O R D E R

IT IS ORDERED that:

1. The joint application of SBC Communications, Inc. (SBC) and AT&T Corp. (AT&T) for authorization to transfer control of AT&T Communications of California, TCG Los Angeles, Inc., TCG San Diego, and TCG San Francisco to SBC, which will occur indirectly as a result of AT&T's merger with a wholly-owned subsidiary of SBC, is granted subject to four conditions. Those conditions are:

a) SBC shall, by February 28, 2006, cease forcing customers to purchase separately traditional local phone service as a condition for obtaining DSL (this condition is commonly known as a requirement to provide "naked DSL." We further order that no later than February 28, 2006 , SBC shall submit an affidavit evidencing compliance with this condition of the merger.

b) Applicants shall adopt the agreement that Applicants negotiated with The Greenlining Institute (Greenlining) and Latino Issues Forum (LIF) ²¹³ and as modified in this decision (Greenlining Agreement). Under the key terms of the Greenlining Agreement the Applicants agree to:

· Participate in a statewide Broadband Task Force

· Increase corporate philanthropy over the next 5 years. Philanthropy will increase to $15 million for years one and two. Philanthropy will increase yet again to $20 million for years three, four, and five. The total net increase in philanthropy from current levels is $57 million. SBC commits to direct at least 60% of this additional philanthropy to minorities and underserved communities.

· Make a good faith effort to increase the supplier diversity goal for minority business enterprises from the current 23% to 27% by 2010. To achieve this goal, minority, supplier, diversity spending in California could grow to $40 million in 2006 and to $80 million by 2010.

c) Applicants shall commit $9 million per year for 5 years in charitable contributions ($45 million total), to a non-profit corporation, the California Emerging Technology Fund (CETF), to be established by the Commission for the purpose of achieving ubiquitous access to broadband and advanced services in California, particularly in underserved communities, through the use of emerging technologies by 2010. No more than half of Applicant's total commitment to the CETF may be counted toward satisfaction of the Applicants' commitment in the Greenlining Agreement to increase charitable contributions by $57 million over 5 years.

d) Applicants shall freeze for one year rates paid by current AT&T customers receiving DS1 or DS3 private network service. This rate freeze shall begin with the date that control is transferred.

2. Applicants shall file and serve a written notice in this proceeding of their agreement to the transfer of control and merger of their companies consistent with the terms set forth in this order. The agreement shall be evidenced by resolutions of their respective Boards of Directors authenticated by appropriate corporate officers. The authority to transfer control and merge granted herein shall expire 90 days from the effective date of this order if Applicants fail to file authenticated resolutions of their agreement with the terms of this order within 90 days from today. The authority to transfer control and merge granted herein shall expire 365 days from the effective date of this order if Applicants fail to transfer control and merge as authorized herein within 365 days from today.

3. Within 30 days of the issuing date of any decision by another jurisdiction which materially changes the terms of the proposed transaction as it affects any of Applicants' California utility operations, Applicants shall file a copy of that decision with the Commission, with a copy served on the service list in this proceeding and the Director of the Telecommunications Division. The filing shall also include an analysis of the impact of any terms and conditions contained therein as they affect any of Applicants' California utility operations.

4. Applicants shall notify the Commission, with a copy served on the service list in this proceeding and the Director of the Telecommunications Division, of the date the merger is consummated. The notice shall be served within 30 days of merger consummation.

5. In the event that the books and records of Applicants or any affiliates thereof are required for inspection by the Commission or its staff, Applicants shall either produce such records at the Commission's offices, or reimburse the Commission for the reasonable costs incurred in having Commission staff travel to any of Applicants' offices.

6. If Applicants consummate the proposed merger authorized herein, their failure to comply with any element of this order shall constitute a violation of a Commission order, and subject applicants to penalties and sanctions consistent with law

This order is effective today.

Dated _______________, at San Francisco, California.

²¹³ This agreement between the Applicants, Greenlining and LIF is referred to as the "Greenling Agreement."