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Week in review: The bell tolls for Ma Bell

With the sale of AT&T and the rise of Skype, the last vestiges of the 20th century's phone system are fading fast. Photos: AT&T's history of innovation Photos: Hush, hush, my PC

    The last vestiges of the 20th century's phone system are fading fast.

    SBC Communications on Monday announced plans to acquire AT&T in a $16 billion deal, a move designed to bolster SBC's sales to enterprise customers nationwide and give it new national and global networks.


    Images from AT&T's
    history of innovation

    The deal also ends more than 100 years of independence for AT&T, also known as Ma Bell, which was forced by federal antitrust regulators to break up its operations in 1984. That spawned the creation of the Baby Bells, including SBC, which focused on local telephone services, while Ma Bell served as a long-distance carrier.

    The acquisition is a sign of ongoing consolidation among both traditional landline providers like SBC-AT&T and cell phone operators. Cingular Wireless, the mobile carrier partly owned by SBC, catapulted to the top of the U.S. cell phone market in late 2004 by purchasing AT&T Wireless. Additionally, Sprint is buying Nextel Communications, the cell phone operator that caters mainly to businesses. Later in the week, talk heated up about the possibility of Qwest Communications International buying MCI.

    Telephone providers have been engaged in a turf war with cable companies and Net phone carriers, which have encroached on the Bells' role as the primary source for delivering phone calls. By the same token, telephone carriers have been looking at ways to expand their markets, by delving into wireless and offering high-speed Internet connections.

    AT&T won't disappear completely. SBC plans to keep that marquee brand name in some form or another.

    "We value the heritage and strength of the AT&T brand, which is one of the most widely recognized and respected names throughout the world, and it will certainly be a part of the new company's future," said SBC's chief executive, Ed Whitacre Jr.


    Edward Whitacre
    Chief executive, SBC

    For AT&T CEO Dave Dorman, the acquisition by SBC could be a case of deja vu--he's been involved in two such deals now. (Dorman previously played a supporting role in getting Pacific Telesis sold to SBC in 1997.) While he remains head of Ma Bell for now, his title is expected to change to SBC president once the acquisition closes next year. Dorman, 51, will be reporting to Whitacre, 63, who is expected to retire in the next two years.

    Even though U.S. carriers are consolidating forces, tech advances such as broadband telephony should keep the price of a local phone call down, industry veterans say. For one thing, the latest technology is giving rise to a new breed of phone operator: one that doesn't have to have its own network. That's injecting much more competition into the local phone market than ever before, with a range of companies, from 7-Eleven to Costco Wholesale to Home Depot, potentially jumping on board.

    "It's not that hard to be a telephone company anymore," said a source at Comcast. "The trick is staying in business."

    Meanwhile, as major U.S. telephone operators spend billions of dollars to expand, telephone software maker Skype says it's building a global phone network virtually for free. New releases of the Skype software for Linux and the Macintosh are a significant expansion for 17-month-old Skype.

    Clearly, the SBC-AT&T combination illustrates how far the traditional phone business has slipped--and how much it needs to change.

    All quiet on the PC front?
    Once a minor annoyance, noise from PCs has become a growing concern as ever-more-powerful computers require stronger and often noisier cooling systems--especially with PCs moving out of the office and into living rooms and bedrooms. The quest for quiet computing has inspired a cottage industry of specialist manufacturers, growing attention from major PC companies and a small underground of acoustic cultists who'll go to any extreme to eliminate another decibel of PC din.


    Keepin' it quiet

    "People are writing in all the time saying, 'It sounds like a jet engine taking off when I run my PC--what can I do about it?'" said Mike Chin, a freelance technical writer in Vancouver, British Columbia, who started Silent PC Review to share what he learned while building a quiet PC. The site has become one of the leading resources for PC owners looking to muffle their rackety rigs.

    "In most cases, it's just bad, inconsiderate design," Chin said. "You see some companies really paying attention and trying to do better, but acoustics still doesn't get much attention."

    One big PC maker that may be catching on to the trend is Dell, which has unveiled a fleet of business PCs it says are faster, more secure and more environmentally friendly than their predecessors.

    The Round Rock, Texas, company launched five Latitude notebook and Precision mobile-workstation models at a news conference in New York and took the wraps off a redesigned OptiPlex GX280 desktop for its business customers. The OptiPlex, which comes in mini-tower and traditional desktop form, uses a new chassis design created to boost PCs' cooling capacity and reduce the noise they make.

    The Latitudes incorporate the latest version of Intel's Centrino chip bundle for wireless notebooks, as well as a security chip.


    HP's new models

    Hewlett-Packard, meanwhile, unveiled 10 new mobile PCs, including its first convertible tablet PC, a notebook whose screen rotates 180 degrees and folds flat to create a writing surface. The company also announced alliances with Good Technology and Nokia, and said it plans to deliver a smart phone later this year. HP says it's using the new products and alliances to better adapt mobile technology to the business world.

