AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 12, 2002
                                                        REGISTRATION NO. 333-
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--------------------------------------------------------------------------------
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                             ---------------------

                                    FORM S-4
            REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
                             ---------------------

                                   AT&T CORP.
          AND THE ADDITIONAL REGISTRANTS LISTED ON THE FOLLOWING PAGES


                                                                            
                NEW YORK                                   4811                                      13-4924710
    (State or other jurisdiction of            (Primary Standard Industrial                       (I.R.S. Employer
     incorporation or organization)            Classification Code Number)                      Identification No.)


                             295 NORTH MAPLE AVENUE
                        BASKING RIDGE, NEW JERSEY 07920
                                 (908) 221-2000
  (Address, including zip code, and telephone number, including area code, of
                   registrant's principal executive offices)
                               MARILYN J. WASSER
                      VICE PRESIDENT -- LAW AND SECRETARY
                                   AT&T CORP.
                             295 NORTH MAPLE AVENUE
                            BASKING RIDGE, NJ 07920
                                 (908) 221-2000
 (Name, address, including zip code, and telephone number, including area code,
                             of agent for service)
                             ---------------------


                                                                                    
                                                           COPIES TO:
     ARTHUR R. BLOCK, ESQ.          BRUCE K. DALLAS, ESQ.       STEVEN A. ROSENBLUM, ESQ.            JOHN B. TEHAN, ESQ.
     SENIOR VICE PRESIDENT          DAVIS POLK & WARDWELL      STEPHANIE J. SELIGMAN, ESQ.           RISE B. NORMAN, ESQ.
    AT&T COMCAST CORPORATION         1600 EL CAMINO REAL      WACHTELL, LIPTON, ROSEN & KATZ      SIMPSON THACHER & BARTLETT
       1500 MARKET STREET        MENLO PARK, CALIFORNIA 94025      51 WEST 52ND STREET               425 LEXINGTON AVENUE
PHILADELPHIA, PENNSYLVANIA 19102     TEL: (650) 752-2000         NEW YORK, NEW YORK 10019          NEW YORK, NEW YORK 10017
      TEL: (215) 665-1700            FAX: (650) 752-2111           TEL: (212) 403-1000               TEL: (212) 455-2000
      FAX: (215) 981-7790                                          FAX: (212) 403-2000               FAX: (212) 455-2502


                             ---------------------
   APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As promptly
as possible upon effectiveness of this Registration Statement.
   If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: [ ]
   If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] ----------
   If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ----------
                        CALCULATION OF REGISTRATION FEE



---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
               TITLE OF EACH CLASS OF                           PROPOSED MAXIMUM                          AMOUNT OF
           SECURITIES TO BE REGISTERED(1)                  AGGREGATE OFFERING PRICE(2)               REGISTRATION FEE(2)
---------------------------------------------------------------------------------------------------------------------------------
                                                                                      
7.00% Notes Due 2005(3)..............................
-----------------------------------------------------
7.50% Notes Due 2006(3)..............................
-----------------------------------------------------
7.75% Notes Due 2007(3)..............................
-----------------------------------------------------
6.00% Notes Due 2009(3)..............................            $2,592,423,500                           $238,503
-----------------------------------------------------
8.125% Debentures Due January 15, 2022(3)............
-----------------------------------------------------
8.125% Debentures Due July 15, 2024(3)...............
-----------------------------------------------------
8.35% Debentures Due 2025(3).........................
-----------------------------------------------------
8.625% Debentures Due December 1, 2031(3)............
---------------------------------------------------------------------------------------------------------------------------------
New Broadband Notes issued upon exchange of the                        --                                    --
 foregoing(4)........................................
---------------------------------------------------------------------------------------------------------------------------------
Guarantees of the New Broadband Notes(4).............                  --                                    --
---------------------------------------------------------------------------------------------------------------------------------
5.625% Notes Due 2004(5).............................
-----------------------------------------------------
6.75% Notes 2004(5)..................................
-----------------------------------------------------
7.75% Medium-Term Notes, Series A Due May 15,
 2025(5).............................................
-----------------------------------------------------
8.00% Medium-Term Notes, Series A Due May 15,                    $4,399,431,530                           $404,748
 2025(5).............................................
-----------------------------------------------------
6.50% Notes Due 2029(5)..............................
-----------------------------------------------------
FRN Medium-Term Notes, Series A Due 2054(5)..........
---------------------------------------------------------------------------------------------------------------------------------
   TOTAL.............................................            $6,991,854,030                           $643,251
---------------------------------------------------------------------------------------------------------------------------------


(1) This registration statement relates to an exchange offer for certain
    outstanding securities of AT&T Corp. ("AT&T"). The securities registered
    hereby to be initially issued in the exchange offer will have identical
    terms, including as to maturity and interest rate, as the securities
    tendered in the exchange offer, except that (a) those securities issued in
    the exchange offer and identified in note (3) will be co-obligations of AT&T
    and AT&T Broadband Corp. ("Broadband") and mandatorily exchanged upon
    completion of the AT&T Comcast transaction (as described herein) for New
    Broadband Notes with the terms, including as to interest rate and maturity,
    as described herein, and (b) those securities issued in the exchange offer
    and identified in note (5) will provide for a change in interest rate and/or
    maturity date, as described herein, upon completion of the AT&T Comcast
    transaction.

(2) The registration fee has been calculated pursuant to Rule 457(f) based on
    the average of the high and low prices reported on the New York Stock
    Exchange as of August 6, 2002 of the securities to be cancelled in the
    exchange (after giving effect to proration) which are listed on the New York
    Stock Exchange and the average of the bid and asked price for the other
    securities to be cancelled in the exchange, and has been estimated solely
    for the purpose of calculating the amount of the registration fee. In
    addition, this registration statement includes such presently indeterminable
    principal amount of New Broadband Notes (consisting of    % Notes Due 2013,
       % Notes Due January 15, 2022,    % Notes Due July 15, 2024,    % Notes
    Due January 15, 2025 and    % Notes Due December 1, 2031) as may be issuable
    upon mandatory exchange of the securities identified in note (3) upon
    completion of the AT&T Comcast transaction.

(3) These securities will be co-obligations of AT&T and Broadband, mandatorily
    exchangeable upon completion of the AT&T Comcast transaction for the New
    Broadband Notes, which will be obligations only of Broadband and which will
    be fully and unconditionally guaranteed by Comcast Cable Communications,
    Inc., AT&T Comcast Corporation, MediaOne Group, Inc. and AT&T Broadband,
    LLC.

(4) No registration fee is payable in connection with the New Broadband Notes
    pursuant to Rule 457(i) or in connection with the Guarantees pursuant to
    Rule 457(n).

(5) These securities will be obligations only of AT&T.

   THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.

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                             ADDITIONAL REGISTRANTS

                              AT&T BROADBAND CORP.
             (Exact name of registrant as specified in its charter)


                                                                              
                DELAWARE                                    4841                                   04-3592397
     (State or other jurisdiction of            (Primary Standard Industrial          (I.R.S. Employer Identification No.)
     incorporation or organization)              Classification Code Number)


                            188 INVERNESS DRIVE WEST
                           ENGLEWOOD, COLORADO 80112
                                 (303) 858-3000
  (Address, including zip code, and telephone number, including area code, of
                   registrant's principal executive offices)

                               MARILYN J. WASSER
                          VICE PRESIDENT AND SECRETARY
                                 C/O AT&T CORP.
                             295 NORTH MAPLE AVENUE
                        BASKING RIDGE, NEW JERSEY 07920
                                 (908) 221-2000
 (Name, address, including zip code, and telephone number, including area code,
                             of agent for service)
                              MEDIAONE GROUP, INC.
             (Exact name of registrant as specified in its charter)


                                                                              
                DELAWARE                                    4841                                   84-0926774
     (State or other jurisdiction of            (Primary Standard Industrial          (I.R.S. Employer Identification No.)
     incorporation or organization)              Classification Code Number)


                            188 INVERNESS DRIVE WEST
                           ENGLEWOOD, COLORADO 80112
                                 (303) 858-3000
  (Address, including zip code, and telephone number, including area code, of
                   registrant's principal executive offices)

                               MARILYN J. WASSER
                                   AT&T CORP.
                             295 NORTH MAPLE AVENUE
                        BASKING RIDGE, NEW JERSEY 07920
                                 (908) 221-2000
 (Name, address, including zip code, and telephone number, including area code,
                             of agent for service)

                              AT&T BROADBAND, LLC
             (Exact name of registrant as specified in its charter)


                                                                              
                DELAWARE                                    4841                                   84-1260157
     (State or other jurisdiction of            (Primary Standard Industrial          (I.R.S. Employer Identification No.)
     incorporation or organization)              Classification Code Number)


                            188 INVERNESS DRIVE WEST
                           ENGLEWOOD, COLORADO 80112
                                 (303) 858-3000
  (Address, including zip code, and telephone number, including area code, of
                   registrant's principal executive offices)

                               MARILYN J. WASSER
                                   AT&T CORP.
                             295 NORTH MAPLE AVENUE
                        BASKING RIDGE, NEW JERSEY 07920
                                 (908) 221-2000
 (Name, address, including zip code, and telephone number, including area code,
                             of agent for service)

                            AT&T COMCAST CORPORATION
             (Exact name of registrant as specified in its charter)


                                                                              
              PENNSYLVANIA                                  4841                                   27-0000798
     (State or other jurisdiction of            (Primary Standard Industrial          (I.R.S. Employer Identification No.)
     incorporation or organization)              Classification Code Number)


                               1500 MARKET STREET
                     PHILADELPHIA, PENNSYLVANIA 19102-2148
                                 (215) 665-1700
  (Address, including zip code, and telephone number, including area code, of
                   registrant's principal executive offices)

                             ARTHUR R. BLOCK, ESQ.
                             SENIOR VICE PRESIDENT
                            AT&T COMCAST CORPORATION
                               1500 MARKET STREET
                     PHILADELPHIA, PENNSYLVANIA 19102-2148
                                 (215) 665-1700
 (Name, address, including zip code, and telephone number, including area code,
                             of agent for service)
                       COMCAST CABLE COMMUNICATIONS, INC.
             (Exact name of registrant as specified in its charter)


                                                                              
                DELAWARE                                    4841                                   23-2175755
     (State or other jurisdiction of            (Primary Standard Industrial          (I.R.S. Employer Identification No.)
     incorporation or organization)              Classification Code Number)


                               1500 MARKET STREET
                     PHILADELPHIA, PENNSYLVANIA 19102-2148
                                 (215) 665-1700
  (Address, including zip code, and telephone number, including area code, of
                   registrant's principal executive offices)

                                STANLEY L. WANG
                            EXECUTIVE VICE PRESIDENT
                               1500 MARKET STREET
                     PHILADELPHIA, PENNSYLVANIA 19102-2148
                                 (215) 665-1700
 (Name, address, including zip code, and telephone number, including area code,
                             of agent for service)

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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND WE ARE NOT SOLICITING OFFERS TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

      PRELIMINARY PROSPECTUS DATED AUGUST 12, 2002 (SUBJECT TO COMPLETION)

                                   AT&T CORP.
                               OFFER TO EXCHANGE

    In connection with the planned combination of Comcast Corporation and the
broadband business of AT&T Corp., referred to as the AT&T Comcast transaction,
AT&T is offering to exchange its Broadband Eligible Notes for a like principal
amount of Broadband Exchange Notes and its AT&T Eligible Notes for a like
principal amount of New AT&T Notes. Upon consummation of the AT&T Comcast
transaction, the Broadband Exchange Notes will be mandatorily exchanged at an
exchange ratio based on the exchange spreads set forth below for New Broadband
Notes with coupons based on the credit spreads set forth below. Additionally,
the maturity date and/or interest rate of the applicable New AT&T Notes will be
adjusted automatically as set forth below. Holders of Broadband Eligible Notes
and AT&T Eligible Notes accepted for exchange in the exchange offer must consent
to the note amendment as described in this prospectus.



                                                      PRORATION    EXCHANGE                                                CREDIT
                                          CUSIP NO.   PERCENTAGE    SPREAD                                                 SPREAD
                                          ---------   ----------   --------                                                ------
                                                                                                            
BROADBAND ELIGIBLE NOTES                                                      NEW BROADBAND NOTES
7.00% Notes Due 2005....................  001957AS8         %           %
7.50% Notes Due 2006....................  001957AP4         %           %
7.75% Notes Due 2007....................  001957AR0         %           %     Notes Due     , 2013......................       %
6.00% Notes Due 2009....................  001957AV1         %           %
8.125% Debentures Due January 15,
  2022..................................  001957AJ8         %           %     Notes Due January 15, 2022................       %
8.125% Debentures Due July 15, 2024.....  001957AK5         %           %     Notes Due July 15, 2024...................       %
8.35% Debentures Due 2025...............  001957AQ2         %           %     Notes Due January 15, 2025................       %
8.625% Debentures Due December 1,
  2031..................................  001957AL3         %           %     Notes Due December 1, 2031................       %




                                                              CUSIP NO.
                                                              ---------
                                                                         
AT&T ELIGIBLE NOTES                                                            NEW AT&T NOTES
5.625% Notes Due 2004...................................  001957AU3.........     % Notes Due March 15, 2004
6.75% Notes Due 2004....................................  001957AM1.........     % Notes Due April 1, 2004
7.75% Medium-Term Notes, Series A Due May 15, 2025......  00206QAP9.........     % Medium-Term Notes, Series A Due May 15, 2025
8.00% Medium-Term Notes, Series A Due May 15, 2025......  00206QAN4.........     % Medium-Term Notes, Series A Due May 15, 2025
6.50% Notes Due 2029....................................  001957AW9.........     % Notes Due March 15, 20__
FRN Medium-Term Notes, Series A Due 2054                                       FRN Medium-Term Notes, Series A Due 2054
  (spread over commercial paper:  %)....................  00206QAE4.........     (spread over commercial paper:  %)


    AT&T is offering to exchange its Broadband Eligible Notes for a like
principal amount of Broadband Exchange Notes. The Broadband Exchange Notes will
be obligations of both AT&T and AT&T Broadband Corp., a newly formed company to
which AT&T will spin off its broadband business prior to completion of the AT&T
Comcast transaction and which we refer to as Broadband. Except as described in
this prospectus, the Broadband Exchange Notes will have terms substantially
identical to the Broadband Eligible Notes as amended by the note amendment
described below. Upon completion of the AT&T Comcast transaction, however, the
Broadband Exchange Notes will be mandatorily exchanged for New Broadband Notes,
which will be primary obligations only of Broadband and which will be fully and
unconditionally guaranteed by Comcast Cable Communications, Inc., AT&T Comcast
Corporation, MediaOne Group, Inc. and AT&T Broadband, LLC. The exchange ratio
and interest rates for each series of New Broadband Notes will be announced by
press release two business days prior to the expiration of the exchange offer
and each will be based on spreads over the relevant reference U.S. Treasury
rates as described in this prospectus.

    AT&T is also offering to exchange its AT&T Eligible Notes for a like
principal amount of New AT&T Notes. Except as described in this prospectus, the
New AT&T Notes will have terms substantially identical to the AT&T Eligible
Notes as amended by the note amendment described below. Upon completion of the
AT&T Comcast transaction, however, the maturity date and/or interest rate of the
applicable New AT&T Notes will be adjusted automatically as set forth in this
prospectus.

    No notes of a series will be accepted for exchange unless more than 50% of
the principal amount of that series of eligible notes have been validly tendered
and not withdrawn by the expiration of the exchange offer for that series. If
more than the relevant proration percentage of the principal amount of any
series of Broadband Eligible Notes is tendered and not withdrawn by the
expiration of the exchange offer for that series, notes of that series will be
accepted for exchange on a prorated basis. The exchange offer for each series of
AT&T Eligible Notes is for all notes of that series and is not subject to
proration. The exchange offer is also subject to other conditions that are
described in this prospectus.

    Holders of Broadband Eligible Notes and AT&T Eligible Notes, to the extent
their notes are accepted for exchange, must consent to an amendment of the terms
of those notes, referred to as the note amendment, relating to the AT&T Comcast
transaction. Notes of any series not validly tendered for exchange and notes of
any series of Broadband Eligible Notes not accepted for exchange due to
proration will remain obligations of AT&T, will not become obligations of
Broadband, and will not be subject to the cable guarantees but will be bound by
the note amendment if more than 50% by principal amount of that series consents
to the note amendment by participating in the exchange. THE TERMS OF YOUR NOTES
MAY BE AMENDED AS A RESULT OF THE EXCHANGE OFFER WHETHER OR NOT YOU PARTICIPATE
IN THE EXCHANGE. If the AT&T Comcast transaction is terminated: (1) the
Broadband Exchange Notes will not be exchanged for New Broadband Notes, will
become obligations only of AT&T with Broadband released as an obligor and will
not be entitled to the benefits of the cable guarantees and (2) the maturity
dates and interest rates on the New AT&T Notes will not change.

    THE EXCHANGE OFFER WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON
    , 2002 UNLESS EXTENDED AS TO ANY SERIES OF ELIGIBLE NOTES IN OUR DISCRETION.
WE WILL ANNOUNCE ANY EXTENSIONS BY PRESS RELEASE OR OTHER PERMITTED MEANS NO
LATER THAN 9:00 A.M., NEW YORK CITY TIME, THE DAY AFTER EXPIRATION OF THE
EXCHANGE OFFER FOR THAT SERIES OF NOTES. YOU MAY WITHDRAW ANY NOTES TENDERED
UNTIL THE EXPIRATION OF THE EXCHANGE OFFER FOR THAT SERIES OF NOTES. THE
EXCHANGE OFFER IS DESCRIBED IN DETAIL IN THIS PROSPECTUS AND WE URGE YOU TO READ
IT CAREFULLY, INCLUDING THE RISK FACTORS STARTING ON PAGE 45. INFORMATION
REGARDING MARKET PRICES FOR THE ELIGIBLE NOTES IS SET FORTH ON PAGE 40. SEE PAGE
75 FOR HOW TO TENDER OR WITHDRAW ELIGIBLE NOTES. THE BOARD OF DIRECTORS OF AT&T
AND THE DEALER MANAGERS MAKE NO RECOMMENDATION AS TO WHETHER YOU SHOULD TENDER
ELIGIBLE NOTES IN THE EXCHANGE OFFER.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE SECURITIES TO BE ISSUED IN
CONNECTION WITH THE EXCHANGE OFFER OR DETERMINED IF THIS PROSPECTUS IS ACCURATE
OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

   The Dealer Managers for the exchange offer are, in alphabetical order, as
                                    follows:

CREDIT SUISSE FIRST BOSTON
                  GOLDMAN, SACHS & CO.
                                          JPMORGAN
                                                MERRILL LYNCH & CO.
                                                            MORGAN STANLEY

         This prospectus is dated     , 2002, and is first being mailed to
                      noteholders on or about     , 2002.


[Illustration consisting of two diagrams. The first diagram is a simplified
diagram of the proposed AT&T Comcast transaction. The right side of the diagram
shows that AT&T will spin off its broadband business, referred to as "AT&T
Broadband Group," to a newly formed company, AT&T Broadband Corp., referred to
as "Broadband," and that Broadband Acquisition Corp., a wholly owned subsidiary
of AT&T Comcast Corporation, referred to as "AT&T Comcast," will merge with and
into Broadband, with Broadband continuing as the surviving corporation and a
wholly owned subsidiary of AT&T Comcast. The left side of the diagram shows that
Comcast Acquisition Corp., a wholly owned subsidiary of AT&T Comcast, will merge
with and into Comcast Corporation, with Comcast Corporation continuing as the
surviving corporation and a wholly owned subsidiary of AT&T Comcast.
The second diagram is a simplified diagram of the corporate structure of AT&T
Comcast, and the primary obligors and guarantors of the New Broadband Notes,
assuming the AT&T Comcast transaction is completed. The diagram shows AT&T
Comcast, which will guarantee the New Broadband Notes, and two of its
subsidiaries, Broadband, which will be the issuer of the New Broadband Notes,
and Comcast Corporation. The diagram shows two subsidiaries of Broadband,
MediaOne Group, Inc., referred to as "MediaOne," and AT&T Broadband, LLC,
formerly known as Tele-Communications, Inc. and referred to as "TCI," each of
which will guarantee the New Broadband Notes, as well as an additional Broadband
subsidiary named AT&T Broadband Overseas, and that MediaOne and TCI will have
various operating subsidiaries. The diagram also shows Comcast Cable
Communications, Inc., referred to as "Comcast Cable," which will guarantee the
New Broadband Notes, and that Comcast Cable will have various operating
subsidiaries. The diagram shows that Comcast Corporation will also have various
non-cable subsidiaries.]



                               TABLE OF CONTENTS


                                       
QUESTIONS AND ANSWERS ABOUT THE EXCHANGE
  OFFER.................................    1
SUMMARY.................................    5
  The AT&T Comcast Transaction..........    5
  The Exchange Offer....................    5
  The Companies.........................   10
  Description of the Broadband Exchange
     Notes..............................   12
  Description of the New Broadband Notes
     and the Cable Guarantees...........   12
  Description of the New AT&T Notes.....   14
  United States Federal Income Tax
     Consequences.......................   15
  The Dealer Managers...................   16
  The Information Agent.................   16
  The Exchange Agent....................   16
  The Luxembourg Exchange Agent.........   16
  Retail Solicitation Fee...............   17
  Recent Financial Results..............   17
SELECTED FINANCIAL DATA OF AT&T.........   18
SUMMARY PRO FORMA COMBINED CONDENSED
  FINANCIAL INFORMATION OF AT&T.........   21
SELECTED FINANCIAL DATA OF AT&T
  BROADBAND GROUP.......................   22
SELECTED FINANCIAL DATA OF BROADBAND....   23
UNAUDITED PRO FORMA COMBINED CONDENSED
  FINANCIAL STATEMENTS OF AT&T
  COMCAST...............................   24
SELECTED FINANCIAL DATA OF COMCAST......   34
SELECTED FINANCIAL DATA OF COMCAST
  CABLE.................................   37
RATIOS OF EARNINGS TO FIXED CHARGES.....   39
PRO FORMA RATIO OF EARNINGS TO FIXED
  CHARGES...............................   40
MARKETS AND MARKET PRICES...............   40
RISK FACTORS............................   45
  Risks Relating to the Exchange
     Offer..............................   45
  Risks Relating to the AT&T Comcast
     Transaction........................   47
  Risks For AT&T Relating to the AT&T
     Comcast Transaction................   51
  Risks Relating to the Business of AT&T
     Comcast............................   53
  Risks Relating to AT&T's Credit
     Rating.............................   58
  Risks Relating to the Businesses of
     AT&T Consumer Services Group and
     AT&T Business Services Group.......   59
DESCRIPTION OF THE EXCHANGE OFFER.......   66
  Purpose of the Exchange Offer.........   66
  Terms of the Exchange Offer; Period
     for Tendering......................   66
  Important Reservation of Rights
     Regarding the Exchange Offer.......   68
  Exchange Ratio for the New Broadband
     Notes..............................   68
  Interest Rate for the New Broadband
     Notes..............................   71
  Other Terms of the Broadband Exchange
     Notes, New Broadband Notes and the
     New AT&T Notes.....................   72
  Conditions to the Exchange Offer......   72
  Proration.............................   74
  Fractional Notes......................   74
  Required Consent......................   75
  Procedures for Tendering..............   75
  Book-Entry Transfer...................   76
  Guaranteed Delivery Procedures........   76
  Acceptance of Eligible Notes and
     Delivery of New Notes..............   77
  Withdrawal Rights.....................   78
  The Dealer Managers...................   79
  Retail Solicitation Fee...............   80
  Information Agent.....................   81
  Exchange Agent........................   81
  Luxembourg Exchange Agent.............   81
  Fees and Expenses.....................   81
  Transfer Taxes........................   82
  Material United States Federal Income
     Tax Consequences of the Exchange
     Offer..............................   82
  Consequences of Failures to Properly
     Tender Broadband Eligible Notes and
     AT&T Eligible Notes in the Exchange
     Offer..............................   90
  Use of Proceeds.......................   90
DESCRIPTION OF THE NOTE AMENDMENT.......   91
  The Note Amendment....................   91
  Terms of the Note Amendment...........   91
  Conditions to the Note Amendment......   92
  Requisite Consents; Outstanding
     Notes..............................   92


                                        i


                                       
  No Consent Fee........................   92
  Expiration Date; Extension of the
     Exchange Offer; Amendment;
     Termination........................   93
  Consequences to Non-Consenting
     Holders; Dissenters' Rights........   93
  Consent Procedures....................   93
  Revocation of Consents................   93
DESCRIPTION OF THE BROADBAND EXCHANGE
  NOTES.................................   94
  Basic Terms of the Broadband Exchange
     Notes..............................   95
  Mandatory Exchange Upon Completion of
     the AT&T Comcast Transaction.......   96
  Interest Payments.....................   96
  Additional Terms Pertaining Only to
     the 6.00% Broadband Exchange Notes
     Due March 15, 2009.................   96
  Optional Redemption...................   98
  No Mandatory Redemption or Sinking
     Fund...............................  101
  Additional Debt.......................  101
  Certain Covenants.....................  101
  Modification of the AT&T Indenture....  103
  Events of Default.....................  103
  Discharge and Defeasance..............  103
  No Personal Liability of Stockholders,
     Officers, Directors or Employees...  104
  Concerning the Trustee................  104
  Governing Law.........................  104
  Book-Entry System.....................  104
  Certificated Notes....................  104
  Same-Day Payment......................  105
  Certain Definitions...................  105

DESCRIPTION OF THE NEW BROADBAND NOTES
  AND THE CABLE GUARANTEES..............  108
  Basic Terms of the New Broadband
     Notes..............................  108
  Interest Payments.....................  108
  Cable Guarantees......................  109
  Optional Redemption...................  109
  No Mandatory Redemption or Sinking
     Fund...............................  110
  Additional Debt.......................  111
  Certain Covenants.....................  111
  Modification and Waiver...............  115
  Events of Default.....................  116
  Discharge and Defeasance..............  118
  No Personal Liability of
     Incorporators, Stockholders,
     Officers, Directors or Employees...  120
  Concerning the Trustee................  120
  Governing Law.........................  120
  Book-Entry System.....................  120
  Certificated Notes....................  122
  Same-Day Payment......................  122

COMPARISON OF THE NEW BROADBAND NOTES
  AND THE BROADBAND EXCHANGE NOTES......  123
  Comparison of Basic Terms.............  123
  Elimination of Payment of Additional
     Amounts; Redemption Upon a Tax
     Event..............................  124
  Optional Redemption...................  124
  Covenants.............................  124
  Modification and Waiver...............  126
  Events of Default.....................  126

DESCRIPTION OF THE NEW AT&T NOTES.......  128
  Basic Terms of the New AT&T Notes.....  128
  Interest Payments.....................  129
  Additional Terms Pertaining Only to
     the New AT&T Notes Due 2004 (Series
     1) and New AT&T Notes Due 20  .....  132
  Optional Redemption...................  134
  Optional Repayment Terms Pertaining
     Only to the New FRN Medium-Term
     Notes, Series A Due 2054...........  137
  No Mandatory Redemption or Sinking
     Fund...............................  138
  Notices...............................  138
  Luxembourg Listing....................  138

DESCRIPTION OF AT&T COMCAST
  TRANSACTION...........................  139
  Structure of the Transaction..........  139
  Timing of Closing.....................  139
  The Merger Agreement..................  139
       Covenants........................  139
       Post-Transaction Governance
          Arrangements..................  141
       Employee Benefits Matters........  142
       Covenant Regarding Comcast's AT&T
          Stock.........................  142
       Representations and Warranties...  143
       Conditions to the Completion of
          the Mergers...................  143
       Termination of the Merger
          Agreement.....................  144


                                        ii



                                                 
       Expenses...................................        145
       Amendments and Waivers.....................        145
  The Separation and Distribution Agreement.......        146
       The Separation.............................        146
       Timing of the Separation and the Broadband
          Spin-Off................................        147
       Repayment of Intracompany Debt.............        147
       Post-Spin-Off Transactions.................        147
       Disposition of Time Warner Entertainment
          Interest................................        147
       Conditions to the Completion of the
          Broadband Spin-Off......................        148
       Mutual Release; Indemnification............        148
       Termination................................        149
       Amendments and Waivers.....................        149
  The Exchange Agreement and Instrument of
     Admission....................................        150
       QUIPS Exchange.............................        150
       Covenants..................................        150
       Conditions to the Completion of the
          Microsoft Transaction...................        151
       Interactive Technology Agreement...........        152
  The Tax Sharing Agreement.......................        152
  The Ancillary Agreements........................        153
  Material Federal Income Tax Consequences of the
     AT&T Comcast Transaction.....................        154

OTHER INDEBTEDNESS AND THE CROSS-GUARANTEES.......        155
  Description of New Credit Facilities............        155
  Other Indebtedness and the Proposed
     Cross-Guarantees.............................        156

LEGAL MATTERS.....................................        158

EXPERTS...........................................        158

INFORMATION REGARDING FORWARD-LOOKING
  STATEMENTS......................................        159

WHERE YOU CAN FIND MORE INFORMATION...............        160

INDEX TO FINANCIAL STATEMENTS.....................        F-1


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

     You should rely only on information contained in this prospectus. No one is
authorized to provide you with information that is different from that contained
in this prospectus. We do not intend the contents of any websites referred to in
this prospectus to be part of this prospectus.

     We are offering to sell, and are seeking offers to buy, the Broadband
Exchange Notes, the New Broadband Notes and the New AT&T Notes only in
jurisdictions where offers and sales are permitted. The information contained in
this prospectus is accurate only as of its date regardless of the time of
delivery of this prospectus or of any sale of the new notes.

     We refer to AT&T Corp. in this prospectus as "AT&T" or "we," "us," "our" or
comparable terms. We refer to Comcast Corporation as "Comcast," Comcast Cable
Communications, Inc. as "Comcast Cable," AT&T Comcast Corporation as "AT&T
Comcast," AT&T Broadband Corp. as "Broadband," MediaOne Group, Inc. as
"MediaOne," AT&T Broadband, LLC (formerly known as Tele-Communications, Inc.) as
"TCI," and the AT&T broadband business as "AT&T Broadband Group."

                                       iii


                 QUESTIONS AND ANSWERS ABOUT THE EXCHANGE OFFER

     The following questions and answers respond to some of the most basic
questions that holders of the notes eligible for the exchange offer may have but
likely will not contain all of the information that is important to you. To
better understand the exchange offer, you should read the summary following the
questions and answers, as well as the rest of this prospectus.

WHAT IS THE AT&T COMCAST TRANSACTION?

     Comcast and AT&T are planning to combine Comcast with the AT&T broadband
business. Comcast and AT&T believe that the combined strengths of Comcast and
AT&T's broadband business will enable them to create the world's premier
broadband communications company.

     The AT&T Comcast transaction will occur in several steps. First, AT&T will
transfer the assets and liabilities of its broadband business to Broadband, a
company newly formed for the purpose of effectuating the AT&T Comcast
transaction. Second, AT&T will spin off Broadband to its shareholders. Third,
Comcast and Broadband will each merge with a different, wholly owned subsidiary
of AT&T Comcast. The merger agreement entered into in connection with the AT&T
Comcast transaction provides for all of the steps described above to occur on
the closing date for the mergers. The AT&T Comcast transaction remains subject
to regulatory and other approvals and other conditions, including the receipt of
specified note consents as described in this prospectus, and is expected to
close by the end of 2002.

     None of AT&T, Broadband or any other party will receive any proceeds from
the issuance of the new notes in the exchange offer. The amount that Broadband
would otherwise be required to pay to AT&T upon completion of the AT&T Comcast
transaction to satisfy intercompany indebtedness then outstanding will be
reduced based upon the aggregate principal amount of New Broadband Notes issued
in the mandatory exchange in an amount to be mutually agreed upon.

     For purposes of this prospectus, the AT&T Comcast transaction is defined as
the transactions contemplated by the AT&T Comcast merger agreement and the
related separation and distribution agreement, in each case as amended,
supplemented or otherwise modified from time to time, including after the date
of this prospectus.

WHAT IS THE EXCHANGE OFFER?

     If you hold Broadband Eligible Notes set forth on the cover of this
prospectus, you are being asked to exchange those notes for Broadband Exchange
Notes that will initially be obligations of AT&T and Broadband. Upon completion
of the AT&T Comcast transaction, the Broadband Exchange Notes will be
mandatorily exchanged at the relevant exchange ratio for New Broadband Notes
that are primary obligations only of Broadband fully and unconditionally
guaranteed by Comcast Cable, AT&T Comcast, MediaOne and TCI, whose guarantees we
refer to as the cable guarantees. AT&T will not be an obligor on the New
Broadband Notes. If the AT&T Comcast transaction is terminated, Broadband will
be released as an obligor on the Broadband Exchange Notes, which will cease to
be exchangeable for New Broadband Notes.

     If you hold AT&T Eligible Notes set forth on the cover of this prospectus,
you are being asked to exchange those notes for New AT&T Notes that will be
obligations solely of AT&T.

     Holders of Broadband Eligible Notes and AT&T Eligible Notes accepted in
exchange must consent to the note amendment described below.

WHEN WILL I RECEIVE ACCRUED INTEREST ON THE BROADBAND ELIGIBLE NOTES, THE
BROADBAND EXCHANGE NOTES, THE NEW BROADBAND NOTES, THE AT&T ELIGIBLE NOTES OR
THE NEW AT&T NOTES?

     You should refer to the specific terms of the notes described in this
prospectus to determine who will be eligible to receive accrued and unpaid
interest and when accrued and unpaid interest will be paid. Interest on each of
the new notes will accrue from the date of original issuance of that series of
notes, which will be on the date the exchange offer is completed with respect to
the Broadband Exchange Notes and the New AT&T Notes and which will be on the
date of mandatory

                                        1


exchange with respect to the New Broadband Notes. However:

- interest accrued and unpaid on any Broadband Eligible Notes accepted in an
  exchange offer (a) will be paid along with the first payment of interest on
  the relevant series of Broadband Exchange Notes or (b) if the mandatory
  exchange of the Broadband Exchange Notes occurs prior to that first payment of
  interest, will be paid at the time of mandatory exchange;

- interest accrued and unpaid on the Broadband Exchange Notes will be paid at
  the time of mandatory exchange;

- interest accrued and unpaid on any AT&T Eligible Notes accepted in an exchange
  offer will be paid along with the first payment of interest on the relevant
  series of New AT&T Notes; and

- interest accrued and unpaid on any Broadband Eligible Notes or AT&T Eligible
  Notes not accepted in an exchange offer will be paid on the same interest
  payment dates as previously scheduled for the respective series.

WILL YOU ACCEPT ALL NOTES TENDERED? WILL THERE BE PRORATION?

     We will not accept any eligible notes of a series unless more than 50% of
that series of notes has been validly tendered and not withdrawn by the
expiration of the exchange offer for that series.

     We will not necessarily accept all Broadband Eligible Notes tendered. If
more than the relevant proration percentage of the principal amount of a series
of Broadband Eligible Notes, as set forth on the cover of this prospectus, is
tendered, we will accept Broadband Eligible Notes of that series for exchange on
a prorated basis.

     The exchange offer for each series of AT&T Eligible Notes is for all notes
of that series and is not subject to proration.

WHAT IS THE NOTE AMENDMENT?

     Holders of Broadband Eligible Notes and AT&T Eligible Notes must consent to
an amendment of the terms of those notes to the extent their notes are accepted
for exchange. The note amendment would clarify that in connection with the AT&T
Comcast transaction, the successor formed by the consolidation or merger, or to
which AT&T shall have transferred its property, need not assume the obligations
of AT&T under the notes of that series and that the successor shall not succeed
to and be substituted for AT&T under the notes of that series.

WILL I BE PAID FOR CONSENTING TO THE NOTE AMENDMENT?

     Holders of Broadband Eligible Notes or AT&T Eligible Notes, to the extent
their notes are accepted for exchange, must consent to the note amendment and
will not receive any consent payment. Notes of any series not accepted for
exchange will not receive any payment but will be bound by the note amendment,
provided that more than 50% of the notes of that series have been accepted for
exchange. For these purposes, all of the Series A Medium-Term Notes outstanding
will be treated as part of a single series.

WHAT IS REQUIRED FOR THE NOTE AMENDMENT TO BE EFFECTIVE? WILL I HAVE ANY
DISSENTERS' RIGHTS IN CONNECTION WITH THE NOTE AMENDMENT?

     The note amendment will be effective as to each series of notes if more
than 50% by principal amount of the notes of that series are accepted for
exchange. For these purposes, all of the Series A Medium-Term Notes outstanding
will be treated as part of a single series. You will not be entitled to any
dissenters' rights if the note amendment becomes effective without your consent.

DO I NEED TO SEPARATELY CONSENT TO THE NOTE AMENDMENT IN ORDER TO BE ELIGIBLE
FOR THE EXCHANGE OFFER?

     Yes. However, completing the letter of transmittal for the exchange offer
will constitute your consent to the note amendment to the extent we accept your
Broadband Eligible Notes or AT&T Eligible Notes for exchange. If the requisite
consents are received, the note amendment will be binding on the relevant series
of Broadband Eligible Notes or AT&T Eligible Notes that remain outstanding.

                                        2


WHAT HAPPENS IF I DO NOT EXCHANGE MY NOTES OR MY NOTES ARE NOT ELIGIBLE FOR OR
ACCEPTED IN THE EXCHANGE OFFER?

     If you do not exchange your notes, they will remain obligations of AT&T
and, in the case of the Broadband Eligible Notes, will not be obligations of
Broadband and will not be entitled to the cable guarantees of AT&T Comcast,
Comcast Cable, MediaOne and TCI. The terms of your notes will be subject to the
note amendment as a result of the exchange offer whether or not you exchange
your notes so long as more than 50% of the notes of that series have been
accepted for exchange.

WHY ARE YOU MAKING THE EXCHANGE OFFER AND WHAT IS THE PURPOSE OF THE NOTE
AMENDMENT?

     The note amendment will satisfy the condition to the AT&T Comcast
transaction that AT&T obtain the consent of, or defease, purchase, retire or
acquire, its debt in respect of series representing at least 90% in aggregate
principal amount outstanding on December 19, 2001, which was approximately $12.7
billion, of debt securities issued under the indenture pursuant to which the
Broadband Eligible Notes and the AT&T Eligible Notes were issued. We refer to
this indenture, which is dated as of September 7, 1990, between AT&T and The
Bank of New York, as trustee, as amended by the First Supplemental Indenture,
dated as of October 30, 1992, as amended, between AT&T and the trustee, as the
AT&T Indenture. As of June 30, 2002, approximately $12.2 billion of these debt
securities, including the Broadband Eligible Notes and the AT&T Eligible Notes,
remained outstanding. We sometimes refer to the Broadband Eligible Notes and the
AT&T Eligible Notes as the AT&T Notes. AT&T and Comcast could mutually agree to
waive this condition with respect to all or any portion of the AT&T Notes for
which consents are not obtained.

     If the AT&T Comcast transaction were to occur and if holders of the AT&T
Notes were to assert successfully that completing the AT&T Comcast transaction
required Broadband or one of its affiliates to assume AT&T's obligations under
the AT&T Notes and that did not occur, then AT&T could be required to refinance
the AT&T Notes. Thus, while AT&T and Comcast could jointly waive the consent
condition to the AT&T Comcast transaction, AT&T is making the exchange offer
primarily to facilitate the AT&T Comcast transaction and to optimize the
respective capital structures of AT&T and AT&T Comcast in an economic and tax
efficient manner.

WHAT HAPPENS IF THE AT&T COMCAST TRANSACTION IS TERMINATED?

     If the AT&T Comcast transaction is terminated:

- the Broadband Exchange Notes will not be exchanged for New Broadband Notes,
  will become obligations only of AT&T with Broadband released as an obligor and
  will not be entitled to the benefits of the cable guarantees; and

- the maturity date and/or interest rate on the New AT&T Notes will not change.

ARE THERE ANY RISKS THAT I SHOULD CONSIDER IN CONNECTION WITH THE EXCHANGE OFFER
AND CONSENT SOLICITATION?

     Yes. You should carefully consider the risk factors starting on page 45, as
well as the risk factors discussed in AT&T's and Comcast Cable's filings with
the Securities and Exchange Commission incorporated by reference in this
prospectus.

WHEN DOES THE EXCHANGE OFFER EXPIRE?

     THE EXCHANGE OFFER WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON
          , 2002 UNLESS EXTENDED AS TO ANY ONE OR MORE SERIES OF NOTES IN OUR
DISCRETION.

     WE WILL ANNOUNCE ANY EXTENSIONS BY PRESS RELEASE OR OTHER PERMITTED MEANS
NO LATER THAN 9:00 A.M., NEW YORK CITY TIME, THE DAY AFTER EXPIRATION OF THE
EXCHANGE OFFER FOR THAT SERIES OF NOTES.

IF I HOLD BROADBAND ELIGIBLE NOTES OR AT&T ELIGIBLE NOTES, HOW DO I TENDER OR
WITHDRAW THOSE NOTES IN THE EXCHANGE OFFER?

     In order to tender eligible notes in the exchange offer, you must properly
submit your notes and a completed letter of transmittal and the other agreements
and documents described in this prospectus. If you own notes held through a
broker or other third party, or in "street name," you will need to follow the
instructions in the

                                        3


letter of transmittal on how to instruct them to tender the notes on your
behalf, as well as submit a completed letter of transmittal and the other
agreements and documents described in this prospectus. In addition, for any
5.625% AT&T Eligible Notes Due 2004 (ISIN No. US 001957AU39), 6.00% Broadband
Eligible Notes Due 2009 (ISIN No. US 00195AV12) or 6.50% AT&T Eligible Notes Due
2029 (ISIN No. US 001957AW94), referred to collectively as the Luxembourg Notes,
letters of transmittal may be submitted in accordance with procedures that may
be obtained by contacting the Luxembourg exchange agent at the telephone number
listed under "-- The Luxembourg Exchange Agent." Completing the letter of
transmittal will constitute your consent to the note amendment to the extent we
accept your Broadband Eligible Notes or AT&T Eligible Notes for exchange, unless
you subsequently withdraw those notes prior to the expiration of the exchange
offer for the notes of that series. If the requisite consents are received, the
note amendment will be binding on the relevant series of Broadband Eligible
Notes or AT&T Eligible Notes that remain outstanding.

     You may withdraw tendered notes at any time prior to the expiration of the
exchange offer for the notes of that series. Validly withdrawing your notes will
revoke the associated consent to the note amendment.

     INSTRUCTIONS ON HOW TO TENDER OR WITHDRAW BROADBAND ELIGIBLE NOTES OR AT&T
ELIGIBLE NOTES FOR EXCHANGE ARE SET FORTH ON PAGE 75 AND IN THE LETTER OF
TRANSMITTAL.

                                        4


                                    SUMMARY

This summary highlights selected information from this prospectus and may not
contain all of the information that is important to you. To better understand
the exchange offer, you should read this entire document carefully, as well as
those additional documents to which we refer you. See "Where You Can Find More
Information."

                          THE AT&T COMCAST TRANSACTION

     Comcast and AT&T are planning to combine Comcast with the AT&T broadband
business. Comcast and AT&T believe that the combined strengths of Comcast and
AT&T's broadband business will enable them to create the world's premier
broadband communications company.

     The AT&T Comcast transaction will occur in several steps. First, AT&T will
transfer the assets and liabilities of AT&T's broadband business to Broadband, a
company newly formed for the purpose of effectuating the AT&T Comcast
transaction. Second, AT&T will spin off Broadband to its shareholders. Third,
Comcast and Broadband will each merge with a different, wholly owned subsidiary
of AT&T Comcast. Comcast and AT&T shareholders will receive the shares of AT&T
Comcast. The merger agreement entered into in connection with the AT&T Comcast
transaction provides for all of the steps described above to occur on the
closing date for the AT&T Comcast transaction. The AT&T Comcast transaction
remains subject to regulatory and other approvals and other conditions,
including the receipt of specified note consents as described in this
prospectus, and is expected to close by the end of 2002.

     See "Description of the AT&T Comcast Transaction" for a description of the
principal agreements governing the AT&T Comcast transaction, the conditions to
completion of the AT&T Comcast transaction and more information.

                               THE EXCHANGE OFFER

  THE EXCHANGE OFFER

     AT&T is offering to exchange its Broadband Eligible Notes for a like
principal amount of Broadband Exchange Notes. The Broadband Exchange Notes will
be obligations of both AT&T and Broadband. Except as described in this
prospectus, the Broadband Exchange Notes will have terms substantially identical
to the Broadband Eligible Notes as amended by the note amendment. The Broadband
Exchange Notes are summarized under "Description of the Broadband Exchange
Notes" below. Upon consummation of the AT&T Comcast transaction, however, the
Broadband Exchange Notes will be mandatorily exchanged for New Broadband Notes
at the relevant exchange ratio. The exchange ratio will be announced by press
release two business days prior to the expiration of the exchange offer and will
be based on the relevant exchange spreads set forth on the cover of this
prospectus over the relevant reference U.S. Treasury rates. The exchange ratio
will be calculated as the exchange price per $1,000 principal amount of the
Broadband Eligible Notes divided by $1,000, and the exchange price is equal to
the present value on the exchange settlement date in accordance with standard
market practice assuming the Broadband Exchange Note would be repaid at $1,000
at maturity, determined on the basis of a yield to maturity equal to the sum of
the relevant exchange spread set forth on the cover of this prospectus and the
related reference U.S. Treasury yield, as calculated by the dealer managers in
accordance with standard market practice based on the bid side price for such
reference security, as of 2:00 p.m., New York City time, two business days prior
to the expiration date of the exchange offer, as displayed in Bloomberg
Government Pricing Monitor, or any other recognized quotation source selected by
the dealer managers. The method for determining the exchange ratio is described
in detail under "Description of the Exchange Offer -- Exchange Ratio for the New
Broadband Notes."

     The New Broadband Notes will be primary obligations only of Broadband,
fully and unconditionally guaranteed by Comcast Cable, AT&T Comcast, MediaOne
and TCI. The interest rates for each series of New Broadband Notes will be
announced by press release two business days prior to the expiration of the
exchange offer for that series and will be based on a credit spread over the
relevant reference U.S. Treasury rates. The reference U.S. Treasury rate with
respect to each series of New Broadband Notes will

                                        5


be calculated, by the dealers managers, in accordance with standard market
practice, based on the bid side price of the relevant reference U.S. Treasury as
listed on the relevant Bloomberg Government Pricing Monitor or any other
recognized quotation source selected by the dealer managers at 2:00 p.m., New
York City time, two days prior to the expiration of the exchange offer. The
relevant reference U.S. Treasury has been selected to approximate the maturity
characteristics of the applicable series of New Broadband Notes. The method for
determining the interest rate is described in detail under "Description of the
Exchange Offer -- Interest Rate for the New Broadband Notes" and the other terms
of the New Broadband Notes are summarized under "Description of the New
Broadband Notes and the Cable Guarantees" below.

     AT&T is also offering to exchange its AT&T Eligible Notes for a like
principal amount of New AT&T Notes. The New AT&T Notes will be obligations only
of AT&T. Except as described in this prospectus, the New AT&T Notes will have
terms substantially identical to the AT&T Eligible Notes as amended by the note
amendment. Upon completion of the AT&T Comcast transaction, however, the
interest rates for each applicable series of New AT&T Notes will be adjusted
automatically as set forth on the cover of this prospectus and the maturity date
of the New AT&T Notes issued in exchange for the 6.50% AT&T Eligible Notes due
March 15, 2029 will be changed to March 15, 20  . The material terms of the New
AT&T Notes are summarized under "Description of the New AT&T Notes" below.

     Holders of Broadband Eligible Notes and AT&T Eligible Notes must consent to
the note amendment described below to the extent their notes are accepted for
exchange. Notes of any series not tendered for exchange and notes of any series
of Broadband Eligible Notes not accepted for exchange due to proration will
remain obligations only of AT&T, will not become obligations of Broadband, and
will not be subject to the cable guarantees but will be bound by the note
amendment if more than 50% by principal amount of that series consents to the
note amendment by participating in the exchange. For these purposes, all of the
Series A Medium Term Notes outstanding will be treated as part of a single
series. THE TERMS OF YOUR NOTES MAY BE AMENDED AS A RESULT OF THE EXCHANGE OFFER
WHETHER OR NOT YOU PARTICIPATE IN THE EXCHANGE.

     The exchange offer is subject to a number of conditions summarized below
under "-- Conditions to the Exchange Offer" and in detail under "Description of
the Exchange Offer -- Conditions to the Exchange Offer."

     Even if the exchange offer is completed, if the AT&T Comcast transaction is
terminated:

     - the Broadband Exchange Notes will not be exchanged for New Broadband
       Notes, will become obligations only of AT&T with Broadband released as an
       obligor and will not be entitled to the benefits of the cable guarantees;
       and

     - the maturity date and interest rate on the New AT&T Notes will not
       change.

  PAYMENT OF INTEREST ACCRUED ON THE BROADBAND ELIGIBLE NOTES, THE BROADBAND
  EXCHANGE NOTES, THE NEW BROADBAND NOTES, THE AT&T ELIGIBLE NOTES AND THE NEW
  AT&T NOTES

     You should refer to the specific terms of the notes described in this
prospectus to determine who will be eligible to receive accrued and unpaid
interest and when accrued and unpaid interest will be paid. Interest on each of
the notes will accrue from the date of original issuance of that series of new
notes, which will be on the date the exchange offer is completed with respect to
the Broadband Exchange Notes and the New AT&T Notes and which will be on the
date of mandatory exchange with respect to the New Broadband Notes. However:

     - interest accrued and unpaid on any Broadband Eligible Notes accepted in
       the exchange offer (a) will be paid along with the first payment of
       interest on the relevant series of Broadband Exchange Notes or (b) if the
       mandatory exchange of the Broadband Exchange Notes occurs prior to that
       first payment of interest, will be paid at the time of mandatory
       exchange;

     - interest accrued and unpaid on any series of Broadband Exchange Notes
       will be paid at the time of mandatory exchange;

     - interest accrued and unpaid on any AT&T Eligible Notes accepted in the
       exchange offer will be paid along with the first payment of interest on
       the relevant series of New AT&T Notes; and

                                        6


     - interest accrued and unpaid on any Broadband Eligible Notes or AT&T
       Eligible Notes not accepted in the exchange offer will be paid on the
       same interest payment dates as previously scheduled for the respective
       series.

  FRACTIONAL NOTES

     Notes will be issued only in denominations of $1,000 and multiples of
$1,000. If the exchange of a series of Broadband Eligible Notes is subject to
proration and proration would result in your being entitled to receive a
fractional interest in the relevant series of Broadband Exchange Notes, the
principal amount of Broadband Eligible Notes accepted in the exchange will be
rounded to the nearest $1,000. This rounding will result in your receiving only
whole Broadband Exchange Notes in exchange for your Broadband Eligible Notes.

     If the mandatory exchange of a series of Broadband Exchange Notes into New
Broadband Notes would result in your being entitled to receive a fractional
interest in the relevant series of New Broadband Notes, the principal amount you
receive will be rounded down to the nearest $1,000 multiple and you will receive
cash in lieu of a fractional New Broadband Note for the balance. The method for
calculating this cash amount is described more fully elsewhere in this
prospectus.

     Because the exchange offer of New AT&T Notes for AT&T Eligible Notes is not
subject to proration and New AT&T Notes will be issued in a like principal
amount as the AT&T Eligible Notes accepted in exchange, there will not be any
need to pay cash in lieu of fractional New AT&T Notes.

 MINIMUM AMOUNT OF NOTES TENDERED; PRORATION OF BROADBAND ELIGIBLE NOTES

     No Broadband Eligible Notes or AT&T Eligible Notes of a series will be
accepted for exchange unless more than 50% of the principal amount of that
series of eligible notes has been validly tendered and not withdrawn by the
expiration of the exchange offer for that series. For these purposes, all of the
Series A Medium-Term Notes outstanding will be treated as part of a single
series. If more than the relevant proration percentage of the principal amount
of any series of Broadband Eligible Notes, as set forth on the cover of this
prospectus, is tendered and not withdrawn, notes of that series will be accepted
for exchange on a prorated basis. The exchange offer for each series of AT&T
Eligible Notes is for all notes of that series and is not subject to proration.

 PURPOSE OF THE EXCHANGE OFFER AND NOTE AMENDMENT

     The AT&T Comcast transaction is conditioned on AT&T's obtaining the consent
of, or having defeased, purchased, retired or acquired its debt in respect of
series representing at least 90% in aggregate principal amount outstanding on
December 19, 2001, which was approximately $12.7 billion, of debt securities
issued under the AT&T Indenture. As of June 30, 2002, approximately $12.2
billion of these debt securities, including the Broadband Eligible Notes and the
AT&T Eligible Notes, remained outstanding. AT&T and Comcast could mutually agree
to waive this condition with respect to all or any portion of the AT&T Notes for
which consents are not obtained.

     If the AT&T Comcast transaction were to occur and if holders of the AT&T
Notes were to assert successfully that completing the AT&T Comcast transaction
required Broadband or one of its affiliates to assume AT&T's obligations under
the AT&T Notes and that did not occur, then AT&T could be required to refinance
the AT&T Notes. Thus, while AT&T and Comcast could jointly waive the consent
condition to the AT&T Comcast transaction, AT&T is making the exchange offer
primarily to facilitate the AT&T Comcast transaction and to optimize the
respective capital structures of AT&T and AT&T Comcast in an economic and tax
efficient manner.

 THE CABLE GUARANTEES

     The New Broadband Notes issued in exchange for Broadband Exchange Notes
upon completion of the AT&T Comcast transaction will be fully and
unconditionally guaranteed by Comcast Cable, AT&T Comcast, MediaOne and TCI,
which we collectively refer to as the cable guarantors. The cable guarantees
will rank equally with all other general unsecured and unsubordinated
obligations of the cable guarantors, including approximately           billion
of outstanding indebtedness as of           2002 and up to

                                        7


$12.8 billion of new indebtedness which will be guaranteed by the cable
guarantors in connection with the closing of the AT&T Comcast transaction. For
more information regarding the cable guarantees, see "Description of the New
Broadband Notes and the Cable Guarantees" and "Other Indebtedness and the
Cross-Guarantees."

     The New AT&T Notes will be obligations only of AT&T and will not be subject
to the cable guarantees.

 THE NOTE AMENDMENT

     If the requisite consents are received, the note amendment will clarify
that in connection with the AT&T Comcast transaction, the successor formed by
the consolidation or merger, or to which AT&T shall have transferred its
property, need not assume the obligations of AT&T under the notes of that series
and that the successor shall not succeed to and be substituted for AT&T under
the notes of that series.

     Holders of the Broadband Eligible Notes and the AT&T Eligible Notes, to the
extent their notes are accepted for exchange, must consent to the note
amendment. The note amendment is designed to satisfy a condition to the AT&T
Comcast transaction.

    Effectiveness of Note Amendment; Dissenters' Rights

     The note amendment will be effective as to a series of notes if more than
50% by principal amount of the notes of that series consent. For these purposes,
all of the Series A Medium Term Notes outstanding will be treated as part of a
single series. You will not be entitled to any dissenters' rights if the note
amendment becomes effective without your consent.

    Description of the Note Amendment

     The note amendment clarifies the covenant in the AT&T Indenture regarding
the consolidation, merger with, or sale or conveyance of all or substantially
all of the property of AT&T. The note amendment will be effective with respect
to each series of notes that consents to the amendment and will provide that the
AT&T Comcast transaction, including all transactions completed as steps in the
AT&T Comcast transaction, (1) will not result in a consolidation, merger, sale,
conveyance or other transfer of property of AT&T (including stock of
subsidiaries) as an entirety or substantially as an entirety for purposes of the
AT&T Indenture, and (2) will not violate the successor clause of the AT&T
Indenture or any other provision of the AT&T Indenture or any security issued
under the AT&T Indenture, regardless of whether any person assumes any of the
indebtedness outstanding under the AT&T Indenture or any other obligation under
the AT&T Indenture or any security issued under the AT&T Indenture.

     The merger covenant applicable to the Broadband Exchange Notes and the New
AT&T Notes will be the AT&T Indenture merger covenant as so amended.

 EXPIRATION OF THE EXCHANGE OFFER

     THE EXCHANGE OFFER WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON
          , 2002 UNLESS IT IS EXTENDED AS TO ONE OR MORE SERIES OF NOTES IN OUR
DISCRETION.

     WE WILL ANNOUNCE ANY EXTENSIONS BY PRESS RELEASE OR OTHER PERMITTED MEANS
NO LATER THAN 9:00 A.M., NEW YORK CITY TIME, THE DAY AFTER EXPIRATION OF THE
EXCHANGE OFFER FOR THAT SERIES OF NOTES.

 AMENDMENT OF THE EXCHANGE OFFER

     We reserve the right to determine whether the conditions of the exchange
offer have been satisfied and not to accept any of the notes of one or more
series we determine have not been validly tendered, and to otherwise interpret
or modify the terms of this exchange offer. We will comply with applicable laws
that require us to extend the period during which notes may be tendered or
withdrawn as a result of changes in the terms of or information relating to the
exchange offer.

                                        8


 TENDERS AND WITHDRAWALS OF NOTES

     In order to tender eligible notes in the exchange offer, you must properly
submit the notes and a completed letter of transmittal and the other agreements
and documents described in this prospectus. Completing the letter of transmittal
will evidence your consent to the note amendment to the extent your notes are
accepted for exchange. If you own notes held through a broker or other third
party, or in "street name," you will need to follow the instructions in the
letter of transmittal on how to instruct them to tender the notes on your
behalf, as well as submit a completed letter of transmittal and the other
documents described in this prospectus. In addition, letters of transmittal may
be submitted for any Luxembourg Notes in accordance with the procedures that may
be obtained by contacting the Luxembourg exchange agent at the telephone number
listed under "-- The Luxembourg Exchange Agent." We will determine in our sole
discretion whether any notes have been validly tendered. Please carefully follow
the instructions on how to tender your notes contained in this prospectus and
the letter of transmittal.

     If you decide to tender eligible notes in the exchange offer, you may
withdraw them at any time prior to the expiration of the exchange offer for the
notes of that series. Validly withdrawing your notes will revoke your consent to
the note amendment with respect to those notes withdrawn.

     If we decide for any reason not to accept any eligible notes for exchange,
those eligible notes will be returned without expense promptly after the
exchange offer expires.

     PLEASE SEE PAGE 74 AND THE LETTER OF TRANSMITTAL FOR PROCEDURES ON HOW TO
TENDER OR WITHDRAW YOUR NOTES.

 CONDITIONS TO THE EXCHANGE OFFER

     The exchange offer is subject to various conditions, including that AT&T
will not accept any eligible notes of a series unless more than 50% of the
aggregate principal amount of that series of notes has been validly tendered and
not withdrawn by the expiration of the exchange offer for that series. In
addition, AT&T is not required to complete the exchange offer, if on or before
the expiration date, among other things:

     - we have not received, as of the expiration of the exchange offer, the
       valid and unrevoked consents to the note amendment of the holders of more
       than 50% in aggregate principal amount of those series of AT&T Notes
       which will result in AT&T's obtaining the consent of, or having defeased,
       purchased, retired or acquired debt in respect of series representing at
       least 90% in aggregate principal amount outstanding on December 19, 2001,
       which was approximately $12.7 billion, of debt securities issued under
       the AT&T Indenture. As of June 30, 2002, approximately $12.2 billion of
       these debt securities, including the AT&T Notes, remained outstanding;

     - there has occurred any specified adverse change with respect to AT&T,
       Comcast or Broadband -- or with respect to the expected benefits of the
       exchange offer;

     - there has occurred any specified adverse changes in the financial or
       capital markets or in political, market, economic or financial conditions
       in the United States or abroad; or

     - the AT&T Comcast transaction has been terminated.

 USE OF PROCEEDS

     None of AT&T, Broadband or any other party will receive any proceeds from
the issuance of the new notes in the exchange offer. The amount that Broadband
would otherwise be required to pay to AT&T upon completion of the AT&T Comcast
transaction to satisfy intercompany indebtedness then outstanding will be
reduced based upon the aggregate principal amount of New Broadband Notes issued
in the exchange in an amount to be mutually agreed.

                                        9


                                 THE COMPANIES
AT&T CORP.
295 North Maple Avenue
Basking Ridge, New Jersey 07920-1002
(908) 221-2000
http://www.att.com

     AT&T is a New York corporation incorporated in 1885. AT&T currently
consists primarily of AT&T Broadband Group, AT&T Consumer Services Group and
AT&T Business Services Group. These AT&T groups are not separate companies, but,
rather, are parts of AT&T. The AT&T Comcast transaction would separate and spin
off the AT&T Broadband Group into a separate company, Broadband, that
immediately would be combined with and become a subsidiary of AT&T Comcast.

     Upon completion of the AT&T Comcast transaction, AT&T will consist of AT&T
Consumer Services Group, the leading provider of domestic and international long
distance service to residential customers in the United States, and AT&T
Business Services Group, one of the nation's largest business services
communications providers, providing a variety of global communications services
to over 4 million customers and operating one of the largest telecommunications
networks in the United States.

     The table below sets forth the approximate percentages of consolidated
revenue, operating income, net loss, assets and indebtedness of AT&T, giving
prior effect to the split-off of the AT&T Wireless Services Group, that were
attributable to each of AT&T Broadband Group and AT&T excluding the AT&T
Broadband Group at or for the three month period ended March 31, 2002 and the
year ended December 31, 2001. These percentages will vary in the future with the
relative performance of the different AT&T groups. In addition, the actual debt
levels of each of the AT&T groups in the future will depend on a variety of
other factors, including the progress AT&T makes on its various debt reduction
activities. The table also should be read in the context of the financial and
other information set forth in this prospectus.



                                                                       % OF
                                                 % OF     % OF AT&T    AT&T     % OF
                                                 AT&T     OPERATING    NET      AT&T    % OF AT&T
                                                REVENUE    INCOME     LOSS*    ASSETS     DEBT
                                                -------   ---------   ------   ------   ---------
                                                                         
AT&T Broadband Group
  At or for the year ended December 31,
     2001.....................................   19.3%     (111.4)%     61.0%   62.4%     43.5%
  At or for the three month period ended March
     31, 2002.................................   20.3%      (19.4)%    378.8%   66.0%     52.5%
AT&T Corp. (excluding AT&T Broadband Group)**
  At or for the year ended December 31,
     2001.....................................   81.2%      211.4%      (1.9)%  37.7%     56.5%
  At or for the three month period ended March
     31, 2002.................................   80.4%      119.4%    (280.0)%  34.2%     47.5%


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

  * Based on net loss from continuing operations before extraordinary gain and
    cumulative effect of accounting change.

 ** Includes AT&T Business Services Group and AT&T Consumer Services Group and
    excludes Liberty Media Group and AT&T Wireless Services Group.

AT&T BROADBAND CORP.
188 Inverness Drive West
Englewood, Colorado 80112
(303) 858-3000

     AT&T Broadband Corp. is a Delaware corporation newly formed for purposes of
effectuating the AT&T Comcast transaction. Throughout this prospectus, we refer
to AT&T Broadband Corp. as Broadband. As part of the AT&T Comcast transaction,
AT&T will transfer to Broadband substantially all

                                        10


the assets, liabilities and businesses represented by AT&T Broadband Group, an
integrated business of AT&T Corp.

     AT&T Broadband Group is one of the nation's largest broadband
communications businesses, providing cable television, high-speed cable Internet
services and communications services over one of the most extensive broadband
networks in the country. At or for the three month period ended March 31, 2002,
AT&T Broadband Group:

     - owned and operated cable systems aggregating approximately 13.38 million
       analog video subscribers;

     - had approximately $2.4 billion in combined revenue;

     - had approximately $1.4 billion in net loss;

     - had debt of approximately $23.3 billion; and

     - had investments in companies, joint ventures and partnerships, including
       Time Warner Entertainment Company, L.P., Insight Midwest, L.P. and Texas
       Cable Partners, L.P.

AT&T COMCAST CORPORATION
1500 Market Street
Philadelphia, Pennsylvania 19102-2148
(215) 665-1700

     AT&T Comcast is a newly formed Pennsylvania corporation that has not, to
date, conducted any activities other than those incident to its formation, the
financing and other matters contemplated by or incident to the merger agreement
entered into in connection with the AT&T Comcast transaction, and the
preparation of this prospectus. Upon completion of the AT&T Comcast transaction,
Comcast and Broadband will each become a wholly owned subsidiary of AT&T
Comcast. The business of AT&T Comcast will be the combined businesses currently
conducted by Comcast and the AT&T Broadband Group.

COMCAST CORPORATION
1500 Market Street
Philadelphia, Pennsylvania 19102-2148
(215) 665-1700

     Comcast is a Pennsylvania corporation incorporated in 1969. Comcast is
involved principally in three lines of business:

     - cable -- through the development, management and operation of broadband
       communications networks and regional sports programming networks;

     - commerce -- through QVC, its electronic retailing subsidiary; and

     - content -- through its consolidated subsidiaries, Comcast-Spectacor, E!
       Entertainment Television, The Golf Channel and Outdoor Life Network, and
       through its other programming investments.

     Upon completion of the AT&T Comcast transaction, Comcast will become a
wholly owned subsidiary of AT&T Comcast.

COMCAST CABLE COMMUNICATIONS, INC.
1500 Market Street
Philadelphia, Pennsylvania 19102-2148
(215) 665-1700

     Comcast Cable is a Delaware corporation incorporated in 1981 and a wholly
owned subsidiary of Comcast. Comcast Cable is currently the third largest cable
operator in the United States and has deployed digital cable applications and
high-speed Internet access service to the vast majority of its cable
communications systems to expand the products available on its broadband
communications networks.
                                        11


Comcast's consolidated cable operations served approximately 8.5 million
subscribers and passed approximately 13.9 million homes as of March 31, 2002.

     Comcast Cable will remain a wholly owned subsidiary of Comcast, and will
become an indirect wholly owned subsidiary of AT&T Comcast after completion of
the AT&T Comcast transaction.

MEDIAONE GROUP, INC.
188 Inverness Drive West
Englewood, Colorado 80112
(303) 858-3000

     MediaOne is a Delaware corporation incorporated in 1999. MediaOne is a
subsidiary of AT&T and, upon completion of the AT&T Comcast transaction, will
become a wholly owned subsidiary of Broadband.

AT&T BROADBAND, LLC
188 Inverness Drive West
Englewood, Colorado 80112
(303) 858-3000

     AT&T Broadband, LLC, referred to in this prospectus as TCI, is a Delaware
limited liability company formerly known as Tele-Communications, Inc., a
Delaware corporation that was formed in 1994. TCI is a subsidiary of AT&T that
holds the former Tele-Communications, Inc. business, and upon completion of the
AT&T Comcast transaction, will become a wholly owned subsidiary of Broadband.

                  DESCRIPTION OF THE BROADBAND EXCHANGE NOTES

     The Broadband Exchange Notes will be entitled to the benefits and subject
to the terms and conditions of the AT&T Indenture as amended by a supplemental
indenture that will have the purpose of, among other things, creating the series
of notes included in, and setting forth the terms applicable to, the Broadband
Exchange Notes, effecting the note amendment with respect to each series of
Broadband Exchange Notes and making Broadband a co-obligor on the Broadband
Exchange Notes. Except as described in this prospectus, the Broadband Exchange
Notes will have terms substantially identical to the Broadband Eligible Notes as
amended by the note amendment. Upon completion of the AT&T Comcast transaction,
however, each series of Broadband Exchange Notes will be mandatorily exchanged
at the relevant exchange ratio for New Broadband Notes, which will be primary
obligations only of Broadband, fully and unconditionally guaranteed by the cable
guarantors, and will not be obligations of AT&T.

