SCHEDULE 14A INFORMATION
                Proxy Statement Pursuant to Section 14(a) of the
                        Securities Exchange Act of 1934

Filed by the Registrant  [ x ]

Check the appropriate box:

[   ]  Preliminary Proxy Statement
[ x ]  Definitive Proxy Statement
[   ]  Definitive Additional Materials
[   ]  Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
[   ]  Confidential, for Use of the Commission Only (as permitted by Rule
       14a-6(e) (2))

                     DATA TRANSMISSION NETWORK CORPORATION
                (Name of Registrant as Specified in its Charter)
                ------------------------------------------------
                   (Name of Person(s) Filing Proxy Statement
                         if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[   ]  $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
       or Item 22(a)(2) of Schedule 14A.

[   ]  $500 per each party to the controversy pursuant to Exchange Act Rule
       14a-6(i)(3).

[   ]  Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

       1) Title of each class of securities to which transaction applies:

          ----------------------------------------------------------------
       2) Aggregate number of securities to which transaction applies:

          ----------------------------------------------------------------
       3) Per unit price or other underlying value of transaction computer
          pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
          the filing fee is calculated and state how it was determined):

          ----------------------------------------------------------------
       4) Proposed maximum aggregate value of transaction:
          
          ----------------------------------------------------------------
       5) Total fee paid:

          ----------------------------------------------------------------

[   ]  Fee paid previously with preliminary materials.

[   ]  Check box if any part of the fee is offset as provided by Exchange Act
       Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
       paid previously.  Identify the previous filing by registration statement
       number, or the Form or Schedule and the date of its filing.

          1)   Amount Previously Paid: 
                                        ----------------------------------
          2)   Form, Schedule or Registration Statement No.: 
                                                             -------------
          3)   Filing Party:
                            ----------------------------------------------
          4)   Date Filed:
                          ------------------------------------------------

                                       2
                                    - 797 -
<PAGE>
  




                      DATA TRANSMISSION NETWORK CORPORATION
                         9110 West Dodge Road, Suite 200
                              Omaha, Nebraska 68114
                                 (402) 390-2328


                    NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
                          TO BE HELD ON APRIL 28, 1999



     NOTICE IS HEREBY  GIVEN that the Annual  Meeting  of  Stockholders  of Data
Transmission Network Corporation,  a Delaware corporation (the "Company"),  will
be held at the Holiday Inn-Old Mill, 655 North 108th Avenue,  Omaha, Nebraska on
Wednesday,  April 28, 1999 at 10:00 A.M. Omaha time for the following  purposes,
as more fully described in the accompanying Proxy Statement:

     1.   To elect nine directors to the Board of Directors.

     2.   To consider  and vote upon a proposal to approve  the  Company's  1999
          Stock Incentive Plan.

     3.   To  consider  and vote upon a proposal  to ratify the  appointment  of
          Deloitte & Touche LLP as  independent  auditors of the Company for the
          1999 fiscal year.

     4.   To  transact  such other  business  as may  properly  come  before the
          meeting or any adjournments thereof.

     Any  action  may be  taken  on any one of the  foregoing  proposals  at the
meeting  on the date  specified  above,  or on any  date or  dates to which  the
meeting may be  adjourned.  The Board of  Directors of the Company has fixed the
close of business on March 1, 1999, as the record date for  determination of the
stockholders of the Company entitled to notice of and to vote at the meeting.

     All  stockholders  are  cordially  invited to attend the meeting in person.
However, to assure your representation at the meeting, please complete, date and
sign the enclosed proxy card and mail it promptly in the self-addressed envelope
provided.  The giving of such proxy does not affect your right to vote in person
in the event you attend the meeting.

                                              BY ORDER OF THE BOARD OF DIRECTORS



Omaha, Nebraska                               Brian L. Larson
March 15, 1999                                Secretary

IMPORTANT:  THE PROMPT  RETURN OF PROXIES  WILL SAVE YOUR COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES IN ORDER TO INSURE A QUORUM. AN ADDRESSED  ENVELOPE
IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES.

                                       3
                                    - 798 -
<PAGE>



                      DATA TRANSMISSION NETWORK CORPORATION
                                 Proxy Statement


                                      Index
                                                                            Page

Proxy Statement..............................................................1
Proxies......................................................................1
Voting Securities............................................................1
Election of Directors........................................................2
Ownership by Certain Beneficial Owners and Management........................5
Executive Compensation.......................................................8
Compensation Committee Report on Executive Compensation......................11
Proposal for 1999 Stock Incentive Plan.......................................13
Approval of Appointment of Auditors..........................................19
Transactions with Management.................................................19
Compensation Committee Interlocks and Insider Participation..................19
Stockholder Proposals for 2000 Annual Meeting................................19
Section 16(a) Beneficial Ownership Reporting Compliance......................20
Other Matters................................................................20
Miscellaneous................................................................20
Exhibit 1 to Proxy Statement - 1999 Stock Incentive Plan.....................22






                                       4
                                     - 799 -
<PAGE>



                                 PROXY STATEMENT

                         ANNUAL MEETING OF STOCKHOLDERS
                            TO BE HELD APRIL 28, 1999

     This Proxy  Statement is furnished in connection  with the  solicitation of
proxies by the Board of Directors of Data Transmission  Network  Corporation,  a
Delaware  corporation  (the  "Company"),  to be used at the  Annual  Meeting  of
Stockholders  (the  "Meeting") to be held at the Holiday Inn-Old Mill, 655 North
108th Avenue, Omaha, Nebraska on Wednesday,  April 28, 1999, at 10:00 A.M. Omaha
time.  Stockholders  of  record at the  close of  business  on March 1, 1999 are
entitled  to  notice  of and to vote at the  Meeting.  The  Company's  principal
executive  offices  are  located at 9110 West  Dodge  Road,  Suite  200,  Omaha,
Nebraska 68114.

                                     PROXIES

     Proxies are being  solicited  by the Board of Directors of the Company with
all costs of the  solicitation  to be paid by the Company.  If the  accompanying
proxy is executed  and  returned,  the shares  represented  by the proxy will be
voted as specified therein. A stockholder may revoke any proxy given pursuant to
this  solicitation  by  delivering to the Company prior to the Meeting a written
notice of  revocation  or by  attending  the Meeting and voting in person.  This
notice of Annual Meeting of Stockholders, proxy statement and accompanying proxy
card are first being mailed to stockholders on or about March 15, 1999.

                                VOTING SECURITIES

     At March 1, 1999, the Company had issued and  outstanding 11,625,320 shares
of the Company's $.001 par value common stock. The Company has no other class of
voting  securities  outstanding.  Each  stockholder  voting in the  election  of
directors may cumulate such stockholder's  votes and give one candidate a number
of votes equal to the number of directors to be elected multiplied by the number
of votes to which such stockholder's shares are entitled, or may distribute such
votes on the same principle among as many candidates as the stockholder chooses,
provided  that votes  cannot be cast for more than the total number of directors
to be elected at the Meeting.  The nine nominees receiving the most votes at the
Meeting  will be  elected  as  directors.  Each  share has one vote on all other
matters. An affirmative vote of a majority of the shares present in person or by
proxy and  entitled to vote at the Meeting is required for approval of all other
matters being submitted to the stockholders for their consideration.

     In accordance  with  Delaware  law, a shareholder  entitled to vote for the
election of  directors  can  withhold  authority to vote for all nominees or for
certain  nominees  for  directors.  Abstentions  from voting on the  proposal to
approve the 1999 Stock  Incentive Plan or to ratify the  appointment of auditors
are treated as votes against such proposal.  Broker non-votes on the proposal to
approve the 1999 Stock  Incentive Plan or to ratify the  appointment of auditors
are  treated  as  shares  as to which  voting  power  has been  withheld  by the
beneficial  holders of those  shares and,  therefore,  as shares not entitled to
vote on the proposal.



                                        
                                       5
                                    - 800 -
<PAGE>



                                 PROPOSAL NO. 1

                              ELECTION OF DIRECTORS

     At the Meeting, the stockholders will elect a board of nine directors for a
term extending  until the 2000 annual meeting of stockholders of the Company and
until their  respective  successors have been elected and qualify.  The Board of
Directors  as nominated  for  election or  re-election  as  directors:  Roger R.
Brodersen, Scott A. Fleck, Richard R. Jaros, Peter H. Kamin, David K. Karnes, J.
Michael  Parks,  Jay E. Ricks,  Greg T. Sloma and Roger W.  Wallace.  All of the
nominees presently are serving as directors of the Company. Proxies may be voted
for nine directors.

     If any  nominee  is unable to serve,  the shares  represented  by all valid
proxies  will be voted  for the  election  of such  substitute  as the  Board of
Directors  may  recommend  or the Board of  Directors  may amend the By-Laws and
reduce the size of the Board. At this time, the Board knows of no reason why any
nominee might be unavailable to serve.

     Set forth below is certain information as of March 1, 1999, with respect to
the nominees for election as directors of the Company.  The information relating
to their  respective  business  experience  was furnished to the Company by such
persons.
<TABLE>
<CAPTION>

Nominee                    Age          Positions and Offices with the Company               Director Since

<S>                        <C>           <C>                                                     <C> 
Roger R. Brodersen         53            Chairman of the Board,                                  1984
                                         Chief Executive Officer and Director

Scott A. Fleck             31            Vice President and Director                             1997

Richard R. Jaros           46            Director                                                1998

Peter H. Kamin             37            Director                                                1998

David K. Karnes            50            Director                                                1989

J. Michael Parks           48            Director                                                1990

Jay E. Ricks               66            Director                                                1995

Greg T. Sloma              47            President, Chief Operating Office and                   1993
                                         Director

Roger W. Wallace           42            Senior Vice President and Director                      1984
</TABLE>

     Mr.  Brodersen  has  served as  Chairman  of the Board and Chief  Executive
Officer of the Company  since 1984.  Mr.  Brodersen  served as  President of the
Company from 1984 to 1995.

     Mr. Fleck has served as Vice  President of the Company  since 1997.  He has
served as Director of Engineering  of the Company since 1996.  Prior to becoming
Director of Engineering, Mr. Fleck held the position of Director of Software and
Hardware Development since joining the Company in 1991.




                                        6
                                     - 801 -
<PAGE>

     Mr. Jaros, age 46, served as President of Kiewit  Diversified  Group, Inc.,
now Level 3  Communications,  Inc.,  from 1996 to 1997.  From 1993 to 1997,  Mr.
Jaros served as an executive  officer and member of the  Executive  Committee of
Peter Kiewit Sons',  Inc.,  first as Executive  Vice President from 1993 to 1995
and then as Executive Vice President, Chief Financial Officer from 1995 to 1997.
He served as Chairman of the Board of CalEnergy Company,  Inc. from 1993 to 1994
and served as its President and Chief  Operating  Officer from 1992 to 1993. Mr.
Jaros  presently  serves on the Board of  Directors  of Level 3  Communications,
Inc., CalEnergy Company, Inc., RCN Corporation and Commonwealth Telephone.

     Mr.  Kamin,  age 37, has served as  President of Peak  Management,  Inc., a
General Partner of Peak Investment  Limited  Partnership,  since 1992. Mr. Kamin
served as co-manager of the U.S. private and public equity market activities for
The Morningside Group (an offshore family trust) from 1987 to 1992. He served as
Assistant  Portfolio  Manager for the  Fidelity  Magellan  Fund and the Fidelity
Over-The-Counter  Fund from 1986 to 1987.  He was an Equity  Analyst at Fidelity
Management and Research from 1983 to 1986. As more fully  disclosed in the Proxy
Statement,  as of  the  record  date  Mr.  Kamin  and  Peak  Investment  Limited
Partnership  are the  beneficial  owners of 546,200  shares of DTN common stock.
Such shares represent  approximately 4.7% of the Company's outstanding shares of
common stock.

     Mr.  Karnes  has served as  President  and Chief  Executive  Officer of The
Fairmont Group,  Inc., a financial  services and consulting firm, since 1989. He
is  currently a Director  of the Federal  Home Loan Bank of Topeka and served as
its  Chairman  from 1989 to 1996.  Mr.  Karnes  also  served as a United  States
Senator from 1987 to 1989.

     Mr. Parks has served as President and Chief  Executive  Officer of Alliance
Data Systems, a provider of data processing  services,  since 1997. He served as
President and Chief Operating  Officer of First Data Resources Inc. from 1993 to
1994 and President of the Merchant  Services  Group of First Data Resources Inc.
from 1991 to 1993.  He also served as President and Chief  Executive  Officer of
Call Interactive,  an affiliate of First Data Resources Inc., from 1989 to 1991.
From 1976 to 1989,  Mr. Parks  served as  President or Senior Vice  President of
various American Express Information Services Companies or their subsidiaries.

     Mr. Ricks has served as Chairman of Douglas Communications  Corporation, an
operator of cable  television  systems,  since 1990. He was a partner in the law
firm of Hogan & Hartson in Washington,  D.C.,  from 1970 to 1990. Mr. Ricks is a
director of Amtera Technologies, Inc., a communications software company.

