FORM 10-K
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

              (X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                   For The Fiscal Year Ended December 31, 1999

                                       OR

            ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

              For The Transition Period From _________ to _________

                          Commission File Number 1-1105

                                   AT&T CORP.

          A NEW YORK                                     I.R.S. EMPLOYER
          CORPORATION                                     NO. 13-4924710

            32 Avenue of the Americas, New York, New York 10013-2412
                          Telephone Number 212-387-5400

Securities  registered  pursuant  to  Section  12(b)  of the Act:  See  attached
SCHEDULE A.

Securities registered pursuant to Section 12(g) of the Act:  None.

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes....x.... No........

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation S-K is not con-tained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

At  February  29,  2000,  the  aggregate  market  value of voting  stock held by
non-affiliates   was   approximately   $157  billion.   At  February  29,  2000,
3,194,755,604  shares  of AT&T  common  stock,  1,181,420,568  shares of Class A
Liberty Media Group  tracking  stock and  103,117,226  shares of Class B Liberty
Media Group tracking stock were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE
(1) Portions of the  registrant's  annual  report to  shareholders  for the year
ended  December 31, 1999 (Part II)
(2) Portions of the  registrant's  definitive proxy  statement  dated  March 27,
2000  issued in  connection  with the annual meeting of shareholders (Part III)
<PAGE>


                                   SCHEDULE A

           Securities registered pursuant to Section 12(b) of the Act:

                                                     Name of each exchange on
          Title of each class                            which registered

Common Shares                                 #      New York, Boston, Chicago,
   (Par Value $1 Per Share)                   ####   Philadelphia and Pacific
                                              #      Stock Exchanges
                                              #
                                              #
Class A Liberty Media Group Tracking          #
   Shares (common, Par Value $1 Per Share)    #
                                              ####   New York Stock Exchange
Class B Liberty Media Group Tracking          #
   Shares (common, Par Value $1 Per Share)    #
                                              #
                                              #
                                              #
Thirty-Five Year 5-1/8% Debentures, due       #
  April 1, 2001                               #
                                              #
Ten Year 7-1/8% Notes, due January 15, 2002   #
                                              #
Three Year 61/2% Notes due September 15, 2002 #
                                              #
Five Year 5 5/8% Notes due March 15, 2004     #
                                              #
Ten Year 6-3/4% Notes, due April 1, 2004      #
                                              #
Ten Year 7% Notes, due May 15, 2005           #
                                              #
Twelve Year 7-1/2% Notes, due June 1, 2006    ###### New York Stock Exchange
                                              #
Twelve Year 7-3/4% Notes, due March 1, 2007   #
                                              #
Ten Year 6% Notes due March 15, 2009          #
                                              #
Thirty Year 8-1/8% Debentures, due            #
  January 15, 2022                            #
                                              #
Thirty Year 8.35% Debentures, due             #
  January 15, 2025                            #
                                              #
Thirty-Two Year 8-1/8% Debentures, due        #
  July 15, 2024                               #
                                              #
Thirty Year 61/2% Notes due March 15, 2029    #
                                              #
Forty Year 8-5/8% Debentures, due             #
  December 1, 2031                            #

<PAGE>

                                TABLE OF CONTENTS

                                     PART I

Item                               Description                              Page

 1.      Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  1
 2.      Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
 3.      Legal Proceedings  . . . . . . . . . . . . . . . . . . . . . . . . . 36
 4.      Submission of Matters to a Vote of Security-Holders  . . . . . . . . 37

PART II

                                   Description

 5.      Market for Registrant's Common Equity and Related Stockholder
           Matters  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
 6.      Selected Financial Data  . . . . . . . . . . . . . . . . . . . . . . 39
 7.      Management's Discussion and Analysis of Financial Condition and
           Results of Operations  . . . . . . . . . . . . . . . . . . . . . . 39
 8.      Financial Statements and Supplementary Data  . . . . . . . . . . . . 39
 9.      Changes in and Disagreements with Accountants on Accounting and
           Financial Disclosure . . . . . . . . . . . . . . . . . . . . . . . 39

PART III

                                   Description

10.      Directors and Executive Officers of the Registrant . . . . . . . . . 39
11.      Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . 39
12.      Security Ownership of Certain Beneficial Owners and Management . . . 39
13.      Certain Relationships and Related Transactions . . . . . . . . . . . 39

PART IV

                                   Description

14.      Exhibits, Financial Statement Schedule, and Reports on Form 8-K  . . 40

See page 38 for "Executive Officers of the Registrant."

<PAGE>

PART I

ITEM 1. BUSINESS.

GENERAL

         AT&T Corp. was  incorporated in 1885 under the laws of the State of New
York and has its principal  executive offices at 32 Avenue of the Americas,  New
York, New York 10013-2412 (telephone number 212-387-5400).

         On   March   9,   1999,    AT&T    completed   the    acquisition    of
Tele-Communications,  Inc. (TCI) in a merger.  In the merger,  AT&T acquired all
the  business and assets of the TCI Group (now  referred to as AT&T  Broadband),
which  consisted  primarily  of  TCI's  domestic  cable  and  telecommunications
operations, as well as TCI's interest in At Home Corporation (@Home) in exchange
for  approximately  664  million  shares  of Common  Stock.  AT&T  Common  Stock
continues to represent an interest in the business and assets of the  historical
AT&T together with those assets acquired in the merger.

         In  addition,  at the time of the merger  TCI  combined  Liberty  Media
Group, its programming  arm, and TCI Ventures Group, its technology  investments
unit, to form the new Liberty Media Group.  The  shareowners  of the new Liberty
Media Group were issued separate  tracking stock rather than traditional  Common
Stock by AT&T Corp.  in exchange for the shares held in Liberty  Media Group and
TCI Ventures  Group.  Under the tracking  stock  arrangement,  the Liberty Media
Group's  earnings  and losses will be excluded  from  earnings  available to the
holders of Common Stock and the Liberty Media Group's businesses and assets will
be managed by a separate operating Board of Directors. As a result, although the
Liberty  Media Group is wholly owned by AT&T Corp.,  it is  accounted  for as an
investment under the equity method of accounting in the  consolidated  financial
statements  of AT&T  Corp.  since  AT&T does not have a  "controlling  financial
interest" in the Liberty Media Group.

         Consequently,  throughout  this  document,  references  to  AT&T or the
Company refer to the  businesses,  results or assets  attributable to the Common
Stock;  references to Liberty Media refer to the  businesses,  results or assets
attributable to the Liberty Media Group tracking  stock;  and references to AT&T
Corp.  refer to the  combined  legal  entity.  References  herein to AT&T Common
Shares,  Common  Shares,  AT&T Common Stock or Common Stock excludes the Liberty
Media Group tracking stock.

         On March 14, 2000 the AT&T shareholders approved amendments to the AT&T
certificate of  incorporation  that would permit AT&T to create a separate class
of its common stock,  the AT&T Wireless Group tracking stock,  which would track
the  performance  of our wireless  business.  As of the date of filing this Form
10-K, no shares of the AT&T Wireless Group tracking stock were outstanding.

AT&T

         AT&T is among the world's communications leaders, providing voice, data
and video communications  services to large and small businesses,  consumers and
government   entities.   AT&T  and  its   subsidiaries   furnish   domestic  and
international  long  distance,   regional,  local  and  wireless  communications
services,  cable  television  and Internet  communications  services.  AT&T also
provides  billing,   directory,   and  calling  card  services  to  support  its
communications business.

<PAGE>

         AT&T's  primary  lines of  business  are  business  services;  consumer
services;  broadband services; and wireless services. In addition,  AT&T's other
lines of business include network  management and professional  services through
AT&T Solutions and international operations and ventures.

         Internet  users can access  information  about AT&T and its services at
www.att.com. Our web site is not a part of this Form 10-K.

DEVELOPMENT OF BUSINESS

         Separation

         During 1999 AT&T continued the  transformation of its business begun in
1996 when AT&T  separated  its business  into three  publicly  held  stand-alone
companies: the current AT&T, focused on communications and information services;
Lucent  Technologies  Inc.  (Lucent),  focused  on  communications  systems  and
technology;   and  NCR  Corporation  (NCR),  focused  on   transaction-intensive
computing.  AT&T  distributed to its shareowners all of the shares AT&T owned of
Lucent on September 30, 1996 and all of the shares of NCR on December 31, 1996.

         Asset Sales

         Following  the  separation,  AT&T  focused on its core  businesses  and
disposed of assets and businesses that were not strategic. In October 1996, AT&T
completed the sale of its majority interest in AT&T Capital Corporation (leasing
services business).  In 1997, AT&T completed the sales of AT&T Skynet (satellite
services),  AT&T Tridom (satellite data and video communications  services), and
its  submarine  systems  business,   as  well  as  its  investment  in  DirectTV
(direct-broadcast  television service and DSS equipment business).  In addition,
in 1998 AT&T sold AT&T  Universal  Card  Services,  Inc.  (credit card  services
business),  American Transtech Inc. (customer care services),  its investment in
LIN  Television  Corporation  (commercial  television  broadcasting),   and  its
investment in SmarTone  Telecommunications  Holdings  Limited (a wireless  joint
venture in Hong Kong).  In 1999,  AT&T sold its interest in Wood-TV  (commercial
television   broadcasting),   AT&T  Language  Line  Services   (over  the  phone
interpretation    business)    and   ACC    Corp.'s    operations    in   Europe
(telecommunications services).

         TCG Acquisition

         During  1998,  AT&T  engaged  in a series of  transactions  to  further
transform  the Company from one  dominated by a single  product,  domestic  long
distance  telecommunications,  to a fully  integrated,  any distance,  broadband
communications  service  provider.  In July 1998, AT&T completed the merger with
Teleport  Communications  Group  (TCG)  pursuant  to which each share of TCG was
exchanged for AT&T Common Stock in an all-stock transaction. TCG was the largest
competitive  local  exchange  carrier  (CLEC)  in the  United  States,  offering
comprehensive   telecommunications   services  in  major  metropolitan   markets
throughout the United States.  TCG provides a broad array of  telecommunications
services,  including basic local exchange  services,  enhanced switch  services,
Internet services,  disaster  avoidance services and video channel  transmission
services, aimed at addressing high-volume business customers.

<PAGE>

         TCI Acquisition

         In the TCI  merger,  which  closed on March 9, 1999,  AT&T  issued AT&T
Common Stock for each share of TCI Group  Series A tracking  stock and TCI Group
Series B tracking  stock. In addition,  AT&T Corp.  issued newly created Liberty
Media Group Class A or Class B tracking stock for each  outstanding  TCI Liberty
Media Group Class A or Class B tracking stock and each  outstanding TCI Ventures
Group Class A or Class B tracking stock. In the merger, AT&T also exchanged AT&T
Common Stock or Liberty Media Group tracking stock for shares of TCI convertible
preferred  stock and made a cash payment in lieu of any  fractional  AT&T Common
Share or Liberty Media Group tracking share.

         IBM Global Network Acquisition

         On April 30, 1999, AT&T completed the first phase of its acquisition of
the IBM Global Network  business  (renamed AT&T Global Network Services or AGNS)
by obtaining the IBM Global Network assets in the United States. Under the terms
of the agreement,  AT&T acquired the global network of IBM for  approximately $5
billion,  and the two companies  entered into  outsourcing  agreements with each
other. IBM is outsourcing a significant  portion of its global  networking needs
to  AT&T,  and  AT&T  is   outsourcing   certain   applications-processing   and
data-center-management  operations to IBM. AGNS serves the  networking  needs of
several  hundred  large  global  companies,   tens  of  thousands  of  mid-sized
businesses and more than one million individual  Internet users in 59 countries.
About 5,300 IBM employees joined AT&T as part of the acquisition.  AGNS has more
than 1,300 dial-up  points of presence and  dedicated  access from more than 850
cities in 59 countries.  AGNS offers business customers  innovative services and
worldwide operations and support, including in-country,  native-language support
personnel.  The  acquisition  occurred  in phases  throughout  1999 as legal and
regulatory  requirements were met in each of the countries in which the business
operates.  As of December 31, 1999,  operations  in over 70 countries  have been
transferred  from  IBM to  AT&T,  representing  more  than  99% of the  contract
revenue.  We are awaiting  regulatory  approval in the  remaining  countries and
expect to be providing  service to  customers  operating in over 80 countries by
the end of the first quarter of 2000.

         Vanguard Acquisition

         On  May  3,  1999,  AT&T  acquired  Vanguard  Cellular  Systems,   Inc.
(Vanguard),  an independent operator of wireless telephone systems in the United
States  with over  700,000  subscribers  and which  operates  in markets  with a
population  of  approximately  6.9  million.  Vanguard  served 26 markets in the
Eastern United States.  Consummation of the acquisition resulted in the issuance
of  approximately  12.6  million  shares of AT&T common stock and the payment of
approximately $485 million in cash.

         Comcast Corporation Exchange

         On May 4, 1999,  AT&T and Comcast  announced  an  agreement to exchange
various cable systems,  which are designed to improve each company's  geographic
coverage by better  clustering  its systems.  The agreement will result in a net
addition to Comcast of approximately  750,000 subscribers.  Because Comcast will
receive more  subscribers  than it is contributing in the exchange,  it will pay
AT&T consideration  having a value of approximately  $4,500 per added subscriber
for a total value of $3.0  billion to $3.5  billion.  Comcast has also agreed to
offer  AT&T-branded  telephony  in  all  of  its  markets,  subject  to  certain
conditions.  The foregoing  agreements are subject to completion of the proposed
AT&T/MediaOne merger and other regulatory and legal approvals.

<PAGE>

         MediaOne Group, Inc. Acquisition

         On May 6, 1999, AT&T and MediaOne Group, Inc. (MediaOne) entered into a
definitive merger agreement. October 21, 1999, shareholders of MediaOne voted in
favor of the proposed  merger  between AT&T and MediaOne.  Under the  agreement,
each MediaOne  shareholder  is entitled to elect to receive  either cash or AT&T
common stock in exchange for their  MediaOne  shares,  subject to the limitation
that the aggregate  consideration  will consist of $30.85 per share in cash plus
0.95 of a share of AT&T stock for every MediaOne  share.  In addition,  the cash
portion  of the AT&T offer will be  increased  to offset up to a 10%  decline in
AT&T's  closing  stock  price of $57 per share on April 21,  1999,  the date the
offer  was  extended.  This  will  maintain  a value of $85 per  share for every
MediaOne  share,  provided  AT&T's stock trades between $57 per share and $51.30
per share.  The  additional  amount of cash that may be  received  is limited to
$5.42 per share.  AT&T  estimates that we will issue  approximately  600 million
shares in the transaction.  The merger,  which remains subject to regulatory and
other approvals, is expected to close in the second quarter of 2000.

         MetroNet Merger

         On June 1, 1999, AT&T Canada Corp. merged with MetroNet  Communications
Corp.,  Canada's largest competitive local exchange carrier.  Under the terms of
the merger  agreement,  AT&T  received 31 percent of the equity  interest and 23
percent of the voting  interest  in the  combined  entity in  exchange  for AT&T
Canada Corp. and ACC  TelEnterprises  Ltd. In addition,  AT&T agreed to purchase
all of the  remaining  shares at the greater of the then  appraised  fair market
value or the  accreted  minimum  price,  which  initially  is C$37.50  per share
accreting after June 30, 2000 at a rate of 16% per annum,  compounded quarterly.
If the acquisition is not completed by June 30, 2003,  those shares,  along with
AT&T's shares, would be sold through an auction process and AT&T will make whole
the other  shareholders  for the amount they would have been entitled to if AT&T
had purchased the shares.  The  completion of the  acquisition is subject to the
condition  that AT&T is permitted to acquire the shares under  Canada's  foreign
ownership  restrictions.  AT&T may acquire  the shares  prior to a change in the
ownership  restrictions  by developing a structure that addresses such ownership
restrictions.

         Cox Communications, Inc. Exchange

         On July 6, 1999,  AT&T and Cox  Communications,  Inc.  (Cox)  signed an
agreement  whereby AT&T would redeem  approximately  50.3 million shares of AT&T
common  stock  held by Cox in  exchange  for cable  television  systems  serving
approximately  312,000  customers,  our  interest  in  certain  investments  and
approximately $750 million in other consideration,  including cash. Based on the
closing  price of AT&T's  stock on July 6, 1999,  the  transaction  is valued at
approximately $2.8 billion. The transaction closed in March 2000.

         AT&T/BT Joint Investments

         On August  16,  1999,  AT&T  completed  its sale to BT of 30% of AT&T's
stake in AT&T Canada for C$600 million.  In addition,  BT has agreed to purchase
30% of the  shares  AT&T  will be  acquiring  from  the  other  stockholders  in
connection with the MetroNet  merger,  subject to BT's right to cap its purchase
at C$1.65 billion.

<PAGE>

         In  addition,  on August 16, 1999,  AT&T and BT  completed  their joint
purchase  of 33.3% of the equity  interest  and 30.6% of the voting  interest in
Rogers  Cantel Mobile  Communications  Inc.,  Canada's  largest  mobile  company
serving more than two million  customers  coast to coast,  for a total  purchase
price of C$1.4  billion.  AT&T and BT hold their  ownership  position  through a
newly established and jointly owned entity.

         BT Joint Venture

         On January 6, 2000 AT&T and British Telecommunications plc (BT) created
a global venture to serve the  communications  needs of multinational  companies
and the international calling needs of businesses around the world. The venture,
named Concert,  is owned equally by AT&T and BT and combined  transborder assets
and operations of each company, including their existing international networks,
their international  traffic,  their transborder products for business customers
--  including  an  expanding  set of  Concert  services  -- and  AT&T  and  BT's
multinational accounts in selected industry sectors.

BUSINESS SERVICES

         Business Services provides a variety of global communications  services
including long distance,  local and data and IP networking to large domestic and
multinational  businesses,  small and  medium-sized  businesses,  and government
agencies.  Business  units  within  this group  provide  regular and custom long
distance  and local  communications  services,  data  transmission  and Internet
services, 500 services, toll-free or 800 and 888 services, 900 services, private
line services,  software defined network services (SDN),  asynchronous  transfer
mode (ATM) and Internet  protocol (IP)  technology  based  services,  integrated
services  digital network (ISDN)  technology  based services,  electronic  mail,
electronic data interchanges, and enhanced facsimile services.

         AT&T also  provides  special long  distance  services,  including  AT&T
Calling Card  services,  special  calling plans and the  Company's  domestic and
international   operator  services.   AT&T  provides   communications   services
internationally,   including  transaction  services,  global  networks,  network
management  and value  added  network  services  (i.e.,  services  offered  over
communications   transmission   facilities  that  employ   computer   processing
applications).

