ADVANCED RADIO TELECOM CORP, S-4, 1997-08-15

ADVANCED RADIO TELECOM CORP
S-4, 1997-08-15
CABLE & OTHER PAY TELEVISION SERVICES

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 15, 1997.

REGISTRATION NO. 333-
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- -------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

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

FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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ADVANCED RADIO TELECOM CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 4812 52-1869023
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
INCORPORATION OR
ORGANIZATION)

500 108TH AVENUE, NE, SUITE 2600, BELLEVUE, WASHINGTON 98004 (425) 688-8700
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

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

THOMAS M. WALKER, ESQ.
GENERAL COUNSEL
500 108TH AVENUE, NE, SUITE 2600
BELLEVUE, WASHINGTON 98004
(425) 688-8700 / (425) 990-1642 (FAX)
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)

COPIES OF ALL COMMUNICATIONS TO:
MARY E. WEBER, ESQ.
ROPES & GRAY
ONE INTERNATIONAL PLACE
BOSTON, MA 02110-2624
(617) 951-7000 / (617) 951-7050 (FAX)

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.

If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]

CALCULATION OF REGISTRATION FEE

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<TABLE>
<CAPTION>
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER SHARE (1) OFFERING PRICE (1) REGISTRATION FEE
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<S> <C> <C> <C> <C>
Common Stock, $.001 Par
Value................. 5,000,000 shs. $8 $40,000,000 $12,122
</TABLE>
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(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(c) for the purpose of calculating the registration fee based
on the average of the high and low sales prices on August 11, 1997.

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

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.

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<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BY ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION DATED AUGUST 15, 1997

PROSPECTUS

5,000,000 SHARES
ADVANCED RADIO TELECOM CORP.

-----------
COMMON STOCK

-----------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAVE
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.

This Prospectus covers 5,000,000 shares (the "Shares") of common stock $.001
par value (the "Common Stock"), of Advanced Radio Telecom Corp. ("ART" or the
"Company") that may be issued and sold by the Company from time to time in
connection with future acquisitions by the Company of other businesses, assets,
or equity and/or debt securities in business combination transactions in
accordance with Rule 415(a)(1)(viii) of Regulation C under the Securities Act
of 1933, as amended (the "Securities Act"). It is expected that the terms of
any such acquisitions will be determined by negotiations with the owners or
controlling persons of the businesses or assets to be acquired, and that the
Shares will be valued at prices reasonably related to market prices current
either at the time of agreement on the terms of an acquisition or at or about
the time of delivery of the Shares. This Prospectus may also be used, with the
Company's prior consent, by persons or entities (the "Selling Stockholders")
who have received or will receive such Shares in acquisitions. See "Outstanding
Securities Covered by this Prospectus" for information relating to resales
pursuant to this Prospectus of shares of Common Stock issued under the
Registration Statement.

No underwriting discounts or commissions will be paid in connection with the
issuance or sale of any Shares by the Company hereunder, although finder's fees
may be paid from time to time in connection with specific acquisitions. Any
person receiving such fee may be deemed to be an underwriter within the meaning
of the Securities Act.

The Common Stock is listed on the Nasdaq National Market under the symbol
"ARTT." Application will be made to list the Shares offered hereby on the
Nasdaq National Market upon notice of issuance. The last reported sale price of
the Common Stock on the Nasdaq National Market on August 11, 1997 was $8.

All expenses of the offering of the Shares made hereby will be paid by the
Company.

FOR A DISCUSSION OF FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE
PURCHASERS OF THE COMMON STOCK OFFERED HEREBY, SEE "RISK FACTORS" BEGINNING ON
PAGE 5.

The date of this Prospectus is , 1997
<PAGE>

No person has been authorized to give information or make any representation
not contained in this Prospectus in connection with any offer made hereby. If
given or made, such information or representation must not be relied upon as
having been authorized by the Company. This Prospectus does not constitute an
offer to sell or a solicitation of an offer to buy any of the securities
offered hereby in any jurisdiction to any person to whom it is unlawful to
make such offer in such jurisdiction. Neither the delivery of this Prospectus
nor any sale made hereunder, under any circumstances, shall create any
implication that there has been no change in the affairs of the Company since
the date hereof.

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
AVAILABLE INFORMATION.................................................... 1
PROSPECTUS SUMMARY....................................................... 2
RISK FACTORS............................................................. 4
DIVIDEND POLICY.......................................................... 8
PRICE RANGE OF COMMON STOCK.............................................. 8
SELECTED CONSOLIDATED FINANCIAL DATA..................................... 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS........................................................... 10
BUSINESS................................................................. 13
MANAGEMENT............................................................... 22
COMMON STOCK OWNERSHIP................................................... 27
CERTAIN TRANSACTIONS..................................................... 29
DESCRIPTION OF CAPITAL STOCK............................................. 32
SHARES ELIGIBLE FOR FUTURE SALE.......................................... 35
OUTSTANDING SECURITIES COVERED BY THIS PROSPECTUS........................ 36
SENIOR NOTES............................................................. 37
LEGAL MATTERS............................................................ 38
EXPERTS.................................................................. 38
ADDITIONAL INFORMATION................................................... 38
INDEX TO FINANCIAL STATEMENTS............................................ F-1
</TABLE>

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy
statements and other information filed by the Company may be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the Commission's
Regional Offices at Seven World Trade Center, Suite 1300, New York, New York
10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661, and copies may be obtained at the prescribed rates from the
Public Reference Section of the Commission at its principal office in
Washington, D.C. In addition, the Commission maintains a site on the World
Wide Web that contains reports, proxy and information statements, and other
information regarding registrants such as the Company that file electronically
with the Commission. The address of the Commission web site is
http://www.sec.gov.

1
<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and the Consolidated Financial Statements and Notes thereto
appearing elsewhere in this Prospectus. Investors should carefully consider the
risk factors related to the purchase of the Shares. See "Risk Factors."

The Company provides point-to-point wireless broadband digital
telecommunications services. Utilizing 38 GHz frequencies, the Company offers
cost-effective, high-capacity, high-quality "last mile" local access to voice,
data, video and Internet services. Licenses which the Company owns, manages or
has a long-term right to use permit it to develop a large-scale national
network in 173 U.S. markets covering an estimated aggregate population of
approximately 158 million people, including 83 of the top 100 markets.

Utilizing unobtrusive equipment mounted on rooftops and other tall
structures, ART is able to transmit voice, data and video signals from fiber-
optic, copper, coaxial cable and satellite earth stations to the end user
locations. Advantages of ART's "last mile" wireless solution include:

. Broad Footprint. The broad scope of the Company's license footprint
enables it to offer wireless broadband services targeting much of the
United States' addressable business market.

. High Data Transfer Rates. ART's current technology permits data transfer
at over 350 times the rate of the current fastest integrated services
digital network, permitting real-time, full motion video and 3-D
graphics and other data-intensive interactive applications.

. High-Quality Transmission. ART's networks are designed for performance
comparable to fiber and superior to copper networks.

. Significant Channel Capacity. Because 38 GHz channels can be efficiently
reused within the licensed area, a single channel can serve a
significant number of end users.

. Rapidly Deployed and Easily Installed Equipment. ART's 38 GHz equipment
can be deployed considerably faster than both wireline and many other
wireless technologies. It is small and unobtrusive and can be easily
installed and redeployed.

. Cost-Effective Service. ART's wireless solution enjoys favorable
economics compared to cabled networks.

ART is marketing its services primarily to carriers, including competitive
local exchange carriers ("CLECs"), local exchange carriers ("LECs"),
competitive access providers ("CAPs"), Internet service providers ("ISPs"),
mobile communications service providers and long distance companies ("IXCs"),
to enable them to extend their networks on a cost-effective basis. ART is
identifying and obtaining roof rights for high-density off-net customer
locations in its markets and plans to market high-speed broadband access to
these locations to carriers. The Company is building its wireless networks
incrementally in response to customer demand in each of its target markets,
thereby efficiently deploying its capital.

The Company intends to seek to acquire additional licenses or businesses
which hold licenses to expand its geographic footprint or to enhance its
ability to provide service within its current markets. In light of the recent
grant by the Federal Communications Commissions (the "FCC") of licenses for
which applications had previously been frozen, the Company believes it may have
an opportunity to acquire additional spectrum.

2
<PAGE>

The Company is a Delaware corporation organized in 1993 under the name of
Advanced Radio Technologies Corporation. In October 1996, the Company acquired
through a merger (the "Merger") Advanced Radio Telecom Corp., a corporation
organized by the Company and others in 1995 to acquire 38 GHz licenses and to
operate its business jointly with the Company. Upon the Merger, Advanced Radio
Telecom Corp. became a wholly owned subsidiary of the Company and changed its
name to ART Licensing Corp. ("ART Licensing"), and the Company changed its name
to Advanced Radio Telecom Corp. The Company commenced commercial operations in
the fourth quarter of 1996. The Company's executive offices are located at 500
108th Avenue NE, Suite 2600, Bellevue, Washington 98004 and its telephone
number is (425) 688-8700.

SUMMARY CONSOLIDATED FINANCIAL INFORMATION

The summary financial data presented below as of December 31, 1996 and for
the years ended December 31, 1995 and 1996 were derived from and should be read
in conjunction with the audited consolidated financial statements of the
Company and the related notes thereto included elsewhere in this Prospectus.
The summary financial data presented below as of June 30, 1997 and for the six
months ended June 30, 1996 and 1997 were derived from and should be read in
conjunction with the unaudited condensed consolidated financial statements of
the Company and the related notes thereto included elsewhere in this
Prospectus.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
------------------------- --------------------------
1995 1996 1996 1997
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<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenue (1)............. $ 5,793 $ 2,907,927 $ 61,520 $ 685,193
Depreciation and
amortization........... 15,684 1,017,959 278,375 2,361,275
Interest and other
expenses, net.......... 121,986 6,512,251 1,826,805 8,756,883
Net loss................ (3,234,843) (30,670,303) (15,671,864) (25,158,390)
Net loss per share...... (0.54) (3.97) (2.38) (1.42)
Weighted average number
of shares of Common
Stock outstanding...... 5,946,338 7,717,755 6,577,461 17,735,974
OTHER FINANCIAL DATA:
EBITDA (2).............. $(2,007,568) $(14,348,920) $ (5,150,958) $(14,455,716)
Capital expenditures.... 3,585,144 16,631,451 4,040,806 10,124,970
</TABLE>

<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF JUNE 30,
1996 1997
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<S> <C> <C>
BALANCE SHEET DATA:
Working capital surplus (deficit)............ $ (9,623,905) $ 49,098,454
Property and equipment, net.................. 19,303,849 28,228,836
FCC licenses, net............................ 4,330,906 131,822,061
Total assets................................. 36,648,701 263,948,181
Long-term debt (including current portion)... 4,977,246 110,278,144
Total stockholders' equity................... 19,949,920 111,752,301
</TABLE>
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(1) For the year ended December 31, 1996 and for the six months ended June 30,
1997, $2,660,811 and $356,970, respectively, of revenue were derived from
non-recurring equipment sales and construction revenue.
(2) EBITDA represents loss before interest and financing expense (net of
interest income), income tax expense (benefit), depreciation and
amortization expense, non-cash compensation expense and non-cash market
development expense. EBITDA is not intended to represent cash flows from
operating activities, as determined in accordance with generally accepted
accounting principles. EBITDA should not be considered as an alternative
to, or more meaningful than, operating income or loss, net income or loss
or cash flow as an indicator of the Company's performance. EBITDA has been
included because the Company uses it as one means of analyzing its ability
to service its debt, because a similar measure is used in the indenture
relating to the Company's 14% Senior Notes due 2007 (the "Senior Notes")
with respect to computations under certain covenants and because the
Company understands that it is used by certain investors as one measure of
a company's historical ability to service its debt. Not all companies
calculate EBITDA in the same fashion and therefore EBITDA as presented may
not be comparable to other similarly titled measures of other companies.

3
<PAGE>

RISK FACTORS

The following risk factors should be considered carefully in addition to the
other information in this Prospectus before purchasing the Shares offered by
this Prospectus. Except for the historical information contained herein, the
discussion in this Prospectus contains certain forward-looking statements that
involve risks and uncertainties. The cautionary statements made in this
Prospectus, including those made in "Management Discussion and Analysis" and
"Business--Business Strategy," should be read as being applicable to all
related forward-looking statements wherever they appear in this Prospectus.
The Company's actual results could differ materially from those discussed
here. Important factors that could cause or contribute to such differences
include, but are not limited to, those discussed below.

Limited Operations; History of Net Losses. ART has a limited operating
history. Having commenced commercial operations in the fourth quarter of 1996,
the Company has generated only nominal revenues from operations to date. Since
inception, the Company has primarily focused on acquiring licenses, hiring
management and other key personnel, raising capital, acquiring equipment and
roof rights and developing its operating and support systems and
infrastructure. The Company has generated operating and net losses since its
inception and expects to generate significant operating and net losses for at
least the next several years. A substantial portion of revenue to date has
been from non-recurring equipment sales and construction activities. There can
be no assurance that the Company will develop a successful business or achieve
or sustain profitability in the future.

Significant Capital Requirements; Need for Additional Financing. The Company
will require significant additional capital in 1998 to fund its operations and
business plan. Based on its current business plan, ART estimates that it will
require several hundred million dollars over the next few years for the
continued development and expansion of its wireless broadband operations.
Because the Company generally deploys radio equipment in response to customer
orders, a substantial portion of its capital requirements is dependent on
customer demand. Accordingly, the Company's capital requirements may increase
or decrease depending largely upon the cost and amount of equipment acquired,
the number of networks installed, the number of markets served and the prices
charged for its services as well as other factors. In addition, if, among
other things, the assumptions underlying the Company's business plan change or
prove to be inaccurate or the Company changes its business plan, the Company's
capital requirements may change. There can be no assurance that the Company
will be able to obtain any financing when required, or, if available, that the
Company will be able to obtain it on acceptable terms. In the event that the
Company fails to obtain additional financing when required, such failure could
result in the modification, delay or abandonment of some or all of the
Company's development and expansion plans. Any such modification, delay or
abandonment could have a material adverse effect on the Company. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."

Leverage; Ability to Service Indebtedness. The Company is highly leveraged
and, accordingly, (i) a substantial portion of the Company's cash flow from
operations will be required to pay interest with respect to its Senior Notes
commencing in 2000 and to pay interest with respect to any additional
indebtedness incurred by the Company; (ii) the Company's ability to obtain any
necessary financing in the future may be limited; (iii) the failure to comply
with the numerous financial and other restrictive covenants of such debt may
result in an event of default, which, if not cured or waived, could have a
material adverse effect on the Company; (iv) the ability of the Company to
satisfy its obligations pursuant to such indebtedness is dependent upon its
future performance which, in turn, is subject to management, financial,
business and other factors affecting the business and operations of the
Company; (v) the Company's flexibility may be limited in responding to changes
in the industry and economic conditions generally; (vi) the Company may be
more highly leveraged than many of its competitors, which may put it at a
competitive disadvantage; and (vii) the Company's leverage may make it more
vulnerable in the event of an economic downturn. There can be no assurance
that the Company will be able to generate sufficient cash flow to meet
required interest and principal payments associated with its indebtedness. If
the Company is unable to generate sufficient cash flow to meet its debt
obligations, the Company may be required to renegotiate the payment terms or
to refinance all or a portion of its indebtedness, to sell assets or to obtain
additional financing. There is no assurance that the Company would be able to
do so. See "Senior Notes."

4
<PAGE>

Uncertain Acceptance of 38 GHz Services. The Company and other providers
have only recently begun to market wireless broadband services on 38 GHz
frequencies and sales to date have been limited. The demand for such services
is uncertain. There can be no assurance that a substantial market will develop
for 38 GHz wireless broadband services.

Developing Technology; Reliability of Equipment; Attenuation. The Company
has only recently commenced commercial operation of its wireless broadband
digital telecommunications networks. Use of 38 GHz frequencies to provide
wireless broadband telecommunications services is a new and developing
technology, and, to date, there has been only limited use of 38 GHz
frequencies for the provision of wireless broadband services. There can be no
assurances that the equipment used by the Company to provide broadband
services will operate at a level of quality and reliability satisfactory to
ART's customers. The Company is unable to predict what technical difficulties
and complications may arise during the implementation of its wireless
broadband services on 38 GHz frequencies. If technical difficulties do occur,
the Company cannot predict what effect this may have on the design,
implementation and operation of its networks or on its ability to retain
customers or to market its services to potential new customers. In addition,
wireless broadband services over 38 GHz frequencies are subject to distance
and rain attenuation. There can be no assurance that the Company will be able
to overcome such attenuation on a cost-effective basis.

Roof Rights. Because 38 GHz services require a direct line of sight between
two transceivers, the Company generally must obtain rights to install its
transceivers and antennas on rooftops and other tall structures ("roof
rights") in appropriate locations in each of its market areas to provide
services. Due to the increased use of wireless technology and increased number
of licensees of mobile communication frequencies, there are frequently lengthy
negotiations to obtain rights, which may take several weeks to several months.
There can be no assurance that the Company will succeed in obtaining roof
rights where required, on a timely basis, and on favorable terms, if at all.
Failure to do so may have a material adverse effect on the Company's
development and results of operations. See "Business--Business Strategy."

Competition. The industry and markets in which the Company plans to provide
services are highly competitive. In each of its markets, the Company will
compete with wireline providers such as LECs, CLECs, CAPs, cable television
operators and IXCs and with other wireless providers, including other 38 GHz
service providers and providers in other portions of the radio spectrum. Many
of these providers have established market acceptance, longer operating
histories, longer standing relationships with customers and suppliers, greater
name recognition, better geographic footprints and greater financial,
technical and marketing resources than the Company. The Company expects to
compete primarily on the basis of price, responsiveness to customer needs,
customer service, quality, reliability and features. There can be no assurance
that the Company will be able to compete effectively against other service
providers in any of its markets. See "Business--Competition." Because the
Company's business strategy is to market primarily to other carriers to
leverage ART's carrier customers' sales forces, channels of distribution and
customer bases, the Company's initial target customers include the LECs,
CLECs, CAPs and IXCs that also compete with the Company. There can be no
assurance that such carriers will choose to utilize the Company's services to
provide "last mile" access service to their end users. See "Business--Business
Strategy."

Government Regulation. The telecommunications services offered by the
Company are subject to regulation by federal, state and local government
agencies. Changes in existing laws and regulations applicable to the provision
of wireless local telecommunications services via 38 GHz or other frequencies
with which the Company competes, including without limitation, those which
place additional restrictions on the Company or its 38 GHz licenses, or which
interfere with the Company's services or operations could have a material
adverse effect on the Company. Also, any failure or significant delay by the
Company in obtaining or maintaining any regulatory approvals which may be
required, could have a material adverse effect on the Company. See "Business--
Government Regulation."

Risk of Forfeiture, Non-Renewal and Fluctuation in Value of FCC
Licenses. The Company must comply with FCC rules relating to its licenses,
including transmission of operational traffic and non-removal of equipment and
facilities. Failure to comply with FCC rules could subject licenses to
forfeiture.

5
<PAGE>

All of the Company's 38 GHz licenses expire in February 2001. Although the
Company currently anticipates that its licenses will be renewed, there can be
no assurance that all or any of the licenses will be renewed upon expiration
of their initial terms. In the event that the FCC does not renew one or more
of the licenses, the Company's business and results of operations could be
materially adversely affected.

The value of the Company's licenses will depend, among other things, upon
the success of the wireless broadband operations of the Company and others and
fluctuations in the level of supply and demand for such licenses. Transfer of
licenses and changes of control involving entities holding licenses require
prior FCC and, in some instances, state regulatory approval and are subject to
restrictions and limitations on the identity and status of the transferee or
acquiror. These regulatory restrictions on transfer of licenses may adversely
affect the value of the Company's licenses. See "Business--Government
Regulation--Federal Regulation."

Foreign Licenses. Entities in which the Company has a substantial interest
have obtained licenses in certain Western European countries and have applied
for licenses to provide wireless broadband services in Canada and in other
Western European countries. There can be no assurance that such entities will
be able to acquire additional licenses, comply with applicable license
restrictions, retain any licenses granted, obtain any other necessary
governmental approvals, obtain necessary financing from third parties,
implement their business plans or operate in any country on a profitable basis
or at all. Because of limitations pursuant to the indenture relating to the
Senior Notes, each of such entities is expected to be independently financed.
See "Business--Foreign Licenses."

Management of Expanding Business. The Company is pursuing a business plan
that, if successfully implemented, will result in expansion of its operations
and the provision of 38 GHz services on a wide-spread basis over the next two
to five years. If this expansion is achieved, the Company's success will
depend on its ability to manage its expanding business effectively, enhance
its operational and financial controls and information systems, and attract
and retain qualified and key personnel. Failure to meet customer demands and
manage expansion could have a material adverse effect on the Company's results
of operations.

Reliance on Third Parties for Construction and Installation. The Company
presently contracts, and expects to continue to contract, with third parties
for a substantial portion of its equipment staging and outfitting, site
acquisition, site preparation, equipment installation and maintenance for the
Company's wireless services and network management software and services
relating to the Company's network management system. There can be no assurance
that the Company will be able to secure contracts with third parties for
installation, construction and maintenance at competitive prices or when
needed. The failure to secure such contracts and the failure of third parties
to perform under existing agreements could have a material adverse effect on
the Company's customer relations, development and results of operations.

Reliance on Equipment Supplier; Lack of Industry Standards. The Company
presently purchases its telecommunications equipment from one supplier. Any
reduction or interruption in supply from this supplier could have a disruptive
effect on the Company. There is no industry standard or uniform protocol for
38 GHz equipment. A single manufacturer's equipment must be used in
establishing a link and generally will be used across an entire market area.
Failure of the Company to procure sufficient equipment from one manufacturer
for a particular market area could adversely effect the Company's results of
operations.

Possible Need to Acquire Additional Bandwidth in Selected Areas; Risks
Associated with Acquisitions. The Company may need to acquire or lease
additional licenses to expand its geographic footprint, to enhance its ability
to provide service to its current target market or customers it may target in
the future or to adapt to changes in equipment technology. There can be no
assurance that the Company will be able to acquire additional radio spectrum
if or when needed on favorable terms or at all. See "Business--38 GHz Wireless
Broadband Licenses."

6
<PAGE>

The Company may face competition for acquisition opportunities in the
industry, increasing the costs of capitalizing on such opportunities. The
Company expects to compete for acquisition opportunities with other companies
that have significantly greater financial and management resources than the
Company. Furthermore, there can be no assurance that the Company would
generate sufficient revenues from any such acquisitions to offset the
associated acquisition costs. In addition, the anticipated benefits from any
acquisitions may not be achieved unless the assets and/or operations of any
acquired business are successfully combined with those of the Company in a
timely manner.

New Services; Technological Change. The telecommunications industry has been
characterized by rapid technological advances, changes in end-user
requirements, frequent new service introductions, evolving industry standards,
and decreases in the cost of equipment. There can be no assurance that (i) the
Company's wireless broadband services will not be outmoded by technology or
services now existing or developed and implemented in the future, (ii) the
Company will have sufficient resources to develop or acquire new technologies
or to introduce new services capable of competing with future technologies or
services offerings, (iii) the Company's equipment will not be rendered
obsolete or (iv) the cost of 38 GHz equipment will decline at all or as
rapidly as that of competitive alternatives.

Dependence on Key Employees. The success of the Company is dependent, in
part, on its ability to attract and retain qualified technical, marketing,
sales and management personnel. Competition for such personnel is intense and
the Company expects such competition to increase. There can be no assurance
that the Company will be successful in attracting and retaining such qualified
personnel. The Company's inability to attract and retain additional key
employees or the loss of one or more of its current key employees could have a
material adverse effect on the Company's business and results of operations.
See "Management."

Possible Volatility of Stock Price. The stock market historically has
experienced volatility which has affected the market price of securities of
many companies and which has sometimes been unrelated to the operating
performance of such companies. In addition, factors such as announcements of
developments related to the Company's business, or that of its competitors,
its industry group or its customers, fluctuations in the Company's results of
operations, a shortfall in revenues or earnings compared to analysts'
expectations and changes in analysts' recommendations or projections, sales of
substantial amounts of securities of the Company into the marketplace,
regulatory developments affecting the telecommunications industry or 38 GHz
services or general conditions in the telecommunications industry or the
worldwide economy, could cause the market price of the Common Stock to
fluctuate substantially.

Shares Eligible for Future Sale; Future Dilution. As of August 11, 1997, the
Company had 19,749,452 shares of Common Stock outstanding, assuming no
exercise of outstanding options or warrants to purchase Common Stock. Of these
outstanding shares, 5,442,241 are freely tradeable by persons other than
"affiliates" of the Company, as that term is defined under the Securities Act,
without restrictions or further registration under the Securities Act. Of the
remaining 14,307,211 outstanding shares, 1,007,776 shares are now available
for sale in the public market under Rule 144, 7,299,435 shares will become
available for sale in the public market under Rule 144 in October 1997, and an
additional 6,000,000 shares will become available for sale in the public
market under Rule 144 in February 1998. In addition, the Company has
registered 2,731,725 shares of Common Stock issuable on exercise of warrants
at $.01 per share. Holders of approximately 14.3 million shares of Common
Stock on a fully diluted basis also have contractual rights to have those
shares registered under the Securities Act for resale to the public in certain
circumstances. Certain of the Common Stock issued from time to time pursuant
to this Prospectus may be resold without restriction or further registration
under the Securities Act. Common Stock issued from time to time hereunder that
is restricted by Rules 144 and 145 under the Securities Act, may, with the
Company's consent, be resold pursuant to this Prospectus. See "Outstanding
Securities Covered by this Prospectus." As of August 11, 1997, an aggregate of
4,603,878 shares of Common Stock were subject to outstanding options and
warrants. The Company has filed a registration statement on form S-8 with
respect to 1,475,000 shares of Common Stock reserved for issuance under its
stock option plans. An increase in the number of shares of Common Stock that
may become available for sale in the public market may adversely affect the
market price prevailing from time to time of the Common Stock in the public
market and could impair

7
<PAGE>

the Company's ability to raise additional capital through the sale of its
equity securities. See "Shares Eligible for Future Sale."