     Mr. Sloma has served as President of the Company since January 1996. He has
served as Chief  Operating  Officer of the Company since January 1994. Mr. Sloma
served as Executive  Vice President of the Company from January 1994 to December
1995 and as Chief Financial  Officer from April 1993 to December 1993. From 1983
to 1993, Mr. Sloma was a Tax Partner at Deloitte & Touche.  Mr. Sloma has served
as a Director of West TeleServices Corporation since 1997.

     Mr.  Wallace has served as Senior Vice President of the Company since 1989.
He served as Vice President of the Company from 1984 to 1989.


                                        

                                       7
                                    - 802 -
<PAGE>


Board Meetings and Committees

     The Board of  Directors  met twelve times (four  regular and eight  special
meetings)  during the fiscal year ended  December 31, 1998.  During fiscal 1998,
with the exception of Mr. Parks and Mr. Robert  Herman  (former  Director of the
Company)  who were not  present at one  meeting of the Board of  Directors,  all
directors  attended all of the meetings of the Board of  Directors,  and related
committees on which they served. The Company does not have a Standing Nominating
Committee.

     The Audit Committee  recommends the selection of the independent  auditors,
reviews the scope of the audits performed by them and reviews their audit report
and any recommendations made by them relating to internal financial controls and
procedures.  Members of the Audit Committee met twice during fiscal 1998.  David
K.  Karnes,  Peter H. Kamin and Jay E. Ricks are  presently  the  members of the
Audit Committee. Jay E. Ricks is the Chairman of the current Audit Committee.

     The Compensation  Committee reviews and makes  recommendations to the Board
of Directors regarding officers' compensation and the Company's employee benefit
plans;  provided,  however, the Compensation Committee administers the Company's
Stock Option Plan of 1989 through its Stock Option Plan Subcommittee, consisting
of all members of the Compensation  Committee other than Greg T. Sloma.  Members
of the Compensation Committee, which met once during fiscal 1998, are Richard R.
Jaros,  David K. Karnes, J. Michael Parks, Jay E. Ricks and Greg T. Sloma. David
K. Karnes is the Chairman of the Compensation  Committee and Richard R. Jaros is
Chairman of the Stock Option Plan Subcommittee.

     At the Annual  Meeting of the Board of Directors  of the Company,  held May
21,  1998,  the Board  established  a  committee  of its members  (the  "Special
Committee") to explore  alternatives  to produce greater value for the Company's
shareholders. Members of the Special Committee, which met three times during the
fiscal year ended December 31, 1998, are Roger R. Brodersen, Jay E. Ricks, Peter
H.  Kamin and  Richard R.  Jaros,  with Mr.  Kamin  acting as  Chairman  for the
meetings.

Directors Compensation

     During  fiscal 1998,  each member of the Board of Directors  who was not an
employee of the Company  received  $2,500 for each  regular  Board of  Directors
meeting  attended,  $5,000 for the eight  special  Board of  Directors  meetings
attended,  $600  for each  Audit  Committee  meeting  attended,  $1,500  for the
Compensation  Committee  meeting  attended  and  $1,500  for the  three  Special
Committee meetings attended. Non-employee members of the Board of Directors also
receive awards under the Company's Non-Employee Directors Stock Option Plan (the
"Non-Employee  Directors  Plan").  Stock option  grants  under the  Non-Employee
Directors  Plan are  automatic  and occur each time a  non-employee  director is
elected,  re-elected or appointed a director of the Company. In 1998, Richard R.
Jaros,  Peter H. Kamin,  David K. Karnes, J. Michael Parks and Jay E. Ricks each
received an option to purchase 3,500 shares of the Company's  common stock at an
exercise  price of $41.75 per share.  The  Non-Employee  Directors Plan had been
amended  for fiscal year 1998 to reduce from 4,500 to 3,500 the number of shares
for which options are to be awarded to each non-employee  director. The exercise
price of  options  granted  under the  Non-Employee  Directors  Plan is the fair
market value of the common stock on the date of the option grant.




                                       8
                                    - 803 -
<PAGE>


              OWNERSHIP BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth  information as to the beneficial  ownership
of the Company's  common stock by each person or group who, as of March 1, 1999,
to  the  knowledge  of the  Company,  beneficially  owned  more  than  5% of the
Company's common stock:

<TABLE>
<CAPTION>
       Name and Address of                       Amount and Nature            Percent of
         Beneficial Owner                           of Ownership                Class

<S>                                                <C>                            <C>                 
Roger R. Brodersen                                 1,719,641   (1)                14.8%
16705 Ontario Plaza
Omaha, NE  68130

Wanger Asset Management, L.P.,                     1,539,800   (2)                13.2%
  Wanger Asset Management Ltd.,
  and Ralph Wanger
227 West Monroe, Suite 3000
Chicago, IL 60606

Wallace R. Weitz & Company                         1,164,100   (3)                10.0%
1125 South 103rd Street
Suite 600
Omaha, NE  68124

Acorn Investment Trust,                            1,028,100   (4)                8.8%
  Series Designated Acorn Fund
227 West Monroe Street, Suite 3000
Chicago, IL 60606


</TABLE>

-----------------------------------

(1)      This includes 249,167 shares subject to options  exercisable  within 60
         days of March 1, 1999, 39,150 shares held in a trust for the benefit of
         Mr.  Brodersen's  children,  36,999  shares  beneficially  owned by Mr.
         Brodersen's  spouse,  and  18,455  shares  allocated  to Mr.  Brodersen
         through his participation in the Company's 401(k) Savings Plan.

(2)      According  to a Schedule  13G dated  February  23, 1999,  Wanger  Asset
         Management,  L.P.,  Wanger Asset Management Ltd., and Ralph Wanger have
         shared  voting and shared  dispositive  power  over such  shares.  Such
         shares   include   1,028,100   shares  also  shown  in  this  table  as
         beneficially  owned by Acorn Investment Trust,  Series Designated Acorn
         Fund.  Wanger Asset  Management,  L.P. serves as investment  adviser to
         such trust.  Wanger  Asset  Management  Ltd. is the general  partner of
         Wanger Asset Management, L.P. Ralph Wanger is the principal stockholder
         of Wanger Asset Management Ltd.

(3)      According to a Schedule 13G dated February 10, 1999, Wallace R. Weitz &
         Company has sole voting and shared dispostive power over such shares.

(4)      According to a Schedule 13G dated February 23, 1999,  Acorn  Investment
         Trust has shared voting and shared  dispositive power over such shares.
         Such  shares  also are  shown in this  table as  beneficially  owned by
         Wanger Asset Management,  L.P. which is the investment advisor of Acorn
         Fund.

                                       
                                       9
                                    - 804 -
<PAGE>



     The following table sets forth information as to the shares of common stock
of the Company  beneficially  owned as of March 1, 1999, by each director of the
Company,  by each nominee for election as a director of the Company,  by each of
the executive officers named in the Summary Compensation Table beginning on page
8, and by all directors and executive officers of the Company as a group:

<TABLE>
<CAPTION>
                                                Amount and Nature                  Percent of
Beneficial Owner                                of Ownership ( 1)                  Class ( 2)

<S>                                                 <C>                                 <C>                     
Roger R. Brodersen                                  1,719,641    ( 3)                   14.8%

Scott A. Fleck                                          6,305    ( 4)                   *

Richard R. Jaros                                           --                          --

Peter H. Kamin                                        546,200                           4.7%

David K. Karnes                                        64,935    ( 5)                   *

James J. Marquiss                                     147,382    ( 6)                   1.3%

J. Michael Parks                                       47,999    ( 7)                   *

Jay E. Ricks                                           19,500    ( 8)                   *

Greg T. Sloma                                         175,857    ( 9)                   1.5%

Roger W. Wallace                                      282,985    (10)                   2.4%

Charles R. Wood                                        48,353    (11)

All directors and executive officers
as a group (19 persons)                             3,214,294    (12)                   27.6%

*Less than 1.0%
--------------------------
</TABLE>

(1)      The  number  of  shares in the  table  include  interests  of the named
         persons,  or of members of the directors  and  executive  officers as a
         group,  in shares held by the trustee of the Company's  401(k)  Savings
         Plan.  The  beneficial  owners  have sole  investment  power over these
         shares but do not have sole voting power.

(2)      Shares subject to options  exercisable  within 60 days of March 1, 1999
         ("Presently  Exercisable Options") are deemed to be outstanding for the
         purpose of computing the percentage  ownership of persons  beneficially
         owning such options but have not been deemed to be outstanding  for the
         purpose of computing the percentage ownership of any other person.

(3)      Includes  249,167  shares  subject to  Presently  Exercisable  Options,
         39,150  shares  which are held in trust for Mr.  Brodersen's  children,
         36,999 shares  beneficially owned by Mr. Brodersen's spouse, and 18,455
         shares  allocated to Mr.  Brodersen  through his  participation  in the
         Company's 401(k) Savings Plan.

(4)      Includes  4,434  shares  subject to Presently  Exercisable  Options and
         1,871 shares  allocated to Mr. Fleck through his  participation  in the
         Company's 401(k) Savings Plan.

                                       10
                                    - 805 -
<PAGE>





(5)      Includes 35,499 shares subject to Presently Exercisable Options.

(6)      Includes  72,999 shares  subject to Presently  Exercisable  Options and
         14,383 shares  allocated to Mr. Marquiss  through his  participation in
         the Company's 401(k) Savings Plan.

(7)      Includes 33,999 shares subject to Presently Exercisable Options.

(8)      Includes 16,500 shares subject to Presently Exercisable Options.

(9)      Includes 131,677 shares subject Presently  Exercisable  Options,  4,212
         shares  beneficially  owned by Mr.  Sloma's  children and 21,728 shares
         allocated  to Mr.  Sloma  through his  participation  in the  Company's
         401(k) Savings Plan.

(10)     Includes 101,182 shares subject to Presently Exercisable Options, 4,500
         shares  beneficially  owned by Mr. Wallace's spouse,  and 15,453 shares
         allocated to Mr.  Wallace  through his  participation  in the Company's
         401(k) Savings Plan.

(11)     Includes  3,758  shares  subject to Presently  Exercisable  Options and
         7,932 shares  allocated to Mr. Wood  through his  participation  in the
         Company's 401(k) Savings Plan.

(12)     Includes  731,037  shares  subject to  Presently  Exercisable  Options,
         39,150 shares held in trust for the children of executive  officers and
         directors,  45,711 shares owned  beneficially by spouses or children of
         executive  officers  and  directors,  and 92,727  shares  allocated  to
         executive officers through their  participation in the Company's 401(k)
         Savings Plan.

                                        

                                       11
                                    - 806 -
<PAGE>


                             EXECUTIVE COMPENSATION

     The  following  table  sets  forth  information  with  respect to the Chief
Executive  Officer  and the four  remaining  most highly  compensated  executive
officers of the Company for the fiscal year ended December 31, 1998.

                           Summary Compensation Table
                                      
<TABLE>
<CAPTION>
                  Long Term
              Annual Compensation                                                Compensation
   (a)                (b)              (c)          (d)            (e)               (f)                    (g)

                                                                   Other          Securities
                                                                   Annual         Underlying
Name and Principal                                                 Compen-          Options            All Other
    Position              Year        Salary        Bonus         sation(1)         shares)         Compensation(2)

<S>                       <C>        <C>           <C>              <C>          <C>                  <C>   
Roger R. Brodersen        1998       $200,000      $122,518         $0           $   7,500            $6,400
Chairman &                1997        195,744       137,304          0              10,000             6,400
Chief Executive Officer   1996        179,172       112,178          0             240,000(3)          9,500

Greg T. Sloma             1998        180,000       110,115          0               7,500             6,400
President &               1997        172,593       121,312          0              10,000             6,400
Chief Operating Officer   1996        145,996       147,707          0              16,500             9,500

Roger W. Wallace          1998        150,000       103,730          0               4,200             6,400
Senior Vice President     1997        143,628       123,498          0               5,600             6,400
                          1996        120,858       108,390          0               7,500             9,170

James J. Marquiss         1998        140,000        97,711          0               3,375             6,400
Senior Vice President     1997        135,936       125,401          0               4,500             6,400
                          1996        120,858       108,390          0               6,000             9,170

Charles R. Wood           1998        136,538        55,210          0               3,375             6,400
Senior Vice President     1997        120,385        59,327          0               3,400             6,400
                          1996        101,346        41,374          0               4,500             5,709

</TABLE>


(1)      Excludes  perquisites and other benefits  because the aggregate of such
         compensation was less than either $50,000 or 10% of the total of annual
         salary and bonus reported for the named executive officer.

(2)      The amounts  included in the All Other  Compensation  column  represent
         401(k) matching contributions made by the Company.

(3)      This amount  includes  225,000 shares  underlying a replacement  option
         issued to Mr.  Brodersen  during 1996 in exchange for the  surrender of
         outstanding,  unexpired and unexercised options to acquire an aggregate
         of  117,999  shares  previously  awarded  to Mr.  Brodersen  under  the
         Company's   Employee  Stock  Option  Plan.  The   surrendered   options
         exercisable  for 117,999  shares were  considered  for tax  purposes as
         incentive stock options,  whereas,  the replacement  option for 225,000
         shares is considered for tax purposes as a non-qualified  stock option.
         The  weighted  average  exercise  price  per  share of the  surrendered
         options was $6.28,  while the exercise price of the replacement  option
         was the fair  market  value of the  common  stock on January 5, 1996 or
         $15.50 per share.

