<PAGE>   1
                                                                   EXHIBIT 10.18

                                             Contract No. 99TX-10266

                               LICENSE AGREEMENT

                                EXECUTED BY THE

                            UNITED STATES OF AMERICA

                              DEPARTMENT OF ENERGY

                           ACTING BY AND THROUGH THE

                        BONNEVILLE POWER ADMINISTRATION

                                      AND

                           ADVANCED TELCOM GROUP, INC.


                               INDEX TO SECTIONS

<TABLE>
<CAPTION>
  SECTION                                                                  PAGE
<S>                                                                      <C>
    1.     Definitions ...................................................   2
    2.     Term ..........................................................   3
    3.     Exhibits.......................................................   3
    4.     Amendment of Agreement ........................................   3
    5.     Ownership .....................................................   4
    6.     License .......................................................   4
    7.     Payment .......................................................   4
    8.     Maintenance, Repair, and Restoration of the Cable .............   6
    9.     Regenerator Building(s) .......................................   8
    10.    Rights and Obligations Concerning the Cable ...................   9
    11.    Relocation of the Cable .......................................  10
    12.    Representations and Warranties ................................  11
    13.    Audit Procedures ..............................................  13
    14.    Insurance .....................................................  14
    15.    Default .......................................................  16
    16.    Indemnification; Waiver of Damages ............................  18
    17.    Dispute Resolution ............................................  20
    18.    General .......................................................  20
    19.    Entire Agreement ..............................................  25
</TABLE>


           Exhibit A    (Route Description)
           Exhibit B    (Fiber Specifications)
           Exhibit C    (Detailed Restoration Plan)
           Exhibit D    (Regeneration Site Lease Agreements and Letter of Entry)
           Exhibit E    (Acceptance Testing Standards)

--------------------
[*] Information redacted pursuant to a confidential treatment request
    throughout this exhibit.
<PAGE>   2
        This LICENSE AGREEMENT (Agreement) executed on __________, 1999, by the
UNITED STATES OF AMERICA (Government), Department of Energy, acting by and
through the BONNEVILLE POWER ADMINISTRATION (Bonneville), and ADVANCED TELCOM
GROUP, INC. (ATG). Both Bonneville and ATG may be referred to herein
individually as "Party" and collectively as "Parties."

1.      DEFINITIONS

        The following terms, when used in this Agreement, shall have the
        meanings set forth in this section:

        (a)     "ATG Fiber" means six (6) optical fibers within the Cable
                located on the Commercial Route owned by Bonneville and
                designated to be licensed to ATG for the term of this Agreement.

        (b)     "Bonneville Facilities" means all Bonneville-owned and/or leased
                structures, buildings, land, access roads, and equipment along
                the Route.

        (c)     "Bonneville Fiber" means all fiber (except the six (6) dark
                optical fibers licensed to ATG) within the Cable designated for
                Bonneville's use.

        (d)     "Bonneville Route" means the portion of the Cable that contains
                Bonneville Fiber extending approximately eighty-four (84) miles
                between Bonneville's Alvey and Salem Substations.

        (e)     "Cable" means Bonneville owned seventy-two (72) SMF28 fibers or
                installed by Bonneville along the Bonneville Route.

        (f)     "Cable Accessories" means the equipment necessary to support the
                attachment of the Cable to the Bonneville Facilities.

        (g)     "Cable Restoration" means repairing and returning a damaged
                cable back to service following an unscheduled outage.

        (h)     "Cable Specifications" means the drawings and specifications
                regarding the hardware and materials incorporated into the
                construction project.

        (i)     "Commercial Route" means the portion of the Cable that contains
                ATG Fiber extending approximately eighty-four (84) miles between
                Bonneville's Alvey and Salem Substations as further described in
                Exhibit A.

        (j)     "Fiber Specifications" means the performance attributes of the
                fiber within the Cable as described in Exhibit B.


                                                                               2
<PAGE>   3

        (k)     "Interest Rate" means 1.25 percent per month to be compounded
                monthly for each month or portion thereof during which interest
                accrues.

        (l)     "License" means the License granted to ATG in section 6(a).

        (m)     "Regenerator Building(s)" means the building(s) along the Route
                that house the terminal and regenerator equipment owned and
                operated by ATG including any optronics or electronics required
                by ATG to make use of the ATG Fibers. For the purpose of this
                Agreement, the Regenerator Building(s) include conduit and fiber
                optic cable, from the Regenerator Building(s) up to Bonneville's
                nearest fiber optic splice box which is located adjacent to the
                substation fence.

        (n)     "Route" means the Bonneville Route and the Commercial Route.

2.      TERM

        (a)     This Agreement shall be effective at 2400 hours on the date of
                execution by both Parties (Effective Date) and shall continue in
                effect for a period of ten (10) years or unless sooner
                terminated in accordance with the terms of this Agreement.

        (b)     The terms of this Agreement may be extended only by mutual
                agreement of the Parties.

        (c)     All obligations incurred and outstanding shall survive the
                expiration or termination of this Agreement.

3.      EXHIBITS

        Exhibit A (Route Description), Exhibit B (Fiber Specifications), Exhibit
        C (Detailed Restoration Plan), Exhibit D (Regeneration Site Lease
        Agreement and Letter of Entry) and Exhibit E (Acceptance Testing
        Standards) are attached hereto and made a part of this Agreement.

4.      AMENDMENT OF AGREEMENT

        This Agreement may be amended or modified only by written agreement
        executed by both Parties. No course of performance or dealing shall
        operate to amend or modify this Agreement.


                                                                               3
<PAGE>   4

5.      OWNERSHIP

        (a)     The Cable shall be owned by Bonneville.


        (b)     Each Party shall own its own electronic and optronic devices
                necessary to transmit signals over the fibers each controls.


        (c)     Bonneville shall also retain ownership of all Bonneville
                electric transmission facilities, rights-of-way, structures,
                improvements, and components installed on such facilities and
                the Route as part of this Agreement.

        (d)     The Regenerator Building(s) and related equipment within the
                Regenerator Building(s) shall be owned by ATG. To the extent
                that any such Regenerator Building(s) or related equipment are
                fixtures of Bonneville real property at the termination of this
                Agreement, Bonneville shall have title to and ownership of such
                fixtures.

6.      LICENSE

        (a)     Grant

                Bonneville hereby grants to ATG an exclusive and indefeasible
                right and License to use the six (6) ATG Fiber along the
                Commercial Route as specified in Exhibit A for the Term of this
                Agreement.

        (b)     No Property Interest

                This Agreement shall not confer upon ATG any ownership or
                possessory interest in the Route or other property owned by
                Bonneville except as provided herein, and ATG agrees that it
                shall never make any claim of such interest based upon this
                Agreement.

7.      PAYMENT

        (a)     ATG shall pay to Bonneville a one-time payment of [*] no later
                than September 30, 1999.

        (b)     ATG shall pay to Bonneville an annual maintenance payment of [*]
                per route mile of Cable used by ATG as specified in Exhibit A.
                The first such payment shall occur within thirty (30) days of
                the execution of this Agreement by both Parties. All subsequent
                annual maintenance-payments shall be payable each year on the
                anniversary date of the execution of this Agreement.

--------------------
[*] Information redacted pursuant to a confidential treatment request
    throughout this exhibit.

                                                                               4
<PAGE>   5

        (c)     Within any given calendar year, ATG will pay to Bonneville its
                pro-rata share (based on ATG fiber count compared to the total
                fiber count of the Cable) for restoration costs pertaining to
                the Commercial Route incurred on or before September 30 of each
                year. ATG shall pay Bonneville on or before September 30 of each
                year after receipt of an invoice.

        (d)     ATG shall pay by wire or ACH transfer, using procedures
                established by Bonneville's Financial Services Group. ATG may
                pay its bill by mail, provided that Bonneville receives full
                payment by the due date. ATG shall include the following
                information in the description field of each transfer:
                Bonneville contract number, Revenue PL6, and End Item Code.

