Document:

EXHIBIT 10.7

                                OPTION AGREEMENT

        This  Option  Agreement  is made  as of  _______________,  1999,  by and
between  Pathnet   Telecommunications,   Inc.,  a  Delaware   corporation   (the
"Company"),  and Colonial Pipeline Company, a Delaware and Virginia  corporation
("Colonial").

                              W I T N E S S E T H:

        WHEREAS,  on November __,  1999,  the parties  hereto  entered into that
certain Contribution Agreement (the "Contribution  Agreement") pursuant to which
Colonial has agreed to contribute to the Company cash and certain  property,  on
the terms and conditions described therein; and

        WHEREAS, in consideration for such contributions, the Company has agreed
to issue to  Colonial  certain  shares  of the  Company's  Series D  Convertible
Preferred  Stock,  par value $0.01 per share  ("Series D  Preferred  Stock") and
certain shares of the Company's Series E Convertible  Preferred Stock, par value
$0.01 per share ("Series E Preferred Stock"); and

        WHEREAS,  pursuant to the Contribution  Agreement,  the Company has also
agreed  to grant (a) an option to  purchase  additional  shares of its  Series E
Convertible  Preferred  Stock, to be exercised by Colonial (with the approval of
the Company if above the level  specified  herein) or to be assigned by Colonial
to certain Designated  Entities (as defined below) and (b) an option to purchase
shares of its common  stock (the  "Common  Stock") to  Colonial  if the  Company
pursues an Initial Public Offering (as defined below),  subject to the terms and
conditions set forth herein.

        NOW THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration,  the receipt and sufficiency of which
are hereby acknowledged, the parties hereby agree as follows:

        1.      Grant of Options.

                (a)  In   consideration   of  $1,000,000  paid  by  Colonial  by
electronic  wire transfer to the Company upon execution of this  Agreement,  the
Company  hereby  grants to Colonial the right and option (the  "Preferred  Stock
Option")  to  purchase  from  the  Company  all or any part of an  aggregate  of
1,593,082  shares of Series E Preferred  Stock,  subject  to, and in  accordance
with,  the terms and  conditions  set forth in this  Agreement.  Subject  to the
provisions of Section 6, Colonial may assign the Preferred Stock Option in whole
or in part to one or more of the  entities  listed on Exhibit B attached  hereto
and incorporated  herein (the "Designated  Entities" and, to the extent Colonial
so assigns a portion of the Preferred Stock Option to a Designated Entity,  such
Designated Entity is sometimes referred to herein as a "Permitted Purchaser") by
providing  written notice to the Company of the name and address of the assignee
and the number of shares subject to the Preferred  Stock Option assigned to such
assignee (the  "Assigned  Option  Shares").  To the extent the  Preferred  Stock
Option  is  exercised  by  Colonial  for more  than  455,166  shares of Series E
Preferred  Stock,  the exercise  with respect to shares in excess of that amount
shall

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require the prior written  consent of the Company,  which may be withheld in the
Company's  sole  discretion.  Any  assignment  to, or exercise  by, a Designated
Entity shall not require the prior written consent of the Company. The grant may
be exercised in whole or in part, but in no event shall the aggregate  number of
shares issued to Colonial and the Designated  Entities  pursuant to the exercise
of the Preferred Stock Option exceed such 1,593,082 shares of Series E Preferred
Stock (subject to adjustment as provided herein).

                (b) For value  received,  the Company hereby grants Colonial the
right and option (the "Common Stock  Option") to purchase from the Company up to
a whole number of shares of Common Stock equal to ten percent (10%) of the total
number of shares of Common Stock  actually sold in the Company's  Initial Public
Offering  (excluding  any shares  issuable upon  exercise of any  over-allotment
option granted to the underwriters of the Initial Public Offering),  subject to,
and in accordance with, the terms and conditions set forth in this Agreement. As
used herein,  "Initial  Public  Offering" means the closing of a firm commitment
underwritten   initial  public  offering  for  cash  pursuant  to  an  effective
registration  statement  under  the  Securities  Act of 1933,  as  amended  (the
"Securities  Act"),  and the rules and regulations  promulgated  thereunder from
time to time,  covering the offer and sale of the Company's  Common Stock to the
public. Any shares of Common Stock acquired by Colonial pursuant to this Section
1(b) shall be subject to the registration rights granted to Colonial pursuant to
the  Stockholders  Agreement of even date herewith among the Company and certain
of its stockholders (the "Stockholders Agreement").

        2.      Term of Options.

                (a) The Preferred Stock Option shall be exercisable, in whole or
in part,  during the term  commencing on the date hereof and ending at 5:00 p.m.
on the date (the "Expiration  Date") that is the earlier of (i) the date that is
the later to occur of (1) the 120th day after the  Agreement  Date (as such term
is  defined  in the  Contribution  Agreement),  and (2) the 15th day  after  the
Initial Closing Date (as such term is defined in the Contribution Agreement); or
(ii) 15 days after the filing by the Company of a registration  statement  under
the Securities Act, for an Initial Public Offering;  provided,  however, that on
and  after  the date  that is the  later to occur of (A) the 90th day  after the
Agreement  Date,  and (B) the 15th day  after  the  Initial  Closing  Date,  the
Preferred  Stock  Option  shall be  exercisable  solely in  connection  with the
concurrent  execution  by and  between  the  Company  and such of the  Permitted
Purchasers as shall seek to exercise such  Preferred  Stock Option of a mutually
acceptable agreement providing for the purchase, use, lease or other acquisition
by the  Company of  telecommunications  network  right-of-way  rights  from such
Permitted Purchasers,  on such terms as the Company and such Permitted Purchaser
or Permitted Purchasers may agree.

                (b)     Colonial may exercise the Common Stock Option solely in
connection with the Company's Initial Public Offering.

        3.      Exercise Price.

                (a) The  price  at  which  the  Preferred  Stock  Option  may be
exercised (the "Preferred Exercise Price") shall be $21.97 per share of Series E
Preferred Stock, as adjusted from time to time pursuant to Section 12 hereof.

                                       -2-
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                (b) The price at which the Common  Stock Option may be exercised
(the "Common Exercise Price") shall be ninety percent (90%) of the initial price
per share to the  public of the Common  Stock  being  offered  in the  Company's
Initial Public Offering,  as reflected on the cover page of the final prospectus
filed with the Securities and Exchange Commission pursuant to Rule 424(b).

        4.      Exercise of Options.

                (a) The  purchase  rights  represented  by the  Preferred  Stock
Option are  exercisable  solely by  Colonial  or, upon  assignment,  one or more
Permitted  Purchasers  at any  time up to the  Expiration  Date for (i) all or a
portion of the shares of Series E Preferred  Stock specified in Section 1(a), if
exercised  by  Colonial,  or (ii) all or a portion  of its  respective  Assigned
Option Shares, if exercised by a Permitted Purchaser;  provided,  however,  that
the prior written  consent of the Company,  which consent may be withheld in the
Company's  sole  discretion,  shall be required  with respect to the exercise by
Colonial in its own name and on its own behalf of options  with  respect to more
than 455,166 Series E Preferred  Shares. To exercise the Preferred Stock Option,
each  Permitted  Purchaser  (or  Colonial,  as the case may be,  with the  prior
written consent of the Company in the Company's sole  discretion)  shall deliver
written  notice  thereof  (the  "Exercise  Notice")  to the  Company in the form
attached  hereto as Exhibit A duly  completed  and  executed  by such  Permitted
Purchaser (or Colonial,  as the case may be). Colonial or a Permitted  Purchaser
that  exercises its option as described in this Section 4(a) (and,  with respect
to  Colonial,  receives the prior  written  consent of the Company) is sometimes
referred to as a "Purchaser."

                (b) The purchase  rights  represented by the Common Stock Option
are  exercisable  by Colonial,  in whole or in part (and Colonial may specify in
such exercise  notice,  in lieu of or in addition to a percentage  of shares,  a
maximum  aggregate amount of its investment,  from which its percentage shall be
derived),  in connection with an Initial Public  Offering,  by written notice by
Colonial delivered to the Company not less than 10 days prior to the filing of a
registration  statement  by the  Company in  connection  with an Initial  Public
Offering  setting  forth any  maximum  aggregate  investment  amount as to which
Colonial  is  exercising  its  Common  Stock  Option,  and,  subject to any such
maximum,  Colonial's  desired  number of shares in respect of which  Colonial is
exercising its Common Stock Option. The Company shall notify Colonial in writing
at least 30 days prior to the filing of a registration  statement for an Initial
Public  Offering (and shall advise  Colonial as promptly as  practicable  of any
delay in the expected date for filing).

        5.      Closing of the Purchase.

                (a) The  closing of any  purchase  of Series E  Preferred  Stock
pursuant  to exercise  of the  Preferred  Stock  Option  (the  "Preferred  Stock
Closing") shall be held at the offices of the Company on a date agreed to by the
Company  and the  Purchaser,  but not later  than  thirty  (30)  days  following
delivery of the Exercise Notice.

                (b)     The closing of any purchase of Common Stock  pursuant to
                        exercise of the Common Stock  Option (the "Common  Stock
                        Closing") shall be held at the offices of the Company on
                        or as  soon  as  reasonably  practicable  following  the
                        closing date of the Initial  Public  Offering in respect
                        of which the option was so exercised.

                (c)     At the Preferred Stock Closing:

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                (i) The  Company  shall  deliver to each  Purchaser  one or more
certificates representing the shares of Series E Preferred Stock to be purchased
by such Purchaser;

                (ii)  Each  Purchaser  shall  deliver  to the  Company  a signed
certificate, dated as of the date of the Closing as described in Section 7;

                (iii) Each Purchaser and the Company shall execute and deliver a
written  agreement,  whereby the Purchaser  shall agree to become a party to and
bound by the terms of the Stockholders  Agreement and the Company shall grant to
such  Purchaser  the  rights and  benefits  of a  "Stockholder"  as such term is
defined in the Stockholders Agreement; and

                (iv)  Payment of the  purchase  price for the Series E Preferred
Stock  shall  be made by wire  transfer  of  immediately  available  funds to an
account designated by the Company in an amount equal to (A) the number of shares
of Series E Preferred Stock  specified by the Purchaser in its Exercise  Notice,
multiplied by (B) the Preferred Exercise Price.