     AT&T does not intend to apply for listing of the Broadband Exchange Notes
on any national exchange. If the AT&T Comcast transaction is terminated, AT&T
will use commercially reasonable efforts to list the Broadband Exchange Notes on
the New York Stock Exchange, and the 6.00% Broadband Exchange Notes Due March
15, 2009 additionally on the Luxembourg Stock Exchange.

     If the AT&T Comcast transaction is terminated, Broadband's obligations
under the Broadband Exchange Notes will be released and discharged and the
Broadband Exchange Notes will become solely direct unsecured obligations of AT&T
and cease to be exchangeable for New Broadband Notes.

        DESCRIPTION OF THE NEW BROADBAND NOTES AND THE CABLE GUARANTEES

     The New Broadband Notes will be entitled to the benefits and subject to the
terms and conditions of an indenture dated as of           , 2002 among
Broadband, the cable guarantors and           , as trustee. We refer to this
indenture as the New Broadband Indenture.

                                        12


  BASIC TERMS

     The New Broadband Notes:

     - will rank equally with all of Broadband's other unsecured and
       unsubordinated debt and will be entitled to the benefits of the cable
       guarantees described below; and

     - will be issued in an aggregate principal amount not exceeding $
       comprised as follows:

      o up to $          in principal amount of New Broadband Notes Due 2013,
        maturing on           , 2013, with interest payable semiannually on each
                  and           beginning on the first           or
        occurring after the initial issuance of the New Broadband Notes Due
        2013, to holders of record on the preceding           and           ;

      o up to $          in principal amount of New Broadband Notes Due 2022,
        maturing on January 15, 2022, with interest payable semiannually on each
        January 15 and July 15, beginning on the first January 15 or July 15
        occurring after the initial issuance of the New Broadband Notes Due
        2022, to holders of record on the preceding January 1 and July 1;

      o up to $          in principal amount of New Broadband Notes Due 2024
        maturing on July 15, 2024, with interest payable semiannually on each
        January 15 and July 15, beginning on the first January 15 or July 15
        occurring after the initial issuance of the New Broadband Notes Due
        2024, to holders of record on the preceding January 1 and July 1;

      o up to $          in principal amount of New Broadband Notes Due 2025,
        maturing on January 15, 2025, with interest payable semiannually on each
        January 15 and July 15, beginning on the first January 15 or July 15
        occurring after the initial issuance of the New Broadband Notes Due
        2025, to holders of record on the preceding January 1 and July 1; and

      o up to $          in principal amount of New Broadband Notes Due 2031,
        maturing on December 1, 2031, with interest payable semiannually on each
        June 1 and December 1, beginning on the first June 1 or December 1
        occurring after the initial issuance of the New Broadband Notes Due
        2031, to holders of record on the preceding May 15 and November 15.

     The interest rate on each series of New Broadband Notes will be announced
by press release two business days prior to the expiration of the exchange offer
and will be based on spreads over the relevant reference U.S. Treasury rates as
described in "Description of the Exchange Offer -- Interest Rate for the New
Broadband Notes."

  CABLE GUARANTEES

     Broadband's obligations under the New Broadband Notes will be fully and
unconditionally guaranteed, on an unsecured and unsubordinated basis, by each of
Comcast Cable, AT&T Comcast, MediaOne and TCI. See "Description of the New
Broadband Notes and the Cable Guarantees -- Cable Guarantees."

  MARKET FOR THE NEW BROADBAND NOTES; LISTING

     Although Broadband expects the New Broadband Notes will be eligible for
trading in the PORTAL market, there is no public market for the New Broadband
Notes, and Broadband does not intend to apply for listing of the New Broadband
Notes on any national exchange or on the Luxembourg Stock Exchange or for
quotation through Nasdaq. Accordingly, there can be no assurance as to the
development of any market for the New Broadband Notes.

  OPTIONAL REDEMPTION

     Broadband will have the right at its option to redeem certain of the New
Broadband Notes, other than the New Broadband Notes Due 2013, at any time or
from time to time, on at least 30 days, but not more than 90 days, prior notice
mailed to the registered address of each holder of the applicable series of New
Broadband Notes. The optional redemption terms for each series of New Broadband
Notes is
                                        13


described under "Description of the New Broadband Notes and the Cable
Guarantees -- Optional Redemption."

  COVENANTS

     The New Broadband Indenture under which Broadband will issue the New
Broadband Notes will contain covenants that, among other things, limit
Broadband's ability and the cable guarantors' ability to create secured
indebtedness and engage in sale and leaseback transactions and Broadband's
ability to enter into some types of mergers and consolidations. See "Description
of the New Broadband Notes and the Cable Guarantees -- Covenants." Neither the
New Broadband Notes nor the cable guarantees will contain financial covenants.

                       DESCRIPTION OF THE NEW AT&T NOTES

     The New AT&T Notes will be entitled to the benefits and subject to the
terms and conditions of the AT&T Indenture, as amended by a supplemental
indenture that will have the purpose of, among other things, creating the series
of notes included in, and setting forth the terms applicable to, the New AT&T
Notes, and effecting the note amendment with respect to each series of New AT&T
Notes.

     The terms of the New AT&T Notes and the AT&T Eligible Notes are
substantially identical, except that:

     - the interest rate on the applicable New AT&T Notes will be adjusted
       automatically upon completion of the AT&T Comcast transaction, as
       described in further detail under "Description of the New AT&T
       Notes -- Interest Payments;"

     - the maturity date of the New AT&T Notes issued in exchange for the 6.50%
       AT&T Eligible Notes Due March 15, 2029 will be changed automatically to
       March 15, 20  upon completion of the AT&T Comcast transaction; and

     - the merger covenant applicable to the New AT&T Notes will be the AT&T
       Indenture merger covenant as amended by the note amendment, which is
       described in greater detail under "Description of the Broadband Exchange
       Notes -- Certain Covenants -- Consolidation, Merger or Sale."

  BASIC TERMS

     The New AT&T Notes:

     - will rank equally with all of AT&T's other unsecured and unsubordinated
       debt;

     - will be obligations only of AT&T;

     - will be issued in an aggregate principal amount not exceeding
       $5,485,563,000 comprised as follows:

      - up to $2,000,000,000 in principal amount of New AT&T Notes Due 2004
        (Series 1), maturing on March 15, 2004, with interest payable
        semiannually on each March 15 and September 15, beginning the first
        March 15 or September 15 occurring after the initial issuance of the New
        AT&T Notes Due 2004 (Series 1), to holders of record on the preceding
        March 1 and September 1;

      - up to $400,000,000 in principal amount of New AT&T Notes Due 2004
        (Series 2), maturing on April 1, 2004, with interest payable
        semiannually on each April 1 and October 1, beginning the first April 1
        or October 1 occurring after the initial issuance of the New AT&T Notes
        Due 2004 (Series 2), to holders of record on the preceding March 15 and
        September 15;

      - up to $25,000,000 in principal amount of New Medium-Term Notes, Series A
        (subseries 1) Due May 15, 2025, maturing on May 15, 2025, with interest
        payable semiannually on each May 15 and November 15, beginning the first
        May 15 or November 15 occurring after the initial issuance
                                        14

        of the New Medium-Term Notes, Series A (subseries 1) Due May 15, 2025,
        to holders of record on the preceding May 1 and November 1;

      - up to $50,000,000 in principal amount of New Medium-Term Notes, Series A
        (subseries 2) Due May 15, 2025, maturing on May 15, 2025, with interest
        payable semiannually on each May 15 and November 15, beginning the first
        May 15 or November 15 occurring after the initial issuance of the New
        Medium-Term Notes, Series A (subseries 2) Due May 15, 2025, to holders
        of record on the preceding May 1 and November 1;

      - up to $3,000,000,000 in principal amount of New AT&T Notes Due 20  ,
        maturing on March 15, 2029, however, upon completion of the AT&T Comcast
        transaction, the maturity will be changed automatically to March 15,
        20  , with interest payable semiannually on each March 15 and September
        15, beginning the first March 15 or September 15 occurring after the
        initial issuance of the New AT&T Notes Due 20  , to holders of record on
        the preceding March 1 and September 1;

      - up to $10,563,000 in principal amount of New FRN Medium-Term Notes,
        Series A Due 2054, maturing on December 28, 2054, with interest payable
        semiannually on each June 28 and December 28, beginning the first June
        28 or December 28 occurring after the initial issuance of the New FRN
        Medium-Term Notes, Series A Due 2054, to holders of record on the
        preceding June 13 and December 13.

  MARKET FOR THE NEW AT&T NOTES; LISTING

     AT&T will apply to have each series of the New AT&T Notes, other than the
Series A Medium-Term Notes, listed on the New York Stock Exchange. AT&T will
also apply to have the New AT&T Notes Due 2004 (Series 1) and the New AT&T Notes
Due 20  additionally listed on the Luxembourg Stock Exchange. AT&T does not
intend to apply for listing of the Series A Medium-Term Notes on any national
exchange.

  OPTIONAL REDEMPTION

     AT&T will have the right at its option to redeem certain of the New AT&T
Notes, other than the New AT&T Notes Due 2004 (Series 2), at any time or from
time to time, on at least 30 days, but not more than 90 days, prior notice
mailed to the registered address of each holder of the applicable series of New
AT&T Notes. The optional redemption terms for each series of New AT&T Notes is
described under "Description of the New AT&T Notes -- Optional Redemption."

  COVENANTS

     The AT&T Indenture under which AT&T will issue the New AT&T Notes contains
covenants that, among other things, limit AT&T's ability and its subsidiaries'
ability to create secured indebtedness and engage in sale and leaseback
transactions and AT&T's ability to enter into some types of mergers and
consolidations. See "Description of the New AT&T Notes" and "Description of the
Note Amendment."

                 UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

     The U.S. federal income tax consequences to a holder of Broadband Eligible
Notes or AT&T Eligible Notes vary depending on which type of notes are held,
whether or not the holder participates in the exchange offer and whether or not
the AT&T Comcast transaction is completed. Depending on those facts, a holder of
eligible notes may recognize gain or loss for U.S. federal income tax purposes
in connection with the exchange and the modification of certain terms of such
notes upon consummation of the AT&T Comcast transaction. Please see "Description
of the Exchange Offer -- Material United States Federal Income Tax Consequences
of the Exchange Offer" beginning on page 82 of this prospectus.

                                        15


                              THE DEALER MANAGERS

     The following firms, listed in alphabetical order, will act as
dealer-managers for the exchange offer, and can be reached at the addresses and
telephone numbers set forth on the back cover of this prospectus:

                       Credit Suisse First Boston Corporation
                              Goldman, Sachs & Co.
                          J.P. Morgan Securities Inc.
                     Merrill Lynch, Pierce, Fenner & Smith
                                  Incorporated
                       Morgan Stanley & Co. Incorporated

                             THE INFORMATION AGENT

     We intend to engage D.F. King & Co., Inc. as information agent for the
exchange offer. Requests for additional copies of this prospectus or the letter
of transmittal and for assistance in tendering eligible notes should be directed
to the information agent below.

                             D.F. KING & CO., INC.
                                77 WATER STREET
                                   20TH FLOOR
                            NEW YORK, NEW YORK 10005
                         TELEPHONE (     )      -
                         FACSIMILE (     )      -

                               THE EXCHANGE AGENT

     We intend to engage The Bank of New York as exchange agent for purposes of
processing tenders and withdrawals of eligible notes in the exchange offer. The
address and telephone number of the exchange agent are as follows:

                      THE BANK OF NEW YORK, EXCHANGE AGENT
                      CORPORATE TRUST REORGANIZATION UNIT
                             101 BARCLAY STREET, 7E
                            NEW YORK, NEW YORK 10286
                         TELEPHONE (     )      -
                         FACSIMILE (     )      -

                         THE LUXEMBOURG EXCHANGE AGENT

     We intend to engage The Bank of New York (Luxembourg) S.A. as the
Luxembourg exchange agent in connection with the exchange offer. In Luxembourg,
you should contact the Luxembourg exchange agent for all services in connection
with the exchange offer, including to obtain copies of this prospectus and the
letter of transmittal or answers to questions about the terms and procedures of
the exchange offer, to have a letter of transmittal submitted on your behalf, or
to have the Luxembourg Notes delivered on your behalf.

     The address and telephone number of the Luxembourg exchange agent are as
follows:

                     THE BANK OF NEW YORK (LUXEMBOURG) S.A.
                                AEROGOLF CENTER
                                  IA, HOHENHOF
                              L-1736 SENNINGERBERG
                                   LUXEMBOURG
                         TELEPHONE (     )      -
                         FACSIMILE (     )      -
                                        16


                            RETAIL SOLICITATION FEE

     We will pay soliciting dealers named in a qualifying letter of transmittal
with respect to eligible notes as having solicited and obtained the tender a
retail solicitation fee of $     per $1,000 of eligible notes tendered by a
beneficial holder of less than $     in principal amount of eligible notes and
accepted in the exchange offer. See "Description of the Exchange Offer -- Retail
Solicitation Fee."

                            RECENT FINANCIAL RESULTS

     For current information on AT&T's earnings for the quarter ended June 30,
2002, please see the Current Reports on Form 8-K filed by AT&T with the SEC on
July 29, 2002 and August 12, 2002, which are incorporated by reference into this
prospectus.

     As previously reported, on January 1, 2002 AT&T adopted Statement of
Financial Accounting Standards No. 142, which eliminated amortization of
goodwill and franchise costs. Based on the requirements of this standard and
current market values in the cable industry, AT&T has reassessed the carrying
value of its broadband cable business. Therefore, on a reported basis, AT&T
recorded non-cash asset impairment charges of $13.1 billion, after tax. As a
result, AT&T's second quarter 2002 loss from continuing operations, in
accordance with generally accepted accounting principles, totaled $12.7 billion,
or $3.49 per diluted share. For additional information on these charges, please
also see the Current Report on Form 8-K filed by AT&T with the SEC on July 29,
2002.

     On August 1, 2002, Comcast issued a press release regarding Comcast's
earnings for the quarter ended June 30, 2002.

                                        17


                        SELECTED FINANCIAL DATA OF AT&T

     The consolidated income statement data below for the three years ended
December 31, 2001, and the consolidated balance sheet data at December 31, 2001
and 2000, were derived from audited consolidated financial statements of AT&T
Corp. incorporated by reference in this prospectus. The remaining data was
derived from AT&T's unaudited consolidated financial statements.



                                        AT OR FOR THE THREE
                                            MONTHS ENDED
                                             MARCH 31,               AT OR FOR THE YEARS ENDED DECEMBER 31,
                                        --------------------   --------------------------------------------------
                                          2002        2001       2001     2000(1)    1999(2)     1998      1997
                                        ---------   --------   --------   --------   --------   -------   -------
                                                                       (UNAUDITED)
                                                     (DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
                                                                                     
RESULTS OF OPERATIONS AND EARNINGS PER
  SHARE:
Revenue...............................  $ 12,023    $13,551    $ 52,550   $ 55,533   $ 54,973   $47,817   $46,910
Operating income......................     1,389        814       3,754      4,228     11,458     7,632     6,835
(Loss) income from continuing
  operations before extraordinary gain
  and cumulative effect of accounting
  changes.............................      (160)    (1,180)     (6,842)     4,133      3,861     5,052     4,088
(LOSS) INCOME FROM CONTINUING
  OPERATIONS BEFORE EXTRAORDINARY GAIN
  AND CUMULATIVE EFFECT OF ACCOUNTING
  CHANGES:
AT&T Common Stock Group:
  (Loss) income.......................      (160)      (483)     (4,131)     2,645      5,883     5,052     4,088
  (Loss) earnings per basic share.....     (0.05)     (0.17)      (1.33)      0.76       1.91      1.89      1.53
  (Loss) earnings per diluted share...     (0.05)     (0.17)      (1.33)      0.75       1.87      1.87      1.53
  Dividends declared per share........    0.0375     0.0375        0.15     0.6975       0.88      0.88      0.88
Liberty Media Group(3):
  (Loss) income.......................        --       (697)     (2,711)     1,488     (2,022)       --        --
  (Loss) earnings per basic and
    diluted share.....................        --      (0.27)      (1.05)      0.58      (0.80)       --        --
ASSETS AND CAPITAL:
Property, plant and equipment, net....  $ 40,829         --    $ 41,322   $ 41,269   $ 33,366   $21,780   $19,177
Total assets -- continuing
  operations..........................   152,807         --     165,282    207,136    146,094    40,134    41,029
Total assets..........................   152,807         --     165,282    234,360    163,457    54,185    55,797
Long-term debt........................    39,070         --      40,527     33,089     23,214     5,555     7,840
Total debt............................    44,303         --      53,485     64,927     35,694     6,638    11,895
Mandatorily redeemable preferred
  securities..........................     1,083         --       2,400      2,380      1,626        --        --
Shareowners' equity...................    51,265         --      51,680    103,198     78,927    25,522    23,678
Debt ratio(4).........................      43.6%        --        47.7%      57.2%      54.3%     36.7%     57.2%
Gross capital expenditures............     1,352         --       8,388     10,462     11,194     6,871     6,065


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

(1) AT&T Common Stock Group continuing operations results exclude Liberty Media
    Group (LMG). In addition, on June 15, 2000, AT&T completed the acquisition
    of MediaOne Group, Inc.

(2) In connection with the March 9, 1999 merger with Tele-Communications, Inc.,
    AT&T issued separate tracking stock for LMG. LMG was accounted for as an
    equity investment prior to its split-off from AT&T on August 10, 2001.

(3) No dividends have been declared for LMG tracking stocks.

(4) Debt ratio reflects debt from continuing operations as a percent of total
    capital (debt plus equity, excluding LMG and AT&T Wireless Group). For
    purposes of this calculation, equity includes convertible quarterly trust
    preferred securities as well as redeemable preferred stock of subsidiary.

     Effective January 1, 2002, AT&T adopted SFAS No. 142, "Goodwill and Other
Intangible Assets." SFAS No. 142 requires that goodwill and indefinite-lived
intangible assets no longer be amortized, but instead be tested for impairment
at least annually. Intangible assets that have finite useful lives will continue
to be amortized over their useful lives. In addition, the amortization period of
intangible assets with finite lives will no longer be limited to 40 years. We
have determined that our franchise costs are indefinite-lived assets, as defined
in SFAS No. 142, and therefore are not subject to amortization beginning in
2002.

                                        18


     The following table presents the impact of SFAS No. 142 on net (loss)
income and (loss) earnings per share had the standard been in effect for the
three years ended December 31, 2001. AT&T Wireless Group tracking stock was
issued in April, 2000, therefore data for this group is not applicable for 1999.



                                                                       AT&T WIRELESS
                                           AT&T COMMON STOCK GROUP         GROUP           LIBERTY MEDIA GROUP
                                          -------------------------   ---------------   --------------------------
                                           2001      2000     1999    2001(1)   2000    2001(2)    2000     1999
                                          -------   ------   ------   -------   -----   -------   ------   -------
                                                      (DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
FOR THE YEAR ENDED DECEMBER 31,
                                                                                   
Net (loss) income:
Reported (loss) income from continuing
  operations before cumulative effect of
  accounting change.....................  $(4,131)  $2,645   $5,883    $  --    $  --   $(2,711)  $1,488   $(2,022)
Dividend requirements of preferred
  stock.................................     (652)      --       --       --       --        --       --        --
Premium on wireless tracking stock
  exchange..............................      (80)      --       --       --       --        --       --        --
Reported (loss) from continuing
  operations available to common
  shareowners...........................   (4,863)   2,645    5,883       --       --    (2,711)   1,488    (2,022)
Add back amortization, net of tax:
  Goodwill *............................      766      687      135       --       --       350      568       424
  Equity method excess basis............      128      337      294       --       --       346      654       285
  Franchise costs.......................      754      645      445       --       --         4        8         5
                                          -------   ------   ------    -----    -----   -------   ------   -------
Adjusted (loss) income from continuing
  operations before cumulative effect of
  accounting change.....................  $(3,215)  $4,314   $6,757    $  --    $  --   $(2,011)  $2,718   $(1,308)
Reported income (loss) from discontinued
  operations............................      115      460     (433)      35       76        --       --        --
Add back discontinued operations
  amortization, net of tax..............      152      222      204       36       27        --       --        --
Gain on disposition of discontinued
  operations............................   13,503       --       --       --       --        --       --        --
Cumulative effect of accounting
  change................................      359       --       --       --       --       545       --        --
                                          -------   ------   ------    -----    -----   -------   ------   -------
ADJUSTED NET INCOME (LOSS)..............  $10,914    4,996   $6,528    $  71    $ 103   $(1,466)  $2,718   $(1,308)
                                          -------   ------   ------    -----    -----   -------   ------   -------
BASIC (LOSS) EARNINGS PER SHARE:
Reported basic (loss) earnings per share
  from continuing operations before
  cumulative effect of accounting
  change................................  $ (1.33)  $ 0.76   $ 1.91    $  --    $  --   $ (1.05)  $ 0.58   $ (0.80)
Add back amortization, net of tax:
  Goodwill *............................     0.21     0.20     0.04       --       --      0.14     0.22      0.17
  Equity method excess basis............     0.03     0.10     0.10       --       --      0.13     0.25      0.11
  Franchise costs.......................     0.21     0.18     0.14       --       --        --     0.01        --
                                          -------   ------   ------    -----    -----   -------   ------   -------
Adjusted basic (loss) earnings per share
  from continuing operations before
  cumulative effect of accounting
  change................................  $ (0.88)  $ 1.24   $ 2.19    $  --    $  --   $ (0.78)  $ 1.06   $ (0.52)
Reported earnings (loss) per share from
  discontinued operations...............     0.03     0.13    (0.14)    0.08     0.21        --       --        --
Add back discontinued operations
  amortization, net of tax..............     0.04     0.06     0.07     0.08     0.08        --       --        --
Gain on disposition of discontinued
  operations............................     3.70       --       --       --       --        --       --        --
Cumulative effect of accounting
  change................................     0.10       --       --       --       --      0.21       --        --
                                          -------   ------   ------    -----    -----   -------   ------   -------
ADJUSTED BASIC EARNINGS (LOSS) PER
  SHARE.................................  $  2.99   $ 1.43   $ 2.12    $0.16    $0.29   $ (0.57)  $ 1.06   $ (0.52)
                                          =======   ======   ======    =====    =====   =======   ======   =======
DILUTED (LOSS) EARNINGS PER SHARE:
Reported diluted (loss) earnings per
  share from continuing operations
  before cumulative effect of accounting
  change................................  $ (1.33)  $ 0.75   $ 1.87    $  --    $  --   $ (1.05)  $ 0.58   $ (0.80)


                                        19




                                                                       AT&T WIRELESS
                                           AT&T COMMON STOCK GROUP         GROUP           LIBERTY MEDIA GROUP
                                          -------------------------   ---------------   --------------------------
                                           2001      2000     1999    2001(1)   2000    2001(2)    2000     1999
                                          -------   ------   ------   -------   -----   -------   ------   -------
                                                      (DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
FOR THE YEAR ENDED DECEMBER 31,
                                                                                   
Add back amortization, net of tax:
  Goodwill *............................     0.21     0.19     0.04       --       --      0.14     0.22      0.17
  Equity method excess basis............     0.03     0.10     0.10       --       --      0.13     0.25      0.11
  Franchise costs.......................     0.21     0.18     0.14       --       --        --     0.01        --
                                          -------   ------   ------    -----    -----   -------   ------   -------
Adjusted diluted (loss) earnings per
  share from continuing operations
  before cumulative effect of accounting
  change................................  $ (0.88)  $ 1.22   $ 2.15    $  --    $  --   $ (0.78)  $ 1.06   $ (0.52)
Reported earnings (loss) per share from
  discontinued operations...............     0.03     0.13    (0.13)    0.08     0.21        --       --        --
Add back discontinued operations
  amortization, net of tax..............     0.04     0.06     0.07     0.08     0.08        --       --        --
Gain on disposition of discontinued
  operations............................     3.70       --       --       --       --        --       --        --
Cumulative effect of accounting
  change................................     0.10       --       --       --       --      0.21       --        --
                                          -------   ------   ------    -----    -----   -------   ------   -------
ADJUSTED DILUTED EARNINGS (LOSS) PER
  SHARE.................................  $  2.99   $ 1.41   $ 2.09    $0.16    $0.29   $ (0.57)  $ 1.06   $ (0.52)
                                          =======   ======   ======    =====    =====   =======   ======   =======


---------------
 *  Goodwill amortization is net of the Excite@Home minority interest impact on
    goodwill.

(1) AT&T Wireless Group was split off from AT&T on July 9, 2001.

(2) Liberty Media Group was split off from AT&T on August 10, 2001.

                                        20


       SUMMARY PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION OF AT&T

     The summary unaudited pro forma combined condensed financial information
set forth below for AT&T gives effect to:

     - the Liberty Media Group distribution; and

     - the AT&T Broadband Group distribution

as if such events had been completed on January 1, 1999 for income statement
purposes, and at March 31, 2002 for balance sheet purposes. Since Liberty Media
Group was split off from AT&T on August 10, 2001, no balance sheet pro forma
adjustments were made for Liberty Media Group. The unaudited selected pro forma
financial information does not necessarily represent what AT&T's financial
position or results of operations would have been had the Broadband distribution
or the Liberty Media Group distribution occurred on such dates.

     We have included detailed unaudited pro forma financial statements starting
on page F-3 of this prospectus.



                                                 AT OR FOR THE
                                                 THREE MONTHS          AT OR FOR THE YEARS
                                                ENDED MARCH 31,        ENDED DECEMBER 31,
                                               -----------------   ---------------------------
                                                2002      2001      2001      2000      1999
                                               -------   -------   -------   -------   -------
                                                                 (UNAUDITED)
                                               (DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
                                                                        
INCOME STATEMENT DATA:
Revenue......................................  $ 9,669   $11,027   $42,665   $47,204   $49,925
Operating income.............................    1,659     2,481     7,937    12,884    12,635
(Loss) income from continuing operations --
  attributable to AT&T common stock group....      (51)      326    (3,475)    3,903     3,450
Weighted average AT&T common
  shares -- basic............................    3,578     3,845     3,695     3,526     3,115
(Loss) earnings per AT&T common share --
  basic(1)...................................    (0.01)     0.08     (0.94)     1.11      1.11
Weighted average AT&T common
  shares -- diluted..........................    3,578     3,851     3,695     3,545     3,152
(Loss) earnings per AT&T common share --
  diluted(1).................................    (0.01)     0.08     (0.94)     1.10      1.09
Cash dividends declared per AT&T common
  share......................................   0.0375    0.0375      0.15    0.6975      0.88
BALANCE SHEET DATA:
Total assets.................................  $52,268        --        --        --        --
Long-term debt...............................   21,034        --        --        --        --
Total shareowners' equity....................    9,561        --        --        --        --


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

(1) Adjusted for the proposed one-for-five reverse stock split of AT&T common
    stock, (loss) earnings per basic share would have been $(0.07) and $0.42 for
    the three months ended March 31, 2002 and 2001, respectively, and $(4.70),
    $5.53 and $5.54 for the years ended December 31, 2001, 2002 and 1999,
    respectively. (Loss) earnings per diluted share on the same basis would have
    been $(0.07) and $0.42 for the three months ended March 31, 2002 and 2001,
    respectively, and $(4.70), $5.50 and $5.47 for the years ended December 31,
    2001, 2000 and 1999, respectively.

                                        21


                SELECTED FINANCIAL DATA OF AT&T BROADBAND GROUP

     Presented in the table below is selected financial data of AT&T Broadband
Group. AT&T Broadband Group is an integrated business of AT&T and not a
stand-alone entity. AT&T Broadband Group represents the assets, liabilities and
businesses that AT&T will assign and transfer to Broadband, a newly formed
company for AT&T's broadband business, in connection with the AT&T Comcast
transaction. AT&T Broadband Group consists primarily of the assets, liabilities
and business of AT&T Broadband, LLC (formerly known as Tele-Communications,
Inc.), acquired by AT&T on March 9, 1999, and MediaOne Group, Inc., acquired by
AT&T on June 15, 2000.

     The combined income statement data of AT&T Broadband Group for the years
ended December 31, 2001 and 2000 and the ten months ended December 31, 1999 and
the combined balance sheet data of AT&T Broadband Group at December 31, 2001 and
2000 were derived from the audited combined financial statements of AT&T
Broadband Group. The remaining data was derived from unaudited combined
financial statements of AT&T Broadband Group.

     The financial data presented below is not necessarily comparable from
period to period as a result of several transactions, including the acquisition
and dispositions of cable systems, primarily the TCI and MediaOne acquisitions.
For this and other reasons, you should read the selected historical financial
data provided below in conjunction with the combined financial statements and
accompanying notes beginning on page F-13 of this prospectus.



                                           AT OR FOR THE                            AT OR FOR THE
                                            THREE MONTHS      AT OR FOR THE YEARS    TEN MONTHS
                                          ENDED MARCH 31,     ENDED DECEMBER 31,        ENDED
                                         ------------------   -------------------   DECEMBER 31,
                                           2002      2001       2001     2000(1)       1999(2)
                                         --------   -------   --------   --------   -------------
                                                               (UNAUDITED)
                                                          (DOLLARS IN MILLIONS)
                                                                     
INCOME STATEMENT DATA:
Revenue................................  $  2,439   $ 2,587   $ 10,132   $  8,445      $ 5,080
Operating loss.........................      (270)   (1,667)    (4,183)    (8,656)      (1,177)
Loss before extraordinary gain and
  cumulative effect of accounting
  change...............................      (606)   (1,757)    (4,171)    (5,370)      (2,200)
BALANCE SHEET DATA:
Total assets...........................  $100,846        --   $103,187   $117,534      $58,228
Total debt.............................    23,269        --     23,285     28,420       14,900
Minority interest......................     2,507        --      3,302      4,421        2,327
Company-Obligated Convertible Quarterly
  Preferred Securities.................     4,723        --      4,720      4,710        4,700


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

(1) Effective June 15, 2000, AT&T acquired MediaOne Group, Inc. which is
    attributed to AT&T Broadband Group. The acquisition was accounted for under
    the purchase method of accounting.

(2) Effective March 1, 1999, AT&T acquired TCI which is attributed to AT&T
    Broadband Group. The acquisition was accounted for under the purchase method
    of accounting.

                                        22


                      SELECTED FINANCIAL DATA OF BROADBAND

     AT&T Broadband Corp. is a newly formed entity for purposes of effectuating
the AT&T Comcast transaction. From the date of inception on December 14, 2001
through March 31, 2002, AT&T Broadband Corp. had no operations.

     The balance sheet data at December 31, 2001, was derived from the audited
balance sheet of AT&T Broadband Corp. The balance sheet data at March 31, 2002,
was derived from an unaudited balance sheet.



                                                              AT MARCH 31,     AT DECEMBER 31,
                                                                  2002              2001
                                                              ------------   -------------------
                                                                         (UNAUDITED)
                                                                       
BALANCE SHEET DATA:
Total assets................................................       $--               $--
Total debt..................................................       --                --


                                        23


          UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
                          OF AT&T COMCAST CORPORATION

     The following Unaudited Pro Forma Combined Condensed Balance Sheet of AT&T
Comcast as of March 31, 2002 and the Unaudited Pro Forma Combined Condensed
Statements of Operations of AT&T Comcast for the three months ended March 31,
2002 and the year ended December 31, 2001 give effect to the AT&T Comcast
transaction. The pro forma financial statements reflect the fact that the AT&T
Comcast transaction is accounted for under the purchase method of accounting.

     The Unaudited Pro Forma Combined Condensed Balance Sheet assumes the AT&T
Comcast transaction occurred on March 31, 2002. The Unaudited Pro Forma Combined
Condensed Statements of Operations assume the AT&T Comcast transaction occurred
on January 1, 2001. The unaudited pro forma financial data is based on the
historical consolidated financial statements of Comcast and the historical
combined financial statements of AT&T Broadband Group under the assumptions and
adjustments set forth in the accompanying explanatory notes.

     AT&T and Comcast have determined that the AT&T Comcast transaction will be
accounted for as an acquisition by Comcast of AT&T Broadband Group. See Note 5
to the consolidated financial statements of Comcast included in this prospectus.
As Comcast is considered the accounting acquiror, the historical basis of
Comcast's assets and liabilities will not be affected by the AT&T Comcast
transaction. For purposes of developing the Unaudited Pro Forma Combined
Condensed Balance Sheet as of March 31, 2002, AT&T Broadband Group's assets,
including identifiable intangible assets, and liabilities have been recorded at
their estimated fair values and the excess purchase price has been assigned to
goodwill. The fair values assigned in these pro forma financial statements are
preliminary and represent management's best estimates of current fair value
which are subject to revision upon completion of the AT&T Comcast transaction.
Management of both companies currently knows of no events or circumstances other
than those disclosed in these pro forma notes that would require a material
change to the preliminary purchase price allocation. However, a final
determination of required purchase accounting adjustments will be made upon the
completion of a study to be undertaken by AT&T Comcast in conjunction with
independent appraisers to determine the fair value of certain of AT&T Broadband
Group's assets, including identifiable intangible assets, and liabilities.
Assuming completion of the AT&T Comcast transaction, the actual financial
position and results of operations will differ, perhaps significantly, from the
pro forma amounts reflected herein due to a variety of factors, including access
to additional information, changes in value not currently identified and changes
in operating results between the dates of the pro forma financial data and the
date on which the AT&T Comcast transaction takes place. See Note (b) to
Unaudited Pro Forma Combined Condensed Balance Sheet.

     Comcast shareholders will receive shares of AT&T Comcast Class A common
stock, AT&T Comcast Class B common stock and AT&T Comcast Class A Special common
stock in exchange for shares of Comcast Class A common stock, Comcast Class B
common stock and Comcast Class A Special common stock, respectively, based on an
exchange ratio of 1 to 1. AT&T Comcast will issue stock options to purchase
shares of AT&T Comcast common stock in exchange for all outstanding stock
options of Comcast, based on an exchange ratio of 1 to 1.

     The consideration to complete the AT&T Comcast transaction will consist of
shares of AT&T Comcast common stock, assumed debt of the AT&T Broadband Group
and Comcast transaction costs. If the closing date of the AT&T Comcast
transaction were as of March 31, 2002, the estimated aggregate consideration to
complete the AT&T Comcast transaction would be $73,003 million, consisting of
$49,104 million of AT&T Comcast common stock, $23,269 million of assumed debt at
the closing date, and $630 million of Comcast's transaction costs directly
related to the AT&T Comcast transaction.

     The consideration in the form of assumed debt includes the short-term debt
due to AT&T, which is due at closing, of $5,956 million, as well as long-term
debt, including current portion, of AT&T Broadband Group of $17,313 million.
Absent additional deleveraging activities, it is expected that the amount of
short-term debt due to AT&T will increase to fund capital expenditures,
operations and third party debt
                                        24


maturities and redemptions through the completion of the AT&T Comcast
transaction. The amount of long-term debt may be lower or higher at the closing
date of the AT&T Comcast transaction.

     The consideration in the form of AT&T Comcast common stock includes the
fair value of the issuance of approximately 1,232.6 million shares of AT&T
Comcast common stock to AT&T shareholders in exchange for all of AT&T's
interests in the AT&T Broadband Group, the fair value of the issuance of 115.0
million shares of AT&T Comcast common stock to Microsoft Corporation in exchange
for AT&T Broadband Group shares that Microsoft will receive immediately prior to
the completion of the AT&T Comcast transaction for settlement of its $5 billion
aggregate principal amount in quarterly income preferred securities (QUIPS), and
the fair value of AT&T Comcast stock options and stock appreciation rights
issued in exchange for AT&T Broadband Group stock options and stock appreciation
rights. The fair value of the shares to be issued for the AT&T Broadband Group
is based on a price per share of $35.97 which reflects the weighted-average
market price of Comcast Class A Special common stock during the period beginning
two days before and ending two days after the AT&T Comcast transaction was
announced. In limited circumstances, the number of shares of AT&T Comcast stock
to be issued to certain AT&T security holders in connection with the AT&T
Comcast transaction is subject to adjustment. In the event this occurs, the fair
value of all of the shares to be issued would be based on the market price of
Comcast Class A Special common stock on the closing date.

     AT&T Comcast intends to review the synergies of the combined business,
which may result in a plan to realign or reorganize certain of AT&T Broadband
Group's existing operations. The costs of implementing such a plan, if it were
to occur, have not been reflected in the accompanying pro forma financial
statements. The impact of a potential realignment, assuming such a plan were in
place at the consummation date of the AT&T Comcast transaction, could increase
or decrease the amount of goodwill and intangible assets recognized by AT&T
Comcast in accordance with Emerging Issues Task Force No. 95-3, "Recognition of
Liabilities in Connection with a Purchase Business Combination." The Unaudited
Combined Condensed Statements of Operations exclude any benefits that may result
from synergies that may be derived, or the elimination of duplicative efforts.

     Among the provisions of Statement of Financial Accounting Standards No.
141, "Business Combinations," new criteria have been established for determining
whether intangible assets should be recognized separately from goodwill. SFAS
No. 142 provides, among other guidelines, that goodwill and intangible assets
with indefinite lives will not be amortized, but rather will be tested for
impairment on at least an annual basis (see Note (b) to the Unaudited Pro Forma
Combined Condensed Balance Sheet for information on AT&T's interim testing under
SFAS No. 142). Management of both companies believes that cable franchise rights
have indefinite lives based upon an analysis utilizing the criteria in paragraph
11 of SFAS No. 142. The pro forma adjustments to the Unaudited Pro Forma
Combined Condensed Statement of Operations for the year ended December 31, 2001
reflect the elimination of AT&T Broadband Group's amortization expense related
to goodwill and cable franchise rights since this acquisition will be accounted
for under the provisions of SFAS No. 142.

     Comcast incurred goodwill and cable and sports franchise rights
amortization expense of approximately $2,002 million for the year ended December
31, 2001. The historical consolidated financial statements of Comcast included
in the Unaudited Pro Forma Combined Condensed Statement of Operations for the
year ended December 31, 2001 include the amortization expense related to
Comcast's goodwill and cable and sports franchise rights, which has not been
eliminated in the pro forma adjustments. Effective January 1, 2002, Comcast, in
accordance with the provisions of SFAS No. 142, no longer amortizes goodwill and
cable and sports franchise rights.

     Management of both companies believes that the assumptions used provide a
reasonable basis on which to present the unaudited pro forma financial data.
Both companies have completed other acquisitions and dispositions that are not
significant, individually or in the aggregate, and, accordingly, have not been
included in the accompanying unaudited pro forma financial data. The unaudited
pro forma financial data may not be indicative of the financial position or
results that would have occurred if the

                                        25


AT&T Comcast transaction had been in effect on the dates indicated or which may
be obtained in the future.

     The unaudited pro forma financial data should be read in conjunction with
the historical consolidated financial statements and accompanying notes thereto
for Comcast, and the historical combined financial statements and accompanying
notes thereto for AT&T Broadband Group, which have been included herein.

                                        26


                            AT&T COMCAST CORPORATION

              UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
                              AS OF MARCH 31, 2002



                                                                          HISTORICAL
                                                            HISTORICAL       AT&T        PRO FORMA         PRO FORMA
                                                            COMCAST(A)   BROADBAND(A)   ADJUSTMENTS       AT&T COMCAST
                                                            ----------   ------------   -----------       ------------
                                                                              (DOLLARS IN MILLIONS)
                                                                                              
ASSETS:
CURRENT ASSETS
  Cash and cash equivalents...............................  $   543.1     $             $                  $    543.1
  Investments.............................................    2,087.4          477.0                          2,564.4
  Accounts receivable, net................................      979.9          549.0                          1,528.9
  Inventories, net........................................      426.1                                           426.1
  Other current assets....................................      193.3          584.0          57.5(b1)          834.8
                                                            ---------     ----------    ----------         ----------
    Total current assets..................................    4,229.8        1,610.0          57.5            5,897.3
                                                            ---------     ----------    ----------         ----------
                                                                                           2,192.0(b2)
INVESTMENTS...............................................    1,065.3       20,625.0      (1,701.0)(d)       22,181.3
PROPERTY AND EQUIPMENT, NET...............................    7,034.0       14,588.0                         21,622.0
GOODWILL..................................................    6,441.2       19,361.0         750.5(b3)       26,552.7
CABLE FRANCHISE RIGHTS....................................   16,491.1       41,381.0                         57,872.1
OTHER INTANGIBLE ASSETS, NET..............................    1,534.2        1,514.0                          3,048.2
OTHER NON-CURRENT ASSETS, NET.............................      349.8        1,767.0          57.5(b4)        2,174.3
                                                            ---------     ----------    ----------         ----------
                                                            $37,145.4     $100,846.0    $  1,356.5         $139,347.9
                                                            =========     ==========    ==========         ==========
LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES
  Accounts payable........................................  $   794.7     $    620.0    $                  $  1,414.7
                                                                                             (40.0)(b5)
  Accrued expenses and other current liabilities..........    1,637.0        2,075.0       1,025.8(b6)        4,697.8
  Deferred income taxes...................................       89.9                                            89.9
                                                                                              57.5(b7)
  Short-term debt.........................................                   5,956.0      (1,977.6)(c)        4,035.9
  Current portion of long-term debt.......................      267.5        1,790.0      (1,277.4)(c)          780.1
                                                            ---------     ----------    ----------         ----------
    Total current liabilities.............................    2,789.1       10,441.0      (2,211.7)          11,018.4
                                                            ---------     ----------    ----------         ----------
                                                                                             572.5(b7)
                                                                                            (553.3)(b8)
LONG-TERM DEBT, LESS CURRENT PORTION......................   11,356.0       15,523.0       3,255.0(c)        30,153.2
                                                            ---------     ----------    ----------         ----------
DEFERRED INCOME TAXES.....................................    6,406.7       25,447.0         522.7(b9)       32,376.4
                                                            ---------     ----------    ----------         ----------
                                                                                            (179.0)(b10)
OTHER NON-CURRENT LIABILITIES.............................    1,418.0          813.0         (38.0)(b11)      2,014.0
                                                            ---------     ----------    ----------         ----------
MINORITY INTEREST.........................................      926.6        2,507.0      (1,300.0)(b12)      2,133.6
                                                            ---------     ----------    ----------         ----------
Company-Obligated Convertible Quarterly Income Preferred
  Securities of Subsidiary Trust Holding Solely
  Subordinated Debt Securities of AT&T....................                   4,723.0      (4,723.0)(b13)
                                                            ---------     ----------    ----------         ----------
STOCKHOLDERS' EQUITY
                                                                                           1,347.6(b14)
  Common stock............................................      945.7                        (47.3)(d)        2,246.0
                                                                                          (1,653.7)(d)
  Additional capital......................................   11,769.9                     47,756.7(b14)      57,872.9
  Retained earnings.......................................    1,541.4                                         1,541.4
  Accumulated other comprehensive loss....................       (8.0)                                           (8.0)
  Combined attributed net assets..........................                  41,392.0     (41,392.0)(b15)
                                                            ---------     ----------    ----------         ----------
    Total stockholders' equity............................   14,249.0       41,392.0       6,011.3           61,652.3
                                                            ---------     ----------    ----------         ----------
                                                            $37,145.4     $100,846.0    $  1,356.5         $139,347.9
                                                            =========     ==========    ==========         ==========


       See Notes to Unaudited Pro Forma Combined Condensed Balance Sheet
                                        27


                            AT&T COMCAST CORPORATION

         NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
                  (AMOUNTS IN MILLIONS, EXCEPT PER SHARE DATA)

(a) These columns reflect the historical balance sheets of the respective
    companies. Certain reclassifications have been made to the combined
    historical financial statements of AT&T Broadband Group to conform to the
    presentation expected to be used by AT&T Comcast.

(b) This entry reflects the preliminary allocation of the purchase price to
    identifiable net assets acquired and the excess purchase price to goodwill.



                                                                    COMMON    ADDITIONAL
                                                                    STOCK      CAPITAL       TOTAL
                                                                   --------   ----------   ----------
                                                                                  
    Calculation of consideration
           Issuance of common stock to AT&T shareholders
           (1,232.6 million shares * $35.97)....................   $1,232.6(i) $43,104.0   $ 44,336.6
           Issuance of common stock to Microsoft Corporation
           (115.0 million shares * $35.97)......................      115.0     4,021.6       4,136.6
           Fair value of AT&T Comcast stock options resulting
           from the conversion of AT&T Broadband Group stock
           options in the merger based on Black-Scholes option
           pricing model........................................                  631.1         631.1
                                                                   --------   ---------    ----------
    (b14)  Comcast common stock equity consideration............    1,347.6    47,756.7      49,104.3
    (b7)   Transaction costs (assumed to be funded -- $57.5
           short-term debt and $572.5 long-term debt)...........                                630.0
                                                                                           ----------
               Total consideration..............................                           $ 49,734.3
                                                                                           ==========
         Preliminary estimate of fair value of identifiable net
         assets acquired
    (b15)  Book value of AT&T Broadband Group...................                           $ 41,392.0
           Elimination of AT&T Broadband Group goodwill.........                            (19,361.0)
    (b1)   Current portion of deferred financing fees...........                                 57.5
    (b2)   Preliminary estimate of adjustment to fair value of
           investments..........................................                              2,192.0
    (b4)   Long-term portion of deferred financing fees.........                                 57.5
    (b5)   Elimination of accrued dividend for Microsoft
           Corporation QUIPS, net of tax benefit................                                 40.0
    (b6)   Preliminary estimate of current tax liability arising
           from the transaction.................................                             (1,025.8)
    (b8)   Preliminary estimate of adjustment to fair value of
           AT&T Broadband Group assumed long-term debt..........                                553.3
    (b9)   Preliminary estimate of adjustment to deferred tax
           liability on adjustments at combined federal and
           state statutory rate.................................                               (522.7)
    (b10)  Certain liabilities retained by AT&T related to
           Excite@Home..........................................                                179.0
    (b11)  Preliminary estimate of adjustment to fair value of
           other non-current liabilities........................                                 38.0
    (b12)  Liabilities retained by AT&T related to TCI Pacific
           Preferred shares.....................................                              1,300.0
    (b13)  Redemption of Microsoft Corporation QUIPS............                              4,723.0
                                                                                           ----------
         Preliminary estimate of fair value of identifiable net
         assets acquired........................................                             29,622.8
                                                                                           ----------
         Acquisition goodwill...................................                           $ 20,111.5
                                                                                           ==========
    Calculation of goodwill acquisition adjustment
         Acquisition goodwill...................................                           $ 20,111.5
         Gross value of AT&T Broadband Group goodwill...........                            (19,361.0)
                                                                                           ----------
    (b3)   Goodwill acquisition adjustment......................                           $    750.5
                                                                                           ==========
           (i)  Maximum number of shares of common stock that
                could be issued in the AT&T Comcast
                transaction.....................................    1,235.0
                     Share equivalent of intrinsic value of AT&T
                     Broadband Group stock options and stock
                     appreciation rights........................       (2.4)
                                                                   --------
                      Common stock to be issued to AT&T
                        shareholders............................    1,232.6
                                                                   ========


                                        28

                            AT&T COMCAST CORPORATION

         NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
                                  (CONCLUDED)

     Certain programming and other contracts of AT&T Broadband Group and Comcast
     may, by their terms, be assumed, altered or terminated as a result of the
     completion of the AT&T Comcast transaction. However, due to confidentiality
     provisions in those contracts as well as legal restrictions, those terms
     cannot be shared between the two parties as of the date of this document.
     Therefore, management cannot currently estimate the impact, if any, of
     favorable or unfavorable contracts that may result from the ultimate
     allocation of purchase price. See note (l) to the Unaudited Pro Forma
     Combined Condensed Statements of Operations for a sensitivity analysis of
     purchase price allocation.

     As of June 30, 2002, AT&T reassessed the carrying value of AT&T Broadband
     Group and cable franchise rights in accordance with SFAS No. 142. AT&T
     determined that the carrying value of AT&T Broadband Group's goodwill and
     cable franchise rights exceeded their fair value by $4,149.0 million and
     $12,330.0 million, respectively, resulting in pre-tax goodwill and
     franchise impairment charges of $16,479.0 million during the quarter ended
     June 30, 2002.

(c) Represents the refinancing of existing short-term debt due to AT&T
    ($5,956.0) and certain components of the current portion of long-term debt
    ($1,277.4) with new debt of AT&T Comcast. The refinancing is assumed to be
    funded 55% with short-term debt and 45% with long-term debt.

(d) Represents the reclassification of AT&T Broadband Group's investment in
    Comcast as follows:


                                                                   
       Elimination of Comcast stock held by AT&T Broadband Group...   $(1,701.0)
       Reclassification of Comcast stock held by AT&T Broadband
         Group to equity (par value common stock $47.3 and
         additional capital $1,653.7)..............................     1,701.0
                                                                      ---------
                                                                      $      --
                                                                      =========


                                        29


                            AT&T COMCAST CORPORATION

         UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
                      FOR THE YEAR ENDED DECEMBER 31, 2001



                                                                                                               PRO FORMA
                                                   HISTORICAL    HISTORICAL    INTERCOMPANY     PRO FORMA         AT&T
                                                   COMCAST(A)   BROADBAND(A)   ADJUSTMENTS    ADJUSTMENTS(D)   COMCAST(L)
                                                   ----------   ------------   ------------   --------------   ----------
                                                              (AMOUNTS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
                                                                                                
REVENUES
  Service revenues(m)............................  $ 5,756.9     $10,132.0       $(108.9)(b)    $              $15,780.0
  Net sales from electronic retailing............    3,917.3                                                     3,917.3
                                                   ---------     ---------       -------        ---------      ---------
                                                     9,674.2      10,132.0        (108.9)                       19,697.3
                                                   ---------     ---------       -------        ---------      ---------
COSTS AND EXPENSES
  Operating (excluding depreciation).............    2,905.8       5,459.0         (62.8)(b)                     8,302.0
  Cost of goods sold from electronic retailing
    (excluding depreciation).....................    2,514.0                                                     2,514.0
  Selling, general and administrative(m).........    1,552.6       2,582.0         (22.6)(b)                     4,112.0
  Depreciation...................................    1,141.8       2,626.0                                       3,767.8
  Amortization...................................    2,306.2       2,154.0                       (1,882.9)(e)    2,577.3
  Asset impairment, restructuring and other
    charges......................................                  1,494.0                                       1,494.0
                                                   ---------     ---------       -------        ---------      ---------
                                                    10,420.4      14,315.0         (85.4)        (1,882.9)      22,767.1
                                                   ---------     ---------       -------        ---------      ---------
OPERATING LOSS...................................     (746.2)     (4,183.0)        (23.5)         1,882.9       (3,069.8)
OTHER INCOME (EXPENSE)
                                                                                                    176.1(f)
  Interest expense...............................     (731.8)     (1,735.0)                        (107.8)(g)   (2,398.5)
  Investment income (expense)....................    1,061.7      (1,947.0)        (18.7)(b)                      (904.0)
                                                                                                   (106.0)(h)
  Equity in net income (losses) of affiliates....      (28.5)                                       148.0(e)        13.5
  Other income (expense).........................    1,301.0        (927.0)                                        374.0
                                                   ---------     ---------       -------        ---------      ---------
                                                     1,602.4      (4,609.0)        (18.7)           110.3       (2,915.0)
                                                   ---------     ---------       -------        ---------      ---------
INCOME (LOSS) BEFORE INCOME TAXES, MINORITY
  INTEREST, EXTRAORDINARY ITEMS AND CUMULATIVE
  EFFECT OF ACCOUNTING CHANGE....................      856.2      (8,792.0)        (42.2)         1,993.2       (5,984.8)
                                                                                                   (554.5)(i)
INCOME TAX (EXPENSE) BENEFIT.....................     (470.2)      3,857.0        (750.3)(c)         37.0(h)     2,119.0
                                                   ---------     ---------       -------        ---------      ---------
INCOME (LOSS) BEFORE MINORITY INTEREST,
  EXTRAORDINARY ITEMS AND CUMULATIVE EFFECT OF
  ACCOUNTING CHANGE..............................      386.0      (4,935.0)       (792.5)         1,475.7       (3,865.8)
Net loss from equity investments.................                    (69.0)                          69.0(h)
MINORITY INTEREST INCOME (EXPENSE)...............     (160.4)        833.0         (24.0)(b)        160.0(j)       808.6
                                                   ---------     ---------       -------        ---------      ---------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS AND
  CUMULATIVE EFFECT OF ACCOUNTING CHANGE.........  $   225.6     $(4,171.0)      $(816.5)       $ 1,704.7      $(3,057.2)
                                                   =========     =========       =======        =========      =========
Earnings (loss) per share from continuing
  operations -- basic............................  $    0.24                                                   $   (1.36)
Earnings (loss) per share from continuing
  operations -- assuming dilution................  $    0.23                                                   $   (1.36)
Weighted average number of common shares
  outstanding -- basic...........................      949.7                                      1,300.3(k)     2,250.0
Weighted average number of common shares
  outstanding -- assuming dilution...............      964.5                                      1,302.7(k)     2,267.2


  See Notes to Unaudited Pro Forma Combined Condensed Statement of Operations
                                        30


                            AT&T COMCAST CORPORATION

         UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
                      FOR THE QUARTER ENDED MARCH 31, 2002



                                                                                                     PRO FORMA
                                         HISTORICAL    HISTORICAL    INTERCOMPANY     PRO FORMA         AT&T
                                         COMCAST(A)   BROADBAND(A)   ADJUSTMENTS    ADJUSTMENTS(D)   COMCAST(L)
                                         ----------   ------------   ------------   --------------   ----------
                                                    (AMOUNTS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
                                                                                      
REVENUES
  Service revenues.....................   $1,679.0      $2,439.0        $(11.8)(b)     $              $4,106.2
  Net sales from electronic
    retailing..........................      993.5                                                       993.5
                                          --------      --------        ------         --------       --------
                                           2,672.5       2,439.0         (11.8)                        5,099.7
                                          --------      --------        ------         --------       --------
COSTS AND EXPENSES
  Operating (excluding depreciation)...      746.0       1,308.0          (6.6)(b)                     2,047.4
  Cost of goods sold from electronic
    retailing (excluding
    depreciation)......................      631.2                                                       631.2
  Selling, general and
    administrative.....................      487.1         625.0          (5.2)(b)                     1,106.9
  Depreciation.........................      333.8         720.0                                       1,053.8
  Amortization.........................       53.3                                                        53.3
  Asset impairment, restructuring and
    other charges......................                     56.0                                          56.0
                                          --------      --------        ------         --------       --------
                                           2,251.4       2,709.0         (11.8)                        4,948.6
                                          --------      --------        ------         --------       --------
OPERATING LOSS.........................      421.1        (270.0)                                        151.1
OTHER INCOME (EXPENSE)
                                                                                          (23.0)(f)
  Interest expense.....................     (186.7)       (366.0)                         (13.3)(g)     (589.0)
  Investment income (expense)..........     (248.0)       (101.0)                                       (349.0)
  Equity in net losses of affiliates...       (5.4)                                       (32.0)(h)      (37.4)
  Other income (expense)...............      (23.6)         (1.0)                                        (24.6)
                                          --------      --------        ------         --------       --------
                                            (463.7)       (468.0)                         (68.3)      (1,000.0)
                                          --------      --------        ------         --------       --------
INCOME (LOSS) BEFORE INCOME TAXES,
  MINORITY INTEREST, EXTRAORDINARY
  ITEMS AND CUMULATIVE EFFECT OF
  ACCOUNTING CHANGE....................      (42.6)       (738.0)                         (68.3)        (848.9)
                                                                                           14.0(i)
INCOME TAX (EXPENSE) BENEFIT...........       (2.7)        229.0                           12.0(h)       252.3
                                          --------      --------        ------         --------       --------
INCOME (LOSS) BEFORE MINORITY INTEREST,
  EXTRAORDINARY ITEMS AND CUMULATIVE
  EFFECT OF ACCOUNTING CHANGE..........      (45.3)       (509.0)                         (42.3)        (596.6)
Net loss from equity investments.......                    (20.0)                          20.0(h)
MINORITY INTEREST INCOME (EXPENSE).....      (43.6)        (77.0)                          40.0(j)       (80.6)
                                          --------      --------        ------         --------       --------
INCOME (LOSS) BEFORE EXTRAORDINARY
  ITEMS AND CUMULATIVE EFFECT OF
  ACCOUNTING CHANGE....................   $  (88.9)     $ (606.0)       $              $   17.7       $ (677.2)
                                          ========      ========        ======         ========       ========
Earnings (loss) per share from
  continuing operations -- basic.......   $  (0.09)                                                   $  (0.30)
Earnings (loss) per share from
  continuing operations -- assuming
  dilution.............................   $  (0.09)                                                   $  (0.30)
Weighted average number of common
  shares outstanding -- basic..........      951.4                                      1,300.3(k)     2,251.7
Weighted average number of common
  shares outstanding -- assuming
  dilution.............................      951.4                                      1,302.7(k)     2,254.1


  See Notes to Unaudited Pro Forma Combined Condensed Statement of Operations
                                        31


                            AT&T COMCAST CORPORATION

                NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED
                            STATEMENT OF OPERATIONS
                  (DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)

(a)  These columns reflect the historical statements of operations of the
     respective companies.

(b)  Adjustment reflects the elimination of historical intercompany transactions
     between Comcast and AT&T Broadband Group as follows: amounts charged by
     Comcast to AT&T Broadband Group for programming, the gains and losses
     resulting from the sales of certain cable systems by AT&T Broadband Group
     to Comcast and Excite@home transactions.

(c)  Represents the elimination of the aggregate historical income tax effects
     recorded by Comcast and AT&T Broadband Group on Note (b) adjustments above.

(d)  AT&T Broadband Group has certain intercompany agreements with AT&T Corp.
     which will be terminated as of the date of the AT&T Comcast transaction.
     The costs of replacing these services is uncertain. However, the impact of
     the termination of these arrangements is not expected to be material.

(e)  Represents the elimination of AT&T Broadband Group's historical goodwill
     and cable franchise rights amortization expense for consolidated
     subsidiaries and equity method investments. Under the accounting rules set
     forth in SFAS No. 142 issued by the Financial Accounting Standards Board in
     June 2001, goodwill and intangibles with indefinite lives are not amortized
     against earnings other than in connection with an impairment.

(f)  Represents the net effect on interest expense resulting from the financings
     described in Note (c) to the Unaudited Pro Forma Combined Condensed Balance
     Sheet. Pro forma interest expense was calculated based on the interest
     rates of the historical debt outstanding plus the interest rates in the
     planned credit facilities. The pro forma financial information assumes the
     financings occurred on January 1, 2001. Amortization of deferred financing
     costs was calculated based on the expected amounts and terms of the new
     facilities. Short-term rates are assumed to be 4% and long term rates are
     assumed to be 7%. Assuming interest rates changed by 0.125%, the related
     interest expense and pre-tax impact on earnings would be $9.1 million for
     the year ended December 31, 2001 and $2.2 million for the three months
     ended March 31, 2002.

(g)  Represents the decrease in interest expense as a result of the adjustment
     of AT&T Broadband Group's long-term debt to its fair value as described in
     Note (b8) to the Unaudited Pro Forma Combined Condensed Balance Sheet. The
     difference between the fair value and the face amount of each borrowing is
     amortized as reduction to interest expense over the remaining term of the
     borrowing.

(h)  Represents the reclassification of losses in equity investments to conform
     with the presentation currently used by Comcast.

(i)   Represents the aggregate pro forma income tax effect of Notes (e) through
      (g) above at the combined federal and state statutory rate.

(j)   Represents the elimination of historical impact of the QUIPS exchanged for
      AT&T Broadband Group common stock.

(k)  For basic earnings per share, this adjustment represents the issuance of
     AT&T Comcast shares to AT&T shareholders and Microsoft Corporation offset
     by shares of Comcast owned by AT&T Broadband Group which are classified as
     treasury shares (see Note (d) to the Unaudited Pro Forma Combined Condensed
     Balance Sheet). In addition, earnings per share assuming dilution has been
     adjusted to include the dilutive effects of AT&T Comcast stock options
     issued in exchange for the AT&T Broadband Group stock options.

                                        32

                            AT&T COMCAST CORPORATION

                NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED
                     STATEMENT OF OPERATIONS -- (CONTINUED)
                  (DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)

(l)   The pro forma combined condensed financial statements reflect a
      preliminary allocation to tangible assets, liabilities, goodwill and other
      intangible assets. The final purchase price allocation may result in
      different allocations for tangible and intangible assets than that
      presented in these pro forma combined condensed financial statements. The
      following table shows the absolute dollar effect on pro forma net income
      (loss) applicable to common shares and net income (loss) per share
      assuming dilution for every $500 of purchase price allocated to
      amortizable assets or certain liabilities over assumed weighted-average
      useful lives. An increase in the purchase amount allocated to amortizable
      assets or a decrease in the amount allocated to certain liabilities will
      result in a decrease to net income. A decrease in the amount allocated to
      amortizable assets or an increase in the amount allocated to certain
      liabilities will result in an increase to net income.



                                                                          THREE MONTHS
                                                        YEAR ENDED           ENDED
WEIGHTED AVERAGE LIFE                                DECEMBER 31, 2001   MARCH 31, 2002
---------------------                                -----------------   --------------
                                                                   
Five years
  Net Income.......................................        $61.5             $15.4
  Per Share........................................        $0.03             $0.01
Ten years
  Net Income.......................................        $30.8             $ 7.7
  Per Share........................................        $0.01             $0.00
Twenty years
  Net Income.......................................        $15.4             $ 3.8
  Per Share........................................        $0.01             $0.00


(m) Comcast's consolidated statement of operations for the year ended December
    31, 2001 reflects franchise fees collected from cable subscribers as a
    reduction of the related franchise fee expense included within selling,
    general and administrative expenses. Upon adoption of EITF 01-14 "Income
    Statement Characterization of Reimbursements Received for 'Out-of-Pocket'
    Expenses Incurred," on January 1, 2002, Comcast reclassified such amounts to
    service revenues. The change in classification had no impact on the
    unaudited pro forma operating loss. The effect of the reclassification on
    the Unaudited Pro Forma Combined Condensed Statement of Operations for the
    ended December 31, 2001 would be to increase service revenues and selling,
    general and administrative expenses by $192.3 million.

                                        33


                       SELECTED FINANCIAL DATA OF COMCAST

     The consolidated selected financial data of Comcast below for the three
months ended March 31, 2002 and 2001 were derived from the unaudited condensed
consolidated financial statements of Comcast, and the consolidated selected
financial data of Comcast for the years ended December 31, 2001, 2000, 1999,
1998 and 1997 were derived from the audited consolidated financial statements of
Comcast.



                                          AT OR FOR THREE
                                              MONTHS
                                          ENDED MARCH 31,                      YEARS ENDED DECEMBER 31,
                                       ---------------------   ---------------------------------------------------------
                                         2002        2001        2001        2000        1999        1998        1997
                                       ---------   ---------   ---------   ---------   ---------   ---------   ---------
                                                                    (DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
                                                                                          
STATEMENT OF OPERATIONS DATA:
Revenues(1)..........................  $ 2,672.5   $ 2,232.0   $ 9,674.2   $ 8,218.6   $ 6,529.2   $ 5,419.0   $ 4,700.4
Operating income (loss)..............      421.1      (100.5)     (746.2)     (161.0)      664.0       557.1       466.6
Income (loss) from continuing
  operations before extraordinary
  items and cumulative effect of
  accounting change..................      (88.9)      616.7       225.6     2,045.1       780.9     1,007.7      (182.9)
Discontinued operations(2)...........                                                      335.8       (31.4)      (25.6)
Extraordinary items..................                               (1.5)      (23.6)      (51.0)       (4.2)      (30.2)
Cumulative effect of accounting
  change.............................                  384.5       384.5
Net income (loss)....................      (88.9)    1,001.2       608.6     2,021.5     1,065.7       972.1      (238.7)
BASIC EARNINGS (LOSS) FOR COMMON
  STOCKHOLDERS PER COMMON SHARE(3)
  Income (loss) from continuing
    operations before extraordinary
    items and cumulative effect of
    accounting change................  $    (.09)  $     .65   $     .24   $    2.27   $    1.00   $    1.34   $    (.29)
  Discontinued operations(2).........                                                        .45        (.04)       (.04)
  Extraordinary items................                                           (.03)       (.07)       (.01)       (.04)
  Cumulative effect of accounting
    change...........................                    .41         .40
                                       ---------   ---------   ---------   ---------   ---------   ---------   ---------
  Net income (loss)..................  $    (.09)  $    1.06   $     .64   $    2.24   $    1.38   $    1.29   $    (.37)
                                       ---------   ---------   ---------   ---------   ---------   ---------   ---------
DILUTED EARNINGS (LOSS) FOR COMMON
  STOCKHOLDERS PER COMMON SHARE(3)
  Income (loss) from continuing
    operations before extraordinary
    items and cumulative effect of
    accounting change................  $    (.09)  $     .64   $     .23   $    2.16   $     .95   $    1.25   $    (.29)
  Discontinued operations(2).........                                                        .41        (.03)       (.04)
  Extraordinary items................                                           (.03)       (.06)       (.01)       (.04)
  Cumulative effect of accounting
    change...........................                    .40         .40
                                       ---------   ---------   ---------   ---------   ---------   ---------   ---------
  Net income (loss)..................  $    (.09)  $    1.04   $     .63   $    2.13   $    1.30   $    1.21   $    (.37)
                                       =========   =========   =========   =========   =========   =========   =========
Cash dividends declared per common
  share(3)...........................                                                              $   .0467   $   .0467
BALANCE SHEET DATA (AT PERIOD END):
Total assets.........................  $37,145.4   $37,216.2   $38,131.8   $35,744.5   $28,685.6   $14,710.5   $11,234.3
Working capital......................    1,440.7     1,507.6     1,419.5     1,670.9     4,771.6     2,497.0        13.6
Long-term debt.......................   11,356.0    10,263.0    11,741.6    10,517.4     8,707.2     5,464.2     5,334.1
Stockholders' equity.................   14,249.0    14,997.0    14,473.0    14,086.4    10,341.3     3,815.3     1,646.5
SUPPLEMENTARY FINANCIAL DATA:
Operating income before depreciation
  and amortization(4)................  $   808.2   $   634.2   $ 2,701.8   $ 2,470.3   $ 1,880.0   $ 1,496.7   $ 1,293.1
Net cash provided by (used in)(5)
  Operating activities...............      519.3       253.0     1,229.5     1,219.3     1,249.4     1,067.7       844.6
  Financing activities...............      130.7       402.1     1,476.3      (271.4)    1,341.4       809.2       283.9
  Investing activities...............     (456.9)     (638.3)   (3,007.3)   (1,218.6)   (2,539.3)   (1,415.3)   (1,045.8)


                                        34


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

(1) Comcast's consolidated statement of operations for the years ended December
    31, 2001, 2000, 1999, 1998 and 1997 reflect franchise fees collected from
    cable subscribers as a reduction of the related franchise fee expense
    included within selling, general and administrative expenses. Upon adoption
    of EITF 01-14 "Income Statement Characterization of Reimbursements Received
    for 'Out-of-Pocket' Expenses Incurred," on January 1, 2002, Comcast
    reclassified such amounts to revenues. The effect of the reclassification on
    the statement of operations for the years ended 2001, 2000, 1999, 1998 and
    1997 would be to increase revenues and selling, general and administrative
    expenses by $192.3 million, $152.3 million, $105.6 million, $94.7 million
    and $72.8 million, respectively.

