<PAGE>   1
     Portions of this exhibit have been omitted and filed separately with the
Securities and Exchange Commission. These portions are designated "[ * * * ]".

                                                                   EXHIBIT 10.29

[FRONTIER LOGO]



                               CAPACITY AGREEMENT

                                     BETWEEN

                    FRONTIER COMMUNICATIONS OF THE WEST, INC.

                                       AND

                                  PATHNET, INC.




08/16/99                                                            CONFIDENTIAL
<PAGE>   2


                               CAPACITY AGREEMENT

This Capacity Agreement ("Agreement") is entered into between the provider of
service, Frontier Communications of the West, Inc. on behalf of itself and its
affiliates that may provide a portion of the services hereunder ("Frontier"), a
California corporation located at 90 Castilian Drive, Goleta, CA 93117 and
Pathnet, Inc. ("Pathnet" or "Purchaser"), a Delaware corporation with its
principal place of business located at lOl5 31st Street NW, Washington DC 20007
(hereinafter, Frontier and Pathnet may be referred to in the aggregate as
"Parties", and each singularly as a "Party".)

                                     PURPOSE

Pathnet desires to purchase dedicated circuit capacity from Frontier for the
transport of Pathnet's telecommunications traffic. For valuable consideration,
receipt of which is hereby acknowledged, the Parties hereto agree as follows.

     DEFINITIONS (not otherwise defined in the body of this Agreement or an
     attachment).

     A.   "Affiliate" means any entity directly or indirectly controlling,
          controlled by or under common control with a Party.

     B.   "Billing Cycle" is the Frontier billing cycle to which Pathnet's
          account hereunder is assigned by Frontier (a full billing cycle
          approximates 30 days).

     C.   "Business Day" is Monday through Friday, 8:00 am to 5:00 PM EST,
          excluding nationally recognized holidays. Unless otherwise stated,
          "days" refers to calendar days.

     D.   "Delinquent" (whether capitalized or not) means any invoiced amounts
          not properly disputed under Section 4 of this Agreement and remaining
          unpaid on the due date of the invoice.

1.   SERVICES; CIRCUIT TERM; CIRCUIT AVAILABILITY DATE:

     1.1  Frontier shall, in accordance with the terms of this Agreement,
          provide Pathnet with DS-1, DS-3, OC-3 and OC-12 circuit capacity as
          the same may be ordered by Pathnet and the order accepted by Frontier
          hereunder from time to time. All such circuit capacity collectively
          referred to as the "Services" or "Private Line Services.

     1.2  Unless one Party provides the other with at least 90 days prior
          written notice of its intent not to renew a circuit after the
          circuit's minimum commitment period expires, then, unless the Parties
          agree otherwise in writing, a circuit shall automatically renew on a
          month to month basis at Frontier's then-current rates and charges for
          that circuit type or as the parties may mutually agree in writing.



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     1.3  Frontier shall provide a 48 hour turnaround response to a Pathnet
          feasibility request. Response shall include provider's POP to POP
          capacity availability and detailed price quote for the POP to POP
          service. Once Frontier fully defines a process for quoting local loops
          on DS1 and DS3 level circuits, Frontier agrees to provide Pathnet with
          a detailed price quote in writing and in a time frame agreed to by the
          Parties. Interval calculation shall commence upon the issuance of a
          completed order by Pathnet and acceptance by Frontier. Frontier shall
          provide notification and appropriate circuit provisioning information
          on the following provisioning dates:

          a.   ORC -- Order Receipt Date: The date upon which Frontier shall
               notify Pathnet that Pathnet's firm order request has been
               received and accepted and any standard interval quote has
               commenced.

          b.   FOC -- Firm Order Confirmation: The date upon which Frontier
               shall notify Pathnet of the firm due date as well as final
               pricing details for both POP to POP and any third party access.

          c.   DLRD -- Design Layout and Design: The date upon which Frontier
               shall notify Pathnet regarding specific circuit configuration to
               include POP to POP locations, Circuit ID, Circuit ID of each
               access line and provider as well as any demarc/interconnect
               information.

          d.   Service Turnup -- The date upon which Frontier will notify
               Pathnet when the end to end circuit including any third party
               access ordered and coordinated by Frontier has passed the circuit
               acceptance criteria.