        (d)     At the Common Stock Closing:

                (i)  The  Company   shall   deliver  to  Colonial  one  or  more
certificates representing the shares of Common Stock to be purchased pursuant to
exercise of the Common Stock Option; and

                (ii) Payment of the purchase price for the Common Stock shall be
made by wire transfer of immediately available funds to an account designated by
the  Company  in an amount  equal to (A) the  number  of shares of Common  Stock
specified  by  Colonial  in its  notice  delivered  pursuant  to  Section  4(b),
multiplied by (B) the Common Exercise Price.

        6.  Transferability.  Colonial  shall not assign,  hypothecate,  donate,
encumber,  transfer  or  otherwise  dispose  of any  interest  in the  Series  E
Preferred Stock or Common Stock of the Company,  and shall not assign all or any
portion of the Preferred Stock Option,  except in compliance with the provisions
herein,  the Stockholders  Agreement,  and applicable  securities laws.  Without
limitation of the foregoing, Colonial shall not assign all or any portion of the
Preferred Stock Option except (i) to a Designated  Entity that agrees in writing
to be bound by the  terms  of this  Option  Agreement  in the same  manner  that
Colonial is bound (including,  without limitation, this Section 6, but excluding
the restrictions  upon Colonial's direct exercise of the Preferred Stock Option,
which apply only to Colonial and any successor entity thereto),  and (ii) on the
condition that Colonial  provides to the Company an opinion of counsel,  in form
and substance to the reasonable  satisfaction of the Company, to the effect that
such assignment and the issuance of any Series E Preferred Stock or Common Stock
upon  exercise of the  Preferred  Stock Option by the assignee  will not require
registration  of  such  securities  under  the  Securities  Act of  1933  or any
applicable state securities law.

        7.      Representations and Warranties.

                                       -4-
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                (a) At the Preferred Stock Closing, as a condition thereto, each
Purchaser shall deliver to the Company a certificate representing and warranting
the following in connection  with the acquisition of Series E Preferred Stock by
such Purchaser pursuant to the exercise of the Preferred Stock Option:

                        (i)     The Purchaser is aware of the Company's business
affairs and financial condition and has acquired sufficient information from the
Company  about the Company to reach an informed  and  knowledgeable  decision to
acquire the Series E Preferred  Stock.  The Purchaser is purchasing the Series E
Preferred Stock for investment for its own account only and not as a nominee for
any  party  and not  with a view to,  or for  resale  in  connection  with,  any
"distribution"  thereof  within the  meaning of the  Securities  Act  (except as
contemplated by Section 10).

                        (ii)    The Purchaser understands that Series E
Preferred Stock has not been registered  under the Securities Act by reason of a
specific exemption therefrom,  which exemption depends upon, among other things,
the bona fide nature of such Purchaser's investment intent as expressed herein.

                        (iii)   The Purchaser further understands that the
Series E Preferred  Stock must be held  indefinitely  unless it is  subsequently
registered  under the Securities Act or an exemption from such  registration  is
available.  The Purchaser further  acknowledges and understands that the Company
is under no  obligation  to register the Series E Preferred  Stock except as set
forth  in  the  Stockholders  Agreement.  The  Purchaser  understands  that  the
certificate  evidencing  the Series E  Preferred  Stock  (and any  Common  Stock
received upon  conversion  thereof) will be imprinted with the following  legend
which prohibits its transfer unless it is registered or such registration is not
required in the opinion of counsel for the Company.

                THE  SECURITIES   REPRESENTED  HEREBY  HAVE  BEEN  ACQUIRED  FOR
                INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
                OF 1933.  SUCH  SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE
                ABSENCE OF SUCH  REGISTRATION  OR AN EXEMPTION  THEREFROM  UNDER
                SAID ACT. COPIES OF THE AGREEMENT COVERING THE PURCHASE OF THESE
                SECURITIES  AND  RESTRICTING  THEIR  TRANSFER  OR  SALE  MAY  BE
                OBTAINED AT NO COST BY WRITTEN  REQUEST MADE TO THE SECRETARY OF
                THE COMPANY AT THE PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY.

                (b) The Company  hereby  represents and warrants to Colonial and
each Purchaser,  as of the date hereof and as of the date of the Preferred Stock
Closing, as follows:

                        (i)     The Company has all requisite corporate power
and  authority  to execute and  deliver  this  Agreement,  to issue and sell the
Series E Preferred Stock and to carry out the provisions of this Agreement.

                                       -5-
<PAGE>

                        (ii)    All corporate action on the part of the Company,
its officers, directors and stockholders necessary for the authorization of this
Agreement,  the  performance  of all  obligations  of the Company  hereunder and
thereunder at the Preferred Stock Closing and the authorization,  sale, issuance
and  delivery  of the Series E  Preferred  Stock has been taken or will be taken
prior to the Preferred  Stock  Closing.  Upon its  execution and delivery,  this
Agreement will be a valid and binding obligation of the Company,  enforceable in
accordance with its terms.

                        (iii)   When issued in compliance with the provisions of
this Agreement,  the Series E Preferred Stock will be validly issued, fully paid
and  nonassessable,  and will be free of any  liens or  encumbrances;  provided,
however,  that the Series E Preferred  Stock may be subject to  restrictions  on
transfer  under state and/or federal  securities  laws as set forth herein or as
otherwise required by such laws at the time a transfer is proposed.

                (c) The Company hereby  represents and warrants to Colonial,  as
of the date hereof and as of the date of the Common Stock Closing, as follows:

                        (i)     The Company has all requisite corporate power
and  authority  to execute and  deliver  this  Agreement,  to issue and sell the
Common Stock and to carry out the provisions of this Agreement.

                        (ii)    All corporate action on the part of the Company,
its officers, directors and stockholders necessary for the authorization of this
Agreement,  the  performance  of all  obligations  of the Company  hereunder and
thereunder at the Common Stock Closing and the authorization, sale, issuance and
delivery of the Common Stock has been taken or will be taken prior to the Common
Stock Closing.  Upon its execution and delivery,  this Agreement will be a valid
and binding obligation of the Company, enforceable in accordance with its terms.

                        (iii)   When issued in compliance with the provisions of
this  Agreement,  the  Common  Stock  will be  validly  issued,  fully  paid and
nonassessable, and will be free of any liens or encumbrances; provided, however,
that the Common  Stock may be subject to  restrictions  on transfer  under state
and/or federal  securities laws as set forth herein or as otherwise  required by
such laws at the time a transfer is proposed.

        8.      Conditions to Obligations of the Company.

                (a) The  Company's  obligation  to issue  and sell the  Series E
Preferred Stock at the Preferred  Stock Closing is subject to the  satisfaction,
on or prior to such Preferred Stock Closing, of the following conditions:

                        (i)     The representations and warranties in Section
7(a)  shall be true and  correct  in all  material  respects  at the date of the
Preferred Stock Closing.

                        (ii)    The Purchaser shall have performed and complied
with all agreements and conditions  required to be performed or complied with by
Purchaser under this Agreement on or before the Preferred Stock Closing.

                                       -6-
<PAGE>

                        (iii)   As of the Preferred Stock Closing, the sale and
issuance of the Series E Preferred Stock shall be legally  permitted by all laws
and regulations to which any Purchaser and the Company are subject.

                        (iv)    The Purchaser shall have executed and delivered
the Stockholders Agreement as provided herein.

                (b) The Company's  obligation to issue and sell the Common Stock
at the Common Stock Closing is subject to the satisfaction,  on or prior to such
Common Stock Closing, of the following conditions:

                        (i)     Colonial shall have performed and complied with
all  agreements  and  conditions  required to be performed  or complied  with by
Colonial  under this Agreement and the  Contribution  Agreement on or before the
Common Stock Closing.

                        (ii)    As of the Common Stock Closing, the sale and
issuance  of the  Common  Stock  shall  be  legally  permitted  by all  laws and
regulations to which Colonial and the Company are subject.

                        (iii)   A registration statement relating to the Initial
Public  Offering  shall have become  effective and no stop order  suspending the
effectiveness  thereof shall have been issued and no proceedings  therefor shall
be pending or threatened by the Securities and Exchange Commission.

        9. Rights of Stockholders.  With respect to the Series E Preferred Stock
and Common Stock subject to option hereunder, neither Colonial nor any Permitted
Purchaser shall be entitled to vote or receive dividends or be deemed the holder
of such  Series E Preferred  Stock or Common  Stock  until the  Preferred  Stock
Option or Common Stock Option shall have been exercised as provided  herein.  In
addition,  nothing contained herein be construed to confer upon Colonial nor any
Permitted Purchaser,  by virtue of their ownership of the Preferred Stock Option
or Common Stock Option, any of the rights of a stockholder of the Company or any
right to vote for the  election of  directors  or upon any matter  submitted  to
stockholders  at any  meeting  thereof,  or to give or  withhold  consent to any
corporate  action  (whether  upon  any  recapitalization,   issuance  of  stock,
reclassification  of stock,  change of par  value,  or change of stock to no par
value, consolidation,  merger, conveyance, or otherwise) or to receive notice of
meetings,  or to receive dividends or subscription rights or otherwise until the
Preferred  Stock Option or the Common Stock Option shall have been  exercised as
provided herein.

        10.     Consulting Agreement. Notwithstanding anything contained herein
                or in any certificate delivered hereunder or under the
                Contribution Agreement or any of the documents, instruments or
                agreements executed in connection with such Contribution
                Agreement, the Company acknowledges that certain of the
                Designated Entities have entered into, or may in the future
                enter into, Consulting Agreements with Colonial pursuant to
                which Colonial shall be entitled to receive from such Designated
                Entities certain consideration, which may include shares of

                                       -7-
<PAGE>

                the Company's Preferred Stock, upon the conditions specified in
                the Consulting Agreements.

        11.     Reservation of Stock.

                (a) The Company  covenants  that  during the term the  Preferred
        Stock  Option  is  exercisable,   the  Company  will  reserve  from  its
        authorized and unissued Series E Preferred Stock a sufficient  number of
        shares to provide for the issuance of Series E Preferred  Stock upon the
        exercise of the  Preferred  Stock Option (and shares of its Common Stock
        for issuance on conversion  of such Series E Preferred  Stock) and, from
        time to time,  will take all steps necessary to amend its Certificate of
        Incorporation  to  provide  sufficient  reserves  of  shares of Series E
        Preferred  Stock  issuable upon  exercise of the Preferred  Stock Option
        (and  shares of its Common  Stock for  issuance  on  conversion  of such
        Series E Preferred Stock). The Company further covenants that all shares
        that may be  issued  upon the  exercise  of  rights  represented  by the
        Preferred  Stock  Option or the Common  Stock  Option and payment of the
        Preferred  Exercise  Price or Common  Exercise  Price,  all as set forth
        herein, will be free from all taxes, liens and charges in respect of the
        issue  thereof  (other than taxes in respect of any  transfer  occurring
        contemporaneously or otherwise specified herein).

