THE MANAGEMENT'S DISCUSSION AND ANALYSIS AND OTHER PORTIONS OF THIS QUARTERLY REPORT INCLUDE "FORWARD-LOOKING" STATEMENTS WITHIN THE MEANING OF THE FEDERAL SECURITIES LAWS, INCLUDING THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995, THAT ARE SUBJECT TO FUTURE EVENTS, RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED OR IMPLIED. IMPORTANT FACTORS THAT EITHER INDIVIDUALLY OR IN THE AGGREGATE COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED INCLUDE, WITHOUT LIMITATION, (1) THAT WE WILL NOT RETAIN OR GROW OUR CUSTOMER BASE, (2) THAT WE WILL FAIL TO BE COMPETITIVE WITH EXISTING AND NEW COMPETITORS, (3) THAT WE WILL NOT ADEQUATELY RESPOND TO TECHNOLOGICAL DEVELOPMENTS THAT IMPACT OUR INDUSTRY AND MARKETS,
(4) THAT NEEDED FINANCING WILL NOT BE AVAILABLE TO US IF AND AS NEEDED, (5) THAT A SIGNIFICANT CHANGE IN THE GROWTH RATE OF THE OVERALL U.S. ECONOMY WILL OCCUR SUCH THAT THERE IS A MATERIAL IMPACT ON CONSUMER AND CORPORATE SPENDING,
(6) THAT WE WILL NOT BE ABLE TO COMPLETE FUTURE ACQUISITIONS, THAT WE MAY HAVE DIFFICULTIES INTEGRATING ACQUIRED BUSINESSES, OR THAT THE COST OF SUCH INTEGRATION WILL BE GREATER THAN WE EXPECT, AND (7) THAT SOME OTHER UNFORESEEN DIFFICULTIES OCCUR, AS WELL AS THOSE RISKS SET FORTH IN OUR ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2007, AND OUR OTHER FILINGS WITH THE SEC. THIS LIST IS INTENDED TO IDENTIFY ONLY CERTAIN OF THE PRINCIPAL FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE DESCRIBED IN THE FORWARD-LOOKING STATEMENTS INCLUDED HEREIN. FORWARD-LOOKING STATEMENTS RELATING TO EXPECTATIONS ABOUT FUTURE RESULTS OR EVENTS ARE BASED UPON INFORMATION AVAILABLE TO US AS OF TODAY'S DATE, AND WE DO NOT ASSUME ANY OBLIGATION TO UPDATE ANY OF THESE STATEMENTS

For convenience in this quarterly report, "Knology," "we," "us," and "the Company" refer to Knology, Inc. and our consolidated subsidiaries, taken as a whole.

Overview

We were formed as a Delaware corporation in September 1998 and began trading publicly on the NASDAQ Global Market in December 2003. We are a fully integrated provider of video, voice, data and advanced communications services to residential and business customers in ten markets in the Southeastern United States and two markets in the Midwestern United States. We provide a full suite of video, voice and data services in Dothan, Huntsville and Montgomery, Alabama; Panama City and portions of Pinellas County, Florida; Augusta, Columbus and West Point, Georgia; Charleston, South Carolina; Knoxville, Tennessee; and Rapid City and Sioux Falls, South Dakota, as well as portions of Minnesota and Iowa. Our primary business is the delivery of bundled communication services over our own network. In addition to our bundled package offerings, we sell these services on an unbundled basis.

We have built our business through:

• construction and expansion of our broadband network to offer integrated video, voice and data services;

• organic growth of connections through increased penetration of services to new marketable homes and our existing customer base, along with new service offerings;

• upgrades of acquired networks to introduce expanded broadband services including bundled video, voice and data services; and

• acquisitions of other broadband companies.

The following is a discussion of our consolidated financial condition and results of operations for the nine months ended September 30, 2008, and certain factors that are expected to affect our prospective financial condition. The following discussion and analysis should be read in conjunction with the financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q.

