<PAGE>
 
                                                                  Exhibit 10.4


                 FOCAL COMMUNICATIONS CORPORATION OF WASHINGTON

                                      AND

                         U S WEST COMMUNICATIONS, INC.

                           ARBITRATED INTERCONNECTION
                                   AGREEMENT

                          FOR THE STATE OF WASHINGTON


                                Agreement Number
                                CDS-990114-0031

                 Focal Communications Corporation of Washington
             Is opting into the Electric Lightwave, Inc. Agreement
<PAGE>
 
                               TABLE OF CONTENTS
I.  RECITALS                                                               1
II. SCOPE OF AGREEMENT                                                     1
III.DEFINITIONS                                                            2
IV. RATES AND CHARGES GENERALLY                                            8
V.  RECIPROCAL TRAFFIC EXCHANGE                                            8
 A. Scope                                                                  8
 B. Types of Traffic                                                       8
 C. Types of Exchanged Traffic                                             9
 D. Rate Structure -- Local Traffic                                        11
 E. Rate Structure -- Toll Traffic                                         12
 F. Rate Structure -- Transit Traffic                                      12
 G. LIS Interface Code Availability And Optional Features                  12
 H. Measuring Local Interconnection Minutes                                13
 I. Testing                                                                14
 J. Ordering                                                               14
 K. Billing Arrangements                                                   15
 L. Mileage Measurement                                                    16
 M. Construction Charges                                                   16
VI. INTERCONNECTION                                                        16
 A. Definition                                                             16
 B. Mid-span Meet POI                                                      17
 C. Collocation                                                            17
 D. Entrance Facility                                                      17
 E. Quality of Interconnection                                             17

                                     Page 1
<PAGE>
 
                               TABLE OF CONTENTS

 F.   Points of Interface (POI)                                            17
 G.   Trunking Requirements                                                18
 H.   Service Interruptions                                                19
 I.   Interconnection Forecasting                                          20
VII.  COLLOCATION                                                          21
 A.   General Provisions                                                   21
 B.   Virtual Collocation                                                  22
 C.   Physical Collocation                                                 24
 D.   Collocation Rate Elements                                            26
 E.   Collocation Installation Intervals                                   29
VIII. INTERIM NUMBER PORTABILITY                                           30
 A.   General Terms                                                        30
 B.   Description of Service                                               31
IX.   DIALING PARITY                                                       35
X.    ACCESS TO TELEPHONE NUMBERS                                          35
XI.   CALL COMPLETION FROM USWC OPERATORS                                  36
XII.  BUSY LINE VERIFY INTERRUPT                                           36
XIII. TOLL AND ASSISTANCE OPERATOR SERVICES                                37
XIV.  DIRECTORY ASSISTANCE                                                 38
XV.   DIRECTORY LISTINGS                                                   39
XVI.  U S WEST DIRECT ISSUES                                               41
XVII. ACCESS TO POLES, DUCTS, CONDUITS, AND RIGHTS OF WAY                  41
XVIII. ACCESS TO DATABASES                                                 41


                                     Page 2
<PAGE>
 
                               TABLE OF CONTENTS

XIX.   NOTICE OF CHANGES                                                   42
XX.    9111E-911 SERVICE                                                   42
XXI.   REFERRAL ANNOUNCEMENT                                               44
XXII.  COORDINATED REPAIR CALLS                                            44
XXIII. NETWORK INTERCONNECTION AND UNBUNDLED ELEMENT REQUEST.              44
XXIV.  AUDIT PROCESS                                                       46
XXV.   AUDIOTEXT AND MASS ANNOUNCEMENT SERVICES                            47
XXVI.  LOCAL INTERCONNECTION DATA EXCHANGE FOR BILLING                     48
XXVII. SIGNALING ACCESS TO CALL-RELATED DATABASES                          49
XXVIII. INTERCONNECTION TO LINE INFORMATION DATABASE (LIDB)                50
XXIX.  CONSTRUCTION CHARGES                                                51
XXX. RESALE                                                                52
 A. Description                                                            52
 B. Scope                                                                  52
 C. Ordering and Maintenance                                               52
 D. Focal Responsibilities                                                 54
 E. Rates and Charges                                                      55
 F. Directory Listings                                                     56
 G. Deposit                                                                56
 H. Payment                                                                57
XXXI. UNBUNDLED ACCESS ELEMENTS                                            58
 A. General Terms                                                          58
 B. Description of Unbundled Elements                                      58


                                     Page 3
<PAGE>
 
                               TABLE OF CONTENTS

XXXII.  SERVICE STANDARDS                                                  64
XXXIII. IMPLEMENTATION SCHEDULE                                            65
XXXIV.  MISCELLANEOUS TERMS                                                66
 A.     General Provisions                                                 66
 B.     Most Favored Nation Terms and Treatment                            67
 C.     Letter of Authorization                                            67
 D.     Payment                                                            67
 E.     Taxes                                                              67
 F.     Intellectual Property                                              68
 G.     Severability                                                       68
 H.     Responsibility for Environmental Contamination                     69
 I.     Responsibility of Each Party                                       69
 J.     Referenced Documents                                               69
 K.     Publicity and Advertising                                          70
 L.     Executed in Counterparts                                           70
 M.     Headings of No Force or Effect                                     70
 N.     Entire Agreement                                                   70
 0.     Joint Work Product                                                 70
 P.     Disclaimer of Agency                                               70
 Q.     Survival                                                           71
 R.     Effective Date                                                     71
 S.     Amendment of Agreement                                             71
 T.     Indemnity                                                          71
 U.     Limitation of Liability                                            72
 V.     Term of Agreement                                                  73

                                     Page 4
<PAGE>
 
                               TABLE OF CONTENTS

 W.     Controlling Law                                                    73
 X.     Cancellation Charges                                               73
 Y.     Regulatory Approval                                                73
 Z.     Compliance                                                         73

 AA.    Compliance with the Communications Law Enforcement Act of 1994
        ("CALEA")                                                          73
 BB.    Independent Contractor                                             74
 CC.    Force Majeure                                                      74
 DD.    Dispute Resolution                                                 74
 EE.    Commission Decision                                                74
 FF.    Nondisclosure                                                      74
 GG.    Notices                                                            76
 HH.    Assignment                                                         76
 II.    Warranties                                                         76
 JJ.    Default                                                            77
 KK.    No Third Party Beneficiaries                                       77
APPENDIX A -  RATES AND CHARGES                                            79
APPENDIX B - ENGINEERING REQUIREMENTS                                      1
APPENDIX C -  PHYSICAL COLLOCATION AGREEMENT                               1
ARTICLE I -  PREMISES                                                      3
ARTICLE II - EFFECTIVENESS AND REGULATORY APPROVAL                         4
ARTICLE III - TERM                                                         5
ARTICLE IV -  PREMISES CHARGES                                             7
ARTICLE V -  INTERCONNECTION CHARGES                                       7
ARTICLE VI - DEMARCATION POINT                                             7


                                     Page 5
<PAGE>
 
                               TABLE OF CONTENTS

ARTICLE VII -  USE OF PREMISES                                             8
ARTICLE VIII - STANDARDS                                                   9
ARTICLE IX -  RESPONSIBILITIES OF THE INTERCONNECTOR AND USWC              9
ARTICLE X - QUIET ENJOYMENT                                                11
ARTICLE XI - ASSIGNMENT                                                    11
ARTICLE XII -CASUALTY LOSS                                                 11
ARTICLE XIII -  LIMITATION OF LIABILITY                                    12
ARTICLE XIV -  SERVICES, UTILITIES, MAINTENANCE AND FACILITIES             13
ARTICLE XV- DISPUTE RESOLUTION                                             13
ARTICLE XVI - SUCCESSORS BOUND                                             13
ARTICLE XVII - CONFLICT OF INTEREST                                        13
ARTICLE XVIII - NON-EXCLUSIVE REMEDIES                                     14
ARTICLE XIX - NOTICES                                                      14
ARTICLE XX - COMPLIANCE WITH LAWS                                          14
ARTICLE XXI- INSURANCE                                                     14
ARTICLE XXII- US WEST'S RIGHT OF ACCESS                                    15
ARTICLE XXIII- OTHER COLLOCATION AGREEMENTS                                15
ARTICLE XXIV - MISCELLANEOUS                                               15



                                     Page 6
<PAGE>
 
                           INTERCONNECTION AGREEMENT

     THIS INTERCONNECTION AGREEMENT, made as of this 15th day of January, 1999,
is between Focal Communications Corporation of Washington ("Focal") and U S WEST
Communications, Inc. ("USWC"), a Colorado corporation.

I.   RECITALS

     Pursuant to this Interconnection Agreement Focal Communications Corporation
     of Washington. ("Focal") and U S WEST Communications, Inc. ("USWC"),
     collectively "the Parties", will extend certain arrangements to one another
     within each LATA in which they both operate within this State. This
     Agreement is a combination of agreed terms and terms imposed by arbitration
     under Section 252 of the Communications Act of 1934, as modified by the
     Telecommunications Act of 1996 ("the Act"), and as such does not
     necessarily represent the position of either Party on any given issue. The
     Parties enter into this Agreement without prejudice to any position they
     may have taken previously, or may take in the future in any legislative
     regulatory, or other public forum addressing any matters, including matters
     related to the types of arrangements prescribed by this Agreement.

II.  SCOPE OF AGREEMENT

     A.   This Agreement sets forth the terms, conditions and prices under which
          USWC agrees to provide (a) services for resale (hereinafter referred
          to as "Local Services") (b) certain Unbundled Network Elements,
          Ancillary Functions and additional features to Focal (hereinafter
          collectively referred to as "Network Elements") or combinations of
          such Network Elements ("Combinations") for Focal's own use or for
          resale to others. The Agreement also sets forth the terms, conditions
          and prices under which the parties agree to provide interconnection
          and reciprocal compensation for the exchange of local traffic between
          USWC and Focal for purposes of offering telecommunications services.
          Unless otherwise provided in this Agreement, the parties will perform
          all of their obligations hereunder throughout, to the extent provided
          in the Appendices attached hereto. The Agreement includes all
          accompanying appendices.

     B.   In the performance of their obligations under this Agreement, the
          Parties shall act in good faith and consistently with the intent of
          the Act. Where notice, approval or similar action by a Party is
          permitted or required by any provision of this Agreement, (including,
          without limitation, the obligation of the parties to further negotiate
          the resolution of new or open issues under this Agreement) such action
          shall not be unreasonably delayed, withheld or conditioned.

     C.   When Focal begins offering residential and business exchange services
          in this state through the use of Focal's facilities, Focal will notify
          USWC.

                                     Page 1
<PAGE>
 
     D.   Acknowledgment of Deferred Issues:

          Focal acknowledges it is USWC's position that USWC's existing
          telecommunications network represents substantial investment made as a
          result of its carrier-of-last-resort obligation and that such network
          allows Focal's end users to interconnect with significantly more
          business and residential customers than vice versa. Focal further
          acknowledges USWC believes that a separate transitional element is
          necessary to compensate USWC for the value of its network in this
          Agreement, that under the Act, the FCC will establish a proceeding to
          address Universal Service Support, and that the Act also empowers the
          state Commission to establish a separate proceeding on universal
          service issues. Focal further acknowledges that USWC believes that
          USWC is entitled to receive additional compensation for costs of
          implementing various provisions of the Act, and that USWC shall seek
          such additional recovery through future state and/or federal
          regulatory proceedings. Focal disagrees with these USWC positions.

          USWC acknowledges it is Focal's position that the relative investments
          of the Parties is not a relevant consideration in the context of this
          agreement and that it is the result of a historical monopoly which
          confers significant, continuing benefits on USWC. USWC acknowledges
          that it is Focal's position that no transitional elements are
          necessary to compensate USWC, that any such transitional elements
          would constitute a windfall to USWC, and that the investigations
          contemplated at the State and federal level for Universal Service
          Funding will substantially disprove USWC's claims. USWC further
          acknowledges that Focal believes that the costs of implementing the
          Act are costs experienced by all telecommunications carriers and that
          it would be unjust, discriminatory, and anti-competitive to favor USWC
          with additional cost recovery of implementation costs. USWC disagrees
          with these Focal positions.

          In consideration of Focal's willingness to interconnect on the terms
          set forth in this Agreement, and without prejudice to the position it
          may take in the FCC docket or before any state Commission, USWC agrees
          to await the outcome of such proceedings, rather than seek universal
          service support from Focal at this time.

III. DEFINITIONS

          A.   "Act" means the Communications Act of 1934 (47 U.S.C. 151
               et.seq.), as amended by the Telecommunications Act of 1996, and
               as from time to time interpreted in the duly authorized rules and
               regulations of the FCC or a Commission within its state of
               jurisdiction.

          B.   "Access Services" refers to the tariffed interstate and
               intrastate switched access and private line transport services
               offered for the origination and/or termination of interexchange
               traffic (see each Parties' appropriate state and interstate
               access tariffs).

                                     Page 2
<PAGE>
 
          C.   "ADSL" or "Asymmetrical Digital Subscriber Line" means a
               transmission technology which transmits an asymmetrical digital
               signal using one of several transmission methods (for example,
               carrier-less AM/PM discrete multi-tone, or discrete wavelet
               multi-tone).

          D.   "Access Service Request" or "ASR" means the industry standard
               forms and supporting documentation used for ordering Access
               Services. The ASR will be used to order trunking and facilities
               between Focal and USWC for Local Interconnection Service.

          E.   "Automatic Number Identification" or "ANI" means a Feature Group
               D signaling parameter which refers to the number transmitted
               through a network identifying the billing number of the calling
               party.

          F.   "CLASS features" are optional end user switched services that
               include, but are not necessarily limited to: Automatic Call Back;
               Call Trace; Caller ID and Related Blocking Features; Distinctive
               Ringing/Call Waiting; Selective Call Forward; Selective Call
               Rejection. (See Bellcore documentation for definition).

          G.   "BLV/BLVI Traffic" means an operator service call in which the
               caller inquires as to the busy status of or requests an
               interruption of a call on another Customer's Telephone Exchange
               Service line.

          H.   "Central Office Switch" means a switch used to provide
               Telecommunications Services, including, but not limited to:

               a.   "End Office Switches" which are used to terminate Customer
                    station loops for the purpose of interconnecting to each
                    other and to trunks; and

               b.   "Tandem Office Switches" which are used to connect and
                    switch trunk circuits between and among other Central Office
                    Switches. Access tandems provide connections for exchange
                    access and toll traffic while local tandems provide
                    connections for local/EAS traffic.

          I.   "Collocation" means an arrangement whereby one Party's (the
               "Collocating Party") facilities are terminated in its equipment
               necessary for Interconnection or for access to Network Elements
               on an unbundled basis which has been installed and maintained at
               the premises of a second Party (the "Housing Party"). Collocation
               may be "physical" or "virtual". In "Physical Collocation," the
               Collocating Party installs and maintains its own equipment in the
               Housing Party's premises. In "Virtual Collocation," the Housing
               Party installs and maintains the Collocating Party's equipment in
               the Housing Party's premises.

          J.   "Commission" means the Washington Utilities and Transportation
               Commission.

          K.   "Customer" means a third party (residence or business) that
               subscribes to Telecommunications Services provided by either of
               the Parties.

                                     Page 3
<PAGE>
 
          L.   "Calling Party Number" or "CPN" is a Common Channel Signaling
               ("CCS") parameter which refers to the number transmitted through
               a network identifying the calling party.

          M.   "Common Channel Signaling" or "CCS" means a method of digitally
               transmitting call set-up and network control data over a special
               signaling network fully separate from the public voice switched
               network elements that carry the actual call. The CCS used by the
               Parties shall be Signaling System 7.

          N.   "Competitive Local Exchange Carrier" means an entity authorized
               to provide Local Exchange Service that does not otherwise qualify
               as an incumbent LEC.

          0.   "Digital Signal Level" means one of several transmission rates in
               the time division multiplexing hierarchy.

          P.   "Digital Signal Level 0" or "DSO" means the 64 Kbps zero-level
               signal in the time-division multiplex hierarchy.

          Q.   "Digital Signal Level 1" or "DS1" means the 1.544 Mbps
               first-level signal in the time-division multiplex hierarchy. In
               the time-division multiplexing hierarchy of the telephone
               network, DS1 is the initial level of multiplexing.

          R.   "Digital Signal Level 3" or "DS3" means the 44.736 Mbps
               third-level in the time-division multiplex hierarchy. In the
               time-division multiplexing hierarchy of the telephone network,
               DS3 is defined as the third level of multiplexing.

          S.   "Exchange Message Record" or "EMR" is the standard used for
               exchange of telecommunications message information between
               telecommunications providers for billable, non-billable, sample,
               settlement and study data. EMR format is contained in
               BR-O10-200-O10 CRIS Exchange Message Record, a Bellcore document
               that defines industry standards for exchange message records.

          T.   "Fiber-Meet" means an interconnection architecture method whereby
               the Parties physically interconnect their networks via an optical
               fiber interface (as opposed to an electrical interface) at a
               mutually agreed upon location.

          U.   "HDSL" or "High-Bit Rate Digital Subscriber Line" means a
               two-wire or four-wire transmission technology which typically
               transmits a DS1-level signal (or, higher level signals with
               certain technologies), using: 2 Binary / 1 Quartenary ("2B1Q").

          V.   "Integrated Digital Loop Carrier" means a subscriber loop carrier
               system which integrates within the switch at a DS1 level that is
               twenty-four (24) local Loop transmission paths combined into a
               1.544 Mbps digital signal.

          W.   "Interconnection" is as described in the Act and refers to the
               connection of separate pieces of equipment, facilities, or
               platforms between or within networks for the purpose of
               transmission and routing of Telephone Exchange Service traffic
               and Exchange Access traffic.

                                     Page 4
<PAGE>
 
          X.   "Interexchange Carrier" or "IXC" means a carrier that provides,
               directly or indirectly, inter LATA or intra LATA Telephone
               Toll Services.

          Y.   "Integrated Services Digital Network" or "ISDN" means a switched
               network service that provides end-to-end digital connectivity for
               the simultaneous transmission of voice and data. Basic Rate
               Interface-ISDN (BRI-ISDN) provides for a digital transmission of
               two 64 Kbps bearer channels and one 16 Kbps data channel (2B+D).

          Z.   "Local Loop Transmission" or "Loop" means the entire transmission
               path which extends from the network interface or demarcation
               point at a Customer's premises to the Main Distribution Frame or
               other designated frame or panel in a Party's Wire Center which
               serves the Customer.

          AA.  "Main Distribution Frame" or "MDF" means the distribution frame
               of the Party providing the Loop used to interconnect cable pairs
               and line and trunk equipment terminals on a switching system.

          BB.  "Meet-Point Billing" or "MPB" refers to an agreement whereby two
               LECs (including a LEC and CLEC) jointly provide switched access
               service to an Interexchange Carrier, with each LEC (or CLEC)
               receiving an appropriate share of the transport element revenues
               as defined by their effective access tariffs.

          CC.  "MECAB" refers to the Multiple Exchange Carrier Access Billing
               (MECAB) document prepared by the Billing Committee of the
               Ordering and Billing Forum (OBF), that functions under the
               auspices of the Carrier Liaison Committee (CLC) of the Alliance
               for Telecommunications Industry Solutions (ATIS). The MECAB
               document, published by Bellcore as Special Report SR-BDS-000983,
               contains the recommended guidelines for the billing of an access
               service provided by two or more LECs (including a LEC and a
               CLEC), or by one LEC in two or more states within a single LATA.

          DD.  "MECOD" refers to the Multiple Exchange Carriers Ordering and
               Design (MECOD) Guidelines for Access Services - Industry Support
               Interface, a document developed by the Ordering/Provisioning
               Committee under the auspices of the Ordering and Billing Forum
               (OBF), that functions under the auspices of the Carrier Liaison
               Committee (CLC) of the Alliance for Telecommunications Industry
               Solutions (ATIS). The MECOD document, published by Bellcore as
               Special Report SR STS-002643, establishes recommended guidelines
               for processing orders for access service that is to be provided
               by two or more LECs (including a LEC and a CLEC). It is published
               by Bellcore as SRBDS 00983.

          EE.  "Mid-Span Meet" is a point of interconnection between two
               networks, designated by two telecommunications carriers, at which
               one carrier's responsibility for service begins and the other
               carrier's responsibility ends.

                                     Page 5
<PAGE>
 
          FF.  "North American Numbering Plan" or "NANP" means the numbering
               plan used in the United States that also serves Canada, Bermuda,
               Puerto Rico and certain Caribbean Islands. The NANP format is a
               10-digit number that consists of a 3-digit NPA code (commonly
               referred to as the area code), followed by a 3-digit NXX code and
               4-digit line number.

          GG.  "NXX" means the fourth, fifth and sixth digits of a ten-digit
               telephone number.

          HH.  "Point of Interface" or "POI" is a mutually agreed upon point of
               demarcation where the exchange of traffic between two LECs
               (including a LEC and a CLEC) takes place.

          II.  "Party" means either USWC or Focal and "Parties" means USWC and
               Focal.

          JJ.  "Port" means a termination on a Central Office Switch that
               permits customers to send or receive telecommunications services
               over the public switched network, but does not include switch
               features or switching functionality.

          KK.  "Rate Center" means the specific geographic point and
               corresponding geographic area which are associated with one or
               more particular NPA-NXX codes which have been assigned to a LEC
               (or CLEC) for its provision of basic exchange telecommunications
               services. The "rate center point" is the finite geographic point
               identified by a specific V & H coordinate, which is used to
               measure distance-sensitive end user traffic to/from, the
               particular NPA-NXX designations associated with the specific Rate
               Center. The "rate center area" is the exclusive geographic area
               identified as the area within which the LEC (or CLEC) will
               provide Basic Exchange Telecommunications Service bearing the
               particular NPA-NXX designations associated with the specific Rate
               Center. The Rate Center point must be located within the Rate
               Center area.

          LL.  "Reseller" is a category of Local Exchange service provider that
               obtains dial tone and associated telecommunications services from
               another provider through the purchase of bundled finished
               services for resale to its end use customers.

          MM.  Service Control Point" or "SCP" means a signaling end point that
               acts as a database to provide information to another signaling
               end point (i.e., Service Switching Point or another SCP) for
               processing or routing certain types of network calls. A
               query/response mechanism is typically used in communicating with
               an SCP.

          NN.  "Signaling Transfer Point" or "STP" means a signaling point that
               performs message routing functions and provides information for
               the routing of messages between signaling end points. An STP
               transmits, receives and processes Common Channel Signaling
               ("CCS") messages.

          OO.  "Switched Exchange Access Service" means the offering of
               transmission or switching services to Telecommunications Carriers
               for the purpose of the origination or termination of Telephone
               Toll Service. Switched Exchange Access Services include: Feature
               Group A, Feature Group B, Feature Group D,800/888

                                     Page 6
<PAGE>
 
               access, and 900 access and their successors or similar Switched
               Exchange Access services.

          PP   "Traffic Type" is the characterization of intraLATA traffic as
               "local" (local includes EAS), or "toll" which shall be the same
               as the characterization established by the effective tariffs of
               the incumbent local exchange carrier as of the date of this
               agreement.

          QQ.  "Wire Center" denotes a building or space within a building, that
               serves as an aggregation point on a given carrier's network,
               where transmission facilities are connected or switched. Wire
               Center can also denote a building where one or more Central
               Offices, used for the provision of Basic Exchange
               Telecommunications Services and Access Services, are located.
               However, for purposes of Collocation Service, Wire Center shall
               mean those points eligible for such connections as specified in
               the FCC Docket No. 91-141, and rules adopted pursuant thereto.

          RR.  "Routing Point" means a location that a LEC or CLEC has
               designated on its own network as the homing (routing) point for
               traffic, bearing a certain NPA-NXX designation, that is inbound
               to Basic Exchange Telecommunications Services provided by the LEC
               or CLEC. The Routing Point is employed to calculate mileage
               measurements for the distance-sensitive transport element charges
               of Switched Access Services. Pursuant to Bellcore Practice BR
               795-100-100, the Routing Point may be an "End Office" location,
               or a "LEC Consortium Point of Interconnection". Pursuant to that
               same Bellcore Practice, examples of the latter shall be
               designated by a common language location identifier (CLLI) code
               with (x)KD in positions 9, 10, 11, where (x) may be any
               alphanumeric A-Z or 0-9. The above referenced Bellcore document
               refers to the Routing Point as the Rating Point. The Rating
               Point/Routing Point need not be the same as the rate center point
               nor must it be located within the rate center area, but must be
               in the same LATA as the NPA/NXX.(1)


          SS.  "Tariff Services" as used throughout this Agreement refers to the
               applicable Party's interstate tariffs and state tariffs, price
               lists, price schedules and catalogs.

          TT.  "Information Service Traffic" means Local Traffic or IntraLATA
               Toll Traffic which originates on a Telephone Exchange Service
               line and which is addressed to an information service provided
               over a Party's information services platform (e.g., 976).

          UU.  Terms not otherwise defined here, but defined in the Act or in
               regulations implementing the Act, shall have the meaning defined
               there.

----------
(1) This sentence is incorporated pursuant to the Arbitrator's decision in
    Docket No. UT-960323.

                                     Page 7
<PAGE>
 
IV.  RATES AND CHARGES GENERALLY

     A.   Prices for termination and transport of traffic, interconnection,
          access to unbundled network elements, and ancillary services are set
          forth in Appendix A.

     B.   USWC's wholesale discounts for resale services are set forth in
          Appendix A.

     C.   The underlying provider of a resold service shall be entitled to
          receive, from the purchaser of switched access, the appropriate access
          charges pursuant to its then effective switched access tariff. For the
          purposes of this paragraph, Unbundled Loops are not considered as
          resold services.

V.   RECIPROCAL TRAFFIC EXCHANGE

     A.   Scope

          Reciprocal traffic exchange addresses the exchange of traffic between
          Focal end users and USWC end users. If such traffic is local, the
          provisions of this Agreement shall apply. Where either party acts as
          an intraLATA toll provider or interLATA Interexchange Carrier (IXC) or
          where either party interconnects and delivers traffic to the other
          from third parties, each party shall bill such third parties the
          appropriate charges pursuant to its respective tariffs or contractual
          offerings for such third party terminations. Absent a separately
          negotiated agreement to the contrary, the Parties will directly
          exchange traffic between their respective networks, without the use of
          third party transit providers.

     B.   Types of Traffic

          The types of traffic to be exchanged under this Agreement include:
          1.   EAS/local traffic as defined above.
          2.   IntraLATA toll traffic as defined above.
          3.   Switched access traffic, or interLATA toll traffic, as
               specifically defined in USWC's state and interstate switched
               access tariffs, and generally identified as that traffic that
               originates at one of the Party's end users and terminates at an
               IXC point of presence, or originates at an IXC point of presence
               and terminates at one of the Party's end users, whether or not
               the traffic transits the other Party's network.
          4.   Transit traffic is any traffic other than switched access, that
               originates from one Telecommunications Carrier's network,
               transits another Telecommunications Carrier's network, and
               terminates to yet another Telecommunications Carrier's network.

               Transit service provides the ability for a Telecommunications
               Carrier to use its connection to a local or access tandem for
               delivery of calls that

                                     Page 8
<PAGE>
 
               originate with a Telecommunications Carrier and terminate to a
               company other than the tandem company, such as another
               Competitive Local Exchange Carrier, an existing Exchange Carrier,
               or a wireless carrier. In these cases, neither the originating
               nor terminating end user is a customer of the tandem
               Telecommunications Carrier. The tandem Telecommunications Carrier
               will accept traffic originated by a Party and will terminate it
               at a point of interconnection with another local, intraLATA or
               interLATA network Telecommunications Carrier. This service is
               provided through local and access tandem switches.

