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Correction to This Article
A Feb. 1 Business graphic reversed the descriptions of the operating territories and networks of SBC Communications Inc. and AT&T Corp. SBC's business operates more than 52 million access lines serving 13 states. It also operates 5.1 million DSL high-speed Internet lines. AT&T operates in 50 countries and has 26 Internet data centers.
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End of the Line For Ma Bell

The deal must be approved by AT&T shareholders, and it must receive the blessing of federal and international regulators. Some members of Congress, including Sens. Mike DeWine (R-Ohio), chairman of the Senate Judiciary Committee's subcommittee on antitrust, competition policy and consumer rights, and ranking minority member Herb Kohl (D-Wis.), pledged to hold hearings.

Under the agreement, AT&T shareholders would receive 0.78 shares of SBC common stock for every AT&T share, or a value of $18.41 per share. At the deal's close, each AT&T shareholder would receive a $1.30-a-share dividend payment. Combining the operations should save the companies more than $15 billion, as they merge networks and personnel, the companies said. Company officials did not quantify how many of the companies' combined 210,000 employees would lose their jobs following the merger.


San Antonio-based SBC would become the nation's largest telephone company with the purchase of AT&T. (Eric Gay -- AP)

_____Background_____
AT&T-SBC Union Now Looks Possible (The Washington Post, Jan 28, 2005)
SBC 4Q Earnings Drop, Announces Job Cuts (Associated Press, Jan 26, 2005)
Tax Benefit Pumps AT&T Profit (The Washington Post, Jan 21, 2005)
AT&T Reports $7 Billion Loss (The Washington Post, Oct 22, 2004)
AT&T Plans More Cuts In Workforce (The Washington Post, Oct 8, 2004)
AT&T Retreats From Tradition (The Washington Post, Jul 23, 2004)
_____Online Resources_____
Press Release
SBC Info/Stock Quote
AT&T Info/Stock Quote
_____Graphics_____
Comparing the Companies
AT&T Through the Years

While there is no word yet on what the new entity would be called, the deal marks a coda to AT&T's illustrious history, which began 128 years ago when Alexander Graham Bell and two others formed the Bell Telephone Co.

American Telephone & Telegraph Co. became the Bell system's parent company, with a mandate to link the nation together by wire so that people on opposite sides of the United States could sit down and have a conversation.

It's difficult to overstate the impact AT&T had on the telecommunications industry, analysts said. Engineers at the company's fabled Bell Labs division pioneered advances that shaped scientific development in radar, transistors and lasers.

To most Americans, however, it was simply The Phone Company -- a behemoth with a virtual monopoly on phone service. As of 1939, it operated 98 percent of all long-distance U.S. phone lines and made 90 percent of all phone equipment.

At the time of its breakup, it was the largest corporation in the United States, with about 1 million employees, and one of the world's best known-brands. The company's motto was "universal service," and it saw itself not just as a profit-seeking corporation but as an organization that fulfilled a vital public service -- bringing phone service to nearly every corner of the nation.

"They pretty much wired the whole country," said Annabel Dodd, author of "The Essential Guide to Telecommunications" and an industry analyst. "AT&T really set the standard worldwide."

But with the growth of new technologies for making calls, the company's lock on phone service couldn't last. When it fell behind in service requests in the 1960s and early 1970s, it became the butt of jokes by comedian Lily Tomlin on "Rowan & Martin's Laugh-In." It also emerged as a target for upstart phone companies like MCI, which complained to the government that Ma Bell was crushing would-be service providers. Attorneys at the Justice Department agreed and brought an antitrust case against the Bell System. With AT&T facing near certain defeat in court, it agreed to cleave off its monopoly elements -- the Bell operating companies -- and focus on the competitive long-distance business.

Edward M. Block, who spent 36 years in the Bell system and was a senior vice president at the time of his retirement in 1986, said AT&T executives never truly reckoned with how the loss of local service would affect the company's business.

"Nobody said, 'The glue that holds this together is gone, and we've got to figure out what to do,' " Block said.

Block approves of the AT&T-SBC merger in principle, but he thinks AT&T's fate could have been avoided had the company's leadership responded more nimbly to life in an ultra-competitive industry. "I'll go to my grave saying I don't think it had to happen this way," he said.

Still, Noam, the Columbia University institute director, maintained that the AT&T brand carries enormous value and that SBC would be foolish not to use it in some way.

If it does, AT&T will survive -- sort of.

"It will live on as part of its children," Noam said, "which, after all, happens to all moms, eventually."

Staff researcher Richard Drezen contributed to this report.


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