Acquisition

On January 4, 2008, the Company completed its acquisition of all of the outstanding stock of Graceba Total Communications Group, Inc. ("Graceba"), a voice, video and high-speed Internet broadband services provider in Dothan, Alabama. The Company used the proceeds of the $59.0 million First Amendment to the Amended and Restated Credit Agreement and cash on hand to fund the $75.0 million purchase price. The financial position and results of operations for Graceba are included in the Company's consolidated

statements since the date of acquisition. The acquisition has been accounted for in accordance with Statement of Financial Accounting Standards ("SFAS") No. 141, "Business Combinations." The total purchase price for the assets acquired, net of liabilities assumed and including direct acquisition costs, was $75.1 million.

Homes Passed and Connections

We report homes passed as the number of residential and business units, such as single family homes, apartments and condominium units, passed by our broadband network and listed in our database. Marketable homes passed are homes passed other than those we believe are covered by exclusive arrangements with other providers of competing services. Because we deliver multiple services to our customers, we report the total number of connections for video, voice and data rather than the total number of customers. We count each video, voice or data purchase as a separate connection. For example, a single customer who purchases cable television, local telephone and Internet access services would count as three connections. We do not record the purchase of digital video services by an analog video customer as an additional connection. As we continue to sell bundled services, we expect more of our video customers to purchase voice, data and other enhanced services in addition to video services. Accordingly, we expect that our number of voice and data connections will continue to grow faster than our video connections and will represent a higher percentage of our total connections in the future.

The following table summarizes the number of marketable homes passed and connections as of September 30, 2007 and 2008.

                                                September 30,
                                              2007        2008
                  Connections:(1)
                  Video                       227,810     231,465
                  Voice:
                  On-net                      229,039     238,292
                  Off-net                       6,001       5,837
                  Data:
                  High Speed Data             173,253     193,293
                  Dial-up                       3,294       1,997

                  Total connections           639,397     670,884

                  Residential connections     551,996     567,014
                  Business connections         87,401     103,870
                  Homes passed              1,095,492   1,127,358
                  Marketable homes passed     885,419     918,093

(1) All of our video connections are provided over our networks. Our voice and data connections consist of both "On-net" and "Off-net" connections. On-net refers to lines provided over our networks. Off-net refers to voice or data connections provided over lines leased from third parties.

Critical Accounting Policies

Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States, which require us to make estimates and assumptions. See our consolidated financial statements and related notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2007, which contains accounting policies including those that may involve a higher degree of judgment and complexity and other disclosures required by accounting principles generally accepted in the United States.

Revenues

Our operating revenues are primarily derived from monthly charges for video, voice and Internet data services and other services to residential and business customers. We provide these services over our network. Our products and services involve different types of charges and in some cases several methods of accounting for or recording revenues. Below is a description of our significant sources of revenue:

• Video revenues. Our video revenues consist of fixed monthly fees for expanded basic, premium and digital cable television services, as well as fees from pay-per-view movies, fees for video-on-demand and events such as boxing matches and concerts that involve a charge for each viewing. Video revenues accounted for approximately 41.8% and 41.9% of our consolidated revenues for the three and nine months ended September 30, 2008, respectively, compared to 41.5% and 42.4% for the three and nine months ended September 30, 2007, respectively.

• Data revenues. Our data revenues consist primarily of fixed monthly fees for data service and rental of cable modems. Data revenues accounted for approximately 22.8% and 22.6% of our consolidated revenues for the three and nine months ended September 30, 2008, respectively, compared to 22.6% and 22.9% for the three and nine months ended September 30, 2007, respectively.

• Other revenues. Other revenues result principally from broadband carrier services. Other revenues accounted for approximately 1.5% of our consolidated revenues for the three and nine months ended September 30, 2008, respectively, compared to 1.4% for the three and nine months ended September 30, 2007, respectively.

