Provides Small and Medium-sized Businesses with Communications Alternative

DALLAS, TEXAS, October 5, 1999 - With the arrival of Allegiance Telecom, Inc. (Nasdaq: ALGX) in Baltimore, local businesses now have a new alternative to Bell Atlantic service. Allegiance is targeting firms in Baltimore to provide them with economical local, long distance, international calling, high-speed data transmission and Internet services. Allegiance is a well-established facilities-based competitive local exchange carrier (CLEC), offering businesses a complete package of telecommunications services. The firm is targeting 24 major metropolitan areas in the United States with its "one-stop shopping" approach. Allegiance is currently operational in 17 other markets, including Atlanta, Boston, Chicago, Dallas, Fort Worth, Houston, Long Island, Los Angeles, New York, Northern New Jersey, Oakland, Orange County, Philadelphia, San Diego, San Francisco, San Jose and Washington D.C. "Baltimore businesses want a reliable alternative choice for economical telecommunications services," said Tony Parella, Allegiance Telecom national vice president of field sales. "Allegiance provides a single source for all the telecom requirements of businesses including local, long distance, high-speed data transmission and Internet services. We offer our customers the value of state-of-the-art technology, consolidated billing arrangements and superior customer service."

Allegiance Telecom's local sales office is located at 7 St. Paul Street, Suite 450, in Baltimore, and can be reached via telephone, 410/230-2500. Allegiance is a facilities-based CLEC headquartered in Dallas, Texas. 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.