          5.   Ancillary traffic includes all traffic destined for ancillary
               services, or that may have special billing requirements,
               including, but not limited to the following:

               a.   Directory Assistance
               b.   911/E911
               c.   Operator call termination (busy line interrupt and verify)
               d.   800/888 database dip
               e.   LIDB
               f.   Information services requiring special billing.

          6.   Unless otherwise stated in this Agreement, ancillary traffic will
               be exchanged in accordance with whether the traffic is Local/EAS,
               intraLATA toll, or Switched Access.

     C.   Types of Exchanged Traffic

          1.   Termination of Local Traffic.

               Local traffic will be terminated as Local Interconnection Service
               (LIS).

          2.   Transport of Local Traffic

               As negotiated between the Parties, the exchange of local traffic
               between the Parties may occur in several ways:

               a.   While the parties anticipate the use of two way trunks for
                    the delivery of local traffic, either Party may elect to
                    provision its own one-way trunks for delivery of local
                    traffic to be terminated on the other Party's network at the
                    "initial" point of interconnection.

               b.   The Parties may elect to purchase transport services from
                    each other or from a third party. Such transport delivers
                    the originating Party's local traffic to the terminating
                    Party's end office or tandem for call termination. Transport
                    may be purchased as either tandem switched transport (which
                    is included in the tandem call termination rate) or direct
                    trunk transport.

                                     Page 9
<PAGE>
 
               c.   Based on forecasted traffic at Focal's busy hour in CCS,
                    where there is a DS1's worth of traffic (512 CCS) between
                    the Focal switch and a USWC end office, the Parties agree to
                    provision a dedicated (i.e., direct) two-way trunk group
                    from the Focal switch directly to the USWC end office. To
                    the extent that Focal has established a collocation
                    arrangement at a USWC end office location, and has available
                    capacity, the Parties agree that Focal shall provide two-way
                    direct trunk facilities, when required, from that end office
                    to the Focal switch. In all other cases, the direct facility
                    may be provisioned by USWC or Focal or a third party. If
                    both Focal and USWC desire to provision the facility and
                    cannot otherwise agree, the parties may agree to resolve the
                    dispute through the submission of competitive bids.

          3.   Transit Traffic.

               a.   USWC will accept traffic originated by Focal and will
                    terminate it at a point of interconnection with another
                    CLEC, Exchange Carrier, Interexchange Carrier or Wireless
                    Carrier. USWC will provide this transit service through
                    local and access tandem switches. Focal may also provide
                    USWC with transit service.

               b.   The Parties expect that all networks involved in
                    transporting transit traffic will deliver calls to each
                    involved network with CCS/SS7 protocol and the appropriate
                    ISUP/TCAP message to facilitate full interoperability and
                    billing functions. In all cases, the originating company is
                    responsible to follow the EMR standard and to exchange
                    records with both the transiting company and the terminating
                    company, to facilitate the billing process to the
                    originating network.

               c.   The Parties will use industry standards developed to handle
                    the provision and billing of Switched Access by multiple
                    providers (MECAB, MECOD and the Parties' FCC tariffs),
                    including the onetime provision of notification to Focal of
                    the billing name, billing address and carrier identification
                    codes of all interexchange carriers originating or
                    terminating at each USWC access tandem.

          4.   Toll Traffic.

               Toll traffic routed to an access tandem, or directly routed to an
               end office, will be terminated as Switched Access Service.
               Traffic terminated at the access tandem will be routed to the end
               offices within the LATA that subtend the USWC access tandem
               switch. Switched Access Service also allows for termination at an
               end office or tandem via direct trunked circuits provisioned
               either by USWC or Focal.

                                    Page 10
<PAGE>
 
     D.   Rate Structure -- Local Traffic

          1.   Call Termination

               a.   The Parties agree that call termination rates as described
                    in Appendix A will apply reciprocally for the termination of
                    local/EAS traffic per minute of use.

               b.   For traffic terminated at an USWC or Focal end office, the
                    end office call termination rate in Appendix A shall apply.

               c.   For traffic terminated at a USWC or Focal tandem switch,
                    tandem call termination rate in Appendix A shall apply. The
                    tandem call termination rate provides for end office call
                    termination, tandem switched transport and tandem switching.

                    The Parties acknowledge that Focal will initially serve all
                    of its customers within a given LATA through a single Focal
                    switch. The Parties also acknowledge that Focal may, in the
                    future, deploy additional switches in each LATA. (2)

               d.   For purposes of call termination, the initial Focal switch
                    shall be treated as a tandem switch. (3)

               e.   Pursuant to the Arbitrator's decision in
                    Docket No. UT-0960323, USWC's proposed paragraph has been
                    deleted.

          2.   Transport
          a.        If the Parties elect to each provision their own one-way
                    trunks to the other Party's end office for the termination
                    of local traffic, each

--------------
(2) This sentence is included pursuant to the Arbitrator's decision in Docket
    No. UT-960323.

(3) This sentence is included pursuant to the Arbitrator's decision in Docket
    No. UT-960323.

                                    Page 11
<PAGE>
 
                    Party will be responsible for its own expenses associated
                    with the trunks and no transport charges will apply. Call
                    termination charges shall apply as described above.

          b.        If one Party desires to purchase direct trunk transport from
                    the other Party, the following rate elements will apply.
                    Transport rate elements include the direct trunk transport
                    facilities between the POI and the terminating party's
                    tandem or end office switches.. The applicable rates are
                    described in Appendix A.

          c.        Direct-trunked transport facilities are provided as
                    dedicated DS3 or DS1 facilities without the tandem switching
                    functions, for the use of either Party between the point of
                    interconnection and the terminating end office or tandem
                    switch.

          d.        If the Parties elect to establish two-way direct trunks, the
                    compensation for such jointly used 'shared' facilities shall
                    be adjusted as follows. The nominal compensation shall be
                    pursuant to the rates for direct trunk transport in Appendix
                    A. The actual rate paid to the provider of the direct trunk
                    facility shall be reduced to reflect the provider's use of
                    that facility. The adjustment in the direct trunk transport
                    rate shall be a percentage that reflects the provider's
                    relative use (i.e., originating minutes of use) of the
                    facility in the busy hour.

          e.        Multiplexing options are available at rates described in
                    Appendix A.

     E.   Rate Structure -- Toll Traffic.

          Applicable Switched Access Tariff rates, terms, and conditions apply
          to toll traffic routed to an access tandem, or directly to an end
          office. Relevant rate elements include Direct Trunk Transport (DTT) or
          Tandem Switched Transport (TST), Interconnection Charge (IC), Local
          Switching, and Carrier Common Line, as appropriate.

     F.   Rate Structure --Transit Traffic.

          Applicable switched access, Type 2 or LIS transport rates apply for
          the use of USWC's network to transport transit traffic. For transiting
          local traffic, the applicable local transit rate applies to the
          originating party per Appendix A. For transiting toll traffic, the
          Parties will charge the applicable switched access rates to the
          responsible carrier. For terminating transiting wireless traffic, the
          Parties will charge their applicable rates to the wireless provider.
          For transiting wireless traffic, the parties will charge each other
          the applicable local transit rate.

     G.   LIS Interface Code Availability And Optional Features

          1.   Interface Code Availability.


                                    Page 12
<PAGE>
 
          Supervisory Signaling specifications, and the applicable network
          channel interface codes for LIS trunks, are the same as those used for
          Feature Group D Switched Access Service, as described in the Parties'
          applicable switched access tariffs.

     2.   Optional Features.

          a.   Inband MF or SS7 Out of Band Signaling.

               Inband MF signaling and SS7 Out of Band Signaling are available
               for LIS trunks. MF signaling or SS7 Out-of-Band Signaling must be
               requested on the order for the new LIS trunks. Provisioning of
               the LIS trunks equipped with MF signaling or SS7 Out of Band
               Signaling is the same as that used for Feature Group D Switched
               Access. Common Channel Signaling Access Capability Service, as
               set forth in Section XXVIII herein, must be ordered by Focal when
               SS7 Out-of-Band Signaling is requested on LIS trunks.

          b.   Clear Channel Capability.

               Clear Channel Capability permits 24 DSO-64 kbit/s services or
               1.536 Mbit/s of information on the 1.544 Mbit/s line rate. Clear
               Channel Capability is available for LIS trunks equipped with SS7
               Out-of-Band Signaling. Clear Channel Capability is only available
               on trunks to USWC's access tandem switch or USWC's end office
               switches (where available); (Clear Channel Capability is not
               available on trunks to USWC's local tandem switches or end
               offices where it is currently not deployed. Focal agrees to use
               the Network Interconnection and Unbundled Element Request process
               to request clear channel capability for such additional switches.
               Prices for such additional clear channel capability, if any, will
               be established through the NIUER Process). Clear Channel
               Capability must be requested on the order for the new LIS trunks.
               The provisioning of the LIS trunks equipped with Clear Channel
               Capability is the same as that used for Feature Group D Switched
               Access Service. USWC will provide Focal with a listing of USWC
               end offices, local tandems and access tandems equipped with clear
               channel capability.

     H.   Measuring Local Interconnection Minutes

          1.   Measurement of terminating Local Interconnection Minutes begins
               when the terminating LIS entry switch receives answer supervision
               from the called end user's end office indicating the called end
               user has answered. The measurement of terminating call usage over
               LIS trunks ends when the terminating LIS entry switch receives
               disconnect supervision from either the called end user's end
               office, indicating the called end user has

                                    Page 13
<PAGE>
 
               disconnected, or Focal's point of interconnection, whichever is
               recognized first by the entry switch.

          2.   USWC and Focal are required to provide each other the proper call
               information (e.g., originated call party number and destination
               call party number, etc.) to enable each Party to issue bills in a
               complete and timely fashion.

I.   Testing

     1.   Acceptance Testing

          At the time of installation of an LIS trunk group, and at no
          additional charge, the Parties will cooperatively test the same
          parameters tested for terminating Feature Group D Switched Access
          Service. Please see USWC's applicable switched access tariff for the
          specifications.

     2.   Testing Capabilities

          a.   Terminating LIS testing is provided where equipment is available,
               with the following test lines: seven-digit access to balance (100
               type), milliwatt (102 type), nonsynchronous or synchronous,
               automatic transmission measuring (105 type), data transmission
               (107 type), loop-around, short circuit, open circuit, and
               non-inverting digital loopback (108 type).

          b.   In addition to LIS acceptance testing, other tests are available
               (e.g., additional cooperative acceptance testing, automatic
               scheduled testing, cooperative scheduled testing, manual
               scheduled testing, and non-scheduled testing) at the applicable
               tariff rates.

J.   Ordering

     1.   When ordering LIS, the ordering Party shall specify on the service
          order: 1) the type and number of interconnection facilities to
          terminate at the point of interconnection in the serving wire center;
          2) the type of interoffice transport, (i.e., direct trunk transport or
          tandem switched transport); 3) the peak busy hour CCS from the Focal
          end office; 4) the number of trunks to be provisioned at a local
          exchange office or tandem; 5) and any optional features (see form
          Appendix B). When the ordering Party requests facilities, routing, or
          optional features different than those determined to be available, the
          Parties will work cooperatively in determining an acceptable
          configuration, based on available facilities, equipment and routing
          plans.

     2.   When the ordering Party initially orders a DS3 interconnection
          facility, in conjunction with tandem switched transport to a tandem,
          or DS3 direct trunk transport facilities to a tandem or local exchange
          office, the provider

                                    Page 14
<PAGE>
 
          will forward the appropriate DS1 facility record information necessary
          to identify the circuit facility assignment (CFA). On subsequent
          orders utilizing existing DS3 interconnection facilities, or the DS3
          trunk transport facility, the provider will assign the DS1 facility to
          the DS3 interconnection facility or DS3 direct trunk transport
          facility, as directed by the ordering Party.

     3.   A joint planning meeting will precede Focal and USWC trunking orders.
          These meetings will result in the transmittal of Access service
          Requests (ASRs) to initiate order activity. A Party requesting tandem
          interconnection will provide its best estimate of the traffic
          distribution to each end office subtending the tandem.

     4.   Service intervals and due dates or negotiated arrangements will be
          determined on an individual case basis.

K.   Billing Arrangements

     1.   USWC and Focal desire to submit separate bills, pursuant to their
          separate tariffs, to interchange carriers for their respective
          portions of jointly provided switched access service.

          Based on the negotiated POI, the Parties will agree on a meet point
          percentage to enable the joint provisioning and billing of Switched
          Access Services to third parties in conformance with the Meet-Point
          Billing guidelines adopted by and contained in the Ordering and
          Billing Forum's MECAB and MECOD documents and referenced in USWC's
          Switched Access Tariffs. The Parties understand and agree that MPB
          arrangements are available and functional only to/from Interchange
          Carriers who directly connect with the tandem(s) that Focal sub-tends
          in each LATA.

     2.   The parties will use reasonable efforts, individually and
          collectively, to maintain provisions in their respective federal and
          state access tariffs, and/or provisions within the National Exchange
          Carrier Association ("NECA") Tariff No. 4, or any successor tariff,
          sufficient to reflect this MPB arrangement, including MPB percentages.

     3.   As detailed in the MECAB document, Focal and USWC will exchange all
          information necessary to bill third parties for Switched Access
          Services traffic jointly handled by Focal and USWC via the meet point
          arrangement in a timely fashion. Information shall be exchanged in
          Exchange message Record ("EMR") format (Bellcore Standard BR
          010-200-010, as amended) on magnetic tape or via a mutually acceptable
          electronic file transfer protocol. The Parties will exchange records
          pursuant to this paragraph without additional compensation.

     4.   The Parties will agree upon reasonable audit standards and other
          procedures as required to ensure billing accuracy.

                                    Page 15
<PAGE>
 
     5.   Each company will bill the IXC's the appropriate rate elements in
          accordance with their respective interstate and intrastate tariffs, as
          follows:

          Rate Element                                 Billing Company
          ------------                                 ---------------
          Carrier Common Line                          Dial Tone Provider
          Local Switching                              Dial Tone Provider
          Interconnection Charge                       Dial Tone Provider
          Local Transport Termination                  Based on negotiated BIP
          Local Transport Facility                     Based on negotiated BIP
               (also called Tandem
               Transmission per mile)
          Tandem Switching                             Access Tandem Provider
          Entrance Facility                            Access Tandem Provider

     6.   For originating 800/888 traffic routed to an access tandem, the tandem
          provider will perform 800/888 database inquiry and translation
          functions and bill the inquiry charge and translation charge (if any)
          to the interexehange carrier pursuant to tariff.

     7.   Pursuant to the Arbitrator's decision in Docket No. UT-960323, this
          proposed paragraph has been deleted.

L.   Mileage Measurement

     Where required, the mileage measurement for LIS facilities and trunks is
     determined in the same manner as the mileage measurement for Feature Group
     D Switched Access Service.

M.   Construction Charges

     For issues related to construction charges, see Section XXIX of this
     Agreement.

VI.  INTERCONNECTION

     A.   Definition
          1.   "Interconnection" is the linking of the USWC and Focal networks
               for the mutual exchange of traffic and for Focal access to
               unbundled network elements. Interconnection does not include the
               transport and termination of traffic. interconnection is provided
               by Virtual or physical collocation, entrance facilities or meet
               point arrangements.

          2.   USWC will provide interconnection at the line side of the local
               switch, the trunk side of the local switch, trunk interconnection
               points of the tandem switch, central office cross-connect points,
               and signaling transfer points necessary to exchange traffic and
               access call related databases.

     B.   Mid-span Meet POI

                                    Page 16
<PAGE>
 
          1.   A Mid-Span Meet POI is a negotiated point of interface, limited
               to the interconnection of facilities between one Party's switch
               and the other Party's switch. The actual physical point of
               interface and facilities used will be subject to negotiations
               between the Parties. Each Party will be responsible for its
               portion of the build to the Mid-Span Meet POI, if the meet point
               arrangement is used exclusively for the exchange of local
               traffic.

          2.   If the Mid-Span Meet arrangement is to be used for access to
               unbundled network elements, Focal must pay the portion of the
               economic costs of the Mid-Span Meet arrangement used by Focal for
               access to unbundled network elements.

     C.   Collocation

          Interconnection may be accomplished through either virtual or physical
          collocation. The terms and conditions under which collocation will be
          available are described in Section VII herein.

     D.   Entrance Facility

          Interconnection may be accomplished through the provision of an
          entrance facility. An entrance facility extends from the serving wire
          center of the provider to the other party's switch location. Entrance
          facilities may not extend beyond the area described by the provider's
          serving wire center. The rates for entrance facilities are provided in
          Appendix A.

     E.   Quality of Interconnection
          USWC will not, for the purpose of interconnection, provide to Focal
          less favorable terms and conditions than USWC provides itself or in a
          manner less efficient than it would impose on itself. The quality of
          interconnection will be at least equal to that of USWC. To the extent
          that Focal requests higher or lower quality interconnection, Focal
          agrees to use the New Interconnection/Unbundled Element Request
          procedure described in Section XXIII.

          Both Parties agree to manage their network switches in accordance with
          the Bellcore LSSGR. The acceptable service levels for LIS and the
          criteria for applying protective controls will be administered in the
          same manner as the network management for Switched Access Service.

     F.   Points of Interface (POI)

          Upon the request for specific point to point routing, USWC will make
          available to Focal information indicating the location and technical
          characteristics of USWC's network facilities. The following
          alternatives are negotiable: (1) a DS1 or DS3 entrance facility, where
          facilities are available (where facilities are not available and USWC
          is required to build, see Section XXIX for issues relating to
          construction charges). (2) Virtual Collocation; (3) Physical
          Collocation;

                                    Page 17
<PAGE>
 
          and (4) negotiated Mid-Span Meet facilities. Each Party is responsible
          for providing its own facilities up to the Mid-Span Meet POI. The
          Parties will negotiate the facilities arrangement between their
          networks.

     G.   Trunking Requirements

          1.   USWC agrees to provide designed interconnection facilities that
               meet the same technical criteria and service standards, such as
               probability of blocking in peak hours and transmission standards,
               in accordance with industry standards.

          2.   Two-way trunk groups will be established wherever possible.
               Exceptions to this provision will be based on billing, signaling,
               and network requirements. For example, (1) billing requirements -
               switched access vs. local traffic, (2) signaling requirements -
               MF vs. SS7, and (3) network requirements - directory assistance
               traffic to TOPS tandems. The following is the current list of
               traffic types that require separate trunk groups, unless
               specifically otherwise agreed to by the Parties (deleted)stated
               in this agreement(deleted). The following list does not include
               separate trunks for transit traffic to third parties. The Parties
               agree that if recording and reporting procedures cannot be
               implemented to appropriately measure local and toll transit
               traffic, either Party may request separate transit trunks. In
               such a case, the other Party will not unreasonably withhold its
               consent to establish separate trunks.(4)

               a.        IntraLATA toll and switched access trunks
               b.        EAS/local trunks
               c.        Directory Assistance trunks
               d.        911/E911 trunks
               e.        Operator services trunks
               f.        Commercial Mobile Radio Service/Wireless traffic for
                         which Focal serves as the transit provider between the
                         CMRS provider and USWC.
               g.        (deleted) Non USWC toll (deleted)
               h.        (deleted) Non USWC local(deleted)
               I.        Meet Point Billing Trunks (for the joint provision of
                         switched access).

          3.   Trunk group connections will be made at a DS1 or multiple DS1
               level for exchange of EAS/local, intraLATA toll,
               wireless/Commercial Mobile Radio Service, and switched access
               traffic. Ancillary service trunk groups will be made below a DS1
               level, as negotiated.

          4.   The Parties will provide Common Channel Signaling (CCS) to one
               another, where available, in conjunction with all Local/EAS Trunk
               Circuits.

---------
(4) The Parties have amended this provision in lieu of the disputed separate
    trunk groups for local and toll transit traffic (formerly g. and h. below).


                                    Page 18
<PAGE>
 
               All CCS signaling parameters will be provided including
               calling party number (CPN), originating line information (OLI)
               calling party category, charge number, etc. All privacy
               indicators will be honored.

          5.   Where CCS is not available, in-band multi-frequency (MF) wink
               start signaling will be provided. When the Parties interconnect
               via CCS for jointly provided switched access service, the tandem
               provider will provide MF/CCS interworking as required for
               interconnection with interexchange carriers who use MF signaling.

          6.   The Parties will follow all Ordering and Billing Forum adopted
               standards pertaining to CIC/OZZ codes.

          7.   USWC will cooperate in the provision of TNS (Transit Network
               Selection) for the joint provision of switched access.

          8.   The Parties shall terminate local/EAS traffic exclusively on
               local/EAS trunk groups. No local/EAS trunk groups shall be
               terminated on USWC's access tandems.

     H.   Service Interruptions

          1.   Standards and procedures for notification of trunk disconnects
               will be jointly developed by the Parties. Neither Party shall be
               expected to maintain active status for a trunk disconnected by
               the other Party for an extended or indefinite period of time.
               Collectively, the Parties will use their best good faith efforts
               to complete and agree on such plan.

          2.   The characteristics and methods of operation of any circuits,
               facilities or equipment of either Party connected with the
               services, facilities or equipment of the other Party pursuant to
               this Agreement shall not: 1) interfere with or impair service
               over any facilities of the other Party; its affiliated companies,
               or its connecting and concurring carriers involved in its
               services; 2) cause damage to their plant; 3) violate any
               applicable law or regulation regarding the invasion of privacy of
               any communications carried over the Party's facilities; or 4)
               create hazards to the employees of either Party or to the public.
               Each of these requirements is hereinafter referred to as an
               "Impairment of Service".

          3.   If either Party causes an Impairment of Service, as set forth in
               this Section, the Party whose network or service is being
               impaired (the "Impaired Party") shall promptly notify the Party
               causing the Impairment of Service (the "Impairing Party") of the
               nature and location of the problem. They shall advise the
               Impairing Party that, unless promptly rectified, a temporary
               discontinuance of the use of any circuit, facility or equipment
               may be required. The Impairing Party and the Impaired Party agree
               to work together to attempt to promptly resolve the Impairment of
               Service. If the Impairing Party is unable to promptly remedy the

                                    Page 19
<PAGE>
 
               Impairment of Service, the Impaired Party may temporarily
               discontinue use of the affected circuit, facility or equipment.

          4.   Each Party shall be solely responsible, and bear the expense, for
               the overall design of its services. Each Party shall also be
               responsible for any redesign or rearrangement of its services
               that may be required because of changes in facilities, operations
               or procedures, minimum network protection criteria, and operating
               or maintenance characteristics of the facilities.

          5.   To facilitate trouble reporting and to coordinate the repair of
               the service provided by each Party to the other under this
               Agreement, each Party shall designate a Trouble Reporting Control
               Office (TRCO) for such service.

          6.   Where new facilities, services and arrangements are installed,
               the TRCO shall ensure that continuity exists and take appropriate
               transmission measurements before advising the other Party that
               the new circuit is ready for service.

          7.   Each Party shall furnish a trouble reporting telephone number for
               the designated TRCO. This number shall give access to the
               location where facility records are normally located and where
               current status reports on any trouble reports that are readily
               available. Alternative out-of-hours procedures shall be
               established to ensure access to a location that is staffed and
               has the authority to initiate corrective action.

          8.   Before either Party reports a trouble condition, they shall use
               their best efforts to isolate the trouble to the other's
               facilities.

               a.   In cases where a trouble condition affects a significant
                    portion of the other's service, the Parties shall assign the
                    same priority provided to other interconnecting carriers.

               b.   The Parties shall cooperate in isolating trouble conditions.

     I.   Interconnection Forecasting

          1.   The Parties agree that during the first year of interconnection,
               joint forecasting and planning meetings will take place no less
               frequently than once per quarter.

          2.   The Parties shall establish joint forecasting responsibilities
               for traffic utilization over trunk groups. Intercompany forecast
               information must be provided by the Parties to each other four
               times a year. The quarterly forecasts shall include forecasted
               requirements for each trunk group identified in Paragraph G(2) of
               this Section. In addition, the forecast shall include, for 
               tandem-switched traffic, the quantity of tandem-switched traffic
               forecasted for each subtending end office. The Parties recognize

                                    Page 20
<PAGE>
 
               that, to the extent historical traffic data can be shared between
               the Parties, the accuracy of the forecasts will improve.
               Forecasts shall be for a minimum of three (current and plus-1 and
               plus-2) years;

               a.   The use of Common Language Location Identifier (CLLI-MSG),
                    which are described in Bellcore documents BR 795-100-100 and
                    BR 795-400-100;

               b.   A description of major network projects anticipated for the
                    following six months that could affect the other Party.
                    Major network projects include trunking or network
                    rearrangements, shifts in anticipated traffic patterns, or
                    other activities that are reflected by a significant
                    increase or decrease in trunking demand for the following
                    forecasting period. This planning will include the issues of
                    network capacity, forecasting and compensation calculation,
                    where appropriate.

          3.   If differences in quarterly forecasts of the Parties vary by more
               than 24 additional DSO two-way trunks for each Local
               Interconnection Trunk Group, the Parties shall meet to reconcile
               the forecast to within 24 DSO trunks.

          4.   If a trunk group is under 75 percent of centum call seconds (ccs)
               capacity on a monthly average basis for each month of any three
               month period, either Party may request to resize the trunk group,
               which resizing will not be unreasonably withheld. If a resizing
               occurs, the trunk group shall not be left with less than 25
               percent excess capacity. In all cases, grade of service
               objectives identified below shall be maintained.

          5.   Each Party shall provide a specified point of contact for
               planning, forecasting and trunk servicing purposes.

VII. COLLOCATION
     A.   General Provisions

          1.   Collocation allows Focal to obtain dedicated space in a USWC wire
               center and to place equipment in such spaces to interconnect with
               the USWC network. Focal may request collocation at other USWC
               locations pursuant to the NIUER Process or through additional
               interconnection negotiations under the Act. USWC will provide the
               resources necessary for the operation and economical use of
               collocated equipment. POIs for network interconnection can be
               established through virtual or physical collocation arrangements.

          2.   Collocation is offered for network interconnection between the
               Parties. The collocated party may cross connect to other
               collocated parties via expanded interconnection channel
               terminations provided by USWC,

                                    Page 21
<PAGE>
 
               provided that Focal's collocated equipment is used for
               interconnection with USWC or access to USWC's unbundled network
               elements. Additional terms, conditions and rates apply in
               conjunction with subsequent call termination (e.g., call
               termination charges, tandem switching, tandem-switched transport,
               see Section V, Reciprocal Traffic Exchange.)

          3.   Except when Focal purchases USWC's unbundled network transmission
               elements, Focal will construct its own fiber optic cable to the
               USWC designated point of interconnection. USWC will extend
               Focal's fiber optic cable from the POI to the cable vault within
               the wire center. If necessary, USWC may bring the cable into
               compliance with USWC internal fire code standards and extend the
               cable to the collocated space.

          4.   Focal will be provided two points of entry into the USWC wire
               center only when there are at least two existing entry points for
               USWC cable and when there are vacant entrance ducts in both. USWC
               will promptly remove any unused cabling to free up entrance ducts
               when no other ducts are available. Cable entry will be limited to
               fiber facilities.

          5.   Focal. may collocate transmission equipment to terminate basic
               transmission facilities. Focal may request collocation of other
               equipment pursuant to the NIUER Process or through additional
               interconnection negotiations under the Act. CLEC must identify
               what equipment will be installed, to allow for USWC to use this
               information in engineering the power, floor loading, heat
               release, environmental particulant level, and HVAC.

          6.   Nothing in this part shall be construed to limit Focal's ability
               to obtain both virtual and physical collocation in a single
               location.

     B.   Virtual Collocation

          1.   USWC shall provide virtual collocation for the purpose of
               Interconnection or access to unbundled Network Elements subject
               to the rates, terms and conditions of this Agreement.

          2.   Focal will not have physical access to the USWC wire center
               building pursuant to a virtual collocation arrangement.

          3.   Focal will be responsible for obtaining and providing to USWC
               administrative codes, e.g., common language codes, for all
               equipment specified by Focal and installed in wire center
               buildings.