Significant Influence of Voting by Officers, Directors and Related
Entities. As of the date of this Prospectus, the Company's officers and
directors and entities which may be considered affiliates of, or related to,
such officers and directors beneficially owned approximately 29.7% of the
Company's outstanding Common Stock (assuming no exercise of outstanding
warrants or options). In addition, approximately 14.7% of the Company's
outstanding Common Stock is held in a voting trust, pursuant to which such
shares are voted in proportion to, or in certain cases, consistent with the
majority of, the vote of other stockholders of the Company. See "Common Stock
Ownership--Voting Trust Agreement." Accordingly, the Common Stock held by the
Company's officers and directors and entities which may be considered
affiliates of, or related to, such officers and directors represents a
significant portion of outstanding Common Stock that is voted on an
independent basis. Thus, these stockholders will have the ability to exercise
significant influence over the Company and the election of its directors and
the approval of any action requiring the approval of the holders of the
Company's voting stock, including adopting certain amendments to the Company's
Certificate of Incorporation and approving mergers or sales of substantially
all of the Company's assets. See "Common Stock Ownership."

Absence of Dividends. The Company has not paid and does not anticipate
paying any cash dividends on its Common Stock in the foreseeable future. The
Company intends to retain its earnings, if any, for use in the Company's
growth and ongoing operations. In addition, the terms of the indenture
relating to the Senior Notes restrict the ability of the Company to pay
dividends on the Common Stock. See "Senior Notes."

Potential Effect of Anti-Takeover Provisions and Issuances of Preferred
Stock. Certain provisions of the Company's Certificate of Incorporation and
Bylaws, the Delaware General Corporation Law and the Company's Shareholder
Rights Plan may have the effect of delaying, deterring or preventing a change
in control of the Company or preventing the removal of incumbent directors.
The existence of these provisions and this Plan may have a negative impact on
the price of the Common Stock and may discourage third party bidders from
making a bid for the Company or may reduce any premiums paid to stockholders
for their Common Stock. In addition, the Company's Board of Directors has the
authority without action by the Company's stockholders to issue shares of the
Company's Preferred Stock and to fix the rights, privileges and preferences of
such stock, which may have the effect of delaying, deterring or preventing a
change in control. See "Description of Capital Stock."

DIVIDEND POLICY

ART has not paid any cash dividends on its Common Stock in the past and does
not anticipate paying any cash dividends on its Common Stock in the
foreseeable future. ART's Board of Directors intends to retain earnings, if
any, to repay indebtedness, to expand ART's business and to fund ongoing
operations for the foreseeable future. In addition, the terms of the indenture
relating to the Senior Notes restrict the ability of the Company to pay
dividends on Common Stock.

PRICE RANGE OF COMMON STOCK

ART's Common Stock is traded in the over-the-counter market and is reported
on the Nasdaq National Market under the symbol "ARTT." The following table
sets forth for the periods indicated the high and low bid information of the
Common Stock as reported on the Nasdaq National Market.

<TABLE>
<CAPTION>
HIGH LOW
------- -------
<S> <C> <C>
1996 Fourth Quarter (commencing on November 5)........... $16.50 $11.50
1997 First Quarter....................................... $15.625 $10.375
1997 Second Quarter...................................... $12.00 $ 5.75
1997 Third Quarter (through August 11, 1997)............. $ 9.875 $ 6.25
</TABLE>

8
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA

The selected financial data presented below as of December 31, 1995 and 1996
and for the years ended December 31, 1994, 1995 and 1996 were derived from and
should be read in conjunction with the audited consolidated financial
statements of the Company and the related notes thereto included elsewhere in
this Prospectus. The selected financial data presented below as of December
31, 1993 and 1994 and for the period from August 23, 1993 (date of inception)
to December 31, 1993 were derived from the audited consolidated financial
statements of the Company not included herein which were audited by Coopers &
Lybrand L.L.P. The selected financial data presented below as of June 30, 1997
and for the six months ended June 30, 1996 and 1997 were derived from and
should be read in conjunction with the unaudited condensed consolidated
financial statements of the Company and the related notes thereto included
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
AUGUST 23, 1993 SIX MONTHS ENDED
(DATE OF INCEPTION) YEAR ENDED DECEMBER 31, JUNE 30,
TO ------------------------------------ --------------------------
DECEMBER 31, 1993 1994 1995 1996 1996 1997
------------------- --------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Service revenue......... $ -- $ -- $ 5,793 $ 247,116 $ 61,520 $ 328,223
Equipment sales and
construction revenue... -- -- -- 2,660,811 -- 356,970
Consulting revenue...... -- 137,489 -- -- -- --
Technical and network
operations expenses.... -- -- -- 3,402,948 270,319 2,621,878
Cost of equipment sales
and construction....... -- -- -- 1,590,779 -- 214,399
Sales and marketing
expenses............... -- -- 191,693 5,548,584 1,472,198 6,241,797
General and
administrative
expenses............... 5,906 253,453 2,911,273 12,896,134 11,364,281 6,383,433
Research and development
expenses............... -- -- -- 1,269,579 521,406 128,715
Depreciation and
amortization........... 688 8,281 15,684 1,017,959 278,375 2,361,275
Loss from operations.... -- (124,245) (3,112,857) (22,818,056) (13,845,059) (17,266,304)
Interest and other
expenses............... -- 4,375 121,986 6,512,251 1,826,805 8,756,883
Extraordinary loss...... -- -- -- (1,339,996) -- --
Net loss................ $ (6,594) $(128,620) $(3,234,843) $(30,670,303) $(15,671,864) $(25,158,390)
Net loss per share...... $ -- $ (0.04) $ (0.54) $ (3.97) $ (2.38) $ (1.42)
Weighted average number
of shares of Common
Stock outstanding...... 1,820,555 3,337,685 5,946,338 7,717,755 6,577,461 17,735,974
OTHER FINANCIAL DATA:
EBITDA(1)............... $ (5,906) $(115,964) $(2,007,568) $(14,348,920) $ (5,150,958) $(14,455,716)
Capital expenditures.... -- 5,175 3,585,144 16,631,451 4,040,806 10,124,970
</TABLE>

<TABLE>
<CAPTION>
AS OF DECEMBER 31,
-------------------------------------------
1993 1994 1995 1996 AS OF JUNE 30, 1997
------- -------- ----------- ----------- -------------------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital surplus
(deficit).............. $13,958 $(76,556) $(3,008,510) $(9,623,905) $49,098,454
Property and equipment,
net.................... -- 3,448 3,581,561 19,303,849 28,228,836
FCC licenses, net....... -- -- 4,235,734 4,330,906 131,822,061
Total assets............ 74,513 42,611 9,876,559 36,648,701 263,948,181
Long-term debt
(including current
portion)............... -- -- 6,450,000 4,977,246 110,278,144
Accumulated deficit..... (6,594) (135,214) (3,370,057) (34,040,360) (59,198,750)
Total stockholders'
equity (deficit)....... 54,542 (39,078) (312,860) 19,949,920 111,752,301
</TABLE>
- --------
(1) EBITDA represents loss before interest and financing expense (net of
interest income), income tax expense (benefit) depreciation and
amortization expense, non-cash compensation expense and non-cash market
development expense. EBITDA is not intended to represent cash flows from
operating activities, as determined in accordance with generally accepted
accounting principles. EBITDA should not be considered as an alternative
to, or more meaningful than, operating income or loss, net income or loss
or cash flow as an indicator of the Company's performance. EBITDA has been
included because the Company uses it as one means of analyzing its ability
to service its debt, because a similar measure is used in the indenture
relating to the Senior Notes with respect to computations under certain
covenants and because the Company understands that it is used by certain
investors as one measure of a company's historical ability to service its
debt. Not all companies calculate EBITDA in the same fashion and therefore
EBITDA as presented may not be comparable to other similarly titled
measures of other companies.
9
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and other sections of this Prospectus include
forward-looking statements. These forward-looking statements are subject to
business and economic risks and uncertainties, and the Company's actual
results of operations may differ materially from those contained in the
forward-looking statements. Factors that could cause or contribute to such
differences include, but are not limited to, those discussed in "Risk Factors"
as well as other risks and uncertainties referenced in this Prospectus.

OVERVIEW

From its inception in 1993 to the fourth quarter of 1996, the Company had
primarily focused on acquiring licenses, hiring management and other key
personnel, raising capital, acquiring equipment and roof rights and developing
its operating and support systems and infrastructure. In the fourth quarter of
1996, the Company commenced commercial operations.

RESULTS OF OPERATIONS

SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO SIX MONTHS ENDED JUNE 30, 1996

Revenue for the six months ended June 30, 1997, was approximately $685,000
compared to approximately $62,000 for the same period in 1996. The revenue for
the first six months of 1997 included approximately $357,000 of non-recurring
installation and equipment sales revenue.

Operating costs and expenses were approximately $18.0 million for the six
months ended June 30, 1997, compared to approximately $13.9 million for the
same period in 1996. General and administrative expenses in the 1996 period
included a $6.8 million charge related to release of escrowed shares to
executive officers. Equipment sales and construction costs of approximately
$214,000 incurred in the 1997 period related to non-recurring revenue and
sales and marketing expenses in the 1996 period included a $1.1 million charge
relating to a distribution agreement. Excluding non-cash and non-recurring
items, operating costs and expenses for the six months ended June 30, 1997,
were approximately $14.9 million compared to approximately $5.2 million for
the same period in 1996.

During July 1997, management initiated certain restructuring activities
intended to more closely align its organization with its current marketing and
business development plans. The Company's preliminary estimate of the
resulting non-recurring employee severance and office closure costs is
approximately $500,000. These activities are expected to result in a slight
reduction in recurring operating expenses for the remainder of 1997. In future
periods the Company expects increases in cash expenses for sales and marketing
and network operations as the development and deployment of the Company's
business continues. The Company also expects depreciation and amortization to
increase substantially in future periods as a result of deployment of its
wireless transmission equipment. Operating losses for the six months ended
June 30, 1997, were approximately $17.3 million compared to approximately
$13.8 million for the same period in the previous year.

Net interest and other expenses were approximately $8.8 million for the six
months ended June 30, 1997, compared to approximately $1.8 million for the
same period in 1996. Included in net interest and other expenses for 1997 was
approximately $2.7 million related to a terminated financing commitment.
Interest expense will increase in future periods due to the amortization of
the original discount on the Senior Notes which were issued in February 1997.
The net loss for the six months ended June 30, 1997, was approximately $25.2
million compared to a net loss for the same period of 1996 of approximately
$15.7 million.

1996 COMPARED TO 1995

Revenues for the year ended December 31, 1996 were approximately $2.9
million compared to $5,793 in 1995. Included in 1996 revenues was
approximately $2.7 million representing non-recurring sales and construction
revenue associated with radio links installed for a third party.

10
<PAGE>

Operating expenses other than interest were approximately $25.7 million for
the year ended December 31, 1996 compared to approximately $3.1 million in 1995.
The increase was primarily due to an overall increase in costs and expenses
associated with preparing for the commencement of commercial operations,
including higher general and administrative, sales and marketing expenses,
technical and network operating expenses and research and development expenses.
Also included in 1996 was approximately $1.6 million of non-recurring expenses
for sales and construction performed for a third party and a non-cash
compensation expense of approximately $7.6 million, including approximately $6.8
million arising from the release from escrow of shares of Common Stock to two
executive officers. Included in sales and marketing expenses were non-cash
marketing costs of approximately $1.1 million related to a strategic
distribution agreement. Research and development costs were incurred as the
Company initiated its research and development of microwave radio technology.

Net interest and other expenses were approximately $6.5 million for the year
ended December 31, 1996 compared to $121,986 in 1995. Included in interest and
other expenses for 1996 were approximately $1.2 million relating to an
unsuccessful debt offering in July 1996 and approximately $3.7 million related
to a financing commitment which was terminated in 1997 upon the sale of the
Senior Notes. Interest expense increased in 1996 due to increased borrowings
in 1996. The early repayment in November 1996 of bridge financings resulted in
a non-cash extraordinary loss of approximately $1.3 million arising from the
write-off of associated unamortized issuance discount and deferred financing
costs.

1995 COMPARED TO 1994

The Company's historical financial statements for 1994 primarily reflect
ART's activities in applying for 38 GHz licenses and meeting FCC requirements.

The Company had $137,489 in consulting revenue for engineering and
management services in 1994, related to filing of applications for 38 GHz
licenses on behalf of others, and $5,793 in service revenue in 1995 derived
from customers for wireless broadband services in markets in which licenses
were acquired in November 1995.

General and administrative expenses increased to approximately $2.9 million
for 1995, from $253,453 for 1994 due to an increased number of employees and
the recognition of non-cash compensation expenses of approximately $1.1
million relating to the release from escrow of shares of Common Stock to two
executive officers as a result of meeting certain performance objectives and
relating to certain employee stock options. Sales and marketing expenses
increased to $191,693 in 1995 from $0 in 1994 as the Company prepared for
commercial operations. Net interest expense increased to $121,986 in 1995 from
$4,375 in 1994 due to increased levels of borrowing. As a result, the net loss
for 1995 was approximately $3.2 million, as compared to a net loss of $128,620
in 1994.

LIQUIDITY AND CAPITAL RESOURCES

The Company has generated negative cash flow and net losses each year since
its inception and expects such negative cash flow and net losses to continue
at least for the next few years. Accordingly, the Company will be dependent on
various financing sources to fund its growth as well as its continued losses
from operations. To date, funding for acquisitions, capital expenditures and
net operating losses has been provided from private placements of equity and
bridge financings in 1994 through 1996, the Company's initial public offering
in November 1996 and the Company's public offering of its Senior Notes in
February 1997. Approximately $52 million of the approximately $130 million net
proceeds from the sale of the Senior Notes was used to purchase a portfolio of
U.S. Treasury securities that will provide for payment of interest on the
Senior Notes through February 2000. Because the Senior Notes have "significant
original issue discount" for tax purposes, the Company is not able to deduct
the interest expense related to the accretion of this original issue discount
for tax purposes.

The Company currently estimates that it will incur approximately $5 million
of capital expenditures for the last two quarters of 1997, including
outstanding commitments to purchase approximately $2.0 million of wireless

11
<PAGE>

transmission equipment. The Company will require significant additional
capital in 1998 to fund its operations and business plan. Based on its current
business plan, ART estimates that it will require several hundred million
dollars over the next few years for the continued development and expansion of
its wireless broadband operations. Because the Company generally deploys radio
equipment in response to customer orders, a substantial portion of its capital
requirements is dependent on customer demand. Accordingly, the Company's
capital requirements may increase or decrease depending largely upon the cost
and amount of equipment acquired, the number of networks installed, the number
of markets served and the prices charged for its services as well as other
factors. In addition, if, among other things, the assumptions underlying the
Company's business plan change or prove to be inaccurate or the Company
changes its business plan, the Company's capital requirements may change.
There can be no assurance that the Company will be able to obtain any
financing when required, or, if available, that the Company will be able to
obtain it on acceptable terms. In the event that the Company fails to obtain
additional financing when required, such failure could result in the
modification, delay or abandonment of some or all of the Company's development
and expansion plans. Any such modification, delay or abandonment could have a
material adverse effect on the Company.

NEW ACCOUNTING PRONOUNCEMENTS

In February 1997, the Financial Accounting Standards Board ("FASB") issued
Financial Accounting Standards No. 128, "Earnings per Share." This statement,
effective for the year ending December 31, 1997, specifies the computation,
presentation and disclosure requirements for earnings per share ("EPS"). The
statement will replace "primary" EPS with "basic" EPS, the principal
difference being the exclusion of common stock equivalents in the computation
of basic EPS and the required dual presentation of basic and diluted EPS on
the face of the consolidated statement of operations. Due to the Company's net
losses, basic and diluted EPS computed pursuant to this statement are not
expected to be materially different from the historical net losses per share
previously presented.

In June 1997, the FASB issued Financial Accounting Standards No. 130,
"Reporting Comprehensive Income." This statement establishes requirements for
disclosure of comprehensive income and becomes effective for the Company for
the year ending December 31, 1998. Comprehensive income includes such items as
foreign currency translation adjustments and unrealized holding gains and
losses on certain investments that are reported by the Company as a component
of stockholders' equity. The Company does not expect this pronouncement to
materially affect the Company's results of operations.

INFLATION

The Company's business has not been materially affected by inflation during
the last three fiscal years and the six months ended June 30, 1997.

12
<PAGE>

BUSINESS

The Company provides point-to-point wireless broadband digital
telecommunications services. Utilizing 38 GHz frequencies, the Company offers
cost-effective, high-capacity, high-quality "last mile" local access to voice,
data, video and Internet services. Licenses which the Company owns, manages or
has a long-term right to use permit it to develop a large-scale national
network in 173 U.S. markets covering an aggregate population of approximately
158 million people, including 83 of the top 100 markets.

INDUSTRY OVERVIEW

Significant increases in microprocessor power and advances in multimedia and
on-line applications such as the Internet, local and wide area networks and
video teleconferencing have significantly increased demand for high-speed,
high-capacity telecommunications services. The growth in demand for high-speed
digital telecommunications services is being driven by the revolution in
microprocessor power and advances in new multimedia and on-line applications
such as the Internet. The ability to access and distribute information quickly
has become critical to business and government users of telecommunications
services. The rapid growth of local area networks ("LANs"), Internet services,
video teleconferencing and other data intensive applications is significantly
increasing the volume of broadband telecommunications traffic. This increasing
demand, together with changes in the regulatory environment, has created an
opportunity to offer cost-effective, high-capacity "last mile" access using
both wireline and wireless solutions. Conventional copper wire networks of
local telephone companies do not have sufficient capacity to service this
demand. Until recently, only fiber-optic networks have been available to
address the "last mile bottleneck." However, fiber reaches only a small
percentage of the addressable market and is expensive to extend to the end
user. Recent advances in 38 GHz technology, coupled with metropolitan-wide
footprint licensing, has enabled 38 GHz providers to extend the reach of
telecommunications networks using broadband wireless technology.

ADVANTAGES OF ART'S WIRELESS SOLUTION

The Company believes that it is well positioned to compete in offering
broadband "last mile" services and broadband network services to other
telecommunications providers. Advantages of ART's wireless solution include:

. Broad Footprint. The broad scope of the Company's footprint enables it
to offer wireless broadband services targeting much of the United
States' addressable business market.

. High Data Transfer Rates. The 100 MHz bandwidth of each 38 GHz channel
supports full broadband capability. An ART transparent LAN service
circuit at 6 Megabits per second ("Mbps") linking a corporate user to an
ISP point of presence ("POP") can transfer data more than 100 times
faster than a 56 Kilobits per second ("Kbps") dial-up modem, which is
the fastest dial-up modem currently in wide-spread commercial use, and
approximately 45 times faster than the fastest integrated services
digital network ("ISDN") lines currently in use (128 Kbps). A 38 GHz DS-
3 link at 45 Mbps today can transfer data at a rate which is over 800
times the rate of a 56 Kbps dial-up modem and over 350 times the rate of
the 128 Kbps ISDN line. Each of the Company's 38 GHz links can support
one DS-3 circuit, which is equivalent to 28 DS-1 circuits. In addition
to accommodating standard voice and data requirements, 45 Mbps data
transmission rates allow end users to receive real-time, full motion
video and 3-D graphics at their workstations and to utilize other data
intensive interactive applications on the Internet and other networks.

. High-Quality Transmission. ART's networks are designed for performance
comparable to fiber and superior to copper networks. The Company's
networks are engineered to provide no less than 99.995% RF path
availability based on local weather patterns with better than a 10-/7/
bit error rate. Actual performance of the networks will depend on
various other factors such as the quality and reliability of the
transmission equipment. See "Risk Factors--Developing Technology;
Reliability of Equipment; Attenuation."

13
<PAGE>

. Significant Channel Capacity. Because 38 GHz radio emissions have a
narrow beam width, a relatively short range and in most instances the
capability to intersect without creating interference, 38 GHz channels
can be efficiently reused in the licensed area, and, as a result, a
single channel can serve a significant number of end users.

. Rapidly Deployed and Easily Installed Equipment. 38 GHz technology can
be deployed considerably faster than both wireline and many other
wireless technologies. Extending fiber-optic or copper-based networks to
reach new customers requires significant time and expense. The equipment
used for 38 GHz point-to-point applications is small (12 to 24 inches in
diameter), unobtrusive and can be easily installed and redeployed to
meet changing customer demand. Microwave equipment at certain other
frequencies is larger and more susceptible to zoning restrictions. 38
GHz license holders can install and operate as many transmission links
as they can engineer in the licensed area without obtaining additional
approvals from the FCC, while certain other portions of the microwave
radio spectrum must be licensed on a link-by-link basis before
commencing service.

. Cost-Effective Service. ART's wireless solution enjoys favorable
economics compared to cabled networks.

BUSINESS STRATEGY

The Company's strategy is to capitalize on its broad footprint of 38 GHz
licenses and other competitive strengths to become a leading provider of "last
mile" wireless broadband services to a diverse group of traditional and
emerging telecommunications service providers. The Company has begun to
implement the following strategic initiatives to achieve this objective:

. Develop Large-Scale Network. The Company's spectrum assets provide it
with the foundation on which to create a large-scale commercial network
of wireless broadband operations. The Company will continue to build out
its infrastructure incrementally in response to customer demand in order
to exploit the value inherent in its spectrum assets and efficiently
deploy its capital.

. Market to Carriers. The Company is marketing its services primarily to
carriers in order to leverage ART's carrier customers' sales forces,
channels of distribution and customer base. The Company believes that
its services will be attractive to carriers because it will allow them
to expand their networks and customer base more cost-effectively. The
Company's initial target customers include CLECs, LECs, CAPs, ISPs,
mobile communications service providers and IXCs.

. Proactively Identify Off-Net Market Opportunities. ART is analyzing
certain carriers' networks to identify high density off-net customer
locations and obtaining roof rights necessary to serve those locations.
By obtaining these roof rights, the Company will be able to provide
wireless access to such locations and plans to market these locations
aggressively to the respective carriers. Utilizing this proactive
approach, the Company will reduce the time from order to service and
will provide the carriers with an immediate and viable alternative to
installing fiber.

. Data Based Services. The Company's 38 GHz services are conducive to
providing high-bandwidth data applications such as Internet access,
high-volume data transmission, high resolution imaging, video
conferencing and video on-demand to end users. ART is developing new
direct and indirect distribution channels to market these services to
end users and may offer switched data services.

. Technological Advancements. The Company has been working with equipment
manufacturers and technology companies to encourage development of
improved equipment with increased capacity, efficiency and capabilities
at lower costs. Lower-cost OC-3 SONET radios which are expected to
provide three times the largest current capacity are under development.
In the future, the Company also expects technological advances to permit
the deployment of multiple point-to-point wireless broadband networks
providing greater cost and spectrum usage efficiencies.

ART WIRELESS SERVICES AND APPLICATIONS

The Company's wireless circuits range in capacity from DS-1 (1.544 Mbps,
capable of carrying 24 voice conversations) to DS-3 (45 Mbps, capable of
carrying 672 simultaneous voice conversations). The Company's

14
<PAGE>

wireless broadband links consist of paired millimeter wave radio transceivers.
Each link requires a direct line of sight between the two transceivers.
Because the maximum length of a single link is generally limited to three to
five miles, intermediate links (or "repeaters") are used to permit wireless
broadband transmission beyond this limit. Repeaters are also used to
circumvent obstacles, such as buildings in urban areas or hills in rural
areas. Transmission links in areas of heavy rainfall are engineered for
shorter distances and greater margin for transmission quality. The Company
currently installs its transceivers on building rooftops and other tall
structures and must secure roof rights for each building or other structure on
which equipment is installed. The Company generally contracts with third
parties for equipment staging and outfitting, site acquisition, site
preparation, equipment installation and maintenance for the Company's wireless
services and network management software and services relating to the
Company's network management system.

The Company's wireless broadband services are sold through a sales cycle
that may average more than six months because of the need to demonstrate the
quality of the Company's 38 GHz services, to formalize service agreements with
customers, to design networks, to acquire necessary roof rights and to provide
and install equipment. The Company believes that the sales cycle may shorten
as the Company's 38 GHz technology becomes more widely accepted and the
Company markets locations where the Company has already acquired roof rights.

The Company is providing or has received orders to provide wireless
broadband services to LECs, CAPs/CLECs, ISPs and mobile communications service
providers and is in the process of becoming a qualified vendor to major IXCs.
The Company currently provides services to carriers such as Bell Atlantic
NYNEX Mobile, MFS Communications Company, Inc./WorldCom, Inc., UUNet, Electric
Lightwave, NEXTLINK Communications LLC, American PCS, L.P., Western Wireless,
Commonwealth Telephone, Public Interest Network, Chadwick Telephone, CGX
Telecom, CAIS, Inc., Brooks Fiber Properties, Inc. and GST Telecommunications,
among others. The Company has entered into master service agreements with
certain of these and other companies which contain the terms by which such
customers may place future orders, including volume discounts, approximate
geographic location of links needed and representative pricing. Although a
master service agreement is not a commitment to purchase, it facilitates the
placement of future orders by a customer.

