Order; and (iii) cancellations that occur less than fourteen (14) days prior to the earliest scheduled Product ship date will result in a cancellation fee of twenty-five percent (25%) of the total price of such Order. Customer may cancel an Order sixty (60) calendar days prior to the earliest scheduled ship date without incurring a cancellation fee. Orders may not be cancelled after shipment of any Product or commencement of any Service under an Order. Customer shall notify Nortel Networks in writing in the event Customer decides to cancel an Order.

c)   During the Term, Customer agrees to purchase and make full payment to Nortel Networks for Products and Services to delivered during the Term in an amount (i.e., price less any applicable discounts, credits or other similar incentives and exclusive of taxes, shipping, handling or other similar charges) totaling not less than five million six hundred thousand dollars ($5,600,000.00USD) ("Volume Commitment"). In the event that Customer fails to achieve such Volume Commitment prior to the expiration or termination of this Agreement, whichever occurs first, Customer shall pay to Nortel Networks a charge equal to thirty percent (30%) of the amount of the Volume Commitment that remains unfulfilled.Customer's purchase/license of Third Party Items shall not count towards the satisfaction of Customer's Volume Commitment.

3.   Consideration for Optical Products and Services.

a)   During the first year of the Term and in consideration of the discounts, terms and conditions provided to Customer in this Agreement, Customer hereby agrees that it will provide Nortel Networks with unbiased consideration with respect to its purchase/license of any optical products and services that Customer purchases for use in its U.S. network ("Consideration for Optical Products and Services").

b)   Prior to a purchase/license of any other vendor's optical products and services that it proposes to purchase/license, Customer shall consider Nortel Networks' optical Products and Services based upon the features, prices, speed of delivery, maintenance, relationship, performance, functionality, delivery and other relevant information and specifications ("Requirements"). If Nortel Networks' optical Products and/or Services substantially meet all of the Requirements, then Customer shall purchase Nortel Networks' optical Products and/or Services. If Customer reasonably and good faith believes that Nortel Networks' optical Products and/or Services do not substantially meet all of the Requirements, then Customer may purchase such other vendor's solution without breach of this provision.

c)   For the purposes of this Section 3 (Consideration for Optical Products and Services), optical products shall include, but not be limited to, the following components: optical amplifiers, switches, regenerators, add/drop multiplexers, transmitters and receivers, wavelength translators and combiners, dense wave division components, network processors, maintenance interfaces, and the associated infrastructure (e.g., shelves, bays and support structures).

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d)   Nortel Networks may partially or wholly accept or refuse any Order for optical Products or Services without liability of any kind. Following any partial or whole refusal of such an Order, Customer shall receive a full credit toward its Volume Commitment proportionate to the amount refused unless such refusal was based upon Customer's then-current financial condition. If Nortel Networks refuses more than three unrelated Orders for optical Products and Services during the first year of the Term, excluding refusals based upon Customer's then-current financial condition, this Consideration for Optical Products provision shall no longer apply for future Orders and will be considered null and void. If any refusal described above is based upon Customer's then-current financial condition, Customer shall be afforded a reasonable opportunity to address any such concern with Nortel Networks.

e)   In the event that Customer breaches the Consideration for Optical Products and Services, Customer shall promptly pay Nortel Networks, as a liquidated damage and not as a penalty, an amount equal to ten percent (10%) of the value of the optical products and services purchased from the other vendor for each such breach. Subject to confidentiality requirements, if any, Customer shah provide adequate documentation relating to such purchases to Nortel Networks upon Nortel Networks' request.

4.   Consideration for Switch Products and Services

During the Term of this Agreement and in consideration of the discounts, terms and conditions provided to Customer in this Agreement, Customer hereby agrees that it will provide Nortel Networks with unbiased consideration with respect to its purchase/license of any switch products and services it requires or uses in the operation of any portion of its U.S. network ("Switch Exclusivity Requirement"). For the purposes of this Section, the switch products for such network shall include, but not be limited to, voice services type equipment. Used switch products that Customer acquires via total corporate mergers or total company acquisitions shall not be considered breaches of this provision; provided such used switch products were originally acquired directly from Nortel Networks.

b)   Prior to a purchase/license of any other vendor's switch products and services that it proposes to purchase/license, Customer shall consider Nortel Networks' switch Products and Services based its Requirements (as defined above). If Nortel Networks' switch Products and/or Services substantially meet all of the Requirements, then Customer shall purchase Nortel Networks' switch Products and/or Services. If Customer reasonably and good faith believes that Nortel Networks' switch Products and/or Services do not substantially meet all of the Requirements, then Customer may purchase such other vendor's solution without breach of this provision.

c)   Nortel Networks may partially or wholly accept or refuse any Order for switch Products or Services without liability of any kind. Following any partial or whole refusal of such an Order, Customer shall receive a full credit toward its Volume Commitment proportionate to the amount refused unless such refusal was based upon Customer's then-current financial condition. If Nortel Networks refuses more than three unrelated Orders for switch Products and Services during the Term, excluding refusals based upon Customer's then-current financial condition, this Consideration for Switch Products provision shall no longer apply for future Orders and will be considered null and void. If any refusal described above is based upon Customer's then-current financial condition, Customer shall be afforded a reasonable opportunity to address any such concern with Nortel Networks.

e) In the event that Customer breaches the Consideration for Switch Products and Services, Customer shall promptly pay Nortel Networks, as a liquidated damage and not as a penalty, an amount equal to ten percent (10%) of the value of the switch products and services purchased from the other vendor for each such breach. Subject to confidentiality requirements, if any, Customer shall provide adequate documentation relating to such purchases to Nortel Networks upon Nortel Networks' request.