(2) In July 1999, Comcast sold Comcast Cellular Corporation to SBC
    Communications, Inc. Comcast Cellular is presented as a discontinued
    operation for all periods presented.

(3) Adjusted for Comcast's two-for-one stock split in the form of a 100% stock
    dividend in May 1999.

(4) Operating income before depreciation and amortization is commonly referred
    to in Comcast's business as "operating cash flow." Operating cash flow is a
    measure of a company's ability to generate cash to service its obligations,
    including debt service obligations, and to finance capital and other
    expenditures. In part due to the capital intensive nature of Comcast's
    businesses and the resulting significant level of non-cash depreciation and
    amortization expense, operating cash flow is frequently used as one of the
    bases for comparing businesses in Comcast's industries, although Comcast's
    measure of operating cash flow may not be comparable to similarly titled
    measures of other companies. Operating cash flow is the primary basis used
    by Comcast's management to measure the operating performance of Comcast's
    businesses. Operating cash flow does not purport to represent net income or
    net cash provided by operating activities, as those terms are defined under
    generally accepted accounting principles, and should not be considered as an
    alternative to those measurements as an indicator of our performance.

(5) Represents net cash provided by (used in) operating activities, financing
    activities and investing activities as presented in Comcast's consolidated
    statement of cash flows.

                                        35


     Comcast adopted SFAS No. 142 on January 1, 2002. Upon adoption of SFAS No.
142, Comcast no longer amortizes goodwill and other indefinite lived intangible
assets, which consist of cable and sports franchise rights. The following pro
forma financial information for the three months ended March 31, 2001, and for
the years ended December 31, 2001, 2000 and 1999, is presented as if SFAS No.
142 was adopted as of January 1, 1999 (amounts in millions, except per share
data):



                                                         THREE
                                                        MONTHS
                                                         ENDED        YEARS ENDED DECEMBER 31,
                                                       MARCH 31,   ------------------------------
                                                         2001        2001       2000       1999
                                                       ---------   --------   --------   --------
                                                                             
Net Income
  As reported........................................  $1,001.2    $  608.6   $2,021.5   $1,065.7
     Amortization of goodwill........................      72.6       334.8      303.5      128.5
     Amortization of equity method goodwill..........       4.3        15.0       15.2        4.4
     Amortization of franchise rights................     254.7     1,083.7      858.1      258.3
                                                       --------    --------   --------   --------
  As adjusted........................................  $1,332.8    $2,042.1   $3,198.3   $1,456.9
                                                       ========    ========   ========   ========
  Income before extraordinary items and cumulative
     effect of accounting change, as adjusted........  $  948.3    $1,659.1   $3,221.9   $1,507.9
                                                       ========    ========   ========   ========
Basic EPS
  As reported........................................  $   1.06    $   0.64   $   2.24   $   1.38
     Amortization of goodwill........................      0.08        0.35       0.34       0.17
     Amortization of equity method goodwill..........                  0.02       0.02       0.01
     Amortization of franchise rights................      0.27        1.14       0.96       0.35
                                                       --------    --------   --------   --------
  As adjusted........................................  $   1.41    $   2.15   $   3.56   $   1.91
                                                       ========    ========   ========   ========
Diluted EPS
  As reported........................................  $   1.04    $   0.63   $   2.13   $   1.30
     Amortization of goodwill........................      0.08        0.35       0.32       0.16
     Amortization of equity method goodwill..........                  0.02       0.02       0.01
     Amortization of franchise rights................      0.26        1.12       0.90       0.31
                                                       --------    --------   --------   --------
  As adjusted........................................  $   1.38    $   2.12   $   3.37   $   1.78
                                                       ========    ========   ========   ========


                                        36


                    SELECTED FINANCIAL DATA OF COMCAST CABLE

     The consolidated selected financial data of Comcast Cable for the three
months ended March 31, 2002 and 2001 were derived from the unaudited condensed
consolidated financial statements of Comcast Cable, and the consolidated
selected financial data of Comcast Cable for the years ended December 31, 2001,
2000, 1999, 1998 and 1997 were derived from the audited consolidated financial
statements of Comcast Cable.



                                    THREE MONTHS ENDED
                                        MARCH 31,                           YEAR ENDED DECEMBER 31,
                                 ------------------------   --------------------------------------------------------
                                     2002         2001       2001(1)     2000(1)     1999(1)      1998        1997
                                 ------------   ---------   ---------   ---------   ---------   ---------   --------
                                                                (DOLLARS IN MILLIONS)
                                                                                       
STATEMENT OF OPERATIONS DATA:
Revenues(2)....................   $ 1,429.6     $ 1,126.2   $ 5,002.8   $ 4,141.9   $ 2,906.5   $ 2,277.4   $2,073.0
Operating income (loss)........       300.0        (183.5)     (960.8)     (758.7)      (38.9)      110.3       83.3
Income (loss) from continuing
  operations before
  extraordinary items and
  cumulative effect of
  accounting change............       100.5         427.3      (360.9)      113.1      (247.5)      (97.2)    (112.1)
Extraordinary items............                                              (7.1)       (6.2)       (0.1)     (16.7)
Cumulative effect of accounting
  change.......................                     (61.3)      (61.3)
Net income (loss)..............       100.5         366.0      (422.2)      106.0      (253.7)      (97.3)    (128.8)
BALANCE SHEET DATA (AT PERIOD
  END):
Total assets...................   $28,728.1     $27,602.1   $28,450.0   $25,804.0   $ 9,967.8   $ 6,449.4   $6,057.8
Working capital................      (242.1)       (336.3)     (514.3)     (414.9)     (628.3)     (285.3)    (225.1)
Long-term debt.................     8,693.8       6,839.7     8,359.4     6,771.0     4,735.3     3,462.1    2,554.9
Stockholders' equity...........    13,073.1      12,592.7    12,980.2    12,057.2     1,808.8       173.0      267.1
SUPPLEMENTARY FINANCIAL DATA:
Operating income before
  depreciation and
  amortization(3)..............   $   585.9     $   483.2   $ 2,026.6   $ 1,624.0   $   978.8   $   784.4   $  709.4
Net cash provided by (used
  in)(4)
  Operating activities.........       434.0         383.1     1,441.1     1,290.1       781.9       701.1      549.5
  Financing activities.........        47.4         347.1     1,009.1       857.7       936.8       320.1      (37.4)
  Investing activities.........      (371.4)       (752.7)   (2,449.3)   (2,164.6)   (1,692.2)   (1,027.4)    (509.8)


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

(1) You should see "Management's Discussion and Analysis of Financial Condition
    and Results of Operations" in Comcast Cable's Annual Report on Form 10-K,
    incorporated by reference in this prospectus, for a discussion of events
    which affect the comparability of the information reflected in this
    financial data.

(2) Comcast Cable's consolidated statement of operations for the years ended
    December 31, 2001, 2000, 1999, 1998 and 1997 reflect franchise fees
    collected from cable subscribers as a reduction of the related franchise fee
    expense included within selling, general and administrative expenses. Upon
    adoption of EITF 01-14 "Income Statement Characterization of Reimbursements
    Received for 'Out-of-Pocket' Expenses Incurred," on January 1, 2002, Comcast
    Cable reclassified such amounts to revenues. The effect of the
    reclassification on the statement of operations for the years ended 2001,
    2000, 1999, 1998 and 1997 would be to increase revenues and selling, general
    and administrative expenses by $189.4 million, $149.9 million, $103.4
    million, $94.7 million and $72.8 million, respectively.

(3) Operating income before depreciation and amortization is commonly referred
    to in Comcast Cable's business as "operating cash flow." Operating cash flow
    is a measure of a company's ability to generate cash to service its
    obligations, including debt service obligations, and to finance capital and
    other expenditures. In part due to the capital intensive nature of Comcast
    Cable's business and the resulting significant level of non-cash
    depreciation and amortization expense, operating cash flow is frequently

                                        37


    used as one of the bases for comparing businesses in Comcast Cable's
    industry, although Comcast Cable's measure of operating cash flow may not be
    comparable to similarly titled measures of other companies. Operating cash
    flow is the primary basis used by Comcast Cable's management to measure the
    operating performance of Comcast Cable's business. Operating cash flow does
    not purport to represent net income or net cash provided by operating
    activities, as those terms are defined under generally accepted accounting
    principles, and should not be considered as an alternative to those
    measurements as an indicator of Comcast Cable's performance.

(4) This represents net cash provided by (used in) operating activities,
    financing activities and investing activities as presented in Comcast
    Cable's consolidated statement of cash flows.

     Comcast Cable adopted SFAS No. 142 on January 1, 2002. Upon adoption of
SFAS No. 142, Comcast Cable no longer amortizes goodwill and other indefinite
lived intangible assets, which consist of cable franchise rights. The following
pro forma financial information for the three months ended March 31, 2001, and
for the years ended December 31, 2001, 2000 and 1999, is presented as if SFAS
No. 142 was adopted as of January 1, 1999 (amounts in millions):



                                                        THREE
                                                       MONTHS
                                                        ENDED        YEARS ENDED DECEMBER 31,
                                                      MARCH 31,   ------------------------------
                                                        2001        2001        2000      1999
                                                      ---------   ---------   --------   -------
                                                                             
Net income (loss) --
  As reported.......................................   $366.0     $  (422.2)  $  106.0   $(253.7)
     Amortization of goodwill.......................     57.5         266.7      246.3      76.6
     Amortization of equity method goodwill.........      1.9           7.6        8.8
     Amortization of franchise rights...............    250.4       1,067.4      842.9     255.2
                                                       ------     ---------   --------   -------
  As adjusted.......................................   $675.8     $   919.5   $1,204.0   $  78.1
                                                       ======     =========   ========   =======
  Income before extraordinary items and cumulative
     effect of accounting change, as adjusted.......   $737.1     $   980.8   $1,211.1   $  84.3
                                                       ======     =========   ========   =======


                                        38


                      RATIOS OF EARNINGS TO FIXED CHARGES



                                           FOR THE THREE
                                           MONTHS ENDED       FOR THE YEARS ENDED DECEMBER 31,
                                             MARCH 31,      -------------------------------------
                                               2002         2001    2000    1999    1998    1997
                                          ---------------   -----   -----   -----   -----   -----
                                                                          
AT&T(a).................................        1.4x          (b)    1.5x    6.2x   14.9x   11.7x
AT&T BROADBAND GROUP(a).................         (c)          (c)     (c)     (c)     (c)     (c)
BROADBAND(d)............................          --           --      --      --      --      --
AT&T COMCAST(d).........................          --           --      --      --      --      --
COMCAST CABLE(e)........................       2.08x          (f)   1.79x     (f)     (f)     (f)
MEDIAONE(a).............................        8.5x         5.0x     (g)      --      --      --
TCI(a)..................................         (h)          (h)     (h)      --      --      --
COMCAST(i)..............................         (j)        2.21x   6.24x   3.78x   5.44x   1.29x


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

(a) For the purpose of calculating the ratio of earnings to fixed charges,
    earnings is calculated by adding fixed charges excluding capitalized
    interest to income from continuing operations before income taxes, and by
    adding distributions of less-than-fifty-percent-owned affiliates. By fixed
    charges we mean total interest, including capitalized interest, dividend
    requirements on preferred stock and interest on trust preferred securities
    and a portion of rentals, which we believe is representative of the interest
    factor of our rental expense, as applicable.

(b) AT&T's loss for the year ended December 31, 2001 was inadequate to cover
    fixed charges, dividend requirements on subsidiary preferred stock and
    interest on trust preferred securities in the amount of $1.6 billion.

(c) AT&T Broadband Group's loss for the three months ended March 31, 2002, the
    years ended December 31, 2001 and 2000, and the ten month period ended
    December 31, 1999 was inadequate to cover fixed charges, dividend
    requirements on subsidiary preferred stock and interest on trust preferred
    securities in the amount of $0.8 billion, $9.2 billion, $10.4 billion and
    $2.0 billion, respectively.

(d) From their respective dates of inception on December 14, 2001 and December
    7, 2001 through March 31, 2002, Broadband and AT&T Comcast have had no
    operations.

(e) For purposes of Comcast Cable's ratio of earnings to fixed charges, earnings
    consist of income (loss) from continuing operations before income taxes,
    extraordinary items, cumulative effect of accounting changes, minority
    interest, equity in net (income) losses of affiliates and fixed charges.
    Fixed charges consist of interest expense and interest expense on notes
    payable to affiliates.

(f) For the years ended December 31, 2001, 1999, 1998 and 1997, Comcast Cable's
    earnings, as defined above, were inadequate to cover fixed charges by $390.0
    million, $399.2 million, $149.6 million and $176.7 million, respectively.

(g) MediaOne's loss for the period ended December 31, 2000 was inadequate to
    cover fixed charges in the amount of $0.4 billion.

(h) TCI's loss for the three months ended March 31, 2002, the years ended
    December 31, 2001 and 2000, and the ten month period ended December 31, 1999
    was inadequate to cover fixed charges in the amount of $0.4 billion, $1.5
    billion, $1.9 billion and $1.3 billion, respectively.

(i) For purposes of Comcast's ratio of earnings to fixed charges, earnings
    consist of income (loss) from continuing operations before income taxes,
    extraordinary items, cumulative effect of accounting changes, minority
    interest, equity in net (income) losses of affiliates and fixed charges.
    Fixed charges consist of interest expense and capitalized interest.

(j) For the three months ended March 31, 2002 Comcast's earnings, as defined
    above, were inadequate to cover fixed charges by $37.2 million.

                                        39


                         PRO FORMA RATIO OF EARNINGS TO
                                 FIXED CHARGES



                                                          FOR THE              FOR THE
                                                     THREE MONTHS ENDED      YEAR ENDED
                                                       MARCH 31, 2002     DECEMBER 31, 2001
                                                     ------------------   -----------------
                                                                    
AT&T(k)............................................          3.6x                 5.2x
AT&T Comcast(l)....................................           (l)                  (l)
Broadband Group....................................           (c)                  (c)


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

(k) The pro forma AT&T ratio of earnings to fixed charges assumes the
    distribution of Liberty Media Group and AT&T Broadband Group and utilizes
    the same methodology as described in footnote (a). The detailed unaudited
    pro forma financial statements on which these calculations were based can be
    found beginning on page F-3 of this prospectus.

(l) For purposes of calculating the AT&T Comcast pro forma ratio of earnings to
    fixed charges, earnings consist of income (loss) before income taxes,
    extraordinary items, cumulative effect of accounting change, minority
    interest, equity in net (income) losses affiliates and fixed charges. Fixed
    charges consist of interest expense. For the three months ended March 31,
    2002 and for the year ended December 31, 2001, earnings, as defined above,
    were inadequate to cover fixed charges by $811.5 million and $5.998 billion,
    respectively.

                           MARKETS AND MARKET PRICES

     The following table sets forth for each series of Broadband Eligible Notes
and AT&T Eligible Notes, the exchanges upon which those notes are listed for
trading, the symbols under which those notes are listed, and the high and low
sale prices paid for the notes for the periods indicated. For current price
information, you should consult publicly available sources.



                                                              LAST SALE PRICE ON NYSE
                                                              -----------------------
                                                                 HIGH         LOW
                                                              ----------   ----------
                                                                     
5.625% NOTES DUE 2004 (NYSE: T M04)
     2000
       First Quarter........................................     94.500       93.000
       Second Quarter.......................................     95.000       92.625
       Third Quarter........................................     95.500       93.625
       Fourth Quarter.......................................     96.125       94.000
     2001
       First Quarter........................................     99.250       96.000
       Second Quarter.......................................    100.625       98.375
       Third Quarter........................................    102.250       99.625
       Fourth Quarter.......................................    102.875      100.250
     2002
       First Quarter........................................    102.375       99.750
       Second Quarter.......................................    100.625       93.250
       Third Quarter (through August 8, 2002)...............     95.500       91.875


                                        40




                                                              LAST SALE PRICE ON NYSE
                                                              -----------------------
                                                                 HIGH         LOW
                                                              ----------   ----------
                                                                     
6.75% NOTES DUE 2004 (NYSE: T A04)
     2000
       First Quarter........................................     98.750       96.750
       Second Quarter.......................................     99.125       98.875
       Third Quarter........................................     99.375       97.250
       Fourth Quarter.......................................     99.875       96.750
     2001
       First Quarter........................................    102.875       98.500
       Second Quarter.......................................    103.125      100.250
       Third Quarter........................................    103.875      102.000
       Fourth Quarter.......................................    104.875      102.125
     2002
       First Quarter........................................    103.875      101.125
       Second Quarter.......................................    102.750       95.000
       Third Quarter (through August 8, 2002)...............     99.000       94.750

7.00% NOTES DUE 2005 (NYSE: T M05)
     2000
       First Quarter........................................    100.000       97.625
       Second Quarter.......................................    101.000       95.125
       Third Quarter........................................    101.000       98.500
       Fourth Quarter.......................................    100.500       97.375
     2001
       First Quarter........................................    103.250       99.875
       Second Quarter.......................................    103.875      101.375
       Third Quarter........................................    105.000      101.750
       Fourth Quarter.......................................    105.375      102.125
     2002
       First Quarter........................................    105.000      101.000
       Second Quarter.......................................    102.750       93.625
       Third Quarter (through August 8, 2002)...............     97.250       87.125

7.50% NOTES DUE 2006 (NYSE: T 06)
     2000
       First Quarter........................................    101.750       99.500
       Second Quarter.......................................    102.000       98.375
       Third Quarter........................................    102.750      100.000
       Fourth Quarter.......................................    101.500       98.000
     2001
       First Quarter........................................    106.000      101.125
       Second Quarter.......................................    106.875      102.625
       Third Quarter........................................    107.000      102.500
       Fourth Quarter.......................................    108.625      103.250


                                        41




                                                              LAST SALE PRICE ON NYSE
                                                              -----------------------
                                                                 HIGH         LOW
                                                              ----------   ----------
                                                                     
     2002
       First Quarter........................................    106.125      102.000
       Second Quarter.......................................    104.875       93.250
       Third Quarter (through August 8, 2002)...............     98.500       86.000

7.75% NOTES DUE 2007 (NYSE: T 07)
     2000
       First Quarter........................................    103.000      101.000
       Second Quarter.......................................    103.000       99.000
       Third Quarter........................................    103.000      101.000
       Fourth Quarter.......................................    102.875       99.500
     2001
       First Quarter........................................    106.875      101.500
       Second Quarter.......................................    106.750      104.750
       Third Quarter........................................    108.250      105.125
       Fourth Quarter.......................................    108.125      104.250
     2002
       First Quarter........................................    107.000      103.000
       Second Quarter.......................................    105.500       92.625
       Third Quarter (through August 8, 2002)...............     98.875       86.750

6.00% NOTES DUE 2009 (NYSE: T 09)
     2000
       First Quarter........................................     90.875       88.250
       Second Quarter.......................................     91.250       85.500
       Third Quarter........................................     90.375       88.375
       Fourth Quarter.......................................     91.375       87.000
     2001
       First Quarter........................................     95.500       89.625
       Second Quarter.......................................     95.250       92.125
       Third Quarter........................................     98.000       93.875
       Fourth Quarter.......................................     99.000       94.000
     2002
       First Quarter........................................     97.000       92.625
       Second Quarter.......................................     94.000       76.625
       Third Quarter (through August 8, 2002)...............     82.500       73.000

8.125% DEBENTURES DUE JANUARY 15, 2022 (NYSE: T 22)
     2000
       First Quarter........................................    101.375       98.875
       Second Quarter.......................................    100.375       96.500
       Third Quarter........................................    100.625       98.375
       Fourth Quarter.......................................     99.875       93.000


                                        42




                                                              LAST SALE PRICE ON NYSE
                                                              -----------------------
                                                                 HIGH         LOW
                                                              ----------   ----------
                                                                     
     2001
       First Quarter........................................    102.375       98.750
       Second Quarter.......................................    102.250       98.875
       Third Quarter........................................    102.875      101.250
       Fourth Quarter.......................................    102.750       99.125
     2002
       First Quarter........................................    103.125       98.000
       Second Quarter.......................................    100.000       75.875
       Third Quarter (through August 8, 2002)...............     82.500       75.250

8.125% DEBENTURES DUE JULY 15, 2024 (NYSE: T 24)
     2000
       First Quarter........................................    101.500       98.125
       Second Quarter.......................................    101.125       95.875
       Third Quarter........................................    100.875       98.000
       Fourth Quarter.......................................     99.750       92.250
     2001
       First Quarter........................................    103.000       98.250
       Second Quarter.......................................    102.125       98.750
       Third Quarter........................................    103.500      101.125
       Fourth Quarter.......................................    103.500       99.625
     2002
       First Quarter........................................    103.000       98.250
       Second Quarter.......................................     99.625       75.250
       Third Quarter (through August 8, 2002)...............     81.000       74.625

8.35% DEBENTURES DUE 2025 (NYSE: T 25)
     2000
       First Quarter........................................    104.000      101.125
       Second Quarter.......................................    103.000       97.625
       Third Quarter........................................    102.500      100.375
       Fourth Quarter.......................................    102.125       95.125
     2001
       First Quarter........................................    104.500       99.500
       Second Quarter.......................................    103.750       98.750
       Third Quarter........................................    105.250      102.250
       Fourth Quarter.......................................    104.750      100.625
     2002
       First Quarter........................................    104.438      100.250
       Second Quarter.......................................    102.250       76.625
       Third Quarter (through August 8, 2002)...............     83.000       77.500


                                        43




                                                              LAST SALE PRICE ON NYSE
                                                              -----------------------
                                                                 HIGH         LOW
                                                              ----------   ----------
                                                                     
6.50% NOTES DUE 2029 (NYSE: T 29)
     2000
       First Quarter........................................     86.125       83.125
       Second Quarter.......................................     88.250       78.250
       Third Quarter........................................     84.625       81.375
       Fourth Quarter.......................................     82.875       78.000
     2001
       First Quarter........................................     89.375       81.000
       Second Quarter.......................................     87.500       81.875
       Third Quarter........................................     89.000       83.375
       Fourth Quarter.......................................     90.500       82.625
     2002
       First Quarter........................................     88.875       82.625
       Second Quarter.......................................     84.375       65.875
       Third Quarter (through August 8, 2002)...............     74.375       60.750

8.625% DEBENTURES DUE DECEMBER 1, 2031 (NYSE: T 31)
     2000
       First Quarter........................................    103.875      101.375
       Second Quarter.......................................    102.750       98.500
       Third Quarter........................................    102.875      100.750
       Fourth Quarter.......................................    102.125       96.125
     2001
       First Quarter........................................    105.250       99.000
       Second Quarter.......................................    104.250      100.125
       Third Quarter........................................    105.375      103.500
       Fourth Quarter.......................................    105.000      101.125
     2002
       First Quarter........................................    105.000      100.625
       Second Quarter.......................................    102.875       79.000
       Third Quarter (through August 8, 2002)...............     85.000       78.500


                                        44


                                  RISK FACTORS

     An investment in the Broadband Exchange Notes, New Broadband Notes or New
AT&T Notes involves a number of risks. You should consider the following
information about these risks, as well as the other information included in and
incorporated by reference into this prospectus. Among the information
incorporated by reference, in particular you should consider the risk factors
discussed in AT&T's and Comcast Cable's filings with the SEC.

RISKS RELATING TO THE EXCHANGE OFFER

  THE NEW BROADBAND NOTES WILL BE UNSECURED AND WILL RANK EQUALLY WITH THE OTHER
  UNSECURED OBLIGATIONS OF BROADBAND AND WILL BE EFFECTIVELY SUBORDINATED TO THE
  INDEBTEDNESS AND OTHER OBLIGATIONS OF ANY SUBSIDIARY OF BROADBAND THAT IS NOT
  A CABLE GUARANTOR, WHILE THE CABLE GUARANTEES OF THE NEW BROADBAND NOTES BY
  THE CABLE GUARANTORS AT&T COMCAST, COMCAST CABLE, MEDIAONE AND TCI WILL BE
  EFFECTIVELY SUBORDINATED TO THE INDEBTEDNESS AND OTHER OBLIGATIONS OF ANY
  SUBSIDIARIES OF THE CABLE GUARANTORS (OTHER THAN BROADBAND) THAT ARE NOT
  THEMSELVES CABLE GUARANTORS.

     The New Broadband Notes will be unsecured and will be effectively
subordinated to the indebtedness and other obligations, including trade
payables, of all subsidiaries of Broadband other than MediaOne and TCI, and of
all subsidiaries of AT&T Comcast other than Broadband that are not themselves
cable guarantors. "Effectively subordinated" means that in the event of
bankruptcy, liquidation or reorganization of an obligor, the assets of each
subsidiary of that obligor will be available to pay obligations of the obligor
only after all of the indebtedness and other obligations of that subsidiary have
been paid in full. The indenture for the New Broadband Notes does not prohibit
or limit the incurrence of additional indebtedness and other liabilities by
Broadband, any of the cable guarantors or any of their subsidiaries other than
certain limits on the incurrence of additional secured indebtedness by Broadband
or the cable guarantors. The incurrence of additional indebtedness and other
liabilities by Broadband, by the cable guarantors or by their subsidiaries, or
of additional indebtedness and other liabilities by AT&T that are assumed by
Broadband or the cable guarantors in connection with the AT&T Comcast
transaction, could adversely affect Broadband's or the cable guarantors' ability
to pay their obligations on the New Broadband Notes. In addition, prior to the
consummation of the AT&T Comcast transaction, Broadband will be a shell company.
If, as a result of the foregoing, Broadband is unable to pay its obligations
under the New Broadband Notes, it will be necessary for you to rely on the cable
guarantees to receive payment. See "Description of the New Broadband Notes and
the Cable Guarantees -- Cable Guarantees."

  AT&T WILL NOT BE AN OBLIGOR UNDER THE NEW BROADBAND NOTES, AND AT&T's
  CO-OBLIGATION UNDER THE BROADBAND EXCHANGE NOTES WILL BE UNSECURED AND WILL
  RANK EQUALLY WITH THE OTHER UNSECURED OBLIGATIONS OF AT&T, AND WILL BE
  EFFECTIVELY SUBORDINATED TO THE INDEBTEDNESS AND OTHER OBLIGATIONS OF AT&T'S
  SUBSIDIARIES OTHER THAN BROADBAND.

     AT&T will not be an obligor of the New Broadband Notes. Accordingly if the
AT&T Comcast transaction is consummated, and Broadband is thereafter unable to
pay its obligations under the New Broadband Notes, it will be necessary for you
to rely on the cable guarantees of AT&T Comcast, Comcast Cable, MediaOne and TCI
to receive payment. AT&T's obligation with respect to the Broadband Exchange
Notes will be effectively subordinated to all indebtedness and other
obligations, including trade payables, of AT&T's subsidiaries other than
Broadband. The supplemental indenture for the Broadband Exchange Notes will not
place any restrictions on the incurrence of additional indebtedness and other
liabilities by AT&T or any of its subsidiaries other than certain limits on the
incurrence of additional secured indebtedness by Broadband or the cable
guarantors. The incurrence of additional indebtedness and other liabilities by
AT&T and its subsidiaries could adversely affect AT&T's ability to pay its
obligations under the Broadband Exchange Notes. In addition, prior to the
consummation of the AT&T Comcast transaction, Broadband will be a shell company.
If, as a result of the foregoing, Broadband is unable to pay

                                        45


its obligations under the Broadband Exchange Notes, it will be necessary for you
to rely on AT&T's co-obligation.

  THE NEW AT&T NOTES WILL BE EFFECTIVELY SUBORDINATED TO THE INDEBTEDNESS AND
  OTHER OBLIGATIONS OF ALL SUBSIDIARIES OF AT&T.

     The New AT&T Notes will be effectively subordinated to the indebtedness and
other obligations, including trade payables, of all subsidiaries of AT&T. The
indenture for the New AT&T Notes will not place any restrictions on the
incurrence of additional indebtedness and other liabilities by AT&T or any of
its subsidiaries other than certain limits on secured indebtedness. The
incurrence of additional indebtedness and other liabilities by AT&T and its
subsidiaries could adversely affect AT&T's ability to pay its obligations on the
New AT&T Notes.

  NO PUBLIC TRADING MARKET EXISTS FOR THE BROADBAND EXCHANGE NOTES, THE NEW
  BROADBAND NOTES OR THE NEW AT&T NOTES.

     No established public trading market for the Broadband Exchange Notes, the
New Broadband Notes or the New AT&T Notes exists and there can be no assurance
that a liquid trading market for these notes will develop, that holders of these
notes will be able to sell those notes, the price at which the holders of these
notes would be able to sell those notes or whether a public trading market, if
it develops, will continue. If a public trading market were to develop, the
Broadband Exchange Notes, New Broadband Notes or the New AT&T Notes could trade
at prices higher or lower than their principal amount, depending on many
factors, including prevailing interest rates, the market for similar securities
and Broadband's, AT&T's or the cable guarantors' operating results. In addition,
some of the Broadband Eligible Notes and AT&T Eligible Notes are listed on
either or both of the New York Stock Exchange or the Luxembourg Stock Exchange,
and we do not intend to list the Broadband Exchange Notes or the New Broadband
Notes on those exchanges.

 IF YOU DO NOT TENDER YOUR BROADBAND ELIGIBLE NOTES OR AT&T ELIGIBLE NOTES, OR
 ANY OF YOUR BROADBAND ELIGIBLE NOTES ARE NOT ACCEPTED AS A RESULT OF PRORATION,
 THE ELIGIBLE NOTES YOU RETAIN ARE EXPECTED TO BECOME LESS LIQUID AS A RESULT OF
 THE EXCHANGE OFFER.

     Because we anticipate that most holders of the Broadband Eligible Notes and
AT&T Eligible Notes will elect to exchange their eligible notes, we expect that
the liquidity of the markets, if any, for eligible notes remaining after the
completion of the exchange offer may be substantially reduced. Any eligible
notes tendered and exchanged in the exchange offer will reduce the aggregate
principal amount of the eligible notes outstanding. After the exchange offer,
one or more series of Broadband Eligible Notes or AT&T Eligible Notes currently
listed on the NYSE may be subject to delisting.

 IF WE DO NOT RECEIVE CONSENT TO THE NOTE AMENDMENT FROM HOLDERS OF THE
 REQUISITE AMOUNT OF AT&T NOTES, AT&T COULD BE REQUIRED TO REFINANCE THAT
 INDEBTEDNESS OR WE MAY NOT BE ABLE TO COMPLETE THE AT&T COMCAST TRANSACTION,
 AND THE VALUE OF THE AT&T NOTES, NEW BROADBAND NOTES AND NEW AT&T NOTES COULD
 BE ADVERSELY AFFECTED.

     The AT&T Comcast transaction is conditioned on AT&T's obtaining the
consents, or deemed consents in the exchange offer, or having defeased,
purchased, retired or acquired debt in respect of series representing at least
90% in aggregate principal amount outstanding on December 19, 2001, which was
approximately $12.7 billion, of debt securities issued under the AT&T Indenture.
AT&T and Comcast could mutually agree to waive this condition with respect to
all or any portion of the AT&T Notes for which consents, or deemed consents, are
not obtained. If holders of the AT&T Notes were to assert successfully that
completing the AT&T Comcast transaction required Broadband or one of its
affiliates to assume AT&T's obligations under the AT&T Notes and that did not
occur, then AT&T could be required to refinance that indebtedness. Depending on
the amount of such indebtedness, market conditions and
                                        46


other factors, this could have a material adverse effect on AT&T, including its
liquidity, and the value of its securities, including its indebtedness. There
can be no assurance that AT&T would be able to obtain additional financing on
terms that would not materially adversely affect AT&T or the value of the AT&T
Notes, Broadband Exchange Notes or New AT&T Notes, or that AT&T's ability to
complete the AT&T Comcast transaction would not be materially adversely
affected.

 IF YOU DO NOT TENDER ELIGIBLE NOTES OR OTHERWISE CONSENT TO THE NOTE AMENDMENT
 AND THE NOTE AMENDMENT IS APPROVED WITH RESPECT TO THE SERIES OF NOTES YOU
 HOLD, THE TERMS OF YOUR NOTES WILL BE AMENDED EVEN THOUGH YOU WITHHELD YOUR
 CONSENT AND YOU WILL RECEIVE NO COMPENSATION FOR THIS NOTE AMENDMENT AND ANY
 RESULTING RISKS.

     The terms of your notes will be amended whether or not you tender if the
note amendment is consented to by the holders of at least 50% by principal
amount of the applicable series of notes. This means that you will hold notes
that will remain obligations of AT&T, but AT&T will no longer include its
broadband businesses and will consist of a smaller pool of less diversified
assets. You will not receive a consent payment or otherwise be compensated for
this change in the terms of your notes and any risks that result, and your notes
will not benefit from the cable guarantees.

RISKS RELATING TO THE AT&T COMCAST TRANSACTION

     In addition to the other information contained in or incorporated by
reference in this prospectus, you should carefully consider the following risk
factors in deciding whether to tender your Broadband Eligible Notes and/or AT&T
Eligible Notes in the exchange offer.

 AT&T COMCAST MAY FAIL TO REALIZE THE ANTICIPATED BENEFITS OF THE AT&T COMCAST
 TRANSACTION.

     The AT&T Comcast transaction will combine two companies that have
previously operated separately. Comcast and Broadband expect to realize cost
savings and other financial and operating benefits as a result of the AT&T
Comcast transaction. However, Comcast and Broadband cannot predict with
certainty when these cost savings and benefits will occur, or the extent to
which they actually will be achieved. There are a large number of systems that
must be integrated, including management information, purchasing, accounting and
finance, sales, billing, payroll and benefits and regulatory compliance. The
integration of Comcast and Broadband will also require substantial attention
from management. The diversion of management attention and any difficulties
associated with integrating Comcast and Broadband could have a material adverse
effect on AT&T Comcast's operating results.

 IF WE DO NOT COMPLETE THE AT&T COMCAST TRANSACTION, AT&T AND THE VALUE OF THE
 SECURITIES OFFERED MAY BE MATERIALLY ADVERSELY AFFECTED.

     Holders of AT&T Notes should consider that the nature and the value of the
securities they will receive in this exchange offer may be materially affected
by whether the AT&T Comcast transaction is completed. If the AT&T Comcast
transaction is not completed, the Broadband Exchange Notes will not be exchanged
for the New Broadband Notes, AT&T will become the sole obligor under the
Broadband Exchange Notes, with Broadband released as an obligor, and the cable
guarantees will not be provided, and the interest rates and maturity of the New
AT&T Notes will remain the same as the interest rates and maturity under the
AT&T Eligible Notes.

     The AT&T Comcast transaction is subject to a number of conditions,
including without limitation receipt of Internal Revenue Service rulings,
regulatory approvals and the consent of the holders in respect of series
representing at least 90% in aggregate principal amount of specified
indebtedness of AT&T as contemplated by this prospectus. We cannot assure you
that these conditions will be met or that the AT&T Comcast transaction will be
completed.

                                        47


     If the AT&T Comcast transaction is not completed, there could be a material
adverse effect on AT&T and the value of its securities, including its
indebtedness and any notes issued in this exchange offer. Also, one of the
anticipated benefits of the AT&T Comcast transaction is the anticipated
improvement in AT&T's debt levels. If the AT&T Comcast transaction is not
completed, AT&T's credit ratings could be materially adversely affected, which
could have a material adverse effect on AT&T and could have a material adverse
effect on the trading price of its securities, including its indebtedness.

 REGULATORY AGENCIES MAY IMPOSE CONDITIONS ON APPROVALS RELATING TO THE AT&T
 COMCAST TRANSACTION.

     Before the AT&T Comcast transaction may be completed, various approvals
must be obtained from, or notifications submitted to, among others, the
Antitrust Division of the U.S. Department of Justice, the Federal Trade
Commission, the Federal Communications Commission, the IRS and numerous state
and local authorities. These governmental entities may attempt to condition
their approval of the AT&T Comcast transaction, or of the transfer to AT&T
Comcast of licenses and other entitlements, on the imposition of certain
conditions that could have a material adverse effect on AT&T Comcast's operating
results.

     Comcast and AT&T have agreed to use their best efforts to obtain all
regulatory approvals that are necessary or advisable in connection with the AT&T
Comcast transaction. In addition, Comcast and AT&T have also agreed to take all
actions necessary to obtain termination of the applicable waiting periods under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976 relating to the AT&T
Comcast transaction and to obtain all consents of the FCC required to complete
the AT&T Comcast transaction.

 AT&T COMCAST WILL HAVE TO ABIDE BY RESTRICTIONS TO PRESERVE THE TAX TREATMENT
 OF THE AT&T COMCAST TRANSACTION.

     Because of the limitations imposed by Section 355(e) of the Internal
Revenue Code of 1986, as amended, or the "Code," and by the separation and
distribution agreement, as described under "Description of the AT&T Comcast
Transaction -- The Separation and Distribution Agreement," the ability of AT&T
Comcast and Broadband to engage in certain acquisitions, redeem stock or issue
equity securities will be limited for a period of 25 months following the
Broadband spin-off. See "Description of the AT&T Comcast Transaction -- The
Separation and Distribution Agreement -- Post-Spin-Off Transactions." These
restrictions may limit AT&T Comcast's ability to issue equity securities to
satisfy its financing needs or to acquire businesses or assets.

 AT&T COMCAST AND ITS SUBSIDIARIES MAY NOT BE ABLE TO OBTAIN THE NECESSARY
 FINANCING AT ALL OR ON TERMS ACCEPTABLE TO IT.

     To complete the AT&T Comcast transaction, Comcast estimates it will require
financing of $11 billion to $14 billion, assuming that the Microsoft
transaction, as described under "Description of the AT&T Comcast
Transaction -- The Exchange Agreement and Instrument of Admission," is
completed. This financing is expected to include (1) approximately $9 billion to
$10 billion to retire the intercompany debt balance which Broadband is expected
to owe AT&T upon completion of the AT&T Comcast transaction, although this
amount will be reduced if the exchange offer is completed, (2) approximately $1
billion to $2 billion to refinance certain Broadband debt that may be put for
redemption by investors or that will mature on or soon after the completion of
the AT&T Comcast transaction and (3) approximately $1 billion to $2 billion to
provide appropriate cash reserves to fund the operations and capital
expenditures of Broadband after completion of the AT&T Comcast transaction.

     On May 3, 2002, Broadband and AT&T Comcast entered into definitive credit
agreements with a syndicate of lenders, including JPMorgan Chase Bank, Citibank,
N.A., Bank of America, N.A., Merrill Lynch Capital Corporation and Morgan
Stanley Senior Funding, Inc. for an aggregate of approximately $12.8 billion in
new indebtedness in order to satisfy these financing requirements. See "Other
Indebtedness

                                        48


and the Cross-Guarantees -- Description of New Credit Facilities." Comcast may
also use other available sources of financing to fund its requirements,
including existing cash, cash equivalents and short term investments, amounts
available under Comcast subsidiaries' lines of credit, and the proceeds of sales
of Comcast's and Broadband's investments.

     Under the terms of the new credit agreements referred to above, the
obligations of the lenders to provide the financing upon completion of the AT&T
Comcast transaction are subject to a number of conditions, including the
condition that AT&T Comcast obtain an investment-grade credit rating. It is
possible that AT&T Comcast will not obtain an investment-grade credit rating or
that any of the other conditions to borrowing may not be satisfied. If the
conditions to borrowing are not satisfied, and if other sources of financing are
not sufficient or available, Comcast may not be able to obtain the necessary
financing. If Comcast fails to obtain the necessary financing or fails to obtain
it on acceptable terms, such failure could have a material adverse effect on the
business and financial condition of AT&T Comcast and its subsidiaries. If
Comcast is unable to obtain the necessary financing, it may be forced to
consider other alternatives to raise the necessary funds, including sales of
assets. There can be no assurance that Comcast will be able to obtain the
necessary financing at all or on terms acceptable to it.

 AT&T COMCAST AND ITS SUBSIDIARIES WILL HAVE SIGNIFICANT DEBT AND DEBT-LIKE
 OBLIGATIONS AND MAY NOT OBTAIN INVESTMENT-GRADE CREDIT RATINGS.

     After completion of the AT&T Comcast transaction, AT&T Comcast and its
subsidiaries will have a significant amount of debt and debt-like obligations.
Although this amount will be reduced by $5 billion if the Microsoft transaction,
as described under "Description of the AT&T Comcast Transaction -- The Exchange
Agreement and Instrument of Admission," is completed, the credit ratings of AT&T
Comcast and its subsidiaries after completion of the AT&T Comcast transaction
may be lower than the existing credit ratings of Comcast, AT&T's principal
broadband subsidiaries and their respective subsidiaries. In addition, it is
possible that neither AT&T Comcast nor any of its subsidiaries that issue debt
may obtain an investment-grade credit rating. The likelihood of lower or
non-investment-grade credit ratings for AT&T Comcast and its subsidiaries after
completion of the AT&T Comcast transaction will be increased if the Microsoft
transaction described in this prospectus, which is not a condition to the
completion of the AT&T Comcast transaction, is not completed. Differences in
credit ratings would affect the interest rates charged on financings, as well as
the amounts of indebtedness, types of financing structures and debt markets that
may be available to AT&T Comcast and its subsidiaries.

     In addition, the failure of certain subsidiaries of AT&T Comcast to
maintain certain credit ratings during the period that is 90 days before and
after the completion of the AT&T Comcast transaction could trigger put rights on
the part of holders of up to approximately $4.8 billion of debt as of the date
of this prospectus, which would require AT&T Comcast to obtain additional
financing. Accordingly, a downgrade in the existing credit ratings of Comcast,
AT&T's principal broadband subsidiaries and their respective subsidiaries or the
failure of AT&T Comcast and its subsidiaries to obtain investment-grade credit
ratings, in each case upon completion of the AT&T Comcast transaction, could
have a material adverse effect on AT&T Comcast's operating results and on the
value of AT&T Comcast common stock.

 ATYPICAL GOVERNANCE ARRANGEMENTS MAY MAKE IT MORE DIFFICULT FOR AT&T COMCAST
 SHAREHOLDERS TO ACT.

     In connection with the AT&T Comcast transaction, AT&T Comcast will
implement a number of governance arrangements that are atypical for a large,
publicly held corporation. A number of these arrangements relate to the election
of the AT&T Comcast Board. The term of the AT&T Comcast Board upon completion of
the AT&T Comcast transaction will not expire until the 2004 annual meeting of
AT&T Comcast shareholders. Since AT&T Comcast shareholders will not have the
right to call special meetings of shareholders or act by written consent and
AT&T Comcast directors will be able to be removed only for cause, AT&T Comcast
shareholders will not be able to replace the initial AT&T Comcast Board members
prior to that meeting. After the 2004 annual meeting of AT&T Comcast

                                        49


shareholders, AT&T Comcast directors will be elected annually. Even then,
however, it will be difficult for an AT&T Comcast shareholder, other than Sural
LLC or a successor entity controlled by Brian L. Roberts, to elect a slate of
directors of its own choosing to the AT&T Comcast Board. Brian L. Roberts,
through his control of Sural LLC or a successor entity, will hold a 33 1/3%
nondilutable voting interest in AT&T Comcast stock. In addition, AT&T Comcast
will adopt a shareholder rights plan upon completion of the AT&T Comcast
transaction that will prevent any holder of AT&T Comcast stock, other than any
holder of AT&T Comcast Class B common stock or any of such holder's affiliates,
from acquiring AT&T Comcast stock representing more than 10% of AT&T Comcast's
voting power without the approval of the AT&T Comcast Board.

     In addition to the governance arrangements relating to the AT&T Comcast
Board, Comcast and AT&T have agreed to a number of governance arrangements which
will make it difficult to replace the senior management of AT&T Comcast. Upon
completion of the AT&T Comcast transaction, C. Michael Armstrong, Chairman of
the Board and CEO of AT&T, will be the Chairman of the Board of AT&T Comcast and
Brian L. Roberts, President of Comcast, will be the CEO and President of AT&T
Comcast. After the 2005 annual meeting of AT&T Comcast shareholders, Brian L.
Roberts will also be the Chairman of the Board of AT&T Comcast. Prior to the
sixth anniversary of the 2004 annual meeting of AT&T Comcast shareholders,
unless Brian L. Roberts ceases to be Chairman of the Board or CEO of AT&T
Comcast prior to such time, the Chairman of the Board and CEO of AT&T Comcast
will be able to be removed only with the approval of at least 75% of the entire
AT&T Comcast Board. This supermajority removal requirement will make it unlikely
that C. Michael Armstrong or Brian L. Roberts will be removed from their
management positions.

  AT&T COMCAST'S PRINCIPAL SHAREHOLDER WILL HAVE CONSIDERABLE INFLUENCE OVER THE
  OPERATIONS OF AT&T COMCAST.

     After completion of the AT&T Comcast transaction, Brian L. Roberts will
have significant control over the operations of AT&T Comcast through his control
of Sural LLC, which as a result of its ownership of all outstanding shares of
AT&T Comcast Class B common stock will hold a nondilutable 33 1/3% of the
combined voting power of AT&T Comcast stock and will also have separate approval
rights over certain material transactions involving AT&T Comcast. In addition,
upon completion of the AT&T Comcast transaction, Brian L. Roberts will be the
CEO and President of AT&T Comcast and will, together with the Chairman of the
Board of AT&T Comcast, comprise the Office of the Chairman, AT&T Comcast's
principal executive deliberative body.

  THE HISTORICAL FINANCIAL INFORMATION OF AT&T BROADBAND GROUP AFTER THE
  BROADBAND SPIN-OFF MAY NOT BE REPRESENTATIVE OF ITS RESULTS WITHOUT THE OTHER
  AT&T BUSINESSES AND THEREFORE IS NOT A RELIABLE INDICATOR OF ITS HISTORICAL OR
  FUTURE RESULTS.

     AT&T Broadband Group is currently a fully integrated business unit of AT&T,
and as a result the financial information of AT&T Broadband Group included in
this prospectus has been derived from the consolidated financial statements and
accounting records of AT&T and reflects certain assumptions and allocations. The
financial position, results of operations and cash flows of AT&T Broadband Group
without the other AT&T businesses could differ from those that would have
resulted had AT&T Broadband Group operated with the other AT&T businesses.

  IF THE TRANSACTION WITH MICROSOFT CORPORATION IS NOT COMPLETED, AT&T COMCAST
  MAY HAVE SIGNIFICANT ADDITIONAL DEBT AND MORE STRINGENT LIMITATIONS ON ITS
  ABILITY TO ISSUE EQUITY.

     The AT&T Comcast transaction is not conditioned on completion of the
transaction with Microsoft Corporation described in this prospectus under
"Description of the AT&T Comcast Transaction -- The Exchange Agreement and
Instrument of Admission -- The QUIPS Exchange." If the Microsoft transaction is
not completed, as described under "Description of the AT&T Comcast
Transaction -- The

                                        50


Merger Agreement -- Covenants -- QUIPS Failure," Broadband will either assume
AT&T's obligations to Microsoft under the trust preferred securities, or QUIPS,
issued by AT&T Finance Trust I or pay AT&T an amount in cash equal to the fair
market value of the QUIPS and indemnify AT&T for certain possible related
liabilities. Absent selling assets or stock to pay down debt and depending on
which outcome occurs, AT&T Comcast and its subsidiaries would have up to an
additional $5 billion of debt upon completion of the AT&T Comcast transaction
and the risks detailed in two of the risk factors described in this
prospectus -- that AT&T Comcast and its subsidiaries may not be able to obtain
the necessary financing at all or on terms acceptable to it and that AT&T
Comcast and its subsidiaries will have significant debt and debt-like
obligations and may not obtain investment-grade credit ratings -- would be
significantly heightened. In addition, if the Microsoft transaction is not
completed, the limitations imposed by Section 355(e) of the Code on AT&T
Comcast's and Broadband's ability to issue equity that are described above would
be expected to be more stringent.

RISKS FOR AT&T RELATING TO THE AT&T COMCAST TRANSACTION

     Holders of AT&T Notes should also consider the following risk factors in
deciding whether to tender eligible notes.

  THE BROADBAND SPIN-OFF MAY MATERIALLY ADVERSELY IMPACT AT&T'S COMPETITIVE
  POSITION.

     If the AT&T Comcast transaction is completed, AT&T and AT&T Comcast will
compete in some markets. Competition between AT&T's and AT&T Comcast's business
units in overlapping markets, including consumer markets where cable, telephone
and digital subscriber lines, or DSL, solutions may be available at the same
time, could result in material downward price pressure on product or service
offerings which could materially adversely impact the companies. In addition,
any incremental costs associated with operating as separate entities may
materially adversely affect the different businesses and companies and their
competitive positions. Synergies resulting from cooperation and joint ownership
among AT&T's businesses may be lost due to the proposed transactions.

  AT&T WILL HAVE TO ABIDE BY POTENTIALLY SIGNIFICANT RESTRICTIONS TO PRESERVE
  THE TAX TREATMENT OF THE AT&T COMCAST TRANSACTION.

     Because of the restrictions imposed by Section 355(e) of the Code and by
the separation and distribution agreement, the ability of AT&T to engage in
certain acquisitions, redeem stock or issue equity securities will be limited
for a period of 25 months following the Broadband spin-off. These restrictions
may limit AT&T's ability to issue equity securities to satisfy its financing
needs or to acquire businesses or assets.

  IF THE AT&T COMCAST TRANSACTION IS COMPLETED, AT&T WILL NEED TO OBTAIN
  FINANCING ON A STAND-ALONE BASIS WHICH MAY INVOLVE COSTS.

     Following the AT&T Comcast transaction, AT&T will have to raise financing
with the support of a reduced pool of less diversified assets, and AT&T may not
be able to secure adequate debt or equity financing on desirable terms. The cost
to AT&T of financing without AT&T Broadband Group may be materially higher than
the cost of financing with AT&T Broadband Group as part of AT&T.

     On May 29, 2002, Moody's Investors Service lowered its ratings of long-term
debt issued or guaranteed by AT&T to Baa2 from A3. Moody's also confirmed AT&T's
short-term rating as Prime-2. Moody's ratings outlook for AT&T remains negative
but AT&T is not currently on review for any additional downgrade by Moody's. On
June 3, 2002, Fitch Ratings also downgraded AT&T's long-term debt rating to BBB+
from A-, with the rating remaining on Rating Watch Negative pending completion
of the AT&T Comcast transaction. AT&T's long-term debt ratings remain BBB+ and
on CreditWatch with negative implications by Standard & Poor's Ratings Group. A
recent press release from Standard &

                                        51


Poor's confirmed that following the AT&T Comcast transaction Standard & Poor's
expects AT&T to have a stable outlook. Further ratings actions could occur at
any time.

     The credit rating of AT&T following the AT&T Comcast transaction may be
different from the current ratings of AT&T and different from what it would be
without the AT&T Comcast transaction. Differences in credit ratings affect the
interest rate charged on financings, as well as the amounts of indebtedness,
types of financing structures and debt markets that may be available to AT&T
following the AT&T Comcast transaction. AT&T may not be able to raise the
capital it requires on favorable terms following the AT&T Comcast transaction.

  THE HISTORICAL FINANCIAL INFORMATION OF AT&T EXCLUDING AT&T BROADBAND GROUP
  MAY NOT BE REPRESENTATIVE OF ITS RESULTS WITHOUT AT&T BROADBAND GROUP AND
  THEREFORE IS NOT A RELIABLE INDICATOR OF ITS HISTORICAL OR FUTURE RESULTS.

     AT&T currently includes AT&T Broadband Group as a fully integrated business
unit of AT&T. Consequently, the financial information of AT&T without AT&T
Broadband Group included in this prospectus has been derived from the
consolidated financial statements and accounting records of AT&T and reflects
certain assumptions and allocations. The financial position, results of
operations and cash flows of AT&T without AT&T Broadband Group could materially
differ from those that would have resulted had AT&T operated without AT&T
Broadband Group or as an entity independent of AT&T Broadband Group.

  AT&T COULD INCUR MATERIAL U.S. FEDERAL INCOME TAX LIABILITIES IN CONNECTION
  WITH THE AT&T COMCAST TRANSACTION.

     AT&T may incur material U.S. federal income tax liabilities as a result of
certain issuances of shares or change of control transactions with respect to
AT&T Comcast, Liberty Media Corporation or AT&T Wireless Services, Inc. Under
Section 355(e) of the Code, a split-off/spin-off that is otherwise tax free may
be taxable to the distributing company (i.e., AT&T) if, as a result of certain
transactions occurring generally within a two-year period after the
split-off/spin-off, non-historic shareholders acquire 50% or more of the
distributing company or the spun-off company. It is possible that transactions
with respect to AT&T could cause all three split-offs or spin-offs to be taxable
to AT&T.

     Under separate intercompany agreements between AT&T and each of Liberty
Media Corporation, AT&T Wireless and Broadband, AT&T generally will be entitled
to indemnification from the spun-off company for any tax liability that results
from the split-off or spin-off failing to qualify as a tax-free transaction,
unless, in the case of AT&T Wireless and AT&T Comcast, the tax liability was
caused by post split-off or spin-off transactions with respect to the stock or
assets of AT&T. AT&T Comcast's indemnification obligation is generally limited
to 50% of any tax liability that results from the split-off or spin-off failing
to qualify as tax free, unless such liability was caused by a post split-off or
spin-off transaction with respect to the stock or assets of AT&T Comcast.

     If one or more of the split-offs or spin-offs were taxable to AT&T and AT&T
were not indemnified for this tax liability, the liability could have a material
adverse effect on AT&T. To the extent AT&T is entitled to an indemnity with
respect to the tax liability, AT&T would be required to collect the claim on an
unsecured basis. In addition, there may be other tax costs incurred as a result
of the Broadband spin-off. If incurred, these costs could be significant to AT&T
and Broadband.

                                        52


RISKS RELATING TO THE BUSINESS OF AT&T COMCAST

  ACTUAL FINANCIAL POSITION AND RESULTS OF OPERATIONS OF AT&T COMCAST MAY DIFFER
  SIGNIFICANTLY AND ADVERSELY FROM THE PRO FORMA AMOUNTS REFLECTED IN THIS
  PROSPECTUS.

     Assuming completion of the AT&T Comcast transaction, the actual financial
position and results of operations of AT&T Comcast may differ, perhaps
significantly and adversely, from the pro forma amounts reflected in the AT&T
Comcast Corporation Unaudited Pro Forma Combined Condensed Financial Statements
included in this prospectus due to a variety of factors, including access to
additional information, changes in value not currently identified and changes in
operating results between the date of the pro forma financial data and the date
on which the AT&T Comcast transaction is completed.

     In addition, in many cases each of Comcast and AT&T Broadband Group has
long-term agreements, in some cases with the same counterparties, for the same
services and products, such as programming, billing services and interactive
programming guides. Comcast and AT&T Broadband Group cannot disclose the terms
of many of these contracts to each other because of confidentiality provisions
included in these contracts or other legal restrictions. For this and other
reasons, it is not clear, in the case of certain services and products, whether
after completion of the AT&T Comcast transaction each of the existing agreements
will continue to apply only to the operations to which they have historically
applied or whether instead one of the two contracts will apply to the operations
of both companies and the other contract will be terminated. Since these
contracts often differ significantly in their terms, resolution of these
contractual issues could cause the actual financial position and results of
operations of AT&T Comcast to differ significantly and adversely from the pro
forma amounts reflected in the AT&T Comcast Corporation Unaudited Pro Forma
Combined Condensed Financial Statements included in this prospectus.

  PROGRAMMING COSTS ARE INCREASING AND AT&T COMCAST MAY NOT HAVE THE ABILITY TO
  PASS THESE INCREASES ON TO ITS CUSTOMERS, WHICH WOULD MATERIALLY ADVERSELY
  AFFECT ITS CASH FLOW AND OPERATING MARGINS.

     Programming costs are expected to be AT&T Comcast's largest single expense
item. In recent years, the cable and satellite video industries have experienced
a rapid increase in the cost of programming, particularly sports programming.
This increase is expected to continue, and AT&T Comcast may not be able to pass
programming cost increases on to its customers. The inability to pass these
programming cost increases on to its customers would have a material adverse
impact on its cash flow and operating margins. In addition, as AT&T Comcast
upgrades the channel capacity of its systems and adds programming to its basic,
expanded basic and digital programming tiers, AT&T Comcast may face increased
programming costs, which, in conjunction with the additional market constraints
on its ability to pass programming costs on to its customers, may reduce
operating margins.

     AT&T Comcast also will be subject to increasing financial and other demands
by broadcasters to obtain the required consent for the transmission of broadcast
programming to its subscribers. Comcast and AT&T cannot predict the financial
impact of these negotiations or the effect on AT&T Comcast's subscribers should
AT&T Comcast be required to stop offering this programming.

  AT&T COMCAST WILL FACE A WIDE RANGE OF COMPETITION IN AREAS SERVED BY ITS
  CABLE SYSTEMS, WHICH COULD ADVERSELY AFFECT ITS FUTURE RESULTS OF OPERATIONS.

     AT&T Comcast's cable communications systems will compete with a number of
different sources which provide news, information and entertainment programming
to consumers. AT&T Comcast will compete directly with program distributors and
other companies that use satellites, build competing cable systems in the same
communities AT&T Comcast will serve or otherwise provide programming and other
communications services to AT&T Comcast's subscribers and potential subscribers.
In addition, federal law now allows local telephone companies to provide
directly to subscribers a wide variety of services that are competitive with
cable communications services. Some local telephone companies provide, or have
announced plans to provide, video services within and outside their telephone
service areas through a
                                        53


variety of methods, including broadband cable networks. Additionally, AT&T
Comcast will be subject to competition from telecommunications providers and
internet service providers, or ISPs, in connection with offerings of new and
advanced services, including telecommunications and Internet services. This
competition may materially adversely affect AT&T Comcast's business and
operations in the future.

  AT&T COMCAST WILL HAVE SUBSTANTIAL CAPITAL REQUIREMENTS WHICH MAY REQUIRE IT
  TO OBTAIN ADDITIONAL FINANCING THAT MAY BE DIFFICULT TO OBTAIN.

     After completion of the AT&T Comcast transaction, AT&T and Comcast expect
that for some period of time AT&T Comcast's capital expenditures will exceed,
perhaps significantly, its net cash provided by operating activities. This may
require AT&T Comcast to obtain additional financing. AT&T Comcast may not be
able to obtain or to obtain on favorable terms the capital necessary to fund the
substantial capital expenditures described above that are required by its
strategy and business plan. A failure to obtain necessary capital or to obtain
necessary capital on favorable terms could have a material adverse effect on
AT&T Comcast and result in the delay, change or abandonment of AT&T Comcast's
development or expansion plans.

     Historically, AT&T Broadband Group's capital expenditures have
significantly exceeded its net cash provided by operations. For the year ended
December 31, 2001 and the three months ended March 31, 2002, AT&T Broadband
Group's capital expenditures exceeded its net cash provided by operations by
$3.5 billion and $0.56 billion, respectively. In addition, for the year ended
December 31, 2001, Comcast's capital expenditures exceeded its net cash provided
by operating activities by $952 million. See "Ratios of Earnings to Fixed
Charges" on page 39.

     Comcast and AT&T anticipate that AT&T Comcast will upgrade a significant
portion of its broadband systems over the coming years and make other capital
investments, including with respect to its advanced services. In 2002, Comcast
and AT&T anticipate that Broadband and Comcast's cable division will incur
capital expenditures of approximately $4.3 billion and $1.3 billion,
respectively. AT&T Comcast is expected to incur substantial capital expenditures
in the years following completion of the AT&T Comcast transaction. However, the
actual amount of the funds required for capital expenditures cannot be
determined with precision at this time. Capital expenditures are expected to be
used to acquire equipment, such as set-top boxes, cable modems and telephone
equipment, and to pay for installation costs for additional video and advanced
services customers. In addition, capital is expected to be used to upgrade and
rebuild network systems to expand bandwidth capacity and add two-way capability
so that it may offer advanced services. There can be no assurance that these
amounts will be sufficient to accomplish the planned system upgrades, equipment
acquisitions and expansion.

     Comcast and AT&T Broadband Group also have commitments under certain of
their franchise agreements with local franchising authorities to upgrade and
rebuild certain network systems. These commitments may require capital
expenditures in order to avoid default and/or penalties.

  ENTITIES THAT WILL BE INCLUDED IN AT&T COMCAST ARE SUBJECT TO LONG-TERM
  EXCLUSIVE AGREEMENTS THAT MAY LIMIT THEIR FUTURE OPERATING FLEXIBILITY AND
  MATERIALLY ADVERSELY AFFECT AT&T COMCAST'S FINANCIAL RESULTS.

     Some of the entities currently attributed to AT&T Broadband Group, and
which will be subsidiaries of AT&T Comcast, are subject to long-term agreements
relating to significant aspects of AT&T Broadband Group's operations, including
long-term agreements for video programming, audio programming, electronic
program guides, billing and other services. For example, AT&T Broadband Group's
predecessor, TCI, and AT&T Broadband Group's subsidiary, Satellite Services,
Inc., are parties to an affiliation term sheet with Starz Encore Group, an
affiliate of Liberty Media, which extends to 2022 and provides for a fixed price
payment, subject to adjustment for various factors including inflation, and may
require Broadband to pay two-thirds of Starz Encore Group's programming costs
above levels designated in the term sheet. Satellite Services, Inc. also entered
into a ten-year agreement with TV Guide in January 1999 for interactive program
guide services, which designates TV Guide Interactive as the
                                        54


interactive programming guide for Broadband systems. Furthermore, a subsidiary
of Broadband is party to an agreement that does not expire until December 31,
2013 under which it purchases certain billing services from an unaffiliated
third party. The price, terms and conditions of the Starz Encore term sheet, the
TV Guide agreement and the billing agreement may not reflect the current market
and if one or more of these arrangements continue to apply to Broadband after
completion of the AT&T Comcast transaction, they may materially adversely impact
the financial performance of AT&T Comcast.

     By letter dated May 29, 2001, AT&T Broadband Group disputed the
enforceability of the excess programming pass through provisions of the Starz
Encore term sheet and questioned the validity of the term sheet as a whole. AT&T
Broadband Group also has raised certain issues concerning the uncertainty of the
provisions of the term sheet and the contractual interpretation and application
of certain of its provisions to, among other things, the acquisition and
disposition of cable systems. In July 2001, Starz Encore Group filed a lawsuit
seeking payment of the 2001 excess programming costs and a declaration that the
term sheet is a binding and enforceable contract. In October 2001, AT&T
Broadband Group and Starz Encore Group agreed to stay the litigation until
August 31, 2002 to allow the parties time to continue negotiations toward a
potential business resolution of this dispute. The court granted the stay on
October 30, 2001. The terms of the stay order allow either party to petition the
court to lift the stay after April 30, 2002 and to proceed with the litigation.

     On March 13, 2002, AT&T Broadband Group informed CSG Systems, Inc. that
AT&T Broadband Group was considering the initiation of an arbitration against
CSG relating to a Master Subscriber Management System Agreement that the two
companies entered into in 1997. Pursuant to the Master Agreement, CSG provides
billing support to AT&T Broadband Group. On May 10, 2002, AT&T Broadband Group
filed a demand for arbitration against CSG before the American Arbitration
Association. On May 31, 2002, CSG answered AT&T Broadband Group's arbitration
demand and asserted various counterclaims. On June 21, 2002, CSG filed a lawsuit
against Comcast Corporation in federal court located in Denver, Colorado
asserting claims related to the Master Agreement and the pending arbitration. In
the event that this process results in the termination of the Master Agreement,
AT&T Broadband Group may incur significant costs in connection with its
replacement of these customer care and billing services and may experience
temporary disruptions to its operations.

  AT&T COMCAST WILL BE SUBJECT TO REGULATION BY FEDERAL, STATE AND LOCAL
  GOVERNMENTS WHICH MAY IMPOSE COSTS AND RESTRICTIONS.

     The federal, state and local governments extensively regulate the cable
communications industry. Comcast and AT&T expect that court actions and
regulatory proceedings will refine the rights and obligations of various
parties, including the government, under the Communications Act of 1934, as
amended. The results of these judicial and administrative proceedings may
materially affect AT&T Comcast's business operations. Local authorities grant
Comcast and Broadband franchises that permit them to operate their cable
systems. AT&T Comcast will have to renew or renegotiate these franchises from
time to time. Local franchising authorities often demand concessions or other
commitments as a condition to renewal or transfer, which concessions or other
commitments could be costly to obtain.

  AT&T COMCAST WILL BE SUBJECT TO ADDITIONAL REGULATORY BURDENS IN CONNECTION
  WITH THE PROVISION OF TELECOMMUNICATIONS SERVICES, WHICH COULD CAUSE IT TO
  INCUR ADDITIONAL COSTS.

     AT&T Comcast will be subject to risks associated with the regulation of its
telecommunications services by the FCC and state public utilities commissions,
or PUCs. Telecommunications companies, including companies that have the ability
to offer telephone services over the Internet, generally are subject to
significant regulation. This regulation could materially adversely affect AT&T
Comcast's business operations.

                                        55


  AT&T COMCAST'S COMPETITION MAY INCREASE BECAUSE OF TECHNOLOGICAL ADVANCES AND
  NEW REGULATORY REQUIREMENTS, WHICH COULD ADVERSELY AFFECT ITS FUTURE RESULTS
  OF OPERATIONS.

     Numerous companies, including telephone companies, have introduced Digital
Subscriber Line technology, known as DSL, which provides Internet access to
subscribers at data transmission speeds greater than that of modems over
conventional telephone lines. Comcast and AT&T expect other advances in
communications technology, as well as changes in the marketplace, to occur in
the future. Other new technologies and services may develop and may compete with
services that cable communications systems offer. The success of these ongoing
and future developments could have a negative impact on AT&T Comcast's business
operations.

     In addition, over the past several years, a number of companies, including
telephone companies and ISPs, have asked local, state, and federal governmental
authorities to mandate that cable communications operators provide capacity on
their broadband infrastructure so that these and others may deliver Internet and
other interactive television services directly to customers over these cable
facilities. Some cable operators have initiated litigation challenging municipal
efforts to unilaterally impose so-called "open access" requirements. The few
court decisions dealing with this issue have been inconsistent. Moreover, in
connection with their review of the AOL-Time Warner merger, the FCC and the
Federal Trade Commission imposed "open access," technical performance and other
requirements related to the merged company's Internet and Instant Messaging
platforms. The FCC recently concluded in a regulatory proceeding initiated by it
to consider "open access" and related regulatory issues that cable modem
service, as it is currently offered, is properly classified as an interstate
information service that is not subject to common carrier regulation but remains
subject to the FCC's jurisdiction. The FCC is seeking public comment regarding
the regulatory implications of this conclusion, including, among other things,
whether it is appropriate to impose "open access" requirements on these services
or whether consumers will be able to obtain a choice of ISPs without government
intervention.

     A number of cable operators have reached agreements to provide unaffiliated
ISPs access to their cable systems in the absence of regulatory requirements.
Recently, Comcast reached an "access" agreement with United Online and Broadband
reached an "access" agreement with each of EarthLink, Internet Central and
Connected Data Systems. In addition, under the terms of the exchange agreement
that Comcast and AT&T have executed with Microsoft, upon completion of the
Microsoft transaction described in this prospectus and the AT&T Comcast
transaction, AT&T Comcast will be required, with respect to each such agreement
with another ISP, to offer Microsoft an "access" agreement on terms no less
favorable than those provided to the other ISP with respect to the specific
cable systems covered under the agreement with the other ISP. Notwithstanding
the foregoing, there can be no assurance that regulatory authorities will not
impose "open access" or similar requirements on AT&T Comcast as part of the
regulatory review of the AT&T Comcast transaction or as part of an industry-wide
requirement. Such requirements could have a negative impact on AT&T Comcast's
business operations.