    Apple Computer's latest PowerBooks, which debuted this week, come with faster G4 processors, lower prices and a couple of new tricks. The Mac maker offered updates to its models with 12-inch, 15-inch and 17-inch screens, including a new scrolling TrackPad designed to make it easier to get through long documents. Another new feature is the Sudden Motion Sensor, which helps protect a computer's hard drive if the machine is accidentally dropped.

    The announcement was a bit of a disappointment for some, who'd been hoping for a speedy G5 laptop. Apple customers have been waiting for such a device for some time. The more powerful chip first arrived in the Power Mac line in 2003, and Apple began offering it in the iMac last year.


    Click to view
    Juiced-up PowerBooks

    Technically, the company could offer a G5 PowerBook now. But given the relatively power-hungry nature of the IBM PowerPC 970FX processor--Apple has dubbed the 970FX and its predecessor, the 970, "G5" chips--such a machine would require compromises in size, weight and other aesthetics such as noise production. Apple, and likely most of its customers, wouldn't be willing to live with that.

    "It'd be this really thick, heavy notebook, and it would be loud as all get-out," said Kevin Krewell, editor in chief of the Microprocessor Report. "Those would not be design choices that Apple would want to pursue."

    Keeping up with the wormses
    There's no business quite like the worm business, apparently.

    Trend Micro is warning of a new variant of the Bropia worm that uses MSN Messenger to spread. Bropia.F is packaged with a second, more damaging worm that tries to exploit poorly patched computers, the antivirus company said Thursday.

    The latest variant of Bropia was discovered Wednesday evening, Trend Micro said. It infects systems belonging to users of MSN Messenger by sending itself as a picture of a roast chicken with tan lines to all available or online contacts. It also releases a second, more dangerous worm, called Agabot.ajc, on the infected computer.

    "The potential for damage is quite high, because it drops another worm on your machine that is quite nasty and can spread through a network by taking advantage of unpatched desktops and servers," said Adam Biviano, a senior systems engineer at Trend Micro.

    Sophos warned Thursday that photos of a "dead" Saddam Hussein are the lure for a new mass-mailing worm, in the latest instance of attackers using well-known figures as bait. The Bobax.H worm purports to offer photos that show that the former Iraqi leader was killed while attempting to escape from custody, the antivirus company said.

    "It's a brand new virus that converts users' PCs into spam factories," said Graham Cluley, a Sophos senior security consultant. "Although it hasn't reached epidemic proportions yet, it is spreading."

    Meanwhile, another new e-mail contains a picture of an old man pulling faces--and a dangerous Trojan horse. This worm, dubbed Wurmark-F, travels as an e-mail attachment and affects systems running Microsoft Windows. When opened, it displays a photo of a man "gurning"--a British tradition of making silly faces.

    Sophos reported that when run, the worm installs a Trojan that allows hackers to take control of infected computers and capture information.

    Worm authors are notoriously difficult to track down, but at least one has been captured and sentenced. In a poll from Sophos, a majority of respondents said the teenager--19-year-old Minnesota resident Jeffrey Lee Parson--got off easy when he was sentenced to 18 months in prison for unleashing a variant of the MSBlast worm.

    A federal district court in January found Parson guilty of modifying the original MSBlast worm, also known as Blaster, and releasing the variant onto the Internet.

    About 53 percent of the 250 business PC users responding to the poll said the sentence was too lenient. Only 14 percent believed the sentence should have been less harsh, and 12 percent said the most appropriate punishment was community service.

    On the Microsoft front, the software giant downplayed the significance of a reported flaw in its latest update to Windows XP.

    Responding to a Russian security company's claim that it found a way to beat a protective element of Microsoft's Windows XP Service Pack 2, Microsoft said it does not believe the issue represents a vulnerability. In fact, the company said the technology highlighted by Moscow-based Positive Technologies was never meant to be "foolproof" and added that the reported flaw does not, by itself, put consumers at risk.

    A bumper crop of Microsoft patches will be released next week, including nine fixes for Windows flaws. The forewarning is part of the company's program to give regular computer users notice of monthly security bulletins before the patches themselves are released.

    Also of note
    Digital photography could become one of the next big opportunities for the chip industry, at least according to companies that want to bring PC-style economics to the camera industry...Sun Microsystems has raised the possibility that it might offer customers its own database, a move that could trigger displeasure at Oracle but curry favor with open-source advocates...With an already commanding share of the desktop market, Microsoft these days is trying to transform Office into a tool that is deeply tied to a company's core business processes...Private fiber-optic networks aren't just for giants anymore--midsize companies in many industries are saving by leasing unused fiber lines and building their own high-speed optical networks...And Sony is set to launch another battle in the emerging handheld-game war when it brings its PlayStation Portable to North America next month.