                                        
                                       12
                                    - 807 -
<PAGE>
                                

         The following table shows,  as to the Chief  Executive  Officer and the
four  remaining  most highly  compensated  executive  officers  of the  Company,
information about stock option grants in fiscal 1998. The Company does not grant
any stock appreciation rights.


                        Option Grants In Last Fiscal Year
                                Individual Grants
<TABLE>
<CAPTION>
                                      
   (a)                (b)                 (c)                  (d)                 (e)                (f)
---------        --------------     ---------------       -------------       --------------     --------------
                   Number of
                   Securities          Percent of
                   Underlying         Total Options
                    Options            Granted to            Exercise                              Grant Date
                    Granted           Employees In            Price             Expiration           Present
  Name            (shares) (1)        Fiscal 1998           (Per share)            Date             Value (2)
------------     --------------     ---------------       -------------       --------------     --------------

<S>                  <C>                 <C>                 <C>                  <C>                  <C>     
Roger R. Brodersen   7,500               3.2%                $27.50               1-01-08              $106,800

Greg T. Sloma        7,500               3.2%                 27.50               1-01-08               106,800

Roger W. Wallace     4,200               1.8%                 27.50               1-01-08                59,800

James J. Marquiss    3,375               1.4%                 27.50               1-01-08                48,100

Charles R. Wood      3,375               1.4%                 27.50               1-01-08                48,100

</TABLE>

(1)      Except  as  indicated  in the  footnotes  to this  table,  the  options
         referred  to in this  table  were  granted  by the  Stock  Option  Plan
         Subcommittee  on  January 1, 1998 under the  Company's  Employee  Stock
         Option Plan.

(2)      As  suggested  by the  Securities  &  Exchange  Commission's  rules  on
         executive  compensation,  the Company used the  Black-Scholes  model of
         option  valuation to determine  grant date present  value.  The Company
         does not necessarily  agree that the  Black-Scholes  model can properly
         determine  the  value  of an  option.  The  actual  value,  if any,  an
         executive may realize will depend on the excess of the stock price over
         the exercise  price on the date the option is exercised,  so that there
         is no assurance  that the value  realized  will be at or near the value
         estimated by the Black-Scholes model.

                                       13
                                    - 808 -
<PAGE>



     The following table provides information on option exercises in fiscal 1998
and the  value of  unexercised  options  at  December  31,  1998  for the  Chief
Executive  Officer  and the four  remaining  most highly  compensated  executive
officers.

                 Aggregated Option Exercises In Last Fiscal Year
                        And Fiscal Year End Option Values
                                      
<TABLE>
<CAPTION>
                                                                    Number of Securities
                         Shares                                    Underlying Unexercised                  Value of Unexercised
                        Acquired                                     Options at Fiscal                     In-the-Money Options
                           On                 Value                  Year End (shares)                   At Fiscal Year End (1)
Name                    Exercise             Realized           Exercisable        Unexercisable      Exercisable      Unexercisable

<S>                        <C>              <C>                 <C>                <C>               <C>       
Roger R. Brodersen           -                    0           163,334             94,166             $2,165,800        $1,130,700

Greg T. Sloma           15,000              382,500           122,834             19,666              2,694,800           120,600

Roger W. Wallace             -                    0           101,415             10,433              2,316,500            67,200

James J. Marquiss            -                    0            71,374              8,375              1,625,800            53,900

Charles R. Wood         36,288            1,327,000                 0              7,141                      0            41,700

</TABLE>


(1)      The closing  "bid"  price of the  Company's  common  stock as quoted by
         NASDAQ on December  31, 1998 was $28.88.  The values shown are computed
         based upon the difference  between this price and the exercise price of
         the underlying options.



Performance Graph

     The following  performance  graph compares the performance of the Company's
common stock to the Center for Research in Securities Prices (CRSP) Total Return
Index for the NASDAQ Stock Market (U.S.  Companies) and to the CRSP Total Return
Industry Index for NASDAQ Telecommunications  Stocks. The graph assumes that the
value of the investment in the Company's Common Stock and each index was $100 at
December 31, 1993.

<TABLE>
<CAPTION>
                                                              Nasdaq 
                                      Nasdaq Total      Telecommunications
     Year               DTN           Return Index        Industry Index
     ----               ---           ------------      ------------------
<S>  <C>                <C>               <C>                 <C>
     1993               100               100                 100
     1994               65                 98                  83
     1995               188               138                 109
     1996               254               170                 112
     1997               320               209                 165
     1998               326               293                 270


</TABLE>

                                       14
                                    - 809 -
<PAGE>





                          COMPENSATION COMMITTEE REPORT
                            ON EXECUTIVE COMPENSATION



Compensation Philosophy

     The Company strives to apply a consistent  philosophy on  compensation  for
all  employees,  including  senior  management.  The  goals of the  compensation
program are to directly link compensation  with corporate  profitability and the
enhancement of the  underlying  value of the Company's  business.  The following
objectives are used by the Company and the Compensation  Committee as guidelines
for compensation decisions:

         Provide a  competitive  total  compensation  package  that  allows  the
Company to attract and retain the best people possible.

         The Company pays for  performance.  Employees  are rewarded  based upon
corporate performance, business unit performance and individual performance.

         Provide  variable  compensation  programs  that  are  linked  with  the
performance  of the  Company  and that  align  executive  compensation  with the
interests of shareholders.

Compensation Program Components

     The  Compensation  Committee  annually  reviews the Company's  compensation
program to ensure that pay levels and incentive  opportunities  are  competitive
and reflect the performance of the Company.  The components of the  compensation
program  for  executive  officers,  which are  comparable  to those used for all
employees, are outlined below.

     Base  Salary - Base pay  levels are  determined  by  reviewing  competitive
positions in the market,  including  comparisons with companies of similar size,
complexity and growth rates. Increases in base salary were recommended by senior
management  for  fiscal  1998 for the  Chief  Executive  Officer  and the  other
executive officers named in the Summary Compensation Table, and the Compensation
Committee acted in accordance with this recommendation.

     Variable  Incentive  Compensation  - The large  majority  of the  Company's
employees,  including the executive officers, participate in an annual incentive
award plan.  The amount of incentive  compensation  is based upon the  Company's
achievement  of goals  established  at the  beginning  of the fiscal year by the
Compensation Committee.  For fiscal 1998, the incentive plans were tied to sales
and income before income taxes,  depreciation  and  amortization  expenses.  The
incentive was awarded  approximately  50% based on sales and 50% based on income
before income taxes and depreciation and amortization expense.

     Stock Option  Program - The purpose of this program,  which is available to
the  large  majority  of  employees,  is to  provide  additional  incentives  to
employees to work to maximize long-term  shareholder value. It also uses vesting
periods to encourage key employees to continue in the employ of the Company. The
number of stock options  granted to executive  officers is based on  competitive
practices.


                                       15
                                    - 810 -
<PAGE>



CEO Compensation

     The factors and criteria upon which Mr. Brodersen's  compensation was based
for  fiscal  year  1998  are the same as those  considered  by the  Compensation
Committee in  establishing  the  compensation  program for all of the  executive
officers  of the  Company  as  outlined  above.  The annual  base  salary of Mr.
Brodersen was established by the Compensation Committee on December 18, 1997 for
the  period of April 1, 1998 to March 31,  1999.  The  Compensation  Committee's
decision was based on Mr. Brodersen's  personal performance of his duties and on
salary  levels  to chief  executive  officers  of  companies  of  similar  size,
complexity and growth rates.

     Mr.  Brodersen's 1998 fiscal year incentive cash  compensation was based on
the actual financial performance of the Company. His annual cash incentive award
was based on the incentive plan described above.

     An option  grant for 7,500  shares was awarded to Mr.  Brodersen  under the
Company's  Employee Stock Option Plan based upon his  performance and leadership
with the Company.

                Compensation Committee of the Board of Directors
                           David K. Karnes - Chairman
                                J. Michael Parks
                                  Jay E. Ricks
                                  Greg T. Sloma
                                Richard R. Jaros



                                       16
                                    - 811 -
<PAGE>






                                 PROPOSAL NO. 2

                            1999 STOCK INCENTIVE PLAN



Proposed Plan and Purposes

     At the Meeting,  the  stockholders  will be asked to approve the  Company's
1999 Stock Incentive Plan (the "1999 Plan"), as adopted by the Board on February
25, 1999. If approved by stockholders,  the 1999 Plan will replace the Company's
existing  employee  Stock  Option Plan of 1989 (the "1989 Plan") and the Company
will not grant any new awards  under the 1989 Plan.  Stock  options  outstanding
under the 1989 Plan will continue to be governed by that plan.

     As of March 1, 1999,  options for approximately  1,577,000 shares of Common
Stock were outstanding under the 1989 Plan, and approximately  353,000 shares of
Common Stock  remained  available for future option grants under that plan.  The
Board of  Directors  is not  requesting  any  additional  shares  not  otherwise
available  under the 1989 Plan.  The 1999 Plan  authorizes  for option grants or
other awards to eligible full-time employees of the Company or any subsidiary of
the Company (i) the 353,000  shares which  remained  available for future option
grants  under the 1989  Plan,  plus (ii) the  number of shares  subject to stock
options outstanding under the 1989 Plan which expire or terminate unexercised as
to such  shares.  No grants or other  awards have been made under the 1999 Plan,
and it is not  possible  to state  the  terms or types of any  options  or other
awards that may be granted to executive officers of the Company or other persons
under the 1999 Plan at a future  time or to  identify  the  persons to whom such
future grants may be made.

     The 1999 Plan is intended to foster and  promote  the  long-term  financial
success of the Company and its  subsidiaries  and thereby  increase  stockholder
value by providing  incentives to those full-time employees who are likely to be
responsible for achieving such success.  The Company  anticipates  that the 1999
Plan will assist it in  recruiting  and  retaining  key  employees in the highly
competitive  communications/information industry. The Company also believes that
participation  in the 1999 Plan by full-time  employees  will  strengthen  their
commitment  to the Company and more closely  align the interests of such persons
with the interests of the Company's stockholders.

Required Vote

     Approval of the 1999 Plan requires the affirmative vote of the holders of a
majority of the shares of Common Stock  present or  represented  by proxy at the
Annual Meeting and entitled to vote at the Annual Meeting.

The  Board of  Directors  Recommends  a vote  FOR  approval  of the  1999  Stock
Incentive Plan.



                                       17
                                    - 812 -
<PAGE>

Description of the 1999 Stock Incentive Plan

     The following  summary of the 1999 Plan does not purport to be complete and
is subject to and  qualified in its entirety by the full terms of the 1999 Plan,
which appears as Exhibit 1 to this Proxy Statement.

     The 1999 Plan authorizes the grant of (i) incentive stock options under the
Internal  Revenue Code of 1986 (as amended from time to time, the "Code"),  (ii)
non-qualified stock options,  (iii) stock appreciation  rights, (iv) performance
unit  awards,  (v)  restricted  stock  awards,  and (vi) stock  bonus  awards to
full-time  employees  of the  Company or any  subsidiary  of the Company who are
responsible  for or  contribute  to,  or are  likely  to be  responsible  for or
contribute  to, the growth and  success of the Company or such  subsidiary.  The
Company  and its  subsidiaries  currently  have  approximately  1,100  full-time
employees who potentially are eligible to receive such a grant.

     The shares of Common Stock available for issuance pursuant to the 1999 Plan
may be authorized and unissued  shares or treasury  shares.  If there is a stock
dividend,  stock split, or other relevant  change in the  outstanding  shares of
Common Stock,  then the Stock Option Plan  Subcommittee (the "Committee") of the
Board will make appropriate adjustments in (a) the aggregate number of shares of
Common  Stock (i)  reserved  for  issuance  under the 1999 Plan,  (ii) for which
grants or awards  may be made to an  individual  grantee,  and (iii)  covered by
outstanding  awards  or  grants,  (b) the  exercise  or other  applicable  price
relating to outstanding  awards or grants,  and (c) the appropriate  fair market
value and other price  determinations  relevant to outstanding awards or grants.
Any shares subject to an option or right which expires or terminates unexercised
as to such  shares  will again be  available  for the grant of awards or options
under the 1999 Plan.  If any shares of Common  Stock which have been  pledged as
collateral for indebtedness incurred by an optionee in connection with an option
exercise are returned to the Company in satisfaction of such indebtedness,  then
such shares will again be available for the grant of awards or options under the
1999 Plan.

     No award or grant under the 1999 Plan may be assigned or transferred by the
recipient except by will, the laws of descent and distribution,  or, in the case
of awards or grants other than incentive stock options,  pursuant to a qualified
domestic relations order or by such other means as the Committee may approve.

Administration

     The 1999 Plan is administered  by the Committee,  which is composed of four
directors  of the  Company  who are not  employees  of the Company or any of its
subsidiaries.  The Committee has authority to interpret the 1999 Plan, to select
the full-time  employees to whom awards or options will be granted, to determine
whether and to what extent  awards and  options  will be granted  under the 1999
Plan, to determine the types of awards and options to be granted and the amount,
size,  terms,  and conditions of each award or grant, and to make other relevant
determinations  and  administrative  decisions.  In general,  all  decisions and
determinations  made by the  Committee  pursuant  to the 1999 Plan are final and
binding on all persons.