                If ATG is paying by mail, payments shall be mailed to:

                Bonneville Power Administration
                P.O. Box 6040
                Portland, OR 97228-6040

        (e)     Late Payment. Payments not received by Bonneville when due shall
                bear interest at the Interest Rate from the date payment was due
                until the date payment is made to Bonneville. Late payments
                shall be collected pursuant to the Debt Collection Act, 1982, 5
                U.S.C. 5514.

        (f)     Escalation of Annual Charge

                All annual payments shall be increased annually on September 30
                to an amount equal to such annual payments as escalated by the
                Consumer Price Index, All Urban Consumers (CPI-U), U.S. City
                Average, All Items, published by the United States Department of
                Labor, Bureau of Labor Statistics (1982-84=100) ("Index") as of
                the month immediately preceding September 30 of each year. If
                the Index is discontinued or revised, the parties shall agree to
                another index to be used in order to obtain substantially the
                same result as would be obtained if the Index had not been
                discontinued or revised.

        (g)     ATG at its sole cost and expense, shall have the right to have
                an engineering consultant review the Bonneville fiber optic
                route design and to monitor the ongoing costs of construction of
                the Cable. Bonneville agrees to cooperate in good faith with ATG
                in this regard and to provide all documentation reasonably
                required by ATG.


                                                                               5
<PAGE>   6

8.      MAINTENANCE, REPAIR, AND RESTORATION OF THE CABLE

        (a)     Maintenance of the Cable

                (1)     During the term of this Agreement, Bonneville shall be
                        responsible for all physical maintenance of the Cable
                        and the Cable Accessories. Bonneville shall maintain the
                        Cable and the Route at all times in good working order
                        and in a safe condition, in conformity with the Cable
                        Specifications and all applicable laws and regulations.

                (2)     ATG shall be responsible for maintenance of its
                        property, including the Regenerator Building(s) along
                        the Route.

        (b)     Detailed Restoration Plan

                (1)     Restoration activities will be integral to ensuring
                        successful implementation of this Agreement. Timely
                        restoration is dependent upon the timely coordination
                        and cooperation between Bonneville and ATG. The Parties
                        agree to jointly develop a Detailed Restoration Plan,
                        which shall, upon its completion become part of this
                        Agreement as Exhibit C.

                (2)     The Parties agree to develop within sixty (60) days of
                        signature of this Agreement by both Parties a Detailed
                        Restoration Plan, the specifics of which will be based
                        upon the provisions of this section 8.

                (3)     The provisions described in this section shall form the
                        principles and basis for the development of such a plan.

        (c)     Restoration Priorities and General Requirements

                (1)     Bonneville's obligation to maintain and repair the Cable
                        and any activity incidental thereto shall be subordinate
                        to, and shall not conflict with, Bonneville's rightful
                        use and operation of its transmission facilities. In the
                        event both Bonneville's transmission facilities and the
                        Cable require maintenance or repair, the restoration of
                        the Cable shall be at all times subordinate to the
                        restoration of Bonneville's transmission facilities,
                        unless otherwise agreed to by Bonneville in advance. The
                        restoration of Bonneville's telecommunications system
                        shall take priority over restoration activities related
                        to ATG Fiber as shall restoration rights contained in
                        pre-existing contracts. The restoration of the ATG Fiber
                        shall take priority over restoration activities related
                        to any fibers licensed in contracts subsequent to the
                        agreement.


                                                                               6
<PAGE>   7

                (2)     Any and all Bonneville or ATG representatives that
                        construct, install, repair, replace, or otherwise handle
                        the Cable, Cable Accessories, ATG Fiber, Bonneville
                        Fiber, or any related materials and equipment shall be
                        properly trained and equipped to meet all current
                        industry standards.

                (3)     A Bonneville representative must be on site during all
                        repair and restoration work to perform functions such as
                        safety watch, protection of Bonneville's transmission
                        facilities, or obtain line clearances. Bonneville shall
                        make its best efforts to have a representative arrive
                        at the site requiring an emergency maintenance activity
                        pursuant to section 8(d)(1) of this Agreement.

                (4)     The Party performing the repair and restoration shall
                        use prudent business methods to acquire the most cost
                        effective restoration procedures and materials
                        available given the Cable Specifications, Fiber
                        Specifications, and current industry standard.

                (5)     Bonneville shall require all employees or agents of ATG
                        who work near Bonneville's transmission facilities to
                        demonstrate that they have been properly trained and
                        equipped to perform the work. The Parties shall agree in
                        advance what constitutes proper training and reasonable
                        costs. The costs of agreed upon training for ATG
                        employees or agents of ATG shall be borne by ATG.

                (6)     A Bonneville representative shall have the authority to
                        stop work for reasons that involve potential health
                        hazards, safety concerns, and potential disruption to
                        Bonneville's operating system.

        (d)     Restoration of the Cable

                (1)     Bonneville shall immediately, upon notification from
                        ATG, of a confirmed cable related interruption in
                        service, failure, disrepair, impairment or other need
                        for repair or restoration of the ATG Fiber, begin to
                        mobilize Bonneville crews and make its continuous best
                        effort to achieve such necessary repair or restoration,
                        including making its best effort to have maintenance
                        personnel at the affected site within four (4) hours
                        after receipt of such notice, provided, however, that in
                        the event any of ATG rights are interrupted by events
                        described in section 18(a), repairs and restoration
                        shall be made as expeditiously as possible consistent
                        with section 8(c)(1). ATG recognizes that the four (4)
                        hour response time represents optimal conditions, and
                        may be impossible to achieve when responding to certain
                        remote locations. Actual response times will be
                        influenced by factors such as the terrain, weather
                        conditions present at the time the request is made, and
                        the actual mileage from Bonneville's dispatch station to
                        the fault site.


                                                                               7
<PAGE>   8

                (2)     For purposes of this section, best efforts means
                        activities and performance consistent with prudent
                        utility practice, existing contract provisions for
                        Bonneville's hourly employees ("Collective Agreement
                        between BPA and Columbia Power Trades Council"), and
                        response times that do not jeopardize the health and
                        safety of Bonneville employees, agents of Bonneville,
                        ATG employees or agents of ATG.

                (3)     The Detailed Restoration Plan shall set forth the roles
                        and responsibilities of the respective parties, and
                        shall address issues regarding logistical
                        considerations, response interval factors, communication
                        between the Parties, sequential activity requirements,
                        and other related items which would impact response time
                        and restoration intervals. The aforementioned issues
                        will be taken into consideration in the determination of
                        whether Bonneville has used its best efforts in such
                        restoration or repair activities.

                (4)     If Bonneville is unable to begin to provide restoration
                        within the agreed-upon timeframe pursuant to section
                        8(d)(1), Bonneville shall provide ATG or its Bonneville-
                        approved subcontractor access to the Cable, pursuant to
                        the Detailed Restoration Plan, after notification from
                        ATG of confirmed cable related interruption in service,
                        failure, disrepair, impairment, or other need for
                        repair, so that ATG or its Bonneville-approved
                        subcontractor can make necessary repairs to the Cable
                        provided such repairs are made in accordance with all
                        current Bonneville and industry safety standards.

                (5)     Given that the Cable has been maintained by Bonneville
                        pursuant to 9(a)(1), and if the cable's ability to
                        transmit a signal degrades over time to a level
                        unacceptable to either Party, the Parties will jointly
                        determine the action to be taken and share any costs
                        associated with the action on a pro rata basis based
                        upon the number of fibers in each Party's control.

9.      REGENERATOR BUILDING(S)

        (a)     ATG shall have sole responsibility for the expense and
                acquisition of any property or utilities necessary for its
                equipment along the Route. If space is available at Bonneville
                substations, such space shall be provided to ATG pursuant to the
                Regenerator Site Lease Agreement form attached as Exhibit D.