          4.   Focal will be responsible for payment of training of USWC
               employees for the maintenance, operation and installation of
               Focal's virtually collocated equipment when that equipment is
               different than the equipment used by USWC.

                                    Page 22
<PAGE>
 
          5.   Focal will be responsible for payment of charges incurred in the
               maintenance and/or repair of Focal's virtually collocated
               equipment.

          6.   USWC does not guarantee the reliability Focal's virtually
               collocated equipment.

          7.   Focal is responsible for ensuring the functionality of virtually
               collocated SONET equipment provided by different manufacturers.

          8.   Maintenance Labor, Inspector Labor, Engineering Labor and
               Equipment Labor business hours are considered to be Monday
               through Friday, 8:00am to 5:00pm and after business hours are
               after 5:00pm and before 8:00am, Monday through Friday, all day
               Saturday, Sunday and holidays.

          9.   Focal will transfer possession of Focal's virtually collocated
               equipment to USWC via a no cost lease. The sole purpose of the
               lease is to provide USWC with exclusive possessory rights to
               Focal's virtually collocated equipment. Title to the Focal
               virtually collocated equipment shall not pass to USWC.

          10.  Installation and maintenance of Focal's virtually collocated
               equipment will be performed by USWC or a USWC authorized vendor.

          11.  Focal shall ensure that upon receipt of the Focal virtually
               collocated equipment by USWC, all warranties and access to
               ongoing technical support are passed through to USWC, all at
               Focal's expense. The interconnector shall advise the manufacturer
               and seller of the virtually collocated equipment that it will be
               possessed, installed and maintained by USWC.

          12.  Focal's virtually collocated equipment must comply with the
               Bellcore Network Equipment Building System (NEBS) Generic
               Equipment Requirements TR-NWT-000063, Company wire center
               environmental and transmission standards and any statutory
               (local, state or federal) and/or regulatory requirements in
               effect at the time of equipment installation or that subsequently
               become effective. Focal shall provide USWC interface
               specifications (e.g., electrical, functional, physical and
               software) of Focal's virtually collocated equipment.

          13.  USWC may restrict the type of virtually collocated equipment.
               USWC will only permit basic transmission terminating equipment to
               be virtually collocated by Focal. Focal may request collocation
               of other equipment pursuant to the NIUER Process or through
               additional interconnection negotiations under the Act.

          14.  Focal must specify all software options and associated plug-ins
               for its virtually collocated equipment.


                                    Page 23
<PAGE>
 
          15.  Focal is responsible for purchasing and maintaining a supply of
               spares. Upon failure of Focal's virtually collocated equipment,
               Focal is responsible for transportation and delivery of
               maintenance spares to USWC at the wire center housing the failed
               equipment.

     C.   Physical Collocation

          1.   USWC shall provide to Focal Physical Collocation of equipment
               necessary for Interconnection or for access to unbundled Network
               Elements, except that USWC may provide for Virtual collocation if
               USWC demonstrates to the Commission that Physical Collocation is
               not practical for technical reasons or because of space
               limitations, as provided in Section 251(c)(6) of the Act. USWC
               shall provide such Collocation for the purpose of Interconnection
               or access to unbundled Network Elements, except as otherwise
               mutually agreed to in writing by the Parties or as required by
               the FCC or the appropriate Commission subject to the rates, terms
               and conditions of this Agreement.

          2.   Where Focal is Virtually Collocated in a premises which was
               initially prepared for Virtual Collocation, Focal may elect to
               (i) retain its Virtual Collocation in that premises and expand
               that Virtual Collocation according to the rates, terms and
               conditions of this Agreement, or (ii) unless it is not practical
               for technical reasons or because of space limitations, convert
               its Virtual Collocation at such premises to Physical Collocation,
               in which case Focal shall coordinate the construction and
               rearrangement with USWC of its equipment (IDLC and transmission)
               and circuits for which Focal shall pay USWC at applicable rates,
               and pursuant to the other terms and conditions in this Agreement.
               In addition, all applicable Physical Collocation recurring
               charges shall apply.

          3.   Focal will be allowed access to the POI on non-discriminatory
               terms. Focal owns and is responsible for the installation,
               maintenance and repair of its transmission equipment located
               within the space rented from USWC.

          4.   Focal must use leased space promptly and may not warehouse space
               for later use or sublease to another provider. Physical
               collocation is offered in wire centers on a space-available,
               first come, first-served basis.

          5.   The minimum standard leasable amount of floor space is 100 square
               feet. Focal must efficiently use the leased space; no more than
               50% of the floor space may be used for storage cabinets and work
               surfaces. The Commission will be the final arbitrator in points
               of dispute between the parties.

          6.   Focal's leased floor space will be separated from other
               competitive providers and USWC space through cages or hard walls.
               Focal may elect to have USWC construct the cage, or choose from
               USWC approved

                                    Page 24
<PAGE>
 
               contractors to construct the cage, meeting USWC's installation
               Technical Publication 77350.

          7.   The following standard features will be provided by USWC:

               a.   Heating, ventilation and air conditioning.

               b.   Smoke/fire detection and any other building code
                    requirement.

          8.   USWC Responsibilities.

               a.   Design the floor space within each wire center which will
                    constitute CLEC's leased space.

               b.   Ensure that the necessary construction work is performed to
                    build CLEC's leased physical space and the riser from the
                    vault to the leased physical space.

               c.   Develop a quotation specific to Focal's request.

               d.   Extend USWC-provided and owned fiber optic cable from the
                    POI through the cable vault and extending the cable to
                    Focal's leased physical space or place the cable in fire
                    retardant tubing prior to extension to Focal's leased
                    physical space.

               e.   Installation and maintenance and all related activity
                    necessary to provide Channel Termination between USWC's and
                    Focal's equipment.

               f.   Work cooperatively with Focal in matters of joint testing
                    and maintenance.

          9.   Focal Responsibilities

               a.   Determine the type of enclosure for the physical space.

               b.   Where applicable, procure, install and maintain all fiber
                    optic facilities up to the USWC designated POI.

               c.   Install, maintain, repair and service all Focal's equipment
                    located in the leased physical space.

               d.   Ensure that all equipment installed by Focal complies with
                    Bellcore Network Equipment Building System Generic Equipment
                    requirements, USWC wire center environmental and
                    transmission standards, and any statutory (local, federal,
                    or state) or regulatory requirements in effect at the time
                    of equipment installation or that subsequently become
                    effective.

                                    Page 25
<PAGE>
 
          10.  Once construction is complete for physical collocation and Focal
               has accepted its leased physical space, Focal may order its DSO,
               DS1, DS3 or other Expanded Interconnection Channel Terminations.

          11.  Focal may not extend dark fiber to Focal's leased physical space
               or connecting DS1/DS3 Channel Terminations to USWC dark fiber.

          12.  If, at any time, USWC determines that the equipment or the
               installation does not meet requirements, Focal will be
               responsible for the costs associated with the removal,
               modification to, or installation of the equipment to bring it
               into compliance. If Focal fails to correct any noncompliance
               within fifteen (15) days of written notice of non-compliance,
               USWC may have the equipment removed or the condition corrected at
               Focal's expense.

          13.  If, during installation, USWC determines Focal activities or
               equipment are unsafe, non-standard or in violation of any
               applicable laws or regulations, USWC has the right to stop work
               until the situation is remedied. If such conditions pose an
               immediate threat to the safety of USWC employees, interfere with
               the performance of USWC's service obligations, or pose an
               immediate threat to the physical integrity of the conduit system
               or the cable facilities, USWC may perform such work and/or take
               action as is necessary to correct the condition at Focal's
               expense.

          14.  For each Physical Collocation, the Parties agree to execute an
               individual 'Physical Collocation Agreement' in form attached
               hereto as Appendix C.

     D.   Collocation Rate Elements

          1.   Common Rate Elements

               The following rate elements are common to both virtual and
               physical collocation:

               a.   Quote Preparation Fee. This covers the work involved in
                    developing a quotation for Focal for the total costs
                    involved in its collocation request.

               b.   Entrance Facility. Provides for fiber optic cable on a per
                    fiber basis from the point of interconnection utilizing USWC
                    owned, conventional single mode type of fiber optic cable to
                    the collocated equipment (for virtual collocation) or to the
                    leased space (for physical collocation). Entrance facility
                    includes riser, fiber placement, entrance closure,
                    conduit/innerduct, and core drilling.

               c.   Cable Splicing. Represents the labor and equipment to
                    perform a subsequent splice to the Focal provided fiber
                    optic cable after the

                                    Page 26
<PAGE>
 
                    initial installation splice. Includes a per-setup and a
                    per-fiber-spliced rate elements.

               d.   -48 Volt Power. Provides -48 volt power to the Focal
                    collocated equipment. Charged on a per ampere basis.

               e.   48 Volt Power Cable. Provides for the transmission of -48
                    Volt DC power to the collocated equipment. It includes
                    engineering, furnishing and installing the main distribution
                    bay power breaker, associated power cable, cable rack and
                    local power bay to the closest power distribution bay. It
                    also includes the power cable (feeders) A and B from the
                    local power distribution bay to the leased physical space
                    (for physical collocation) or to the collocated equipment
                    (for virtual collocation).

               f.   Inspector Labor. Provides for the USWC qualified personnel
                    necessary when Focal requires access to the point of
                    interconnection after the initial installation or access to
                    its physical collocation floor space, where an escort is
                    required A call-out of an inspector after business hours is
                    subject to a minimum charge of four hours. The minimum
                    call-out charge shall apply when no other employee is
                    present in the location, and an `off-shift' USWC employee
                    (or contract employee) is required to go `on-shift' on
                    behalf of Focal.

               g.   Expanded Interconnection Channel Termination (EICT).
                    Telecommunications interconnection between Focal's
                    collocated equipment and USWC's network is accomplished via
                    an Expanded Interconnection Channel Termination (EICT). This
                    element can be at the DSO, DS1, DS3 or other level depending
                    on the USWC service it is connecting to. Connection to any
                    other network or telecommunications source within the wire
                    center is allowed only through USWC services.

               h.   Expanded Interconnection Channel Regeneration. Required when
                    the distance from the leased physical space (for physical
                    collocation) or from the collocated equipment (for virtual
                    collocation) to the USWC network is of sufficient length to
                    require regeneration.

          2.   Physical Collocation Rate Elements

               The following rate elements apply only to physical collocation
               arrangements:

               a.   Floor Space Rental. Provides the monthly rent for the leased
                    physical space, property taxes and base operating cost
                    without -48 Volt DC power. Includes convenience 110 AC, 15
                    amp electrical outlets provided in accordance with local
                    codes and may

                                    Page 27
<PAGE>
 
                    not be used to power transmission equipment or -48 Volt DC
                    power generating equipment. Also includes maintenance for
                    the leased space; provides for the preventative maintenance
                    (climate controls, filters, fire and life systems and
                    alarms, mechanical systems, standard HVAC); biweekly
                    housekeeping services (sweeping, spot cleaning, trash
                    removal) of the USWC wire center areas surrounding the
                    leased physical space and general repair and maintenance.

               b.   Enclosure Buildout. The Enclosure Buildout element, either
                    Cage or, at Focal's option, Hardwall, includes the material
                    and labor to construct the enclosure specified by Focal or
                    Focal may choose from USWC approved contractors to construct
                    the cage, meeting USWC's installation Technical Publication
                    77350. It includes the enclosure (cage or hardwall), air
                    conditioning (to support Focal loads specified), lighting
                    (not to exceed 2 watts per square foot), and convenience
                    outlets (3 per cage or number required by building code for
                    the hardwall enclosure). Also provides for humidification,
                    if required.

               c.   Pricing for the above physical collocation rate elements
                    will be provided on an individual basis due to the
                    uniqueness of Focal's requirements, central office structure
                    and arrangements.

          3.   Virtual Collocation Rate Elements

               The following rate elements apply uniquely to virtual
               collocation:

               a.   Maintenance Labor - Provides for the labor necessary for
                    repair of out of service and/or service-affecting conditions
                    and preventative maintenance of the Focal virtually
                    collocated equipment. Focal is responsible for ordering
                    maintenance spares. USWC will perform maintenance and/or
                    repair work upon receipt of the replacement maintenance
                    spare and/or equipment for Focal. A call-out of a
                    maintenance technician after business hours is subject to a
                    minimum charge as specified above.

               b.   Training Labor -- Provides for the billing of
                    vendor-provided training for USWC personnel on a
                    metropolitan service area basis, necessary for Focal
                    virtually collocated equipment which is different from USWC
                    provided equipment. USWC will require three USWC employees
                    to be trained per metropolitan service area in which the
                    Focal virtually collocated equipment is located. If, by an
                    act of USWC, trained employees are relocated, retired, or
                    are no longer available, USWC will not require Focal to
                    provide training for additional USWC employees for the same
                    virtually collocated equipment in the same metropolitan
                    area. The amount of training billed to Focal will be reduced
                    by half, should a second

                                    Page 28
<PAGE>
 
                    collocator in the same metropolitan area select the same
                    virtually collocated equipment as Focal.

               c.   Equipment Bay -- Provides mounting space for the Focal
                    virtually collocated equipment. Each bay includes the 7-foot
                    bay, its installation, and all necessary environmental
                    supports. Mounting space on the bay, including space for the
                    fuse panel and air gaps necessary for heat dissipation is
                    limited to 78 inches. The monthly rate is applied per shelf.

               d.   Engineering Labor -- Provides the planning and engineering
                    of the Focal virtually collocated equipment at the time of
                    installation, change or removal.

               e.   Installation Labor -- Provides for the installation, change
                    or removal of the Focal virtually collocated equipment.

     E.   Collocation Installation Intervals

          The following intervals are common to both virtual and physical
          collocation:

          1.   Acknowledgment of Floor Space Availability. Within fifteen days
               of the receipt by USWC from Focal of a Request for Collocation
               and an associated Quote Preparation Fee, USWC will notify Focal
               whether the sufficient floor space is available to accommodate
               Focal's request.

          2.   Quote Preparation. Within twenty-five business days of the
               receipt by USWC from Focal of a Request for Collocation and an
               associated Quote Preparation Fee, USWC provide Focal with a
               written quotation containing all nonrecurring charges for the
               requested collocation arrangement.

          3.   Quote Acceptance. Within thirty days of the receipt by Focal of
               the USWC quotation, Focal will accept the USWC proposed
               quotation. Acceptance shall require payment to USWC of fifty
               percent of the nonrecurring charges provided on the quotation.

          4.   Completion of Cage Construction (physical collocation only).
               Within 90 days of the acceptance of the quotation by Focal, the
               construction of the necessary cage/hardwall enclosure shall be
               completed. At this time, the leased floor space will be available
               to Focal for installation of its collocated equipment.

          5.   Completion of Collocated Equipment Installation (virtual
               collocation only) -- USWC shall complete the installation of
               Focal's collocated equipment within 90 days of USWC's receipt of
               Focal's collocated equipment. The installation of line cards and
               other minor modifications shall be performed by USWC on intervals
               equivalent to those that USWC applies to itself, but in no
               instance shall any such interval exceed 90 days.

                                    Page 29
<PAGE>
 
VII. INTERIM NUMBER PORTABILITY

     A.   General Terms

          1.   The Parties shall provide Number Portability on a reciprocal
               basis to each other to the extent technically feasible, and in
               accordance with rules and regulations as from time to time
               prescribed by the FCC and/or the Commission.

          2.   Until Number Portability is implemented by the industry pursuant
               to regulations issued by the FCC or the Commission, the Parties
               agree to provide Interim Telecommunications Number Portability
               ("INP") to each other through remote call forwarding, direct
               inward dialing and NXX migration.

          3.   Once permanent number portability is implemented pursuant to FCC
               or Commission regulation, either Party may withdraw, at any time
               and at its sole discretion, its INP offerings, subject to advance
               notice to the other Party and coordination to allow the seamless
               and transparent conversion of INP customer numbers to permanent
               number portability. Upon implementation of permanent number
               portability pursuant to FCC regulations, both parties agree to
               conform and provide such permanent number portability.

          4.   USWC will update its Line Information Database ("LIDB") listings
               for retained numbers, and restrict or cancel calling cards
               associated with these forwarded numbers as directed by Focal.
               LIDB updates shall be completed by the Parties on the same
               business day each INP arrangement is activated.

          5.   Upon request, USWC shall provide to Focal INP via Direct Inward
               Dial Trunks pursuant to applicable tariffs.

          6.   Where either party has activated an entire NXX for a single
               customer, or activated a substantial portion of an NXX for a
               single customer with the remaining numbers in that NXX either
               reserved for future use or otherwise unused, if such customer
               chooses to receive service from the other Party, the first Party
               shall cooperate with the second Party to have the entire NXX
               reassigned in the LERG (and associated industry databases,
               routing tables, etc.) to an End Office operated by the second
               Party. Such transfer will be accomplished with appropriate
               coordination between the Parties and subject to appropriate
               industry lead-times for movement of NXXs from one switch to
               another. Other applications of NXX migration will be discussed by
               the Parties as circumstances arise.

                                    Page 30
<PAGE>
 
     B.   Description of Service

          1.   Interim Number Portability Service ("INP") is a service
               arrangement that can be provided by USWC to Focal or by Focal to
               USWC. For the purposes of this section, the Party porting traffic
               to the other Party shall be referred to as the "INP Provider" and
               the Party receiving INP traffic for termination shall be referred
               to as the "INP Requestor".

          2.   INP applies to those situations where an end-user customer elects
               to transfer service from the INP Provider to the INP Requestor
               and they also wish to retain their existing telephone number. INP
               consists of INP Provider's provision to the INP Requestor the
               capability to route calls placed to telephone numbers assigned to
               the INP Provider's switches to the INP Requestor's switches. INP
               is available only for working telephone numbers assigned to the
               INP Provider's customers who request to transfer to the INP
               Requestor's service.

          3.   INP is available as INP-Remote Call Forwarding ("INP-RCF")
               permitting a call to a INP Provider's assigned telephone number
               to be translated to the INP Requestor's dialable local number.
               INP Requestor may terminate the call as desired. Additional
               capacity for simultaneous call forwarding is available where
               technically feasible. The INP Requestor will need to specify the
               number of simultaneous calls to be forwarded for each number
               ported.

          4.   INP is subject to the following restrictions:

               a.   An INP telephone number may be assigned by INP Requestor
                    only to the Requestor's customers located within the INP
                    Provider's local calling area and toll rating area that is
                    associated with the NXX of the portable number.

               b.   INP is applicable only if the INP Requestor is engaged in a
                    reciprocal traffic exchange arrangement with the INP
                    Provider.

               c.   Only the existing, INP Provider assigned end-user telephone
                    number may be used as a ported number for INP.

               d.   INP will not be provided by the INP Provider for customers
                    whose accounts are in arrears and who elect to make a change
                    of service provider unless and until the following
                    conditions are met:

                    i.   Full payment for the account (including
                         directory-advertising charges associated with the
                         customer's telephone number) is made by customer or INP
                         Requestor agrees to make full payment on behalf of
                         customer.

                                    Page 31
<PAGE>
 
                    ii.  INP Provider is notified in advance of the change in
                         service provider and a Change of Responsibility form is
                         issued.

                    iii. INP Provider accepts the transfer of responsibility.

               e.   INP services shall not be re-sold, shared or assigned by
                    either party to another LEC or CLEC.

               f.   INP is not offered for NXX Codes 555, 976, 960 and coin
                    telephones, and Service Access Codes (i.e. 500, 700,
                    800/888, 900). INP is not available for FGA seven-digit
                    numbers, including foreign exchange (FEX), FX and FX/ONAL
                    and foreign Central Office Service. Furthermore, INP numbers
                    may not be used for mass calling events.

               g.   The ported telephone number will be returned to the
                    originating company (or to the common pool of telephone
                    numbers upon implementation of permanent number portability)
                    when the ported service is disconnected. The company
                    purchasing a ported number may not retain it and reassign it
                    to another customer. The normal intercept announcement will
                    be provided by the INP Provider for the period of time until
                    the telephone number is reassigned by the Provider.

          5.   Ordering and Maintenance

               a.   The INP Requestor is responsible for all dealings with and
                    on behalf of its end users, including all end user account
                    activity, e.g. end user queries and complaints.

               b.   Each party is responsible for obtaining a Letter of
                    Authorization (LOA) from its end users that requests a
                    transfer of the end user's telephone number from the other
                    party.

               c.   The INP Provider will work cooperatively with the Requestor
                    to ensure a smooth customer transition and to avoid
                    unnecessary duplication of other facilities (e.g., unbundled
                    loops). The Parties will cooperate to develop intercompany
                    procedures to implement the requirements of this paragraph.

               d.   If an end user requests transfer of service from the INP
                    Requestor back to the INP Provider, the Provider may rely on
                    that end user request to institute cancellation of the INP
                    service. The INP Provider will provide at least 48 hours
                    notice to the INP Requestor of the cancellation of INP
                    service, and will work cooperatively with the Requestor to
                    ensure a smooth customer transition and to avoid unnecessary
                    duplication of other facilities (e.g., unbundled loops). The
                    Parties will cooperate to develop intercompany procedures
                    to implement the requirements of this paragraph.

                                    Page 32
<PAGE>
 
               e.   Certain features are not available on calls passed through
                    INP service.

               f.   The Requestor's designated INP switch must return answer and
                    disconnect supervision to the INP Provider's switch.

               g.   The Requestor will provide to the E91 1 database provider
                    the network telephone number that the Requestor assigned to
                    the Provider-assigned, ported telephone number. Updates to
                    and maintenance of the INP information to the E911 database
                    are the responsibility of the INP Requestor.

               h.   The INP Requestor will submit to the INP Provider a
                    disconnect order for each ported number that is relinquished
                    by the Requestor's end users.

          6.   Cost Recovery

               The parties agree that, for the purposes of this agreement that
               the following cost structure is an acceptable measure of the
               costs incurred by the INP Provider.

               a.   Number Ported -- This cost is incurred per number ported,
                    per month. Should the INP Requestor provide the transport
                    from the Provider's end office to the Requestor's end office
                    switch, a lower cost is incurred. This cost represents a
                    single call path from the Provider's end office switch to
                    the Requestor for the portable number.

               b.   Additional Call Path -- This cost is incurred per additional
                    call path per month added to a particular ported telephone
                    number. Should the INP Requestor provide the transport from
                    the Provider's end office to the Requestor's end office
                    switch, a lower cost is incurred.

               c.   Service Establishment -- Per Switch. This non-recurring cost
                    is incurred for each INP Provider's end office switch that
                    is equipped to provide INP to the INP Requestor.

               d.   Service Establishment -- Per Number -- This non-recurring
                    cost is for each telephone number equipped with INP.

               e.   The parties agree that Appendix A reasonably identifies the
                    above costs.


                                    Page 33
<PAGE>
 
                    (deleted)USWC position:

               f.   Each of the above costs should be borne by the INP
                    Requestor. MFS:(deleted)

               f.   Solely for the purposes of this arbitrated agreement between
                    USWC and Focal, these two parties agree to assign between
                    themselves, on an interim basis, interim number portability
                    costs on the basis of active local numbers, recognizing that
                    such assignment necessarily excludes recovery from other
                    industry participants. Each party is free to advocate the
                    assignment of interim number portability costs to other
                    industry participants as part of the appropriate industry-
                    wide cost recovery method. Section f has been incorporated
                    pursuant to the Arbitrator's decision in Docket UT-960323.

               g.   The parties shall, each quarter, exchange the confidential
                    data necessary to implement the above pro-rata assignment of
                    interim number portability costs.

               h.   The INP Provider will, when using RCF, send the original
                    ("ported") number over the interconnection arrangements as
                    the calling party number using the signaling protocol
                    applicable to the arrangements. The INP Requestor will
                    capture and measure the number of minutes of INP incoming
                    traffic. USWC will provide (and update quarterly) percentage
                    distributions of all terminating traffic in the LATA by
                    jurisdictional nature of the traffic: a) local; b)
                    intrastate, intraLATA switched access; c) intrastate,
                    interLATA switched access; d) interstate, intraLATA switched
                    access; e) interstate, interLATA switched access.. Separate
                    residence and business percentage distributions will be
                    provided, to the extent possible. The Parties agree to work
                    cooperatively to develop and exchange the data required to
                    implement this paragraph. The appropriate percentage will be
                    applied to the number of minutes of INP traffic in each
                    category to determine the number of minutes eligible for
                    additional "pass through" switched access compensation. Pass
                    through switched access compensation will be paid at the
                    following rates:

                    (deleted)USWC PROPOSAL:

                    For all intra LATA toll and inter LATA minutes delivered
                    over INP, USWC will pay, in addition to reciprocal
                    compensation, the applicable CCLC for each minute.

                    MFS PROPOSAL:(deleted)

                         For all intra-LATA toll and inter-LATA minutes
                         delivered over INP, USWC will pay, in lieu of
                         reciprocal

                                    Page 34
<PAGE>
 
                         compensation, all terminating switched access elements
                         otherwise due the terminating office provider,
                         including:

                              end office switching;
                              IC (interconnection charge);
                              CCLC; and
                              appropriate portion of tandem switched
                              transport.(6)

               i.   Rates are contained in Appendix A.

IX.  DIALING PARITY

     The Parties shall provide Dialing Parity to each other as required under
     Section 251 (b)(3) of the Act. This Agreement does not impact either
     Party's ability to default intraLATA toll via a specific dialing pattern
     until otherwise required by the Act.

X.   ACCESS TO TELEPHONE NUMBERS

     A.   Number Resources Arrangements.

          1.   Nothing in this Agreement shall be construed in any manner to
               limit or otherwise adversely impact either Party's right to the
               request and assignment of any NANP number resources including,
               but not limited to, central office (NXX) codes pursuant to the
               Central Office Code Assignment Guidelines (last published by the
               Industry Numbering Committee ("INC") as INC 95-0407-008, Revision
               4/19/96, formerly ICCF 93-0729-010). NXXs, and the initial points
               of interface for interconnection between the Parties' networks,
               will be included in Addenda to this Agreement.

          2.   To the extent USWC serves as Central Office Code Administrator
               for a given region, USWC will support all Focal requests related
               to central office (NXX) code administration and assignments in
               the manner required and consistent with the Central Office Code
               Assignment Guidelines.

          3.   The parties shall provide local dialing parity to each other as
               required under Section 251 (b)(3) of the Act.

---------
(6) The Parties recognize that the Arbitrator has ordered that the Parties
    incorporate a Provision in this Agreement requiring that "each carrier issue
    a bill to the IXC for its Portion of the access charges, based upon the
    functions and facilities provided by the carrier for call termination" and
    that the Parties' agreement should "take into account the fact that USWC
    receives compensation for INP costs by means of the Remote Call Forwarding
    charges". Because the Parties recognize that such a provision would incur
    additional costs and for purposes of consistency with other arbitrated
    results, the Parties agree to the above language.

                                    Page 35
<PAGE>
 
          4.   The Parties will comply with code administration requirements as
               prescribed by the Federal Communications Commission, the
               Commission, and accepted industry guidelines.

          5.   It shall be the responsibility of each Party to program and
               update its own switches and network systems pursuant to the Local
               Exchange Routing Guide (LERG) guidelines to recognize and route
               traffic to the other Party's assigned NXX codes at all times.
               Neither Party shall impose any fees or charges whatsoever on the
               other Party for such activities. The Parties will cooperate to
               establish procedures to ensure the timely activation of NXX
               assignments in their respective networks.

          6.   Each Party shall be responsible for notifying its customers of
               any changes in numbering or dialing arrangements to include
               changes such as the introduction of new NPAs or new NXX codes.

          7.   Until an impartial entity is appointed to administer
               telecommunications numbering and to make such numbers available
               on an equitable basis, USWC will assign NXX codes to Focal in
               accordance with national guidelines at no charge.