                (b) The Company  will use its best efforts to direct for sale to
Colonial in the Initial Public  Offering as many shares as Colonial may request,
subject to any  restrictions  imposed by the National  Association of Securities
Dealers and subject to the best advice of the underwriters of the Initial Public
Offering.

        12. Dilution.  In the event that prior to the delivery by the Company of
the shares of Series E Preferred  Stock in respect of which the Preferred  Stock
Option is granted, the outstanding shares of Series E Preferred Stock, including
any Common Stock into which the Series E Preferred  Stock shall be  convertible,
shall be changed in number or class or exchanged for a different  number or kind
of shares of stock or other  securities  of the  Company,  whether  by reason of
recapitalization,  reclassification, reorganization, combination, stock split or
reverse stock split,  or payment of a stock  dividend or other similar change in
capitalization,  the  number  and kind of  shares of  Series E  Preferred  Stock
subject to the Preferred Stock Option shall be adjusted in a manner set forth in
Section  5.3.4(e) and (f)(ii) of the  Certificate of  Incorporation  so that the
Preferred  Stock Option  shall  thereafter  represent  the right to acquire such
number and kind of securities as would have been issuable if the Preferred Stock
Option  had  been  exercised   immediately   prior  to  such   recapitalization,
reclassification,  reorganization,  combination,  stock  split or reverse  stock
split, or payment of a stock dividend or other similar change in capitalization.
For purposes of the foregoing, the "Certificate of Incorporation" shall mean the
Certificate  of  Incorporation  of the Company as amended  and/or  restated  and
effective  immediately  prior to the change in terms of the  Company's  Series E
Preferred Stock.

        13.  Series D Preferred  Stock.  The Company and one or more  Designated
Entities,  may, but are not required to, hereafter enter into agreements for the
issuance of stock of the Company in exchange for a contribution of rights-of-way
rights  from such  Designated  Entities.  In the event that the Company and such
Designated  Entities enter into such agreement,  Colonial and the Company hereby
agree that, between the date of this Option Agreement and the

                                       -8-
<PAGE>

Expiration  Date,  unless the  parties  otherwise  agree,  (a) the type of stock
delivered to such Designated  Entity shall be Series D Preferred  Stock, (b) the
purchase price per share for such Series D Preferred Stock shall be $21.97,  and
(c) the Company and the  Designated  Entity shall  execute and deliver a written
agreement  pursuant to which the  Designated  Entity shall become a party to and
bound by the terms of the  Stockholders  Agreement  such  that  such  Designated
Entity shall have the rights and benefits of a "Stockholder"  as such is defined
in the Stockholders Agreement.

        14.     Miscellaneous.

                (a)  Transfer and Similar  Taxes.  All stock,  stamp,  transfer,
registration or similar taxes or duties, if any,  resulting from the purchase of
Series E Preferred  Stock or Common Stock  pursuant to this  Agreement  shall be
paid by the Purchaser acquiring such shares.

                (b)     Authorized Signatories. The persons executing this
Agreement for and on behalf of Colonial and the Company each represent that they
have the requisite authority to bind the entities on whose behalf they are
signing.

                (c) Successors and Assigns. Except as provided in Sections 1 and
6, this  Agreement may not be assigned,  delegated or otherwise  transferred  by
either party without the written consent of the other party. Except as otherwise
expressly  provided  herein,  all  covenants  and  agreements  contained in this
Agreement  by or on behalf of the  parties  hereto  shall  bind and inure to the
benefit of the  respective  successors and assigns of the parties hereto whether
so expressed or not.

                (d)  Severability.  Whenever  possible,  each  provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable  law, but if any provision of this Agreement is held to be prohibited
by or invalid under  applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.

                (e) Counterparts.  This Agreement may be executed simultaneously
in two or more counterparts, any one of which need not contain the signatures of
more than one party, but all such  counterparts  taken together shall constitute
one and the same Agreement.

                (f)     Descriptive Headings: Interpretation. The descriptive
headings of this Agreement are inserted for convenience only and do not
constitute a Section of this Agreement. The use of the word "including" in this
Agreement shall be by way of example rather than by limitation. Except as
otherwise provided herein, capitalized terms used herein without definition
shall have the meanings ascribed to them in the Contribution Agreement.

                (g) Governing Law. This Agreement  shall be governed by the laws
of the State of Delaware,  without  giving effect to its  principles or rules of
conflict of laws to the extent such  principles or rules would require or permit
the application of the laws of another jurisdiction.

                                       -9-
<PAGE>

                (h)     Amendment. No change or addition shall be made to this
Agreement except by a written agreement executed by Colonial and the Company.

                (i) Notices. All notices,  demands or other communications to be
given or delivered  under or by reason of the provisions of this Agreement shall
be in writing and shall be deemed to have been given when  delivered  personally
to the recipient,  sent to the recipient by reputable  express  courier  service
(charges  prepaid) or mailed to the recipient by certified or  registered  mail,
return receipt  requested and postage prepaid.  Such notices,  demands and other
communications  shall be sent to the  parties  hereto at the  address  indicated
below:

            If to Colonial:

            Colonial Pipeline Company
            945 East Paces Ferry Road, NE
            Atlanta, Georgia 30326-1125
            Attn:  General Counsel
            Fax:  404-841-2315

            With a copy to (which shall not constitute notice):

            Arnall Golden & Gregory, LLP
            2800 One Atlantic Center
            1201 West Peachtree Street
            Atlanta, Georgia 30309-3450
            Attn:  Donald I. Hackney, Jr., Esq.
            Fax:  404-873-8639

            If to a Permitted Purchaser:

            At the address provided by Colonial pursuant to Section 1(a) above

            If to the Company to:

            Pathnet Telecommunications, Inc.
            1015 31st Street, N.W.
            Washington, D.C.  20007
            Attn:  General Counsel
            Fax:  202-625-7369

            With a copy to (which shall not constitute notice):

            Covington & Burling
            1201 Pennsylvania Avenue., N.W.
            P.O. Box 7566
            Washington, D.C.  20044
            Attn:  Bruce S. Wilson, Esq.
            Fax:  202-662-6291

                                      -10-
<PAGE>

or to such  other  address  or to the  attention  of such  other  person  as the
recipient party has specified by prior written notice to the sending party.

                (j) Complete  Agreement.  This  Agreement  represents the entire
agreement  between Colonial and the Company covering  everything  agreed upon or
understood in this transaction and all other prior  agreements,  written or oral
are  merged  into  this  Agreement.  There  are no  oral  promises,  conditions,
representations,  understandings,  interpretations  or  terms  of  any  kind  as
conditions or inducements to the execution hereof in effect between the parties.

                            [SIGNATURE PAGES FOLLOW]

                                      -11-
<PAGE>

        IN WITNESS  WHEREOF,  the  parties  hereto  have  executed  this  Option
Agreement on the date first written above.

                                  PATHNET TELECOMMUNICATIONS, INC.
                                   /s/ Richard Jalkut
                                  ------------------------------------

                                  By:
                                     ---------------------------------
                                  Its: CEO
                                      --------------------------------

                                  COLONIAL PIPELINE COMPANY

                                  ------------------------------------

                                  By:/s/ D.L. Lemmon
                                     ---------------------------------
                                  Its: D.L. Lemmon, President and
                                      --------------------------------
                                        Chief Executive Officer

                                      -12-EXHIBIT 10.8

                       Positions of this exhibit have been
                        omitted and filed separately with
                     the Securities and Exchange Commission.
                         These positions are designated
                                  "[ * * * ]."

                             FIBER OPTIC ACCESS AND
                                LICENSE AGREEMENT

                               dated as of March 30, 2000

                                     between

                            CSX TRANSPORTATION, INC.
                     A VIRGINIA CORPORATION, FOR ITSELF AND
    AS OPERATOR FOR NEW YORK CENTRAL LINES LLC, A DELAWARE LIMITED LIABILITY
   COMPANY AND A WHOLLY-OWNED SUBSIDIARY OF CONSOLIDATED RAIL CORPORATION, A
                            PENNSYLVANIA CORPORATION

                                       and

                        PATHNET TELECOMMUNICATIONS, INC.,
                             a Delaware corporation

<PAGE>
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
ARTICLE                                                                     PAGE
<S>       <C>                                                              <C>
   1.      Certain Definitions
   2.      License
   3.      Term
   4.      Exclusivity
   5.      Equity Consideration
   6.      Title Limits
   7.      Third Party Joint Facilities and Trackage Rights
   8.      Conduit (Innerduct); Fiber; and Capacity
   9.      Disclaimer
</TABLE>

<TABLE>
<CAPTION>
EXHIBIT SUMMARY
<S>                                    <C>
  Exhibit 1                             Form Build Supplement
  Exhibit 2                             Description of NYC and CSXT Corridor
  Exhibit 3                             Depiction of Radii Around Tier Cities
  Exhibit 4                             Designation of Tier Cities
  Exhibit 5                             Depiction of [* * *] and [* * *] Builds
  Exhibit 6                             Initial Designation of NYC Corridor
  Exhibit 7                             [* * *]
</TABLE>
<PAGE>

                    FIBER OPTIC ACCESS AND LICENSE AGREEMENT

     THIS FIBER OPTIC ACCESS AND LICENSE AGREEMENT (this "License Agreement") is
made as of March 30, 2000 ("Effective Date"), by and between CSX TRANSPORTATION,
INC., a Virginia corporation  ("CSXT"),  for itself and as operator for New York
Central  Lines LLC, a Delaware  limited  liability  company  ("NYC Lines") and a
wholly  owned  subsidiary  of  Consolidated  Rail  Corporation,  a  Pennsylvania
corporation (CSXT and NYC Lines,  collectively,  the "Railroad"),  whose mailing
address  is  500  Water  Street,   Jacksonville,   Florida  32202,  and  PATHNET
TELECOMMUNICATIONS,  INC., a Delaware  corporation  ("Pathnet"),  whose  mailing
address is 1015 31st Street, N.W., Washington, D.C. 20007.