        (b)     Other than the Bonneville Facilities, ATG shall provide and own
                the Cable Accessories splice boxes, and other components
                necessary for the operation of the ATG Fiber as set forth in
                Exhibit D.


                                                                               8
<PAGE>   9

        (c)     Bonneville will provide to ATG the Bonneville Safety
                Requirements. ATG shall have sole responsibility to comply with
                Bonneville Safety Requirements with regard to the installation
                and maintenance of ATG facilities on or about Bonneville's
                right-of-way and property. ATG's compliance with Bonneville
                Safety Requirements and for maintenance of certain environmental
                control procedures such as maintenance of the grounds around the
                Regenerator Building(s) will be at ATG's expense.

        (d)     ATG may use Bonneville's access roads to access the Regenerator
                Building(s), provided that heavy vehicles or other equipment
                being used on the access road will not impair the use of the
                access road by Bonneville. Access to the roads shall be limited
                to the times and frequency required for maintenance and
                operation of the Regenerator Building(s) and equipment, and any
                repair and restoration of the Cable pursuant to section 8. ATG
                shall at ATG's expense repair any damage to the access roads
                caused as a result of ATG use of the access roads.

10.     RIGHTS AND OBLIGATIONS CONCERNING THE CABLE

        (a)     Permits

                Bonneville shall acquire all necessary regulatory or
                governmental permits and approvals with the exception of any
                permits and/or approvals that may be required for the
                Regenerator Building(s). Additionally, Bonneville shall acquire
                all necessary National Environmental Policy Act (NEPA) permits
                for the Regenerator Building(s) pursuant to paragraph (d) of
                this section.

                When feasible and necessary, Bonneville shall acquire permits,
                easements, or additional rights-of-way for the Regenerator
                Building(s) provided ATG pays for the full cost of such
                assistance and protects Bonneville from future liability
                resulting from such actions.

        (b)     Taxes, Mechanic's Liens, and Encumbrances

                ATG shall pay its own income taxes as well as all franchise fees
                and other fees and taxes resulting from ATG License over the ATG
                Fiber along the Route. ATG shall keep the Route free from all
                liens and encumbrances resulting from its performance of this
                Agreement. If ATG does not pay the foregoing taxes and fees when
                such become due, and such nonpayment results in the imposition
                of a lien on, or encumbrance of, the Route, then Bonneville
                shall have the right, but not the obligation, to pay all amounts
                due and discharge such lien or encumbrance, upon thirty (30)
                calendar days prior written notice to ATG and charge the amount
                thereof to ATG. In the event Bonneville causes such liens or
                encumbrances to be discharged, ATG shall pay such amounts to
                Bonneville upon demand together with interest thereon at the
                Interest Rate, accruing from the date that Bonneville makes
                payment discharging such liens or encumbrances until the date
                Bonneville receives full reimbursement from ATG. ATG shall have
                the absolute right to dispute or challenge any tax or fee
                assessed on its use of the ATG Fibers.


                                                                               9
<PAGE>   10

        (c)     Access to Local Landowners

                Contacts made by ATG with local landowners adjacent to the Route
                shall be coordinated with Bonneville as specified in the
                Detailed Restoration Plan.

        (d)     Environmental Compliance Activities

                Bonneville shall be responsible for compliance with the Federal,
                State, and local laws and regulations pertaining to NEPA and
                related public involvement and information exchange in relation
                to the proposed project activities. Bonneville shall acquire all
                necessary permits associated with the project operations,
                maintenance, and construction. The project activities will be
                limited to construction and operation of cable, hardware;
                Regenerator Building(s), access roads and distribution lines if
                needed for Regenerator Building(s). If any mitigation measures
                are identified as part of the NEPA compliance activities, these
                measures will be performed by Bonneville at the sole cost of ATG
                provided, however, that ATG shall not be liable for the costs of
                any mitigation measures that arise from activities unrelated to
                activities authorized by this Agreement. Contacts with the local
                landowners will be performed by Bonneville-appointed
                representatives. Any landowner compensation required as part of
                the NEPA and project activities will be made by ATG. All of the
                compliance activities undertaken by Bonneville pursuant to this
                subparagraph shall be at the cost and expense of ATG.

        (e)     Taxes, title to and ownership of the ATG Fiber shall remain in
                Bonneville which will be responsible for ad valorem taxes, if
                any, imposed on its ownership of the ATG Fiber. If requested in
                writing, Bonneville will reasonably assist ATG in any dispute or
                challenge of any tax or fee assessed that ATG believes should be
                properly assessed based on the ownership of the ATG Fiber.

11.     RELOCATION OF THE CABLE

        The Cable or a portion thereof may require relocation or replacement
        during the term of this Agreement. The cost of such relocation or
        replacement shall be allocated as follows:

        (a)     If requested by ATG for its operational purposes, ATG shall pay
                all such costs, provided, however, that Bonneville shall, in its
                sole discretion, determine whether such relocation of the Cable
                may be accommodated considering Bonneville's own need to provide
                economical and reliable electric power;

        (b)     If requested by Bonneville due to requirements necessary to
                provide economical and reliable electric power, Bonneville shall
                pay all such costs;


                                                                              10
<PAGE>   11

        (c)     If the Cable must be relocated due to the order of any court or
                governmental agency, or because of a force majeure event
                Bonneville shall, in consultation with ATG designate a new route
                for the Cable. The costs associated with such required
                relocation that are not paid by a third party, shall be
                allocated between the Parties on a pro rata basis.

        (d)     If the Cable must be relocated pursuant to section 11(c) above,
                Bonneville and ATG shall work together to select contractors and
                materials to achieve the most cost effective relocation
                available in the market place given the Cable Specifications
                Fiber, Specifications, and current industry standards.

12.     REPRESENTATIONS AND WARRANTIES

        (a)     ATG represents and warrants to Bonneville as follows:

                (1)     ATG has full power and authority to execute, deliver,
                        and perform its obligations under this Agreement. The
                        execution of this Agreement by ATG has been duly and
                        validly authorized by all necessary action on the part
                        of ATG. This Agreement is a legal, valid, and binding
                        obligation of ATG enforceable against ATG in accordance
                        with its terms. The execution and delivery of this
                        Agreement by ATG and the performance of the terms,
                        covenants, and conditions contained herein will not
                        violate the articles of the limited partnership or
                        bylaws of ATG or any applicable law or regulation or any
                        order of court or arbitrator, and will not conflict with
                        and will not constitute a material breach of, or default
                        under, the provisions of any contract by which ATG is
                        bound. Except as otherwise stated herein, no approval,
                        authorization, or other action by any governmental
                        authority or filing with any such authority which has
                        not been obtained or accomplished is required in
                        connection with the execution, delivery, and performance
                        by ATG of this Agreement.

                (2)     There are no known actions, suits, or proceedings
                        pending or overtly threatened against ATG before any
                        court or administrative agency that would materially
                        impair ATG's performance of its obligations under this
                        Agreement.

        (b)     Bonneville represents and warrants to ATG as follows:

                (1)     Bonneville is duly authorized to execute and deliver
                        this Agreement and to perform its obligations hereunder.
                        This Agreement constitutes a legal and valid obligation
                        of Bonneville enforceable in accordance with its terms
                        to the full extent provided by law. The enforceability
                        of this Agreement is qualified as to:


                                                                              11
<PAGE>   12

                        (A)     limitations imposed by bankruptcy laws of the
                                United States, insolvency, reorganization,
                                arrangement, moratorium, or other laws relating
                                to or affecting the enforcement of creditor's
                                rights generally.

                (2)     Upon execution of this Agreement, Bonneville warrants
                        that there are no known conflicts with this Agreement
                        and that neither execution and delivery of this
                        Agreement nor performance by Bonneville of its
                        obligations hereunder constitutes a material breach of
                        or a default under any constitutional provision, or any
                        law or administrative regulation, or violate any
                        judgment, decree, or other instrument, or any other
                        contract related to the Route to which Bonneville is a
                        Party or to which Bonneville or any of its property or
                        assets is subject.