               Pathnet will be responsible for accepting/rejecting the end to
               end service within 48 hours of Service Turnup from Frontier.
               Frontier will not start billing of any part of the end to end
               (Pathnet premises to Pathnet premises) service until acceptance
               of the service from Pathnet which shall occur within 48 hours. If
               Pathnet does not communicate a good faith rejection of the
               circuit within 48 hours, it shall be deemed to have been
               accepted. Upon receipt of a complete and accurate service order
               for a circuit, Frontier shall notify Pathnet of its target date
               for the delivery of each circuit (the "Estimated Availability
               Date"). Any Estimated Availability Date given by Frontier to
               Pathnet shall be subject to Frontier's then-current standard and
               expedited interval guidelines. Frontier shall use reasonable
               efforts to install each circuit on or before the Estimated
               Availability Date, but the inability of Frontier to deliver a
               circuit by such date, or within the interval guidelines, shall
               not be deemed a breach of this Agreement by Frontier. If Frontier
               fails to make any circuit available within 90 days after
               acceptance by Frontier of the service order with respect to such
               circuit (or such greater time as is set forth in the interval
               guidelines), Pathnet's sole remedy shall be to cancel the service
               order which pertains to such circuit upon ten days prior written
               notice to Frontier.


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     1.4  At each end of the city pairs on which Pathnet orders circuits,
          Frontier shall provide appropriate equipment in its SONET POP
          locations necessary to connect the circuits to Pathnet's
          Interconnection Facilities. If Pathnet desires to install its own
          equipment in one or more SONET POP, and Frontier, in its sole
          discretion, agrees to such installation, the Parties shall execute a
          collocation agreement acceptable to both Parties. Pathnet agrees that
          its Interconnection Facilities shall connect to the circuits provided
          by Frontier hereunder at the network interface points located in the
          Frontier SONET POPs. As used herein, the term "Interconnection
          Facilities" shall mean transmission capacity provided by Pathnet or
          its third party Frontier to extend the circuits provided by Frontier
          from a SONET POP to any other location (e.g., a local access telephone
          service provided by a local telephone company).

     1.5  For DS-3 and lesser capacity circuits, Frontier shall use reasonable
          efforts to order Interconnection Facilities on behalf of Pathnet from
          Pathnet's designated Frontier, provided that Pathnet furnishes
          Frontier with an acceptable letter of agency. Pathnet shall be billed
          directly by Frontier of such Interconnection Facilities, and shall
          defend and indemnify Frontier from any loss or liability incurred by
          Frontier as a result of Frontier's ordering Interconnection Facilities
          from any third party on Pathnet's behalf. Pathnet may, at its
          election, but subject to Frontier's prior written approval, order its
          own Interconnection Facilities. If any party other than Frontier
          provides Interconnection Facilities, then unavailability,
          incompatibility, delay in installation, or other impairment of
          Interconnection Facilities shall not excuse Pathnet's obligation to
          pay Frontier all rates or charges applicable to the circuits, whether
          or not such circuits are useable by Pathnet. Frontier will not order
          Interconnection Facilities on behalf of Pathnet for OC-N circuits.

2.   TERM OF THE AGREEMENT:

     This Agreement is binding on the Parties upon the date of execution by
     Frontier ("Effective Date") and, subject to the termination provisions of
     this Agreement, shall continue in effect for a period of three (3) years
     from the Effective Date (the" Initial Term"). If a circuit remains
     installed beyond the term of this Agreement, then this Agreement shall
     remain in effect as long as a circuit is installed hereunder.

3.   BILLING AND PAYMENT; MINIMUM COMMITMENTS:

     3.1  Pathnet shall pay Frontier for the Services at the rates and charges
          set out in Exhibit A or as the Parties may otherwise agree in writing.
          Pathnet is also liable for applicable taxes and governmental
          assessments with respect to its use of the Services. If Pathnet is
          required to provide security for payment hereunder, then Frontier is
          not obligated to accept orders, or provide or continue to provide any
          Services or circuits, until the required security is received by
          Frontier. That commencement may be delayed by Pathnet for a cumulative
          period of 30 days from Firm Order Confirmation date without penalty.
          All invoices shall include the itemized detail of price elements
          comprising each service, including all charges and credits. The
          Pathnet circuit ID entered on the originating Service Order request
          shall be cross-referenced on a separate report setting forth the
          appropriate Frontier circuit ID. All discounts and promotions, if any,
          and taxes, will be included in the monthly invoice. All pro-rated
          monthly charges will be based upon a 30 day month. Billing for a POP
          to POP circuit shall commence upon the earlier to occur of (i) 30 days
          following the date Frontier notifies Pathnet, in writing or via
          electronic transmission, that the ordered circuit capacity is
          available from Frontier (regardless of whether or not Pathnet's
          Interconnection Facilities are installed and operational), and (ii)
          the date the ordered circuit capacity is first utilized by Pathnet
          (the "Service Date").

