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                                                            EXHIBIT 10(iii)(a)38

                                                                     [AT&T LOGO]

April 2, 2001

James Cicconi

Dear Jim:

         In recognition of the role AT&T Corp. (the "Company") anticipates that
you will play during the AT&T restructuring, the Company will establish a
special individual deferred account (hereinafter the "Deferred Account") for
you. The maintenance, vesting, forfeiture and distribution of the Deferred
Account shall be in accordance with the following terms and conditions.

         The Company shall credit the Deferred Account with an initial balance
of one million dollars ($1,000,000.00) retroactive to December 1, 2000
(hereinafter the "Effective Date"). The Deferred Account will be credited with
an annual rate of interest equal to the annual rate applicable to actively
traded 30-Year Treasury Bonds plus 2%, compounded quarterly (one-quarter (1/4)
of the average rate for the prior calendar quarter plus .5%), retroactive to the
Effective Date, and on a pro-rata basis through the date that the Deferral
Account remains undistributed. Interest will be calculated in accordance with
procedures determined by AT&T in its sole and absolute discretion.

         The Deferred Account will be maintained as a bookkeeping account on the
records of the Company, and you will have no present ownership right or interest
in the Deferred Account, nor in any assets of the Company with respect thereto.
You shall not have any right to receive any payment with respect to the Deferred
Account, except as expressly provided below. The Deferred Account may not be
assigned, pledged or otherwise alienated by you and any attempt to do so, or any
garnishment, execution or levy of any kind with respect to the Deferred Account,
will not be recognized.

         This Agreement may not be amended or waived, unless the amendment or
waiver is in a writing signed by you and AT&T's Executive Vice President - Human
Resources.

         The Deferred Account will vest (including interest thereon) on December
31, 2002, contingent upon your continued Company employment to the vesting date.
As of the vesting date, you will be responsible for applicable FICA and Medicare
taxes on the amount vested on such date.

         In the event of your termination of employment for any reason on or
after December 31, 2002, the entire amount then credited to the Deferred Account
shall be distributed to you in a lump sum payment as soon as administratively
feasible in the calendar quarter immediately following the calendar quarter in
which your termination occurs; provided however, that at any time on or before
June 30, 2002, you may elect the entire amount credited to the Deferred Account
(including interest thereon) as of the end of any calendar quarter following
December 31, 2002, be distributed to you in a lump sum payment as soon as
administratively feasible in the calendar quarter

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immediately following (1) such calendar quarter or (2) the calendar quarter in
which your termination of employment occurs, whichever is earlier.

         If, prior to December 31, 2002, you resign from the Company other than
for Good Reason (as defined below), or are terminated for Cause, as defined
below, the entire amount then credited to the Deferred Account shall be
forfeited.

         In the event your termination of employment from the Company due to
Long Term Disability as defined below, or your death, prior to December 31,
2002, the entire amount then credited to the Deferred Account shall become
vested and be distributed to you or your named beneficiary (or to your estate if
no beneficiary has been named), in a lump sum payment as soon as
administratively feasible in the calendar quarter immediately following the
calendar quarter in which your termination of employment occurs.

         In the event of your resignation for Good Reason or a Company-initiated
termination for other than Cause (as defined below) prior to December 31, 2002,
the entire amount then credited to the Deferred Account shall become vested and
be distributed to you in a lump sum payment as soon as administratively feasible
in the calendar quarter immediately following the calendar quarter in which your
termination occurs.

     For purposes of this Agreement:

     (a)  "Cause" termination shall mean:

          (i) your conviction (including a plea of guilty or nolo contendere) of
          a crime involving theft, fraud, dishonesty or moral turpitude;

          (ii) violation by you of the Company's Code of Conduct or
          Non-Competition Guideline which have previously been provided to you;

          (iii) gross omission or gross dereliction of any statutory, common law
          or other duty of loyalty to the Company or any of its affiliates; or

          (iv) repeated failure to carry out the duties of your position despite
          specific instruction to do so.