                (3)     Bonneville has sufficient interests in the real property
                        along the Route to construct its Cable and carry out its
                        obligations under this Agreement.

        (c)     Materials Warranties.

                (1)     Except as otherwise specifically set forth in the
                        representations, warranties, covenants and conditions of
                        this agreement, each party makes no warranty to the
                        other party or to any other person or entity, whether
                        express, implied or statutory, as to the installation,
                        description, quality, merchantability, completeness or
                        fitness for any purpose of any portion of the system or
                        any service provided hereunder or described herein, or
                        as to any other matter, all of which warranties are
                        hereby excluded and disclaimed.

                (2)     In procuring and obtaining materials, each Party shall
                        use reasonable efforts to obtain from the vendors and
                        suppliers, for the mutual benefit of the Parties,
                        warranties that such materials are:

                        (A)     of the kind and quality described in the
                                purchase order or supply contract;

                        (B)     free of defects in workmanship, material, design
                                and title;

                        (C)     of good and merchantable quality; and where
                                appropriate, fit for their intended purpose.


                                                                              12
<PAGE>   13

                (3)     Each Party shall attempt to obtain standard warranty
                        periods for all materials it is responsible to procure,
                        and shall use reasonable efforts to obtain longer
                        warranty periods, if such extended warranties do not
                        materially increase the cost of such materials. Each
                        Party's sole obligation and liability to the other with
                        respect to the materials warranties shall be to
                        administer such warranties. In no event shall either
                        Party be deemed to have guaranteed any such warranties
                        provided by vendors or suppliers.

                (4)     Each Party will cooperate and assist the other with
                        respect to any claim that a Party may assert against
                        vendors and suppliers under such warranties, including
                        such reasonable actions as may be necessary to assign or
                        otherwise make available to a Party the right to make
                        such claims.

        (d)     No Bonneville Warranty Concerning Route

                Bonneville makes no representation or warranty whatsoever
                concerning the physical characteristics of the Route. ATG
                acknowledges that neither Bonneville nor any of Bonneville's
                officers, employees, representatives, contractors, or
                subcontractors or agents have made any such representation, nor
                is Bonneville or ATG entering into this Agreement in reliance
                upon any such representation or warranty.

13.     AUDIT PROCEDURES

        (a)     Records

                The Parties shall maintain true and correct sets of records in
                connection with the performance of this Agreement and all
                transactions related thereto and shall retain all such records
                for a period of not less than three (3) years after the
                Effective Date has been provided in accordance with section 2 of
                this Agreement. The Parties shall also maintain true and correct
                sets of records in connection with its accounting, billing, and
                collection of its payment of the restoration of the Cable, and
                shall retain all such records for a period of not less that
                three (3) years after each such transaction.

        (b)     Reimbursement

                If Bonneville or ATG is entitled under this Agreement to be paid
                amounts determined in whole or in part on a reimbursement of
                costs basis, the costs to be reimbursed shall be only those
                reasonably necessary to perform the work in an efficient manner
                in accordance with the time schedule required.


                                                                              13
<PAGE>   14

        (c)     Audit Rights

                Notwithstanding anything in this Agreement to the contrary,
                either Party which is required to make payment under this
                Agreement, may, at the paying Party's sole discretion and
                expense, request and perform a complete audit of the records of
                the Party requesting reimbursement which are described in
                Paragraph 14(a) above. In the event that the Parties agree that
                the auditing Party's audit is determined to be correct, the
                nonauditing Party shall reimburse the auditing Party the agreed
                upon amount. In the event that the nonauditing Party disagrees
                with the results of the Party's audit and resolution is not
                reached between the Parties, the Parties agree to resolve the
                dispute pursuant to Section 17 of this Agreement.

14.     INSURANCE

        (a)     General

                At all times during the term of this Agreement and the License
                term, ATG at its own cost and expense, shall provide the
                insurance specified by this section.

        (b)     Evidence Required

                On the Effective Date of this Agreement, ATG shall provide
                Bonneville with a certificate of insurance (Certificate of
                Insurance) executed by an authorized representative of the
                insurer(s) evidencing that ATG insurance complies with this
                section.

        (c)     Notice of Cancellation, Reduction, or Material Change in
                Coverage

                Policies shall include a provision requiring written notice by
                the insurer(s) to Bonneville not less than thirty (30) calendar
                days prior to any cancellation, reduction, or material change in
                coverage. If insurance coverage is canceled, reduced, or
                materially changed, ATG shall, prior to the effective date of
                such cancellation, reduction, or material change, obtain the
                coverage required under this section 14 and provide to
                Bonneville documentation evidencing such coverage. ATG shall be
                responsible to the extent not caused by Bonneville's negligence,
                for the costs of any damage, liability, or injury occurring
                during such cancellation, reduction, or material change in
                insurance coverage which are not otherwise covered by insurance.

        (d)     Qualifying Insurers

                Policies shall be issued by companies which hold a current
                policyholders alphabetic and financial size category rating of
                not less than A- according to Best's Insurance Report or a
                similar rating from another recognized rating agency.


                                                                              14
<PAGE>   15

        (e)     Insurance Required

                (1)     Liability

                        Commercial general liability insurance for bodily injury
                        (including death) and property damage shall provide
                        limits of not less than $10 million per occurrence.

                        (A)     Coverage included shall be:

                                (i)     premises and operations;

                                (ii)    broad form property damage;

                                (iii)   products and completed operations;

                                (iv)    blanket contractual liability;

                                (v)     personal injury liability;

                                (vi)    cross-liability and severability of
                                        interests; and

                                (vii)   independent contractors liability.

                        (B)     Coverage shall be endorsed to include the
                                following:

                                (i)     inclusion of Bonneville, its officers,
                                        representatives, agents, and employees
                                        as an additional insured as respects
                                        services or operations in connection
                                        with this Agreement; and

                                (ii)    stipulation that the insurance is
                                        primary insurance and that no insurance
                                        or self-insurance of Bonneville will be
                                        called upon to contribute to a loss:

                (2)     Business Automobile Liability Insurance

                        Business Automobile Liability Insurance for bodily
                        injury (including death) and property damage shall
                        provide total limits of not less than $2 million
                        combined single limit per occurrence to all owned,
                        non-owned, and hired vehicles.

                (3)     Workers' Compensation/Employer's Liability Insurance

                        Statutory Workers' Compensation and Employer's Liability
                        Insurance for not less than $l million per occurrence
                        shall apply to employer's liability coverage for all
                        employees engaged in services or operations under this
                        Agreement. The policy shall include broad form
                        all-States/other States coverage.


                                                                              15
<PAGE>   16

        (f)     Special Provisions

                (1)     The foregoing requirements as to the types and limits of
                        insurance coverage to be maintained by ATG and any
                        approval of said insurance by Bonneville or ATG are not
                        intended to and shall not in any manner limit or qualify
                        the liabilities and obligations otherwise assumed by ATG
                        pursuant to this Agreement, including, but not limited
                        to, the provisions concerning indemnification.

                (2)     Bonneville acknowledges that some insurance requirements
                        contained in this section 14 may be fulfilled by a
                        formal self-insurance program of ATG. However, this
                        shall not in any way limit liabilities assumed by ATG
                        under this Agreement. Any self-insurance program must be
                        first approved in writing by Bonneville.

15.     DEFAULT

        (a)     Events of Default

                If either Party is in material breach or default (Defaulting
                Party), under this Agreement, the other Party (Nondefaulting
                Party) may notify in writing the Defaulting Party that it is in
                material breach or default, such notice to be effective upon its
                receipt by the Defaulting Party. The following events shall
                constitute material breach or default under this Agreement:

                (1)     failure to make any payment when due hereunder, with the
                        exception of payments that become payable to either
                        Party during the period of any Force Majeure, when the
                        event of Force Majeure results in a Party's physical
                        inability to make such payment. During these periods,
                        the Party experiencing Force Majeure shall immediately
                        notify the other Party to make alternative arrangements
                        that are agreeable to both Parties.