  AT&T COMCAST, THROUGH BROADBAND, WILL HAVE SUBSTANTIAL ECONOMIC INTERESTS IN
  JOINT VENTURES IN WHICH IT WILL HAVE LIMITED MANAGEMENT RIGHTS.

     AT&T Broadband Group is a partner in several large joint ventures, such as
Time Warner Entertainment, Texas Cable Partners and Kansas City Cable Partners,
in which it has a substantial economic interest but does not have substantial
control with regard to management policies or the selection of management. These
joint ventures may be managed in a manner contrary to the best interests of AT&T
Comcast, and the value of AT&T Comcast's investment, through Broadband, in these
joint ventures may be affected by management policies that are determined
without input from AT&T Comcast or over the objections of AT&T Comcast. AT&T
Broadband Group has cable partnerships with each of AOL Time Warner, Insight
Communications, Adelphia Communications, Midcontinent and US Cable. Materially
adverse financial or other developments with respect to a partner could
adversely impact the applicable partnership.

                                        56


     On June 25, 2002, three cable partnerships between subsidiaries of AT&T and
subsidiaries of Adelphia Communications Corporation commenced bankruptcy
proceedings by the filing of chapter 11 petitions in the Bankruptcy Court for
the Southern District of New York at about the same time that other Adelphia
entities filed for bankruptcy. These partnerships are: Century-TCI California
Communications, L.P. (in which AT&T Broadband Group holds a 25% interest through
a wholly-owned subsidiary and which as of December 31, 2001 had an aggregate of
approximately 775,000 subscribers in the greater Los Angeles, California area),
Parnassos Communications, L.P. (in which AT&T Broadband Group holds a 33.33%
interest through a wholly owned subsidiary) and Western NY Cablevision, L.P. (in
which AT&T Broadband Group holds a 33.33% interest through a wholly-owned
subsidiary and which as of December 31, 2001 had, together with Parnassos
Communications, L.P., an aggregate of approximately 470,000 subscribers in
Buffalo, New York and the surrounding areas). AT&T cannot predict what the
outcome of these proceedings will be on any of the partnerships and the
proceedings may have a material adverse impact on the partnerships.

     AT&T Broadband Group recorded an impairment charge through net losses
related to equity investments of $143 million, net of taxes of $90 million, in
connection with the bankruptcy proceedings of the Adelphia partnerships.

  BROADBAND FACES RISKS ARISING FROM ITS AND AT&T'S RELATIONSHIP WITH AT HOME
  CORPORATION.

     Through a subsidiary, AT&T owns approximately 23% of the outstanding common
stock and 74% of the voting power of the outstanding common stock of At Home
Corporation, which filed for bankruptcy protection on September 28, 2001. Until
October 1, 2001, AT&T appointed a majority of At Home's directors, and it now
appoints none.

     Since September 28, 2001, some creditors of At Home have threatened to
commence litigation against AT&T relating to the conduct of AT&T or its
designees on the At Home Board in connection with At Home's declaration of
bankruptcy and At Home's subsequent aborted efforts to dispose of some of its
businesses or assets in a bankruptcy court-supervised auction, as well as in
connection with other aspects of AT&T's relationship with At Home. The liability
for any such lawsuits would be shared equally between AT&T and Broadband. No
such lawsuits have been filed to date. On May 1, 2002, At Home filed a draft
proposed plan of liquidation pursuant to Chapter 11 of the U.S. Bankruptcy Code,
which, as modified on June 18, 2002, among other things, implements the
creditor's settlement and provides that all claims and causes of action of the
bankrupt estate of At Home against AT&T and other shareholders will be
transferred to a liquidating trust owned ratably by the bondholders of At Home
and funded with at least $12 million, and as much as $17 million, to finance the
litigation of those claims. The plan has not yet become effective. However, the
creditor settlement calls for the plan to be effective by August 30, 2002.

     In addition, purported class action lawsuits have been filed in California
state court on behalf of At Home shareholders against AT&T, At Home, Comcast and
former directors of At Home. The lawsuits claim that the defendants breached
fiduciary obligations of care, candor and loyalty in connection with a
transaction announced in March 2000 in which, among other things, AT&T, Cox and
Comcast agreed to extend existing distribution agreements, the At Home Board was
reorganized, and AT&T agreed to give Cox and Comcast rights to sell their At
Home shares to AT&T. These actions have been consolidated by the court and are
subject to a stay, which the plaintiffs are seeking to have lifted and which the
At Home bondholders are seeking to enforce. At Home's bondholders have asserted
that the claims asserted in these actions belong to At Home's bankruptcy estate,
not its shareholders. The bankruptcy court has not yet definitively ruled on
this issue. The liability for any such lawsuits would be shared equally between
AT&T and Broadband.

     In the Spring of 2002, three purported class actions were filed in the
United States District Court for the Southern District of New York against,
among others, AT&T and certain of its senior officers alleging violations of the
federal securities laws in connection with the disclosures made by At Home in
the period

                                        57


from March 28, 2000 through August 28, 2001. These actions have been
consolidated. Any liabilities resulting from this lawsuit would be shared
equally between AT&T and Broadband.

RISKS RELATING TO AT&T'S CREDIT RATING

     The AT&T Comcast transaction, if implemented as proposed, would result in a
substantial reduction in AT&T's overall debt level. Nevertheless, the AT&T
Comcast transaction may not be completed and, even if it is completed, AT&T will
continue to have substantial indebtedness. As a result, AT&T noteholders should
consider the following additional risk.

  THE FINANCIAL CONDITION AND PROSPECTS OF AT&T AND THE AT&T GROUPS MAY BE
  MATERIALLY ADVERSELY AFFECTED BY FURTHER RATINGS DOWNGRADES.

     On May 29, 2002, Moody's Investors Service lowered its ratings of long-term
debt issued or guaranteed by AT&T to Baa2 from A3. Moody's also confirmed AT&T's
short-term rating as Prime-2. Moody's ratings outlook for AT&T remains negative
but AT&T is not currently on review for any additional downgrade by Moody's. On
June 3, 2002, Fitch Ratings also downgraded AT&T's long-term debt rating to BBB+
from A-, with the rating remaining on Rating Watch Negative pending completion
of the AT&T Comcast transaction. AT&T's long-term debt ratings remain BBB+ and
on CreditWatch with negative implications by Standard & Poor's Ratings Group.
Further ratings actions could occur at any time.

     Any downgrade by either Standard & Poor's or Moody's increases, by
one-quarter of one percent (0.25%) for each ratings notch downgrade by either
agency, the interest rates paid by AT&T on approximately $10.1 billion of
long-term debt, which would increase AT&T's interest costs by approximately $25
million per year for each such ratings notch downgrade by either rating agency.
As a result, the Moody's downgrade referred to above increased by one-half of
one percent (0.50%) the interest rates paid by AT&T on approximately $10.1
billion of long-term debt, which will increase AT&T's interest costs by
approximately $50 million per year. Any ratings downgrade by Standard & Poor's
would also increase such interest costs by one-quarter of one percent (0.25%)
for each ratings notch downgrade.

     In addition to the increased interest costs on the $10.1 billion of
long-term debt referred to above, AT&T could incur increased costs in the
replacement or renewal of its credit facility and refinancings of approximately
$5 billion of debt through March 31, 2003. Assuming current market conditions
and assumptions regarding the type of financing available, the additional
annualized cost increases could approximate $100 million, although it is not
possible to predict the actual amount of any such interest cost increase as a
result of a rating notch downgrade. Additional ratings downgrades could result
in greater interest rate increases for each notch downgrade. In addition,
interest expense could be higher in subsequent periods than it otherwise would
have been as additional maturing debt is replaced by debt with higher interest
rate spreads due to the lower credit ratings. Also, in addition to interest
rates, differences in credit ratings affect the amounts of indebtedness, types
of financing structures and debt markets that may be available to AT&T. For
example, with additional ratings downgrades, AT&T may not have access to the
commercial paper market sufficient to satisfy its short-term borrowing needs. If
necessary, AT&T could access its short-term credit facilities or increase its
borrowings under its securitization program.

     To the extent that the combined outstanding short-term borrowings under the
bank credit facilities and AT&T's commercial paper program were to exceed the
market capacity for such borrowings at the expiration of the bank credit
facilities, AT&T's continued liquidity would depend upon its ability to reduce
such short-term debt through a combination of capital market borrowings, asset
sales, operational cash generation, capital expenditure reduction and other
means. AT&T's ability to achieve such objectives is subject to a risk of
execution and such execution could materially impact AT&T's operational results.
In addition, the cost of any capital market financing could be significantly in
excess of AT&T's historical financing costs. Also, AT&T could suffer negative
banking, investor, and public relations repercussions if

                                        58


AT&T were to draw upon the bank facilities, which are intended to serve as a
back-up source of liquidity only. Such impacts could cause further deterioration
in AT&T's cost of and access to capital.

     As a result of the credit rating downgrade by Moody's, AT&T is in the
process of replacing its $8 billion 364-day term bank facility (under which no
amounts are drawn) that expires in December 2002 with a new 364-day term bank
facility of up to $4 billion. This is necessary because the old facility
provided among other things that AT&T could not consummate the AT&T Comcast
transaction unless after giving effect thereto AT&T's long term debt would be
rated at least Baa1 by Moody's. On July 1, 2002, AT&T announced that it had
received initial commitments from four banks for a significant portion of this
new facility.

RISKS RELATING TO THE BUSINESSES OF AT&T CONSUMER SERVICES GROUP AND AT&T
BUSINESS SERVICES GROUP

  AT&T CONSUMER SERVICES GROUP AND AT&T BUSINESS SERVICES GROUP EXPECT THERE TO
  BE A CONTINUED DECLINE IN THE LONG DISTANCE INDUSTRY.

     Historically, prices for voice communications have fallen because of
competition, the introduction of more efficient networks and advanced
technology, product substitution, excess capacity and deregulation. AT&T
Consumer Services Group and AT&T Business Services Group expect these trends to
continue, and each of AT&T Consumer Services Group and AT&T Business Services
Group may need to reduce its prices in the future to remain competitive. In
addition, AT&T Consumer Services Group and AT&T Business Services Group do not
expect that they will be able to achieve increased traffic volumes in the near
future to sustain their current revenue levels. The extent to which each of AT&T
Consumer Services Group's and AT&T Business Services Group's business, financial
condition, results of operations and cash flow could be materially adversely
affected will depend on the pace at which these industry-wide changes continue
and its ability to create new and innovative services to differentiate its
offerings, enhance customer retention, and retain or grow market share.

  AT&T CONSUMER SERVICES GROUP AND AT&T BUSINESS SERVICES GROUP FACE SUBSTANTIAL
  COMPETITION THAT MAY MATERIALLY ADVERSELY IMPACT BOTH MARKET SHARE AND
  MARGINS.

     Each of AT&T Consumer Services Group and AT&T Business Services Group
currently faces significant competition, and AT&T expects the level of
competition to continue to increase. Some of the potential materially adverse
consequences of this competition include the following:

     - market share loss and loss of key customers;

     - possibility that customers shift to less profitable, lower margin
       services;

     - need to initiate or respond to price cuts in order to retain market
       share;

     - difficulties in AT&T Consumer Services Group's and AT&T Business Services
       Group's ability to grow new businesses, introduce new services
       successfully or execute on their business plan; and

     - inability to purchase fairly priced access services or fairly priced
       elements of local carriers' networks.

     As a result of competitive factors, AT&T Consumer Services Group and AT&T
Business Services Group believe it is unlikely that they will sustain existing
price or margin levels.

                                        59


  AT&T CONSUMER SERVICES GROUP AND AT&T BUSINESS SERVICES GROUP FACE COMPETITION
  FROM A VARIETY OF SOURCES.

     - Competition from new entrants into long distance, including regional
       phone companies.  AT&T Consumer Services Group and AT&T Business Services
       Group traditionally have competed with other long distance carriers. In
       recent years, AT&T Consumer Services Group and AT&T Business Services
       Group have begun to compete with incumbent local exchange carriers, which
       historically have dominated local telecommunications, and with other
       competitive local exchange carriers for the provision of long distance
       services. In addition, other long distance companies are beginning to
       offer local residential services bundled with long distance in portions
       of over 30 states.

      Some regional phone companies, such as Verizon Communications Inc. and SBC
      Communications Inc., already have been permitted to offer long distance
      services in some states within their regions. AT&T expects that the
      regional phone companies will seek to enter all states in their regions
      and eventually will be given permission to offer long distance services
      within their regions.

      The incumbent local exchange carriers presently have numerous advantages
      as a result of their historic monopoly control over local exchanges.

     - Competition from facilities-based companies, including regional phone
       companies.  AT&T Consumer Services Group and AT&T Business Services Group
       also face the risk of increasing competition from entities that own their
       own access facilities, particularly the regional phone companies, which
       have access facilities across vast regions of the United States with the
       ability to control cost, cycle time and functionality for most end-to-end
       services in their regions. These entities can preserve large market share
       and high margins on access services as they enter new markets, including
       long distance and end-to-end services. This places them in a superior
       position vis-a-vis AT&T Consumer Services Group and AT&T Business
       Services Group and other competitors that must purchase such high-margin
       access services.

     - Competition from lower-cost or less-leveraged providers.  The cost
       structure of AT&T Consumer Services Group and AT&T Business Services
       Group also affects their competitiveness. Each faces the risk that it
       will not be able to maintain a competitive cost structure if newer
       technologies favor newer competitors that do not have legacy
       infrastructure and as technology substitution continues. The ability of
       each of AT&T Consumer Services Group and AT&T Business Services Group to
       make critical investments to improve cost structure also may be impaired
       by its current debt obligations.

     - Competition as a result of technological change.  AT&T Consumer Services
       Group and AT&T Business Services Group also may be subject to additional
       competitive pressures from the development of new technologies and the
       increased availability of domestic and international transmission
       capacity. The telecommunications industry is in a period of rapid
       technological evolution, marked by the introduction of new product and
       service offerings and increasing satellite, wireless, fiber optic and
       coaxial cable transmission capacity for services similar to those
       provided by AT&T Consumer Services Group and AT&T Business Services
       Group. AT&T cannot predict which of many possible future product and
       service offerings will be important to maintain its competitive position,
       or what expenditures will be required to develop and provide these
       products and services. Many of these new products and services are
       substitutes for traditional telephone service. In particular, the rapid
       expansion of usage of wireless and email services has led and is expected
       to lead to an overall decline in telephone voice traffic volume on
       traditional wireline networks.

     - Competition as a result of excess capacity.  Each of AT&T Consumer
       Services Group and AT&T Business Services Group faces competition as a
       result of excess capacity resulting from substantial network build-out by
       competitors that had access to inexpensive capital.

                                        60


     - Strength of competitors.  Some of AT&T Consumer Services Group's and AT&T
       Business Services Group's existing and potential competitors have
       financial, personnel and other resources significantly greater than those
       of AT&T Consumer Services Group and AT&T Business Services Group.

  THE PRICES CHARGED TO AT&T CONSUMER SERVICES GROUP FOR NETWORK UTILIZATION MAY
  INCREASE OVER TIME AND MAY BE ADVERSELY IMPACTED BY THE VOLUME OF THE BUSINESS
  OF AT&T BUSINESS SERVICES GROUP.

     During the next few years, AT&T's voice traffic volumes may decline at a
rate faster than the rate at which AT&T is able to reduce the cost of operating
its circuit switched network, resulting in higher unit costs for both AT&T
Consumer Services Group and AT&T Business Services Group. Under the terms of a
proposed master carrier agreement, AT&T Consumer Services Group will be required
to procure all of its telecommunications needs from Network Services within the
AT&T Business Group. The pricing of these services will be based on the costs to
Network Services of providing those services, unless otherwise agreed. Also, the
agreement will contain provisions intended to assure that the AT&T Consumer
Services Group is treated no less favorably than the AT&T Business Services
Group with respect to the allocation of costs between the units, including a
fair allocation of any low cost capacity Network Services provides or obtains.

     The overall level of network utilization by AT&T Consumer Services Group
and AT&T Business Services Group together will impact the per minute cost of
providing telecommunications services. There are substantial fixed costs
associated with providing telecommunications services and it is possible that
overall levels of usage (including usage by AT&T Business Services Group) may
decrease faster than the related decrease in variable costs. As a result,
although it will depend upon a variety of factors that are difficult to predict,
it is possible that costs per minute may increase over time. Since the terms of
this arrangement by which AT&T Consumer Services Group purchases
telecommunications services are essentially cost based, any such cost increase
would increase the charges to the AT&T Consumer Services Group and could
materially adversely impact the results of operations and financial condition of
the Group.

     Since per minute costs are affected by both the level of usage of the AT&T
Consumer Services Group and AT&T Business Services Group, adverse business
conditions of either Group could increase per minute costs. As a result, the
costs charged to AT&T Consumer Services Group may increase as a result of a
decrease in the volume of usage by AT&T Business Services, and vice versa.

     AT&T Consumer Services Group, however, may be more adversely affected by a
downturn in telecommunications traffic than its competitors since it is required
to obtain all of its telecommunications services from AT&T, even if more
favorable pricing is available elsewhere.

  AT&T FACES RISKS IN CONNECTION WITH AT&T CANADA AND ALESTRA.

     AT&T has an approximately 31% equity ownership in AT&T Canada. On June 25,
2002, AT&T provided notice triggering the requirement to purchase in cash the
outstanding shares of AT&T Canada from the public at the greater of fair market
value and a floor price. AT&T has arranged for Tricap Investments Corporation, a
wholly owned subsidiary of Brascan Financial Corporation, and CIBC Capital
Partners to acquire such AT&T Canada shares. AT&T has agreed to pay the purchase
price for the AT&T Canada shares on behalf of Tricap and CIBC Capital Partners.
On June 11, 2002, AT&T completed an offering of 200,000,000 shares of AT&T
common stock to the public together with 30,000,000 shares of AT&T common stock
pursuant to the underwriters' over-allotment option. The offer price to the
public was $11.25 per share of AT&T common stock. The underwriting discount and
commission was $0.2897 per share of AT&T common stock. AT&T will use the
proceeds from this offering to satisfy a portion of its obligations to AT&T
Canada common stockholders.

     In 2001, AT&T recorded $1.8 billion of after tax charges ($3.0 billion of
pretax charges) reflecting the estimated loss on AT&T's commitment to purchase
the publicly owned shares of AT&T Canada.

                                        61


Included in these charges was approximately $0.6 billion related to the
assumption of British Telecommunications plc's obligation to purchase the
publicly owned shares of AT&T Canada. In the first and second quarters of 2002,
AT&T recorded an additional $0.3 billion in after-tax charges ($0.5 billion
pretax) reflecting further deterioration in the underlying value of AT&T Canada
as well as the accretion of the floor price. These charges reflect the
difference between the underlying value of AT&T Canada shares and the price AT&T
has committed to pay for them, and are included in "Net losses related to other
equity investments" in the Consolidated Statement of Income and the related
liability of $3.7 billion within current liabilities in the Consolidated Balance
Sheet. The liability at June 30, 2002, also reflects foreign currency
translation adjustments due to fluctuations in the Canadian dollar recorded
through "Other comprehensive (loss)" as a component of shareowners' equity of
$0.1 billion after tax ($0.2 billion pretax). AT&T has a hedge related to this
obligation and at June 30, 2002, had realized and unrealized gains of $0.2
billion pretax relating to this hedge.

     AT&T no longer records equity earnings or losses related to AT&T Canada
since AT&T's investment balance was written down to zero, largely through losses
generated by AT&T Canada. In the event AT&T acquires more than 50% of the voting
equity of AT&T Canada, AT&T Canada's results will be consolidated into AT&T's
results. At April 26, 2002, AT&T Canada had outstanding debt of approximately
$2.9 billion.

     On March 14, 2002, AT&T Canada announced that it has formed a board
committee to help management address what AT&T Canada described as "complex
issues" facing the company. It also said one of the committee's first steps had
been to hire Greenhill & Co. LLC as its financial adviser to work with the
committee and management to evaluate various scenarios regarding what it
described as "the issues, opportunities and alternatives for the company."

     On March 15, 2002, a group of more than 20 investors holding almost $1
billion of AT&T Canada public notes announced that they have organized as an ad
hoc committee to express their concerns about the company's business operations
and financial prospects. They stated that the group was formed in response to
several recent "troubling financial releases" from AT&T Canada and the rating
agency downgrades of AT&T Canada's public notes, including the notes issued by
MetroNet Communications.

     On April 18, 2002, the counsel to the ad hoc group of bondholders issued a
press release stating that this group was concerned about AT&T's and AT&T
Canada's failure to engage in a dialogue concerning the commitment to
bondholders. The committee said it was troubled that AT&T would not commit to
stand behind the AT&T Canada bonds, alleging that senior executives of AT&T
participated in the road shows for placement of the AT&T Canada notes and made
certain statements to rating agencies. Further, the release stated that, in the
absence of AT&T committing to support AT&T Canada, the committee will have no
choice but to explore any and all available remedies. As stated above,
approximately Canadian $4.5 billion (approximately U.S. $2.9 billion) in
aggregate amount of indebtedness of AT&T Canada was outstanding as of April 26,
2002. AT&T expressly disclaims any obligation with respect to the bonds.

     On May 9, 2002, a group of institutional investors holding approximately
$458 million of AT&T Canada's public notes announced that it had filed an
oppression application with the Ontario Superior Court of Justice asserting that
the conduct of AT&T Canada and its directors has been oppressive and unfairly
prejudicial to, and has unfairly disregarded, the interests of AT&T Canada's
noteholders. The investors also stated that the Application is supported by
other AT&T Canada noteholders holding an additional $250 million of AT&T
Canada's notes. Among other things, the Application seeks the following relief:
replacement of all current directors of AT&T Canada or orders regulating the
conduct of current directors; an order restraining AT&T Canada from collapsing
any "in the money" foreign currency swaps; and an order requiring AT&T Canada
and its directors to preserve assets and liquidity pending a restructuring.

     AT&T Business Services also owns a 49% economic interest in Alestra S. de
R.L. de C.V., a telecommunications company in Mexico that offers voice, data and
internet services throughout Mexico to residential, small business and
enterprise customers. Alestra has announced that it may not be able to
                                        62


make a $35 million bond payment due in November 2002 and that it is working
jointly with Morgan Stanley in analyzing available options to address the
company's financial condition, including its liquidity position. Standard &
Poor's has downgraded Alestra's corporate credit rating and said the company
would likely default on its debt obligations during financial year 2002,
probably by way of a bond restructuring. Moody's also downgraded all ratings of
Alestra stating that "based upon current long distance network asset valuations,
Moody's considers that unsecured debt holders face poor recovery prospects in a
distress scenario." AT&T cannot predict what the impact of these developments
will be.

     In addition, adverse business developments involving AT&T Canada and
Alestra could affect AT&T in a variety of ways. For example, in the event AT&T
no longer obtains telecommunications services from AT&T Canada, there are a
variety of other carriers that could provide AT&T with the telecommunications
services necessary to service its customers. However, there may be some
difficulty in obtaining services with comparable features and functions and
prices from these carriers which could adversely impact AT&T's ability to
provide products and services to its customers. In addition, AT&T may incur
significant costs as a result.

  THE REGULATORY AND LEGISLATIVE ENVIRONMENT CREATES CHALLENGES FOR AT&T
  CONSUMER SERVICES GROUP AND AT&T BUSINESS SERVICES GROUP.

     Each of AT&T Consumer Services Group and AT&T Business Services Group faces
risks relating to regulation and legislation. These risks include:

     - difficulty of effective entry into local markets due to noncompetitive
       pricing and to regional phone company operational issues that do not
       permit rapid large-scale customer changes from regional phone companies
       to new service providers;

     - new head-on competition as regional phone companies begin to enter the
       long distance business; and

     - emergence of few facilities-based competitors to regional phone
       companies, and the absence of any significant alternate source of supply
       for most access and local services.

     This dependency on supply materially adversely impacts each of AT&T
Consumer Services Group's and AT&T Business Services Group's cost structure, and
ability to create and market desirable and competitive end-to-end products for
customers.

     In addition, regional phone companies will be entering the long distance
business while they still control substantially all the access facilities in
their regions. This will likely result in an increased level of competition for
long distance or end-to-end services as the services offered by regional phone
companies expand.

  EACH OF AT&T CONSUMER SERVICES GROUP AND AT&T BUSINESS SERVICES GROUP MAY
  SUBSTANTIALLY INCREASE ITS DEBT LEVEL IN THE FUTURE, WHICH COULD SUBJECT IT TO
  VARIOUS RESTRICTIONS AND HIGHER INTEREST COSTS AND DECREASE ITS CASH FLOW AND
  EARNINGS.

     Each of AT&T Consumer Services Group and AT&T Business Services Group may
substantially increase its debt level in the future, which could subject it to
various restrictions and higher interest costs and decrease its cash flow and
earnings. It also may be difficult for AT&T Consumer Services Group and AT&T
Business Services Group to obtain all the financing they need to fund their
businesses and growth strategies on desirable terms. The amount of debt required
in the future will depend upon the performance revenue and margin of each of
AT&T Consumer Services Group and AT&T Business Services Group, which, in turn,
may be materially adversely affected by competitive and other pressures. Any
agreements governing indebtedness obtained by AT&T Consumer Services Group or
AT&T Business Services Group may contain financial and other covenants that
could impair AT&T Consumer Services Group's or AT&T Business Services Group's
flexibility and restrict its ability to pursue growth opportunities.
                                        63


  THE ACTUAL AMOUNT OF FUNDS NECESSARY TO IMPLEMENT EACH OF AT&T CONSUMER
  SERVICES GROUP'S AND AT&T BUSINESS SERVICES GROUP'S STRATEGY AND BUSINESS PLAN
  MAY MATERIALLY EXCEED CURRENT ESTIMATES, WHICH COULD HAVE A MATERIAL ADVERSE
  EFFECT ON ITS FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

     The actual amount of funds necessary to implement each of AT&T Consumer
Services Group's and AT&T Business Services Group's strategy and business plan
may materially exceed AT&T Consumer Services Group's and AT&T Business Services
Group's current estimates in the event of various factors, including:

     - competitive downward pressures on revenues and margins;

     - departures from AT&T Consumer Services Group's and AT&T Business Services
       Group's respective current business plans;

     - regulatory developments;

     - unforeseen competitive developments;

     - technological and other risks;

     - unanticipated expenses;

     - unforeseen delays and cost overruns; and

     - engineering design changes.

     If actual costs do materially exceed AT&T Consumer Services Group's and/or
AT&T Business Services Group's current estimates for these or other reasons,
this would have a material adverse effect on AT&T Consumer Services Group's
and/or AT&T Business Services Group's financial condition and results of
operations.

  AT&T CONSUMER SERVICES GROUP'S POTENTIAL GROWTH IN ITS AT&T DSL SERVICE
  COMBINING VOICE AND DATA SERVICES UTILIZING DSL TECHNOLOGY INVOLVES
  TECHNOLOGICAL, MARKETING AND REGULATORY HURDLES AND REQUIRES SUBSTANTIAL
  CAPITAL EXPENDITURES.

     AT&T Consumer Services Group's business plan will require substantial
capital expenditures in connection with its expansion into providing voice and
data services through DSL technology. The development of voice and data services
through DSL technology involves uncertainty relating to potential technological
hurdles, marketing success, regulatory and legislative requirements and
unforeseen costs. AT&T Consumer Services Group historically has not had to incur
these capital expenditures, and it may not be able to obtain sufficient capital
on favorable terms or at all. A failure to obtain capital could have a material
adverse effect on AT&T Consumer Services Group, and result in the delay, change
or abandonment of its development or expansion plans.

  SUBSTANTIALLY ALL OF THE TELEPHONE CALLS MADE BY EACH OF AT&T CONSUMER
  SERVICES GROUP'S AND AT&T BUSINESS SERVICES GROUP'S CUSTOMERS ARE CONNECTED
  USING OTHER COMPANIES' NETWORKS, INCLUDING THOSE OF COMPETITORS, WHICH MAKES
  COMPETITION MORE DIFFICULT FOR AT&T.

     AT&T Consumer Services Group principally is a long distance voice
telecommunications company. AT&T Consumer Services Group does not own or operate
any primary transmission facilities. Accordingly, it must route domestic and
international calls made by its customers over transmission facilities that it
obtains from network services within AT&T Business Services Group under a Master
Carrier Agreement. AT&T Business Services Group provides long distance and, to a
limited extent, local telecommunications over its own transmission facilities.
Because AT&T Business Services Group's network does not extend to homes, both
AT&T Consumer Services Group and AT&T Business Services Group must route calls

                                        64


through a local telephone company to reach AT&T Business Services Group's
transmission facilities and, ultimately, to reach their final destinations.

     In the United States, the providers of local telephone service generally
are the incumbent local exchange carriers, including the regional phone
companies. The permitted pricing of local transmission facilities that AT&T
Consumer Services Group and AT&T Business Services Group lease in the United
States is subject to legal uncertainties. In view of the proceedings pending
before the courts and regulatory authorities, 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 Consumer Services Group with
new market opportunities. The effect of the most recent court decisions is to
increase the risks, costs, difficulties and uncertainty of entering local
markets through using the incumbent local exchange carriers' facilities and
services.

  AT&T CONSUMER SERVICES GROUP MUST RELY ON AT&T BUSINESS SERVICES GROUP'S
  ABILITY TO MAINTAIN, UPGRADE AND REDUCE COSTS ASSOCIATED WITH THE CORE
  NETWORK, WHICH MAY LEAD TO ADDITIONAL COSTS.

     AT&T Consumer Services Group currently is dependent upon AT&T Business
Services Group for leased line capacity, data communications facilities, traffic
termination services and physical space for offices and equipment. Although AT&T
Consumer Services Group expects to enter into a service agreement with AT&T
Business Services Group for it to provide these services, if AT&T Business
Services Group becomes unable to provide its current level of services to AT&T
Consumer Services Group during the term of the service agreement or thereafter,
AT&T Consumer Services Group may not be able to find replacement service
providers on a timely basis.

  FAILURE TO DEVELOP FUTURE BUSINESS OPPORTUNITIES MAY HAVE A MATERIAL ADVERSE
  EFFECT ON AT&T CONSUMER SERVICES GROUP'S GROWTH POTENTIAL.

     AT&T Consumer Services Group intends to actively evaluate pursuing growth
opportunities by providing local telecommunications service. AT&T Consumer
Services Group faces risk associated with effective entry into local markets due
to non-competitive pricing and the emergence of few facilities-based competitors
to regional phone companies and the absence of any significant alternative
source of supply for most access and local services. AT&T Consumer Services
Group is also evaluating pursuing further growth opportunities in these markets
through DSL technology which involve new services for which there are only
limited proven markets. In addition, the ability to deploy and deliver these
services relies, in many instances, on new and unproven technology. AT&T
Consumer Services Group's DSL technology may not perform as expected and AT&T
Consumer Services Group may not be able to successfully develop new enabling
systems to effectively and economically deliver these services. In addition,
these opportunities require substantial capital outlays to be incurred by AT&T
Business Services and charged to AT&T Consumer Services Group as part of its
network usage under the transport agreement. These outlays are currently
estimated to be approximately $1 billion over a three-year planning period, to
deploy on the planned scale, but are subject to adjustment for change in
competitive conditions and market uncertainties. This capital may not be
available to support these services. Furthermore, each of these opportunities
entails additional operational risks. For example, the delivery of these
services requires AT&T Consumer Services Group to provide installation and
maintenance services, which services AT&T Consumer Services Group has never
provided previously.

     These services may not be successful when they are in place and customers
may not purchase the services offered. If these services are not successful or
costs associated with implementation and completion of the rollout of these
services materially exceed those currently estimated by AT&T Consumer Services
Group, AT&T Consumer Services Group's financial condition and prospects could be
materially adversely affected.

                                        65


                       DESCRIPTION OF THE EXCHANGE OFFER

PURPOSE OF THE EXCHANGE OFFER

     We are making this exchange offer in connection with the proposed transfer
of AT&T's broadband businesses to Broadband, the spin-off of Broadband, and the
subsequent combination of Broadband with Comcast into a new entity, AT&T
Comcast. The AT&T Comcast transaction is described under "Description of the
AT&T Comcast Transaction."

     The AT&T Comcast transaction is conditioned on AT&T's obtaining the
consents, or deemed consents in the exchange offer, or having defeased,
purchased, retired or acquired its debt in respect of series representing at
least 90% in aggregate principal amount outstanding on December 19, 2001, which
was approximately $12.7 billion, of debt securities issued under the AT&T
Indenture. AT&T and Comcast could mutually agree to waive this condition with
respect to all or any portion of the AT&T Notes for which consents, or deemed
consents, are not obtained. If the AT&T Comcast transaction were to occur and if
holders of the AT&T Notes were to assert successfully that completing the AT&T
Comcast transaction required Broadband or one of its affiliates to assume AT&T's
obligations under the AT&T Notes and that did not occur, then AT&T could be
required to refinance the AT&T Notes. Thus, while AT&T and Comcast could jointly
waive the consent condition to the AT&T Comcast transaction, AT&T is making the
exchange offer primarily to facilitate the AT&T Comcast transaction and to
optimize the respective capital structures of AT&T and AT&T Comcast in an
economic and tax efficient manner.

     The exchange offer is not being made to, nor will we accept tenders for
exchange from, holders of Broadband Eligible Notes and AT&T Eligible Notes in
any jurisdiction in which the exchange offer or the acceptance of it would not
be in compliance with the securities or blue sky laws of such jurisdiction.

TERMS OF THE EXCHANGE OFFER; PERIOD FOR TENDERING

     This prospectus and the accompanying letter of transmittal contain the
terms and conditions of the exchange offer. Upon the terms and subject to the
conditions included in this prospectus and in the accompanying letter of
transmittal, which together are the exchange offer, we will accept for exchange
Broadband Eligible Notes and AT&T Eligible Notes which are properly tendered on
or prior to the expiration date, unless you have previously withdrawn them.

     - When you tender to us Broadband Eligible Notes and AT&T Eligible Notes as
       provided below, our acceptance of the Broadband Eligible Notes and AT&T
       Eligible Notes will constitute a binding agreement between you and us
       upon the terms and subject to the conditions in this prospectus and in
       the accompanying letter of transmittal.

     - For each $1,000 principal amount of Broadband Eligible Notes accepted by
       us in the exchange offer, we will give you a like principal amount of
       Broadband Exchange Notes. Upon consummation of the AT&T Comcast
       transaction, the Broadband Exchange Notes will be mandatorily exchanged
       at the exchange ratio set forth on the cover page of this prospectus for
       New Broadband Notes. For each $1,000 principal amount of AT&T Eligible
       Notes accepted by us in the exchange offer, we will give you a like
       principal amount of New AT&T Notes.

     - AT&T will accept Broadband Eligible Notes in the exchange offer only up
       to the applicable proration percentage set forth on the cover of this
       prospectus of the aggregate principal amount outstanding with respect to
       each series of Broadband Eligible Notes. If Broadband Eligible Notes of
       any series are tendered in excess of that amount, the tendered notes of
       that series will be subject to proration as described under
       "-- Proration" when the exchange offer expires. The exchange offer for
       each series of AT&T Eligible Notes is for all notes of that series and is
       not subject to proration.

     - Notes will only be issued in denominations of $1,000 and multiples of
       $1,000. If the exchange of a series of Broadband Eligible Notes is
       subject to proration and proration would result in your being entitled to
       receive a fractional interest in the relevant series of Broadband
       Eligible Notes, the principal amount of Broadband Eligible Notes accepted
       in the exchange will be rounded to the
                                        66


       nearest $1,000, which will result in your receiving only whole Broadband
       Exchange Notes in the exchange. If the mandatory exchange of a series of
       Broadband Exchange Notes into New Broadband Notes would result in your
       being entitled to receive a fractional interest in the relevant series of
       New Broadband Notes, the principal amount you receive will be rounded
       down to the nearest $1,000 multiple and you will receive cash in lieu of
       a fractional New Broadband Note for the balance.

     - With respect to each series of Broadband Eligible Notes and AT&T Eligible
       Notes, the exchange offer is conditioned upon the holders of at least 50%
       in principal amount of that series having validly tendered and not
       withdrawn their notes. For these purposes, all of the Series A Medium-
       Term Notes are treated as part of a single series.

     - AT&T's obligation to accept Broadband Eligible Notes and/or AT&T Eligible
       Notes for exchange in the exchange offer is also subject to the
       conditions described under "-- Conditions to the Exchange Offer."

     - The exchange offer expires at 12:00 midnight, New York City time, on
                 , 2002. AT&T may, however, in its sole discretion, extend the
       period of time for which the exchange offer is open as to any one or more
       series of Broadband Eligible Notes or AT&T Eligible Notes. References in
       this prospectus to the expiration date with respect to any series of
       Broadband Eligible Notes or AT&T Eligible Notes mean           , 2002 or,
       if extended by AT&T, the latest time and date to which the exchange offer
       is extended by AT&T as to that series of notes.

     - AT&T will keep the exchange offer open for not less than 20 business
       days, or longer if required by applicable law, after the date that we
       first mail notice of the exchange offer to the holders of the Broadband
       Eligible Notes and AT&T Eligible Notes. We are sending this prospectus,
       together with the letter of transmittal, on or about the date of this
       prospectus to all of the registered holders of Broadband Eligible Notes
       and AT&T Eligible Notes at their addresses listed in the trustee's
       security register with respect to those notes.

     - AT&T expressly reserves the right, at any time, to extend the period of
       time during which the exchange offer is open with respect to any one or
       more series of Broadband Eligible Notes or AT&T Eligible Notes, and
       thereby delay acceptance of any series of Broadband Eligible Notes or
       AT&T Eligible Notes to which the extension applies, by giving oral or
       written notice of an extension to the exchange agent and notice of that
       extension to the holders as described below. During any extension, all
       Broadband Eligible Notes and AT&T Eligible Notes previously tendered will
       remain subject to the exchange offer unless withdrawal rights are
       exercised. Any Broadband Eligible Notes and AT&T Eligible Notes not
       accepted for exchange for any reason will be returned without expense to
       the tendering holder as promptly as practicable after the expiration or
       termination of the exchange offer.

     - AT&T expressly reserves the right to amend or terminate the exchange
       offer with respect to any series of Broadband Eligible Notes or AT&T
       Eligible Notes, and not to accept for exchange any Broadband Eligible
       Notes or AT&T Eligible Notes that it has not yet accepted for exchange,
       if any of the conditions of the exchange offer specified below under
       "-- Conditions to the Exchange Offer" are not satisfied.

     - AT&T will give oral or written notice of any extension, amendment,
       termination or non-acceptance described above to holders of the Broadband
       Eligible Notes and AT&T Eligible Notes as promptly as practicable. If
       AT&T extends the expiration date with respect to any one or more series,
       AT&T will give notice by means of a press release or other public
       announcement no later than 9:00 a.m., New York City time, on the business
       day after the previously scheduled expiration date. Without limiting the
       manner in which AT&T may choose to make any public announcement and
       subject to applicable law, AT&T will have no obligation to publish,
       advertise or otherwise communicate any public announcements other than by
       issuing a release to the Dow Jones News Service. Notices in Luxembourg
       with respect to these matters will be published in the Luxemburger Wort.

                                        67


     - Holders of Broadband Eligible Notes and AT&T Eligible Notes do not have
       any appraisal or dissenters' rights in connection with the exchange
       offer.

     - Broadband Eligible Notes and AT&T Eligible Notes which are not tendered
       for exchange or are tendered but not accepted in connection with the
       exchange offer will remain outstanding and be subject to the note
       amendment described below under "Description of the Note Amendment -- The
       Note Amendment," assuming the note amendment receives the requisite
       consents as described under "Description of the Note
       Amendment -- Requisite Consents; Outstanding Notes."

     - Holders of Broadband Eligible Notes and AT&T Eligible Notes that validly
       tender and do not withdraw their notes must consent to the note
       amendment, as described under "Description of the Note Amendment -- The
       Note Amendment," to the extent their notes are actually exchanged. See
       "-- Required Consent."

     - We intend to conduct the exchange offer in accordance with the applicable
       requirements of the Exchange Act and the applicable rules and regulations
       of the SEC, and with respect to the eligible notes listed on the
       Luxembourg Stock Exchange, with the applicable rules and regulations of
       the CSSF.

IMPORTANT RESERVATION OF RIGHTS REGARDING THE EXCHANGE OFFER

     You should note that:

     - All questions as to the validity, form, eligibility, time of receipt and
       acceptance of Broadband Eligible Notes and AT&T Eligible Notes tendered
       for exchange will be jointly determined by AT&T and AT&T Comcast in their
       sole discretion, which determination shall be final and binding.

     - AT&T reserves the absolute right to reject any and all tenders of any
       particular Broadband Eligible Notes and/or AT&T Eligible Notes not
       properly tendered or to not accept any particular Broadband Eligible
       Notes and/or AT&T Eligible Notes which acceptance might, in AT&T's or
       AT&T Comcast's judgment or the judgment of AT&T's or AT&T Comcast's
       counsel, be unlawful.

     - AT&T and AT&T Comcast also reserve the absolute right to jointly waive
       any defects or irregularities or conditions of the exchange offer as to
       any particular Broadband Eligible Notes and/or AT&T Eligible Notes either
       before or after the expiration date, including the right to waive the
       ineligibility of any holder who seeks to tender Broadband Eligible Notes
       and/or AT&T Eligible Notes in the exchange offer. Unless AT&T and AT&T
       Comcast agree to waive any defect or irregularity in connection with the
       tender of Broadband Eligible Notes and/or AT&T Eligible Notes for
       exchange, you must cure any defect or irregularity within any reasonable
       period of time as AT&T and AT&T Comcast shall determine.

     - AT&T's and AT&T Comcast's interpretation of the terms and conditions of
       the exchange offer as to any particular Broadband Eligible Notes and/or
       AT&T Eligible Notes either before or after the expiration date shall be
       final and binding on all other parties.

     - None of AT&T, AT&T Comcast, the exchange agent, the Luxembourg exchange
       agent or any other person shall be under any duty to give notification of
       any defect or irregularity with respect to any tender of Broadband
       Eligible Notes and/or AT&T Eligible Notes for exchange, nor shall any of
       them incur any liability for failure to give any notification.

EXCHANGE RATIO FOR THE NEW BROADBAND NOTES

     - The exchange ratio will be calculated as the exchange price per $1,000
       principal amount of the Broadband Eligible Notes divided by $1,000, and
       the exchange price is equal to the present value on the exchange
       settlement date in accordance with standard market practice assuming the
       Broadband Exchange Note would be repaid at $1,000 at maturity, determined
       on the basis of a yield to maturity equal to the sum of the relevant
       exchange spread set forth on the cover of this prospectus and the table
       below and the related reference U.S. Treasury yield, as calculated by the
                                        68


       dealer managers in accordance with standard market practice based on the
       bid side price for such reference security, as of 2:00 p.m., New York
       City time, two business days prior to the expiration date of the exchange
       offer, as displayed in Bloomberg Government Pricing Monitor, or any other
       recognized quotation source selected by the dealer managers.

     - The reference U.S. Treasury rate with respect to each series of Broadband
       Eligible Notes is set forth in the table below and has been selected to
       approximate the maturity characteristics for the applicable series of
       Broadband Eligible Notes. For current yield information for a particular
       U.S. Treasury security, you should consult publicly available sources.



BROADBAND ELIGIBLE NOTES  REFERENCE US TREASURY      BLOOMBERG PAGE   EXCHANGE SPREAD
------------------------  ---------------------      --------------   ---------------
                                                             
7.00% Notes Due 2005....  6.500% US Treasury Note         PX5
                          Due 05/15/05
7.50% Notes Due 2006....  4.625% US Treasury Note         PX5
                          Due 05/15/06
7.75% Notes Due 2007....  6.250% US Treasury Note         PX6
                          Due 02/15/07
6.00% Notes Due 2009....  4.750% US Treasury Note         PX6
                          Due 11/15/08
8.125% Debentures Due
  January 15, 2022......  5.375% US Treasury Bond         PX8
                          Due 02/15/31
8.125% Debentures Due
  July 15, 2024.........  5.375% US Treasury Bond         PX8
                          Due 02/15/31
8.35% Debentures Due
  2025..................  5.375% US Treasury Bond         PX8
                          Due 02/15/31
8.625% Debentures Due
  December 1, 2031......  5.375% US Treasury Bond         PX8
                          Due 02/15/31


                                        69


  CALCULATION OF EXCHANGE PRICE

     The following formula will be used to calculate the exchange price of a
relevant series of Broadband Eligible Notes based upon a given exchange spread
over the relevant reference U.S. treasury security.


            
    P(BEN)   =    The price per $1,000 principal amount of the series of
                  Broadband Eligible Notes being calculated (excluding accrued
                  interest), rounded to the second digit after the decimal
                  point.



    N        =    The number of remaining cash payment dates (both principal
                  and interest) for the series of Broadband Eligible Notes
                  whose price is being determined from but excluding the
                  settlement date for that series to and including the
                  maturity date for such securities.



    CF(i)    =    The aggregate amount of cash per $1,000 principal amount
                  scheduled to be paid on the securities being priced on the
                  "ith" of the N remaining cash payment dates from such
                  securities. Scheduled payments of cash include interest and,
                  on the applicable maturity date, principal.



    YLD      =    The specified yield to maturity (expressed as a decimal
                  number) equal to the Exchange Spread set forth on the cover
                  of this prospectus for that series of Broadband Eligible
                  Notes plus the interest rate for the applicable reference
                  U.S. Treasury security.



    D(i)     =    The number of days from and including the settlement date
                  for that series of Broadband Eligible Notes to but excluding
                  the "ith" out of the N remaining cash payment dates for the
                  securities being priced. The number of days is computed
                  using the 30/360 day count method in accordance with market
                  convention.



    N             Summate. The term to the right of summation symbol is
    (Sum     =    separately calculated "N" times (substituting for the "i" in
    sign)         that term each whole number between 1 and N, inclusive) and
    i=1           the separate calculations are then added together.



    Accrued
    Interest =    Accrued and unpaid interest per $1,000 principal amount of
                  the Broadband Eligible Notes from and including the last
                  applicable interest payment date to but excluding the
                  applicable settlement date.



                                                                         
                                            N
                               P(BEN)   =  (Sum     [    (CF(i))       ]  - Accrued Interest
                                          sign)        ------------
                                           i=1         (1+YLD) (D(i))
                                                          ---   ---
                                                           2    180


                                        70


  HYPOTHETICAL EXCHANGE RATIO CALCULATION

     The following table sets forth a hypothetical example for $100,000
principal amount of Broadband Eligible Notes assuming relevant U.S. Treasury
yields on the applicable reference U.S. Treasury as reported on                ,
2002 plus the applicable Exchange Spread for a settlement date of           ,
2002.


                                                                                                   EXCHANGE
                                                                                     BROADBAND     PRICE OF
                                                                                      ELIGIBLE     BROADBAND                FACE
                                                             REFERENCE                  NOTE       ELIGIBLE               AMOUNT OF
                                                                US                    EXCHANGE      NOTE AT                  NEW
                                                             TREASURY    EXCHANGE    YIELD [SUM    EXCHANGE    EXCHANGE   BROADBAND
BROADBAND ELIGIBLE NOTE        REFERENCE U.S. TREASURY         YIELD      SPREAD    OF LAST TWO]     YIELD      RATIO       NOTE
-----------------------     ------------------------------   ---------   --------   ------------   ---------   --------   ---------
                                                                                                     
                            6.500% US Treasury
7.00% Notes Due 2005......  Note Due 05/15/05
                            4.625% US Treasury
7.50% Notes Due 2006......  Note Due 05/15/06
                            6.250% US Treasury
7.75% Notes Due 2007......  Note Due 02/15/07
                            4.750% US Treasury
6.00% Notes Due 2009......  Note Due 11/15/08
8.125% Debentures Due       5.375% US Treasury
  January 15, 2022........  Bond Due 02/15/31
8.125% Debentures Due       5.375% US Treasury
  July 15, 2024...........  Bond Due 02/15/31
8.35% Debentures Due        5.375% US Treasury
  2025....................  Bond Due 02/15/31
8.625% Debentures Due       5.375% US Treasury
  December 1, 2031........  Bond Due 02/15/31



                            RESIDUAL
                              CASH
BROADBAND ELIGIBLE NOTE      AMOUNT
-----------------------     --------
                         
7.00% Notes Due 2005......
7.50% Notes Due 2006......
7.75% Notes Due 2007......
6.00% Notes Due 2009......
8.125% Debentures Due
  January 15, 2022........
8.125% Debentures Due
  July 15, 2024...........
8.35% Debentures Due
  2025....................
8.625% Debentures Due
  December 1, 2031........


INTEREST RATE FOR THE NEW BROADBAND NOTES

     The interest rate for each series of New Broadband Notes will be announced
by press release two business days prior to the expiration of the exchange offer
for that series and will be based on a credit spread over the relevant reference
U.S. Treasury rates. The reference U.S. Treasury rate with respect to each
series of New Broadband Notes will be calculated, by the dealer managers, in
accordance with standard market practice, based on the bid side price of the
relevant reference U.S. Treasury as listed on the relevant Bloomberg Government
Pricing Monitor or any other recognized quotation source selected by the dealer
managers at 2:00 p.m., New York City time, two days prior to the expiration of
the exchange offer. The relevant reference U.S. Treasury has been selected to
approximate the maturity characteristics of the applicable series of New
Broadband Notes. The interest rate will be equal to the reference U.S. Treasury
rate plus the applicable credit spread as set forth below. For current yield
information for a particular U.S. Treasury security, you should consult publicly
available sources. While those spreads have been selected so that as of the date
of calculation the New Broadband Notes would trade at par, there can be no
assurance as to the price at which the New Broadband Notes will actually trade.
In addition, because the New Broadband Notes will not be issued until completion
of the AT&T Comcast transaction, it is not possible to determine the present
value of the combined cash flows on any series of Broadband Exchange Notes and
the related series of New Broadband Notes.



                                                                              BLOOMBERG
NEW BROADBAND NOTES                           REFERENCE U.S. TREASURY           PAGE      CREDIT SPREAD
-------------------                           -----------------------         ---------   -------------
                                                                                 
   % Notes Due     , 2013............  [4.875% US Treasury Note Due              PX7
                                       02/15/12]
   % Notes Due January 15, 2022......  5.375% US Treasury Note Due 02/15/31      PX8
   % Notes Due July 15, 2024.........  5.375% US Treasury Note Due 02/15/31      PX8
   % Notes Due January 15, 2025......  5.375% US Treasury Note Due 02/15/31      PX8
   % Notes Due December 1, 2031......  5.375% US Treasury Note Due 02/15/31      PX8


                                        71


OTHER TERMS OF THE BROADBAND EXCHANGE NOTES, NEW BROADBAND NOTES AND THE NEW
AT&T NOTES

     Descriptions of the terms of the Broadband Exchange Notes, the New
Broadband Notes and the Cable Guarantees, and the New AT&T Notes are included in
this prospectus under "Description of the Broadband Exchange Notes,"
"Description of the New Broadband Notes and the Cable Guarantees" and
"Description of the New AT&T Notes," respectively. A comparison of the terms of
the New Broadband Notes to those of the Broadband Exchange Notes is included in
this prospectus under "Comparison of the New Broadband Notes and the Broadband
Exchange Notes." The material differences in the terms of the Broadband Exchange
Notes from those of the Broadband Eligible Notes, and in the terms of the New
AT&T Notes from those of the AT&T Eligible Notes, are described under
"Description of the Broadband Exchange Notes" and "Description of the New AT&T
Notes," respectively.

CONDITIONS TO THE EXCHANGE OFFER

     Unless holders of more than 50% of the principal amount of any series of
Broadband Eligible Notes or AT&T Eligible Notes have consented to the note
amendment discussed below and validly tendered and not withdrawn their notes
prior to the expiration date of the exchange offer for that series, no notes of
that series will be accepted for exchange.

     The following table sets forth the aggregate principal amount outstanding
of each series of Broadband Eligible Notes and AT&T Eligible Notes as of the
date of this prospectus:



                                                               PRINCIPAL AMOUNT
BROADBAND ELIGIBLE NOTES                                         OUTSTANDING
------------------------                                       ----------------
                                                            
7.00% Notes Due 2005........................................   $   300,000,000
7.50% Notes Due 2006........................................       500,000,000
7.75% Notes Due 2007........................................       500,000,000
6.00% Notes Due 2009........................................     3,000,000,000
8.125% Debentures Due January 15, 2022......................       500,000,000
8.125% Debentures Due July 15, 2024.........................       500,000,000
8.35% Debentures Due 2025...................................       300,000,000
8.625% Debentures Due December 1, 2031......................       676,000,000

AT&T ELIGIBLE NOTES
-------------------
5.625% Notes Due 2004.......................................     2,000,000,000
6.75% Notes Due 2004........................................       400,000,000
7.75% Medium-Term Notes, Series A Due May 15, 2025..........        25,000,000
8.00% Medium-Term Notes, Series A Due May 15, 2025..........        50,000,000
6.50% Notes Due 2029........................................     3,000,000,000
FRN Medium-Term Notes, Series A Due 2054....................        10,563,000
                                                               ---------------
          TOTAL.............................................   $11,761,563,000
                                                               ===============


     Even if this condition is met with respect to each series of eligible
notes, despite any other term of the exchange offer, AT&T will not be required
to accept for exchange any Broadband Eligible Notes or AT&T Eligible Notes and
may terminate, amend, or extend the exchange offer before the acceptance of the
Broadband Eligible Notes and/or AT&T Eligible Notes, if, on or before the
expiration date:

     - AT&T has not received, as of the expiration of the exchange offer, the
       valid and unrevoked consents to the note amendment of the holders of more
       than 50% in aggregate principal amount of those series of AT&T Notes
       which will result in AT&T's obtaining the consent of, or having defeased,
       purchased, retired or acquired its debt in respect of series representing
       at least 90% in aggregate principal amount outstanding on December 19,
       2001, which was approximately $12.7 billion, of debt securities issued
       under the AT&T Indenture. As of June 30, 2002, approximately $12.2
       billion of these debt securities, including Broadband Eligible Notes and
       AT&T Eligible Notes, remained outstanding;

                                        72


     - any action, proceeding or litigation seeking to enjoin, make illegal,
       delay the completion of or challenge in any respect the exchange offer or
       the AT&T Comcast transaction or otherwise relating in any manner to the
       exchange offer or AT&T Comcast transaction is pending, instituted or
       threatened;

     - any order, stay, judgment or decree is issued by any court, government,
       governmental authority or other regulatory or administrative authority
       and is in effect or any statute, rule, regulation, governmental order or
       injunction shall have been proposed, enacted, enforced or deemed
       applicable to the exchange offer or AT&T Comcast transaction, any of
       which would or might restrain, prohibit or delay completion of the
       exchange offer or the AT&T Comcast transaction or impair the contemplated
       benefits of the exchange offer or the AT&T Comcast transaction to AT&T,
       Broadband or AT&T Comcast;

     - there has occurred

      o any general suspension of trading in, or limitation on prices for,
        securities on any national securities exchange or in the
        over-the-counter market in the United States or the European Union,

      o the declaration of a banking moratorium or any suspension of payments in
        respect of banks in the United States or the European Union,

      o the commencement of a war, armed hostilities or other international or
        national calamity (or, with regard to the conflict in Afghanistan or the
        Middle East, any material escalation or expansion of such conflicts)
        directly or indirectly involving the United States or any of its
        territories,

      o any limitation (whether or not mandatory) by any governmental,
        regulatory or administrative agency or authority on, or any event, or
        any disruption or adverse change in the financial or capital markets
        generally or the market for loan syndications in particular, that, in
        our reasonable judgment, might affect the extension of credit by banks
        or other lending institutions in the United States,

      o any change in the general political, market, economic or financial
        conditions in the United States or abroad that could, in our reasonable
        judgment, have an adverse effect on the business, condition (financial
        or other), income, operations or prospects of the AT&T broadband
        business, taken as a whole, AT&T and its subsidiaries (other than the
        AT&T broadband business), taken as a whole, or Comcast and its
        subsidiaries, taken as a whole, or otherwise impair in any way the
        contemplated future conduct of the business of the AT&T broadband
        business, AT&T and its subsidiaries (other than the AT&T broadband
        business), taken as a whole, Comcast and its subsidiaries, taken as a
        whole, or AT&T Comcast and its subsidiaries, taken as a whole,

      o any event or events that have resulted or may result, in AT&T's or AT&T
        Comcast's judgment, in an actual or threatened change in the business
        condition, income, operations, assets, liabilities, properties,
        securities ownership or prospects of AT&T and its subsidiaries (other
        than the AT&T broadband business) taken as a whole, or the AT&T
        broadband business, taken as a whole, Comcast and its subsidiaries,
        taken as a whole, or AT&T Comcast and its subsidiaries, taken as a
        whole, or that otherwise affects AT&T, the AT&T broadband business,
        Comcast or AT&T Comcast, or that otherwise materially affects the
        expected benefits of the exchange offer or the AT&T Comcast transaction;
        or

     - the AT&T Comcast transaction has been terminated.

     The exchange of the Broadband Eligible Notes for the Broadband Exchange
Notes is not contingent upon the completion of the AT&T Comcast transaction,
however the Broadband Exchange Notes will not be exchanged for the New Broadband
Notes if the AT&T Comcast transaction is terminated. In addition, if the AT&T
Comcast transaction is terminated, the interest rate and maturity of each series
of New AT&T Notes shall remain the same as the interest rate and maturity
applicable to the AT&T Eligible Notes tendered for those New AT&T Notes.

     The conditions listed above are for AT&T's and AT&T Comcast's sole benefit
and may be asserted by AT&T or AT&T Comcast regardless of the circumstances
giving rise to any of these conditions. On or before the expiration date, AT&T
and AT&T Comcast may waive these conditions in their sole discretion

                                        73


in whole or in part at any time and from time to time. The conditions may only
be waived by AT&T and AT&T Comcast jointly. The failure by AT&T or AT&T Comcast
at any time to exercise any of the above rights will not be considered a waiver
of that right, and these rights will be considered to be ongoing rights which
may be asserted, before the expiration date, at any time and from time to time.

     If either AT&T or AT&T Comcast determines in its reasonable discretion that
any of the conditions are not satisfied, AT&T may:

     - refuse to accept any Broadband Eligible Notes or AT&T Eligible Notes,
       return any tendered Broadband Eligible Notes or AT&T Eligible Notes to
       the tendering holders, and terminate the exchange offer with respect to
       one or more series of Broadband Eligible Notes or AT&T Eligible Notes;

     - extend the exchange offer and retain all Broadband Eligible Notes and
       AT&T Eligible Notes tendered before the expiration of the exchange offer,
       subject, however, to the rights of holders to withdraw these Broadband
       Eligible Notes and AT&T Eligible Notes (see "-- Withdrawal Rights"
       below); or

     - determine jointly with AT&T Comcast to waive unsatisfied conditions
       relating to the exchange offer with respect to one or more series of
       Broadband Eligible Notes or AT&T Eligible Notes and accept all properly
       tendered Broadband Eligible Notes and AT&T Eligible Notes of those series
       that have not been withdrawn.

PRORATION

     AT&T will accept in the exchange offer up to the applicable proration
percentage set forth on the cover page of this prospectus of the aggregate
principal amount outstanding of each series of Broadband Eligible Notes. If,
upon the expiration date, holders of any one or more series of Broadband
Eligible Notes have validly tendered a number of Broadband Eligible Notes in
excess of the applicable proration percentage of the aggregate principal amount
outstanding of that series of notes, AT&T will accept, on a prorated basis, the
notes of that series validly tendered and not withdrawn. This means that, with
respect to any series of Broadband Eligible Notes for which the exchange offer
is oversubscribed, a percentage of the total number of Broadband Eligible Notes
of that series that are validly tendered and not withdrawn will be accepted by
AT&T for exchange. That percentage will be equal to (1) the aggregate principal
amount of notes equal to the applicable proration percentage of the aggregate
principal amount outstanding of that series of notes divided by (2) the
aggregate principal amount of notes of that series validly tendered and not
withdrawn. The exchange offer for each series of AT&T Eligible Notes is for all
notes of that series and is not subject to proration.

FRACTIONAL NOTES

     Notes will only be issued in denominations of $1,000 and multiples of
$1,000. If the exchange of a series of Broadband Eligible Notes is subject to
proration and proration would result in your being entitled to receive a
fractional interest in the relevant series of Broadband Exchange Notes, the
principal amount of Broadband Eligible Notes accepted in the exchange will be
rounded to the nearest $1,000. This rounding will result in your receiving only
whole Broadband Exchange Notes in exchange for your Broadband Eligible Notes.

     If the mandatory exchange of a series of Broadband Exchange Notes into New
Broadband Notes would result in your being entitled to receive a fractional
interest in the relevant series of New Broadband Notes, the principal amount you
receive will be rounded down to the nearest $1,000 multiple and you will receive
cash in lieu of a fractional New Broadband Note for the balance.

     Because the exchange offer of New AT&T Notes for AT&T Eligible Notes is not
subject to proration and will be issued in a like principal amount as the AT&T
Eligible Notes accepted in exchange, there will not be any need to pay cash in
lieu of fractional New AT&T Notes.

                                        74


REQUIRED CONSENT

     If you wish to tender your Broadband Eligible Notes or AT&T Eligible Notes,
you must also consent to the note amendment to the indenture governing the
Broadband Eligible Notes and AT&T Eligible Notes to the extent your notes are
accepted for exchange. By submitting a letter of transmittal, you will be
granting that consent. See "Description of the Note Amendment." Any Broadband
Eligible Notes or AT&T Eligible Notes that are validly tendered and not
withdrawn but are not exchanged as a result of the proration feature described
under "-- Proration" will be treated as if they have not consented to the note
amendment.

PROCEDURES FOR TENDERING

  WHAT TO SUBMIT AND HOW

     If you, as the registered holder of Broadband Eligible Notes and/or AT&T
Eligible Notes, wish to tender your Broadband Eligible Notes or AT&T Eligible
Notes for exchange in the exchange offer, you must transmit a properly completed
and duly executed letter of transmittal to The Bank of New York or, in the case
of the Luxembourg Notes held in Luxembourg, The Bank of New York (Luxembourg)
S.A., the expected Luxembourg exchange agent, at the address set forth below
under "-- Exchange Agent" and "-- Luxembourg Exchange Agent," respectively, on
or prior to the expiration date.

     In addition,

          (1) certificates for the Broadband Eligible Notes and/or AT&T Eligible
     Notes must be received by the exchange agent along with the letter of
     transmittal, or

          (2) a timely confirmation of a book-entry transfer of the Broadband
     Eligible Notes and/or AT&T Eligible Notes, if such procedure is available,
     into the exchange agent's account at DTC using the procedure for book-entry
     transfer described below, must be received by the exchange agent prior to
     the expiration date, or

          (3) you must comply with the guaranteed delivery procedures described
     below.

     For any Luxembourg Notes, letters of transmittal may be submitted in
accordance with procedures that may be obtained by contacting the Luxembourg
exchange agent at the telephone number listed on the back cover of this
prospectus. In addition, in Luxembourg you may contact the Luxembourg exchange
agent to obtain delivery of documents or for other assistance.

     The method of delivery of Broadband Eligible Notes and/or AT&T Eligible
Notes, letters of transmittal and notices of guaranteed delivery is at your
election and risk. If delivery is by mail, we recommend that registered mail,
properly insured, with return receipt requested, be used. In all cases,
sufficient time should be allowed to assure timely delivery. No letters of
transmittal or Broadband Eligible Notes or AT&T Eligible Notes should be sent to
AT&T, AT&T Comcast, any dealer manager or any other person other than the
exchange agent or the Luxembourg exchange agent.

  HOW TO SIGN YOUR LETTER OF TRANSMITTAL AND OTHER DOCUMENTS

     Signatures on a letter of transmittal or a notice of withdrawal, as the
case may be, must be guaranteed unless the Broadband Eligible Notes and/or AT&T
Eligible Notes being surrendered for exchange are tendered:

          (1) by a registered holder of the Broadband Eligible Notes or AT&T
     Eligible Notes who has not completed the box entitled "Special Issuance
     Instructions" or "Special Delivery Instructions" on the letter of
     transmittal, or

          (2) for the account of an eligible institution.

     If signatures on a letter of transmittal or a notice of withdrawal, as the
case may be, are required to be guaranteed, the signatures must be guaranteed by
an "eligible guarantor institution" meeting the

                                        75


requirements of the exchange agent, which requirements include membership or
participation in the Security Transfer Agent Medallion Program, referred to in
this prospectus as STAMP, or such other "signature guarantee program" as may be
determined by the exchange agent in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.

     If the letter of transmittal or any powers of attorney are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers or
corporations or others acting in a fiduciary or representative capacity, the
person should so indicate when signing and, unless waived by AT&T, proper
evidence satisfactory to AT&T of its authority to so act must be submitted.

BOOK-ENTRY TRANSFER

     The exchange agent will make a request to establish an account with respect
to the Broadband Eligible Notes and AT&T Eligible Notes at DTC for purposes of
the exchange offer promptly after the date of this prospectus. Any financial
institution that is a participant in DTC's systems may make book-entry delivery
of Broadband Eligible Notes and AT&T Eligible Notes by causing DTC to transfer
Broadband Eligible Notes and AT&T Eligible Notes into the exchange agent's
account in accordance with DTC's Automated Tender Offer Program procedures for
transfer. However, the exchange for the Broadband Eligible Notes and AT&T
Eligible Notes so tendered will only be made after timely confirmation of
book-entry transfer of Broadband Eligible Notes and AT&T Eligible Notes into the
exchange agent's account, and timely receipt by the exchange agent of an agent's
message, transmitted by DTC and received by the exchange agent and forming a
part of a book-entry confirmation. The agent's message must state that DTC has
received an express acknowledgment from the participant tendering Broadband
Eligible Notes and AT&T Eligible Notes that are the subject of that book-entry
confirmation that the participant has received and agrees to be bound by the
terms of the letter of transmittal, and that we may enforce the agreement
against that participant.

     Although delivery of Broadband Eligible Notes and AT&T Eligible Notes may
be effected through book-entry transfer into the exchange agent's account at
DTC, the letter of transmittal, or a facsimile copy, properly completed and duly
executed, with any required signature guarantees, must in any case be delivered
to and received by the exchange agent at its address listed under "-- Exchange
Agent" on or prior to the expiration date.

     If your Broadband Eligible Notes or AT&T Eligible Notes are held through
DTC, you must complete a form called "instructions to registered holder and/or
book-entry participant," which will instruct the DTC participant through whom
you hold your notes of your intention to tender your Broadband Eligible Notes
and AT&T Eligible Notes or not tender your Broadband Eligible Notes and AT&T
Eligible Notes. Please note that delivery of documents to DTC in accordance with
its procedures does not constitute delivery to the exchange agent, and we will
not be able to accept your tender of notes until the exchange agent receives a
letter of transmittal, and a book-entry confirmation from DTC, with respect to
your notes. A copy of that form is available from the exchange agent.

     Except as described under "Description of the New Broadband Notes and the
Cable Guarantees -- Certificated Form" and "Description of the New AT&T
Notes -- Certificated Form" we have arranged for the New Broadband Notes and the
New AT&T Notes to be issued in the form of global notes registered in the name
of DTC or its nominee and each holder's interest in it will be transferable only
in book-entry form through DTC.