     The Committee may delegate to any officer or officers of the Company any of
the Committee's  duties,  powers,  and authorities under the 1999 Plan upon such
conditions and with such  limitations as the Committee may determine;  provided,
that only the  Committee  may select for awards or options  under the 1999 Plan,
and make grants of awards or options under the 1999 Plan to, full-time employees
of the Company or any subsidiary of the Company who are subject to Section 16 of
the Securities  Exchange Act of 1934 at the time of such selection or the making
of such a grant.
  
Awards and Grants

     Stock Options.  The Committee may grant  incentive  stock options under the
Code and non-qualified stock options. The option price per share may not be less
than the fair  market  value of the Common  Stock on the date of the grant.  The



                                       18
                                    - 813 -
<PAGE>

Committee  will fix the term of each  option at the time of its grant,  but such
term may not be more than ten years after the date of the grant.  The  Committee
may determine when an option becomes  exercisable and may accelerate  previously
established  exercise  rights.  The Committee  may permit  payment of the option
exercise  price in cash or in shares of Common Stock valued at their fair market
value on the exercise  date. The Committee also may permit the exercise price to
be paid by the  optionee's  delivery  of a  properly  executed  exercise  notice
together with  irrevocable  instructions to a broker to promptly  deliver to the
Company the amount of the applicable  sale or loan proceeds  required to pay the
exercise price.

     If an optionee's  employment  terminates for any reason other than death or
disability,  then the optionee generally may exercise an option to the extent it
was  exercisable at the time of the termination for a period of six months after
the termination (but not after the expiration date of the option).  However, the
Committee has the power to terminate an optionee's  rights under an  outstanding
option if the Committee determines that the optionee's employment was terminated
for cause. If an optionee's employment terminates by reason of disability,  then
the optionee's options generally will be exercisable for twelve months after the
termination  to the extent that the exercise was permitted  prior to or upon the
termination  (but not after the expiration  date of the option).  If an optionee
dies while in the employ of the  Company or a  subsidiary,  then the  optionee's
options generally will be exercisable by the optionee's personal  representative
or other  successor for twelve months after the date of death to the extent that
the exercise was permitted prior to or upon the optionee's  death (but not after
the expiration date of the option).

     Stock  Appreciation  Rights.  The  Committee  may grant stock  appreciation
rights  ("SAR's") which entitle the grantee to receive,  upon the exercise of an
SAR,  an award  equal to all or a portion of the  excess of (i) the fair  market
value  of a  specified  number  of  shares  of  Common  Stock at the time of the
exercise over (ii) a specified  price not less than the fair market value of the
Common  Stock  at  the  time  the  SAR  was  granted.  An  SAR  may  be  granted
independently  or in connection with a stock option grant.  Upon the exercise of
an SAR,  the  applicable  award may be paid in cash or in shares of Common Stock
(or a combination  thereof) as the Committee may  determine.  The Committee will
fix the term of an SAR at the time of its  grant,  but such term may not be more
than ten years after the date of the grant.  The Committee may determine when an
SAR becomes  exercisable  and may  accelerate  previously  established  exercise
rights.

     The  provisions of the 1999 Plan relating to  exercisability  of SAR's upon
the  termination of a grantee's  employment are similar to those discussed above
in connection with stock options.

     Performance Unit Awards.  The Committee may grant  performance unit awards,
which entitle the grantees to receive future  payments based upon and subject to
the achievement of preestablished  long-term  performance targets. In connection
with such awards, the Committee is required to establish (i) performance periods
of not  less  than  two nor  more  than  five  years,  (ii)  the  value  of each
performance  unit,  and (iii)  maximum  and  minimum  performance  targets to be
achieved  during the  performance  period.  The Committee may adjust  previously
established  performance  targets or other terms and conditions of a performance
unit award to reflect major  unforeseen  events,  but such  adjustments  may not
increase  the  payment  due  upon  attainment  of  the  previously   established
performance targets.  Performance unit awards, to the extent earned, may be paid
in cash or shares of Common Stock (or a  combination  thereof) as the  Committee
may determine.

     If the employment of a grantee of a performance unit award terminates prior
to  the  end of an  applicable  performance  period  other  than  by  reason  of
disability or death, then the award generally terminates. However, the 1999 Plan
permits the Committee to make partial payments of performance unit awards if the
Committee determines such action to be equitable. If the employment of a grantee
of a performance unit award  terminates as a result of the grantee's  disability
or  death  prior  to the  end of an  applicable  performance  period,  then  the
Committee may authorize the payment of all or a portion of the performance  unit
award (to the extent  earned in the case of  disability)  to the  grantee or the
grantee's legal representative.


                                       19
                                    - 814 -
<PAGE>


     Restricted  Stock Awards.  The Committee may grant  restricted stock awards
consisting of shares of Common Stock restricted  against transfer,  subject to a
substantial risk of forfeiture and to other terms and conditions  established by
the Committee. The Committee must determine the restriction period applicable to
a  restricted  stock  award and the amount,  form,  and time of payment (if any)
required from the grantee of a restricted  stock award in  consideration  of the
issuance of the shares  covered by such award.  The Committee in its  discretion
may provide for the lapse in  installments  of the  restrictions  applicable  to
restricted stock awards and may waive the restrictions in whole or in part.

     If the employment of a grantee of a restricted  stock award  terminates for
any  reason  while  some or all of the  shares  covered  by such award are still
restricted, the grantee's rights with respect to the restricted shares generally
terminate.  However, the Committee has the discretion to provide for complete or
partial exemptions to such employment requirement.

     Stock Bonus Awards.  The Committee may grant a stock bonus award based upon
the performance of the Company,  a subsidiary,  or a segment thereof in terms of
preestablished   objective  financial  criteria  or  performance  goals  or,  in
appropriate  cases,  such other measures or standards of performance  (including
but not  limited to  performance  already  accomplished)  as the  Committee  may
determine.  The  Committee  may  adjust  preestablished  financial  criteria  or
performance  goals  to  take  into  account  unforeseen  events  or  changes  in
circumstances, but such adjustments may not increase the amount of a stock bonus
award. The Committee, in its discretion, may impose additional restrictions upon
the shares of Common Stock which are the subject of a stock bonus award.

Miscellaneous Provisions

     Unless the 1999 Plan is sooner  terminated by the Board, the 1999 Plan will
terminate on the tenth  anniversary  of the date the Plan is initially  approved
and adopted by the stockholders of the Company. Awards or options outstanding at
the time of the termination of the 1999 Plan will remain in effect in accordance
with  their  terms.  The Board  may  amend  the 1999 Plan at any time;  however,
stockholder  approval must be obtained for any amendment for which such approval
is required by Rule 16b-3 under the Securities  Exchange Act of 1934 or Sections
162(m) or 422 of the Code. The Company's  obligation to deliver shares of Common
Stock or make cash  payments  under the 1999 Plan is subject to  applicable  tax
withholding  requirements;  in the  discretion  of the  Committee,  required tax
withholding amounts may be paid by the grantee in cash or shares of Common Stock
having a fair market value equal to the required tax withholding amount.

Certain Federal Income Tax Consequences

     The following brief  description of certain federal income tax consequences
is based  upon  present  federal  income tax laws and  regulations  and does not
purport to be a complete  description of the federal income tax  consequences of
the 1999 Plan.

     Incentive  Stock Options.  The grant of an incentive stock option under the
1999 Plan will not result in taxable  income to the  grantee or a tax  deduction
for the Company.  If the grantee holds the shares purchased upon the exercise of
an incentive stock option for at least one year after the purchase of the shares
and until at least two years after the option was  granted,  then the  grantee's
sale of the shares will result in a long-term gain or loss  (depending  upon the
grantee's  holding  period),  and the  Company  will not be  entitled to any tax
deduction.  If the grantee  sells or otherwise  transfers the shares before such
holding periods have elapsed, then the grantee generally will recognize ordinary
income and the Company  would be entitled to a tax  deduction in an amount equal
to the lesser of (i) the fair market  value of the shares on the  exercise  date
minus the option price or (ii) the amount  realized upon the  disposition  minus
the option price.  Any gain in excess of such ordinary  income  portion would be
taxable as long-term or  short-term  capital gain  depending  upon the grantee's
holding period for the shares. The excess of the fair market value of the shares
received  on the option  exercise  date over the option  price is an item of tax
preference, potentially subject to the alternative minimum tax.

                                       20
                                     - 815 -
<PAGE>


     Non-Qualified  Stock  Options.  The grant of a  non-qualified  stock option
under the 1999 Plan will not  result in taxable  income to the  grantee or a tax
deduction for the Company.  Upon the exercise of a  non-qualified  stock option,
the  grantee  will be taxed at ordinary  income  rates on the excess of the fair
market value of the shares  received  over the option  exercise  price,  and the
Company  generally  will be entitled to a tax deduction in the same amount.  The
exercise price of the non-qualified stock option plus the amount included in the
grantee's  income as a result of the  option  exercise  will be  treated  as the
grantee's basis in the shares  received,  and any gain or loss on the subsequent
sale of the shares will be treated as  long-term or  short-term  capital gain or
loss depending upon the grantee's  holding period for the shares.  The grantee's
sale of shares acquired upon the exercise of a  non-qualified  stock option will
have no tax consequences to the Company.

     Stock Appreciation  Rights and Performance Unit Awards. The grant of an SAR
or a  performance  unit  award  under the 1999 Plan will not  result in  taxable
income to the grantee or a tax deduction  for the Company.  Upon the exercise of
an SAR or the  receipt of cash or shares of Common  Stock upon the  payment of a
performance  unit award,  the grantee  will  recognize  ordinary  income and the
Company  generally will be entitled to a tax deduction in an amount equal to the
fair market value of the shares plus any cash received.

     Restricted  Stock Awards.  The grant of a restricted stock award should not
result in taxable  income for the grantee or a tax  deduction for the Company if
the  shares  of  Common  Stock   transferred  to  the  grantee  are  subject  to
restrictions  which create a substantial risk of forfeiture of the shares by the
grantee  if  certain  conditions  prescribed  at the time of the  grant  are not
subsequently satisfied.  However, the grantee may elect within 30 days after the
acquisition  of the  shares  to  recognize  ordinary  income  on the date of the
acquisition  in an amount equal to the excess (if any) of the fair market of the
shares on the date of the grant,  determined  without regard to the restrictions
imposed on such shares (other than restrictions  which by their terms will never
lapse),  over the amount (if any) paid for the shares.  If the grantee  does not
make  the  election  referred  to in the  preceding  sentence,  then,  when  the
restrictions imposed upon the shares lapse or otherwise  terminate,  the grantee
of the shares will  recognize  ordinary  income in an amount equal to the excess
(if any) of the fair  market  value of the  shares on the date of such  lapse or
other  termination over the amount (if any) paid for the shares. If and when the
grantee of a restricted stock award  recognizes  ordinary income with respect to
the shares  covered by such award,  the Company  generally will be entitled to a
tax deduction in the same amount.  The amount paid by the grantee for restricted
shares plus any amount  recognized  by the grantee as ordinary  income under the
rules described above will be treated as the grantee's basis in the shares; when
the grantee sells the shares covered by a restricted  share award  following the
lapse or other  termination of the  restrictions,  any gain or loss on such sale
will be treated as long-term or short-term  capital gain or loss  depending upon
the grantee's  holding  period.  Any dividends paid to the grantee of restricted
shares while the shares are still subject to the  restrictions  would be treated
as compensation for federal income tax purposes.

     Stock  Bonus  Awards.  When a stock bonus award is paid to a grantee by the
delivery of shares of Common Stock,  the grantee will recognize  ordinary income
and the Company generally will be entitled to a tax deduction in an amount equal
to the fair  market  value of such  shares  at the  time of such  delivery.  If,
however, such shares are subject to any restrictions, which create a substantial
risk  of  forfeiture,  then  the tax  rules  described  above  with  respect  to
restricted stock awards would be applicable.

Market Price

     The closing  price of the Common  Stock on the Nasdaq Stock Market on March
1, 1999, was $22.25 per share.




                                       21
                                    - 816 -
<PAGE>


                                 PROPOSAL NO. 3

                       APPROVAL OF APPOINTMENT OF AUDITORS

     The Board of Directors has, upon the recommendation of the Audit Committee,
appointed  the firm of  Deloitte & Touche LLP to audit the  Company's  financial
statements for the fiscal year ending December 31, 1999, subject to ratification
by the  stockholders  of the  Company.  Deloitte  &  Touche  LLP  served  as the
Company's auditors for the 1998 fiscal year.

     Ratification of the appointment of the  independent  auditors  requires the
affirmative vote of a majority of the shares of Common Stock present,  in person
or by proxy, and voting at the Meeting.  If the  stockholders  should not ratify
the appointment of Deloitte & Touche LLP, the Board of Directors will reconsider
the appointment.

     A representative  of Deloitte & Touche LLP is expected to be present at the
Meeting,  will have an opportunity  to make a statement if desired,  and will be
available to respond to appropriate stockholder questions.