         Business  Services has a dedicated sales force through which it markets
its voice  and data  communication  services.  Sales  forces  are  divided  into
geographic   markets,   and  in  each  market  focus  on  large,   multinational
corporations,  small businesses,  government markets, and value-added  resellers
and other  wholesalers.  Business Services employs full service support teams to
provide significant customer support and service to ensure customer satisfaction
and retention.

         Business  Services  offers its regulated  services in  accordance  with
applicable  tariffs filed with the Federal  Communications  Commission (FCC) and
various states.  Rates can vary by a number of factors,  particularly the volume
of usage and the day and time that calls are made. AT&T Business Services offers
voice and data services  individually  and in combination  with other offerings.
Through combined offerings, AT&T provides customers with benefits such as single
billing,  unified services for  multilocation  companies and customized  calling
plans.

<PAGE>

            Voice Services

            Long distance voice services. Business Services' voice communication
offerings   include  the   traditional   "one  plus"  dialing  of  domestic  and
international long distance for customers that select AT&T as their primary long
distance carrier.

            Business  Services'  dedicated  services  include  private  line and
special access services that use high-capacity  digital circuits to carry voice,
data and video (or  multimedia)  transmission  from  point-to-point  in multiple
configurations.  These  services  provide  high-volume  customers  with a direct
connection  to an AT&T switch  instead of switched  access shared by many users.
These services permit  customers to create internal  computer  networks,  access
external  computer  networks  and the  Internet,  as well as reduce  originating
access costs.

         Business  Services  also  offers  toll free (800,  888 or 877)  inbound
service,  where the  receiving  party pays for the call.  This is used in a wide
variety of  applications,  many of which generate  revenue for the user (such as
reservation  centers or  customer  service  centers).  AT&T  offers a variety of
features to enhance  customers  toll free  service,  including  call  routing by
origination point and time of day routing.

         Business  Services  also offers a variety of calling  cards which allow
the user to  place  calls  from  virtually  anywhere  in the  world.  Additional
features  include  prepaid  calling  cards,  conference  calling,  international
origination, information service access (such as weather or stock quotes), speed
dialing and voice messaging.

         Business  Local  Services.   Local  carriers  provide  local  exchange,
exchange access, toll, and resold services;  sell, install and maintain customer
premises equipment;  and provide operator and directory services. The market for
local exchange  services  consists of a number of distinct  service  components.
These   service   components   are   defined  by  specific   regulatory   tariff
classifications  including:  (i) local network services, which generally include
basic dial tone charges and private line services; (ii) network access services,
which consist of access charges received by local exchange  carriers (LECs) from
long distance  carriers for the local transport and termination  portion of long
distance  telephone calls;  (iii) long distance network services,  which include
the  variable  portion  of  charges  received  by local  exchange  carriers  for
intra-LATA long distance calls; and (iv) additional value added services such as
caller  identification,  call waiting,  call  forwarding,  three way calling and
voice mail.

         AT&T     Business      Local's      customers      are      principally
telecommunications-intensive    businesses,    healthcare,    and    educational
institutions,  governmental  agencies,  long  distance  carriers and  resellers,
Internet service  providers,  disaster  recovery service  providers and wireless
communications and financial services companies. AT&T Business Local's centrally
managed  customer care and support  operations  are designed to  facilitate  the
installation  of new  services  and the  processing  of orders for  changes  and
upgrades in customer services.

         With a direct sales force in each of its markets,  AT&T Business  Local
initially targets the large telecommunications-intensive businesses concentrated
in the major  metropolitan  markets served by its networks.  AT&T Business Local
also targets small- and medium-sized  business  customers in office buildings or
multiple dwelling units already served by its network.

<PAGE>

         AT&T Business Local  generally  offers its services in accordance  with
applicable  tariffs  filed  with  state  regulatory   agencies  (for  intrastate
services).  AT&T  Business  Local  typically  offers local  service as part of a
package of services,  which can include any combination of other AT&T offerings.
Customers  also  choose  among  analog,  digital  voice-only  and  ISDN  Centrex
telephone lines to their desktops.  AT&T owns, houses, manages and maintains the
switch,  while customers  retain control over network  configurations,  allowing
customers to add, delete and move lines as needed. For local service,  customers
are billed a fixed charge plus usage.

         Data and Internet Services

         Enhanced  Data  Communications.   Enhanced  data  services  consist  of
interexchange   data  networks   utilizing  packet  switching  and  transmission
technologies  and  application  services,  such as Internet  access and Web Site
hosting and  management,  which utilize the frame relay  network.  Enhanced data
services enable customers to economically and securely transmit large volumes of
data typically  sent in bursts from one site to another.  Enhanced data services
are utilized for local area network (LAN) interconnection, remote site, point of
sale and branch office communications solutions.

         AT&T  utilizes  both  IP  and  ATM  systems.  Both  technologies  offer
significant  efficiencies  over  circuit  switched  systems  which use a single,
dedicated  circuit to complete each  transmission.  ATM switching is also a more
efficient  method  of  switching  and   transmitting   comingled  or  multimedia
information. The packet switching technology breaks up a transmission into short
pieces, or packets,  which are encoded and transmitted with other packets on the
same circuit, and reassembled at the desired destination. ATM differs from IP in
that the data packets used in ATM (called cells) are one size (53 bytes) whereas
in IP the data packets vary in length.  Also,  whereas ATM  establishes  virtual
circuits to ensure that the  information  sent is reassembled at its destination
in its proper  sequence,  IP ships each packet of information to its destination
by a different  path.  While AT&T will  continue to have both circuit and packet
switching  and  transmission  technologies  for some  time,  significant  future
capital expenditures are not scheduled for circuit switching.

         ISDN  services   provide   customers   with  multiple  voice  and  data
communications  services over a single  telecommunications  line.  The Company's
ISDN services allow customers to perform multiple functions such as simultaneous
voice and computer links, and enable the Company to offer customers  value-added
features.  High speed ISDN  applications  include  desk top video  conferencing,
interconnection of LANs and Internet access.

         AT&T  Business  Internet  Services.  AT&T  WorldNet  Business  Services
provides IP connectivity and IP value-added services,  messaging, and electronic
commerce  services to businesses.  AT&T offers Managed Internet  Service,  which
gives customers dedicated, high-speed access to the public Internet for business
applications  at a variety of speeds and types of  access,  as well as  Business
Dial Service, a dial-up version of Internet access designed to meet the needs of
small- and medium-sized businesses.

         AT&T Virtual Private Network (VPN) Service allows  businesses to obtain
remote  access to e-mail,  order  entry  systems,  employee  directories,  human
resources and other databases, or to create an Intranet and extranets with their
clients,  suppliers and business partners, and enables customers to tailor their
VPNs to accommodate specific business applications,  performance requirements or
the need to integrate with existing data networks.

<PAGE>

         AT&T Web Services are a family of hosting and transaction  services and
platforms serving the web needs of thousands of businesses.  Offers include AT&T
Shared  Hosting  Services,  an  economical  way for  businesses  to  establish a
presence on the World Wide Web, and AT&T  Enhanced Web  Development  Package for
businesses  that want to create web sites that require  higher  performance  and
greater user demand.  AT&T Dedicated  Hosting Service provides  customizable and
pre-packaged  Web hosting  solutions.  AT&T  SecureBuySM  Service  provides  the
backoffice   infrastructure  required  to  electronically  process  credit  card
transactions  online,  high-speed  links  into two of the  leading  credit  card
processing services, and management reports that measure a site's success.

         Other IP services AT&T offers let Web site visitors click on a "call me
now" icon if they wish to speak to a customer service agent;  connect enterprise
networks that use host or LAN-based and  browser-based  e-mail systems to AT&T's
value-added  messaging  services  such as  e-mail  and  fax;  and  enhanced  fax
services.

         Transport

         Business  Services  is  one  of  the  leaders  in  providing  wholesale
networking  services to other  carriers,  providing  both  network  capacity and
switched  services.  AT&T  offers  a  combination  of  high-volume  transmission
capacity,  conventional  dedicated line services and dedicated switched services
to  Internet  service  providers  (ISPs)  and  Tier 1 and Tier 2  carriers  on a
national or regional  basis,  as well as  switchless  resale  services to Tier 3
carriers.

         Wholesale   networking   service  is  typically  provided  pursuant  to
long-term service  agreements for terms of one year or longer.  These agreements
generally  provide for  payments at fixed rates based on the capacity and length
of the circuit used.  Customers are typically billed on a monthly basis and also
may incur an  installation  charge or certain  ancillary  charges for equipment.
After contract  expiration,  the contracts may be renewed or the services may be
provided on a month-to-month  basis.  Switched services agreements are generally
offered on a month-to-month  basis and the service is billed on a minutes-of-use
basis. More recently,  AT&T has also sold network capacity through  indefeasible
rights of use agreements under which capacity is furnished for contract terms as
long as 25 years.

CONSUMER SERVICES

         Long Distance Voice

         AT&T  is the  leading  provider  of  domestic  and  international  long
distance  service to residential  consumers in the United States.  AT&T provides
regular  and  custom  long  distance  communications  services  which it  offers
individually and in combination with other services.

         AT&T    provides    interstate    and    intrastate    long    distance
telecommunications   services  throughout  the  continental  United  States  and
provides, or joins in providing with other carriers, telecommunications services
to and from Alaska, Hawaii, Puerto Rico and the Virgin Islands and international
telecommunications  services to and from  virtually all nations and  territories
around  the  world.  Consumers  can use AT&T  domestic  and  international  long
distance  services by the  traditional  "one plus"  dialing of the desired  call
destination, by dial-up access or through the use of AT&T calling cards.

<PAGE>

         AT&T both delivers and receives  international  traffic pursuant to its
operating  agreements with foreign  carriers  throughout the world. The terms of
most switched voice  operating  agreements,  as well as established  FCC policy,
require  that inbound  switched  voice  traffic from the foreign  carrier to the
United States be routed to United States international  carriers,  like AT&T, in
proportion to the  percentage of United States  outbound  traffic routed by that
United States international carrier to the foreign carrier.  AT&T's revenues and
costs of sales are sensitive to changes in  international  settlement  rates and
international traffic routing patterns.

         In  the  continental   United  States,   AT&T  provides  long  distance
telecommunications   services  over  AT&T's  backbone   network.   International
telecommunications  services are provided by  submarine  cable  systems in which
AT&T holds investment positions, satellites and facilities of other domestic and
foreign carriers.

         AT&T markets its consumer long distance  services in a variety of ways,
including by means of  television  advertising,  direct mail  solicitations  and
telephonic solicitations, as well as through brand awareness.

         AT&T charges  customers based on applicable  tariffs filed with the FCC
and individual states. Customers select different services and from various rate
plans which  determine the price per minute that they pay on their long distance
calls.  Rates  typically  vary based on a variety or factors,  particularly  the
volume of usage and the day and time that calls are made.

         Consumer Local Services

         Local  carriers  provide local  exchange,  exchange  access,  toll, and
resold  services;  and provide  operator and directory  services.  By the end of
1997,  AT&T offered resold local service to  residential  customers in 8 states.
Notwithstanding its substantial efforts, AT&T experienced significant difficulty
in entering local markets.  AT&T's ability to purchase combined network elements
from the  incumbent  LECs  (ILECs),  one of the  primary  methods  by which AT&T
intended to provide local service to residential customers, was severely limited
by, among other factors,  ILEC-sponsored  regulatory and judicial actions, and a
lack of operating  interfaces  necessary to process  network element orders with
ILECs.  In spite of strong  demand,  in the fourth  quarter of 1997 AT&T stopped
actively marketing resold local service to residential  customers in most of the
areas in which it offered such service  because of limitations on ILECs' ability
to handle  anticipated demand and because the wholesale rates AT&T received from
ILECs on the sale of such  service  were  insufficient  to make  resale a viable
method of offering service.

         AT&T intends to pursue local entry by transforming  the cable footprint
of one-way cable plant into a two-way,  broadband network capable of meeting the
full spectrum of communication needs of the residential  customer.  AT&T intends
to deploy a variety of  services  over the  upgraded  cable  plant,  including a
richly featured all distance (i.e., local, long distance,  international)  voice
telephony offering. AT&T has used existing circuit-switched  technology to pilot
telephony service offers over the cable plant beginning in 1999.  However,  AT&T
expects to begin to transition to an  integrated  Internet  protocol (IP) packet
data architecture by the end of 2000 that affords cost and feature benefits over
the older circuit-switched technology.

<PAGE>

         In addition, AT&T will pursue other transport options, including:

o        Expanding  AT&T's ability to offer the full range of consumer  services
         our  existing  cable  footprint  through a variety of  partnership  and
         investment initiatives;

o        Continued investment in alternative narrowband,  wideband and broadband
         access technologies,  including the fixed wireless technology that AT&T
         is  currently  testing  in  select  markets,  and the  construction  of
         dedicated,  high-capacity  access  facilities  to serve  the  broadband
         communication  needs  of  residential   customers  living  in  multiple
         dwelling units (MDUs); and

o        Using combinations of ILEC unbundled network elements,  as well as ILEC
         unbundled  loops (which can be combined with  switching,  transport and
         other  network  elements)  to  support  differentiated  voice  and data
         services.

         AT&T intends to use the AT&T Broadband  sales force actively to solicit
cable  customers as local  service  customers.  In these areas,  AT&T intends to
offer cable and local telephony as a bundle of services.  AT&T will market local
service in other areas as it rolls out its local telephony capabilities.

         For local service, customers are billed a fixed charge plus usage. AT&T
intends  to offer  rates  competitive  with those  offered  by LECs,  as well as
discounted offers for certain bundles of services.

         AT&T WorldNet(R) Consumer Services

         AT&T  offers  dial-up  Internet  access to  consumers  through its AT&T
WorldNet  Services,  a leading provider of direct Internet access service in the
United States.  At December 31, 1999,  AT&T WorldNet  service had  approximately
1.479 million customers.

         In 1998,  AT&T WorldNet  Services  entered into agreements with Yahoo!,
Excite and Lycos to offer co-branded access services to the portals'  customers.
For example,  a Yahoo!  customer may subscribe to Internet access through Yahoo!
Online Powered by AT&T WorldNet Services.  In these cases AT&T WorldNet Services
supplies the  underlying  access,  billing and customer  care,  while the portal
provides  the  content  in the form of a  personalizable  start  page and  other
popular features.

         In 1999, AT&T WorldNet  Services began offering members an AT&T branded
search  engine as part of  redesign  of the  Company's  web site,  and  enhanced
several other subscriber  features,  including increasing the disk storage space
for personal  web pages to 10  megabytes  for each e-mail id (six e-mail ids per
account,  60 megabytes  of disk  storage)  and  providing a template  that helps
members  build  personal web pages quickly and easily.  AT&T  WorldNet  Services
entered into a co-marketing arrangement with Sega, providing Internet access via
Sega's new Dreamcast game machine, and it received recognition as the top ISP in
the industry from PC Week, PC Magazine and Smart Money.

         AT&T  WorldNet  Services   generates   revenues   principally   through
subscription and usage fees, as well as from electronic commerce and advertising
revenues.  AT&T  WorldNet  Service  offers a variety  of pricing  plan  options,
including  bundled options.  Generally,  customers are charged a flat rate for a
certain number of hours with charges for each additional hour of usage.

<PAGE>

         AT&T WorldNet Services'  marketing programs are designed to attract and
retain profitable customers.  AT&T seeks to build brand recognition and customer
loyalty and to make it easy for  consumers to try, and stay with,  AT&T WorldNet
Services. In addition to direct marketing through brand name advertising, direct
mail and magazine insert  promotions and bundling offers,  AT&T WorldNet service
maintains a large  indirect  channel  marketing  effort.  Through this  indirect
channel AT&T WorldNet service  software is bundled in new computers  produced by
major manufacturers, and is included on millions of software titles published by
independent software vendors.

BROADBAND SERVICES

                  AT&T Broadband  offers a variety of services through its cable
broadband network,  including  traditional analog video and new services such as
digital cable and  AT&T@Home,  which offers  high-speed  cable  Internet  access
service.  Also included in AT&T  Broadband are the  operations  associated  with
developing  and  refining  the   infrastructure   that  will  support  broadband
telephony.

         Cable  television   systems  receive  video,  audio  and  data  signals
transmitted  by nearby  television  and radio  broadcast  stations,  terrestrial
microwave relay services and  communications  satellites.  Such signals are then
amplified and  distributed by coaxial cable and optical fiber to the premises of
customers who pay a fee for the service. In many cases, cable television systems
also originate and distribute local programming.

         At December  31,  1999,  approximately  74% of AT&T  Broadband's  cable
television  systems had bandwidth  capacities  ranging from 450 megahertz to 750
megahertz.  The Company's  cable  television  systems  generally  carry up to 80
analog channels.  Compressed digital video technology converts on average twelve
analog  signals (now used to transmit video and voice) into a digital format and
compresses  such signals (which is  accomplished  primarily by  eliminating  the
redundancies  in  television  imagery) into the space  normally  occupied by one
analog signal. The digitally compressed signal is uplinked to a satellite, which
retransmits  the signal to a customer's  satellite  dish or to a cable  system's
headend  to be  distributed,  via  optical  fiber  and  coaxial  cable,  to  the
customer's  home.  At the home, a set-top  video  terminal  converts the digital
signal into analog channels that can be viewed on a normal television set.

         Domestic   Basic-TV  cable  customers  served  by  AT&T  Broadband  are
summarized as follows (amounts in millions):

                                            Basic-TV customers at December 31,
                                       -----------------------------------------
                                       1999     1998     1997     1996     1995
                                      ------   ------   ------   ------   ------
Managed through AT&T Broadband's
  operating divisions                  11.3     11.4     14.2     13.4     11.9
Other non-managed subsidiaries of
  AT&T Broadband                        0.1      0.5      0.2      0.5      0.6
                                      ------   ------   ------   ------   ------
                                       11.4     11.9     14.4     13.9     12.5
                                      ======   ======   ======   ======   ======

<PAGE>

         During 1999,  AT&T  Broadband  completed two  transactions  in which it
contributed  cable  television  systems  serving in the aggregate  approximately
863,000 customers to two separate joint ventures in exchange for non-controlling
ownership interests in such joint ventures,  and the assumption and repayment by
the joint ventures of indebtedness.

         The  decline  in  total  Basic-TV  customers  between  1997 and 1998 is
attributable to certain  contribution  transactions entered into in 1998. In the
most  significant  of  these  transactions,  on March 4,  1998,  AT&T  Broadband
contributed  to  Cablevision  Systems  Corporation  (CSC)  certain  of its cable
television  systems  serving  approximately  830,000  customers  in exchange for
approximately  48.9  million  newly  issued CSC Class A common  shares  (the CSC
Transaction) and the assumption of indebtedness.

