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                                                          Exhibit (10)(iii)(A)10

                                 August 8, 1995

Mr. Donald K. Peterson
11 Breckenridge
Nashville, TN 37215

Dear Don,

This offer letter completely replaces my offers of employment dated July 28 and
August 2, 1995 and supersedes all other oral and written communications on this
subject.

It gives me great pleasure to offer you a Senior Management position within AT&T
(the Company). In addition to confirming my offer, this letter will detail the
terms and conditions of your employment and outline the current major features
of AT&T's compensation and benefit plans and practices.

      Assumption of Duties: Effective on or about September 1, 1995, you will
      assume the position of CFO within the Communications Services with a dual
      reporting relationship to Alex Mandl, Executive Vice President AT&T and
      CEO Communications Services Group and to Rick Miller, Executive Vice
      President AT&T and Chief Financial Officer.

      Base Salary: Your initial base salary will be $325,000 per year. This rate
      will increase annually to reflect individual performance and base salary
      structure changes applicable to similarly situated Senior Managers. Your
      first review for your base salary level will be effective January 1996.

      Annual Incentive: The annual incentives for Senior Managers currently take
      the form of (1) AT&T Performance Award (APA), (2) Merit Award (MA), and
      (3) Unit Performance Award (UPA).

      (1)   AT&T Performance Award (APA) is predicated on corporate performance.

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      (2)   Merit Award (MA) is driven by individual and team contributions.

      (3)   Unit Performance Award (UPA) is predicated on your organization
            meeting its financial targets.

Except as reflected below in the "Guaranteed 1995 Annual Incentive" provision,
the Company cannot make any definitive representations regarding the
continuation of the APA/MA/UPA format or the size of individual awards under
these plans. The following information, however, will provide a frame of
reference regarding the potential size of your annual incentive. Based on your
initial base salary, your 1995 target (not actual) APA/MA is $113,000 and your
target (not actual) UPA is $61,000. These awards are payable in the first
quarter of 1996 and will be prorated to reflect partial 1995 service.

Guaranteed 1995 Annual Incentive Amount: In the event that your earned prorated
1995 APA/MA/UPA (see above provision) is less than $58,000 (assuming a September
1, 1995 start date), you will be provided a lump sum that, when combined with
your actual earned APA/MA/UPA, will total $58,000. In the event that your earned
prorated 1995 APA/MA/UPA is higher than $58,000, you would receive that higher
amount and no lump sum would be payable under this Guaranteed 1995 Annual
Incentive Amount provision.

It is understood that this minimum guaranteed incentive award for performance
year 1995 shall not in any way be construed as a precedent for future
performance years.

AT&T Long Term Incentives:

--AT&T Performance Shares: Effective on your date of hire, you will receive
2,366 AT&T Performance Shares covering the 1995-97 performance period (payout,
if any, is in the first quarter of 1998). This is the 1995 standard grant for
your Senior Management position. Historically, such awards have been made
annually. Performance shares, which are equivalent in value to AT&T common
shares, are awarded based on position rate at the beginning of a three-year
performance period. Payout of from 0% to 150% of such Performance Shares is made
in the form of cash and/or AT&T shares at the end of the performance period
based on the Company's return to equity performance as approved annually by the
Board of Directors. Dividend equivalents are paid quarterly on all undistributed
Performance Shares.

--AT&T Stock Options: Effective on the date of your hire, you will be awarded
8,256 AT&T Stock Options. This is the 1995 standard grant for your Senior
Management position. Historically, standard stock option grants have been made
in January of each year to Senior Managers. Currently, the term of the stock
option grant is ten years. Assuming continued Company employment, 

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stock options vest as follows: one-third of the options will vest on the first
anniversary of the date of grant, one-third on the second anniversary, and
one-third on the third anniversary of the date of grant. The option price is
100% of market price on date of grant, e.g., your date of hire for the 1995
award. As with the Annual Incentive Awards, Long Term Incentives are closely
liked with the Company's strategy to meet the challenges of an ever changing
marketplace. Accordingly, other than the initial grant, the Company cannot
guarantee continuation of the Long Term Incentive Plan in its current format,
nor can it guarantee annual grant levels to individual participants.

Hiring Bonus: In order to address certain forfeitures, (e.g., Stock Options)
prompted by leaving your current employer and to incent you to join AT&T, the
Company will provide you with the following:

(I)   You will be granted the following "Seasoned" AT&T Performance Shares under
      the Company's Long Term Incentive Program:

      --    2,366 AT&T Performance Shares (1993-95 Performance Period, payable
            in 1996)

      --    2,366 AT&T Performance Shares (1994-96 Performance Period, payable
            in 1997)

      Dividend equivalent payments will be made on the above Performance Share
      awards.

(II)  You will be provided a one-time cash hiring bonus of $111,000 payable
      within 30 days of your date of hire.