The Company currently provides, or anticipates providing, wireless broadband
services to the following types of customers, among others:

Competitive Access Providers/Competitive Local Exchange Carriers and Local
Exchange Carriers. Currently, CAPs/CLECs compete with LECs by installing
fiber-optic cable rings in the highest density business locations to connect
with long distance carriers and for intra-ring transmissions. Due to the high
cost inherent in building fiber networks, CAPs/CLECs generally target densely
populated areas with high concentrations of large end users. In order to reach
"off-net" customers, CAPs/CLECs must either lease or purchase facilities and
services from LECs or alternative suppliers until such time as it becomes
economical to extend the CAP/CLEC fiber networks to these customers. Without
sharing proprietary information with a direct competitor, such as a LEC,
CAPs/CLECs can utilize the Company's wireless broadband services as an
alternative to LEC facilities to reach areas where extensions of CAP/CLEC
networks are not cost-efficient, feasible or quick or to provide redundant or
backup capacity to their existing networks.

LECs are encountering many of the same obstacles CAPs/CLECs are encountering
in seeking to enhance their networks to deliver broadband services. Certain
LECs have sought to utilize 38 GHz technology to expand the range of their
service offerings to match those offered by CAPs/CLECs. Further, as LECs are
permitted to provide inter-LATA long distance services, they may seek to use
38 GHz technology to bypass other LECs outside of their region.

Internet Service Providers. The expanding demand for Internet access, the
growing importance of audio, video and graphic Internet applications to both
businesses and individuals and the lack of high-capacity access through
existing LEC facilities has created a growing market for wireless broadband
services. The Company can provide ISPs access at the required high-speed data
rates from 1.544 Mbps to 45 Mbps, linking ISPs and their customers and linking
ISP POPs and the Internet backbone.

15
<PAGE>

Mobile Communications Service Providers. ART's wireless broadband services
can provide cellular, wireless dispatch and PCS carriers, cost-effective
backbone network connections between cell sites, base stations and wireline
networks, with reduced construction time and installation costs.

Inter-exchange Carriers. To minimize LEC access charges and to gain more
direct contact with the consumer, IXCs can utilize the Company's wireless
broadband services to connect call origination or termination points either
directly to the IXCs' POPs or by way of CAP/CLEC intermediate fiber rings or
two or more of their respective POPs in a single market area and to provide
carriers with physical diversity routes (i.e., backup capacity) for traffic in
situations when primary routes become incapacitated or network reliability
concerns demand alternate telecommunications paths. By utilizing the Company's
wireless broadband services, IXCs are able to avoid the capacity barriers
inherent in copper wire connections, which have typically prevented them from
providing their customers with the end-to-end, high bandwidth, full digital
services available from a fiber-optic or wireless-based system.

Private User Networks. Heavy usage customers can utilize ART's wireless
broadband services to create private voice, data and video communications
networks within and among their local facilities and buildings.

Interactive Video Services Users. ART's wireless broadband services can
provide high-speed, high-capacity access to communications networks for
customers who require reliable videoconferencing, video on demand, and
Internet video services.

As a non-dominant carrier, ART does not have to cost-justify its rates to
regulatory bodies and therefore has a wide latitude to exercise individual
case-based pricing, subject to certain policies against discriminatory
treatment. As a result, ART enters into customer-specific and service-specific
arrangements, which include volume, capacity and term discounts and customized
billing and payment options. ART expects to price its services competitively
with those of the incumbent LECs. The Company also expects to charge for
installation where appropriate. The Company also anticipates offering metered
services to various end users at an appropriate point in the future.

38 GHZ WIRELESS BROADBAND LICENSES

The FCC has allocated the 37.0-40.0 GHz (the "38 GHz") band for wireless
broadband transmissions and authorized the use of fourteen 100 MHz channels
between 38.6 GHz and 40.0 GHz. Licensees are authorized to provide point-to-
point wireless telecommunications services within a specified geographic
footprint.

The Company owns 217 38 GHz licenses and manages or has the right to use on
a long-term basis 28 38 GHz licenses (including the 12 licenses that are
subject to the Commco Option (as defined herein)). Of the 217 licenses that
the Company owns, it acquired 129 from CommcoCCC, Inc. in 1997 in exchange for
6 million shares of Common Stock and 32 from EMI Communications Corporation in
1995 for $3.0 million in cash and a $1.5 million three-year promissory note.
The Company's agreements for managing and using on a long-term basis 38 GHz
licenses generally have terms of five or more years. Taken together, these
licenses allow the Company to provide 38 GHz wireless broadband services in
173 U.S. markets, covering an aggregate population of approximately 158
million people, allowing it to provide between 100 and 500 MHz of transmission
capacity in 83 of the top 100 U.S. markets.

The Company selectively utilizes other radio frequencies to provide its
services under certain circumstances. The Company intends to seek to acquire
additional licenses or businesses which hold licenses to expand its geographic
footprint or to enhance its ability to provide service within its current
markets. In light of the recent grant by the Federal Communications
Commissions (the "FCC") of licenses applications for which had previously been
frozen, the Company believes it may have an opportunity to acquire additional
spectrum.

FOREIGN LICENSES

Foreign subsidiaries of the Company have been granted broadband wireless
authorizations covering Norway, Denmark and the United Kingdom which authorize
"last mile" broadband wireless connectivity for

16
<PAGE>

voice, video, data and Internet applications with certain limitations and have
applied for licenses in other countries in Europe. The Company has provided a
consultant of the Company the right to acquire an equity interest in certain
subsidiaries formed or to be formed to conduct operations in Europe upon
achievement of certain performance objectives. There can be no assurance that
such entities will be able to acquire additional licenses, comply with
applicable license restrictions, retain any such licenses, obtain any other
necessary governmental approvals, obtain necessary financing from third
parties, implement their business plans or operate in any country on a
profitable basis or at all. Because of limitations pursuant to the indenture
relating to the Senior Notes, each of such entities is expected to be
independently financed.

ART has entered into a binding letter of intent with Advantage Telecom, Inc.
("ATI"), a Canadian Company which has applied for licenses to provide 38 GHz
service in the 66 major markets in Canada covering a population of at least 21
million people. The letter of intent provides for ART to acquire a substantial
direct and indirect minority interest in ATI and to be a party to a services
agreement with ATI pursuant to which ART may construct and operate radio
systems based upon any licenses that may be granted to ATI and subject to
control by ATI. Under the letter of intent ATI is responsible for securing any
additional funding necessary to construct the radio systems. Due to current
uncertainty in Canada's licensing policy, there can be no assurance that ATI
will be granted these licenses or that, if licenses are granted, ATI will
obtain the funding necessary to construct the radio systems.

COMPETITION

The telecommunications services industry is highly competitive. The Company
has only recently begun to market its wireless broadband services to potential
customers and is currently providing services on a limited basis. In each
market area in which the Company is authorized to provide services, the
Company competes or will compete with several other service providers and
technologies. The consolidation of telecommunications companies and the
formation of strategic alliances and cooperative relationships in the
telecommunications and related industries, as well as the development of new
technologies, could give rise to significant new competitors to the Company.
The Company expects to compete primarily on the basis of price, responsiveness
to customer needs, customer service, quality, reliability and features. The
Company faces significant competition from incumbent LECs, CAPs/CLECs and
other 38 GHz providers. The Company may also compete with other wireless
service providers, cable television operators, electric utilities, LECs
operating outside their current local service areas and IXCs. There can be no
assurance that the Company will be able to compete effectively in any of its
market areas with any of its existing and potential competitors. Many of the
Company's competitors have long-standing relationships with customers and
suppliers, greater name recognition and greater financial, technical and
marketing resources than the Company. As a result, these competitors may be
able to develop and exploit, among other things, new or emerging technologies
or adapt to changes in customer requirements more quickly than the Company or
devote greater resources to the marketing and sale of their services than the
Company. Because the Company's business strategy is to market primarily to
other carriers to leverage ART's carrier customers' sales forces, channels of
distribution and customer bases, the Company's initial target customers
include the CLECs, LECs, CAPs and IXCs that also compete with the Company.
There can be no assurance that such carriers will choose to utilize the
Company's services to service their end users.

Incumbent LECs. The Company faces significant competition from incumbent
LECs, utilizing copper and fiber-optic networks as well as 38 GHz and other
wireless services. Incumbent LECs have long-standing relationships with their
customers, generally own significant PCS or cellular assets, have the
potential to subsidize competitive services with revenues from a variety of
businesses and benefit from favorable federal and state policies and
regulations. Regulatory decisions and recent legislation, such as the
Telecommunications Act of 1996 (the "Telecommunications Act"), have reduced
barriers to entry into the local exchange markets which is expected to
increase competition in these markets which in turn may result in increased
price competition. These changes will affect both the Company and its carrier
customers.

Digital subscriber line products, such as ADSL (asymmetrical digital
subscriber line), HDSL (high-speed digital subscriber line) and VDSL (video
digital subscriber line) are under development or are being implemented

17
<PAGE>

to enhance the performance of LECs' copper networks. There can be no assurance
that the Company will be able to compete effectively with companies offering
these enhancements.

CAPs/CLECs. The Company also competes with CAPs/CLECs for the provision of
"last mile" access and additional services in most of its market areas.
However, the Company believes that many CAPs/CLECs may utilize 38 GHz
transmission links to augment their own service offerings to other carriers
and end users and that the Company is well positioned to provide such 38 GHz
services to CAPs/CLECs. Nonetheless, there can be no assurance that CAPs/CLECs
will utilize the Company's 38 GHz services or that CAPs/CLECs will not seek to
acquire their own 38 GHz licenses or other spectrum or use the services of
other wireless or wireline providers. Furthermore, the ability of CAPs/CLECs
to compete in the local exchange market currently is limited by lack of parity
with LECs in number portability, dialing parity and reasonable
interconnection.

38 GHz Service Providers. The Company also faces competition from other 38
GHz service providers within its market areas including WinStar
Communications, Inc. and BizTel Communications, Inc., a subsidiary of Teleport
Communications Group, Inc. ("TCG"). In many cases, one or both of these
service providers hold licenses to operate in other portions of the 38 GHz
band in the Company's market areas. In certain of the Company's market areas,
they may have a longer history of operations, a larger geographic footprint
and more spectrum. Both WinStar and TCG operate as CLECs and have
substantially greater financial resources than the Company. In addition,
several dozen other entities have been granted 38 GHz authorizations in the
Company's markets. Due to the relative ease and speed of deployment of 38 GHz
technology, the Company could face intense price competition and competition
for customers from other 38 GHz service providers.

The Company also faces potential competition from new entrants to the 38 GHz
market, including LECs, CAPs, CLECs and other telecommunications companies.
The FCC has granted additional licenses in the 38 GHz band as a result of a
partial lifting of the freeze on processing new applications and may grant
licenses in other portions of the spectrum with characteristics similar to the
38 GHz band and is expected to auction additional 38 GHz licenses. Entities
having greater resources than the Company could acquire licenses and provide
services competitive with the Company's services. See "--Government
Regulation--Federal Regulation--FCC Rulemaking."

Other Wireless Competitors. The Company also faces or may face competition
from other terrestrial wireless services, including 2 GHz and 28 GHz wireless
cable systems (MMDS and LMDS), 24 GHz point-to-point or multipoint microwave
services (DEMS), FCC Part 15 wireless radio devices, wireless communications
services at 2.3 GHz (WCS), and other services that use existing point-to-point
microwave channels on other frequencies.

The FCC recently established service and competitive bidding rules for LMDS
and has announced plans to initiate an auction by the end of 1997 to award
LMDS licenses. LMDS licensees may use the spectrum to offer a variety of
services such as multichannel video programming, telephony, video
communications and data services in competition with the Company. Recently,
the FCC has permitted certain wireless cable operators licensed to provide
video programming in the 2 GHz band to offer two-way digital broadband
telecommunications services in select markets. It is expected that the FCC
will continue authorizing wireless cable operators to provide similar
services.

In addition, one competitive group holds licenses in the 24 GHz band in 31
markets, which would allow it to provide voice, data, Internet and
videoconferencing services to small and medium sized businesses in competition
with the Company.

Motorola Satellite Systems, Inc. has filed an application with the FCC for a
global network of satellites in certain spectrum bands including 38 GHz, which
are proposed to be used for broadband voice and data services. Other companies
have filed applications for global broadband satellite systems in the 28 GHz
band and other companies may file applications for satellite systems in the 38
GHz band. If licensed and developed, these systems could also represent future
competition to the Company. Satellite transmissions in the 38 GHz

18
<PAGE>

frequencies could adversely affect the Company's existing operations or its
future expansions by creating interference or by inducing the FCC to impose
power and other limitations upon the Company's transmissions. However,
licensing satellite systems in the 38 GHz band would require changes in FCC
rules.

The FCC has allocated a number of spectrum blocks for use by wireless
devices that do not require site or network licensing. A number of vendors
have developed such devices that may provide competition to the Company for
certain low data-rate transmission services.

In January 1997, the FCC allocated 300 MHz of spectrum in the 5 GHz band for
unlicensed devices to provide short-range, high-speed wireless digital
communications. These frequencies must be shared with incumbent users without
causing interference. Although the allocation is designed to facilitate the
creation of new wireless local area networks (and thus might not be
competitive for the Company's services), it is too early to predict what kind
of equipment might ultimately be manufactured and for what purposes it might
be utilized.

Other Competitors. Although cable modems that provide high-speed data
capability over installed coaxial cable television networks are not widely
available currently and may require significant cable system upgrades, the
Company may face competition from cable television operators providing such
modems.

The Company may also face competition from electric utilities, LECs
operating outside their current local service areas, IXCs and other providers.
These entities may provide transmission services using technologies which may
enjoy a greater degree of market acceptance than 38 GHz wireless broadband
technology in the provision of "last mile" broadband services. In addition,
the Company may face competition from new market entrants using fiber-optic
and enhanced copper-based networks to provide local broadband services.

GOVERNMENT REGULATION

The Company's wireless broadband services are subject to regulation by
federal, state and local governmental agencies. At the federal level, the FCC
has jurisdiction over the use of the electromagnetic spectrum (i.e., wireless
services) and has exclusive jurisdiction over all interstate
telecommunications services, that is, those that originate in one state and
terminate in another state. State regulatory commissions have jurisdiction
over intrastate communications, that is, those that originate and terminate in
the same state. Municipalities may regulate limited aspects of the Company's
business by, for example, imposing zoning requirements and requiring
installation permits.

Federal Regulation

FCC Licensing. The Communications Act of 1934 (the "Communications Act")
imposes certain requirements relating to licensing, common carrier
obligations, reporting and treatment of competition. Under current FCC rules,
the recipient of a license for 38 GHz microwave facilities is required to
construct facilities to place the station "in operation" within 18 months of
the date of grant of the license. Although, under current FCC regulations, the
term "in operation" is not defined beyond the requirement that the station be
capable of providing service, the industry custom is to establish at least one
link between two transceivers in each market area for which it holds a
license. In the event that the recipient fails to comply with the construction
deadline, the license is subject to forfeiture. In addition, pursuant to rules
that became effective August 1, 1996, if a station does not transmit
operational traffic (not test or maintenance signals) for a consecutive period
of twelve months at any time after construction is complete, or if removal of
equipment or facilities renders the station incapable of providing service,
the license is subject to forfeiture, absent a waiver of the FCC's rules.
Although this rule has not been interpreted by the FCC, it is possible that it
could be applied in such a way that could cause one or more of the Company's
licenses to be subject to forfeiture.

All of the 38 GHz licenses owned or to be acquired by the Company are due to
expire in February 2001. Although there can be no assurance, the Company
anticipates that its licenses will be renewed based upon the

19g
<PAGE>

FCC's custom and practice in connection with other services which have
established a presumption in favor of licensees that have complied with
regulatory obligations during the initial license period.

Common Carrier Regulation. Under the terms of its licenses, the Company is
classified as a common carrier, and as such is required to offer service on a
non-discriminatory basis at just and reasonable rates to anyone reasonably
requesting such service. Although the Communications Act prohibits the Company
from discriminating among its customers, the Communications Act, as currently
interpreted by the FCC, does permit the Company substantial discretion in
classifying its customers and discriminating among such classifications. The
Company generally is obligated to furnish service to its competitors and might
be obligated to allow other 38 GHz providers to install links within one of
the Company's market areas for a non-discriminatory fee. Under the FCC's
streamlined regulation of non-dominant carriers, the Company, as a non-
dominant carrier, must file tariffs with the FCC for certain interstate
services on an ongoing basis. The Company is in the process of filing tariffs
with the FCC, to the extent required, with respect to its provision of
interstate service. The FCC has recently initiated a Rulemaking proceeding to
eliminate the tariff filing requirement. The Company is not currently subject
to rate regulation as a non-dominant carrier.

Services Agreements. There is no FCC precedent addressing the limits of
management and service agreements for 38 GHz services. However, the Company
believes that the provisions of its management and service agreements comply
with the FCC's policies concerning licensee control of FCC-licensed facilities
in other services. No assurance can be given that the Company's management and
service agreements, if challenged, would be found to comply with FCC policies
or what modifications, if any, may need to be made to comply with those
policies. If the FCC were to void or require modifications of the management
and service arrangements, the Company's operating results could be adversely
affected.

Competition. Over the last several years, the FCC has issued a series of
decisions and Congress has recently enacted legislation making the interstate
access services market more competitive by requiring reasonable and fair
interconnection by LECs. Concomitant with its decision to require such
interconnection, the FCC has provided LECs with a greater degree of pricing
flexibility between services and between geographic markets (such as cross-
subsidizing price cuts across geographic markets).

Telecommunications Act. The Telecommunications Act substantially departs
from prior legislation in the telecommunications industry by establishing
local exchange competition as a national policy through the removal of state
regulatory barriers to competition and the preemption of laws restricting
competition in the local exchange market. The provisions of the
Telecommunications Act are designed to ensure that RBOCs take affirmative
steps to level the playing field for their competitors so that CAPs, CLECs and
others can compete effectively. The FCC, with advice from the United States
Department of Justice, and the states are given jurisdiction to enforce these
requirements. There can be no assurance, however, that the states and the FCC
will implement the Telecommunications Act in a manner favorable to the
Company.

FCC Rulemaking. On November 13, 1995, the FCC released an order barring the
acceptance of new applications for 38 GHz licenses. On December 15, 1995, the
FCC announced the issuance of a notice of proposed Rulemaking (the "NPRM"),
pursuant to which it proposed to amend its current rules to provide for, among
other things, (i) the adoption of an auction procedure for the issuance of
licenses in the 38 GHz band, including a possible auction of the lower
fourteen proposed 100 MHz channels (which are similar to those used by the
Company) and the lower four proposed 50 MHz channels in the 38 GHz band that
have not been previously available for commercial use and a possible auction
of the unlicensed areas in the upper fourteen 100 MHz channels, (ii) licensing
frequencies using predefined geographic service areas ("Basic Trading Areas"),
(iii) the imposition of substantially stricter construction requirements for
licenses that are not received pursuant to auctions as a condition to the
retention of such licenses and (iv) the implementation of certain technical
rules designed to avoid radio frequency interference among licensees. In
addition, the FCC ordered that those applications subject to mutual
exclusivity with other applicants or placed on public notice by the FCC after
September 13, 1995 would be held in abeyance pending the outcome of the NPRM
and might then be dismissed

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<PAGE>

(the "freeze"). In December 1996, the FCC adopted an order that partially
lifted the freeze on the processing of pending applications. Among other
actions, the order provides that the FCC will process certain amendments filed
before December 15, 1995 that have the effect of eliminating mutual
exclusivity among pending applications. The FCC has granted additional 38 GHz
licenses to various applicants, including the Company. On March 24, 1997, the
FCC released another notice of proposed rulemaking ("FNPRM") in which it
proposed an omnibus spectrum allocation plan for the frequencies located above
38 GHz. The FCC proposed to allocate the spectrum band that the Company
currently uses (38.6-40.0 GHz) for wireless services. In the FNPRM, the FCC
noted that it has already issued licenses for fixed operations throughout this
band and that it has proposed to continue to license these services in that
band. In addition, the FCC has proposed to designate the spectrum bands that
surround the Company's licenses (37.5-38.5 GHz and 40.5-41.5 GHz) as well as
48.2-50.2 GHz bands predominantly for fixed-satellite services. The FCC has
announced its intention to open a processing window so that interested parties
can file applications for systems in these bands. Final rules issued in
connection with the NPRM and FNPRM may require that 38 GHz service providers
share the 38 GHz band with satellite services. The NPRM proposes substantial
strengthening of the current rules concerning the steps that a grantee of a 38
GHz license must take to satisfy the FCC's construction requirements other
than those received pursuant to an auction. There can be no assurance that the
final rules, if any, issued in connection with the NPRM will resemble the
rules proposed in the NPRM. There also can be no assurance that any proposed
or final rules will not have a material adverse effect on the Company. The
Company has not determined whether to seek additional licenses in the event of
an auction.

State Regulation

Many of the Company's services, either now or in the future, may be
classified as intrastate and therefore may be subject to state regulation. The
Company is in the process of obtaining state authorizations to conduct its
proposed business in the near-term. The Company is implementing a program to
expand the scope of its intrastate certifications in various state
jurisdictions as its product line expands and as the Telecommunications Act is
implemented.

Under current state regulatory schemes, entities can compete with LECs in
the provision of (i) local access services, (ii) dedicated access services,
(iii) private network services, including WAN services, for businesses and
other entities and (iv) long distance toll services. The remaining local
telecommunications services, including switched local exchange services
encompassing calls originating and terminating within a single defined local
area, are not currently subject to competition in most states. The
Telecommunication Act requires each of these states to remove these barriers
to competition. No assurance can be given as to how quickly and how
effectively each state will act to implement the new legislation.

EMPLOYEES

As of August 11, 1997, the Company had a total of 148 employees. None of the
Company's employees is represented by a collective bargaining agreement.

PROPERTIES

The Company leases approximately 32,500 square feet of office, technical
operations and engineering field services depot space in Bellevue, Washington,
under leases expiring in January 2002. As of August 11, 1997, the Company also
leased an additional approximately 58,088 square feet of office space in 23
cities nationwide.

LEGAL PROCEEDINGS

The Company is not a party to any material litigation.

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<PAGE>

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The executive officers and directors of the Company are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION*
- ---- --- ---------
<S> <C> <C>
Vernon L. Fotheringham(1).... 49 Chairman of the Board of Directors, President
and Chief Executive Officer

Thomas A. Grina.............. 39 Executive Vice President, Chief Operating
Officer and Chief Financial Officer

James D. Miller.............. 55 Senior Vice President, Sales and Marketing

Richard A. Shields, Jr....... 41 Senior Vice President, Technical Operations

James C. Cook(2)............. 37 Director

Mark C. Demetree(1).......... 40 Director

Andrew I. Fillat(2).......... 49 Director

James B. Murray, Jr.(1)...... 50 Director

Alan Z. Senter(2)............ 55 Director
</TABLE>
- --------
* Includes positions with predecessor
(1) Member of Compensation Committee
(2) Member of Audit Committee

Vernon L. Fotheringham has served as Chairman of the Board of Directors and
Chief Executive Officer of the Company and ART Licensing since inception and
as President since April 1997. From 1993 to 1995, Mr. Fotheringham served as
president and chief executive officer of Norcom Networks Corporation, a
nationwide provider of mobile satellite services. In 1992, Mr. Fotheringham
co-founded Digital Satellite Broadcasting Corporation, a development stage
company planning to provide satellite radio services nationwide, served as its
chairman from 1992 to 1993 and currently serves as one of its directors. From
1988 to 1994, Mr. Fotheringham served as senior vice president of The Walter
Group, Inc., a wireless telecommunications consulting and project management
firm.

Thomas A. Grina has served as Executive Vice President, Chief Operating
Officer and Chief Financial Officer of the Company and ART Licensing since
April 1997 and as Executive Vice President, Finance and Chief Financial
Officer from April 1996 until April 1997. Mr. Grina was executive vice
president and chief financial officer of Dial Page, Inc., a paging provider,
from 1989 to 1996 and as executive vice president of its wholly-owned
subsidiary, Dial Call Communications, Inc., a wireless communications company
operating in the southeastern U.S., from 1993 to 1996.

James D. Miller has served as Senior Vice President, Sales and Marketing of
the Company since December 1995. From 1993 to 1995, Mr. Miller was vice
president and general manager of U.S. Intelco Wireless. Mr. Miller served as
executive vice president of Atlas Telecom from 1987 to 1993.

Richard A. Shields, Jr. has served as Senior Vice President, Technical
Operations of the Company since December 1996 and served as Vice President,
Technology Development of the Company from March 1996 to December 1996. From
1992 through 1996, Mr. Shields was vice president, engineering and design for
Claircom Communications. From 1991 to 1992, Mr. Shields served as director of
product development of The Walter Group, Inc.

James C. Cook has served as director of the Company since November 1996. Mr.
Cook is currently senior vice president of First Union Capital Partners, Inc.,
the private equity investment affiliate of First Union Corporation, where he
has been employed since 1989.

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<PAGE>

Mark C. Demetree has served as director of the Company since May 1995. From
1993 to June 1997, Mr. Demetree was president of North American Salt Company.
From 1991 through 1993, Mr. Demetree served as president of Trona Railway
Company, a shortline railroad division of North American Chemical Company. Mr.
Demetree currently is a director of J.C. Nichols Company, a real estate
Company.

Andrew I. Fillat has served as a director of the Company since November
1995. Mr. Fillat has been employed since 1989 by Advent International
Corporation ("Advent"), a global venture capital and private equity management
firm and currently serves as senior vice president. Mr. Fillat is also a
director of: Interlink Computer Sciences, a systems management and
communications software company; Lightbridge, Inc., a company providing
customer acquisition and marketing related services for cellular and PCS
carriers; Voxware, Inc., a software company providing advanced voice
compression and processing; and several private companies in the Advent
portfolio.