GUARANTEED DELIVERY PROCEDURES

     If you are a registered holder of Broadband Eligible Notes and/or AT&T
Eligible Notes and you want to tender your Broadband Eligible Notes or AT&T
Eligible Notes but your Broadband Eligible Notes or AT&T Eligible Notes are not
immediately available, or time will not permit your Broadband Eligible

                                        76


Notes or AT&T Eligible Notes to reach the exchange agent before the expiration
date, or the procedure for book-entry transfer cannot be completed on a timely
basis, a tender may be effected if:

     (1) the tender is made through an eligible institution;

     (2) prior to the expiration date, the exchange agent receives, by facsimile
transmission, mail or hand delivery, from that eligible institution a properly
completed and duly executed letter of transmittal and notice of guaranteed
delivery, in the form provided by us, stating:

     - the name and address of the holder of Broadband Eligible Notes or AT&T
       Eligible Notes;

     - the amount of Broadband Eligible Notes and/or AT&T Eligible Notes
       tendered; and

     - the tender is being made by delivering that notice and guaranteeing that
       within three New York Stock Exchange trading days after the date of
       execution of the notice of guaranteed delivery, the certificates of all
       physically tendered Broadband Eligible Notes and/or AT&T Eligible Notes,
       in proper form for transfer, or a book-entry confirmation, as the case
       may be, will be deposited by that eligible institution with the exchange
       agent; and

     (3) the certificates for all physically tendered Broadband Eligible Notes
and/or AT&T Eligible Notes, in proper form for transfer, or a book-entry
confirmation, as the case may be, are received by the exchange agent within
three New York Stock Exchange trading days after the date of execution of the
notice of guaranteed delivery.

ACCEPTANCE OF ELIGIBLE NOTES AND DELIVERY OF NEW NOTES

     Once all of the conditions to the exchange offer are satisfied or waived,
AT&T will accept, promptly after the expiration date, subject to the completion
of the proration process described under "-- Proration" with respect to any
series of Broadband Eligible Notes, all Broadband Eligible Notes and AT&T
Eligible Notes properly tendered and AT&T and Broadband will issue the Broadband
Exchange Notes and AT&T will issue New AT&T Notes promptly after acceptance of
the Broadband Eligible Notes and AT&T Eligible Notes. See "-- Conditions to the
Exchange Offer" above. For purposes of the exchange offer, AT&T's giving of oral
or written notice of its acceptance to the exchange agent will be considered its
acceptance of the exchange offer.

     In all cases, AT&T (and Broadband, with respect to Broadband Exchange
Notes) will issue Broadband Exchange Notes and New AT&T Notes in exchange for
Broadband Eligible Notes and AT&T Eligible Notes, respectively, that are
accepted for exchange only after timely receipt by the exchange agent of:

     - certificates for the Broadband Eligible Notes and/or AT&T Eligible Notes;
       or

     - a timely book-entry confirmation of transfer of the Broadband Eligible
       Notes and/or AT&T Eligible Notes into the exchange agent's account at DTC
       using the book-entry transfer procedures described above; and

     - a properly completed and duly executed letter of transmittal.

     AT&T will have accepted validly tendered Broadband Eligible Notes and AT&T
Eligible Notes if and when it has given oral or written notice to the exchange
agent. The exchange agent will act as agent for the tendering holders for the
purposes of receiving the Broadband Exchange Notes and the New AT&T Notes from
us. The exchange agent will make the exchange on, or promptly after, the date it
receives notice of acceptance from AT&T, and as a result of this exchange the
holders in whose names the Broadband Exchange Notes and the New AT&T Notes will
be issuable upon exchange will be deemed to be the holders of record of the
Broadband Exchange Notes and the New AT&T Notes, respectively.

                                        77


     The reasons AT&T may not accept tendered Broadband Eligible Notes and/or
AT&T Eligible Notes are:

     - the Broadband Eligible Notes or AT&T Eligible Notes were not validly
       tendered pursuant to the procedures for tendering; see "-- Procedures for
       Tendering;"

     - AT&T or AT&T Comcast determines in its reasonable discretion that one or
       more of the conditions to the exchange offer has not been satisfied; see
       "-- Conditions to the Exchange Offer;"

     - a holder has validly withdrawn a tender of Broadband Eligible Notes or
       AT&T Eligible Notes as described under "-- Withdrawal Rights;"

     - AT&T has, in its sole discretion, delayed or terminated the exchange
       offer; see "-- Terms of the Exchange Offer; Period for Tendering;" or

     - the proration feature applies to any series of Broadband Eligible Notes;
       see "-- Proration."

     If AT&T does not accept any tendered Broadband Eligible Notes or AT&T
Eligible Notes for any reason included in the terms and conditions of the
exchange offer, including as a result of the proration feature, or if you submit
certificates representing Broadband Eligible Notes or AT&T Eligible Notes in a
greater principal amount than you wish to exchange, AT&T will return any
unaccepted or non-exchanged Broadband Eligible Notes or AT&T Eligible Notes
without expense to the tendering holder or, in the case of Broadband Eligible
Notes or AT&T Eligible Notes tendered by book-entry transfer into the exchange
agent's account at DTC using the book-entry transfer procedures described above,
non-exchanged Broadband Eligible Notes or AT&T Eligible Notes will be credited
to an account maintained with DTC as promptly as practicable after the
expiration or termination of the exchange offer.

     Broadband Eligible Notes or AT&T Eligible Notes which are not tendered for
exchange or are tendered but not accepted in connection with the exchange offer
will remain outstanding and remain subject to the AT&T Indenture, as modified by
the note amendment.

WITHDRAWAL RIGHTS

     You can withdraw your tender of Broadband Eligible Notes and/or AT&T
Eligible Notes at any time on or prior to the expiration date.

     For a withdrawal to be effective, a written notice of withdrawal must be
received by the exchange agent at one of the addresses listed below under
"-- Exchange Agent." Any notice of withdrawal must specify:

     - the name of the person having tendered the Broadband Eligible Notes or
       AT&T Eligible Notes to be withdrawn;

     - the Broadband Eligible Notes or AT&T Eligible Notes to be withdrawn;

     - the principal amount of the Broadband Eligible Notes or AT&T Eligible
       Notes to be withdrawn;

     - if certificates for Broadband Eligible Notes or AT&T Eligible Notes have
       been delivered to the exchange agent, the name in which the Broadband
       Eligible Notes or AT&T Eligible Notes are registered, if different from
       that of the withdrawing holder;

     - if certificates for Broadband Eligible Notes or AT&T Eligible Notes have
       been delivered or otherwise identified to the exchange agent, then, prior
       to the release of those certificates, you must also submit the serial
       numbers of the particular certificates to be withdrawn and a signed
       notice of withdrawal with signatures guaranteed by an eligible
       institution unless you are an eligible institution; and

     - if Broadband Eligible Notes or AT&T Eligible Notes have been tendered
       using the procedure for book-entry transfer described above, any notice
       of withdrawal must specify the name and number of the account at DTC to
       be credited with the withdrawn Broadband Eligible Notes or AT&T Eligible
       Notes and otherwise comply with the procedures of that facility.

                                        78


     Please note that all questions as to the validity, form, eligibility and
time of receipt of notices of withdrawal will be determined by AT&T and AT&T
Comcast, and their determination shall be final and binding on all parties. Any
Broadband Eligible Notes or AT&T Eligible Notes so withdrawn will be considered
not to have been validly tendered for exchange for purposes of the exchange
offer. In addition, any Broadband Eligible Notes or AT&T Eligible Notes so
withdrawn will be considered not to have consented to the note amendment
described under "Description of the Note Amendment -- The Note Amendment."

     If you have properly withdrawn Broadband Eligible Notes or AT&T Eligible
Notes and wish to re-tender them, you may do so by following one of the
procedures described under "-- Procedures for Tendering" above at any time on or
prior to the expiration date.

THE DEALER MANAGERS

     We have retained the following firms, listed in alphabetical order, to act
as dealer managers in connection with the exchange offer:

                     Credit Suisse First Boston Corporation
                              Goldman, Sachs & Co.
                          J.P. Morgan Securities Inc.
                     Merrill Lynch, Pierce, Fenner & Smith
                                  Incorporated
                       Morgan Stanley & Co. Incorporated

     The principal solicitation in connection with the exchange offer and the
note amendment is being made by mail. However, additional solicitation may be
made by telephone, facsimile, electronic media or in person by the dealer
managers, the soliciting dealers, and their officers, regular employees and
affiliates. In addition, additional solicitation may be made by telephone,
facsimile, electronic media or in person by our officers, regular employees and
affiliates. We will not pay any additional compensation to any of our officers
and employees who engage in soliciting tenders.

     The dealer managers have provided, and we expect will provide, investment
banking, advisory and commercial banking services to AT&T, Comcast and AT&T
Comcast, as the case may be, for which they received, and we expect will receive
customary fees. In particular,

     - Credit Suisse First Boston Corporation and Goldman, Sachs & Co. advised
       AT&T in the AT&T Comcast transaction;

     - J.P. Morgan Securities Inc., Merrill Lynch, Pierce, Fenner & Smith
       Incorporated and Morgan Stanley & Co. Incorporated advised Comcast in the
       AT&T Comcast transaction.

     In addition, affiliates of certain of the dealer managers will act as
lenders to Broadband and AT&T Comcast under their new credit facilities.

     AT&T, Comcast, AT&T Comcast and the cable guarantors will enter into a
dealer manager agreement with the dealer managers. In that agreement, AT&T,
Comcast, AT&T Comcast and the cable guarantors will indemnify the dealer
managers for liabilities under the federal securities and other laws.

     At any given time, the dealer managers may trade the New AT&T Notes, the
Broadband Exchange Notes and the New Broadband Notes or other securities of
AT&T, Broadband or the cable guarantors for their own accounts or for the
accounts of their customers, and accordingly, may hold a long or a short
position in the notes or such other securities.

     None of the dealer managers assumes any responsibility for the accuracy or
completeness of the information concerning the exchange offers, AT&T, Comcast,
AT&T Comcast, Comcast Cable, MediaOne and TCI contained in this prospectus or
any documents incorporated herein by reference or for any failure by us to
disclose events that may have occurred and may affect the significance or
accuracy of such information.

                                        79


     Questions regarding the terms of the exchange offer should be directed to
the dealer managers at the addresses and telephone numbers set forth on the back
cover of this prospectus.

RETAIL SOLICITATION FEE

     AT&T will pay to soliciting dealers a retail solicitation fee of
$          per $1,000 of eligible notes tendered and accepted for exchange in
the exchange offer. As used herein, a "soliciting dealer" is an entity covered
by a letter of transmittal which names the dealer as having solicited and
obtained the tender, and is:

     - any broker or dealer in securities, excluding the dealer manager, which
       is a member of any national securities exchange or of the National
       Association of Securities Dealers, Inc. ("NASD");

     - any foreign broker or dealer not eligible for membership in the NASD
       which agrees to conform to the NASD's Rules of Fair Practice in
       soliciting tenders outside the United States to the same extent as though
       it were an NASD member; or

     - any bank or trust company.

     No fee shall be payable to a soliciting dealer:

     - to the extent eligible notes tendered due to solicitation by that dealer
       are not validly tendered or otherwise are not accepted in the exchange
       offer;

     - with respect to the tender of eligible notes by a holder unless the
       letter of transmittal accompanying such tender designates that soliciting
       dealer;

     - with respect to the tender of eligible notes by a holder as to which a
       soliciting dealer fee has already been paid;

     - with respect to the tender of eligible notes by a beneficial holder of
       more than $          in principal amount of eligible notes;

     - in respect of eligible notes registered in the name of that soliciting
       dealer unless the eligible notes are held by that soliciting dealer as
       nominee and the eligible notes are being tendered for the benefit of one
       or more beneficial owners identified on the letter of transmittal;

     - if the soliciting dealer is a dealer manager;

     - if the soliciting dealer is required for any reason to transfer the
       amount of the fee to a tendering holder other than itself; or

     - with respect to eligible notes tendered for that soliciting dealer's own
       account.

     Soliciting dealers should take care to ensure proper record-keeping to
document their entitlement to any solicitation fee. AT&T and the exchange agent
reserve the right to require additional information, as deemed warranted in
their sole discretion.

     No broker, dealer, bank, trust company or fiduciary shall be deemed to be
the agent of AT&T, Broadband, the cable guarantors, DTC, any of the
dealer-managers or the information agent for purposes of the exchange offer.

     AT&T will also, upon request, reimburse soliciting dealers for reasonable
and customary handling and mailing expenses incurred by them in forwarding
materials relating to the exchange offer to their customers.

     All questions as to the validity, form, and eligibility, including time of
receipt of notices of solicited tenders will be determined by the exchange
agent, AT&T and AT&T Comcast, in their sole discretion, which determination will
be final and binding. Neither AT&T, AT&T Comcast, the exchange agent nor any
other person will be under any duty to give notification of any defects or
irregularities in a notice of solicited tender or incur any liability for
failure to give such notification.

                                        80


INFORMATION AGENT

     We intend to engage D.F. King & Co. as the information agent for the
exchange offer. Questions and requests for assistance, requests for additional
copies of this prospectus or of the letter of transmittal and requests for
notices of guaranteed delivery should be directed to the information agent. The
information agent may be contacted as follows:
                             D. F. King & Co., Inc.
                                77 Water Street
                                   20th Floor
                            New York, New York 10005

EXCHANGE AGENT

     We intend to engage The Bank of New York as the exchange agent for the
exchange offer. All executed letters of transmittal (other than in Luxembourg)
should be directed to the exchange agent at the address set forth below:

                                  Deliver To:

                      The Bank of New York, Exchange Agent
                      Corporate Trust Reorganization Unit
                             101 Barclay Street, 7E
                            New York, New York 10286
                                     Attn:

                            Facsimile Transmissions:

                            To Confirm by Telephone
                              or for Information:

     Delivery to an address other than as listed above or transmission of
instructions via facsimile other than as listed above does not constitute a
valid delivery.

LUXEMBOURG EXCHANGE AGENT

     We intend to engage The Bank of New York (Luxembourg) S.A. to act as the
Luxembourg exchange agent in connection with the exchange offer. In Luxembourg,
all services in connection with the exchange offer are available through the
Luxembourg exchange agent as more fully set forth in the prospectus and the
transmittal letter. In Luxembourg, you may contact the Luxembourg exchange agent
at the telephone number listed on the back cover for assistance in connection
with the exchange offer, including (1) to obtain the exchange offer materials,
(2) to obtain additional copies of the exchange offer materials, (3) for answers
to questions concerning the terms and procedures of the exchange offer, (4) to
have a letter of transmittal submitted on your behalf by the Luxembourg exchange
agent and (5) to have Luxembourg Notes accepted for exchange delivered on your
behalf by the Luxembourg exchange agent to the exchange agent. The Luxembourg
exchange agent will also have information available regarding the exchange offer
during the exchange offer period.

FEES AND EXPENSES

     The information agent, exchange agent and Luxembourg exchange agent will
receive reasonable and customary compensation for their services, and will be
reimbursed by AT&T for various reasonable out-of-pocket expenses.

     The dealer managers, information agent, exchange agent and Luxembourg
exchange agent will be indemnified against various liabilities in connection
with the exchange offer, including liabilities under the federal securities
laws.

                                        81


     Except as set forth above under "Retail Solicitation Fee" no fees or
commissions (other than fees to the dealer managers, information agent and
exchange agent as described above) will be payable by AT&T to brokers, dealers
or other persons for soliciting tenders of eligible notes pursuant to the
exchange offer. AT&T, however, upon request, will reimburse brokers, dealers and
commercial banks for customary mailing and handling expenses incurred by them in
forwarding this prospectus and related materials to the beneficial owners of
notes held by them as a nominee or in a fiduciary capacity. Other than the
dealer managers, no broker, dealer, commercial bank or trust company has been
authorized to act as the agent of AT&T for purposes of the exchange offer.

     We estimate that the approximate amount of fees and other expenses of the
exchange offer will be $          million, of which approximately $
million will be payable by AT&T and $          million will be payable by
Comcast.

TRANSFER TAXES

     Holders who tender their Broadband Eligible Notes and AT&T Eligible Notes
for exchange will not be obligated to pay any U.S. transfer taxes in connection
therewith, except that holders who instruct us to register Broadband Exchange
Notes, New Broadband Notes or New AT&T Notes in the name of, or request that
Broadband Eligible Notes and AT&T Eligible Notes not tendered or not accepted in
the exchange offer be returned to, a person other than the registered tendering
holder will be responsible for the payment of any applicable transfer tax
thereon.

MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE EXCHANGE OFFER

     The following is a summary of the material United States federal income tax
consequences to holders of (i) Broadband Eligible Notes resulting from the
exchange of such notes for Broadband Exchange Notes which, in turn, are
mandatorily exchanged for New Broadband Notes, (ii) AT&T Eligible Notes
resulting from the exchange of such notes for New AT&T Notes and the amendment
of certain terms of the New AT&T Notes upon consummation of the AT&T Comcast
transaction, and (iii) New Broadband Notes and New AT&T Notes that acquired such
notes pursuant to the exchange offer regarding the ownership and disposition of
the New Broadband Notes and New AT&T Notes after consummation of the AT&T
Comcast transaction. This summary assumes that the AT&T Comcast transaction will
be completed. If the AT&T Comcast transaction does not occur, there should be no
federal income tax consequences from the exchange of Broadband Eligible Notes
for Broadband Exchange Notes or AT&T Eligible Notes for New AT&T Notes, as the
case may be, and the federal income tax consequences regarding the ownership and
disposition of such notes will be the same as those of the Broadband Eligible
Notes and AT&T Eligible Notes.

     Except where otherwise noted, this summary is based on the Internal Revenue
Code of 1986, as amended (the "Code"), administrative pronouncements, judicial
decisions and existing and proposed U.S. Treasury Regulations, all as in effect
on the date of this exchange offer and prospectus and all of which are subject
to change, possibly with retroactive effect. This summary assumes that the notes
are held as capital assets (within the meaning of Section 1221 of the Code) and
does not address the tax consequences that may be relevant to a holder subject
to special U.S. tax rules, including, but not limited to, non-U.S. holders,
certain expatriates, dealers in securities or foreign currency, banks, trusts,
insurance companies, tax-exempt organizations, persons that hold notes as part
of a straddle, hedge against currency risk or constructive sale or conversion
transaction, persons that have a functional currency other than the U.S. dollar,
investors in pass-through entities and persons that acquired such notes as
"qualified replacement property" within the meaning of Section 1042 of the Code.
Moreover, this discussion does not address any aspect of state, local or foreign
tax considerations and does not address federal income tax consequences that may
be relevant to a particular holder in light of his or her personal
circumstances.

                                        82


     As used herein, a "holder" means a beneficial owner of an eligible note or
new note who is, for federal income tax purposes:

     - a citizen or resident of the United States;

     - a corporation (or an entity taxable as a corporation for federal income
       tax purposes) created or organized in or under the laws of the United
       States or of any political subdivision thereof;

     - an estate the income of which is subject to federal income taxation
       regardless of its source; or

     - a trust if a U.S. court is able to exercise primary supervision over the
       administration of the trust and one or more U.S. persons have the
       authority to control all substantial decisions of the trust.

     The Exchange of Broadband Eligible Notes

     AT&T intends to take the position that the exchange of Broadband Eligible
Notes for Broadband Exchange Notes is not an exchange pursuant to which gain or
loss should be realized for federal income tax purposes. If the exchange is not
one pursuant to which gain or loss should be realized, there will be no federal
income tax consequences to the exchange of Broadband Eligible Notes for
Broadband Exchange Notes and the federal income tax consequences regarding the
ownership and disposition of Broadband Exchange Notes will be the same as those
of Broadband Eligible Notes. For federal income tax purposes, the exchange of a
Broadband Eligible Note for a Broadband Exchange Note followed by an exchange of
such Broadband Exchange Note for a New Broadband Note, should be treated as a
single exchange of a Broadband Eligible Note for a New Broadband Note upon the
consummation of the AT&T Comcast transaction and the following discussion is
based on this assumption. For purposes of the following discussion in this
section entitled "Material United States Federal Income Tax Consequences of the
Exchange Offer," all references to "Broadband Eligible Notes" shall include
Broadband Exchange Notes.

     Subject to the discussion below relating to excess principal amount, the
exchange of Broadband Eligible Notes for New Broadband Notes pursuant to the
mandatory exchange will not be treated as a taxable transaction for federal
income tax purposes if both the Broadband Eligible Notes and the New Broadband
Notes are treated as securities under the relevant provisions of the Code. The
term "securities" is not defined under the Code or in the regulations
promulgated thereunder. Under applicable administrative pronouncements and
judicial decisions, as a general matter, the determination of whether a debt
instrument is a security depends on the terms, conditions and other facts and
circumstances relating to the instrument and, consequently, is inherently
uncertain.

     Broadband Eligible Notes due January 15, 2022, July 15, 2024, January 15,
     2025 and December 1, 2031.  The Broadband Eligible Notes due January 15,
     2022, July 15, 2024, January 15, 2025 and December 1, 2031 and each
     corresponding series of New Broadband Notes will be treated as securities
     for purposes of the relevant provisions of the Code. Except as described
     below with respect to cash received in lieu of fractional New Broadband
     Notes, the material federal income tax consequences of the exchange of such
     notes to a holder will be as follows:

     - no gain or loss will be recognized on the exchange, except that gain
       (measured by the amount by which the "issue price" (as defined below) of
       the New Broadband Note exceeds the adjusted tax basis (discussed below)
       of the Broadband Eligible Note), if any, should be recognized but not in
       an amount in excess of the fair market value of any excess of the
       principal amount of the New Broadband Note received over the principal
       amount of the Broadband Eligible Note surrendered (the "excess principal
       amount");

     - the holding period of the New Broadband Note will include the holding
       period of the Broadband Eligible Note exchanged for the New Broadband
       Note;

     - the adjusted tax basis of the New Broadband Note will be the same as the
       adjusted tax basis of the Broadband Eligible Note exchanged for the New
       Broadband Note;

                                        83


     - any bond premium applicable to the Broadband Eligible Note will carry
       over to the New Broadband Note;

     - any accrued market discount on the Broadband Eligible Note not previously
       treated as ordinary income will carry over to the New Broadband Note to
       the extent that the holder's tax basis in the Broadband Eligible Note is
       less than the issue price of the New Broadband Note; and

     - any additional market discount on the Broadband Eligible Note will be
       converted to original issue discount (discussed below) on the New
       Broadband Note.

     The calculation of excess principal amount is not entirely clear under
current federal income tax law. In particular, such calculation might be based
upon the difference between the stated principal amounts of the Broadband
Eligible Note and the New Broadband Note, or, alternatively, the difference
between the issue price of the New Broadband Note and the adjusted issue price
of the Broadband Eligible Note. Holders should consult their own tax advisors
regarding alternative interpretations of excess principal amount and the federal
income tax consequences thereof.

     Broadband Eligible Notes due 2009.  The Broadband Eligible Notes due 2009
may be treated as securities for purposes of the relevant provisions of the
Code. If these notes are properly classified as securities, the material federal
income tax consequences of the exchange of such notes will be as described in
the immediately preceding section. If the Broadband Eligible Notes due 2009 are
not treated as securities, the exchange of such Broadband Eligible Notes for the
New Broadband Notes will be a taxable exchange and the material federal income
tax consequences will be as described in the following section.

     Broadband Eligible Notes due 2005, 2006, and 2007.  The Broadband Eligible
Notes due 2005, 2006 and 2007 will not be treated as securities for purposes of
the relevant provisions of the Code. Except as described below with respect to
cash received in lieu of fractional New Broadband Notes, the material federal
income tax consequences of the exchange of such notes will be as follows:

     - Gain or loss will be recognized in an amount equal to the difference
       between the issue price of the New Broadband Note (except to the extent
       the issue price is attributable to accrued but unpaid interest, which is
       taxable as ordinary interest income upon the exchange) and the holder's
       adjusted tax basis in the Broadband Eligible Note. If the New Broadband
       Notes are "traded on an established market" (generally meaning that they
       are listed on a major securities exchange, appear on a quotation medium
       of general circulation or otherwise are readily quotable by dealers,
       brokers or traders during the 60-day period ending 30 days after the date
       of the exchange), the issue price of the New Broadband Notes will be
       equal to their fair market value on the date of the mandatory exchange.
       Otherwise, the issue price of the New Broadband Notes will be equal to
       the fair market value of the Broadband Eligible Notes exchanged on such
       date.

     - The adjusted tax basis in the Broadband Eligible Note will generally
       equal the cost of the note to the holder, increased by the amount of any
       market discount and accrued but unpaid interest previously included in
       income by the holder with respect to such Broadband Eligible Note and
       decreased by any amount of any amortizable bond premium previously
       deducted from income by the holder with respect to such note.

     - The gain or loss recognized on the exchange will generally be capital
       gain (subject to the market discount rules discussed below) or loss and
       will be long-term capital gain or loss if at the time of the exchange the
       Broadband Eligible Note has been held for more than one year. The
       deduction of capital losses for federal income tax purposes is subject to
       limitations.

     Cash Received in Connection with the Exchange by Holders of Broadband
Eligible Notes

     A holder of Broadband Eligible Notes will not be entitled to receive any
fractional New Broadband Notes in exchange for Broadband Eligible Notes but will
receive cash in lieu of such fractional interest. For federal income tax
purposes, a holder may be treated as if it received the fractional New Broadband
Note pursuant to the mandatory exchange and received the cash in retirement of
such fractional interest.

                                        84


In that case, a holder generally would recognize taxable gain or loss based upon
the difference between the amount of cash received and such holder's adjusted
tax basis in the fractional New Broadband Note. The gain or loss recognized on
the retirement of a fractional New Broadband Note would be treated as described
below for the sale or disposition of a New Broadband Note. Alternatively, a
holder may be treated as having received New Broadband Notes and cash in
exchange for Broadband Eligible Notes. In that event, holders of Broadband
Eligible Notes that qualify as securities for federal income tax purposes would
recognize gain (but not loss) in an amount equal to the lesser of the gain
realized, if any, with respect to the Broadband Eligible Notes exchanged and the
cash received. Such holders should consult their own tax advisors regarding
alternative characterizations of any cash received in lieu of fractional New
Broadband Notes.

     Payments of accrued interest on any series of Broadband Eligible Notes made
at the time of the mandatory exchange will be taxable to a holder as ordinary
interest income, unless such holder has previously included such amount in
income in accordance with its method of accounting for federal income tax
purposes.

     The Exchange of AT&T Eligible Notes

     AT&T intends to take the position that the exchange of AT&T Eligible Notes
for New AT&T Notes is not an exchange pursuant to which gain or loss should be
realized for federal income tax purposes. If the exchange is not one pursuant to
which gain or loss should be realized, there will be no federal income tax
consequences to the exchange of AT&T Eligible Notes for New AT&T Notes and the
federal income tax consequences regarding the ownership and disposition of New
AT&T Notes prior to the consummation of the AT&T Comcast transaction will be the
same as those of AT&T Eligible Notes. As described below, for federal income tax
purposes, the modification of a New AT&T Note in connection with the AT&T
Comcast transaction may be treated as an exchange. For purposes of the following
discussion in this section entitled "Material United States Federal Income Tax
Consequences of the Exchange Offer," all references to "AT&T Eligible Notes"
shall include New AT&T Notes prior to the modification of the terms of such
notes upon consummation of the AT&T Comcast transaction.

     AT&T Eligible Notes due 2054.  For federal income tax purposes, a
"significant modification" of a debt instrument -- i.e., a modification that
results in a debt instrument that differs materially either in kind or in
extent -- may be treated as a taxable exchange of the debt instrument for a new
debt instrument, whether or not evidenced by a physical surrender of the debt
instrument for a newly-issued debt instrument. Under applicable Treasury
regulations, a change in yield of a debt instrument generally is a significant
modification if the yield, as modified (determined taking into account any
payments made to the holder as consideration for the modification), varies from
the yield of the unmodified instrument by more than the greater of (i) 0.25% and
(ii) 5% of the annual yield of the unmodified instrument.

     The adjusted rate of interest, which will be received by a holder of a New
AT&T Note due 2054 upon consummation of the AT&T Comcast transaction, is not
expected to increase the yield of a New AT&T Note held by such holder by more
than the greater of (i) 0.25% and (ii) 5% of the AT&T Eligible Note's current
annual yield. Accordingly, for federal income tax purposes, it is not expected
that the adjustment of the interest rate of the AT&T Eligible Notes due 2054
that would occur upon consummation of the AT&T Comcast transaction will result
in a deemed exchange pursuant to which gain or loss should be realized for
federal income tax purposes. In that event, there should be no federal income
tax consequences from the adjustment of the interest rate of the AT&T Eligible
Notes due 2054 and the federal income tax consequences regarding the ownership
and disposition of such notes will be the same as those of the AT&T Eligible
Notes due 2054.

     If the adjustment of the interest rate does increase the yield of a New
AT&T Note held by a holder of an AT&T Eligible Note due 2054 by more than the
greater of (i) 0.25% and (ii) 5% of the AT&T Eligible Note's current annual
yield, the adjustment will result in a deemed exchange pursuant to which gain or
loss should be realized. In that event, the federal income tax consequences of
the deemed exchange will depend on whether the AT&T Eligible Notes due 2054 and
the corresponding New AT&T

                                        85


Notes are treated as securities for purposes of the relevant provisions of the
Code. Holders should consult their own tax advisors to evaluate whether the AT&T
Eligible Notes due 2054 qualify as securities for federal income tax purposes
and the tax consequences of a deemed exchange to them.

     AT&T Eligible Notes due 2029.  AT&T intends to take the position that the
change of the maturity of the AT&T Eligible Notes due 2029 from March 15, 2029
to March 15, 20  that would occur upon consummation of the AT&T Comcast
transaction is not a deemed exchange pursuant to which gain or loss should be
realized for federal income tax purposes. In that event, there should be no
federal income tax consequences from the change of the maturity of the AT&T
Eligible Notes due 2029 and the federal income tax consequences regarding the
ownership and disposition of such notes will be the same as those of the AT&T
Eligible Notes due 2029.

     If the change of the maturity of the AT&T Eligible Notes due 2029 were a
deemed exchange pursuant to which gain or loss is realized, since the AT&T
Eligible Notes due 2029 and the corresponding New AT&T Notes will be treated as
securities for purposes of the relevant provisions of the Code, the federal
income tax consequences of such deemed exchange would be the same as those
described above for the exchange of Broadband Eligible Notes that qualify as
securities for New Broadband Notes that qualify as securities.

     AT&T Eligible Notes due 2004 and May 15, 2025.  The adjusted rate of
interest, which will be received by a holder that exchanges an AT&T Eligible
Note due 2004 or May 15, 2025 for a corresponding New AT&T Note upon
consummation of the AT&T Comcast transaction, may increase the yield of a New
AT&T Note held by such holder by more than both (i) 0.25% and (ii) 5% of the
AT&T Eligible Note's current annual yield. Accordingly, for federal income tax
purposes, a holder of such an AT&T Eligible Note may be deemed to have exchanged
the AT&T Eligible Note for a New AT&T Note in a taxable exchange.

     If the adjusted rate of interest that will be received by a holder of a New
AT&T Note due 2004 or May 15, 2025 upon consummation of the AT&T Comcast
transaction does not increase the yield of a New AT&T Note held by such holder
by more than the greater of (i) 0.25% and (ii) 5% of the AT&T Eligible Note's
current annual yield, the adjustment will not result in a deemed exchange
pursuant to which gain or loss should be recognized for federal income tax
purposes. In that event, there should be no federal income tax consequences from
the adjustment of the interest rate and the federal income tax consequences
regarding the ownership and disposition of such notes will be the same as those
of the AT&T Eligible Notes due 2004 or May 15, 2025. Otherwise, the adjustment
will result in a deemed exchange pursuant to which gain or loss should be
recognized for federal income tax purposes and the material federal income tax
consequences of such deemed exchange are as described below.

     The AT&T Eligible Notes due 2004 will not be treated as securities for
purposes of the relevant provisions of the Code. Consequently, the material
federal income tax consequences of a deemed exchange of such notes will be as
described above for the exchange of Broadband Eligible Notes that do not qualify
as securities for New Broadband Notes that qualify as securities, except that
(1) the issue price of the New AT&T Notes will be equal to their fair market
value if such notes are considered to be "traded on an established market" or,
alternatively, equal to the fair market value of the AT&T Eligible Notes deemed
exchanged, in each case as of the date on which the deemed exchange occurs, and
(2) holders that are cash method taxpayers may need to include in income
interest that has accrued but has not yet been paid as of the date of the deemed
exchange, but any such interest would not be included in income when it is
actually paid.

     The AT&T Eligible Notes due May 15, 2025 will be treated as securities for
purposes of the relevant provisions of the Code. Consequently, the material
federal income tax consequences of a deemed exchange of such notes will be as
described above for the exchange of Broadband Eligible Notes that qualify as
securities for New Broadband Notes that qualify as securities.

                                        86


     Nonparticipation in the Exchange Offer

     While the matter is not free from doubt, AT&T intends to take the position
that the adoption of the note amendment should not constitute a significant
modification of the terms of the Broadband Eligible Notes or AT&T Eligible
Notes. As such, holders of Broadband Eligible Notes or AT&T Eligible Notes that
do not participate in the exchange offer should not be deemed to have exchanged
their Broadband Eligible Notes or AT&T Eligible Notes, and otherwise should not
recognize income, gain or loss solely as a result of the adoption of the note
amendment.

     Similarly, there should be no federal income tax consequences of the
exchange offer to a participating holder with respect to any portion of the
holder's eligible notes that are not tendered, are withdrawn prior to the
expiration of the exchange offer, or are not exchanged because of proration.
Furthermore, if the AT&T Comcast transaction does not occur, there should be no
federal income tax consequences from the exchange of Broadband Eligible Notes
for Broadband Exchange Notes or AT&T Eligible Notes for New AT&T Notes, as the
case may be, and the federal income tax consequences regarding the ownership and
disposition of such notes will be the same as those of the Broadband Eligible
Notes and AT&T Eligible Notes.

     Broadband Eligible Notes or AT&T Eligible Notes Purchased With Market
Discount

     Any gain recognized by a holder on the exchange of Broadband Eligible Notes
or AT&T Eligible Notes having market discount will be treated as ordinary income
to the extent of the market discount that has accrued while such Broadband
Eligible Notes or AT&T Eligible Notes were held by the holder, unless the holder
has included market discount in income currently as it accrues. In general,
market discount is the excess, if any, of the Broadband Eligible Notes' or AT&T
Eligible Notes' stated redemption price at maturity over the holder's tax basis
therein immediately after its acquisition (unless the amount of such excess is
less than a specified de minimis amount, in which case the market discount is
considered to be zero).

     Consequences of Holding New Broadband Notes or New AT&T Notes

     The following is a summary of the principal federal income tax consequences
resulting from the ownership and disposition of (i) New Broadband Notes and (ii)
New AT&T Notes after the consummation of the AT&T Comcast transaction. To the
extent that the adjustment to the rate of interest of the AT&T Eligible Notes
due 2054 or the change of the maturity of the AT&T Eligible Notes due 2029 upon
consummation of the AT&T Comcast transaction did not result in a deemed exchange
pursuant to which gain or loss is realized for federal income tax purposes, the
principal federal income tax consequences resulting from the ownership and
disposition of such notes will not change. The discussion that follows,
therefore, is not applicable to the New AT&T Notes due 2054 or the New AT&T
Notes due 20  .

     Payments of Interest and Original Issue Discount.  Qualified stated
interest (defined as stated interest that is unconditionally payable in cash or
property at least annually at a single fixed rate of interest) paid on a New
Broadband Note or New AT&T Note will be taxable to a holder as ordinary interest
income at the time it accrues or is received in accordance with the holder's
method of accounting for federal income tax purposes. Each New Broadband Note or
New AT&T Note will be considered to be issued with original issue discount
("OID") if the "stated redemption price at maturity" of the New Broadband Note
or New AT&T Note exceeds its "issue price", provided such excess is greater than
a specified de minimis amount. For purposes of the foregoing, the general rule
is that the stated redemption price at maturity of a debt instrument is the sum
of all payments provided by the debt instrument other than payments of qualified
stated interest. The issue price of each New Broadband Note or New AT&T Note
(other than a New AT&T Note due 2054) will be equal to such note's fair market
value if such note is considered to be "traded on an established market" or,
alternatively, equal to the to the fair market value of the Eligible Broadband
Notes exchanged or Eligible AT&T Notes deemed exchanged, in each case as of the
date on which the exchange or deemed exchange occurs. Holders of New AT&T Notes
due 2054 should consult their own tax advisors regarding the determination of
the issue price of such notes and the amounts of qualified stated interest and
OID.

                                        87


     Each New Broadband Note and each New AT&T Note may be issued with OID that
exceeds the specified de minimis amount. In that event, each holder will be
required to include in income each year, without regard to whether any cash
payments of interest are made with respect to the New Broadband Notes and New
AT&T Notes and without regard to the holder's method of accounting for federal
income tax purposes, a portion of the OID on the New Broadband Notes and New
AT&T Notes so as to provide a constant yield to maturity, subject to reductions
in respect of acquisition premium as described below. The amount required to be
so included will be treated as ordinary income. Any amount of such OID included
in income will increase a holder's adjusted tax basis in a New Broadband Note or
New AT&T Note, and any payments from the issuer to the holder, other than
payments of qualified stated interest, will decrease a holder's adjusted tax
basis in such notes. A holder will not be subject to federal income tax on such
payments. In compliance with U.S. Treasury regulations, AT&T or Broadband, as
the case may be, will provide certain information to the Internal Revenue
Service ("IRS") and holders that is relevant to determining the amount of OID in
each accrual period.

     If a holder's tax basis in a New Broadband Note or New AT&T Note
immediately after the exchange of a Broadband Eligible Note for a New Broadband
Note or an AT&T Eligible Note for a New AT&T Note, exceeds the sum of all
amounts payable on such New Broadband Note or New AT&T Note other than qualified
stated interest then the holder will not be required to include OID in gross
income.

     Acquisition Premium and Amortizable Bond Premium.  If a holder's adjusted
tax basis in a New Broadband Note or New AT&T Note immediately after the
exchange of a Broadband Eligible Note for a New Broadband Note or the deemed
exchange of an AT&T Eligible Note for a New AT&T Note, (i) is less than or equal
to the sum of all amounts payable on the New Broadband Note or New AT&T Note
(other than payments of qualified stated interest), but (ii) exceeds the
adjusted issue price of such New Broadband Note or New AT&T Note, such excess
will be considered "acquisition premium". In such case, a holder may reduce its
OID inclusions with respect to the New Broadband Note or New AT&T Note by an
amount equal to the amount of OID such holder would otherwise include in its
gross income multiplied by a fraction, the numerator of which is the amount of
acquisition premium and the denominator of which is the excess of the sum of all
amounts (other than qualified stated interest) payable on the New Broadband Note
or New AT&T Note after the date of the exchange over the adjusted issue price of
the New Broadband Note or New AT&T Note. Alternatively, a holder may elect to
amortize acquisition premium on a constant-yield basis.

     If a holder's adjusted tax basis in a New Broadband Note or New AT&T Note
immediately after the exchange of a Broadband Eligible Note for a New Broadband
Note or the deemed exchange of an AT&T Eligible Note for a New AT&T Note exceeds
the amount that is payable at maturity, the holder will be considered to have
amortizable bond premium equal to such excess. The holder may elect to amortize
this premium using a constant yield method, over the remaining term of the note
(where the note is not optionally redeemable prior to its maturity date). If the
note may be optionally redeemed prior to maturity, the amount of amortizable
bond premium is determined with reference to the amount payable on maturity or,
if it results in a smaller premium attributable to the period up to the earlier
redemption date, with reference to the amount payable on the earlier redemption
date. A holder who elects to amortize bond premium may offset each interest
payment on such note by the portion of the bond premium allocable to such
payment and must reduce its tax basis in the note by the amount of the premium
amortized in any year. An election to amortize bond premium applies to all
taxable debt obligations then owned and thereafter acquired by the holder and
may be revoked only with the consent of the IRS.

     Market Discount.  Market discount on a Broadband Eligible Note or AT&T
Eligible Note will carry over to the New Broadband Note or New AT&T Note to the
extent that the holder's tax basis in the Broadband Eligible Note or AT&T
Eligible Note is less than the issue price of the New Broadband Note or AT&T
Eligible Note. A holder will be required to treat any principal payment on, or
any gain on the sale, exchange, retirement or other disposition of a New
Broadband Note or New AT&T Note as ordinary income to the extent of the market
discount on the note at the time of the payment or disposition unless the market
discount has been previously included in income by the holder pursuant to an
election by the holder to include the market discount in income as it accrues,
or pursuant to a constant yield election by
                                        88


the holder. If the New Broadband Note or New AT&T Note is disposed of in certain
nontaxable transactions, accrued market discount will be includible as ordinary
income to the holder as if the holder had sold the note at its then fair market
value. In addition, the holder may be required to defer, until the maturity of
the note or its earlier disposition (including certain nontaxable transactions),
the deduction of all or a portion of the interest expense on any indebtedness
incurred or maintained to purchase or carry such note.

     Sale, Exchange, Redemption or other Taxable Disposition of New Broadband
Notes or New AT&T Notes.  Upon the sale, exchange, redemption or other taxable
disposition of a New Broadband Note or New AT&T Note, a holder will recognize
gain or loss, if any, for federal income tax purposes equal to the difference
between (i) the amount realized upon the sale, exchange, redemption or other
taxable disposition (except to the extent such amount is attributable to accrued
but unpaid interest, which is taxable as ordinary interest income upon the sale,
exchange, redemption or other taxable disposition) and (ii) such holder's
adjusted tax basis in such New Broadband Notes or New AT&T Notes. A holder's
adjusted tax basis in a New Broadband Note or New AT&T Note that was received in
a tax-free exchange of a Broadband Eligible Note or AT&T Eligible Note is
generally the adjusted tax basis of such Broadband Eligible Note or AT&T
Eligible Note, and a holder's adjusted tax basis in a New Broadband Note or a
New AT&T Note that was received in a taxable exchange of a Broadband Eligible
Note or AT&T Eligible Note is generally the issue price of such note, in each
case increased by any original issue discount, accrued but unpaid interest and
market discount, if any, included in such holder's income and reduced (but not
below zero) by any amortized bond premium which a holder has elected to deduct
from taxable income on an annual basis and any payments other than payments of
"qualified stated interest" with respect to a New Broadband Note or New AT&T
Note.

     Except as provided below, any gain or loss recognized on the sale, exchange
or redemption of a New Broadband Note or New AT&T Note will generally be capital
gain or loss and will be long-term capital gain or loss if at the time of sale,
exchange or redemption the holder's holding period of the New Broadband Note or
New AT&T Note for federal income tax purposes is more than one year. A holder
that has market discount with respect to a New Broadband Note or New AT&T Note
will generally be required to treat gain realized on the sale, exchange,
redemption or other disposition of the New Broadband Notes or New AT&T Notes
(including certain dispositions which are nonrecognition transactions under the
Code) as ordinary income to the extent of the market discount accrued to the
date of the disposition, less any accrued market discount previously reported as
ordinary income.

     Information Reporting and Backup Withholding

     Information reporting requirements will generally apply to certain payments
made and OID with respect to the New Broadband Notes and New AT&T Notes. To
prevent backup withholding at the then applicable rate with respect to such
payments and with respect to the exchange, federal income tax law requires that
each exchanging holder must provide the paying agent with such holder's correct
taxpayer identification number which, in the case of an individual is his or her
social security number, and certain other information, or otherwise establish a
basis for exemption from backup withholding. Exempt holders (including, among
others, all corporations, and certain foreign individuals) are not subject to
these backup withholding and information reporting requirements. Backup
withholding tax is not an additional federal income tax. Rather, the federal
income tax liability of persons subject to backup withholding tax will be offset
by the amount of tax withheld. If backup withholding tax results in an
overpayment of federal income tax, a refund or credit may be obtained from the
IRS, provided the required information is furnished.

     THE FOREGOING DISCUSSION IS NOT INTENDED TO BE A COMPLETE ANALYSIS OR
DESCRIPTION OF ALL POTENTIAL FEDERAL INCOME TAX CONSIDERATIONS OR ANY OTHER
CONSIDERATIONS RELATING TO THE EXCHANGE OF BROADBAND ELIGIBLE NOTES OR AT&T
ELIGIBLE NOTES OR THE MODIFICATION OF CERTAIN TERMS OF SUCH NOTES UPON
CONSUMMATION OF THE AT&T COMCAST TRANSACTION. THUS, HOLDERS ARE URGED TO CONSULT
THEIR OWN TAX ADVISORS AS TO THE SPECIFIC
                                        89


TAX CONSEQUENCES OF THE TENDER TO THEM, INCLUDING TAX RETURN REPORTING
REQUIREMENTS, THE APPLICABILITY AND EFFECT OF FEDERAL, STATE, LOCAL, FOREIGN AND
OTHER APPLICABLE TAX LAWS AND THE EFFECT OF ANY PROPOSED CHANGES IN THE TAX
LAWS.

CONSEQUENCES OF FAILURES TO PROPERLY TENDER BROADBAND ELIGIBLE NOTES AND AT&T
ELIGIBLE NOTES IN THE EXCHANGE OFFER

     Issuance of the Broadband Exchange Notes and the New AT&T Notes in exchange
for the Broadband Eligible Notes and AT&T Eligible Notes, respectively, under
the exchange offer will be made only after timely receipt by the exchange agent
of such Broadband Eligible Notes or AT&T Eligible Notes, a properly completed
and duly executed letter of transmittal and all other required documents, and
the completion of the proration process with respect to any series of Broadband
Eligible Notes. Therefore, holders desiring to tender Broadband Eligible Notes
or AT&T Eligible Notes in exchange for Broadband Exchange Notes or New AT&T
Notes, as applicable, should allow sufficient time to ensure timely delivery. We
are under no duty to give notification of defects or irregularities of tenders
of Broadband Eligible Notes or AT&T Eligible Notes for exchange.

     To the extent that Broadband Eligible Notes and AT&T Eligible Notes are
tendered and accepted in connection with the exchange offer, any trading markets
for the remaining Broadband Eligible Notes and AT&T Eligible Notes could be
adversely affected. See "Risk Factors -- Risks Relating to the Exchange Offer."

     To the extent that any Broadband Eligible Notes and AT&T Eligible Notes
remain outstanding following completion of the exchange offer, they will remain
obligations of AT&T.

USE OF PROCEEDS

     None of AT&T, Broadband or any other party will receive any proceeds from
the issuance of the new notes in the exchange offer. The amount that Broadband
would otherwise be required to pay to AT&T upon completion of the AT&T Comcast
transaction to satisfy intercompany indebtedness then outstanding will be
reduced based upon the aggregate principal amount of New Broadband Notes issued
in the mandatory exchange in an amount to be mutually agreed upon.

                                        90


                       DESCRIPTION OF THE NOTE AMENDMENT

THE NOTE AMENDMENT

     Any holders of Broadband Eligible Notes or AT&T Eligible Notes whose notes
are accepted in the exchange offer must consent to the note amendment to the
AT&T Indenture governing each series of those notes, upon the terms and subject
to the conditions set forth in this prospectus, the accompanying letter of
transmittal, applicable law and, to the extent applicable, the AT&T Indenture.
The note amendment would change the terms of the notes regarding the
consolidation, merger with, or sale or conveyance of all or substantially all of
the property of, AT&T to clarify that in connection with the AT&T Comcast
transaction the successor formed by the consolidation or merger, or to which
AT&T shall have transferred the property, need not assume the obligations of
AT&T under the notes of that series and that such a successor shall not succeed
to and be substituted for AT&T under the notes of that series. The note
amendment is described in further detail under "-- Terms of the Note Amendment."

     The note amendment is designed to satisfy a condition to the AT&T Comcast
transaction. The AT&T Comcast transaction is conditioned on AT&T's obtaining the
consent of, or having defeased, purchased, retired or acquired debt in respect
of series representing 90% in aggregate principal amount of AT&T Notes
outstanding on December 19, 2001, which was approximately $12.7 billion, of debt
securities issued under the AT&T Indenture. As of June 30, 2002, approximately
$12.2 billion of these debt securities, including the Broadband Eligible Notes
and AT&T Eligible Notes, remained outstanding. AT&T and Comcast could mutually
agree to waive this condition with respect to all or any portion of the AT&T
Notes for which consents are not obtained. If the AT&T Comcast transaction were
to occur and if holders of the AT&T Notes were to assert successfully that
completing that AT&T Comcast transaction required Broadband or one of its
affiliates to assume AT&T's obligations under the AT&T Notes and that did not
occur, then AT&T could be required to refinance that indebtedness. Thus, while
AT&T and Comcast could jointly waive the consent condition to the AT&T Comcast
transaction, AT&T is making the exchange offer primarily to facilitate the AT&T
Comcast transaction and to optimize the respective capital structures of AT&T
and AT&T Comcast in an economic and tax efficient manner.

TERMS OF THE NOTE AMENDMENT

     The note amendment is an amendment to the AT&T Indenture covenant regarding
the consolidation, merger with, or sale or conveyance of all or substantially
all of the property of AT&T. The note amendment will be effective with respect
to each series of notes that consents to the amendment and will provide that the
AT&T Comcast transaction, including all transactions consummated as steps in the
AT&T Comcast transaction, (1) will not result in a consolidation, merger, sale,
conveyance or other transfer of property of AT&T (including stock of
subsidiaries) as an entirety or substantially as an entirety for purposes of the
AT&T Indenture, and (2) will not violate the successor clause of the AT&T
Indenture or any other provision of the AT&T Indenture or any security issued
under the AT&T Indenture, regardless of whether any person assumes any of the
indebtedness outstanding under the AT&T Indenture or any other obligation under
the AT&T Indenture or any security issued under the AT&T Indenture.

     The foregoing description of the terms of the note amendment is qualified
in its entirety by reference to the forms of the supplemental indenture with
respect to the Broadband Exchange Notes and the supplemental indenture with
respect to all other AT&T Notes, which are filed as exhibits to the registration
statement of which this prospectus is a part. The forms of supplemental
indentures to the AT&T Indenture may be modified or supplemented before their
execution in a manner that would not require us to obtain additional consents
under the terms of the AT&T Indenture. The description is also qualified in its
entirety by reference to the full provisions of the AT&T Indenture, which is
filed as an exhibit to the registration statement of which this prospectus is a
part, and copies of which the information agent can provide to you. Holders of
Broadband Eligible Notes or AT&T Eligible Notes should carefully review the note
amendment before consenting to the note amendment by tendering and not
withdrawing their notes in the exchange offer.

                                        91


CONDITIONS TO THE NOTE AMENDMENT

     The adoption of the note amendment is conditioned on

     - our receiving the requisite consents to the note amendment and AT&T
       having so certified to the indenture trustee; see "-- Requisite Consents;
       Outstanding Notes;" and

     - the AT&T Comcast transaction not having been terminated.

     If these conditions are satisfied, AT&T and Broadband expect to execute and
deliver to the indenture trustee the supplemental indentures with respect to
each consenting series of notes as soon as the requisite consents are obtained.
The supplemental indentures will be effective as soon as they are executed.

REQUISITE CONSENTS; OUTSTANDING NOTES

     In order for the note amendment to be effective as to a series of Broadband
Eligible Notes or AT&T Eligible Notes, registered holders of more than 50% in
aggregate principal amount of the notes of that series outstanding at the
expiration of the exchange offer must have been accepted in the exchange offer
and consented to the note amendment as of the expiration of the exchange offer
with respect to that series. For these purposes, all of the Series A Medium-Term
Notes outstanding are treated as part of a single series. The following table
sets forth the principal amount outstanding of each series of Broadband Eligible
Notes and AT&T Eligible Notes as of the date of this prospectus.



                                                              PRINCIPAL AMOUNT
BROADBAND ELIGIBLE NOTES                                        OUTSTANDING
------------------------                                      ----------------
                                                           
7.00% Notes Due 2005........................................  $   300,000,000
7.50% Notes Due 2006........................................      500,000,000
7.75% Notes Due 2007........................................      500,000,000
6.00% Notes Due 2009........................................    3,000,000,000
8.125% Debentures Due January 15, 2022......................      500,000,000
8.125% Debentures Due July 15, 2024.........................      500,000,000
8.35% Debentures Due 2025...................................      300,000,000
8.625% Debentures Due December 1, 2031......................      676,000,000

AT&T ELIGIBLE NOTES
-------------------

5.625% Notes Due 2004.......................................    2,000,000,000
6.75% Notes Due 2004........................................      400,000,000
7.75% Medium-Term Notes, Series A Due May 15, 2025..........       25,000,000
8.00% Medium-Term Notes, Series A Due May 15, 2025..........       50,000,000
6.50% Notes Due 2029........................................    3,000,000,000
FRN Medium-Term Notes, Series A Due 2054....................       10,563,000
                                                              ---------------
          TOTAL.............................................  $11,761,563,000
                                                              ===============


     The failure of a holder of Broadband Eligible Notes or AT&T Eligible Notes
to have those notes accepted in the exchange offer, including any failures
resulting from failures by brokers to properly tender or to receive instructions
from their clients as to whether to tender Broadband Eligible Notes or AT&T
Eligible Notes in the exchange offer, will have the same effect as if that
holder had not granted a consent to the note amendment.

     To our knowledge, no director or executive officer of AT&T, Broadband or
any of their affiliates held any Broadband Eligible Notes or AT&T Eligible Notes
as of the close of business on           , 2002.

NO CONSENT FEE

     Holders of Broadband Eligible Notes or AT&T Eligible Notes, to the extent
their notes are accepted for exchange, must consent to the note amendment and
will not receive any consent payment. Notes of any series not accepted for
exchange will not receive any payment but will be bound by the note

                                        92


amendment provided that more than 50% of the notes of that series have consented
and been accepted for exchange.

EXPIRATION DATE; EXTENSION OF THE EXCHANGE OFFER; AMENDMENT; TERMINATION

     If, at the expiration of the exchange offer, we have obtained the requisite
consents, AT&T will so certify to the indenture trustee, and the consents will
be effective and irrevocable. If we do not receive the requisite consents before
the expiration of the exchange offer, we reserve the right to extend the
exchange offer as to any one or more series of Broadband Eligible Notes or AT&T
Eligible Notes on one or more occasions. If we extend the exchange offer, we
will give oral or written notice of this extension to the indenture trustee and
make a public announcement of this extension by no later than 9:00 a.m. (Eastern
time) on the next business day after the scheduled expiration date of the
exchange offer.

     AT&T reserves the right, exercisable in its sole discretion, to terminate
the exchange offer and not adopt the note amendment, whether or not we have
received the requisite consents, by giving oral or written notice of termination
to the indenture trustee and making a public announcement of termination. AT&T
also reserves the right, subject to applicable laws, to amend the exchange offer
in any respect by giving oral or written notice of the amendment to the
indenture trustee and making a public announcement of the note amendment.

     If we make any public announcement in connection with the exchange offer,
we will disseminate it to AT&T noteholders in a manner reasonably designed to
inform noteholders of the announced change on a timely basis. Without limiting
the manner in which we may choose to make a public announcement, except as may
be required by applicable law, we will have no obligation to publish, advertise
or otherwise communicate any public announcement other than by issuing a release
to the Dow Jones News Service. Notices in Luxembourg with respect to these
matters will be published in the Luxemburger Wort.

CONSEQUENCES TO NON-CONSENTING HOLDERS; DISSENTERS' RIGHTS

     If we obtain the requisite consents and execute the note amendment with
respect to a series of Broadband Eligible Notes or AT&T Eligible Notes, it will
be binding on each holder of notes of that series, regardless of whether or not
that holder consented. You will not be entitled to any appraisal or dissenters'
rights if the note amendment becomes effective without your consent.

CONSENT PROCEDURES

     In order to consent to the note amendment, a holder of Broadband Eligible
Notes or of AT&T Eligible Notes must validly tender and not withdraw its notes
in the exchange offer. The letter of transmittal will include the holder's
consent with respect to all of that holder's notes accepted in the exchange
offer. See "Description of the Exchange Offer -- Required Consent."

REVOCATION OF CONSENTS

     If you consent by validly tendering AT&T Eligible Notes or Broadband
Eligible Notes, you may automatically revoke your consent by withdrawing those
notes from the exchange offer prior to their acceptance. See "Description of the
Exchange Offer -- Withdrawal Rights."

                                        93


                  DESCRIPTION OF THE BROADBAND EXCHANGE NOTES

     The Broadband Exchange Notes initially will be AT&T's and Broadband's
direct unsecured and unsubordinated obligations, however, upon completion of the
AT&T Comcast transaction, the Broadband Exchange Notes will be mandatorily
exchanged for New Broadband Notes, which will be primary obligations only of
Broadband, fully and unconditionally guaranteed by AT&T Comcast, Comcast Cable,
MediaOne and TCI, referred to as the cable guarantors. See "-- Mandatory
Exchange Upon Completion of the AT&T Comcast Transaction" below. If the AT&T
Comcast transaction is terminated, the Broadband Exchange Notes will not be
exchanged for New Broadband Notes, will become obligations only of AT&T with
Broadband released as an obligor and will not be entitled to the benefits of the
cable guarantees. The Broadband Eligible Notes were issued under the AT&T
Indenture. The Broadband Exchange Notes will be issued under the AT&T Indenture,
as amended by a supplemental indenture that will have the purpose of, among
other things, creating the series of notes included in, and setting forth the
terms applicable to, the Broadband Exchange Notes, effecting the note amendment
with respect to each series of Broadband Exchange Notes and making Broadband a
co-obligor on the Broadband Exchange Notes, each as described below in this
section and under "Description of the Note Amendment." We refer to this
supplemental indenture as the "Broadband Exchange Supplemental Indenture." The
terms of the Broadband Exchange Notes include those stated in the AT&T
Indenture, those stated in the Broadband Exchange Supplemental Indenture and
those made part of the AT&T Indenture by reference to the Trust Indenture Act of
1939.

     The following is a summary of the material provisions of the AT&T Indenture
as amended by the Broadband Exchange Supplemental Indenture. Because this is a
summary, it may not contain all the information that is important to you. You
should read both the AT&T Indenture and the Broadband Exchange Supplemental
Indenture, which have been filed as exhibits to the registration statement of
which this prospectus is a part, in their entirety.

     The terms of the Broadband Exchange Notes are substantially identical to
the terms of the Broadband Eligible Notes, except that:

     - the Broadband Exchange Notes will be:

      o co-obligations of AT&T and Broadband unless the AT&T Comcast transaction
        is terminated; and

      o mandatorily exchanged upon completion of the AT&T Comcast transaction
        for New Broadband Notes, which will be primary obligations only of
        Broadband, fully and unconditionally guaranteed by the cable guarantors;

     - the merger covenant applicable to the Broadband Exchange Notes will be
       the AT&T Indenture merger covenant, as amended by the note amendment,
       which is described in greater detail under "-- Certain
       Covenants -- Consolidation, Merger or Sale;" and

     - the Broadband Exchange Notes will not be listed on any exchange if the
       AT&T Comcast transaction is completed; if the AT&T Comcast transaction is
       terminated, AT&T will use its commercially reasonable efforts to list the
       Broadband Exchange Notes on the New York Stock Exchange and the 6.00%
       Broadband Exchange Notes Due 2009 additionally on the Luxembourg Stock
       Exchange.

     For information regarding the New Broadband Notes and the cable guarantees
and for a summary of the material differences between the New Broadband Notes
and the Broadband Exchange Notes, see "Description of the New Broadband Notes
and the Cable Guarantees" and "Comparison of the New Broadband Notes and the
Broadband Exchange Notes."

                                        94


BASIC TERMS OF THE BROADBAND EXCHANGE NOTES

     The Broadband Exchange Notes:

     - will be co-obligations of AT&T and Broadband (unless the AT&T Comcast
       transaction is terminated, in which case Broadband's obligations under
       the Broadband Exchange Notes will be automatically fully and completely
       discharged and released) ranking equally with all of AT&T's and
       Broadband's other unsecured and unsubordinated debt;

     - will be mandatorily exchanged upon completion of the AT&T Comcast
       transaction for the applicable series of New Broadband Notes, which will
       be primary obligations only of Broadband, fully and unconditionally
       guaranteed by the cable guarantors;

     - in the event that the AT&T Comcast transaction is terminated, will cease
       to be exchangeable for New Broadband Notes;

     - will be issued in an aggregate principal amount not exceeding
       $          , comprised as follows:

      o up to $          in principal amount of 7.00% Broadband Exchange Notes
        Due May 15, 2005, with interest payable semiannually on each May 15 and
        November 15, beginning the first May 15 or November 15 occurring after
        the initial issuance of the 7.00% Broadband Exchange Notes Due May 15,
        2005, to holders of record on the preceding May 1 and November 1;

      o up to $          in principal amount of 7.50% Broadband Exchange Notes
        Due June 1, 2006, with interest payable semiannually on each June 1 and
        December 1, beginning the first June 1 or December 1 occurring after the
        initial issuance of the 7.50% Broadband Exchange Notes Due June 1, 2006,
        to holders of record on the preceding May 15 and November 15;

      o up to $          in principal amount of 7.75% Broadband Exchange Notes
        Due March 1, 2007, with interest payable semiannually on each March 1
        and September 1, beginning the first March 1 or September 1 occurring
        after the initial issuance of the 7.75% Broadband Exchange Notes Due
        March 1, 2007, to holders of record on the preceding February 15 and
        August 15;

      o up to $          in principal amount of 6.00% Broadband Exchange Notes
        Due March 15, 2009, with interest payable semiannually on each March 15
        and September 15, beginning the first March 15 or September 15 occurring
        after the initial issuance of the 6.00% Broadband Exchange Notes Due
        March 15, 2009, to holders of record on the preceding March 1 and
        September 1;

      o up to $          in principal amount of 8.125% Broadband Exchange Notes
        Due January 15, 2022, with interest payable semiannually on each January
        15 and July 15, beginning the first January 15 or July 15 occurring
        after the initial issuance of the 8.125% Broadband Exchange Notes Due
        January 15, 2022, to holders of record on the preceding January 1 and
        July 1;

      o up to $          in principal amount of 8.125% Broadband Exchange Notes
        Due July 15, 2024, with interest payable semiannually on each January 15
        and July 15, beginning the first January 15 or July 15 occurring after
        the initial issuance of the 8.125% Broadband Exchange Notes Due July 15,
        2024, to holders of record on the preceding January 1 and July 1;

      o up to $          in principal amount of 8.35% Broadband Exchange Notes
        Due January 15, 2025, with interest payable semiannually on each January
        15 and July 15, beginning the first January 15 or July 15 occurring
        after the initial issuance of the 8.35% Broadband Exchange Notes Due
        January 15, 2025, to holders of record on the preceding January 1 and
        July 1; and

      o up to $          in principal amount of 8.625% Broadband Exchange Notes
        Due December 1, 2031, with interest payable semiannually on each June 1
        and December 1, beginning the first June 1 or December 1 occurring after
        the initial issuance of the 8.625% Broadband Exchange Notes Due December
        1, 2031, to holders of record on the preceding May 15 and November 15;

     - are issuable in fully registered form, in denominations of $1,000 and
       multiples thereof.

                                        95


MANDATORY EXCHANGE UPON COMPLETION OF THE AT&T COMCAST TRANSACTION

     Upon completion of the AT&T Comcast transaction, the Broadband Exchange
Notes will be automatically and mandatorily exchanged for the applicable series
of New Broadband Notes without any action on the part of the holders of the
Broadband Exchange Notes. You will find a summary of the material terms and
conditions of the New Broadband Notes, the New Broadband Indenture pursuant to
which the New Broadband Notes will be issued and the cable guarantees in
"Description of the New Broadband Notes and the Cable Guarantees" and a summary
of the material differences between the New Broadband Notes and the Broadband
Exchange Notes in "Comparison of the New Broadband Notes and the Broadband
Exchange Notes." New certificates (or global notes, as the case may be)
representing the New Broadband Notes will be delivered to holders of the
Broadband Exchange Notes, which will become void.

     Upon completion of the mandatory exchange, each $1,000 principal amount of
Broadband Exchange Notes will be exchanged for that principal amount times the
relevant exchange ratio announced by press release two business days prior to
the expiration of the exchange offer of New Broadband Notes, Broadband will be
released and discharged from all obligations under the AT&T Indenture and
holders of the Broadband Exchange Notes will become holders of New Broadband
Notes, entitled to look only to Broadband and the cable guarantors under the
cable guarantees for payment of principal, premium, if any, and interest on the
New Broadband Notes.

INTEREST PAYMENTS

     Interest accrued and unpaid on any Broadband Eligible Notes accepted in an
exchange offer (a) will be paid along with the first payment of interest on the
relevant series of Broadband Exchange Notes or (b) if the mandatory exchange of
the Broadband Exchange Notes occurs prior to that first payment of interest,
will be paid at the time of the mandatory exchange.

     Interest accrued and unpaid on any series of Broadband Exchange Notes will
be paid at the time of mandatory exchange.

     Interest for the Broadband Exchange Notes will be computed on the basis of
a 360-day year consisting of twelve 30-day months. Interest on the notes accrues
from the date of original issuance, which will be on the date this exchange
offer is consummated with respect to each series of Broadband Exchange Notes, or
from the next recent interest payment date to which interest has been paid as
duly provided for, and is payable semiannually on interest payment dates
described of each year.

     For more information on payment and transfer procedures for the Broadband
Exchange Notes, see "-- Book-Entry System," "-- Same-Day Payment" and
"-- Additional Terms Pertaining Only to the 6.00% Broadband Exchange Notes Due
March 15, 2009 -- Payment of Additional Amounts."

ADDITIONAL TERMS PERTAINING ONLY TO THE 6.00% BROADBAND EXCHANGE NOTES DUE MARCH
15, 2009

  PAYMENT OF ADDITIONAL AMOUNTS

     AT&T will, subject to the exceptions and limitations set forth below, pay
as additional interest on the 6.00% Broadband Exchange Notes Due March 15, 2009
such additional amounts as are necessary so that the net payment by AT&T or a
paying agent of the principal of and interest on the 6.00% Broadband Exchange
Notes Due March 15, 2009 to a person that is not a United States Holder (as
defined below), after deduction for any present or future tax, assessment or
governmental charge of the United States or a political subdivision or taxing
authority thereof or therein, imposed by withholding with respect to the
payment, will not be less than the amount that would have been payable in
respect of the 6.00% Broadband Exchange Notes Due March 15, 2009 had no such
withholding or deduction been required.

     As used herein, a "United States Holder" of a note means a beneficial owner
that is for United States federal income tax purposes: (a) a citizen or resident
of the United States, (b) a corporation, partnership or other entity created or
organized in or under the laws of the United States or of any political

                                        96


subdivision thereof, (c) an estate or trust the income of which is subject to
United States federal income taxation regardless of its source or (d) any other
person whose income from a note is effectively connected with the conduct of a
United States trade or business.

