Mpower Holdings Corporation - Communications Services

(585) 218-6550

175 Sully's Trail, Suite 300

Pittsford, NY 14534

www.mpowerss.com

Business Description

We were one of the first facilities-based competitive local telephone companies founded after the inception of the Telecommunications Act of 1996, which opened up the local telephone market to competition. Today, we offer local and long distance voice services as well as high-speed Internet access and voice over internet protocol (“VOIP”) telephony by way of a variety of broadband product and service offerings over our own network of collocations and switches. On January 1, 2005, we acquired certain assets of ICG Communications, Inc. (“ICG”) in California. The assets acquired include ICG’s customer base and certain network assets in California, including a 1,412 route mile state-wide fiber ring and 915 miles of metropolitan fiber rings that connect 128 commercial buildings throughout major cities in California. Our services have historically been offered primarily to small and medium-sized business customers in all of our markets and residential customers primarily in the Las Vegas, Nevada market through our wholly-owned subsidiary, Mpower Communications Corp. (“Communications”). Our markets include Los Angeles, California, San Diego, California, Northern California (the San Francisco Bay area and Sacramento), Las Vegas, Nevada and Chicago, Illinois. As of February 2005, we have approximately 48,000 business customers and approximately 18,000 residential customers, excluding the customers we obtained in the ICG acquisition. Many of the ICG customers acquired are larger accounts that generate more average monthly revenue than our existing customer base. We also bill a number of major local and long distance carriers for the costs of originating and terminating traffic on our network for our local service customers. We do not have any unbundled network element platform (“UNE-P”) revenues although we are actively pursuing opportunities to provide network-based alternatives to UNE-P carriers on a wholesale basis in light of recent regulatory changes.