EXHIBIT 10.4


                                                   CONTRACT NUMBER:  LNM980917MP


                               AMENDMENT NUMBER 1

                     TO THE PROFESSIONAL SERVICES AGREEMENT

                                     BETWEEN

                                KMC TELECOM INC.

                                       AND

                            LUCENT TECHNOLOGIES INC.


This is Amendment No. 1 (hereinafter  "Amendment") to the Professional  Services
Agreement by and between KMC Telcom Inc.,  a Delaware  corporation  with offices
1545 Route 206, Suite 300, Bedminster, New Jersey 07921 (hereinafter "Customer")
and Lucent Technologies Inc., a Delaware Corporation,  acting through its Global
Service  Providers  Group,  with  offices at 283 King George Road,  Warren,  New
Jersey 07059 (hereinafter "Lucent").

WHEREAS, Customer and Lucent have entered into a Professional Services Agreement
Number  LNS970602JC  dated  September  4, 1997  (hereinafter  "the  Agreement"),
setting  forth the terms  and  conditions  pursuant  to which  Lucent  agreed to
provide and Customer  agreed to procure  certain  Professional  Services as such
Services are described therein; and

WHEREAS,  Customer  and  Lucent  wish  to  make  certain  modifications  to that
Agreement as set forth herein,

NOW THEREFORE, in consideration of the mutual promises hereinafter set forth and
other good and valuable  consideration,  the receipt and sufficiency of which is
hereby acknowledged, the parties agree as follows:

1.  TERM OF AGREEMENT

The expiration  date of the  Professional  Services  Agreement shall be extended
from July 22, 2000 to September 30, 2000.

2.  CHARGES

Charges for Services to be performed  under this Amendment shall be as set forth
in  Appendix  A,  attached  hereto and made part of this  Amendment.  Appendix A
modifies the charges set forth in Appendix A, Section 2 of the  Agreement.  This
Amendment and the charges  specified in Appendix A shall be effective October 1,
1998.


<PAGE>

3.  ENTIRE AGREEMENT

Except as specifically  modified,  amended or supplemented herein, all terms and
conditions of the Agreement shall remain in full force and effect. The terms and
conditions  contained  in this  Amendment  and  those  nonconflicting  terms and
conditions of the Agreement supercede all prior oral and written  understandings
between  the  parties  and shall  constitute  the entire  agreement  between the
parties with respect to the subject matter herein.  This Amendment  shall not be
modified or amended except by a writing  signed by an authorized  representative
of both parties.

IN WITNESS  WHEREOF,  the parties  have caused this  Amendment to be executed by
their duly authorized representative on the date (s) indicated.


KMC TELECOM INC.                                LUCENT TECHNOLOGIES INC.

By: /S/MICHAEL STERNBERG                        By: /S/ W.H. PITTMAN
    --------------------                            ----------------

Name: MICHAEL STERNBERG                         Name: W.H. PITTMAN
      -----------------                               ------------

Title: PRESIDENT                                Title: DIRECTOR-NATIONAL ACCOUNT
       ---------                                       -------------------------

Date: OCTOBER 1, 1998                           Date: OCTOBER 20, 1998
      ---------------                                 ----------------



<PAGE>

                                   APPENDIX A

                                     CHARGES

<TABLE>
<CAPTION>

                      ANNUAL        GATEWAY
SERVICES LEVELS       PRICE         ELEMENTS      5ESS       SLC       SM      DACS II    DACS IV
---------------       -----         --------      ----       ---       --      ---- --    ---- --

<S>                   <C>           <C>             <C>    <C>          <C>       <C>        <C>
Very Small            $163,000      up to 15        1      up to 8      1         1          1
Small                 $198,000      16 to 25        1      up to l5     1         1          1
Medium                $245,000      26 to 35        1      up to 20     2         1          1
Large                 $320,000      36 to 50        1      up to 25     3         1          1
Very Large            $390,000                      1

</TABLE>

The Annual prices listed above are based on the following:

     1.   Traffic  Management,  Capacity  Management and Network  Management are
          included in the Annual Price.

     2.   The  Annual  Price is based on  5ESS(R)  -2000  Very  Compact  Digital
          Exchange  ("VCDX")  as  configured  above with the  associated  Lucent
          equipment/components.

     3.   For the annual period beginning  October 1, 1998 through September 30,
          1999,  Customer  will be  charged  at the  Very  Small  Service  Level
          ($163,000) for all Customer cities with a 5ESS/VCDX.  Thereafter,  the
          parties  agree to meet  sixty (60) days prior to the end of the annual
          period  (September  30) to  determine  the  annual  price for the next
          annual period.  The annual price charged may change,  for any Customer
          city, if any two (2) of the components  listed above change during the
          preceding annual period.

     4.   Lucent  agrees  to  provide a monthly  report  based on the  number of
          system  components  and type of service being  utilized at each of the
          Customer's  5ESS/VCDX  locations.  Historical  data  can  be  used  to
          determine if a new  Customer  5ESS/VCDX  location  should begin at the
          Small  Service  Level instead of the Very Small Service Level based on
          the  period of time it took for a  Customer's  5ESS/VCDX  Location  to
          reach its Service Level Capacity in a similar size city.

     5.   System Integration Services (Turnover/Cutover) are not included in the
          price quoted above,  but such Services are available at a price of one
          hundred thousand dollars ($100,000) per small 5ESS/VCDX switch site.

PROVISIONING/TRANSLATIONS AND CUSTOMER CARE:

Provisioning/Translations  and  Customer  Care  Services  maybe  purchased on as
needed basis at the following prices:


<PAGE>

     1.   1500 hour block at a price of one hundred twenty-one thousand and five
          hundred dollars ($121,500) per 1500 hour block, or

     2.   after the completion of ten (10) 1500 hour blocks, or the beginning in
          the tenth  (10th)  month of the annual  period,  such  service  may be
          purchased at a price of eighty-one dollars ($81) per hour as incurred.
          There will be a minimum one (1) hour charge.