AT&T Inc. is a holding company incorporated under the laws of the State of
Delaware in 1983 and has its principal executive offices at 175 E. Houston, San'
Antonio, Texas 78205-2233 (telephone number 210-821-4105).
History
AT&T, formerly known as SBC Communications Inc. (SBC), was formed as one
of several regional holding companies created to hold AT&T Corp.'s (ATTC)
local telephone companies. On January 1, 1984, we were spun-off from ATTC pursuant
to an anti-trust consent decree, becoming an independent publicly traded telecommunications
services provider. At formation, we primarily operated in five southwestern
states. Our subsidiaries merged with Pacific Telesis Group in 1997, Southern
New England Telecommunications Corporation in 1998 and Ameritech Corporation
in 1999, thereby expanding our wireline operations as the incumbent local exchange
carrier (ILEC) into a total of 13 states. On November 18, 2005, one of our subsidiaries
merged with ATTC, creating one of the world's largest telecommunications providers.
In connection with the merger, we changed the name of our company from 'SBC
Communications Inc.' to 'AT&T Inc.' Our services and products are marketed
under the AT&T and during a transition period our former name SBC, brand
names as well as several other brands including Cingular Wireless (Cingular),
through our joint venture with BellSouth Corporation (BellSouth); AT&T Yahoo!
through our alliance with Yahoo! Inc.; and prior to the amendment discussed
below, AT&T'|'DISH Network through our agreement with EchoStar Communications
Corp. (EchoStar).
Scope
We rank among the largest providers of telecommunications services in the United
States and the world. Through our subsidiaries and affiliates, we provide communications
services and products in the U.S. and in 240 countries. We offer our services
and products to consumers in the U.S. and services and products to businesses
and other providers of telecommunications services worldwide.
The services and products that we offer vary by market, and include: local
exchange services, wireless communications, long-distance services, data/broadband
and internet services, telecommunications equipment, managed networking, and
wholesale transport services and directory advertising and publishing. In 2004,
we began offering satellite television services through our agreement with EchoStar,
which was subsequently amended in September 2005, to an agency agreement under
which we will continue marketing the co-branded AT&T | DISH Network satellite
television service but will receive only commission revenues when signing up
future customers. We group our operating subsidiaries as follows, corresponding
to our operating segments for financial reporting purposes:
AT&T wireline subsidiaries (i.e., SBC's traditional wireline subsidiaries)
provide primarily landline telecommunications services in thirteen states,
AT&T Corp. subsidiaries provide landline telecommunications services to
large business and governmental customers, and to a lesser degree to small-
and mid-sized businesses and residential consumers,
Cingular provides both wireless voice and data communications services across
the U.S. and is held by a wireless subsidiary of AT&T,
directory subsidiaries provide services related to directory advertising and
publishing,
international subsidiaries, other than those acquired in our acquisition of
ATTC, hold investments with primarily international operations, and
other subsidiaries provide primarily corporate operations and also our paging
services, which was sold in November 2005.
We provide telecommunications services throughout the U.S. and internationally.
Our traditional wireline subsidiaries operate in thirteen states: Arkansas,
California, Connecticut, Illinois, Indiana, Kansas, Michigan, Missouri, Nevada,
Ohio, Oklahoma, Texas and Wisconsin (13-state area). Wireline local exchange
services offered in our 13-state area are provided through regulated subsidiaries
which operate within authorized regions subject to regulation by each state
in which they operate and by the Federal Communications Commission (FCC). Subsidiaries
of our AT&T Corp. segment provide services both domestically and internationally
with domestic services subject to regulation by various states and the FCC.
Additional information relating to regulation is contained under the heading
'Government Regulation' below and in the 2005 AT&T Annual Report to Stockholders
under the heading 'Operating Environment and Trends of the Business,' and is
incorporated herein by reference pursuant to General Instruction G(2).
Our acquisition of ATTC will help change the focus of our company towards business
and broadband/data revenues. Cingular's late 2004 acquisition of AT&T Wireless
Services Inc. (AT&T Wireless) also increased our potential for growth in
the wireless area. Discussed below are the factors upon which we are focusing
in 2006.
Business Markets
With the acquisition of ATTC, we expect to strengthen the reach and sophistication
of our network facilities and our ability to offer a variety of global communications
services to large businesses worldwide. We expect significant opportunity in
the small and medium business markets and to increase our governmental and large-business
(referred to as 'enterprise') customer base. We also expect to extend our wholesale
business to other service products and systems integrations.
Data/Broadband
Project Lightspeed In June 2004, we announced key advances in developing a
network capable of delivering a new generation of integrated digital television,
super-high-speed broadband and Voice over Internet Protocol (VoIP) services
to our residential and small business customers, referred to as Project Lightspeed.
