AT&T; Chairman Sees Positive Effects in Merger

BOSTON — Building his case for a possible deal with SBC Communications, AT&T; Chairman Robert Allen said Tuesday that such a partnership could “turbocharge” AT&T; Corp.’s expansion into local phone service.

In a speech to business leaders and in later remarks to reporters, Allen refused to confirm reports of talks with SBC, one of the local phone companies created by the breakup of AT&T; 13 years ago.

But Allen said a hypothetical union between a long-distance telephone carrier--like, say, AT&T--and; a local carrier--like, say, SBC--could be completed in a way that increases competition.

Allen said AT&T; could get a boost into local service by partnering with an existing carrier. He also held out the possibility that AT&T; could help a local telephone company take on rivals nationwide.

And if those options don’t come together, “We are fully prepared to go it alone,” he said.

Critics say a mammoth deal with SBC--at $50 billion it would be twice the size of any other in corporate history--would defy the spirit of the court-ordered breakup of Ma Bell in 1984. It also would test the limits of new laws designed to allow local phone companies and long-distance carriers to compete in each other’s markets.

In a speech to the Chief Executives Club, Allen said AT&T;’s efforts to enter local phone markets have been stymied by resistance from Baby Bell “monopolies.”

Despite capital investments of $1 billion this year, Allen said, AT&T; has been able to offer local service in only four states in the 1 1/2 years since the Telecommunications Act of 1996 opened up the market.