Our ability to increase the number of our connections and, as a result, our revenues is directly affected by the level of competition we face in each of our markets with respect to each of our service offerings:

• In providing video services, we currently compete with AT&T, Bright House, Charter, Comcast, Mediacom, MidContinent Communications and Time Warner. We also compete with satellite television providers such as DirecTV and EchoStar. Our other competitors include broadcast television stations and other satellite television companies. We expect in the future to face additional competition from telephone companies providing video services within their service areas.

• In providing local and long-distance telephone services, we compete with the incumbent local phone company and various long-distance providers in each of our markets. AT&T, Verizon and Qwest are the incumbent local phone companies in our markets. They offer both local and long-distance services in our markets and are particularly strong competitors. We also compete with providers of long-distance telephone services, such as AT&T, MCI and Sprint. We also expect an increase in the deployment of Voice over Internet Protocol ("VoIP") services and expect to continue to compete with Vonage Holding Company, Comcast and other providers.

• In providing data services, we compete with traditional dial-up Internet service providers; incumbent local exchange carriers that provide dial-up and DSL services; providers of satellite-based Internet access services; cable television companies; and providers of wireless high-speed data services. Providing data services is a rapidly growing business and competition is increasing in each of our markets. Some of our competitors have competitive advantages such as greater experience, resources, marketing capabilities and stronger name recognition.

Costs and Expenses

Our operating expenses include direct cost of services, selling, general and administrative expenses, and depreciation and amortization.

Direct costs of services include:

• Direct costs of video services. Direct costs of video services consist primarily of monthly fees to the National Cable Television Cooperative and other programming providers. Programming costs are our largest single cost, and we expect this trend to continue. Programming costs as a percentage of video revenue were approximately 52.4% and 52.9% for the three and nine months ended September 30, 2008, respectively, compared to 54.2% and 52.2% for the three and nine months ended September 30, 2007, respectively. We have entered into contracts with various entities to provide programming to be aired on our network. We pay a monthly fee for these programming services, generally based on the average number of subscribers to the program, although some fees are adjusted based on the total number of subscribers to the system and/or the system penetration percentage. Since programming cost is partially based on numbers of subscribers, it will increase as we add more subscribers. It will also increase as costs per channel increase over time.

• Direct costs of data services. Direct costs of data services consist primarily of transport cost and network access fees. The direct cost of data services as a percentage of data revenue was approximately 6.0% and 5.7% for the three and nine months ended September 30, 2008, respectively, compared to 4.6% and 4.5% for the three and nine months ended September 30, 2007, respectively.

• Direct costs of other services. Direct costs of other services consist primarily of transport cost and network access fees. The direct cost of other services as a percentage of other revenue was approximately 15.6% and 15.4% for the three and nine months ended September 30, 2008, respectively, compared to 19.5% and 16.6% for the three and nine months ended September 30, 2007, respectively.

• Pole attachment and other network rental expenses. Pole attachment and other network rental expenses consist primarily of pole attachment rents paid to utility companies for space on their utility poles to deliver our various services and network hub rents. Pole attachment and other network rental expenses as a percentage of total revenue was approximately 1.1% and 1.2% for the three and nine months ended September 30, 2008, respectively, compared to 1.8% and 1.6% for the three and nine months ended September 30, 2007, respectively.

Relative to our current product mix, we expect voice and data revenue will become larger percentages of our overall revenue and potentially will provide higher gross profits. Based on the anticipated changes in our revenue mix, we expect that our consolidated cost of services as a percentage of our consolidated revenues will decrease.

Selling, general and administrative expenses include:

• Sales and marketing expenses. Sales and marketing expenses include the cost of sales and marketing personnel and advertising and promotional expenses.

• Network operations and maintenance expenses. Network operations and maintenance expenses include payroll and departmental costs incurred for network design, 24 hours a day, seven days a week maintenance monitoring and plant maintenance activity.

• Service and installation expenses. Service and installation expenses include payroll and departmental costs incurred for customer installation and service technicians.

• Customer service expenses. Customer service expenses include payroll and departmental costs incurred for customer service representatives and customer service management, primarily at our centralized call center.