          8.   Each Party is responsible for administering NXX codes assigned to
               it. Each Party is responsible for obtaining Local Exchange
               Routing Guide ("LERG") listings of CLLI codes assigned to its
               switches. Each party shall use the LERG published by Bellcore or
               its successor for obtaining routing information and shall provide
               all required information to Bellcore for maintaining the LERG in
               a timely manner.

XI.  CALL COMPLETION FROM USWC OPERATORS

     USWC Operators will provide operator call completion and call completion
     and rating information and like assistance to any end user customer
     reaching USWC Operators (including information for calls to Focal NXXs) in
     the same manner as they provide such services for end user customers served
     by USWC NXXs and for calls involving only USWC NXXs.

XII. BUSY LINE VERIFY / INTERRUPT

     A.   Busy Line Verification ("BLV") is performed when one Party's Customer
          requests assistance from the operator bureau to determine if the
          called line is in use, however, the operator bureau will not complete
          the call for the Customer initiating the BLV inquiry. Only one BLV
          attempt will be made per Customer operator bureau call, and a charge
          shall apply whether or not the called party releases the line.

     B.   Busy Line Verification Interrupt ("BLVI") is performed when one
          Party's operator bureau interrupts a telephone call in progress after
          BLV has occurred. The operator bureau will interrupt the busy line and
          inform the called party that there

                                    Page 36
<PAGE>
 
          is a call waiting. The operator bureau will only interrupt the call
          and will not complete the telephone call of the Customer initiating
          the BLVI request. The operator bureau will make only one BLVI attempt
          per Customer operator telephone call and the applicable charge applies
          whether or not the called party releases the line.

     C.   The rate for Busy Line Verify shall be $.72 per call, and for Busy
          Line Verify and Interrupt, $.87 per call.

     D.   Each Party's operator bureau shall accept BLV and BLVI inquiries from
          the operator bureau of the other Party in order to allow transparent
          provision of BLV/BLVI Traffic between the Parties' networks.

     E.   Each Party shall route BLV/BLVI Traffic inquiries over separate direct
          trunks (and not the Local/IntraLATA Trunks) established between the
          Parties' respective operator bureaus. Unless otherwise mutually
          agreed, the Parties shall configure BLV/BLVI trunks over the
          Interconnection architecture defined in Section VI, Interconnection,
          consistent with the Joint Grooming Plan. Each Party shall compensate
          the other Party for BLV/BLVI Traffic as set forth above.

XIII. TOLL AND ASSISTANCE OPERATOR SERVICES

     A.   Description of Service.

               Toll and Assistance refers to functions customers associate with
               the "0" operator. Subject to availability and capacity, access
               may be provided via operator services trunks purchased from USWC
               or provided by Focal via collocation arrangements to route calls
               to Focal's platform.

     B.   Functions include:

          1.   O-Coin, Automatic Coin Telephone Service (ACTS) - these functions
               complete coin calls, collect coins and provide coin rates.

          2.   Alternate Billing Services (ABS or 0+ dialing): Bill to third
               party, Collect and Mechanized Credit Card System (MCCS).

          3.   O- or operator assistance which provides general assistance such
               as dialing instruction and assistance, rate quotes, emergency
               call completion and providing credit.

          4.   Automated Branding - ability to announce the carrier's name to
               the customer during the introduction of the call.

          5.   Rating Services - operators have access to tables that are
               populated with all toll rates used by the operator switch.

     C.   Pricing for Toll and Assistance Operator Services shall be determined
          on a case-by-case basis, upon request.

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     D.   Interconnection to the USWC Toll and Assistance Operator Services from
          an end office to USWC T/A is technically feasible at three distinct
          points on the trunk side of the switch. The first connection point is
          an operator services trunk connected directly to the T/A host switch.
          The second connection point is an operator services trunk connected
          directly to a remote T/A switch. The third connection point is an
          operator services trunk connected to a remote access tandem with
          operator concentration capabilities.

     E.   Trunk provisioning and facility ownership will follow the guidelines
          recommended by the Trunking and Routing, IOF and Switch sub-teams. All
          trunk interconnections will be digital.

     F.   Toll and Assistance interconnection will require an operator services
          type trunk between the end office and the interconnection point on the
          USWC switch.

     G.   Connecting a position to the host system requires two circuits (one
          voice and one data) per position on a T1 facility.

     H.   The technical requirements of operator services type trunks and the
          circuits to connect the positions to the host are covered in the OSSGR
          under Section 6 (Signaling) and Section 10 (System Interfaces) in
          general requirements form.

XIV. DIRECTORY ASSISTANCE

     A.   USWC agrees to (1) provide to Focal's operators on line access to
          USWC's directory assistance database; (2) provide to Focal unbranded
          directory assistance service (3) provide to Focal directory assistance
          service under Focal brand (where technically feasible); (4) allow
          Focal or an Focal designated operator bureau to license USWC's
          directory assistance database for use in providing competitive
          directory assistance services; and (5) in conjunction with (2) or (3)
          above, provide caller-optional directory assistance call completion
          service which is comparable in every way to the directory assistance
          call completion service USWC makes available to its own users and to
          provide caller name and number.

     B.   The price for directory assistance, provided pursuant to this
          Agreement, shall be 34 cents per call. As an alternative, the Parties
          may obtain directory assistance service pursuant to effective tariffs.

     C.   The price for directory call completion services shall be 35 cents per
          call, pending the completion of an approved TELRIC cost study.
          Additional charges, for USWC intraLATA toll services, also apply for
          completed intraLATA toll calls. Long distance service shall be
          available pursuant to the wholesale discount provided in Section XXX,
          Resale, herein. Call completion service is an optional service. Focal
          may, at its option, request USWC to not provide call completion
          services to Focal customers.

                                    Page 38
<PAGE>
 
XV.  DIRECTORY LISTINGS

     A.   Scope

          1.   Listings Service ("Listings") consists of USWC placing the names,
               addresses and telephone numbers of Focal's end users in USWC's
               listing database, based on end user information provided to USWC
               by Focal. USWC is authorized to use Listings in Directory
               Assistance (DA) and as noted in paragraph 4, below.

          2.   Focal will provide in standard, mechanized format, and USWC will
               accept at no charge, one primary listing for each main telephone
               number belonging to Focal's end user customers. Primary listings
               are as defined for USWC end users in USWC's general exchange
               tariffs. Focal will be charged for premium listings, e.g.,
               additional, foreign, cross-reference, informational, etc., at
               USWC's general exchange listing tariff rates. Focal utilizing
               Remote Call Forwarding for local number portability can list only
               one number without charge - either the end customer's original
               telephone number or the Focal-assigned number. The standard
               discounted rate for an additional listing applies to the other
               number.

          3.   USWC will furnish Focal the Listings format specifications. Focal
               may supply a maximum of one batch file daily, containing only
               Listings that completed on or prior to the transmission date.
               USWC cannot accept Listings with advance completion dates. Large
               volume activity (e.g., 100 or more listings) on a caption set is
               considered a project that requires coordination between Focal and
               USWC to determine time frames.

          4.   Focal grants USWC a non-exclusive license to incorporate Listings
               information into its directory assistance database. Focal hereby
               selects one of two options for USWC's use of Listings and
               dissemination of Listings to third parties.

                    EITHER:

               a.   Treat the same as USWC's end user listings - No prior
                    authorization is needed for USWC to release Listings to
                    directory publishers or other third parties. USWC will
                    incorporate Listings information in all existing and future
                    directory assistance applications developed by USWC. Focal
                    authorizes USWC to sell and otherwise make Listings
                    available to directory publishers. USWC shall be entitled to
                    retain all revenue associated with any such sales. Listings
                    shall not be provided or sold in such a manner as to
                    segregate end users by carrier.

                    OR:

               b.   Restrict to USWC's directory assistance -- Prior
                    authorization required by Focal for all other uses. Focal
                    makes its own,

                                    Page 39
<PAGE>
 
                    separate agreements with USWC, third parties and directory
                    publishers for all uses of its Listings beyond DA. USWC will
                    sell Listings to directory publishers (including USWC's
                    publisher affiliate), other third parties and USWC products
                    only after the third party presents proof of Focal's
                    authorization. USWC shall be entitled to retain all revenue
                    associated with any such sales. Listings shall not be
                    provided or sold in such a manner as to segregate end users
                    by carrier.

          5.   To the extent that state tariffs limit USWC's liability with
               regard to Listings, the applicable state tariff(s) is
               incorporated herein and supersedes Section XXXIV(U), "Limitation
               of Liability", of this Agreement with respect to Listings only.

     B.   USWC Responsibilities

          1.   USWC is responsible for maintaining Listings, including entering,
               changing, correcting, rearranging and removing Listings in
               accordance with Focal orders. USWC will take reasonable steps in
               accordance with industry practices to accommodate non-published
               and non-listed Listings provided that Focal has supplied USWC the
               necessary privacy indicators on such Listings.

          2.   USWC will include Focal Listings in USWC's Directory Assistance
               service to ensure that callers to USWC's Directory Assistance
               service have nondiscriminatory access to Focal's Listings.

          3.   USWC will incorporate Focal Listings provided to USWC in the
               White Pages directory published on USWC's behalf.

     C.   Focal Responsibilities

          1.   Focal agrees to provide to USWC its end user names, addresses and
               telephone numbers in a standard mechanized format, as specified
               by USWC.

          2.   Focal will supply its ACNA/CIC or CLCC/OCN, as appropriate, with
               each order to provide USWC the means of identifying Listings
               ownership.

          3.   Focal represents and warrants the end user information provided
               to USWC is accurate and correct. Focal further represents and
               warrants that it has reviewed all Listings provided to USWC,
               including end user requested restrictions on use such as
               non-published and non-listed. Focal shall be solely responsible
               for knowing and adhering to state laws or rulings regarding
               Listings (e.g., no solicitation requirements in the states of
               Arizona and Oregon, privacy requirements in Colorado), and for
               supplying USWC with the applicable Listing information.

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<PAGE>
 
          4.   Focal is responsible for all dealings with, and on behalf of,
               Focal's end users, including:

               a.   All end user account activity, e.g. end user queries and
                    complaints.

               b.   All account maintenance activity, e.g., additions, changes,
                    issuance of orders for Listings to USWC.

               c.   Determining privacy requirements and accurately coding the
                    privacy indicators for Focal's end user information. If end
                    user information provided by Focal to USWC does not contain
                    a privacy indicator, no privacy restrictions will apply.

               d.   Any additional services requested by Focal's end users.

     D.   The terms contained in this Section refer specifically to the
          provision of Listings from Focal to USWC. The Parties acknowledge that
          the Telecommunications Act of 1996 imposes reciprocal obligations on
          incumbent and new entrant Local Exchange providers with respect to
          directory assistance listings and white pages listings. As a result,
          the Parties agree that the terms in this Section are reciprocal and
          also include the provision of Listings from USWC to Focal, in the
          event that Focal provides its own directory assistance service or
          publishes its own white pages directory.

XVI. U S WEST DIRECT ISSUES

     USWC and Focal agree that certain issues, such as yellow page advertising,
     directory distribution, access to call guide pages, yellow page listings,
     will be the subject of negotiations between Focal and directory publishers,
     including U S WEST Direct. USWC acknowledges that Focal may request USWC to
     facilitate discussions between Focal and U S WEST Direct.

XVII. ACCESS TO POLES, DUCTS, CONDUITS, AND RIGHTS OF WAY

     Each Party shall provide the other Party access to its poles, ducts,
     rights-of-way and conduits it controls on terms, conditions and prices
     comparable to those offered to any other entity pursuant to each party's
     applicable tariffs and/or standard agreements.

XVIII. ACCESS TO DATABASES

     In accordance with Section 271 of the Act, USWC shall provide Focal with
     interfaces to access USWC's databases and associated signaling necessary
     for the routing and completion of Focal's traffic. Except where otherwise
     specified, access to such databases, and the appropriate interfaces, shall
     be made available to Focal via a Network Interconnection and Unbundled
     Element Request.

                                    Page 41
<PAGE>
 
XIX. NOTICE OF CHANGES

     If a Party makes a change in its network, which it believes will materially
     affect the inter-operability of its network with the other Party, the Party
     making the change shall provide advance notice of such change to the other
     Party in accordance with the applicable FCC regulations.

XX.  911 / E-911 SERVICE

     A.   Scope.

          1.   Focal exchanges to be included in USWC's E-911 DataBase will be
               indicated via written notice and will not require an amendment to
               this Agreement.

          2.   In counties where USWC has obligations under existing agreements
               as the primary provider of the 911 System to the county, Focal
               will participate in the provision of the 911 System as described
               in this Agreement.

               a.   Each party will be responsible for those portions of the 911
                    System for which it has total control, including any
                    necessary maintenance to each Party's portion of the 911
                    System.

               b.   USWC will be responsible for maintaining the E-911
                    Database. USWC will provide a copy of the Master Street
                    Address Guide ("MSAG"), and periodic updates, to Focal.

               c.   Focal assumes all responsibility for the accuracy of the
                    data that Focal provides to USWC for MSAG preparation and
                    E-911 Data Base operation.

               d.   Focal will provide end user data to the USWC ALI database
                    utilizing NENA-02-001 Recommended Formats For Data Exchange,
                    NENA-02-002 Recommended Standard For Street Thoroughfare
                    Abbreviations and NENA-02-003 Recommended Protocols For Data
                    Exchange. USWC will furnish Focal any variations to NENA
                    recommendations required for ALI database input.

               e.   Focal will provide end user data to the USWC ALI data base
                    that are Master Street Address Guide (MSAG) valid and meet
                    all components of the NENA-02-004 Recommended Measurements
                    For Data Quality.

               f.   Focal will update its end user records provided to the USWC
                    ALI database to agree with the 911 MSAG standards for its
                    service areas.
 
                                    Page 42
<PAGE>
 
               g.   USWC will provide Focal with the identification of the USWC
                    911 controlling office that serves each geographic area
                    served by Focal.

               h.   The Parties will cooperate in the routing of 911 traffic in
                    those instances where the ALI/ANI information is not
                    available on a particular 911 call.

               i.   USWC will provide Focal with the ten-digit telephone numbers
                    of each PSAP agency, for which USWC provides the 911
                    function, to be used by Focal operators for handling
                    emergency calls in those instances where the Focal customer
                    dials "0" instead of "911".

          3.   If a third party; i.e., LEC, is the primary service provider to a
               county, Focal will negotiate separately with such third party
               with regard to the provision of 911 service to the county. All
               relations between such third party and Focal are totally separate
               from this Agreement and USWC makes no representations on behalf
               of the third party.

          4.   If Focal is the primary service provider to the county, Focal and
               USWC will negotiate the specific provisions necessary for
               providing 911 service to the county and will include such
               provisions in an amendment to this Agreement.

          5.   Focal will separately negotiate with each county regarding the
               collection and reimbursement to the county of applicable customer
               taxes for 911 service.

          6.   Focal is responsible for network management of its network
               components in compliance with the Network Reliability Council
               Recommendations and meeting the network standard of USWC for the
               911 call delivery.

          7.   The parties shall provide a single point of contact to coordinate
               all activities under this Agreement.

          8.   Neither Party will reimburse the other for any expenses incurred
               in the provision of E-911 services.

     B.   Performance Criteria. E-911 Data Base accuracy shall be as set forth
          below:

          1.   Accuracy of ALI (Automatic Location Identification) data will be
               measured jointly by the PSAP's (Public Safety Answering Points)
               and USWC in a format supplied by USWC. The reports shall be
               forwarded to Focal by USWC when relevant and will indicate
               incidents when incorrect or no ALI data is displayed.

          2.   Each discrepancy report will be jointly researched by USWC and
               Focal. Corrective action will be taken immediately by the
               responsible party.
 
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<PAGE>
     
          3.   Each party will be responsible for the accuracy of its customer
               records. Each party specifically agrees to indemnify and hold
               harmless the other party from any claims, damages, or suits
               related to the accuracy of customer data provided for inclusion
               in the E-911 Data Base.

          4.   The additional parameters by which the Parties will utilize the
               911 or E-911 database will be the subject of further discussion
               between the parties.

XXI. REFERRAL ANNOUNCEMENT

     When an end user customer changes from USWC to Focal, or from Focal to
     USWC, and does not retain their original telephone number, the Party
     formerly providing service to the end user will provide a transfer of
     service announcement on the abandoned telephone number. Each Party will
     provide this referral service consistent with its tariff. This announcement
     will provide details on the new number that must be dialed to reach this
     customer.

XXII. COORDINATED REPAIR CALLS

     A.   Focal and USWC will employ the following procedures for handling
          misdirected repair calls;

          1.   Focal and USWC will provide their respective customers with the
               correct telephone numbers to call for access to their respective
               repair bureaus.

          2.   Customers of Focal shall be instructed to report all cases of
               trouble to Focal. Customers of USWC shall be instructed to report
               all cases of trouble to USWC.

          3.   To the extent the correct provider can be determined, misdirected
               repair calls will be referred to the proper provider of Basic
               Exchange Telecommunications Service.

          4.   Focal and USWC will provide their respective repair contact
               numbers to one another on a reciprocal basis.

          5.   In responding to repair calls, neither Party shall make
               disparaging remarks about each other, nor shall they use these
               repair calls as the basis for internal referrals or to solicit
               customers to market services. Either Party may respond with
               accurate information in answering customer questions.

XXIII. NETWORK INTERCONNECTION AND UNBUNDLED ELEMENT REQUEST

     A.   Any request for interconnection or access to an unbundled Network
          Element that is not already available as described herein shall be
          treated as a Network

                                    Page 44
<PAGE>
 
          Interconnection and Unbundled Element Request (NIUER). USWC shall use
          the NIUER Process to determine technical feasibility of the requested
          interconnection or Network Elements and, for those items found to be
          feasible, to provide the terms and timetable for providing the
          requested items.

     B.   A NIUER shall be submitted in writing and shall, at a minimum,
          include: (a) a technical description of each requested Network Element
          or interconnection; (b) the desired interface specification; (c) each
          requested type of interconnection or access; (d) a statement that the
          interconnection or Network Element will be used to provide a
          telecommunications service; and (e) the quantity requested.

     C.   Within 15 business days of its receipt, USWC shall acknowledge receipt
          of the NIUER and in such acknowledgment advise Focal of any missing
          information, if any, necessary to process the NIUER. Thereafter, USWC
          shall promptly advise Focal of the need for any additional information
          that will facilitate the analysis of the NIUER.

     D.   Within 30 calendar days of its receipt of the NIUER and all
          information necessary to process it, USWC shall provide to Focal a
          preliminary analysis of the NIUER. The preliminary analysis shall
          specify: (a) USWC's conclusions as to whether or not the requested
          interconnection or access to an unbundled Network Element is
          technically feasible; and (b) any objections to qualification of the
          requested Network Element or interconnection under the Act.

          1.   If USWC determines during the 30 day period that a NIUER is not
               technically feasible or that the NIUER otherwise does not qualify
               as a Network Element of interconnection that is required to be
               provided under the Act, USWC shall advise Focal as soon as
               reasonably possible of that fact, and USWC shall promptly, but in
               no case later than ten days after making such a determination,
               provide a written report setting forth the basis for its
               conclusion.

          2.   If USWC determines during the thirty-day period that the NIUER is
               technically feasible and otherwise qualifies under the Act, it
               shall notify Focal in writing of such determination within ten
               days.

          3.   As soon as feasible, but in any case within 90 days after USWC
               notifies Focal that the NIUER is technically feasible, USWC shall
               provide to Focal a NIUER quote which will include, at a minimum,
               a description of each interconnection and Network Element, the
               quantity to be provided, any interface specifications, and the
               applicable rates (recurring and nonrecurring) including the
               separately stated amortized development costs of the
               interconnection or the network elements and any minimum volume
               and term commitments required to achieve amortization of
               development costs. An initial payment for development cost is
               appropriate only where Focal is the only conceivable customer or
               where requested quantity is insufficient to provide amortization.

                                    Page 45
<PAGE>
 
     E.   If USWC has indicated minimum volume and term commitments, then within
          30 days of its receipt of the NIUER quote, Focal must either agree to
          purchase under those commitments, cancel its NIUER, or seek mediation
          or arbitration.

     F.   If Focal has agreed to minimum volume and term commitments under the
          preceding paragraph, Focal may cancel the NIUER or volume and term
          commitment at any time, but in the event of such cancellation Focal
          will pay USWC's reasonable development costs incurred in providing the
          interconnection or network element, to the extent that those
          development costs are not otherwise amortized.

     G.   If either Party believes that the other Party is not requesting,
          negotiating or processing any NIUER in good faith, or disputes a
          determination, or quoted price or cost, it may seek arbitration or
          mediation under S 252 of the Act. Focal is not required to use this
          section as the exclusive method of seeking access to interconnection
          or Network Elements.

XXIV. AUDIT PROCESS

     A.   "Audit" shall mean the comprehensive review of:

          1.   data used in the billing process for services performed and
               facilities provided under this Agreement; and

          2.   data relevant to provisioning and maintenance for services
               performed or facilities provided by either of the Parties for
               itself or others that are similar to the services performed or
               facilities provided under this Agreement for interconnection or
               access to unbundled elements.

     B.   The data referred to in subsection (2), above, shall be relevant to
          any performance standards that are adopted in connection with this
          Agreement, through negotiation, arbitration or otherwise.

     C.   This Audit shall take place under the following conditions:

          1.   Either Party may request to perform an Audit.

          2.   The Audit shall occur upon 30 business days written notice by the
               requesting Party to the non-requesting Party.

          3.   The Audit shall occur during normal business hours.

          4.   There shall be no more than one Audit requested by each Party
               under this Agreement in any 12-month period.

          5.   The requesting Party may review the non-requesting Party's
               records, books and documents, as may reasonably contain
               information relevant to the operation of this Agreement.
  
                                    Page 46
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          6.   The location of the Audit shall be the location where the
               requested records, books and documents are retained in the normal
               course of business.

          7.   All transactions under this Agreement which are over 24 months
               old will be considered accepted and no longer subject to Audit.

          8.   Each Party shall bear its own expenses occasioned by the Audit,
               provided that the expense of any special data collection shall be
               born by the requesting Party.

          9.   The Party requesting the Audit may request that an Audit be
               conducted by a mutually agreed-to independent auditor. Under this
               circumstance, the costs of the independent auditor shall be paid
               for by the Party requesting the Audit.

          10.  In the event that the non-requesting Party requests that the
               Audit be performed by an independent auditor, the Parties shall
               mutually agree to the selection of the independent auditor. Under
               this circumstance, the costs of the independent auditor shall be
               shared equally by the Parties.

          11.  The Parties agree that if an Audit discloses error(s), the Party
               responsible for the error(s) shall, in a timely manner, undertake
               corrective action for such error(s).

     D.   All information received or reviewed by the requesting Party or the
          independent auditor in connection with the Audit is to be considered
          Proprietary Information as defined by this Agreement. The
          non-requesting Party reserves the right to require any non-employee
          who is involved directly or indirectly in any Audit or the resolution
          of its findings as described above to execute a nondisclosure
          agreement satisfactory to the non-requesting Party. To the extent an
          Audit involves access to information of other competitors, Focal and
          USWC will aggregate such competitors' data before release to the other
          Party, to insure the protection of the proprietary nature of
          information of other competitors. To the extent a competitor is an
          affiliate of the party being audited (including itself and its
          subsidiaries), the Parties shall be allowed to examine such
          affiliates' disaggregated data, as required by reasonable needs of the
          audit.

XXV. AUDIOTEXT AND MASS ANNOUNCEMENT SERVICES

     A.   The Parties agree that access to the audiotext, mass announcement and
          information services of each Party should be made available to the
          other Party upon execution of an agreement defining terms for billing
          and compensation of such calls. Services included in this category
          include 976 calls, whether flat rated or usage sensitive, intra-LATA
          900 services and other intra-LATA 976-like services. Such calls will
          be routed over the Local Interconnection Trunks.

     B.   Focal and USWC will work together in good faith to negotiate and
          execute the agreement for billing and compensation for these services
          within 90 days of the

                                    Page 47
<PAGE>
 
          execution of this Agreement. The Parties agree that their separate
          agreement on audiotext and mass announcement services will include
          details concerning the creation, exchange and rating of records, all
          of which will occur without any explicit charge between the Parties,
          as well as a process for the handling of uncollectables so that the
          originating Party does not have any responsibility for uncollectables.

     C.   Until such time that such an agreement is executed, Focal may choose
          to block such calls, or Focal will agree to back-bill and compensate
          retroactively for such calls once the subsequent agreement is executed
          retroactive to the effective date of this Agreement.

     D.   Usage Sensitive Compensation

          All audiotext and mass announcement calls shall be considered toll
          calls for purposes of reciprocal compensation between the Parties.
          Compensation will be paid based on the compensation for toll calls
          referenced in this Agreement with respect to reciprocal compensation
          between the Parties, except that such compensation shall be paid by
          the Party terminating the call, rather than the Party originating the
          call.

     E.   Billing and Collection Compensation

          Billing and collection compensation will be dealt with in the
          agreement referenced in this section.

XXVI. LOCAL INTERCONNECTION DATA EXCHANGE FOR BILLING

     A.   There are certain types of calls or types of interconnection that
          require exchange of billing records between the Parties, including,
          for example, alternate billed and Toll Free Service calls. The Parties
          agree that all call types must be routed between the networks,
          accounted for, and settled among the parties. Certain calls will be
          handled via the Parties' respective operator service platforms. The
          Parties agree to utilize, where possible and appropriate, existing
          accounting and settlement systems to bill, exchange records and settle
          revenue.
 
     B.   The exchange of billing records for alternate billed calls (e.g.
          calling card, bill-to-third number, and collect) will be distributed
          through the existing CMDS processes, unless otherwise separately
          agreed to by the Parties.

     C.   Inter-Company Settlements ("ICS") revenues will be settled through the
          Calling Card and Third Number Settlement System ("CATS"). Each Party
          will provide for its own arrangements for participation in the CATS
          processes, through direct participation or a hosting arrangement with
          a direct participant.

     D.   Non-ICS revenue is defined as collect calls, calling card calls, and
          billed to third number calls which originate on one service provider's
          network and terminate on another service provider's network in the
          same Local Access Transport Area ("LATA"). The Parties agree to
          negotiate and execute an Agreement within 30

                                    Page 48
<PAGE>
 
          days of the execution of this Agreement for settlement of non-ICS
          revenue. This separate arrangement is necessary since existing CATS
          processes do not permit the use of CATS for non-ICS revenue. The
          Parties agree that the CMDS system can be used to transport the call
          records for this traffic.

     E.   Both Parties will provide the appropriate call records to the
          intraLATA Toll Free Service Provider, thus permitting the Service
          Provider to bill its subscribers for the inbound Toll Free Service. No
          adjustments to bills via tapes, disks or NDM will be made without the
          mutual agreement of the Parties.

XXVII. SIGNALING ACCESS TO CALL-RELATED DATABASES

     A.   When Focal is purchasing local switching from USWC, USWC will provide
          access via the STP to call related databases used in AIN services. The
          Parties agree to work in the industry to define the mediated access
          mechanisms for SCP access. Access to the USWC SMS will be provided to
          CLEC to create, modify, or update information in the call related
          databases, equivalent to the USWC access.

     B.   USWC will offer unbundled signaling via LIS-Common Channel Signaling
          Capability (CCSAC). CCSAC service utilizes the SS7 network and
          provides access to call-related databases that reside at USWC'S SCPs,
          such as the Line Information Database (LIDB) and the 800 Database. The
          access to USWC's SCP's will be mediated via the STP Port in order to
          assure network reliability.

     C.   CCSAC includes:

          1.   Entrance Facility - This element connects Focal's signaling point
               of interface with the USWC serving wire center (SWC). Focal may
               purchase this element or it may self-provision the entrance
               facility. If the entrance facility is self-provisioned, Focal
               would need to purchase collocation and an expanded
               interconnection channel termination.