     AT&T's obligation to pay additional amounts will not apply:

          1.  to a tax, assessment or governmental charge that is imposed or
     withheld solely because the holder, or a fiduciary, settlor, beneficiary,
     member or shareholder of the holder if the holder is an estate, trust,
     partnership or corporation, or a person holding a power over an estate or
     trust administered by a fiduciary holder:

             (a)  is or was present or engaged in trade or business in the
        United States or has or had a permanent establishment in the United
        States;

             (b)  has a current or former relationship with the United States,
        including a relationship as a citizen or resident thereof;

             (c)  is or has been a foreign or domestic personal holding company,
        a passive foreign investment company or a controlled foreign corporation
        with respect to the United States or a corporation that has accumulated
        earnings to avoid United States federal income tax; or

             (d)  is or was a "10-percent shareholder" of AT&T as defined in
        section 871(h)(3) of the United States Internal Revenue Code or any
        successor provision;

          2.  to any holder that is not the sole beneficial owner of the 6.00%
     Broadband Exchange Notes Due March 15, 2009, or a portion thereof, or that
     is a fiduciary or partnership, but only to the extent that the beneficial
     owner, a beneficiary or settlor with respect to the fiduciary, or a member
     of the partnership would not have been entitled to the payment of an
     additional amount had such beneficial owner, beneficiary, settlor or member
     received directly its beneficial or distributive share of the payment;

          3.  to a tax, assessment or governmental charge that is imposed or
     withheld solely because the holder or any other person failed to comply
     with certification, identification or information reporting requirements
     concerning the nationality, residence, identity or connection with the
     United States of the holder or beneficial owner of the 6.00% Broadband
     Exchange Notes Due March 15, 2009, if compliance is required by statute, by
     regulation of the United States Treasury Department or by an applicable
     income tax treaty to which the United States is a party as a precondition
     to exemption from such tax, assessment or other governmental charge;

          4.  to a tax, assessment or governmental charge that is imposed other
     than by withholding by AT&T or a paying agent from the payment;

          5.  to a tax, assessment or governmental charge that is imposed or
     withheld solely because of a change in law, regulation, or administrative
     or judicial interpretation that becomes effective more than 15 days after
     the payment becomes due or is duly provided for, whichever occurs later;

          6.  to an estate, inheritance, gift, sales, excise, transfer, wealth
     or personal property tax or a similar tax, assessment or governmental
     charge;

          7.  to any tax, assessment or other governmental charge any paying
     agent must withhold from any payment of principal of or interest on any
     6.00% Broadband Exchange Notes Due March 15, 2009, if such payment can be
     made without such withholding by any other paying agent; or

          8.  in the case of any combination of the above items.

     The 6.00% Broadband Exchange Notes Due March 15, 2009 are subject in all
cases to any tax, fiscal or other law or regulation or administrative or
judicial interpretation applicable. Except as specifically provided under this
heading "-- Payment of Additional Amounts" and below under "-- Redemption Upon a
Tax Event," AT&T does not have to make any payment with respect to any tax,
assessment or governmental charge imposed by any government or a political
subdivision or taxing authority.
                                        97


  REDEMPTION UPON A TAX EVENT

     If (a) AT&T becomes or will become obligated to pay additional amounts as
described above under "-- Payment of Additional Amounts" as a result of any
change in, or amendment to, the laws (or any regulations or rulings promulgated
thereunder) of the United States (or any political subdivision or taxing
authority thereof or therein), or any change in, or amendments to, any official
position regarding the application or interpretation of such laws, regulations
or rulings, which change or amendment is announced or becomes effective on or
after March 23, 1999, or (b) a taxing authority of the United States takes an
action on or after March 23, 1999, whether or not with respect to AT&T or any of
its affiliates, that results in a substantial probability that AT&T will or may
be required to pay such additional amounts, then AT&T may, at its option,
redeem, as a whole, but not in part, the 6.00% Broadband Exchange Notes Due
March 15, 2009 on any interest payment date on not less than 30 nor more than 60
calendar days' prior notice, at a redemption price equal to 100% of their
principal amount, together with interest accrued thereon to the date fixed for
redemption, provided that AT&T determines, in its business judgment, that the
obligation to pay such additional amounts cannot be avoided by the use of
reasonable measures available to AT&T, not including substitution of the obligor
under the 6.00% Broadband Exchange Notes Due March 15, 2009. No redemption
pursuant to (b) above may be made unless AT&T has received an opinion of
independent counsel to the effect that an act taken by a taxing authority of the
United States results in a substantial probability that AT&T will or may be
required to pay the additional amounts described herein under the heading
"-- Payment of Additional Amounts" and delivered to the trustee a certificate,
signed by a duly authorized officer stating, that based on such opinion AT&T is
entitled to redeem the notes pursuant to their terms.

OPTIONAL REDEMPTION

     AT&T will have the right, at its option, to redeem those Broadband Exchange
Notes indicated below at any time or from time to time during specified periods,
with at least 30 days, but not more than 90 days, prior notice mailed to the
registered address of each holder of such series of notes.

     On and after the redemption date, interest will cease to accrue on the
Broadband Exchange Notes or any portion thereof that is called for redemption
(unless AT&T defaults in the payment of the redemption price and accrued and
unpaid interest). On or before the redemption date, AT&T will deposit with a
paying agent (or the trustee) money sufficient to pay the redemption price of
and accrued interest on the notes to be redeemed on such date. If less than all
of the Broadband Exchange Notes are to be redeemed, the notes to be redeemed
shall be selected by the trustee by such method as the trustee shall deem fair
and appropriate.

     The optional redemption terms for each series of notes are described below.

  7.00% BROADBAND EXCHANGE NOTES DUE MAY 15, 2005

     The 7.00% Broadband Exchange Notes Due May 15, 2005 will not be subject to
optional redemption by AT&T.

  7.50% BROADBAND EXCHANGE NOTES DUE JUNE 1, 2006

     The 7.50% Broadband Exchange Notes Due June 1, 2006 will not be subject to
optional redemption by AT&T.

  7.75% BROADBAND EXCHANGE NOTES DUE MARCH 1, 2007

     The 7.75% Broadband Exchange Notes Due March 1, 2007 will not be subject to
optional redemption by AT&T.

                                        98


  6.00% BROADBAND EXCHANGE NOTES DUE MARCH 15, 2009

     The 6.00% Broadband Exchange Notes Due March 15, 2009 will be redeemable at
AT&T's option at any time or from time to time, in whole or in part. If you hold
any of these notes and AT&T decides to redeem them, then AT&T will pay you the
greater of:

          (1)  100% of the principal amount of the 6.00% Broadband Exchange
     Notes Due March 15, 2009 to be redeemed and

          (2)  the sum of the present values of the Remaining Scheduled Payments
     (as defined below) discounted, on a semiannual basis (assuming a 360-day
     year consisting of twelve 30-day months), at a rate equal to the sum of the
     Treasury Rate (as defined below under "-- Certain Definitions") and 15
     basis points.

     In the case of each of clause (1) and (2), accrued interest will be payable
to the redemption date.

     Please see "-- Additional Terms Pertaining Only to the 6.00% Broadband
Exchange Notes Due March 15, 2009" for information regarding AT&T's option to
redeem the 6.00% Broadband Exchange Notes Due March 15, 2009 upon the occurrence
of certain tax events.

  8.125% BROADBAND EXCHANGE NOTES DUE JANUARY 15, 2022

     The 8.125% Broadband Exchange Notes Due January 15, 2022 will be redeemable
at AT&T's option at any time or from time to time, as a whole or in part, at the
following prices (expressed as percentages of the principal amount), together
with accrued interest to the date fixed for redemption.

     If redeemed during the 12-month period beginning January 15:



YEAR                                                          PERCENTAGE
----                                                          ----------
                                                           
2002........................................................    103.21%
2003........................................................    102.89
2004........................................................    102.57
2005........................................................    102.25
2006........................................................    101.93
2007........................................................    101.60
2008........................................................    101.28
2009........................................................    100.96
2010........................................................    100.64
2011........................................................    100.32


and thereafter at 100%.

                                        99


  8.125% BROADBAND EXCHANGE NOTES DUE JULY 15, 2024

     The 8.125% Broadband Exchange Notes Due July 15, 2024 will be redeemable at
AT&T's option at any time or from time to time, as a whole or in part, at the
following prices (expressed as percentages of the principal amount), together
with accrued interest to the date fixed for redemption.

     If redeemed during the 12-month period beginning July 15:



YEAR                                                          PERCENTAGE
----                                                          ----------
                                                           
2002........................................................   103.971%
2003........................................................   103.640
2004........................................................   103.309
2005........................................................   102.978
2006........................................................   102.647
2007........................................................   102.316
2008........................................................   101.985
2009........................................................   101.655
2010........................................................   101.324
2011........................................................   100.993
2012........................................................   100.662
2013........................................................   100.331


and thereafter at 100%.

 8.35% BROADBAND EXCHANGE NOTES DUE JANUARY 15, 2025

     The 8.35% Broadband Exchange Notes Due January 15, 2025 will not be
redeemable prior to January 15, 2005. On or after such date, the 8.35% Broadband
Exchange Notes Due January 15, 2025 will be redeemable at AT&T's option at any
time or from time to time, as a whole or in part, at the following prices
(expressed as percentages of the principal amount), together with accrued
interest to the date fixed for redemption.

     If redeemed during the 12-month period beginning January 15:



YEAR                                                          PERCENTAGE
----                                                          ----------
                                                           
2005........................................................   103.288%
2006........................................................   102.959
2007........................................................   102.630
2008........................................................   102.302
2009........................................................   101.973
2010........................................................   101.644
2011........................................................   101.315
2012........................................................   100.986
2013........................................................   100.658
2014........................................................   100.329


and thereafter at 100%.

                                       100


 8.625% BROADBAND EXCHANGE NOTES DUE DECEMBER 1, 2031

     The 8.625% Broadband Exchange Notes Due December 1, 2031 will be redeemable
at AT&T's option at any time, as a whole or in part, at the following prices
(expressed as percentages of the principal amount), together with accrued
interest to the date fixed for redemption:

     If redeemed during the 12-month period beginning December 1:



YEAR                                                          PERCENTAGE
----                                                          ----------
                                                           
2001........................................................    105.56%
2002........................................................    105.28
2003........................................................    105.00
2004........................................................    104.73
2005........................................................    104.45
2006........................................................    104.17
2007........................................................    103.89
2008........................................................    103.61
2009........................................................    103.34
2010........................................................    103.06
2011........................................................    102.78
2012........................................................    102.50
2013........................................................    102.22
2014........................................................    101.95
2015........................................................    101.67
2016........................................................    101.39
2017........................................................    101.11
2018........................................................    100.83
2019........................................................    100.56
2020........................................................    100.28


and thereafter at 100%.

NO MANDATORY REDEMPTION OR SINKING FUND

     There will be no mandatory redemption prior to maturity or sinking fund
payments for the Broadband Exchange Notes.

ADDITIONAL DEBT

     The AT&T Indenture does not limit the amount of debt that AT&T may issue
under the AT&T Indenture or otherwise.

CERTAIN COVENANTS

     AT&T has agreed to some restrictions on its activities for the benefit of
holders of all series of debt securities issued under the AT&T Indenture. The
restrictive covenants summarized below will apply, unless the covenants are
waived or amended, so long as any of the debt securities are outstanding. Please
see "-- Certain Definitions" for the meaning of the capitalized terms used in
describing the covenants.

 LIMITATION ON SECURED INDEBTEDNESS

     AT&T will not, and AT&T will not permit any of its Restricted Subsidiaries
to, create, assume, incur or guarantee any Secured Indebtedness unless AT&T
secures the debt securities issued under the AT&T

                                       101


Indenture to the same extent as such Secured Indebtedness. However, AT&T may
incur Secured Indebtedness without securing these debt securities if,
immediately after incurring the Secured Indebtedness, the aggregate amount of
all Secured Indebtedness and the discounted present value of all net rentals
payable under leases entered into in connection with sale and leaseback
transactions would not exceed 10% of Consolidated Net Tangible Assets. The
aggregate amount of all Secured Indebtedness in the preceding sentence excludes
Secured Indebtedness which is secured to the same extent as these debt
securities and Secured Indebtedness that is being repaid concurrently with the
issuance of new Secured Indebtedness.

 LIMITATION ON SALE AND LEASEBACK TRANSACTIONS

     AT&T will not, and AT&T will not permit any of its Restricted Subsidiaries
to, enter into any lease longer than three years, excluding leases of newly
acquired, improved or constructed property, covering any Principal Property of
AT&T or any Restricted Subsidiary that is sold to any other person in connection
with such lease, unless either

     - immediately thereafter, the sum of

      o the discounted present value of all net rentals payable under all such
        leases entered into after April 1, 1986 (except for any lease entered
        into by a Restricted Subsidiary before it became a Restricted
        Subsidiary) and

      o the aggregate amount of all Secured Indebtedness, excluding Secured
        Indebtedness which is secured to the same extent as these debt
        securities

      does not exceed 10% of Consolidated Net Tangible Assets, or

     - an amount equal to the greater of

      o the net proceeds to AT&T or a Restricted Subsidiary from such sale and

      o the discounted present value of all net rentals payable thereunder

      is used within 180 days to retire long-term debt of AT&T or a Restricted
      Subsidiary. However, debt which is subordinate to these debt securities or
      which is owed to AT&T or a Restricted Subsidiary may not be retired.

 CONSOLIDATION, MERGER OR SALE

     AT&T has agreed not to consolidate with or merge into any other corporation
or convey or transfer substantially all of its properties and assets to any
person except as set forth below, unless

     - that person is authorized to acquire and operate its property and

     - the successor corporation expressly assumes by a supplemental indenture
       the due and punctual payment of the principal of and any premium or any
       interest on all the debt securities and the performance of every covenant
       in the AT&T Indenture that AT&T would otherwise have to perform.

     In addition, the merger covenant will be the merger covenant set forth in
the AT&T Indenture as amended by the note amendment, and will provide that the
AT&T Comcast transaction, including all transactions completed as steps in the
AT&T Comcast transaction, (1) will not result in a consolidation, merger, sale,
conveyance or other transfer of property of AT&T (including stock of
subsidiaries) as an entirety or substantially as an entirety for purposes of the
AT&T Indenture; and (2) will not violate the successor clause of the AT&T
Indenture or any other provision of the AT&T Indenture or any security issued
under the AT&T Indenture, regardless of whether any person assumes any of the
indebtedness outstanding under the AT&T Indenture or any other obligation under
the AT&T Indenture or any security issued under the AT&T Indenture.

                                       102


MODIFICATION OF THE AT&T INDENTURE

     AT&T's rights and obligations and the rights of the holders under the AT&T
Indenture may be modified if the holders of a majority in aggregate principal
amount of the outstanding debt securities of each series affected by the
modification consent to it. No modification of the principal or interest payment
terms, and no modification reducing the percentage required for modifications,
is effective against any holder without its consent.

EVENTS OF DEFAULT

     The AT&T Indenture specifies Events of Default for the debt securities
issued under the AT&T Indenture. An Event of Default with respect to a series of
debt securities will occur if:

     - AT&T fails to pay the principal or any premium on any debt security of
       that series when due;

     - AT&T fails to pay interest when due on any debt security of that series
       for 90 days;

     - AT&T fails to perform any other covenant in the AT&T Indenture and this
       failure continues for 90 days after AT&T receives written notice of it
       from the trustee or from the holders of 25% in principal amount of the
       outstanding debt securities of that series; or

     - AT&T or a court take certain actions relating to the bankruptcy,
       insolvency or reorganization of AT&T for the benefit of its creditors.

     A default under AT&T's other indebtedness is not a default under the AT&T
Indenture, and a default under one series of debt securities under the AT&T
Indenture is not necessarily a default under another series.

     The trustee may withhold notice to the holders of debt securities of any
default, except in the payment of principal or interest, if it considers such
withholding of notice to be in the best interests of the holders. Default means
any event which is an Event of Default described above or would be an Event of
Default but for the giving of notice or the passage of time.

     If an Event of Default for any series of debt securities occurs and
continues, the trustee or the holders of at least 25% in aggregate principal
amount of the debt securities of such series may require AT&T to repay
immediately the entire principal and accrued but unpaid interest on the debt
securities of such series.

     The holders of a majority of the aggregate principal amount of the debt
securities of the affected series can rescind this accelerated payment
requirement or waive any past default or Event of Default or allow AT&T to not
comply with any provision of the AT&T Indenture. However, among other things,
they cannot waive a default in payment of principal of, premium, if any, or
interest on, any of the debt securities of such series.

     Other than its duties in case of a default, the trustee will not be
obligated to exercise any of its rights or powers under the AT&T Indenture at
the request, order or direction of any holders, unless the holders offer the
trustee reasonable indemnity. If they provide reasonable indemnity, the holders
of a majority in principal amount of any series of debt securities, may, subject
to certain limitations, direct the time, method and place of conducting any
proceeding or any remedy available to the trustee, or exercising any power
conferred upon the trustee, for any series of debt securities.

     AT&T is not required to provide the trustee with any certificate or other
document saying that AT&T is in compliance with the AT&T Indenture or that there
are no defaults.

DISCHARGE AND DEFEASANCE

     The term defeasance means discharge of AT&T from some or all of its
obligations under the AT&T Indenture. If AT&T deposits with the trustee
sufficient cash or government securities to pay the principal,

                                       103


interest, any premium and any other sums due to the stated maturity date or a
redemption date of the debt securities of a particular series, then at AT&T's
option:

     - AT&T will be discharged from its obligations with respect to the debt
       securities of such series; or

     - AT&T will no longer be under any obligation to comply with certain
       restrictive covenants under the AT&T Indenture, and certain Events of
       Default will no longer apply to AT&T.

     If this happens, the holders of the debt securities of the affected series
will not be entitled to the benefits of the AT&T Indenture except for
registration of transfer and exchange of the debt securities and replacement of
lost, stolen or mutilated debt securities. Such holders may look only to such
deposited funds or obligations for payment.

     AT&T must deliver to the trustee an opinion of counsel to the effect that
the deposit and related defeasance would not cause the holders of the debt
securities to recognize income, gain or loss for Federal income tax purposes.
AT&T must also deliver a ruling to such effect received from or published by the
United States Internal Revenue Service if AT&T is discharged from its
obligations with respect to the debt securities.

NO PERSONAL LIABILITY OF STOCKHOLDERS, OFFICERS, DIRECTORS OR EMPLOYEES

     The AT&T Indenture provides that no stockholder, officer, director or
employee of AT&T shall have any liability under the debt securities issued under
the AT&T Indenture. Each holder, by accepting the debt securities, waives and
releases all such liability.

CONCERNING THE TRUSTEE

     The AT&T Indenture provides that, except during the continuance of a
default, the trustee will not be liable, except for the performance of such
duties as are specifically set forth in the AT&T Indenture. If an event of
default occurs and is continuing, the trustee will exercise such rights and
powers vested in it under the AT&T Indenture and will use the same degree of
care and skill in its exercise as a prudent person would exercise under the
circumstances in the conduct of such person's own affairs. AT&T may have normal
banking relationships with the trustee under the AT&T Indenture in the ordinary
course of business.

GOVERNING LAW

     The AT&T Indenture and the debt securities issued under the AT&T Indenture
will be governed by, and construed in accordance with, the internal laws of the
State of New York.

BOOK-ENTRY SYSTEM

     AT&T and Broadband will initially issue the Broadband Exchange Notes in the
form of one or more global notes (the "Global Notes"). The Global Notes will be
deposited with, or on behalf of, The Depository Trust Company ("DTC") and
registered in the name of DTC or its nominee. Except as set forth below, the
Global Notes may be transferred, in whole and not in part, only to DTC or
another nominee of DTC. A holder may hold beneficial interests in the Global
Notes directly through DTC if such holder has an account with DTC or indirectly
through organizations which have accounts with DTC, including Euroclear and
Clearstream.

     For more information on DTC and clearance and settlement of the securities
through DTC, please see "Description of the New Broadband Notes and the Cable
Guarantees -- Book-Entry System -- DTC."

CERTIFICATED NOTES

     If DTC is at any time unwilling or unable to continue as depositary and a
successor depositary is not appointed by AT&T within 90 days, AT&T will issue
Broadband Exchange Notes in definitive form in exchange for the Global Notes. In
addition, AT&T may at any time and in its sole discretion determine
                                       104


not to have its debt securities issued under the AT&T Indenture represented by
the Global Notes and, in such event, will issue the debt securities in
definitive form in exchange for the Global Notes. In any such instance, an owner
of a beneficial interest in the Global Notes will be entitled to physical
delivery in definitive form of AT&T's debt securities represented by the Global
Notes equal in principal amount to such beneficial interest and to have such
debt securities registered in its name. AT&T's debt securities so issued in
definitive form will be issued as registered debt securities in denominations of
$1,000 and multiples thereof, unless otherwise specified by AT&T. AT&T's
definitive debt securities can be transferred by presentation for registration
to the registrar at its New York or Luxembourg offices and must be duly endorsed
by the holder or his attorney duly authorized in writing, or accompanied by a
written instrument or instruments of transfer in form satisfactory to AT&T or
the trustee duly executed by the holder or his attorney duly authorized in
writing. AT&T may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any exchange or
registration of transfer of definitive AT&T debt securities.

SAME-DAY PAYMENT

     The AT&T Indenture requires payments to be made in respect of the
applicable Broadband Exchange Notes represented by the Global Notes (including
principal, premium and interest) by wire transfer of immediately available funds
to the accounts specified by the holder thereof or, if no such account is
specified, by mailing a check to such holder's registered address.

     Payments (including principal, premium and interest) and transfers with
respect to Broadband Exchange Notes in certificated form may be executed at the
office or agency maintained for such purpose within the City and State of New
York (initially the office of the paying agent maintained for such purpose) or,
at AT&T's option, by check mailed to the holders thereof at the respective
addresses set forth in the register of holders of the applicable Broadband
Exchange Notes, provided that all payments (including principal, premium and
interest) on Broadband Exchange Notes in certificated form, for which the
holders thereof have given wire transfer instructions, will be required to be
made by wire transfer of immediately available funds to the accounts specified
by the holders thereof. No service charge will be made for any registration of
transfer, but payment of a sum sufficient to cover any tax or governmental
charge payable in connection with that registration may be required.

CERTAIN DEFINITIONS

     The following definitions have been used to describe the restrictive
covenants that are contained in the AT&T Indenture and described above.

     "PRINCIPAL PROPERTY" means land, land improvements, buildings and
associated factory, laboratory, office and switching equipment (excluding all
products marketed by AT&T or any of its subsidiaries) constituting a
manufacturing, development, warehouse, service, office or operating facility
owned by or leased to AT&T or a Restricted Subsidiary, located within the United
States and having an acquisition cost plus capitalized improvements in excess of
0.25 per cent of Consolidated Net Tangible Assets of the date of such
determination, other than any such property financed through the issuance of
tax-exempt governmental obligations, or which the Board of Directors determines
is not of material importance to AT&T and its Restricted Subsidiaries taken as a
whole, or in which the interest of AT&T and all its subsidiaries does not exceed
50%.

     "CONSOLIDATED NET TANGIBLE ASSETS" means the total assets of AT&T and its
subsidiaries, less current liabilities and certain intangible assets (other than
product development costs).

     "RESTRICTED SUBSIDIARY" means any subsidiary of AT&T which has
substantially all its property in the United States, which owns or is a lessee
of any Principal Property and in which the investment of AT&T and all its
subsidiaries exceeds 0.25 per cent of Consolidated Net Tangible Assets as of the
date of such determination, other than certain financing subsidiaries and
subsidiaries formed or acquired after April 1, 1986 for the purpose of acquiring
the business or assets of another person and that do not acquire all or

                                       105


any substantial part of the business or assets of AT&T or any Restricted
Subsidiary. In addition, the Board of Directors of AT&T may designate any other
subsidiary as a Restricted Subsidiary.

     "SECURED INDEBTEDNESS" means:

     - indebtedness of AT&T or any Restricted Subsidiary secured by any lien
       upon any Principal Property or the stock or indebtedness of a Restricted
       Subsidiary or

     - any conditional sale or other title retention agreement covering any
       Principal Property or Restricted Subsidiary but does not include any
       indebtedness secured by any lien or any conditional sale or other title
       retention agreement:

      o outstanding on April 1, 1986;

      o incurred or entered into after April 1, 1986 to finance the acquisition,
        improvement or construction of such property and either secured by
        purchase money mortgages or liens placed on such property within 180
        days of acquisition, improvement or construction;

      o on Principal Property or the stock or indebtedness of Restricted
        Subsidiaries and existing at the time of acquisition of the property,
        stock or indebtedness;

      o owing to AT&T or any other Restricted Subsidiary;

      o existing at the time a corporation becomes a Restricted Subsidiary;

      o incurred to finance the acquisition or construction of property in favor
        of any country or any of its political subdivisions; and

      o replacing, extending or renewing any such indebtedness (to the extent
        such indebtedness is not increased).

     The following definitions have been used to describe the optional
redemption provisions applicable to each of the 6.00% Broadband Exchange Notes
Due March 15, 2009, described above, and the New AT&T Notes Due 2004 (Series 1)
and the New AT&T Notes Due 20  , which are described below under "Description of
the New AT&T Notes -- Optional Redemption."

     "TREASURY RATE" means, with respect to any redemption date, the rate per
annum equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption date.

     "COMPARABLE TREASURY ISSUE" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the 6.00% Broadband Exchange Notes Due March 15, 2009, New
AT&T Notes Due 2004 (Series 1) or the New AT&T Notes Due 20  , as the case may
be, to be redeemed that would be utilized, at the time of selection and in
accordance with customary financial practice, in pricing new issues of corporate
debt securities of comparable maturity to the remaining term of such notes.
"Independent Investment Banker" means one of the Reference Treasury Dealers
appointed by AT&T.

     "COMPARABLE TREASURY PRICE" means, with respect to any redemption date, (1)
the average of the Reference Treasury Dealer Quotations for such redemption date
after excluding the highest and lowest of such Reference Treasury Dealer
Quotations, or (2) if the Trustee obtains fewer than five such Reference
Treasury Dealer Quotations, the average of all such quotations. "Reference
Treasury Dealer Quotations" means, with respect to each Reference Treasury
Dealer and any redemption date, the average, as determined by the Trustee, of
the bid and asked prices for the Comparable Treasury Issue (expressed in each
case as a percentage of its principal amount) quoted in writing to the Trustee
by such Reference Treasury Dealer at 3:30 p.m., New York City time, on the third
business day preceding such redemption date.

                                       106


     "REFERENCE TREASURY DEALER" means each of Merrill Lynch, Pierce, Fenner &
Smith Incorporated, Salomon Smith Barney Inc., Chase Securities Inc., Deutsche
Bank Securities Inc., First Chicago Capital Markets, Inc., Lehman Brothers Inc.,
J.P. Morgan Securities Inc. and NationsBanc Montgomery Securities LLC and their
respective successors. If any of the foregoing ceases to be a primary U.S.
Government securities dealer (a "Primary Treasury Dealer"), AT&T will substitute
another nationally recognized investment banking firm that is a Primary Treasury
Dealer.

     "REMAINING SCHEDULED PAYMENTS" means, with respect to each note to be
redeemed, the remaining scheduled payments of principal of and interest on such
note that would be due after the related redemption date but for such
redemption. If such redemption date is not an interest payment date with respect
to such note, the amount of the next succeeding scheduled interest payment on
such note will be reduced by the amount of interest accrued on such note to such
redemption date.

                                       107


        DESCRIPTION OF THE NEW BROADBAND NOTES AND THE CABLE GUARANTEES

     The New Broadband Notes will be Broadband's direct unsecured and
unsubordinated obligations and will be fully and unconditionally guaranteed by
Comcast Cable, AT&T Comcast, MediaOne and TCI, referred to as the cable
guarantors, as described below. The New Broadband Notes will be issued under an
indenture, dated as of           , 2002, among Broadband, the cable guarantors
and           , as trustee. The term "New Broadband Indenture" refers to this
indenture. The terms of the New Broadband Notes include those stated in the New
Broadband Indenture and those made part of the New Broadband Indenture by
reference to the Trust Indenture Act of 1939.

     The following is a summary of the material provisions of the New Broadband
Indenture, the New Broadband Notes and the cable guarantees. Because this is a
summary, it may not contain all the information that is important to you. You
should read the New Broadband Indenture, which has been filed as an exhibit to
the registration statement of which this prospectus is a part, in its entirety.

BASIC TERMS OF THE NEW BROADBAND NOTES

     The New Broadband Notes:

     - will rank equally with all of Broadband's other unsecured and
       unsubordinated debt and will be entitled to the benefits of the cable
       guarantees described below;

     - will be issued in an aggregate principal amount not exceeding
       $          , comprised as follows:

      o up to $          in principal amount of New Broadband Notes Due 2013,
        maturing on           , 2013, with interest payable semiannually on each
                  and           , beginning the first           or
        occurring after the initial issuance of the New Broadband Notes Due
        2013, to holders of record on the preceding           and           ;

      o up to $          in principal amount of New Broadband Notes Due 2022,
        maturing on January 15, 2022, with interest payable semiannually on each
        January 15 and July 15, beginning the first January 15 or July 15
        occurring after the initial issuance of the New Broadband Notes Due
        2022, to holders of record on the preceding January 1 and July 1;

      o up to $          in principal amount of New Broadband Notes Due 2024
        maturing on July 15, 2024, with interest payable semiannually on each
        January 15 and July 15, beginning the first January 15 or July 15
        occurring after the initial issuance of the New Broadband Notes Due
        2024, to holders of record on the preceding January 1 and July 1;

      o up to $          in principal amount of New Broadband Notes Due 2025,
        maturing on January 15, 2025, with interest payable semiannually on each
        January 15 and July 15, beginning the first January 15 or July 15
        occurring after the initial issuance of the New Broadband Notes Due
        2025, to holders of record on the preceding January 1 and July 1;

      o up to $          in principal amount of New Broadband Notes Due 2031,
        maturing on December 1, 2031, with interest payable semiannually on each
        June 1 and December 1, beginning the first June 1 or December 1
        occurring after the initial issuance of the New Broadband Notes Due
        2031, to holders of record on the preceding May 15 and November 15; and

     - are issuable in fully registered form, in denominations of $1,000 and
       multiples thereof.

     The New Broadband Notes will not be listed on any stock exchange.

INTEREST PAYMENTS

     The interest rate for each series of New Broadband Notes will be announced
by press release two business days prior to the expiration of the exchange offer
and each will be based on spreads over the relevant U.S. Treasury rates. The
method for determining the interest rate is described in detail under
"Description of the Exchange Offer -- Interest Rate for the New Broadband
Notes."

                                       108


     Interest for the New Broadband Notes will be computed on the basis of a
360-day year consisting of twelve 30-day months. Interest on the New Broadband
Notes will accrue from the date of original issuance, which will be the date of
mandatory exchange with respect to the New Broadband Notes, or from the most
recent interest payment date to which interest has been paid and will be payable
semiannually on interest payment dates described of each year.

     For more information on payment and transfer procedures for the New
Broadband Notes, see "-- Book-Entry System" and "-- Same-Day Payment."

CABLE GUARANTEES

     The obligations of Broadband, including the payment of principal, premium,
if any, and interest, will be fully and unconditionally guaranteed by each of
Comcast Cable, AT&T Comcast, MediaOne and TCI. The cable guarantees will rank
equally with all other general unsecured and unsubordinated obligations of the
cable guarantors.

     The cable guarantees will not contain any restrictions on the ability of
any of cable guarantor to (i) pay dividends or distributions on, or redeem,
purchase, acquire, or make a liquidation payment with respect to, any of that
cable guarantor's capital stock or (ii) make any payment of principal, interest
or premium, if any, on or repay, repurchase or redeem any debt securities of
that cable guarantor.

OPTIONAL REDEMPTION

     Broadband shall have the right at its option to redeem certain of the New
Broadband Notes, at any time or from time to time, on at least 30 days, but not
more than 90 days, prior notice mailed to the registered address of each holder
of the applicable series of New Broadband Notes.

     On and after the redemption date, interest will cease to accrue on the New
Broadband Notes or any portion of the New Broadband Notes called for redemption
(unless Broadband defaults in the payment of the redemption price and accrued
interest). On or before the redemption date, Broadband will deposit with the
trustee money sufficient to pay the redemption price of and (unless the
redemption date shall be an interest payment date) accrued interest to the
redemption date on the New Broadband Notes to be redeemed on such date. If less
than all of the New Broadband Notes of any series are to be redeemed, the New
Broadband Notes to be redeemed shall be selected by the trustee by such method
as the trustee shall deem fair and appropriate.

     The optional redemption terms for each series of notes is described below.

  NEW BROADBAND NOTES DUE 2013

     The New Broadband Notes Due 2013 will not be subject to optional redemption
by Broadband.

  NEW BROADBAND NOTES DUE 2022

     The New Broadband Notes Due 2022 will be redeemable at Broadband's option
at any time or from time to time, as a whole or in part, at the following prices
(expressed as percentages of the principal amount), together with accrued
interest to the date fixed for redemption.

     If redeemed during the 12-month period beginning January 15:



YEAR                                                          PERCENTAGE
----                                                          ----------
                                                           
      ......................................................        %
      ......................................................
      ......................................................
      ......................................................
      ......................................................


and thereafter at 100%.

                                       109


  NEW BROADBAND NOTES DUE 2024

     The New Broadband Notes Due 2024 will be redeemable at Broadband's option
at any time or from time to time, as a whole or in part, at the following prices
(expressed as percentages of the principal amount), together with accrued
interest to the date fixed for redemption.

     If redeemed during the 12-month period beginning July 15:



YEAR                                                           PERCENTAGE
----                                                           ----------
                                                            
    ........................................................         %
    ........................................................
    ........................................................
    ........................................................
    ........................................................


and thereafter at 100%.

  NEW BROADBAND NOTES DUE 2025

     The New Broadband Notes Due 2025 will not be redeemable prior to January
15, 2005. On or after such date, the New Broadband Notes due 2025 will be
redeemable at Broadband's option at any time or from time to time, as a whole or
in part, at the following prices (expressed as percentages of the principal
amount), together with accrued interest to the date fixed for redemption.

     If redeemed during the 12-month period beginning January 15:



YEAR                                                           PERCENTAGE
----                                                           ----------
                                                            
    ........................................................         %
    ........................................................
    ........................................................
    ........................................................
    ........................................................


and thereafter at 100%.

  NEW BROADBAND NOTES DUE 2031

     The New Broadband Notes Due 2031 will be redeemable at Broadband's option
at any time or from time to time, as a whole or in part, at the following prices
(expressed as percentages of the principal amount), together with accrued
interest to the date fixed for redemption.

     If redeemed during the 12-month period beginning December 1:



YEAR                                                           PERCENTAGE
----                                                           ----------
                                                            
    ........................................................         %
    ........................................................
    ........................................................
    ........................................................
    ........................................................


and thereafter at 100%.

NO MANDATORY REDEMPTION OR SINKING FUND

     There will be no mandatory redemption prior to maturity or sinking fund
payments for the New Broadband Notes.

                                       110


ADDITIONAL DEBT

     The New Broadband Indenture does not limit the amount of debt Broadband may
issue under the New Broadband Indenture or otherwise.

CERTAIN COVENANTS

     Broadband will agree to some restrictions on its activities for the benefit
of holders of all series of debt securities issued under the New Broadband
Indenture. The restrictive covenants summarized below will apply, unless the
covenants are waived or amended, so long as any of the debt securities are
outstanding. Please see "-- Certain Definitions" for the meaning of the
capitalized terms used in describing the covenants.

     The New Broadband Indenture will not contain any financial covenants other
than those summarized below and will not restrict Broadband or its subsidiaries
or AT&T Comcast from paying dividends or incurring additional debt. In addition,
the New Broadband Indenture will not protect holders of notes issued under it in
the event of a highly leveraged transaction or a change in control.

  LIMITATION ON LIENS SECURING INDEBTEDNESS

     Neither Broadband nor any cable guarantor shall create, incur or assume any
Lien (other than any Permitted Lien) on such person's assets, including the
Capital Stock of its wholly owned subsidiaries to secure the payment of
Indebtedness of Broadband or any cable guarantor, unless Broadband secures the
outstanding New Broadband Notes equally and ratably with (or prior to) all
Indebtedness secured by such Lien, so long as such Indebtedness shall be so
secured.

  LIMITATION ON SALE AND LEASEBACK TRANSACTIONS

     Neither Broadband nor any cable guarantor shall enter into any Sale and
Leaseback Transaction involving any of such person's assets, including the
Capital Stock of its wholly owned subsidiaries.

     The restriction in the foregoing paragraph shall not apply to any Sale and
Leaseback Transaction if:

     - the lease is for a period of not in excess of three years, including
       renewal of rights;

     - the lease secures or relates to industrial revenue or similar financing;

     - the transaction is solely between Broadband and a cable guarantor or
       between or among cable guarantors; or

     - Broadband or such cable guarantor, within 270 days after the sale is
       completed, applies an amount equal to or greater than (a) the net
       proceeds of the sale of the assets or part thereof leased or (b) the fair
       market value of the assets or part thereof leased (as determined in good
       faith by Broadband's Board of Directors) either to:

      o the retirement (or open market purchase) of notes, other long-term
        Indebtedness of Broadband ranking on a parity with or senior to the New
        Broadband Notes or long-term Indebtedness of a cable guarantor; or

      o the purchase by Broadband or any cable guarantor of other property,
        plant or equipment related to the business of Broadband or any cable
        guarantor having a value at least equal to the value of the assets or
        part thereof leased.

     This provision and the provision described under "-- Limitation on Liens
Securing Indebtedness" do not apply to any subsidiaries of AT&T Comcast other
than the cable guarantors and Broadband.

     "CAPITALIZED LEASE" means, as applied to any person, any lease of any
property (whether real, personal, or mixed) of which the discounted present
value of the rental obligations of such person as lessee, in conformity with
GAAP, is required to be capitalized on the balance sheet of such person; and
"Capitalized Lease Obligation" is defined to mean the rental obligations, as
aforesaid, under such lease.

                                       111


     "CAPITAL STOCK" means, with respect to any person, any and all shares,
interests, participations, or other equivalents (however designated, whether
voting or non-voting) of such person's capital stock or other ownership
interests, whether now outstanding or issued after the date of the New Broadband
Indenture, including, without limitation, all common stock and preferred stock.

     "CURRENCY AGREEMENT" means any foreign exchange contract, currency swap
agreement, or other similar agreement or arrangement designed to protect against
the fluctuation in currency values.

     "GAAP" means generally accepted accounting principles in the United States
of America as in effect as of the date of determination, including, without
limitation, those set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as approved by a significant segment
of the accounting profession. All ratios and computations contained in the New
Broadband indenture shall be computed in conformity with GAAP applied on a
consistent basis.

     "GUARANTEE" means any obligation, contingent or otherwise, of any person
directly or indirectly guaranteeing any Indebtedness or other obligation of any
other person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such person:

     - to purchase or pay (or advance or supply funds for the purchase or
       payment of) such Indebtedness or other obligation of such other person
       (whether arising by virtue of partnership arrangements, or by agreement
       to keep-well, to purchase assets, goods, securities, or services, to
       take-or-pay, or to maintain financial statement conditions or otherwise);
       or

     - entered into for purposes of assuring in any other manner the obligee of
       such Indebtedness or other obligation of the payment thereof or to
       protect such obligee against loss in respect thereof (in whole or in
       part);

Provided that the term "Guarantee" shall not include endorsements for collection
or deposit in the ordinary course of business. The term "Guarantee" used as a
verb has a corresponding meaning.

     "INDEBTEDNESS" means, with respect to any person at any date of
determination (without duplication):

     - all indebtedness of such person for borrowed money;

     - all obligations of such person evidenced by bonds, debentures, notes, or
       other similar instruments;

     - all obligations of such person in respect of letters of credit or other
       similar instruments (including reimbursement obligations with respect
       thereto);

     - all obligations of such person to pay the deferred and unpaid purchase
       price of property or services (but excluding trade accounts payable or
       accrued liabilities arising in the ordinary course of business);

     - all obligations of such person as lessee under Capitalized Leases;

     - all Indebtedness of other persons secured by a Lien on any asset of such
       person, whether or not such Indebtedness is assumed by such person;
       provided that the amount of such Indebtedness shall be the lesser of:

      o the fair market value of such asset at such date of determination; and

      o the amount of such Indebtedness;

     - all Indebtedness of other persons Guaranteed by such person to the extent
       such Indebtedness is Guaranteed by such person; and

     - to the extent not otherwise included in this definition, obligations
       under Currency Agreements and Interest Rate Agreements.

                                       112


     The amount of Indebtedness of any person at any date shall be the
outstanding balance at such date of all unconditional obligations as described
above and, with respect to contingent obligations, the maximum liability upon
the occurrence of the contingency giving rise to the obligation; provided:

     - that the amount outstanding at any time of any Indebtedness issued with
       original issue discount is the face amount of such Indebtedness less the
       remaining unamortized portion of the original issue discount of such
       Indebtedness at such time as determined in conformity with GAAP; and

     - that Indebtedness shall not include any liability for federal, state,
       local, or other taxes.

     "INTEREST RATE AGREEMENTS" means any obligations of any person pursuant to
any interest rate swaps, caps, collars, and similar arrangements providing
protection against fluctuations in interest rates. For purposes of the
indenture, the amount of such obligations shall be the amount determined in
respect thereof as of the end of the then most recently ended fiscal quarter of
such person, based on the assumption that such obligation had terminated at the
end of such fiscal quarter, and in making such determination, if any agreement
relating to such obligation provides for the netting of amounts payable by and
to such person thereunder or if any such agreement provides for the simultaneous
payment of amounts by and to such person, then in each such case, the amount of
such obligations shall be the net amount so determined, plus any premium due
upon default by such person.

     "LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind, or any other type of
preferential arrangement that has the practical effect of creating a security
interest, in respect of such asset. For the purposes of the New Broadband
Indenture, Broadband or any cable guarantor shall be deemed to own subject to a
Lien any asset that it has acquired or holds subject to the interest of a vendor
or lessor under any conditional sale agreement, capital lease or other title
retention agreement relating to such asset.

     "PERMITTED LIENS" means:

     - any Lien on any asset incurred prior to the date of the New Broadband
       Indenture;

     - any Lien on any assets acquired after the date of the New Broadband
       Indenture (including by way of merger or consolidation) by Broadband or
       any cable guarantor, which Lien is created, incurred or assumed
       contemporaneously with such acquisition, or within 270 days thereafter,
       to secure or provide for the payment or financing of any part of the
       purchase price thereof, or any Lien upon any assets acquired after the
       date of the New Broadband Indenture existing at the time of such
       acquisition (whether or not assumed by Broadband or any cable guarantor),
       provided that any such Lien shall attach only to the assets so acquired;

     - any Lien on any assets in favor of Broadband or any cable guarantor;

     - any Lien on assets incurred in connection with the issuance of tax-exempt
       governmental obligations (including, without limitation, industrial
       revenue bonds and similar financing);

     - any Lien granted by any cable guarantor on assets to the extent
       limitations on the incurrence of such Liens are prohibited by any
       agreement to which such cable guarantor is subject as of the date of the
       New Broadband Indenture; and

     - any renewal of or substitution for any Lien permitted by any of the
       preceding bullet points, including any Lien securing reborrowing of
       amounts previously secured within 270 days of the repayment thereof,
       provided that no such renewal or substitution shall extend to any assets
       other than the assets covered by the Lien being renewed or substituted.

     "SALE AND LEASEBACK TRANSACTION" means any direct or indirect arrangement
with any person or to which any such person is a party, providing for the
leasing to Broadband or a cable guarantor of any property, whether owned by
Broadband or such cable guarantor at the date of the original issuance of the
New Broadband Notes or later acquired, which has been or is to be sold or
transferred by Broadband or such cable guarantor to such person or to any other
person by whom funds have been or are to be advanced on the security of such
property.

                                       113


  FINANCIAL INFORMATION

     Broadband will file, whether or not required to do so under applicable law,
with the trustee, within 15 days after being required to file the same under the
Securities Exchange Act of 1934, copies of the annual reports and the
information, documents and other reports to be filed pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934. Broadband intends to file all such
reports, information and documents with the SEC, whether or not required by
Section 13 or 15(d), and will send copies to the trustee within such 15-day
period. Notwithstanding the foregoing, if AT&T Comcast is required to file
reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
that includes combined or consolidating financial information of Broadband
pursuant to Rule 3-10 of Regulation S-X, this covenant shall be deemed satisfied
by AT&T Comcast filing with the trustee, within 15 days after AT&T Comcast is
required to file the same under the Securities Exchange Act of 1934, copies of
AT&T Comcast annual reports and the information, documents and other reports to
be filed by it pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934.

  CONSOLIDATION, MERGER AND SALE OF ASSETS

     The New Broadband Indenture will restrict Broadband's ability to
consolidate with, merge with or into, or sell, convey, transfer, lease, or
otherwise dispose of all or substantially all of its property and assets as an
entirety or substantially an entirety in one transaction or a series of related
transactions to any person (other than a consolidation with or merger with or
into or a sale, conveyance, transfer, lease or other disposition to a
wholly-owned subsidiary with a positive net worth; provided that, in connection
with any merger of Broadband and a wholly-owned subsidiary, no consideration
other than common stock in the surviving person shall be issued or distributed
to Broadband's stockholders) or permit any person to merge with or into such
party unless:

     - Broadband is the continuing person or the person formed by such
       consolidation or into which such party is merged or that acquired or
       leased such property and assets shall be a corporation or limited
       liability company organized and validly existing under the laws of the
       United States of America or any jurisdiction thereof and shall expressly
       assume, by a supplemental indenture, executed and delivered to the
       trustee, all of Broadband's obligations on all of the New Broadband Notes
       and under the New Broadband Indenture;

     - immediately after giving effect to such transaction, no default or event
       of default shall have occurred and be continuing; and

     - Broadband delivers to the trustee an officers' certificate and opinion of
       counsel, in each case stating that such consolidation, merger, or
       transfer and such supplemental indenture complies with this provision and
       that all conditions precedent provided for in the New Broadband Indenture
       and notes relating to such transaction have been complied with;

provided, however, that the foregoing limitations will not apply if, in the good
faith determination of Broadband's board of directors, whose determination must
be set forth in a board resolution, the principal purpose of such transaction is
to change the state of incorporation of such party; and provided further that
any such transaction shall not have as one of its purposes the evasion of the
foregoing limitations.

     Upon any express assumption of Broadband's obligations as described above,
Broadband shall be released and discharged from all obligations and covenants
under the New Broadband Indenture and all the New Broadband Notes.

     The New Broadband Indenture and the cable guarantees do not limit the
ability of any guarantor to consolidate with or merge into or sell all or
substantially all its assets. Upon the sale or disposition of any guarantor (by
merger, consolidation, the sale of its capital stock or the sale of all or
substantially all of its assets) to any person, that guarantor will be deemed
released from all its obligations under the New Broadband Indenture and its
guarantee.

                                       114


MODIFICATION AND WAIVER

     Broadband and the trustee may amend or supplement the New Broadband
Indenture or the New Broadband Notes without notice to or the consent of any
holder:

     - to cure any ambiguity, defect, or inconsistency in the New Broadband
       Indenture; provided that such amendments or supplements shall not
       adversely affect the interests of the holders in any material respect;

     - to comply with the provisions described under "-- Certain
       Covenants -- Consolidation, Merger and Sale of Assets;"

     - to comply with any requirements of the SEC in connection with the
       qualification of the New Broadband Indenture under the Trust Indenture
       Act;

     - to evidence and provide for the acceptance of appointment hereunder by a
       successor trustee;

     - to establish the form or forms or terms of the New Broadband Notes as
       permitted by the New Broadband Indenture;

     - to provide for uncertificated notes and to make all appropriate changes
       for such purpose;

     - to make any change that does not adversely affect the rights of any
       holder;

     - to add to its covenants such new covenants, restrictions, conditions or
       provisions for the protection of the holders, and to make the occurrence,
       or the occurrence and continuance, of a default in any such additional
       covenants, restrictions, conditions or provisions an event of default; or

     - to make any change so long as no New Broadband Notes or Broadband
       Exchange Notes are outstanding.

     Subject to certain conditions, without prior notice to any holder of New
Broadband Notes, modifications and amendments of the New Broadband Indenture may
be made by Broadband and the trustee with respect to any series of New Broadband
Notes with the written consent of the holders of a majority in principal amount
of the affected series of New Broadband Notes, and compliance by Broadband with
any provision of the New Broadband Indenture with respect to any series of New
Broadband Notes may be waived by written notice to the trustee by the holders of
a majority in principal amount of the affected series of New Broadband Notes
outstanding; provided, however, that each affected holder must consent to any
modification, amendment or waiver that:

     - changes the stated maturity of the principal of, or any installment of
       interest on, the New Broadband Notes of the affected series;

     - reduces the principal amount of, or premium, if any, or interest on, the
       New Broadband Notes of the affected series;

     - changes the place or currency of payment of principal of, or premium, if
       any, or interest on, the New Broadband Notes of the affected series;

     - changes the provisions for calculating the optional redemption price,
       including the definitions relating thereto;

     - changes the provisions relating to the waiver of past defaults or changes
       or impairs the right of holders to receive payment or to institute suit
       for the enforcement of any payment of the New Broadband Notes of the
       affected series on or after the due date therefor;

     - reduces the above-stated percentage of outstanding New Broadband Notes of
       the affected series the consent of whose holders is necessary to modify
       or amend or to waive certain provisions of or defaults under the New
       Broadband Indenture;

     - waives a default in the payment of principal of, premium, if any, or
       interest on the New Broadband Notes; or
                                       115


     - modifies any of the provisions of this paragraph, except to increase any
       required percentage or to provide that certain other provisions cannot be
       modified or waived without the consent of the holder of each New
       Broadband Note of the series affected by the modification.

     It is not necessary for the consent of the holders under the New Broadband
Indenture to approve the particular form of any note amendment, supplement or
waiver, but it shall be sufficient if such consent approves the substance
thereof. After an amendment, supplement or waiver under the New Broadband
Indenture becomes effective, notice must be given to the holders affected
thereby briefly describing the amendment, supplement, or waiver. Supplemental
indentures will be mailed to holders upon request. Any failure to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental indenture or waiver.

EVENTS OF DEFAULT

     For purposes of this section, the term "Obligor" shall mean each of
Broadband, AT&T Comcast, Comcast Cable, MediaOne and TCI, in each case excluding
such entities' subsidiaries.

     An event of default for a series of New Broadband Notes is defined under
the New Broadband Indenture as being:

          (1) a default by any Obligor in the payment of principal or premium on
     the New Broadband Notes of such series when the same becomes due and
     payable whether at maturity, upon acceleration, redemption or otherwise;

          (2) a default by any Obligor in the payment of interest on the New
     Broadband Notes of such series when the same becomes due and payable, if
     that default continues for a period of 30 days;

          (3) default by any Obligor in the performance of or breach by any
     Obligor of any of its other covenants or agreements in the New Broadband
     Indenture applicable to all the New Broadband Notes or applicable to the
     New Broadband Notes of any series and that default or breach continues for
     a period of 30 consecutive days after written notice is received from the
     trustee or from the holders of 25% or more in aggregate principal amount of
     the New Broadband Notes of all affected series;

          (4) any cable guarantee is not (or claimed by any of AT&T Comcast,
     Comcast Cable, MediaOne or TCI not to be) in full force and effect;

          (5) a court having jurisdiction enters a decree or order for:

           - relief in respect of any Obligor in an involuntary case under any
             applicable bankruptcy, insolvency, or other similar law now or
             hereafter in effect;

           - appointment of a receiver, liquidator, assignee, custodian,
             trustee, sequestrator or similar official of any Obligor for any
             substantial part of such party's property and assets; or

           - the winding up or liquidation of any Obligor's affairs and such
             decree or order shall remain unstayed and in effect for a period of
             180 consecutive days; or

          (6) any Obligor:

           - commences a voluntary case under any applicable bankruptcy,
             insolvency, or other similar law now or hereafter in effect, or
             consent to the entry of an order for relief in an involuntary case
             under any such law;

           - consents to the appointment of or taking possession by a receiver,
             liquidator, assignee, custodian, trustee, sequestrator, or similar
             official of such party or for any substantial part of such party's
             property; or

           - effects any general assignment for the benefit of creditors.

     A default under any Obligor's other indebtedness is not a default under the
New Broadband Indenture.
                                       116


     If an event of default other than an event of default specified in clauses
(5) and (6) above occurs with respect to an issue of New Broadband Notes and is
continuing under the New Broadband Indenture, then, and in each and every such
case, either the trustee or the holders of not less than 25% in aggregate
principal amount of such New Broadband Notes then outstanding under the New
Broadband Indenture by written notice to Broadband and to the trustee, if such
notice is given by the holders, may, and the trustee at the request of such
holders shall, declare the principal amount of and accrued interest, if any, on
such New Broadband Notes to be immediately due and payable. The amount due upon
acceleration shall include only the original issue price of the New Broadband
Notes and accrued to the date of acceleration and accrued interest, if any. Upon
a declaration of acceleration, such principal amount of and accrued interest, if
any, on such New Broadband Notes shall be immediately due and payable. If an
event of default specified in clauses (5) and (6) above occurs with respect to
any Obligor, the principal amount of and accrued interest, if any, on each issue
of New Broadband Notes then outstanding shall be and become immediately due and
payable without any notice or other action on the part of the trustee or any
holder.

     Upon certain conditions such declarations may be rescinded and annulled and
past defaults may be waived by the holders of a majority in aggregate principal
amount of an issue of New Broadband Notes that has been accelerated.
Furthermore, subject to various provisions in the New Broadband Indenture, the
holders of at least a majority in aggregate principal amount of an issue of New
Broadband Notes by notice to the trustee may waive an existing default or event
of default with respect to such New Broadband Notes and its consequences, except
a default in the payment of principal of or interest on such New Broadband Notes
or in respect of a covenant or provision of the New Broadband Indenture which
cannot be modified or amended without the consent of the holders of each such
New Broadband Notes. Upon any such waiver, such default shall cease to exist,
and any event of default with respect to such New Broadband Notes shall be
deemed to have been cured, for every purpose of the New Broadband Indenture; but
no such waiver shall extend to any subsequent or other default or event of
default or impair any right consequent thereto. For information as to the waiver
of defaults, see "-- Modification and Waiver."

     The holders of at least a majority in aggregate principal amount of an
issue of New Broadband Notes may direct the time, method, and place of
conducting any proceeding for any remedy available to the trustee or exercising
any trust or power conferred on the trustee with respect to such New Broadband
Notes. However, the trustee may refuse to follow any direction that conflicts
with law or the New Broadband Indenture, that may involve the trustee in
personal liability, or that the trustee determines in good faith may be unduly
prejudicial to the rights of holders of such issue of New Broadband Notes not
joining in the giving of such direction and may take any other action it deems
proper that is not inconsistent with any such direction received from holders of
such issue of New Broadband Notes. A holder may not pursue any remedy with
respect to the New Broadband Indenture or any series of New Broadband Notes
unless:

     - the holder gives the trustee written notice of a continuing event of
       default;

     - the holders of at least 25% in aggregate principal amount of such series
       of New Broadband Notes make a written request to the trustee to pursue
       the remedy in respect of such event of default;

     - the requesting holder or holders offer the trustee indemnity satisfactory
       to the trustee against any costs, liability, or expense;

     - the trustee does not comply with the request within 60 days after receipt
       of the request and the offer of indemnity; and

     - during such 60-day period, the holders of a majority in aggregate
       principal amount of such series of New Broadband Notes do not give the
       trustee a direction that is inconsistent with the request.

     These limitations, however, do not apply to the right of any holder of a
New Broadband Note to receive payment of the principal of, premium, if any, or
interest on such New Broadband Note, or to bring suit for the enforcement of any
such payment, on or after the due date for the New Broadband Notes, which right
shall not be impaired or affected without the consent of the holder.

                                       117


     The New Broadband Indenture will require certain of officers of Broadband
to certify, on or before a date not more than 120 days after the end of each
fiscal year, as to their knowledge of Broadband's compliance with all conditions
and covenants under the New Broadband Indenture, such compliance to be
determined without regard to any period of grace or requirement of notice
provided under the New Broadband Indenture.

DISCHARGE AND DEFEASANCE

     The New Broadband Indenture provides that, except as otherwise provided in
this paragraph, Broadband may discharge its obligations with respect to an issue
of New Broadband Notes and the New Broadband Indenture with respect to that
series of New Broadband Notes if:

     - the New Broadband Notes of the affected series previously authenticated
       and delivered with certain exceptions, have been delivered to the trustee
       for cancellation and Broadband has paid all sums payable under the New
       Broadband Indenture; or

     - the New Broadband Notes of the affected series mature within one year or
       all of them are to be called for redemption within one year under
       arrangements satisfactory to the trustee for giving the notice of
       redemption and:

      o Broadband irrevocably deposits in trust with the trustee, as trust funds
        solely for the benefit of the holders of the New Broadband Notes of the
        affected series, for that purpose, money or U.S. government obligations
        or a combination thereof sufficient (unless such funds consist solely of
        money, in the opinion of a nationally recognized firm of independent
        public accountants expressed in a written certification thereof
        delivered to the trustee), without consideration of any reinvestment and
        after payment of all federal, state and local taxes or other charges and
        assessments in respect thereof payable by the trustee, to pay principal
        of and interest on the New Broadband Notes of the affected series to
        maturity or redemption, as the case may be, and to pay all other sums
        payable by it under the New Broadband Indenture; and

      o Broadband delivers to the trustee an officers' certificate and an
        opinion of counsel, in each case stating that all conditions precedent
        provided for in the New Broadband Indenture relating to the satisfaction
        and discharge of the New Broadband Indenture with respect to the New
        Broadband Notes of the affected series have been complied with.

     With respect to all New Broadband Notes which have been delivered to the
trustee for cancellation and for which have been paid all sums payable by
Broadband under the New Broadband Indenture, only Broadband's obligations to
compensate and indemnify the trustee and Broadband's right to recover excess
money held by the trustee under the New Broadband Indenture shall survive. With
respect to New Broadband Notes which mature within one year or are to be called
for redemption within one year under redemption arrangements deemed appropriate
by the trustee, only Broadband's obligations with respect to the issue of
defeased New Broadband Notes to execute and deliver such New Broadband Notes for
authentication, to set the terms of such New Broadband Notes, to maintain an
office or agency in respect of such New Broadband Notes, to have moneys held for
payment in trust, to register the transfer or exchange of such New Broadband
Notes, to deliver such New Broadband Notes for replacement or cancellation, to
compensate and indemnify the trustee and to appoint a successor trustee, and
Broadband's right to recover excess money held by the trustee shall survive
until such New Broadband Notes are no longer outstanding. Thereafter, only
Broadband's obligations to compensate and indemnify the trustee, and Broadband's
right to recover excess money held by the trustee shall survive.

     The New Broadband Indenture also provides that, except as otherwise
provided in this paragraph, Broadband:

     - will be deemed to have paid and will be discharged from any and all
       obligations in respect of a series of New Broadband Notes, and the
       provisions of the New Broadband Indenture and the cable guarantees will
       no longer be in effect with respect to those New Broadband Notes ("legal
       defeasance"); and
                                       118


     - may omit to comply with any term, provision or condition of the New
       Broadband Indenture described above under "-- Certain Covenants" and such
       omission shall be deemed not to be an event of default under the third
       clause of the first paragraph of "-- Events of Default" with respect to
       that series of New Broadband Notes ("covenant defeasance");

provided that the following conditions shall have been satisfied:

     - Broadband has irrevocably deposited in trust with the trustee as trust
       funds solely for the benefit of the holders of the New Broadband Notes of
       such series, for payment of the principal of and interest on the New
       Broadband Notes of such series, money or U.S. government obligations or a
       combination thereof sufficient (unless such funds consist solely of
       money, in the opinion of a nationally recognized firm of independent
       public accountants expressed in a written certification thereof delivered
       to the trustee) without consideration of any reinvestment and after
       payment of all federal, state and local taxes or other charges and
       assessments in respect thereof payable by the trustee, to pay and
       discharge the principal of and accrued interest on the New Broadband
       Notes of such series to maturity or earlier redemption (irrevocably
       provided for under arrangements satisfactory to the trustee), as the case
       may be;

     - such deposit will not result in a breach or violation of, or constitute a
       default under, the New Broadband Indenture, the cable guarantees or any
       other material agreement or instrument to which Broadband is a party or
       by which Broadband is bound;

     - no default or event of default with respect to the New Broadband Notes of
       such series shall have occurred and be continuing on the date of such
       deposit;

     - Broadband shall have delivered to the trustee:

       o either an opinion of counsel that the holders of the New Broadband
         Notes of such series will not recognize income, gain or loss for
         federal income tax purposes as a result of our exercising our option
         under this provision of the New Broadband Indenture and will be subject
         to federal income tax on the same amount and in the same manner and at
         the same times as would have been the case if such deposit and
         defeasance had not occurred (which opinion, in the case of a legal
         defeasance, shall be based upon a change in law) or a ruling directed
         to the trustee received from the Internal Revenue Service to the same
         effect; and

       o an opinion of counsel that the holders of the New Broadband Notes of
         such series have a valid security interest in the trust funds subject
         to no prior liens under the Uniform Commercial Code; and

     - Broadband has delivered to the trustee an officers' certificate and an
       opinion of counsel, in each case stating that all conditions precedent
       provided for in the New Broadband Indenture relating to the defeasance
       contemplated of the New Broadband Notes of such series have been complied
       with.

     Subsequent to legal defeasance under the first bullet point above, the
obligations of Broadband with respect to the issue of defeased New Broadband
Notes to execute and deliver such New Broadband Notes for authentication, to set
the terms of such New Broadband Notes, to maintain an office or agency in
respect of such New Broadband Notes, to have moneys held for payment in trust,
to register the transfer or exchange of such New Broadband Notes, to deliver
such New Broadband Notes for replacement or cancellation, to compensate and
indemnify the trustee and to appoint a successor trustee, and right of Broadband
to recover excess money held by the trustee shall survive until such New
Broadband Notes are no longer outstanding. After such New Broadband Notes are no
longer outstanding, in the case of legal defeasance under the first bullet point
above, only Broadband's obligations to compensate and indemnify the trustee and
Broadband's right to recover excess money held by the trustee shall survive.

                                       119


NO PERSONAL LIABILITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS, DIRECTORS OR
EMPLOYEES

     The New Broadband Indenture and the cable guarantees provide that no
recourse shall be had under or upon any obligation, covenant, or agreement of
Broadband or the cable guarantors in the New Broadband Indenture or any
supplemental indenture, or in any of the New Broadband Notes or in any of the
cable guarantees or because of the creation of any indebtedness represented
thereby, against any incorporator, stockholder, officer, director, employee of
Broadband or any cable guarantor or of any successor person thereof under any
law, statute or constitutional provision or by the enforcement of any assessment
or by any legal or equitable proceeding or otherwise. Each holder, by accepting
the New Broadband Notes, waives and releases all such liability.

CONCERNING THE TRUSTEE

     The New Broadband Indenture provides that, except during the continuance of
a default, the trustee will not be liable, except for the performance of such
duties as are specifically set forth in the New Broadband Indenture. If an event
of default has occurred and is continuing, the trustee will exercise such rights
and powers vested in it under the New Broadband Indenture and will use the same
degree of care and skill in its exercise as a prudent person would exercise
under the circumstances in the conduct of such person's own affairs. Broadband
may have normal banking relationships with the trustee under the New Broadband
Indenture in the ordinary course of business.

GOVERNING LAW

     The New Broadband Indenture, the New Broadband Notes and the cable
guarantees will be governed by, and construed in accordance with, the internal
laws of the State of New York.

BOOK-ENTRY SYSTEM

     Broadband will initially issue the New Broadband Notes in the form of one
or more global notes (the "Global Notes"). The Global Notes will be deposited
with, or on behalf of, The Depository Trust Company ("DTC") and registered in
the name of DTC or its nominee. Except as set forth below, the Global Notes may
be transferred, in whole and not in part, only to DTC or another nominee of DTC.
A holder may hold beneficial interests in the Global Notes directly through DTC
if such holder has an account with DTC or indirectly through organizations which
have accounts with DTC, including Euroclear and Clearstream.

  DTC

     DTC has advised Broadband as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a member of the
Federal Reserve System a clearing corporation within the meaning of the New York
Uniform Commercial Code and a clearing agency registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities of institutions that have accounts with DTC ("participants") and to
facilitate the clearance and settlement of securities transactions among its
participants in such securities through electronic book-entry changes in
accounts of the participants, thereby eliminating the need for physical movement
of securities certificates. DTC's participants include securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations. Access to DTC's book-entry system is also available to others
such as banks, brokers, dealers and trust companies (collectively, the "indirect
participants") that clear through or maintain a custodial relationship with a
participant, whether directly or indirectly.

     Broadband expects that pursuant to procedures established by DTC, upon the
deposit of the Global Notes with DTC, DTC will credit on its book entry
registration and transfer system the principal amount of New Broadband Notes
represented by such Global Notes to the accounts of participants. Ownership of
beneficial interests in the Global Notes will be limited to participants or
persons that may hold interests

                                       120


through participants. Ownership of beneficial interests in the Global Notes will
be shown on and the transfer of those ownership interests will be effected only
through, records maintained by DTC (with respect to participants' interests),
the participants and the indirect participants (with respect to the owners of
beneficial interests in the Global Note other than participants). All interests
in a Global Note deposited with DTC are subject to the procedures and
requirements of DTC.

     The laws of some jurisdictions may require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
limits and laws may impair the ability to transfer or pledge beneficial
interests in the Global Notes.

     So long as DTC (or its nominee) is the registered holder and owner of a
Global Note, DTC (or such nominee) will be considered the sole legal owner and
holder of the notes evidenced by such Global Note for all purposes of such notes
and the indenture. Except as set forth below under "-- Certificated Notes," as
an owner of a beneficial interest in a Global Note, you will not be entitled to
have the notes represented by such Global Note registered in your name, will not
receive or be entitled to receive physical delivery of certificated notes and
will not be considered to be the owner or holder of any notes under such Global
Note. We understand that under existing industry practice, in the event an owner
of a beneficial interest in a Global Note desires to take any action that DTC,
as the holder of such Global Note, is entitled to take, DTC would authorize the
participants to take such action, and the participants would authorize
beneficial owners owning through such participants to take such action or would
otherwise act upon the instructions of beneficial owners owning through them.

     Broadband will make payments of principal of, premium, if any, and interest
on the New Broadband Notes represented by the Global Notes registered in the
name of and held by DTC or its nominee to DTC or its nominee, as the case may
be, as the registered owner and holder of the Global Notes.

     Broadband expects that DTC (or its nominee), upon receipt of any payment of
principal of, premium, if any, or interest on the Global Notes will credit the
accounts of their relevant participants or account holders, as applicable, with
payments in amounts proportionate to their respective beneficial interests in
the principal amount of the applicable Global Note as shown on the records of
DTC (or its nominee). Broadband also expects that payments by participants or
indirect participants or account holders, as applicable, to owners of beneficial
interests in the Global Notes held through such participants or indirect
participants or account holders will be governed by standing instructions and
customary practices and will be the responsibility of such participants or
indirect participants or account holders, as applicable. Broadband will not have
any responsibility or liability for any aspect of the records relating to, or
payments made on account of, beneficial ownership interests in the Global Notes
for any New Broadband Notes or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests or for any other aspect
of the relationship between DTC and its participants or indirect participants,
or the relationship between such participants or indirect participants, and the
owners of beneficial interests in the Global Notes owning through such
participants.

     All amounts payable under the New Broadband Notes will be payable in U.S.
dollars, except as may otherwise be agreed between any applicable securities
clearing system and any holders. Payments will be subject in all cases to any
fiscal or other laws and regulations (including any regulations of any
applicable securities clearing system) applicable thereto. None of the trustee,
Broadband, the cable guarantors or any of their respective agents shall be
liable to any holder of a Global Note or other person for any commissions,
costs, losses or expenses in relation to or resulting from any currency
conversion or rounding effected in connection therewith. Investors may be
subject to foreign exchange risks that may have important economic and tax
consequences to them.