                                R E C I T A L S:

      A. Railroad is the owner or operator of a continuous right-of way (by fee,
easement,  license,  operating agreement, joint use agreement or other interest)
within  certain  real  property  upon  which  it  operates  an  interstate  rail
transportation  system,  as shown on Railroad's  current System Map (hereinafter
referred to as the "Rail Corridor").

      B. Pursuant to the Contribution  Agreement and Stockholder Agreement being
executed in connection herewith, Pathnet desires to enter into an agreement with
Railroad to permit  Pathnet to  install,  market,  sell and/or  maintain a Fiber
Optic Communication System, including Conduit (Innerduct), Cable, Optical Fibers
and related equipment and structures,  along, in and on up to [ * * * ] miles of
Rail Corridor,  along Segments of the Rail Corridor to be selected in accordance
herewith.

     C. Pursuant to the Contribution  Agreement and Stockholder  Agreement being
executed  in  connection  herewith,  Railroad  is  willing to  transfer  certain
property  interests to Pathnet in exchange for stock in Pathnet,  provided  that
Pathnet  accepts a license to use the  selected  Segments  of the Rail  Corridor
subject to all of the terms and  conditions of this License  Agreements  and the
Right of Way Operating  Agreement being entered into by and between Railroad and
Pathnet  concurrently  herewith  (hereinafter,  the "Operating  Agreement"  and,
together  with this  License  Agreement,  the  "Agreements"),  which  Agreements
provide,  among other  things,  that (i) the license  granted  thereby  shall be
subject  to the  existing  rights and  interests  of other  parties,  including,
without  limitation,  [ * * * ]  and  [ * * * ],  and  (ii)  Railroad  makes  no
representation or warranty with respect to its right, title or interest, if any,
in and to any  portion  of the Rail  Corridor  or its right to grant any type of
license or other right for any party,  including  Pathnet,  to use or occupy the
same.

      NOW,  THEREFORE,  for good and  valuable  consideration,  the  receipt and
adequacy of which are hereby acknowledged,  Railroad and Pathnet hereby agree as
follows:

                                        2
<PAGE>

1.    CERTAIN DEFINITIONS.

1.1 General  Interpretive  Principles.  For purposes of this License  Agreement,
except as otherwise expressly provided or unless the context otherwise requires,
(i) the terms defined in this Section have the meanings assigned to them in this
Section  and  include  the  plural as well as the  singular,  and the use of any
gender in this License  Agreement  shall be deemed to include the other  gender;
(ii) the word "including" means  "including,  but not limited to," and (iii) the
article,  section and  paragraph  headings  in this  License  Agreement  are for
convenience  only and are not intended to describe,  interpret,  define or limit
the scope, extent, or intent of any of the provisions of this License Agreement.

      1.2 Incorporation of Recitals. The Recitals set forth above are
incorporated herein by this reference.

      1.3 Definitions.  As used in this License  Agreement,  the following terms
shall  have  the  following  respective  meanings  (unless  otherwise  expressly
provided):

      "Affiliate"  shall mean any Person that,  directly or indirectly,  through
one or more  intermediaries,  controls or is  controlled  by, or is under common
control with, another Person.  The term "control," for this purpose,  shall mean
the ability,  whether by the  ownership of shares or other equity  interest,  by
contract or otherwise,  to elect a majority of the  directors of a  corporation,
independently  to select the managing  partner of a partnership  or the managing
member  of  a  limited  liability  company,  or  otherwise  to  have  the  power
independently  to remove and then select a majority of those Persons  exercising
governing  authority over an entity.  Control shall be conclusively  presumed in
the case of the direct or indirect  ownership of fifty  percent (50%) or more of
the equity interests in an entity.

      "Agreements" shall be as defined in Recital C.

      "Broadform Telecommunications Rights" shall mean, exclusive of the Limited
Telecommunications  Rights granted  hereunder,  the right of owners of and other
parties  with  interests  in the land  underlying  the Rail  Corridor to license
generally,  for  telecommunications  purposes,  any  and  all  portions  of Rail
Corridor.

      "Build Supplement" shall have the meaning set forth in Section 2.6 below

      "Cable"  shall  mean a single  cable  containing  Optical  Fiber,  and any
support material and protective  casing,  capable of transmitting  data or voice
communications in a Fiber Optic Communication System.

      "Conduit  (Innerduct)" shall mean a single duct or pipe, not exceeding two
inches (2") inside  diameter (or similar  cross  sectional  equivalent),  except
where  specifically  required or approved by  Railroad,  suitable  for housing a
Fiber Optic Cable.

      "Construction Exclusivity" shall have the meaning set forth in Section 4.2
below.

      "Construction Plans" shall mean the drawings, plans and specifications for
the construction  and  installation of Pathnet's System and Facilities,  showing
the proposed  location of all  Pathnet's  System and  Facilities,  in sufficient
detail,  with distance shown from nearest track, with separate detailed drawings
of all junction, Repeater (Regen) Sites, bridge and tunnel occupancies,  showing
depth of installation, details and methods

                                        3
<PAGE>

of the proposed construction, with numbers and size of Conduit(s) (Innerduct(s))
to be placed,  including Optical Fiber count and total mileage for each Segment.
Construction  Plans  shall  clearly  note  Railroad  Valuation  Map  references,
Railroad  Survey  Station and Milepost  references  for all beginning and ending
points and all alignment  transition points.  Each set of Construction Plans for
each Segment shall have an overview map showing all of the required information.

      "Construction Schedule" shall have the meaning set forth in Section 2.6

below

      "Contribution  Agreement" shall mean that certain  Contribution  Agreement
dated as of  _____________,  1999 by and  between,  among  others,  Railroad and
Pathnet.

      "CSX Conduits" shall have the meaning set forth in Section 8.5 below.

      "CSXT Corridor" shall mean, subject to Section 2.1 of this Agreement,  all
of the Rail Corridor  exclusive of the NYC Corridor,  as described in Exhibit 2,
attached hereto and incorporated herein.

      "Designated  Rail  Corridor"  shall  mean a Segment  of the Rail  Corridor
selected by Pathnet and approved by Railroad in accordance with the terms of the
Agreements.

      "Designation  Period"  shall have the  meaning  set forth in  Section  2.6
below.

      "Exclusivity  Period"  shall have the  meaning  set forth in  Section  4.2
below.

      "Facilities",  when applied to property of or installed by Pathnet,  shall
mean Conduit (Innerduct), Cable, carrier pipes, Pathnet wires and poles, Optical
Fibers,  junctions,  Repeaters (Regens),  Handholds,  terminals,  power sources,
fault alarm system(s),  emergency equipment storage shelters,  attachments,  and
all other structures and articles of personal property connected with, necessary
for,  appurtenant  to, or useful to the  installation,  operation,  maintenance,
repair, re-installation,  replacement,  relocation or removal of Pathnet's Fiber
Optic Communication System.

      "Fiber Optic" or "Optical Fiber" shall mean a strand of optical  waveguide
permitting the transmission of communications signals.

      "Fiber  Optic  Communication  System"  or  "System"  shall mean the system
utilizing Optical Fiber as the medium for  communications and transmission to be
installed  by  Pathnet  in the  Designated  Rail  Corridor,  which  may  contain
Conduit(s)  (Innerducts(s)),  Cable(s)  and Optical  Fiber(s).  Such terms shall
include all Conduit  (Innerduct),  Cable,  Optical Fiber,  Handholds,  manholes,
marker tape, signs, coupler,  structure  attachment,  pull rope, other necessary
ancillary hardware,  and bridge, tunnel and trestle attachments,  and shall also
include  such  communications  technologies  as may  hereafter  evolve  from  or
relating to Optical Fiber but which utilize  Pathnet's  Facilities and/or System
as initially installed or as thereafter modified pursuant to the Agreements.

      "Handholds"  shall  include  Cable loops,  or boxes or vaults placed in or
above ground at junctions,  Repeaters (Regens) or at areas of Cable splicing and
connection, for storage of slack Cable.

      "Interest Notice" shall have the meaning set forth in Section 4.2 below.

      "License" shall have the meaning set forth in Section 2.1 below.

      "Limited   Telecommunications   Rights"  shall  mean  Pathnet's  right  to
construct,  install,  operate,  repair and maintain the Facilities and System as
more particularly  described in, and subject to the terms and conditions of, the
Agreements,  including,  without limitation, those contained in Article 6 of the
License Agreement.

      "Negotiation  Exclusivity" shall have the meaning set forth in Section 4.2
below.

      "NYC  Corridor"  shall  mean that  certain  portion  of the Rail  Corridor
operated by CSXT pursuant to that certain  Operating  Agreement dated as of June
1, 1999 by and

                                        4
<PAGE>

between NYC Lines, as owner,  and CSXT, as operator,  as described in Exhibit 2,
attached hereto and incorporated herein.

      "Operating Agreement" shall have the meaning set forth in Recital C above.

      "Optical Fiber" shall mean Fiber Optic.

      "Person"  shall mean any  individual,  association,  partnership,  limited
liability  company,  corporation,  joint stock  company,  trust,  joint venture,
unincorporated organization or governmental entity or any department,  agency or
political subdivision thereof.

     "[ * * * ] Obligations"  shall mean that Railroad,  in accordance with that
certain  Agreement,  dated as of [ * * * ], between  Railroad and [ * * * ], now
known as [ * * * ], shall refer Pathnet's Route Plan on CSXT Corridor to [ * * *
], in writing,  and [ * * * ] shall have ten (10)  business days from receipt to
confirm its intent to negotiate with Pathnet for the  installation of a proposed
portion of the Pathnet  System.  If [ * * * ] declines to negotiate with Pathnet
or fails to advise Railroad of its intent to negotiate  within ten (10) business
days following its receipt of  notification,  the terms of this Agreement  shall
become operative as to the Build Supplement  evidenced by the Route Plan, except
in those areas subject to the following exclusivity provisions. In addition, [ *
* * ] has  exclusivity on those segments of CSXT Corridor on which [ * * * ] has
commenced   installation  of  its  fiber  optic   communications   system.  Such
exclusivity  does not apply:  (i) to any  segment in which all  conduit or fiber
optic capacity has been sold or utilized;  and (ii) to third party installations
of ten (10) miles or less.

      "Rail Corridor" shall have the meaning set forth in Recital A above.

      "Railroad Duct" shall have the meaning set forth in Section 8.1 below.