James B. Murray, Jr. became a director of the Company in February 1997 as a
condition of the Company's acquisition of assets from CommcoCCC, Inc. Since
March 1989, Mr. Murray has been a director of the Columbia Capital
Corporation, a venture capital firm focusing on the telecommunications
industry, and since January 1995, has been a director of The Columbia Group
Incorporated. From January 1990 to January 1993, Mr. Murray was also the
President of Randolph Cellular Corp., a cellular communications company. Mr.
Murray is a director of Saville Systems, which provides billing solutions for
service providers in the telecommunications industry, as well as several
privately-held telecommunications companies.

Alan Z. Senter has served as a director of the Company since December 1996.
From June 1996 to date and from 1993 to 1994, Mr. Senter has served as
chairman of Senter Associates, a financial advisory firm. From 1994 to May
1996, Mr. Senter served as executive vice president and chief financial
officer of NYNEX Corporation. From 1992 to 1993, Mr. Senter was executive vice
president, chief financial officer and a director of GAF/ISP Corporation. From
1990 to 1992, Mr. Senter was vice president of finance at Xerox Corporation.
Mr. Senter is also a director of XL Insurance Company.

BOARD COMPOSITION

Under the terms of the Company's Amended and Restated Certificate of
Incorporation and bylaws, the Board of Directors is composed of three classes
of similar size, each to be elected in a different year, so that only one
class will be elected each year, in each case for a three-year term and until
their respective successors are duly elected and qualified. The Board of
Directors currently consists of six members. Messrs. Fillat and Senter serve
as Class I directors for terms expiring at the 2000 Annual Meeting of
Stockholders and when their respective successors are duly elected and
qualified. Messrs. Cook and Fotheringham serve as Class II directors for terms
expiring at the 1998 Annual Meeting of Stockholders and when their respective
successors are duly elected and qualified. Messrs. Demetree and Murray serve
as Class III directors for terms expiring at the 1999 Annual Meeting of
Stockholders and when their successors are duly elected and qualified.

DIRECTOR COMPENSATION

Each director who is not a full-time employee of the Company or one of its
subsidiaries receives $4,000 per year for services rendered as a director and
$500 for each board meeting attended and $500 for each committee meeting
attended.

The 1996 Non-Employee Directors Automatic Stock Option Plan, as amended (the
"Directors Plan"), provides for the automatic grant of stock options to
directors who are not employees of the Company or one of its subsidiaries to
purchase up to an aggregate of 75,000 shares. Under the Directors Plan,
options to acquire 2,200 shares of Common Stock are automatically granted to
each such director on January 1 of each year. In addition, each non-employee
director serving on the Board of Directors immediately after the date of the
Company's initial public offering in November 1996, or if later the date of
his first appointment to the Board of Directors, received, and in the future
each newly elected non-employee director on the date of his or her first

23
<PAGE>

appointment or election to the Board of Directors will receive, an automatic
grant of options to acquire 2,600 shares of Common Stock.

Stock options awarded under the Directors Plan are priced automatically at
an exercise price equal to the most recent closing selling price per share of
Common Stock prior to the date of the grant or, if no public market for the
Common Stock exists, the fair market value of the Common Stock on the date of
grant. Under the Directors Plan, option grants vest over a three-year period
and are exercisable for a period of 5 years from the date of grant, provided,
however, vested options may only be exercised for (i) three months following
the date the director ceases to be a director for any reason other than death
and (ii) one year following the date the director ceases to be a director
because of death.

EXECUTIVE COMPENSATION

The following table sets forth information with respect to compensation paid
to or accrued on behalf of the Chief Executive Officer and each of the four
other most highly paid executive officers of the Company in 1996 (the "Named
Executive Officers").

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION SECURITIES
---------------------- UNDERLYING ALL OTHER
YEAR SALARY BONUS OPTIONS(#) COMPENSATION
---- -------- ----- ------------ ------------
<S> <C> <C> <C> <C> <C>
Vernon L. Fotheringham,....... 1996 $250,000 -- -- --
Chief Executive Officer 1995 90,000 -- -- --

Steven D. Comrie(1),.......... 1996 197,500 -- -- --
President and Chief Operating 1995 70,000(2) -- 275,160 $30,000(3)
Officer

W. Theodore Pierson, Jr.(4),.. 1996 186,107(5) -- -- --
Executive Vice President 1995 77,000(5) -- -- --

Thomas A. Grina,.............. 1996 122,190(2) -- 181,818 25,000(6)
Chief Operating Officer, 1995 -- -- -- --
Executive Vice President
and Chief Financial Officer

James D. Miller,.............. 1996 135,000 -- 36,364 --
Senior Vice President,Sales
and Marketing 1995 -- -- 18,182 --
</TABLE>
- --------
(1) Mr. Comrie resigned his position as an executive officer of the Company in
April 1997.
(2) Reflects compensation for a partial year.
(3) Reflects the forgiveness on January 1, 1996 of a loan to Mr. Comrie that
has been accounted for as compensation expense in the 1995 statement of
operations of the Company.
(4) Mr. Pierson resigned his position as an executive officer of the Company
in March 1997.
(5) The Company paid Pierson & Burnett, L.L.P., of which Mr. Pierson is a
partner, approximately $520,000 and $210,000 for services rendered to the
Company in 1996 and 1995, respectively.
(6) Reflects the reimbursement of moving expenses.

24
<PAGE>

Option Grants. The following table sets forth certain information regarding
stock option grants made to the Named Executive Officers during the fiscal
year ended December 31, 1996. No grants were made during 1996 to Messrs.
Fotheringham, Comrie or Pierson.

<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS(2)
--------------------------------------------------
POTENTIAL REALIZABLE VALUE AT
NUMBER OF PERCENT OF ASSUMED ANNUAL RATES OF
SECURITIES TOTAL OPTIONS STOCK PRICE APPRECIATION FOR
UNDERLYING GRANTED TO OPTION TERM(1)
OPTIONS EMPLOYEES IN EXERCISE PRICE EXPIRATION -----------------------------
NAME GRANTED FISCAL YEAR PER SHARE DATE 5% 10%
- ---- ---------- ------------- -------------- ---------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
Thomas A. Grina......... 109,091 25.0% $17.1875 4/25/04(3) $ 432,927 $ 1,341,934
72,727 16.6% 17.1875 10/13/01 325,270 992,323
James D. Miller......... 36,364 8.3% 17.1875 10/13/01 162,635 496,161
</TABLE>
- --------
(1) The potential realizable value is calculated based on the term of the
option at its time of grant. It is calculated by assuming that the stock
price on the date of grant appreciates at the indicated annual rate,
compounded annually for the entire term of the option.
(2) See "--Employment Agreements."
(3) One-third of such options vested at the time of grant, one-third vested on
April 26, 1997 and the remainder vest on April 26, 1999, provided however,
vesting of the remainder may be accelerated to April 26, 1998 if certain
financial goals to be agreed upon are met. The options are exercisable for
five years from the date of vesting.

Aggregate Stock Option Exercises in Last Fiscal Year and Fiscal Year-End
Option Values. The following table sets forth the number and value as of
December 31, 1996 of shares underlying unexercised options held by each of the
Named Executive Officers. As of December 31, 1996, Messrs. Fotheringham and
Pierson held no options. As of December 31, 1996, no stock options had been
exercised by any Named Executive Officers.

FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY-OPTIONS AT
FISCAL YEAR END FISCAL YEAR END(1)
------------------------- -------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Steven D. Comrie............ 172,525 102,635 $1,660,657 $987,923
Thomas A. Grina............. 36,364 145,454 -- --
James D. Miller............. 7,273 47,273 48,780 73,167
</TABLE>
- --------
(1) Based on the last sales price of the Company's Common Stock reported on
the Nasdaq National Market on December 31, 1996 of $11.25 per share, less
the exercise price payable upon exercise of such options.

EMPLOYMENT AGREEMENTS

On December 15, 1995, the Company entered into a three-year employment
agreement with Mr. Fotheringham providing for full-time employment at an
annualized base salary of $250,000 for 1996, $275,000 for 1997 and $300,000
for 1998. Under the agreement, Mr. Fotheringham is entitled to receive an
annual bonus of up to $100,000 depending on the achievement of specified
annual link installation goals to be established based on the operating budget
approved by the Board of Directors. The agreement contains a noncompetition
provision for one year after the cessation of his employment, regardless of
the reason for such cessation. The agreement may be terminated at any time by
either party and provides that, if the Company terminates Mr. Fotheringham
without cause or Mr. Fotheringham's employment is terminated due to his
disability or death, Mr. Fotheringham will be entitled to continue to receive
the full amount of his base salary and bonus and any other benefits to which
he would have been entitled for a period of 12 months, and all options granted
to Mr. Fotheringham pursuant to the agreement, if any, will vest fully.

25
<PAGE>

The Company has entered into an employment agreement with Mr. Grina,
providing for full-time employment on an at will basis at an annualized base
salary currently of $210,000. Under the Agreement, Mr. Grina is entitled to
receive an annual bonus of up to $100,000 depending upon the achievement of
specified annual link installation goals to be established based on the
operating budget approved by the Board of Directors. The agreement contains a
noncompetition provision for one year after the cessation of his employment,
regardless of the reason for such cessation. The agreement may be terminated
at any time by either party and provides that, if the Company terminates Mr.
Grina without cause or Mr. Grina's employment is terminated due to his
disability or death, Mr. Grina will be entitled to continue to receive the
full amount of his base salary and any other benefits to which he would have
otherwise been entitled for a period of six months from the date of such
termination. Pursuant to his employment agreement, Mr. Grina has been granted
NQSOs expiring on various dates through April 25, 2004 to purchase 109,091
shares of Common Stock at a price of $17.1875 per share.

The Company has also entered into an employment agreement with Mr. Miller,
providing for full-time employment at an annual base salary equal to $150,000.
His employment agreement provides for the payment by the Company of an annual
bonus in designated amounts based upon the achievement of specified
performance goals. The agreement has a term of three years expiring January
1999 and precludes him from competing with the Company for one year after the
cessation of employment, regardless of the reason for such cessation. Mr.
Miller has been granted NQSOs expiring December 29, 2000 to purchase 18,182
shares of Common Stock at a price of $4.543 per share. The employment
agreement may be terminated at any time by the Company or Mr. Miller and
provides that, if the Company terminates Mr. Miller's employment without cause
or his employment is terminated due to his disability or death, Mr. Miller may
continue to receive the full amount of his base salary and any other benefits
to which he would have otherwise been entitled for a period of six months from
the date of such termination.

Steven D. Comrie resigned his positions as director, president and chief
operating officer of the Company effective April 3, 1997 and terminated his
employment with the Company effective May 1, 1997. Pursuant to his employment
and separation agreements, Mr. Comrie received severance benefits of $320,000,
a monthly relocation allowance of $3,800 and certain benefits for twelve
months and options previously granted by the Company to Mr. Comrie to acquire
102,635 shares of Common Stock were vested.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Messrs. Demetree, Fillat and Fotheringham served on the Compensation
Committee during 1996. Matthew C. Gove served on the Compensation Committee
until November 1996 when he resigned as a director of the Company. Only Mr.
Fotheringham has been an executive officer or employee of the Company.

The Advent Partnerships purchased $725,000 principal amount of March Bridge
Notes and 58,000 March Bridge Warrants in the March Bridge Financing and
purchased $500,000 principal amount of September Bridge Notes and 14,546
September Bridge Warrants in the September Bridge Financing. Advent, of which
Mr. Fillat is an officer, controls the general partner of each of the Advent
Partnerships. In 1995, partnerships in which Mr. Demetree and members of his
immediate family were limited partners purchased $1,789,000 of ART Licensing
common stock and Series A and B preferred stock. Immediate family members of
Mr. Demetree purchased $500,000 principal amount of March Bridge Notes and
40,000 March Bridge Warrants in the March Bridge Financing and purchased
$100,000 principal amount of September Bridge Notes and 2,909 September Bridge
Warrants in the September Bridge Financing. Mr. Demetree, an immediate family
member and their designees were also paid $225,000 and were issued 59,090
Indemnity Warrants for providing credit support to the Company in connection
with the Equipment Financing. See "Certain Transactions--LHC Purchase
Agreement and Related Transactions," "--March Bridge Financing," "--Equipment
Financing" and "--September Bridge Financing."

26
<PAGE>

COMMON STOCK OWNERSHIP

The following table sets forth certain information with respect to the
beneficial ownership of shares of Common Stock as of August 11, 1997 by (i)
each Named Executive Officer, (ii) each director of the Company, (iii) all
executive officers and directors of the Company as a group and (iv) each
person (including any "group" as that term is used in Section 13(d)(3) of the
Exchange Act) known to the Company to be the beneficial owner of more than
five percent of the outstanding Common Stock. Except as noted below, each of
the persons listed has sole investment and voting power with respect to the
shares indicated:

<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
-----------------------
NAME NUMBER PERCENT
---- ------------ ----------
<S> <C> <C>
Advent International Corporation (1).................... 1,321,511 6.7%
Columbia Capital Corporation (2)........................ 2,719,978 13.7%
Commco, L.L.C. (3)...................................... 2,848,577 14.1%
Landover Holdings Corporation (4)....................... 2,909,718 14.7%
Steven D. Comrie (5).................................... 85,128 *
James C. Cook (6)....................................... 56,969 *
Mark C. Demetree (7).................................... 385,342 2.0%
Andrew I. Fillat (8).................................... 4,128 *
Vernon L. Fotheringham.................................. 1,289,114 6.5%
Thomas A. Grina (9)..................................... 72,728 *
James D. Miller (10).................................... 7,273 *
James B. Murray, Jr. (11)............................... 61,656 *
W. Theodore Pierson, Jr. (12)........................... 657,377 3.3%
Alan Z. Senter (13)..................................... 6,817 *
Laurence S. Zimmerman (4)............................... 2,909,718 14.7%
All executive officers and directors
as a group (14)........................................ 1,885,168 9.5%
</TABLE>
- --------
Unless otherwise indicated, the business address of each director and
executive officer named above is c/o Advanced Radio Telecom Corp., 500 108th
Avenue NE, Suite 2600, Bellevue, Washington 98004.

* Less than 1.0%.
(1) Includes 1,189,673 shares, 1,149 shares and 58,143 shares of Common Stock
and 69,107 shares, 58 shares and 3,381 shares of Common Stock issuable
upon exercise of warrants, respectively, owned by Global Private Equity
II, L.P., Advent International Investors II Limited Partnership and
Advent Partners Limited Partnership (collectively, the "Advent
Partnerships"), each a limited partnership whose general partner is
controlled by Advent International Corporation ("Advent"). Mr. Fillat is
an officer of Advent. The address of Advent and each of the Advent
Partnerships is 101 Federal Street, Boston, Massachusetts 02110.
(2) Includes 62,173 shares of Common Stock issuable upon exercise of warrants
owned by Columbia Capital Corporation ("Columbia Capital") and includes
2,350,310 shares, 171,060 shares and 136,435 shares owned by CCC
Millimeter L.P. ("CCC Millimeter"), Columbia Millimeter Communications,
L.P. ("Millimeter") and Columbia Capital, respectively. Columbia Capital,
as the sole general partner of CCC Millimeter and Millimeter, has the
power to vote and dispose of the Common Stock held by CCC Millimeter and
Millimeter. Messrs. Blow, Kington, Mixer, Murray and Warner share
investment control of the shares held by such entities and may be deemed
to beneficially own such shares. Each of Messrs. Blow, Byrne, Herget,
Kington, Mixer, Murray, Schneider and Warner disclaims beneficial
ownership of the shares held by such entities, except to the extent of
such individual's interest in such entities. The address of each of
Columbia Capital, CCC Millimeter and Millimeter is 0 Court Square, P.O.
Box 1465, Charlottesville, VA 22902.
(3) Includes 54,191 shares of Common Stock issuable upon exercise of
warrants. The address of Commco, L.L.C. is 4513 Pin Oak Court, Sioux
Falls, SD 57103.
(4) All of such securities are held in the LHC Voting Trust (as defined
below). Includes 15,672 shares of Common Stock issuable upon exercise of
warrants. Does not include 36,364 shares of Common Stock beneficially
owned by the wife of and 36,364 shares of Common Stock beneficially owned
by a family trust of Laurence S. Zimmerman, of which shares LHC and Mr.
Zimmerman disclaim beneficial ownership. LHC is controlled by Mr.
Zimmerman. LHC's address is 156 W. 56th Street, Suite 2000, New York, New
York 10019. See "--Voting Trust Agreement."
(5) Mr. Comrie resigned his position as an executive officer of the Company
in April 1997. Includes 85,128 shares of Common Stock issuable upon
exercise of options exercisable within 60 days of August 11, 1997.
(6) Includes 8,000 shares of Common Stock issuable upon exercise of warrants
and 1,601 shares of Common Stock issuable upon exercise of options
exercisable within 60 days of August 11, 1997.

27
<PAGE>

(7) Includes 1,601 shares of Common Stock beneficially issuable upon exercise
of options exercisable within 60 days of August 11, 1997. Does not
include 117,999 shares of Common Stock issuable upon exercise of warrants
or 1,534,964 shares of Common Stock beneficially owned in each case by
members of Mr. Demetree's family or a trust for their benefit, of which
he disclaims beneficial ownership. Mr. Demetree's address is 11825
Norwood, Leawood, KS 66211.
(8) Includes 1,601 shares of Common Stock issuable upon exercise of options
exercisable within 60 days of August 11, 1997. Does not include shares of
Common Stock and shares of Common Stock issuable upon exercise of
warrants held by the Advent Partnerships, of which Mr. Fillat disclaims
beneficial ownership, except for 2,495 shares of Common Stock and 32
shares issuable upon exercise of warrants.
(9) Includes 72,728 shares of Common Stock issuable upon exercise of options
exercisable within 60 days of August 11, 1997.
(10) Includes 7,273 shares of Common Stock issuable upon exercise of an option
exercisable within 60 days of August 11, 1997.
(11) Includes 867 shares of Common Stock issuable upon exercise of options
exercisable within 60 days of August 11, 1997. Mr. Murray is a Managing
Director of Columbia Capital Corporation. Excludes shares held by
Columbia Capital, CCC Millimeter and Millimeter. See Footnote 2. Mr.
Murray's address is c/o Columbia Capital Corporation, 0 Court Square,
P.O. Box 1465, Charlottesville, VA 22902.
(12) Mr. Pierson's address is c/o Pierson & Burnett L.L.P., 1667 K Street,
N.W., Washington, D.C. 20006. Mr. Pierson resigned his position as an
executive officer of the Company in March 1997.
(13) Includes 4,817 shares of Common Stock issuable upon exercise of options
exercisable within 60 days of August 11, 1997.
(14) Includes 91,629 shares of Common Stock issuable upon exercise of options
exercisable within 60 days of August 11, 1997 and 8,032 shares of Common
Stock issuable upon exercise of warrants. Does not include 2,894,046
shares of Common Stock held in the LHC Voting Trust by trustees, all of
whom are directors of the Company and do not have beneficial ownership of
such shares. See "--Voting Trust Agreement."

VOTING TRUST AGREEMENT

Pursuant to a Voting Trust Agreement, dated November 5, 1996, Landover
Holdings Corporation ("LHC") and the wife of and a trust for the benefit of
the family of Laurence S. Zimmerman deposited all of their shares of Common
Stock in trust (the "LHC Voting Trust") with Messrs. Demetree, Fillat and
Fotheringham with irrevocable instructions to vote such shares on all matters
submitted to a vote of the stockholders of the Company in proportion to, or in
certain cases, consistent with the majority of, the vote of other stockholders
of the Company. The voting trust will expire on November 5, 2006, but is
subject to early termination in the event of (i) a business combination in
which the Company stockholders own less than 50%, and the Company directors
constitute less than 50% of the board of directors, of the combined entity and
LHC owns less than 5% of the voting power of such entity, (ii) the death of
Mr. Zimmerman or (iii) the sale by LHC of such shares to unaffiliated parties.
The trustees of the trust will be indemnified by the Company. LHC retains the
right to dispose of the Common Stock to third parties. Any such shares of
Common Stock which are transferred to an affiliate of LHC will remain subject
to the terms of the Voting Trust Agreement. Any such shares of Common Stock
which are transferred to parties not affiliated with LHC will be released from
the LHC Voting Trust upon such transfer.

28
<PAGE>

CERTAIN TRANSACTIONS

Organization of ART Licensing

On March 28, 1995, ART and LHC organized ART Licensing and purchased for
$.001 per share 340,000 shares of Class A common stock and 640,000 shares of
Class B common stock of ART Licensing, respectively.

LHC Purchase Agreement and Related Transactions

LHC Purchase Agreement. Pursuant to a Purchase Agreement, dated April 21,
1995 (the "LHC Purchase Agreement") among ART, LHC and ART Licensing, LHC
agreed to purchase or cause to be purchased additional securities of ART
Licensing (the "LHC Stock") for an aggregate purchase price of $7,000,000 (the
"Purchase Price"). Pursuant to the LHC Purchase Agreement, these additional
securities would dilute only LHC's interest in ART Licensing. In 1995, the
Company entered into various transactions which satisfied LHC's commitment
under the LHC Purchase Agreement including those described below. Because
actual cash proceeds received from these transactions exceeded LHC's
commitment, the Company redeemed 62,148 shares of stock held by LHC for $2
million. The Company paid LHC expenses of $391,750 in connection with the LHC
Purchase Agreement.

Landover Partnerships. In a series of separate private placements in 1995
pursuant to the LHC Purchase Agreement, the Company issued to various limited
partnerships 419,677 shares of ART Licensing Series A preferred stock for
$1,006,600, 114,679 shares of ART Licensing Series B preferred stock for
$880,700, and 7,363 shares of ART Licensing Series C preferred stock for
$112,700. The general partner for each of the partnerships was controlled by
LHC. Mark Demetree and members of his immediate family were limited partners
in two of the partnerships.

Advent Private Placement. In 1995, pursuant to the LHC Purchase Agreement,
ART sold, for $5.0 million in the aggregate, $4.95 million principal amount of
10% notes due May 13, 1997 (the "Advent Notes") and $50,000 stated amount of
ART Series A Preferred Stock, convertible into 232,826 shares of ART Licensing
Series E preferred stock. The general partner of each of the Advent
Partnerships is controlled by Advent.

Merger, Services and Related Agreement. Pursuant to the LHC Purchase
Agreement, ART and ART Licensing entered into a Merger Agreement pursuant to
which ART was to merge into ART Licensing and a Services Agreement dated May
8, 1995 pursuant to which for a 20-year term, ART Licensing was to provide
management services for, and receive 75.0% of the cash flow from, operations
after deducting certain related direct expenses under wireless licenses held
by ART. The Company also entered into a stockholders agreement and a
registration rights agreement. In connection with these agreements, Mr.
Fotheringham deposited 733,711 shares of Common Stock in escrow to be released
upon achievement by the Company of certain performance goals. These shares
were released to Mr. Fotheringham in part on November 13, 1995 and the balance
on February 2, 1996 in connection with the February 1996 Reorganization
described below.

LHC Consulting Agreements. Pursuant to the LHC Purchase Agreement, LHC and
ART Licensing entered into a consulting agreement (the "LHC Consulting
Agreement"), dated May 8, 1995, under which LHC agreed to provide financial
and strategic planning and other advisory and management services to the
Company for a fee of $10,000 per month. The LHC Consulting Agreement was
terminated on November 13, 1995. Thereafter, LHC and ART Licensing entered
into a new consulting agreement (the "Second LHC Consulting Agreement"), dated
November 13, 1995, for an initial term of one year under which the Company
would pay LHC $420,000 per year for consulting services and additional fees in
connection with additional services, such as merger and acquisition advisory
services, provided to the Company by LHC. The Second LHC Consulting Agreement
was terminated in November 1996. The Company paid LHC an aggregate of $830,000
and $70,000 in 1996 and 1995, respectively, in connection with services
rendered under the LHC Consulting Agreement and the Second LHC Consulting
Agreement.

29
<PAGE>

February 1996 Reorganization

On February 2, 1996, the Company, ART Licensing and their respective
stockholders agreed to an amendment and restatement of the May 1995
Stockholders Agreement, which, among other things, (i) reorganized the capital
structure of ART Licensing, including providing for the conversion of ART
Licensing Class A and Class B common stock into ART Licensing common stock,
the revision of the terms of the conversion of the Series A, B, C, D, E and F
preferred stock (originally issued by ART Licensing and converted to the
Company's preferred stock in the Merger) into the Company's Common Stock
(which conversion occurred upon the consummation of the Company's initial
public offering) and a 13-for-1 stock split, (ii) exchanged the Advent
Securities for 232,826 shares of ART Licensing Series E preferred stock (which
was ultimately converted into 1,100,632 shares of Common Stock), (iii) revised
provisions for election of directors, (iv) amended and restated the Company's
registration rights agreement, including waiver of registration rights
relating to the Company's initial public offering and (v) released to Mr.
Fotheringham his remaining escrow shares. (The foregoing is collectively
referred to as the "February 1996 Reorganization").

March Bridge Financing

On March 8, 1996, ART Licensing entered into a financing (the "March Bridge
Financing") pursuant to which it issued $5.0 million of 10% unsecured notes
due in 1998 (the "March Bridge Notes") and five-year warrants to purchase up
to an aggregate of 400,000 shares of ART Licensing common stock at a price of
$17.1875 per share (the "March Bridge Warrants") to private investors
including (i) immediate family members of Mark C. Demetree and (ii) the Advent
Partnerships, who invested $500,000 and $725,000, respectively, in the March
Bridge Notes and March Bridge Warrants. The March Bridge Notes were repaid
with the proceeds of the Company's initial public offering.