         In addition to the CSC  Transaction,  during 1998 AT&T  Broadband  also
completed eight transactions whereby AT&T Broadband contributed cable television
systems  serving in the  aggregate  approximately  1,924,000  customers to eight
separate joint ventures (collectively,  the 1998 Joint Ventures) in exchange for
non-controlling  ownership interests in each of the 1998 Joint Ventures, and the
assumption and repayment by the 1998 Joint Ventures of indebtedness.

         AT&T  Broadband had  approximately  1.8 million  digital  customers and
200,000 AT&T@Home customers at December 31, 1999.

         AT&T Broadband  operates cable television systems throughout the United
States.

         Service  Charges.  AT&T  Broadband  offers a  limited  "basic  service"
(Basic-TV)   (primarily   comprised  of  local  broadcast  signals  and  public,
educational  and  governmental  (PEG) access  channels)  and an "expanded  tier"
(primarily  comprised  of  specialized  programming  services,  in such areas as
health,  family  entertainment,   religion,   news,  weather,   public  affairs,
education,  shopping,  sports and  music).  The  monthly  fee for basic  service
generally  ranges  from $9.50 to $15.00,  and the  monthly  service  fee for the
expanded tier  generally  ranges from $15.00 to $21.50.  AT&T  Broadband  offers
"premium services" (referred to in the cable television industry as "Pay-TV" and
"pay-per-view") to its customers.  Such services consist  principally of feature
films, as well as live and taped sports events,  concerts and other programming.
AT&T  Broadband  also offers  Pay-TV  services  for a monthly  fee.  Charges are
usually discounted when multiple Pay-TV services are ordered. Customers may also
elect to subscribe to digital  video  services  comprised of up to 80 additional
video  channe;s  and  between  10 and 30  additional  audio  channels  featuring
additional   specialized   programming  and  premium   services  at  an  average
incremental monthly charge of $10.00.

         As further  enhancements to their cable services,  for a monthly charge
customers  may generally  rent  converters  or  converters  with remote  control
devices,  as well as purchase a channel guide. Also a nonrecurring  installation
charge is usually charged.

         Monthly fees for Basic-TV and Pay-TV  services to commercial  customers
vary widely depending on the nature and type of service.  Except under the terms
of certain  contracts to provide service to commercial  accounts,  customers are
free to discontinue service at any time without penalty.

         AT&T  Broadband  also offers  AT&T@Home,  a high speed  cable  Internet
access service, in some markets. Monthly charges for AT&T@Home range from $29.95
to $39.95.

<PAGE>

         The Cable  Television  Consumer  Protection and Competition Act of 1992
(the   1992   Cable   Act)  and  the   Telecommunications   Act  of  1996   (the
Telecommunications  Act,  together  with the 1992  Cable Act,  the Cable  Acts),
established  rules under which AT&T Broadband's  basic service and expanded tier
service  rates  and  equipment  and  installation  charges  are  regulated  if a
complaint is filed or if the appropriate franchise authority is certified.

         Local  Franchises.  Cable television  systems generally are constructed
and operated under the authority of nonexclusive permits or "franchises" granted
by local and/or state governmental authorities. Federal law, including the Cable
Communications  Policy  Act of 1984 (the 1984 Cable Act) and the 1992 Cable Act,
limits the power of the  franchising  authorities to impose  certain  conditions
upon cable  television  operators as a condition of the granting or renewal of a
franchise.

         Franchises  contain varying  provisions  relating to  construction  and
operation of cable television systems,  such as time limitations on commencement
and/or  completion of  construction;  quality of service,  including (in certain
circumstances) requirements as to the number of channels and broad categories of
programming  offered to  customers;  rate  regulation;  provision  of service to
certain  institutions;  provision of channels for public  access and  commercial
leased-use;   and  maintenance  of  insurance  and/or   indemnity  bonds.   AT&T
Broadband's franchises also typically provide for periodic payments of fees, not
to exceed 5% of revenue,  to the governmental  authority granting the franchise.
Additionally,  many franchises require payments to the franchising authority for
the funding of PEG access  channels.  Franchises  usually require the consent of
the franchising  authority prior to a transfer of the franchise or a transfer or
change in ownership or operating control of the franchisee.

         Subject to applicable  law, a franchise may be terminated  prior to its
expiration  date if the  cable  television  operator  fails to  comply  with the
material terms and conditions thereof.  Under the 1984 Cable Act, if a franchise
is lawfully terminated,  and if the franchising  authority acquires ownership of
the cable television system or effects a transfer of ownership to a third party,
such  acquisition or transfer must be at an equitable price or, in the case of a
franchise  existing  on the  effective  date of the 1984 Cable  Act,  at a price
determined in accordance with the terms of the franchise, if any.

         In connection with a renewal of a franchise,  the franchising authority
may require  the cable  operator to comply  with  different  and more  stringent
conditions than those originally imposed,  subject to the provisions of the 1984
Cable Act and other applicable federal, state and local law. The 1984 Cable Act,
as supplemented by the renewal provisions of the 1992 Cable Act,  establishes an
orderly  process for franchise  renewal which protects cable  operators  against
unfair denials of renewals when the operator's past performance and proposal for
future  performance  meet the standards  established by the 1984 Cable Act. AT&T
Broadband  believes  that its  cable  television  systems  generally  have  been
operated in a manner which  satisfies  such standards and allows for the renewal
of such franchises;  however,  there can be no assurance that the franchises for
such systems will be successfully renewed as they expire.

         Most of AT&T  Broadband's  present  franchises  had  initial  terms  of
approximately  10 to 15 years.  The  duration  of AT&T  Broadband's  outstanding
franchises  presently varies from a period of months to an indefinite  period of
time.  Approximately  one thousand of AT&T Broadband's  franchises expire within
the next five years. This represents approximately 25% percent of the franchises
held by AT&T Broadband and involves over 4 million basic customers.

<PAGE>

         Cable Telephony.  AT&T Broadband's  telephony pilot market  initiatives
progressed  on schedule in 1999.  As of December 31, 1999,  AT&T  Broadband  had
introduced  broadband  telephony  service to customers in 16 cities  within nine
pilot markets and had nearly 8,300 broadband  telephony  customers.  The markets
include the California Bay Area (including Fremont),  Chicago,  Dallas,  Denver,
Pittsburgh, Seattle, Salt Lake City, St. Louis and Portland, Oregon.

WIRELESS SERVICES

The AT&T Wireless Group Tracking Stock

         On March 14, 2000 the AT&T shareholders approved amendments to the AT&T
certificate of  incorporation  that would permit AT&T to create a separate class
of its common stock,  the AT&T Wireless Group tracking stock,  which would track
the  performance  of our wireless  business.  As of the date of filing this Form
10-K, no shares of the AT&T Wireless Group tracking stock were outstanding.

         The AT&T  Wireless  Group  includes  the results of certain  assets and
liabilities  which were not managed as part of the Wireless  Services segment in
1999.  AT&T Wireless  Group  tracking  stock is designed to reflect the separate
economic  performance of the AT&T Wireless Group.  Except as described below, we
attribute all of AT&T's current wireless  operations to the AT&T Wireless Group,
including:

o        all mobile and fixed wireless licenses,
o        all wireless networks, operations, cell sites,
         retail operations, wireless customer care
         facilities and customer location assets, and
o        interests in partnerships and affiliates providing
         wireless mobile communications in the United
         States and internationally.

         The AT&T Common Stock Group retains:

o        existing and future wireless activities that stem
         from country-specific joint venture relationships
         that are predominantly non-wireless, and
o        incidental wireless capabilities or links in any
         backbone or other communications network that is
         predominantly non-wireless.

         We currently  intend to include all future  wireless  activities in the
AT&T Wireless Group. Our board of directors may, however, in its discretion, but
subject to the AT&T Wireless Group policy  statement,  direct new businesses and
assets to the AT&T  Wireless  Group or the AT&T Common Stock Group or dispose of
or transfer businesses or assets of either group.

Business of the AT&T Wireless Group

         The  AT&T  Wireless  Group  is  one  of the  largest  wireless  service
providers in the United States,  based on approximately $7.6 billion in revenues
for the year ended December 31, 1999.  Including its  partnership  markets,  the
AT&T  Wireless  Group had over 12 million total  subscribers  as of December 31,
1999.

         The AT&T  Wireless  Group  operates  one of the  largest  U.S.  digital
wireless  networks.  The AT&T  Wireless  Group,  including its  partnership  and
affiliate markets,  currently holds 850 megahertz and 1900 megahertz licenses to

<PAGE>

provide  wireless   services   covering  94%  of  the  U.S.   population,   with
approximately  81% of the U.S.  population  covered by at least 30  megahertz of
wireless  spectrum as of December  31, 1999.  As of December 31, 1999,  the AT&T
Wireless  Group's built network,  including  partnership and affiliate  markets,
covered 65% of the U.S.  population.  This  includes  operations in 42 of the 50
largest U.S.  metropolitan  areas.  The AT&T Wireless Group  supplements its own
operations  with  roaming  agreements  that allow its  subscribers  to use other
providers'  wireless  services in regions where the AT&T Wireless Group does not
have operations.  Through these roaming  agreements,  the AT&T Wireless Group is
able to offer its  customers  wireless  services  covering  over 95% of the U.S.
population.

         Services and products

         The AT&T Wireless Group offers a variety of services for both voice and
data communications.  Service can include wireless voice transmission as well as
custom  calling  services  for  digital  services,   such  as  voicemail,   call
forwarding,  call  waiting,  caller ID,  three-way  calling,  no-answer and busy
transfer.  The AT&T  Wireless  Group  also  offers a variety  of other  enhanced
features,  including display messaging, which allows a cellular phone to receive
and store short alphanumeric  messages and pages and to provide subscribers with
notification  of voicemail  messages,  even if the handset is in use or switched
off,  extended  battery life and enhanced  directory  assistance,  which enables
callers to be connected to the party whose number was sought without  hanging up
and redialing.

         As a  packet-switched  network,  the  AT&T  Wireless  Group's  cellular
digital  packet data (CDPD)  network takes  advantage of the fact that with many
data applications, data is sent in bursts with intermittent quiet periods, which
allows many users to share the network  channel.  As a result,  relative to data
services carried over circuit-switched  analog or digital wireless networks, the
AT&T  Wireless  Group's  packet-switched  CDPD service is a  significantly  more
cost-effective means of sending data for the majority of applications because it
allows a channel to be shared by many users. For example, for many applications,
the AT&T Wireless  Group's  packet-switched  CDPD network allows it to offer its
customers  unlimited,  always-on usage,  most often for a flat monthly fee. This
makes its CDPD network service attractive for a variety of new applications.

         In the future,  the AT&T Wireless  Group expects a number of additional
applications will be developed,  including  e-commerce and shopping services and
services  that are  enhanced  by  information  about  the  user's  location.  By
providing or facilitating such applications, the AT&T Wireless Group believes it
can generate new revenue streams, as well as develop personalized  relationships
with its customers.

         The AT&T Wireless  Group offers a variety of products as complements to
its wireless  service,  including  handsets and  accessories,  such as chargers,
headsets,  belt clips,  faceplates and  batteries.  As part of its basic service
offering, the AT&T Wireless Group provides easy-to-use,  interactive menu-driven
handsets that can be activated over the air. These  handsets  primarily  feature
word prompts and menus rather than numeric codes to operate  handset  functions.
Some  handsets  allow  mobile  access to the  Internet.  In  addition,  the AT&T
Wireless Group offers tri-mode handsets, which are handsets compatible with PCS,
digital  cellular and analog cellular  frequencies  and service modes.  Tri-mode
handsets  permit  customers  to roam across a variety of wireless  networks  and
incorporates  AT&T's  intelligent  roaming  data base  (IRDB)  system.  The AT&T
Wireless  Group offers its  customers  use of Nokia,  Ericsson,  Mitsubishi  and
Motorola handsets.

<PAGE>

         The AT&T Wireless  Group  markets its wireless  services in its managed
markets under the AT&T brand name. It markets wireless  services to business and
residential  customers  through a direct  sales  force of 2,100,  through  sales
points of presence in approximately 390 AT&T company-owned  stores located in 36
states, and kiosks and other customer points of presence, including the Internet
and  inbound  call  centers,  and  through  local  and  national  non-affiliated
retailers  throughout the United States. The AT&T Common Stock Group sales force
also sells wireless  services to business and  residential  customers as part of
bundled  offerings  with  services  of the AT&T  Common  Stock  Group.  The AT&T
Wireless  Group  also  relies  upon  dealers  to  market  its  services  in some
locations.

         The  AT&T   Wireless   Group  charges  may  include  fees  for  service
activation,  monthly access,  per-minute airtime and customer-calling  features,
which may  include a fixed  number of  minutes or packets of data per month at a
set price and  generally  offers a variety  of  pricing  options,  most of which
combine a fixed  monthly  access fee for a fixed number of minutes or packets of
data and additional charges for usage in excess of those allotted. Customers may
also incur long distance and roaming fees.

         Fixed Wireless

         Fixed wireless  service  provides  customers with high speed  broadband
access coupled with wireline  quality voice access.  Fixed  wireless  provides a
high speed  packet  data  channel  which can be used by up to five data  devices
simultaneously (for example,  five personal computers  simultaneously  accessing
the Internet) at download  speeds of up to 512 kilobits per second.  The service
is expected to be capable of speeds of up to one megabit per second by mid 2000.
In addition,  fixed  wireless  can provide up to four lines of wireline  quality
voice telephony,  including custom calling features (e.g., call waiting,  caller
ID, three-way calling)  available today over wireline  networks.  Fixed wireless
was reported within the Consumer  Services segment in 1999, but will be included
in the AT&T Wireless Group in 2000.

         Other assets

         The AT&T  Wireless  Group  also  possesses  certain  other  assets  not
described above. The most significant of these assets include a number of equity
interests in domestic and international wireless operations and an air-to-ground
wireless operation.

         Domestically,  the AT&T  Wireless  Group  has  joint  ventures  with or
interests in a number of wireless operators,  including Telecorp PCS, Triton PCS
and Tritel Inc..  Internationally,  the AT&T Wireless Group owns one half of the
33.3%   equity   stake  in  Rogers   Cantel  it  holds   jointly   with  British
Telecommunications. The AT&T Wireless Group is the operating partner in wireless
ventures in Colombia, India and Taiwan. In 2000 the AT&T Wireless Group was also
allocated  one half the  interest  that  AT&T  possesses  in Japan  Telecom.  In
addition, subject to existing agreements or commitments, to the extent that AT&T
acquires any  international  wireless  investments in connection with its merger
with MediaOne,  AT&T intends to allocate those  investments to the AT&T Wireless
Group in exchange for fair and reasonable consideration.

         The Aviation  Communications  Division (ACD) of the AT&T Wireless Group
provides air-to-ground communications services. A minority ownership interest in
ACD is held by Rogers  Cantel.  ACD owns and operates a network of  ground-based
and  airborne  telecommunications  equipment  and related  assets  that  deliver
digital telephone service to commercial and private aircraft in North America.

<PAGE>

         Wireless network

         The AT&T  Wireless  Group's  ownership  position  in U.S.  markets  was
obtained through FCC auctions and the FCC lottery and settlement process as well
as through  acquisitions of, and purchases and exchanges of, licenses with other
cellular providers.

         Mobile voice network

         Coverage.  As of December 31, 1999,  the AT&T  Wireless  Group's  built
network,  including  partnership and affiliate markets,  covered 65% of the U.S.
population,  including  operations  in 42 of the 50  largest  U.S.  metropolitan
areas.  The AT&T Wireless Group provides  virtually  seamless  services over its
wireless  network,  which  operates  using both 850 megahertz and 1900 megahertz
licenses.  Where  agreements  are in place,  the AT&T Wireless  Group is able to
offer service to customers of other wireless  providers when they travel through
its service area,  and AT&T Wireless  Group  subscribers  can roam through other
wireless providers' service areas.

         Analog and digital  technologies.  The AT&T Wireless  Group offers both
analog and digital  service in its 850 megahertz  markets and digital service in
its 1900  megahertz  markets.  The AT&T  Wireless  Group  believes  that digital
technology   offers   many   advantages   over  analog   technology,   including
substantially  increased  network  capacity,   greater  call  privacy,  enhanced
services and features,  lower operating costs,  reduced  susceptibility to fraud
and the opportunity to provide improved data transmissions.  Moving customers to
digital  service has been a key component of the AT&T Wireless  Group's  overall
wireless  strategy.  Digital  service enables the AT&T Wireless Group to provide
added benefits and services to its customers,  including  extended battery life,
caller ID, text messaging and voicemail with message waiting indicator.

         TDMA network. The AT&T Wireless Group has chosen time division multiple
access  (TDMA)  technology  for its  digital  network.  TDMA  permits the use of
advanced  tri-mode  handsets  that allow for roaming  across  analog and digital
systems and across 850  megahertz  and 1900  megahertz  spectrums.  TDMA digital
technology allows for enhanced services and features, such as short alphanumeric
message  service,  extended battery life, added call security and improved voice
quality.  TDMA's  hierarchical cell structure enables the AT&T Wireless Group to
enhance  network  coverage  with  lower  incremental   investment   through  the
deployment of micro and pico, as opposed to macro,  cell sites. This enables the
AT&T Wireless  Group to offer  customized  billing  options and to track billing
information per individual cell site,  which is practical for advanced  wireless
applications  such as fixed  wireless and  wireless  office  applications.  TDMA
served an estimated 35 million subscribers  worldwide and 18 million subscribers
in North America as of December 31, 1999,  according to the  Universal  Wireless
Communications   Consortium,  an  association  of  TDMA  service  providers  and
manufacturers.  TDMA  equipment  is  available  from  leading  telecommunication
vendors such as Lucent,  Ericsson and Nortel Networks  Corporation.  A number of
other wireless service  providers have chosen code division mobile access (CDMA)
or global  system  for mobile  communications  (GSM) as their  digital  wireless
technology.

         CDPD network.  The AT&T Wireless Group's CDPD network  currently covers
89 million POPs,  which  represents over 60% of its built network,  and its CDPD
customers  can roam on the CDPD  networks of other  wireless  providers,  which,
together,  cover an  additional 72 million  POPs.  CDPD is an industry  standard
using Internet Protocol, which allows most applications written for the Internet
as well as many  corporate  applications  to run  efficiently  over the  network

<PAGE>

without  modification.  Using CDPD, data files and transactions are divided into
small  packets  and  sent  on  a  dedicated  wireless  channel.   In  many  data
applications,  data is sent in bursts with  intermittent  quiet periods.  Packet
transmission  technologies take advantage of this fact and allow user data to be
efficiently carried on the same network channel.  As a result,  relative to data
services carried over circuit-switched  analog or digital wireless networks, the
AT&T  Wireless  Group's  packet-switched  CDPD service is a  significantly  more
cost-effective means of sending data for the majority of applications because it
allows many users to share the same channel.

