A Brief History: The New AT&T

On September 20, 1995, AT&T announced that it was restructuring into three separate publicly traded companies: a systems and equipment company (which became Lucent Technologies,) a computer company (NCR) and a communications services company (which would remain AT&T.) It was the largest voluntary break-up in the history of American business. Lucent became independent on September 30, 1996. NCR followed on January 1, 1997. Employees generally followed their work. While the Bell Laboratories name went to Lucent Technologies, those researchers who supported the communications services business stayed with AT&T as the staff of the new AT&T Labs.

The new AT&T began evolving from a long distance company to an integrated voice and data communications company, as an ever increasing percentage of the traffic on its network was data, and to a lesser extent video, rather than voice. AT&T worked to reenter the local telephone service business, as envisioned by the Telecommunications Act of 1996. AT&T realized that as a result of this new law, the stand-alone long distance business was likely to decline. The company successfully launched an Internet service, AT&T WorldNet® Service , while selling operations, such as AT&T Submarine Systems and Skynet Satellite Services, that no longer were a strategic fit.

Over the next four years, AT&T took many actions to succeed in the changing environment. The company invested over $35 billion in acquisitions and upgrades to its infrastructure both to manage ever-increasing volumes of internet protocol and other data traffic, and to establish direct local connections to business customers. AT&T acquired a leading provider of local telephone service to business customers (TCG.) It acquired a leading provider of global data networking services (IBM Global Network.) It merged with two large cable companies, (TCI and MediaOne.) Operating as AT&T Broadband, the unit became the largest cable company in the United States.

By mid-2000, AT&T had three rapidly evolving networks- data, broadband, and wireless, and four separate businesses-cable, wireless, business, and consumer. And in 2000, the volume of data traffic for the first time exceeded the volume of voice traffic on the AT&T network.

In October 2000, AT&T announced that it would restructure over the next two years into a family of separate publicly held companies: AT&T Wireless, AT&T Broadband, and AT&T. In this way, each business could best obtain the capital structure needed to fund its growth. AT&T Wireless became an independent company on July 9, 2001. On December 9, 2001, AT&T and the cable-operator Comcast reached a definitive agreement to merge AT&T Broadband with Comcast. The businesses completed their merger on November 18, 2002, and began combined operations as the Comcast Corporation.

With the completion of the restructuring, David W. Dorman succeeded C. Michael Armstrong as Chairman and Chief Executive Officer of AT&T in November 2002.

As Dorman assumed leadership of AT&T, the global telecommunications industry entered an era of unprecedented chaos and instability – marked by oversupply, fraud, a complicated regulatory environment and nonstop pricing pressures. Combined, these forces led to an industry meltdown in which numerous bankruptcies, defaults and business failures occurred; investors lost billions and countless workers in the communications sector lost their jobs.

To address the dynamic environment, Dorman led an aggressive strategic transformation to fundamentally reshape AT&T – to evolve from a consumer-oriented voice company to an enterprise-focused networking company. The redesigned AT&T became a global IP networking provider dedicated to delivering powerful networks, applications and capabilities to business and government customers. Concurrently, AT&T introduced a breakthrough alternative to traditional services – VoIP, or Voice over Internet Protocol – for consumers and small businesses.

In January 2005, the most profound aspect of AT&T's ongoing transformation was announced: the pending $16 billion merger with SBC Communications to create the industry’s premier communications and networking company. Through this deal, the people of AT&T have the opportunity to build the defining entity in global communications for the 21st century – a company capable of delivering advanced networking technologies and a full suite of integrated communications services throughout America and around the world.

March 2005