Primary Target of Salesforce is Small and Medium-Sized Businesses

DALLAS, TEXAS, August 23, 1999 - Allegiance Telecom, Inc. (Nasdaq: ALGX) announced today that it initiated service in Long Island, New York. The Company will serve businesses in the Long Island area, specifically Nassau and Suffolk Counties, through a facilities-based network. The announcement furthers Allegiance's presence in the New York metropolitan area -- the Company is already providing service in New York City and Northern New Jersey.

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 16 other markets, including Atlanta, Boston, Chicago, Dallas, Fort Worth, Houston, Los Angeles, New York, Northern New Jersey, Oakland, Orange County, Philadelphia, San Diego, San Francisco, San Jose and Washington D.C.

"Businesses in Long Island deserve a reliable choice for telecommunications services," said Tony Parella, National Vice President of Field Sales. "Allegiance provides a one-stop shop for all telecom services including local, long distance, high-speed data transmission and Internet services, offering customers the value of state-of-the-art technology, consolidated billing arrangements and superior customer service."

The Allegiance sales office is located at One Huntington Quadrangle, Suite 1N05 in Melville, New York.

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.