• General and administrative expenses. General and administrative expenses consist of corporate and subsidiary management and administrative costs.

Depreciation and amortization expenses include depreciation of our interactive broadband networks and equipment and amortization of costs in excess of net assets and other intangible assets related to acquisitions.

As our sales and marketing efforts continue and our networks expand, we expect to add customer connections resulting in increased revenue. We also expect our cost of services and operating expenses to increase as we add connections and grow our business.

Results of Operations

Three months ended September 30, 2008 compared to three months ended
September 30, 2007

The following table sets forth financial data as a percentage of operating
revenues for the three months ended September 30, 2007 and 2008.



                                                       Three months ended
                                                          September 30,
                                                       2007           2008
       Operating revenues:
       Video                                               42 %           42 %
       Voice                                               34             34
       Data                                                23             23
       Other                                                1              1

       Total                                              100            100
       Operating expenses:
       Direct costs                                        31             30
       Selling, general and administrative                 39             38
       Depreciation and amortization                       25             23

       Total                                               95             91

       Operating income                                     5              9

       Interest income                                      0              0
       Interest expense                                   (12 )          (12 )
       Loss on debt extinguishment                          0              0
       Loss on interest rate derivative instrument          0              0
       Loss on adjustment of warrants to market             0              0
       Other income (expense), net                          0              0

       Total other expense                                (12 )          (12 )

       Loss from continuing operations                     (7 )           (3 )
       Income from discontinued operations                  9              0

       Net loss                                             2             (3 )

Revenues. Operating revenues increased 11.8% from $92.3 million for the three months ended September 30, 2007, to $103.2 million for three months ended September 30, 2008. Operating revenues from video services increased 12.6% from $38.3 million for the three months ended September 30, 2007, to $43.1 million for the same period in 2008. Operating revenues from voice services increased 10.1% from $31.8 million for the three months ended September 30, 2007, to $35.0 million for the same period in 2008. Operating revenues from data services increased 12.6% from $20.9 million for the three months ended September 30, 2007, to $23.5 million for the same period in 2008. Operating revenues from other services increased 16.0% from $1.3 million for the three months ended September 30, 2007, to $1.5 million for the same period in 2008.

The increased revenues are due primarily to an increase in the number of connections, from 639,397 as of September 30, 2007, to 670,884 as of September 30, 2008 and rate increases effective in the first and second quarters of 2008. The additional connections resulted primarily from the Graceba acquisition and:

• continued growth in our bundled customers;

• continued strong growth in business sales; and,

• continued penetration in our mature markets.

Direct Costs. Direct costs increased 7.5% from $28.8 million for the three months ended September 30, 2007, to $30.9 million for the three months ended September 30, 2008. Direct costs of video services increased 8.8% from $20.8 million for the three months ended September 30, 2007, to $22.6 million for the same period in 2008. Direct costs of voice services increased 7.3% from $5.1 million for the three months ended September 30, 2007, to $5.5 million for the same period in 2008. Direct costs of data services increased 46.5% from $1.0 million for the three months ended September 30, 2007, to $1.4 million for the same period in 2008. Direct costs of other services decreased 7.2% from $258,000 for the three months ended September 30, 2007, to $239,000 for the same period in 2008. Pole attachment and other network rental expenses decreased 28.7% from $1.6 million for the three months ended September 30, 2007, to $1.2 million for the same period in 2008. We expect our cost of services to increase as we add more connections. The increase in direct costs of video services is primarily due to the Graceba acquisition and programming costs increases, which have been increasing over the last several years on an aggregate basis due to an increase in subscribers and on a per subscriber basis due to an increase in costs per program channel. We expect this trend to continue, and we may not be able to pass these higher costs on to customers because of competitive factors, which could adversely affect our cash flow and gross profit. We expect increases in voice, data and other direct costs of services with the additions of leased facilities used to backhaul our traffic to our switching facilities as connections and data capacity requirements increase.