Equipment Financing

On April 1, 1996, CRA, Inc. ("CRA") provided the Company with $2.5 million
in equipment financing (the "Equipment Financing") secured by the equipment,
the Company's $1.0 million letter of credit and a $500,000 letter of credit
provided by Mark C. Demetree, a member of his immediate family and LHC (the
"Indemnitors"). The Indemnitors also agreed to provide the Company with funds
and support for up to $2.0 million of its obligations in the event of default
under the Equipment Financing or draw against the Company's letter of credit.
The Company paid the Indemnitors or their designees an aggregate of $225,000
in cash and five-year warrants to purchase an aggregate of 118,181 shares of
Common Stock (the "Indemnity Warrants") on terms substantially similar to the
March Bridge Warrants as compensation for such indemnity. The letter of credit
provided by the Indemnitors was returned to the Indemnitors in December 1996.

September Bridge Financing

In August 1996, the Company received commitments for $3.0 million of 14.75%
unsecured notes due March 1998 (the "September Bridge Financing"). Such notes
(the "September Bridge Notes") were funded from August 1996 to October 1996.
In October 1996, the Company also received a commitment for an additional $1.0
million of such notes. The Company also issued five-year warrants to purchase
up to an aggregate of 116,363 shares of Common Stock at a price of $17.1875
per share ($15.00 after giving effect to anti-dilution adjustment) (the
"September Bridge Warrants") to private investors who participated in the
financing, including the Advent Partnerships, affiliates of CommcoCCC, LHC and
immediate family members of Mark C. Demetree. The September Bridge Notes were
repaid with the proceeds of the Company's initial public offering.

Merger of ART Licensing

In October 1996, ART Licensing became a wholly-owned subsidiary of the
Company through the Merger. In the Merger, the holders of ART Licensing common
stock received 2,945,848 shares of Common Stock and holders of ART Licensing
preferred stock received 920,951 shares of preferred stock of the Company
which was

30
<PAGE>

converted into 4,353,587 shares of Common Stock upon the consummation of the
Company's initial public offering in November 1996. LHC received an aggregate
of 2,920,393 shares of Common Stock in the Merger on an as-converted basis.

Commco Option and Sublease

In connection with the CommcoCCC Acquisition, the Company granted Commco,
L.L.C., a stockholder of CommcoCCC, an option (the "Commco Option") to acquire
twelve 38 GHz licenses, each in one of the top 100 markets by estimated
population. Each of the licenses covers a market in which ART holds one or
more other 38 GHz licenses. Commco exercised its option in June 1997. The
purchase price will be paid by a non-recourse secured note and will be
determined by a formula based on $7.125, the sales price of ART's Common Stock
on Nasdaq on the day the option was exercised, and the population covered by
the twelve authorizations. The Company has the right to be a reseller with
respect to these licenses for a term of five years at market rates. In
addition, an affiliate of Commco L.L.C. has the right to sublease channel
capacity from the Company in the New York and Washington, D.C. markets on
terms agreed to by the Company and Commco L.L.C.

31
<PAGE>

DESCRIPTION OF CAPITAL STOCK

The following description of the capital stock of the Company and certain
provisions of the Company's Certificate of Incorporation, Bylaws and Rights
Agreement (as defined below) is a summary and is qualified in its entirety by
the provisions of the Certificate of Incorporation, Bylaws and Rights
Agreement, which have been incorporated by reference as exhibits to the
Company's Registration Statement of which this Prospectus is part.

The authorized capital stock of the Company consists of 100,000,000 shares
of Common Stock, $.001 par value, and 10,000,000 shares of Serial Preferred
Stock, $.001 par value (the "Preferred Stock").

COMMON STOCK

As of August 11, 1997, there were 19,749,452 shares of Common Stock
outstanding held of record by 1,505 stockholders (without giving effect to any
exercise of outstanding warrants or options). The holders of Common Stock are
entitled to one vote per share on all matters to be voted on by the
stockholders. Subject to preferences that may be applicable to the outstanding
shares of Preferred Stock, if any, the holders of Common Stock are entitled to
receive ratably such dividends as may be declared from time to time by the
Board of Directors out of funds legally available therefor. See "Dividend
Policy." In the event of the liquidation, dissolution or winding up of the
Company, the holders of Common Stock are entitled to share ratably in all
assets remaining after payment of liabilities, subject to prior liquidation
rights of the Preferred Stock then outstanding. The Common Stock has no
preemptive conversion rights or other subscription rights. There are no
redemption or sinking fund provisions applicable to the Common Stock. All
outstanding shares of Common Stock are, and the shares of Common Stock being
offered by the Company, upon their issuances and sale, will be, fully paid and
non-assessable.

PREFERRED STOCK

The Board of Directors has the authority to issue Preferred Stock in one or
more series and to fix the rights, preferences, privileges and restrictions
granted to or imposed upon any wholly unissued shares of Preferred Stock and
to fix the number of shares consisting any series in the designation of such
series, without any further vote or action by the stockholders. The Board of
Directors, without stockholder approval, can issue Preferred Stock with voting
and conversion rights which could adversely affect the voting power of the
holders of Common Stock. The issuance of Preferred Stock may have the effect
of delaying, deferring or preventing a change in control of the Company.

The Board of Directors has reserved 1,000,000 shares of Junior Preferred
Stock for issuance upon exercise of the Rights (as hereinafter defined), which
shares have the following terms. Each share of Junior Preferred Stock will be
entitled, subject to the rights of holders of any other series of preference
stock having superior rights, to receive cumulative quarterly cash dividends
payable on the last day of March, June, September and December in each year
equal to the greater of (a) $1.00, or (b) subject to certain adjustments for
stock splits, combinations or dividends, 100 times the aggregate per share
amount of all cash dividends and 100 times the aggregate per share amount
(payable in kind) of all non-cash dividends or other distributions other than
dividends payable in shares of Common Stock, payable since the immediately
preceding quarterly dividend payment date on the Junior Preferred Stock or,
with respect to the first such dividend, since the first issuance of any share
or fraction thereof of Junior Preferred Stock.

Holders of shares of Junior Preferred Stock shall, subject to certain
adjustments for stock splits, combinations or dividends, be entitled to 100
votes per share of Junior Preferred Stock on all matters submitted to a vote
of the Company's stockholders, voting together with the Common Stock as a
single class, except as otherwise required by law or the Certificate of
Designation.

In the event that any dividends or distributions payable on the Junior
Preferred stock are in arrears, the Company is subject to certain limitations
in its ability to (i) pay or declare dividends or make any distribution to

32
<PAGE>

holders of stock ranking junior to or on parity with the Junior Preferred
Stock, (ii) redeem, purchase or otherwise acquire shares of any stock ranking
junior to the Junior Preferred stock, and (iii) redeem, purchase or otherwise
acquire shares of any stock ranking on a parity with the Junior Preferred
Stock.

Upon any liquidation (voluntary or otherwise), dissolution or winding up of
the Company, holders of the Junior Preferred stock shall be entitled to
receive, before any distribution is made with respect to shares of stock
ranking junior to the Junior Preferred Stock, $100 per share plus an amount
equal to any accrued and unpaid dividends and distributions thereon. After
such payments are made, additional distributions shall be made to holders of
shares of Junior Preferred Stock only after certain payments are made to
holders of Common Stock and stock ranking on parity therewith.

In the event of any consolidation, merger, combination or other transaction
in which the shares of Common Stock are exchanged for or changed into other
stock or securities, cash and/or other property, then in any such case the
shares of the Junior Preferred Stock shall be similarly exchanged or changed
in an amount per share, subject to certain adjustments for stock splits,
combinations or dividends, equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or
exchanged.

The shares of Junior Preferred Stock shall rank pari passu with (or if
determined by the Board of Directors in any vote establishing any other series
of preferred stock, either senior to and prior in preference to, or junior and
subordinate to) other series of preferred stock of the Company with respect to
dividends and/or liquidation preference.

The shares of Junior Preferred Stock may be issued in fractional shares, and
are not subject to mandatory redemption.

DELAWARE LAW AND CERTAIN PROVISIONS OF THE COMPANY'S CHARTER, BYLAWS AND
SHAREHOLDERS' RIGHTS PLAN

Certain provisions of the Company's Certificate of Incorporation, Bylaws and
Shareholders' Rights Plan may have the effect of preventing, discouraging or
delaying any change in the control of the Company and may maintain the
incumbency of the Board of Directors and management. The authorization of
Preferred Stock makes it possible for the Board of Directors to issue
Preferred Stock with voting or other rights or preferences that could impede
the success of any attempt to effect a change in control of the Company.
Certain provisions of the Certificate of Incorporation create three classes of
directors serving for staggered three-year terms and prevent any amendment to
such provisions without the consent of holders of at least 75% of the then
outstanding shares of Common Stock. These provisions could also impede the
success of any attempt to effect a change in control of the Company.

The Company is subject to Section 203 ("Section 203") of the Delaware
General Corporation Law (the "Delaware GCL"). Section 203 prohibits a
publicly-held Delaware corporation from engaging in a "business combination"
with an "interested stockholder" for a period of three years after the time of
the transaction in which the person became an interested stockholder, unless
(i) prior to such time, the board of directors of the corporation approves
either the business combination or the transaction which resulted in the
stockholder becoming an interested stockholder, (ii) upon consummation of the
transaction which resulted in the stockholder becoming an interested
stockholder, the interested stockholder owns at least 85% of the outstanding
voting stock (excluding certain shares held by persons who are both directors
and officers of the corporation and certain employee stock plans), or (iii) on
or after the consummation date, the business combination is approved by the
board of directors and by the affirmative vote of at least 66 2/3% of the
outstanding voting stock that is not owned by the interested stockholder. For
purposes of Section 203, a "business combination" includes, among other
things, a merger, asset sale or other transaction resulting in a financial
benefit to the interested stockholder, and an "interested stockholder" is
generally a person who, together with affiliates and associates, owns (or
within three years, owned) 15% or more of the corporation's voting stock.

33
<PAGE>

The Company's Certificate of Incorporation provides that so long as the
Company has a class of capital stock registered under the Exchange Act, any
action by the stockholders of that class must be taken at a duly called annual
or special meeting of the stockholders, and not by written consent. This
provision could have the effect of delaying until the next stockholders
meeting stockholder actions which are favored by the holders of a majority of
the outstanding voting securities of the Company, since special meetings of
stockholders may be called only by a majority of the Board of Directors, the
Chairman of the Board, the Vice-Chairman of the Board, if any, or the
President of the Company. These provisions may also discourage another person
or entity from making a tender offer for Common Stock, because such person or
entity, even if it acquired a majority of the outstanding voting securities of
the Company, would be able to take action as a stockholder (such as electing
new directors or approving a merger) only at a duly called stockholders
meeting, and not by written consent.

The Bylaws establish procedures, including advance notice procedures, with
regard to the nomination, other than by or at the direction of the Board of
Directors, of candidates for election as directors and with regard to certain
matters to be brought before meetings of stockholders of the Company. In
general, notice must be received by the Company not less than 30 days prior to
the meeting and must contain certain specified information concerning the
stockholder submitting the proposal. In addition, the By-laws require that any
such nomination of candidates for election as a director be accompanied by a
petition signed by at least 50 record holders of capital stock entitled to
vote in the election of directors, representing in the aggregate 5% of the
outstanding capital stock entitled to vote thereon. Such procedures also
authorize regulation of the order of business and conduct of stockholder
meetings, the authority of the presiding officer and attendance at such
meetings. The foregoing provisions, which may be amended only by the
affirmative vote of 75% of the outstanding shares of capital stock entitled to
vote generally in the election of directors, could have the effect of making
it more difficult for a third party to effect a change in the control of the
Board of Directors. In addition, these provisions could have the effect of
making it more difficult for a third party to acquire, or of discouraging a
third party from attempting to acquire, a majority of the outstanding voting
stock of the Company and may make more difficult or discourage a takeover of
the Company.

The Board of Directors is permitted pursuant to the Certificate of
Incorporation to consider special factors, such as employee welfare and the
future prospects of the Company, when evaluating tender or exchange offers or
a "business combination" as defined in Section 203 of the Delaware General
Corporation Law.

The Company has also included in its Certificate of Incorporation provisions
to eliminate the personal liability of its directors for monetary damages
resulting from breaches of their fiduciary duty to the extent permitted by the
Delaware General Corporation Law and to indemnify its directors and officers
to the fullest extent permitted by Section 145 of the Delaware General
Corporation Law.

On June 20, 1997, the Board of Directors of the Company declared a dividend
of one purchase right (a "Right") for every outstanding share of the Common
Stock. The terms of the Rights are set forth in a Rights Agreement dated as of
June 20, 1997 (the "Rights Agreement") between the Company and Continental
Stock Transfer & Trust Company (the "Rights Agent"). The Rights Agreement also
provides for the issuance of one Right for each share of Common Stock which is
issued or sold after that date and prior to the "Distribution Date" (as
defined below). Each Right entitles the holder to purchase from the Company
one one-hundredth of a share of Junior Preferred Stock at a price of $90 per
one one-hundredth of a share, subject to adjustment and expires on June 20,
2007, or the earlier redemption of the Rights (the "Expiration Date"), and are
not exercisable until the Distribution Date. At any time prior to the
Expiration Date, the Company, by a majority vote of the Board of Directors,
may redeem the Rights at a redemption price of $.01 per Right (the "Redemption
Price"), as described in the Rights Agreement. Unless otherwise determined by
a majority of the Board of Directors then in office, the Distribution Date
will occur on the earlier of (i) the fifteenth business day following the
later of the date of a public announcement that a person (an "Acquiring
Person"), including affiliates or associates of such person, has acquired, or
obtained the right to acquire, beneficial ownership of 15% or more of the
outstanding shares of Common Stock (including shares of Common Stock subject
to the Warrants and certain other warrants) and the date on which an executive
officer of the Company has actual knowledge of such acquisition (the "Stock

34
<PAGE>

Acquisition Date") and (ii) the fifteenth business day following commencement
of a tender offer or exchange offer that would result in any person or its
affiliates and associates owning 15% or more of the Company's outstanding
Common Stock (including shares of Common Stock subject to the Warrants and
certain other warrants). The Board of Directors may delay the distribution of
the certificates. After the Distribution Date, separate certificates
evidencing the Rights ("Rights Certificates") will be mailed to holders of
record of the Company's Common Stock.

If any person or group of affiliated or associated persons (other than the
Company and its affiliates), becomes an Acquiring Person, each holder of a
Right will have the right to receive shares of Common Stock (or, in certain
circumstances, cash, property or other securities of the Company) having a
market value of two times the then current purchase price of the Right. Also,
if the Company were acquired in a merger or other business combination, or
more than 25% of its assets or earning power were sold, each holder of a Right
would have the right to exercise such Right and thereby receive common stock
of the acquiring company with a market value of two times the then current
purchase price of the Right. Following the occurrence of any of the foregoing
events, any Rights that are, or (in certain circumstances) were, beneficially
owned by any Acquiring Person will become null and void.

The Board of Directors may, at any time after any person becomes an
Acquiring Person, exchange all or part of the then outstanding and exercisable
Rights for shares of Common Stock at a ratio of one share of Common Stock per
Right, subject to adjustment. The Board of Directors may not effect an
exchange at any time after any person (other than the Company, any subsidiary
of the Company, any employee benefit plan of the Company or any such
subsidiary or any entity holding Common Stock for or pursuant to the terms of
any such plan), together with all affiliates of such person, becomes the
beneficial owner of 50% or more of the Common Stock then outstanding.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the Common Stock is Continental Stock
Transfer & Trust Company.

35
<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE

As of August 11, 1997, the Company had 19,749,452 shares of Common Stock
outstanding, assuming no exercise of outstanding options or warrants. Of these
outstanding shares, 5,442,241 are freely tradeable by persons other than
"affiliates" of the Company as that term is defined under the Securities Act,
without restrictions or further registration under the Securities Act. Of the
remaining 14,307,211 shares outstanding, 1,007,776 shares are available for
sale in the public market under Rule 144, 7,299,435 shares will become
available for sale in the public market under Rule 144 in October 1997 and an
additional 6,000,000 shares will become available for sale under Rule 144 in
February 1998.

As of August 11, 1997, an aggregate of 4,603,878 shares of Common Stock are
subject to outstanding options and warrants. The Company has registered
2,731,725 shares of Common Stock issuable upon exercise of warrants at $.01 per
share. An aggregate of 1,475,000 shares are reserved for future issuance
pursuant to the Company's Equity Incentive Plan and Directors Plan
(collectively, the "Plans"). As of August 11, 1997, 245,145 of such shares were
vested and exercisable. The Company has filed a Registration Statement on Form
S-8 to register the shares of Common Stock to be issued and issuable pursuant
to the Plans. Accordingly, shares of Common Stock issued under the Plans are
available for sale in the public market upon vesting of such shares, subject,
with respect to affiliates of the Company, to certain volume limitations under
Rule 144.

Certain of the Common Stock issued from time to time pursuant to this
Prospectus may be resold without restriction or further registration under the
Securities Act. In addition, Common Stock issued from time to time hereunder
that is restricted by Rules 144 and 145 under the Securities Act, may, with the
Company's consent, be resold pursuant to this Prospectus.

In general, under Rule 144 as currently in effect, a person (or person whose
shares are aggregated), who has beneficially owned "restricted securities" (as
that term is defined in Rule 144) for a period of at least one year from the
later of the date such restricted securities were acquired from the Company or
the date they were acquired from an affiliate, is entitled to sell, within any
three-month period, a number of such securities that does not exceed the
greater of 1% of the then outstanding shares of the Company's Common Stock
(approximately 197,000 shares as of the date of this Prospectus) or the average
weekly trading volume in the Company's Common Stock during the four calendar
weeks preceding the filing of notice of such sale. Sales under Rule 144 are
also subject to certain restrictions on the manner of sale, notice
requirements, and the availability of current public information about the
Company. Further, under Rule 144(k), if a period of at least two years has
elapsed between the later of the date restricted securities were acquired from
the Company and the date they were acquired from an affiliate of the Company, a
holder of such restricted securities who is not an affiliate of the Company at
the time of the sale and has not been an affiliate of the Company for at least
three months prior to the sale would be entitled to sell the shares immediately
without regard to such volume limitations and other conditions.

There has been a limited trading market for the Common Stock and no
prediction can be made as to the effect that sales of Common Stock under Rule
144, pursuant to a registration statement or otherwise, or the availability of
shares of Common Stock for sale, will have on the market price prevailing from
time to time. Sales of substantial amounts of Common Stock in the public market
could adversely affect the market price of the Common Stock and could impair
the Company's future ability to raise capital through the sale of its equity
securities.

REGISTRATION RIGHTS

Under the terms of the Second Amended and Restated Registration Rights
Agreement, dated as of July 3, 1996, among the Company, ART Licensing, their
respective stockholders and the holders of the March Bridge Warrants, Indemnity
Warrants, CommcoCCC Warrants, the September Bridge Warrants, and Initial CIBC
Warrants, and CommcoCCC, Inc. (as amended, the "Registration Rights
Agreement"), such stockholders and the holders of the March Bridge Warrants,
Indemnity Warrants, the September Bridge Warrants, CommcoCCC Warrants and
Initial CIBC Warrants, who are the holders of an aggregate approximately 14.3
million shares of Common Stock on a fully-diluted basis (the "Registrable
Securities"), will be entitled to certain demand rights

36
<PAGE>

with respect to the registration of such shares under the Securities Act. In
addition, under the Registration Rights Agreement, if the Company proposes to
register any of its securities under the Securities Act (other than on Form S-4
or Form S-8), either for its own account or the account of other security
holders, the holders of Registrable Securities are entitled to notice of such
registration and are entitled to include their Registrable Securities in any
such registration on the same terms and conditions as the securities otherwise
being sold in such registration; provided, that, among other things, the
underwriters have the right, subject to certain limitations, to limit the
number of such shares included therein.

37
<PAGE>

OUTSTANDING SECURITIES COVERED BY THIS PROSPECTUS

This Prospectus relates to the 5,000,000 shares of Common Stock that may be
offered and issued by the Company from time to time in connection with future
acquisitions by the Company of other businesses, properties or equity and/or
debt securities in business combination transactions. This Prospectus, as
amended or supplemented, if necessary, also relates to certain shares of
Common Stock which may be resold or reoffered by persons who acquired such
shares pursuant to this Prospectus (the "Selling Stockholders"); provided,
however, that no Selling Stockholder will be authorized to use this Prospectus
for any offer of such Common Stock without first obtaining the consent of the
Company. The Company may consent to the use of this Prospectus for a limited
period of time by the Selling Stockholders and subject to limitations and
conditions which may be varied by agreement between the Company and the
Selling Stockholders. The Selling Stockholders may sell all or a portion of
the shares offered hereby in private transactions or in the over-the-counter
market at prices related to the prevailing prices of the shares on the Nasdaq
National Market. The Selling Stockholders may be deemed to be underwriters
within the meaning of the Securities Act. Any Selling Stockholder may effect
such transactions by selling to or through one or more broker-dealers, and
such broker-dealers may receive compensation in the form of underwriting
discounts, concessions or commissions from the Selling Stockholders. The
Selling Stockholders and any broker-dealers that participate in the
distribution may under certain circumstances be deemed to be underwriters
within the meaning of the Securities Act, and any commissions received by such
broker-dealers and any profits realized on the resale of shares by them may be
deemed to be underwriting discounts and commissions under the Securities Act.
The Company and the Selling Stockholders may agree to indemnify such broker-
dealers against certain liabilities, including liabilities under the
Securities Act. In addition, the Company may agree to indemnify the Selling
Stockholders and any underwriter with respect to the shares of Common Stock
offered hereby against certain liabilities, including, without limitation,
certain liabilities under the Securities Act, or, if such indemnity is
unavailable, to contribute toward amounts required to be paid in respect of
such liabilities.

Any Selling Stockholder may sell the shares of Common Stock offered hereby
from time to time and may choose to sell less than all or none of such shares.

To the extent required under the Securities Act, a supplemental prospectus
will be filed, disclosing (a) the name of any Selling Stockholder; (b) the
name of any broker-dealers effecting the transaction on behalf of the Selling
Stockholder; (c) the number of shares involved; (d) the price at which such
shares are to be sold; (e) the commissions paid or discounts or concessions
allowed to such broker-dealer, where applicable; (f) that such broker-dealer
did not conduct any investigation to verify the information set out or
incorporated by reference in this Prospectus, as supplemented, and (g) other
facts material to the transaction.

The Company may agree to pay certain costs and expenses incurred in
connection with the registration of the shares of Common Stock offered hereby,
except that the Selling Stockholders shall be responsible for all selling
commissions, transfer taxes and related charges in connection with the offer
and sale of such shares.

The Company may agree to keep the Registration Statement relating to the
offering and sale by the Selling Stockholders of the shares of Common Stock
continuously effective until a fixed date or such earlier date as such shares
of Common Stock may be resold without registration under the provisions of the
Securities Act.

38
<PAGE>

SENIOR NOTES

There are outstanding $135 million principal amount of Senior Notes issued by
the Company pursuant to an indenture between the Company and The Bank of New
York, as trustee (the "Indenture"). The following is a summary of certain
provisions of the Senior Notes and the Indenture and is qualified in its
entirety by reference to all the provisions of the Senior Notes and the
Indenture, copies of which have been filed as exhibits to the Registration
Statement of which this Prospectus is a part.

Cash interest on the Senior Notes is payable at a rate of 14% per annum,
semi-annually in arrears on February 15 and August 15 of each year, commencing
August 15, 1997. The Notes will mature on February 15, 2007. Upon a change of
control, each holder of the Senior Notes has the right to require the Company
to repurchase such holder's Senior Notes at 101% of the principal amount
thereof, plus accrued and unpaid interest thereon, if any, to the date of
repurchase. In addition, the Company may be obligated to make an offer to
repurchase Senior Notes with the net cash proceeds of certain asset sales at a
price of 100% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the date of purchase. The Senior Notes are senior
obligations of the Company and are unsecured, except for the pledge by the
Company of the securities purchased with a portion of the proceeds of the
Senior Notes as described below under "Security." The Senior Notes will rank
pari passu in right of payment with any future unsecured, senior indebtedness
of the Company. The Indenture permits the Company to incur a substantial amount
of secured indebtedness, which if incurred will effectively rank senior to the
Senior Notes with respect to the assets securing such indebtedness.

REDEMPTION PROVISIONS

In the event of a sale by the Company of its Common Stock in one or more
registered underwritten public offerings or floatation of Common Stock of the
Company or an investment by one or more Strategic Equity Investors (as defined)
on or prior to February 15, 2000 (other than in connection with a change in
control of the Company), the Company may, at its option, upon not less than 30
nor more than 60 days' notice given within 30 days after any such offering or
investment by Strategic Equity Investors, use all or a portion of the net
proceeds thereof to redeem up to a maximum of 25% of the initially outstanding
aggregate principal amount of the Notes at a redemption price equal to 114% of
the principal amount thereof, plus accrued and unpaid interest thereon, if any,
to the repurchase date; provided that not less than 75% of the initially
outstanding aggregate principal amount of the Senior Notes remains outstanding
following such redemption. A Strategic Equity Investor is defined in the
Indenture as any person engaged principally in the telecommunications business
that has a total market capitalization of at least $1.0 billion.

In addition, the Senior Notes are subject to redemption at the option of the
Company, in whole or in part, at any time on or after February 15, 2002, upon
not less than 30 nor more than 60 days' notice, at the redemption prices as a
percentage of the principal amount at maturity thereof of 107.00% to February
14, 2003, 104.67% to February 14, 2004, 102.33% to February 14, 2005, and 100%
thereafter, together in each case with accrued and unpaid interest, if any, to
the date of repurchase.

SECURITY

The Company used approximately $51.8 million of the net proceeds of from the
sale of the Senior Notes to purchase a portfolio of securities, pledged as
collateral and held by the collateral agent for the benefit of the collateral
agent and the holders of the Senior Notes to provide for the payment of
interest on the Senior Notes through February 15, 2000.