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     3.2  Pathnet shall provide Frontier with financial security in the amount
          of $0.

     3.3  Pathnet's initial credit limit hereunder shall be [ * * * ]. If
          Pathnet's monthly charges for the Services exceed its credit limit,
          Frontier may require security of its choice from Pathnet in an amount
          equal to Pathnet's highest invoice over the prior six month period (or
          such lesser period if this Agreement has not been in effect for six
          months) as a condition to continuing to provide the Services. In
          addition, if Pathnet is delinquent in payment of an invoice and
          Frontier does not have security from Pathnet in an amount equal to
          Pathnet's highest invoice over the prior six month period (or such
          lesser period if this Agreement has not been in effect for six
          months), Frontier may require additional security of its choice from
          Pathnet in such amount. Any such additional security shall be provided
          by Pathnet to Frontier within 48 hours (if the security is to be other
          than a letter of credit and within ten Business Days if the security
          is to be a letter of credit) from its receipt of Frontier's written
          request for additional security.

     3.4  Monthly recurring charges ("MRC") shall be invoiced by Frontier on a
          monthly basis in advance and non-recurring charges shall be invoiced
          in arrears. If the Service Date for any circuit falls on other than
          the first day of any Billing Cycle, the initial charge to Pathnet
          shall consist of: (i) the pro-rata portion of the applicable monthly
          charge covering the period from the Service Date to the first day of
          the subsequent Billing Cycle, and (ii) the monthly charge for the
          following Billing Cycle. Payment terms are net 30 days from the
          invoice date. Any invoice not paid by its due date shall bear late
          payment fees at the rate of 1-1/2% per month (or such lower amount as
          maybe required by law) until paid.

     3.5  The pricing in this Agreement and any attached Exhibits applies only
          to the Private Line Services provided between the "on-net" nodes set
          out in the Frontier SONET POP List attached hereto as Exhibit B or as
          amended and is valid for the term of this Agreement. If Frontier's
          cost in providing the Private Line Services is increased due to
          circumstances beyond its reasonable control, or Frontier elects to
          pass through any governmental or regulatory assessments related to its
          provision of the Private Line Services, then Frontier may revise the
          rates and charges in this Agreement and any attached Exhibits upon 30
          days written notice to Pathnet. Pathnet may cancel any circuits
          subject to a rate/charge increase upon written notice to Frontier
          given no later than 30 days after Pathnet's receipt of the increase
          notice.

     3.6  Commencing with the twelfth (12th) month following the Effective
          Date, Pathnet shall be liable for a monthly minimum usage charge for
          the Services of $150,000 (the "Minimum Charge"). If during the term of
          the contract, Pathnet's net charges for the Services are less than the
          Minimum Charge, Pathnet shall pay rates as outlined in Exhibit A
          Standard Pricing. If this Agreement is terminated prior to the time
          the Minimum Charge becomes effective (other than termination by
          Pathnet for an uncured breach by Frontier), Pathnet shall be liable
          for an amount equal to the Minimum Charge for the remaining portion of
          the unexpired term of this Agreement.

     3.7  Pathnet shall be liable for the applicable minimum circuit terms and
          minimum circuit commitment charges set out in Exhibit A.
          Notwithstanding the foregoing, should Pathnet fail to place an order
          for the two OC-12 circuits (as stated in Exhibit A) (the "Pathnet
          Specific Circuits") by September 30, 1999, then the Pathnet Specific
          Circuits shall be considered null and void and will require
          re-negotiation between the Parties.


08/16/99                               6

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          Frontier agrees to provide the Special Pricing for circuits ordered
          with one year terms during Pathnet's ramp up period and shall continue
          at such pricing level provided Pathnet is attaining its Minimum Charge
          obligation under this Agreement. In the event, Pathnet is not meeting
          its Minimum Charge obligation, then Pathnet will be charged the
          Standard Pricing for any circuits ordered.