(III) You will receive a one-time "extra" (over and above the standard annual
      award) grant of 24,100 AT&T Stock Options. These "extra" Stock Options
      will cliff vest at the end of three years of employment with the Company.

(IV)  In the event you forfeit your 1995 annual bonus (payable in 1996) from
      your current employer, you will receive a one-time cash payment related to
      the amount forfeited, (where the amount forfeited is based on the actual
      months of employment at this employer during 1995). Based on an August 31,
      1995 termination from your current employer, and an above target payout of
      $166,000, this cash payment would be $111,000. Such amount will be payable
      within 30 days of your date of hire.

(V)   The Company will provide you a housing loan up to $250,000 on terms which
      are generally comparable to those provided by your current employer.

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(VI)  In the event you are prevented from exercising your vested stock options
      (or are required to repay to your current employer the bargain spread on
      such options), the Company will reimburse you up to $89,000 for such
      forfeiture.

Severance Benefit: In the event of any Company initiated termination other than
for disability or for "cause" (as defined below), within 36 months from the
effective date of your employment you will be entitled to a payment equal to the
higher of (1) $650,000 or (2) 200% of your annual base salary in effect on the
date of such termination, such payment to be made in the month following the
month of termination.

Such payment as described above in this Severance Benefit provision as well as
any "DCA" benefits payable to you under the "Special Deferred Compensation
Account" provision (below) related to a Company initiated termination, will be
conditioned upon you signing a release and agreement not to sue the Company. The
form of this release and agreement will be that then in use for AT&T Senior
Managers.

For purposes of this employment letter, "cause" shall be defined as follows: (1)
your conviction (including a plea of guilty to nolo contendere) of a felony or
any crime of theft, dishonesty or moral turpitude; or (2) gross omission or
gross dereliction of any statutory or common law duty of loyalty to the Company,
or (3) violation of the Company's Code of Conduct.

Senior Management Employee Benefit Plans: Attachment A outlines the benefits
available to you under various Senior Management, mid-career and employee
benefit plans, programs and practices. In addition, under the provisions of the
Mid-Career Hire Program you will be eligible for the following benefits:

Mid-Career Pension: Managers hired at age thirty-five and over at salary band D
and above who retire or terminate employment at Executive level or above will be
eligible for supplemental pension benefits from the AT&T Mid-Career Hire Pension
Plan provided they have at least five years service credited while at or above
Executive level. (The Senior Management position you would be hired into is
above the Executive level). These supplemental pension payments are in addition
to those provided by other existing plans. For example: under the Plan's current
terms and conditions, a participant hired at age 46 and retired at age 65 would
receive extra pension credit for 16 years at approximately one half the rate
under the AT&T Management Pension Plan.

Special Deferred Compensation Account: Beginning on your date of hire, $190,000
will be credited in your name in an individual Deferred Compensation Account
(DCA). You will have no ownership interest in the DCA nor in any asset of the
Company and you may not assign or pledge the DCA. You will have 

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no right to receive any part of the DCA except as provided below under the
"Vesting, Forfeiture, and Distribution of DCA" paragraphs. Such credited DCA
shall bear interest from the first day following the effective date of your AT&T
employment. The interest credited thereon will be compounded as of the end of
each calendar quarter for as long as any sums remain in the DCA, and the
quarterly rate of interest applied at the end of any calendar quarter shall be
one-quarter of the average 30-year Treasury Note rate for the previous quarter.

Vesting, Forfeiture, and Distribution of DCA: In the event of your termination
of employment prior to August 13, 2009, for any reason other than death, "long
term disability" (as defined below), or Company initiated termination for other
than "cause" (as defined below), all amounts credited to your DCA will be
canceled, and you will not receive any distribution from the DCA.

In the event of your termination of employment, prior to August 13, 2009,
because of death or "long term disability," the amount credited to your DCA as
of such termination will become vested. Your DCA balance as of your date of
death or termination will be distributed to you, or in the case of death, to
your designated beneficiary (or to your estate if no beneficiary has
designated), within 30 business days after your termination or death.

In the event of your termination of employment from your date of hire to August
13, 2009, as a result of a Company initiated termination for other than "cause"
(as defined below), your DCA will vest in full at such date and all amounts
credited to the DCA as of your termination of employment will be distributed to
you within 30 business days after your termination of employment.

As of August 13, 2009, all amounts then credited to your DCA will vest in full,
assuming your continued employment to such date with the Company or any
affiliate of the Company. Any amounts credited to your DCA subsequent to August
13, 2009 will vest as credited.

In the event of your termination of employment on or subsequent to August 13,
2009, because of death all amounts credited to your DCA as of your date of death
will be distributed to your designated beneficiary (or to your estate if no
beneficiary has been designated), within 30 business days after your death.