OTHER BUSINESSES

         AT&T Solutions

         AT&T Solutions,  established in 1995, provides outsourcing,  consulting
and networking integration services to large businesses. AT&T Solutions provides
clients with a broad array of professional  services to satisfy clients complete
networking technology needs.

         AT&T Solutions' offerings include operational and networking management
services  for  a  broad  range  of  computing  platforms,  including  mainframe,
mid-range  computers,  personal  computer  and  network  environments,  such  as
local-area  networks and wide-area  networks.  Most customers  execute long-term
contracts for AT&T Solutions networking services.

         AT&T   Solutions'   customers  are   generally   within  the  top  2000
multinational  corporations in the world. AT&T Solutions' sales force engages in
direct  solicitation of those customers as well as referrals from other units of
AT&T.

         International

         AT&T has  established a number of  international  alliances to increase
the reach and scope of AT&T's services and network over time and has invested in
certain  countries  in order to increase  the range of  services  AT&T offers in
those countries.

         International   operations  include   international   carrier  services
businesses,  international  online  services,  as well as  consolidated  foreign
operations such as frame relay services in the United  Kingdom.  AT&T also has a
number of international joint ventures and alliances, such as Alestra in Mexico,
AT&T Canada Corp., and Japan Telecom.

         On January 6, 2000 AT&T and British Telecommunications plc (BT) created
a global venture to serve the  communications  needs of multinational  companies
and the international calling needs of businesses around the world. The venture,
called Concert and owned equally by AT&T and BT, combined transborder assets and
operations of each company,  including  their existing  international  networks,
their international  traffic,  their transborder products for business customers
--  including  an  expanding  set of  Concert  services  -- and  AT&T  and  BT's
multinational accounts in selected industry sectors.

         On June 1, 1999, AT&T Canada Corp. merged with MetroNet  Communications
Corp.,  Canada's largest competitive local exchange carrier.  Under the terms of
the merger  agreement,  AT&T  received 31 percent of the equity  interest and 23
percent of the voting  interest  in the  combined  entity in  exchange  for AT&T
Canada Corp. and ACC  TelEnterprises  Ltd. In addition,  AT&T agreed to purchase

<PAGE>

all of the  remaining  shares at the greater of the then  appraised  fair market
value or the accreted minimum price,  which initially is C$37.50 accreting after
June  30,  2000  at a rate  of  16%  per  annum,  compounded  quarterly.  If the
acquisition is not completed by June 30, 2003,  those shares,  along with AT&T's
shares,  would be sold  through an auction  process and AT&T will make whole the
other  shareholders  for the amount they would have been entitled to if AT&T had
purchased  the  shares.  The  completion  of the  acquisition  is subject to the
condition  that AT&T is permitted to acquire the shares under  Canada's  foreign
ownership  restrictions.  AT&T may acquire  the shares  prior to a change in the
ownership  restrictions  by developing a structure that addresses such ownership
restrictions.

LEGISLATIVE AND REGULATORY DEVELOPMENTS

         Telecommunications Act of 1996

         In  February   1996,  the   Telecommunications   Act  became  law.  The
Telecommunications  Act,  among  other  things,  was  designed  to foster  local
exchange  competition  by  establishing  a  regulatory  framework  to govern new
competitive entry in local and long distance  telecommunications  services.  The
Telecommunications Act will permit the Regional Bell Operating Companies (RBOCs)
to provide  interexchange  services originating in any state in its region after
demonstrating  to the FCC that such  provision  is in the  public  interest  and
satisfying the conditions for developing  local  competition  established by the
Telecommunications Act.

         In  August  1996,  the FCC  adopted  rules and  regulations,  including
pricing  rules  (the  "Pricing  Rules")  to  implement  the  local   competition
provisions of the  Telecommunications  Act,  including with respect to the terms
and conditions of interconnection  with LEC networks and the standards governing
the purchase of unbundled  network  elements and  wholesale  services from LECs.
These  implementing  rules rely on state public utilities  commissions (PUCs) to
develop the specific rates and procedures applicable to particular states within
the framework prescribed by the FCC.

         On July 18,  1997,  the  United  States  Court of  Appeals  for the 8th
Circuit  issued a decision  holding  that the FCC lacks  authority  to establish
pricing rules to implement the sections of the local  competition  provisions of
the  Telecommunications  Act applicable to interconnection with LEC networks and
the purchase of unbundled  network  elements and  wholesale  services from LECs.
Accordingly,  the Court  vacated  the rules  that the FCC had  adopted in August
1996,  and which had been stayed by the Court since  September  1996. On October
14,  1997,  the 8th  Circuit  Court of  Appeals  vacated  an FCC  Rule  that had
prohibited  incumbent LECs from separating network elements that are combined in
the LEC's  network,  except at the  request  of the  competitor  purchasing  the
elements.  This  decision  increased  the  difficulty  and  costs  of  providing
competitive  local  service  through  the  use  of  unbundled  network  elements
purchased from the incumbent LECs.

         On January 25, 1999,  the Unites States Supreme Court issued a decision
reversing  the 8th  Circuit  Court  of  Appeal's  holding  that  the  FCC  lacks
jurisdiction to establish  pricing rules applicable to  interconnection  and the
purchase of unbundled  network  elements,  and the Court of Appeal's decision to
vacate  the  FCC's  rule  prohibiting  incumbent  LECs from  separating  network
elements  that are  combined  in the LEC's  network.  The effect of the  Supreme
Court's  decision  is to  reinstate  the FCC's rules  governing  pricing and the
separation of unbundled network elements.  The 8th Circuit Court of Appeals will

<PAGE>

now consider the incumbent  LECs' claims that although the FCC has  jurisdiction
to  adopt  pricing  rule,  the  rules it  adopted  are not  consistent  with the
applicable  provisions of the Act. The Supreme Court also vacated the FCC's rule
identifying and defining the unbundled  network elements that incumbent LECs are
required to make  available to new  entrants,  and directed the FCC to reexamine
this issue in light of the standards mandated by the Act.

         In response to the Supreme  Court's  decision,  the FCC  completed  its
re-examination  of and released an order  identifying and defining the unbundled
network  elements  that  incumbent  LECs are  required to make  available to new
entrants.  That order  re-adopted  the original  list of elements,  with certain
exceptions. An association of incumbent LECs has appealed the FCC's order to the
United States Court of Appeals for the District of Columbia  Circuit,  and asked
the  Court to hear the  appeal  on an  expedited  basis.  A number  of  parties,
including AT&T and other  incumbent  LECs, have petitioned the FCC to reconsider
and/or  clarify  its  order.  The FCC has moved to hold the  appeal in  abeyance
pending its disposition of the reconsideration petitions.

         In view of the proceedings  pending before the 8th Circuit, DC Circuit,
FCC and  state  PUCs,  there  can be no  assurance  that the  prices  and  other
conditions  established  in each state will provide for effective  local service
entry and competition or provide AT&T with new market opportunities.

         In  December  1999,  Bell  Atlantic  obtained  approval  to offer  long
distance  telecommunications  service in New York state,  the first time an RBOC
had received this approval under the Telecommunications Act. Bell Atlantic began
offering combined local and long distance service in January 2000.

         In  January  2000,  SBC  Communications,  Inc.  filed  with  the FCC an
application for authorization to offer long distance  telecommunications service
in Texas.  Under the  Telecommunications  Act,  the FCC is  required  to issue a
decision on the application by April 2000.

         Modification of Final Judgment of 1982

         Prior to 1996, AT&T and the RBOCs were subject to the provisions of the
Modification  of Final  Judgment  of 1982 (MFJ)  since its  implementation.  The
Telecommunications  Act  effectively  superseded  future  operation  of the MFJ.
Consequently, on April 11, 1996, Judge Harold Greene issued an order terminating
the MFJ.
         Regulation of Rates

         AT&T  is  subject  to the  jurisdiction  of the  FCC  with  respect  to
interstate and international rates, lines and services,  and other matters. From
July 1989 to October 1995, the FCC regulated AT&T under a system known as "price
caps" whereby AT&T's prices, rather than its earnings,  were limited. On October
12, 1995,  recognizing a decade of enormous  change in the long distance  market
and finding  that AT&T  lacked  market  power in the  interstate  long  distance
market,  the FCC reclassified AT&T as a "non-dominant"  carrier for its domestic
interstate services. As a result, AT&T became subject to the same regulations as
its long  distance  competitors  for such  services.  Thus,  AT&T was no  longer
subject to price cap  regulation  for these  services,  was able to file tariffs
that are presumed lawful on one day's notice,  and was free of other regulations
and reporting requirements that apply only to dominant carriers.

         In addition,  on October 31,  1996,  the FCC issued an order that would
have prohibited  non-dominant carriers,  including AT&T, from filing tariffs for

<PAGE>

their domestic interstate services.  AT&T and other parties have filed an appeal
of the FCC's order with the United States Court of Appeals for the D.C. Circuit.
In February 1997, the D.C.  Circuit stayed the  effectiveness of the FCC's order
pending appeal.  Oral argument has not yet been scheduled.  If the Court affirms
the FCC's order and lifts the stay, non-dominant carriers,  including AT&T, will
have to  utilize  mechanisms  other  than  tariffs  to  establish  the terms and
conditions that apply to domestic, interstate telecommunications services.

         Furthermore,  in May 1997,  the FCC adopted  three  orders  relating to
Price Caps, Access Reform, and Universal Service that substantially  revised the
level and structure of access charges that AT&T as a long distance  carrier pays
to incumbent  LECs.  AT&T has agreed to pass through to consumers any savings to
AT&T as a  result  of  access  charge  reform.  AT&T  began  implementing  these
reductions July 15, 1997. Consequently,  AT&T's results after June 1997 reflects
lower  revenue  per minute of usage and lower  access and other  interconnection
costs per minute of usage.

         The Price Cap Order  requires LECs to reduce their price cap indices by
6.5 percent  annually,  less an  adjustment  for  inflation,  which is likely to
result in a  reduction  in the  interstate  access  charges  that long  distance
carriers, such as AT&T, pay to LECs. The Access Charge Reform Order restructured
access  charges  so that  certain  costs  that do not vary  with  usage  will be
recovered on a flat-rate basis and permitted increased flat-rate  assessments on
multiline  business  customers  and on  residential  lines  beyond  the  primary
telephone line. This restructuring allows a reduction in access charges assessed
on long distance carriers on a usage basis. Finally, the Universal Service Order
(which represents an FCC mandated  contribution to support schools and libraries
and rural  health  care  programs,  high cost  support  and low  income  support
mechanisms  which  are paid to the  Universal  Service  Administrative  Company)
adopts a new  mechanism for funding  universal  service which expands the set of
carriers  that must  contribute  to  support  universal  service  from only long
distance  carriers to all  carriers,  including  LECs,  that provide  interstate
telecommunications  services.  Similarly,  the set of carriers  eligible for the
universal  service  support  has been  expanded  from only LECs to any  eligible
carrier  providing local service to a customer,  including AT&T as a new entrant
in local markets.  The Universal  Service Order also adopted measures to provide
discounts on  telecommunications  services,  Internet  access and inside wire to
eligible schools and libraries and rural health carrier providers.

         AT&T remains  subject to the statutory  requirements of Title II of the
Communications  Act. AT&T must offer service under rates,  terms and  conditions
that are just, reasonable and not unreasonably discriminatory;  it is subject to
the FCC's  complaint  process,  and it must give notice to the FCC and  affected
customers prior to discontinuance, reduction, or impairment of service. AT&T has
also made certain  commitments  that address  concerns that had been raised with
regard to the potential impact of declaring AT&T to be non-dominant, including a
three-year rate assurance for low income and low usage  residential  users and a
three-year  limit on, and 5 days  advance  notice  for,  rate  increases  on 800
directory assistance and analog private line services.

         AT&T's  international  private line  services  have been  classified as
non-dominant  for several years.  AT&T's  switched  international  services have
become subject to increased competition, similar to its domestic services and on
May 9, 1996,  the FCC  adopted  an order  reclassifying  AT&T as a  non-dominant
carrier for such  services.  AT&T has made certain  voluntary  commitments  that
address issues raised in that proceeding, including commitments: (i) to maintain
its annual average revenue per minute for international  residential calls at or

<PAGE>

below the 1995  level  through  May 9, 1999,  and in the event of a  significant
change that substantially  raises AT&T's costs, to provide the FCC five business
days notice prior to  implementing  rate  increases  that would raise the annual
average  revenue  per minute for such calls  above the 1995  level;  and (ii) to
maintain  certain  discount  calling plans providing at least a 15% discount off
basic pricing schedules until May 9, 1999. AT&T also made voluntary  commitments
relating to its operation of international cable facilities,  its negotiation of
settlement  agreements with foreign carriers and its  relationship  with foreign
partners.

         In  addition  to  the  matters  described  above  with  respect  to the
Telecommunications  Act, state public service commissions or similar authorities
having  regulatory  power over  intrastate  rates,  lines and services and other
matters regulate AT&T's local and intrastate communications services. The system
of regulation used in many states is rate-of-return regulation. In recent years,
many states have adopted  different  systems of  regulation,  such as:  complete
removal of rate-of-return regulation,  pricing flexibility rules, price caps and
incentive regulation.

         Wireless Regulatory Environment

         The FCC regulates the licensing, construction,  operation, acquisition,
sale and  resale of  wireless  systems  in the  United  States  pursuant  to the
Communications  Act of 1934 and the associated  rules,  regulations and policies
promulgated by the FCC.

Licensing of wireless services systems

         The AT&T Wireless Group owns protected geographic service area licenses
granted by the FCC to provide  cellular  service and PCS. It also owns  licenses
granted by the FCC to provide  point-to-multi-point  communications  services in
various bands, including significant licenses in the 37 to 39 gigahertz bands.

         A cellular system operates on one of two 25 megahertz  frequency blocks
that the FCC allocates for cellular radio service.  Cellular  systems  generally
are used for two-way  mobile voice  applications,  although they may be used for
data  applications and fixed wireless  services as well.  Cellular license areas
are  issued  for  either  metropolitan  service  areas or rural  service  areas.
Initially,  one of the two  cellular  licenses  available  in each  metropolitan
service  area or rural  service area was awarded to a local  exchange  telephone
company  by the  FCC,  while  the  other  license  was  awarded  either  through
competitive processes or lotteries.  Licenses were issued beginning in 1983, and
over the years numerous  license  transfers and corporate  reorganizations  have
obscured  the  original  pattern of  distributing  one set of  licenses to local
telephone  company  affiliates and the other to companies that do not have local
exchange service in the license area.

         A PCS system  operates on one of six  frequency  blocks  allocated  for
personal  communications  services.  PCS systems  generally are used for two-way
voice applications  although they may carry two-way data communications as well.
Narrowband  PCS systems,  in contrast,  are for non-voice  applications  such as
paging and data service and are separately licensed. For the purpose of awarding
PCS  licenses,  the FCC has  segmented  the United  States into 51 large regions
called major trading  areas,  which are comprised of 493 smaller  regions called
basic  trading  areas.  The FCC awarded two PCS licenses for each major  trading
area and four  licenses  for each  basic  trading  area.  Thus,  generally,  six
licensees  are  authorized  to compete in each area.  The two major trading area

<PAGE>

licenses authorize the use of 30 megahertz of spectrum. One of the basic trading
area  licenses is for 30 megahertz  of spectrum,  and the other three are for 10
megahertz  each. The FCC permits  licensees to split their licenses and assign a
portion, on either a geographic or frequency basis or both, to a third party.

         The FCC awarded  initial PCS licenses by auction.  Auctions  began with
the 30 megahertz major trading area licenses and concluded in 1998 with the last
of the basic trading area licenses.  However,  in March 1998, the FCC adopted an
order that allows troubled  entities that won PCS 30 megahertz  C-Block licenses
at auction to obtain  financial  relief from their  payment  obligations  and to
return some or all of their C-Block  licenses to the FCC for  reauctioning.  The
FCC completed the reauction of the returned licenses in April 1999. In addition,
certain of the C-block  licenses are  currently in bankruptcy  proceedings,  and
these licenses may be returned to the FCC for reauction.

         Under the FCC's current rules specifying  spectrum  aggregation  limits
affecting  wireless  licensees,  no  entity  may  hold  attributable  interests,
generally 20% or more of the equity of, or an officer or director position with,
the  licensee,  in licenses  for more than 45  megahertz  of PCS,  cellular  and
certain  specialized mobile radio services where there is significant overlap in
any  geographic  area.  Significant  overlap will occur when at least 10% of the
population  of the PCS  licensed  service  area is within  the  cellular  and/or
specialized mobile radio service area(s).  The FCC recently increased this limit
to 55 megahertz in  situations  in which a 25 megahertz  cellular  rural service
area is  attributed to a 30 megahertz PCS license.  These  spectrum  aggregation
rules are subject to a pending FCC  proceeding  that could  revise or  eliminate
them.

         All wireless  licenses  have a 10-year  term,  at the end of which term
they must be  renewed.  The FCC will  award a renewal  expectancy  to a wireless
licensee that has provided substantial service during its past license term, and
has  substantially  complied  with  applicable  FCC rules and  policies  and the
Communications  Act.  Licenses  may be  revoked  for cause and  license  renewal
applications  denied if the FCC  determines  that a renewal  would not serve the
public  interest.  FCC rules provide that  competing  renewal  applications  for
licenses  will  be  considered  in  comparative  hearings,   and  establish  the
qualifications  for  competing  applications  and the standards to be applied in
hearings.

         All wireless  licenses must satisfy  specified  coverage  requirements.
Cellular  licenses were required,  during the five years  following the grant of
the  license,  to  construct  their  systems to provide  service (at a specified
signal strength) to the territory  encompassed by their service area. Failure to
provide such coverage  resulted in reduction of the relevant license area by the
FCC.  All A and B block PCS  licensees  must  construct  facilities  that  offer
coverage to one-third of the population of the service area within five years of
the original  license  grants and to  two-thirds  of the  population  within ten
years.  All D and E block PCS licensees  must  construct  facilities  that offer
coverage to one-fourth of the population of the licensed area or "make a showing
of substantial  service in their license area" within five years of the original
license  grants.  Licensees that fail to meet the coverage  requirements  may be
subject to forfeiture of the license.

