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                                                                     Exhibit 4.1


                                    AMENDMENT ("Amendment") dated as of July 28,
                              2000 between FIBERNET TELECOM GROUP, INC.
                              ("Company"), SIGNAL EQUITY PARTNERS, L.P.
                              (formerly known as Signal Capital Partners, L.P.),
                              as the Majority in Interest of the Purchasers
                              ("Signal"), and NORTEL NETWORKS INC. ("Nortel")
                              (each term as defined herein), to the Stockholders
                              Agreement dated as of May 7, 1999 (as amended by
                              the Amendment dated as of June 30, 2000, the
                              "Stockholders Agreement") by and among the Company
                              and the Stockholders (as defined in the
                              Stockholders Agreement) listed therein
                              ("Stockholders").


     WHEREAS, pursuant to Section 17 of the Stockholders Agreement, the Company,
Nortel and Signal, as the Majority in Interest, have the right to modify the
Stockholders Agreement; and

     WHEREAS, the Company, Nortel and Signal, as the Majority in Interest, wish
to amend the Stockholders Agreement.

     NOW, THEREFORE, the parties agree as follows:

     Section 1.  Definitions.  Capitalized terms used and not otherwise defined
                 -----------
herein shall have the meanings ascribed to such terms in the Stockholders
Agreement.

     Section 2.  Agreement to Amend.  Pursuant to Section 17 of the Stockholders
                 ------------------
Agreement, the Company, Nortel and Signal hereby agree to amend the Stockholders
Agreement as provided herein.

     Section 3.  Amendments.
                 ----------

             (a) Section 1 (Definitions) of the Stockholders Agreement shall be
amended as follows:

               (i) The definition of the term "Stock" shall be amended and
restated in its entirety as follows:

                    "Stock" shall mean (i) the presently issued and outstanding
                     -----
               shares of Common Stock, Series C Preferred Stock, Series D
               Preferred Stock, Series E Preferred Stock, Series F Preferred
               Stock and Series H Preferred Stock and any options, warrants or
               other instruments exercisable therefor (which options, warrants
               or other instruments shall be deemed to be that number of
               outstanding shares of Stock for which they are exercisable), (ii)
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               any additional shares of capital stock of the Company hereafter
               issued and outstanding and (iii) any shares of capital stock of
               the Company into which such shares may be converted or for which
               they may be exchanged or exercised.

               (ii)  The following definition shall be deleted:

                    "Series G Preferred Stock" shall mean the Series G
                     ------------------------
               Convertible Preferred Stock, par value $.001, of the Company.

               (iii)  The following definition shall be added:

                    "Series H Preferred Stock" shall mean the Series H
                     ------------------------
               Convertible Preferred Stock, par value $.001, of the Company.

     (b) In partial consideration of the deletion of Section 3 of the
Stockholders Agreement (as set forth below in Section 3(c) of this Amendment)
and the amendment and restatement of Section 4 of the Stockholders Agreement (as
set forth below in Section 3(d) of this Amendment), Section 2 (Limitations on
Transfers of Stock by Stockholders) of the Stockholders Agreement  shall be
amended and restated in its entirety as follows:

              "Section 2.  Limitations on Transfers of Stock by Stockholders.
                           -------------------------------------------------

               (a) The Stockholders shall not, at any time during the term of
          this Agreement, Transfer any Stock without first complying with the
          provisions of Sections 4 and 6; provided, that a Stockholder may
                                          --------
          Transfer Stock to another member of the Group of such Stockholder
          without complying with Sections 4 and 6 if the recipient of such Stock
          shall agree in writing with the parties to this Agreement to be bound
          by and to comply with all applicable provisions of this Agreement and
          to be deemed a Stockholder.  Any Transfer made or attempted to be made
          in contravention of the terms of this Section 2 shall be null and
          void.

               (b) Each Stockholder (other than Nortel) hereby agrees that it
          shall not Transfer any Stock for a period of the shorter of: (x) one
          (1) year after June 30, 2000; and (y) the period  provided for in any
          agreement entered into by such Stockholder at the request of the
          managing underwriters with respect to a Qualified Public Offering.

               (c) The foregoing provisions of this Section 2 shall not apply to
          or be binding upon Nortel.  Anything contained herein to the contrary
          notwithstanding, Nortel hereby agrees that it shall not Transfer any
          Stock for a period of one (1) year after the date of the Securities
          Purchase Agreement dated as of June 30, 2000, between the Company and
          Nortel, other than (i) pursuant to Section 4(c) hereof or (ii) to any
          member of Nortel's Group, provided that such Group member agrees in
          writing to be bound by this provision.
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               (d) Each Stockholder agrees, upon request of the Company or the
          managing underwriters with respect to a Qualified Public Offering, to
          enter into an agreement providing that, for a period of time (not to
          exceed one hundred eighty (180) days) from the effective date of the
          Qualified Public Offering, the Stockholder shall not sell, make any
          short sale of, loan, grant any option for the purchase of, or
          otherwise dispose of any Stock, other than shares of Stock included in
          the registration, without the prior written consent of the Company or
          such underwriters, as the case may be; provided, however, the
          Stockholder shall not be obligated to enter into such agreement unless
          all executive officers and directors of the Company and each holder of
          more than 5% of the outstanding Common Stock (or derivatives thereof),
          shall have entered into similar agreements."