COVENANTS

The Senior Notes contain covenants that, among other things, restrict the
ability of the Company and its Restricted Subsidiaries to incur debt; to make
distributions; to make investments; to repurchase stock; to make optional
repayments on indebtedness; to engage in other businesses; to incur liens; to
engage in transactions with affiliates; and to sell assets. The Indenture also
requires that the Company offer to repurchase the Senior Notes in the event of
a change in control.

39
<PAGE>

LEGAL MATTERS

The validity of the Shares offered hereby will be passed upon for the Company
by Ropes & Gray, Boston, Massachusetts.

EXPERTS

The consolidated balance sheets as of December 31, 1996 and 1995 and the
consolidated statements of operations, stockholders' equity (deficit) and cash
flows for the years ended December 31, 1996, 1995 and 1994 included in this
Prospectus, have been included herein in reliance on the report of Coopers &
Lybrand L.L.P., independent accountants, given on the authority of that firm as
experts in accounting and auditing.

ADDITIONAL INFORMATION

The Company has filed with the Commission a Registration Statement on Form S-
4 (the "Registration Statement") under the Securities Act, with respect to the
Common Stock offered hereby. This Prospectus, which constitutes part of the
Registration Statement, omits certain of the information contained in the
Registration Statement and the exhibits and schedules thereto on file with the
Commission pursuant to the Securities Act and the rules and regulations of the
Commission thereunder. The Registration Statement, including exhibits and
schedules thereto, may be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Judiciary Plaza, Washington, DC 20549, and at the Commission's regional offices
at 7 World Trade Center, Suite 1300, New York, New York 10048 and Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and
copies may be obtained at prescribed rates from the Public Reference Section of
the Commission at its principal office in Washington, D.C. Statements contained
in this Prospectus as to the contents of any contract or other document are not
necessarily complete and in each instance reference is made to the copy of such
contract or other document filed as an exhibit to the Registration Statement,
each such statement being qualified in all respects by such reference. In
addition, the Commission maintains a site on the World Wide Web that contains
reports, proxy and information statements, and other information regarding
registrants such as the Company that file electronically with the Commission.
The address of the Commission web site is http://www.sec.gov.

40
<PAGE>

INDEX TO FINANCIAL STATEMENTS

ADVANCED RADIO TELECOM CORP. AND SUBSIDIARIES

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Accountants........................................ F-2
Consolidated Balance Sheets--December 31, 1996 and 1995.................. F-3
Consolidated Statements of Operations for the Three Years Ended December
31, 1996, 1995 and 1994................................................. F-4
Consolidated Statements of Stockholders' Equity (Deficit) for the Three
Years Ended December 31, 1996, 1995 and 1994............................ F-5
Consolidated Statements of Cash Flows for the Three Years Ended December
31, 1996, 1995 and 1994................................................. F-6
Notes to Consolidated Financial Statements............................... F-7
Condensed Consolidated Balance Sheet -- June 30, 1997 (unaudited)........ F-20
Condensed Consolidated Statements of Operations (unaudited) for the Six
Months Ended June 30, 1997 and 1996..................................... F-21
Condensed Consolidated Statements of Stockholders' Equity (unaudited) for
the Six Months Ended June 30, 1997 ..................................... F-22
Condensed Consolidated Statements of Cash Flows (unaudited) for the Six
Months Ended June 30, 1997 and 1996 .................................... F-23
Notes to Unaudited Interim Condensed Consolidated Financial Statements... F-24
</TABLE>

F-1
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of
Advanced Radio Telecom Corp.

We have audited the accompanying consolidated balance sheets of Advanced
Radio Telecom Corp. and Subsidiaries as of December 31, 1996 and 1995, and the
related consolidated statements of operations, stockholders' equity (deficit)
and cash flows for the years ended December 31, 1996, 1995 and 1994. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Advanced
Radio Telecom Corp. and Subsidiaries as of December 31, 1996 and 1995, and the
consolidated results of their operations and their cash flows for the years
ended December 31, 1996, 1995 and 1994, in conformity with generally accepted
accounting principles.

Coopers & Lybrand L.L.P.

Seattle, Washington
March 18, 1997

F-2
<PAGE>

ADVANCED RADIO TELECOM CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 1996 AND 1995

<TABLE>
<CAPTION>
1996 1995
------------ -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents......................... $ 1,974,407 $ 633,654
Accounts receivable............................... 1,819,593
Prepaid expenses and other current assets......... 196,791 52,325
------------ -----------
Total current assets............................ 3,990,791 685,979
Restricted cash..................................... 1,032,060
Property and equipment, net......................... 19,303,849 3,581,561
FCC licenses, net................................... 4,330,906 4,235,734
Equity investment................................... 3,285,000 285,000
Deferred financing costs, net....................... 3,255,688 778,897
Other assets........................................ 1,450,407 309,388
------------ -----------
Total assets.................................... $ 36,648,701 $ 9,876,559
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable.................................. $ 9,425,834 $ 3,340,144
Accrued compensation and benefits................. 1,350,894 267,091
Other accrued liabilities......................... 944,807 87,254
Current portion of long-term debt................. 1,893,161
------------ -----------
Total current liabilities....................... 13,614,696 3,694,489
Long-term debt, net of current portion.............. 3,084,085 6,450,000
------------ -----------
Total liabilities............................... 16,698,781 10,144,489
------------ -----------
Commitments and contingencies
Redeemable preferred stock, $0.01 par value, 1 share
issued and outstanding at December 31, 1995........ 44,930
------------ -----------
Stockholders' equity (deficit):
Serial preferred stock, $0.001 par value, 488,492
shares issued and outstanding at December 31,
1995............................................. 488
Common stock, $0.001 par value, 13,559,420 and
6,529,975 shares issued and outstanding.......... 13,559 6,530
Additional paid-in capital.......................... 53,976,721 3,050,179
Accumulated deficit................................. (34,040,360) (3,370,057)
------------ -----------
Total stockholders' equity (deficit).............. 19,949,920 (312,860)
------------ -----------
Total liabilities and stockholders' equity
(deficit)...................................... $ 36,648,701 $ 9,876,559
============ ===========
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

F-3
<PAGE>

ADVANCED RADIO TELECOM CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

<TABLE>
<CAPTION>
1996 1995 1994
------------ ----------- ---------
<S> <C> <C> <C>
Service revenue......................... $ 247,116 $ 5,793
Equipment sales and construction
revenue................................ 2,660,811
Consulting revenue...................... $ 137,489
------------ ----------- ---------
Total revenue....................... 2,907,927 5,793 137,489
------------ ----------- ---------
Costs and expenses:
Technical and network operations...... 3,402,948
Cost of equipment sales and
construction......................... 1,590,779
Sales and marketing................... 5,548,584 191,693
General and administrative............ 12,896,134 2,911,273 253,453
Research and development.............. 1,269,579
Depreciation and amortization......... 1,017,959 15,684 8,281
------------ ----------- ---------
Total operating expenses............ 25,725,983 3,118,650 261,734
------------ ----------- ---------
Loss from operations.................... (22,818,056) (3,112,857) (124,245)
Interest and other:
Interest expense...................... (1,695,489) (131,540) (4,375)
Financing commitment expense.......... (3,687,644)
Other................................. (1,248,000)
Interest income....................... 118,882 9,554
------------ ----------- ---------
Loss before extraordinary item...... (29,330,307) (3,234,843) (128,620)
Extraordinary loss on early
retirement of debt................. (1,339,996)
------------ ----------- ---------
Net loss............................ $(30,670,303) $(3,234,843) $(128,620)
============ =========== =========
Pro forma loss per share of common stock
before extraordinary item.............. $ (2.97) $ (0.30)
Extraordinary loss per share of common
stock.................................. (0.13)
------------ -----------
Pro forma net loss per share of common
stock.................................. $ (3.10) $ (0.30)
============ ===========
Pro forma weighted average number of
shares of common stock outstanding..... 9,885,193 10,912,338
============ ===========
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

F-4
<PAGE>

ADVANCED RADIO TELECOM CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

<TABLE>
<CAPTION>
SERIAL
COMMON STOCK PREFERRED STOCK ADDITIONAL
--------------------- ------------------- PAID-IN ACCUMULATED
SHARES PAR VALUE SHARES PAR VALUE CAPITAL DEFICIT TOTAL
---------- --------- -------- --------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31,
1993................... 1,070,915 $ 1,071 $ 60,065 $ (6,594) $ 54,542
Issuance of common stock
for cash............... 1,070,915 1,071 33,929 35,000
Net loss................ (128,620) (128,620)
---------- ------- -------- ----- ----------- ------------ ------------
Balance, December 31,
1994................... 2,141,830 2,142 93,994 (135,214) (39,078)
Issuance of common stock
to ART West............ 26,773 27 24,973 25,000
Issuance of common stock
to existing
stockholders........... 1,472,508 1,472 (1,472)
Conversion of note
payable and interest to
paid-in capital........ 75,250 75,250
Issuance of common stock
to Landover and
affiliates for cash.... 3,120,000 3,120 (2,100) 1,020
Issuance of preferred
stock to limited
partnerships affiliated
with Landover for cash:
Series A................ 332,091 $ 332 1,006,268 1,006,600
Series B................ 82,318 82 880,618 880,700
Series C................ 5,402 5 112,695 112,700
Issuance of Series D
preferred stock for
cash................... 61,640 62 1,999,938 2,000,000
Shares issued to reflect
anti-dilution
adjustments............ 62,655 63 7,041 7 (70)
Preferred stock issuance
costs.................. (229,814) (229,814)
Redemption of common
stock.................. (293,791) (294) (1,999,706) (2,000,000)
Increase in additional
paid-in capital as a
result of the release
of Escrow Shares....... 802,002 802,002
Accrued stock option
compensation........... 287,603 287,603
Net loss................ (3,234,843) (3,234,843)
---------- ------- -------- ----- ----------- ------------ ------------
Balance, December 31,
1995................... 6,529,975 6,530 488,492 488 3,050,179 (3,370,057) (312,860)
Issuance of Series E
preferred stock........ 232,826 233 4,672,953 4,673,186
Shares issued to reflect
anti-dilution
adjustments............ 56,984 57 150,740 151 (208)
Issuance of Series F
preferred stock and
warrants in exchange
for cash and the
Ameritech strategic
distribution
agreement.............. 48,893 49 3,552,951 3,553,000
Preferred stock issuance
costs.................. (150,000) (150,000)
Increase in additional
paid-in capital as a
result of the release
of Escrow Shares....... 6,795,514 6,795,514
Value ascribed to the
equipment financing
warrants............... 484,937 484,937
Value ascribed to the
Bridge Financing
Warrants............... 1,795,533 1,795,533
Issuance of common stock
in an initial public
offering............... 2,300,500 2,301 34,505,199 34,507,500
Initial public offering
common stock issuance
costs.................. (6,081,098) (6,081,098)
Conversion of preferred
stock to common stock
in connection with the
initial public
offering............... 4,353,587 4,353 (920,951) (921) (3,432)
Value ascribed to the
CIBC Warrants.......... 4,503,848 4,503,848
Accrued stock option
compensation........... 850,663 850,663
Common stock issued in
connection with the
exercise of the
Ameritech warrants..... 318,374 318 (318)
Net loss................ (30,670,303) (30,670,303)
---------- ------- -------- ----- ----------- ------------ ------------
Balance, December 31,
1996................... 13,559,420 $13,559 $ $53,976,721 $(34,040,360) $ 19,949,920
========== ======= ======== ===== =========== ============ ============
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

F-5
<PAGE>

ADVANCED RADIO TELECOM CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

<TABLE>
<CAPTION>
1996 1995 1994
------------ ----------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss................................ $(30,670,303) $(3,234,843) $(128,620)
Adjustments to reconcile net loss to net
cash used in operating activities:
Non-cash compensation expense.......... 7,646,177 1,089,605
Depreciation and amortization.......... 1,017,959 15,684 8,281
Financing commitment expense........... 3,687,644
Extraordinary item..................... 1,339,996
Non-cash interest expense.............. 772,221 110,828
Non-cash marketing expense............. 1,053,000
Changes in operating assets and
liabilities:
Accounts payable and accrued
liabilities......................... 3,633,043 563,351 (8,282)
Accounts receivable.................. (1,819,593)
Prepaid expenses and other current
assets.............................. (144,466) (56,337)
------------ ----------- ---------
Net cash used in operating
activities........................ (13,484,322) (1,511,712) (128,621)
------------ ----------- ---------
Cash flows from investing activities:
Additions to property and equipment..... (9,439,481) (621,364) (5,175)
Investment in ART West.................. (3,000,000) (255,000)
Acquisition of EMI licenses and property
and equipment.......................... (3,023,971)
Additions to other assets............... (1,425,032) (280,000)
Investment in restricted cash........... (1,032,060)
Additions to FCC licenses............... (201,183) (13,912)
------------ ----------- ---------
Net cash used in investing
activities........................ (15,097,756) (4,194,247) (5,175)
------------ ----------- ---------
Cash flows from financing activities:
Proceeds from issuance of common stock.. 34,507,500 1,020 35,000
Proceeds from issuance of preferred
stock.................................. 2,500,000 4,050,000
Proceeds from bridge financings......... 12,000,000
Proceeds from issuance of equipment
financing note......................... 2,445,000
Proceeds from issuance of convertible
note payable........................... 4,950,000
Proceeds from loan and advances from
Landover............................... 183,500 70,000
Redemption of common stock.............. (2,000,000)
Stock issuance costs.................... (6,231,098) (213,884)
Repayment of bridge financings.......... (12,000,000)
Principal payments of loan and long-term
debt................................... (1,131,443) (8,500)
Additions to deferred financing costs... (2,167,128) (452,656)
Repayment of cash advances from
Landover............................... (175,000)
------------ ----------- ---------
Net cash provided by financing
activities........................ 29,922,831 6,334,480 105,000
Net increase (decrease) in cash.... 1,340,753 628,521 (28,796)
Cash, beginning of period................ 633,654 5,133 33,929
------------ ----------- ---------
Cash, end of period...................... $ 1,974,407 $ 633,654 $ 5,133
============ =========== =========
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

F-6
<PAGE>

ADVANCED RADIO TELECOM CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. THE COMPANY AND BASIS OF PRESENTATION:

Advanced Radio Telecom Corp. ("ART", and collectively with its subsidiaries,
the "Company") provides wireless broadband telecommunications services using
point-to-point microwave transmissions in the 38 GHz band of the radio
spectrum throughout the United States. Prior to the commencement of commercial
operations during 1996, the Company's principal business activities included
the acquisition of spectrum rights, build out of its systems, development of
its operating infrastructure, and raising of funds to implement its business
plan.

ART, formerly named Advanced Radio Technologies Corporation, was organized
as a Delaware corporation in August 1993. Advanced Radio Technology Ltd.,
renamed Advanced Radio Telecom Corp. ("Telecom"), was organized in March 1995
by ART and Landover Holdings Corporation ("Landover") for the purpose of
acquiring certain 38 GHz licenses and to facilitate Landover's commitment to
invest or cause to invest $7 million in the Company. Pursuant to the related
purchase, shareholder, and services agreements, ART and Telecom were operated
as a single entity pending approval of their merger from the Federal
Communications Commission ("FCC"). Such approval was received and Telecom
became a wholly-owned subsidiary of ART by merger in October 1996. The merger
was accounted for in a manner consistent with a reorganization of entities
under common control which is similar to that of a pooling of interests, and
the financial statements of prior periods have been restated.

Under the Company's current business plan, the development of the Company's
business and the deployment of its services and systems will require
significant expenditures in the near term, a substantial portion of which is
expected to be incurred before realization of significant revenues. Management
believes that under its current business plans, the funds received from its
initial public offering of equity securities and issuance of public debt
securities are sufficient to enable the Company to fund its operations and
capital requirements at least through December 1997 and that the Company will
require significant additional capital after that date. While not expected, in
the event that the Company's business development and expansion plans change,
the Company may require additional financing earlier than December 31, 1997.
In the event that the Company fails to obtain such financing when required,
such failure could result in the modification, delay or abandonment of some or
all of the Company's development and expansion plans which in turn, could have
a material adverse affect on the Company.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Consolidation

The consolidated financial statements include all majority owned
subsidiaries in which the Company has the ability to exercise control. All
intercompany transactions have been eliminated in consolidation.

Development Stage Enterprise

During 1996, the Company commenced commercial operations, and is no longer
considered to be in the development stage as defined in Statement of Financial
Accounting Standards No. 7, "Accounting and Reporting by Development Stage
Enterprises." Such change in classification of the Company had no impact on
the net loss or stockholders' equity (deficit) for any periods presented.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with remaining
maturities of three months or less to be cash equivalents.

F-7
<PAGE>

ADVANCED RADIO TELECOM CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The Company places its temporary cash investments with major financial
institutions. At December 31, 1996 and 1995, the Company's temporary cash
investments are principally placed in one entity.

Property and Equipment

Property and equipment are stated at cost. Depreciation and amortization are
computed using the straight-line method over the estimated useful lives,
generally 5 years for wireless transmission equipment and 3 to 5 years for
other property and equipment.

The costs of normal maintenance and repairs are charged to expense as
incurred. Direct costs of placing assets into service and major improvements
are capitalized. Gains or losses on the disposition of assets are recorded at
the time of disposition.

Capitalized Software

Purchased software is capitalized at cost and amortized over its estimated
useful life of 3 to 5 years.

FCC Licenses

The direct costs of obtaining 38 GHz radio spectrum licenses by grant from
the FCC or by purchase from others and the cost of perfecting such licenses
are capitalized and amortized on a straight-line basis over a 40 year period.
Accumulated amortization as of December 31, 1996 totaled $106,011. All of the
Company's licenses expire in 2001 and it is management's expectation that they
will be renewed by the FCC for successive ten year periods.

Recoverability of Long-Lived Assets

The recoverability of property and equipment and capitalized FCC licenses is
dependent on, among other things, the successful development of systems in
each of the respective markets, or sale of such assets. Management estimates
that it will recover the carrying amount of those costs from undiscounted cash
flows generated by the systems once they have been developed. However, it is
reasonably possible that such estimates will change in the near term as a
result of technological, regulatory or other changes. The Company periodically
reviews the carrying value of its capitalized assets for impairment and
recoverability.

Equity Investment

The Company accounts for its fifty percent interest in the ART West joint
venture under the equity method. There were no operations in this joint
venture for the year ended December 31, 1996.

Financing Costs

Direct costs associated with obtaining debt financing are deferred and
charged to interest expense using the effective interest rate method over the
term of the debt. Direct costs of obtaining commitments for financing are
deferred and charged to expense over the term of the commitments. Direct costs
associated with obtaining equity financing are deferred and charged to
additional paid-in capital as the related funds are raised. Deferred costs
associated with unsuccessful financings are charged to other expense.

Accumulated amortization of deferred financing costs totaled $3,753,605 and
$44,376 at December 31, 1996 and 1995, respectively. Deferred costs of
approximately $1.2 million associated with an unsuccessful public debt
offering were charged to other expense in 1996.

F-8
<PAGE>

ADVANCED RADIO TELECOM CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Revenue Recognition

Revenue from telecommunications services are recognized ratably over the
period such services are provided.

Equipment sales and construction revenue is recorded at the time the
equipment is delivered and construction is completed. Cost of equipment sales
are based on the average cost method.

A single customer accounted for approximately forty-two percent of the
Company's service revenues during 1996. Additionally, the Company entered into
an equipment sales and construction services agreement with another customer
during 1996 to act as a sub-contractor to provide transmission facilities
construction services and the related wireless transmission equipment. This
agreement was substantially completed during 1996 and total equipment sales
and construction revenue are attributable to this customer. The receivables
from this customer accounted for approximately ninety-four percent of total
accounts receivable at December 31, 1996.

During 1994, the Company recognized income from consulting fees associated
with the application of FCC licenses on behalf of third parties, including
consulting fees of approximately $80,000 to a related party.

Research and Development

Research and development costs are charged to expense as incurred.

Income Taxes

The Company accounts for income taxes under the liability method of
accounting. Under the liability method, deferred taxes are determined based on
the differences between the financial statement and tax bases of assets and
liabilities at enacted tax rates in effect in the year in which the
differences are expected to reverse. Valuation allowances are established,
when necessary, to reduce deferred tax assets to the amounts expected to be
realized.

Net Loss Per Share

Historical net loss per share is computed based on the loss for the period
divided by the weighted average number of shares of common stock outstanding
during each period. Historical net loss per share and the weighted average
number of shares of common stock outstanding for the years ended December 31
are as follows:

<TABLE>
<CAPTION>
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Loss per share before extraordinary item.. $ (3.80) $ (0.54) $ (0.04)
Extraordinary loss per share.............. (0.17)
---------- ---------- ----------
Net loss per share........................ $ (3.97) $ (0.54) $ (0.04)
========== ========== ==========
Weighted average number of shares of
common stock outstanding................. 7,717,755 5,946,338 3,337,685
========== ========== ==========
</TABLE>

In accordance with the Securities and Exchange Commission rules, potentially
dilutive instruments issued within one year prior to the Company's initial
public offering at exercise prices below the initial public offering price
must be treated as outstanding for all periods presented in the initial public
offering prospectus. Accordingly, 2,167,438 and 4,966,000 additional shares
are reflected in the weighted average number of shares of common stock
outstanding in computing the unaudited pro forma net loss per share for the
years ended December 31, 1996 and 1995, respectively.

F-9
<PAGE>

ADVANCED RADIO TELECOM CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings Per Share." This
statement specifies the computation, presentation, and disclosure requirements
for earnings per share ("EPS"), to simplify the existing computational
guidelines and increase comparability on an international basis. The statement
will be effective for the year ending December 31, 1997. This statement will
replace "primary" EPS with "basic" EPS, the principal difference being the
exclusion of common stock equivalents in the computation of basic EPS. In
addition, this statement will require the dual presentation of basic and
diluted EPS on the face of the consolidated statement of operations. Due to
the Company's net losses, basic and diluted EPS computed pursuant to this
statement are not expected to be materially different from the historical net
losses per share previously presented.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities as of the date of the
financial statements and the reported amounts of expenses during the reporting
period. Actual results could differ from those estimates.

3. SPECTRUM ACQUISITIONS:

CommcoCCC Licenses

In June 1996, the Company agreed to acquire 129 38 GHz licenses from
CommcoCCC, Inc. ("CommcoCCC") in exchange for 6 million shares of the
Company's common stock, which acquisition was consummated in February 1997.
The aggregate market value of the common shares issued to CommcoCCC was
approximately $88 million. The Company incurred approximately $3 million in
fees in connection with this acquisition, of which approximately $1 million
had been paid as of December 31, 1996 and included in other assets.

The Company has given a stockholder of CommcoCCC an option to purchase FCC
licenses in specified market areas in which the Company will have more than
one license. The Option is exercisable only in the event that the stockholder
receives licenses pursuant to pending applications covering a minimum
specified population and expires in August 1997. The price of licenses to be
purchased under the option is based upon a formula that considers the market
price of the Company's common stock on the date of exercise.

ART West Licenses

In February 1997, the Company completed its acquisition from Extended
Communications, Inc. ("Extended") of the remaining 50% interest in ART West, a
partnership jointly controlled by Extended and the Company, for $6 million in
cash, of which $3 million was paid in November 1996. The Company's initial 50%
interest was obtained in 1995 through its initial capital contribution of
$255,000 in cash and 26,773 shares of common stock. ART West held certain 38
GHz licenses that were transferred to the Company upon the completion of the
acquisition. An officer of the Company is the president and a shareholder of
Extended.

EMI Licenses

In November 1995, the Company acquired from EMI Communications Corp. ("EMI")
certain 38 GHz radio spectrum licenses and related assets (the "EMI Licenses")
in exchange for $3 million in cash and a $1.5 million non-negotiable
promissory note. Landover advanced $175,000 to the Company to fund a portion
of the

F-10
<PAGE>

ADVANCED RADIO TELECOM CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

initial payment to EMI, which was repaid in 1995. The total purchase price,
including expenses, was allocated to the acquired assets as follows:

<TABLE>
<S> <C>
FCC licenses..................................................... $4,226,821
Property and equipment........................................... 297,150
----------
$4,523,971
==========
</TABLE>

4. PROPERTY AND EQUIPMENT:

Property and equipment at December 31 were as follows:

<TABLE>
<CAPTION>
1996 1995
----------- ----------
<S> <C> <C>
Wireless transmission equipment placed in
service.......................................... $ 5,303,386 $ 297,150
Wireless transmission equipment not yet placed in
operation........................................ 10,727,923 3,199,755
Computer software................................. 2,334,683
Computer hardware................................. 1,063,928
Office furniture and equipment.................... 458,698 93,414
Other equipment and vehicles...................... 333,152
----------- ----------
20,221,770 3,590,319
Accumulated depreciation.......................... (917,921) (8,758)
----------- ----------
$19,303,849 $3,581,561
=========== ==========
</TABLE>

Depreciation expense for the years ended December 31, 1996, 1995 and 1994
was $909,163, $7,031, and $1,727, respectively.

5. INCOME TAXES:

Deferred tax assets and liabilities at December 31 were as follows:

<TABLE>
<CAPTION>
1996 1995
----------- ---------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards................... $ 9,100,000 $ 870,000
Accrued compensation and benefits.................. 470,000
Valuation allowance................................ (9,258,000) (870,000)
----------- ---------
$ 312,000 $
=========== =========
Deferred tax liabilities:
Depreciation and amortization...................... $ (312,000)
===========
</TABLE>

Differences between the tax bases of assets and liabilities and their
financial statement amounts are reflected as deferred income taxes based on
enacted tax rates. The net deferred tax assets have been reduced by a
valuation allowance based on management's determination that the recognition
criteria for realization has not been met.