         For a period of up to five  years  after  the  grant of a PCS  license,
subject to  extension,  a  licensee  will be  required  to share  spectrum  with
existing  licensees  that operate  certain fixed  microwave  systems  within its
license area under circumstances where  interconnection is not available through

<PAGE>

the local exchange  carrier or the  competitive  local exchange  carrier.  In an
effort to balance the competing  interests of existing microwave users and newly
authorized PCS licensees, the FCC has adopted a transition plan to relocate such
microwave  operators to other spectrum blocks and a cost sharing plan so that if
the  relocation  of an  incumbent  benefits  more than one PCS  licensee,  those
licensees will share the cost of the relocation. Initially, this transition plan
allowed  most  microwave  users to operate in the PCS  spectrum  for a voluntary
two-year  negotiation period and an additional  mandatory  one-year  negotiation
period.  For public  safety  entities  that  dedicate a majority of their system
communications  to police,  fire or emergency medical services  operations,  the
voluntary  negotiation  period  is three  years,  with an  additional  mandatory
two-year   negotiation   period.  In  1998,  the  FCC  shortened  the  voluntary
negotiation  period by one year, without  lengthening the mandatory  negotiation
period, for non-public safety PCS licensees in the C, D, E and F Blocks. Parties
unable to reach agreement  within these time periods may refer the matter to the
FCC for  resolution,  but the incumbent  microwave user is permitted to continue
its operations until final FCC resolution of the matter. The transition and cost
sharing  plans  expire  on April 4,  2005,  at which  time  remaining  microwave
incumbents in the PCS spectrum will be  responsible  for the costs of relocating
to alternate spectrum locations.

         Wireless  systems are subject to certain FAA regulations  governing the
location,  lighting and construction of transmitter  towers and antennas and are
subject  to  regulation   under  federal   environmental   laws  and  the  FCC's
environmental  regulations.  State or local zoning and land use regulations also
apply to tower  siting  and  construction  activities.  We expect to use  common
carrier  point-to-point  microwave  facilities to connect certain  wireless cell
sites,  and to link them to the main  switching  office.  The FCC licenses these
facilities  separately  and they  are  subject  to  regulation  as to  technical
parameters and service.

         The Communications Act preempts state and local regulation of the entry
of, or the rates charged by, any provider of private  mobile radio service or of
commercial mobile radio service,  which includes PCS and cellular  service.  The
FCC does not regulate  commercial  mobile radio service or private  mobile radio
service rates.  However,  commercial  mobile radio service  providers are common
carriers and are required under the  Communications  Act to offer their services
to the public without  unreasonable  discrimination.  The FCC's rules  currently
require  providers  to  permit  others to resell  their  services  for a profit;
however, these rules will expire in 2002.

         Transfers and assignments of cellular and PCS
licenses

         The  Communications  Act and FCC rules require the FCC's prior approval
of the  assignment  or  transfer  of control of a license  for a PCS or cellular
system. In addition,  the FCC has established  transfer disclosure  requirements
that require  licensees who assign or transfer  control of a PCS license  within
the first three years of their license terms to file  associated sale contracts,
option agreements, management agreements or other documents disclosing the total
consideration  that the  licensee  would  receive in return for the  transfer or
assignment of its license.  Non-controlling interests in an entity that holds an
FCC license  generally may be bought or sold without FCC approval subject to the
FCC's  spectrum  aggregation  limits.  However,  notification  and expiration or
earlier  termination  of the  applicable  waiting period under Section 7A of the
Clayton Act by either the Federal Trade  Commission or the Department of Justice
may be required,  as well as approval by state or local  regulatory  authorities

<PAGE>

having competent  jurisdiction,  if we sell or acquire PCS or cellular interests
over a certain size.

         Foreign ownership

         Under existing law, no more than 20% of an FCC licensee's capital stock
may be owned,  directly or  indirectly,  or voted by non-U.S.  citizens or their
representatives,  by a foreign government or its representatives or by a foreign
corporation.  If an FCC licensee is controlled by another entity, as is the case
with our ownership  structure,  up to 25% of that entity's  capital stock may be
owned or voted by  non-U.S.  citizens  or their  representatives,  by a  foreign
government or its representatives or by a foreign corporation. Foreign ownership
above the 25% level may be allowed  should the FCC find such  higher  levels not
inconsistent  with the public interest.  The FCC has ruled that higher levels of
foreign ownership, even up to 100%, are presumptively consistent with the public
interest  with  respect  to  investors  from  certain  nations.  If our  foreign
ownership  were to exceed  the  permitted  level,  the FCC could  revoke our FCC
licenses,  although we could seek a declaratory ruling from the FCC allowing the
foreign  ownership  or take  other  actions  to  reduce  our  foreign  ownership
percentage in order to avoid the loss of our  licenses.  We have no knowledge of
any present foreign ownership in violation of these restrictions.

         Recent regulatory developments

         The FCC has announced rules for making emergency 911 services available
by cellular, PCS and other commercial mobile radio service providers,  including
enhanced 911 services that provide the caller's  telephone number,  location and
other useful  information.  The original  timetable  required  commercial mobile
radio  services  providers to be able to process and transmit 911 calls  without
call   validation,   including   those  from  callers  with  speech  or  hearing
disabilities,  by late  1997.  Additionally,  commercial  mobile  radio  service
providers  are  required  to take  actions  enabling  them to  relay a  caller's
automatic number  identification and cell site if requested to do so by a public
safety  dispatch agency that agreed to reimburse the provider for the additional
expenses  incurred to provide those  services.  In October 1999, the FCC revised
its rules to eliminate any  requirement  that such agencies  reimburse  wireless
providers. In a companion order issued earlier in the fall of 1999, the FCC also
modified rules requiring  commercial  mobile radio service  providers to provide
information on the location of a 911 call. The modified rules allow providers to
use either network or  handset-based  technologies to provide such  information.
However,  providers are not  permitted to recover their costs of deploying  such
technologies from dispatch agencies.

         The FCC has granted  waivers of the  requirement to provide 911 service
to users with speech or hearing  disabilities to various providers,  and we have
obtained a waiver.  On June 9, 1999,  the FCC also  adopted  rules  designed  to
ensure that analog  cellular calls to 911 are completed.  These rules,  which do
not apply to digital cellular  service or to PCS, give each cellular  provider a
choice of three ways to meet this requirement.  State actions  incompatible with
the FCC rules are subject to preemption.

         On  August  8,  1996,  the FCC  released  its  order  implementing  the
interconnection  provisions of the Telecommunications  Act. Although many of the
provisions  of this order were struck down by the U.S.  Court of Appeals for the
Eighth Circuit,  on January 25, 1999, the U.S. Supreme Court reversed the Eighth
Circuit and upheld the FCC in all respects  material to our operations.  On June
10, 1999, the Eighth Circuit issued an order requesting briefs on certain issues

<PAGE>

it did not  address in its  earlier  order,  including  the  pricing  regime for
interconnection.  While  appeals have been  pending,  the rationale of the FCC's
order has been  adopted by many states'  public  utility  commissions,  with the
result that the charges that  cellular  and PCS  operators  pay to  interconnect
their  traffic  to  the  public   switched   telephone   network  have  declined
significantly from pre-1996 levels.

         In  its   implementation  of  the   Telecommunications   Act,  the  FCC
established federal universal service requirements that affect commercial mobile
radio service operators.  Under the FCC's rules, commercial mobile radio service
providers are potentially  eligible to receive  universal  service subsidies for
the first time;  however,  they are also  required to  contribute to the federal
universal  service  fund and can be required to  contribute  to state  universal
funds.  Many states also are moving forward to develop state  universal  service
fund  programs.  A number of these state funds  require  contributions,  varying
greatly from state to state, from commercial mobile radio service providers. The
FCC's  universal  service  order was  modified  on  appeal in the U.S.  Court of
Appeals for the Fifth Circuit. The court's ruling has had the effect of reducing
commercial  mobile radio  service  provider  support  payments  required for the
federal universal service programs.

         On August 1, 1996,  the FCC released a report and order  expanding  the
flexibility of cellular, PCS and other commercial mobile radio service providers
to provide fixed as well as mobile services.  These fixed services include,  but
need not be limited to, wireless local loop services,  for example, to apartment
and office buildings, and wireless backup services to private branch exchange or
switchboards  and local area networks,  to be used in the event of interruptions
due to weather or other  emergencies.  The FCC has not yet decided whether fixed
services provided on a co-primary basis to mobility services should be subjected
to  universal  service  obligations,  or  how  such  fixed  services  should  be
regulated,  but  it has  proposed  a  presumption  that  they  be  regulated  as
commercial mobile radio service services.  If the fixed services are provided as
an ancillary service to a carrier's mobility services,  the FCC has decided that
such fixed services should be regulated as commercial mobile radio services.

         The FCC has adopted  rules on telephone  number  portability  that will
enable  customers to migrate their  landline and cellular  telephone  numbers to
cellular or PCS providers and from a cellular or PCS provider to another service
provider. On February 8, 1999, the FCC extended the deadline for compliance with
this requirement to November 24, 2002,  subject to any later  determination that
number portability is necessary to conserve telephone numbers.  The FCC has also
adopted  rules  requiring  cellular and PCS  providers  to provide  functions to
facilitate  electronic  surveillance  by law  enforcement  officials by June 30,
2000,  and has  proposed  to adopt  certain  additional  obligations  furthering
provision of these functions.  Representatives  of the cellular and PCS industry
are  challenging  the  surveillance  rules.  Additionally,  it is not clear that
commercial mobile radio service providers will be able to comply with the rules'
compatibility  requirements by the current  deadline of June 30, 2000; nor is it
clear  whether  the FCC will grant  waivers to extend the  deadline  or what the
scope of penalties for failing to comply may be.

         The FCC has determined  that the interstate,  interexchange  offerings,
commonly  referred to as long  distance,  of  commercial  mobile  radio  service
providers  are  subject to the  interstate,  interexchange  rate  averaging  and
integration  provisions of the Communications Act. Rate averaging requires us to
average our  interstate  long  distance  commercial  mobile radio  service rates
between high cost and urban  areas.  The FCC has delayed  implementation  of the

<PAGE>

rate  integration  requirements  with  respect  to wide area rate plans we offer
pending  further  reconsideration  of  its  rules.  The  FCC  also  delayed  the
requirement  to integrate  commercial  mobile radio service long distance  rates
among commercial mobile radio service affiliates.  On December 31, 1998, the FCC
reaffirmed,  on  reconsideration,  that its interexchange rate integration rules
apply  to  interexchange  commercial  mobile  radio  service  services.  The FCC
announced it would  initiate a further  proceeding to determine how  integration
requirements  apply  to  typical  commercial  mobile  radio  service  offerings,
including one-rate plans.  Until this further  proceeding is concluded,  the FCC
will enforce  long  distance  rate  integration  on our  services  only where we
separately  state a long distance toll charge and bill to our customers.  To the
extent that the AT&T Wireless  Group offers  services  subject to the FCC's rate
integration and averaging requirements,  these requirements generally reduce its
pricing  flexibility.  We cannot  assure you that the FCC will decline to impose
rate integration or averaging requirements on the AT&T Wireless Group or decline
to require it to integrate  its  commercial  mobile radio  service long distance
rates across its commercial mobile radio service affiliates.

         The FCC  recently  adopted  new  rules  limiting  the  use of  customer
proprietary  network information by  telecommunications  carriers in marketing a
broad range of telecommunications  and other services to their customers and the
customers  of  affiliated  companies.  The rules were struck down by the federal
circuit  court in 1999,  and their  effectiveness  has been  stayed  pending the
court's review of a petition to the FCC for  reconsideration.  Even if the rules
are  reinstated,  the AT&T  Wireless  Group does not  anticipate  that they will
result in a significant  adverse  impact on its financial  position,  results of
operation or liquidity.

         In addition,  state commissions have become increasingly  aggressive in
their efforts to conserve numbering resources. These efforts may impact wireless
service providers  disproportionately  by imposing  additional costs or limiting
access to numbering  resources.  Examples of state conservation methods include:
number  pooling,  number  rationing  and code  sharing.  A number of states have
petitioned the FCC for authority to adopt  "technology  specific"  overlays that
would require wireless  providers to obtain telephone  numbers out of a separate
area  code  and may  require  wireless  providers  to  change  their  customers'
telephone numbers. The FCC approval and the states' subsequent implementation of
such "technology  specific overlays" could increase wireless  providers' cost of
doing business and impact their ability to market services. On June 2, 1999, the
FCC released a notice of proposed rulemaking soliciting comments on a variety of
administrative   and  technical  measures  that  would  promote  more  efficient
allocation  and use of  numbering  resources.  Adoption of some of the  proposed
methods could have a disproportionate impact on commercial mobile radio services
providers.

         The FCC is also  considering  adopting rules to govern customer billing
by  commercial  mobile radio  services  providers  and applied a number of these
rules to commercial  mobile radio service  providers.  The FCC adopted  detailed
billing  rules  for  landline   telecommunications   service  providers  and  is
considering  whether to extend the remaining  rules to  commercial  mobile radio
services providers.  The FCC may require that more billing detail be provided to
consumers,  which could add to the expense of the billing process as systems are
modified to conform to any new requirements. The FCC also is considering whether
carriers  that  decide  to  pass  through  their  mandatory   universal  service
contributions   to  their  customers  should  be  required  to  provide  a  full
explanation  of the program,  and whether to ensure that the carriers  that pass
through their  contribution  do not recover amounts greater than their mandatory

<PAGE>

contributions  from their  customers.  Adoption  of some of the FCC's  proposals
could increase the complexity of our billing  processes and restrict our ability
to bill customers for services in the most commercially advantageous way.

         The FCC has  adopted  an  order  that  determines  the  obligations  of
telecommunications  carriers to make their  services  accessible to  individuals
with disabilities.  The order requires  telecommunications services providers to
offer  equipment and services that are accessible to and useable by persons with
disabilities.  While the rules exempt  telecommunications  carriers from meeting
general  disability  access   requirements  if  such  results  are  not  readily
achievable,  it is not clear how liberally the FCC will construe this exemption.
Accordingly,  the rules  require us to make  material  changes  to our  network,
product line, or services at our expense.

         In June 1999, the FCC initiated an administrative rulemaking proceeding
to help  facilitate  the offering of calling party pays as an optional  wireless
service.  Under the calling party pays service,  the party placing the call to a
wireless customer pays the wireless airtime charges.  Most wireless customers in
the United States now pay both to place calls and to receive them. Adoption of a
calling  party pays system on a widespread  basis could make  commercial  mobile
radio   service   providers   more   competitive   with   traditional   landline
telecommunications providers for the provision of regular telephone service.

         State regulation and local approvals

         State and local governments are preempted from regulating either market
entry by, or the rates of, wireless  operators.  However,  state governments can
regulate other terms and conditions of wireless  service and several states have
imposed  (or have  proposed  legislation  that  will  impose)  various  consumer
protection  regulations on the wireless  industry.  States also may impose their
own universal  service support regimes on wireless and other  telecommunications
carriers,  similar to the requirements that have been established by the FCC. At
the local level,  wireless  facilities  typically are subject to zoning and land
use regulation. State and local jurisdictions may also impose some conditions on
a driver's use of wireless technology while operating a motor vehicle.  However,
under the federal  Telecommunications  Act, neither local nor state  governments
may  categorically  prohibit  the  construction  of wireless  facilities  in any
community.

         Cable Regulation and Legislation

         The operation of cable television  systems is extensively  regulated by
the  FCC,   some   state   governments   and   most   local   governments.   The
Telecommunications  Act  removes  barriers  to  competition  in both  the  cable
television  market and the local telephone market and reduces the scope of cable
rate regulation.

         The  Telecommunications  Act  required  the FCC to  implement  numerous
rulemakings,  the final outcome of which cannot yet be  determined  due to court
challenges. Moreover, Congress and the FCC have frequently revisited the subject
of cable  television  regulation  and may do so again.  Future  legislative  and
regulatory  changes could adversely  affect AT&T  Broadband's  operations.  This
section  briefly  summarizes key laws and  regulations  currently  affecting the
growth and operation of AT&T Broadband's cable systems.

         Cable Rate  Regulation.  The 1992 Cable Act imposed an  extensive  rate
regulation regime on the cable television industry, which limited the ability of

<PAGE>

cable  companies  to increase  subscriber  fees.  Under that  regime,  all cable
systems  were  subjected  to  rate  regulation,  unless  they  faced  "effective
competition" in their local franchise area.  Federal law now defines  "effective
competition"  on  a  community-specific   basis  as  requiring  satisfaction  of
conditions rarely satisfied in the current marketplace.

         Although the FCC  establishes  all cable rate rules,  local  government
units  (commonly  referred  to as local  franchising  authorities  or LFAs)  are
primarily  responsible for  administering  the regulation of the lowest level of
cable -- the basic service tier (BST),  which typically contains local broadcast
stations and PEG access channels.  Before an LFA begins BST rate regulation,  it
must certify to the FCC that it will follow  applicable  federal rules, and many
LFAs have  voluntarily  declined  to  exercise  this  authority.  LFAs also have
primary  responsibility for regulating cable equipment rates. Under federal law,
charges for various types of cable  equipment  must be unbundled from each other
and from monthly charges for programming services, and priced no higher than the
operator's actual cost, plus an 11.25% rate of return.

         The  FCC  historically   administered  rate  regulation  of  any  cable
programming  service tiers (CPST),  which typically contain  satellite-delivered
programming.  Under the  Telecommunications  Act, the FCC's  ability to regulate
CPST rates  expired on March 31, 1999.  The FCC has taken the  position  that it
will  adjudicate  pending CPST complaints but will strictly limit its review and
possible refund orders to the time period predating March 31, 1999.

         Cable  Entry  Into   Telecommunications.   The  Telecommunications  Act
provides  that no state or local laws or  regulations  may  prohibit or have the
effect of  prohibiting  any entity from  providing any  interstate or intrastate
telecommunications   service.   States  are  authorized,   however,   to  impose
"competitively  neutral" requirements regarding universal service, public safety
and  welfare,  service  quality,  and  consumer  protection.   State  and  local
governments  also retain  their  authority  to manage the public  rights-of-way.
Although the  Telecommunications  Act clarifies that traditional cable franchise
fees may be based only on revenues  related to the provision of cable television
services,  it also  provides  that LFAs may  require  reasonable,  competitively
neutral  compensation  for  management  of the public  rights-of-way  when cable
operators  provide  telecommunications  service.  In 1999,  there  were  several
conflicting and  inconclusive  federal court decisions that addressed the issues
of  lawful  "management  of  the   right-of-ways"  and  "competitively   neutral
compensation."  The  Telecommunications  Act prohibits LFAs from requiring cable
operators to provide  telecommunications service or facilities as a condition of
a franchise  grant,  renewal or  transfer,  except that LFAs argue they can seek
"institutional  networks" as part of such franchise negotiations.  The favorable
pole  attachment  rates  afforded  cable  operators  under  federal  law  can be
increased  by utility  companies  owning the poles  during a five year  phase-in
period  beginning in 2001,  if the cable  operator  provides  telecommunications
service, as well as cable service,  over its plant. The FCC has clarified that a
cable  operator's  provision of Internet  service does not affect the  favorable
pole rates.

