Primary Target of Salesforce is Small and Medium-Sized Businesses

DALLAS, TEXAS, July 7, 1999 - Allegiance Telecom, Inc. (Nasdaq: ALGX) announced today that it initiated service in the San Diego metropolitan area. The Company is deploying a facilities-based network in San Diego, with services throughout the surrounding suburbs.

Allegiance is a facilities-based 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. Allegiance is operational in 15 other markets, including Atlanta, Boston, Chicago, Dallas, Fort Worth, Houston, Los Angeles, New York, Northern New Jersey, Oakland, Orange County, Philadelphia, San Francisco, San Jose and Washington D.C.

"Allegiance is excited to begin offering a reliable, customer-oriented choice in telecom services to San Diego businesses," said Tony Parella, National Vice President of Field Sales. "Allegiance provides unique value by offering a 'one-stop shop' for all communication needs - voice, data and Internet services -- packaged with consolidated billing arrangements and superior customer service."

The Allegiance sales office is located at 6165 Greenwich Drive, Suite 300, and the switch site is located at 5761 Copley Drive, Suite 150, both in downtown San Diego.

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.