New National Plan for Multi-Location Companies Offers Volume and Term Pricing, No Long Distance Charges Between Branch Offices

DALLAS, September 4, 2002 -- Allegiance Telecom, Inc. (Nasdaq: ALGX), a leading integrated communications provider, today announced its Independence Plan, a new service plan providing a unified solution, significant savings and superior service to small- and medium-sized enterprise (SME) customers.

"With facilities in 36 markets across the nation, Allegiance is positioned to address more than half the business lines in the United States," chairman and chief executive officer Royce J. Holland noted. "With one of the largest network footprints serving medium and small business today, Independence Plan reinforces our standing as the leading nationwide competitor to the regionally-focused Bells."

Allegiance Telecom's Independence Plan enables its multi-location, business customers to place telephone calls to branch offices in 36 cities across the nation with no long distance charges between locations. Additionally, Independence Plan customers have one contact for all billing and customer care inquiries, and can consolidate all branch office telecom bills to one, easy-to-read invoice from Allegiance.

Independence Plan allows customization of Allegiance's voice and enterprise data solutions to fit the needs of each branch office. Each branch office then contributes to a customer's aggregate purchases, which drives discounts that are applied nationally. Independence Plan customers will, in turn, realize greater value alongside operating efficiencies.

"Our recent acquisition of Shared Technologies and its base of large, multi-location customers will fuel Independence Plan sales," said Donovan Dillon, vice president for strategic marketing at Allegiance.

With Independence Plan, multi-location customers choose Allegiance as a single source for both local and long distance services. In return, these customers receive a single invoice solution for multiple products across multiple locations, no long distance charges between branch offices, plus Allegiance's competitive rates for calls to all other locations.

"Imagine the savings when a call from your New York City office to your Los Angeles headquarters costs no more than a call across town," explained Dillon. "The regionally-focused Bells cannot make this kind of national offer, because their service offerings are confined to their traditional local monopoly markets."

This unique offer is enabled by Allegiance's facilities-based voice and enterprise data infrastructure, flexible and robust billing platform, plus one of the most powerful and complete back-office systems in telecommunications today.

Rollout of the Independence Plan to all Allegiance markets will be completed in the fourth quarter of 2002. The Plan is already being sold to businesses in Texas, New York, California, Missouri, Georgia and Florida.

Allegiance Telecom is a facilities-based integrated communications provider headquartered in Dallas, Texas. As the leader in competitive local service for medium and small businesses, Allegiance offers "One source for business telecom^™"- a complete telecommunications package, including local, long distance, international calling, high-speed data transmission and Internet services and a full suite of customer premise communications equipment and service offerings. Allegiance serves 36 major metropolitan areas in the U.S. with its single source approach. 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 that 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; the Company's ability to retain existing customers; the Company's ability to obtain additional financing should it be necessary to do so; the Company's ability to develop and maintain efficient billing, customer service and information systems; and technological, regulatory or other developments in the industry and general economy that might adversely affect the Company. 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 June 30, 2002. 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.