     3.8  If a circuit is canceled prior to expiration of its minimum term
          commitment, except if canceled by Pathnet under Section 3.5 hereof, or
          this Agreement is terminated for Frontier's uncured breach, Pathnet
          shall be liable for, and shall pay to Frontier upon demand, an early
          termination fee in an amount equal to the applicable monthly per
          circuit minimum charge times the number of months remaining on the
          unexpired term commitment (whether the initial or a renewal term) for
          the circuit.

     3.9  Pathnet agrees that any minimum charge shortfall and any early
          termination fees for which it may be liable under this Agreement are
          based on agreed upon minimum commitments on its part and corresponding
          rate concessions on Frontier's part, and are not penalties or
          consequential or other damages under Section 6.3 hereof.

     3.10 Pathnet agrees that a breach of any other agreement it may have with
          Frontier or a Frontier Affiliate shall be deemed a material breach of
          this Agreement.

4.   BILLING DISPUTES: Pathnet shall have the affirmative obligation of
     providing written notice of any dispute with an invoice within 90 days
     after receipt of the invoice by Pathnet (which notice shall include
     sufficient detail for Frontier to investigate the dispute). Pathnet may
     withhold payment only on amounts so disputed within 30 Business Days after
     Pathnet's receipt of the invoice. Pathnet may not withhold payment of
     amounts disputed after such 30 Business Day period. Pathnet shall not be
     responsible for the payment of any charges nor shall Frontier invoice any
     charges for Services that were not invoiced within 90 days after the
     Service for the charge was actually rendered other than third party charges
     not invoiced within the same 90 day period. If Pathnet does not report a
     dispute with respect to an invoice within the 90 day period, Pathnet is
     deemed to have waived its dispute rights for that invoice and to have
     agreed to pay the same. Provided Pathnet has provided sufficient detail for
     investigation of the dispute, Frontier will use reasonable efforts to
     resolve and communicate its resolution of the dispute within 30 Business
     Days of its receipt of the dispute notice. If the dispute is resolved in
     Frontier's favor any amounts to be paid by Pathnet shall be subject to the
     late payment charges under Section 3.4 hereof retroactive to the due date
     of the disputed invoice. Notwithstanding anything herein to the contrary,
     Pathnet shall not withhold any disputed amounts while its Frontier account
     is delinquent.

5.   TERMINATION RIGHTS:

     5.1  Either Party may terminate this Agreement upon the other Party's
          insolvency, dissolution or cessation of business operations.

     5.2  Frontier may, upon written notice, only immediately terminate this
          Agreement for (i) Pathnet's failure to pay any delinquent invoice, or
          (ii) to pay any security or additional security within the time-frame
          required under this Agreement.


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     5.3  In the event of a breach of any material term or condition of this
          Agreement by a Party (other than a failure to pay or provide security
          which is covered under Section 5.2 hereof), the other Party may
          terminate this Agreement upon 30 days written notice, unless the
          breaching Party cures the breach during the 30 day period. A breach
          that cannot be reasonably cured within a 30 day period may be
          addressed by a written waiver of this paragraph signed by the Parties.
          In addition to any other rights hereunder, Pathnet may terminate this
          Agreement and/or the affected Service without early termination fee or
          penalty, except for unpaid charges as of the effective date of
          termination, as follows:

          Pathnet shall have the right to terminate a circuit, without incurring
          early termination liability, upon ten days written notice to Frontier
          that the circuit has experienced repeated or chronic Service Outages
          (as defined below). For purposes of this Section, "repeated or chronic
          Service Outages" is defined as the occurrence of four (4) or more
          Pathnet reported service interruptions or outages (excepting planned
          maintenance and force majeure events) in the same circuit of more than
          one (1) hour duration each in any month.

     5.4  If this Agreement is terminated prior to expiration of a circuit's
          term commitment, except if terminated by Pathnet under Section 5.3
          hereof, then Pathnet shall pay to Frontier upon demand an early
          termination fee in an amount equal to the aggregate sum of each
          existing circuit's monthly minimum commitment, times the number of
          months remaining on each circuit's minimum commitment period.

6.   WARRANTIES AND LIMITATION OF LIABILITY:

     6.1  The Services shall be provided by Frontier in accordance with the
          applicable technical standards established for dedicated circuit
          capacity by the telecommunications industry for a digital fiber optic
          network. FRONTIER MAKES NO OTHER WARRANTY, EXPRESS OR IMPLIED, WITH
          RESPECT TO TRANSMISSION, EQUIPMENT OR SERVICE PROVIDED HEREUNDER, AND
          EXPRESSLY DISCLAIMS ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR ANY
          PARTICULAR PURPOSE OR FUNCTION.