5.   Changes to Orders

a)   The parties may, by mutual agreement, make changes to an Order ("Change"). The party asking for a Change shall describe in writing the details of the requested Change ("Change Order Request"). Nortel Networks shall provide in writing to Customer a summary of any and all adjustments to the charges and other changes/charges resulting from the Change Order Request.

b)   Customer may request a Change sixty (60) calendar days prior to the earliest scheduled ship date without incurring a Change Order fee. Requests for Change during the period (i) sixty (60) up to thirty (30) days prior to earliest scheduled ship date is subject to a Change Order fee equivalent to ten percent (10%) of the net price of the Products impacted by any such Change; and (ii) less than thirty (30) calendar days prior to the earliest scheduled ship date is subject to a Change Order fee equivalent to twenty (20%) of the net price of the Products impacted by any such Change. c) If a Customer-initiated Change Order Request affects work already performed, including, but not limited to, engineering or installation of Products, Nortel Networks shall invoice Customer for any associated expenses.

d)   In no event shall any Change be effective or acted upon in any way until such time as (i) an authorized representative of each party has agreed to the terms of the Change Order Request in writing based on the charges set forth in this Section and (ii) Nortel Networks receives an Order from Customer for any additional charges resulting from the Change Order Request.

6.   Electronic Commerce Programs

By enrolling in any Nortel Networks electronic commerce program, Customer agrees to comply with the terms of such program. The parties agree that all electronic Orders issued are equivalent to a written Order, are governed by the terms and conditions of this Agreement and that in the event of any conflict between this Agreement and the information contained in Customer's or Nortel Networks' electronic commerce website, this Agreement governs. Customer is responsible for the use and protection of all electronic commerce passcodes provided by Nortel Networks and agrees that all Orders submitted using such passcodes are valid and binding Orders authorized by Customer; provided, however, Customer shall not be responsible for the use of passcodes after Nortel Networks has received written notice from Customer that such passcodes have been misappropriated or are otherwise no longer secure. Nortel Networks shall have no liability to Customer due to Customer's failure to access Customer's or Nortel Networks' electronic commerce website or errors or failures relating to its operation.

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7.   Licensed Use of Software

Nortel Networks grants Customer a nonexclusive license to use a copy of the Software with the Products to the extent of the activation or authorized usage level. To the extent Software is furnished for use with designated Products or Customer furnished equipment ("CFE"), Customer is granted a nonexclusive license to use Software only on such Products or CFE, as applicable. Software contains trade secrets and Customer agrees to treat Software as Information as defined in Section 13. Customer will ensure that anyone who uses the Software does so only in compliance with the terms of this Agreement. Customer shall not a) use, copy, modify, transfer or distribute the Software except as expressly authorized; b) reverse assemble, reverse compile, reverse engineer or otherwise translate the Software; c) create derivative works or modifications unless expressly authorized; or d) sublicense, rent or lease the Software. Licensors of intellectual property to Nortel Networks are beneficiaries of this provision. Upon termination or breach of the license by Customer or in the event designated Product or CFE is no longer in use in Customer's network, this license terminates and Customer will promptly return the Software to Nortel Networks or certify its destruction. Nortel Networks may audit by remote polling or other reasonable means to determine Customer's Software activation or usage levels. With respect to Third Party Software, Customer agrees to abide by the terms provided by Nortel Networks with respect to any such software. Customer further agrees that the terms contained in any Nortel Networks or third party "shrink wrap" or "click" licenses shall govern the use of such software.

8.   Charges and Payment

a)   Amounts, less any disputed amounts, are due and shall be paid by Customer within thirty (30) days from receipt of invoice. Invoicing disputes must be identified in writing within thirty (30) days of invoice receipt. Any disputed amounts that are determined to be validly billed by Nortel Networks are due for payment based upon the original invoice date. In the event of non-payment of undisputed amounts, Nortel Networks may suspend performance, product shipments or otherwise terminate an Order or this Agreement; provided that, Nortel Networks has provided Customer with written notice of such non-payment and afforded Customer five (5) business days to cure prior to taking any such action. Customer shall pay interest on any late payments (excluding validly disputed amounts) at the rate of 18% per annum (1 l/2 % per month). Additional charges shall apply for shipping, insurance and special handling. Charges for Software may be based on extent of use authorized as specified in a Supplement or invoice. Customer agrees to pay the charges applicable for any activation or usage beyond the authorized level. If any authority imposes a tax, duty, levy or fee, excluding those based on Nortel Networks' income or personal property taxes assessed for each Product prior to initial delivery to Customer, upon a Product or Service supplied by Nortel Networks under this Agreement, Customer agrees to pay that amount as specified in the invoice, or supply exemption documentation at the time of Order submission. Customer is responsible for personal property taxes for each Product from the date of initial delivery to Customer. Customer consents without qualification to the sale of receivables, in whole or in part, including all or any part of any associated rights, remedies, and obligations, by Nortel Networks without further notice and authorizes the disclosure of this Purchase and License Agreement and Supplements as necessary to facilitate such sale.

b)   Except for Orders for DMS Switch Products that include associated installation Services, Nortel Networks shall invoice Customer one hundred percent (100%) of the price of the Products upon shipment of the Products and one hundred percent (100%) of the Services upon completion unless the Service continues beyond thirty days, in which case Nortel Networks shall invoice Customer at the end of each month for Services performed in that month.

c)   Certain reoccurring Services (for example, Maintenance Services) may be invoiced in advance of the performance of such Services.

d)   With respect to Orders for DMS Switch Products that include installation Services therefor, Nortel Networks shall invoice Customer in accordance with the following schedule: (i) one hundred percent (100)% of the DMS Switch Products shall be invoiced at shipment; and ; (ii) one hundred percent (100%) of the Services upon completion unless the Service continues beyond thirty days, in which case Nortel Networks shall invoice Customer at the end of each month for Services performed in that month.