                                       121


CERTIFICATED NOTES

     Subject to certain conditions, the New Broadband Notes represented by the
Global Notes are exchangeable for certificated notes in definitive form of like
tenor in denominations of $1,000 principal amount and multiples thereof if:

          (1) DTC provides notification that it is unwilling or unable to
     continue as depositary for the Global Notes or DTC ceases to be a clearing
     agency registered under the Exchange Act and, in either case, a successor
     is not appointed within 90 days;

          (2) Broadband in its discretion at any time determines not to have all
     the New Broadband Notes represented by the Global Notes; or

          (3) a default entitling the holders of the applicable New Broadband
     Notes to accelerate the maturity thereof has occurred and is continuing.

     Any New Broadband Note that is exchangeable as above is exchangeable for
certificated notes issuable in authorized denominations and registered in such
names as DTC shall direct. Subject to the foregoing, a Global Note is not
exchangeable, except for a Global Note of the same aggregate denomination to be
registered in the name of DTC (or its nominee).

SAME-DAY PAYMENT

     The New Broadband Indenture requires payments to be made in respect of the
applicable New Broadband Notes represented by the Global Notes (including
principal, premium and interest) by wire transfer of immediately available funds
to the accounts specified by the holder thereof or, if no such account is
specified, by mailing a check to such holder's registered address.

     Payments (including principal, premium and interest) and transfers with
respect to New Broadband Notes in certificated form may be executed at the
office or agency maintained for such purpose within the City and State of New
York (initially the office of the paying agent maintained for such purpose) or,
at Broadband's option, by check mailed to the holders thereof at the respective
addresses set forth in the register of holders of the applicable New Broadband
Notes, provided that all payments (including principal, premium and interest) on
New Broadband Notes in certificated form, for which the holders thereof have
given wire transfer instructions, will be required to be made by wire transfer
of immediately available funds to the accounts specified by the holders thereof.
No service charge will be made for any registration of transfer, but payment of
a sum sufficient to cover any tax or governmental charge payable in connection
with that registration may be required.

                                       122


                     COMPARISON OF THE NEW BROADBAND NOTES
                        AND THE BROADBAND EXCHANGE NOTES

     The following comparison of the New Broadband Notes and the Broadband
Exchange Notes summarizes the material differences between the New Broadband
Notes and the Broadband Exchange Notes. See "Description of the Broadband
Exchange Notes" for a more complete discussion of the material terms of the AT&T
Indenture, the Broadband Exchange Supplemental Indenture and the Broadband
Exchange Notes, and "Description of the New Broadband Notes and the Cable
Guarantees" for a more complete discussion of the material terms of the New
Broadband Indenture, the New Broadband Notes and the cable guarantees. Because
this is a summary, it may not contain all the information that is important to
you. You should read the AT&T Indenture, the Broadband Exchange Supplemental
Indenture and the New Broadband Indenture, which have been filed as exhibits to
the registration statement of which this prospectus is a part, in their
entirety.

COMPARISON OF BASIC TERMS

  CHANGES IN OBLIGORS

     The Broadband Exchange Notes will be the co-obligations of AT&T and
Broadband. The New Broadband Notes will be the primary obligations of Broadband
only, fully and unconditionally guaranteed by the cable guarantors. The
Broadband Exchange Notes will not have the benefit of the cable guarantees.

  CERTAIN CHANGES TO INTEREST RATE, MATURITY DATE, INTEREST PAYMENT DATES AND
RECORD DATES

     The interest rate on the Broadband Exchange Notes will not be the same as
the interest rate on the applicable series of New Broadband Notes into which
they are expected to be exchanged. The interest rate for each series of New
Broadband Notes will be announced by press release two business days prior to
the expiration of the exchange offer and will be based on spreads over the
relevant U.S. Treasury rates set forth on the cover of this prospectus. For a
more complete discussion of the method of calculating interest on the New
Broadband Notes, see "Description of the Exchange Offer -- Interest Rate for the
New Broadband Notes."

     Interest on the New Broadband Notes accrues from the date of original
issuance, which will be the date of mandatory exchange with respect to the New
Broadband Notes, or from the most recent interest payment date to which interest
has been paid.

     Interest accrued and unpaid on any Broadband Eligible Notes accepted in an
exchange offer (a) will be paid along with the first payment of interest on the
relevant series of Broadband Exchange Notes or (b) if the mandatory exchange of
the Broadband Exchange Notes occurs prior to that first payment of interest,
will be paid at the time of mandatory exchange.

     Interest accrued and unpaid on any series of Broadband Exchange Notes will
be paid at the time of mandatory exchange.

     Except as described below with respect to the New Broadband Notes Due 2013
which are offered for exchange for each of the 7.00% Broadband Exchange Notes
Due May 15, 2005, the 7.50% Broadband Exchange Notes Due June 1, 2006, the 7.75%
Broadband Exchange Notes Due March 1, 2007 and the 6.00% Broadband Exchange
Notes Due March 15, 2009, each series of New Broadband Notes has the identical
maturity date, interest payment dates and record dates of the series of
Broadband Exchange Notes for which it will be exchanged.

     The New Broadband Notes Due 2013 mature on           , 2013, with interest
payable semiannually on each           and           , beginning on the first
          or           occurring after the initial issuance of the New Broadband
Notes Due 2013, to holders of record on the preceding           and           ,
which are changes from the respective current maturity dates, interest payment
dates and record dates for the 7.00% Broadband Exchange Notes Due May 15, 2005,
the 7.50% Broadband Exchange Notes Due June 1, 2006, the 7.75% Broadband
Exchange Notes Due March 1, 2007 and the 6.00% Broadband

                                       123


Exchange Notes Due March 15, 2009 for which the New Broadband Notes Due 2013 are
expected to be exchanged.

  ELIMINATION OF EXCHANGE LISTINGS

     The New Broadband Notes will not be listed on any exchange. If the AT&T
Comcast transaction is terminated, AT&T will use its commercially reasonable
efforts to list the Broadband Exchange Notes on the New York Stock Exchange and
the 6.00% Broadband Exchange Notes Due March 15, 2009 additionally on the
Luxembourg Stock Exchange. The Broadband Eligible Notes which are exchangeable
into Broadband Exchange Notes are currently listed on the New York Stock
Exchange and the 6.00% Broadband Eligible Notes Due March 15, 2009 are
additionally listed on the Luxembourg Stock Exchange.

ELIMINATION OF PAYMENT OF ADDITIONAL AMOUNTS; REDEMPTION UPON A TAX EVENT

     The 6.00% Broadband Exchange Notes Due March 15, 2009 provide for the
payment of additional amounts and redemption upon a tax event as described under
"Description of the Broadband Exchange Notes -- Additional Terms Pertaining Only
to the 6.00% Broadband Exchange Notes Due March 15, 2009." No series of New
Broadband Notes, including the New Broadband Notes Due 2013 issued in exchange
for the 6.00% Broadband Exchange Notes Due March 15, 2009, will contain similar
provisions.

OPTIONAL REDEMPTION

     The price at which AT&T may redeem the Broadband Exchange Notes subject to
optional redemption will not be the same as the price at which Broadband may
redeem the applicable series of New Broadband Notes into which they are expected
to be exchanged. For a more complete description of the applicable redemption
prices of the New Broadband Notes, see "Description of the New Broadband Notes
and the Cable Guarantees -- Optional Redemption."

     Other than different redemption prices, except as described below with
respect to the New Broadband Notes Due 2013, each series of New Broadband Notes
has substantially identical optional redemption terms as the series of Broadband
Exchange Notes for which it will be exchanged upon the completion of the AT&T
Comcast transaction.

     The 6.00% Broadband Exchange Notes Due March 15, 2009 for which the New
Broadband Notes Due 2013 also will be exchanged upon completion of the AT&T
Comcast transaction have the optional redemption terms set forth under
"Description of the Broadband Exchange Notes -- Optional Redemption -- 6.00%
Broadband Exchange Notes Due March 15, 2009." Like the 7.00% Broadband Exchange
Notes Due May 15, 2005, the 7.50% Broadband Exchange Notes Due June 1, 2006 and
the 7.75% Broadband Exchange Notes Due March 1, 2007 for which the New Broadband
Notes Due 2013 will be exchanged upon the completion of the AT&T Comcast
transaction, the New Broadband Notes Due 2013 will not be subject to optional
redemption by Broadband.

COVENANTS

     The New Broadband Indenture:

     - contains covenants that restrict Broadband's ability and the cable
       guarantors' ability to create secured indebtedness and engage in sale and
       leaseback transactions that are different from those covenants that are
       in the AT&T Indenture described under "Description of the Broadband
       Exchange Notes -- Certain Covenants -- Limitation on Secured
       Indebtedness; -- Limitation on Sale and Leaseback Transactions" and

     - modifies the "Consolidation, Merger or Sale" covenant as described below.

                                       124


 LIMITATIONS ON LIENS SECURING INDEBTEDNESS AND ON SALE AND LEASEBACK
 TRANSACTIONS

     Under the New Broadband Indenture, neither Broadband nor any cable
guarantor will be permitted to create any lien, other than certain permitted
liens, on such person's assets, including the capital stock of its wholly owned
subsidiaries, to secure the payment of indebtedness of Broadband or any cable
guarantor, unless Broadband secures the outstanding New Broadband Notes equally
and ratably with (or prior to) all indebtedness secured by such lien, so long as
such indebtedness shall be so secured. See "Description of the New Broadband
Notes and the Cable Guarantees -- Certain Covenants -- Limitation on Liens
Securing Indebtedness" for a more complete discussion of the provisions of the
new Broadband Indenture relating to restrictions on the ability of Broadband and
the cable guarantors to create secured indebtedness. The New Broadband Indenture
also restricts Broadband's ability and the cable guarantors' ability to engage
in sale and leaseback transactions. A more complete discussion of these
provisions is set forth in "Description of the New Broadband Notes and the Cable
Guarantees -- Certain Covenants -- Limitation on Sale and Leaseback
Transactions." These provisions do not apply to any subsidiaries of AT&T Comcast
other than the cable guarantors and Broadband.

     Under the AT&T Indenture, AT&T cannot, and AT&T cannot permit certain
subsidiaries to, create any secured indebtedness unless AT&T secures the debt
securities issued under the AT&T Indenture to the same extent as such secured
indebtedness or enter into any leases longer than three years. However, AT&T and
its subsidiaries may incur secured indebtedness without securing those debt
securities or enter into leases longer than three years if immediately after
incurring the secured indebtedness or entering into the lease, the aggregate
amount of all secured indebtedness and the discounted present value of all net
rentals payable under leases entered into in connection with sale and leaseback
transactions would not exceed 10% of consolidated net tangible assets. See
"Description of the Broadband Exchange Notes -- Certain Covenants -- Limitation
on Secured Indebtedness" and "-- Limitation on Sale and Leaseback Transactions"
for a more complete discussion of the provisions of the AT&T Indenture relating
to restrictions on the ability of AT&T and its subsidiaries to create secured
indebtedness.

  MODIFICATION OF CONSOLIDATION, MERGER OR SALE

     Pursuant to the AT&T Indenture, AT&T may not consolidate with or merge into
any other corporation or convey or transfer substantially all of its properties
and assets to any person, unless

     - that person is authorized to acquire and operate its property and

     - the successor corporation expressly assumes by a supplemental indenture
       the due and punctual payment of the principal of and any premium or any
       interest on all the debt securities and the performance of every covenant
       in the AT&T Indenture that AT&T would otherwise have to perform.

     Pursuant to the New Broadband Indenture, these provisions would not:

     - apply to a consolidation with or merger with or into or a sale,
       conveyance, transfer, lease or other disposition to a wholly owned
       subsidiary with a positive net worth; provided that, in connection with
       any merger of either party and a wholly-owned subsidiary, no
       consideration other than common stock in the surviving person or
       Broadband's shall be issued or distributed to such party's stockholders;
       or

     - expressly require such person to be authorized to acquire and operate its
       property.

     In addition, the New Broadband Indenture will expressly provide that upon
express assumption of any party's obligations as described above, that party
shall be discharged from all obligations and covenants under the New Broadband
Indenture and on all of the New Broadband Notes.

     See "Description of the New Broadband Notes and the Cable
Guarantees -- Certain Covenants -- Consolidation, Merger and Sale of Assets" for
a more complete discussion of the provisions of the New Broadband Indenture
relating to restrictions on the ability of the Broadband to consolidate, merge
or sell property and assets.
                                       125


MODIFICATION AND WAIVER

     In addition to the kinds of amendments, modifications or waivers that may
be made under the AT&T Indenture without notice to or the consent of any holder,
the New Broadband Indenture further provides that Broadband and the trustee may
amend or supplement the New Broadband Indenture or the New Broadband Notes
without notice to or the consent of any holder:

     - to comply with any requirements of the SEC in connection with the
       qualification of the New Broadband Indenture under the Trust Indenture
       Act of 1939;

     - to evidence and provide for the acceptance of appointment under the New
       Broadband Indenture by a successor trustee; and

     - to make any change so long as no New Broadband Notes or Broadband
       Exchange Notes are outstanding.

     In addition, whereas the AT&T Indenture permits AT&T and the trustee to
amend or supplement the AT&T Indenture or the Broadband Exchange Notes without
notice to or the consent of any holder to cure any ambiguity, defect, or
inconsistency in the AT&T Indenture provided that such amendments or supplements
shall not adversely affect the interests of the holders, the New Broadband
Indenture permits these amendments or supplements provided that the amendment or
supplement shall not adversely affect the interests of the holders in any
material respect (added text in italics).

     In addition, the New Broadband Indenture includes the requirement in
instances where modifications and amendments of the Broadband Indenture and the
New Broadband Notes may be made by Broadband and the trustee with the written
consent of the holders of a majority in principal amount of an issue of New
Broadband Notes that each affected holder must consent to any modification,
amendment or waiver that changes the provisions for calculating the optional
redemption price, including the definitions thereto, which requirement is not
contained in the AT&T Indenture.

     See "Description of the New Broadband Notes and the Cable
Guarantees -- Modification and Waiver" for a more complete discussion of the
rights of Broadband and the trustee to amend or supplement the New Broadband
Indenture or the New Broadband Notes.

EVENTS OF DEFAULT

     For purposes of this section, the term "Obligor" shall mean each of
Broadband, AT&T Comcast, Comcast Cable, MediaOne and TCI, in each case excluding
such entities' subsidiaries.

     Pursuant to the AT&T Indenture governing the Broadband Exchange Notes, an
Event of Default would occur if:

        (a) a court having jurisdiction enters a decree or order for:

           - relief in respect of AT&T in an involuntary case under any
             applicable bankruptcy, insolvency, or other similar law now or
             hereafter in effect;

           - appointment of a receiver, liquidator, assignee, custodian,
             trustee, sequestrator, or similar official of AT&T for all or
             substantially all of AT&T's property and assets; or

           - the winding up or liquidation of AT&T's affairs and such decree or
             order shall remain unstayed and in effect for a period of 60
             consecutive days; or

        (b) AT&T:

           - commences a voluntary case under any applicable bankruptcy,
             insolvency, or other similar law now or hereafter in effect, or
             consents to the entry of an order for relief in an involuntary case
             under any such law;

                                       126


           - consents to the appointment of or taking possession by a receiver,
             liquidator, assignee, custodian, trustee, sequestrator, or similar
             official of such party or for any substantial part of its property;

           - effects any general assignment for the benefit of creditors;

           - admits in writing its inability to pay its debts generally as they
             become due; or

           - takes corporate action in furtherance of any of the foregoing.

     The New Broadband Indenture's provisions relating to Events of Defaults
apply to Broadband and each cable guarantor. However, the New Broadband
Indenture would extend the period for which the court's decree or order for the
winding up or liquidation of the Obligors' affairs would be required to remain
unstayed and in effect to trigger an event of default to 180 consecutive days
from the 60 consecutive days currently required by the AT&T Indenture and would
eliminate as Events of Default (i) the admission in writing by an Obligor of its
inability to pay its debts generally as they become due and (ii) the taking of
an Obligor of corporate action in furtherance of any action specified in clause
(b).

     In addition, the New Broadband Indenture shortens to 30 days from the 90
days currently required by the AT&T Indenture the consecutive day period for
which:

      - a default by any Obligor in the payment of interest on the New Broadband
        Notes of a series when the same becomes due and payable must continue
        before triggering an Event of Default and

      - a default by any Obligor in the performance of or breach by an Obligor
        of any of its other covenants or agreements in the New Broadband
        Indenture applicable to all the New Broadband Notes or applicable to the
        New Broadband Notes of any series must continue after written notice is
        received from the trustee or from holders of 25% or more in aggregate
        principal amount of the New Broadband Notes of all affected series
        before triggering an Event of Default.

     In addition, the AT&T Indenture requires that the trustee or holders of not
less than 25% in aggregate principal amount of the affected series of Broadband
Exchange Notes then outstanding give notice of any event of default set forth in
clauses (a) and (b) above to declare the principal amount of and accrued
interest, if any, on such Broadband Exchange Notes to be immediately due and
payable. The New Broadband Indenture eliminates this requirement and if an event
of default specified in clauses (a) and (b) above occurs with respect to any
Obligor, the principal amount of and accrued interest, if any, on each issue of
New Broadband Notes then outstanding shall be and become immediately payable
without any notice or other action on the part of the trustee or any holder.

     An additional Event of Default not included in the AT&T Indenture that
occur under the New Broadband Indenture if, at any time, any cable guarantee is
not (or claimed by any of AT&T Comcast, Comcast Cable, MediaOne or TCI not to
be) in full force and effect.

     Another change in the New Broadband Indenture as compared to the AT&T
Indenture is that the New Broadband Indenture will require certain officers of
Broadband to certify no later than 120 days after the end of each fiscal year,
as to their knowledge, as to Broadband's compliance with all conditions and
covenants under the New Broadband Indenture, such compliance to be determined
without regard to any period of grace or requirement of notice provided under
the New Broadband Indenture.

                                       127


                       DESCRIPTION OF THE NEW AT&T NOTES

     The New AT&T Notes will be direct unsecured and unsubordinated obligations
of AT&T. The AT&T Eligible Notes were issued under the AT&T Indenture. The New
AT&T Notes will be issued under the AT&T Indenture, as amended by a supplemental
indenture that will have the purpose of, among other things, creating the series
of notes included in, and setting forth the terms applicable to, the New AT&T
Notes, and effecting the note amendment with respect to each series of New AT&T
Notes and each other series of AT&T Notes that have consented to the note
amendment, each as described in this section and under "Description of the Note
Amendment." We refer to this supplemental indenture as the "New AT&T
Supplemental Indenture." The terms of the New AT&T Notes include those stated in
the AT&T Indenture, those stated in the New AT&T Supplemental Indenture and
those made a part of the AT&T Indenture by reference to the Trust Indenture Act
of 1939.

     The summary of the material provisions of the New AT&T Notes provided in
this section should be read in conjunction with provisions of the AT&T Indenture
summarized under the subheadings "-- Additional Debt," "-- Certain Covenants,"
"-- Modification of the AT&T Indenture," "-- Events of Default," "-- Discharge
and Defeasance," "-- No Personal Liability of Stockholders, Officers, Directors
or Employees," "-- Concerning the Trustee," "-- Governing Law," "-- Certain
Definitions," "-- Book-Entry System," "-- Certificated Notes" and "-- Same-Day
Payment" under "Description of the Broadband Exchange Notes." Because this is a
summary, it may not contain all the information that is important to you. You
should read both the AT&T Indenture and the New AT&T Supplemental Indenture,
which have been filed as exhibits to the registration statement of which this
prospectus is a part, in their entirety.

     The terms of the New AT&T Notes are substantially identical to the terms of
the AT&T Eligible Notes, except that:

     - the interest rate on the applicable New AT&T Notes will be adjusted
       automatically upon completion of the AT&T Comcast transaction, as
       described in further detail under "-- Interest Payments" below;

     - the maturity date of the New AT&T Notes issued in exchange for the 6.50%
       AT&T Eligible Notes Due March 15, 2029 will be changed automatically to
       March 15, 20  upon completion of the AT&T Comcast transaction; and

     - the merger covenant applicable to the New AT&T Notes will be the AT&T
       Indenture merger covenant as amended by the note amendment, which is
       described in greater detail under "Description of the Broadband Exchange
       Notes -- Certain Covenants -- Consolidation, Merger or Sale."

BASIC TERMS OF THE NEW AT&T NOTES

     The New AT&T Notes:

     - will rank equally with all of AT&T's other unsecured and unsubordinated
       debt;

     - will be obligations only of AT&T;

     - will be issued up to $5,485,563,000 in aggregate principal amount of
       notes comprised as follows:

      o up to $2,000,000,000 in principal amount of New AT&T Notes Due 2004
        (Series 1), maturing on March 15, 2004, with interest payable
        semiannually on each March 15 and September 15, beginning the first
        March 1 or September 1 occurring after the initial issuance of the New
        AT&T Notes Due 2004 (Series 1), to holders of record on the preceding
        March 1 and September 1;

      o up to $400,000,000 in principal amount of New AT&T Notes Due 2004
        (Series 2), maturing on April 1, 2004, with interest payable
        semiannually on each April 1 and October 1, beginning the first April 1
        or October 1 occurring after the initial issuance of the New AT&T Notes
        Due 2004 (Series 2), to holders of record on the preceding March 15 and
        September 15;

                                       128


      o up to $25,000,000 in principal amount of New Medium-Term Notes, Series A
        (subseries 1) Due May 15, 2025, maturing on May 15, 2025, with interest
        payable semiannually on each May 15 and November 15, beginning the first
        May 15 or November 15 occurring after the initial issuance of the New
        Medium-Term Notes Due 2025 Series A (subseries 1) Due May 15, 2025, to
        holders of record on the preceding May 1 and November 1;

      o up to $50,000,000 in principal amount of New Medium-Term Notes, Series A
        (subseries 2) Due May 15, 2025, maturing on May 15, 2025, with interest
        payable semiannually on each May 15 and November 15, beginning the first
        May 15 or November 15 occurring after the initial issuance of the New
        Medium-Term Notes Due 2025 Series A (subseries 2) Due May 15, 2025, to
        holders of record on the preceding May 1 and November 1;

      o up to $3,000,000,000 in principal amount of New AT&T Notes Due 20  ,
        maturing on March 15, 2029, however upon the completion of the AT&T
        Comcast transaction, the maturity will be changed automatically to March
        15, 20  , with interest payable semiannually on each March 15 and
        September 15, beginning the first March 15 or September 15 occurring
        after the initial issuance of the New AT&T Notes Due 20  , to holders of
        record on the preceding March 1 and September 1; and

      o up to $10,563,000 in principal amount of New FRN Medium-Term Notes,
        Series A Due 2054, maturing on December 28, 2054, with interest payable
        semiannually on each June 28 and December 28, beginning the first June
        28 or December 28 occurring after the initial issuance of the New FRN
        Medium-Term Notes, Series A Due 2054, to holders of record on the
        preceding June 13 and December 13;

     - will be issued issuable in fully registered form, in denominations of
       $1,000 and multiples thereof, other than the New FRN Medium-Term Notes,
       Series A Due 2054, which will be issued in denominations of $25,000 and
       multiples of $1,000 thereof.

     AT&T will apply to have each series of the New AT&T Notes, other than those
issued in exchange for Series A Medium-Term Notes, listed on the New York Stock
Exchange. AT&T will also apply to have the New AT&T Notes due 2004 (Series 1)
and the New AT&T Notes due 20  additionally listed on the Luxembourg Stock
Exchange. See "-- Luxembourg Listing" for more information with respect to the
proposed listing of the New AT&T Notes Due 2004 (Series 1) and the New AT&T
Notes due 20  .

     AT&T does not intend to apply for listing of the New AT&T Notes issued in
exchange for the Series A Medium-Term Notes on any national exchange.

INTEREST PAYMENTS

     Initially, each series of New AT&T Notes will have the same interest rate
as the series of AT&T Eligible Notes for which it is exchangeable. Interest
accrued and unpaid on any AT&T Eligible Notes accepted in an exchange offer will
be paid along with the first payment of interest on the relevant series of New
AT&T Notes.

     Upon completion of the AT&T Comcast transaction, the interest rate on each
applicable series of New AT&T Notes will be adjusted automatically as set forth
on the cover of this prospectus.

     Except with respect to the New FRN Medium-Term Notes, Series A Due 2054
described below, interest for the New AT&T Notes will be computed on the basis
of a 360-day year consisting of twelve 30-day months. Interest on the notes will
accrue from the date of original issuance, which will be the date the exchange
offer is completed with respect to each series of New AT&T Notes, or from the
most recent interest payment date to which interest has been paid and is payable
semiannually on interest payment dates described of each year.

                                       129


  NEW FRN MEDIUM-TERM NOTES, SERIES A DUE 2054

     Initially the New FRN Medium-Term Notes, Series A Due 2054 will have the
same interest rate as the series of AT&T Eligible Notes for which they are
exchangeable. Upon completion of the AT&T Comcast transaction, the New FRN
Medium-Term Notes, Series A Due 2054 will bear interest at the interest rate
calculated with reference to the Commercial Paper Rate and the New Spread
described below.

     The rate of interest on each New FRN Medium-Term Note, Series A Due 2054
will be reset monthly commencing the 28th calendar day of the first month
occurring after the initial issuance of the New FRN Medium-Term Notes, Series A
Due 2054 and on completion of the AT&T Comcast Transaction (such period being
the "Interest Reset Period" for such New FRN Medium-Term Note, Series A Due 2054
and the first date of each Interest Reset Period being an "Interest Reset
Date"); provided, however, that the interest rate in effect from the date of
issue to the first Interest Reset Date (the "Initial Interest Reset Date") with
respect to a New FRN Medium-Term Note, Series A Due 2054 will be the same
interest rate as the series of AT&T Eligible Notes for which it is exchangeable.

     If any Interest Reset Date for any New FRN Medium-Term Note, Series A Due
2054 would otherwise be a day that is not a business day, such Interest Reset
Date will be postponed to the next succeeding business day.

     For purposes of this section "Spread" refers to the Old Spread until the
completion of the AT&T Comcast Transaction and to the New Spread thereafter. The
interest rate on each New FRN Medium-Term Note, Series A Due 2054 will be
calculated by reference to the Commercial Paper Rate plus or minus the Spread.
Interest payments on New FRN Medium-Term Note, Series A Due 2054 will be the
amount of interest accrued from, and including, the date of issue or the last
date to which interest has been paid to, but excluding, the Interest Payment
Date or date of maturity, as the case may be; provided that if the maturity date
that would otherwise fall on a day that is not a business day is postponed or
changed as described above, the interest payable on such date shall accrue to,
but exclude, the date that would have been the or maturity date had it been a
business day.

     With respect to a New FRN Medium-Term Note, Series A Due 2054, accrued
interest shall be calculated by multiplying the principal amount of such New FRN
Medium-Term Note, Series A Due 2054 by an accrued interest factor. Such accrued
interest factor will be computed by adding the interest factors calculated for
each day in the Interest Reset Period or from the last date from which accrued
interest is being calculated. The interest factor for each such day is computed
by dividing the interest rate applicable to such day by 360. The interest rate
applicable to any day that is an Interest Reset Date is the applicable rate as
reset on such date. The interest rate applicable to any other day is the
interest rate for the immediately preceding Interest Reset Date (or, if none,
the Initial Interest Rate, as described below).

               will be the calculation agent with respect to the New FRN
Medium-Term Notes, Series A Due 2054. Upon the request of the holder of any New
FRN Medium-Term Note, Series A Due 2054, the calculation agent will provide the
interest rate then in effect and, if determined, the interest rate which will
become effective on the next Interest Reset Date with respect to such New FRN
Medium-Term Note, Series A Due 2054.

     All percentages resulting from any calculation of the rate of interest on a
New FRN Medium-Term Note, Series A Due 2054 will be rounded, if necessary, to
the nearest one-hundred-thousandth of a percentage point (.0000001), with five
one-millionths of a percentage point rounded upward, and all dollar amounts used
in or resulting from such calculation on New FRN Medium-Term Notes, Series A Due
2054 will be rounded to the nearest cent (with one-half cent rounded upward).

     The interest rate for each Interest Reset Date subsequent to the Initial
Interest Reset Date will be determined by the calculation agent as follows. The
"Calculation Date" pertaining to any Commercial Paper Interest Determination
Date will be the earlier of, either (i) the tenth calendar day after such date,
or, if such tenth day is not a business day, the next succeeding business day,
or (ii) the business day preceding the applicable Interest Payment Date or date
of maturity, as the case may be.
                                       130


     The "Commercial Paper Rate" for each Interest Reset Date will be determined
on the Calculation Date by the calculation agent as of the second business day
prior to such Interest Reset Date (a "Commercial Paper Interest Determination
Date") and shall be the Money Market Yield (as defined below) on such Commercial
Paper Interest Determination Date of the rate for commercial paper having a
30-day maturity, as such rate shall be published by the Board of Governors of
the Federal Reserve System in "Statistical Release H.15(519), Selected Interest
Rates" ("H.15(519)"), or any successor publication, under the heading
"Commercial Paper." In the event that such rate is not published prior to 9:00
A.M., New York City time, on the Calculation Date, then the Commercial Paper
Rate shall be the Money Market Yield on such Commercial Paper Interest
Determination Date of the rate for commercial paper having a 30-day maturity as
published by the Federal Reserve Bank of New York in its daily statistical
release "Composite 3:30 P.M. Quotations for U.S. Government Securities"
("Composite Quotations") under the heading "Commercial Paper." If by 3:00 P.M.,
New York City time, on such Calculation Date such rate is not yet published in
either H.15(519) (or any successor publication) or Composite Quotations, then
the Commercial Paper Rate shall be the Money Market Yield of the arithmetic mean
of the offered rates as of 11:00 A.M., New York City time, on such Commercial
Paper Interest Determination Date of three leading dealers of commercial paper
in The City of New York selected by the calculation agent for commercial paper
having a 30-day maturity, placed for an industrial issuer whose bond rating is
AA, or the equivalent, from a nationally recognized rating agency; provided,
however, that if the dealers selected as aforesaid by the calculation agent are
not quoting offered rates as mentioned in this sentence, the rate of interest in
effect for the applicable period will be the rate of interest in effect on such
Commercial Paper Interest Determination Date.

     "Money Market Yield" shall be a yield calculated in accordance with the
following formula:


                                                      
                                            D x 360
              Money Market Yield =                          x 100
                                          ------------
                                          360 -(D x M)


where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal, and "M" refers to the actual
number of days in the period for which interest is being calculated.

     The "Old Spread" to the Commercial Paper Rate is adjusted each Interest
Period based upon the Standard and Poor's (S&P) long-term senior debt rating of
AT&T as follows:



AT&T RATING                                                       OLD SPREAD
-----------                                                    ----------------
                                                            
AAA.........................................................   -30 basis points
AA+.........................................................   -27 basis points
AA..........................................................   -25 basis points
AA-.........................................................   -23 basis points
A+..........................................................   -21 basis points
A...........................................................   -19 basis points
A-..........................................................   -17 basis points
BBB+........................................................   -15 basis points
BBB.........................................................   -13 basis points
BBB-........................................................   -11 basis points
Below BBB...................................................   +35 basis points


                                       131


     The "New Spread" to the Commercial Paper Rate is adjusted each Interest
Period based upon the Standard and Poor's (S&P) long-term senior debt rating of
AT&T as follows:



AT&T RATING                                                      NEW SPREAD
-----------                                                   ----------------
                                                           
AAA.........................................................      basis points
AA+.........................................................      basis points
AA..........................................................      basis points
AA-.........................................................      basis points
A+..........................................................      basis points
A...........................................................      basis points
A-..........................................................      basis points
BBB+........................................................      basis points
BBB.........................................................      basis points
BBB-........................................................      basis points
Below BBB...................................................      basis points


     If S&P ceases to exist, then the calculation agent and AT&T shall mutually
select a nationally recognized securities ratings agency, with preference, if
possible, given to one contemporaneously assigning the same rating to AT&T as
that of S&P at the time of S&P's cessation, to act as a substitute rating
agency, and mutually make any necessary adjustments to provide for an equivalent
ratings scale.

     Interest payments will include the amount of interest accrued from and
including the most recent Interest Payment Date to which interest has been paid
(or from and including the original issue date if no interest has been paid on
the notes) to, but excluding the applicable Interest Payment Date.

     The Aggregate Interest Amount shall be the sum of (i) the Interest Amount
calculated for such Interest Period, (ii) the Aggregate Carry-over Interest
Amount in respect of such Interest Period and (iii) the Compounding Amount. If
the Interest Reset Date is an Interest Payment Date, then the Aggregate Interest
Amount will be the Interest Payment Amount payable on such Interest Payment
Date. If the Interest Reset Date is not an Interest Payment Date, then such
amount shall be deemed to be the Aggregate Carry-over Interest Amount for the
next succeeding Interest Period and no payment shall be made on that date.
Interest Amount means with respect to each Interest Period, the product of the
Principal Amount and an accrued Interest Factor. This accrued Interest Factor
will be computed by adding the Interest Factors calculated for each day in the
Interest Period. The Interest Factor for the notes for each such day will be
computed by dividing the Interest Rate applicable to such day by 360.

     Interest Period means each of the following periods: (i) from and including
the original issue date to but excluding the Initial Reset Date and (ii) from
and including each Interest Reset Date (other than the maturity date) to but
excluding the next Interest Reset Date. Aggregate Carry-over Interest Amount
shall be zero with respect to each interest period immediately succeeding an
Interest Payment Date and with respect to each of the succeeding Interest
Periods, means the amount calculated as provided above. Aggregate Interest
Amount means the amount calculated as provided above. Compounding Amount means
the amount which is the product of (i) the accrued Interest Factor for any
relevant Interest Period and (ii) the Aggregate Carry-over Interest Amount for
such Interest Period.

ADDITIONAL TERMS PERTAINING ONLY TO THE NEW AT&T NOTES DUE 2004 (SERIES 1) AND
NEW AT&T NOTES DUE 20

  PAYMENT OF ADDITIONAL AMOUNTS

     AT&T will, subject to the exceptions and limitations set forth below, pay
as additional interest on the New AT&T Notes Due 2004 (Series 1) and the New
AT&T Notes due 20  such additional amounts as are necessary so that the net
payment by AT&T or a paying agent of the principal of and interest on the New
AT&T Notes Due 2004 (Series 1) and the New AT&T Notes Due 20  to a person that
is not a

                                       132


United States Holder (as defined above under "Description of the Broadband
Exchange Notes -- Additional Terms Pertaining Only to the 6.00% Broadband
Exchange Notes Due March 15, 2009"), after deduction for any present or future
tax, assessment or governmental charge of the United States or a political
subdivision or taxing authority thereof or therein, imposed by withholding with
respect to the payment, will not be less than the amount that would have been
payable in respect of such New AT&T Notes had no such withholding or deduction
been required.

     AT&T's obligation to pay additional amounts shall not apply:

          (1) to a tax, assessment or governmental charge that is imposed or
     withheld solely because the holder, or a fiduciary, settlor, beneficiary,
     member or shareholder of the holder if the holder is an estate, trust,
     partnership or corporation, or a person holding a power over an estate or
     trust administered by a fiduciary holder:

             (a) is or was present or engaged in trade or business in the United
        States or has or had a permanent establishment in the United States;

             (b) has a current or former relationship with the United States,
        including a relationship as a citizen or resident thereof;

             (c) is or has been a foreign or domestic personal holding company,
        a passive foreign investment company or a controlled foreign corporation
        with respect to the United States or a corporation that has accumulated
        earnings to avoid United States federal income tax; or

             (d) is or was a "10-percent shareholder" of AT&T as defined in
        section 871(h)(3) of the United States Internal Revenue Code or any
        successor provision;

          (2) to any holder that is not the sole beneficial owner of such New
     AT&T Notes, or a portion thereof, or that is a fiduciary or partnership,
     but only to the extent that the beneficial owner, a beneficiary or settlor
     with respect to the fiduciary, or a member of the partnership would not
     have been entitled to the payment of an additional amount had such
     beneficial owner, beneficiary, settlor or member received directly its
     beneficial or distributive share of the payment;

          (3) to a tax, assessment or governmental charge that is imposed or
     withheld solely because the holder or any other person failed to comply
     with certification, identification or information reporting requirements
     concerning the nationality, residence, identity or connection with the
     United States of the holder or beneficial owner of such notes, if
     compliance is required by statute, by regulation of the United States
     Treasury Department or by an applicable income tax treaty to which the
     United States is a party as a precondition to exemption from such tax,
     assessment or other governmental charge;

          (4) to a tax, assessment or governmental charge that is imposed other
     than by withholding by AT&T or an exchange agent from the payment;

          (5) to a tax, assessment or governmental charge that is imposed or
     withheld solely because of a change in law, regulation, or administrative
     or judicial interpretation that becomes effective more than 15 days after
     the payment becomes due or is duly provided for, whichever occurs later;

          (6) to an estate, inheritance, gift, sales, excise, transfer, wealth
     or personal property tax or a similar tax, assessment or governmental
     charge;

          (7) to any tax, assessment or other governmental charge any paying
     agent must withhold from any payment of principal of or interest on such
     note, if such payment can be made without such withholding by any other
     paying agent; or

          (8) in the case of any combination of the above items.

     The New AT&T Notes Due 2004 (Series 1) and the New AT&T Notes Due 20  are
subject in all cases to any tax, fiscal or other law or regulation or
administrative or judicial interpretation applicable. Except as specifically
provided under this heading "-- Payment of Additional Amounts" and under the
heading "-- Redemption Upon a Tax Event," we do not have to make any payment
with respect to any
                                       133


tax, assessment or governmental charge imposed by any government or a political
subdivision or taxing authority.

  REDEMPTION UPON A TAX EVENT

     If (a) AT&T becomes or will become obligated to pay additional amounts as
described above under the heading "-- Payment of Additional Amounts" as a result
of any change in, or amendment to, the laws (or any regulations or rulings
promulgated thereunder) of the United States (or any political subdivision or
taxing authority thereof or therein), or any change in, or amendments to, any
official position regarding the application or interpretation of such laws,
regulations or rulings, which change or amendment is announced or becomes
effective on or after March 23, 1999, or (b) a taxing authority of the United
States takes an action on or after March 23, 1999, whether or not with respect
to AT&T or any of its affiliates, that results in a substantial probability that
AT&T will or may be required to pay such additional amounts, then AT&T may, at
its option, redeem, as a whole, but not in part, the New AT&T Notes Due 2004
(Series 1) and/or the New AT&T Notes Due 20  on any interest payment date on not
less than 30 nor more than 60 calendar days' prior notice, at a redemption price
equal to 100% of their principal amount, together with interest accrued thereon
to the date fixed for redemption; provided that AT&T determines, in its business
judgment, that the obligation to pay such additional amounts cannot be avoided
by the use of reasonable measures available to it, not including substitution of
the obligor under such notes. No redemption pursuant to (b) above may be made
unless AT&T shall have received an opinion of independent counsel to the effect
that an act taken by a taxing authority of the United States results in a
substantial probability that AT&T will or may be required to pay the additional
amounts described above under the heading "-- Payment of Additional Amounts" and
AT&T shall have delivered to the trustee a certificate, signed by a duly
authorized officer stating, that based on such opinion AT&T is entitled to
redeem the notes pursuant to their terms.

OPTIONAL REDEMPTION

     AT&T shall have the right, at its option, to redeem certain of the New AT&T
Notes, other than the New AT&T Notes Due 2004 (Series 2), at any time or from
time to time during specified periods, with at least 30 days, but not more than
90 days, prior notice mailed to the registered address of each holder of such
series of notes.

     On and after the redemption date, interest will cease to accrue on the New
AT&T Notes or any portion of the New AT&T Notes called for redemption (unless
AT&T defaults in the payment of the redemption price and accrued interest). On
or before the redemption date, AT&T will deposit with a paying agent (or the
trustee) money sufficient to pay the redemption price of and accrued interest on
the New AT&T Notes. If less than all of the New AT&T Notes are to be redeemed,
the New AT&T Notes to be redeemed shall be selected by the trustee by such
method as the trustee shall deem fair and appropriate.

     The optional redemption terms for each series of notes are described below.

  NEW AT&T NOTES DUE 2004 (SERIES 1) AND NEW AT&T NOTES DUE 20

     The New AT&T Notes Due 2004 (Series 1) and the New AT&T Notes Due 20  will
be redeemable by AT&T at any time or from time to time, as a whole or in part.
If you hold any of these notes and AT&T decides to redeem them then AT&T will
pay you the greater of:

          (1) 100% of the principal amount of the series of New AT&T Notes to be
     redeemed and

          (2) the sum of the present values of the Remaining Scheduled Payments
     (as defined under "Description of the Broadband Exchange Notes -- Certain
     Definitions") discounted, on a semiannual basis (assuming a 360-day year
     consisting of twelve 30-day months), at a rate equal to the sum of the

                                       134


     Treasury Rate (as defined under "Description of the Broadband Exchange
     Notes -- Certain Definitions") and:

        - 10 basis points for the New AT&T Notes Due 2004 (Series 1)

        - 20 basis points for the New AT&T Notes Due 20  .

     In the case of each of clause (1) and (2), accrued interest will be payable
to the redemption date.

  NEW AT&T NOTES DUE 2004 (SERIES 2)

     The New AT&T Notes Due 2004 (Series 2) will not be subject to optional
redemption by AT&T.

  NEW AT&T NOTES DUE 2025 (SERIES 1)

     The New AT&T Notes Due 2025 (Series 1) will not be redeemable prior to May
15, 2005. On or after such date, the 7.75% Broadband Exchange Notes Due May 15,
2025 will be redeemable by AT&T at any time or from time to time, as a whole or
in part, at the following prices (expressed as percentages of the principal
amount), together with accrued interest to the date fixed for redemption:

     If redeemed during the 12-month period beginning May 15:



YEAR                                                          PERCENTAGE
----                                                          ----------
                                                           
2005........................................................   103.7130%
2006........................................................   103.3417
2007........................................................   102.9704
2008........................................................   102.5991
2009........................................................   102.2278
2010........................................................   101.8565
2011........................................................   101.4852
2012........................................................   101.1139
2013........................................................   100.7426
2014........................................................   100.3713


and thereafter at 100%.

                                       135


  NEW AT&T NOTES DUE 2025 (SERIES 2)

     The New AT&T Notes Due 2025 (Series 2) will not be redeemable prior to May
15, 2005. On or after such date, the New AT&T Notes Due 2025 (Series 2) will be
redeemable by AT&T at any time or from time to time, as a whole or in part, at
the following prices (expressed as percentages of the principal amount),
together with accrued interest to the date fixed for redemption:

     If redeemed during the 12-month period beginning May 15:



YEAR                                                          PERCENTAGE
----                                                          ----------
                                                           
2005........................................................   104.062%
2006........................................................   103.656
2007........................................................   103.250
2008........................................................   102.843
2009........................................................   102.437
2010........................................................   102.031
2011........................................................   101.625
2012........................................................   101.219
2013........................................................   100.812
2014........................................................   100.406


and thereafter at 100%.

  NEW FRN MEDIUM-TERM NOTES, SERIES A DUE 2054

     The New FRN Medium-Term Notes, Series A Due 2054 will not be redeemable
prior to December 28, 2009. On or after such date the New FRN Medium-Term Notes,
Series A Due 2054 will be redeemable prior to maturity at the option of AT&T on
December 28, 2009 and on December 28th every year thereafter with not less than
30 calendar days notice, at the following prices (expressed as a percentage of
the principal amount):

     If redeemed on December 28th:



YEAR                                                          PERCENTAGE
----                                                          ----------
                                                           
2009 through 2013...........................................   110.000%
2014 through 2018...........................................   108.000%
2019 through 2023...........................................   107.000%
2024 through 2028...........................................   106.000%
2029 through 2035...........................................   105.500%
2036........................................................   105.000%
2037........................................................   104.375%
2038........................................................   103.750%
2039........................................................   103.125%
2040........................................................   102.500%
2041........................................................   101.875%
2042........................................................   101.250%
2043........................................................   100.625%
2044 through 2054...........................................   100.000%


                                       136


OPTIONAL REPAYMENT TERMS PERTAINING ONLY TO THE NEW FRN MEDIUM-TERM NOTES,
SERIES A DUE 2054

     The New FRN Medium-Term Notes, Series A Due 2054 are repayable at the
option of the holders on December 28, 2005 and on each December 28th every third
year thereafter with not less than 30 calendar days notice, at the following
redemption prices (expressed as a percentage of the principal amount) plus
interest accrued from, and including, the last date to which interest has been
paid to but excluding the applicable optional repayment date:

     If repayed on December 28th:



YEAR                                                          PERCENTAGE
----                                                          ----------
                                                           
2005........................................................     99.40%
2008........................................................     99.52%
2011........................................................     99.64%
2014........................................................     99.78%
2017........................................................     99.92%
2020........................................................    100.00%
2023........................................................    100.00%
2026........................................................    100.00%
2029........................................................    100.00%
2032........................................................    100.00%
2035........................................................    100.00%
2038........................................................    100.00%
2041........................................................    100.00%
2044........................................................    100.00%
2047........................................................    100.00%
2050........................................................    100.00%
2053........................................................    100.00%


     The New FRN Medium-Term Notes, Series A Due 2054 are repayable at the
option of the holders upon the occurrence and continuance of any Event of
Default specified in the AT&T Indenture at the next Interest Payment Date at
100.00% of principal amount plus interest accrued from, and including, the last
date to which interest has been paid to, but excluding, the Interest Payment
Date for repayment.

     In order for the repayment option applicable to a New FRN Medium-Term Note,
Series A Due 2054 to be exercised, the trustee must receive at least 30 days but
no more than 45 days prior to the repayment date (i) the New FRN Medium-Term
Note, Series A Due 2054 with the form entitled "Option to Elect Repayment" on
the reverse of the note duly completed or (ii) a telegram, telex, facsimile
transmission or a letter from a member of a national securities exchange or the
National Association of Securities Dealers, Inc. or a commercial bank or trust
company in the United States setting forth the name of the holder of the note,
the principal amount of the note, the principal amount of the note to be repaid,
the certificate number or a description of the tenor and terms of the note, and
containing a statement that the option to elect repayment is being exercised
thereby and a guarantee that the note to be repaid with the form entitled
"Option to Elect Repayment" on the reverse of the note duly completed will be
received by the trustee not later than five business days after the date of such
telegram, telex, facsimile transmission or letter and such note and form duly
completed are received by the trustee by such fifth business day. The repayment
option may be exercised by the holder of a New FRN Medium-Term Note, Series A
Due 2054 for less than the entire principal amount of the note, provided that
the principal amount of the New FRN Medium-Term Note, Series A Due 2054
remaining outstanding after repayment is an authorized denomination.

                                       137


NO MANDATORY REDEMPTION OR SINKING FUND

     There will be no mandatory redemption prior to maturity or sinking fund
payments for the New AT&T Notes.

NOTICES

     Notices to holders of the New AT&T Notes will be published in authorized
newspapers in The City of New York, in London, and, with respect to any New AT&T
Notes listed on the Luxembourg Stock Exchange, in Luxembourg. It is expected
that publication will be made in The City of New York in The Wall Street
Journal, in London in the Financial Times and in Luxembourg in the Luxemburger
Wort. AT&T will be deemed to have given such notice on the date of each
publication or, if published more than once, on the date of the first such
publication.

LUXEMBOURG LISTING

     We intend to apply to list the New AT&T Notes Due 2004 (Series 1) and the
New AT&T Notes Due 20  on the Luxembourg Stock Exchange. In connection with our
listing application, the Amended and Restated Certificate of Incorporation and
the By-laws of AT&T and a legal notice relating to the issuance of the New AT&T
Notes Due 2004 (Series 1) and the New AT&T Notes Due 20  will be deposited prior
to listing with the Chief Registrar of the District Court of Luxembourg, where
copies may be inspected or obtained upon request. Copies of the above documents,
together with this prospectus, any supplements or amendments hereto, the AT&T
Indenture, the New AT&T Supplemental Indenture, and AT&T's current and future
quarterly and annual reports, so long as any of the New AT&T Notes Due 2004
(Series 1) and the New AT&T Notes Due 20  are listed on the Luxembourg stock
exchange, may be obtained free of charge from the Luxembourg exchange agent. We
intend to engage the Bank of New York (Luxembourg) S.A. as the Luxembourg
exchange agent to act as intermediary between the Luxembourg stock exchange and
AT&T and holders of the New AT&T Notes Due 2004 (Series 1) and the New AT&T
Notes Due 20  .

                                       138


                    DESCRIPTION OF AT&T COMCAST TRANSACTION

     Comcast and AT&T are planning to combine Comcast with the AT&T broadband
business. Comcast and AT&T believe that the combined strengths of Comcast and
AT&T's broadband business will enable them to create the world's premier
broadband communications company.

STRUCTURE OF THE TRANSACTION

     The AT&T Comcast transaction will occur in several steps. First, AT&T will
transfer the assets and liabilities of AT&T's broadband business to Broadband, a
company newly formed for the purpose of effectuating the AT&T Comcast
transaction. Second, AT&T will spin off Broadband to its shareholders. Third,
Comcast and Broadband will each merge with a different, wholly owned subsidiary
of AT&T Comcast. The Comcast and AT&T shareholders will receive the shares of
AT&T Comcast. The merger agreement provides for all of the steps described above
to occur on the closing date for the mergers. The AT&T Comcast transaction
remains subject to regulatory and other approvals and other conditions,
including the receipt of the specified note consents as described in this
prospectus, and is expected to close by the end of 2002.

     Immediately after the completion of the spin off of Broadband, Broadband
Acquisition Corp., a wholly owned subsidiary of AT&T Comcast, will merge with
and into Broadband, with Broadband continuing as the surviving corporation and a
wholly owned subsidiary of AT&T Comcast. This merger is referred to in this
prospectus as the "Broadband merger." At approximately the same time, Comcast
Acquisition Corp., a wholly owned subsidiary of AT&T Comcast, will merge with
and into Comcast, with Comcast continuing as the surviving corporation and a
wholly owned subsidiary of AT&T Comcast. This merger is referred to in this
prospectus as the "Comcast merger." After completion of the mergers, the
shareholders of Comcast and Broadband will be shareholders of AT&T Comcast.

TIMING OF CLOSING

     The closing date for the AT&T Comcast transaction will occur as soon as
practicable, and, in any event, within five business days, after satisfaction or
waiver of all conditions to the mergers set forth in the merger agreement. The
mergers will become effective after the separation and the Broadband spin-off on
the closing date for the transaction at a time that is mutually agreeable to
Comcast and AT&T.

THE MERGER AGREEMENT

     The following summary of the terms of the merger agreement for the AT&T
Comcast transaction, and of the agreements related to that transaction, is
qualified in its entirety by reference to the complete text of the merger
agreement, as amended, which is included as an exhibit to the registration
statement of which this prospectus is a part.

     COVENANTS

       Interim Operations.  Comcast and AT&T (with respect to its broadband
business) have agreed to conduct their business in the ordinary course
consistent with past practice and to not engage in specified material
transactions, in each case prior to the completion of the AT&T Comcast
transaction, without the prior written consent of the other party, which consent
will not be unreasonably withheld. AT&T has also agreed not to enter into any
material agreement or arrangement relating to its interest in or amend or modify
in any material respect any of its existing material contracts relating to Time
Warner Entertainment, acquire, other than pursuant to a cashless exercise of an
option currently held by AT&T, additional interests in Time Warner Entertainment
or sell any part of its interest in Time Warner Entertainment, except solely for
cash or pursuant to the registration provisions of the Time Warner Entertainment
partnership agreement, in each case prior to the completion of the AT&T Comcast

                                       139


transaction, without the prior written consent of Comcast, which consent will
not be unreasonably withheld. AT&T has further agreed to run its broadband
business for the benefit of the broadband business prior to the completion of
the AT&T Comcast transaction. Each party has also agreed to restrictions on its
ability to issue equity securities with some exceptions, including in the case
of AT&T the issuance of up to 275 million shares of AT&T common stock in
connection with the acquisition of shares of AT&T Canada and to satisfy
obligations relating to deferred compensation plans and in the case of Comcast
the issuance of shares of Comcast common stock having a value of up to $3
billion. In May 2002, AT&T issued approximately 14 million shares of AT&T common
stock to satisfy obligations relating to deferred compensation plans and in June
2002, AT&T completed an offering of 230 million shares of AT&T common stock in
connection with the acquisition of shares of AT&T Canada.

       Covenant to Obtain Regulatory Approvals.  Under U.S. antitrust laws,
Comcast and AT&T may not complete the AT&T Comcast transaction until Comcast and
AT&T have notified the Antitrust Division of the United States Department of
Justice and the Federal Trade Commission of the AT&T Comcast transaction by
filing the necessary report forms and until a required waiting period has ended.
Comcast and AT&T have filed the required information and materials to notify the
U.S. Department of Justice and the Federal Trade Commission of the AT&T Comcast
transaction. On February 21, 2002, Comcast and AT&T received a request from the
United States Department of Justice, the reviewing agency, for additional
information regarding the AT&T Comcast transaction.

     Under federal communications law and local franchise requirements, Comcast
and AT&T must also obtain the approval of the FCC and a number of state and
local authorities in connection with the AT&T Comcast transaction. Comcast and
AT&T have filed the required applications with the FCC and these state and local
authorities. The FCC and a number of these state and local authorities have not
completed their reviews of the AT&T Comcast transaction.

     Comcast and AT&T have agreed to use their best efforts to obtain all
regulatory approvals that are necessary or advisable in connection with the AT&T
Comcast transaction. In addition, Comcast and AT&T have also agreed to take all
actions necessary to obtain termination of the applicable waiting periods under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976 relating to the AT&T
Comcast transaction and to obtain all consents of the FCC required to complete
the AT&T Comcast transaction.

     There can be no assurances that Comcast and AT&T will obtain all regulatory
approvals necessary to complete the AT&T Comcast transaction or that the
granting of these approvals will not involve the imposition of conditions on the
completion of the AT&T Comcast transaction or require changes to the terms of
the AT&T Comcast transaction.

       TOPrS Covenant.  AT&T Comcast has agreed, on the earliest date on which
the Broadband debt known by the acronym TOPrS as to which AT&T has guaranteed
certain obligations may be redeemed, to either redeem that series of TOPrS,
cause AT&T to be released from any guarantee or post a letter of credit in
respect of that debt. As of the date of this filing, $500 million in principal
amount of outstanding TOPrS remains subject to this obligation.

       QUIPS Failure.  Comcast and AT&T have agreed that if on the date that
would otherwise be the closing date for the AT&T Comcast transaction the
Microsoft transaction described below under "-- The Exchange Agreement and
Instrument of Admission -- QUIPS Exchange" does not occur (the "QUIPS Failure
Date"), the closing date for the AT&T Comcast transaction may be delayed for up
to 180 days after the QUIPS Failure Date. During this period, AT&T and Comcast
will use commercially reasonable efforts to complete the Microsoft transaction
or, if it appears reasonably likely that the Microsoft transaction will not
occur, the transfer of the obligations under the QUIPS (the "QUIPS Transfer")
from AT&T to Broadband, in either case on the closing date for the AT&T Comcast
transaction. If neither the Microsoft transaction nor the QUIPS Transfer occurs
on the closing date for the AT&T Comcast transaction during this period,
Broadband will pay AT&T an additional amount at closing equal to the fair market
value of the QUIPS, as determined pursuant to an appraisal process specified in
the merger agreement, and will indemnify AT&T for certain possible related
liabilities. In such event, Comcast will be
                                       140


permitted to sell assets and take any other actions that are necessary or
reasonably designed to enable it to provide Broadband with sufficient funds to
pay AT&T the QUIPS fair market value.

       Covenant Permitting Certain AT&T Transactions.  Comcast and AT&T have
agreed that AT&T may enter into an agreement relating to a transaction providing
for the sale or disposition of more than 50% of AT&T's communications businesses
that would delay completion of the mergers (a "Significant Excepted
Transaction") if such Significant Excepted Transaction would not reasonably be
expected to result in a delay in the completion of the mergers past March 1,
2003, the date on or after which Comcast or AT&T may elect to terminate the
merger agreement if the mergers have not closed (the "End Date"); provided that,
in such event, at the request of Comcast, the End Date will be extended by the
reasonably expected period of delay in the completion of the mergers caused by
such Significant Excepted Transaction up to sixty days.

     Comcast and AT&T have also agreed that AT&T may enter into an agreement
relating to a Significant Excepted Transaction that would reasonably be expected
to result in a delay in the completion of the mergers past the End Date but
which would not reasonably be expected to result in a delay in the completion of
the mergers to a date that is more than sixty days after the End Date; provided
that (1) Microsoft consents to extend the "end" date for the Microsoft
transaction to the date after the End Date (which date will be no later than
sixty days after the End Date) on which it is reasonably anticipated that the
mergers would be completed if the Significant Excepted Transaction were to
occur, (2) the End Date is extended to the new "end" date for the Microsoft
transaction and (3) AT&T, and not Broadband, agrees to pay any costs, expenses
or fees payable in connection with obtaining Microsoft's consent to the
extension of the "end" date for the Microsoft transaction.

     AT&T has agreed that it will not enter into any agreement relating to a
Significant Excepted Transaction that would reasonably be expected to result in
a delay in the completion of the mergers to a date that is more than sixty days
after the End Date.

       Alternative Structure.  Comcast and AT&T have agreed that, at the request
of the other party, it will consider amending the terms of the merger agreement
to the extent necessary to provide for a structure or a sequencing of the
mergers that is more tax efficient or otherwise more advantageous than the
structure and sequencing of the mergers described in this prospectus and is not
adverse to the other party.

  POST-TRANSACTION GOVERNANCE ARRANGEMENTS

     Pursuant to the terms of the merger agreement, upon completion of the AT&T
Comcast transaction:

     - the AT&T Comcast Board will initially be comprised of twelve individuals,
       five of whom will be then existing Comcast directors designated by
       Comcast, five of whom will be then existing AT&T directors designated by
       AT&T, and two of whom will be independent persons jointly designated by
       Comcast and AT&T. Except for pre-approved designees, the director
       designees will be mutually agreed upon by Comcast and AT&T. Ralph J.
       Roberts, Brian L. Roberts, Sheldon M. Bonovitz, Julian A. Brodsky and
       Decker Anstrom are preapproved Comcast director designees and C. Michael
       Armstrong is a pre-approved AT&T director designee;

     - the term of the AT&T Comcast Board will not expire until the 2004 annual
       meeting of AT&T Comcast shareholders. Since AT&T Comcast shareholders
       will not have the right to call special meetings of shareholders or act
       by written consent and AT&T Comcast directors will be able to be removed
       only for cause, AT&T Comcast shareholders will not be able to replace the
       initial AT&T Comcast Board members prior to that meeting. After the 2004
       annual meeting of AT&T Comcast shareholders, AT&T Comcast directors will
       be elected annually. Even then, however, it will be difficult for an AT&T
       Comcast shareholder, other than Sural LLC or a successor entity
       controlled by Brian L. Roberts, to elect a slate of directors of its own
       choosing to the AT&T Comcast Board.

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Brian L. Roberts, through his control of Sural LLC or a successor entity, will
hold a 33 1/3% nondilutable voting interest in AT&T Comcast stock;

     - C. Michael Armstrong, Chairman of the Board and Chief Executive Officer
       of AT&T, will serve as the Chairman of the Board of AT&T Comcast. C.
       Michael Armstrong will serve as Chairman of the Board until the 2005
       annual meeting of AT&T Comcast shareholders, but he will serve as
       nonexecutive Chairman of the Board after April 1, 2004 and until the 2005
       annual meeting of AT&T Comcast shareholders. Removal of the Chairman of
       the Board will require the approval of at least 75% of the entire AT&T
       Comcast Board until the earlier of the date that neither C. Michael
       Armstrong nor Brian L. Roberts is Chairman of the Board and the sixth
       anniversary of the 2004 annual meeting of shareholders;

     - Brian L. Roberts, President of Comcast, will serve as CEO and President
       of AT&T Comcast. Removal of the CEO requires the vote of at least 75% of
       the entire AT&T Comcast Board until the earlier of the date when Brian L.
       Roberts is not the CEO and the sixth anniversary of the 2004 annual
       meeting of shareholders;

     - the initial senior officers of AT&T Comcast will be designated by Brian
       L. Roberts in consultation with C. Michael Armstrong;

     - Sural LLC will hold shares of AT&T Comcast Class B common stock
       constituting 33 1/3% of the combined voting power of AT&T Comcast common
       stock. Brian L. Roberts has sole voting power over membership interests
       representing a majority of the voting power of all Sural LLC equity; and

     - AT&T Comcast will adopt a shareholder rights plan that will prevent any
       holder of AT&T Comcast stock, other than any holder of AT&T Comcast Class
       B common stock or any of such holder's affiliates, from acquiring AT&T
       Comcast stock representing more than 10% of AT&T Comcast's voting power
       without the approval of the AT&T Comcast Board.

     EMPLOYEE BENEFITS MATTERS

     In the merger agreement, AT&T Comcast has agreed to honor the terms of all
Broadband employee benefit plans and arrangements and to pay and provide the
benefits required thereunder, recognizing that the AT&T Comcast transaction is a
change in control under the plans, and to provide until December 31, 2003 to
employees of Broadband and its subsidiaries (other than those subject to
collective bargaining obligations or agreements) aggregate employee benefits and
compensation that are substantially comparable in the aggregate to those
provided by Broadband and its subsidiaries as of the completion of the AT&T
Comcast transaction, other than benefits provided under severance or separation
plans of Broadband or its subsidiaries. Until December 31, 2003, AT&T Comcast
has agreed to continue certain severance plans of Broadband and its subsidiaries
without adverse change.

     AT&T Comcast has also agreed to special severance arrangements for AT&T
executive officers expected to become employees of Broadband prior to
consummation of the AT&T Comcast merger transaction. Based on currently
available information, if all such executive officers were terminated without
cause immediately following completion of the AT&T Comcast transaction, they
would receive severance payments approximately equal in the aggregate to
$44,700,000.

     COVENANT REGARDING COMCAST'S AT&T STOCK.  Comcast and AT&T have agreed
that, prior to the Broadband spin-off, Comcast will exchange all of its shares
of AT&T common stock for shares of a newly created series of AT&T exchangeable
preferred stock. The AT&T exchangeable preferred stock will be mandatorily
exchangeable after the completion of the AT&T Comcast transaction into shares of
AT&T common stock. The exchange formula included in the merger agreement will
provide Comcast with an interest in the communications business of AT&T that,
subject to the cap described below, is equal in value to the interest Comcast
held in the combined communications and broadband business of AT&T prior to the
AT&T Comcast transaction. Based on the closing price of AT&T common stock of
$9.80 per

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share on August 8, 2002, the most recent practicable date prior to the printing
and mailing of this prospectus, Comcast's AT&T interest had a value of
approximately $406.84 million.

     Comcast has agreed to cap the shares of AT&T common stock, or shares of any
class of AT&T stock issued as a dividend on shares of AT&T common stock, it is
eligible to receive pursuant to the exchange formula included in the merger
agreement at 10% of the outstanding shares of AT&T common stock, or any class of
stock issued as a dividend on AT&T common stock. Comcast has also agreed that if
as a result of the mandatory exchange it holds in excess of 5% of the
outstanding shares of AT&T common stock, or any class of stock issued as a
dividend on AT&T common stock, then (1) it will sell the excess shares within a
year of the exchange and (2) prior to the sale of the excess shares it will vote
them on any matter submitted to shareholders in the same proportion as all other
shareholders.

     REPRESENTATIONS AND WARRANTIES

     The merger agreement includes substantially reciprocal representations and
warranties made by Comcast and AT&T customary for a transaction similar to the
AT&T Comcast transaction. The representations and warranties contained in the
merger agreement will not survive the completion of the AT&T Comcast transaction
or a termination of the merger agreement.

     CONDITIONS TO THE COMPLETION OF THE MERGERS

       Conditions to the Obligations of Comcast and AT&T.  The obligations of
each party to the merger agreement to complete the mergers are subject to the
satisfaction or waiver, to the extent permissible, of the following conditions:

     - expiration or termination of any applicable waiting period under the
       Hart-Scott-Rodino Antitrust Improvements Act of 1976;

     - absence of a material legal prohibition on the AT&T Comcast transaction;

     - approval for the listing on The Nasdaq Stock Market of the shares of AT&T
       Comcast common stock to be issued in the mergers, other than the shares
       of AT&T Comcast Class B common stock, or to be reserved for issuance in
       connection with the mergers;

     - receipt of all required regulatory approvals other than those the failure
       of which to be obtained would not reasonably be expected to have a
       Material Adverse Effect, as described below, on Comcast or AT&T's
       broadband business;

     - absence of any order or statute, rule or regulation restraining or
       prohibiting the effective operation of the business of AT&T Comcast,
       Broadband or Comcast after the completion of the mergers that would
       reasonably be expected to have a Material Adverse Effect on Comcast or
       AT&T's broadband business;

     - completion of the separation and the Broadband spin-off;

     - execution of all of the transaction agreements described or referred to
       in the merger agreement;

     - receipt and continuing effectiveness of an Internal Revenue Service
       ruling or rulings (or, if Comcast and AT&T mutually agree, an opinion
       from tax counsel acceptable to AT&T and Comcast) to the effect that, for
       U.S. federal income tax purposes, the separation and the Broadband
       spin-off will be tax-free, the mergers will not cause the separation and
       the Broadband spin-off to fail to qualify as tax-free, and the separation
       and the Broadband spin-off will not cause the distribution by AT&T of all
       of the common stock of AT&T Wireless or of Liberty Media to fail to
       qualify as tax-free transactions; and

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     - AT&T shall have obtained the consent of, or having defeased, purchased or
       acquired debt, in respect of series representing at least 90% in
       aggregate principal amount of the securities issued under the AT&T
       Indenture outstanding as of December 19, 2001, which was approximately
       $12.7 billion.

       Additional Conditions to the Obligations of AT&T.  The obligations of
AT&T to consummate the Broadband merger are also subject to the satisfaction or
waiver, to the extent permissible, of the following conditions:

     - material accuracy of the representations and warranties of Comcast,
       including with respect to the absence of a Material Adverse Effect on
       Comcast;

     - performance by Comcast in all material respects of its obligations under
       the merger agreement;

     - receipt by AT&T of an opinion of Wachtell, Lipton, Rosen & Katz to the
       effect that the combination of Broadband and Comcast will qualify as a
       tax-free transaction; and

     - performance by Sural in all material respects of its obligations under
       the support agreement.

       Additional Conditions to the Obligations of Comcast.  The obligations of
Comcast to consummate the Comcast merger are also subject to the satisfaction or
waiver, to the extent permissible, of the following conditions:

     - material accuracy of the representations and warranties of AT&T,
       including with respect to the absence of a Material Adverse Effect on
       Broadband,

     - performance by AT&T in all material respects of its obligations under the
       merger agreement, and

     - receipt by Comcast of an opinion of Davis Polk & Wardwell to the effect
       that the combination of Broadband and Comcast will qualify as a tax-free
       transaction.

     "Material Adverse Effect" with respect to Comcast or AT&T's broadband
business means a material adverse effect on the financial condition, assets or
results of operations of Comcast or AT&T's broadband business, as applicable,
taken as a whole, excluding any effect resulting from or arising in connection
with (1) changes or conditions generally affecting the industries in which
Comcast or AT&T's broadband business, as applicable, operate, (2) changes in
general economic, regulatory or political conditions or (3) the announcement of
the merger agreement or of the transactions contemplated by the merger
agreement.