                (2)     failure to perform in any material respect any
                        obligations required to be observed or performed
                        hereunder;

                (3)     any representation or warranty made by one Party to the
                        other herein proving incorrect in any material respect
                        as of the date of the making thereof;

                (4)     ATG files a voluntary petition in bankruptcy, or a
                        petition in bankruptcy is filed against ATG and not
                        dismissed within sixty (60) days, or ATG is adjudicated
                        as bankrupt or insolvent, or files any petition or
                        answer seeking or acquiescing in any reorganization,


                                                                              16
<PAGE>   17

                        arrangement, composition, readjustment, liquidation,
                        dissolution, or similar relief under any present or
                        future Federal, State, or other statute, law, or
                        regulation relating to bankruptcy, insolvency, or other
                        relief for debtors, or seeks or consents to or
                        acquiesces in the appointment of any trustee,
                        receiver, custodian, liquidator, or similar official of
                        ATG or makes any general assignment for the benefit of
                        creditors;

                (5)     willful and material interference by one Party to the
                        other Party's operations; or

                (6)     failure to make full restitution for any damage to one
                        Party's real property or equipment caused as a result of
                        the sole negligent or willful actions by the other
                        Party.

        (b)     Remedies

                (1)     Defaulting Party's Right to Cure

                        The Defaulting Party shall have the right to cure any
                        material breach or default under this Agreement within
                        thirty (30) calendar days after the receipt by the
                        Defaulting Party of notification of such material breach
                        or default. In the case of any material breach or
                        default which may not reasonably be cured within thirty
                        (30) calendar days, the Defaulting Party shall have the
                        right to provide the Nondefaulting Party with a plan for
                        the appropriate actions to cure such material breach or
                        default. Within the thirty (30) calendar day period, the
                        Defaulting Party must commence diligently pursuing
                        appropriate action under the plan to cure the material
                        breach or default, in which event the Defaulting Party
                        shall have a longer period of time to cure the material
                        breach or default so long as the Defaulting Party shall
                        continue to be diligently pursuing appropriate action
                        during such period; provided, however, that in no event
                        shall such time period exceed one hundred twenty (120)
                        days.

                (2)     Nondefaulting Party's Remedies

                        After the time allowed the Defaulting Party to cure any
                        material breach or default has expired, then the
                        Nondefaulting Party shall have the right to: (A)
                        terminate this Agreement; (B) cure any material breach
                        or default of the Defaulting Party to preserve the
                        Nondefaulting Party's rights that may be prejudiced as a
                        result of such material breach or default; and (C)
                        exercise and pursue all other rights and remedies
                        available to it under applicable law.


                                                                              17
<PAGE>   18

                (3)     Rights and Remedies Cumulative

                        Except as otherwise provided in this Agreement, any
                        right, or remedy afforded to either ATG or Bonneville
                        under any provision of this Agreement on account of
                        material breach or default by the other is in addition
                        to, and not in lieu of, all rights or remedies afforded
                        either ATG or Bonneville under any other provision of
                        this Agreement, by law or otherwise on account of the
                        material breach or default.

16.     INDEMNIFICATION; WAIVER OF DAMAGES.

        (a)     Indemnification by ATG

                (1)     To the extent allowed by law, ATG shall release and
                        indemnify, defend, and hold harmless Bonneville and each
                        of its directors, officers, agents, representatives,
                        subcontractors, and employees (the "Bonneville
                        Indemnitees") from and against any and all liabilities,
                        losses, claims, demands and actions of any nature
                        ("Claims") for injury to or death of a person, including
                        an employee of ATG or a Bonneville Indemnitee, or for
                        loss of or damage to property resulting directly or
                        indirectly from ATG's performance or nonperformance of
                        this Agreement, except to the extent that such Claim is
                        the result of negligence or willful misconduct of a
                        Bonneville Indemnitee.

                (2)     ATG accepts responsibility and liability, whether now
                        existing or arising, in connection with any Federal or
                        state statute, law, ordinance, regulation or judgment
                        related to the existence, disposal, or release of
                        hazardous waste, contaminants or pollutants, including
                        but not limited to polychlorinated biphenyl (PCB) on the
                        Route, directly or indirectly resulting from or caused
                        by ATG or ATG performance or nonperformance of this
                        Agreement.

                (3)     If negligence nor willful misconduct of a Bonneville
                        Indemnitee has contributed to a Claim, ATG shall not be
                        obligated to indemnify the Bonneville Indemnitees for
                        the proportionate share of such Claims caused by such
                        negligence or willful misconduct. Bonneville shall have
                        the right, at its own cost, to retain counsel, to
                        monitor, or participate in the defense of any Claim that
                        is covered by ATG's indemnity hereunder. Bonneville
                        shall reimburse ATG for that portion of a Claim
                        determined or agreed to be caused by Bonneville's
                        negligence or willful misconduct. Reimbursement shall be
                        due to ATG thirty (30) calendar days after the
                        determination or agreement with respect thereto, and
                        shall bear interest at the Interest Rate from said date
                        until the date of payment by Bonneville.


                                                                              18
<PAGE>   19

        (b)     Indemnification by Bonneville

                (1)     To the extent allowed by law, Bonneville shall release
                        and indemnify, defend, and hold harmless ATG and each of
                        its directors, officers, agents, representatives,
                        subcontractors, and employees (the "ATG Indemnitees")
                        from and against any and all Claims as defined in
                        section 16(a)(1) for injury to or death of a person,
                        including an employee of Bonneville or an ATG
                        Indemnitee, or for loss of or damage to property
                        resulting directly or indirectly from Bonneville's
                        performance or nonperformance of this Agreement, except
                        to the extent that such Claim is the result of
                        negligence or willful misconduct of a ATG Indemnitee.

                (2)     Bonneville accepts responsibility and liability, whether
                        now existing or arising, in connection with any Federal
                        or state statute, law, ordinance, regulation or judgment
                        related to the existence, disposal, or release of
                        hazardous waste, contaminants or pollutants, including
                        but not limited to PCB on the Route, directly or
                        indirectly resulting from or caused by Bonneville or
                        Bonneville's performance or nonperformance of this
                        Agreement.

                (3)     If negligence or willful misconduct of a ATG Indemnitee
                        has contributed to a Claim, Bonneville shall not be
                        obligated to indemnify the ATG Indemnitees for the
                        proportionate share of such Claims caused by such
                        negligence or willful misconduct. ATG shall have the
                        right, at its own cost, to retain counsel, to monitor,
                        or participate in the defense of any Claim that is
                        covered by Bonneville's indemnity hereunder. ATG shall
                        reimburse Bonneville for that portion of a Claim
                        determined or agreed to be caused by ATG's negligence or
                        willful misconduct. Reimbursement shall be due to
                        Bonneville thirty (30) calendar days after the
                        determination or agreement with respect thereto, and
                        shall bear interest at the Interest Rate from said date
                        until the date of payment by ATG.

                (4)     Bonneville agrees to indemnify ATG against any claims of
                        underlying landowners along the Route of damage to
                        property resulting from Bonneville's construction and
                        maintenance of the Cable.

        (c)     Waiver of Certain Damages

                Each Party hereby waives any right to consequential, incidental,
                special or indirect damages, or damages for lost profits or
                exemplary damages with respect to any claim arising out of or
                related to this Agreement. The Parties acknowledge that the
                foregoing waiver shall not prejudice the right of indemnity
                respecting any Claim under this section.


                                                                              19

<PAGE>   20
        (d)   The provisions of this section shall survive the expiration or
              termination of this Agreement.

