Competitive Provider for Businesses Serves 29 U.S. Markets

FT. LAUDERDALE, March 29, 2001 - Telephone lines are the lifeblood of small and medium-sized businesses and the cost of telecommunications services are a major recurring expense for these companies. With the arrival of Allegiance Telecom, Inc. in Fort Lauderdale, Fla., business owners now have an economical alternative to the incumbent provider for all telecom-related services. Allegiance is targeting small and medium-sized businesses in the Ft. Lauderdale area, providing local, long distance, international calling, high-speed data transmission and Internet service packages.

With the activation of lines in Ft. Lauderdale, Allegiance Telecom secures its third market in the Sunshine State (it already serves customers in Miami and Tampa) and 29^th market nationwide.

The addition of seven more U.S. markets in 2001 will complete Allegiance's fully funded 36-market business plan, addressing 57 percent of the total U.S. non-residential communications lines. As of the end of 2000, Allegiance Telecom has installed more than 600,000 lines for business customers nationwide.

"Business owners in Ft. Lauderdale rely on services like basic local dial tone, high-speed Internet access and e-commerce applications to build and grow a successful business," said Joseph D'Amico, Allegiance Telecom national vice president of sales. "Allegiance Telecom is an excellent alternative to incumbent telecom providers because we offer a single source for business telecom services with considerable savings over current bills. With dedicated direct sales and customer care teams supported by superior back office systems, Allegiance brings value to small and medium-sized enterprises previously only offered to large business organizations."

Allegiance Telecom's local sales office is located at 2101 West Commercial Blvd. in Ft. Lauderdale and can be reached via telephone at 954/535-5380. Scott Belazi serves as the Allegiance Telecom city vice president for Ft. Lauderdale.

Allegiance has electronically bonded its operations support systems (OSS) with BellSouth, reducing the time required to process customer orders for local telephone service requests. The bonding between these systems makes it easier for Ft. Lauderdale area businesses to switch from one local service provider to another; there’s no need to change phone numbers. Electronic bonding enables computers at different phone companies to communicate with each other in real-time, providing for rapid sharing of customer information, service requests and other data.

Allegiance Telecom is a facilities-based integrated communications provider (ICP), offering businesses a complete package of telecommunications services consolidated on a single bill. The company is targeting 36 major metropolitan areas in the U.S. with its single source approach for businesses. Allegiance Telecom is currently operational in 29 U.S. markets including: Atlanta, Baltimore, Boston, Chicago, Cleveland, Dallas, Denver, Detroit, Fort Lauderdale, Fort Worth, Houston, Long Island, Los Angeles, Miami, Minneapolis/St. Paul, New York, Northern New Jersey, Oakland, Orange County, Philadelphia, Phoenix, St. Louis, San Antonio, San Diego, San Francisco, San Jose, Seattle, Tampa and Washington D.C.

Allegiance Telecom was founded by Royce J. Holland and Thomas M. Lord in 1997. Previously, Holland was president and one of several co-founders of MFS Communications Company, Inc.; Lord was a managing director at Bear, Stearns & Co. overseeing transactions in the telecommunications, information services and technology industries. 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 about $1 billion and a market value of approximately $13 billion when the merger between MFS and WorldCom was completed on December 31, 1996.

Allegiance Telecom is a facilities-based ICP with headquarters in Dallas, Texas. Allegiance's common stock is traded on the Nasdaq National Market under the symbol ALGX.

Certain statements in this press release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, and the Company intends that such forward-looking statements be subject to the safe harbors created thereby. The words "believes," "expects," "estimates," "anticipates," "plans," "will be" and "forecasts" and similar words or expressions identify forward-looking statements made by or on behalf of the Company. These forward-looking statements were derived using numerous assumptions and are subject to many uncertainties and factors which may cause the actual results of the Company to be materially different from those stated in such forward-looking statements. Examples of such uncertainties and factors include, but are not limited to, the Company's ability to timely and effectively provision new customers; technological, regulatory or other developments in the industry; and the ability to develop and maintain efficient billing, customer service and information systems. Additional factors are set forth in the Company's SEC reports, including but not limited to the Quarterly Report on Form 10-Q for the quarter ended September 30, 2000. The Company does not undertake any obligation to update or revise any forward-looking statement made by it or on its behalf, whether as a result of new information, future events or otherwise.