9.   Warranty

a)   Nortel Networks warrants that Hardware i) is free from defects in materials and workmanship and ii) substantially conforms to Nortel Networks' specifications. If Hardware does not function as warranted during the warranty period, Nortel Networks will use commercially reasonable efforts to respond promptly and in any event Nortel Networks will commence to cure in accordance with Nortel Networks' standard response times, to either i) make it do so, or ii) replace it with equivalent Hardware.

b)   Nortel Networks warrants that when Software is used in the specified operating environment it will substantially conform to its specifications and is free from material and service-affecting defects. If Software does not function as warranted during the warranty period, Nortel Networks will provide a suitable fix or workaround or will replace the Software; provided Software is within one software release level of the then-current software.

c)   Services will be performed in a professional and workmanlike manner. If Services are not performed as warranted and Nortel Networks is notified in writing by Customer within 30 days, Nortel Networks will re-perform the non-conforming Services and use commercially reasonable efforts to respond promptly to such notification. Nortel Networks will commence to cure in accordance with Nortel Networks' standard response times.

d)   The warranty period for Hardware and Software shall be the warranty period identified in the Nortel Networks Warranty Matrix in effect at the time of Customer's Order. In the event Nortel Networks determines that, during an applicable Warranty Period, repair or replacement as set forth in this Section cannot be made using commercially reasonable efforts, Nortel Networks will give Customer a credit equal to the amount Customer paid for such Hardware or Software, as applicable.

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e)   No warranty is provided for i)  supply items normally consumed during Product operation; ii) failures caused by non-Nortel Networks products; iii) failures caused by a Product's inability to operate in conjunction with other Customer hardware or software unless, prior to delivery of the respective Product, the parties have agreed in a formal written amendment to this Agreement that such Product will so operate; or iv) performance failures resulting from services, including installation, not performed by Nortel Networks or Customer's use of unauthorized parts or components. Warranty will be voided by any of the following that was not caused directly by Nortel Networks: misuse, accident, damage, alteration or modification, failure to maintain proper physical or operating environment, use of unauthorized parts or components, or improper Customer installation or maintenance. Software is not warranted to operate uninterrupted or error free.

f)   Nortel Networks provides Third Party Vendor Items on an "AS IS" BASIS WITHOUT WARRANTIES OF ANY KIND, unless Nortel Networks specifies otherwise. However, such Third Party Vendor Items may carry their own warranties and Nortel Networks shall pass through to Customer any such warranties to the extent authorized.

THESE WARRANTIES AND LIMITATIONS ARE CUSTOMER'S EXCLUSIVE WARRANTIES AND SOLE REMEDIES AND REPLACE ALL OTHER WARRANTIES OR CONDITIONS, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OR CONDITIONS OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.

10.   Warranty Service

During the warranty period, Nortel Networks provides certain types of warranty services without charge for specified Products to correct Product defects or to bring them up to conformance with Nortel Networks published specifications. Nortel Networks will inform Customer of the types of warranty services available to Customer, which are consistent with Nortel Networks standard practices and response times. Customer will obtain Nortel Networks' concurrence prior to returning any Product and must reference a return material authorization number issued by Nortel Networks on documentation accompanying such returned Product. Customer agrees to ship Product prepaid and suitably packaged to a location Nortel Networks designates. Nortel Networks will return the Hardware to Customer at Nortel Networks' expense. Nortel Networks is responsible for loss of, or damage to, Customer Hardware while it is a) in Nortel Networks' possession or b) in transit back to Customer. Any returned Hardware becomes Nortel Networks' property and, subject to Nortel Networks' receipt of the exchanged Hardware, its replacement becomes the Customer's property. The replacement Hardware may not be new, but will be in working order and equivalent to the item exchanged. If Nortel Networks provides Customer with replacement Product in advance of receiving the Product requiring repair, Customer agrees to return the Product requiring repair within thirty (30) calendar days from the ship date of the replacement Product. Title and risk of loss for replacement Product(s) will pass upon the earlier of delivery to the Customer or prior to importation to destination country. If Customer fails to return such Product within thirty (30) days of receipt of the replacement Product, Nortel Networks will not accept such returned Product and will invoice Customer the then-current list price for the replacement Product received. Customer shall make payment within thirty (30) days from Nortel Networks' invoice therefor. The warranty period for the Hardware shall be the greater of ninety (90) days from the date of repair or replacement or the remaining Hardware warranty period. Customer agrees to ensure that exchanged Hardware is free of any legal obligations or restrictions that prevent its exchange and represents that all returned items are genuine and unaltered. Where applicable, before Nortel Networks provides warranty services, Customer agrees to a) follow the problem determination, problem analysis, and warranty services request procedures that Nortel Networks provides; b) secure all programs and data contained in Hardware; and c) inform Nortel Networks of changes in the Hardware's location. Services to supplement the warranty and Post-warranty Services, including advance shipment of replacement parts, may be available at Nortel Networks' then-current prices and policies.