     6.2  The entire liability of Frontier for all claims of whatever nature
          arising out of its provision of the Private Line Services (including
          its negligence), and not caused by (i) Pathnet or third parties, or
          (ii) a scheduled or emergency interruption, shall be a credit for
          service interruptions greater than 120 continuous minutes for linear
          routes and 60 continuous minutes for protected routes (hereafter an
          "Outage"). The amount of the credit is computed in accordance with the
          following formula (the "Outage Credit"):

<TABLE>
          <S>      <C>
          Example: Outage Credit = Hours of Outage - 2 hours x Total MRC for Affected Circuit
                                   -------------------------
                                                  720 hours
</TABLE>

          A.   The Outage Credit shall apply to the charges for any circuit
               affected by an Outage; provided, however, that if any portion of
               the affected circuit remains useable by Pathnet, the Outage
               Credit shall not apply to that pro-rata portion of the mileage.
               The duration of each Outage shall be calculated in hours and
               shall include fractional portions thereof. An Outage shall be
               deemed to have commenced one hour after verifiable notification
               thereof by Pathnet to Frontier, or, when indicated by network
               control information actually known to Frontier network personnel,
               whichever is earlier for SONET protected routes and after two
               hours for linear routes. Each Outage shall be deemed to terminate
               upon restoration of the affected circuit as evidenced by
               appropriate network tests by Frontier. Frontier shall give notice
               to Pathnet of any scheduled interruption as early as is
               practicable.


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          B.   Outage Credits shall not be granted if the malfunction of any
               end-to-end circuit is due to an outage or other defect occurring
               in Pathnet's Interconnection Facilities.

          C.   All Outage Credits shall be credited on the next monthly invoice
               for the affected circuit after receipt of Pathnet's written
               request for credit. The total of all Outage Credits applicable to
               or accruing in any given month shall not exceed the amount
               payable by Pathnet to Frontier for that same month for the
               affected circuit.

          D.   The Outage Credit described in this Section shall be the sole and
               exclusive remedy of Pathnet in the event of any Outage or other
               failure in the Services, and under no circumstance shall an
               Outage or other such failure be deemed a breach of this Agreement
               by Frontier.

     6.3  In no event shall either Party be liable to the other Party for
          incidental and consequential damages, loss of goodwill, anticipated
          profit, or other claims for indirect damages in any manner related to
          this Agreement or the Services.

7.   INDEMNIFICATION: Each Party shall defend and indemnify the other Party and
     its directors, officers, employees, representatives and agents from any and
     all claims, taxes, penalties, interest, expenses, damages, lawsuits or
     other liabilities (including without limitation, reasonable attorney fees
     and court costs) relating to or arising out of (i) acts or omissions in the
     operation of its business, and (ii) its breach of this Agreement; provided,
     however, Frontier shall not be liable and shall not be obligated to
     indemnify Pathnet, and Pathnet shall defend and indemnify Frontier
     hereunder, for any claims by any third party, including Pathnet's
     customers, with respect to services provided by Pathnet which may
     incorporate any of the Services.

8.   REPRESENTATION: The Parties acknowledge and agree that the relationship
     between them is solely that of independent contractors. Neither Party, nor
     their respective employees, agents or representatives, has any right, power
     or authority to act or create any obligation, express or implied, on behalf
     of the other Party.

9.   FORCE MAJEURE: Other than with respect to failure to make payments due
     hereunder, neither Party shall be liable under this Agreement for delays,
     failures to perform, damages, losses or destruction, or malfunction of any
     equipment, or any consequence thereof, caused or occasioned by, or due to
     fire, earthquake, flood, water, the elements, labor disputes or shortages,
     utility curtailments, power failures, explosions, civil disturbances,
     governmental actions, shortages of equipment or supplies, unavailability of
     transportation, acts or omissions of third parties, or any other cause
     beyond its reasonable control.

10.  WAIVERS: Failure of either Party to enforce or insist upon compliance with
     the provisions of this Agreement shall not be construed as a general waiver
     or relinquishment of any provision or right under this Agreement.

11.  ASSIGNMENT: Neither Party may assign or transfer its rights or obligations
     under this Agreement without the other Party's written consent, which
     consent may not be unreasonably withheld, except that Frontier may assign
     this Agreement to its Affiliates or successors in interest without
     Pathnet's consent. Any assignment or transfer without the required consent
     is void.