At December 31, 1996, the Company has accumulated net operating loss
carryforwards for Federal income tax purposes of approximately $26.7 million
which expire between 2008 and 2011. The Company's ability to use its net
operating losses to offset future income is subject to restrictions in the
Internal Revenue Code which could limit the Company's future use of its net
operating losses if certain stock ownership changes occur.

F-11
<PAGE>

ADVANCED RADIO TELECOM CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

6. LONG-TERM DEBT, BRIDGE, AND OTHER FINANCINGS:

Long-Term Debt

Long-term debt as of December 31 consisted of the following:

<TABLE>
<CAPTION>
1996 1995
----------- ----------
<S> <C> <C>
EMI note, payable in quarterly installments of
principal of $187,500 plus interest at prime plus 2%
(10.25% at December 31, 1996), through January 1,
1999................................................. $ 1,312,500 $1,500,000
Equipment financing note, net of original issue
discount of $333,476, payable in monthly installments
of $92,694 including interest at 17.26%, and final
payment of $642,305 due April 29, 1998............... 1,446,699
GTE software financing, payable in monthly
installments of $67,000 including interest at 8.5%,
through December 1, 1999............................. 2,079,372
Other................................................. 138,675
Advent notes, payable on demand on or after May 13,
1997................................................. 4,950,000
----------- ----------
4,977,246 6,450,000
Less current portion.................................. (1,893,161)
----------- ----------
$ 3,084,085 $6,450,000
=========== ==========
</TABLE>

The aggregate amount of the principal payments for long-term debt as of
December 31, 1996 follows:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31:
------------
<S> <C>
1997.............................................................. $2,159,941
1998.............................................................. 2,346,811
1999.............................................................. 803,970
----------
$5,310,722
==========
</TABLE>

The equipment financing note is collateralized by a portion of the Company's
wireless transmission equipment and a $1 million certificate of deposit. The
certificate of deposit is included in restricted cash. In connection with the
issuance of the equipment financing note, certain shareholders of the Company
guaranteed payment of the note in exchange for warrants to purchase 118,181
shares of the Company's common stock for $17.19 per share and $225,000 in
fees. In November 1996, the shareholders were released from the guarantee.

Bridge Financings

During 1996 the Company issued in the aggregate $12 million of bridge
financings in three private placements, consisting of $5 million of 10% notes
issued in March 1996, $3 million of 14.75% notes issued in July 1996, and $4
million of 14.75% notes issued in September and October 1996. Of these notes,
approximately $8.1 million principal amount was issued to certain shareholders
of the Company and CommcoCCC. Warrants to purchase in the aggregate 603,637
shares of the Company's common stock (the "Bridge Financing Warrants") at a
price per share ranging from $15.00 to $17.19, were issued in connection with
these bridge financings.

In November 1996, the Company repaid these bridge financings with the
proceeds from the initial public offering of the Company's common stock. The
early repayment of these bridge financings resulted in an extraordinary loss
arising from the write-off of the unamortized note discounts and the related
deferred financing costs.

F-12
<PAGE>

ADVANCED RADIO TELECOM CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

In November 1995, the Company issued $4.95 million in 10% promissory notes
and one share of the Company's Series A redeemable preferred stock to certain
limited partnerships controlled by Advent International Corp. in exchange for
$5 million in cash. In February 1996, the notes, related accrued interest and
the redeemable preferred stock were exchanged for 232,826 shares of Series E
preferred stock.

Public Debt Offering

In February 1997, the Company received $135 million of gross proceeds from a
public offering of $135 million of 14% Senior Notes due 2007 (the "Senior
Notes") and warrants to purchase an aggregate of 2,731,725 shares of the
Company's common stock for $0.01 per share. The Company used approximately
$51.8 million of the net proceeds of this offering to purchase a portfolio of
U.S. Treasury securities, pledged as collateral for the payment of interest on
the Senior Notes through February 15, 2000.

The Senior Notes are unsecured senior obligations of the Company, due
February 2007, with interest payable on February 15 and August 15 of each year
and are redeemable at the Company's option beginning in February 2002 at
redemption prices declining to par. The Senior Notes were issued under an
indenture which contains covenants limiting the Company's ability to incur
additional debt, pay dividends or make other distributions, incur liens, merge
or sell assets, or enter into certain transactions with related parties, among
other restrictions.

CIBC Financing Commitment

In November 1996, in connection with Company's initial public offering of
common stock, the Company entered into agreements with certain lenders which
provided for the issuance of up to $50 million of Senior Secured Notes (the
"CIBC Financing Commitment"), at any time at the Company's option through
February 1997. In connection with the CIBC Financing Commitment, the Company
paid placement and commitment fees and other expenses of approximately $1.9
million and issued warrants to purchase 300,258 shares of common stock (the
"CIBC Warrants") at an exercise price of $0.01 per share. No amounts were
borrowed under the CIBC Financing Commitment. The CIBC Financing Commitment
was terminated in connection with the issuance of the Senior Notes.

7. COMMITMENTS AND CONTINGENCIES:

Equipment Purchase Agreement

In August 1995, the Company entered into an agreement to purchase wireless
transmission equipment from a vendor. Under the terms of the agreement, the
Company is obligated to purchase a specified number of wireless transmission
units between August 1995 and December 31, 1998, subject to termination upon
90 days advance notice by either party. At December 31, 1996, this obligation
amounted to approximately $9.5 million.

The Company currently purchases the majority of its wireless transmission
equipment from this vendor. There are a limited number of other manufacturers
who have, or are developing, equipment that would meet the Company's
requirements; however, there can be no assurance that such equipment would be
available to the Company on comparable terms or on terms more favorable to
those included in its current arrangements. Moreover, a change in vendors
could cause a delay in the Company's ability to provide its services, which
would affect future operating results adversely.

F-13
<PAGE>

ADVANCED RADIO TELECOM CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Operating Leases

The Company has entered into operating leases for office space and antenna
sites which expire between 1997 and 2002. Lease expense amounted to
approximately $618,000, $16,000 and $6,400 for 1996, 1995 and 1994,
respectively. Future annual minimum lease payments as of December 31, 1996 are
as follows:

<TABLE>
<S> <C>
1997............................................................ $ 645,493
1998............................................................ $ 535,021
1999............................................................ $ 526,200
2000............................................................ $ 500,439
2001............................................................ $ 500,547
Thereafter...................................................... $ 382,033
----------
$3,089,733
==========
</TABLE>

Research and Development Arrangements

During 1996, the Company funded approximately $400,000 of research and
development with an entity, of which an executive of the Company was a
shareholder and former director, related to development of wireless
transmission equipment.

Employment Agreements

The Company has entered into various employment agreements with certain
executives that provide for annual base salaries and cash bonuses based on
achievement of specific performance goals.

DCT Agreement

In June 1996, the Company entered into an agreement with DCT Communications,
Inc. ("DCT") to acquire 16 38 GHz licenses from DCT for $3.6 million in cash.
DCT has alleged that the Company has failed to satisfy a provision of the
agreement, causing it to terminate and DCT to be able to retain a $100,000
deposit. Although the Company believes that it has satisfied such provision,
there can be no assurance as to the outcome of such dispute. The Company does
not currently expect to purchase the licenses pursuant to the agreement.

Contingencies

The Company is party to certain claims and makes routine filings with the
FCC and state regulatory authorities. Management believes that the resolution
of any such claims or matters arising from such filings, if any, will not have
a material adverse impact on the consolidated financial position, results of
operations or cash flows of the Company.

F-14
<PAGE>

ADVANCED RADIO TELECOM CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

8. CAPITAL STOCK:

Preferred Stock

The Company is authorized to issue 10 million shares of $0.001 par value
serial preferred stock. Each series of the preferred stock issued is a
separate class and, as a class, has a liquidation preference equal to the
aggregate purchase price paid for such class. As of December 31, 1996, there
were no shares of preferred stock outstanding. The historical share
information regarding the Company's preferred stock activity follows:

<TABLE>
<CAPTION>
SERIAL PREFERRED STOCK
-------------------------------------------------------------------
SERIES A SERIES B SERIES C SERIES D SERIES E SERIES F TOTAL
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Year ended December 31,
1995:
Issuance of preferred
stock to limited
partnerships affiliated
with Landover for cash:
Series A............... 332,091 332,091
Series B............... 82,318 82,318
Series C............... 5,402 5,402
Issuance of Series D
preferred stock for
cash................... 61,640 61,640
Shares issued to reflect
anti-dilution.......... 2,852 4,189 7,041
-------- -------- ------ ------- -------- ------- --------
334,943 86,507 5,402 61,640 488,492
Year ended December 31,
1996:
Issuance of Series E
preferred stock........ 232,826 232,826
Shares issued to reflect
anti-dilution.......... 120,607 28,172 1,961 150,740
Issuance of Series F
preferred stock to
Ameritech.............. 48,893 48,893
-------- -------- ------ ------- -------- ------- --------
455,550 114,679 7,363 61,640 232,826 48,893 920,951
Serial preferred stock
converted to common
stock in connection
with initial public
offering of common
stock.................. (455,550) (114,679) (7,363) (61,640) (232,826) (48,893) (920,951)
</TABLE>

Common Stock

The Company is authorized to issue 100 million shares of common stock,
$0.001 par value. As of December 31, 1996, and February 25, 1997, there were
13,559,420 and 19,559,420 shares of the Company's common stock outstanding,
respectively.

The Company was initially formed in August 1993 by two of its executives and
during November 1993, the Company issued additional shares of common stock in
a private placement to a limited partnership. During March 1994, an affiliate
of the limited partnership contributed $100,000 to the Company in exchange for
214,183 shares of common stock and a $70,000 promissory note. In connection
with this financing, the Company issued an additional 856,732 shares of common
stock to all of the then existing shareholders. In March 1995, the limited
partnership agreed to assign the $70,000 promissory note, plus accrued
interest, to the executives in exchange for two new promissory notes executed
by the executives. Concurrent with the exchange of the promissory notes, the
executives contributed the $70,000 promissory notes plus accrued interest to
the Company, for which contribution there were no additional shares issued.

In March and April 1995, the Company entered into certain agreements with
Landover pursuant to which Landover agreed to invest or cause to be invested
$7 million in the Company (the "Landover Funding Commitment") in exchange for
approximately 3.1 million shares of the Company's common stock issued to
Landover and certain of its affiliates. The agreements also contained
provisions under which additional shares of the Company's preferred and common
stock would be issued to shareholders of the Company, excluding

F-15
<PAGE>

ADVANCED RADIO TELECOM CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Landover, for no consideration, such that the additional securities issued to
satisfy the Landover Funding Commitment would dilute only Landover's ownership
interest in the Company. The preferred stock transactions in 1995 and 1996
satisfied the Landover Funding Commitment and, as a result, the anti-dilution
provisions terminated. As the actual cash proceeds received from these
preferred stock transactions were in excess of Landover's commitment, the
Company redeemed 293,791 shares of common stock from Landover for $2 million.

As part of the Landover Funding Commitment, approximately 1.9 million shares
of the Company's common stock previously held by certain individual
shareholders were placed in escrow to be released upon attainment of certain
objectives, including the acquisition of a specified number of 38 GHz licenses
("Escrow Shares"). In November 1995, 681,102 Escrow Shares, with an estimated
fair value of approximately $800,000, were released as a result of the
acquisition of the EMI Licenses. In February 1996, the remaining Escrow
Shares, with an estimated fair value of $6.8 million, were released as part of
a reorganization of the Company. The estimated fair values of the Escrow
Shares on the dates such shares were released were recorded as compensation
expense and as an increase in additional paid-in capital.

In February 1996, the Company sold 48,893 shares of preferred stock for an
aggregate purchase price of $2.5 million to Ameritech Development Corporation
("Ameritech"). In addition, the Company entered into a strategic distribution
agreement with Ameritech Corp., the parent of Ameritech, and, as partial
consideration, granted warrants to Ameritech to purchase up to 318,959 shares
of common stock at an exercise price of $0.01 per share. The Company recorded
the estimated value of the strategic distribution agreement of $1.1 million as
marketing expense and additional paid-in capital in 1996. The Company incurred
fees of $150,000 in connection with this transaction. In December 1996,
Ameritech exercised its warrants and was issued 318,374 shares of common stock
by the Company.

The financial statements and footnotes reflect the effects of various common
stock splits and reverse stock splits, including a 1 for 2.75 reverse split of
the Company's common stock effected in October 1996. All references to the
number of shares, per share amounts and par value amounts have been restated
for all stock splits and reverse stock splits. Such stock splits and reverse
stock splits have no impact on the total amount of stockholders' equity
(deficit).

Initial Public Common Stock Offering

During November 1996, the Company completed an initial public offering of
2,300,500 shares of common stock, raising approximately $34.5 million of gross
proceeds. The Company incurred approximately $6.1 million of expenses in
connection with this offering.

Warrants to Purchase Common Stock

The Company has issued warrants to purchase common stock in connection with
its financing activities during the year ended December 31, 1996. The
following summarizes the warrants outstanding at December 31, 1996:

<TABLE>
<CAPTION>
EXERCISE
NUMBER OF PRICE PER PERIOD OF
SHARES SHARE EXERCISE
--------- --------- ---------
<S> <C> <C> <C>
Equipment financing warrants................... 118,181 17.19 2001
Bridge Financing Warrants...................... 400,000 17.19 2001
Bridge Financing Warrants...................... 203,637 15.00 2001
CIBC Warrants.................................. 300,258 0.01 2001
</TABLE>

F-16
<PAGE>

ADVANCED RADIO TELECOM CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The warrants contain certain anti-dilution provisions.

In February 1997, in connection with the issuance of the Senior Notes, the
Company issued warrants to purchase 2,731,725 shares of the Company's common
stock at an exercise price of $0.01 per share. The warrants will be
exercisable at any time after August 15, 1997 through February 2007.

Stock Option Plans

During 1996, the Company adopted the Restated Equity Incentive Plan (the
"Plan") that permits the Company to grant incentive and non-qualified options
and other equity incentives to employees and independent consultants of the
Company. The Company has reserved 1,400,000 shares of common stock for
issuance under the Plan. The exercise price of incentive options granted under
the Plan may not be less than 100% of the fair market value of the common
stock on the grant date. Options granted under the Plan are generally
exercisable for a term that does not exceed ten years from the date of grant.

In May 1996 the Company adopted the 1996 Non-Employee Directors Automatic
Stock Option Plan (the "Directors Plan"), which provides for the automatic
grant of stock options to non-employee directors to purchase up to an
aggregate of 75,000 shares.

The Company applies the accounting provisions of Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees," and related
interpretations for its stock-based plans. Accordingly, compensation costs for
employee stock options is measured as the excess, if any, of the fair value of
the Company's stock at the measurement date over the amount an employee must
pay to acquire the stock. Deferred compensation costs charged to operations
was $850,663 and $287,603 in 1996 and 1995, respectively, and as of December
31, 1996, unearned compensation costs amounted to $449,312.

A summary of the stock option transactions follows:

<TABLE>
<CAPTION>
WEIGHTED AVERAGE
SHARES EXERCISE PRICE
------- ----------------
<S> <C> <C>
Options granted in 1995............................ 382,630 $ 2.276
-------
Options outstanding, December 31, 1995............. 382,630 2.276
Options granted.................................. 461,112 16.074
Options canceled................................. (16,363) 12.247
-------
Options outstanding, December 31, 1996............. 827,379 $ 9.950
=======
</TABLE>

The Company has adopted the disclosure provisions of Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS
No. 123"). Had the Company elected to recognize compensation costs as provided
for by SFAS No. 123, the Company's net loss and per share amounts on a pro
forma basis for the years ended December 31 would have been as follows:

<TABLE>
<CAPTION>
1996 1995
PRO FORMA PRO FORMA
------------ -----------
<S> <C> <C>
Loss before extraordinary item................... $(29,410,915) $(3,049,032)
Extraordinary item............................... (1,339,996)
------------ -----------
Net loss......................................... $(30,750,911) $(3,049,032)
============ ===========
Loss per share before extraordinary item......... $ (3.81) $ (0.51)
Extraordinary loss per share..................... (0.17)
------------ -----------
Net loss per share............................... $ (3.98) $ (0.51)
============ ===========
</TABLE>

F-17
<PAGE>

ADVANCED RADIO TELECOM CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The weighted average fair values per share at the date of grant for options
granted during the years ended December 31, 1996 and 1995 were as follows:

<TABLE>
<CAPTION>
1996 1995
----- -----
<S> <C> <C>
Options granted with exercise prices equal to the fair value of
the stock at the date of grant................................ $6.59 $0.82
Options granted with exercise prices greater than the fair
value of the stock at the date of grant....................... $7.04
</TABLE>

The assumptions applied in these valuations for periods prior to the Company
becoming a public entity were (i) use of the minimum value method, (ii) risk
free interest rates ranging from 6.1% to 6.5%, (iii) assumed expected lives of
3 to 5 years, and (iv) no expected dividends. The assumptions applied for
periods subsequent to the Company becoming a public entity were (i) use of the
Black-Scholes option pricing model, (ii) risk free interest rates ranging from
5.8% to 6.0%, (iii) expected volatility rate of approximately 60%, (iv)
assumed expected lives of 3 to 5 years, and (v) no expected dividends.

The following table summarizes information about fixed-price options
outstanding at December 31, 1996 as follows:

<TABLE>
<CAPTION>
WEIGHTED-
NUMBER AVERAGE WEIGHTED- NUMBER WEIGHTED-
OUTSTANDING REMAINING AVERAGE EXERCISABLE AVERAGE
EXERCISE PRICE AT 12/31/96 CONTRACTUAL LIFE EXERCISE PRICE AT 12/31/96 EXERCISE PRICE
- -------------- ----------- ---------------- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
$ 1.624 to 4.543........ 382,630 3 $ 2.276 194,876 $ 2.136
$10.835 to 17.188....... 444,749 4.5 $16.552 58,887 $16.163
</TABLE>

9. RELATED PARTY TRANSACTIONS:

In 1995 and 1996, the Company entered into various management consulting
agreements with Landover. Fees paid to Landover under the agreements totaled
approximately $830,000 and $70,000 in 1996 and 1995, respectively. The
agreements with Landover terminated in November 1996. Additionally, the
Company paid Landover approximately $390,000 for expenses in connection with
the Landover Funding Commitment.

The Company has paid legal fees to a law firm in which a principal of the
law firm was also an officer of the Company. Total fees paid to such law firm
were approximately $520,000, $34,800 and $74,600 in 1996, 1995 and 1994,
respectively.

10. FAIR VALUES OF FINANCIAL INSTRUMENTS:

The carrying amounts and the estimated fair values of the Company's
financial instruments at December 31, 1996 were as follows:

<TABLE>
<CAPTION>
CARRYING FAIR
AMOUNT VALUE
---------- ----------
<S> <C> <C>
Cash and cash equivalents............................. $1,974,407 $1,974,407
Restricted cash....................................... 1,032,060 1,032,060
EMI Note.............................................. 1,312,500 1,312,500
Other long-term debt.................................. 3,664,746 3,950,568
</TABLE>

Cash, cash equivalents and restricted cash: The carrying amount reported in
the balance sheet approximates fair value.

F-18
<PAGE>

ADVANCED RADIO TELECOM CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

EMI Note and other long-term debt: The fair values are based upon interest
rates currently available to the Company for issuance of similar debt with
similar terms and maturities.

11. SUPPLEMENTAL CASH FLOW INFORMATION:

Supplemental disclosure of cash flow information are summarized below for
the years ended December 31:

<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Non-cash financing and investing activities:
Additions to property and equipment.................... $9,548,102 $2,666,630
Exchange of Advent Notes for Series E preferred stock,
net of deferred financing costs....................... 4,673,186
Value ascribed to issuance of warrants................. 2,115,388
Accrued deferred financing costs....................... 300,405 370,617
Issuance of promissory note payable to EMI............. 1,500,000
Conversion of note payable and interest to common
stock................................................. 75,250
Issuance of stock and contribution of licenses to ART
West.................................................. 30,000
Interest paid............................................ $ 926,821
</TABLE>

F-19
<PAGE>

ADVANCED RADIO TELECOM CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)

<TABLE>
<CAPTION>
JUNE 30,
1997
------------
<S> <C>
ASSETS
Current assets
Cash and cash equivalents..................................... $ 24,463,966
Short-term investments........................................ 19,671,556
Pledged securities............................................ 18,251,339
Accounts receivable........................................... 448,303
Prepaid and other current assets.............................. 305,168
------------
Total current assets........................................ 63,140,332
Restricted cash................................................. 1,032,060
Pledged securities.............................................. 34,787,959
Property and equipment, net of accumulated depreciation of
$2,117,904..................................................... 28,228,836
FCC licenses, net of accumulated amortization of $1,267,303..... 131,822,061
Deferred financing costs, net................................... 4,300,668
Other assets.................................................... 636,265
------------
Total assets................................................ $263,948,181
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable........................................ $ 1,657,015
Accrued compensation and benefits............................. 1,934,891
Accrued interest payable...................................... 7,508,219
Other accrued liabilities..................................... 446,243
Current portion of long-term debt............................. 2,495,510
------------
Total current liabilities................................... 14,041,878
------------
Long-term debt, net of current portion.......................... 107,782,634
Deferred income tax liability................................... 30,371,368
------------
Total liabilities........................................... 152,195,880
------------
Commitments and contingencies
Stockholders' equity:
Common stock, $.001 par value, 100,000,000 shares authorized,
19,749,452 shares issued and outstanding....................... 19,749
Additional paid-in capital...................................... 170,931,302
Accumulated deficit............................................. (59,198,750)
------------
Total stockholders' equity.................................... 111,752,301
------------
Total liabilities and stockholders' equity.................. $263,948,181
============
</TABLE>

The accompanying notes are an integral part of the unaudited interim
consolidated financial statements.

F-20
<PAGE>

ADVANCED RADIO TELECOM CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED:
--------------------------
JUNE 30, JUNE 30,
1997 1996
------------ ------------
<S> <C> <C>
Service revenue.................................... $ 328,223 $ 61,520
Equipment sales and construction revenue........... 356,970
------------ ------------
Total revenue.................................... 685,193 61,520
------------ ------------
Costs and expenses:
Technical and network operations................. 2,621,878 270,319
Cost of equipment sales and construction......... 214,399
Sales and marketing.............................. 6,241,797 1,472,198
General and administrative....................... 6,383,433 11,364,281
Research and development......................... 128,715 521,406
Depreciation and amortization.................... 2,361,275 278,375
------------ ------------
Total operating costs and expenses............... 17,951,497 13,906,579
------------ ------------
Loss from operations............................... (17,266,304) (13,845,059)
Interest expense................................... (8,616,576) (618,694)
Financing commitment expenses...................... (2,699,881)
Other.............................................. (1,248,000)
Interest income.................................... 2,559,574 39,889
------------ ------------
Loss before income taxes......................... (26,023,187) (15,671,864)
Deferred income tax benefit........................ 864,797
------------ ------------
Net loss......................................... $(25,158,390) $(15,671,864)
============ ============
Pro forma net loss per common share................ $ (1.44)
============
Pro forma weighted average common shares........... 10,912,338
============
Net loss per common share.......................... $ (1.42) $ (2.38)
============ ============
Weighted average common shares..................... 17,735,974 6,577,461
============ ============
</TABLE>

The accompanying notes are an integral part of the unaudited interim
consolidated financial statements.

F-21
<PAGE>

ADVANCED RADIO TELECOM CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(UNAUDITED)

FOR THE SIX MONTHS ENDED JUNE 30, 1997

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
-------------------- PAID-IN ACCUMULATED
SHARES PAR VALUE CAPITAL DEFICIT TOTAL
---------- --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Balance, December 31,
1996................... 13,559,420 $13,559 $ 53,976,721 $(34,040,360) $ 19,949,920
Common stock issued in
connection with the
acquisition of the
CommcoCCC, Inc.
licenses............... 6,000,000 6,000 87,744,000 87,750,000
Value ascribed to
warrants issued with
Senior Notes........... 29,707,509 29,707,509
Warrant issuance costs.. (1,254,697) (1,254,697)
Accrued stock option
compensation........... 449,313 449,313
Stock options
exercised.............. 190,032 190 308,456 308,646
Net loss................ (25,158,390) (25,158,390)
---------- ------- ------------ ------------ ------------
Balance, June 30, 1997.. 19,749,452 $19,749 $170,931,302 $(59,198,750) $111,752,301
========== ======= ============ ============ ============
</TABLE>

The accompanying notes are an integral part of the unaudited interim
consolidated financial statements.

F-22
<PAGE>

ADVANCED RADIO TELECOM CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
--------------------------
JUNE 30, JUNE 30,
1997 1996
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net loss......................................... $(25,158,390) $(15,671,864)
Adjustments to reconcile net loss to net cash
used in operating activities:
Non-cash compensation expense.................. 449,313 7,362,726
Non-cash marketing expense..................... 1,053,000
Depreciation and amortization.................. 2,361,275 278,375
Non-cash financing commitment expense.......... 2,699,881
Write-off of deferred financing costs.......... 1,248,000
Non-cash interest expense...................... 824,263 587,992
Changes in assets and liabilities:
Accrued interest payable....................... 7,491,060 167,567
Accounts receivable............................ 1,371,290
Accrued interest on pledged securities......... (1,261,232)
Accounts payable and accrued liabilities....... (1,674,200) (890,333)
Deferred income taxes.......................... (864,797)
Deposits and other assets...................... (198,774) (50,381)
Prepaid expenses and other current assets...... (78,474) (79,615)
------------ ------------
Net cash used in operating activities........ (14,038,785) (5,994,533)
------------ ------------
Cash flows from investing activities:
Additions to property and equipment.............. (15,571,289) (3,050,607)
Additions to FCC licenses........................ (5,398,269)
Additions to short-term investments.............. (19,671,556)
Investment in restricted cash.................... (1,000,000)
Investment in pledged securities................. (51,778,066)
------------ ------------
Net cash used in investing activities........ (92,419,180) (4,050,607)
------------ ------------
Cash flows from financing activities:
Proceeds from issuance of Senior Notes and
warrants........................................ 135,000,000
Proceeds from exercise of stock options.......... 308,646
Proceeds from issuance of preferred stock........ 2,500,000
Proceeds from bridge financings.................. 6,000,000
Proceeds from issuance of equipment financing
note............................................ 2,445,000
Stock issuance costs............................. (150,000)
Warrant issuance costs........................... (1,254,697)
Principal payments of long-term debt............. (1,121,997) (272,814)
Additions to deferred financing costs............ (3,984,428) (281,103)
------------ ------------
Net cash provided by financing activities.... 128,947,524 10,241,083
------------ ------------

Net increase in cash............................. 22,489,559 195,943
Cash, beginning of period.......................... 1,974,407 633,654
------------ ------------
Cash, end of period................................ $ 24,463,966 $ 829,597
============ ============
</TABLE>

The accompanying notes are an integral part of the unaudited interim
consolidated financial statements.

