DALLAS, TX, October 20, 1998 - Allegiance Telecom, Inc. (Nasdaq: ALGX) announced today that it received competitive local exchange service authority in New Jersey. In the first quarter of 1999, the Company plans to provide service in Northern New Jersey, starting with the following communities: Jersey City, Union City, North Bergen and Bayonne.

Allegiance will offer Northern New Jersey businesses a full package of telecommunications services, including local, long distance, international calling, high-speed data transmission and Internet services.

"Allegiance is looking forward to having the opportunity to bring the benefits of competition to customers in Northern New Jersey," said Royce Holland, chairman and CEO of Allegiance Telecom. "Users of voice, data and Internet services will soon have an expanded choice for their communications needs, similar to the choices customers can now make when selecting a long distance phone company."

Allegiance is a competitive local exchange carrier (CLEC) based in Dallas, Texas. The Company is targeting 24 major metropolitan areas in the U.S. with its "one-stop shopping" approach. In addition to the Atlanta, Chicago, Dallas, Fort Worth, Los Angeles and New York markets where the Company has already begun to provide service, other markets scheduled for initial service in 1998 include Boston, Oakland and San Francisco. The Company's web address is www.allegiancetele.com. Allegiance's common stock is traded on the Nasdaq National Market under the symbol ALGX.