The Board of Directors  recommends a vote FOR the approval of the appointment of
Deloitte & Touche LLP as independent auditors for the Company.

                                       22
                                    - 817 -
<PAGE>


                          TRANSACTIONS WITH MANAGEMENT

     No reportable  transactions occurred during fiscal 1998 between the Company
and its officers and directors.

           COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

         The following  directors  served on the  Compensation  Committee of the
Company's  Board of  Directors:  Richard R. Jaros,  David K. Karnes,  J. Michael
Parks, Jay E. Ricks and Greg T. Sloma.  Mr. Sloma,  because he is an officer and
employee  of  the  Company,   abstains  from  all  votes  dealing  with  officer
compensation.  Also,  only Mr. Jaros,  Mr.  Karnes,  Mr. Parks and Mr. Ricks are
members of the Stock  Option Plan  Subcommittee  of the  Compensation  Committee
which administers the Company's Stock Option Plan of 1989.

                  STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING

     Proposals of stockholders  for which  consideration  is desired at the 2000
annual meeting of stockholders of the Company must be received by the Company no
later than November 15, 1999, for inclusion in the Company's proxy statement and
form of proxy relating to such meeting.  Any such proposals  shall be subject to
the requirements of the proxy rules adopted under the Securities Exchange Act of
1934, as amended.

     If a stockholder wishes to present a proposal for consideration at the 2000
annual  meeting of  stockholders  of the  Company  without  having  such  matter
included in the proxy  statement of the Company for such annual meeting but does
not give the Company notice of such matter by February 1, 2000, then the proxies
solicited  by the  Board  of  Directors  for  such  annual  meeting  may  confer
discretionary  authority  on the persons  holding  such  proxies to vote on such
matter in accordance with their judgment.  Stockholder  proposals should be sent
to the  Secretary  of the  Company  at the  principal  executive  office  of the
Company.


             SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     Section  16(a) of the  Securities  Exchange  Act of 1934,  as amended  (the
"Exchange  Act"),  requires  the  Company's  directors,  executive  officers and
holders  of more  than  10% of the  Company's  common  stock  to file  with  the
Securities and Exchange  Commission  initial reports of ownership and reports of
changes in ownership of common stock and other equity securities of the Company.
The Company  believes that during the fiscal year ended  December 31, 1998,  its
executive  officers,  directors  and  holders of more than 10% of the  Company's
common stock  complied with all Section 16(a) filing  requirements,  except that
Mr.  German and Mr. Sloma each filed one late report  covering  one  transaction
each. In making these statements, the Company has relied solely upon a review of
Forms 3 and 4 furnished to the Company during its most recent fiscal year, Forms
5 furnished  to the Company with  respect to its most recent  fiscal  year,  and
written representations from reporting persons that no Form 5 was required.

                                  OTHER MATTERS

     The Board of  Directors  is not aware of any  business  to come  before the
Meeting other than those matters  described above in this Proxy  Statement.  The
Company did not receive  timely advance  notice from any  stockholder  that such
stockholder  intends to bring a matter  before the  Meeting;  for such  purpose,
timely  advance  notice means notice of the  particular  matter at least 45 days
before this year's date which corresponds to the date on which the Company first
mailed its proxy  materials  for last  year's  annual  meeting of  stockholders.
Therefore,  if any matter not  discussed  in this Proxy  Statement  is  properly
presented at the Meeting,  the persons named in the accompanying  proxy or their
substitutes  will  have  discretionary  authority  to  vote on  such  matter  in
accordance with their judgment.



                                       23
                                    - 818 -
<PAGE>


                                  MISCELLANEOUS

     The cost of  solicitation  of  proxies  will be borne by the  Company.  The
Company will,  upon request,  reimburse  brokerage  firms and other  custodians,
nominees and  fiduciaries  for reasonable  expenses  incurred by them in sending
proxy  material  to the  beneficial  owners  of common  stock.  In  addition  to
solicitations by mail, directors, officers, and regular employees of the Company
may solicit proxies personally or by telegram,  telephone or other means without
additional compensation.  The Company has retained First National Bank of Omaha,
the  Company's  stock  transfer  agent,  to  assist  in  the   distribution  and
solicitation  of  proxies  at a cost  of  approximately  $5,000,  including  the
reimbursement of certain expenses.

     The  Company's   Annual  Report  to   Stockholders,   including   financial
statements,  has been  mailed to all  stockholders  of record as of the close of
business on March 1, 1999. Any  stockholder  who has not received a copy of such
Annual  Report may obtain a copy by writing the Company.  Such Annual  Report is
not to be  treated as a part of this proxy  solicitation  material  or as having
been incorporated herein by reference.

     Notwithstanding  anything to the contrary set forth in any of the Company's
previous  filings under the Securities Act of 1933, as amended,  or the Exchange
Act that might incorporate  future filings,  including this Proxy Statement,  in
whole  or in  part,  the  Compensation  Committee  Report  on  page  11 and  the
Performance  Graph on page 10 shall not be  incorporated  by reference  into any
such filings.

                                                         THE BOARD OF DIRECTORS

Omaha, Nebraska
March 15, 1999


A COPY OF THE FORM 10-K AS FILED WITH THE  SECURITIES  AND EXCHANGE  COMMISSION,
EXCLUDING  EXHIBITS,  WILL BE FURNISHED WITHOUT CHARGE TO STOCKHOLDERS AS OF THE
RECORD DATE UPON WRITTEN  REQUEST TO THE SECRETARY,  DATA  TRANSMISSION  NETWORK
CORPORATION, 9110 WEST DODGE ROAD, SUITE 200, OMAHA, NEBRASKA 68114.




                                       24
                                    - 819 -
<PAGE>


                                    Exhibit 1
                               To Proxy Statement




                      DATA TRANSMISSION NETWORK CORPORATION
                            1999 Stock Incentive Plan

         1. Purpose.  The purpose of the Data Transmission  Network  Corporation
1999 Stock  Incentive  Plan (the "Plan") is to foster and promote the  long-term
financial  success of the Company  and its  Subsidiaries  and  thereby  increase
stockholder value by providing  incentives to those full-time  employees who are
likely to be responsible for achieving such success.

         2. Certain Definitions.

         "1989 Plan" means the Company's  existing employee Stock Option Plan of
1989.

         "Board" means the Board of Directors of the Company.

         "Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any successor  thereto.  References to a particular section of the Code
shall include any regulations issued under such section.

         "Committee" shall have the meaning provided in Section 3 of the Plan.

         "Common  Stock" means the Common Stock,  $.001 par value per share,  of
the Company.

         "Company"  means  Data  Transmission  Network  Corporation,  a Delaware
corporation.

         "Disability"  means (i) with  respect to the  exercise of an  Incentive
Stock Option after termination of employment, a disability within the meaning of
Section  22(e)(3)  of the  Code and (ii) for all  other  purposes,  a mental  or
physical  condition  which,  in the opinion of the Committee,  renders a grantee
unable or incompetent to carry out the job  responsibilities  which such grantee
held or the tasks to which such grantee was assigned at the time the  disability
was incurred and which is expected to be permanent or for an indefinite duration
exceeding one year.

         "Exchange  Act" means the  Securities  Exchange Act of 1934, as amended
from time to time.

         "Fair Market Value" means,  as  determined by the  Committee,  the last
reported sale price on the principal national  securities  exchange on which the
Common  Stock is listed or  admitted to trading on the trading day for which the
determination  is being made,  or, if no such  reported sale takes place on such
day,  the  average  of the  closing  bid and  asked  prices  on such  day on the
principal  national  securities  exchange on which the Common Stock is listed or
admitted to  trading,  or, if the Common  Stock is not  admitted to trading on a
national securities exchange, the average of the closing bid and asked prices in
the over-the-counter market on the day for which the determination is being made
as reported through Nasdaq,  or, if bid and asked prices for the Common Stock on
such day are not  reported  through  Nasdaq,  the  average  of the bid and asked
prices for such day as  furnished  by any New York Stock  Exchange  member  firm
regularly  making a market in the Common Stock  selected for such purpose by the
Committee,  or, if none of the  foregoing  is  applicable,  then the fair market
value of the Common Stock as  determined  in good faith by the  Committee in its
sole discretion.

         "Incentive  Stock Option" means any stock option intended to qualify as
an "incentive stock option" within the meaning of Section 422 of the Code.

                                       25
                                    - 820 -
<PAGE>


         "Non-Qualified  Stock  Option"  means  any  stock  option  that  is not
intended  to be an  Incentive  Stock  Option,  including  any stock  option that
provides (as of the time such option is granted)  that it will not be treated as
an Incentive Stock Option.

         "Parent  Corporation" means any corporation (other than the Company) in
an unbroken chain of corporations ending with the Company if, at the time of the
granting of the option,  each of the  corporations  other than the Company  owns
stock  possessing 50% or more of the total combined  voting power of all classes
of stock in one of the other corporations in such chain.

         "Performance Unit Award" means an award granted pursuant to Section 8.

         "Plan Year" means the  twelve-month  period  beginning on January 1 and
ending on December 31; provided,  that the first Plan Year shall be a short Plan
Year beginning on the date the Plan becomes effective and ending on December 31,
1999.

         "Restricted  Stock  Award"  means  an  award of  Common  Stock  granted
pursuant to Section 9.

         "Rule 16b-3" means Rule 16b-3 under the Exchange Act, as in effect from
time to time.

         "Stock  Appreciation  Right" means an award granted pursuant to Section
7.

         "Stock Bonus Award" means an award of Common Stock granted  pursuant to
Section 10.

         "Stock  Option"  means any  option to  purchase  Common  Stock  granted
pursuant to Section 6.

         "Subsidiary"  means (i) as it relates to Incentive  Stock Options,  any
corporation  (other  than the  Company)  in an  unbroken  chain of  corporations
beginning  with the Company if, at the time of the granting of the option,  each
of the corporations (other than the last corporation in the unbroken chain) owns
stock  possessing 50% or more of the total combined  voting power of all classes
of stock in one of the other  corporations  in such chain and (ii) for all other
purposes, a corporation,  domestic or foreign, of which not less than 50% of the
voting  shares are held by the Company or by a  Subsidiary,  whether or not such
corporation  now exists or  hereafter is organized or acquired by the Company or
by a Subsidiary.

         3.  Administration.  The Plan  shall  be  administered  by a  committee
composed solely of two or more members of the Board (the  "Committee")  selected
by the Board, each of whom shall qualify as a "Non-Employee Director" within the
meaning of Rule 16b-3 and as an "outside director" within the meaning of Section
162(m) of the Code.

     The Committee  shall have  authority to grant to eligible  employees of the
Company  or its  Subsidiaries,  pursuant  to the  terms of the  Plan,  (a) Stock
Options,  (b) Stock  Appreciation  Rights,  (c)  Restricted  Stock  Awards,  (d)
Performance Unit Awards,  (e) Stock Bonus Awards,  or (f) any combination of the
foregoing.

     Subject to the applicable  provisions of the Plan, the Committee shall have
authority to interpret the provisions of the Plan and to decide all questions of
fact arising in the  application  of such  provisions;  to select the  full-time
employees  to whom  awards or  options  shall be  granted  under  the  Plan;  to
determine  whether and to what extent  awards or options  shall be granted under
the Plan;  to determine  the types of awards and options to be granted under the
Plan and the amount, size, terms and conditions of each such award or option; to
determine  the time when awards or options  shall be granted  under the Plan; to
determine  whether,  to what extent and under what  circumstances the payment of
Common Stock and other  amounts  payable with respect to an award  granted under
the Plan  shall be  deferred  either  automatically  or at the  election  of the
grantee;  to  determine  the Fair Market  Value of the Common Stock from time to
time;  to  authorize  persons to execute on behalf of the Company any  agreement
required  to be entered  into under the Plan;  to adopt,  alter and repeal  such
administrative  rules,  guidelines  and  practices  governing  the  Plan  as the

                                       26
                                    - 821 -
<PAGE>

Committee  from  time to time  shall  deem  advisable;  and to  make  all  other
determinations necessary or advisable for the administration of the Plan.

     Unless  otherwise  expressly  provided  in  the  Plan,  all  decisions  and
determinations  made by the  Committee  pursuant to the  provisions  of the Plan
shall be made in the sole  discretion  of the  Committee  and shall be final and
binding  on all  persons,  including  but not  limited  to the  Company  and its
Subsidiaries,  the  full-time  employees  to whom awards and options are granted
under the Plan, the heirs and legal  representatives of such employees,  and the
personal representatives and beneficiaries of the estates of such employees.

     The Committee may delegate to any officer or officers of the Company any of
the  Committee's  duties,  powers,  and  authorities  under  the Plan  upon such
conditions and with such  limitations as the Committee may determine;  provided,
that only the  Committee  may select for awards or options  under the Plan,  and
make grants of awards or options under the Plan to,  full-time  employees of the
Company or any  Subsidiary  who are subject to Section 16 of the Exchange Act at
the time of such selection or the making of such a grant.