      "Repeater  (Regen)"  shall mean a device which  regenerates,  amplifies or
extends optical  signals,  used to send the light impulse through Optical Fiber,
and includes attendant  equipment,  facilities,  power source, and technological
changes.

      "Repeater  (Regen) Sites" shall mean those permitted  portions of the Rail
Corridor on which  Repeaters  (Regens) are  located,  and shall be limited to an
area of five  hundred  (500)  square  feet  or  less,  and  located  beyond  the
Restricted Working Area, unless otherwise  specifically  permitted in writing by
Railroad.

      "Restricted  Working  Area"  shall mean the area  parallel  to and located
thirty  feet (30') (or the top of any ditch  slope if that  distance  is greater
than  thirty feet (30')) from the  centerline  of the  outermost  track (on each
side) in the Rail Corridor.

       "Segment" shall mean either a longitudinal  section of Rail Corridor or a
longitudinal  section of Conduit  (Innerduct) or Cable installed by Pathnet,  as
applicable.

      "Stockholder  Agreement"  shall mean that  certain  Stockholder  Agreement
dated on or about the date hereof by and  between, among  others,  Railroad  and
Pathnet.

      "Substitution  Notice"  shall have the  meaning  set forth in Section  4.2
below.

      "System" shall mean Fiber Optic Communication System.

      "System  Map"  shall mean  Railroad's  line map,  published  periodically,
designating the general location of the Railroad's operating lines.

                                        5
<PAGE>

      "Term" shall have the meaning set forth in Section 3.1 below.

      "Title Deficient Areas" shall mean those portions of the Rail Corridor, if
any,  for which  Railroad  holds title in less than fee simple  absolute and for
which  Railroad may not otherwise have the right to grant to Pathnet the license
for use and occupancy as contemplated by this License Agreement.

      "Trackage  Rights"  shall mean the  rights  arising  by  agreement  of one
railroad to use the tracks or right-of-way of another  railroad for the carriage
of rail traffic;  said agreement  ordinarily  imparting no ownership interest in
the burdening  carrier  relating to the tracks or  rights-of-way of the burdened
carrier.

      "[* * *] Obligations" shall mean that in CSXT Corridor occupied by a fiber
optic  communications  system  installed by [* * *] (or any predecessor  entity)
(collectively  "[* * *]")  or,  in any  CSXT  Corridor  over  which  [* * *] has
exercised its option to install its system within the preceding [* * *] prior to
the date of the  applicable  Build  Supplement,  Pathnet's  System  shall not be
installed in any length longer than [* * *] contiguous  miles and no closer than
[* * *] from any existing [* * *] facility.  For the purposes of this limitation
only,  any two (2) Segments of Pathnet's  Fiber Optic  Communications  System of
which the  respective  ends are less than [* * *] apart shall be deemed a single
Segment and the  aggregate  length of such two (2) Segments  (but not the length
between the respective ends of such Segments) shall be considered in determining
contiguous mileage.

      2.    LICENSE

      2.1 Grant of License. (a) Subject to the terms and conditions contained in
the  Agreements,  including,  without  limitation,  Article 6 of this Agreement,
Railroad  hereby  grants  to  Pathnet a license  of  Limited  Telecommunications
Rights, for the Term and upon the conditions, covenants and agreements set forth
in the Agreements,  to select up to [* * *] miles of Rail Corridor (including up
to 2,000 miles of NYC Corridor) to be designated (as provided herein and subject
to Railroad's approval rights as set forth in the Agreements) as Designated Rail
Corridor  and  to  use  such   Designated  Rail  Corridor  for  the  purpose  of
constructing,  installing,  operating,  maintaining,  repairing,  replacing  and
removing (and including  rights of access subject to the  conditions,  covenants
and agreements set forth in the Agreements) a Fiber Optic Communications Systems
containing no more than eight (8) Conduits  (Innerducts) and an unlimited number
of Optical Fibers  therein,  together with necessary  appurtenant  equipment and
structures (the "License").  Subject to Railroad's  prior consent,  which may be
withheld in Railroad's sole discretion,  Pathnet may install additional Conduits
(Innerducts), if Railroad and Pathnet can reach agreement on how to share in the
revenue resulting from sales of such Conduits  (Innerducts) or the Optical Fiber
contained therein.

            (b) With respect to CSXT Corridor  located  within the State of [* *
*],  Pathnet  acknowledges  the pendancy of certain  class  action  litiga- tion
concerning the use of railroad  rights of way by  telecommunications  companies.
During the pendancy of this or any related  litigation,  Pathnet  shall not have
any right under this  Agreement  to install its System or  Facilities  upon CSXT
Corridor in the State of [* * *] without the prior written  consent of Railroad,
which shall not be unreasonably  withheld,  provided however,  that if the court
rules that telecommunications  companies (such as Pathnet), cannot install their
systems and facilities on such rights of way, Pathnet shall have the obligation,
prior to the installation of any portion of its System or Facilities on the CSXT
Corridor  in the State of [* * *], to  acquire  Broad-  form  Telecommunications
Rights  sufficient  in  Railroad's   reasonable  discretion  to  authorize  such
installation.    Pathnet    understands    and   agrees   that   any   Broadform
Telecommunications  Rights  acquired  by  Pathnet  are  subject to the terms and
conditions of this License Agreement.

      2.2   Acknowledgement   of  Condition  of  Title.   Pathnet   understands,
acknowledges and agrees that (a) portions of the Designated Rail Corridor may be
in Title  Deficient  Areas,  and (b)  Pathnet  accepts  the License in any Title
Deficient Areas

                                        6
<PAGE>
 subject  to  the  terms  and  conditions  of  the  Agreements.  Subject  to the
provisions of this Article 2, with respect to any Segment of the Designated Rail
Corridor in Title  Deficient  Areas,  the License herein  granted  Pathnet shall
include  the  additional  right in favor of  Pathnet to  procure  all  Broadform
Telecommunications Rights from third parties as Pathnet determines are necessary
to enable it to  construct,  install,  operate,  maintain,  repair,  replace and
remove  Pathnet's  Facilities and System in such Title  Deficient Areas provided
that Pathnet shall not acquire  exclusive  Broadform  Telecommunications  Rights
(such that the underlying fee owner no longer has the right to grant such rights
to third parties)  without the prior written  consent of Railroad,  which may be
withheld in  Railroad's  sole  discretion.  All  provisions  of the  Agreements,
including,  but not limited to,  Pathnet's  obligations for the payment or other
delivery of the consideration  described in this License Agreement,  shall apply
as between  Railroad  and Pathnet  with  respect to any Title  Deficient  Areas,
notwithstanding  that Pathnet's  right to occupy the Title Deficient Areas is or
may be derived,  in whole or in part, from Broadform  Telecommunications  Rights
obtained by Pathnet from third parties. The License is made and given subject to
the [* * *] Obligations, the [* * *] Obligations and the rights and interests of
all other third  parties,  existing as of the Effective  Date or the date of any
Build Supplement.

      2.3  Operating  Agreement.  The  parties  acknowledge  and agree  that the
License shall be exercised in accordance  with the terms and  provisions of this
License  Agreement  and  the  Operating  Agreement,   the  terms  of  which  are
incorporated herein by this reference.  In the event of any conflict between the
Operating  Agreement  and this License  Agreement  with respect to any rights or
obligations  under this License  Agreement,  the terms of this License Agreement
shall control.  Notwithstanding  any contrary  provision in the Agreements,  the
parties agree that (i) any dispute relating to this License Agreement,  except a
dispute  arising  under  Section 8.5 hereof,  shall not be subject to Article 25
(Liaison;  Coordination and Dispute Resolution) of the Operating  Agreement,  it
being the  specific  intention  of the parties to litigate  any and all disputes
hereunder,   without  resort  to   arbitration   or  mediation,   and  (ii)  the
indemnification  provisions  contained  in this License  Agreement  shall not be
governed or  affected  by Article 17  (Liability;  Indemnity)  of the  Operating
Agreement.

      2.4 Transfer of  Broadform  Telecommunications  Rights.  In the event that
Pathnet obtains  Broadform  Telecommunications  Rights with respect to any Title
Deficient  Areas that provide use and occupancy  rights in excess of the Limited
Telecommunications  Rights  granted  by  Railroad  to  Pathnet  pursuant  to the
Agreements,  then Pathnet shall  immediately  offer,  by way of  assignment,  to
convey such  Broadform  Telecommunications  Rights to Railroad.  Upon receipt of
Pathnet's offer of assignment,  Railroad shall promptly  determine,  in its sole
and absolute  discretion,  to accept such  assignment or reject the same. In the
event Railroad  accepts such  assignment,  Railroad shall pay to Pathnet,  fifty
percent (50%) of the actual  direct out of pocket costs  (exclusive of Pathnet's
internal  overhead)  incurred by Pathnet in connection  with the  acquisition of
such rights  together  with the actual  direct costs  including  overhead of any
Pathnet field personnel to the extent dedicated to such acquisition.

                                        7
<PAGE>

          2.5 Sublicenses.  Pathnet may sell, lease, license, or otherwise grant
rights  in  and  to  Optical  Fibers,   telecommunications   capacity,   Conduit
(Innerduct) or other  portions of Pathnet's  System on such terms as Pathnet may
determine  in its  sole  discretion.  Pathnet  may  also  involve  customers  or
co-development or strategic  partners in the installation of Pathnet's System on
Designated  Rail  Corridors  on such  terms as Pathnet  determines,  in its sole
discretion.  Any such arrangements shall be expressly subject and subordinate to
the terms and  conditions of the  Agreements,  Pathnet shall remain fully liable
for its obligations under the Agreements, Pathnet shall remain the sole point of
contact with Railroad in connection with such arrangements, and Pathnet shall be
responsible  for and shall  supervise any and all activities on or affecting the
Designated  Rail  Corridor.  Pathnet shall have no right to sell,  sublicense or
otherwise  transfer  the right to access  any  portion  of the  Designated  Rail
Corridor to a third party without the prior written  consent of Railroad,  which
consent may be withheld in Railroad's sole discretion.