          2.   Direct Link Transport (DLT) - This element connects the SWC to
               the USWC STP. Focal may purchase this element or self-provision
               transport directly to the STP. If Focal provides the link to the
               STP, it must purchase collocation and an expanded interconnection
               channel termination at the STP location.

          3.   STP Port - This element provides the switching function at the
               STP. One STP Port is required for each DLT Link. The Port
               provides access to the Service Control Point (SCP).

     D.   Access to Advanced Intelligent Network (AIN) functions is available
          only through the STP.

     E.   USWC will provide access to Service Management Systems (SMS) through
          its Service Creation Environment (SCE) on an equivalent basis as USWC
          provides

                                    Page 49
<PAGE>
 
          to itself. SMS allows Focal to create, modify, or update information
          in call-related databases. Currently, the SCE process is predominantly
          manual.

     F.   The pricing for CCSAC service is provided in Appendix A.

XXVIII. INTERCONNECTION TO LINE INFORMATION DATA BASE (LIDB)

     A.   Description of Line Information Data Base (LIDB).

          Line Information Data Base (LIDB) stores various line numbers and
          Special Billing Number (SBN) data used by operator services systems to
          process and bill calls. The operator services system accesses LIDB
          data to provide origination line (calling number), billing number and
          termination line (called number) management functions. LIDB is used
          for calling card validation, fraud verification, preferred IC
          association with the calling card, billing or service restrictions and
          the sub-account information to be included on the call's billing
          record.

     B.   Interfaces.

          Bellcore's GR-446-CORE defines the interface between the
          administration system and LIDB including specific message formats.
          (Bellcore's TR-NWP000029, Section 10)

     C.   LIDB Access.

          1.   All LIDB queries and responses from operator services systems and
               end offices are transmitted over a CCS network using a Signaling
               System 7 (557) protocol (TR-NWT-000246, Bell Communications
               Research Specification of Signaling System 7).

          2.   All LIDB queries and responses from the Public Packet Switched
               Network (PPSN) nodes are transmitted over one or more PPSN as
               TR-TSYOOO3O1 describes. The application data needed for
               processing LIDB data are formatted as TCAP messages. TCAP
               messages may be carried as an application level protocol network
               using 5S7 protocols for basic message transport.

          3.   The SCP node provides all protocol and interface support. CLEC
               SS7 connections will be required to meet Bellcore's GR905. TR954
               and USWC's Technical Publication 77342 specifications.

          4.   Non-USWC companies will submit LIDB updates through the exchange
               carrier service center and the LSS service bureau. These two
               centers enter information into USWC's service order process
               interface system, SOPI.

          5.   It is currently USWC's policy to allow LIDB access to non-USWC
               companies through regional STPs.

                                    Page 50
<PAGE>
 
     D.   Pricing for LIDB access shall be determined on a case-by-case basis.

XXIX. CONSTRUCTION CHARGES

     Pursuant to the Arbitrator's decision in Docket UT-960323, USWC may not
     assess separate "construction" charges in addition to the rate for
     unbundling and provisioning the local loop. USWC may still assess
     construction charges where they are provided for by tariff. In addition,
     construction charges proposals can be further reviewed in the generic
     pricing proceeding. With regard to resale, Focal will pay those
     construction charges that would be applicable to the end-user if the
     end-user ordered the same service directly from USWC.

     (deleted)USWC Proposal:

     A.   All rates, charges and initial service period specified in this
          Agreement contemplates the provision of network interconnection
          services, equipment and facilities to the extent available. Where USWC
          is required to build facilities for network interconnection,
          construction charges will apply. Construction charges will also apply
          when USWC determines that the placement of facilities will be
          temporary, or facilities are ordered in advance of actual MFS demand
          for service.

     B.   When facilities for interconnection services are not available and
          USWC is required to construct said facilities, USWC will develop the
          cost required to be paid by MFS to provide the service.

     C.   Except where required, all necessary construction will be undertaken
          at the discretion of USWC, consistent with budgetary responsibilities
          and consideration for the impact on the general body of customers.

     D.   A quote for the MFS portion of a specific job will be provided to MFS.
          The quote will be in writing and will be binding for ninety (90) days
          after the issue date. When accepted, MFS will be billed the quoted
          price and construction will commence after receipt of payment. If MFS
          chooses not to have USWC construct the facilities, USWC reserves the
          right to bill MFS for the expense incurred for producing the
          engineered job design.

     E.   In the event a construction charge is applicable, MFS service
          application date will become the date upon which USWC receives the
          required payment.

     MFS Position:

          No provisions for construction charges are required or justified under
          the Act or regulations. An appropriately performed TELRIC study
          provides recovery of all costs, including construction.(deleted)

                                    Page 51
<PAGE>
 
XXX. RESALE

     A.   Description

          1.   USWC Basic Exchange Telecommunications Service (as defined in
               Section III) will be available for resale from USWC pursuant to
               the Act and will reference terms and conditions (except prices)
               in USWC tariffs, where applicable. Appendix A lists services
               which are available for resale under this Agreement, and is
               attached and incorporated herein by this reference.

          2.   Certain USWC services are not available for resale under this
               Agreement. USWC's Telecommunication Services which are not
               available for resale are identified in Appendix A.

          3.   Certain USWC services shall be available for resale at prices
               absent a wholesale discount. Such services include residence
               exchange service, private line, special access and switched
               access services, and packages of services comprised of services
               available for resale separately. These services are listed in
               Appendix A.

          4.   Focal may contest the legality of any resale restrictions in a
               USWC retail tariff through a complaint filed with the State
               Commission.

     B.   Scope

          1.   Basic Exchange Telecommunications Service may be resold only to
               the same class of customer to which USWC sells local Basic
               Exchange Telecommunications Service. For example:

               a.   Residence service may not be resold to business customers;

               b.   Basic Exchange Telecommunications Service may not be resold
                    as a substitute for switched access service.

               c.   Pursuant to the Arbitrator's Decision in Docket UT-960323,
                    USWC's proposed paragraph has been deleted.
                    (deleted)Telecommunications Service may be resold only for
                    its intended or disclosed use.(deleted)

          2.   USWC shall bill Focal and Focal is responsible for all applicable
               charges for the resold services. Focal shall be responsible for
               all charges associated with services that Focal resells to an end
               user.

     C.   Ordering and Maintenance.

          1.   Focal, or Focal's agent, shall act as the single point of contact
               for its end users' service needs, including without limitation,
               sales, service design

                                    Page 52
<PAGE>
 
               order taking, provisioning, change orders, training, maintenance,
               trouble reports, repair, post-sale servicing, billing, collection
               and inquiry. Focal shall make it clear to its end users that they
               are customers of the Focal for resold services. Focal's end users
               contacting USWC will be instructed to contact Focal; however,
               nothing in this Agreement shall be deemed to prohibit USWC from
               discussing its products and services with Focal's customers who
               call USWC for any reason.

          2.   Focal shall transmit to USWC all information necessary for the
               installation (billing, listing and other information), repair,
               maintenance and post-installation servicing according to USWC's
               standard procedures, as described in the USWC resale operations
               guide that will be provided to Focal. When USWC's end user or the
               end user's new service provider discontinues the end user's
               service in anticipation of moving to another service provider,
               USWC will render its closing bill to end user customer effective
               with the disconnection. Should Focal's end user customer, a new
               service provider or Focal request service be discontinued to the
               end user, USWC will issue a bill to Focal for that portion of the
               service provided to Focal. USWC will notify Focal by FAX, EDI, or
               other processes when end user moves to another service provider.
               Focal shall issue disconnect orders to USWC, which shall be
               coordinated with new connect orders issued by the new service
               provider

          3.   Resold services shall be installed and repaired in a manner
               consistent with USWC's effective tariffs with the same quality
               and timeliness that USWC provides to its own end users.

          4.   Focal shall provide USWC and USWC shall provide Focal with points
               of contact for order entry, problem resolution and repair of the
               resold services.

          5.   Prior to placing orders on behalf of the USWC customer, Focal
               shall be responsible for obtaining and have in its possession a
               Letter of Authorization or Agency (LOA) from the end user. Focal
               shall make LOAs available to USWC upon request.

          6.   Prior to placing orders that will disconnect a line from another
               reseller's account Focal is responsible for obtaining all
               information needed to process the disconnect order and
               re-establish the service on behalf of the end user. If Focal is
               displaced by another reseller or service provider, Focal is
               responsible for coordination with the other reseller or service
               provider. Should an end user dispute or a discrepancy arise
               regarding the authority of Focal to act on behalf of the end
               user, Focal is responsible for providing written evidence of its
               authority to USWC within three (3) business days. If there is a
               conflict between the end user designation and Focal's written
               evidence or its authority, USWC shall honor the designation of
               the end user and change the end user back to the previous service
               provider. If Focal does not provide the LOA within

                                    Page 53
<PAGE>
 
               three (3) business days, or if the end user disputes the
               authority of the LOA, then Focal must, by the end of the third
               business day:

               a.   notify USWC to change the end user back to the previous
                    reseller or service provider, and

               b.   provide any end user information and billing records Focal
                    has obtained relating to the end user to the previous
                    reseller, and

               c.   notify the end user and USWC that the change has been made,
                    and

               d.   remit to USWC a slamming charge as provided in Appendix A as
                    compensation for the change back to the previous reseller or
                    service provider.

          7.   Focal shall designate the Primary Interexchange Carrier (PIC)
               assignments on behalf of its end users for interLATA services and
               intraLATA services when intraLATA presubscription is implemented.

     D.   Focal Responsibilities

          1.   Focal must send USWC complete and accurate end-user listing
               information for Directory Assistance, Directory, and 911
               Emergency Services using the established processes of USWC. Focal
               must provide to USWC accurate end-user information to ensure
               appropriate listings in any databases in which USWC is required
               to retain and/or maintain end-user information. USWC assumes no
               liability for the accuracy of information provided by Focal.

          2.   Focal may not reserve blocks of USWC telephone numbers, except as
               allowed by tariffs.

          3.   Focal is liable for all fraud associated with service to its
               end-users and accounts. USWC takes no responsibility, and will
               make no adjustments to Focal's account in cases of fraud. The
               Parties will cooperate in the prevention and investigation of
               fraudulent use of resold services.

          4.   This agreement does not address the resale of USWC provided
               calling cards.

          5.   Focal will provide a three year forecast within ninety (90) days
               of signing this Agreement. The forecast shall be updated and
               provided to USWC on a quarterly basis in as specified in Appendix
               B. The initial forecast will provide:

               a.   The date service will be offered (by city and/or state)
               b.   The type and quantity of service(s) which will be offered
               c.   Focal's anticipated order volume

                                    Page 54
<PAGE>
 
               d.   Focal's key contact personnel.

          6.   In the event USWC terminates the provisioning of any resold
               services to Focal for any reason, Focal shall be responsible for
               providing any and all necessary notice to its end users of the
               termination. In no case shall USWC be responsible for providing
               such notice.

     E.   Rates and Charges

          1.   Resold services as listed in Appendix A are available for resale
               at the applicable resale tariff rates or at the rates or at the
               wholesale discount levels set forth in Appendix A.

          2.   If the resold services are purchased pursuant to Tariffs and the
               Tariff rates change, charges billed to Focal for such services
               will be based upon the new Tariff rates less the applicable
               wholesale discount as agreed to herein. The new rate will be
               effective upon the Tariff effective date.

          3.   A Customer Transfer Charge (CTC) as specified in Appendix A
               applies when transferring any existing account or lines to Focal.

          4.   A Subscriber Line Charge (SLC) will continue to be paid by Focal
               without discount for each local exchange line resold under this
               Agreement. All federal and state rules and regulations associated
               with SLC as found in the applicable tariffs also apply.

          5.   Focal will pay to USWC the PIC change charge without discount
               associated with Focal end user changes of inter-exchange or
               intraLATA carriers.

          6.   Focal agrees to pay USWC when its end user activates any services
               or features that are billed on a per use or per activation basis
               (e.g., continuous redial, last call return, call back calling,
               call trace, etc.). USWC shall provide Focal with detailed billing
               information (per applicable OBF standards, if any) as necessary
               to permit Focal to bill its end users such charges.

          7.   To the extent such charges apply to USWC's retail customers,
               special construction charges, line extension charges, and land
               development agreements may apply to Focal, as detailed in
               individual state tariffs regarding end user obligations for
               construction charges. Specifically, special construction charges
               will be applicable where, at the request of Focal on behalf of
               its customers, USWC constructs a greater quantity of facilities
               than that which USWC would otherwise construct or normally
               utilize.

               (deleted)USWC Proposed Paragraph:(deleted)

                                    Page 55
<PAGE>
 
               (deleted)8. Nonrecurring charges will be billed at the applicable
               Tariff rates.

               MFS Proposed Paragraph:(deleted)

          8.   Nonrecurring charges will be billed at the applicable Tariff
               rates, less a wholesale discount of 11%, pending determination by
               the Commission in the generic cost proceeding of an appropriate
               wholesale discount, if any.7





          9.   As part of the resold line, USWC provides operator services,
               directory assistance, and IntraLATA long distance with standard
               USWC branding. At the request of Focal and where technically
               feasible USWC will rebrand operator services and directory
               assistance in Focal's name, provided the costs associated with
               such rebranding are paid by Focal. Focal will have the option of
               obtaining such services on an unbranded basis, at no additional
               cost for "unbranding" the service.

          10.  USWC will address all Focal requests for ancillary resale
               systems, programs, and initiatives on an individual case basis.

     F.   Directory Listings

          As part of each resold line, USWC will accept at no charge one primary
          listing for each main telephone number belonging to Focal's end user
          customer based on end user information provided to USWC by Focal. USWC
          will place Focal's listings in USWC's directory listing database for
          directory assistance purposes and will make listings available to
          directory publishers and to other third parties. Additional terms and
          conditions with respect to directory listings are described in Section
          XV, Directory Listings, herein..

     G.   Deposit

          1.   USWC may require Focal to make a suitable deposit to be held by
               USWC as a guarantee of the payment of charges. Any deposit
               required of an existing reseller is due and payable within ten
               days after the requirement is imposed. The amount of the deposit
               shall be the estimated charges for the resold service which will
               accrue for a two-month period. Interest on the deposit shall be
               accumulated by USWC at a rate equal to the federal discount rate,
               as published in the Wall Street Journal from time to time.

          2.   When the service is terminated, or when Focal has established
               satisfactory credit, the amount of the initial or additional
               deposit, with any interest due, will, at Focal's option, either
               be credited to Focal's account or refunded. Satisfactory credit
               for a reseller is defined as twelve consecutive months service as
               a reseller without a termination for

----------
(7) The Parties are unable to determine whether the Arbitrator determined
    whether wholesale discounts apply to nonrecurring charges. Without waiving
    their respective positions, the Parties have included this provision
    providing for an interim discount rate only.

                                    Page 56
<PAGE>
 
               nonpayment and with no more than one notification of intent to
               terminate Service for nonpayment.

H.   Payment

     1.   Amounts payable under this Agreement are due and payable within thirty
          (30) days after the date of USWC's invoice.

     2.   A late payment charge of 1.5% applies to all billed balances which are
          not paid by the billing date shown on the next bill. To the extent
          Focal pays the billed balance on time, but the amount of the billed
          balance is disputed by Focal, and, it is later determined that a
          refund is due Focal, interest shall be payable on the refunded amount
          in the amount of 1.5% per month.

     3.   USWC may discontinue processing orders for the failure by Focal to
          make full payment for the resold services provided under this
          Agreement within thirty (30) days of Focal's receipt of bill.

     4.   USWC may disconnect for the failure by Focal to make full payment for
          the resold services provided under this Agreement within sixty (60)
          days of Focal's receipt of bill.

     5.   Collection procedures and the requirements for deposit are unaffected
          by the application of a late payment charge.

     6.   In the event USWC terminates the provisioning of any resold services
          to Focal for any reason, Focal shall be responsible for providing any
          and all necessary notice to its end users of the termination. In no
          case shall USWC be responsible for providing such notice.

     (deleted)USWC Proposed Language:

     7.   USWC shall bill all amounts due from MFS for each resold service in
          accordance with the terms and conditions as specified in the USWC
          tariff.

     MFS Proposed Language(deleted)

     7.   USWC shall bill all amounts due from Focal for resold service within
          90 days.(8)

----------
(8) The proposed provision has been included pursuant to the Arbitrator's
    Decision in Docket UT-960323.

                                    Page 57

<PAGE>
 
XXXI. UNBUNDLED ACCESS/ELEMENTS

     A.   General Terms

          1.   USWC agrees to provide the following unbundled network elements
               which are addressed in more detail in later sections of this
               agreement: 1) local loop, 2) local and tandem switches (including
               all vertical switching features provided by such switches, 3)
               interoffice transmission facilities, 4) network interface
               devices, 5) signaling and call-related database facilities, 6)
               operations support systems functions, and 7) operator and
               directory assistance facilities.

          (deleted)USWC Proposed Paragraph:(deleted)

          2.   (deleted)(9)This Agreement provides for the provision of
               Unbundled Loops to MFS which may be connected with MFS's switch
               for the purpose of offering a finished retail service. In
               addition, USWC agrees to provide an Unbundled Switching Element
               to MFS pursuant to the NIUER Process which may be combined with
               MFS provided loops to provide a finished retail service. USWC
               will not combine USWC's Unbundled Loops with USWC's Unbundled
               Switching Element to provide a finished service to MFS. USWC
               agrees, however, to offer finished retail services to MFS for
               resale pursuant to Section XXX, Resale, of this
               Agreement.(deleted)

          3.   USWC will not restrict the types of telecommunications services
               Focal may offer through unbundled elements, nor will it restrict
               Focal from combining elements with any technically compatible
               equipment the Focal owns. USWC will provide Focal with all of the
               functionalities of a particular element, so that Focal can
               provide any telecommunications services that can be offered by
               means of the element. USWC agrees to perform and Focal agrees to
               pay for the functions necessary to combine requested elements in
               any technically feasible manner either with other elements from
               USWC's network, or with elements possessed by Focal. However,
               USWC need not combine network elements in any manner requested if
               not technically feasible, but must combine elements ordinarily
               combined in its network in the manner they are typically
               combined.

     B.   Description of Unbundled Elements

          1.   Tandem Switching

               USWC will provide a tandem switching element on an unbundled
               basis. The tandem switch element includes the facilities
               connecting the trunk distribution frames to the switch, and all
               the functions of the switch itself,

----------
(9) The proposed USWC paragraph has been deleted pursuant to the Arbitrator's
    Decision in Docket UT 960323.

                                    Page 58
<PAGE>
 
               including those facilities that establish a temporary
               transmission path between two other switches. The definition of
               the tandem switching element also includes the functions that are
               centralized in tandems rather than in separate end office
               switches, such as call recording, the routing of calls to
               operator services, and signaling conversion functions.

          2.   Transport

               USWC will provide unbundled access to shared transmission
               facilities between end offices and the tandem switch. Further,
               USWC will provide unbundled access to dedicated transmission
               facilities between its central offices or between such offices
               and those of competing carriers. This includes, at a minimum,
               interoffice facilities between end offices and serving wire
               centers (SWCs), SWCs and IXC POPs, tandem switches and SWCs, end
               offices or tandems of USWC , and the wire centers of USWC and
               requesting carriers. USWC will also provide all technically
               feasible transmission capabilities, such as DS1, D53, and Optical
               Carrier levels (e.g. OC-311 2/48/96) that Focal could use to
               provide telecommunications services.

          3.   Digital Cross Connect System.

               USWC will provide Focal with access to mutually agreed upon
               digital cross-connect system (DCS) points.

          4.   Unbundled Loops

               a.   Service Description

                    i.   An Unbundled Loop establishes a transmission path
                         between the USWC distribution frame (or equivalent) up
                         to, and including, USWC's network interface device
                         (NID). For existing loops, the inside wire connection
                         to the NID will remain intact.

                    ii.  Basic Unbundled Loops are available as a two-wire or
                         four-wire, point-to-point configuration suitable for
                         local exchange type services within the analog voice
                         frequency range of 300 to 3000 Hz. For the two-wire
                         configuration, Focal is requested to specify loop
                         start, ground start or loop reverse battery options.
                         The actual loop facilities that provide this service
                         may utilize various technologies or combinations of
                         technologies. Basic Unbundled Loops provide an analog
                         facility to Focal.

                         (a)  To the extent Focal requires an Unbundled Loop to
                              provide ISDN, HDSL, ADSL or DS1 service, such
                              requirements will be identified on the order for
                              Unbundled Loop Service. Conditioning charges will

                                    Page 59
<PAGE>
 
                              apply, as required, to condition such loops to
                              ensure the necessary transmission standard.(10)

                         (b)  Specific channel performance options for the loops
                              can be ordered by identifying the Network Channel
                              (NC)/Network Channel Interface (NCI) for the
                              functions desired. USWC will provide Focal with
                              the available NC/NCI codes and their descriptions.

               b.   Unbundled Loops are provided in accordance with the
                    specifications, interfaces and parameters described in the
                    appropriate Technical Reference Publications. USWC's sole
                    obligation is to provide and maintain Unbundled Loops in
                    accordance with such specifications, interfaces and
                    parameters. USWC does not warrant that Unbundled Loops are
                    compatible with any specific facilities or equipment or can
                    be used for any particular purpose or service. Transmission
                    characteristics may vary depending on the distance between
                    Focal's end user and USWC's end office and may vary due to
                    characteristics inherent in the physical network. USWC, in
                    order to properly maintain and modernize the network, may
                    make necessary modifications and changes to the network
                    elements in its network on an as needed basis. Such changes
                    may result in minor changes to transmission parameters.
                    Changes that affect network interoperability require advance
                    notice pursuant to Section XIX, Notice of Changes, herein.

               c.   Facilities and lines furnished by USWC on the premises of
                    Focal's end user and up to the NID or equivalent are the
                    property of USWC. USWC must have access to all such
                    facilities for network management purposes. USWC's employees
                    and agents may enter said premises at any reasonable hour to
                    test and inspect such facilities and lines in connection
                    with such purposes or upon termination or cancellation of
                    the Unbundled Loop Service to remove such facilities and
                    lines. The Parties agree to explore issues surrounding the
                    extension of Unbundled Loops beyond the NID.

               d.   Unbundled Loops include the facilities between the USWC
                    distribution frame up to and including USWC's NID located at
                    Focal's end user premise. The connection between the
                    distribution frame and Focal facilities is accomplished via
                    channel

----------
(10) Conditioning charges were addressed at Page 11/12 of the Arbitrator's
     Decision in Docket UT-960323. The Parties have agreed to this footnote in
     order to implement Paragraph XXXI.B.4.a.ii.(a). The appropriate charges
     will be determined in the consolidated cost proceeding. Pending such
     determination. USWC will not assess conditioning charges for deloading or
     the removal of excessive bridge tans on Unbundled Loops which are less than
     12.000 feet in length.

                                    Page 60
<PAGE>
 
                    terminations that can be ordered in conjunction with either
                    Collocation or Unbundled Interoffice Transport Service.

               e.   Ordering and Maintenance.

                    i.   For the purposes of loop assignment, tracking, and
                         dispute resolution, USWC will require a Letter of
                         Authorization for each existing USWC end user for which
                         Focal has requested reassignment of the loop serving
                         that end user.

                    ii.  If there is a conflict between an end user (and/or its
                         respective agent) and Focal regarding the disconnection
                         or provision of Unbundled Loops, USWC will honor the
                         latest dated Letter of Authorization designating an
                         agent by the end user or its respective agent. If the
                         end user's service has not been disconnected and
                         Unbundled Loop Service is not yet established, Focal
                         will be responsible to pay the nonrecurring charge as
                         set forth herein. If the end user's service has been
                         disconnected and the end user's service is to be
                         restored with USWC, Focal will be responsible to pay
                         the applicable nonrecurring charges as set forth in
                         USWC's applicable tariff, to restore the end user's
                         prior service with USWC.

                    iii. Focal is responsible for its own end user base and will
                         have the responsibility for resolution of any service
                         trouble report(s) from its customers. USWC will work
                         cooperatively with Focal to resolve trouble reports
                         when the trouble condition has been isolated and found
                         to be within a portion of USWC's network. Focal must
                         provide to USWC switch-based test results when testing
                         its customer's trouble prior to USWC performing any
                         repair functions. The Parties will cooperate in
                         developing mutually acceptable test report standards.
                         USWC shall provide Focal with Maintenance of service
                         charges in accordance with applicable time and material
                         charges in USWC tariffs will apply when the trouble is
                         not in USWC's network.

                    iv.  Focal will be responsible to submit to USWC a
                         disconnect order for a Unbundled Loop that is
                         relinquished by the end user due to cessation of
                         service. Unbundled Loop facilities will be returned to
                         USWC when the disconnect order is complete. In the
                         event of transfer of the end user's service from one
                         provider to another, the new provider will issue a
                         request for transfer of service, resulting in the
                         appropriate disconnect/reconnection of service.

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                    v.   The installation due date is a negotiated item. For
                         related orders, new connects will be physically worked
                         within the same calendar day.

                    vi.  When ordering Unbundled Loops, Focal is responsible for
                         obtaining or providing facilities and equipment that
                         are compatible with the service.

                    vii. Focal will have responsibility for testing the
                         equipment, network facilities and the Unbundled Loop
                         facility. If USWC performs tests of the Unbundled Loop
                         facility at Focal's request, and the fault is not in
                         the USWC facilities, a charge shall apply.

                   viii. Focal will be responsible for providing battery and
                         dial tone to its connection point two days prior to the
                         due date on the service order.

                    ix.  The following procedures shall apply to Unbundled Loops
                         ordered with the option of Basic Testing at Coordinated
                         Time:

                         (a)  On each Unbundled Loop order, Focal and USWC will
                              agree on a cutover time at least 48 hours before
                              that cutover time. The cutover time will be
                              defined as a 30 minute window within which both
                              the Focal and USWC personnel will make telephone
                              contact to complete the cutover.

                         (b)  Within the appointed 30 minute cutover time, the
                              Focal person will call the USWC person designated
                              to perform cross-connection work and when the USWC
                              person is reached in that interval such work will
                              be promptly performed. If the Focal person fails
                              to call or is not ready within the appointed
                              interval, and if Focal had not called to
                              reschedule the work at least 2 hours prior to the
                              start of the interval, USWC and Focal will
                              reschedule the work order and Focal will pay the
                              non-recurring charge for the Unbundled Loops
                              scheduled for the missed appointment. In addition,
                              non-recurring charges for the rescheduled
                              appointment will apply. If the USWC person is not
                              available or not ready at any time during the 30
                              minute interval, Focal and USWC will reschedule
                              and USWC will waive the non-recurring charge for
                              the Unbundled Loops scheduled for that interval.
                              The standard time expected from disconnection of
                              service on a line to the connection of the
                              Unbundled Loop to the Focal

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                              Collocation Service is 5 minutes. If USWC causes a
                              line to be out of service due solely to its
                              failure for more than 15 minutes, USWC will waive
                              the nonrecurring charge for that Unbundled Loop.
                              If unusual or unexpected circumstances prolong or
                              extend the time required to accomplish the
                              coordinated cut-over, the Party responsible for
                              such circumstances is responsible for the
                              reasonable labor charges of the other Party.
                              Delays caused by the customer are the
                              responsibility of Focal. In addition, if Focal has
                              ordered INP as a part of the Unbundled Loop
                              installation, USWC will coordinate implementation
                              of INP with the Unbundled Loop installation;
                              provided, separate INP installation charges will
                              apply.

                    x.   Focal and USWC will work cooperatively to develop
                         forecasts for Unbundled Loop service. USWC requests an
                         eighteen month forecast of Unbundled Loop service. The
                         forecast will include the specific serving Wire Center
                         that will be requested, plus the specific quantity of
                         each service desired. The forecast will be updated
                         quarterly, and will be treated as Focal confidential
                         information.

               f.   Appendix A contains the rate information for Unbundled
                    Loops.

               g.   If applicable, the New Interconnection/Unbundled Element
                    Request Process will apply as detailed in Section XXIII of
                    this Agreement.