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12.  CONFIDENTIALITY: Each Party agrees that all information furnished to it by
     the other Party, or to which it has access under this Agreement, shall be
     deemed the confidential and proprietary information or trade secrets
     (collectively referred to as "Proprietary Information") of the Disclosing
     Party and shall remain the sole and exclusive property of the Disclosing
     Party (the Party furnishing the Proprietary Information referred to as the
     "Disclosing Party" and the other Party referred to as the "Receiving
     Party"). Each Party shall treat the Proprietary Information and the
     contents of this Agreement in a confidential manner and, except to the
     extent necessary in connection with the performance of its obligations
     under this Agreement, neither Party may directly or indirectly disclose the
     same to anyone other than its employees on a need to know basis and who
     agree to be bound by the terms of this Section, without the written consent
     of the Disclosing Party.

13.  INTEGRATION: This Agreement and all Exhibits and other attachments
     incorporated herein, represent the entire agreement between the Parties
     with respect to the subject matter hereof and supersede and merge all prior
     agreements, promises, understandings, statements, representations,
     warranties, indemnities and inducements to the making of this Agreement
     relied upon by either Party, whether written or oral.

14.  GOVERNING LAW: Frontier currently maintains regional service and operations
     centers to support customer accounts in New York, California and Michigan.
     This Agreement will be construed and enforced in accordance with the law of
     the state where Pathnet's account is supported, as designated by Frontier
     in this Agreement or as designated in Exhibits or amendments to this
     Agreement, without regard to that state's choice of law principles. The
     Parties agree that any action related to this Agreement shall be brought
     and maintained only: (i) in the Superior court of the State of California
     for the County of Santa Barbara, if the designated customer support center
     is located in California; (ii) in a Federal or State court of competent
     jurisdiction located in Monroe County, New York, if the designated customer
     support center is located in New York; or (iii) in the Federal District
     Court for the Eastern District of Michigan or a State court of competent
     jurisdiction located in Oakland County, Michigan, if the designated
     customer support center is located in Michigan. The Parties each consent to
     the jurisdiction and venue of such courts and waive any right to object to
     such jurisdiction and venue.

15.  NOTICES: All notices, including but not limited to, demands, requests and
     other communications required or permitted hereunder (not including
     Invoices) shall be in writing and shall be deemed given: (i) when delivered
     in person, (ii) 24 hours after deposit with an overnight delivery service
     for next day delivery, (ii) the same day when sent by facsimile
     transmission during normal business hours, receipt confirmed by sender's
     equipment, or (iii) 72 hours after deposit in the United States mail,
     postage prepaid, registered or certified mail, return receipt requested,
     and addressed to the recipient Party at the address set forth below:

     If to Frontier:  Frontier Communications
                      180 South Clinton Ave.
                      Rochester, NY 14646
                      Attn: Brian Fitzpatrick or Vice President Carrier Services
                      Facsimile #: (716) 232-9168

     with a copy to:  Frontier Communications
                      90 Castilian Drive
                      Goleta, CA 93117
                      Attn: Peggy Palak Manager, National Contract Admin.
                      Facsimile #: (800) 689-2395


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     If to Pathnet                 Pathnet, Inc.
                                   1015 31st Street, NW
                                   Washington, DC 20007
                                   Attn: General Counsel
                                   Facsimilie #: (202) 625-7369

16.  COMPLIANCE WITH LAWS: During the term of this Agreement, the Parties shall
     comply with all local, state and federal laws and regulations applicable to
     this Agreement and to their respective businesses.

17.  SURVIVAL OF PROVISIONS: Any obligations of the Parties relating to monies
     owed, as well as those provisions relating to confidentiality, limitations
     on liability and indemnification, shall survive termination of this
     Agreement.

18.  UNENFORCEABLE PROVISIONS: The illegality or unenforceability of any
     provision of this Agreement does not affect the legality of enforceability
     of any other provision or portion. If any provision or portion of this
     Agreement is deemed illegal or unenforceable for any reason, there shall be
     deemed to be made such minimum change in such provision or portion as is
     necessary to make it valid and enforceable as so modified.

19.  CUMULATIVE RIGHTS AND REMEDIES: Except as may otherwise be provided herein,
     the assertion by a Party of any right or the obtaining of any remedy
     hereunder shall not preclude such Party from asserting or obtaining any
     other right or remedy, at law or in equity, hereunder.

