Vulcan Ventures Has Option to Purchase Up to 5 Million Additional Shares in Allegiance

DALLAS, TX, September 14, 1999--Allegiance Telecom, Inc. (Nasdaq: ALGX) today announced that Vulcan Ventures Inc. has closed its purchase of 1.5 million shares of Allegiance common stock from certain of the Allegiance private equity fund investors and certain other investors. Vulcan Ventures is the investment organization of Paul G. Allen. The 1.5 million shares of common stock were purchased from at $50 per share. The agreement also grants Vulcan an option to purchase up to an additional 5 million shares, at $56 per share, on or before November 1, 1999, from these private equity investors and certain other investors. As part of the deal, Allegiance's board of directors has appointed a representative from Vulcan to the Allegiance board.

Allegiance Telecom is a competitive local exchange carrier (CLEC) based in Dallas, Texas. Allegiance provides businesses with local, long distance, high-speed data and Internet services, including digital subscriber line (DSL) services. The Company is currently operational in 17 markets and has plans to offer its "one-stop shop" approach in 24 major metropolitan areas in the U.S. by mid-year 2000. Vulcan Ventures has investments in over 100 companies supporting Paul Allen's vision of a "Wired World," which include many leaders in the Internet content and e-commerce sectors. As a result of the investment, Allegiance and Vulcan plan to explore strategic alliances to enhance Allegiance's product portfolio of Internet and e-commerce applications and provide a state-of-the-art distribution channel for Vulcan's portfolio companies.

About Vulcan Ventures
Vulcan Ventures, Inc. of Bellevue, Washington, was founded by Paul G. Allen in 1986. Through Vulcan Ventures, Allen invests in companies that offer products, services or technologies that fit his wired world strategy. William D. Savoy is president of Vulcan Ventures and represents Allen in his professional and personal financial transactions as well as managing the Vulcan analysts who investigate the secure investment opportunities. Allen remains chairman of Vulcan. Vulcan Ventures' web address is: www.paulallen.com.

About Allegiance Telecom
Based in Dallas, Texas, Allegiance Telecom is a facilities-based competitive local exchange carrier 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 currently operational in 17 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. The Company's web address is: www.allegiancetele.com. Allegiance's common stock is traded on the Nasdaq National Market under the symbol ALGX.