11.   Title and Risk of Loss

Title and risk of loss for ordered hardware shall pass from Nortel Networks to Customer upon delivery to the carrier. Until receipt of the applicable amounts due from Customer hereunder, Customer grants to Nortel Networks a continuing purchase money security interest ("PMSI") in the Products sold and/or licensed under this Agreement and agrees to support Nortel Networks in the perfection of such interest. Customer authorizes Nortel Networks to file financing or continuation statements, including amendments thereto, relating to the Products without the signature of Customer where permitted by law. The PMSI so granted in each Product shall terminate upon Nortel Networks' irrevocable receipt of payment in full for such Product and no PMSI shall continue or attach to any Product or other good sold to Customer for which Vendor has received full payment. Upon written request by Customer and Nortel Networks' receipt of the applicable amounts due from Customer hereunder, Nortel Networks will initiate removal of the associated UCC-1 for such Products pursuant to applicable law.

12.   Implementation and Installation Services

Unless otherwise agreed to by the parties, Customer agrees to provide, during normal business hours, free, safe and reasonably sufficient access to Customer's facilities, data information and personnel and a suitable physical environment meeting Nortel Networks' reasonably specified requirements to permit the timely delivery and installation of Products and/or performance of Services, including the recovery of Nortel Network tools. Nortel Networks may subcontract any portion or all of the Services to subcontractors selected by Nortel Networks, but no such subcontract shall relieve Nortel Networks of its responsibilities hereunder. Nortel Networks will perform its responsibilities in accordance with the standard Nortel Networks Statement of Work where applicable. Nortel Networks will successfully complete its standard installation and commissioning procedures before it considers Products installed. Nortel Networks may make alterations to any Product and Service as necessary to comply with specifications, changed safety standards or governmental regulations, to make a Product non-infringing with respect to any patent, copyright, trade secret or other proprietary interest, or to otherwise improve a Product or Service.   Customer is responsible for i) the results obtained from the use of Products and Services; ii) integration and interconnection with and configuration of Customer's hardware and/or third party hardware and/or systems; and iii) installation of Furnish-only Products. All configuration assistance provided by Nortel Networks is without warranty or guarantee of any kind. Customer shall be responsible for the accuracy and completeness of all data and information that it provides or causes to be provided to Nortel Networks. In the event that there are any delays by either party in fulfilling its responsibilities as stated above, or there are errors or inaccuracies in the information provided, the other party shall be entitled to appropriate schedule and pricing adjustments, including, but not limited to any warehousing and other resulting costs.

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13.   Confidential Information

a)   Confidential information ("Information") means i) Software and Third Party Software; and ii) all business, technical, marketing, information related to network architecture and financial information and data that is clearly marked with a restrictive legend of the disclosing party ("Discloser").

b)   The party receiving Information ("Recipient") will use the same care and discretion, but not less than reasonable care, to avoid disclosure, publication or dissemination of Information as it uses with its own similar information that it does not wish to disclose, publish or disseminate. The Recipient may disclose Information only to i) its employees and employees of its parent, subsidiary or affiliated companies who have a need to know for purposes of carrying out this Agreement; and ii) any other party with the Discloser's prior written consent. Customer hereby consents and permits Nortel Networks to disclose this Agreement to Flextronics Telecom Systems Ltd. Before disclosure to any of the above parties, the Recipient will have a written agreement with such party sufficient to require that party to treat Information in accordance with this Agreement.

c)   The Recipient may disclose Information to the extent required by law. However, the Recipient must give the Discloser prompt notice and make a reasonable effort to obtain a protective order.

d)   No obligation of confidentiality applies to any Information that the Recipient i) already possesses without obligation of confidentiality; ii) develops independently; or iii) rightfully receives without obligations of confidentiality from a third party. No obligation of confidentiality applies to any Information that is, or becomes, publicly available without breach of this Agreement.

e)   The release of any advertising or other publicity relating to this Agreement requires the prior approval of both parties.

14.   Patents and Copyrights

If a third party claims that Nortel Networks Hardware or Software or Services provided to Customer under this Agreement infringes that party's intellectual property rights, Nortel Networks will indemnify, defend and hold Customer harmless against that claim at Nortel Networks' expense and pay all costs, external expenses, reasonable attorney's fees, and damages that a court finally awards or are agreed in settlement, provided that Customer a) promptly notifies Nortel Networks in writing of the claim and b) allows Nortel Networks to control, and cooperates with Nortel Networks in, the defense and any related settlement negotiations.    If such a claim is made or appears likely to be made, Nortel Networks agrees to secure the right for Customer to continue to use the Hardware or Software or Services, or to modify it, or to replace it with equivalent Hardware or Software or Services. If Nortel Networks determines that none of these options is reasonably available, Customer agrees to return the Hardware or Software or the deliverable associated with the Services to Nortel Networks on Nortel Networks' written request. Nortel Networks will then give Customer a credit equal to Customer's net book value for the Hardware or Software or Services provided Customer has followed generally-accepted accounting principles. Additionally, in the event Customer agrees to return the Products or the deliverable associated with the Services to Nortel Networks as a result of an alleged claim as described in this Section, then, if applicable, and to the extent of the impacted Products and/or Services only (i) Customer will be excused from further obligation to satisfy the commitment(s) as set forth in either Section 3 (Consideration of Optical Products and Services) and 4 (Consideration for Switch Products and Services), as applicable; and (ii) Customer's Volume Commitment shall be reduced proportionately by the forecasted amount of purchases to be made by Customer for such Products and Services. Any such claims against the Customer or liability for infringement arising from use of the Hardware or Software following a request for return by Nortel Networks are the sole responsibility of Customer. This represents Customer's sole and exclusive remedy regarding any claim of infringement. Nortel Networks has no obligation regarding any claim based on any of the following: a) anything Customer provides which is incorporated into the Hardware or Software; b) compliance by Nortel Networks with the Customer's specifications, designs or instruction; c) the amount of revenues or profits earned or other value obtained by the use of a Product by Customer; d) the lost revenues or profits of third parties arising from the Customer's use of a Product; e) Customer's modification of Hardware or Software; f) the combination, operation, or use of Hardware or Software with other products not provided by Nortel Networks as a system, or the combination, operation, or use of Hardware or Software with any product, data, or apparatus that Nortel Networks did not provide unless, prior to delivery of the respective Product, the parties have agreed in a formal written amendment to this Agreement that such Product will so operate; g) the Customer's failure to install or have installed changes, revisions or updates as instructed by Nortel Networks; or h) infringement by a Third Party Vendor Item alone, as opposed to its combination with Products Nortel Networks provides to Customer as a system. If Third Party Vendor Items carry their own patent and copyright infringement protections, Nortel Networks shall pass through to Customer any such protections to the extent authorized.