              (c) Section 3 of the Stockholders Agreement is hereby deleted in
its entirety.

              (d) Section 4 (Tag-along Right) of the Stockholders Agreement
shall be amended and restated in its entirety as follows:

          "Section 4.  Tag-along Right.
                       ---------------

               (a) In the event that a Stockholder ("Section 4 Offeror") desires
          to Transfer shares of Stock constituting twenty percent (20%) or more
          of the Company's Common Stock, as determined on a fully diluted basis
          assuming the full exercise and conversion of the outstanding
          securities of the Company (the "Section 4 Offer") to a Person (the
          "Section 4 Purchaser"), the Selling Group shall promptly forward a
          notice (the "Section 4 Offer Notice") to the Stockholders.  Subject to
          Section 4(b), the Selling Group shall not Transfer any Stock to the
          Section 4 Purchaser unless the terms of the Section 4 Offer are
          extended to the Stockholders with respect to their Proportionate
          Percentage of the aggregate number of shares of Stock (on a Common
          Stock equivalent basis) to which the Section 4 Offer relates,
          whereupon each Stockholder shall be entitled to Transfer to the
          Section 4 Purchaser pursuant to the Section 4 Offer the Stockholder's
          Proportionate Percentage of the aggregate number of shares of Stock
          (on a Common Stock equivalent basis) to which the Section 4 Offer
          relates by delivering a written notice of acceptance to the Selling
          Group within 15 days after delivery of the Section 4 Offer Notice.

               (b) Anything contained herein to the contrary notwithstanding,
          any purchaser of Stock pursuant to this Section 4 which is not then a
          Stockholder shall agree in writing to be bound by all applicable
          provisions of this Agreement and shall be deemed to be a Stockholder
          for all purposes of this Agreement.

               (c) Anything contained herein to the contrary notwithstanding,
          (i) any Transfer by Nortel of any of the shares of Stock held by
          Nortel shall not be subject to the provisions of this Section 4 and
          (ii) Nortel shall be entitled to Transfer shares of Stock held by
          Nortel to a Section 4 Purchaser pursuant to a Section 4 Offer only in
          the event that such Section 4 Purchaser is purchasing at
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          least twenty percent (20%) of the Company's Common Stock, as
          determined on a fully diluted basis assuming the full exercise and
          conversion of the outstanding securities of the Company."

          (e) New subsection (f)(vii) shall be added to Section 7 (Pre-emptive
Rights) of the Stockholders Agreement as follows:

              "(vii) 426,333 shares of Series H Preferred Stock issued or to be
          issued to Nortel Networks Inc. (and shares of Common Stock to be
          issued upon conversion thereof)."

          (e) Section 13 is hereby amended and restated as follows:

              "Section 13.  Duration of Agreement; Compliance.
                            ---------------------------------

              The rights and obligations of each Stockholder under this
          Agreement shall terminate upon the earliest to occur of (a) the valid
          and enforceable Transfer of all Stock owned by such Stockholder, and
          (b) a Qualified Public Offering (except with respect to Section 2(b),
          which obligations shall survive and not terminate upon a Qualified
          Public Offering)."

          Section 4.  Governing Law.  This Amendment shall be governed by and
                      -------------
construed in accordance with the laws of the State of New York (without regard
to principles of conflicts of laws).

          Section 5.  Successors and Assigns.  This Amendment shall bind and
                      ----------------------
inure to the benefit of the parties and their respective successors and assigns,
transferees, legal representatives and heirs.

          Section 6.  Headings.  The headings of this Amendment have been
                      --------
inserted for convenience of reference only and shall not be deemed to be a part
of this Amendment.

          Section 7.  Entire Agreement.  This Amendment, the Stockholders
                      ----------------
Agreement and the other writings referred to herein or delivered pursuant hereto
contain the entire agreement among the parties hereto with respect to the
subject matter hereof and supersede all prior and contemporaneous agreements and
understandings with respect thereto.

          Section 8.  Counterparts.  This Amendment may be executed in any
                      ------------
number of counterparts, and each such counterpart shall be deemed to be an
original instrument, but all such counterparts together shall constitute but one
agreement.


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              IN WITNESS WHEREOF, the parties have executed this Amendment as of
the date first written above.



                                      FIBERNET TELECOM GROUP, INC.


                                      By: _________________________________
                                          Name:
                                          Title:



                                      SIGNAL EQUITY PARTNERS, L.P.

                                      By: Signal Equity Advisors, L.P.
                                      Its: General Partner

                                      By: Signal Equity Advisors, Inc.
                                      Its: General Partner


                                      By: _________________________________
                                          Name:
                                          Title:



                                      NORTEL NETWORKS INC.


                                      By: _________________________________
                                          Name:
                                          Title: