DALLAS, TX, October 29, 1998 - Allegiance Telecom, Inc. (Nasdaq: ALGX) announced today that it received competitive local exchange service authority in Virginia. The Company plans to provide service in the Commonwealth of Virginia starting with the following communities: Alexandria, Arlington, Falls Church and McLean. These Virginia communities will be part of the Washington, D.C. network, which is scheduled to be operational in the first quarter of 1999.

Allegiance will offer Virginia 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 Virginia," 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.

NOTE TO EDITOR: Royce Holland, chairman and CEO of Allegiance Telecom, was one of the original founders of MFS Communications Company, the first major competitor to the Bell System. As president of MFS, Holland was an industry leader in developing the competitive provisions of the Telecommunications Act of 1996, which opened the local exchange market to competition throughout the U.S. Under Holland's leadership, MFS grew from a privately held start-up operation to one of the Nasdaq 100 Index companies with annual revenue of approximately $1 billion and a market value of approximately $13 billion.