         Cable entry into  telecommunications will be affected by the regulatory
landscape  now being  fashioned  by the FCC and state  regulators.  One critical
component of the  Telecommunications Act intended to facilitate the entry of new
telecommunications  providers (including cable operators) is the interconnection
obligation  imposed  on all  telecommunications  carriers.  This  requires,  for
example,  that the incumbent  local  telephone  company must allow new competing
telecommunications  providers  to  connect to the local  telephone  distribution

<PAGE>

system.  In a January 1999 decision,  the United States Supreme Court upheld the
FCC's fundamental interconnection requirements.

         Cable Systems Providing Internet Service.  Although there is at present
no significant federal regulation of cable system delivery of Internet services,
and the FCC recently  issued several reports finding no immediate need to impose
such  regulation,  this  situation  may  change as cable  systems  expand  their
broadband  delivery of Internet  services.  In  particular,  proposals have been
advanced at the FCC and Congress that would  require cable  operators to provide
access to unaffiliated  Internet service providers and online service providers.
Additionally,  some local franchising authorities are considering the imposition
of mandatory Internet access requirements as part of cable franchise renewals or
transfers.  A federal  district court in Portland,  Oregon  recently  upheld the
legal ability of local franchising authorities to impose such conditions, but an
appeal was filed with the Ninth Circuit Court of Appeals, oral argument has been
held and the parties  are  awaiting a decision.  Other  local  authorities  have
imposed or may impose mandatory Internet access requirements on cable operators.
Finally, several states are considering legislation that would require mandatory
access for unafffiliated  Internet service providers.  These developments could,
if they become  widespread,  burden the capacity of cable systems and complicate
and delay plans for providing Internet service.

         Telephone Company Entry Into Cable Television.  The  Telecommunications
Act allows  telephone  companies  to compete  directly  with cable  operators by
repealing the historic telephone  company/cable company  cross-ownership ban and
the FCC's video dialtone regulations. This will allow LECs, including the RBOCs,
to compete with cable operators both inside and outside their telephone  service
areas.  Because of their resources,  LECs could be formidable  competitors,  and
certain LECs have begun offering cable service.

         Under the Telecommunications Act, a LEC or other entity providing video
programming  to  customers  will be regulated as a  traditional  cable  operator
(subject to local franchising and federal  regulatory  requirements),  unless it
elects to provide its  programming  via an "open  video  system"  (OVS).  It was
anticipated  that the primary  benefit of using an OVS  regulatory  model was to
avoid the need to obtain a local franchise prior to providing services. However,
a January 1999 federal court of appeals  decision held that OVS providers can be
required to obtain such a franchise. To be eligible for OVS status, the provider
cannot occupy more than one-third of the system's activated channels when demand
for channels  exceeds  supply.  Nor can it  discriminate  among  programmers  or
establish unreasonable rates, terms or conditions for service.

         Although LECs and cable operators can now expand their offerings across
traditional service boundaries,  the general  prohibitions remain on LEC buyouts
(i.e., any ownership interest exceeding 10 percent) of co-located cable systems,
cable operator buyouts of co-located LEC systems, and joint ventures among cable
operators and LECs in the same market. The Telecommunications Act provides a few
limited exceptions to this buyout prohibition.

         Electric Utility Entry Into
Telecommunications/Cable Television.  The
Telecommunications  Act provides that registered  utility holding  companies and
subsidiaries may provide telecommunications services,  information services, and
other   services  or  products   subject  to  the   jurisdiction   of  the  FCC,
notwithstanding  the Public Utilities  Holding Company Act.  Electric  utilities
must  establish  separate  subsidiaries,  known  as  "exempt  telecommunications
companies" and must apply to the FCC for operating authority.  Again, because of
their resources, electric utilities could be formidable competitors.

<PAGE>

         Cable  Television  Ownership  Restrictions.  Pursuant to the 1992 Cable
Act, the FCC adopted regulations establishing a 30% limit on the number of homes
nationwide  that a cable  operator may reach  through  cable systems in which it
holds an attributable  interest with an increase to 35% if the additional  cable
systems  are  minority  controlled.  The FCC  stayed  the  effectiveness  of its
ownership  limits  pending  the appeal of a September  16, 1993  decision by the
United States  District  Court for the District of Columbia  which,  among other
things, found unconstitutional the provision of the 1992 Cable Act requiring the
FCC to establish such ownership  limits.  If the ownership limits are determined
on appeal to be  constitutional,  they may affect  AT&T  Broadband's  ability to
acquire attributable interests in additional cable systems including the pending
MediaOne Merger.

         The FCC recently  completed  its  reconsideration  of both the national
subscriber  cap formula and the manner in which cable  ownership is  attributed.
Although the new FCC formula  increased the number of subscribers AT&T Broadband
may "own",  it is not yet clear  under the new  attribution  rules  whether  the
pending MediaOne Merger will be considered compliant with the new ownership cap.

         The FCC previously adopted  regulations  limiting carriage by the cable
operator  of  national  programming  services  in which that  operator  holds an
attributable  interest  to 40% of the  activated  channels  on each of the cable
operator's systems.  The rules provide for the use of two additional channels or
a 45% limit,  whichever is greater,  provided that the additional channels carry
minority  controlled  programming  services.  The regulations  also  grandfather
existing carriage  arrangements which exceed the channel limits, but require new
channel  capacity to be devoted to unaffiliated  programming  services until the
system achieves compliance with the regulations.  These channel occupancy limits
apply only up to 75 activated channels on the cable system, and the rules do not
apply to local or regional programming services.

         The   Telecommunications   Act  eliminates  statutory  restrictions  on
broadcast/cable     cross-ownership     (including    broadcast    network/cable
restrictions),  but leaves in place existing FCC regulations  prohibiting  local
cross-ownership   between   television   stations   and   cable   systems.   The
Telecommunications   Act  leaves  in  place  existing   restrictions   on  cable
cross-ownership   with   Satellite   Master  Antenna   Television   (SMATV)  and
multi-channel  multi-point  distribution  systems (MMDS)  facilities,  but lifts
those restrictions where the cable operator is subject to effective competition.
In January  1995,  however,  the FCC  adopted  regulations  which  permit  cable
operators to own and operate SMATV systems within their franchise area, provided
that such operation is consistent with local cable franchise requirements.

         Must   Carry/Retransmission   Consent.  The  1992  Cable  Act  contains
broadcast signal carriage  requirements  that allow local commercial  television
broadcast  stations to elect once every three  years  between  requiring a cable
system to carry the station  ("must  carry") or  negotiating  for  payments  for
granting permission to the cable operator to carry the station  ("retransmission
consent").  Less popular  stations  typically elect must carry, and more popular
stations typically elect retransmission  consent. Must carry requests can dilute
the appeal of a cable system's programming offerings, and retransmission consent
demands  may  require   substantial   payments  or  other  concessions  (e.g.  a
requirement that the cable system also carry the local broadcaster's  affiliated
cable programming  service).  Either option has a potentially  adverse effect on
AT&T Broadband's  business.  The burden  associated with must-carry  obligations
could  dramatically  increase if  television  broadcast  stations  proceed  with
planned  conversions  to digital  transmissions  and if the FCC  determines in a
pending  rulemaking that cable systems must carry all analog and digital signals
transmitted by the television stations.

<PAGE>

         Access Channels.  LFAs can include franchise provisions requiring cable
operators to set aside certain channels for PEG access programming.  Federal law
also  requires a cable system with 36 or more channels to designate a portion of
its activated  channel capacity (either 10% or 15%) for commercial leased access
by unaffiliated  third parties.  The FCC has adopted rules regulating the terms,
conditions  and  maximum  rates  a cable  operator  may  charge  for use of this
designated  channel  capacity,  but use of commercial leased access channels has
been  relatively  limited.  In February of 1997, the FCC released  revised rules
which mandated a modest rate reduction that has made commercial  leased access a
more attractive option for third party  programmers,  particularly for part-time
leased access carriage.

         "Anti-Buy Through"  Provisions.  Federal law requires each cable system
to permit  customers  to  purchase  premium or  pay-per-view  video  programming
offered by the operator on a  per-channel  or a  per-program  basis  without the
necessity of  subscribing  to any tier of service  (other than the basic service
tier)  unless  the  system's  lack  of  addressable  converter  boxes  or  other
technological  limitations does not permit it to do so. The statutory  exemption
for  cable  systems  that do not have the  technological  capability  to  comply
expires in October 2002, but the FCC may extend that period if deemed necessary.

         Access to  Programming.  To spur the  development of independent  cable
programmers  and competition to incumbent  cable  operators,  the 1992 Cable Act
imposed   restrictions  on  the  dealings  between  cable  operators  and  cable
programmers.  Of special  significance from a competitive  business posture, the
1992 Cable Act  precludes  satellite  video  programmers  affiliated  with cable
operators  from favoring  cable  operators  over  competing  multichannel  video
programming  distributors  (such as DBS and MMDS  distributors).  This provision
limits the ability of vertically integrated satellite cable programmers to offer
exclusive programming arrangements to AT&T Broadband.  Both Congress and the FCC
have considered proposals that would expand the program access rights of cable's
competitors,   including  the  possibility  of  subjecting  both   terrestrially
delivered video  programming  and video  programmers who are not affiliated with
cable operators to all program access requirements.

         Inside Wiring;  Subscriber  Access. In an order issued in 1997, the FCC
established  rules that require an incumbent  cable operator upon  expiration or
termination of an MDU service  contract to sell,  abandon,  or remove "home run"
wiring that was installed by the cable operator in a MDU building.  These inside
wiring rules are expected to assist building owners in their attempts to replace
existing cable operators with new  programming  providers who are willing to pay
the building  owner a higher fee, where such a fee is  permissible.  The FCC has
also proposed  abrogating  all exclusive MDU contracts  held by incumbent  cable
operators,  but allowing such  contracts  when held by new entrants.  In another
proceeding,  the FCC has  preempted  restrictions  on the  deployment of private
antenna  on rental  property  within  the  exclusive  use of a  tenant,  such as
balconies  and  patios.  This FCC ruling may limit the extent to which  multiple
dwelling  unit  owners may  enforce  certain  aspects of MDU  argreements  which
otherwise  prohibit,  for  example,  placement  of digital  broadcast  satellite
receiver antennae in MDU areas under the exclusive occupancy of a renter.  These
developments may make it more difficult for AT&T Broadband to provide service in
MDUs.

         Other FCC Regulations.  In addition to the FCC regulations noted above,
there  are  other  FCC  regulations  covering  such  areas as  equal  employment
opportunity,  customer privacy,  programming practices  (including,  among other
things,  syndicated program exclusivity,  network program nonduplication,  local

<PAGE>

sports  blackouts,   indecent   programming,   lottery  programming,   political
programming,  sponsorship identification,  children's programming advertisements
and closed captioning),  registration of cable systems and facilities licensing,
maintenance of various records and public  inspection  files,  frequency  usage,
lockbox  availability,   antenna  structure  notification,   tower  marking  and
lighting,   consumer  protection  and  customer  service  standards,   technical
standards,  consumer  electronics  equipment  compatibility  and emergency alert
systems.

          The FCC  recently  ruled  that  cable  customers  must be  allowed  to
purchase  cable  converters  from third  parties and  established  a  multi-year
phase-in during which security  functions,  which would remain in the operator's
exclusive  control,  would be unbundled from basic  converter  functions,  which
could then be satisfied by third party vendors.

         The FCC has the  authority  to  enforce  its  regulations  through  the
imposition of substantial  fines, the issuance of cease and desist orders and/or
the imposition of other administrative  sanctions, such as the revocation of FCC
licenses  needed to operate certain  transmission  facilities used in connection
with cable operations.

         Copyright.  Cable television  systems are subject to federal  copyright
licensing  covering  carriage of  television  and radio  broadcast  signals.  In
exchange for filing  certain  reports and  contributing  a  percentage  of their
revenue to a federal copyright royalty pool (such percentage varies depending on
the size of the system and the number of distant  broadcast  television  signals
carried),   cable   operators  can  obtain  blanket   permission  to  retransmit
copyrighted  material  on  broadcast  signals.  The  possible   modification  or
elimination of this compulsory copyright license is subject to continuing review
and could adversely affect AT&T Broadband's  ability to obtain desired broadcast
programming.  In  addition,  the cable  industry  pays music  licensing  fees to
Broadcast Music, Inc. and is negotiating a similar arrangement with the American
Society  of  Composers,   Authors  and  Publishers.   Copyright  clearances  for
nonbroadcast programming services are arranged through private negotiations.

         State and Local  Regulation.  Cable  television  systems  generally are
operated pursuant to nonexclusive  franchises granted by a municipality or other
state or local government entity. The  Telecommunications Act clarified that the
need for an entity providing cable services to obtain a local franchise  depends
solely on whether  the entity  crosses  public  rights of way.  Federal  law now
prohibits  franchise  authorities  from  granting  exclusive  franchises or from
unreasonably  refusing to award additional franchises covering an existing cable
system's service area.  Cable  franchises  generally are granted for fixed terms
and in many cases are terminable if the franchisee fails to comply with material
provisions.  Non-compliance by the cable operator with franchise  provisions may
also result in monetary penalties.

         The  terms  and   conditions  of  franchises   vary   materially   from
jurisdiction  to  jurisdiction.  Each franchise  generally  contains  provisions
governing cable operations,  service rates,  franchise fees, system construction
and  maintenance  obligations,  system  channel  capacity,  design and technical
performance,  customer service standards,  and  indemnification  protections.  A
number of  states  subject  cable  television  systems  to the  jurisdiction  of
centralized  state  governmental  agencies.   Although  LFAs  have  considerable
discretion  in  establishing   franchise   terms,   there  are  certain  federal
limitations.  For example,  LFAs cannot insist on franchise fees exceeding 5% of

<PAGE>

the system's gross revenue, cannot dictate the particular technology used by the
system,  and cannot  specify  video  programming  other than  identifying  broad
categories of programming.

         Federal law contains renewal  procedures  designed to protect incumbent
franchisees  against  arbitrary  denials  of  renewal.  Even if a  franchise  is
renewed,  the  franchise  authority  may seek to  impose  new and  more  onerous
requirements  such  as  significant  upgrades  in  facilities  and  services  or
increased franchise fees and funding for PEG channels as a condition of renewal.
Similarly,  if a franchise  authority's  consent is required for the purchase or
sale of a cable system or franchise,  such  authority may attempt to impose more
burdensome or onerous  franchise  requirements  in connection with a request for
consent.  Historically,  franchises  have been renewed for cable  operators that
have  provided  satisfactory  services and have complied with the terms of their
franchises.

         Proposed  Changes in  Regulation.  The  regulation of cable  television
systems at the  federal,  state and local  levels is  subject  to the  political
process and has been in constant flux over the past decade.  Material changes in
the law and  regulatory  requirements  must be  anticipated  and there can be no
assurance  that AT&T  Broadband's  business  will not be affected  adversely  by
future legislation, new regulation or deregulation.

COMPETITION

         Competition  in  communications  services is based on price and pricing
plans,  the types of  services  offered,  customer  service,  access to customer
premises, and communications quality, reliability and availability,  as well as,
for business  customers,  the ability to provide high quality data communication
services  and  technical   support.   AT&T's   principal   competitors   include
MCIWorldcom,  Inc., Sprint Corporation, the RBOCs and GTE Corporation. AT&T also
experiences significant competition in long distance from dial around resellers.

         The ILECs  have very  substantial  capital  and other  resources,  long
standing customer  relationships and extensive  existing  facilities and network
rights-of-way  and are AT&T's primary  competitors in the local services market.
In addition, it is anticipated that a number of long distance telecommunication,
wireless and cable service  providers  and others will enter the local  services
market in  competition  with  AT&T.  Some of these  potential  competitors  have
substantial  financial and other resources.  AT&T will also compete in the local
services  market  with a number of CLECs,  a few of which  have  existing  local
networks and significant financial resources.

         Competition for subscribers  among wireless service  providers is based
principally  upon the services  and features  offered,  call  quality,  customer
service, system coverage and price. The AT&T Wireless Group's ability to compete
successfully  will depend,  in part, on its ability to anticipate and respond to
various competitive factors affecting the industry,  including new services that
may be introduced, changes in consumer preferences, demographic trends, economic
conditions and pricing strategies. The AT&T Wireless Group's primary competitors
are Vodafone AirTouch,  BellSouth,  Bell Atlantic,  GTE, Nextel  Communications,
Inc., SBC, VoiceStream Communications and Sprint.

         In addition, the wireless communications industry has been experiencing
significant  consolidation  and  the  AT&T  Wireless  Group  expects  that  this
consolidation will continue.  The previously announced mergers or joint ventures
of Bell  Atlantic/GTE/Vodafone/AirTouch,  MCIWorldCom/Sprint  and  SBC/Ameritech

<PAGE>

will create large,  well-capitalized  competitors  with  substantial  financial,
technical, marketing and other resources to respond to the AT&T Wireless Group's
offerings.  Assuming  these mergers or ventures were completed  today,  the AT&T
Wireless  Group  estimates  that its  ranking  would  decline  to second in U.S.
revenue,  third in U.S.  subscriber share and fourth in terms of U.S. population
covered by licenses,  or POPs.  As a result,  these  competitors  may be able to
offer nationwide  services and plans more quickly and more economically than the
AT&T Wireless  Group and to obtain  roaming rates that are more  favorable  than
those obtained by the AT&T Wireless Group,  and may be better able to respond to
offers of the AT&T Wireless Group.

         The AT&T Wireless Group's cellular  operations have always  experienced
direct  competition from the second cellular licensee in each market.  Beginning
in 1997, the AT&T Wireless Group began experiencing  competition from as many as
six license holders in certain  markets.  Competition  from new providers in the
AT&T  Wireless  Group's  markets  will  continue to increase as the  networks of
license holders are built out over the next several years. In addition,  the FCC
is likely to offer  additional  spectrum  for  wireless  mobile  licenses in the
future using existing or new technologies.