Selling, general and administrative expenses. Our selling, general and administrative expenses increased 9.2% from

$36.0 million for the three months ended September 30, 2007, to $39.3 million for the three months ended September 30, 2008. The increase in our operating costs, included in selling, general and administrative expenses, is consistent with our acquisition of Graceba and growth in connections and customers since the third quarter of 2007, and consists mainly of increases in sales and marketing, repairs and maintenance and gas for vehicles expense. We incurred non-recurring charges related to travel and other costs associated with the integration of PrairieWave Holdings, Inc. ("PrairieWave") and Graceba, included in selling, general and administrative expenses, which decreased from $303,000 for the three months ended September 30, 2007, to $268,000 for the three months ended September 30, 2008. Our non-cash stock option compensation expense, included in selling, general and administrative expenses, increased from $595,000 for the three months ended September 30, 2007, to $1.4 million for the three months ended September 30, 2008.

Depreciation and amortization. Our depreciation and amortization increased from $23.3 million for the three months ended September 30, 2007, to $23.8 million for the three months ended September 30, 2008 primarily due to the Graceba acquisition and new capital expenditures.

Interest expense. Interest expense increased from $11.1 million for the three months ended September 30, 2007, to $11.8 million for the three months ended September 30, 2008. The increase in interest expense is primarily a result of the additional incremental loan entered into in connection with the Graceba acquisition.

Loss from continuing operations. We incurred a loss from continuing operations of $6.7 million and $2.8 million for the three months ended September 30, 2007 and 2008, respectively.

Income from discontinued operations. On September 7, 2007, we sold our telephone directory business to Yellow Book for $8.6 million. This business was included in our April 2007 acquisition of PrairieWave. After recording transactions costs of $139,000 and writing off net assets of $210,000, the Company recorded a gain of $8.3 million. The net income for the three months ended September 30, 2007 was $248,000 and is also presented in income from discontinued operations.

Net loss. We incurred a net income of $1.8 million and a net loss of $2.8 million for the three months ended September 30, 2007 and 2008, respectively.

Nine months ended September 30, 2008 compared to nine months ended September 30, 2007

The following table sets forth financial data as a percentage of operating revenues for the nine months ended September 30, 2007 and 2008.

                                                        Nine months ended
                                                          September 30,
                                                       2007          2008
        Operating revenues:
        Video                                              43 %          42 %
        Voice                                              33            34
        Data                                               23            23
        Other                                               1             1

        Total                                             100           100
        Operating expenses:
        Direct costs                                       30            30
        Selling, general and administrative                40            38
        Depreciation and amortization                      25            23

        Total                                              95            91

        Operating income                                    5             9

        Interest income                                     0             0
        Interest expense                                  (12 )         (12 )
        Loss on debt extinguishment                       (11 )           0
        Loss on interest rate derivative instrument         0             0
        Loss on adjustment of warrants to market            0             0
        Other income (expenses), net                        0             0

        Total other expense                               (23 )         (12 )

        Loss from continuing operations                   (18 )          (3 )
        Income from discontinued operations                 3             0

        Net loss                                          (15 )          (3 )

Revenues. Operating revenues increased 21.3% from $252.9 million for the nine months ended September 30, 2007, to $306.7 million for nine months ended September 30, 2008. Operating revenues from video services increased 19.7% from $107.3 million for

the nine months ended September 30, 2007, to $128.5 million for the same period in 2008. Operating revenues from voice services increased 23.7% from $84.3 million for the nine months ended September 30, 2007, to $104.3 million for the same period in 2008. Operating revenues from data services increased 20.0% from $57.8 million for the nine months ended September 30, 2007, to $69.4 million for the same period in 2008. Operating revenues from other services increased 31.2% from $3.5 million for the nine months ended September 30, 2007, to $4.6 million for the same period in 2008.

The increased revenues are due primarily to an increase in the number of connections, from 639,397 as of September 30, 2007, to 670,884 as of September 30, 2008 and rate increases effective in the first and second quarters . . .