17.     DISPUTE RESOLUTION

        (a)   Pending resolution of a disputed matter, the Parties shall
              continue performance of their respective obligations hereunder.
              Any controversy between the Parties rising out of this Agreement
              or breach thereof, or out of performance under this Agreement, is
              subject to the mediation process described below. If not resolved
              by mediation, then the matter must be submitted to the American
              Arbitration Association ("AAA") for arbitration before a sole
              arbitrator.

        (b)   A meeting will be held promptly between the Parties to attempt in
              good faith to negotiate a resolution of the dispute. The meeting
              will be attended by individuals with decision-making authority
              regarding the dispute. If within thirty (30) calendar days after
              such meeting the Parties have not succeeded in resolving the
              dispute, either party may within thirty (30) calendar days
              thereafter serve written notice to the other party and submit the
              dispute to a mutually acceptable third-party mediator who is
              acquainted with dispute resolution methods. If the dispute is not
              resolved by mediation either Party may initiate arbitration with
              the AAA, upon the written notice from either Party to the other
              Party. The dispute shall be resolved by arbitration under the
              AAA's Complex Commercial rules. The arbitrator's authority shall
              be limited by Federal Law. Judgment upon the award rendered by the
              arbitrator may be entered in any court having jurisdiction
              thereof. Neither Party is entitled to seek or recover punitive
              damages in considering or fixing any award under these
              proceedings.

        (c)   The costs of mediation and arbitration, including any mediator's
              fees, AAA administration fee, the arbitrators fee, and costs for
              the use of facilities during the hearings," shall be borne equally
              by the Parties. Reasonable attorneys' fees may be awarded to the
              prevailing Party (provided such a Party can clearly be determined
              from the proceedings) at the discretion of the arbitrator. Each
              Party's other costs and expenses will be borne by the Party
              incurring them.

18.      GENERAL

        (a)   Force Majeure

              (1)   As used in this Agreement, the term "Force Majeure" means
                    acts of God (including but not limited to, earthquakes,
                    fires, floods, windstorms, landslides, and ice storms);
                    strikes, lockouts, or other labor disputes; acts of public
                    enemy; acts of vandalism, wars, riots,



                                                                              20

<PAGE>   21
                    and insurrection; epidemics; civil disturbances; explosions;
                    train derailments; breakdown or failure of machinery or
                    facilities (excluding the Cable and Cable Accessories);
                    accidents to machinery or equipment (excluding the Cable and
                    Cable Accessories), and delay in delivery of equipment to
                    the extent such occurrences are beyond the reasonable
                    control of the Parties; electrical disturbance originating
                    in or transmitted through such Party's electrical system or
                    equipment or any electrical system with which such Party's
                    system or equipment is interconnected; and any other event,
                    cause, or condition beyond the party's reasonable control,
                    which, by the exercise of reasonable diligence, prevents the
                    Party claiming Force Majeure from performing its obligations
                    under this Agreement.

              (2)   If either Party is unable to carry out its obligations
                    under this Agreement as a result of an event, cause, or
                    condition of Force Majeure, the Party claiming Force Majeure
                    shall give notice and full particulars of such Force Majeure
                    in writing to the other Party within five (5) calendar days
                    at the beginning of the occurrence of the Force Majeure
                    event, cause, or condition. Any obligations that such Party
                    is unable to perform due to an event, cause, or condition of
                    Force Majeure shall be suspended during the continuance of
                    such event of Force Majeure. The Party claiming Force
                    Majeure shall use reasonable efforts to remedy and minimize
                    the effects of such event of Force Majeure with all
                    reasonable dispatch.

              (3)   Neither Party shall be liable under this Agreement for, or
                    be considered to be in material breach or default under,
                    this Agreement on account of any delay in or failure of
                    performance due to Force Majeure unless specifically stated
                    in this Agreement.

              (4)   If Bonneville is the Party claiming Force Majeure and such
                    event of Force Majeure prevents restoration by Bonneville or
                    ATG within one (1) year from the event of such Force
                    Majeure, then ATG shall have the option to terminate this
                    Agreement under the provisions of section 15(b)(1).

        (b)   Notices

              All notices and other communications under this Agreement shall be
              properly given only if made in writing; and

              (1)   mailed by certified mail, return receipt requested, postage
                    prepaid; or



                                                                              21

<PAGE>   22
              (2)   delivered by facsimile transmission followed by certified
                    mail to the Party's at the address or facsimile number set
                    forth in this section 18(b) or such other address or
                    facsimile number as such Party may designate by notice to
                    the other Party. Such notices and other communications
                    shall be effective on the date of receipt. If any such
                    notice or communication is not received or cannot be
                    delivered due to a change in the address of the receiving
                    Party of which notice was not previously given to the
                    sending Party or due to a refusal to accept by the receiving
                    Party, such notice or other communication shall be effective
                    on the date delivery is attempted.

                    If to Bonneville:
                    The Bonneville Power Administration
                    P.O. Box 491
                    Vancouver, WA 98666-0491
                    Attn: To be identified under separate letter

                    With a copy to:
                    The Bonneville Power Administration
                    P.O. Box 491
                    Vancouver, WA 98666-0491
                    Attn: To be identified under separate letter

                    If to ATG:
                    Advanced TelCom Group, Inc.
                    100 Stony Point Road, Suite 130
                    Santa Rosa, CA 95401
                    Attn: Mr. Luis Aguilar
                    Telephone: (707)535-8900

        (c)   Assignment

              ATG may sell, assign, lease, sublease, or otherwise allow use of
              ATG License under this Agreement to any person or entity only
              after receiving Bonneville's written approval. Bonneville's
              written approval shall not be unreasonably withheld. ATG shall
              have the right, without Bonneville's consent, to assign or
              otherwise transfer this Agreement in whole or in part (a) as
              collateral to any institutional lender to ATG (or institutional
              lender to any permitted transferee or assignee of ATG) subject to
              the prior rights and obligations of the parties hereunder, (b) to
              any parent, subsidiary or affiliate of ATG, (c) to any person,
              firm or corporation which shall control, be under the control of
              or be under common control with ATG, or (d) any other entity into
              which ATG may be merged or consolidated or which purchases all or
              substantially all of the stock or assets of ATG; provided that the
              assignee or transferee in any such circumstance shall continue to
              be subject to all of the



                                                                              22

<PAGE>   23
              provisions of this Agreement, including without limitation this
              section 18(c) (except that any lender referred to in clause (a)
              above shall not incur any obligations under this Agreement, nor
              shall it be restricted from exercising any right of enforcement or
              foreclosure with respect to any related security interest or lien,
              so long as the purchaser in foreclosure is subject to the
              provisions of this Agreement, including, without limitation, this
              section 18(c); and provided further that in any of the
              circumstances described in clauses (b), (c) or (d) all of the
              payment obligations of ATG hereunder for the remainder of the Term
              shall be paid in full as a condition to such transfer or
              assignment; and provided further that promptly following any such
              assignment or transfer, ATG shall give Bonneville written notice
              identifying the assignee or transferee.

        (d)   Partial Invalidity

              If any provision of this Agreement is determined by a proper court
              to be invalid, illegal or unenforceable, such invalidity,
              illegality or unenforceability shall not affect the performance of
              other provisions of this Agreement and this Agreement shall remain
              in full force and effect without such invalid, illegal or
              unenforceable provision.

        (e)   Governing Law

              This Agreement shall be governed by and construed in accordance
              with Federal law.

        (f)   Terms Generally

              The defined terms in this Agreement shall apply equally to both
              the singular and the plural forms of the terms defined. Whenever
              the context may require, any pronoun shall include the
              corresponding masculine, feminine, and neuter forms. The term
              "person" includes individuals, limited partnerships, partnerships,
              trusts, other legal entities, organizations, anti associations,
              and any Government or governmental agency or authority. The words
              "include," "includes" and "including" shall be deemed to be
              followed by the phrase "without limitation." The words "approval,"
              "consent" and "notice" shall be deemed to be preceded by the word
              "written."