         Cable  television  competes for  customers in local  markets with other
providers of  entertainment,  news and  information.  The  competitors  in these
markets include broadcast television and radio, newspapers,  magazines and other
printed material,  motion picture theatres, video cassettes and other sources of
information and entertainment  including  directly  competitive cable television
operations  and  internet  service  providers.  The Cable Acts are  designed  to
increase  competition in the cable  television  industry.  There are alternative
methods of distributing the same or similar video  programming  offered by cable
television systems.  These include DBS (allowing the subscriber to receive video
services  directly  via  satellite  using a relatively  small  dish),  telephone
networks  (whether it is through wireless cable, or through  upgraded  telephone
networks),  utility company networks,  MMDS (which deliver programming  services
over  microwave   channels   received  by  customers  with  special   antennas),
competitive,  non-exclusive  franchises,  city provided  cable  services,  SMATV
systems (which provide  multichannel  program services directly to hotel, motel,
apartment,   condominium  and  similar  multi-unit   complexes  within  a  cable
television  system's  franchise area,  generally free of any regulation by state
and local governmental  authorities).  In addition to competition for customers,
the cable television  industry  competes with broadcast  television,  radio, the
print media and other sources of information and  entertainment  for advertising
revenue.  Additionally,  as AT&T begins to offer new services such as high speed
Internet access and telephone  services,  there will be significant  competition
from both the local telephone companies and new providers of such services.

         AT&T currently faces significant competition and expects that the level
of  competition  will  continue to  increase.  As  competitive,  regulatory  and
technological    changes   occur,    including    those    occasioned   by   the
Telecommunications Act, AT&T anticipates that new and different competitors will
enter and expand their position in the  communications  services markets.  These
may include entrants from other segments of the  communications  and information
services  industry  or  global  competitors   seeking  to  expand  their  market
opportunities.  Many such new  competitors  are  likely  to enter  with a strong
market  presence,   well  recognized  names  and  pre-existing  direct  customer
relationships.

         The   Telecommunications  Act  has  already  impacted  the  competitive
environment.  Anticipating changes in the industry, non-RBOC LECs, which are not

<PAGE>

required to implement the  Telecommunications  Act's competitive checklist prior
to offering long distance in their home markets,  have begun  integrating  their
local service offerings with long distance offerings in advance of AT&T offering
combined  local and long distance  service in these areas,  adversely  affecting
AT&T's revenues and earnings in these service regions.

         In addition,  the  Telecommunications  Act will permit RBOCs to provide
interLATA  interexchange  services  after  demonstrating  to the FCC  that  such
provision is in the public interest and satisfying the conditions for developing
local  competition  established  by the  Telecommunications  Act. The RBOCs have
petitioned the FCC for permission to provide interLATA interexchange services in
one or more states  within their home  market;  to date the FCC granted only one
petition.  In  December  1999,  Bell  Atlantic  became  the first RBOC to obtain
approval to provide long distance in a state within its home  territory,  in New
York. In January 2000  Southwestern Bell applied to the FCC for authorization to
provide long distance  service in Texas;  by law, the FCC is required to rule on
the application in April 2000.

         To the  extent  that the RBOCs  obtain  in-region  interLATA  authority
before the  Telecommunications  Act's checklist of conditions have been fully or
satisfactorily   implemented  and  adequate   facilities-based   local  exchange
competition   exists,   there  is  a  substantial   risk  that  AT&T  and  other
interexchange  service  providers  would be at a  disadvantage  to the  RBOCs in
providing both local service and combined service packages. Because it is widely
anticipated  that  substantial  numbers of long distance  customers will seek to
purchase local,  interexchange  and other services from a single carrier as part
of a combined or full service package, any competitive  disadvantage,  inability
to  profitably   provide  local  service  at  competitive  rates  or  delays  or
limitations  in  providing  local  service or combined  service  packages  could
adversely  affect  AT&T's  future  revenue  and  earnings.  In  any  event,  the
simultaneous entrance of numerous new competitors for interexchange and combined
service  packages is likely to  adversely  affect  AT&T's  future long  distance
revenue and could adversely affect future earnings.

         Furthermore, in February 1997, a General Agreement on Trade in Services
(GATS) was reached under the World Trade  Organization.  The GATS,  which became
effective  January  1,  1998,  is  designed  to  open  each  country's  domestic
telecommunications  markets to foreign  competitors.  The GATS, and future trade
agreements,  may  accelerate  the  entrance  into the  U.S.  market  of  foreign
telecommunications  providers,  certain of whom are  likely to possess  dominant
home market positions in which there is not effective competition.  The GATS may
also  permit  AT&T's  entrance  into  other  markets  as only a small  number of
countries refused to eliminate their foreign ownership restrictions.

         In addition to the matters  referred to above,  various other  factors,
including technological hurdles,  market acceptance,  start-up and ongoing costs
associated  with  the  provision  of  new  services  and  local  conditions  and
obstacles, could adversely affect the timing and success of AT&T's entrance into
the local exchange  services market and AT&T's ability to offer combined service
packages that include local service.

EMPLOYEE RELATIONS

         At December 31, 1999 AT&T employed approximately 148,000 persons in its
operations,  approximately 96.5% of whom are located domestically.  About 28% of
the domestically  located  employees of AT&T are represented by unions. Of those
so  represented,  about 94% are  represented  by the  Communications  Workers of

<PAGE>

America  (CWA),  which  is  affiliated  with  the  AFL-CIO;   about  5%  by  the
International Brotherhood of Electrical Workers (IBEW), which is also affiliated
with the  AFL-CIO.  In  addition,  there is a very small  remainder  of domestic
employees  represented  by other  unions.  Labor  agreements  with most of these
unions extend through May 2002.

SEGMENT, OPERATING REVENUE AND RESEARCH AND DEVELOPMENT
EXPENSE INFORMATION

         For information about the Company's  research and development  expense,
see Note 2 to the Consolidated  Financial Statements.  For information about the
consolidated  operating  revenues  contributed by the Company's major classes of
products and services,  see the revenue tables and  descriptions on pages 14 and
19 through 25 of the Company's  annual report to shareholders for the year ended
December 31, 1999.  All such  information  is  incorporated  herein by reference
pursuant to General Instruction G(2).

LIBERTY MEDIA GROUP

         The economic  performance  of the Liberty  Media Group are reflected in
the Liberty Media Group tracking stock. A description of the Liberty Media Group
is included as Exhibit 99 to this Form 10-K.

FORWARD LOOKING STATEMENTS

         This Form 10-K contains certain  forward-looking  statements within the
meaning of the Private Securities  Litigation Reform Act of 1995 with respect to
the financial condition, results of operations, cash flows, dividends, financing
plans,  business  strategies,  operating  efficiencies  or  synergies,  budgets,
capital and other expenditures,  competitive positions, growth opportunities for
existing  products,  benefits  from new  technology,  plans  and  objectives  of
management, and other matters.

         Statements in this Form 10-K that are not  historical  facts are hereby
identified as "forward  looking  statements"  for the purpose of the safe harbor
provided  by Section  27A of the  Securities  Act of 1933 and Section 21E of the
Securities  Exchange Act of 1934. Any Form 10-K,  Annual Report to Shareholders,
Form  10-Q or Form  8-K of AT&T  may  include  forward  looking  statements.  In
addition,  other written or oral  statements  which  constitute  forward looking
statements have been made and may in the future be made by or on behalf of AT&T,
including   statements   concerning  future  operating   performance,   business
prospects,  capital  needs,  AT&T's  share of new and existing  markets,  AT&T's
short- and long-term revenue and earnings growth rates,  general industry growth
rates and AT&T's performance relative thereto.  These forward looking statements
are necessarily estimates reflecting the best judgment of senior management that
rely on a number of  assumptions  concerning  future  events,  many of which are
outside of AT&T's control,  and involve a number of risks and uncertainties that
could cause  actual  results to differ  materially  from those  suggested by the
forward-looking statements.  These forward-looking statements should, therefore,
be considered in light of various important  factors,  including those set forth
in this Form 10-K.  Important  factors that could cause actual results to differ
materially  from  estimates  or  projections  contained  in the  forward-looking
statements include, without limitation:

<PAGE>

         - the adoption and  implementation  of balanced and effective rules and
           regulations by the FCC and state regulatory agencies to implement the
           provisions of the  Telecommunications  Act; the outcome of litigation
           relative  thereto;  and the impact of regulatory  changes relating to
           access reform,  the unbundling of cable facilities and  international
           settlement reform;

         - success and market  acceptance for new  initiatives,  including cable
           telephony and fixed wireless,  many of which are untested;  the level
           and  timing  of the  growth  and  profitability  of new  initiatives;
           start-up  costs  associated  with  entering  new  markets,  including
           advertising  and  promotional  efforts;   successful  deployment  and
           technological  implementation  of new  systems  and  applications  to
           support  new  initiatives;  the  ability  to  address  the  needs  of
           customers for broadband and Internet access; and local conditions and
           obstacles;

         - competitive  pressures,  including   pricing  pressures,  alternative
           routing  developments,  and the  ability  to offer  combined  service
           packages  that include  local  service;  technological  developments,
           including the rate of technological  advances in, and  implementation
           of,  internet   telephony  services  that  compete  with  traditional
           telephony   services;   the  extent  and  pace  at  which   different
           competitive   environments   develop   for   each   segment   of  the
           telecommunications  industry;  the extent at and  duration  for which
           competitors from each segment of the telecommunications  industry are
           able to offer  combined or full service  packages prior to AT&T being
           able  to;  and  the  degree  to  which  AT&T   experiences   material
           competitive  impacts to its  traditional  service  offerings prior to
           achieving adequate local service entry;

         - the  availability,  terms and  deployment  of capital;  the impact of
           regulatory  and  competitive  developments  on capital  outlays;  the
           ability  to   achieve   cost   savings   and   realize   productivity
           improvements;  the ability to  effectively  integrate  operations  of
           acquired  entities  with  AT&T,  the timing of  approval  of, and any
           conditions  imposed on, the  completion of the MediaOne  merger;  the
           ability  to  realize  cost-saving  and  revenue  synergies  from  the
           MediaOne  merger;   the  ability  to  successfully   implement  cable
           telephony joint  ventures;  the ability to expand the cable footprint
           and the wireless  footprint in an economical and expeditious  manner;
           and the ability to enter into agreements which provide for reasonable
           roaming rates for wireless services; and

         - the ability to attract and retain qualified  management  employees in
           all  key  areas  of  the  business;   general  economic   conditions,
           government and regulatory  policies,  and business  conditions in the
           communications industry.

         The words  "estimate,"  "project,"  "intend,"  "expect,"  "believe" and
similar expressions are intended to identify forward-looking  statements.  These
forward-looking statements are found at various places throughout this Form 10-K
and throughout the other documents incorporated herein by reference. Readers are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date hereof.  AT&T  undertakes  no  obligation  to publicly
release any revisions to these  forward-looking  statements to reflect events or
circumstances   after  the  date  hereof  or  to  reflect  the   occurrence   of
unanticipated events.

<PAGE>

ITEM 2.  PROPERTIES.

         The properties of AT&T Corp.  consist  primarily of plant and equipment
used to provide long distance and wireless telecommunications services and cable
television services and administrative office buildings.  AT&T's owns and leases
properties to support its offices, facilities and equipment.

         Telecommunications  plant and  equipment  consists of:  central  office
equipment,  including  switching and  transmission  equipment;  connecting lines
(cables,  wires,  poles,  conduits,  etc.);  wireless  cell sites,  antennas and
wireless switching facilities;  land and buildings; and miscellaneous properties
(work equipment, furniture, plant under construction, etc.). The majority of the
connecting  lines  are on or  under  public  roads,  highways  and  streets  and
international  and  territorial  waters.  The  remainder are on or under private
property. Physical cable television properties, which are located throughout the
United  States,  consist of system  components,  motor  vehicles,  miscellaneous
hardware, spare parts and other components. AT&T also operates a number of sales
offices,  customer  care  centers,  and other  facilities,  such as research and
development laboratories.

         AT&T continues to manage the  deployment and  utilization of its assets
in order to meet its global  growth  objectives  while at the same time ensuring
that these assets are generating value for the  shareholder.  AT&T will continue
to manage its asset base consistent with globalization initiatives,  marketplace
forces, productivity growth and technology change.

ITEM 3.  LEGAL PROCEEDINGS.

         In the normal course of business, AT&T Corp. is subject to proceedings,
lawsuits and other  claims,  including  proceedings  under  government  laws and
regulations related to environmental and other matters. Such matters are subject
to  many   uncertainties  and  outcomes  are  not  predictable  with  assurance.
Consequently, AT&T Corp. is unable to ascertain the ultimate aggregate amount of
monetary liability or financial impact with respect to these matters at December
31, 1999. While these matters could affect operating  results of any one quarter
when resolved in future  periods,  it is  management's  opinion that after final
disposition,  any monetary  liability or financial  impact to AT&T Corp.  beyond
that  provided  for at year-end  would not be material  to AT&T  Corp.'s  annual
consolidated financial position or results of operations.

         On July 6,  1997,  MCI  Telecommunications  Corp.  and  Ronald  A. Katz
Technology  Licensing,  L.P.  filed  suit in  United  States  District  Court in
Philadelphia,  Pennsylvania against AT&T. The suit alleges that a number of AT&T
services  infringe  patents  owned by Katz but  licensed to MCI for  enforcement
against AT&T. This matter is currently in discovery. Based on review to date, it
is  management's  opinion that the claims do not present any  material  monetary
liability  or financial  impact to AT&T that is not subject to patent  indemnity
agreements with third-party equipment vendors.

         AT&T is also a named party in a number of environmental  actions,  none
of which is material to the consolidated financial statements or business of the
Company. In addition,  pursuant to the Separation and Distribution  Agreement by
and among AT&T,  Lucent,  and NCR, dated as of February 1, 1996, and amended and
restated  as of March 29,  1996,  Lucent has assumed  liability,  subject to the
liability sharing provisions of that agreement, for a number of actions in which
AT&T remains a named  party.  AT&T is working to be released as a party to these
actions,  although  there can be no assurance that it will be successful in this
regard.

<PAGE>

         There  are four  environmental  proceedings  which are  required  to be
reported  pursuant  to  Instruction  5.C.  of Item  103 of  Regulation  S-K.  In
September  1997,  the  government of the U.S.  Virgin  Islands filed suit in the
federal district court of the Virgin Islands against the Company, AT&T Submarine
Systems International ("SSI International"), A&L Underground, Inc., a contractor
for SSI  International at that time, and other entities.  In connection with the
purported  1996 release of non-toxic  bentonite  drilling mud within the coastal
region of St. Croix by the  contractor,  the suit seeks penalties for violations
of various federal and Virgin Island statutes;  damages under several  statutory
and common law theories;  removal of the mud (which has since been  completed to
the  satisfaction  of  the  federal  agency  that  ordered  the  cleanup);   and
restitution  of response costs  allegedly  incurred by the Virgin  Islands.  SSI
International  was a wholly owned  subsidiary of AT&T at the time of the alleged
violation.  On December 31, 1998 the Government of the U.S. Virgin Islands filed
an administrative  complaint against AT&T of the Virgin Islands,  Inc.,  seeking
$23 million in penalties  (primarily  for the release of drilling mud in 1996 in
conjunction with the construction of the St. Croix cable landing  station).  The
foregoing environmental proceeding is not material to the consolidated financial
statements  or  business  of the  Company  and  would  not be  reported  but for
Instruction 5 C. of Item 103 of Regulation  S-K,  which  requires  disclosure of
such matters.

         In addition,  three  proceedings  involve  matters for which Lucent has
assumed  liability,  as described  above.  On July 31, 1991,  the United  States
Environmental  Protection  Agency  Region III  issued a  complaint  pursuant  to
Section 3008a of the Resource  Conservation and Recovery Act alleging violations
of  various  waste  management  regulations  at the  Company's  Richmond  Works,
Richmond, Virginia. The complaint seeks a total of $4.2 million in penalties. In
addition,  on July 31, 1991, the United States  Environmental  Protection Agency
filed a civil complaint in the U.S.  District Court for the Southern District of
Illinois  against the Company and nine other parties seeking  enforcement of its
Comprehensive Environmental Response,  Compensation and Liability Act ("CERCLA")
Section  106 cleanup  order,  issued in  November  1990 for the NL Granite  City
Superfund site,  Granite,  Illinois,  past costs, civil penalties of $25,000 per
day and treble damages related to certain United States' costs. Finally,  during
1994, AT&T Nassau Metals  Corporation  ("Nassau"),  a wholly owned subsidiary of
AT&T, and the New York State Department of Environmental Conservation ("NYSDEC")
were  engaged in  negotiations  over a study and  cleanup  of the  Nassau  plant
located  on  Richmond  Valley  Road in Staten  Island,  New York.  During  these
negotiations,  in June 1994,  NYSDEC presented Nassau with a draft consent order
which  included  not  only  provisions   relating  to  site   investigation  and
remediation  but also a  provision  for  payment of a $3.5  million  penalty for
alleged  violations  of  hazardous  waste  management  regulations.   No  formal
proceeding has been commenced by NYSDEC.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS.

         No matter was  submitted  to a vote of  security  holders in the fourth
quarter of the fiscal year covered by this report.

<PAGE>

                      Executive Officers of the Registrant
                             (as of March 17, 2000)

                                                                Became AT&T
Name                    Age                                 Executive Officer On
----                    ---                                --------------------

C. Michael Armstrong* .  61   Chairman of the Board and
                                Chief Executive Officer . . . . . . 10-97

Harold W. Burlingame. .  59   Executive Vice President,
                                Communications and Human
                                Resources, AT&T Wireless Group  . .  9-86

James Cicconi . . . . .  47   Executive Vice President-Law &
                                Government Affairs and
                                General Counsel . . . . . . . . . . 12-98

Mirian Graddick . . . .  45   Executive Vice President,
                                Human Resources . . . . . . . . . .  3-99

Mohan Gyani . . . . . .  48   Executive Vice President and
                                President & CEO, AT&T Wireless
                                Services  . . . . . . . . . . . . .  1-00

Frank Ianna . . . . . .  50   Executive Vice President and
                                President, AT&T Network Services. .  3-97

Michael G. Keith. . . .  51   Executive Vice President - AT&T
                                Wireless Group  . . . . . . . . . . 12-98

Richard J. Martin . . .  53   Executive Vice President, Public
                                Relations and Employee
                                Communication . . . . . . . . . . . 11-97

John C. Malone**. . . .  59   Chairman of the Board, Liberty
                                Media Corporation . . . . . . . . .  3-99

David C. Nagel. . . . .  55   President, AT&T Labs & Chief
                                Technology Officer  . . . . . . . .  3-97

Charles H. Noski. . . .  47   Senior Executive Vice President
                                and Chief Financial Officer . . . . 12-99

John C. Petrillo. . . .  50   Executive Vice President, Corporate
                                Strategy and Business Development .  1-96

Richard Roscitt . . . .  48   Executive Vice President and
                                President, AT&T Business Services .  9-97

Daniel E. Somers. . . .  52   President and CEO, AT&T Broadband . .  5-97

John D. Zeglis**. . . .  52   President, AT&T, and Chairman and
                                Chief Executive Officer, AT&T
                                Wireless Group  . . . . . . . . . .  9-86
-----------
 *Chairman of the Board of Directors and Chairman of the Executive
    and Proxy Committees.
**Member of the Board of Directors.
<PAGE>

         All of the above  executive  officers  have held high level  managerial
positions with AT&T or its affiliates for more than the past five years,  except
Messrs.  Armstrong,  Cicconi,  Guyani, Malone, Nagel, Noski and Somers. Prior to
joining AT&T in October 1997,  Mr.  Armstrong  was Chairman and Chief  Executive
Officer of Hughes Electronics from 1991. Prior to joining AT&T in September 1998
as Senior Vice President-Law and Government  Affairs,  Mr. Cicconi was a Partner
at the law firm of Akin, Gump, Strauss,  Houer and Feld, L.L.P. from 1991. Prior
to joining AT&T in January  2000,  Mr. Gyani was  Executive  Vice  President and
Chief  Financial  Officer  of  Airtouch  Communications  from 1995 to 1999,  and
following  the  merger  of  Vodafone  and  Airtouch,  was head of  strategy  and
corporate  development  at Vodafone  Airtouch plc.  Prior to joining  AT&T,  Dr.
Malone was President,  Chairman and Chief Executive Officer of TCI from 1994. In
addition,  Dr.  Malone  served as director of TCI Pacific  Communications,  Inc.
since  1996.  Prior to  joining  AT&T in April  1996,  Mr.  Nagel was with Apple
Computer,  serving as Senior Vice President  from 1995 and General  Manager from
1988  through  1995.  Prior to joining  AT&T in  December  1999,  Mr.  Noski was
president and chief operating officer of Hughes Electronics  Corporation.  Prior
to joining AT&T in May 1997, Mr. Somers was Chairman and Chief Executive Officer
for Bell  Cablemedia,  plc,  of London for two years and from 1992 to 1995,  Mr.
Somers was Executive Vice President and Chief Financial  Officer for Bell Canada
International.