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15.   Limitation of Liability

In no event shall either party or its agents or suppliers be liable to the other party for more than the amount of any actual direct damages up to the greater of U.S. $100,000 (or equivalent in local currency) or the charges for the Product or Services paid or payable hereunder, including any associated interest that may accrue pursuant to this Agreement, that are the subject of the claim, regardless of the cause and whether arising in contract, tort (including negligence) or otherwise. This limitation will not apply to (i) claims for damages for bodily injury (including death) and damage to real property and tangible personal property for which a party is legally liable, (ii) breaches by either party of the confidentiality provisions of this Agreement, (iii) breach by Customer of the software licensing provisions of this Agreement, and (iv) payments as set forth in Section 12 Patents and Copyrights. IN NO EVENT SHALL NORTEL NETWORKS OR ITS AGENTS OR SUPPLIERS BE LIABLE FOR ANY OF THE FOLLOWING: a) DAMAGES BASED ON ANY THIRD PARTY CLAIM EXCEPT AS EXPRESSLY PROVIDED HEREIN AND IN SECTION 12; b) LOSS OF, OR DAMAGE TO, CUSTOMER'S RECORDS, FILES OR DATA; OR c) INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS OR SAVINGS), EXCEPT FOR A BREACH BY NORTEL NETWORKS OF THE CONFIDENTIALITYPROVISIONSOFTHIS AGREEMENT, EVEN IF NORTEL NETWORKS IS INFORMED OF THEIR POSSIBILITY. EXCEPT FOR BREACHES OF THE CONFIDENTIALITY OR SOFTWARE LICENSING PROVISIONS OF THIS AGREEMENT, CUSTOMER SHALL NOT BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS OR SAVINGS), EVEN IF CUSTOMER IS INFORMED OF THEIR POSSIBILITY.

16.   Training Credits

a)   Nortel Networks shall make training available to Customer with respect to the operation, configuration, installation, service, maintenance and support of the Products at current Nortel Networks prices and at Nortel Networks facilities, subject to course and class availability. Upon the request of Customer, Nortel Networks shall provide to Customer such training as Customer requests, at a time and place mutually agreed upon and at the prices to be quoted for such training. Nortel Networks training products and services are listed at the Nortel Networks website for technical training http: //www.nortelnetworks. com/knowledgeservices ("Nortel Networks Website for Technical Training"). The training policies as listed at the Nortel Networks Website for Technical Training shall apply. Nortel Networks may change, modify, update and/or add training programs as new Products or Product features/releases are made available. Prices shall be subject to change by Nortel Networks.

b)   Customer shall bear the cost of transportation, meals, lodging or other incidental expenses of Customer's personnel to, from and during training.

c)   Nortel Networks shall provide Customer with "Training Bank Dollars" that Customer may apply toward tuition costs for Nortel Networks training products and services, provided that Customer notifies Nortel Networks of its intent to apply Training Bank Dollars toward tuition costs for training prior to Nortel Networks' issuance of invoices for such training. The "Training Bank Dollars" may be applied to all training media offerings, including (but not limited to) Nortel Networks instructor-led classroom training at a Nortel Networks facility, Nortel Networks instructor-led classroom training at the Customer location (Customer site training), self-paced training, and eLearning training medias. The "Training Bank Dollars" will be allocated to the Training Bank quarterly and the amount of "Training Bank Dollars" Customer accrues during the Term shall equal five thousand, two hundred and fifty dollars ($5,250.00) for every one million dollars ($l,000,000.00USD) Customer spends on Nortel Networks' optical and DMS Products, excluding Third Party Vendor Items. Customer shall not accrue Training Bank Dollars for Services, other Products or for any Third Party Vendor Items, including, without limitation, optical and DMS Third Party Vendor Items. The "Training Bank Dollars" will expire twenty-four (24) months after allocation to the Training Bank.

d)   Any training tuition charges which Customer does not satisfy by application of "Training Bank Dollars" shall be payable by Customer to Nortel Networks at the prices quoted at the Nortel Networks Website for Technical Training and Customer shall render payment within thirty (30) days of receipt of such invoice. The payment method identified in the student registration record on the first day of class is the payment method that will prevail for course charges.

e)   Nortel Networks may, at its sole and exclusive discretion, attempt to meet any reasonable request by Customer for a course other than the courses listed at the Nortel Networks Website for Technical Training, ("Customized Training"). The price for Nortel Networks to modify existing training courses/materials or to design new training materials for Customer will be quoted to Customer on a per request basis. Customer may pay for "Customized Training" with "Training Bank Dollars" or Nortel Networks shall invoice the value of the Customized Training and Customer shall render payment within thirty (30) days of receipt of such invoice.

f)   The availability of any training course to Customer as set forth above shall be subject to the prerequisite policy identified by Nortel Networks at the Nortel Networks Website for Technical Training. Nortel Networks training materials are proprietary and copyrighted information. Any use or replication of this material must have written consent by Nortel Networks' Knowledge Services organization.