        (g)   Waivers

              No waiver of any provision or breach of this Agreement shall be
              effective unless such waiver is in writing and signed by the
              waiving Party and any such waiver shall not be deemed a waiver of
              any other provision of this Agreement or any other breach of this
              Agreement.




                                                                              23


<PAGE>   24
        (h)   Confidentiality

              If and to the extent any information or documents furnished by one
              Party to the other under this Agreement is confidential or
              proprietary to the furnishing Party, the receiving Party shall
              treat such information or documents as confidential and
              proprietary and shall take reasonable steps to protect against the
              unauthorized use or disclosure of such information or documents;
              PROVIDED, that such information and documents are conspicuously
              marked or otherwise clearly identified as confidential or
              proprietary when furnished; and PROVIDED, FURTHER, that this
              section 18(g) shall not apply to information or documents in the
              public domain or to information or documents required to be
              disclosed by any law, rule, regulation, order, or other
              requirement of any governmental authority having jurisdiction. If
              a Freedom of Information Act request is received by Bonneville for
              such written information or documents, Bonneville must promptly
              notify ATG of such request and will, further, notify ATG if
              Bonneville is required to disclose such written information or
              documents.

        (i)   No Third-Party Beneficiaries

              This Agreement creates rights and obligations only between the
              Parties hereto. The Parties hereto expressly do not intend to
              create any obligations or promise of performance to any other
              third person or entity nor have the Parties conferred any rights
              or remedy upon any third person or entity other than the Parties
              hereto, their respective successor or assigns to enforce this
              Agreement.

        (j)   Miscellaneous

              Neither Party shall make public announcement of this Agreement or
              the transactions contemplated by this Agreement without the prior
              consent of the other Party, unless such public announcement is
              necessary to comply with applicable law. This Agreement shall
              benefit and bind ATG and Bonneville and their respective permitted
              successors and assigns. Time is of the essence of this Agreement.
              This Agreement may be executed in counterparts, each of, which
              shall be an original, but all of which shall constitute one and
              the same Agreement. This Agreement may not be amended or modified
              except by a written instrument signed by ATG and Bonneville.



                                                                              24

<PAGE>   25
19.     ENTIRE AGREEMENT

        Except as stated otherwise herein, this Service Agreement constitutes
        the entire Agreement between the Parties with respect to the subject
        matter hereof and there are no other understandings or agreements
        between the Parties with respect thereof.

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement in two
counterparts.



ADVANCED TELCOM GROUP, INC.                  UNITED STATES OF AMERICA
                                             Department of Energy
                                             Bonneville Power Administration



By:         /s/ CLIFFORD RUDOLPH             By:    /s/ KEVIN A. WARD
           ----------------------------            ----------------------------

Name:       Clifford Rudolph                 Name:      Kevin A. Ward
           ----------------------------            ----------------------------
Print/Type                                   Print/Type

Title:      Chairman and CEO                 Title:     Account Executive
           ----------------------------            ----------------------------

Date:      9/8/99                            Date: 8/24/99
           ----------------------------            ----------------------------



                                                                              25

<PAGE>   26

                                    EXHIBIT A
                               ROUTE DESCRIPTION

The following Route description is a best estimate of how the Route will be laid
out.

From the Salem Substation, the Cable will then traverse a distance of
approximately 23.4 miles to the Albany Substation on the Salem-to-Albany No. l,
115-kv H-frame wood pole line, encountering two river crossings on steel towers.
From Albany Substation, the Cable will span a distance of approximately 39.5
miles to the Eugene Substation, traveling along the Albany-to.-Eugene No. 1,
115-kv H-frame wood pole line, with one river crossing on steel towers. From
Eugene Substation, the Cable will run a distance of approximately. 8.3 miles on
the Albany - Eugene No. 1 and Marion-Lane 500-kV lattice steel tower line to
Lane Substation. From Lane Substation, the Cable will run a distance of
approximately 13.2 miles on the Alvey-Lane 230-kV lattice steel tower line to
the southern terminus of the Cable to be located at the Alvey Substation.




                                  Page 1 of 1
<PAGE>   27

                                    EXHIBIT B
                              FIBER SPECIFICATIONS
                           CORNING(R) SMF-28(TM) CPC6
                            SINGLE-MODE OPTICAL FIBER



GENERAL

Corning(R) SMF-28(TM) single mode fiber is considered the "standard" optical
fiber for telephony, cable television, submarine, and private network
applications in the transmission of data, voice, and/or video services. Corning
SMF-28 fiber is manufactured to the most demanding specifications in the
industry.

SMF-28 fiber is optimized for use in the 1310 nm wavelength region. The
information carrying capacity of the fiber is at its highest in this
transmission window, and it is also where dispersion is the lowest. SMF-28 fiber
can also be effectively used in the 1550 nm wavelength region.

Corning's enhanced, dual layer acrylate CPC6 coating provides excellent fiber
protection and is easy to work with. CPC6 can be mechanically stripped and has
an outside diameter of 245 (Micron)m. CPC6 is optimized for use in many single
and multi-fiber cable designs including loose tube, ribbon, slotted core, and
tight buffer cables.

SMF-28 fiber is manufactured using the Outside Vapor Deposition (OVD) process,
which produces a totally synthetic, ultra-pure fiber. As a result, Corning
SMF-28 has consistent geometric properties, high strength, and low attenuation.
Corning SMF-28 fiber can be counted on to deliver excellent performance and high
reliability, reel after reel.

FEATURES AND BENEFITS

- Versatility in 1310 nm and 1550 nm applications.

- Outstanding geometrical properties for low splice loss and high splice yields.

- OVD manufacturing reliability and product consistency.

- Optimized for use in ribbon, loose tube, and other common cable designs.



                                  Page 1 of 4


<PAGE>   28
OPTICAL SPECIFICATIONS

Attenuation

<TABLE>
<CAPTION>

     UNCABLED FIBER ATTENUATION CELLS
--------------------------------------------
                     Attenuation Cells
                          (dB/km)
                ----------------------------
Wavelength
   (nm)                   Standard
----------      ----------------------------
<S>             <C>
   1310         (less than/equal to) 0.40
   1550         (less than/equal to) 0.30
</TABLE>

POINT DISCONTINUITY
No point of discontinuity greater than 0.10 dB at either 1310 nm or 1550 nm.

ATTENUATION AT THE WATER PEAK
The attenuation at 1383 (plus/minus) 3 nm shall not exceed 2.1 dB/km.

<TABLE>
<CAPTION>

             ATTENUATION VS. WAVELENGTH
-----------------------------------------------------------
                                            Max
   Range         Ref. (Greek lambda)     Increase
   (nm)               (nm)             (Greek Alpha) (dB/km)
   -----         -------------------   ---------------------
<S>              <C>                   <C>
1285-1330             1310                   0.05
1525-1575             1550                   0.05
</TABLE>

The attenuation in a given wavelength range does not exceed the attenuation of
the reference
wavelength (Greek lambda) by more than the value (Greek alpha).

<TABLE>
<CAPTION>

                   ATTENUATION WITH BENDING
----------------------------------------------------------------
Mandrel                                         Induced
Diameter     Number     Wavelength            Attenuation
  (mm)      of Turns       (nm)                  (dB)
--------    --------    ----------            -----------
<S>         <C>         <C>                   <C>
   32            1         1550        (less than/equal to) 0.50
   75          100         1310        (less than/equal to) 0.05
   75          100         1550        (less than/equal to) 0.10
</TABLE>

The induced attenuation due to fiber wrapped around a mandrel of a specified
diameter.


