DALLAS, Feb. 4, 2002 -- Allegiance Telecom, Inc. (Nasdaq: ALGX), a leading facilities-based integrated communications provider, today announced an IP Aggregation service that allows service providers, enterprise networks and other large customers to expand in existing markets and move into new markets with minimal capital cost.

Whether you are a service provider or enterprise network manager, you can aggregate IP traffic at a single point of access into the network and distribute in any of Allegiance Telecom's 36 U.S. markets. This makes IP Aggregation particularly attractive to local and regional service providers looking to expand their market reach. While some service providers have done similar deals with fledgling DSL companies, the Allegiance Telecom T1 based services are based on tried and true technologies, and have enhanced reliability and performance backed up by service level agreements.

Historically, network planners desiring to expand their market reach would build a point of presence (POP) in each market in order to sell services. Local loops were purchased from the incumbent carrier while leasing long haul network services and Internet transit from one of the major carriers. With Allegiance Telecom's IP Aggregation service, service providers can minimize the up front capital and network expense that is typically needed before ever acquiring initial customers.

"Our IP Aggregation product offers any IP centric service provider or enterprise network operator a secure and scalable, low cost solution to get IP access in any of Allegiance's markets," said Chris Malinowski, senior vice president of strategic sales for Allegiance Telecom. "This is a virtual private network with predictable costs that minimizes up front capital expenditure."

The incumbent local exchange carriers typically charge for T1 local loop services based on the distance from the end user to the service provider's POP, making it difficult to predict costs. Allegiance pricing for this service is a flat rate in each market, enabling the network manager to have fixed price services which include both the local loop and IP access. Pricing may be discounted based on term and volume commitments and whether or not the customer has interconnected with Allegiance in that specific market or not.

Allegiance Telecom recently completed the construction of its 36-city network with nearly 800 central office collocations.

Earlier this year, Allegiance Telecom announced its purchase of substantially all of the assets of Intermedia Business Internet [the former Digex.net] from WorldCom, Inc. This acquisition, along with recent enhancements, allows Allegiance Telecom to benefit from a scale, state-of-the-art Tier 1 Internet backbone. The IP Aggregation service is one of several upcoming products that Allegiance will be launching that take advantage of this next generation IP backbone.

Allegiance Telecom is a facilities-based integrated communications provider (ICP), offering businesses a complete package of telecommunications services consolidated on a single bill. Allegiance Telecom is now fully operational in 36 U.S. markets including: Atlanta, Austin, 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, Ontario/Riverside CA, Orange County, Philadelphia, Phoenix, Pittsburgh, Portland, Sacramento, St. Louis, San Antonio, San Diego, San Francisco, San Jose, Seattle, Tampa, Washington D.C., West Palm Beach/Boca Raton FL and White Plains, NY. Allegiance Telecom's Web address is www.algx.com. 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 period ended September 30, 2001. 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.