We have been building out this network in numerous locations and began providing
services in one limited market, including Internet Protocol (IP) video, in late
2005. Our goal in this controlled initial launch is to ensure all operating
and back-office systems function at a level capable of supporting our targeted
mid-2006 scaled-up deployment. To that end, we have restricted the number of
customers and services offered to the necessary minimum. Subject to successful
results from this controlled launch and successful testing of our additional
IP video services, we plan to enter additional markets in mid-2006. At that
time we expect to add additional services and features to our service offerings.
We expect to have the capability to offer service to approximately 18 million
households by the end of 2008, as part of our initial deployment, and expect
to spend approximately $4.4 billion in network related deployment costs and
capital expenditures beginning in 2006 through 2008 as well as additional success-based
customer activation capital expenditures.
With respect to our IP video service (marketed under AT&T U-verse TV) we
continue to work with our vendors to develop, in a timely manner, the requisite
hardware and software technology. Our deployment plans could be delayed if we
do not receive the required equipment and software on schedule. We also continue
to negotiate with programming owners (e.g., movie studios and cable networks)
for permission to offer existing television programs and movies and, if applicable,
other new interactive services we could offer in the future using advances in
the IP technology we are testing. Our ability to provide an attractive and profitable
video offering will depend in large part on the results of these efforts. We
are supporting legislation at both the federal and state levels that would streamline
the regulatory process for new video competitors to enter the market. If the
legislation or regulatory outcomes are not as we expect, it could have a material
adverse effect on the cost, timing and extent of our deployment plans. Additional
information about Project Lightspeed is included in our 'Operating Environment
and Trends of the Business' section under the heading 'Expected Growth Areas'
on page 34 of the 2005 AT&T Annual Report to Stockholders and is incorporated
herein by reference pursuant to General Instruction G(2).
Voice over Internet Protocol VoIP is generally used to describe the transmission
of voice using internet-protocol-based technology rather than a traditional
wire and switch-based telephone network. A company using this technology often
can provide voice services at a lower cost because this technology uses bandwidth
more efficiently than a traditional network and because this technology has
not been subject to traditional telephone industry regulation. But, depending
on the bandwidth allocated, VoIP services may not necessarily be of the same
quality as traditional telephone service. In early 2004, the FCC opened a proceeding
to establish the regulatory framework for IP-enabled services, including VoIP.
In this ongoing proceeding, the FCC will address various regulatory issues,
including universal service, intercarrier compensation, numbering, disability
access, consumer protection and customer access to 911 emergency services.
Notwithstanding the unresolved regulatory questions before the FCC and various
state public utility commissions, numerous communications providers have begun
providing various forms of VoIP or announced their intentions to do so in the
near future. These providers include both established companies as well as new
entrants. Thus, while the deployment of VoIP will result in increased competition
for our voice services, it also presents growth opportunities for us to develop
new products for our customers. Additional information relating to VoIP is contained
in the 2005 AT&T Annual Report to Stockholders in our 'Regulatory Developments'
section under the heading 'Voice over Internet Protocol,' and is incorporated
herein by reference pursuant to General Instruction G(2).
Wireless
Cingular, our wireless joint venture with BellSouth, began operations in October
2000 and in October 2004 acquired AT&T Wireless. As of December 31, 2005,
Cingular served approximately 54.1 million customers and is the largest provider
of mobile wireless voice and data communications services in the U.S. Additional
information on the merger and our funding sources is contained in the 2005 AT&T
Annual Report to Stockholders in Note 16 and is incorporated herein by reference
pursuant to General Instruction G(2).
As part of the merger of Cingular and AT&T Wireless, ATTC retained the
right to offer products under the AT&T Wireless brand. In November 2005,
following our merger with ATTC, we announced that where the joint venture agreement
allows, we intend to sell Cingular services using the AT&T Wireless brand.
Revenues from AT&T Wireless customers are recorded by Cingular and are recognized
as equity in net income in our Consolidated Statements of Income and are recorded
in our Cingular segment for segment reporting.
Cingular's wireless networks use equipment with digital transmission technologies
known as Global System for Mobile Communication (GSM) technology and Time Division
Multiple Access (TDMA) technology. Cingular has upgraded its existing TDMA markets
to use GSM technology in order to provide a common voice standard. Cingular
is also upgrading its network wireless data technology by adding General Packet
Radio Services (GPRS) and Enhanced Data Rates for GSM Evolution (EDGE), which
allows customers to access the Internet from their wireless devices at higher
speeds than GPRS. Cingular will continue to deploy Universal Mobile Telecommunications
System (UMTS) third generation (3G) network technology with High-Speed Downlink
Packet Access (HSDPA) concurrent with its network integration. UMTS and HSDPA
provide superior speeds for data and video services, as well as operating efficiencies
using the same spectrum and infrastructure for voice and data on an IP-based
platform.