               (deleted)USWC Proposed Paragraph:(deleted)

               h.   For issues regarding If applicable, Construction Charges,
                    see Section XXIX of this Agreement. (deleted)pursuant to
                    Section XXIX, of this Agreement, may apply to the
                    construction of new Unbundled Loops on behalf of
                    MFS.(deleted)

          5.   Local Switching Elements

               The switching network element includes facilities that are
               associated with the line (e.g., the line card), facilities that
               are involved with switching the call, and facilities used for
               custom routing. USWC will provide the local switching element to
               Focal pursuant to the Network Interconnection/Unbundled Element
               Request Process described in Section XXIII herein.

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          6.   Network Interface Device (NID)

               a.   Service Description.

                    A device wired between a telephone protector and the inside
                    wiring to isolate the customer's equipment from the network
                    at the subscriber's premises. It is a device for the
                    termination of inside wire that is available in single and
                    multiple pair configurations.

               b.   Focal may connect its loops, via its own NID, to the USWC
                    NID.

               c.   Any costs associated with Focal connecting its NID to USWC's
                    NID, will be the responsibility of Focal.

               d.   Connecting Focal's loop directly to the USWC NID is
                    prohibited.

               e.   If Focal purchases an unbundled loop, Focal may provide its
                    own NID or have USWC provide the NID.

               f.   The price for access to the NID will be provided on a
                    case-by-case basis.

          7.   Additional Unbundled Elements

               USWC shall provide nondiscriminatory access to, and where
               appropriate, development of additional unbundled network elements
               not covered in this Agreement in response to specific requests
               therefor, pursuant to the New Interconnection/Unbundled Element
               Request Process detailed in Section XXIII of this Agreement.

XXXII. SERVICE STANDARDS

     A.   Definitions

          When used in this Section, the following terms shall have the meanings
          indicated.

          1.   "Specified Performance Commitment" means the commitment by USWC
               to meet the Performance Criteria for any Specified Activity
               during the Specified Review Period.

          2.   "Specified Activity" means any of the following activities:

               a.   The installation by USWC of Unbundled Loops for Focal
                    ("Unbundled Loop Installation");

               b.   USWC's provision of Interim Number Portability ("INP
                    Installation") to Focal;

                                    Page 64
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               c.   The repair of USWC service provided to Focal ("Out of
                    Service Repairs"); or

               d.   The installation by USWC of interconnection trunks for the
                    mutual exchange of local exchange traffic with Focal ("LIS
                    Trunk Installation")
   
          3.   "Performance Criteria" means, with respect to a Specified Review
               Period (i.e., a calendar month or quarter), the performance by
               USWC for the specified activities for Focal will meet or exceed
               the average performance by USWC for the total universe of
               specified performance.  

     B.   Failure to Meet the Performance Criteria. If during a Specified Review
          Period USWC fails to meet the performance criteria, USWC will use its
          best efforts to meet the Performance Criteria for the next Specified
          Review Period. If USWC fails to meet the performance criteria for two
          consecutive periods, the Parties agree, in good faith, to attempt to
          resolve such issues through negotiation or non-binding arbitration.
          This paragraph shall not be construed to waive either Party's right to
          seek legal or regulatory intervention as provided by state or federal
          law. Focal may seek regulatory or other legal relief including
          requests for specific performance of USWC's obligations under this
          Agreement.

     C.   Limitations. USWC's failure to meet or exceed and of the Performance
          Criteria can not be as a result, directly or indirectly, of a Delaying
          Event. A "Delaying Event" means (a) a failure by Focal to perform any
          of its obligations set forth in this Agreement, (b) any delay, act or
          failure to act by a Customer, agent of subcontractor of Focal or (C)
          any Force Majeure Event. If a Delaying Event prevents USWC from
          performing a Specified Activity, then such Specified Activity shall be
          excluded from the calculation of USWC's compliance with the
          Performance Criteria.

     D.   Records. USWC shall maintain complete and accurate records, for the
          Specified Review Period of its performance under this Agreement for
          each Specified Activity and its compliance with the Performance
          Criteria. USWC shall provide to Focal such records in a self-reporting
          format. The parties agree that such records shall be deemed
          "Proprietary Information".

XXXIII. IMPLEMENTATION SCHEDULE

     A.   Within 3 months from the date of final approval of this Agreement, the
          Parties agree to make a good faith effort to complete each of the
          following interconnection arrangements:

          1.   Two-way trunk groups, as listed in Section VI, Paragraph G(2)
               herein, necessary for the mutual exchange of traffic.

          2.   E-911 Trunking and database access;

          3.   SS7 Interconnection and Certification;
 
                                    Page 65
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          4.   Directory Listings Arrangements and Directory Assistance
               Interconnection;

          5.   Access to Unbundled Loops in at least one wire center;

          6.   Completion of Physical Collocation arrangements in at least one
               USWC wire center.

          7.   Completion of inter-carrier billing arrangements necessary for
               the joint provision of switched access services and for
               reciprocal traffic exchange.

     B.   The Parties have agreed to commence discussion of these and other
          implementation issues by May 1, 1997 to facilitate the above
          implementation schedule.

XXXIV. MISCELLANEOUS TERMS

     A.   General Provisions

          1.   Each Party shall use its best efforts to comply with the
               Implementation Schedule.

          2.   Each Party is individually responsible to provide facilities
               within its network which are necessary for routing, transporting,
               measuring, and billing traffic from the other Party's network and
               for delivering such traffic to the other Party's network in the
               standard format compatible with Focal's network and to terminate
               the traffic it receives in that standard format or the proper
               address on its network. Such facility shall be designed based
               upon the description and forecasts provided under this Agreement.
               The Parties are each solely responsible for participation in and
               compliance with national network plans, including the National
               Network Security Plan and the Emergency Preparedness Plan.

          3.   Neither Party shall use any service related to or use any of the
               services provided in this Agreement in any manner that interferes
               with other persons in the use of their service, prevents other
               persons from using their service, or otherwise impairs the
               quality of service to other carriers or to either Party's
               Customers, and each Party may discontinue or refuse service if
               the other Party violates this provision Upon such violation,
               either Party shall provide the other Party notice of such
               violation, if practicable, at the earliest practicable time.

          4.   Each Party is solely responsible for the services it provides to
               its Customers and to other Telecommunications Carriers.

                                    Page 66
<PAGE>
 
          5.   The parties shall work cooperatively to minimize fraud associated
               with third-number billed calls, calling card calls, and any other
               services related to this Agreement.

     B.   Most Favored Nation Terms and Treatment

          The parties agree that the provisions of Section 252(i) of the Act
          shall apply, including state and federal interpretive regulations in
          effect from time to time.

     C.   Letter of Authorization

          Where so indicated in specific sections of this Agreement, Focal is
          responsible to have a Letter of Authorization. Focal is solely
          responsible to obtain authorization from its end user for the handling
          of the disconnection of the end user's service with USWC, the
          provision of service by Focal, and the provision of Unbundled Loops
          and all other ancillary services. Should a dispute or discrepancy
          arise regarding the authority of Focal to act on behalf of the end
          user, Focal is responsible for providing written evidence of its
          authority to USWC.

     D.   Payment

          1.   Amounts payable under this Agreement are due and payable within
               thirty (30) days after the date of invoice.

          2.   Unless otherwise specified, any amount due and not paid by the
               due date stated above shall be subject to a late charge equal to
               either i) 0.03 percent per day compounded daily for the number of
               calendar days from the payment due date to and including, the
               date of payment, that would result in an annual percentage rate
               of 12% or ii) the highest lawful rate, whichever is less. If late
               payment charges for services are not permitted by local
               jurisdiction, this provision shall not apply.

     E.   Taxes

          Each party purchasing services hereunder shall pay or otherwise be
          responsible for all federal, state, or local sales, use, excise, gross
          receipts, transaction or similar taxes, fees or surcharges levied
          against or upon such purchasing Party (or the providing Party when
          such providing Party is permitted to pass along to the purchasing
          Party such taxes, fees or surcharges), except for any tax on either
          Party's corporate existence, status or income. Whenever possible,
          these amounts shall be billed as a separate item on the invoice. To
          the extent a sale is claimed to be for resale tax exemption, the
          purchasing Party shall furnish the providing Party a proper resale tax
          exemption certificate as authorized or required by statute or
          regulation by the jurisdiction providing said resale tax exemption.
          Failure to timely provide said resale tax exemption certificate will
          result in no exemption being available to the purchasing Party.

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     F.   Intellectual Property

          1.   Each Party hereby grants to the other Party the limited, personal
               and nonexclusive right and license to use its patents, copyrights
               and trade secrets but only to the extent necessary to implement
               this Agreement or specifically required by the then applicable
               federal and state rules and regulations relating to
               interconnection and access to telecommunications facilities and
               services, and for no other purposes. Nothing in this Agreement
               shall be construed as the grant to the other Party of any rights
               or licenses to trademarks.

          2.   The rights and licenses under Section F. 1. above are granted "AS
               IS" and the other Party's exercise of any such right and license
               shall be at the sole and exclusive risk of the other Party.
               Neither Party shall have any obligation to defend, indemnify or
               hold harmless, or acquire any license or right for the benefit
               of, or owe any other obligation or have any liability to, the
               other based on or arising from any claim, demand, or proceeding
               (hereinafter "claim") by any third party alleging or asserting
               that the use of any circuit, apparatus, or system, or the use of
               any software, or the performance of any service or method, or the
               provision of any facilities by either Party under this Agreement
               constitutes infringement, or misuse or misappropriation of any
               patent, copyright, trade secret, or any other proprietary or
               intellectual property right of any third party.

          3.   Focal shall not, without the express written permission of USWC,
               state or imply that; 1) Focal is connected, or in any way
               affiliated with USWC or its affiliates, 2) Focal is part of a
               joint business association or any similar arrangement with USWC
               or its affiliates, 3) USWC and its affiliates are in any way
               sponsoring, endorsing or certifying Focal and its goods and
               services, or 4) with respect to Focal advertising or promotional
               activities or materials, that the resold goods and services are
               in any way associated with or originated from USWC or any of its
               affiliates. Nothing in this paragraph shall prevent Focal from
               truthfully describing the network elements it uses to provide
               service to its customers.

     G.   Severability

          The Parties recognize that the FCC is promulgating rules addressing
          issues contained in this Agreement. In the event that any one or more
          of the provisions contained herein shall for any reason be held to be
          unenforceable in any respect under law or regulation, the parties will
          negotiate in good faith for replacement language. If replacement
          language cannot be agreed upon, either party may seek regulatory
          intervention, including negotiations pursuant to Sections 251 and 252
          of the Act.

                                    Page 68
<PAGE>
 
     H.   Responsibility for Environmental Contamination

          Neither Party shall be liable to the other for any costs whatsoever
          resulting from the presence or Release of any Environmental Hazard
          that either Party did not introduce to the affected Work Location.
          Both Parties shall defend and hold harmless the other, its officers,
          directors and employees from and against any losses, damages, claims,
          demands, suits, liabilities, fines, penalties and expenses (including
          reasonable attorneys' fees) that arise out of or result from (i) any
          Environmental Hazard that the indemnifying party, its contractors or
          agents introduce to the Work Locations or (ii) the presence or Release
          of any Environmental Hazard for which the indemnifying party is
          responsible under Applicable Law.

     I.   Responsibility of Each Party

          Each Party is an independent contractor, and has and hereby retains
          the right to exercise full control of and supervision over its own
          performance of its obligations under this Agreement and retains full
          control over the employment, direction, compensation and discharge of
          all employees assisting in the performance of such obligations. Each
          Party will be solely responsible for all matters relating to payment
          of such employees, including compliance with social security taxes,
          withholding taxes and all other regulations governing such matters.
          Each Party will be solely responsible for proper handling, storage,
          transport and disposal at its own expense of all (i) substances or
          materials that it or its contractors or agents bring to, create or
          assume control over at work locations or, (ii) waste resulting
          therefrom or otherwise generated in connection with its or its
          contractors' or agents' activities at the work locations. Subject to
          the limitations on liability and except as otherwise provided in this
          Agreement, each Party shall be responsible for (i) its own acts and
          performance of all obligations imposed by applicable law in connection
          with its activities, legal status and property, real or personal and,
          (ii) the acts of its own affiliates, employees, agents and contractors
          during the performance of that Party's obligations hereunder.

     J.   Referenced Documents

          All references to Sections, Exhibits, and Schedules shall be deemed to
          be references to Sections of, and Exhibits and Schedules to, this
          Agreement unless the context shall otherwise require. Whenever any
          provision of this Agreement refers to a technical reference, technical
          publication, Focal practice, USWC practice, any publication of
          telecommunications industry administrative or technical standards, or
          any other document specifically incorporated into this agreement, it
          will be deemed to be a reference to the most recent version or edition
          (including any amendments, supplements, addenda, or successors) or
          such document that is in effect, and will include the most recent
          version or edition (including any amendments, supplements, addenda, or
          successors) or each document incorporated by reference in such a
          technical reference, technical publication, Focal practice, USWC
          practice, or publication of industry standards (unless Focal elects
          otherwise). Should there by any inconsistency

                                    Page 69
<PAGE>
 
          between or among publications or standards, Focal shall elect which
          requirement shall apply.

     K.   Publicity and Advertising

          Neither party shall publish or use any advertising, sales promotions
          or other publicity materials that use the other party's logo,
          trademarks or service marks without the prior written approval of the
          other party.

     L.   Executed in Counterparts

          This Agreement may be executed in any number of counterparts, each of
          which shall be deemed an original; but such counterparts shall
          together constitute one and the same instrument.

     M.   Headings of No Force or Effect

          The headings of Articles and Sections of this Agreement are for
          convenience of reference only, and shall in no way define, modify or
          restrict the meaning or interpretation of the terms or provisions of
          this Agreement.

     N.   Entire Agreement

          This Agreement constitutes the entire agreement between the Parties
          and supersedes all prior oral or written agreements, representations,
          statements, negotiations, understandings, proposals and undertakings
          with respect to the subject matter hereof.

     O.   Joint Work Product

          This Agreement is the joint work product of the Parties and has been
          negotiated by the Parties and their respective counsel and shall be
          fairly interpreted in accordance with its terms and, in the event of
          any ambiguities, no inferences shall be drawn against either Party.

     P.   Disclaimer of Agency

          Except for provisions herein expressly authorizing a Party to act for
          another, nothing in this Agreement shall constitute a Party as a legal
          representative or agent of the other Party, nor shall a Party have the
          right or authority to assume, create or incur any liability or any
          obligation of any kind, express or implied, against or in the name or
          on behalf of the other Party unless otherwise expressly permitted by
          such other Party Except as otherwise expressly provided in this
          Agreement, no Party undertakes to perform any obligation of the other
          Party whether regulatory or contractual, or to assume any
          responsibility for the management of the other Party's business.

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     Q.   Survival

          The Parties' obligations under this Agreement which by their nature
          are intended to continue beyond the termination or expiration of this
          Agreement shall survive the termination or expiration of this
          Agreement.

     R.   Effective Date

          This Agreement shall become effective pursuant to Sections 251 and 252
          of the Act.

     S.   Amendment of Agreement

          Focal and USWC may mutually agree to amend this Agreement in writing.
          Since it is possible that amendments to this Agreement may be needed
          to fully satisfy the purposes and objectives of this Agreement, the
          Parties agree to work cooperatively, promptly and in good faith to
          negotiate and implement any such additions, changes and corrections to
          this Agreement.

     T.   Indemnity

          1.   Each of the Parties agrees to release, indemnify, defend and hold
               harmless the other Party and each of its officers, directors,
               employees and agents (each an "Indemnitee") from and against and
               in respect of any loss, debt, liability, damage, obligation,
               claim, demand, judgment or settlement of any nature or kind,
               known or unknown, liquidated or unliquidated including, but not
               limited to, costs and attorneys' fees, whether suffered, made,
               instituted, or asserted by any other party or person, for
               invasion of privacy, personal injury to or death of any person or
               persons, or for loss, damage to, or destruction of property,
               whether or not owned by others, resulting from the indemnifying
               Party's performance, breach of Applicable Law, or status of its
               employees, agents and subcontractors; or for failure to perform
               under this Agreement, regardless of the form of action.

          2.   The indemnification provided herein shall be conditioned upon:

               a.   The indemnified Party shall promptly notify the indemnifying
                    Party of any action taken against the indemnified Party
                    relating to the indemnification. Failure to so notify the
                    Indemnifying Party shall not relieve the Indemnifying Party
                    of any liability that the Indemnifying Party might have,
                    except to the extent that such failure prejudices the
                    Indemnifying Party's ability to defend such claim.

               b.   The indemnifying Party shall have sole authority to defend
                    any such action, including the selection of legal counsel,
                    and the

                                    Page 71
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                    indemnified Party may engage separate legal counsel only at
                    its sole cost and expense.

               c.   In no event shall the indemnifying Party settle or consent
                    to any judgment pertaining to any such action without the
                    prior written consent of the indemnified Party.

     U.   Limitation of Liability

          1.   Except as otherwise provided in the indemnity section, no Party
               shall be liable to the other Party for any Loss, defect or
               equipment failure caused by the conduct of the other Party, the
               other Party's agents, servants, contractors or others acting in
               aid or concert with the other Party.

          2.   Except for Losses alleged or made by a Customer of either Party,
               in the case of any Loss arising from the negligence or willful
               misconduct of both Parties, each Party shall bear, and its
               obligations under this Section shall be limited to, that portion
               (as mutually agreed to by the Parties) of the resulting expense
               caused by its (including that of its agents, servants,
               contractors or others acting in aid or concert with it)
               negligence or willful misconduct.

          3.   Except for indemnity obligations, each Party's liability to the
               other Party for any Loss relating to or arising out of any
               negligent act or omission in its performance of this Agreement,
               whether in contract or in tort, shall be limited to the total
               amount that is or would have been charged to the other Party by
               such negligent or breaching Party for the service(s) or
               function(s) not performed or improperly performed.

          4.   In no event shall either Party have any liability whatsoever to
               the other Party for any indirect, special, consequential,
               incidental or punitive damages, including but not limited to loss
               of anticipated profits or revenue or other economic loss in
               connection with or arising from anything said, omitted or done
               hereunder (collectively, "Consequential Damages"), even if the
               other Party has been advised of the possibility of such damages;
               provided, that the foregoing shall not limit a Party's obligation
               to indemnify, defend and hold the other Party harmless against
               any amounts payable to a third party, including any losses,
               costs, fines, penalties, criminal or civil judgments or
               settlements, expenses (including attorneys' fees) and
               Consequential Damages of such third party. Nothing contained in
               this section shall limit either Party's liability to the other
               for (I) willful or intentional misconduct (including gross
               negligence); (ii) bodily injury, death or damage to tangible real
               or tangible personal property proximately caused by such party's
               negligent act or omission or that of their respective agents,
               subcontractors or employees nor shall anything contained in this
               section limit the Parties' indemnification obligations, as
               specified below.

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     V.   Terms of Agreement

          This Agreement shall be effective upon Commission Approval and shall
          remain in effect through July 7, 1999, and thereafter the Agreement
          shall continue in force and effect unless and until a new agreement,
          addressing all of the terms of this Agreement, becomes effective
          between the Parties. The Parties agree to commence negotiations on a
          new agreement no later than two years after this Agreement becomes
          effective.

     W.   Controlling Law

          This Agreement was negotiated by the Parties in accordance with the
          terms of the Act and the laws of the state where service is provided
          hereunder. It shall be interpreted solely in accordance with the terms
          of the Act and the applicable state law in the state where the service
          is provided.

     X.   Cancellation Charges

          Except as provided pursuant to a Network Element Network
          Interconnection and Unbundled Element Request, or as otherwise
          provided in any applicable tariff or contract referenced herein, no
          cancellation charges shall apply.

     Y.   Regulatory Approval

          The Parties understand and agree that this Agreement will be filed
          with the Commission and may thereafter be filed with the FCC. In the
          event the Commission rejects any portion of this Agreement, the
          parties agree to meet and negotiate in good faith to arrive at a
          mutually acceptable modification to the rejected portion.

     Z.   Compliance

          Each party shall comply with all applicable federal, state, and local
          laws, rules and regulations applicable to its performance under this
          Agreement.

     AA.  Compliance with the Communications Law Enforcement Act of 1994
          ("CALEA")

          Each Party represents and warrants that any equipment, facilities or
          services provided to the other Party under this Agreement comply with
          CALEA. Each party shall indemnify and hold the other Party harmless
          from any and all penalties imposed upon the other Party for such
          noncompliance and shall at the non-compliant Party's sole cost and
          expense, modify or replace any equipment, facilities or services
          provided to the other Party under this Agreement to ensure that such
          equipment, facilities and services fully comply with CALEA.

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     BB.  Independent Contractor

          Each party shall perform services hereunder as an independent
          contractor and nothing herein shall be construed as creating any other
          relationship between the Parties. Each party and each Party's
          contractor shall be solely responsible for the withholding or payment
          of all applicable federal, state and local income taxes, social
          security taxes and other payroll taxes with respect to their
          employees, as well as any taxes, contributions or other obligations
          imposed by applicable state unemployment or workers' compensation
          acts. Each party has sole authority and responsibility to hire, fire
          and otherwise control its employees.

     CC.  Force Majeure

          Neither party shall be liable for any delay or failure in performance
          of any part of this Agreement from any cause beyond its control and
          without its fault or negligence including, without limitation, acts of
          nature, acts of civil or military authority, government regulations,
          embargoes, epidemics, terrorist acts, riots, insurrections, fires,
          explosions, earthquakes, nuclear accidents, floods, work stoppages,
          equipment failure, power blackouts, volcanic action, other major
          environmental disturbances, unusually sever weather conditions,
          inability to secure products or services of other persons or
          transportation facilities or acts or omissions of transportation
          carriers (collectively, a "Force Majeure Event") In the event of a
          labor dispute or strike the Parties agree to provide service to each
          other at a level equivalent to the level they provide themselves.

     DD.  Dispute Resolution

          The Parties agree, in good faith, to attempt to resolve any claim,
          controversy or dispute between the Parties, their agents, employees,
          officers, directors or affiliated agents ("Dispute") through
          negotiation or non-binding arbitration. This paragraph shall not be
          construed to waive the Parties' rights to seek legal or regulatory
          intervention as provided by state or federal law.

     EE.  Commission Decision

          This Agreement shall at all times be subject to such review by the
          Commission or FCC as permitted by the Act. If any such review renders
          the Agreement inoperable or creates any ambiguity or requirement for
          further amendment to the Agreement, the Parties will negotiate in good
          faith to agree upon any necessary amendments to the Agreement.

     FF.  Nondisclosure

          1.   All information, including but not limited to specifications,
               microfilm, photocopies, magnetic disks, magnetic tapes, drawings,
               sketches, models, samples, tools, technical information, data,
               employee records, maps, financial reports, and market data, (i)
               furnished by one Party to the other Party dealing with customer
               specific, facility specific, or usage

                                    Page 74
<PAGE>
 
               specific information, other than customer information
               communicated for the purpose of publication of directory database
               inclusion, or (ii) in written, graphic, electromagnetic, or other
               tangible form and marked at the time of delivery as
               "Confidential" or "Proprietary", or (iii) communicated orally and
               declared to the receiving Party at the time of delivery, or by
               written notice given to the receiving Party within ten (10) days
               after delivery, to be "Confidential" or "Proprietary"
               (collectively referred to as "Proprietary Information"), shall
               remain the property of the disclosing Party. A Party who receives
               Proprietary Information via an oral communication may request
               written confirmation that the material is Proprietary
               Information. A Party who delivers Proprietary Information via an
               oral communication may request written confirmation that the
               Party receiving the information understands that the material is
               Proprietary Information.

          2.   Upon request by the disclosing Party, the receiving Party shall
               return all tangible copies of Proprietary Information, whether
               written, graphic or otherwise, except that the receiving Party
               may retain one copy for archival purposes.

          3.   Each Party shall keep all of the other Party's Proprietary
               Information confidential and shall use the other Party's
               Proprietary Information only in connection with this Agreement.
               Neither Party shall use the other Party's Proprietary Information
               for any other purpose except upon such terms and conditions as
               may be agreed upon between the Parties in writing.

          4.   Unless otherwise agreed, the obligations of confidentiality and
               non-use set forth in this Agreement do not apply to such
               Proprietary Information as:

               a.   was at the time of receipt already known to the receiving
                    Party free of any obligation to keep it confidential
                    evidenced by written records prepared prior to delivery by
                    the disclosing Party; or

               b.   is or becomes publicly known through no wrongful act of the
                    receiving Party; or

               c.   is rightfully received from a third person having no direct
                    or indirect secrecy or confidentiality obligation to the
                    disclosing Party with respect to such information; or

               d.   is independently developed by an employee, agent, or
                    contractor of the receiving Party which individual is not
                    involved in any manner with the provision of services
                    pursuant to the Agreement and does not have any direct or
                    indirect access to the Proprietary Information; or

               e.   is disclosed to a third person by the disclosing Party
                    without similar restrictions on such third person's rights;
                    or

                                    Page 75
<PAGE>
 
               f.   is approved for release by written authorization of the
                    disclosing Party; or

               g.   is required to be made public by the receiving Party
                    pursuant to applicable law or regulation provided that the
                    receiving Party shall give sufficient notice of the
                    requirement to the disclosing Party to enable the disclosing
                    Party to seek protective orders.

          5.   Effective Date of This Section. Notwithstanding any other
               provision of this Agreement, the Proprietary Information
               provisions of this Agreement shall apply to all information
               furnished by either Party to the other in furtherance of the
               purpose of this Agreement, even if furnished before the date of
               this Agreement.

     GG.  Notices

          Any notices required by or concerning this Agreement shall be sent to
          the Parties at the addresses shown below:

               USWC 
               Director Interconnection Services
               1801 California, Room 2340
               Denver, CO 80202

               Focal Communications Corporation of Washington
               Director, Regulatory Affairs (fax 312-895-8403)
               200 N. LaSalle Street, Suite 800
               Chicago, Illinois 60601

          Each Party shall inform the other of any changes in the above
          addresses.

     HH.  Assignment

          Neither Party may assign or transfer (whether by operation of law or
          otherwise) this Agreement (or any rights or obligations hereunder) to
          a third party without the prior written consent of the other Party
          provided that each Party may assign this Agreement to a corporate
          affiliate or an entity under its common control or an entity acquiring
          all or substantially all of its assets or equity by providing prior
          written notice to the other Party of such assignment or transfer. Any
          attempted assignment or transfer that is not permitted is void ab
          initio. Without limiting the generality of the foregoing, this
          Agreement shall be binding upon and shall inure to the benefit of the
          Parties' respective successors and assigns.

     II.  Warranties

          NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, THE PARTIES
          AGREE THAT NEITHER PARTY HAS MADE, AND THAT THERE

                                    Page 76
<PAGE>
 
          DOES NOT EXIST, ANY WARRANTY, EXPRESS OR IMPLIED, INCLUDING BUT NOT
          LIMITED TO WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
          PURPOSE.

     JJ.  Default

          If either Party defaults in the payment of any amount due hereunder,
          or if either Party violates any other provision of this Agreement, and
          such default or violation shall continue for thirty (30) days after
          written notice thereof, the other Party may seek legal and/or
          regulatory relief. The failure of either Party to enforce any of the
          provisions of this Agreement or the waiver thereof in any instance
          shall not be construed as a general waiver or relinquishment on its
          part of any such provision, but the same shall, nevertheless, be and
          remain in full force and effect.

     KK.  No Third Party Beneficiaries

          Except as may be specifically set forth in this Agreement, this
          Agreement does not provide and shall not be construed to provide third
          parties with any remedy, claim, liability, reimbursement, cause of
          action, or other privilege.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective duly authorized representatives.