F-23
<PAGE>

ADVANCED RADIO TELECOM CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

1. THE COMPANY AND BASIS OF PRESENTATION:

Advanced Radio Telecom Corp. (collectively with its subsidiaries "ART" or
the "Company") provides wireless broadband telecommunications services using
point-to-point microwave transmissions in the 38 GHz band of the radio
spectrum throughout the United States.

The unaudited condensed consolidated financial statements included herein
have been prepared by the Company. The financial statements contain all
adjustments, consisting only of normal recurring adjustments which are, in the
opinion of the Company's management, necessary to present fairly the
consolidated financial position of the Company as of June 30, 1997, the
consolidated results of its operations for the six months ended June 30, 1997
and 1996, and its cash flows for the six months ended June 30, 1997 and 1996.
The consolidated statements of operations for the six months ended June 30,
1996, and cash flows for the six months ended June 30, 1996, have been
restated to reflect a merger in October 1996.

The Company will require significant additional capital in 1998 to fund its
operations and business plan. Based on its current business plan, the Company
will require significant capital over the next few years for the continued
development and expansion of its wireless broadband operations. Because the
Company generally deploys radio equipment in response to customer orders, a
substantial portion of its capital requirements is dependent on customer
demand. Accordingly, the Company's capital requirements may increase or
decrease depending largely upon the cost and amount of equipment acquired, the
number of networks installed, the number of markets served and the prices
charged for its services as well as other factors. In addition, if, among
other things, the assumptions underlying the Company's business plan change or
prove to be inaccurate or the Company changes its business plan, the Company's
capital requirements may change. In the event the Company fails to obtain such
financing when required, such failure could result in the modification, delay
or abandonment of some or all of the Company's development and expansion plans
which in turn, could have a material adverse effect on the Company.

Certain information and footnote disclosures normally included in financial
statements have been condensed or omitted pursuant to the rules and
regulations of the Securities and Exchange Commission. The unaudited condensed
consolidated financial statements should be read in conjunction with the
Company's December 31, 1996 audited consolidated financial statements and
notes thereto.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Short-Term Investments

Short-term investments are comprised of commercial paper and other similar
investments purchased with a term to maturity of more than three months. The
amount reported in the balance sheet at June 30, 1997, approximates fair
value.

Property and Equipment

As of June 30, 1997, approximately $7.0 million out of a total of $23.0
million of wireless transmission equipment had been placed in service.

F-24
<PAGE>

ADVANCED RADIO TELECOM CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

3. FCC LICENSES

In February 1997, the Company completed the acquisition (the "CommcoCCC
Acquisition") of 129 38 GHz licenses from CommcoCCC, Inc. ("CommcoCCC") in
exchange for six million shares of the Company's common stock. The total
acquisition cost was approximately $122.2 million, comprised of the fair value
of the six million shares of common stock issued of approximately $87.8
million, direct costs incurred of approximately $3.2 million and the related
deferred tax liability of approximately $31.2 million.

In connection with the CommcoCCC Acquisition, the Company granted Commco,
L.L.C., ("Commco"), a stockholder of CommcoCCC, an option to acquire twelve 38
GHz licenses. Each of the licenses covers a market in which ART holds one or
more other 38 GHz licenses. Commco exercised its option in June 1997, with
closing subject to FCC approval. The purchase price will be paid by a non-
recourse secured note and will be determined by a formula based on the sales
price of the Company's common stock on the day the option was exercised and
the population covered by the twelve licenses. The Company has the right to be
a reseller with respect to these licenses for a term of five years at market
rates.

In February 1997, the Company completed its acquisition from Extended
Communications, Inc. of the remaining 50% interest in ART West, for $6 million
in cash, of which $3 million was paid in November 1996, of which the total
cost has been included in FCC licenses.

4. SENIOR NOTES:

In February 1997, the Company received $135 million of gross proceeds from a
public offering of $135 million of 14% Senior Notes (the "Senior Notes") and
warrants to purchase an aggregate of 2,731,725 shares of the Company's common
stock for $0.01 per share. The aggregate value ascribed to the warrants of
approximately $29.7 million, was reflected as both a debt discount and an
increase in additional paid-in capital. The debt discount is accounted for as
a component of interest expense using the effective interest rate method. The
Senior Notes are considered to have "significant original issue discount"
under Federal tax rules and the Company is not able to deduct the accretion of
the debt discount for Federal income tax purposes.

5. INCOME TAXES:

Deferred income tax liabilities at June 30, 1997, consisted of approximately
$44.4 million of deferred tax liabilities, principally arising from the
CommcoCCC Acquisition, partially offset by approximately $13.8 million of
deferred tax assets. Deferred tax assets consisted primarily of $19.3 million
of net operating loss carryforwards, partially offset by a valuation allowance
of approximately $5.6 million. In February 1997, the Company reversed
approximately $12.8 million of its deferred tax asset valuation allowance as a
result of recording deferred taxes arising from the CommcoCCC Acquisition. The
valuation allowance is based on management's determination that the
recognition criteria for a portion of the deferred tax assets has not been
met.

The effective tax rate is based on an estimate of the annualized tax rate
and differs from the Federal statutory rate principally due to the provision
for the net deferred tax asset valuation allowance.

F-25
<PAGE>

ADVANCED RADIO TELECOM CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

6. SUPPLEMENTAL CASH FLOW INFORMATION:

Supplemental disclosure of cash flow information is summarized below:

<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
-------------------------
1997 1996
------------ ------------
<S> <C> <C>
Non-cash financing and investing activities:
Additions to property and equipment................ $ 829,217 $ 4,040,806
Value ascribed to warrants......................... 29,707,509 509,937
Issuance of shares for licenses.................... 87,750,000
Value ascribed to strategic distribution agreement
reflected as paid-in capital...................... 1,053,000
Accrued deferred financing costs................... 967,491
Exchange of notes for Series E preferred stock, net
of deferred financing costs....................... 4,673,186
Release of escrow shares........................... 6,795,514
Conversion of note payable and interest into common
stock............................................. 75,250
Interest paid........................................ 287,716 74,538
</TABLE>

F-26
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the Delaware General Corporation Law, as amended (the
"DGCL"), provides that a corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amount paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding
if he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had not reasonable cause to believe his conduct
was unlawful. Section 145 further provides that a corporation similarly may
indemnify any such person serving in any such capacity who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment in
its favor, against expenses actually and reasonably incurred in connection
with the defense or settlement of such action or suit if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the
best interest of the corporation and except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall
have been adjudged to be liable to the corporation unless and only to the
extent that the Delaware Court of Chancery or such other court in which such
action or suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnify for such expenses
which the Court of Chancery or such other court shall deem proper.

Section 102(b)(7) of the DGCL permits a corporation to include in its
certificate of incorporation a provision eliminating or limiting the personal
liability of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, provided that such
provision shall not eliminate or limit the liability of a director (i) for any
breach of the director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174
of the DGCL (relating to unlawful payment of dividends and unlawful stock
purchase and redemption) or (iv) for any transaction from which the director
derived an improper personal benefit.

The Registrant's Certificate of Incorporation provides that the liability of
the directors shall be eliminated to the fullest extent permissible by Section
102(b)(7) of the DGCL, as amended. The Certificate of Incorporation further
provides that the Registrant shall indemnify its directors and officers to the
fullest extent permitted by Section 145 of the DGCL, as amended.

Reference is made to each of the Indemnification Agreements incorporated by
reference as Exhibit 10.7 to this Registration Statement for information
regarding indemnification of directors and officers under certain
circumstances.

ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

Exhibits

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
3.1 --Amended and Restated Certificate of Incorporation.
3.2 --Restated and Amended Bylaws of Registrant.
3.3 --Certificate of Designation.
4.1 --Specimen of Common Stock Certificate.
</TABLE>

II-1
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
4.2 --Indenture relating to the Senior Notes.
4.3 --Specimen of Senior Note (included in Exhibit 4.2)
4.4 --Collateral Pledge and Security Agreement relating to the Senior
Notes.
4.5 --Form of Warrant Agreement in connection with offering of Senior
Notes.
4.6 --Specimen of Warrant Certificate in connection with offering of
Senior Notes (included in Exhibit 4.5).
4.7 --Shareholders' Rights Agreement.
4.8 --Form of Rights Certificate.
5.1 --Opinion of Ropes & Gray.
9.1 --Voting Trust Agreement dated November 5, 1996.
9.2 --Form of Trustee Indemnification Agreement.
9.3 --Cooperation Agreement dated November 5, 1996.
9.4 --Confidentiality Agreement dated November 5, 1996.
10.1 --Employment Agreement between the Company and Vernon L. Fotheringham,
dated December 16, 1995.
10.2 --Severance Agreement between the Company and Steven D. Comrie, dated
April 3, 1997.
10.3 --Consulting Agreement between the Company and W. Theodore Pierson,
Jr., dated May 8, 1995 and effective January 1, 1995.
10.4 --Employment Agreement between the Company and Charles Menatti, dated
March 8, 1996.
10.5 --Employment Agreement between the Company and James D. Miller, dated
February 1, 1996.
10.6 --Employment Agreement between the Company and Thomas A. Grina, dated
April 26, 1996.
10.7 --Form of Director Indemnification Agreement.
10.8 --Company's Restated Equity Incentive Plan, as amended.
10.9 --Form of Stock Option Agreement.
10.10 --Company's 1996 Non-Employee Directors Automatic Stock Option Plan.
10.11 --Form of Non-Employee Directors Stock Option Agreement.
10.12 --Grina Option Agreement.
10.13 --$1,500,000 Non-negotiable and Nontransferable Promissory Note to EMI
Communications Corp.
10.14 --38 GHz Radio Links Purchase Agreement dated August 11, 1995 with P-
Com, Inc.
10.15 --Second Restated and Amended Registration Rights Agreement dated July
3, 1996 with ART Licensing and the stockholders of each of ART
Licensing and the Company.
10.16 --Amendment No. 1 to Registration Rights Agreement dated as of October
16, 1996.
10.17 --Warrant issued on February 2, 1996 to Ameritech.
10.18 --$2,445,000 Promissory Note in favor of CRA, Inc. ("CRA").
10.19 --Security Agreement with CRA.
10.20 --Form of Indemnity Warrant.
10.21 --Form of Subscription Agreement dated March 8, 1996, including Forms
of Bridge Note and Bridge Warrant.
10.22 --Asset Acquisition Agreement and Plan of Reorganization dated July 3,
1996 with CommcoCCC, Inc.
</TABLE>

II-2
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.23 --Option Agreement dated July 3, 1996 with Commco, L.L.C.
10.24 --Form of Noncompetition Agreement with Columbia and affiliates of
Columbia.
10.25 --Right of First Offer Agreement dated July 3, 1996 with Columbia and
affiliates of Columbia.
10.26 --Agreement to Lease between Commco, L.L.C. and Advanced Radio
Technologies Corporation.
10.27 --Amendment No. 1 to Asset Acquisition Agreement and Plan of
Reorganization.
10.28 --Consulting Agreement dated March 1, 1996 with Trond Johannesen.
10.29 --Shareholders Agreement between the Company and Trond Johannesen.
10.30 --Form of September Bridge Warrant.
10.31 --Form of CIBC Warrants.
10.32 --Services Agreement dated as of October 29, 1996 with ICG Telecom
Group, Inc. and Pacific & Eastern Digital Transmission Services, Inc.
21 --Subsidiaries of the Company.
23 --Consent of Independent Accountants.
23.1 --Consent of Ropes & Gray (Included in Exhibit 5.1).
24 --Power of Attorney (Appears on page II-5).
</TABLE>

ITEM 22. UNDERTAKINGS

The undersigned Company hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:

(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;

(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high and of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration Statement;

(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.

(2) That for the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment
any securities being registered which remain unsold at the termination of
the offering.

(4) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the registrant pursuant to the provisions described in Item 20,
or otherwise, the registrant has been advised that in the opinion of the
Commission such indemnification is against public policy as expressed in
the Act and is, therefore, unenforceable. In the event that a claim for

II-3
<PAGE>

indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.

(5) That prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this registration
statement, by any person or party who is deemed to be an underwriter within
the meaning of Rule 145(c), the issuer undertakes that such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items
of the applicable form.

(6) That every prospectus that is filed pursuant to paragraph (5)
immediately preceding will be filed in a prospectus supplement pursuant to
Rule 424(c).

(7) That every prospectus that purports to meet the requirements of
section 10(a)(3) of the Securities Act and is used in connection with an
offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

(8) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Item 4 of this Form, within one
business day of receipt of such request, and to send the incorporated
documents by first class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the effective date
of the registration statement through the date of responding to the
request.

In addition, the undersigned registrant hereby undertakes as follows:

(1) With respect to an acquisition that involves the offering of
securities that would be exempt from Section 5 of the Securities Act but
for the possibility of integration and that would not have a material
financial effect on the registrant, individually or when aggregated with
prior transactions since the date of the registrant's most recent audited
financial statements, to file following the consummation of such
acquisition a supplement to the prospectus included as part of this
Registration Statement to briefly describe the transaction if such
information is material to subsequent purchasers of shares under this
Registration Statement.

(2) With respect to an acquisition that involves the offering of
securities that would be exempt from Section 5 of the Securities Act but
for the possibility of integration and that would have a material financial
effect on the registrant, including an acquisition that when aggregated
with prior acquisitions since the date of the registrant's most recent
audited financial statements would have such a material financial effect,
to file following the consummation of such acquisition a post-effective
amendment to this Registration Statement containing financial and other
information material to subsequent purchasers under this Registration
Statement, including pro forma information about the surviving entity as
required by Article 11 of Regulation S-X and historical financial
information about the acquired company to the extent required by Rule 3-05
of Regulation S-X.

(3) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that involves the offering of securities that would not be exempt from
Section 5 of the Securities Act and that was not the subject of and
included in this Registration Statement when it became effective.

II-4
<PAGE>

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE COMPANY HAS DULY
CAUSED THIS REGISTRATION STATEMENT ON FORM S-4 TO BE SIGNED ON ITS BEHALF BY
THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF BELLEVUE, STATE OF
WASHINGTON ON THE 14TH DAY OF AUGUST, 1997.

Advanced Radio Telecom Corp.

/s/ Vernon L. Fotheringham
By: _________________________________
TITLE: CHAIRMAN & CEO

POWER OF ATTORNEY

Each person whose signature appears below hereby authorizes and appoints
Vernon Fotheringham, Thomas A. Grina and Thomas M. Walker, and each of them,
with full power of substitution and full power to act without the other, as
his true and lawful attorney-in-fact and agent to act in his name, place and
stead and to execute in the name and on behalf of each person, individually
and in each capacity stated below, and to file, any and all amendments to this
Registration Statement, including any and all post-effective amendments and
any subsequent Registration Statement for the same offering which may be filed
under Rule 462(b).

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED
BELOW ON THE 14TH DAY OF AUGUST, 1997.

SIGNATURE TITLE

/s/ Vernon L. Fotheringham Chairman, Chief
- ------------------------------------- Executive Officer
VERNON L. FOTHERINGHAM and Director

/s/ Thomas A. Grina Executive Vice
- ------------------------------------- President, Chief
THOMAS A. GRINA Operating Officer
and Chief Financial
Officer

/s/ James C. Cook Director
- -------------------------------------
JAMES C. COOK

/s/ Mark C. Demetree Director
- -------------------------------------
MARK C. DEMETREE

/s/ Andrew I. Fillat Director
- -------------------------------------
ANDREW I. FILLAT

/s/ James B. Murray Director
- -------------------------------------
JAMES B. MURRAY

/s/ Alan Z. Senter Director
- -------------------------------------
ALAN Z. SENTER

II-5
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
3.1 --Amended and Restated Certificate of Incorporation.(11)
3.2 --Restated and Amended Bylaws of Registrant.(11)
3.3 --Form of Certificate of Designation.(12)
4.1 --Specimen of Common Stock Certificate.(3)
4.2 --Indenture relating to the Senior Notes.(10)
4.3 --Specimen of Senior Note (included in Exhibit 4.2).(10)
4.4 --Collateral Pledge and Security Agreement relating to the Senior
Notes.(10)
4.5 --Form of Warrant Agreement in connection with offering of Senior
Notes.(10)
4.6 --Specimen of Warrant Certificate in connection with offering of
Senior Notes (included in Exhibit 4.5).(10)
4.7 --Shareholders' Rights Agreement.(12)
4.8 --Form of Rights Certificate.(12)
5.1 --Opinion of Ropes & Gray.
9.1 --Voting Trust Agreement dated November 5, 1996.(9)
9.2 --Form of Trustee Indemnification Agreement.(3)
9.3 --Cooperation Agreement dated November 5, 1996.(9)
9.4 --Confidentiality Agreement dated November 5, 1996.(9)
10.1 --Employment Agreement between the Company and Vernon L. Fotheringham,
dated December 16, 1995.(1)
10.2 --Severance Agreement between the Company and Steven D. Comrie, dated
April 3, 1997.(13)
10.3 --Consulting Agreement between the Company and W. Theodore Pierson,
Jr., dated May 8, 1995 and effective January 1, 1995.(1)
10.4 --Employment Agreement between the Company and Charles Menatti, dated
March 8, 1996.(1)
10.5 --Employment Agreement between the Company and James D. Miller, dated
February 1, 1996.(1)
10.6 --Employment Agreement between the Company and Thomas A. Grina, dated
April 26, 1996.(8)
10.7 --Form of Director Indemnification Agreement.(1)
10.8 --Company's Restated Equity Incentive Plan, as amended.(2)
10.9 --Form of Stock Option Agreement.(3)
10.10 --Company's 1996 Non-Employee Directors Automatic Stock Option Plan.(1)
10.11 --Form of Non-Employee Directors Stock Option Agreement.(3)
10.12 --Grina Option Agreement.(9)
10.13 --$1,500,000 Non-negotiable and Nontransferable Promissory Note to EMI
Communications Corp.(1)
10.14 --38 GHz Radio Links Purchase Agreement dated August 11, 1995 with P-
Com, Inc.(1)
10.15 --Second Restated and Amended Registration Rights Agreement dated July
3, 1996 with ART Licensing and the stockholders of each of ART
Licensing and the Company.(2)
10.16 --Amendment No. 1 to Registration Rights Agreement dated as of October
16, 1996.(9)
10.17 --Warrant issued on February 2, 1996 to Ameritech.(1)
10.18 --$2,445,000 Promissory Note in favor of CRA, Inc. ("CRA").(1)
10.19 --Security Agreement with CRA.(1)
10.20 --Form of Indemnity Warrant.(1)
10.21 --Form of Subscription Agreement dated March 8, 1996, including Forms
of Bridge Note and Bridge Warrant.(2)
10.22 --Asset Acquisition Agreement and Plan of Reorganization dated July 3,
1996 with CommcoCCC, Inc.(2)
10.23 --Option Agreement dated July 3, 1996 with Commco, L.L.C.(2)
10.24 --Form of Noncompetition Agreement with Columbia and affiliates of
Columbia.(2)
10.25 --Right of First Offer Agreement dated July 3, 1996 with Columbia and
affiliates of Columbia.(2)
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.26 --Agreement to Lease between Commco, L.L.C. and Advanced Radio
Technologies Corporation.(4)
10.27 --Amendment No. 1 to Asset Acquisition Agreement and Plan of
Reorganization.(5)
10.28 --Consulting Agreement dated March 1, 1996 with Trond Johannesen.(3)
10.29 --Shareholders Agreement between the Company and Trond Johannesen. (5)
10.30 --Form of September Bridge Warrant.(9)
10.31 --Form of CIBC Warrants.(7)
10.32 --Services Agreement dated as of October 29, 1996 with ICG Telecom
Group, Inc. and Pacific & Eastern Digital Transmission Services,
Inc.(6)
21 --Subsidiaries of the Company.(2)
23 --Consent of Independent Accountants.
23.1 --Consent of Ropes & Gray (Included in Exhibit 5.1).
24 --Power of Attorney (Included on page II-5).
</TABLE>
- --------
(1) Previously filed with the Company's Registration Statement on Form S-1,
effective November 5, 1996 (SEC Reg. No. 333-04388) and incorporated by
reference herein.
(2) Previously filed with Amendment 1 to the Company's Registration Statement
on Form S-1, effective November 5, 1996 (SEC Reg. No. 333-04388) and
incorporated by reference herein.
(3) Previously filed with Amendment 2 to the Company's Registration Statement
on Form S-1, effective November 5, 1996 (SEC Reg. No. 333-04388) and
incorporated by reference herein.
(4) Previously filed with Amendment 4 to the Company's Registration Statement
on Form S-1, effective November 5, 1996 (SEC Reg. No. 333-04388) and
incorporated by reference herein.
(5) Previously filed with Amendment 6 to the Company's Registration Statement
on Form S-1, effective November 5, 1996 (SEC Reg. No. 333-04388) and
incorporated by reference herein.
(6) Previously filed with Amendment 7 to the Company's Registration Statement
on Form S-1, effective November 5, 1996 (SEC Reg. No. 333-04388) and
incorporated by reference herein.
(7) Previously filed with Amendment 8 to the Company's Registration Statement
on Form S-1, effective November 5, 1996 (SEC Reg. No. 333-04388) and
incorporated by reference herein.
(8) Previously filed with the Company's Registration Statement on Form S-1,
filed May 15, 1996 (SEC Reg. No. 333-03735) and incorporated by reference
herein.
(9) Previously filed with the Company's Registration Statement on Form S-1,
effective February 3, 1997 (SEC Reg. No. 333-19295) and incorporated by
reference herein.
(10) Previously filed with Amendment 2 to the Company's Registration Statement
on Form S-1, effective February 3, 1997 (SEC Reg. No. 333-19295) and
incorporated by reference herein.
(11) Previously filed with the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996 and incorporated by reference herein.
(12) Previously filed with the Company's Registration Statement on Form 8-A,
filed on July 10, 1997 (SEC Reg. No. 000-21091) and incorporated by
reference herein.
(13) Previously filed with the Company's Registration Statement on Form S-1,
filed on July 17, 1997 (SEC Reg. No. 333-31453) and incorporated by
reference herein.

<PAGE>

EXHIBIT 5.1

[LETTERHEAD OF ROPES & GRAY]

August 15, 1997

Advanced Radio Telecom Corp.
500 108th Avenue, NE
Suite 2600
Bellevue, WA 98004

Ladies and Gentlemen:

This opinion is furnished to you in connection with a registration statement
on Form S-4 (the "Registration Statement"), filed with the Securities and
Exchange Commission under the Securities Act of 1933, as amended, for the
registration of 5,000,000 shares (the "Shares") of common stock, $.001 par
value (the "Common Stock"), of Advanced Radio Telecom Corp., a Delaware
corporation (the "Company"), that may be issued and sold by the Company from
time to time in connection with future acquisitions by the Company of other
businesses, assets, or equity and/or debt securities in business combination.

We have acted as counsel for the Company in connection with the proposed
issue and sale of the Shares, and the preparation and filing of the
Registration Statement. For purposes of this opinion, we have examined and
relied upon the information set forth in the Registration Statement and such
other documents, records, certificates and other instruments as we have deemed
necessary.

We express no opinion as to the applicability of, compliance with or effect
of federal law or the law of any jurisdiction other than the General
Corporation Law of the State of Delaware. For purposes of our opinion set
forth below, we have assumed that the per share consideration paid to the
Company upon issuance of the Shares will exceed the par value of a share of
Common Stock and that there will be an adequate number of shares of authorized
Common Stock available for issuance at the time of any issuance of the Shares.

Based upon the foregoing, we are of the opinion that:

Assuming that the issuance of the Shares is duly and validly authorized by
the Board of Directors of the Company, then when issued as so authorized by
the Board of Directors of the Company in accordance with the terms and against
payment therefor, each as authorized by the Board of Directors, the Shares
will be duly and validly authorized and will be validly issued, fully paid and
nonassessable.

We understand that this opinion is to be used in connection with the
Registration Statement. We hereby consent to the filing of this opinion as
part of the Registration Statement and to the use of our name in the
prospectus which is part of the Registration Statement under the caption
"Legal Matters."

It is understood that this opinion is to be used only in connection with the
issuance and sale of the Shares while the Registration Statement is in effect.

Very truly yours,

/s/ Ropes & Gray

Ropes & Gray

<PAGE>

EXHIBIT 23

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the inclusion in this registration statement on Form S-4 of our
report dated March 18, 1997, on our audits of the financial statements of
Advanced Radio Telecom Corp. and Subsidiaries as of December 31, 1996 and 1995
and for the years ended December 31, 1996, 1995 and 1994. We also consent to
the references to our firm under the captions "Experts" and "Selected
Consolidated Financial Data."

Coopers & Lybrand L.L.P.

Seattle, Washington
August 12, 1997