         4. Common Stock Subject to the Plan. Subject to adjustment  pursuant to
Section  19,  the  maximum  number of shares of Common  Stock that may be issued
under the Plan is (i) 353,000 shares of Common Stock which remain  available for
future option grants under the 1989 Plan, plus (ii) the number of shares subject
to stock options outstanding under the 1989 Plan that are forfeited, terminated,
canceled,  acquired by the Company or expire  unexercised,  which maximum number
shall not exceed  1,930,000.  The Company shall  reserve and keep  available for
issuance under the Plan such maximum  number of shares of Common Stock,  subject
to  adjustment  pursuant  to Section  19. Such shares may consist in whole or in
part of authorized  and unissued  shares or treasury  shares or any  combination
thereof.  Except as  otherwise  provided in the Plan,  any shares  subject to an
option or right which  expires for any reason or  terminates  unexercised  as to
such shares  shall again be available  for the grant of awards or options  under
the Plan.  If any shares of Common  Stock have been  pledged as  collateral  for
indebtedness  incurred by an optionee in connection with the exercise of a Stock
Option and such  shares are  returned  to the  Company in  satisfaction  of such
indebtedness,  then such shares shall again be available for the grant of awards
or options under the Plan.

         5. Eligibility to Receive Awards and Options. Awards and options may be
granted  under  the Plan to those  full-time  employees  of the  Company  or any
Subsidiary  who are  responsible  for or  contribute  to,  or are  likely  to be
responsible  for or contribute  to, the growth and success of the Company or any
Subsidiary.  The granting of an award or option under the Plan to an employee of
the  Company or any  Subsidiary  shall  conclusively  evidence  the  Committee's
determination that such grantee meets one or more of the criteria referred to in
the preceding  sentence.  Directors of the Company or of any  Subsidiary who are
not  employees  of the  Company  or any  Subsidiary  shall  not be  eligible  to
participate in the Plan.

         6. Stock Options.  A Stock Option may be an Incentive Stock Option or a
Non-Qualified Stock Option. To the extent that any Stock Option does not qualify
as an Incentive Stock Option, it shall constitute a separate Non-Qualified Stock
Option.  Stock  Options may be granted alone or in addition to other awards made
under the Plan.  Stock  Options shall be evidenced by agreements in such form as
the Committee  shall approve from time to time. The agreements  shall contain in
substance the following  terms and  conditions  and may contain such  additional
terms and  conditions,  not  inconsistent  with the  terms of the  Plan,  as the
Committee shall deem appropriate:

                  (a) Type of Option.  Each option  agreement shall identify the
         Stock  Option  represented  thereby as an  Incentive  Stock Option or a
         Non-Qualified Stock Option, as the case may be.

                  (b) Option Price.  The option  exercise  price per share shall
         not be less than the Fair Market  Value of the Common Stock on the date
         the Stock  Option is granted and in no event shall be less than the par
         value of the Common Stock.

                                       27
                                    - 822 -
<PAGE>

                  (c) Term.  Each  option  agreement  shall  state the period or
         periods of time  within  which the Stock  Option may be  exercised,  in
         whole or in part,  which shall be such period or periods of time as the
         Committee  may  determine  at the  time  of  the  Stock  Option  grant;
         provided,  that no  Stock  Option  granted  under  the  Plan  shall  be
         exercisable  more  than ten  years  after  the date of its  grant;  and
         provided  further,  that  one-third of the shares covered by each Stock
         Option  granted under the Plan shall become  exercisable on each of the
         first three  anniversaries of the date of its grant,  unless the option
         agreement   specifically   provides   otherwise   and  except  as  such
         exercisability  is  accelerated  upon the  death or  Disability  of the
         optionee  as  provided  in  Section  6(e).  The  Committee  shall  have
         authority to accelerate previously established exercise rights, subject
         to the requirements set forth in the Plan, under such circumstances and
         upon such terms and conditions as the Committee shall deem appropriate.

                  (d) Payment for Shares.  The  Committee may permit all or part
         of the payment of the option  exercise price to be made (i) in cash, by
         check or by wire  transfer or (ii) in shares of Common  Stock (A) which
         already  are owned by the  optionee  and which are  surrendered  to the
         Company  in good form for  transfer  or (B) which are  retained  by the
         Company  from the shares of the Common  Stock which would  otherwise be
         issued  to the  optionee  upon the  optionee's  exercise  of the  Stock
         Option.  Such shares  shall be valued at their Fair Market Value on the
         date of exercise of the Stock  Option.  In lieu of payment in fractions
         of shares, payment of any fractional share amount shall be made in cash
         or check payable to the Company.  The  Committee  also may provide that
         the  exercise  price  may be paid by  delivering  a  properly  executed
         exercise  notice in a form  approved  by the  Committee  together  with
         irrevocable instructions to a broker to promptly deliver to the Company
         the amount of the applicable sale or loan proceeds  required to pay the
         exercise  price.  No  shares  of  Common  Stock  shall be issued to any
         optionee upon the exercise of a Stock Option until the Company receives
         full payment therefor as described above.

                  (e) Rights upon  Termination of Employment.  In the event that
         an  optionee  ceases  to be  employed  by the  Company  and  all of its
         Subsidiaries  for any  reason  other  than  such  optionee's  death  or
         Disability,  any rights of the optionee  under any Stock Option then in
         effect immediately shall terminate; provided, that the optionee (or the
         optionee's legal  representative)  shall have the right to exercise the
         Stock  Option  during its term within a period of six (6) months  after
         such  termination of employment to the extent that the Stock Option was
         exercisable at the time of such termination or within such other period
         and subject to such other terms and  conditions  as may be specified by
         the Committee. Notwithstanding the foregoing provisions of this Section
         6(e), the optionee (and the optionee's legal  representative) shall not
         have any rights under any Stock  Option,  and the Company  shall not be
         obligated to sell or deliver  shares of Common Stock (or have any other
         obligation or liability) under any Stock Option, if the Committee shall
         determine  that the  employment of the optionee with the Company or any
         Subsidiary  has  been  terminated  for  cause.  In the  event  of  such
         determination,  the optionee (and the optionee's legal  representative)
         shall have no right under any Stock  Option to  purchase  any shares of
         Common Stock  regardless  of whether the  optionee  (or the  optionee's
         legal  representative)  shall have delivered a notice of exercise prior
         to the Committee's making of such  determination.  Any Stock Option may
         be  terminated  entirely by the Committee at the time of or at any time
         subsequent to a determination  by the Committee under this Section 6(e)
         which has the effect of eliminating the Company's obligation to sell or
         deliver shares of Common Stock under such Stock Option.

                  In the event that an  optionee  ceases to be  employed  by the
         Company  and all of its  Subsidiaries  by  reason  of  such  optionee's
         Disability,  prior to the expiration of a Stock Option and without such
         optionee's  having fully exercised such Stock Option,  such optionee or
         such optionee's legal  representative  shall have the right to exercise
         such Stock Option during its term within a period of twelve (12) months
         after such  termination  of  employment  to the extent  that such Stock
         Option  was  exercisable  at the  time of  such  termination  (as  such
         exercisability is accelerated  pursuant to the next sentence) or within
         such other period and subject to such other terms and conditions as may

                                       28
                                    - 823 -
<PAGE>

         be specified by the Committee.  Notwithstanding  the provisions of this
         Section 6(e), unless otherwise specified in the Stock Option agreement,
         in the event that an optionee  ceases to be employed by the Company and
         all of its Subsidiaries by reason of such optionee's  Disability,  each
         Stock  Option  granted more than twelve (12) months prior to such event
         shall become immediately exercisable in full.

                  In the event that an  optionee  ceases to be  employed  by the
         Company and all of its Subsidiaries by reason of such optionee's death,
         prior to the  expiration of a Stock Option and without such  optionee's
         having fully exercised such Stock Option,  the personal  representative
         of such  optionee's  estate or the  person  who  acquired  the right to
         exercise such Stock Option by bequest or inheritance from such optionee
         shall  have the right to  exercise  such Stock  Option  during its term
         within a period of twelve (12) months after the date of such optionee's
         death to the extent that such Stock Option was  exercisable at the time
         of such death (as such  exercisability  is accelerated  pursuant to the
         next  sentence)  or within such other  period and subject to such other
         terms  and   conditions   as  may  be  specified   by  the   Committee.
         Notwithstanding  the provisions of this Section 6(e),  unless otherwise
         specified in the Stock Option agreement,  in the event that an optionee
         dies,  each Stock Option  granted more than twelve (12) months prior to
         such death shall become immediately exercisable in full.

                  To the extent that the aggregate Fair Market Value (determined
         as of the time the option is granted) of the Common  Stock with respect
         to which  Incentive Stock Options granted under the Plan (and all other
         plans of the Company and its Subsidiaries)  become  exercisable for the
         first time by any  individual  in any calendar  year exceeds  $100,000,
         such Stock Options shall be treated as Non-Qualified  Stock Options. No
         Incentive Stock Option shall be granted to any employee if, at the time
         the  option is  granted,  the  employee  (in his or her own right or by
         reason of the attribution  rules applicable under Section 424(d) of the
         Code)  owns  more than 10% of the total  combined  voting  power of all
         classes of stock of the Company or any Parent Corporation or Subsidiary
         unless at the time such option is granted the option  price is at least
         110% of the Fair Market Value of the stock subject to such Stock Option
         and such  Stock  Option  by its  terms  is not  exercisable  after  the
         expiration of five years from the date of its grant.

         7. Stock Appreciation  Rights.  Stock Appreciation  Rights shall enable
the  grantees  thereof to benefit  from  increases  in the Fair Market  Value of
shares of Common Stock and shall be evidenced by  agreements in such form as the
Committee  shall  approve from time to time.  The  agreements  shall  contain in
substance the following  terms and  conditions  and may contain such  additional
terms and  conditions,  not  inconsistent  with the  terms of the  Plan,  as the
Committee shall deem appropriate:

                  (a)  Award.  A Stock  Appreciation  Right  shall  entitle  the
         grantee,  subject to such terms and  conditions  as the  Committee  may
         prescribe,  to receive upon the exercise  thereof an award equal to all
         or a portion of the excess of (i) the Fair Market  Value of a specified
         number of shares of Common  Stock at the time of the  exercise  of such
         right over (ii) a specified price which shall not be less than the Fair
         Market  Value of the Common  Stock at the time the right is granted or,
         if connected with a previously  granted Stock Option, not less than the
         Fair Market Value of the Common Stock at the time such Stock Option was
         granted.  Subject to the limitations set forth in Section 4, such award
         may be paid by the Company in cash,  shares of Common Stock  (valued at
         their  then Fair  Market  Value)  or any  combination  thereof,  as the
         Committee may determine.  Stock Appreciation Rights may be, but are not
         required  to  be,   granted  in   connection   with  a  previously   or
         contemporaneously granted Stock Option. In the event of the exercise of
         a Stock Appreciation  Right, the number of shares reserved for issuance
         under the Plan shall be reduced by the number of shares  covered by the
         Stock Appreciation Right as to which such exercise occurs.

                  (b) Term.  Each agreement shall state the period or periods of
         time within which the Stock  Appreciation  Right may be  exercised,  in
         whole or in part,  subject to such terms and conditions  prescribed for

                                       29
                                    - 824 -
<PAGE>

         such purpose by the  Committee;  provided,  that no Stock  Appreciation
         Right  shall be  exercisable  more than ten years after the date of its
         grant; and provided further,  that one-third of each Stock Appreciation
         Right  granted under the Plan shall become  exercisable  on each of the
         first  three  anniversaries  of the  date  of  its  grant,  unless  the
         agreement   specifically   provides   otherwise   and  except  as  such
         exercisability  is  accelerated  upon the  death or  Disability  of the
         grantee as provided in Section 7(c). The Committee shall have authority
         to accelerate  previously  established exercise rights,  subject to the
         requirements set forth in the Plan, under such  circumstances  and upon
         such terms and conditions as the Committee shall deem appropriate.

                  (c) Rights upon Termination of Employment. In the event that a
         grantee of a Stock  Appreciation  Right  ceases to be  employed  by the
         Company  and all of its  Subsidiaries  for any  reason  other than such
         grantee's  death or  Disability,  any rights of the  grantee  under any
         Stock  Appreciation  Right then in effect  immediately shall terminate;
         provided,  that the grantee  (or the  grantee's  legal  representative)
         shall have the right to exercise  the Stock  Appreciation  Right during
         its term within a period of six (6) months  after such  termination  of
         employment  to  the  extent  that  the  Stock  Appreciation  Right  was
         exercisable at the time of such termination or within such other period
         and subject to such other terms and  conditions  as may be specified by
         the Committee. Notwithstanding the foregoing provisions of this Section
         7(c), the grantee (and the grantee's  legal  representative)  shall not
         have any rights  under any Stock  Appreciation  Right,  and the Company
         shall not be obligated to pay or deliver any cash,  Common Stock or any
         combination  thereof (or have any other  obligation or liability) under
         any Stock Appreciation Right, if the Committee shall determine that the
         employment of the grantee with the Company or any  Subsidiary  has been
         terminated for cause. In the event of such  determination,  the grantee
         (and the grantee's legal  representative) shall have no right under any
         Stock  Appreciation  Right  regardless  of whether  the grantee (or the
         grantee's  legal  representative)  shall  have  delivered  a notice  of
         exercise prior to the  Committee's  making of such  determination.  Any
         Stock Appreciation Right may be terminated entirely by the Committee at
         the  time  of or at  any  time  subsequent  to a  determination  by the
         Committee  under this Section 7(c) which has the effect of  eliminating
         the Company's obligations under such Stock Appreciation Right.