      2.6 Selection and  Development of Rail  Corridor.  Pursuant to one or more
supplements to this License  Agreement,  the form of which is attached hereto as
Exhibit  1 (each a "Build  Supplement"),  Pathnet  shall,  except  as  otherwise
provided  herein,  designate  as  Designated  Rail  Corridor  for its System and
Facilities  up to the  maximum  number  of  miles  of Rail  Corridor  authorized
hereunder.  Pathnet may  designate  such  Designated  Rail  Corridor at any time
during  the first [* * *] years  after  the  Effective  Date  (the  "Designation
Period").  Railroad shall approve each Build Supplement  within thirty (30) days
of submission  thereof  unless such  approval  cannot be granted due to existing
contractual  or  other  legal  limitations,   safety  concerns,  operational  or
engineering  conflicts  or  interference  with  existing or  foreseeable  future
development of the Rail Corridor for railroad purposes.  Designation of the Rail
Corridor  pursuant to an approved Build  Supplement  shall remove the designated
mileage  from the mileage bank granted  under this License  Agreement.  Together
with each Build  Supplement,  Pathnet  shall also submit a proposed  schedule of
construction (the "Construction Schedule") of its System and Facilities over the
Segment designated in the Build Supplement. Railroad shall have the right, to be
exercised in its reasonable discretion within thirty (30) days after submission,
to approve or reject any proposed  Construction Schedule (giving the reasons for
any such rejection and leave for Pathnet to resubmit such Construction  Schedule
within the Designation  Period),  provided that Pathnet shall commence  physical
installation of Conduit (Innerduct) in the ground no sooner than sixty (60) days
after Railroad's approval of the Build Supplement and Construction Schedule, but
no later than three (3) years of Pathnet's  submission of the  applicable  Build
Supplement,  unless  otherwise  provided  herein.  If  Pathnet  fails to  timely
commence such physical installation, Pathnet shall be prohibited from installing
any portion of its  Facilities  or System  within such  Segment and shall not be
entitled  to any refund of the miles  deducted  (from the mileage  bank  granted
hereunder)  as a result of such Build  Supplement,  provided  that  Pathnet  may
submit a second  Build  Supplement  and  Construction  Schedule for such Segment
during the Designation  Period (which second  submission  shall be treated as an
initial submission hereunder).

                                        8
<PAGE>

      3.    TERM

      3.1 Term.  Unless sooner  terminated in accordance  with the provisions of
the  Agreements,  the License,  the  Agreements and the rights granted under any
Build  Supplement  shall be for a term  commencing as of the Effective  Date and
ending thirty (30) years hence (the "Term").

      4.     EXCLUSIVITY

      4.1  Exclusive  Rights.  Except  as set  forth  below in this  Article  4,
Pathnet's  rights  and  interests  under the  License  and with  respect  to the
Designated  Rail  Corridor  (including  those  portions of the  Designated  Rail
Corridor for which Pathnet obtains Broadform  Telecommunication Rights) shall be
non-exclusive.

      4.2 NYC  Corridor  Development.  For a period of three (3) years  from the
Effective Date hereof (the "Exclusivity  Period"),  with respect to the Segments
of the NYC Corridor (up to a maximum of 2,000 miles)  designated by Pathnet upon
execution  of this License  Agreement as set forth in Exhibit 6 hereof,  Pathnet
shall have the  exclusive  right to place and operate its System and  Facilities
within such Segment(s) (the "Construction Exclusivity"); provided, however, that
the foregoing  exclusivity right will not apply to any Segment of less that [* *
*]  unless  either  (i)  the  Segment  connects  two  cities  in  which  Pathnet
establishes a point of presence;  or (ii) the Segment connects Pathnet's network
on property that is not within the NYC Corridor to a city on the NYC Corridor in
which Pathnet  establishes a point of presence.  Notwithstanding  the foregoing,
Pathnet  will not have  exclusivity  rights  within the radii  around the cities
designated on Exhibits 3 and 4, attached hereto and incorporated herein. For the
four (4) years following the expiration of the Exclusivity  Period (although the
foregoing  exclusivity  shall no longer apply),  Railroad shall promptly  notify
(the "Interest  Notice") Pathnet in writing of any serious  inquiries from third
parties  who wish  access to a Segment of the NYC  Corridor  which  Pathnet  and
Railroad have executed a Build  Supplement for  construction and installation of
Pathnet's  System and/or  Facilities.  Within ten (10) days after its receipt of
the  Interest  Notice,  Pathnet  shall  notify  Railroad  if it has a good faith
interest in pursuing  negotiations  with the interested  third party. If Pathnet
fails  to  notify  Railroad  that it has an  interest  within  such ten (10) day
period,  then Pathnet shall be deemed to have  conclusively  waived its right to
negotiate  with such  third  party.  If  Pathnet  notifies  Railroad  that it is
interested in such negotiations within such ten (10) day period,  Pathnet shall,
for a period of [* * *] after Pathnet's  receipt of such Interest  Notice,  have
the exclusive right to negotiate with such third party with respect to

                                        9
<PAGE>
 such third party's  access,  construction,  installation  and/or use of a fiber
optic   communications   system  along  such  Segment  (the  foregoing   rights,
collectively  "Negotiation  Exclusivity").  If Pathnet and such third party have
not executed a definitive  agreement within such [* * *] period,  Railroad shall
be free to negotiate  and enter into an agreement  with such third party for the
development of the referenced Segments of the NYC Corridor.  Upon written notice
to Railroad  (the  "Substitution  Notice"),  Pathnet may  substitute  additional
Segments of NYC Corridor for Segments of NYC Corridor  previously  designated in
Exhibit 6, provided that (i) any such  substitute  NYC Corridor shall be subject
to the  rights  of  third  parties  in such NYC  Corridor  as of the date of the
Substitution Notice; (ii) the aggregate mileage of Pathnet's  designation of NYC
Corridor (after  deducting the mileage of the originally  designated  Segment(s)
and  adding the  mileage of the  substitute  Segment(s))  does not exceed  2,000
miles;  (iii) the  Construction  Exclusivity  which  initially  attached  to the
originally  designated Segment(s) shall no longer apply to such Segment(s) after
the Substitution  Notice;  (iv) no Construction  Exclusivity shall attach to the
substitute Segment(s);  and (v) with respect to such substitute Segment(s),  the
Negotiation  Exclusivity  shall  commence  upon the date of  completion  of such
substitute  Segment(s)  and  shall  continue  for a  period  of four  (4)  years
following the expiration of the Exclusivity Period (even though the Construction
Exclusivity shall not apply).

      4.3 Third Party  Non-Exclusive  Grants.  Except as provided in Section 4.2
above,  Railroad  may  grant  development  rights  for  fiber  optic  and  other
communication  systems  in the Rail  Corridor  (including  the  Designated  Rail
Corridor) to any third party on a non-exclusive basis.

      4.4 Third Party Exclusive Grants. Except as provided in Section 4.2 above,
Railroad may grant  development  rights for fiber optic and other  communication
systems in the Rail Corridor  (including  the  Designated  Rail Corridor) to any
third party on an exclusive basis; provided,  however, that Pathnet shall not be
subject to such exclusivity provisions.

      4.5 Additional  Restrictions.  In addition to the foregoing  restrictions,
Pathnet  represents  that (i) Pathnet  will  commence and  diligently  pursue to
completion the installation of its System and Facilities over five hundred (500)
miles of NYC  Corridor in each of the first three (3) years after the  Effective
Date  hereof;  and (ii) in all stages of its  development  of the NYC  Corridor,
seventy five percent (75%) of the Designated  Rail Corridor miles  completed and
under development (in accordance with the applicable  Construction  Schedule(s))
will be in contiguous  segments of at least two hundred (200) miles each. In the
event Pathnet breaches either of these representations,  then as Railroad's sole
and exclusive remedy,  Pathnet will automatically lose Construction  Exclusivity
as to the  entirety  of the NYC  Corridor  except  as to those  Segments  of NYC
Corridor  which  Pathnet has  completed  in  accordance  with this  Section 4.5,
provided that Pathnet shall be entitled to Negotiation Exclusivity commencing on
the date of completion of any Segment(s) for which Construction  Exclusivity was
lost  hereunder  and  continuing  for a period of four (4) years  following  the
expiration of the Exclusivity  Period (even though the Construction  Exclusivity
shall not apply).

      5.    EQUITY CONSIDERATION

      5.1  Consideration.  As  consideration  for the  License,  Railroad  shall
receive an equity interest in Pathnet pursuant to the Contribution Agreement.

      6.    TITLE LIMITS.

      6.1 General.  Pathnet understands and acknowledges that Railroad occupies,
uses and possesses lands,  rights-of-way  and rail corridors under all forms and
qualities  of  ownership  rights  or facts,  from fee  simple  absolute  to bare
occupation.  Accordingly, nothing in the Agreements shall act as or be deemed to
act as any warranty, guaranty or

                                       10
<PAGE>

representation  of the  quality or quantity  of  Railroad's  title in and to any
particular Segment occupied,  used or enjoyed in any manner by Pathnet under any
rights created in the Agreements.  It is expressly understood that Railroad does
not  warrant  title to any  portion of the Rail  Corridor,  and  Pathnet  hereby
accepts  the  grants  and  privileges  contained  herein,  subject to all lawful
outstanding existing liens, mortgages and superior rights or interests in and to
the Rail  Corridor,  and all leases,  licenses and easements or other  interests
previously granted to or reserved by others therein.

      6.2 Limitations of License. The term "License" herein shall mean: (a) with
regard to any portion of Rail Corridor  which is owned by Railroad in fee simple
absolute or in which the uses contemplated  hereunder are otherwise  statutorily
authorized  or  approved  by the state in which such Rail  Corridor  is located,
merely a  "license";  (b) with  regard to any  portion of Rail  Corridor  owned,
occupied, used or controlled by Railroad in less than fee simple absolute (e.g.,
fee simple determinable, fee simple conditional, lease or rail easement or other
occupancy  right),  where the  applicable law permits such grants by Railroad to
Pathnet,  merely "a right of occupancy" commensurate with the term and extent of
Railroad's ownership,  occupancy, etc; and (c)with regard to any portion of Rail
Corridor  for which  Railroad  does not possess the right to license the same to
third parties for  telecommunications  purposes, the Agreements shall not convey
any rights to Pathnet except that Railroad merely waives its exclusive rights to
occupy,  use and/or  control the Rail  Corridor  commensurate  with the term and
extent of such Railroad rights.

      6.3 Broadform  Telecommunications  Rights.  Pathnet understands and agrees
that the rights conveyed hereunder may not be sufficient to permit  installation
of its System and Facilities at all desired locations  throughout the Designated
Rail Corridor. Accordingly, except as otherwise provided herein, Pathnet may, as
Pathnet reasonably deems necessary, obtain Broadform Telecommunication Rights in
accordance  herewith before  commencing  construction on any Segment,  provided,
however,   that  Pathnet   understands   and  agrees  that  any  such  Broadform
Telecommunications  Rights  acquired  by  Pathnet  within  the  Designated  Rail
Corridor are subject to the terms and conditions of this License Agreement.