- CABLE CUTOFF WAVELENGTH ((Greek lambda)ccf)
  (Greek lambda)ccf (less than) 1260 nm

- MODE-FIELD DIAMETER
  9.30 (plus/minus) 0.50 (Greek mu)m at 1310 nm
  10.50 (plus/minus) 1.00 (Greek mu)m at 1550 nm

- DISPERSION
  Zero Dispersion Wavelength ((Greek lambda)o): 1301.5 nm (less than/equal to)
  (Greek lambda) (less than or equal to 1321.5 nm

  Zero Dispersion Slope (So): (less than/equal to) 0.092 ps/(nm2 (times) km)

  Fiber Polarization Mode Dispersion Coefficient (PMD): (less than/equal to)
  0.5 psec/(square root of)km



                                                                     Page 2 of 4
<PAGE>   29
                             DISPERSION CALCULATION

Dispersion = D(Lambda): (approximately equal to) S (sub 0) divided by 4
[(Lambda) minus (Lambda) (base 0) (power of 4) divided by (Lambda) (cubed)]
ps/nm X km), for 1200 nm (less than or equal to) Lambda (less than or equal to)
1600 nm

(Lambda) = Operating Wavelength

ENVIRONMENTAL SPECIFICATIONS


<TABLE>
<CAPTION>
                                                                              INDUCED
             ENVIRONMENTAL TEXT                                             ATTENUATION
                  CONDITION                                                   (dB/km)
<S>                                             <C>                                     <C>
Temperature Dependence                          (less than or equal to) 0.05            (less than or equal to) 0.05
-60(degrees) to + 85(degrees)C

Temperature-Humidity Cycling                    (less than or equal to) 0.05            (less than or equal to) 0.05
-10(degrees)C to +85(degrees)C, up to 98% RH

Water Immersion, 23(degrees)C                   (less than or equal to) 0.05            (less than or equal to) 0.05

Heat Aging, 85(degrees)C                        (less than or equal to) 0.05            (less than or equal to) 0.05
</TABLE>

DIMENSIONAL SPECIFICATIONS

Standard Length (km/reel): 2.2 - 25.0

<TABLE>
<CAPTION>
GLASS GEOMETRY                                                     COATING GEOMETRY
<S>                                                                <C>
Fiber Curl: (less than or equal to) 2.0 m radius of curvature      Coating Diameter: 245 (plus or minus) 10 (greek mu)m

Cladding Diameter: 125.0 (plus or minus) 1.0 (greek mu)m

Core-Clad Concentricity: (less than or equal to) 0.8 (greek mu)m   Coating-Cladding Concentricity: < 12 (greek mu)m

Cladding Non-Circularity: < 1.0%
</TABLE>

                |       Min. Cladding Diameter  |
Defined as:     | 1-   ------------------------ | x 100
                |       Max. Cladding Diameter  |



--------------------------------------------------------------------------------
                                                                     Page 3 of 4





<PAGE>   30
MECHANICAL SPECIFICATIONS

PROOF TEST:
The entire length of fiber is subjected to a tensile proof stress (greater than
or equal to) 100 kpsi (0.7 GN/m(squared))

PERFORMANCE CHARACTERIZATIONS
Characterized parameters are typical values.

<TABLE>
<S>                                            <C>
CORE DIAMETER:                                 REFRACTIVE INDEX DIFFERENCE:
8.3 (greek mu)m                                0.36%

NUMERICAL APERTURE:                            EFFECTIVE GROUP INDEX OF REFRACTION (N (inferior eff)):
0.13                                           1.4675 at 1310 nm
NA was measured at the one percent             1.4681 at 1550 nm
power angle of a one-dimensional far
field scan at 1310 nm.

ZERO DISPERSION WAVELENGTH                     FATIGUE RESISTANCE PARAMETER (n (inferior d)):
 (Lambda (inferior o)):                        (Greater than or equal to) 20
1312 nm

ZERO DISPERSION SLOPE (So):                    COATING STRIP FORCE:
0.090 ps/(nm(squared) - km)                    Dry: 0.7 lbs. (3.2 N)
                                               Wet: 14 days room temperature: 0.7 lbs. (3.2 N)
</TABLE>





                                  Page 4 of 4
<PAGE>   31

                                    EXHIBIT C
                            DETAILED RESTORATION PLAN



        The Detailed Restoration Plan will be developed within sixty (60) days
of signature of this Agreement by both Parties.





                                  Page 1 of 1
<PAGE>   32

                                    EXHIBIT D
             REGENERATION SITE LEASE AGREEMENTS AND LETTER OF ENTRY.



             If needed, information to be provided at a later date.




                                  Page 1 of 1
<PAGE>   33

                                    EXHIBIT E
                          ACCEPTANCE TESTING STANDARDS


Bonneville shall meet the Acceptance Testing Standards set forth below. In the
event Bonneville's performance requirements for its communications system
requires Bonneville to exceed the standards and requirements specified in this
Exhibit, Bonneville shall apply the higher standard.

Client Network Span and Final Acceptance Requirements:

1.      DESIGN CRITERIA

        The number of cable splices at the time of original construction will be
        designed to maximize reel lengths between splices. Due to cable cuts,
        project changes and cable relocation, additional splices may be
        necessary and are allowed. The number of splices will be monitored to
        insure that attenuation and reflection tolerances are maintained.

2.      CONSTRUCTION

        Cable must be constructed in accordance with sound commercial practices.
        Bonneville requirements will in general be more stringent however. The
        National Electric Code shall be followed as a minimum.

3.      TYPICAL FIBER CABLE INFORMATION

        Single mode fiber specifications may vary, depending on the fiber
        manufacturer. Typical concatenated levels of 0.40 dB per km @ 1310nm
        (for SMF-28) and 0.25 per km @ 1550nm (for SMF-28 fibers and LEAF(TM)).

4.      SPAN REQUIREMENTS

        Span loss measurements must be performed using the two following
        methods: OTDR (optical time domain reflectometer) and insertion loss
        (stabilized light source and power meter) measurement in each direction
        at 1550nm wavelength. Insertion loss testing will not be completed until
        Client fibers have been terminated at each site.

        (a)   Maximum dB/km loss must not exceed 0.35 dB/km at 1550nm including
              splice losses.



                                  Page 1 of 3
<PAGE>   34

        (b)   In no case shall a fiber show a point discontinuity greater than
              0.1dB. Discontinuities (known as steps, splices, or attenuation
              non-uniformity's) shall be measured with an OTDR to determine the
              loss of the localized attenuation. The least squares fit method of
              measurement must be used to determine the magnitude of the loss of
              a point discontinuity.

        (c)   Client shall provide Bonneville access to it's fiber termination
              panels at each but on the route to perform these measurements.

        (d)   Preliminary power meter testing consisting of a mechanical fiber
              coupler, stabilized light source and a power meter (to assure that
              no transposed fibers are spliced) may be completed within 60 days
              of the completion of construction.

        (e)   Test data including OTDR trace data in hard copy or electronic
              format must be submitted to Client within 60 days of Bonneville's
              receipt of a written request for this data. This data will not be
              available until after construction is complete.

In the event the measured span values exceeds the calculated values, Bonneville
will perform corrective maintenance as required to restore the Commercial Fiber
to the tolerances noted in this exhibit.

5.      SPLICE LOSS

        The bi-directional splice loss average shall be 0.l0dB or less over the
        span. All splicing will be performed by the proprietor pursuant to the
        Fiber Lease Agreement. All fiber splicing must be fusion type.

6.      COMPLIANCE

        Client, at its discretion, may choose to physically monitor any or all
        testing associated with acceptance of the Commercial Fiber. If requested
        in writing test data including OTDR trace data in- hard copies or
        electronic form must be submitted to Client for review. Client has the
        option to waive any specifications and/or requirements listed in the
        technical specification criteria by providing written notice to
        Bonneville.



                                  Page 2 of 3
<PAGE>   35

7.      KEY OPTICAL PERFORMANCE CHARACTERISTICS REQUIRED FOR SINGLE-MODE AND
        LEAF OPTICAL CABLES

        Client fiber shall be Corning LEAF(TM) (see attachment) and a portion of
        Bonneville's fiber shall be Single Mode (see attachment).




                                  Page 3 of 3