THE TRAINING MATERIALS AND ANY SUPPORT OR OTHER SERVICES WHICH MAY BE PROVIDED BY NORTEL NETWORKS SHALL BE PROVIDED WITHOUT WARRANTY OF ANY KIND OR NATURE, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. NORTEL NETWORKS DOES NOT WARRANT THAT THE TRAINING MATERIALS WILL BE ERROR-FREE OR THE STUDYING OF THE TRAINING MATERIALS WILL QUALIFY ANY PERSON TO PERFORM ANY FUNCTIONS COVERED BY THE INSTRUCTIONAL MATERIALS. NORTEL NETWORKS SHALL HAVE NO OBLIGATION TO UPDATE OR MONITOR THE USE, REPRODUCTION, OR DISTRIBUTION BY CUSTOMER OR ANY THIRD PARTIES OF SUCH TRAINING MATERIALS. EXCEPT FOR A BREACH OF THE CONFIDENTIALITY PROVISIONS SET FORTH IN THIS AGREEMENT, IN NO EVENT SHALL NORTEL NETWORKS BE LIABLE FOR ANY INCIDENTAL, CONSEQUENTIAL, SPECIAL OR INDIRECT DAMAGES OF ANY NATURE WHATSOEVER RELATED TO TRAINING MATERIALS AND ANY SUPPORT OR OTHER RELATED SERVICES.

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17.   Certification

a)   Customer shall, at its expense, ensure that any Nortel Networks switch that (i) consists of non-Nortel Networks provided equipment, either in whole or in part, or (ii) was not acquired directly from Nortel Networks, has an acceptable Nortel Networks software release and has a current baseline Nortel Networks software release (to the circuit pack level). Such Nortel Networks switch must also be in a fully Nortel Networks-supported Hardware configuration. If non-Nortel Networks provided equipment is added to a previously certified or warranted switch, the switch must be re-certified by Nortel Networks, at Customer's cost and expense, after each such addition. Customer's performance of any installation services invalidates the previous certification and any warranties. A Nortel Networks switch must have a Nortel Networks software load within one (1) of the current release as well as the hardware required to support the load. If such software load is a lower release than required, the Nortel Networks switch must be certified on the lower release load first, with the Customer's agreement to purchase the current Nortel Networks Generally Available (GA) software release if the certification is successful.

b)   Customer is responsible for the cost of the certification as well as the following: (i) any costs associated with ensuring that the Nortel Networks products to be certified meet pre-certification requirements; (ii) any costs for replacement hardware required due to a failure of such hardware during the certification process; (iii) any costs associated with correcting issues identified during the certification; (iv) subsequent certifications by Nortel Networks after Customer corrects issues identified during the previous certification; and (v) any other costs that are outside the scope of work described herein.

CERTIFICATION SERVICES DO NOT IMPLY ANY WARRANTIES ON THE SWITCH. COMPLETION OF CERTIFICATION DOES NOT TRANSFER THE RIGHT TO USE ANY PREVIOUSLY UNLICENSED SOFTWARE.

18.   Force Majeure

If the performance of this Agreement, or of any obligation hereunder except for the obligations set forth in Section 8 (Charges and Payment) is prevented, restricted or interfered with by reason of fires, breakdown of plant, labor disputes, embargoes, government ordinances or requirements, civil or military authorities, acts of God or of the public enemy, acts or omissions of carriers, inability to obtain necessary materials or services from suppliers, or other causes beyond the reasonable control of the party whose performance is affected ("Force Majeure"), then the party affected, upon giving prompt notice to the other party, shall be excused from such performance on a day-for-day basis to the extent of such prevention, restriction, or interference (and the other party shall likewise be excused from performance of its obligations on a day-for-day basis to the extent such party's obligations relate to the performance so prevented, restricted or interfered with); provided that the party so affected shall use reasonable efforts to avoid or remove such cause of non­performance and both parties shall proceed to perform their obligations with dispatch whenever such causes are removed or cease.

19.   Termination

a)   Either party may terminate this Agreement, and in whole or in part, by providing sixty (60) day advance written notice (a "Termination Notice") to the other party, upon the occurrence of any of the following events: (i) if the other party becomes insolvent or subject to any proceeding under the federal bankruptcy laws or other similar laws for the protection of creditors and such proceeding shall not have been dismissed prior to the termination date; (ii) if the other party materially breaches a material provision or obligation of this Agreement and such breach is not commenced to be cured within ninety (90) days of receipt of written notice. Notwithstanding, the party in breach shall use commercially reasonable efforts to cure any such material breach as soon as reasonably practicable from its receipt of written notice. Such rights of termination are in addition to Nortel Networks' other rights of termination as set forth elsewhere in this Agreement.

b)   In the event of a termination as described in this Section or elsewhere in this Agreement, Nortel Networks may invoice Customer for any fees related to Customer's failing to satisfy any of its purchase obligations as set forth in the Agreement, including, without limitation, the Volume Commitment, the Consideration for Optical Products and Services and the Consideration for Switch Products and Services. Nothing contained in this Section shall preclude Nortel Networks from invoicing Customer for any other amounts that are due and owing, including, but not limited to, fees related to any Products or other deliverables provided or Services performed up to the termination date.

20.   General

a)   Customer agrees not to assign, or otherwise transfer this Agreement or Customer's rights under it, or delegate Customer's obligations, without Nortel Networks' prior written consent, and any attempt to do so is void. Notwithstanding anything to the contrary contained herein, Customer may transfer or assign this Agreement to any entity that acquires all or substantially all of its capital stock and assets; provided that, such transferee or assignee (i) is not a competitor of Nortel Networks; (ii) has not materially breached past agreements with Nortel Networks or its parent or affiliated companies and is not otherwise engaged with Nortel Networks or its parent or affiliated companies in an agreement for the purchase, license and/or supply of Nortel Networks products or services; (iii) agrees in writing to abide by all of the terms of this Agreement, including, but not limited to, the software licensing and confidentiality provisions; and (iv) satisfies Nortel Networks' credit criteria. Customer represents and warrants that it is buying Products and/or Services for its own internal use and not for resale. Both parties agree to comply with all applicable laws including all applicable export and import laws and regulations. Except for non-payment, neither Customer nor Nortel Networks will bring a legal action under this Agreement more than two years after the cause of action arose. In the event that any provision of this Agreement or portions thereof are held to be invalid or unenforceable, the remainder of this Agreement will remain in full force and effect.

PLA v01-14-02 US CONFIDENTIAL INFORMATION Page 7 of 8

PURCHASE AND LICENSE AGREEMENT

b)   The terms and conditions of this Agreement, including any Supplement(s) and Annexes, form the complete and exclusive agreement between Customer and Nortel Networks and replace any prior oral or written proposals, correspondence or communications regarding the subject matter hereof. In the event of a conflict between this Purchase and License Agreement and a Supplement, the terms in any Supplement(s) prevail. In the event of a conflict between this Purchase and License Agreement and a Statement of Work, the terms in this Purchase and License Agreement shall prevail. Any changes to this Agreement must be made by mutual agreement in writing. All Customer's rights and all of Nortel Networks' obligations are valid only in the country in which the Products and Services were supplied; the laws of the State of Texas govern this Agreement, exclusive of its conflict of laws provisions; and nothing in this Agreement affects any statutory rights of consumers that cannot be waived or limited by contract. This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument.

c)The parties hereby agree to terminate the existing Master Purchase Agreement, dated November 23, 1999, between the parties, as amended (the "MPA"), as of the effective date of this Agreement, except for any surviving terms and conditions; provided that, the terms of the MPA will continue to apply to any outstanding purchase orders and unresolved claims thereunder. Notwithstanding the preceding, the parties herby agree that all provisions related to minimum purchase commitments of Customer under such MPA (including, without limitation, Sections 2, 3, and 6 of such MPA) are declared void and shall be unenforceable. Upon full execution of this Agreement by the parties, Nortel Networks hereby waives all claims related to any failure of Customer to satisfy its such purchase commitments under the MPA; provided that, such waiver shall not release Customer from any of its other obligations of the MPA, including, without limitation, its payment obligations and associated responsibilities for purchase orders issued under the MPA.

GRANDE COMMUNICATIONS NETWORKS, INC.

By: /s/ Joe Ross                                                                        

Name: Joe Ross                                                                         

Title: President                                                                          

Address: 401 Carlson Circle San Marcos TX 78666            

State of Incorporation: Delaware                                           

Tax I.D. Number: 52-2229928                                                   

Date: 1/11/05                                                                              

NORTEL NETWORKS INC.

By: /s/ Lance Levin                                                                  

Name: Lance Levin                                                                   

Title: Counsel                                                                            

Address: 2221 Lakeside Blvd, Richardson, TX 75082-4395

Date: 1-24-05                                                                              

OCD# 25154

PLA v01-14-02 US CONFIDENTIAL INFORMATION Page 8 of 8

EX-10.2

Exhibit 10.2

AMENDMENT NO. 1

TO

PURCHASE AND LICENSE AGREEMENT

BETWEEN

GRANDE COMMUNICATIONS NETWORKS INC.

AND NORTEL NETWORKS INC.

This Amendment No. 1 to the Purchase and License Agreement is made effective as of the 24th day of January, 2008 (the "Effective Date") by and between Nortel Networks Inc. (''Nortel") and Grande Communications Networks Inc. ("Customer").

WHEREAS, Customer and Nortel entered into a Purchase and License Agreement ("Agreement") dated January 24, 2005, for the sale, licensing, and purchase of Nortel's Products and Services; and,

WHEREAS, Customer and Nortel now wish to, among other things, amend the Agreement to provide for reinstatement and modification of the Agreement and extension of the Term.

NOW, THEREFORE, in consideration of the mutual covenants herein contained, Customer and Nortel hereby agree to amend the Agreement as follows:

1.   The capitalized terms in this Amendment shall have the same meaning as the defined terms in the Agreement.

2.   The parties hereby agree and acknowledge that the Agreement is reinstated as of the Effective Date. The parties further agree that all purchases made between January 24, 2008 and the date of execution of this Amendment shall be deemed to have been purchased pursuant to the terms and conditions of the Agreement. Customer hereby ratifies and affirms all the terms and conditions in the Agreement and agrees to be bound by all such terms and conditions.

The following modifications are made to the Agreement effective as of the Effective Date:

3   The Term described in the preamble to the Agreement shall be amended to read as follows:

"...and continuing for a period of three (3) years therefrom until December 31, 2008 ("Term")."

4   Section 3.a) is amended by modifying the first sentence to read as follows:

"a) In consideration of the discounts, terms   and conditions provided to Customer......"

5.   Section 4. is amended by inserting subparagraph "a)" before the first sentence to correct a numbering error.

6.   Section 16, Training, of the Agreement is amended and restated in its entirety as follows:

"16.   Training Credits

a)           Nortel Networks shall make training available to Customer's purchase with respect to the operation, configuration, installation, service, maintenance and support of the Products at current Nortel Networks prices and at Nortel Networks facilities, subject to course and class availability. Upon the request of Customer, Nortel Networks shall provide to Customer such training as Customer requests, at a time and place mutually agreed upon and at the prices to be quoted for such training. Nortel Networks training products and services are listed at the Nortel Networks website for technical training http://www.nortelnetworks.com/knowledgeservices ("Nortel Networks Website for Technical Training"). The training policies as listed at the Nortel Networks Website for Technical Training shall apply. Nortel Networks may change, modify, update and/or add training programs as new Products or Product features/releases are made available. Prices shall be subject to change by Nortel Networks.

b)           Customer shall bear the training costs and cost of transportation, meals, lodging or other incidental expenses of Customer's personnel to, from and during training.

c)           The "Training Bank Dollars" accrued under the Agreement prior to the effective date of this Amendment No. 1 will expire —on March 31, 2008 if not used by Customer and may not be redeemed for cash or other discounts.

d)           Any training tuition charges shall be payable by Customer to Nortel Networks at the prices quoted at the Nortel Networks Website for Technical Training and Customer shall render payment within thirty (30) days of receipt of such invoice.

e)           Nortel Networks may, at its sole and exclusive discretion, attempt to meet any reasonable request by Customer for a course other than the courses listed at the Nortel Networks Website for Technical Training_ ("Customized Training"). The price for Nortel Networks to modify existing training courses/materials or to design new training materials for Customer will be quoted to Customer on a per request basis.

f)           The availability of any training course to Customer as set forth above shall be subject to the prerequisite policy identified by Nortel Networks at the Nortel Networks Website for Technical Training. Nortel Networks training materials are proprietary and copyrighted information. Any use or replication of this material must have written consent by Nortel Networks' Knowledge Services organization.

THE TRAINING MATERIALS AND ANY SUPPORT OR OTHER SERVICES WHICH MAY BE PROVIDED BY NORTEL NETWORKS SHALL BE PROVIDED WITHOUT WARRANTY OF ANY KIND OR NATURE, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. NORTEL NETWORKS DOES NOT WARRANT THAT THE TRAINING MATERIALS WILL BE ERROR-FREE OR THE STUDYING OF THE TRAINING MATERIALS WILL QUALIFY ANY PERSON TO PERFORM ANY FUNCTIONS COVERED BY THE INSTRUCTIONAL MATERIALS. NORTEL NETWORKS SHALL HAVE NO OBLIGATION TO UPDATE OR MONITOR THE USE, REPRODUCTION, OR DISTRIBUTION BY CUSTOMER OR ANY THIRD PARTIES OF SUCH TRAINING MATERIALS. EXCEPT FOR A BREACH OF THE CONFIDENTIALITY PROVISIONS SET FORTH IN THIS AGREEMENT, IN NO EVENT SHALL NORTEL NETWORKS BE LIABLE FOR ANY INCIDENTAL, CONSEQUENTIAL, SPECIAL OR INDIRECT DAMAGES OF ANY NATURE WHATSOEVER RELATED TO TRAINING MATERIALS AND ANY SUPPORT OR OTHER RELATED SERVICES.

7. All other terms and conditions of the Agreement shall remain in full force and effect, except as modified above, with respect to purchases made after the Amendment No. I Effective Date.

8. The terms of this Amendment 1 shall supercede all oral or prior written statements concerning the subject matter of this Amendment.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to be executed by their duly authorized representatives.

GRANDE COMMUNICATIONS NETWORKS INC.	NORTEL NETWORKS INC.
By: /s/ Brady Adams	By: /s/ Lance Levin
Title: VP Network Operations and Engineering	Title: Counsel, N.A.
Date: 3/18/08	Date: 3-24-2008

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Roy H. Chestnutt, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Grande Communications Holdings, 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(s) 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(s) 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 the 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: May 9, 2008	/s/    ROY H. CHESTNUTT
	Roy H. Chestnutt
	President, Chief Executive Officer and Chairman of the Board of Directors

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Michael L. Wilfley, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Grande Communications Holdings, 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(s) 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(s) 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 the 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: May 9, 2008	/s/    MICHAEL L. WILFLEY
	Michael L. Wilfley
	Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification of the Chief Executive Officer and Chief Financial Officer

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Each of the undersigned, the Chief Executive Officer and the Chief Financial Officer, respectively, of Grande Communications Holdings, Inc., hereby certifies that, to my knowledge, on the date hereof:

1. The quarterly report on Form 10-Q of Grande Communications Holdings, Inc. for the three months ended March 31, 2008 filed on the date hereof with the Securities and Exchange Commission (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Grande Communications Holdings, Inc.

Date: May 9, 2008	/s/    ROY H. CHESTNUTT
	Roy H. Chestnutt
	President, Chief Executive Officer and Chairman of the Board of Directors

Date: May 9, 2008	/s/    MICHAEL L. WILFLEY
	Michael L. Wilfley
	Chief Financial Officer

The foregoing certification is being furnished solely pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 (the “Exchange Act”) and 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document. This certification shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to liability under that section. This certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act except to the extent this Exhibit 32.1 is expressly and specifically incorporated by reference in any such filing.