     (b)  "Good Reason" shall mean the occurrence without your express written
          consent of any of the following events:

          (i) Your assignment to a position other than that of General Counsel
          of AT&T; or of AT&T Broadband or AT&T Business, in anticipation of the
          spin-off of such legal entity by the Company, or

          (ii) Your demotion to a position which is not of a rank and
          responsibility comparable to members of the current Operations Group
          or those of a similar/replacing governance body; provided, however,
          that the Company's decision not to continue an Operations Group shall
          not be Good Reason, and provided, further, that (1) changes in
          reporting relationships shall not, alone,

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          constitute Good Reason and/or (2) a reduction in your business unit's
          budget or a reduction your business unit's head count, by themselves,
          do not constitute Good Reason; or

          (iii) A reduction in your "Total Annual Compensation" (defined as the
          sum of your Annual Base Salary Rate, Target Annual Incentive and
          "Target Annual Long Term Incentive Grants") for any calendar or fiscal
          year, as applicable, to an amount that is less than the Total Annual
          Compensation that existed in the prior calendar or fiscal year, as
          applicable. For purposes of this Paragraph (b)(ii) the dollar value of
          the "Target Annual Long Term Incentive Grants" shall exclude the value
          of any special one-time or periodic long-term incentive grants, and
          shall be determined by valuing Performance Shares, Stock Units,
          Restricted Stock, Restricted Stock Units, etc., at the market share
          price utilized in valuing the annual Senior Management compensation
          structures in the materials presented to the Compensation and Employee
          Benefits Committee of the Company's Board of Directors ("the
          Committee") when authorizing such grants, and assuming 100%
          performance achievement if such grants include performance criteria.
          Stock Options and Stock Appreciation Rights will be valued by the
          Black-Scholes methodology (and related share price) as utilized in the
          materials presented to the Committee when authorizing such grants.

          You must notify the Company within 60 days following knowledge of an
          event you believe constitutes Good Reason, or such event shall not
          constitute Good Reason hereunder.

     (c)  "Long Term Disability" shall mean termination of your employment with
          the Company with eligibility to receive a disability allowance under
          the AT&T Long Term Disability Plan for Management Employees or a
          replacement plan.

          It is understood and agreed that you will not talk about, write about
or otherwise publicize the terms or existence of this Agreement or any fact
concerning its execution or implementation unless required by law or to enforce
the terms of this Agreement. You may, however, discuss its contents with your
spouse, legal and/or financial counselor, provided that you advise them of your
obligations of confidentiality and that any disclosures made by any of them may
be treated by the Company as disclosures made by you for purposes of this
provision.

         THIS AGREEMENT IS NOT AN EMPLOYMENT CONTRACT AND SHOULD NOT BE
CONSTRUED OR INTERPRETED AS CONTAINING ANY GUARANTEE OF CONTINUED EMPLOYMENT.
THE EMPLOYMENT RELATIONSHIP WITH THE COMPANY IS BY MUTUAL CONSENT
("EMPLOYMENT-AT-WILL"). THIS MEANS THAT EMPLOYEES 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.

         Payments from the Deferred Account are in addition to and not in lieu
(nor will it or anything in this Agreement postpone, reduce or negatively
impact) any qualified or non-qualified pension, savings, or other retirement
plan, program or arrangement covering you. The Deferred Account payments
provided under this Agreement are

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subject to payroll tax withholding and reporting, and amounts credited to the
Deferred Account are not included in the base for calculating benefits (nor
shall such amounts offset any benefits) under any employee or Senior Management
benefit plan, program or practice.

         You understand that the terms of this Agreement shall apply to the
Company and its successors. The Company specifically reserves the right to
assign the terms of this Agreement to any successor, whether the successor is
the result of a sale, purchase, merger, consolidation, asset sale, divestiture
or spin-off or any combination or form thereof. No sale, purchase, merger,
consolidation, asset sale, divestiture or spin-off or any combination or form
thereof by the Company shall be construed as a termination of your employment
and will not be considered a termination for purposes of this Agreement.

         The construction, interpretation and performance of this Agreement
shall be governed by the laws of the State of New Jersey, without regard to its
conflict of laws rule.

         Jim, I am happy to present this special arrangement to you. It
recognizes the extraordinary contributions that we expect you to continue to
make to our business. If you agree with the terms and conditions detailed above
sign and date this Agreement in the spaces provided below and return the
original executed copy to me.

                                            Sincerely,

/s/ James W. Cicconi                 4/24/01
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Acknowledged and Agreed to                  Date

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