<PAGE>

PART II

Items 5. through 8.

         The information required by these items is included in pages 12 through
55 and the inside back cover of the Company's  annual report to shareholders for
the year ended December 31, 1999.  Such  information is  incorporated  herein by
reference, pursuant to General Instruction G(2). The referenced information from
the Company's annual report to shareholders has been filed as Exhibit 13 to this
document.

Item 9.  Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.

         There  have  been  no  changes  in  independent   accountants   and  no
disagreements   with  independent   accountants  on  any  matter  of  accounting
principles or practices,  financial statement  disclosure,  or auditing scope or
procedure during the last two years.

PART III

Items 10. through 13.

         Information  regarding  executive  officers  required  by  Item  401 of
Regulation  S-K is furnished in a separate  disclosure  in Part I of this report
because the Company did not furnish such  information  in its  definitive  proxy
statement prepared in accordance with Schedule 14A.

         The other  information  required  by Items 10 through 13 is included in
the Company's  definitive  proxy  statement  dated March 27, 2000: the third and
fourth  paragraphs  on page 7, the first and  second  paragraphs  on page 8, the
first full  paragraph on page 9 through the first full  paragraph on page 21 and
the  fourth   paragraph  on  page  40  through  page  71.  Such  information  is
incorporated herein by reference, pursuant to General Instruction G(3).

<PAGE>

PART IV

Item 14.  Exhibits, Financial Statement Schedule, and
Reports on Form 8-K.

      (a)  Documents filed as a part of the report:

      (1)  Financial Statements:
                                                           Pages
                                                           -----

              Report of Management .......................   *
              Report of Independent Accountants ..........   *


           Statements:

              Consolidated Statements of Income ..........   *
              Consolidated Balance Sheets ................   *
              Consolidated Statements of Changes in
                Shareowners' Equity ......................   *
              Consolidated Statements of Cash Flows ......   *
              Notes to Consolidated Financial Statements .   *

      (2)  Financial Statement Schedule:

              Report of Independent Accountants ..........   47

           Schedule:

              II -- Valuation and Qualifying Accounts ....   48

           Separate  financial  statements  of  Liberty  Media  Group,  which is
           a "significant  subsidiary" pursuant to the  provisions of Regulation
           S-X, Article 3-9, are included as Exhibit 99.

      (3)  Exhibits:

           Exhibits   identified  in   parentheses  below,  on  file  with   the
           Securities and  Exchange Commission ("SEC"),  are incorporated herein
           by reference as exhibits hereto.

Exhibit Number:

(3)a              Restated Certificate of Incorporation  of the registrant filed
                  January 10, 1989,  Certificate of Correction of the registrant
                  filed June 8, 1989,  Certificate  of Change of the  registrant
                  filed  March  18,  1992,   Certificate  of  Amendment  of  the
                  registrant filed June 1, 1992, Certificate of Amendment of the
                  registrant  filed April 20,  1994,  Certificate  of  Amendment
                  filed June 8, 1998 and Certificate of Amendment filed March 9,
                  1999 (Exhibit (3)a to Form 10-K for 1998, File No. 1-1105).

------------

*Incorporated  herein by reference to the appropriate  portions of the Company's
annual report to  shareholders  for the year ended December 31, 1999.  (See Part
II.)

<PAGE>

(3)b              By-Laws of  the registrant, as amended March 17, 1999 (Exhibit
                  (3)b to Form 10-K for 1998, File No. 1-1105).

(4)               No instrument which defines the rights of holders of long term
                  debt,  of  the   registrant   and  all  of  its   consolidated
                  subsidiaries,  is filed herewith  pursuant to Regulation  S-K,
                  Item  601(b)(4)(iii)(A).  Pursuant  to  this  regulation,  the
                  registrant  hereby  agrees  to  furnish  a copy  of  any  such
                  instrument to the SEC upon request.

(10)(i)1          Form of  Separation and  Distribution Agreement  by and  among
                  AT&T Corp.,  Lucent  Technologies  Inc.  and NCR  Corporation,
                  dated as of February  1, 1996 and  amended and  restated as of
                  March 29, 1996 (Exhibit  (10)(i)1 to Form 10-K for 1996,  File
                  No. 1-1105).

(10)(i)2          Form of Distribution Agreement, dated as of November 20, 1996,
                  by  and  between  AT&T  Corp.  and  NCR  Corporation  (Exhibit
                  (10)(i)2 to Form 10-K for 1996, File No. 1-1105).

(10)(i)3          Tax   Sharing  Agreement  by  and  among  AT&T  Corp.,  Lucent
                  Technologies Inc. and NCR Corporation, dated as of February 1,
                  1996 and  amended and  restated as of March 29, 1996  (Exhibit
                  (10)(i)3 to Form 10-K for 1996, File No. 1-1105).

(10)(i)4          Employee  Benefits  Agreement by  and  between  AT&T Corp. and
                  Lucent  Technologies  Inc.,  dated as of  February 1, 1996 and
                  amended and restated as of March 29, 1996 (Exhibit (10)(i)4 to
                  Form 10-K for 1996, File No. 1-1105).

(10)(i)5          Form of Employee Benefits Agreement, dated as of  November 20,
                  1996, between AT&T Corp. and NCR Corporation (Exhibit (10)(i)5
                  to Form 10-K for 1996, File No. 1-1105).

(10)(ii)(B)1      General  Purchase  Agreement  between  AT&T  Corp. and  Lucent
                  Technologies  Inc.,  dated  February  1, 1996 and  amended and
                  restated as of March 29, 1996  (Exhibit  (10)(ii)(B)1  to Form
                  10-K for 1996, File No. 1-1105).

(10)(ii)(B)2      Form of  Volume Purchase  Agreement, dated as of  November 20,
                  1996, by and between AT&T Corp. and NCR  Corporation  (Exhibit
                  (10)(ii)(B)2 to Form 10-K for 1996, File No. 1-1105).

(10)(iii)(A)1     AT&T Short Term Incentive Plan as amended March, 1994 (Exhibit
                  (10)(iii)(A)1 to Form 10-K for 1994, File No. 1-1105).

(10)(iii)(A)2     AT&T 1987  Long Term Incentive Program as amended December 17,
                  1997  (Exhibit  10)(iii)(A)2  to Form 10-K for 1997,  File No.
                  1-1105).

(10)(iii)(A)3     AT&T  Senior Management  Individual Life Insurance  Program as
                  amended March 3, 1998 (Exhibit  (10)(iii)(A)3 to Form 10-K for
                  1997, File No. 1-1105).

(10)(iii)(A)4     AT&T  Senior  Management  Long  Term Disability  and  Survivor
                  Protection Plan, as  amended and restated effective January 1,
                  1995 (Exhibit  (10)(iii)(A)4  to Form 10-K for 1996,  File No.
                  1-1105).

<PAGE>

(10)(iii)(A)5     AT&T  Senior  Management  Financial  Counseling  Program dated
                  December  29,  1994  (Exhibit  (10)(iii)(A)5  to Form 10-K for
                  1994, File No. 1-1105).

(10)(iii)(A)6     AT&T Deferred Compensation Plan for Non-Employee Directors, as
                  amended December 15, 1993 (Exhibit (10) (iii)(A)6 to Form 10-K
                  for 1993, File No. 1-1105).

(10)(iii)(A)7     The  AT&T   Directors  Individual  Life Insurance  Program  as
                  amended March 2, 1998 (Exhibit  (10)(iii)(A)1 to Form 10-K for
                  1997, File No. 1-1105).

(10)(iii)(A)8     AT&T   Plan  for   Non-Employee  Directors'  Travel   Accident
                  Insurance  (Exhibit  (10)(iii)(A)8 to Form 10-K for 1990, File
                  No. 1-1105).

(10)(iii)(A)9     AT&T  Excess  Benefit  and  Compensation Plan,  as amended and
                  restated  effective October 1, 1996 (Exhibit  (10)(iii)(A)9 to
                  Form 10-K for 1996, File No. 1-1105).

(10)(iii)(A)10    AT&T  Non-Qualified  Pension Plan,  as  amended  and  restated
                  January 1, 1995 (Exhibit (10)(iii)(A)10 to Form 10-K for 1996,
                  File No. 1-1105).

(10)(iii)(A)11    AT&T Senior  Management  Incentive  Award  Deferral  Plan,  as
                  amended January 21, 1998 (Exhibit  (10)(iii)(A)11 to Form 10-K
                  for 1998, File No. 1-1105).

(10)(iii)(A)12    AT&T Mid-Career Hire Program revised effective January 1, 1988
                  (Exhibit (10)(iii)(A)4  to Form SE, dated March 25, 1988, File
                  No. 1-1105) including AT&T Mid-Career Pension Plan, as amended
                  and restated July 1, 1999.

(10)(iii)(A)13    AT&T 1997 Long Term Incentive Program as amended through March
                  14, 2000

(10)(iii)(A)14    Form  of Indemnification Contract  for Officers and  Directors
                  (Exhibit  (10)(iii)(A)6 to Form SE, dated March 25, 1987, File
                  No.1-1105).

(10)(iii)(A)15    Pension Plan for  AT&T Non-Employee Directors revised February
                  20, 1989 (Exhibit  10)(iii)(A)15  to Form 10-K for 1993,  File
                  No. 1-1105).

(10)(iii)(A)16    AT&T Corp. Senior  Management Basic Life Insurance Program, as
                  amended February 27, 1998 (Exhibit (10)(iii)(A)16 to Form 10-K
                  for 1997, File No. 1-1105).

(10)(iii)(A)17    Form of  AT&T Benefits Protection  Trust Agreement as  amended
                  and  restated  as  of  November  1993,   including  the  first
                  amendment thereto dated December 23, 1997.

(10)(iii)(A)18    AT&T Senior Officer Severance Plan  effective October 9, 1997,
                  as amended  October 30, 1997 (Exhibit  (10)(iii)(A)18  to Form
                  10-K for 1997, File No. 1-1105).

(10)(iii)(A)19    Form of Pension  Agreement between  AT&T Corp. and Frank Ianna
                  dated  October 30, 1997  (Exhibit (10)(iii)(A)19 to  Form 10-K
                  for 1997, File No. 1-1105).

<PAGE>

(10)(iii)(A)20    Form  of  Pension  Agreement  between  AT&T Corp. and  John C.
                  Petrillo  dated  October 30, 1997 (Exhibit  (10)(iii)(A)21  to
                  Form 10-K for 1997, File No. 1-1105).

(10)(iii)(A)21    Form of  Pension Agreement  between AT&T Corp. and John Zeglis
                  dated May 7,  1997  (Exhibit  (10)(iii)(A)22  to Form 10-K for
                  1997, File No. 1-1105).

(10)(iii)(A)22    Form of Employment Agreement between AT&T Corp. and C. Michael
                  Armstrong  dated October 17, 1997 (Exhibit  (10)(iii)(A)23  to
                  Form 10-K for 1997, File No. 1-1105).

(10)(iii)(A)23    Form of  Employment Agreement between AT&T Corp. and Daniel E.
                  Somers dated  April, 1997 (Exhibit (10)(iii)(A)23 to Form 10-K
                  for 1998, File No. 1-1105).

(10)(iii)(A)24    Liberty  Media  401(K) Savings  Plan (Incorporation  herein by
                  reference to Exhibit 99.1 to Post-Effective Amendment No. 2 on
                  Form  S-8 to the  Registration  Statement  on Form S-4 of AT&T
                  Corp. (Commission File No. 333-70279) filed March 10, 1999).

(12)              Computation of Ratio of Earnings to Fixed Charges.

(13)              Specified  portions (pages 12 through 55  and  the inside back
                  cover) of the Company's  Annual Report to Shareholders for the
                  year ended December 31, 1999.

(21)              List of subsidiaries of AT&T.

(23)a             Consent of PricewaterhouseCoopers, LLP

(23)b             Consent of KPMG, LLP

(24)              Powers  of Attorney  executed  by officers  and directors  who
                  signed this report.

(27)              Financial Data Schedules.

(99)              Supplemental Information regarding Liberty Media Group.

         AT&T will furnish, without charge, to a shareholder upon request a copy
of the annual report to shareholders and the proxy statement,  portions of which
are  incorporated  herein by  reference  thereto.  AT&T will  furnish  any other
exhibit at cost.

     (b) Reports on Form 8-K:

         During the fourth  quarter  1999,  Form 8-K dated  October 29, 1999 was
filed  pursuant to Item 5 (Other  Events),  Form 8-K dated November 16, 1999 was
filed  pursuant to Item 5 (Other Events) and Form 8-K dated December 6, 1999 was
filed pursuant to Item 5 (Other Events).

<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

  To the Board of Directors and Shareowners of AT&T Corp.:

Our audits of the consolidated  financial  statements  referred to in our report
dated March 9, 2000 appearing in the 1999 Annual Report to  Shareholders of AT&T
Corp.  (which report and consolidated  financial  statements are incorporated by
reference  in this  Annual  Report on Form 10-K) also  included  an audit of the
financial  statement  schedule listed in Item 14(a)(2) of this Form 10-K. In our
opinion,  this financial  statement  schedule  presents fairly,  in all material
respects,  the information  set forth therein when read in conjunction  with the
related consolidated financial statements.



PricewaterhouseCoopers LLP

New York, New York

March 9, 2000

<PAGE>

                              Schedule II--Sheet 1

                                   AT&T CORP.
                        AND ITS CONSOLIDATED SUBSIDIARIES

                 SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS

                              (Millions of Dollars)

------------------------------------------------------------------------------
           COL. A            COL. B       COL. C       COL. D       COL. E
------------------------------------------------------------------------------
                                        Charged to
                           Balance at   Costs and                   Balance
                           Beginning     Expenses                   at End
        Description        of Period     and Other  Deductions(a)  of Period
------------------------------------------------------------------------------
         Year 1999

Allowances for doubtful
  accounts (b)               $1,106       $1,416      $  962         $1,560

Deferred tax asset valuation
  allowance (c)              $  278       $  124      $  171         $  231

         Year 1998

Allowances for doubtful
  accounts (b)               $1,037       $1,389      $1,320         $1,106

Deferred tax asset valuation
  allowance (c)              $  361       $   23      $  106         $  278

The Notes on Sheet 2 are an integral part of this Schedule.

<PAGE>

                              Schedule II--Sheet 2

                                   AT&T CORP.
                        AND ITS CONSOLIDATED SUBSIDIARIES

                 SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS

                              (Millions of Dollars)

------------------------------------------------------------------------------
           COL. A            COL. B       COL. C       COL. D       COL. E
------------------------------------------------------------------------------
                                        Charged to
                           Balance at   Costs and                   Balance
                           Beginning     Expenses                   at End
        Description        of Period     and Other  Deductions(a)  of Period
------------------------------------------------------------------------------
         Year 1997

Allowances for doubtful
  accounts (b)               $1,000       $1,522      $1,485         $1,037

Deferred tax asset valuation
  allowance (c)              $  220       $  142      $    1         $  361

------------

(a)     Amounts   written  off   as   uncollectible,  net   of  recoveries   and
        reclassifications.
(b)     Includes  allowances for doubtful  accounts on long-term  receivables of
        $53,  $46 and $49 at  December  31,  1999,  1998 and 1997,  respectively
        (included in other assets in the Consolidated Balance Sheets).
(c)     End of period  balances at December  31, 1998 and 1997,  include $18 and
        $14,  respectively,  which represent the current portion of the deferred
        tax valuation  allowance.  There was no current  portion at December 31,
        1999. The increase in the deferred tax asset valuation allowance in 1999
        is due to the acquisition of Tele-Communications, Inc.

<PAGE>

                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.


                                   AT&T Corp.



                                   /s/  M. J. Wasser
                                   ------------------------------
                                   By:  M. J. Wasser
                                        Vice President - Law
                                          and Secretary


March 27, 2000


         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
registrant and in the capacities and on the date indicated.

Principal Executive Officers:                     #
                                                  #
  C. Michael Armstrong     Chairman of the Board  #
                           and Chief Executive    #
                           Officer                #
                                                  #
  John Zeglis              President and Director #
                                                  #
Principal Financial Officer:                      #
                                                  #
  Charles H. Noski         Senior Executive Vice  #
                           President and Chief    #
                           Financial Officer      #
                                                  #
Principal Accounting Officer:                     #
                                                  #
  Nicholas S. Cyprus       Vice President and     #
                           Controller             ##   By M. J. Wasser
                                                  #    (attorney-in-fact)*
   Directors:                                     #
                                                  #    March 27, 2000
  Kenneth T. Derr                                 #
  M. Kathryn Eickhoff                             #
  Walter Y. Elisha                                #
  George M. C. Fisher                             #
  Donald V. Fites                                 #
  Amos B. Hostetter, Jr.                          #
  Ralph S. Larsen                                 #
  John C. Malone                                  #
  Donald F. McHenry                               #
  Michael I. Sovern                               #
  Sanford I. Weill                                #
  Thomas H. Wyman                                 #