                  In the event  that a  grantee  of a Stock  Appreciation  Right
         ceases to be employed by the  Company  and all of its  Subsidiaries  by
         reason of such grantee's Disability, prior to the expiration of a Stock
         Appreciation  Right and without such grantee's  having fully  exercised
         such Stock  Appreciation  Right,  such grantee or such grantee's  legal
         representative shall have the right to exercise such Stock Appreciation
         Right  during its term within a period of twelve (12) months after such
         termination  of employment  to the extent that such Stock  Appreciation
         Right  was  exercisable  at the  time  of  such  termination  (as  such
         exercisability is accelerated  pursuant to the next sentence) or within
         such other period and subject to such other terms and conditions as may
         be specified by the Committee.  Notwithstanding  the provisions of this
         Section  7(c),  unless  otherwise  specified in the Stock  Appreciation
         Right  agreement,  in the event that a grantee ceases to be employed by
         the Company  and all of its  Subsidiaries  by reason of such  grantee's
         Disability, each Stock Appreciation Right granted more than twelve (12)
         months  prior to such event shall  become  immediately  exercisable  in
         full.

                  In the event  that a  grantee  ceases  to be  employed  by the
         Company and all of its  Subsidiaries by reason of such grantee's death,
         prior to the expiration of a Stock  Appreciation Right and without such
         grantee's  having fully exercised such Stock  Appreciation  Right,  the
         personal  representative  of the  grantee's  estate or the  person  who
         acquired the right to exercise such Stock Appreciation Right by bequest
         or inheritance  from such grantee shall have the right to exercise such
         Stock  Appreciate  Right during its term within a period of twelve (12)
         months after the date of such  grantee's  death to the extent that such
         Stock  Appreciation Right was exercisable at the time of such death (as
         such  exercisability  is accelerated  pursuant to the next sentence) or
         within such other period and subject to such other terms and conditions
         as may be specified by the Committee. Notwithstanding the provisions of
         this Section 7(c), unless otherwise specified in the Stock Appreciation
         Right  agreement,  in  the  event  that  a  grantee  dies,  each  Stock

                                       30
                                    - 825 -
<PAGE>

         Appreciation  Right  granted more than twelve (12) months prior to such
         death shall become immediately exercisable in full.

         8. Performance  Unit Awards.  Performance Unit Awards shall entitle the
grantees  thereof  to receive  future  payments  based  upon and  subject to the
achievement  of  preestablished  long-term  performance  targets  and  shall  be
evidenced by agreements in such form as the Committee shall approve from time to
time.  The  agreements  shall  contain  in  substance  the  following  terms and
conditions  and  may  contain  such  additional   terms  and   conditions,   not
inconsistent   with  the  terms  of  the  Plan,  as  the  Committee  shall  deem
appropriate:

                  (a)  Performance  Period.  The Committee  shall establish with
         respect  to each  Performance  Unit Award a  performance  period of not
         fewer than two years nor more than five years.

                  (b) Unit Value.  The Committee shall establish with respect to
         each  Performance  Unit  Award a value  for each unit  which  shall not
         change thereafter or which may vary thereafter on the basis of criteria
         specified by the Committee.

                  (c)  Performance  Targets.  The Committee shall establish with
         respect to each Performance Unit Award maximum and minimum  performance
         targets to be achieved during the applicable  performance  period.  The
         achievement  of the maximum  targets shall entitle a grantee to payment
         with  respect  to the  full  value of a  Performance  Unit  Award.  The
         achievement  of less  than the  maximum  targets,  but in excess of the
         minimum  targets,  shall entitle a grantee to payment with respect to a
         portion  of  a  Performance  Unit  Award  according  to  the  level  of
         achievement of the applicable targets as specified by the Committee. To
         the extent the  Committee  deems  necessary or  appropriate  to protect
         against the loss of  deductibility  pursuant  to Section  162(m) of the
         Code,  such  targets  shall  be  established  in  conformity  with  the
         requirements of Section 162(m) of the Code.

                  (d) Performance  Measures.  Performance targets established by
         the Committee shall relate to corporate, division, subsidiary, group or
         unit   performance  in  terms  of  objective   financial   criteria  or
         performance  goals which satisfy the  requirements of Section 162(m) of
         the Code or, with respect to grantees not subject to Section  162(m) of
         the Code,  such other  measures  or  standards  of  performance  as the
         Committee may determine.  Multiple targets may be used and may have the
         same or  different  weighting,  and the  targets may relate to absolute
         performance or relative  performance  measured against other companies,
         businesses or indexes.

                  (e)  Adjustments.  At  any  time  prior  to the  payment  of a
         Performance Unit Award, the Committee may adjust previously established
         performance  targets or other terms and conditions of such  Performance
         Unit Award,  including  the  Company's or another  company's  financial
         performance for Plan purposes, in order to reduce or eliminate, but not
         to increase,  the payment with respect to a Performance Unit Award that
         otherwise   would  be  due  upon  the  attainment  of  such  previously
         established  performance  targets.  Such  adjustments  shall be made to
         reflect major unforeseen events such as changes in laws, regulations or
         accounting  practices,  mergers,  acquisitions or divestitures or other
         extraordinary, unusual or nonrecurring items or events.
  
                  (f) Payment of Performance Unit Awards. Upon the conclusion of
         each  performance  period,  the Committee shall determine the extent to
         which the  applicable  performance  targets have been  attained and any
         other  terms and  conditions  have been  satisfied  for such period and
         shall provide such certification thereof as may be necessary to satisfy
         the  requirements  of Section 162(m) of the Code.  The Committee  shall
         determine what, if any, payment is due on a Performance Unit Award and,
         subject to the limitations set forth in Section 4, whether such payment
         shall be made in cash,  shares of Common  Stock  (valued  at their then
         Fair Market Value) or a combination  thereof.  Payment of a Performance
         Unit  Award  shall  be  made  in a  lump  sum  or in  installments,  as
         determined  by the  Committee,  commencing  as promptly as  practicable

                                       31
                                    - 826 -
<PAGE>

         after the end of the performance period unless such payment is deferred
         upon such terms and conditions as may be specified by the Committee.

                  (g) Termination of Employment.  In the event that a grantee of
         a  Performance  Unit Award ceases to be employed by the Company and all
         of its  Subsidiaries  for any reason other than such grantee's death or
         Disability, any rights of such grantee under any Performance Unit Award
         then in effect whose  performance  period has not ended shall terminate
         immediately;  provided,  that the  Committee  may authorize the partial
         payment of any such Performance Unit Award if the Committee  determines
         such action to be equitable.

                  In the event that a grantee of a Performance Unit Award ceases
         to be employed by the Company and all of its  Subsidiaries by reason of
         such grantee's  death or  Disability,  any rights of such grantee under
         any Performance Unit Award then in effect whose performance  period has
         not ended shall terminate immediately; provided, that the Committee may
         authorize  the  payment  to  such  grantee  or  such  grantee's   legal
         representative  of all or any portion of such Performance Unit Award to
         the extent earned under the applicable performance targets, even though
         the applicable  performance  period has not ended,  upon such terms and
         conditions as may be specified by the Committee.

         9. Restricted  Stock Awards.  Restricted  Stock Awards shall consist of
shares of Common Stock  restricted  against  transfer,  subject to a substantial
risk of  forfeiture  and to other terms and  conditions  intended to further the
purpose of the Plan as the  Committee may  determine,  and shall be evidenced by
agreements  in such form as the Committee  shall approve from time to time.  The
agreements shall contain in substance the following terms and conditions and may
contain such additional terms and conditions, not inconsistent with the terms of
the Plan, as the Committee shall deem appropriate:

                  (a) Restriction Period. The Common Stock covered by Restricted
         Stock   Awards  shall  be  subject  to  the   applicable   restrictions
         established  by the Committee  over such period as the Committee  shall
         determine.  To the extent the Committee  deems necessary or appropriate
         to protect against the loss of deductibility pursuant to Section 162(m)
         of the  Code,  Restricted  Stock  Awards  also  may be  subject  to the
         attainment of one or more preestablished  performance  objectives which
         relate to corporate, subsidiary, division, group or unit performance in
         terms of  objective  financial  criteria  or  performance  goals  which
         satisfy the requirements of Section 162(m) of the Code; provided,  that
         any  such  preestablished   financial  criteria  or  performance  goals
         subsequently  may be adjusted by the  Committee to reduce or eliminate,
         but not to  increase,  a  Restricted  Stock Award in order to take into
         account unforeseen events or changes in circumstances.

                  (b) Restriction upon Transfer.  Shares of Common Stock covered
         by  Restricted  Stock  Awards may not be sold,  assigned,  transferred,
         exchanged,  pledged,  hypothecated or otherwise  encumbered,  except as
         provided in the Plan or in any Restricted Stock Award agreement entered
         into between the Company and a grantee,  during the restriction  period
         applicable to such shares.  Notwithstanding the foregoing provisions of
         this Section 9(b), and except as otherwise  provided in the Plan or the
         applicable Restricted Stock Award agreement,  a grantee of a Restricted
         Stock  Award  shall have all of the other  rights of a holder of Common
         Stock  including but not limited to the right to receive  dividends and
         the right to vote such shares.

                  (c) Payment.  The Committee shall  determine the amount,  form
         and time of payment, if any, that shall be required from the grantee of
         a Restricted  Stock Award in consideration of the issuance and delivery
         of the shares of Common Stock covered by such Restricted Stock Award.

                  (d) Certificates. Each certificate issued in respect of shares
         of Common Stock covered by a Restricted Stock Award shall be registered
         in the name of the  grantee  and shall  bear the  following  legend (in
         addition to any other legends which may be appropriate):

                                       32
                                    - 827 -
<PAGE>

                           "This certificate and the shares of stock represented
                           hereby  are  subject  to  the  terms  and  conditions
                           (including  forfeiture  provisions  and  restrictions
                           against transfer)  contained in the Data Transmission
                           Network  Corporation  1999 Stock Incentive Plan and a
                           Restricted Stock Award Agreement entered into between
                           the registered  owner and Data  Transmission  Network
                           Corporation.  Release from such terms and  conditions
                           may  be  obtained   only  in   accordance   with  the
                           provisions of such Plan and Agreement, a copy of each
                           of which is on file in the office of the Secretary of
                           Data Transmission Network Corporation."

         The  Committee  may require the grantee of a Restricted  Stock Award to
         enter  into  an  escrow  agreement   providing  that  the  certificates
         representing  the shares  covered by such  Restricted  Stock Award will
         remain  in  the   physical   custody  of  an  escrow  agent  until  all
         restrictions are removed or expire. The Committee also may require that
         the  certificates  held in such escrow be accompanied by a stock power,
         endorsed in blank by the grantee,  relating to the Common Stock covered
         by such certificates.

                  (e)  Lapse  of   Restrictions.   Except   for   preestablished
         performance  objectives  established  with respect to Restricted  Stock
         Awards to grantees subject to Section 162(m) of the Code, the Committee
         may provide for the lapse of  restrictions  applicable  to Common Stock
         subject to Restricted  Stock Awards in installments  and may waive such
         restrictions  in whole or in part  based  upon  such  factors  and such
         circumstances as the Committee shall determine.  Upon the lapse of such
         restrictions,  certificates  for  shares of Common  Stock,  free of the
         restrictive  legend set forth in Section  9(c),  shall be issued to the
         grantee or the grantee's legal representative. The Committee shall have
         authority to accelerate the  expiration of the  applicable  restriction
         period with respect to all or any portion of the shares of Common Stock
         covered by a Restricted  Stock Award  except,  with respect to grantees
         subject to Section 162(m) of the Code, to the extent such  acceleration
         would result in the loss of the  deductibility of such Restricted Stock
         Award pursuant to Section 162(m) of the Code.

                  (f) Termination of Employment.  In the event that a grantee of
         a  Restricted  Stock Award ceases to be employed by the Company and all
         of its  Subsidiaries  for any reason,  any rights of such  grantee with
         respect to shares of Common Stock that remain  subject to  restrictions
         under such Restricted Stock Award shall terminate immediately,  and any
         shares of  Common  Stock  covered  by a  Restricted  Stock  Award  with
         unlapsed  restrictions shall be subject to reacquisition by the Company
         upon the terms set forth in the applicable agreement with such grantee.
         The  Committee  may provide for complete or partial  exceptions to such
         employment  requirement if the Committee  determines  such action to be
         equitable.

         10. Stock Bonus Awards.  The Committee may grant a Stock Bonus Award to
an eligible grantee under the Plan based upon corporate,  division,  subsidiary,
group  or unit  performance  in  terms  of  preestablished  objective  financial
criteria or performance  goals or, with respect to  participants  not subject to
Section  162(m) of the Code,  such other  measures or standards  of  performance
(including but not limited to performance already accomplished) as the Committee
may determine;  provided,  that any such  preestablished  financial  criteria or
performance goals  subsequently may be adjusted to reduce or eliminate,  but not
to increase, a Stock Bonus Award in order to take into account unforeseen events
or changes in circumstances.