      6.4  Waiver  of  Claims.  Pathnet  agrees  it shall  not  have and  hereby
completely  and  absolutely  waives its right to any claim against  Railroad for
damages or any other legal or equitable relief on account of any deficiencies in
title to the Designated Rail Corridor.

      6.5 Indemnity.  In addition to the indemnities  contained in the Operating
Agreement,  Pathnet shall indemnify, defend (at Pathnet's sole cost and expense,
with counsel  selected and controlled by Railroad,  if Railroad so requests) and
hold  Railroad and its  Affiliates,  officers,  directors,  employees and agents
harmless  from and against all claims or  litigation  for  trespass,  slander of
title,  overburden of easement, or any other claims arising out of or based upon
(i) Pathnet's Conduit (Innerduct), Cable or Optical Fiber placement, or (ii) the
presence of Pathnet's Conduit (Innerduct), Cable or Optical

                                       11
<PAGE>

Fiber or other Facilities in, on or along the Designated Rail Corridor, or (iii)
Pathnet's failure to obtain sufficient Broadform  Telecommunications  Rights, or
(iv)  the   presence   of   Pathnet's   purchasers,   sublicensees,   customers,
co-development  or  strategic  partners,   agents,  invitees,  their  respective
employees or any other third party acting for the benefit or at the direction of
Pathnet or any such third  party,  on the  Designated  Rail  Corridor,  or their
individual or collective use of Pathnet's Conduit (Innerduct),  Cable or Optical
Fiber or other  Facilities in, on or along the Designated Rail Corridor,  or (v)
the title  related  claims of  Pathnet's  purchasers,  sublicensees,  customers,
co-development  or  strategic  partners,   agents,  invitees,  their  respective
employees or any other third party acting for the benefit or at the direction of
Pathnet or any such third party,  including  all claims for damages,  including,
but not  limited  to,  civil,  criminal,  compensatory,  consequential,  direct,
indirect,  treble,  exemplary,  special,  punitive  and  all  other  damages  or
penalties  of any kind  available  at law or in equity..  This  indemnity  shall
survive the expiration or termination of the Agreements. The foregoing indemnity
shall not be deemed to apply to any of the foregoing claims, liabilities,  costs
or  expenses to the extent  attributable  to  Railroad's  own  operations  or to
Railroad's grant of rights of way for fiber optic,  utility or other uses to any
parties other than Pathnet.

      6.6 [* * *] Obligations and [* * *] Obligations. The License and all other
rights and interests granted pursuant to the Agreements and all of the terms and
provisions  of  the  Agreements  are  made  expressly  subject  to  the  [* * *]
Obligations and the [* * *] Obligations.  The parties  acknowledge that the [* *
*]  Obligations  and the [* * *]  Obligations  affect  all or  part of the  CSXT
Corridor.  The portions of the CSXT Corridor over which [* * *] and [* * *] have
installed  conduit are depicted on Exhibit 5, attached  hereto and  incorporated
herein.  Railroad  shall  promptly give written  notice to Pathnet of all future
installations  and/or  designations  of CSXT  Corridor  by Pathnet  and [* * *].
Nothing  in this  paragraph  will be  deemed  to  expand  the [* * *] or [* * *]
Obligations  beyond  the  scope  of such  obligations  arising  pursuant  to the
agreements between Railroad and [* * *] and [* * *], respectively.

      7.     THIRD PARTY JOINT FACILITIES AND TRACKAGE RIGHTS.

      7.1 This Agreement does not pertain to any occupancies  over or structures
upon rights-of-way owned jointly by Railroad with another Person which is not an
Affiliate  of Railroad  or upon any Rail  Corridor  on which  Railroad  has only
Trackage  Rights.  Railroad,  however,  agrees to reasonably  cooperate with and
assist  Pathnet in obtaining any approvals of third parties  necessary to permit
Pathnet to use any such  jointly  owned  rights-of-way,  and agrees not to block
Pathnet's  application to use any portion of the Rail Corridor on which Railroad
only has  Trackage  Rights;  provided,  however,  that Pathnet  shall  reimburse
Railroad,  upon demand,  for any costs,  including  reasonable  attorneys' fees,
incurred by Railroad in  connection  with such  cooperation.  The portion of the
Rail Corridor over which Railroad possesses only Trackage Rights are depicted on
the Railroad System Map which has been made available to Pathnet.

      8.    CONDUIT (INNERDUCT); FIBER; AND CAPACITY.

                                       12
<PAGE>

      8.1  Railroad  Ducts  and  Signal  Cable.  Pathnet,  at its sole  cost and
expense,  shall install one (1) two-inch (2.0") SDR-11 or equivalent single duct
or pipe, of not less than one and nine-tenths  inches (1.9") inside diameter for
Railroad (the "Railroad Duct").  The Railroad Duct shall be installed by Pathnet
along the entire length of Designated  Rail Corridors in which Pathnet  installs
the Pathnet System and where  installation  of such Railroad Duct in addition to
the Conduits  (Innerducts) to be installed by Pathnet,  is physically  feasible,
with such  installation  to be concurrent  with  Pathnet's  Conduit  (Innerduct)
installation.  The Railroad Duct shall become the sole property of Railroad upon
installation,  and  Railroad,  its  successors  and/or  assigns,  shall have the
exclusive right of use of such Railroad Duct. To the extent assignable,  Pathnet
shall assign to Railroad,  without  charge,  any service and product  warranties
relating to such  Railroad  Duct that it obtains  from its  manufacturer  and/or
installation  contractor(s).  The Railroad Duct may be used only for  Railroad's
internal  communications needs, and neither the Railroad Duct, nor Optical Fiber
therein, nor telecommunications capacity thereon, may be sold, assigned, leased,
licensed,  or otherwise made available to  third-parties,  or used in connection
with any  telecommunications  business,  until the earlier of (a) five (5) years
after completion of construction of the relevant Segment containing the Railroad
Duct,  (b) the sale,  option to  purchase,  or use by Pathnet  of all  installed
Conduits (Innerducts) or Optical Fibers on such Segment other than those held in
reserve by Pathnet, or (c) ten (10) years from the Effective Date hereof.

      8.2 Fiber Optic Capacity.

      A. Pathnet  will provide up to [* * *] at no charge to Railroad,  provided
that the maximum  number of [* * *] miles  shall not exceed [* * *] miles.  Such
mileage shall be calculated in straight  line (i.e.  airline)  miles,  not route
miles. Pathnet will make such capacity available to Railroad at Pathnet's points
of presence,  including at any central office where Pathnet is co-located, where
Pathnet has  equipment  in place to offer [* * *] service.  Notwithstanding  the
foregoing,  Pathnet  agrees  that if and when it offers  services  in the cities
listed on [* * *] Pathnet  will  install  equipment to offer [* * *] service and
will  provide  such [* * *]  service to  Railroad  pursuant  to this  Agreement.
Railroad will be  responsible  for any costs required to transport such capacity
from Pathnet's  point of presence to Railroad's  required point of  termination,
including  costs of  interconnection,  provisioning,  co-location  of additional
required equipment, and the cost of any local loop, leased lines, or other means
of transport.  At Railroad's  request,  Pathnet will arrange such  transport and
interconnection  costs,  provided Railroad reimburses Pathnet for all actual and
reasonable costs incurred by Pathnet in connection therewith, including internal
costs,  but  excluding  any  overhead,  without  mark-up  for  profit.  Prior to
incurring any such costs,  Pathnet will discuss such  arrangements with Railroad
so that the parties may identify the most cost-effective solution.

      B. The maximum cross-section of the capacity provided to Railroad pursuant
to this  Section at any point shall not exceed [* * *] of the total  capacity of
Pathnet's  network at such point. In addition,  the number of [* * *] terminated
at any point shall not exceed [* * *] of the capacity terminated at such point.

      C. The capacity  described in this Section may be utilized by Railroad and
its  Affiliates  for its  internal  communications  only,  and may not be  sold,
assigned, leased, licensed, or otherwise made available to third-parties.

      8.3 Ability to Purchase  Telecommunications  Capacity. CSX shall also have
the right,  subject to  availability  as determined by Pathnet in its reasonable
discretion, to purchase telecommunications capacity anywhere on Pathnet's entire
fiber optic communications  system at prices at least as favorable as Pathnet is
then  offering as its best rate to other  unrelated  parties for like amounts of
telecommunications  capacity in like markets. The foregoing capacity may be used
only for Railroad's or any Railroad Affiliate's internal  communications  needs,
and may not be sold, assigned, leased, licensed, or otherwise

                                       13
<PAGE>

made available to third-parties.

      8.4 Last Available Build in Segment. If, in any Segment of Designated Rail
Corridor,  Railroad  determines  that it is likely that  Pathnet's  construction
will,  due to  engineering  or  construction  limitations,  be the last  Conduit
(Innerduct)  placed or  constructed  within such  Segment,  Railroad may require
Pathnet to build additional  Conduits  (Innerducts) for Railroad's  benefit.  In
such  event  Railroad  will  pay a sum  equal  to the  ratio  of the  additional
Conduit(s)  (Innerduct(s))  installed  in such  Segment  to the total  number of
Conduits (Innerducts)  installed therein,  multiplied by the total actual direct
out of pocket costs  (exclusive  of Pathnet's  internal  overhead) of the entire
installation  together with the actual costs (including overhead) of any Pathnet
field  personnel to the extent  dedicated to such  installation.  The  foregoing
additional  Conduits  (Innerducts)  will be subject to the same  restrictions as
apply to the Railroad Duct.