20.  AMENDMENTS: This Agreement is voidable by Frontier if the text is modified
     by Pathnet without the written or initialed consent of a Frontier Vice
     President. Except as may otherwise be provided herein, any amendments or
     modifications to this Agreement must be in writing and signed by a Frontier
     Vice President (or higher level officer) and an authorized officer of
     Pathnet.

21.  NON-SOLICITATION: Pathnet agrees that while this Agreement is in effect,
     and for a period of 12 months following expiration or termination of this
     Agreement, neither it nor its representatives will directly or indirectly
     solicit Frontier employees to leave their employment with Frontier.

22.  AUTHORITY: Each individual executing below on behalf of a Party hereby
     represents and warrants to the other Party that such individual is duly
     authorized to so execute, and to deliver, this Agreement. By its signature
     below, each Party acknowledges and agrees that sufficient allowance has
     been made for review of this Agreement by respective counsel and that each
     Party has been advised by its legal counsel as to its legal rights, duties
     and obligations under this Agreement.

Frontier Communications of the West, Inc.              Pathnet, Inc.

By:/s/ BRIAN V. FITZPATRICK 8/20/99            By:/s/ MICHAEL A. LUBIN
   ----------------------------------           --------------------------------
   Brian v. Fitzpatrick, SVP Carrier Sales      Michael A. Lubin, Vice President
     Frontier Carrier Services Group

Date:                       8/20/99            Date:
     ---------------------------------              ----------------------------



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<PAGE>   11
                                  EXHIBIT A


                               RATES AND CHARGES

                                                                       Exhibit A
                                                                     Page 1 of 1


Special Ordered Circuits (Unprotected)

<TABLE>
<CAPTION>
Circuit Capacity
<S>              <C>        <C>       <C>     <C>
(1) OC-12        [***]      [***]     [***]   [***]
(1) OC-12        [***]      [***]     [***]   [***]

</TABLE>


Special pricing - Pricing is based on Pathnet maintaining its $150,000
Minimum Charge commitment.


<TABLE>
<CAPTION>
Circuit Capacity
<S>              <C>        <C>
DS-1             [***]      [***]
DS-3             [***]      [***]
OC-3             [***]      [***]
OC-12            [***]      [***]
</TABLE>


Standard pricing - In the event Pathnet fails to meet their $150,000 Minimum
Charge commitment, Pathnet will receive the standard pricing which is based upon
the length of the circuit term commitment.

<TABLE>
<CAPTION>
Circuit Capacity
<S>              <C>        <C>       <C>     <C>
DS-1             [***]      [***]     [***]   [***]
DS-3             [***]      [***]     [***]   [***]
OC-3             [***]      [***]     [***]   [***]
OC-12            [***]      [***]     [***]   [***]

</TABLE>

Notes: Pricing is per DS-0 mile times V & H mileage for specific city pairs.

<TABLE>
<CAPTION>

<S>                       <C>               <C>               <C>           <C>
Non-Recurring Charges      Installation*     Rearrangement**    Expedite     Drop & Insert

DS-1                          [***]                [***]          [***]         [***]
DS-3                          [***]                [***]          [***]         [***]
OC-3                          [***]                [***]          [***]         [***]
OC-12                         [***]                [***]          [***]         [***]

</TABLE>
 *Installation charges are per end.
**Rearrangement is defined to be any move, change or rearrangement of a circuit.
Rearrangement charges are per end.

If Pathnet should cancel an ordered circuit prior to the Service Date,
Pathnet will be assessed the applicable cancellation charge.


<TABLE>
<CAPTION>
Circuit Cancellation Charges
<S>              <C>
DS-1             [***]
DS-3             [***]
OC-3             [***]
OC-12            [***]
OC-48            [***]
</TABLE>

                                                                Initials /s/ MAZ
                                                                   Initials ____

                                       12
<PAGE>   12
                                  EXHIBIT B


                  Natural Fiber Network POP Location (By Site)




<TABLE>
<CAPTION>
               Expected
Site         Service Date      State     LATA    POP Location     Zip Code   NPA-NXX
----         ------------      -----     ----    ------------     --------   -------
[***]           [***]          [***]     [***]      [***]           [***]     [***]
<S>          <C>              <C>       <C>     <C>              <C>        <C>



</TABLE>