Move to Accelerate Allegiance's Data, DSL and Internet Service Offerings

DALLAS, TEXAS, July 25 -- Allegiance Telecom, Inc. (Nasdaq: ALGX) today announced that it has acquired InterAccess, an Internet Service Provider (ISP) based in Chicago, Ill. Terms of the deal were not disclosed.

Founded in 1993, at the very start of the Internet age, InterAccess is one of the largest independent regional ISPs in the United States with more than 17,000 customers and over 80 employees. InterAccess pioneered the offering of digital subscriber lines (DSL) commercially and now offers Internet, DSL and web hosting solutions throughout the Chicago metropolitan area. Operations include 24-hour technical support, a 24-hour network operation center, multi-backbone connectivity, and complete local dial-up locations.

Headquartered in Dallas, Texas, Allegiance Telecom is a facilities-based competitive local exchange carrier (CLEC) offering businesses a complete package of telecommunications services, including local, long distance, international calling, high-speed data transmission and Internet services. The Company is targeting 36 major metropolitan areas in the U.S. with its "one-stop shopping" approach. Allegiance is operational in 24 markets, including Atlanta, Baltimore, Boston, Chicago, Cleveland, Dallas, Denver, Detroit, Fort Worth, Houston, Long Island, Los Angeles, Miami, New York, Northern New Jersey, Oakland, Orange County, Philadelphia, St. Louis, San Diego, San Francisco, San Jose, Seattle and Washington D.C.

"The vast potential of the Internet has already had a profound impact on our customers, an effect that will only increase as e-commerce proliferates," said Royce Holland, chairman and CEO of Allegiance Telecom, Inc. "InterAccess brings an extremely attractive customer base to Allegiance, serving small and medium-sized businesses over dedicated connections. InterAccess is also using DSL to deliver Internet services, complementing Allegiance's own DSL products. Combining InterAccess' service offerings, experience and strategy with ours will better position Allegiance Telecom to achieve our plan of offering a 'one-stop shop' to small and medium-sized businesses," he said.

"InterAccess has found it to be in the best interests of our customers, employees, and shareholders to join with an industry leader such as Allegiance Telecom," said Tom Simonds, president of InterAccess. "The need for us to expand our facilities and geographical coverage lead us to partnering with a company that brings substantial assets to the table. With expertise in both the voice and data side of the business and a robust entrepreneurial tradition, we will be a service leader in this exciting market space."

Based in Dallas, Texas, Allegiance's web address is: www.allegiancetele.com. The Company's common stock is traded on the Nasdaq National Market under the symbol ALGX.