Provides Communications Alternative for Small and Medium-Sized Businesses

CLEVELAND, May 25, 2000 - Small and medium-sized businesses, often neglected by the major telecommunications providers, have a new voice in Cleveland. With initiation of Allegiance Telecom, Inc. (Nasdaq: ALGX) service in Cleveland, local businesses can enjoy levels of service previously only available to large corporations. Allegiance is targeting small and medium-sized businesses in the Cleveland area, providing economical local, long distance, international calling, high-speed data transmission and Internet services.

Allegiance is a facilities-based competitive local exchange carrier (CLEC), offering businesses a complete package of telecommunications services. The company is targeting 36 major metropolitan areas in the United States with its "one-stop shopping" approach. Allegiance Telecom is currently operational in 21 other markets, including Atlanta, Baltimore, Boston, Chicago, Dallas, Denver, Detroit, Fort Worth, Houston, Long Island, Los Angeles, New York, Northern New Jersey, Oakland, Orange County, Philadelphia, St. Louis, San Diego, San Francisco, San Jose and Washington D.C.

"Telecommunications services, from basic local dial tone to high speed Internet access and e-commerce applications, are vitally important to business owners in Cleveland," said Tony Parella, Allegiance Telecom senior vice president of sales and customer care. "Allegiance brings competition to the local marketplace, providing an economical single source for these business telecommunication requirements, all consolidated on one bill."

Parella noted the new Allegiance Telecom office will be headed by Cleveland area native Mike Csanad, a veteran Allegiance salesperson who has been promoted to city vice president.

Allegiance Telecom«s new local sales office is located at 6155 Rockside Road in Independence, Ohio, and can be reached via telephone, 216/503-2000.

Allegiance Telecom has electronically bonded operations support systems (OSS), reducing the time required to process customer orders for local service requests. This bonding between Allegiance and Ameritech systems makes it easier for Cleveland area businesses to switch from one local service provider to another. Electronic bonding enables Allegiance«s back office computers to communicate with Ameritech«s in real-time, providing for rapid implementation of local service requests, service changes and other data.

"The lack of electronic bonding between other facilities-based local carriers and the incumbents has been widely recognized as the principal bottleneck in realizing the competitive local service marketplace envisioned by the Telecommunications Act of 1996," said Parella. "Our direct interface with Ameritech systems is another major step toward reaching our goal of achieving electronic bonding with all incumbent local phone providers."

Currently, many competitive local exchange carriers (CLECs) have unique electronic systems that may not adhere to various industry standards. Therefore, many CLECs depend upon faxing customer orders to the incumbent local telephone company, which then must manually input this information into their systems for processing. Allegiance, however, developed its electronic interfaces to conform with Ameritech standards.

By adopting this process, Allegiance is able to receive from Ameritech a "firm order commitment" - confirmation that an order has been received - much more rapidly. Using electronic interfaces, this confirmation is typically sent within six hours, and on many occasions, it is sent almost instantaneously. Using the manual system, it took approximately 5 to 7 days on average to complete this step. This process reduces the sales cycle from selling new customer service to actually installing and billing by the company to 15 days or less.

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.