End of the Line For Ma Bell

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

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.

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.