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Phone company to start local service in Md. Allegiance to compete with Bell Atlantic for business sector


Allegiance Telecom Inc., a Dallas telephone company, said yesterday that it has been granted permission by the Public Service Commission to provide local phone service in Maryland.

The company will offer service in Washington suburbs early next year. It plans to introduce Baltimore-area service in late 1999 at the earliest.

Allegiance President and Chief Operating Officer Dan Yost said the privately owned company will open a series of offices in Maryland.

"We certainly will be hiring sales teams as well as some operations management in the area," he said. Yost said the size of the company's Maryland investment has not been determined.

Competitive local exchange carriers (CLECs) like Allegiance have sprung up in U.S. cities to challenge regional phone companies like Bell Atlantic for a share of the $100 billion local-service market. Allegiance also plans to offer Internet and other data services with its networks.

According to New Paradigm Resources Group Inc., a Chicago telecommunications consulting firm, CLEC revenue in 1997 was $4.535 billion.

"It's a long way from being a settled, mature, locked-up market," said Dwight Allen, a telecommunications consultant with Deloitte Touche Consulting Group LLC in Washington. "There's no question that some [CLECs] will fall by the wayside. There's also a lot of consolidation going on."

Yost said Allegiance will target small- and medium-sized businesses. CLECs tend to focus on business clients, which are wealthier and in more condensed areas than residential customers.

For now, Allegiance will not be laying its wires in Maryland. Instead, the company will lease network capacity from other phone companies and use its switches to route customers' traffic.

The firm began selling local service in Dallas in January. The company has also established operations in New York and plans to be in a dozen major markets by the middle of next year.

Allegiance was founded in August 1997 by Royce Holland, the company's chairman and chief executive officer. Holland was a founder and president of MFS Communications Co., one of the most successful CLECs. MFS enjoyed fast growth and was bought by WorldCom Inc. in August 1996 for $12.4 billion.

Pub Date: 5/05/98

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