         If  appropriate in the sole  discretion of the  Committee,  Stock Bonus
Awards shall be  evidenced by  agreements  in such form as the  Committee  shall
approve from time to time. In addition to any  applicable  performance  goals or

                                       33
                                    - 828 -
<PAGE>

standards and subject to the terms of the Plan, shares of Common Stock which are
the subject of a Stock Bonus Award may be (i) subject to additional restrictions
(including but not limited to restrictions on transfer) or (ii) granted directly
to a grantee free of any restrictions, as the Committee shall deem appropriate.

         11. General  Restrictions.  Each award or grant under the Plan shall be
subject to the  requirement  that if at any time the Committee  shall  determine
that (i) the  listing,  registration  or  qualification  of the shares of Common
Stock subject or related thereto upon any securities exchange or under any state
or federal  law,  (ii) the consent or approval  of any  governmental  regulatory
body,  or (iii) an agreement by the grantee of an award or grant with respect to
the  disposition  of the shares of Common  Stock  subject or related  thereto is
necessary or desirable as a condition of, or in connection  with,  such award or
grant or the  issuance or purchase of shares of Common  Stock  thereunder,  then
such award or grant may not be consummated and any rights  thereunder may not be
exercised in whole or in part unless such listing, registration,  qualification,
consent,  approval  or  agreement  shall have been  effected  or  obtained  upon
conditions acceptable to the Committee. Awards or grants under the Plan shall be
subject to such additional terms and conditions, not inconsistent with the Plan,
as the Committee in its sole discretion deems necessary or desirable,  including
but not  limited  to such  terms and  conditions  as are  necessary  to enable a
grantee to avoid any short-swing profit recapture  liability under Section 16 of
the Exchange Act.

         12. Single or Multiple  Agreements.  Multiple forms of awards or grants
or  combinations  thereof may be  evidenced  either by a single  agreement or by
multiple agreements, as determined by the Committee.

         13. Rights of a Stockholder. Unless otherwise provided by the Plan, the
grantee  of any  award or  grant  under  the  Plan  shall  have no  rights  as a
stockholder of the Company with respect to the shares of Common Stock subject or
related to such award or grant unless and until  certificates for such shares of
Common Stock are issued to such grantee.

         14.  No Right to  Continue  Employment.  Nothing  in the Plan or in any
agreement  entered  into  pursuant to the Plan shall confer upon any grantee the
right to continue in the  employment of the Company or any  Subsidiary or affect
any  right  which  the  Company  or any  Subsidiary  may have to  terminate  the
employment of any grantee with or without cause.

         15.  Withholding.  The Company's  obligation  to (i) deliver  shares of
Common  Stock or pay  cash  upon  the  exercise  of any  Stock  Option  or Stock
Appreciation  Right,  (ii) deliver shares of Common Stock or pay cash in payment
of any Performance Unit Award, (iii) deliver stock certificates upon the vesting
of any Restricted  Stock Award, and (iv) deliver shares of Common Stock upon the
grant of any Stock Bonus Award shall be subject to applicable federal, state and
local tax withholding requirements.  In the discretion of the Committee, amounts
required to be  withheld  for taxes may be paid by the grantee in cash or shares
of Common  Stock  (either  through the  surrender of  previously  held shares of
Common Stock or the  withholding  of shares of Common Stock  otherwise  issuable
upon the exercise or payment of such Stock Option,  Stock  Appreciation Right or
Award) having a Fair Market Value equal to the required tax  withholding  amount
and upon such other  terms and  conditions  as the  Committee  shall  determine;
provided,  that any  election  by a  grantee  subject  to  Section  16(b) of the
Exchange  Act to pay any tax  withholding  in shares of  Common  Stock  shall be
subject to and must comply with any applicable  rules under Section 16(b) of the
Exchange Act.

         16. Indemnification.  No member of the Board or the Committee,  nor any
officer or employee of the Company or a Subsidiary acting on behalf of the Board
or the Committee,  shall be personally  liable for any action,  determination or
interpretation  taken or made in good  faith with  respect to the Plan;  and all
members of the Board or the  Committee  and each and any  officer or employee of
the  Company  or any  Subsidiary  acting on their  behalf  shall,  to the extent
permitted by law, be fully  indemnified  and protected by the Company in respect
of any such action, determination or interpretation.

         17.  Non-Assignability.  No  award  or grant  under  the Plan  shall be
assignable or transferable by the recipient  thereof except by will, by the laws
of  descent  and  distribution  or, in the case of awards or grants  other  than

                                       34
                                    - 829 -
<PAGE>

Incentive Stock Options,  pursuant to a qualified domestic relations order or by
such other means (if any) as the  Committee  may approve  from time to time.  No
right or  benefit  under the Plan  shall in any  manner be subject to the debts,
contracts, liabilities or torts of the person entitled to such right or benefit.

         18. Nonuniform Determinations. The Committee's determinations under the
Plan  (including  but not  limited to  determinations  of the persons to receive
awards or grants,  the form,  amount and  timing of such  awards or grants,  the
terms and provisions of such awards or grants and the agreements evidencing them
and the establishment of values and performance targets) need not be uniform and
may be made by the Committee  selectively among the persons who receive,  or are
eligible  to  receive,  awards or grants  under  the Plan,  whether  or not such
persons are similarly situated.

         19.  Adjustments.  In the event of any change in the outstanding shares
of Common Stock,  by reason of a stock  dividend or  distribution,  stock split,
recapitalization,  merger,  reorganization,  consolidation,  split-up, spin-off,
combination of shares, exchange of shares or other change in corporate structure
affecting the Common Stock, the Committee shall make appropriate  adjustments in
(a) the  aggregate  number of shares of Common  Stock (i)  reserved for issuance
under the Plan,  (ii) for which  grants or awards  may be made to an  individual
grantee and (iii) covered by outstanding awards and grants denominated in shares
or units of Common Stock,  (b) the exercise or other applicable price related to
outstanding awards or grants and (c) the appropriate Fair Market Value and other
price  determinations  relevant to  outstanding  awards or grants and shall make
such other  adjustments as may be equitable under the  circumstances;  provided,
that the number of shares  subject to any award or grant always shall be a whole
number.

         20. Terms of Payment. Subject to any other applicable provisions of the
Plan and to any applicable laws,  whenever payment by a grantee is required with
respect  to shares of Common  Stock  which are the  subject of an award or grant
under the Plan, the Committee  shall determine the time, form and manner of such
payment, including but not limited to lump-sum payments and installment payments
upon such terms and  conditions  as the  Committee  may  prescribe.  Installment
payment   obligations   of  a  grantee  may  be  evidenced   by   full-recourse,
limited-recourse or non-recourse promissory notes or other instruments,  with or
without  interest  and  with or  without  collateral  or other  security  as the
Committee may determine.

         21.  Termination  and  Amendment.  The Board may  terminate the Plan or
amend the Plan or any portion thereof at any time,  including but not limited to
amendments  to the Plan  necessary  to comply with the  requirements  of Section
16(b) of the Exchange Act,  Section 162(m) of the Code,  Section 422 of the Code
or  any  regulations  issued  under  any  of  such  statutory  provisions.   The
termination or any  modification or amendment of the Plan shall not, without the
consent of a grantee,  adversely  affect such grantee's rights under an award or
grant  previously  made to such grantee under the Plan.  The Committee may amend
the terms of any award or grant previously made under the Plan, prospectively or
retroactively;  but,  except as  otherwise  expressly  permitted by the Plan and
subject to the  provisions  of Section  19, no such  amendment  shall  adversely
affect the rights of the grantee of such award or grant  without such  grantee's
consent.   Notwithstanding   the  foregoing   provisions  of  this  Section  21,
stockholder  approval  of any  action  referred  to in this  Section 21 shall be
required  whenever  necessary to satisfy the applicable  requirements of Section
16(b) of the Exchange Act,  Section 162(m) of the Code,  Section 422 of the Code
or any regulations issued under any of such statutory provisions.

         22. Severability. With respect to participants subject to Section 16 of
the  Exchange  Act,  (i) the Plan is  intended  to  comply  with all  applicable
conditions  of Rule 16b-3 or any successor to such rule,  (ii) all  transactions
involving  grantees  who are subject to Section  16(b) of the  Exchange  Act are
subject to such  conditions,  regardless of whether the conditions are expressly
set forth in the Plan and (iii) any  provision of the Plan that is contrary to a
condition  of Rule 16b-3 shall not apply to grantees  who are subject to Section
16(b) of the Exchange  Act. If any of the terms or  provisions  of the Plan,  or
awards or grants made under the Plan,  conflict with the requirements of Section
162(m) or Section 422 of the Code with respect to awards or grants subject to or
governed by Section  162(m) or Section 422 of the Code, as the case may be, then
such terms or  provisions  shall be deemed  inoperative  to the  extent  they so
conflict with the  requirements of Section 162(m) or Section 422 of the Code, as

                                       35
                                    - 830 -
<PAGE>

the case may be. With respect to an Incentive Stock Option, if the Plan does not
contain any  provision  required to be included in the Plan under Section 422 of
the Code (as amended from time to time) or any successor to such  section,  then
such  provision  shall be  deemed to be  incorporated  in the Plan with the same
force and effect as if such provision had been expressly set out in the Plan.

         23. Effect on Other Plans.  Participation  in the Plan shall not affect
an employee's  eligibility to participate in any other benefit or incentive plan
of the Company or any Subsidiary. Any grants or awards made pursuant to the Plan
shall not be taken into account in  determining  the benefits  provided or to be
provided under any other plan of the Company or any Subsidiary  unless otherwise
specifically provided in such other plan.

         24. Term of Plan. The Plan shall become  effective upon the approval of
the Plan by the  stockholders  of the Company not later than  December 31, 1999,
and shall  terminate for purposes of further grants on the first to occur of (i)
the tenth anniversary of the date the Plan is initially  approved and adopted by
the  stockholders of the Company,  or (ii) the effective date of the termination
of the Plan by the Board  pursuant  to Section  21. No awards or options  may be
granted under the Plan after the  termination of the Plan, but such  termination
shall  not  affect  any  awards  or  options  outstanding  at the  time  of such
termination or the authority of the Committee to continue to administer the Plan
apart from the making of further grants.

         25.  Governing  Law.  The Plan shall be  governed by and  construed  in
accordance with the laws of Delaware.




                                       36
                                    - 831 -
<PAGE>






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                                       37
                                    - 832 -
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                      DATA TRANSMISSION NETWORK CORPORATION
                         9110 West Dodge Road, Suite 200
                                 Omaha, NE 68114







                                       38
                                    - 833 -
                                       
<PAGE>

                  DATA TRANSMISSION NETWORK CORPORATION PROXY
            Annual Meeting of Stockholders To Be Held April 28, 1999

          THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS


The  undersigned  hereby  appoints  Roger R.  Brodersen and Brian L. Larson,  or
either of them, as proxies of the  undersigned,  with full power of substitution
to either of them, and hereby authorizes them to vote all shares of common stock
of Data  Transmission  Network  Corporation held of record by the undersigned on
March 1, 1999 at the Annual Meeting of Stockholders to be held on April 28, 1999
and at any further adjournments thereof (a) as designated below on the following
matters and (b) in their  discretion on any other matters that properly may come
before the meeting or any adjournments thereof:


1.  ELECTION OF DIRECTORS 

          FOR all nominees listed below (except as marked)                     
    -----                        

          WITHHOLD AUTHORITY to vote for all nominees listed below
    -----    


(INSTRUCTIONS: To withhold authority to vote for any individual nominee(s), draw
a line through the nominee's name below.)

    Roger R. Brodersen   Scott A. Fleck       Richard R. Jaros
    Peter H. Kamin       David K. Karnes      J. Michael Parks
    Jay E. Ricks         Greg T. Sloma        Roger W. Wallace



2.  ADOPTION OF 1999 STOCK INCENTIVE PLAN         FOR      AGAINST       ABSTAIN
                                              ----     ----          ----



3.   RATIFICATION  OF  APPOINTMENT  OF  DELOITTE  &  TOUCHE  LLP as  independent
     auditors of the Corporation for fiscal year ending December 31, 1999.

         FOR                            AGAINST                          ABSTAIN
     ----                           ----                             ----

This proxy will be voted as specified.  IF NO SPECIFICATION IS GIVEN, THIS PROXY
WILL BE  VOTED  FOR THE  PROPOSALS  SET  FORTH  ABOVE.  The  undersigned  hereby
acknowledges  receipt of the Notice of Annual  Meeting of  Stockholders  of Data
Transmission  Network  Corporation  to be held on April  28,  1999 and the Proxy
Statement for such meeting.

Dated                             , 1999
      ---------------------------          -----------------------------------
 

                                           -----------------------------------
                                                  (Signature of Stockholder)

Note:  Please sign exactly as name appears on stock certificate (as Indicated on
reverse  side).   All  joint  owners  should  sign.  When  signing  as  personal
representative,  executor, administrator,  attorney, trustee or guardian, please
give full title as such. If a corporation,  please sign in full corporation name
by  president  or other  authorized  person.  If a  partnership,  please sign in
partnership name by a partner.

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