The traditional telecommunications market was turned on its ear in 2005 as big phone companies aggressively started entering new markets to fight stiff competition from cable providers and Internet companies such as Google and Yahoo.

The year started off with a bang as the two largest long-distance telephone companies were acquired by two of the strongest Baby Bells. SBC Communications agreed to pay $16 billion for AT&T. The deal closed in November and SBC decided to rename itself AT&T. Verizon Communications came next, with its $8.4 billion acquisition of MCI.

In order to fight competition from cable companies and Internet companies offering their own voice over Internet Protocol (VoIP) services, phone companies got more serious about offering television service. Verizon, which is building a new fiber-optic network called Fios, launched its service in Keller, Texas. AT&T is still building its Internet Protocol TV network and plans to offer service early next year.

On the wireless side, the cell phone quickly became the Swiss Army knife of electronic gadgets, offering users everything from traditional voice calling to music listening to TV programming.

In 2005, Cingular Wireless, Verizon Wireless and Sprint Nextel introduced mobile-TV services for the small screen. It's still too soon to know if subscribers in the North American market are even interested in Mobile TV, but several content providers, including all three major network news divisions, are developing programming especially for cell phones.

Music on cell phones also became hot in 2005, as wireless operators began branching out from offering simple ring tones to offering full-length music tracks to mobile customers.

Cingular and Motorola struck a deal with Apple Computer in September to allow users to download songs from their iTunes libraries onto their phones. And in October, Sprint Nextel announced Sprint Music Store, a service that allows subscribers to download full song tracks over the air from the Sprint library onto their phones.

2005 was also a big year for Internet telephony. Cable operators made a big push into the market, with Time Warner Cable hitting the 1 million subscribers mark for its digital telephony service. Independent VoIP providers also had a big year, with Vonage also reaching the million mark.

In addition to hitting key subscriber milestones this year, VoIP providers scrambled to comply with a Federal Communications Commission deadline to integrate their networks with the existing enhanced 911 system, which enables emergency operators to see addresses and telephone numbers when an emergency call is made. The deadline of Nov. 28 came and went, with few providers reaching 100 percent compliance.

VoIP's big moment in the spotlight came in September, when eBay announced that it would pay $2.6 billion to acquire Skype, which provides free calling from computer to computer over the Internet.

Several Internet players also threw their hats into the increasingly crowded VoIP ring. AOL announced its free Internet voice service, and the company also plans to offer a phone-based VoIP service in early 2006. EarthLink also launched new Internet telephony products, and Google and Yahoo announced instant message-based VoIP.

--Marguerite Reardon

2005 Highlights

Cell phones channel TV broadcasts

Major rollouts from Cingular and Verizon mean never having to miss an episode of "According to Jim."

SBC to acquire AT&T for $16 billion

SBC says the deal will give it one of the world's "most widely recognized and respected" brand names.

Verizon, MCI to link up in $6.7 billion deal

Valentine's Day betrothal will give regional titan Verizon access to MCI's worldwide long-distance and IP networks.

Cell phones: They do voice calling too?

The cell phone is transforming into a true multimedia device, as this week's CTIA show will demonstrate.

Verizon's salvo on cable TV

Phone giant's deal with NBC Universal is first step toward tackling cable providers head-on in the paid TV market.

Comcast dials in more phone markets

Accelerating its rollout, the cable giant prepares to push into Chicago, Boston and other cities in next few weeks.

FAQ: FCC sets rules for VoIP 911

New FCC guidelines require Net phones to include a sticker warning that calls to 911 may not get through to a live operator.

Rokr iTunes phone, iPod Nano unveiled

iPod Nano, which is 80 percent smaller than the original iPod, and the iTunes-enabled cell phone called the Rokr are unveiled in San Francisco.

eBay to nab Skype for $2.6 billion

Auction site hopes to let consumers discuss transactions in real time. But analysts remain skeptical of the high-price deal.

AOL, Microsoft prep dueling VoIP efforts

America Online plans to launch its Net phone service within three weeks, while Redmond is partnering with Qwest.

Mobile entertainment faces issues

As cell phone operators prepare to offer music and video services, they'll need to settle basic business matters.

Tight squeeze for mobile TV

New 3G networks aren't built to handle streaming video for the masses. Can the pipes be opened up?

FAQ: The lowdown on mobile TV

TV on mobile phones is expected to be a hot new service that will generate lots of revenue for carriers.

Sprint dials into music

Sprint Nextel offers a music service that allows customers to wirelessly download songs to their cell phones.

With E911 deadline past, what's next for VoIP firms?

FCC deadline for providing 911 service to all VoIP customers has come and gone, but uncertainty has only begun.

Behind the headlines

• Merger mania promises fewer, bigger telcos
• Cell phone makers to adopt Internet calling
• Phone options expand despite telecom mergers
• Sprint, Nextel shareholders approve merger
• Congress to take up VoIP 911 rules in September
• FAQ: Demystifying VoIP
• Expect a Net phone evolution, not revolution
• Katrina spurs federal action on VoIP
• FCC extends 911 deadline for Net phones
• Skype to make U.S. retail debut