      8.5 Boston to Framingham  Conduits  (Innerducts).  On the  Effective  Date
hereof,  Pathnet shall submit a Build Supplement and  Construction  Schedule for
the  development of the Segment of Rail Corridor  between Boston and Framingham,
provided that,  notwithstanding  any provision  hereof to the contrary,  Pathnet
shall  commence  physical  installation  of Conduit  (Innerduct) in such Segment
within  one (1) year of the  Effective  Date  hereof.  In  connection  with such
installation,  Pathnet shall also install,  at Pathnet's  sole cost and expense,
four (4) two inch (2") Conduits (Innerducts) for Railroad's exclusive use and/or
for sale by Railroad to third  parties  (the "CSX  Conduits").  The CSX Conduits
shall be in lieu of the  Railroad  Duct to be  installed  along such  Segment by
Pathnet in  accordance  with Section  8.1. In the event that Pathnet  determines
that the Boston to Framingham  Segment is not commercially  practicable  (taking
into consideration  Pathnet's  obligation to install the CSX Conduits),  Pathnet
shall not be obligated to install such Segment, provided that, in recognition of
the value of the CSX Conduits to Railroad,  which  constituted a material aspect
of the bargain  achieved  through the  Agreements,  Pathnet and  Railroad  shall
negotiate,  in good faith,  for Pathnet to deliver  equivalent value to Railroad
pursuant to a mutually  agreed  alternative.  If the parties are unable to agree
upon such mutually agreed  alternative,  the dispute shall be subject to Article
25 (Liaison; Coordination and Dispute Resolution) of the Operating Agreement.

      9.    DISCLAIMER

      9.1 Disclaimer Relating to Certain Information.  Railroad does not warrant
the  accuracy of those maps,  descriptions  and  depictions  attached  hereto as
Exhibits 2, 3 and 5, nor does it warrant the accuracy of the Railroad  Valuation
Maps or the Railroad  System Map.  Railroad states that such items were prepared
and are utilized in the ordinary course of Railroad's business.  With respect to
Exhibit 5 only, Railroad's Assistant Vice President,  T. R. Jackson,  represents
that such Exhibit accurately depicts the current status of the occupancies of [*
* *] and [* * *] on CSXT Corridor, to the best of his knowledge.

      IN WITNESS WHEREOF,  the undersigned have executed this License  Agreement
as of the Effective Date.

                                       14
<PAGE>

                            CSX TRANSPORTATION, INC.,
                            a Virginia corporation, for itself and as Operator
                            for New York Central Lines, L.L.C.

                            By:  /s/ J Randall Evans
                                ---------------------------------
                            Title: ___________________________

                            PATHNET TELECOMMUNICATIONS, INC.,

                             a Delaware corporation

                            By: /s/  Richard Jalkut
                                --------------------------------
                            Title: CEO
                                --------------------------------

                                       15

<PAGE>

                                    EXHIBIT 1
                        NYC BUILD SUPPLEMENT NO. -------

Utility Project Name:______________________________________________________
Segment:___________________________________________________________________
Railroad Project Name:_____________________________________________________

     THIS BUILD SUPPLEMENT  NO._______  ("Build  Supplement") is made as of this
_______ day of ____________________, _______ (the "Effective Date"), between CSX
TRANSPORTATION,  INC., a Virginia corporation,  as Operator for New York Central
Lines LLC, a Delaware limited liability company and a wholly owned subsidiary of
Consolidated  Rail Corporation,  a Pennsylvania  corporation  ("Railroad"),  and
PATHNET TELECOMMUNICATIONS, INC., a Delaware corporation ("Utility").

                                    RECITALS:

     A.   Railroad and Utility have previously  entered into those certain Fiber
          Optic  License  and  Access  Agreement  and  Right  of  Way  Operating
          Agreement both dated as of _____ ____________________,  as amended and
          supplemented from time to time by the parties (collectively, the "Base
          Agreement").

     B.   The Base Agreement  grants  certain  rights to Utility,  including the
          right to install a Fiber Optic  Communications  System pursuant to one
          or more Build  Supplements  over certain  Segments of Designated  Rail
          Corridor as more fully defined therein.

     C.   Utility wishes to expand its current Fiber Optic Communications System
          in accordance with the Base Agreement and this Build Supplement.

     NOW,  THEREFORE,  in  consideration  of the mutual covenants and agreements
contained  herein,  and for the sum of Ten and No/100  Dollars  ($10.00) in hand
paid and other good and valuable  consideration,  the receipt and sufficiency of
which are hereby acknowledged, Railroad and Utility agree as follows:

     1.   The above Recitals are true and correct and are incorporated herein by
this reference.

     2. Unless  otherwise  specifically  defined in this Build  Supplement,  all
capitalized  terms used herein shall have the same meanings  defined in the Base
Agreement.

     3. In  addition  to the  rights  and  obligations  set  forth  in the  Base
Agreement  and any  previously  executed  Build  Supplements,  and in accordance
therewith and herewith,  Utility is hereby  granted a  non-exclusive  License to
install the following  additional  Segment(s) of its Fiber Optic  Communications
System  as shown on  Exhibit(s)  _______________,  attached  hereto  and by this
reference made a part hereof and described as follows:

Segment:                              from:                     to:

City, State                      _______________          _______________,
County                           _______________          _______________,
Township                         _______________          _______________,
Valuation Map No.                _______________          _______________,
Milepost                         _______________          _______________,

                                                                               1
<PAGE>

Railroad Survey Station No.      _______________          _______________,
Total distance:                             ___________________;

Aggregate Optical Fiber Count
   (irrespective of number of Conduit/Innerduct or Cable)   ___________________;
Number of Conduit/Innerduct                                 ___________________;
Size of Conduit/Innerduct                                   ___________________;
Number of Cable                                             ___________________;
Size of Cable                                               ___________________.

     4. The  non-exclusive  license  granted  to  Utility  with  respect  to the
additional  installation  pursuant to this Build  Supplement shall be for a term
concurrent with the Base Agreement.

     5. The parties hereby ratify and affirm the Base Agreement, as supplemented
hereby, which shall continue in full force and effect.

IN WITNESS WHEREOF, the parties hereto have executed this Build Supplement as of
the Effective Date.

Witnesses:                              CSX TRANSPORTATION, INC.,
                                        a Virginia corporation, as Operator for
                                        New York Central Lines LLC,
                                        a Delaware limited liability company

________________________________        By:_______________________________
                                        Print Name:_______________________
________________________________        Print Title:______________________

Witnesses:                               PATHNET TELECOMMUNICATIONS, INC.,
                                          a Delaware corporation

________________________________        By:_______________________________
                                        Print Name:_______________________
________________________________        Print Title:______________________

                                                                               2

<PAGE>

                                    EXHIBIT 1
                        CSXT BUILD SUPPLEMENT NO. -------

Utility Project Name:______________________________________________________
Segment:___________________________________________________________________
Railroad Project Name:_____________________________________________________

     THIS BUILD SUPPLEMENT NO._______ ("Build Supplement") is made as of this
day of _____ _______________, _______ (the "Effective Date"), between CSX
TRANSPORTATION, INC., a Virginia corporation ("Railroad"), and PATHNET
TELECOMMUNICATIONS, INC., a Delaware corporation ("Utility").

                                    RECITALS:

     A.   Railroad and Utility have previously  entered into those certain Fiber
          Optic  License  and  Access  Agreement  and  Right  of  Way  Operating
          Agreement  both  dated as of _____  _______________,  as  amended  and
          supplemented from time to time by the parties (collectively, the "Base
          Agreement").

     B.   The Base Agreement  grants  certain  rights to Utility,  including the
          right to install a Fiber Optic  Communications  System pursuant to one
          or more Build  Supplements  over certain  Segments of Designated  Rail
          Corridor as more fully defined therein.

     C.   Utility wishes to expand its current Fiber Optic Communications System
          in accordance with the Base Agreement and this Build Supplement.

     NOW,  THEREFORE,  in  consideration  of the mutual covenants and agreements
contained  herein,  and for the sum of Ten and No/100  Dollars  ($10.00) in hand
paid and other good and valuable  consideration,  the receipt and sufficiency of
which are hereby acknowledged, Railroad and Utility agree as follows:

     1.   The above Recitals are true and correct and are incorporated herein by
this reference.

     2. Unless  otherwise  specifically  defined in this Build  Supplement,  all
capitalized  terms used herein shall have the same meanings  defined in the Base
Agreement.

     3. In  addition  to the  rights  and  obligations  set  forth  in the  Base
Agreement  and any  previously  executed  Build  Supplements,  and in accordance
therewith and herewith,  Utility is hereby  granted a  non-exclusive  License to
install the following  additional  Segment(s) of its Fiber Optic  Communications
System  as shown on  Exhibit(s)  _______________,  attached  hereto  and by this
reference made a part hereof and described as follows:

Segment:                              from:                     to:

City, State                      _______________          _______________,
County                           _______________          _______________,
Township                         _______________          _______________,
Valuation Map No.                _______________          _______________,
Milepost                         _______________          _______________,
Railroad Survey Station No.      _______________          _______________,
Total distance:                             ___________________;

                                                                               1
<PAGE>

Aggregate Optical Fiber Count
   (irrespective of number of Conduit/Innerduct or Cable)  ____________________;
Number of Conduit/Innerduct                                ____________________;
Size of Conduit/Innerduct                                  ____________________;
Number of Cable                                            ____________________;
Size of Cable                                              ____________________.

     4. The  non-exclusive  license  granted  to  Utility  with  respect  to the
additional  installation  pursuant to this Build  Supplement shall be for a term
concurrent with the Base Agreement.

     5. The parties hereby ratify and affirm the Base Agreement, as supplemented
hereby, which shall continue in full force and effect.

IN WITNESS WHEREOF, the parties hereto have executed this Build Supplement as of
the Effective Date.

Witnesses:                              CSX TRANSPORTATION, INC.,
                                        a Virginia corporation

_______________________________         By:__________________________________
                                        Print Name:__________________________
_______________________________         Print Title:_________________________

Witnesses:                               PATHNET TELECOMMUNICATIONS, INC.,
                                          a Delaware corporation

_______________________________         By:__________________________________
                                        Print Name:__________________________
_______________________________         Print Title:_________________________

                                                                               2

<PAGE>
                                    EXHIBIT 2

                                 CSX System Map
                                 --------------

                           (Map of CSX Railway System)

<PAGE>
                                    Exhibit 3

                     Non-exclusivity around specific cities
                     --------------------------------------

                                  [ *  *  * ]
<PAGE>

                                    EXHIBIT 4

                                   TIER CITIES

                            [* * *]          [* * *]
                                    [* * *]
<PAGE>
                                    Exhibit 5
                       Map of [* * *] and [* * *] Builds
                                    [* * *]
<PAGE>
                                    Exhibit 6

                  Pathnet's Initial Designation of Conrail Build

                                  [Map of Conrail ROW]
<PAGE>

                                    EXHIBIT 7

                                    [ * * * ]

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00009-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00009-of-00352.parquet"}]]