Focal Communications                        U S WEST Communications, Inc.
Corporation of Washington

John R Barnicle (on file)                   Katherine L. Fleming (on file)**
----------------------------------          ----------------------------------
Signature                                   Signature

John R Barnicle                             Katherine L. Fleming
----------------------------------          ----------------------------------
Name Printed/Typed                          Name Printed/Typed

                                            Executive Director Interconnect
EVP & C.O.O                                 Neg.
----------------------------------          ----------------------------------
Title                                       Title

1/18/99                                     1/21/99
----------------------------------          ----------------------------------
Date                                        Date


*        This Agreement is made pursuant to Section 252 (i) of the Act and is
premised upon the Interconnection Agreement between Electric Lightwave, Inc. and
U S WEST Communications, Inc. (the "Underlying Agreement"). The Underlying
Agreement was approved by the Commission on April 23, 1997.

                                    Page 77
<PAGE>
 
With respect to this agreement, the Parties understand and agree:


i) The Parties shall request the Commission to expedite its review and approval
of this Agreement.

ii) Notwithstanding the mutual commitments set forth herein, the Parties are
entering into this Agreement without prejudice to any positions they have taken
previously, or may take in the future, in any legislative, regulatory, or other
public forum addressing any matters, including those relating to the types of
arrangements contained in this Agreement. During the proceeding in which the
Commission is to review and approve the Agreement, U S WEST may point out that
it has objected, and continues to object, to the inclusion of the terms and
conditions to which it objected in the proceedings involving the approval of the
Underlying Agreement.

iii) This Agreement contains provisions based upon the decisions and orders of
the FCC and the Commission under and with respect to the Act. Currently, court
and regulatory proceedings affecting the subject matter of this Agreement are in
various stages, including the proceedings where certain of the rules and
regulations of the FCC are being challenged (see Iowa Utilities Board v. Federal
Communications Commission. 120 F.3d 753 (8th Cir. 1997), et sec.) and the
proceedings where the Commission's decision(s) giving rise to the Underlying
Agreement are under and subject to appeal and review (the "Proceedings"). The
Agreement has not been corrected to reflect the requirements, claims or outcomes
of any of the Proceedings, although the pricing does reflect the Commission's
most current generic order, if any. Accordingly, when a final, decision or
decisions are made in the Proceedings that automatically change and modify the
Underlying Agreement, then like changes and modifications will similarly be made
to this Agreement.

iv) Subsequent to the execution of this Agreement, the FCC or the Commission may
issue decisions or orders that change or modify the rules and regulations
governing implementing of the Act. If such changes or modifications alter the
state of the law upon which the Underlying Agreement was negotiated and agreed,
and it reasonably appears that the parties to the Underlying Agreement would
have negotiated and agreed to different term(s) condition(s) or covenant(s) than
as contained in the Underlying Agreement had such change or modification been in
existence before execution of the Underlying Agreement, then this Agreement
shall be amended to reflect such different terms(s), condition(s), or
covenant(s). Where the parties fail to agree upon such an amendment, it shall be
resolved in accordance with the Dispute Resolution provision of this Agreement.

**   Signature does not indicate agreement with all aspects of the arbitrator's
     decision, nor does it waive any of U S WEST's rights to seek judicial
     review of all or part of the agreement, or to reform the agreement as the
     result of successful judicial review.


                                    Page 78
<PAGE>
 
                         APPENDIX A - RATES AND CHARGES

                                   Washington

INTERCONNECTION - LOCAL EXCHANGE

Local Call Termination                                      Agreed Price
     End Office - Per Minute of Use                         $0.003141
     Tandem Switch - Per Minute of Use                      $0.005416
     (Note 1)
     (includes End Office Call Termination and Tandem Transport)

Note 1: The above local tandem call termination rate includes tandem
transmission based on an assumed transport mileage of 10 miles.
Should the average tandem transmission mileage experienced by the Parties exceed
10 miles, the Parties agree to adjust the tandem call termination rate based on
the tandem transmission rates set forth below.

                                             Agreed Price   Agreed Price
Entrance Facility                            Recurring      Nonrecurring
DS1, Electrical                              $99.78         $583.92
DS3, Electrical                              $404.24        $668.95

Direct Trunked Transport                     Agreed Price   Agreed Price
                                             Fixed          Per Mile
DS1 - 0 Miles                                None           None
DS1 - Over 0 to 8                            $41.72         $0.67
DS1 - Over 8 to 25                           $41.72         $0.84
DS 1 -  Over 25 to 50                        $41.73         $2.97
DS1 - Over 50                                $41.73         $3.49

DS3 - 0 miles                                None           None
DS3 - Over 0 to 8                            $283.30        $13.83
DS3 - Over 8 to 25                           $284.17        $15.03
DS3 - Over 25 to 50                          $291.31        $39.19
DS3 - Over 50                                $293.91        $44.74

                                             Agreed Price   Agreed Price
Multiplexing, per arrangement                Recurring      Nonrecurring
DS3 to DS1                                   $218.58        $418.45

Local Transit Traffic Rate                   Agreed Price
Tandem Switching, per MOU                    $0.001794

                                             Agreed Price   Agreed Price
Tandem Transmission                          Fixed          Per Mile
0 Mile                                       None           None
Over 0 to 8 miles                            $0.000411      $0.000009
Over 8 to 25 miles                           $0.000411      $0.000007
Over 25 to 50                                $0.000408      $0.000008
Over 50                                      $0.000409      $0.000015

                                    Page 79
<PAGE>
 
INTERCONNECTION 0xf0 EXCHANGE ACCESS         Agreed Price

Call Termination, Transport, and Transit     Per Switched Access Tariff


COMMON CHANNEL SIGNALLING ACCESS SERVICE

                                             Agreed Price   Agreed Price
Entrance Facility                            Recurring      Nonrecurring
DS1                                          $99.78         $563.92
DS3                                          $404.24        $668.95

                                             Agreed Price   Agreed Price
Direct Link Transport                        Fixed          Per Mile
DSO - 0 Mile                                 None           None
DSO - Over 0 to 8 miles                      $ 20.89        $0.13
DSO - Over 8 to 25 miles                     $ 20.88        $0.10
DSO - Over 25 to 50                          $ 20.88        $0.10
DSO - Over 50                                $ 20.89        $0.17

DS1 - 0 Mile                                 None           None
DS1 - Over 0 to 8 miles                      $41.72         $0.67
DS1 - Over 8 to 25 miles                     $41.72         $0.84
DS1 - Over 25 to 50                          $41.73         $2.97
DS1 - Over 50                                $41.73         $3.49

                                             Agreed Price   Agreed Price
Direct Link Transport                        Fixed          Per Mile
DS3 - 0 Mile                                 None           None
DS3 - Over 0 to 8 miles                      $283.30        $13.83
DS3 - Over 8 to 25 miles                     $284.17        $15.03
DS3 - Over 25 to 50                          $291.31        $39.19
DS3 - Over 50                                $293.91        $44.74

                                             Agreed Price   Agreed Price
                                             Recurring      Nonrecurring
CCS Link - First Link                        None           $504.68
CCS Link - Each additional  Link             None           $72.42
STP Port - Per Port                          $208.57        None

                                             Agreed Price   Agreed Price
                                             Recurring      Nonrecurring
Multiplexing
DS1 to DS0                                   $221.08        None
DS3 to DS1                                   $218.58        None

                                    Page 80
<PAGE>
 
PHYSICAL AND VIRTUAL COLLOCATION

                                                  Arbitrated Price
Common Elements                              Recurring      Nonrecurring

Quote Preparation Fee                        None           $2437.30

Entrance Facility - Per cable (Note 3)       $2.07          $1307.45
2-wire DSO EICT                              $1.41          $339.61 (Note 4)
4-wire DSO EICT                              $1.79          $339.61 (Note 4)
DSI EICT                                     $9.12          $405.02
DS3 EICT                                     $31.93         $433.23
DSI EICT - regeneration       (Note 5)       $14.38
DS3 EICT - regeneration       (Note 5)       $94.24

Cable Splicing                               Agreed Price   Agreed Price
                                             Recurring      Nonrecurring
Per set up                                   None           $103.59
Per fiber Spliced                            None           $12.95
48 Volt Power, per ampere per month          $13.45         None
48 Volt Power Cable
20 Ampere Capacity - recurring               $0.15          $68.37
40 Ampere Capacity - recurring               $0.20          $92.71
60 Ampere Capacity - recurring               $0.22          $104.42

Equipment Bay, per shelf                     $8.58          None

                                             Agreed Price   Agreed Price
                                             Regular Hours  After Hours
Inspector per 1/2 Hour                       $28.62         $37.02
Training per 1/2 hour                        $25.36         None
Engineering per 1/2 hour                     $24.73         $33.09
Installation per 1/2 hour                    $28.62         $37.20
Maintenance per 1/2 hour                     $25.36         $33.73

                                             Agreed Price   Agreed Price
                                             Recurring      Nonrecurring
PHYSICAL COLLOCATION (Note 6)
Cage/Hard Wall Enclosure                       ICB          ICB
Rent (w/Maintenance) per square foot -Zone 1   $2.75        None
Rent (w/Maintenance) per square foot -Zone 2   $2.26        None
Rent (w/Maintenance) per square foot -Zone 3   $2.06        None


Note 3: Pricing is pursuant to Arbitrator's Decision in Docket UT-960323.

Note 4: same as note 3 above, and, DS0 EICT NRC does not apply to unbundled
loops where a separate unbundled loop NRC applies.

                                    Page 81
<PAGE>
 
Note 5: If required. No NRC to regeneration ordered concurrently with an
associated EICT element.

Note 6: Zones per NECA-4 Tariff

ANCILLARY SERVICES

                                              Agreed Price
Directory Assistance
Price per Call -- Facilities-Based Providers  $0.34

Listings
Primary Listings, Directory Assistance,
White Pages                                  No charge

E911
LEC and Focal recover costs from PSAP        No charge


                                             Agreed Cost
                                             Recurring
Interim Number Portability
Without Transport
Per Number Ported - First Path               $4.25
Per Number Ported - Additional Path          $3.02

With Transport
Per Number Ported - First Path               $8.73
Per Number Ported - Additional Path          $7.50


                                             Agreed Cost
                                             Nonrecurring
Additional charges
Service Establishment, per switch, per
Route                                        $43.80
Service Establishment - additional number
ported or changes to existing numbers,
per number ported                            $9.49

Additional and Consecutive Numbers --
additional number ported on same
account name and consecutive numbers,
per number ported                            $7.05

                                             Agreed Price
Assignment of Numbers
Assignments per industry guidelines          No charges

Busy Line Verification
Per Call                                     $0.72

Busy Line Interrupt
Per Call                                     $0.87

                                    Page 82
<PAGE>
 
                                                  Arbitrated Price
                                             Recurring         Nonrecurring

Unbundled Loops (Note 7)
State-wide per loop                          $13.37



Without testing, first loop per service order                  $96.30
With Basic Testing, first loop per service order               $153.86
With Basic Testing at Designated Time, first loop per          $206.02
service order

Without testing, additional loop per service order             $20.00
With Basic Testing, additional loop per service order          $30.00
With Basic Testing at Designated Time, additional loop         $30.00
per service order

Note 7: Price of unbundled Loops and additional Loops is ordered pursuant to
Arbitrators Decision in Docket UT-960323



                                    Page 83
<PAGE>
 
                                   APPENDIX A


                           COMMISSION IMPOSED RESALE
                                WHOLESALE RATES
                                   WASHINGTON

U S WEST need not make the following services available for Resale:
          Enhanced services including Voice Mail
U S WEST shall make the following services available for Resale:
          All telecommunications services.

U S WEST shall make all services, except Switched Access, Special Access, and
Residence Exchange services, available for Resale at a 21% discount rate, as
ordered by the Commission (i.e. Wholesale price is 79% of Retail price, where
Retail is the offered tariff price). Where USWC offers services under a volume
discount, Focal may purchase such services at the volume discount rate or the
21% Resale discount rate, whichever provides a greater discount.


                                    Page 84
<PAGE>
 
                                   APPENDIX A

                                     RESALE
                              NONRECURRING CHARGES
                                   WASHINGTON


Description                             Arbitrated Price

Customer Transfer Charge
      Business, per end user            $56.60
      Residence, per end user           $54.13
      ISDN, per end user                $57.15


                                    Page 85
<PAGE>
 
                     APPENDIX B - ENGINEERING REQUIREMENTS
                              TRUNK FORECAST FORMS

                           INTERCONNECTION CHECKLIST
                                   MEET POINT

DATE OF MEETING:
Interconnector Information

Name
------------------------------------------------------------------------------
Address
------------------------------------------------------------------------------
City, State, Zip:
------------------------------------------------------------------------------
Technical Contact Person:
------------------------------------------------------------------------------
Technical Contact Person Telephone #:
------------------------------------------------------------------------------
USWC Negotiator:
------------------------------------------------------------------------------
USWC Negotiator Telephone #:
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Desired U S WEST Central office
------------------------------------------------------------------------------
CLLI
------------------------------------------------------------------------------
Central office address:
------------------------------------------------------------------------------
City, State:
------------------------------------------------------------------------------
Meet Point Address:
------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------

Equipment
------------------------------------------------------------------------------
Manufacture/ model #                    Quantity
------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------

Cable Makeup
------------------------------------------------------------------------------
Number of cables:
------------------------------------------------------------------------------
Number of fibers per cable:
------------------------------------------------------------------------------
Distance from USWC to Meet Point
------------------------------------------------------------------------------
Distance from Focal to Meet Point
------------------------------------------------------------------------------
Service Requirements

                              Year 1         Year 2         Year 3
------------------------------------------------------------------------------
DS3
------------------------------------------------------------------------------
DS1
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Remarks:

Please attach a sketch of the requested meet point arrangement:

                                    Page 86
<PAGE>
 
                              Appendix B - PAGE 2
                           INTERCONNECTION CHECKLIST
                              ADDITIONAL TRUNKING

Interconnector Information

Name:
------------------------------------------------------------------------------
Address:
------------------------------------------------------------------------------
City, State, Zip:
------------------------------------------------------------------------------
Technical Contact Person:
------------------------------------------------------------------------------
Technical Contact Person Telephone #:
------------------------------------------------------------------------------
USWC Negotiator:
------------------------------------------------------------------------------
USWC Negotiator Telephone #:
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Desired Central office (TANDEM) 
------------------------------------------------------------------------------
CLLI:
------------------------------------------------------------------------------
Central office address:
------------------------------------------------------------------------------
City, State:
------------------------------------------------------------------------------
Meet Point Address:
------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------

Service Requirements
                                        Year 1         Year 2         Year 3
------------------------------------------------------------------------------
USWC End Office:
------------------------------------------------------------------------------
- Terminating CCS (peak busy hr)
------------------------------------------------------------------------------
- Number Portability:
------------------------------------------------------------------------------
     Arrangements
------------------------------------------------------------------------------
     Call paths per # ported
------------------------------------------------------------------------------
USWC End Office:
------------------------------------------------------------------------------
- Terminating COS (peak busy hr)
------------------------------------------------------------------------------
- Number Portability:
------------------------------------------------------------------------------
     Arrangements
------------------------------------------------------------------------------
     Call paths per # ported
------------------------------------------------------------------------------
USWC End Office:
------------------------------------------------------------------------------
- Terminating CCS (peak busy hr)
------------------------------------------------------------------------------
- Number Portability:
------------------------------------------------------------------------------
     Arrangements
------------------------------------------------------------------------------
     Call paths per # ported
------------------------------------------------------------------------------
USWC End Office:
------------------------------------------------------------------------------
- Terminating CCS (peak busy hr)
------------------------------------------------------------------------------
- Number Portability:
------------------------------------------------------------------------------
     Arrangements
------------------------------------------------------------------------------
     Call paths per # ported
------------------------------------------------------------------------------
Remarks:

Please attach a sketch of the agreed upon meet point arrangement

                                    Page 87
<PAGE>
 
                  APPENDIX C - PHYSICAL COLLOCATION AGREEMENT



                                    BETWEEN



                             US WEST COMMUNICATIONS


                                      AND


                 FOCAL COMMUNICATIONS CORPORATION OF WASHINGTON
<PAGE>
 
TABLE OF ARTICLES
ARTICLE I - PREMISES                                                  -1-
ARTICLE II - EFFECTIVENESS AND REGULATORY APPROVAL                    -2-
ARTICLE Ill - TERM                                                    -4-
ARTICLE IV -  PREMISES CHARGES                                        -4-
ARTICLE V - INTERCONNECTION CHARGES                                   -8-
ARTICLE VI - DEMARCATION POINT                                        -8-
ARTICLE VII - USE OF PREMISES                                         -8-
ARTICLE VIII - STANDARDS                                              -10-
ARTICLE IX - RESPONSIBILITIES OF THE INTERCONNECTOR AND US WEST       -11-
ARTICLE X - QUIET ENJOYMENT                                           -14-
ARTICLE XI - ASSIGNMENT                                               -14-
ARTICLE XII - CASUALTY LOSS                                           -14-
ARTICLE XIII - LIMITATION OF LIABILITY                                -16-
ARTICLE XIV - SERVICES, UTILITIES, MAINTENANCE AND FACILITIES         -17-
ARTICLE XV - DISPUTE RESOLUTION                                       -17-
ARTICLE XVI - SUCCESSORS BOUND                                        -17-
ARTICLE XVII - CONFLICT OF INTEREST                                   -18-
ARTICLE XVIII - NON-EXCLUSIVE REMEDIES                                -18-
ARTICLE XIX - NOTICES                                                 -18-
ARTICLE XX - COMPLIANCE WITH LAWS                                     -19-
ARTICLE XXI - INSURANCE                                               -19-
ARTICLE XXII - US WEST'S RIGHT OF ACCESS                              -20-
ARTICLE XXIII - OTHER COLLOCATION AGREEMENTS                          -21-
ARTICLE XXIV - MISCELLANEOUS                                          -21-

                                     Page 2
<PAGE>
 
                         PHYSICAL COLLOCATION AGREEMENT

     THIS PHYSICAL COLLOCATION AGREEMENT ("Agreement") is made this _____day of
_______________19___ by and between U S WEST COMMUNICATIONS, a Colorado
corporation ("USWC"), and FOCAL COMMUNICATIONS CORPORATION OF WASHINGTON, a
Delaware corporation, its successors and assigns ("Interconnector").

                                   WITNESSETH

     WHEREAS, USWC is an incumbent local exchange carrier having a statutory
duty to provide for "physical collocation" of "equipment necessary for
interconnection or access to unbundled network elements at its Premises, U.S.C.
251 (c)(6); and

     WHEREAS, the Interconnector wishes to physically locate certain of its
equipment within the Premises (as defined herein) and connect with USWC; and

     NOW THEREFORE, in consideration of the mutual agreements and covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, USWC and the Interconnector (the
"parties") agree as follows:

     ARTICLE I - PREMISES

         1.1 Right to Use. Subject to this Agreement, USWC grants to
Interconnector the right to use the premises described on Exhibit C
("Premises"), attached and incorporated herein, within real property at
__________________________in the City of _______________County of
_________________ State of ______________.

         1.2 Relocation. Notwithstanding Section 1.1, in the event that it is
necessary for the Premises to be moved within the structure in which the
Premises is located ("Physical Collocation Site") or to another USWC Physical
Collocation Site, at the Interconnector's option, the Interconnector shall move
its facilities to the new Premises. The Interconnector shall be responsible for
the preparation of the new Premises if such relocation arises from circumstances
beyond the reasonable control of USWC, including condemnation or government
order or regulation that makes the continued occupancy of the Premises or
Physical Collocation Site impossible. Otherwise USWC shall be responsible for
any such preparation and shall bear all costs associated with the relocation.

         If the Interconnector requests that the Premises be moved within the
Physical Collocation Site or to another USWC Physical Collocation Site, USWC
shall permit the Interconnector to relocate the Premises, subject to
availability of space and associated requirements. The Interconnector shall be
responsible for all applicable charges associated with the move, including the
reinstallation of its equipment and facilities and the preparation of the new
Premises.

         In either such event, the new Premises shall be deemed the "Premises"
hereunder and the new Physical Collocation Site (where applicable) the "Physical
Collocation Site."

                                     Page 3
<PAGE>
 
         1.3 The Premises. USWC agrees, at the Interconnector's sole cost and
expense as set forth herein, to prepare the Premises in accordance with working
drawings and specifications entitled ____________________________ and dated
__________________ which documents, marked Exhibit C, are attached and
incorporated herein. The preparation shall be arranged by USWC in compliance
with all applicable codes, ordinances, resolutions, regulations and laws. In
return for the Interconnector's agreement to make the payments required by
Section 2.1 hereof, USWC agrees to pursue diligently the preparation of the
Premises for use by the Interconnector.

         ARTICLE II- EFFECTIVENESS AND REGULATORY APPROVAL

         2.1 Submission to State Commission. The Agreement is prepared as a
component of the Interconnection Agreement under Sections 251 and 252 of the
Telecommunications Act of 1996, between USWC and Focal Communications
Corporation of Washington ("Interconnection Agreement"), and the parties intend
to submit the Agreement and other elements of the Interconnection Agreement to
state commissions for approval under the provisions of 47 U.S.C. 0xf5 252. This
Agreement is conditioned upon the approval of this Agreement and the
Interconnection Agreement. After execution of this Agreement, the parties shall
submit it and the applicable Interconnection Agreement to the State commission
in the State in which the Premises is located for approval, and shall defend the
Agreement and support any reasonable effort to have this Agreement so approved,
including the supplying of witnesses and testimony if a hearing is held.

         2.2 Failure to Receive Approval. If this Agreement does not receive
such unqualified approval, this Agreement shall be void upon written notice of
either party to the other after such regulatory action becomes final and
unappealable. Thereafter Interconnector may request to begin negotiations again
under 47 U.S.C. 251. Alternatively, the parties may both agree to modify this
Agreement to receive such approval, but neither shall be required to agree to
any modification. Any agreement to modify shall not waive the right of either
party to pursue any appeal of the ruling made by any reviewing regulatory
commission or to seek arbitration of any of the terms of this Agreement or any
of the terms of the Interconnection Agreement.

         2.3 Preparation Prior to Regulatory Approval. At the written election
of the Interconnector, USWC shall begin preparing the Premises for the
Interconnector prior to receiving the approval required by Section 2.1 hereof.
Except as specified in the Interconnection Agreement, the evidence of such
election shall be the delivery to USWC of a letter requesting that USWC begin
preparations, payment of 50 percent of the non-recurring charge for preparing
the Premises for use by Focal, and the promise of Focal to pay the balance of
the non-recurring charges as provided in this Agreement. Payment to USWC of the
remaining non-recurring charges due under this Agreement shall be due one month
after the Interconnector's equipment is installed at the Premises,
interconnected with USWC and operational as described in Section 3.2 below. Upon
such an election, this Agreement shall become effective but only insofar as to
be applicable to Premises preparation. If the Agreement does not become fully
effective as contemplated by this Article due in any part to USWC not fulfilling
its obligation under 2.1 preceding, the Interconnector shall be entitled to a
refund of all payments made to USWC for preparation.

                                    Page 91
<PAGE>
 
         ARTICLE III  - TERM

         3.1 Commencement Date. This Agreement shall be a term agreement,
beginning on the "Commencement Date" and ending on a date five years afterwards.
The "Commencement Date" shall be the first day after the Interconnector's
equipment becomes operational as described in Section 3.2. At the end of the
term and unless the parties agree to an extension or a superseding arrangement,
this Agreement shall automatically convert to a month-to-month Agreement.

         3.2 Occupancy. Unless there are unusual circumstances, USWC will notify
the Interconnector that the Premises is ready for occupancy within five (5) days
after USWC completes preparations described in Section 2.3 The Interconnector
must place operational telecommunications equipment in the Premises and connect
with USWC's network within one hundred fifty (150) days after receipt of such
notice; provided, however, that such one hundred fifty day period shall not
begin until regulatory approval is obtained under Article II and, further, that
USWC may extend beyond the one hundred fifty days upon a demonstration by the
Interconnector of a best efforts to meet that deadline and circumstances beyond
its reasonable control that prevented the Interconnector from meeting that
deadline. If the Interconnector fails to do so, this Agreement is terminated on
the thirtieth (30 ) day after USWC provides to the Interconnector written notice
of such failure and the Interconnector does not place operational
telecommunications equipment in the Premises and connect with USWC's network by
such thirtieth day. In any such event, the Interconnector shall be liable in an
amount equal to the unpaid balance of the preparation charges due. For purposes
of this Section, the Interconnector's telecommunications equipment is considered
to be operational and interconnected when connected to USWC's network for the
purpose of providing service.

         ARTICLE IV - PREMISES CHARGES

         4.1 Monthly Charges. Beginning on the Commencement Date, Interconnector
shall pay to USWC monthly fees as specified in Exhibit A.

         4.2 Billing. Billing for Monthly Charges shall occur on or about the
25th day of each month, with payment due thirty (30) days from the bill date.
USWC may change its billing date practices upon providing ninety (90) days
written notice to the Interconnector. Each USWC bill must identify the Premises
location by CLLI and/or address and must separately identify any non-contiguous
Premises within the Physical Collocation Site. Further, USWC must specify
separately for each Premises CLLI and/or address and for any non-contiguous
Premises each rate element individually along with the quantity purchased by the
Interconnector at that (those) Premises and the individual rate charged for each
element along with the dates for which such charges apply. USWC shall promptly
adjust Interconnector's account in each instance of misbilling identified and
demonstrated by the Interconnector.

         4.3 Nonrecurring Charges.

               (a)  The one-time charge for preparing the Premises for use by
                    the Interconnector as well as all other one-time charges
                    associated with the Interconnector's request shall be
                    exactly as stated in Exhibit B.

                                    Page 5
<PAGE>
 
               (b)  USWC will contract for and perform the procurement,
                    construction and preparation activities underlying the
                    Monthly Fees and Nonrecurring Charges, using the same or
                    consistent practices that are used by USWC for other
                    construction and preparation work performed in the Physical
                    Collocation Site and shall make every possible effort to
                    obtain all necessary approvals and permits, where
                    applicable, promptly. USWC will obtain more than one trade
                    subcontractor submission to the extent available when the
                    initial trade subcontractor bid, proposal or quotation
                    associated with an ICB pursuant to Exhibit B exceeds
                    ten-thousand dollars ($10,000.00). It is understood and
                    agreed that any such request for additional subcontractor
                    submissions will likely add to the time necessary to provide
                    physical collocation and, for that reason, Interconnector
                    reserves the right to authorize USWC to forgo such
                    additional bids but will only do so in writing. USWC will
                    permit the Interconnector to inspect all supporting
                    documents for the Monthly Fees and Nonrecurring Charges. Any
                    dispute regarding such USWC charges will be subject to the
                    dispute resolution provisions hereof. Notwithstanding the
                    above, the Interconnector may directly contract with any
                    supplier, vendor, subcontractor, or contractor that USWC
                    approves for such work (including but not limited to the
                    procurement and installation of cages) and may, at
                    Interconnector's election, be solely responsible for any and
                    all payments due to such supplier, vendor, subcontractor or
                    contractor for such procurement, construction and
                    preparation activities. Where Interconnector exercises this
                    right, Interconnector shall pay to USWC only those amounts
                    associated with labor hours of USWC personnel necessary for
                    such USWC personnel to observe and approve such work at the
                    Premises within the Physical Collocation Site.

               (c)  Nonrecurring Charges associated with the
                    point-of-termination bay shall be applied to the
                    Interconnector by USWC only where the Interconnector
                    requests in writing that USWC supply such
                    point-of-termination bay. Otherwise, the Interconnector
                    shall be responsible for purchasing such
                    point-of-termination bays and for arranging their
                    installation by a vendor, subcontractor or contractor
                    approved by USWC to perform such work.

