869561--3/16/2006--RURAL_CELLULAR

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Our implementation of 2.5G network technology has resulted in network capacity constraints and heightened customer churn. We may not be successful in reversing the six quarter trend of declining postpaid customers, which would force us to change our business plan and financial outlook and would likely negatively affect the price of our stock. As we dedicate more resources to 2.5G technology, our TDMA customers may seek other competitive offerings, resulting in a loss of customers and reduced profitability. We have required and will continue to require substantial amounts of capital to maintain our upgrade to 2.5G technologies and to meet various obligations under our financing arrangements. Our ability to generate the required capital depends on many factors, including some that are beyond our control. We have committed a substantial amount of capital to upgrade our wireless networks to offer 2.5G data services. If the demand for wireless data services does not grow, or if we fail to capitalize on such demand, it could have an adverse effect on our growth. Our business could be materially and adversely affected by our failure to anticipate and react to frequent and significant technological changes. A significant portion of our revenue is from roaming charges. Outcollect roaming yields have been declining over the last few years and are expected to continue to decline in the future. As a result, our future operating results could be adversely affected if increases in roaming minutes do not offset anticipated decreases in roaming yield. Our roaming revenue is subject to some effects of seasonality, and as a result, our overall revenue and operating income are also subject to seasonal fluctuations. We operate in a very competitive business environment, which can adversely affect our business and operations. Competitors who offer more services than we do may attract our targeted customers. Market prices for wireless service may decline in the future. Wireless number portability may continue to have a negative impact on our customer retention and increase our marketing costs. If we encounter significant problems, such as delays, inaccuracies, or loss of customer information from our database, in the process of upgrading our billing function, we could experience customer dissatisfaction and increased churn, which could have a material adverse impact on our financial performance. Regulation or potential litigation relating to the use of wireless phones while driving could adversely affect our results of operations. Further, if wireless handsets are perceived to pose health and safety risks, we may be subject to new regulations, and demand for our services may decrease. Our business is subject to extensive government regulation, which could adversely affect our business by increasing our expenses. We also may be unable to obtain or retain regulatory approvals necessary to operate our business, which would negatively affect our results of operations. Our designation or certification as an Eligible Telecommunications Carrier ( ETC ) in any state where we conduct business could be refused, conditioned, or revoked due to circumstances beyond our control, thus depriving us of financial support in that state from the Universal Service Fund ( USF ). In addition, we cannot be certain that we will continue to receive payments at the current levels. If we are unable to comply with obligations imposed by the Communications Assistance for Law Enforcement Act ( CALEA ), our financial results could be adversely affected. Equipment failure and natural disasters may adversely affect our operations. Difficulties in the continued upgrade of our wireless systems could increase our planned capital expenditures, delay the continued build-out of our networks, and negatively impact our roaming arrangements Our future financial results could be adversely impacted by asset impairments or other charges. We may not be able to successfully integrate acquired or exchanged properties, which could have an adverse effect on our financial results. We will continue to incur increased costs as a result of being a public company subject to the Sarbanes-Oxley Act of 2002 ( SOA ), as well as new rules implemented by the Securities and Exchange Commission and The Nasdaq Stock Market. If we fail to maintain an effective system of internal and disclosure controls, we may not be able to accurately report our financial results or prevent fraud. Our common stock price has been and may continue to be volatile. Litigation instituted against us and our officers and directors as a result of changes in the price of our securities could materially and adversely affect our business, financial condition, and operating results. We have a significant amount of debt and preferred stock, which may limit our ability to meet our debt service and dividend obligations, obtain future financing, make capital expenditures in support of our business plan, react to a downturn in our business, or otherwise conduct necessary corporate activities. The restrictive covenants in our existing debt and preferred stock instruments and agreements may limit our ability to operate our business. Our failure to pay the cash dividends on our senior exchangeable preferred stock may affect our ability to incur additional debt or refinance our existing indebtedness. Our failure to pay the cash dividends on our junior exchangeable preferred stock may result in changes in our board of directors and affect our ability to incur additional debt. We have shareholders who could exercise significant influence on management. Antitakeover provisions could adversely affect the price of our Class A common stock.

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869561--3/16/2006--RURAL_CELLULAR_CORP