Proposed Rules Would Prevent Backsliding Once RBOCs Are Approved for Long Distance

DALLAS, TEXAS, February 2, 1999 -- Allegiance Telecom, Inc. (Nasdaq: ALGX) announced today that it petitioned the Federal Communications Commission (FCC) to enact new regulations that would be used to prevent Regional Bell Operating Companies (RBOCs) from backsliding into anti-competitive practices once they have gained the right to offer in-region long distance service.

"Allegiance filed this petition since some of the Bells are currently seeking approval for long distance authority, with a reasonable likelihood that they will be successful in one or more states in 1999," said Royce Holland, chairman and chief executive officer of Allegiance Telecom. "Once that takes place, steps must be taken to ensure continued compliance with the Telecommunications Act's 14 Point Competitive Checklist."

Under the Act, the RBOCs are obligated to provide competitive local exchange carriers (CLECs) with, among other things, interconnection, including collocation, non-discriminatory access to operations support systems and rights-of-way and unbundled network elements (UNEs). The RBOCs are required to provide those UNEs at parity with the retail services that they provide to their customers. This parity obligation extends not only to provisioning and installation intervals, but to the level of quality itself. Congress imposed such obligations on the RBOCs and charged the regulators with enforcement.

Allegiance's petition will "put some teeth" into the enforcement of the Competitive Checklist. It urges the FCC to: 1) develop and enact a national framework that would deter and detect backsliding; 2) develop and implement RBOC "performance criteria" so that all parties can measure whether they are providing adequate service to CLECs; and 3) implement a three-tiered penalty approach-first phase begins with reductions to UNE prices; second phase suspends the backsliding RBOC's authority to continue selling in-region long distance service to new customers; and the third phase involves substantial monetary fines.

These important aspects of Allegiance's petition would apply in all states in which similar protections are not put in place by the state regulators. They would not apply in states that already have such protections. For example, it would not apply in New York and Texas, since their rules were used as the model for Allegiance's proposal.

In addition, the filing requests that the FCC create a federal complaint mechanism to ensure that a BOC's backsliding is formally and expeditiously addressed and enforcement measures to ensure that, once detected, backsliding is quickly remedied.

"To realize a fully competitive local market, customers must be able to change local carriers as rapidly and seamlessly as they change their long distance carriers - and as easily as they can obtain new local phone service from the Bells," said Holland. "This means approximately five business days from request for service until installation -- not a month to six weeks. State Commissions in New York and Texas are striving to achieve this goal in the Section 271 process and beyond."

"It is essential that everyone in the process -- the RBOCs, the CLECs and the regulators -- understand exactly what their statutory rights and obligations are and what the provisions in the Act actually mandate in the real world," added Holland. "If we address the backsliding issue now with new regulations that set unambiguous standards, we can avoid the potential for significant backsliding by the RBOCs, thus protecting the important progress we have made in creating a growing competitive marketplace that Congress envisioned."

Allegiance Telecom, a facilities-based CLEC, offers businesses a complete package of telecommunications services, including local, long distance, international calling, high-speed data transmission and Internet services. Based in Dallas, Allegiance is targeting 24 metropolitan areas in the U.S. with its "one-stop shopping" approach. The Company is currently operational in Atlanta, Boston, Chicago, Dallas, Fort Worth, Los Angeles, New York, Oakland, Philadelphia and San Francisco. Allegiance's web address is http://www.allegiancetele.com/.

-30-