         4.4 Preparation. USWC will begin preparation on execution of this
Agreement and upon receipt of written notice from Interconnector as described in
Section 2.3.

         4.5 Pre-Preparation Access. USWC shall permit the Interconnector to
have access to the Premises for the purpose of inspection once physical
collocation site preparation activities have begun. Interconnector agrees to
limit the number of such inspections to three per Premises except where such
inspection exposes a non-conformance with the Interconnector's requirements as
stated in its initial request or this Agreement.

         4.6 Breach Prior to Commencement Date. If the Interconnector materially
breaches this Agreement by purporting to terminate this Agreement after USWC has
begun preparation of the Premises then, in addition to any other remedies that
USWC might have, the Interconnector shall be liable in the amount equal to the
non-recoverable costs less estimated net salvage. Non-recoverable costs include
the non-recoverable cost of equipment and material ordered, provided or used;
subcontractor charges paid by USWC for work performed

                                    Page 6
<PAGE>
 
on behalf of Interconnector; the non-recoverable cost of installation and
removal, including the costs of equipment and material ordered, provided and
used; labor for work done on behalf of Interconnector for preparation;
transportation and any other associated costs. USWC shall provide Interconnector
with a detailed invoice showing the costs it incurred associated with
preparation. Further, at the Interconnector's election, USWC shall provide to
the Interconnector all materials that it determined to be unsalvageable. Should
the costs incurred by USWC be used for the provision of a collocation
arrangement for a third party, such costs shall be refunded to the
Interconnector.

         4.7 Space Preparation Fee True-Up. For all work performed by USWC and
by vendors, subcontractors and contractors hired by USWC in order to prepare the
Premises pursuant to the Interconnector's written request and pursuant to 4.3
preceding, USWC shall within ninety (90) days of the completion of the Premises
preparation work perform a true-up of all USWC, vendor, subcontractor and
contractor bill amounts associated with any ICB pricing performed pursuant to
Exhibit B. If the resulting total cost is less than that paid by the
Interconnector, then USWC shall within thirty (30) days refund to the
Interconnector the difference between the actual cost and the payment that the
Interconnector had previously submitted to USWC. Alternatively, if the total
cost exceeds that previously paid by the Interconnector, then the Interconnector
shall submit payment to USWC for the difference within thirty (30) days for its
receipt of the bill for such an amount. Nothing in either case releases USWC
from its obligation to make best-faith efforts to achieve the lowest-available
cost for the preparation work that it proves is necessary or releases USWC from
its obligation to allow the Interconnector to inspect such documents pursuant to
4.3 preceding.

         ARTICLE V - INTERCONNECTION CHARGES

         Charges for interconnection and collocation shall be set forth in
Exhibits A and B.

         ARTICLE VI - DEMARCATION POINT

         6.1 Cable Entrances. The Interconnector shall use a dielectric fiber
optic cable as a transmission medium to the Premises, or other transmission
media as it determines is necessary in order to provide services for which it
has legal and regulatory authority. The Interconnector shall be permitted at
least two (2) cable entrance routes into the Premises whenever two entrance
routes are used by USWC at that Physical Collocation Site.

         6.2 Demarcation Point. USWC and the Interconnector shall designate the
point(s) of interconnection within the Physical Collocation Site as the point(s)
of physical demarcation between the Interconnector's network and USWC's network,
with each being responsible for maintenance and other ownership obligations and
responsibilities on its side of that demarcation point. USWC and the
Interconnector anticipate that the demarcation point will be within the
point-of-termination bay which the Interconnector may elect to provide and
install pursuant to 4.3 preceding. Where no point of termination bay is elected
by the Interconnector, the point(s) of interconnection shall be specified in
Exhibit D.


                                    Page 7
<PAGE>
 
         ARTICLE VII - USE OF PREMISES


         7.1 Nature of Use. The Premises are to be used by the Interconnector
for purposes of locating equipment and facilities within USWC's Physical
Collocation Sites to connect with USWC services or facilities and other
Interconnectors. USWC shall permit Interconnector to place, maintain and operate
on Premises any equipment, pursuant to the FCC's regulations on the types of
equipment required to be collocated. Consistent with the nature of the Premises
and the environment of the Premises, the Interconnector shall not use the
Premises for office, retail, or sales purposes. No signs or marking of any kind
by the Interconnector shall be permitted on the Premises or on the grounds
surrounding the Premises.

         7.2 Administrative Uses. The Interconnector may use the Premises for
placement of equipment and facilities only. The Interconnector's employees,
agents and contractors shall be permitted access to the Premises at all
reasonable times, provided that the Interconnector's employees, agent and
contractors comply with USWC's policies and practices pertaining to fire, safety
and security. The Interconnector agrees to comply promptly with all laws,
ordinances and regulations affecting the use of the Premises. Upon the
expiration of the Agreement, the Interconnector shall surrender the Premises to
USWC in the same condition as when first occupied by the Interconnector except
for ordinary wear and tear.

         7.3 Threat to Network or Facilities. Interconnector equipment or
operating practices representing a significant demonstrable technical threat to
USWC's network or facilities, including the Premises, are strictly prohibited.

         7.4 Interference or Impairment. Notwithstanding any other provision
hereof, the characteristics and methods of operation of any equipment or
facilities placed in the Premises shall not interfere with or impair service
over any facilities of USWC or the facilities of any other person or entity
located in the Physical Collocation Site; create hazards for or cause damage to
those facilities, the Premises, or the Physical Collocation Site; impair the
privacy of any communications carried in, from, or through the Physical
Collocation Site; or create hazards or cause physical harm to any individual or
the public. Any of the foregoing events would be a material breach of this
Agreement if, after USWC's submission to Interconnector of written notice of
such interference or impairment, Interconnector did not promptly work to
eliminate the interference or impairment.

         7.5 Interconnection to Others. The Interconnector may directly connect
to other Interconnectors' facilities within the Physical Collocation Site. USWC
agrees to provide to Interconnector, upon its receipt of the Interconnector's
written request, any facilities necessary for such interconnection wherever such
facilities exist or can be made available and USWC shall provide any such
facilities pursuant to 4.3 preceding and Exhibits A and B. Further, USWC agrees
to provide to the Interconnector, upon its receipt of the Interconnector's
written request, unbundled network transmission elements at rates specified in
Exhibits A and B, and USWC will facilitate interconnection of the
Interconnector's collocation equipment to other services offered in USWC's
tariffs or other Agreements (e.g., Synchronous Service Transport service). For
the purposes of Interconnection to Others, where the other Interconnector's
Interconnection Agreement differs from this Agreement, the less restrictive
terms and conditions relating to such direct interconnection and the lower
charges identified in the two Agreements for such direct interconnection shall
apply to both Interconnectors for all


                                    Page 8
<PAGE>
 
Interconnection between those two Interconnectors. Interconnector agrees to
continue to pay to USWC all applicable Monthly Charges for space, power and for
all other interconnection circuits at the Premises.

         7.6 Personality and its Removal. Subject to the Article, the
Interconnector may place or install in or on the Premises such fixtures and
equipment as it shall deem desirable for the conduct of business. Personal
property, fixtures and equipment placed by the Interconnector in the Premises
shall not become a part of the Premises, even if nailed, screwed or otherwise
fastened to the Premises, but shall retain their status as personality and may
be removed by Interconnector at any time. Any damage caused to the Premises by
the removal of such property shall be promptly repaired by Interconnector at its
expense.

         7.7 Alterations In no case shall the Interconnector or any person
purporting to be acting through on or behalf of the Interconnector make any
rearrangement, modification, improvement, addition, repair, or other alteration
to the Premises or the Physical Collocation Site without the advance written
permission and direction of USWC. USWC shall make best efforts to honor any
reasonable request for a modification, improvement, addition, repair, or other
alteration proposed by the Interconnector, provided that USWC shall have the
right to, for reasons that it specifies in writing, reject or modify any such
request except as required by state or federal regulators. The cost of any such
specialized alterations shall be paid by Interconnector in accordance with the
terms and conditions identified in Article IV herein.

         ARTICLE VIII - STANDARDS

         8 Minimum Standards. This Agreement and the physical collocation
provided hereunder is made available subject to and in accordance with the (i)
Bellcore Network Equipment Premises System (NEBS) Generic Requirements
(GR-63-CORE and GR-1089-CORE), as may be amended at any time and from time to
time, and any successor documents, except to the extent that USWC deviates from
any such requirements for its equipment and the facilities and services that it
uses and provides or to the extent that USWC allows other Interconnectors to
deviate from any such requirements; and, (ii) any statutory and/or regulatory
requirements in effect at the execution of this Agreement or that subsequently
become effective and then when effective. The Interconnector shall strictly
observe and abide by each. USWC shall publish and provide to the Interconnector
its Reference Handbook for Collocation to provide Interconnector with guidelines
and USWC's standard operating practices for collocation. USWC agrees that the
material terms and conditions of collocation are not contained in such a
technical publication, nor can USWC change the terms and conditions of this
Agreement by changing that technical publication; however, any revision made to
address situations potentially harmful to USWC's network or the Premises or
Physical Collocation Site, or to comply with statutory and/or regulatory
requirements shall become effective immediately and the Interconnector agrees to
take steps to comply with such revisions immediately upon its receipt of USWC's
written notification of the change.

         ARTICLE IX - RESPONSIBILITIES OF THE INTERCONNECTOR AND USWC

         9.1 Contact Number. The Interconnector and USWC are responsible for
providing to each other personnel contact numbers for their respective technical
personnel who are readily accessible 24 hours a day, 7 days a week, 365 days a
year.

                                    Page 9
<PAGE>
 
         9.2 Trouble Status Reports. The Interconnector is responsible for
promptly providing trouble report status when requested by USWC. Likewise, USWC
is responsible for promptly providing trouble report status when requested by
Interconnector.

         9.3 Cable Extension. The Interconnector is responsible for bringing its
cable to entrance manhole(s) or other appropriate sites designated by USWC
(e.g., utility poles or controlled environmental vaults), and for leaving
sufficient cable length in order for USWC to fully extend the
Interconnector-provided cable to the Premises. In the alternative, at the
Interconnector's option, USWC shall provide interconnection facilities, i.e.,
unbundled network transmission elements, from an Interconnector-designated
location (e.g., the Interconnector's Node) to the Premises within the Physical
Collocation Site. Nothing in this paragraph shall preclude the Interconnector
from obtaining unbundled network transmission elements from USWC at any Premises
within a Physical Collocation Site for primary or redundant interconnection.

         9.4 Regeneration. Regeneration on intra-building connections will be
provided by USWC, when requested. The price for regeneration shall be pursuant
to Exhibit B.

         9.5 Removal. The Interconnector is responsible for removing any
equipment, property or other items that it brings into the Premises or any other
part of the Physical Collocation Site. If the Interconnector fails to remove any
equipment, property, or other items from the Premises or Physical Collocation
Site within thirty (30) days after discontinuance of use, USWC may perform the
removal and may charge the Interconnector for any materials used in any such
removal, and the time spent on such removal at the then-applicable hourly rate
for administrative work pursuant to the TA96 factor approach identified on
Exhibit B.

         9.6 Interconnector's Equipment and Facilities. The Interconnector is
solely responsible for the design, engineering, testing, performance, and
maintenance of the equipment and facilities used by the Interconnector in the
Premises. The Interconnector will be responsible for servicing, supplying,
repairing, installing and maintaining the following facilities within the
Premises:

         (a)   its cable(s);
         (b)   its equipment;
         (c)   required point of termination cross connects;
         (d)   point of termination maintenance, including replacement fuses and
               circuit breaker restoration, to the extent that such fuses and
               circuit breakers are not controlled by USWC and only if and as
               required; and
         (e)   the connection cable and associated equipment which may be
               required within the Premises to the point(s) of interconnection.
               USWC does not assume any such responsibility unless contracted to
               perform such work on behalf of the Interconnector.

         9.7 Verbal Notifications Required. The Interconnector is responsible
for immediate verbal notification to USWC of significant outages or operations
problems which could impact or degrade USWC's network, switches, or services,
and for providing an estimated clearing time for restoration. In addition,
written notification must be provided within twenty-four (24) hours. Likewise,
USWC is responsible for providing immediate verbal notification to the
Interconnector

                                    Page 10
<PAGE>
 
of problems with USWC's network or operations which could impact or degrade
Interconnector's network, switches, or services, and provide an estimated
clearing time for restoration. Further, USWC shall provide written notification
to Interconnector within the same twenty-four (24) hour interval. For the
purposes of this paragraph, written notification may be given by electronic mail
so long as the notifying party provide the required verbal notification to the
other.

         9.8 Service Coordination. The Interconnector is responsible for
coordinating with USWC to ensure that services are installed in accordance with
the service request. Likewise, USWC is obligated to coordinate with
Interconnector to ensure the services are installed in accordance with the
service request and fulfill the service request in a timely, effective manner.

         9.9 Testing. The Interconnector is responsible for testing, to identify
and clear a trouble when the trouble has been isolated to an
Interconnector-provided facility or piece of equipment. If USWC testing is also
required, it will be promptly provided as part of its obligation to provide to
Interconnector network interconnection.

         ARTICLE X - QUIET ENJOYMENT

         Subject to the other provisions hereof, USWC covenants that it has full
right and authority to permit the use of the Premises by the Interconnector and
that, so long as the Interconnector performs all of its obligations herein, the
Interconnector may peaceably and quietly enjoy the Premises during the term
hereof.

         ARTICLE XI - ASSIGNMENT

         The Interconnector shall not assign or otherwise transfer this
Agreement, neither in whole nor in part, or permit the use of any part of the
Premises by any other person or entity, without the prior written consent of
USWC. Any purported assignment or transfer made without such consent may be made
void by USWC at its option.

         ARTICLE XII - CASUALTY LOSS

         12.1 Damage to Premises. If the Premises are damaged by fire or other
casualty, and

          (i)  the Premises are not rendered untenantable in whole or in part,
               USWC shall repair the same at its expense (as hereafter limited)
               and the Monthly Charges shall not be abated, or

          (ii) the Premises are rendered untenantable in whole or in part and
               such damage or destruction can be repaired within ninety (90)
               days, USWC has the option to repair the Premises at its expense
               (as hereafter limited) and all Monthly Charges shall be
               proportionately abated while Interconnector was deprived of the
               use and the interconnection. If the Premises cannot be repaired
               within ninety (90) days, or USWC opts not to rebuild, then this
               Agreement shall (upon notice to the Interconnector within thirty
               (30) days following such occurrence) terminate as of the date of
               such damage. However, USWC must provide to Interconnector

                                    Page 11
<PAGE>
 
               comparable substitute interconnection and collocation
               arrangements at another mutually-agreeable Physical Collocation
               Site without penalty or nonrecurring charges assessed against the
               Interconnector.

Any obligation on the part of USWC to repair the Premises shall be limited to
repairing, restoring and rebuilding the Premises as originally prepared for the
Interconnector and shall not include any obligation to repair, restore, rebuild
or replace any alterations or improvements made by the Interconnector or by USWC
on request of the Interconnector; or any fixture or other equipment installed in
the Premises by the Interconnector or by USWC on request of the Interconnector.

         12.2 Damage to Premises. In the event that the Premises shall be so
damaged by fire or other casualty that closing, demolition or substantial
alteration or reconstruction thereof shall, in USWC's opinion, be advisable,
then, notwithstanding that the Premises may be unaffected thereby, USWC, at its
option, may terminate this Agreement by giving the Interconnector ten (10) days
prior written notice within thirty (30) days following the date of such
occurrence.

         ARTICLE XIII - LIMITATION OF LIABILITY

         14.1 Limitation. With respect to any claim or suit for damages arising
in connection with the mistakes, omissions, interruptions, delays or errors, or
defects in transmission occurring in the course of furnishing service hereunder,
the liability of USWC, if any shall be as described in the Interconnection
Agreement in effect between the parties.

         Each party shall be indemnified and held harmless by the other against
claims and damages by any third party arising from provision of the other
party's services or equipment except those claims and damages directly
associated with the provision of services to the other party which are governed
by the provisioning party's applicable tariffs. Neither party shall have any
liability whatsoever to the customers of the other party for claims arising from
the provision of the other party's service to its customers, including claims
for interruption of service, quality of service or billing disputes.

         The liability of either party for its willful misconduct, if any, is
not limited by this Agreement.

         14.2 Third Parties. The Interconnector acknowledges and understands
that USWC may provide space in or access to the Physical Collocation Site to
other persons or entities ("Others"), which may include competitors of the
Interconnector; that such space may be close to the Premises, possibly including
space adjacent to the Premises and/or with access to the outside of the
Premises; and that any in-place optional cage around the Premises is a permeable
boundary that will not prevent the Others from observing or even damaging the
Interconnector's equipment and facilities. In addition to any other applicable
limitation, USWC shall have no liability with respect to any action or omission
by any Other, except in instances involving negligence or willful actions by
USWC or its agents or employees. The Interconnector shall save and hold USWC
harmless from any and all costs, expenses, and claims associated with any such
acts or omission by any Other.

                                    Page 12
<PAGE>
 
         ARTICLE XIV - SERVICES, UTILITIES, MAINTENANCE AND FACILITIES

         16.1 Operating Services. USWC, at its sole cost and expense, shall
maintain for the Physical Collocation Site customary Premises services,
utilities (excluding telephone facilities), including janitor and, where
applicable, elevator services, 24 hours a day, 365 days a year. The
Interconnector shall be permitted to have a single-line business telephone
service for the Premises subject to applicable USWC tariffs.

         16.2 Utilities. USWC will provide negative DC and AC power, back-up
power, heat, air conditioning and other environmental support necessary for the
Interconnector's equipment, in the same manner that it provides such support
items for its own equipment within that Premises.

         16.3 Maintenance. USWC shall maintain the exterior of the Premises and
grounds, and all entrances, stairways, passageways, and exits used by the
Interconnector to access the Premises.

         16.4 Legal Requirements. USWC agrees to make, at its expense, all
changes and additions to the Premises required by laws, ordinances, orders or
regulations of any municipality, county, state or other public authority
including the furnishing of required sanitary facilities and fire protection
facilities.

         ARTICLE XV - DISPUTE RESOLUTION

         For disputes arising out of this Agreement, the parties agree that they
will follow the procedures as set forth in Section XXXIV of the Interconnection
Agreement executed between the parties.

         ARTICLE XVI - SUCCESSORS BOUND

         Without limiting Article XI hereof, the conditions and agreements
contained herein shall bind and inure to the benefit of USWC, the Interconnector
and their respective successors and, except as otherwise provided herein,
assigns.

         ARTICLE XVII - CONFLICT OF INTEREST

         The Interconnector represents that no employee or agent of USWC has
been or will be employed, retained, paid a fee, or otherwise has received or
will receive any personal compensation or consideration from the Interconnector,
or any of the Interconnector's employees or agents in connection with the
arranging or negotiation of this Agreement or associated documents. USWC
represents that no employee or agent of the Interconnector has been or will be
employed, retained, paid a fee, or otherwise has received or will receive any
personal compensation or consideration from USWC, or any of USWC's employees or
agents in connection with the arranging or negotiation of this Agreement or
associated documents.

                                    Page 13
<PAGE>
 
         ARTICLE XVIII - NON-EXCLUSIVE REMEDIES

         No remedy herein conferred upon is intended to be exclusive of any
other remedy in equity, provided by law, or otherwise, but each shall be in
addition to every other such remedy.

         ARTICLE XIX - NOTICES

        Except as may be specifically permitted in this Agreement, any notice,
demand, or payment required or desired to be given by on party to the other
shall be in writing and shall be valid and sufficient if dispatched by
registered or certified mail, return receipt requested, postage prepaid, in the
United States mail, or via professional overnight courier, or by facsimile
transmission; provided, however, that notices sent by such registered or
certified mail shall be effective on the third business day after mailing and
those sent by facsimile transmission shall only be effective on the date
transmitted if such notice is also sent by such registered or certified mail no
later than the next business day after transmission, all addressed as follows:

                    USWC
                    Director Interconnection Services
                    1801 California, Room 2340
                    Denver, CO 80202

                    Focal Communications Corporation of Washington
                    Director, Regulatory Affairs (fax 312-895-8403)
                    200 N. LaSalle Street, Suite 800
                    Chicago, Illinois 60601

Either party hereto may change its address by written notice given to the other
party hereto in the manner set forth above.

         ARTICLE XX - COMPLIANCE WITH LAWS

         The Interconnector and all persons acting through or on behalf of the
Interconnector shall comply with the provisions of the Fair Labor Standards Act,
the Occupational Safety and Health Act, and all other applicable federal, state,
county, and local laws, ordinances, regulations and codes (including
identification and procurement of required permits, certificates, approvals and
inspections) in its performance hereunder.

         ARTICLE XXI - INSURANCE

         Interconnector agrees to maintain, at Interconnector's expense during
the entire time that Interconnector and its equipment occupies Premises: (i)
General Liability Insurance in an amount not less than one million dollars
($1,000,000.00) per occurrence for bodily injury or property damage, (ii)
Employer's Liability in an amount not less than five hundred thousand dollars
($500,000.00) per occurrence, (iii) Worker's Compensation in an amount not less
than that prescribed by statutory limits, and (iv) Umbrella/Excess Liability
coverage in an amount of five million dollars ($5,000,000.00) excess of coverage
specified above.

                                    Page 14
<PAGE>
 
         Each policy shall be underwritten by an insurance company having a BEST
insurance rating of B+VII or better, and which is authorized to do business in
the jurisdiction in which the Premises is located.

         Interconnector shall furnish USWC with certificates of insurance which
evidence the minimum levels of insurance set forth herein and which name USWC as
an additional insured. The Interconnector shall arrange for USWC to receive at
least thirty (30) days advance written notice from the Interconnector's
insurance companies of cancellation and shall notify USWC in writing to achieve
its approval should the Interconnector later elect to self-insure.

         ARTICLE XXII - US WEST'S RIGHT OF ACCESS

         USWC, its agents, employees, and other USWC-authorized persons shall
have the right to enter the Premises at any reasonable time to examine its
conditions, make repairs required to be made by USWC hereunder, and for any
other purpose determined to be necessary by USWC in complying with the terms of
this Agreement and providing telecommunications services at the Physical
Collocation Site. USWC may access the Premises at any time for purposes of
averting any threat of harm imposed by the Interconnector or its equipment or
facilities upon the operation of USWC equipment, facilities and/or personnel
located outside of the Premises. If routine inspections are required, they shall
be conducted at a mutually agreeable time. USWC agrees to minimize and to limit
any and all instances in which access by its employees, agents or other persons
whom it authorizes takes place and agrees not to allow any party which is
suspected of any previous instance of wrongdoing of any kind or who has been
subject to any form of discipline by USWC at any time in the past to enter
Premises. USWC will, in all instances, provide to Interconnector written
notification of its access to Premises any time that such access occurs without
advance notice to the Interconnector and such written notification shall contain
a brief explanation of the reason for such access as well as the name(s) and
title(s) of such persons and USWC shall provide to Interconnector such written
notice within twenty-four (24) hours of the time when such access took place.

         ARTICLE XXIII- OTHER COLLOCATION AGREEMENTS

The parties agree that the provisions of Section 252(i) of the Act shall apply,
including state and federal interpretive regulations in effect from time to
time.

         ARTICLE XXIV - MISCELLANEOUS

         27.1 Exhibits. The following Exhibits are attached hereto and made part
         hereof:

         Exhibit A, The Schedule of All Interstate and Intrastate Monthly
         Recurring Charges
         Exhibit B The Schedule of All Interstate and Intrastate Nonrecurring
         Charges
         Exhibit C, Working Drawings and Specifications Entitled
         Exhibit D, Point of Interconnection

         27.2 Variations. In the event of variation or discrepancy between any
duplicate originals hereof, including exhibits, the original Agreement shall
control.

                                    Page 15
<PAGE>
 
         27.3 Governing Law. This Agreement shall be governed by the laws of the
State in which the Premises are located, without regard to the choice of law
principles thereof.

         27.4 Joint and Several. If Interconnector constitutes more than one
person, partnership, corporation, or other legal entities, the obligation of all
such entities under this Agreement is joint and several.

         27.5 Future Negotiations. USWC may refuse requests for additional space
at the Physical Collocation Site or in any other USWC site if the Interconnector
is in material breach of this Agreement. In such event, the Interconnector
hereby releases and shall hold USWC harmless

         27.6 Severability. With the exception of the requirements, obligations,
and rights set forth in Article II hereof, if any of the provisions hereof are
otherwise deemed invalid, such invalidity shall not invalidate the entire
Agreement, but rather the entire Agreement shall be construed as if not
containing the particular invalid provision(s), and the rights and obligations
of USWC and the Interconnector shall be construed accordingly.

         27.7 Paragraph Headings and Article Numbers. The headings of the
articles paragraphs herein are inserted for convenience only and are not
intended to affect the meaning or interpretation of this agreement.

         27.8 Entire Agreement. Recognizing that this Agreement is component of
a Interconnection Agreement, this Agreement with the attached schedules and
exhibits, and referenced documentation and materials attached hereto set forth
the entire understanding of the parties with respect to physical collocation and
supersedes all prior agreements, arrangements and understandings relating to
this subject matter and may not be changed except in writing by the parties. No
representation, promise, inducement or statement of intention has been made by
either party which is not embodied herein, and there are no other oral or
written understandings or agreements between the parties relating to the subject
matter hereof except as may be referenced herein.

         27.9 No Third Party Beneficiaries. Nothing in this Agreement is
intended, nor shall be deemed, to confer any rights or remedies upon any person
or legal entity not a party hereto.

         27.10 Binding Effect. (a) This Agreement is binding upon the parties
hereto, their respective executors, administrators, heirs, assigns and
successors in interest; (b) all obligations by either party which expressly or
by their nature survive the expiration or termination of this Agreement shall
continue in full force and effect subsequent to and notwithstanding its
expiration or termination and until they are satisfied in full or by their
nature.

         27.11 Force Maieure. Neither party shall be liable for any delay or
failure in performance of any part of this Agreement from any cause beyond its
control and without its fault or negligence including, without limitation, acts
of nature, acts of civil or military authority, government regulations,
embargoes, epidemics, terrorist acts, riots, insurrections, fires, explosions,
earthquakes, nuclear accidents, floods, work stoppages, equipment failure, cable
cuts, power blackouts, volcanic action, other major environmental disturbances,
unusually

                                    Page 16
<PAGE>
 
severe weather conditions, inability to secure products or services of other
persons or transportation facilities or acts or omissions of transportation
carriers (collectively, a "Force Majeure Condition"). If any Force Majeure
Condition occurs, the party delayed or unable to perform shall give prompt
notice to the other party and shall take all reasonable steps to correct the
force Majeure Condition. During the pendancy of such Condition, the duties of
the parties under this agreement affected by the Force Majeure Condition shall
be abated and shall resume without liability thereafter.

         IN WITNESS WHEREOF, the duly authorized representatives of the parties
have executed and delivered this Agreement as of the day and year first above
written.

US WEST COMMUNICATIONS:

By:  __________________________________

Title:  _______________________________

Date:  ________________________________

INTERCONNECTOR:

By:____________________________________

Title:_________________________________

Date: _________________________________



                                    Page 17
<PAGE>
 
                                   Exhibit A

    The Schedule of All Interstate and Intrastate Monthly Recurring Charges

                         To be provided by the Parties



                                    Page 18
<PAGE>
 
                                   Exhibit B

        The Schedule of All Interstate and Intrastate Nonrecurring Charges

                         To be Provided by the Parties



                                    Page 19
<PAGE>
 
                                   Exhibit C

                  Working Drawings and Specifications Entitled

                         To be provided by the Parties




                                    Page 20
<PAGE>
 
                                   Exhibit D

                            Point of Interconnection

                         To be Provided by the Parties


                                    Page 21