In the event of your termination of employment on or subsequent to August 13,
2009, for any reason other than for death, then all amounts credited to your DCA
as of your termination of employment will be distributed to you in ten
approximately equal annual installments. Interest will continue to be credited
on the outstanding balance in your DCA.

Notwithstanding any other provision of this Special Deferred Compensation
Account, in the event of your termination of employment for "cause", at any time

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from your date of hire to August 13, 2009, all amounts credited to your DCA will
be canceled and forfeited in their entirety, and you will not receive any
distribution from the DCA. For purposes of this DCA provision, "cause" shall be
as defined in the Severance Benefit provision above. For purposes of this DCA
provision, "long term disability" will mean your termination of Company
employment with eligibility to receive long term disability benefits under the
AT&T Long Term Disability Plan for Salaried Employees or a replacement or
comparable affiliate plan.

The payments from the DCA are in addition to and not in lieu of any pension,
savings or other defined benefit or defined contribution type retirement plans
of the Company in which you would be eligible to participate as an AT&T employee
or AT&T Senior Manager. Accordingly, the DCA will not affect your participation
or potential participation in such plans. The DCA, however, is not includable in
the base for calculating any AT&T employee or Senior Manager benefits.

Payout of the DCA, when payable in ten installments, will commence on the first
day of the calendar quarter next following the end of the month in which you
terminate employment.

Relocation Plan: You will be eligible for the same AT&T Management Relocation
Plan (AT&TMRP) benefits accorded to other management employees (Attachment B).
It is understood that your family will be remaining in Tennessee through June
1996. Therefore, effective with your month of hire, you will be paid a monthly
amount of $6,000 (100% taxable). These monthly payments will cease after the
earlier of (1) July 31, 1996 or (2) the month you relocate to your New Jersey
residence. It is understood and agreed that these monthly payments will be made
in lieu of the Lump Sum Payment (for interim living, home search, etc.)
provided for in the AT&TMRP (see Attachment B).

It is agreed and understood that you will not talk about, write about or
otherwise disclose the terms of existence of this employment letter or any fact
concerning its negotiation or implementation. You may, however, discuss the
contents of this letter with your spouse, legal and/or financial counselor.

As indicated in the attached AT&T Non-Competition Guideline (Attachment C), a
number of AT&T incentive arrangements and non-qualified pension and benefit
plans are subject to non-competition constraints.

This offer is contingent upon successful completion of AT&T's pre-employment
medical review process.

This letter reflects the entire agreement regarding the terms and conditions of
your employment. Accordingly, it supersedes and completely replaces any prior
oral or written communication on this subject. This letter is not an employment

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contract and should not be construed or interpreted as containing any guarantee
of continued employment. The employment relationship at AT&T is by mutual
consent ("Employment-At-Will"). This means that managers have the right to
terminate their employment at any time and for any reason. Likewise, the Company
reserves the right to discontinue your employment with or without cause at any
time and for any reason.

The incentive plans as well as the employee and Senior Management benefit plans,
programs and practices as briefly outlined in this letter, reflect their current
provisions. Payments and benefits under these plans and programs, as well as
other payments referred to in this letter, are subject to IRS rules and
regulations with respect to withholding, reporting, and taxation, and will not
be grossed-up unless specifically stated. The Company reserves the right to
discontinue or modify any such plans, programs and practices. Moreover, the
summaries contained herein are subject to the terms of such plans, programs and
practices.

For purposes of the Senior Management and employee benefits plans, the
definition of compensation is as stated in the plans. Currently, pensions are
based on base salary and annual incentives. Other benefits are based on either
base salary or base salary plus annual incentives. All other compensation and
payments reflected in this offer, e.g., hiring bonus, relocation, long term
incentives, are not included in the calculation of any employee or Senior
Management benefits (except for the AT&T Incentive Deferral Award Plan, which
currently permits the deferral of annual incentives and Performance Shares).

By acceptance of this offer, you agree that (1) no trade secret or proprietary
information belonging to your previous employer will be disclosed or used by you
at AT&T, and that no such information, whether in the form of documents,
memoranda, software, drawings, etc., will be retained by you or brought with
your to AT&T, and (2) you have brought to AT&T's attention and provided it with
a copy of any agreement which may impact your future employment at AT&T,
including non-disclosure, non-competition, invention assignment agreements or
agreements containing future work restrictions.

Don, I feel the package we have developed for you is attractive and anticipates
that you will make a critical contribution to the business as it develops over
the coming years. We look forward to having you join us. If you have any
questions, please don't hesitate to call me or Marty O'Donnell on (908)
221-3596.

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If you agree with the foregoing, and affirm that there are no agreements or
other impediments not disclosed to AT&T that would prevent you from providing
exclusive service to the Company, please sign this letter by August 11, 1995 in
the space provided below and return the original executed copy to me.

                                   Sincerely,


--------------------------                        --------------
Acknowledged and Agreed to                             Date
Donald K. Peterson

Attachments