One of First to Provide Expanded Envelope of One Stop-Shopping; Additional Internet and High-Speed Data Communications Services to Follow in '99

"To date, very few telecom companies are offering a bundled package of local and long distance services," said Dan Yost, president and chief operating officer of Allegiance Telecom. "With our announcement today, Allegiance is one of the first to provide an expanded envelope of one-stop shopping services, including local, long distance, Internet and data services with one point of sale, one consolidated bill and one call for customer service."

Allegiance combines its current voice services with the ability to reserve a company's domain name, utilize electronic mail and host company web sites. Domain name services include the registration and parking of new domains as well as the transfer of existing domains. Customers have the ability to configure and manage their company e-mail services and web sites using an online Allegiance Customer Toolkit.

Allegiance's Internet-based Customer Toolkit allows businesses to manage all aspects of their Internet communications portfolio, from security administration on personal e-mails to activating company web sites. Businesses can access the Toolkit 24 hours a day/7 days a week. The Toolkit was created such that the business end user can use any web browser to access its real-time interface. In addition to creating and managing e-mail accounts, the business administrator can activate web sites, manage support for Microsoft's FrontPage 98 server extensions and handle web site security.

The e-mail toolkit also allows the end user to manage his/her own personal e-mail box. This includes the ability to change passwords, forward e-mail and set automatic response messages.

Allegiance's high speed dedicated Internet access offering initially includes fractional and full T1 services, with dial-up and advanced networking services to follow.

"A single point of contact for voice and data products allows our customers to concentrate on their core business -- thus, achieving excellence in all of their business communications," said Yost. "Our service is a fast, dependable Internet solution for companies that need full-time, managed connectivity for sites in selected metropolitan areas."

"We were looking for quality service and value, and we've received it from Allegiance," said Marty Smith, Information Technology Manager at Dallas-based Cinemark USA, Inc. "One source for local dial tone, Internet access and web services provides us with the resources we need to communicate throughout our business. Internet connectivity and communication is important to us and by outsourcing to one partner, we have saved time and received superior customer service."

Planned 1999 Internet solution offerings include: E-Commerce services including storefront building tools and product catalog management capability, enhanced security and merchant services. The Company will also offer web site design services, including custom programming, commerce and other advanced features. In addition, Allegiance is planning other web-based applications such as workflow tools, group calendaring, sales automation tools and virtual offices.

"The technology used to deliver all of our services of voice, data and Internet products will be transparent to our customers as the converged products will utilize one piece of equipment on-site," said Yost.

Build Out of Data Network and Phase Two Offerings

Technical Highlights of Internet Protocol Network

• Designed for redundancy and scalability
• Facilities provisioned over SONET technology
• All cities capable of 45 Mbps of data transfer
• Supports and is scalable to 1 million mailboxes
• Data center servers contain a suite of Sun Enterprise servers and Sun Netra Telco Class servers with gigabit Ethernet and fibre channel arbitrated loop technology
• 1.2 terabytes of enterprise storage

Relay services-these products are expected to be available in the first quarter of 1999. In addition, Allegiance recently completed the development of its Network Operation Control Center (NOCC). The NOCC, based in Dallas, monitors connectivity, data delivery and quality assurance.

"The technology deployed in our network today allows for rapid and dynamic growth and ensures performance, reliability and scalability," added Yost.

Allegiance is a competitive local exchange carrier (CLEC) that offers businesses a complete package of telecommunications services, including local, long distance, international calling, high-speed data transmission and Internet services. 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, New York and San Francisco markets where the Company has already begun to provide service, other markets scheduled for initial service in 1998 include Boston and Oakland, California. Based in Dallas, the Company's web address is: www.allegiancetele.com. Allegiance's common stock is traded on the Nasdaq National Market under the symbol ALGX.

Certain statements in this press release constitute "forward-looking statements" within the meaning of federal securities laws, and the Company intends that such forward-looking statements be subject to the safe harbors created thereby. The words "believes," "expects," "estimates," "anticipates" and "will be" and similar words or expressions identify forward-looking statements made by or on behalf of the Company. These forward-looking statements reflect the Company's views as of the date they are made with respect to future events and financial performance, but are subject to many uncertainties and factors which may cause the actual results of the Company to be materially different from any future results expressed or implied by such forward-looking statements. Examples of such uncertainties and factors include, but are not limited to, the extent to which the Company can achieve "electronic bonding" with ILECs, the Company's ability to timely and effectively provision new customers and the Company's continued access to necessary capital. The Company does not undertake any obligation to update or revise any forward-looking statement made by it or on its behalf, whether as a result of new information, future events or otherwise.