  TERMINATION OF THE MERGER AGREEMENT

     The merger agreement may be terminated in any of the following
circumstances:

     - The merger agreement may be terminated by mutual written agreement of
       Comcast and AT&T.

     - The merger agreement may be terminated by either Comcast or AT&T if:

      o the mergers have not been completed by March 1, 2003, provided that the
        party seeking to terminate the merger agreement pursuant to this
        provision has not breached any provision of the merger agreement
        resulting in the failure of the mergers to be completed by such date;

      o the other party breaches the merger agreement such that the related
        closing conditions cannot be satisfied by March 1, 2003; or

      o any material law or regulation makes completion of the AT&T Comcast
        transaction illegal or a permanent injunction prohibiting completion of
        the AT&T Comcast transaction is entered.

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     - AT&T may terminate the merger agreement if the closing date for the AT&T
       Comcast transaction has not occurred within 30 days of the QUIPS Failure
       Date, provided that AT&T may terminate the merger agreement pursuant to
       this provision only (1) on two business days' notice delivered to Comcast
       prior to the 45th day after the QUIPS Failure Date and (2) if prior to
       the effectiveness of the termination Comcast does not agree to close the
       AT&T Comcast transaction by the 60th day after the QUIPS Failure Date.

     If the merger agreement is terminated as provided above, the merger
agreement will become void without liability on the part of any party unless
such party has intentionally breached a covenant or other agreement included in
the merger agreement or knowingly breached a representation or warranty included
in the merger agreement. However, the provisions of the merger agreement
described below relating to termination fees and expenses will continue in
effect after any termination of the merger agreement.

  EXPENSES

     The merger agreement provides that all costs and expenses incurred in
connection with the AT&T Comcast transaction will be paid by the party incurring
the cost or expense, provided that (1) AT&T will pay any costs and expenses
incurred by Broadband that are in excess of $120 million (exclusive of any costs
and expenses incurred by Broadband as described in clauses (2), (3), (4) and (5)
of this sentence), (2) Broadband will pay any costs and expenses incurred in
connection with any financing arrangement entered into by Broadband, except that
Comcast will pay any costs and expenses incurred in connection with the credit
facilities referred to in the first sentence of the second paragraph under "Risk
Factors -- Risk Relating to the AT&T Comcast Transaction -- AT&T Comcast and its
subsidiaries may not be able to obtain the necessary financing at all or on
terms acceptable to it," (3) Broadband will pay any costs and expenses, to the
extent not paid by AT&T Comcast, incurred in connection with redeeming or
refinancing the TOPrS, releasing AT&T from any obligations in respect of the
TOPrS or posting a letter of credit in support of such AT&T obligations, in each
case as described under "-- Covenants -- TOPrS Covenant," (4) Broadband will pay
50% of any costs and expenses in excess of $50 million incurred by AT&T or any
of its subsidiaries in connection with obtaining the note consents (through
either a one-time cash payment of a consent fee or through a coupon increase or
a combination thereof), and (5) AT&T and Comcast each will pay 50% of any fees
and expenses, other than attorneys' and accounting fees and expenses, incurred
in relation to the printing, filing and mailing of this prospectus and the
registration statement in which this prospectus is included.

     However, the merger agreement does not expressly contemplate the exchange
offer described in this prospectus. AT&T and Comcast have agreed on a framework
for sharing costs associated with the exchange offer. We estimate that the
approximate amount of the fees and other expenses of the exchange offer will be
$          million, of which approximately $  million will be payable by AT&T
and $          million will be payable by Comcast.

  AMENDMENTS AND WAIVERS

     Any provision of the merger agreement may be amended or waived prior to the
completion of the mergers if, but only if, such amendment or waiver is in
writing and is signed, in the case of an amendment, by each of the parties to
the merger agreement or, in the case of a waiver, by each of the parties to the
merger agreement against whom the waiver is to be effective. After the adoption
of the merger agreement by shareholders of Comcast or AT&T, no amendment or
waiver of any provision of the merger agreement may be made or given that
requires the approval of shareholders of Comcast or AT&T, respectively, unless
such required approval is obtained.

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THE SEPARATION AND DISTRIBUTION AGREEMENT

     The following summary of the separation and distribution agreement, as
amended, is qualified in its entirety by reference to the complete text of the
separation and distribution agreement, as amended, which is an exhibit to the
registration statement of which this prospectus is a part.

  THE SEPARATION

     Assignment.  AT&T will assign and transfer to Broadband all of AT&T's and
its subsidiaries' right, title and interest in all of the assets of AT&T's
broadband business which are not already held by Broadband or Broadband
subsidiary. The assets comprising AT&T's broadband business are generally
determined in the following manner:

     - assets reflected in the AT&T Broadband Group balance sheet dated as of
       December 31, 2000 are assets of AT&T's broadband business, except as
       described below;

     - assets reflected in the AT&T Communications Group balance sheet dated as
       of December 31, 2000 are assets of AT&T's communications business, except
       as described below;

     - certain assets are specifically assigned to AT&T's broadband business
       regardless of whether or not they are reflected in the AT&T Broadband
       Group balance sheet dated as of December 31, 2000;

     - certain assets are specifically assigned to AT&T's communications
       business regardless of whether or not they are reflected in the AT&T
       Communications Group balance sheet dated as of December 31, 2000; and

     - assets that are not reflected in the AT&T Broadband Group balance sheet
       or the AT&T Communications Group balance sheet, in each case dated as of
       December 31, 2000, or specifically assigned to AT&T's broadband business
       or AT&T's communications business are assigned to the business to which
       they primarily relate.

     Assumption.  At the same time as the assignment, Broadband will assume all
of the liabilities of AT&T's broadband business that are not already liabilities
of Broadband or a Broadband subsidiary. The liabilities of AT&T's broadband
business are generally determined in the following manner:

     - liabilities reflected in the AT&T Broadband Group balance sheet dated as
       of December 31, 2000 are liabilities of AT&T's broadband business, except
       as described below;

     - liabilities reflected in the AT&T Communications Group balance sheet
       dated as of December 31, 2000 are liabilities of AT&T's communications
       business, except as described below;

     - certain liabilities are specifically assigned to AT&T's broadband
       business regardless of whether or not they are reflected in the AT&T
       Broadband Group balance sheet dated as of December 31, 2000;

     - certain liabilities are specifically assigned to AT&T's communications
       business regardless of whether or not they are reflected in the AT&T
       Communications Group balance sheet dated as of December 31, 2000;

     - certain liabilities such as liabilities arising out of the AT&T Comcast
       transaction or involving At Home or AT&T Wireless (to the extent AT&T is
       not indemnified by AT&T Wireless for such liabilities) are divided evenly
       between AT&T's broadband business and AT&T's communications business
       regardless of whether or not they are reflected in the AT&T Broadband
       Group balance sheet or the AT&T Communications Group balance sheet, in
       each case dated as of December 31, 2000; and

                                       146


     - Liabilities that are not reflected in the Broadband Group balance sheet
       or the AT&T Communications balance sheet, in each case dated as of
       December 31, 2000, or specifically assigned to AT&T's broadband business
       or AT&T's communications business are assigned to the business to which
       they primarily relate.

     TIMING OF THE SEPARATION AND THE BROADBAND SPIN-OFF

     The separation and the Broadband spin-off are scheduled to occur on the
closing date for the mergers. See "-- Timing of Closing." On the closing date,
the separation will occur prior to the Broadband spin-off which will occur prior
to the mergers.

     REPAYMENT OF INTRACOMPANY DEBT

     Broadband has agreed to pay to AT&T at the completion of the AT&T Comcast
transaction an amount equal to the amount of debt that it or any Broadband
subsidiary owes to AT&T or any AT&T subsidiary, other than Broadband or any
Broadband subsidiary, in exchange for a contribution of such debt to Broadband's
capital and for the contribution of the Broadband business. As described under
"Other Indebtedness and the Cross-Guarantee -- Description of New Credit
Facilities" Comcast has agreed to arrange for the financing necessary to permit
Broadband to repay debt owed by Broadband and its subsidiaries to AT&T and its
subsidiaries, other than Broadband and its subsidiaries. As described under
"Other Indebtedness and the Cross-Guarantee -- Description of New Credit
Facilities" on May 3, 2002, Broadband and AT&T Comcast entered into definitive
credit agreements arranged by Comcast with a syndicate of lenders providing for
the financing that is anticipated to be necessary to repay this intracompany
debt, which as of March 31, 2002, was $5.96 billion. The amount that Broadband
would otherwise be required to pay to AT&T upon completion of the AT&T Comcast
transaction to satisfy intercompany indebtedness then outstanding will be
reduced based upon the aggregate principal amount of New Broadband Notes issued
in the exchange in an amount to be mutually agreed. Absent additional
deleveraging activities, it is expected that this figure will grow to fund
capital expenditures, operations and third party debt maturities and redemptions
through the completion of the AT&T Comcast transaction. See "Risk
Factors -- Risks Relating to the AT&T Comcast Transaction -- AT&T Comcast and
its subsidiaries may have difficulty obtaining necessary financing at all or on
terms acceptable to it."

     AT&T has agreed to repay at the completion of the AT&T Comcast transaction
any debt that it or any of its subsidiaries, other than Broadband or any
Broadband subsidiary, owes to Broadband or any Broadband subsidiary.

  POST-SPIN-OFF TRANSACTIONS

     The ability of AT&T and Broadband to engage in certain acquisitions, redeem
stock, issue equity securities or take any other action or actions that in the
aggregate would be reasonably likely to have the effect of causing or permitting
one or more persons to acquire directly or indirectly stock representing a 50%
or greater interest, within the meaning of Section 355(e) of the Code, in AT&T
or Broadband or otherwise jeopardize the non-recognition of taxable gain or loss
for U.S. federal income tax purposes to AT&T, AT&T affiliates and AT&T
shareholders in connection with the separation and the Broadband spin-off may be
limited for a period of 25 months following the Broadband spin-off.

  DISPOSITION OF TIME WARNER ENTERTAINMENT INTEREST

     Upon any disposition of all or any portion of its interest in Time Warner
Entertainment after the signing of the merger agreement, Broadband has agreed to
pay AT&T 50% of the proceeds received from such disposition in excess of the
threshold amount described in the next sentence reduced by taxes on 50% of such
excess. The threshold amount is equal to the balance, plus 7% simple interest
per annum on the balance, of $10.2 billion reduced by the aggregate proceeds of
any previous dispositions of any portion of

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the Time Warner Entertainment interest. If the Time Warner Entertainment
interest has not been fully disposed of within 54 months of the completion of
the AT&T Comcast transaction, the remaining Time Warner Entertainment interest
will be appraised at fair market value. To the extent that the amount of such
appraisal exceeds the threshold amount specified above, Broadband has agreed to
pay AT&T 50% of such excess, on a tax-adjusted basis.

  CONDITIONS TO THE COMPLETION OF THE BROADBAND SPIN-OFF

     The obligations of AT&T to complete the separation and the Broadband
spin-off are subject to the satisfaction or waiver, to the extent permissible,
of certain conditions, including:

     - receipt of all required regulatory approvals other than those the failure
       of which to be obtained would not reasonably be expected to have a
       Material Adverse Effect with respect to AT&T's broadband business or
       AT&T's communications business (as defined under "-- The Merger
       Agreement -- Conditions to the Completion of the Mergers" but with
       respect to AT&T's communications business);

     - satisfaction of all conditions necessary to permit the Broadband spin-off
       to qualify as a tax-free distribution to AT&T, Broadband and the AT&T
       shareholders and absence of any condition likely to prevent the Broadband
       spin-off from qualifying as a tax-free distribution to AT&T, Broadband
       and the AT&T shareholders;

     - absence of a legal prohibition on the separation or the Broadband
       spin-off; and

     - satisfaction of all of the other conditions to the mergers specified
       under "-- The Merger Agreement -- Conditions to the Completion of the
       Mergers" other than the condition that the separation and the Broadband
       spin-off have been completed and other than the additional conditions to
       Comcast's obligations to effect the mergers.

     MUTUAL RELEASE; INDEMNIFICATION

        Mutual Release of Pre-Closing Claims.  AT&T and Broadband have each
agreed to release the other from any and all claims that it may have against the
other party arising from any acts or events occurring or failing to occur prior
to the completion of the Broadband spin-off, subject to certain exceptions
specified in the separation and distribution agreement.

        Indemnification by AT&T.  After completion of the Broadband spin-off,
AT&T will indemnify Broadband from any and all liabilities relating to, arising
out of or resulting from any of the following:

     - the failure of AT&T or any of its subsidiaries or any other person to pay
       any liabilities, or perform under any contracts, of AT&T's communications
       business;

     - the assets or contracts of AT&T's communications business; and

     - any breach of the separation and distribution agreement or any of the
       ancillary agreements by AT&T.

        Indemnification by Broadband.  After completion of the Broadband
spin-off, Broadband will indemnify AT&T from any and all liabilities relating
to, arising out of or resulting from any of the following:

     - the failure of Broadband or any of its subsidiaries or any other person
       to pay any liabilities, or perform under any contracts, of AT&T's
       broadband business,

     - the assets or contracts of AT&T's broadband business,

                                       148


     - any breach of the separation and distribution agreement or any of the
       ancillary agreements by Broadband, and

     - if neither the Microsoft transaction nor the QUIPS Transfer occurs, any
       liabilities relating to, arising out of or resulting from any action
       commenced by Microsoft claiming that the transaction violates the terms
       of the QUIPS; however, if AT&T is required to repay the QUIPS as a result
       of such action, the indemnified liability in respect of the repayment
       will be reduced by the amount of the QUIPS fair market value plus any
       accrued interest on the QUIPS since the date of determination of the
       QUIPS fair market value. See "-- The Merger Agreement -- Covenants --
       QUIPS Failure."

        Tax Indemnification.  Subject to the exceptions described below,
Broadband will indemnify AT&T against 50% of the taxes and related costs
assessed against AT&T resulting from the disqualification of the separation and
the Broadband spin-off as tax-free transactions under Section 355 of the Code.

     If such disqualification results from a transaction involving the stock or
assets of Broadband occurring after the Broadband spin-off, from Broadband's
failure to remain actively engaged in a trade or business or from the failure of
any representation made with respect to Broadband in connection with certain tax
opinions and Internal Revenue Service rulings, then Broadband will be required
to indemnify AT&T against all such taxes and related costs.

     If such disqualification results from a transaction involving the stock or
assets of AT&T occurring after the Broadband spin-off, from AT&T's failure to
remain actively engaged in a trade or business or from the failure of any
representation made with respect to AT&T in connection with certain tax opinions
and Internal Revenue Service rulings, then Broadband is not required to
indemnify AT&T against any such taxes or related costs.

     Broadband will also indemnify AT&T against 50% of the taxes and related
costs resulting from the Liberty Media or AT&T Wireless spin-offs failing to be
tax-free, unless either spin-off becomes taxable as a result of an action taken
by AT&T or Broadband, in which case the acting party bears full responsibility
for any resulting AT&T liabilities. Broadband's obligation described in the
preceding sentence is reduced by Broadband's share of any indemnification that
AT&T receives from Liberty Media or AT&T Wireless as a result of the relevant
spin-off failing to qualify as tax-free.

        Other Indemnification.  Subject to the next sentence, AT&T and Broadband
will indemnify each other for 50% of any liability resulting from any untrue
statement or omission of a material fact in any registration statement relating
to the Broadband spin-off or in any other filing made by AT&T or Broadband with
the Securities and Exchange Commission in connection with the separation, the
Broadband spin-off, the Broadband merger or any related agreements. AT&T will
indemnify Broadband and AT&T Comcast for any liability resulting from any untrue
statement or omission of a material fact in any registration statement relating
to the Consumer Services charter amendment proposal, any other proposal related
to the creation of AT&T Consumer Services Group tracking stock, the reverse
stock split proposal or any AT&T 2002 annual meeting proposal other than the
AT&T transaction proposal or the AT&T Comcast charter proposal.

     TERMINATION

     The separation and distribution agreement may be terminated by AT&T if the
merger agreement has terminated.

     AMENDMENTS AND WAIVERS

     Any provision of the separation and distribution agreement may be amended
or waived prior to the completion of the AT&T Comcast transaction if, but only
if, such amendment or waiver is in writing and
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is signed, in the case of an amendment, by AT&T, Broadband and Comcast or, in
the case of a waiver, by the party to the separation and distribution agreement
against whom the waiver is to be effective and Comcast.

THE EXCHANGE AGREEMENT AND INSTRUMENT OF ADMISSION

     In connection with the AT&T Comcast transaction, Comcast and Microsoft
entered into an exchange agreement dated December 7, 2001. On December 19, 2001,
following execution of the merger agreement, AT&T and AT&T Comcast each became a
party to the exchange agreement by executing the instrument of admission. On
March 11, 2002, Comcast, AT&T, AT&T Comcast and Microsoft amended the exchange
agreement and instrument of admission. The following summary of the exchange
agreement and the instrument of admission, in each case as amended, is qualified
in its entirety by reference to the complete texts of the exchange agreement and
the instrument of admission, in each case as amended, which are incorporated by
reference and attached as exhibits to the registration statement of which this
prospectus is a part.

     QUIPS EXCHANGE

        QUIPS.  Microsoft (through a wholly owned subsidiary) holds $5 billion
of aggregate liquidation preference amount of 5% Convertible Quarterly Income
Preferred Securities (referred to in this prospectus by their acronym "QUIPS")
of AT&T Finance Trust I, a Delaware business trust. The QUIPS are convertible
into $5 billion aggregate face amount of 5% Junior Convertible Subordinated
Debentures due 2029 of AT&T, which are in turn convertible into AT&T common
stock.

        The Exchange.  In connection with the Broadband spin-off, Microsoft has
agreed to exchange the QUIPS for a number of shares of Broadband common stock
that, subject to the limitation described in the next sentence, will be
converted in the Broadband merger into 115 million shares of AT&T Comcast Class
A common stock. To the extent necessary so that Microsoft and its affiliates
will not hold more than 4.95% of AT&T Comcast's voting power as a result of the
AT&T Comcast transaction, Microsoft has agreed to accept shares of the
non-voting AT&T Comcast Class A Special common stock in the Broadband merger
instead of an equivalent number of shares of voting AT&T Comcast common stock.
If Microsoft transfers shares of voting AT&T Comcast common stock or its voting
interest in AT&T Comcast is diluted below 4.95%, subject to certain conditions,
Microsoft will have the right to cause AT&T Comcast to exchange the shares of
non-voting AT&T Comcast Class A Special common stock received in the Broadband
merger for shares of voting AT&T Comcast common stock provided that its voting
interest in AT&T Comcast does not exceed 4.95% after the exchange.

        Internet Access.  Until the fifth anniversary of the Microsoft
transaction, subject to the completion of the Microsoft transaction and the AT&T
Comcast transaction, AT&T Comcast has agreed that if AT&T Comcast offers a
high-speed Internet access agreement to any third party, then it will be
obligated to offer an agreement on nondiscriminatory terms with respect to the
same cable systems to Microsoft for its Internet service provider, The Microsoft
Network. Because Comcast has entered into an access agreement with United Online
and Broadband has entered into an access agreement with each of Earthlink,
Internet Central and Connected Data Systems, upon completion of the Microsoft
transaction and the AT&T Comcast transaction AT&T Comcast will be required, with
respect to each such agreement with another ISP, to offer an access agreement to
Microsoft on terms no less favorable than those provided to the other ISP with
respect to the specific cable systems covered under the agreement with the other
ISP.

  COVENANTS

     Each of Comcast, Microsoft, AT&T and AT&T Comcast has undertaken certain
covenants in the exchange agreement. The following summarizes the more
significant of these covenants.

                                       150


        Merger Documentation.  Comcast has agreed that, without the prior
written consent of Microsoft, which consent will not be unreasonably withheld,
Comcast will not agree to any amendment or waiver of any provision of any of the
AT&T Comcast transaction agreements that would reasonably be expected to (1)
conflict with any provision of the exchange agreement, the agreements relating
to the set-top box commitment described below or any access agreement entered
into between Microsoft and AT&T Comcast pursuant to the most favored nation
provision described above or (2) be materially adverse to Microsoft's rights
under the exchange agreement or the benefits that Microsoft reasonably expects
to realize from the exchange agreement, in the case of (2), to the extent that
any such amendment or waiver would have an effect on Microsoft that is
materially disproportionate to the effect it would have on other Broadband or
AT&T Comcast shareholders.

        Lockup.  Prior to six months after completion of the Microsoft
transaction, subject to certain exceptions, Microsoft has agreed that neither
Microsoft nor any of its wholly owned subsidiaries will sell, or enter into any
agreement, arrangement or negotiations relating to the sale of, any of the
shares of AT&T Comcast common stock that it receives in connection with the
Microsoft transaction.

        Indemnity.  Comcast has agreed to indemnify Microsoft against any claim
by Comcast, AT&T or any shareholder of Comcast, AT&T or AT&T Comcast for any
loss arising as a result of the Broadband spin-off or the mergers failing to be
tax-free, except to the extent such a failure results directly from a breach by
Microsoft of its covenant described under "-- Lockup" or of the failure of a
related representation and warranty made by Microsoft in the exchange agreement.

  CONDITIONS TO THE COMPLETION OF THE MICROSOFT TRANSACTION

        Conditions to the Obligations of Microsoft.  The obligations of
Microsoft to complete the Microsoft transaction are subject to the satisfaction
or waiver, to the extent permissible, of the following conditions:

     - absence of a material legal prohibition on the Microsoft transaction or
       the mergers;

     - except as provided in the next bullet point, satisfaction or waiver of
       all conditions to the mergers and the reasonable satisfaction of
       Microsoft that the mergers will occur immediately following the Microsoft
       transaction;

     - satisfaction, but not waiver, of the condition to the mergers that there
       has been no Material Adverse Effect with respect to AT&T's broadband
       business;

     - material accuracy of the representations and warranties of Comcast, AT&T
       and AT&T Comcast contained in the exchange agreement or made pursuant to
       the exchange agreement;

     - performance by Comcast, AT&T and AT&T Comcast of all of their respective
       obligations under the exchange agreement;

     - approval for the listing on The Nasdaq Stock Market of the shares of AT&T
       Comcast common stock to be issued in the mergers, other than the shares
       of AT&T Comcast Class B common stock;

     - delivery by AT&T and Comcast of opinions of counsel relating to various
       corporate matters; and

     - after completion of the Broadband spin-off, Broadband holds substantially
       all of the assets and liabilities of AT&T's broadband business.

        Conditions to the Obligations of Comcast and AT&T.  The obligations of
Comcast and AT&T to complete the Microsoft transaction are subject to the
satisfaction or waiver, to the extent permissible, of the following conditions:

     - satisfaction or waiver of all conditions to the mergers and the
       reasonable satisfaction of Comcast that the mergers will occur;
                                       151


     - material accuracy of the representations and warranties of Microsoft
       contained in the exchange agreement;

     - performance by Microsoft of all of its obligations under the exchange
       agreement; and

     - delivery by Microsoft of an opinion of counsel relating to various
       corporate matters.

        Termination.  The exchange agreement may be terminated by either Comcast
or Microsoft in any of the following circumstances:

     - the merger agreement has been terminated,

     - any law or regulation makes completion of the Microsoft transaction
       illegal or a permanent injunction prohibiting completion of the Microsoft
       transaction is entered, or

     - the mergers have not been completed by March 1, 2003.

  INTERACTIVE TECHNOLOGY AGREEMENT

     In connection with the exchange agreement, Microsoft and Comcast Cable have
entered into a three-year agreement pursuant to which the parties will conduct a
trial during 2002 of an interactive television platform, including set-top box
middleware. If the trial results meet agreed technical standards, the platform
meets defined competitive requirements and a launch would meet Comcast Cable's
reasonable business objectives, Comcast Cable has agreed that it will
commercially launch the Microsoft platform to at least 25% of its newly
installed middleware customer base.

THE TAX SHARING AGREEMENT

     The following summary of the tax sharing agreement is qualified in its
entirety by reference to the complete text of the tax sharing agreement, which
is incorporated by reference into this prospectus and attached as an exhibit to
the registration statement in which this prospectus is included.

        In General.  Broadband is currently included in AT&T's federal
consolidated income tax group and Broadband's tax liability will be included in
the consolidated federal income tax liability of AT&T for 2002 until the time of
the Broadband spin-off. The tax sharing agreement provides for tax sharing
payments between Broadband and AT&T for periods prior to the Broadband spin-off,
based on the taxes or tax benefits of hypothetical affiliated groups consisting
of the businesses, assets and liabilities that make up Broadband, on the one
hand, and all other businesses, assets and liabilities of AT&T, on the other
hand. Each group is generally responsible for the taxes attributable to its
lines of business and entities comprising its group.

     AT&T and Broadband have agreed that the consolidated tax liability (before
credits) of the hypothetical group will be allocated to each group based on such
group's contribution to consolidated taxable income. This allocation will take
into account losses, deductions and other tax attributes that are utilized by
the hypothetical group even if these attributes could not be utilized on a
stand-alone basis. Tax sharing payments in respect of the consolidated tax
liability of the hypothetical group, after allocation of consolidated tax
credits, will be made between AT&T and Broadband consistent with the allocations
under the tax sharing agreement. As between AT&T and Broadband, certain tax
items are specially allocated to the AT&T group and Broadband group under the
tax sharing agreement.

        Broadband Spin-off.  AT&T and Broadband have agreed that taxes related
to intercompany transactions that are triggered by the Broadband spin-off will
be generally allocated to Broadband.

        Non-Income Tax Liabilities.  AT&T and Broadband have agreed that joint
non-income tax liabilities will generally be allocated between AT&T and
Broadband based on the amount of such taxes attributable to each group's line of
business. If the line of business with respect to which the liability is

                                       152


appropriately associated cannot be readily determined, the tax liability will be
allocated to the AT&T group.

        Audit Adjustments.  AT&T and Broadband have agreed that taxes resulting
from audit adjustments will generally be allocated between the two groups based
on line of business. In general, AT&T controls audits and administrative matters
related to pre-spin-off periods.

        Post-Spin-off Tax Attributes.  Generally, Broadband may not carry back a
loss, credit or other tax attribute from a post-spin-off period to a
pre-spin-off period, unless Broadband obtains AT&T's consent (which, in the case
of significant net operating or capital loss carrybacks, may not be unreasonably
withheld) and then only to the extent permitted by applicable law.

        Amendments and Waivers.  Any provision of the tax sharing agreement may
be amended or waived prior to the completion of the transaction if, but only if,
such amendment or waiver is in writing and is signed, in the case of an
amendment, by AT&T, Broadband and Comcast or, in the case of a waiver, by the
party to the tax sharing agreement against whom the waiver is to be effective
and Comcast.

THE ANCILLARY AGREEMENTS

     In addition to the other agreements described in this section, AT&T and
Broadband have entered into various other commercial agreements in connection
with the AT&T Comcast transaction. A brief summary of these agreements follows:

     NETWORK SERVICE AGREEMENTS.  AT&T and Broadband have entered into principal
network service agreements as follows.

        - Master Carrier Agreement.  This agreement reflects the rates, terms
          and conditions on which AT&T Business Services Group will provide
          voice, data and Internet services to Broadband, including both
          wholesale services (those used as a component in Broadband's services
          to its customers) and "administrative" services (for internal
          Broadband usage). Pricing is market based, with provisions defining an
          ongoing process to ensure that the prices remain competitive.

        - First Amended and Restated Local Network Connectivity Services
          Agreement.  This agreement reflects the rates, terms and conditions on
          which AT&T Business Services Group will provide certain local network
          connectivity services to Broadband for use in providing local
          telephone services to Broadband's subscribers. This agreement consists
          of two parts:

         o a capital lease from AT&T Business Services Group to Broadband of
           certain network switching and transport assets to be used exclusively
           by Broadband for a term of up to ten years, commencing January 1,
           2001 for initial assets leased under the agreement, and

         o an operating agreement for the provision of local network
           connectivity, management and operational services in support of
           Broadband's local cable telephone services, with a minimum term of
           five years commencing January 1, 2001.

        - Master Facilities Agreement.  This agreement permits AT&T or any of
          its subsidiaries to use existing fiber facilities owned or leased by
          Broadband or its controlled affiliates, together with related
          services. In addition, Broadband will construct and lease to AT&T new
          fiber facilities in the areas served by Broadband's cable systems for
          use in providing telecommunications services. The term of the
          build-out period will expire on January 8, 2013. Subject to certain
          termination rights specified in this agreement, the term of AT&T's
          right to use facilities leased under this agreement will expire on
          January 8, 2028, renewable at AT&T's option for successive 20-year
          terms in perpetuity.

                                       153


        - Interconnection and Intercarrier Compensation Term Sheet.  This
          agreement, which has a five-year initial term commencing January 1,
          2001, specifies the terms of interconnection of the parties' networks,
          and compensation for:

         o the origination or termination of interexchange traffic for the other
           party, and

         o the exchange of local traffic between the parties' local customers.

        - High Speed Internet Services Binding Term Sheet.  This agreement
          reflects the rates, terms and conditions on which AT&T will provide
          specified processes, procedures and services to support Broadband in
          its provision of broadband Internet services to Broadband subscribers.
          This agreement has a four-year initial term commencing December 4,
          2001.

        - Intellectual Property Agreement.  This agreement specifies the
          ownership and license rights granted by each party to the other in
          specified patents, software, copyrights and trade secrets. Among other
          rights granted, the effect of this agreement is to allow Broadband and
          AT&T to continue to have the same rights to use the intellectual
          property that they had at the time of the separation and Broadband
          spin-off.

        - Other Agreements to be Executed.  AT&T and AT&T Comcast will enter
          into a corporate name agreement immediately prior to the completion of
          the AT&T Comcast transaction pursuant to which AT&T will grant to AT&T
          Comcast the right to use the term "AT&T" as part of its full corporate
          name, but prohibit any use of "AT&T" as a trade name, trademark, or
          service mark, or in a domain name other than specified domain names
          permitted for certain purposes. Such grant of rights will be perpetual
          unless terminated as a result of the Roberts family's voting power
          falling below 33% or pursuant to any other terms of the agreement.

     Subject to the terms of the separation and distribution agreement, prior to
the completion of the AT&T Comcast transaction, AT&T and Broadband may also
enter into other agreements in connection with the AT&T Comcast transaction.

MATERIAL FEDERAL INCOME TAX CONSEQUENCES OF THE AT&T COMCAST TRANSACTION

     Subject to the limitations and qualifications described herein, the
following is a summary of the material U.S. federal income tax consequences of
the Broadband spin-off to AT&T and Broadband and the material U.S. federal
income tax consequences of the mergers to Comcast, Broadband, the Broadband
merger subsidiary and the Comcast merger subsidiary. This summary is based on
the Code, the Treasury Regulations promulgated thereunder, judicial opinions,
published positions of the Internal Revenue Service, and all other applicable
authorities as of the date of this document, all of which are subject to change
(possibly with retroactive effect). This summary assumes that all conditions to
the AT&T Comcast transaction have been satisfied.

     No gain or loss will be recognized by, and no amount will be included in
the income of, AT&T or Broadband upon the separation and the Broadband spin-off
other than gains related to certain intercompany transactions that will be
triggered by the Broadband spin-off.

     No gain or loss will be recognized by Comcast, Broadband, the Broadband
merger subsidiary, or the Comcast merger subsidiary as a result of the mergers.

                                       154


                  OTHER INDEBTEDNESS AND THE CROSS-GUARANTEES

DESCRIPTION OF NEW CREDIT FACILITIES

     On May 3, 2002, Broadband and AT&T Comcast, as co-borrowers, entered into
definitive credit agreements with a syndicate of lenders led by JPMorgan Chase
Bank, as administrative agent, for an aggregate of approximately $12.8 billion
in order to obtain the financing necessary to complete the AT&T Comcast
transaction. The following summary of the new credit facilities is qualified in
its entirety by reference to the complete texts of the new credit facilities,
which are incorporated by reference and attached as exhibits to the registration
statement in which this prospectus is included.

     The new credit facilities include (1) a term loan facility of approximately
$3.18 billion, (2) a revolving loan facility of approximately $2.645 billion
which provides for revolving credit loans and swing line loans and under which
letters of credit may be issued and (3) a bridge loan facility of $7.0 billion.
Availability of borrowings and letters of credit under the new credit facilities
will be subject to satisfaction of conditions precedent on or before March 31,
2003, including, among other customary conditions, (1) the AT&T Comcast
transaction shall occur substantially simultaneously and (2) AT&T Comcast holds
investment-grade credit ratings from both the Standard & Poor's and Moody's
credit reporting agencies at the time of the closing. The term loan will mature
two years after the effective date of the new credit facilities, the revolving
loan will mature five years after the effective date of the new credit
facilities and the bridge loan will mature one year after the effective date of
the new credit facilities.

     Loans under the new credit facilities will bear interest per year, at the
option of AT&T Comcast, at:

     - the base rate plus a margin ranging from 0% to 0.875% based upon AT&T
       Comcast's credit rating or the alternate eurodollar rate plus a margin
       ranging from 0.475% to 1.875% based upon AT&T Comcast's credit rating, in
       either case for borrowings under the term loan;

     - the base rate plus a margin ranging from 0% to 0.625% based upon AT&T
       Comcast's credit rating or the alternate eurodollar rate plus a margin
       ranging from 0.225% to 1.625% based upon AT&T Comcast's credit rating, in
       either case for borrowings under the revolving loan; and

     - the base rate plus a margin ranging from 0% to 0.875% based upon AT&T
       Comcast's credit rating or the alternate eurodollar rate plus a margin
       ranging from 0.475% to 1.875% based upon AT&T Comcast's credit rating, in
       either case for borrowings under the bridge loan.

     Prior to the effective date of the new credit facilities (or the date of
termination of the commitments under the facilities, if earlier), AT&T Comcast
will pay commitment fees at a rate equal to 0.125% per year on each lender's
commitments under each facility. The fees will accrue from April 26, 2002 and
will be payable on the effective date of the new credit facilities (or the date
of termination of the commitments under the facilities, if earlier).

     After the effective date of the new credit facilities, AT&T Comcast will
pay commitment fees at a rate per year ranging from 0.085% to 0.25% based upon
AT&T Comcast's credit rating on the daily average unused portion of the
revolving credit facility. These fees are payable quarterly in arrears.

     AT&T Comcast will pay utilization fees at a rate equal to (1) for each day
that the outstanding revolving loans exceed 33% of the combined revolving
commitments on such day, 0.125% or (2) for each day that the outstanding
revolving loans exceed 66% of the combined revolving commitments on such day,
0.25%. These fees are payable quarterly in arrears.

     The term loan is repayable during the second year after the effective date
of the new credit facilities in four consecutive quarterly installments of $500
million, $750 million, $750 million and approximately $1.18 billion.

     Each of Comcast Cable, MediaOne, TCI, AT&T Comcast, Broadband and each
restricted subsidiary that becomes a party to the guarantee agreement will be a
guarantor of the new credit facilities.

                                       155


     The new credit facilities contain customary covenants and restrictions on
AT&T Comcast and its restricted subsidiaries' ability to engage in specified
activities, including, but not limited to (1) limitations on subsidiary
indebtedness, (2) limitations on liens, (3) limitations on fundamental changes,
(4) limitations on upstreaming and (5) so long as the bridge facility remains in
effect, limitations on prepayments of other material long-term indebtedness.
After the effective date of the new credit facilities, availability of
borrowings and letters of credit under the revolving loan facility will be
subject to satisfaction of customary conditions.

     The new credit facilities also contain financial covenants requiring AT&T
Comcast to maintain (1) a minimum coverage of interest expense and (2) a maximum
leverage ratio.

     As noted above, under the terms of the new credit facilities, the
obligations of the lenders to provide the financing upon completion of the AT&T
Comcast transaction are subject to a number of conditions, including the
condition that AT&T Comcast holds investment-grade credit ratings from both the
Standard & Poor's and Moody's credit reporting agencies at the time of the
closing. Accordingly, there can be no assurance that Broadband and AT&T Comcast
will be able to obtain the financing necessary to complete the AT&T Comcast
transaction. See "Risk Factors -- Risks Relating to the AT&T Comcast
Transaction -- AT&T Comcast and its subsidiaries may not be able to obtain the
necessary financing at all or on terms acceptable to it."

OTHER INDEBTEDNESS AND THE PROPOSED CROSS-GUARANTEES

     Although Comcast continues to analyze the appropriate capital structure
AT&T Comcast and its subsidiaries should have after completion of the AT&T
Comcast transaction, it currently believes that existing and future investors
will be confused by the multiplicity of present debt obligors and the potential
for different creditworthiness among these obligors. To simplify AT&T Comcast's
capital structure and to insure that the traded debt securities of AT&T Comcast,
Comcast Cable, Broadband, MediaOne and TCI are treated equally, Comcast
currently expects that immediately after completion of the AT&T Comcast
transaction, AT&T Comcast, Comcast Cable, Broadband, MediaOne and TCI will each
fully and unconditionally guarantee each other's traded debt securities.

     Comcast does not currently expect that Comcast itself would be a guarantor,
nor would its debt securities be guaranteed, because it believes future
investors will be interested in "pure play" debt securities of AT&T Comcast's
cable communications operations and not Comcast's content assets, such as QVC,
E! Entertainment and Comcast Spectacor.

     Comcast also does not currently expect that MediaOne of Delaware, Inc.,
formerly known as Continental Cablevision, Inc. and one of AT&T's cable
subsidiaries to be transferred to Broadband, and which we refer to as
Continental in this prospectus, would be a guarantor, nor would its debt
securities be guaranteed. Continental's indentures contain covenants that
effectively prohibit Continental from guaranteeing its affiliates' debt
obligations. If these indentures were amended to permit guarantees of affiliate
debt obligations, Continental might become a guarantor and its debt securities
might be cross-guaranteed as well.

     The following table presents as of March 31, 2002 for each of Comcast
Cable, Broadband, MediaOne, TCI and Continental, their payment obligations for
principal, excluding obligations of their subsidiaries and excluding interest
but including principal accreted under discount obligations, under (a) debt
securities that will be subject, or in the case of Continental, might be
subject, to the cross-guarantees, (b) other contractual liabilities, including
capital leases, none of which will be subject to the cross-guarantees, and (c)
operating leases, none of which will be subject to the cross-guarantees. For
purposes of the table, amounts are included only with respect to the person who
is the primary obligor and not with respect to amounts for which that person may
be secondarily liable as guarantor. The table presents for AT&T

                                       156


Comcast the pro forma effect of the New Credit Facilities, for which all amounts
are shown for AT&T Comcast although Broadband is a co-obligor on those amounts.



                                                                 PAYMENTS DUE BY PERIOD
                                                    -------------------------------------------------
                                         PAYMENT    REMAINDER
CONTRACTUAL OBLIGATION                    TOTAL      OF 2002    1-2 YEARS   3-5 YEARS   AFTER 5 YEARS
----------------------                  ---------   ---------   ---------   ---------   -------------
                                                          (IN MILLIONS, UNAUDITED)
                                                                         
AT&T Comcast:
  New Credit Facility.................  $12,825.0    $   --     $10,180.0   $2,645.0      $     --
  Other liabilities, including capital
     leases...........................         --        --            --         --            --
  Operating leases....................         --        --            --         --            --
                                        ---------    ------     ---------   --------      --------
     Total AT&T Comcast...............   12,825.0        --      10,180.0    2,645.0            --
Comcast Cable:
  Guaranteed debt securities..........    8,704.8        --         320.8    3,764.8       4,619.2
  Other liabilities, including capital
     leases...........................
  Operating leases....................
                                        ---------    ------     ---------   --------      --------
     Total Comcast Cable..............
Broadband:
  New Broadband Notes.................                   --            --         --
  Other liabilities, including capital
     leases...........................         --        --            --         --            --
  Operating leases....................         --        --            --         --            --
                                        ---------    ------     ---------   --------      --------
     Total Broadband..................                   --            --         --
MediaOne:
  Guaranteed debt securities..........      305.4      13.0           7.2       82.3         202.9
  Other liabilities, including capital
     leases...........................         --        --            --         --            --
  Operating leases....................        5.3       1.5           3.8         --            --
                                        ---------    ------     ---------   --------      --------
     Total MediaOne...................      310.7      14.5          11.0       82.3         202.9
TCI:
  Guaranteed debt securities..........    6,233.9     380.0       1,748.7    1,165.5       2,939.7
  Other liabilities, including capital
     leases...........................         --        --            --         --            --
  Operating leases....................       59.4      10.8          25.8       15.9           6.9
                                        ---------    ------     ---------   --------      --------
     Total TCI........................    6,293.3     390.8       1,774.5    1,181.4       2,946.6
                                        ---------    ------     ---------   --------      --------
Total.................................  $            $          $           $             $
                                        =========    ======     =========   ========      ========
Continental:
  Potentially guaranteed debt
     securities.......................  $ 1,800.0    $   --     $   100.0   $  875.0      $  825.0
  Other liabilities, including capital
     leases...........................        8.3       5.2           3.1         --            --
  Operating leases....................        1.4       0.5           0.9         --            --
                                        ---------    ------     ---------   --------      --------
     Total Continental................  $ 1,809.7    $  5.7     $   104.0   $  875.0      $  825.0
                                        =========    ======     =========   ========      ========


                                       157


                                 LEGAL MATTERS

     The validity of the New AT&T Notes and Broadband Exchange Notes offered
hereby will be passed upon for AT&T by Robert S. Feit, Chief
Counsel -- Corporate and Financial Matters, of AT&T Corp. The validity of the
New Broadband Notes offered hereby will be passed upon for Broadband and the
cable guarantors by Davis Polk & Wardwell. Certain legal matters relating to the
offering will be passed upon for the dealer managers by Simpson Thacher &
Bartlett.

                                    EXPERTS

AT&T

     The audited consolidated financial statements of AT&T Corp. as of December
31, 2001 and 2000, and for each of the three years in the period ended December
31, 2001, incorporated by reference in this prospectus/registration statement,
have been audited by PricewaterhouseCoopers LLP, independent accountants, whose
report thereon appears herein and, insofar as they relate to Liberty Media Group
as of December 31, 2000 and 1999, and for the two years in the period ended
December 31, 2000, by KPMG LLP, independent certified public accountants. Such
financial statements have been so incorporated in reliance on the reports of
such independent accountants given on the authority of such firms as experts in
auditing and accounting.

     The consolidated balance sheets of Liberty Media Corporation and
subsidiaries ("New Liberty or Successor") as of December 31, 2001 and 2000, and
the related consolidated statements of operations, comprehensive earnings,
stockholders' equity, and cash flows for the years ended December 31, 2001 and
2000 and the period from March 1, 1999 to December 31, 1999 (Successor periods)
and from January 1, 1999 to February 28, 1999 (Predecessor period) which appear
as an exhibit to the Annual Report on Form 10-K/A of AT&T Corp., have been
incorporated by reference herein in reliance upon the report, dated March 8,
2002, of KPMG LLP, independent certified public accountants, incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing.

     The KPMG LLP report states that Liberty Media Corporation changed its
method of accounting for derivative instruments and hedging activities in 2001.

     In addition, the KPMG LLP report contains an explanatory paragraph that
states that, effective March 9, 1999, AT&T Corp., the former parent company of
New Liberty, acquired Tele-Communications, Inc., the former parent company of
Liberty Media Corporation, in a business combination accounted for as a
purchase. As a result of the acquisition, the consolidated financial information
for the periods after the acquisition is presented on a different basis than
that for the periods before the acquisition and, therefore, is not comparable.

     The consolidated financial statements of AT&T Canada Inc. as of December
31, 2001 and 2000, and for each of the years in the three year period ended
December 31, 2001, incorporated in this document by reference to the Annual
Report on Form 10-K/A of AT&T Corp. for the year ended December 31, 2001, have
been so incorporated in reliance on the report of KPMG LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.

     The KPMG LLP report dated February 1, 2002, except as to note 2, which is
as of March 14, 2002, as to note 5, which is as of February 20, 2002 and as to
note 9(h), which is as of May 1, 2002, contains Comments by the Auditors for
U.S. Readers on Canada -- U.S. Reporting Differences which states that in the
United States, reporting standards for auditors require the addition of an
explanatory paragraph (following the opinion paragraph) when the financial
statements are affected by conditions and events that cast substantial doubt on
AT&T Canada Inc.'s ability to continue as a going concern such as those
described in note 2 to the consolidated financial statements. The KPMG LLP
report to the shareholders is expressed in accordance with Canadian reporting
standards, which do not permit a reference to such conditions and events in the
auditors' report when these are adequately disclosed in the financial
statements.
                                       158


     The consolidated financial statements of Concert, B.V., incorporated in
this prospectus/registration statement by reference to the Annual Report on Form
10-K/A of AT&T Corp. for the year ended December 31, 2001 have been so
incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.

AT&T BROADBAND GROUP

     The combined financial statements of AT&T Broadband Group as of December
31, 2001 and 2000, and for each of the two years in the period ended December
31, 2001 and for the ten-month period ended December 31, 1999, included in this
prospectus/registration statement, have been so included in reliance on the
report of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.

BROADBAND

     The balance sheet of AT&T Broadband Corp. as of December 31, 2001, included
in this prospectus/ registration statement, has been so included in reliance on
the report of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.

AT&T COMCAST

     The balance sheet of AT&T Comcast as of December 31, 2001 included in this
prospectus has been audited by Deloitte & Touche LLP, independent auditors, as
stated in their report, appearing herein, and is so included in reliance upon
the report of such firm given upon their authority as experts in accounting and
auditing.

COMCAST CABLE

     The financial statements and the related financial statement schedule of
Comcast Cable, a wholly owned subsidiary of Comcast, and subsidiaries
incorporated in this prospectus by reference from Comcast Cable's Annual Report
on Form 10-K for the year ended December 31, 2001 have been audited by Deloitte
& Touche LLP, independent auditors, as stated in their reports (which report on
the financial statements expresses an unqualified opinion and includes an
explanatory paragraph related to the adoption of Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities," as amended, effective January 1, 2001), which are incorporated
herein by reference, and have been so incorporated in reliance upon the reports
of such firm given upon their authority as experts in accounting and auditing.

COMCAST

     The financial statements of Comcast as of December 31, 2001 and 2000 and
for each of the three years ended December 31, 2001 included in this prospectus
have been audited by Deloitte & Touche LLP, independent auditors, as stated in
their report (which report expresses an unqualified opinion and includes an
explanatory paragraph related to the adoption of Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities," as amended, effective January 1, 2001), which is included herein
and has been so included in reliance upon the report of such firm given upon
their authority as experts in accounting and auditing.

                INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

     This prospectus contains "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. These statements may be
made directly in this prospectus referring to AT&T, Broadband, AT&T Comcast,
Comcast Cable, MediaOne, or TCI, and they may also be made a part of this
prospectus by reference to other documents filed with the SEC, which is known as

                                       159


"incorporation by reference." These statements may include statements regarding
the period leading up to and following completion of the AT&T Comcast
transaction.

     Words such as "anticipate," "estimate," "expect," "project," "intend,"
"plan," "believe" and words and terms of similar substance used in connection
with any discussion of future operating or financial performance, or the AT&T
Comcast transaction, identify forward-looking statements. All forward-looking
statements are management's present estimates of future events and are subject
to a number of factors and uncertainties, including without limitation the risks
associated with the lack of complete data and the potential inaccuracy of data
relied upon in making such forward-looking statements, that could cause actual
results to differ materially from those described in the forward-looking
statements. In addition, the risks related to the businesses of AT&T, Broadband,
AT&T Comcast, Comcast Cable, MediaOne and TCI and the factors relating to the
AT&T Comcast transaction discussed under "Risk Factors," among others, could
cause actual results to differ materially from those described in the
forward-looking statements. Noteholders are cautioned not to place undue
reliance on the forward-looking statements, which speak only as of the date of
this prospectus or as of the date of any document incorporated by reference in
this prospectus, as applicable. None of AT&T, Broadband, AT&T Comcast, Comcast
Cable, MediaOne or TCI is under any obligation, and each expressly disclaims any
obligation, to update or alter any forward-looking statements, whether as a
result of new information, future events or otherwise.

     For additional information about factors that could cause actual results to
differ materially from those described in the forward-looking statements, please
see the annual reports on Form 10-K and the quarterly reports on Form 10-Q that
AT&T and Comcast Cable have filed with the SEC.

     All subsequent forward-looking statements attributable to AT&T, Broadband,
AT&T Comcast, Comcast Cable, MediaOne or TCI, or any person acting on their
behalf are expressly qualified in their entirety by the cautionary statements
contained or referred to in this section.

                      WHERE YOU CAN FIND MORE INFORMATION

     Broadband, TCI and MediaOne do not currently file information with the SEC.
AT&T, Comcast, AT&T Comcast and Comcast Cable file annual, quarterly and special
reports, prospectuses and other information with the SEC. You may read and copy
any reports, statements or other information AT&T, Comcast or Comcast Cable file
at the SEC's public reference room at 450 Fifth Street, N.W., Washington, D.C.
20549. Please call the SEC at 1-800-SEC-0330 for further information on the
public reference room. The SEC filings of AT&T, Comcast, AT&T Comcast and
Comcast Cable are also available to the public from commercial document
retrieval services and at the website maintained by the SEC at www.sec.gov.

     The SEC allows us to "incorporate by reference" information into this
prospectus, which means that we can disclose important information to you by
referring you to another document we have filed separately with the SEC. The
information incorporated by reference is deemed to be part of this prospectus,
except for any information superseded by information contained directly in this
prospectus.

     This prospectus incorporates by reference the documents set forth below
that AT&T, AT&T Comcast and Comcast Cable have previously filed with the SEC.
These documents contain important information about the financial condition of
AT&T, AT&T Comcast and Comcast Cable.

     AT&T SEC Filings (File No. 1-1105)

     - Annual Report on Form 10-K for the year ended December 31, 2001, filed on
       April 1, 2002, as amended on May 3, 2002 and May 13, 2002

     - Quarterly Report on Form 10-Q for the quarter ended March 31, 2002, filed
       on May 15, 2002

     - Current Reports on Form 8-K filed on January 4, 2002, February 5, 2002,
       February 21, 2002, April 16, 2002, April 25, 2002, May 13, 2002, May 29,
       2002, June 5, 2002, June 11, 2002, July 3, 2002, July 11, 2002, July 22,
       2002, July 29, 2002, July 30, 2002 and August 12, 2002.

                                       160


     Comcast Cable SEC Filings (File No. 333-30745)

     - Annual Report on Form 10-K for the year ended December 31, 2001, filed on
       March 29, 2002

     - Quarterly Report on Form 10-Q for the quarter ended March 31, 2002, filed
       on May 15, 2002

     We also incorporate by reference into this prospectus additional documents
that may be filed by AT&T, AT&T Broadband, or Comcast Cable with the SEC
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act from the date
of this prospectus before the termination of this offering. These include
periodic reports, such as Annual Reports on Form 10-K, Quarterly Reports on Form
10-Q and Current Reports on Form 8-K, as well as prospectuses. Any statements
contained in a previously filed document incorporated by reference into this
prospectus is deemed to be modified or superseded for purposes of this
prospectus to the extent that a statement contained in this prospectus, or in a
subsequently filed document also incorporated by reference herein, modifies or
supersedes that statement.

     You may obtain copies of any documents incorporated by reference in this
prospectus through us, the SEC or the SEC's website as described above.
Documents incorporated by reference are available from us without charge,
excluding exhibits thereto unless we have specifically incorporated by reference
such exhibits in this prospectus. Any person, including any beneficial owner, to
whom this prospectus is delivered may obtain documents incorporated by reference
in, but not delivered with, this prospectus by requesting them from the
information agent in writing or by telephone at the address set forth on the
back cover of this prospectus. Any request should be made not later than five
business days prior to the end of the exchange offer.

     AT&T, Broadband, AT&T Comcast, Comcast Cable, MediaOne and TCI have
together filed a registration statement on Form S-4 under the Securities Act
with the SEC with respect to the exchange offer. This prospectus does not
contain all of the information included in the registration statement and the
exhibits and schedules to the registration statement. You will find additional
information about the new notes and the companies involved in the exchange offer
in the registration statement. Certain items are omitted in accordance with the
rules and regulations of the SEC. For further information with respect to the
companies and the new notes, reference is made to the registration statement and
the exhibits and any schedules filed therewith. All documents incorporated by
reference will, so long as the eligible notes are listed on the Luxembourg Stock
Exchange, be available free of charge during normal business hours at the
specified office of the Luxembourg exchange agent.

     If for any reason we are not required to comply with the reporting
requirements of the Securities Exchange Act of 1934, as amended, we are still
required under the AT&T Indenture and the New Broadband Indenture to furnish the
holders of the new notes with the information, documents and other reports
specified in Sections 13 and 15(d) of the Exchange Act.

                                       161


                         INDEX TO FINANCIAL STATEMENTS


                                                           
AT&T
  PRO FORMA FINANCIAL STATEMENTS TO GIVE EFFECT TO THE AT&T
     COMCAST TRANSACTION
     Unaudited Pro Forma Combined Condensed Balance Sheet at
      March 31, 2002........................................    F-4
     Unaudited Pro Forma Combined Condensed Statement of
      Operations for the Three Months ended March 31,
      2002..................................................    F-5
     Unaudited Pro Forma Combined Condensed Statement of
      Operations for the Three Months Ended March 31,
      2001..................................................    F-6
     Unaudited Pro Forma Combined Condensed Statement of
      Operations for the Year Ended December 31, 2001.......    F-7
     Unaudited Pro Forma Combined Condensed Statement of
      Income for the Year Ended December 31, 2000...........    F-8
     Unaudited Pro Forma Combined Condensed Statement of
      Income for the Year Ended December 31, 1999...........    F-9
     Notes to Unaudited Pro Forma Combined Condensed
      Financial Statements..................................   F-10

AT&T BROADBAND GROUP
  HISTORICAL FINANCIAL STATEMENTS
     At or for the Three Months ended March 31, 2002 and
      March 31, 2001:
     Unaudited Combined Statements of Operations............   F-13
     Unaudited Combined Balance Sheets......................   F-14
     Unaudited Combined Statements of Changes in Combined
      Attributed Net Assets.................................   F-15
     Unaudited Combined Statements of Cash Flows............   F-16
     Notes to Unaudited Combined Financial Statements.......   F-17
     At or for the Year Ended December 31, 2001 and December
      31, 2000:
     Report of Independent Accountants......................   F-26
     Combined Statements of Operations......................   F-27
     Combined Balance Sheets................................   F-28
     Combined Statements of Changes in Combined Attributed
      Net Assets............................................   F-29
     Combined Statements of Cash Flows......................   F-30
     Notes to Combined Financial Statements.................   F-31

AT&T BROADBAND CORP.
  HISTORICAL FINANCIAL STATEMENTS
     At March 31, 2002:
     Unaudited Balance Sheet................................   F-75
     Note to Unaudited Balance Sheet........................   F-76
     At December 31, 2001:
     Report of Independent Accountants......................   F-77
     Balance Sheet..........................................   F-78
     Note to Balance Sheet..................................   F-79

AT&T COMCAST CORPORATION
  HISTORICAL FINANCIAL STATEMENTS
     Balance Sheet as of March 31, 2002 (Unaudited).........   F-80
     Note to Balance Sheet (Unaudited)......................   F-81
     Independent Auditors' Report...........................   F-82
     Balance Sheet as of December 31, 2001..................   F-83
     Note to Balance Sheet..................................   F-84


                                       F-1



                                                           
  UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL
     STATEMENTS
     Unaudited Pro Forma Combined Condensed Balance Sheet as
      of March 31, 2002.....................................     27
     Notes to Unaudited Pro Forma Combined Condensed Balance
      Sheet.................................................     28
     Unaudited Pro Forma Combined Condensed Statement of
      Operations for the Year Ended December 31, 2001.......     30
     Unaudited Pro Forma Combined Condensed Statement of
      Operations for the Quarter Ended March 31, 2002.......     31
     Notes to Unaudited Pro Forma Combined Condensed
      Statement of Operations...............................     32
COMCAST CORPORATION
  HISTORICAL FINANCIAL STATEMENTS
     Independent Auditors' Report...........................   F-85
     Consolidated Balance Sheet as of December 31, 2001 and
      2000..................................................   F-86
     Consolidated Statement of Operations for the Years
      Ended December 31, 2001, 2000 and 1999................   F-87
     Consolidated Statement of Cash Flows for the Years
      Ended December 31, 2001, 2000 and 1999................   F-88
     Consolidated Statement of Stockholders' Equity for the
      Years Ended December 31, 2001, 2000 and 1999..........   F-89
     Notes to Consolidated Financial Statements.............   F-90
     Condensed Consolidated Balance Sheet as of March 31,
      2002 and December 31, 2001 (Unaudited)................  F-124
     Condensed Consolidated Statement of Operations and
      Retained Earnings for the Three Months Ended March 31,
      2002 and 2001 (Unaudited).............................  F-125
     Condensed Consolidated Statement of Cash Flows for the
      Three Months Ended March 31, 2002 and 2001
      (Unaudited)...........................................  F-127
     Notes to Condensed Consolidated Financial Statements
      (Unaudited)...........................................  F-128


                                       F-2


                                      AT&T

          UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS

     The unaudited pro forma combined condensed financial statements set forth
below for AT&T give effect to

     - the Liberty Media Group distribution

     - the AT&T Broadband Group distribution

(collectively, the AT&T restructuring events), as if such events had been
completed on January 1, 1999 for income statement purposes, and at March 31,
2002 for balance sheet purposes, subject to the assumptions and adjustments in
the accompanying notes to the pro forma financial statements. Upon the
distribution of AT&T Broadband Group, AT&T will report AT&T Broadband Group as a
Discontinued Operation, in accordance with SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." For accounting purposes, the
spin-off (the distribution) of AT&T Broadband Group is considered a non pro-rata
distribution and is expected to be recorded at fair value resulting in the
recognition of a gain or loss by the remaining AT&T entity upon the distribution
date. The split-off of Liberty Media Group, which was completed on August 10,
2001, was a pro-rata distribution and was therefore recorded at historical cost.
Since Liberty Media Group was split-off from AT&T on August 10, 2001, no first
quarter 2002 balance sheet or income statement pro forma adjustments were made
for Liberty Media Group. See the Notes to the Unaudited Pro Forma Combined
Condensed Financial Statements for additional disclosure of potential material
nonrecurring charges and credits directly attributable to the events as noted
above which are not reflected in the pro forma financial statements. Note (i) to
the AT&T Unaudited Pro Forma Combined Condensed Financial Statements includes
the impacts to earnings per share of the proposed one-for-five reverse stock
split of AT&T common stock.

     The pro forma adjustments included herein are based on available
information and certain assumptions that management believes are reasonable and
are described in the accompanying notes to the pro forma financial statements.
The Unaudited Pro Forma Combined Condensed Financial Statements do not
necessarily represent what AT&T's financial position or results of operations
would have been had the AT&T Broadband distribution or the Liberty Media Group
distribution occurred on such dates or to project AT&T's financial position or
results of operations at or for any future date or period. In the opinion of
management, all adjustments necessary to present fairly the unaudited pro forma
financial information have been made. The Unaudited Pro Forma Combined Condensed
Financial Statements should be read in conjunction with the historical financial
statements of AT&T.

     AT&T currently intends to dividend AT&T Consumer Services Group tracking
stock to current AT&T shareholders representing some or all of the financial
performance and economic value of AT&T Consumer Services Group at such time as
AT&T determines that there is sufficient market receptivity and support for such
a distribution. Due to the accumulated deficit that exists at AT&T Corp., the
dividend will be reflected as a reduction of additional paid-in capital for the
fair value of AT&T Consumer Services with a corresponding increase in par value
of AT&T Consumer Services Group tracking stock and additional paid-in capital.
The issuance of the AT&T Consumer Services Group tracking stock has no impact on
the pro forma balance sheet or pro forma income statements other than to result
in the attribution of net income to AT&T Consumer Services Group and therefore
to reduce income and earnings attributable to AT&T Common Stock Group. For
purposes of these pro forma financial statements we have assumed distribution of
all of the AT&T Consumer Services Group tracking stock.

                                       F-3


                                      AT&T

              UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
                               AT MARCH 31, 2002



                                                                          AT&T
                                                                        BROADBAND
                                                        HISTORICAL        GROUP            OTHER        PRO FORMA
                                                         AT&T(A)     DISTRIBUTION(E)   ADJUSTMENTS(G)     AT&T
                                                        ----------   ---------------   --------------   ---------
                                                                          (DOLLARS IN MILLIONS)
                                                                                            
                                                     ASSETS
Cash and cash equivalents.............................   $  2,343       $      --          $  70        $  2,413
                                                                            5,956(f)
                                                                           (5,956)(f)
Receivables -- net....................................      8,867            (549)          (156)          8,162
Investments...........................................        477            (477)            --              --
Deferred income taxes.................................      1,175              --            (89)          1,086
Other current assets..................................        737            (584)           419             572
                                                                            5,956(f)
                                                                           (5,956)(f)
Property, plant and equipment -- net..................     40,829         (14,588)            --          26,241
Franchise costs -- net................................     41,381         (41,381)            --              --
Goodwill -- net.......................................     24,668         (19,361)            --           5,307
Other purchased intangibles -- net....................      2,145          (1,514)            --             631
Investments and related advances......................     21,790         (20,625)            --           1,165
Prepaid pension costs.................................      3,391              --             (1)          3,390
Other assets..........................................      5,004          (1,767)            64           3,301
                                                                          (17,856)(c)
                                                                           17,856(c)
                                                         --------       ---------          -----        --------
    Total Assets......................................    152,807        (100,846)           307          52,268
                                                         ========       =========          =====        ========
                                                   LIABILITIES
Accounts payable......................................      3,866            (620)            72           3,318
Payroll and benefit-related liabilities...............      1,602            (442)            --           1,160
Debt maturing within one year.........................      5,233          (7,746)            --              --
                                                                            5,956(f)
                                                                           (3,443)(f)
Other current liabilities.............................      5,273          (1,633)           169           3,809
Long-term debt........................................     39,070         (15,523)            --          21,034
                                                                           (2,513)(f)
Long-term benefit-related liabilities.................      3,590              --           (136)          3,454
Deferred income taxes.................................     27,762         (25,447)           136           2,451
Other long-term liabilities and deferred credits......      7,691            (813)           199           7,256
                                                                              179(d)
                                                         --------       ---------          -----        --------
    Total Liabilities.................................     94,087         (52,045)           440          42,482
Minority interest.....................................      2,732          (2,507)            --             225
Company-obligated convertible quarterly income
  preferred securities of subsidiary trust holding
  solely subordinated debt securities of AT&T.........      4,723          (4,723)            --              --
                                               SHAREOWNERS' EQUITY
Common Stock:
AT&T common stock, $1 par value, authorized
  6,000,000,000 shares; issued and outstanding
  3,566,313,758 shares................................      3,566              32(d)          --           3,598
Additional paid-in capital............................     52,682         (41,872)          (203)         28,252
                                                                           17,856(c)
                                                                           (1,300)(d)
                                                                             (179)(d)
                                                                            1,268(d)
Accumulated deficit...................................     (4,459)        (17,856)(c)         70         (22,245)
Accumulated other comprehensive loss..................       (524)            480             --             (44)
                                                         --------       ---------          -----        --------
    Total shareowners' equity.........................     51,265         (41,571)          (133)          9,561
    Total Liabilities & Shareowners' Equity...........   $152,807       $(100,846)         $ 307        $ 52,268
                                                         ========       =========          =====        ========


 See Notes To AT&T Unaudited Pro Forma Combined Condensed Financial Statements
                                       F-4


                                      AT&T

         UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
                   FOR THE THREE MONTHS ENDED MARCH 31, 2002



                                                          AT&T BROADBAND
                                             HISTORICAL        GROUP            OTHER        PRO FORMA
                                              AT&T(A)     DISTRIBUTION(E)   ADJUSTMENTS(G)     AT&T
                                             ----------   ---------------   --------------   ---------
                                                               (DOLLARS IN MILLIONS)
                                                                                 
Revenue....................................   $12,023         $(2,439)           $ 85         $9,669
OPERATING EXPENSES
Costs of services and products.............     3,290          (1,308)            104          2,086
Access and other connection................     2,808              --             (19)         2,789
Selling, general and administrative........     2,585            (625)             --          1,960
Depreciation and amortization..............     1,895            (720)             --          1,175
Net restructuring and other charges........        56             (56)             --             --
                                              -------         -------            ----         ------
Total operating expenses...................    10,634          (2,709)             85          8,010
Operating income...........................     1,389             270              --          1,659
Other (expense) income.....................      (162)            102              --            (60)
Interest expense...........................       767            (366)             --            401
Income from continuing operations before
  income taxes, minority interest and
  (losses) earnings related to equity
  investments..............................       460             738              --          1,198
Provision for income taxes.................       266             229              (2)           493
Minority interest (expense) income.........       (57)             77              --             20
Net losses related to other equity
  investments..............................      (297)             20              --           (277)
                                              -------         -------            ----         ------
Net (loss) earnings from continuing
  operations attributable to common
  shareowners..............................   $  (160)        $   606            $  2         $  448
                                              =======         =======            ====         ======
AT&T COMMON STOCK GROUP:
Loss from continuing operations............   $  (160)                                        $  (51)(h)(j)
Weighted average shares
  outstanding -- (basic & diluted).........     3,546                                          3,578
Basic and diluted loss per share...........     (0.05)                                         (0.01)(i)


 See Notes To AT&T Unaudited Pro Forma Combined Condensed Financial Statements
                                       F-5


                                      AT&T

         UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
                   FOR THE THREE MONTHS ENDED MARCH 31, 2001



                                                       LIBERTY MEDIA    AT&T BROADBAND
                                         HISTORICAL        GROUP             GROUP            OTHER        PRO FORMA
                                          AT&T(A)     DISTRIBUTION(B)   DISTRIBUTION(E)   ADJUSTMENTS(G)     AT&T
                                         ----------   ---------------   ---------------   --------------   ---------
                                                                    (DOLLARS IN MILLIONS)
                                                                                            
Revenue................................   $13,551          $ --             $(2,587)           $63          $11,027
OPERATING EXPENSES
Costs of services and products.........     3,572            --              (1,465)            66            2,173
Access and other connection............     3,151            --                  --             (3)           3,148
Selling, general and administrative....     2,794            --                (698)            --            2,096
Depreciation and amortization..........     2,412            --              (1,283)            --            1,129
Net restructuring and other charges....       808            --                (808)            --               --
                                          -------          ----             -------            ---          -------
Total operating expenses...............    12,737            --              (4,254)            63            8,546
Operating income.......................       814            --               1,667             --            2,481
Other (expense) income.................      (783)           --                 953             --              170
Interest expense.......................       879            --                (479)            --              400
(Loss) income from continuing
  operations before income taxes,
  minority interest and (losses)
  earnings related to equity
  investments..........................      (848)           --               3,099             --            2,251
Provision for income taxes.............       218            --                 744             --              962
Minority interest income...............       640            --                (549)            --               91
Equity losses from Liberty Media
  Group................................      (697)          697                  --             --               --
Net losses related to other equity
  investments..........................       (57)           --                 (49)            --             (106)
(Loss) income from continuing
  operations...........................    (1,180)          697               1,757             --            1,274
Dividend requirements of preferred
  stock................................       181            --                  --             --              181
                                          -------          ----             -------            ---          -------
Net (loss) earnings from continuing
  operations attributable to common
  shareowners..........................   $(1,361)         $697             $ 1,757            $--          $ 1,093
                                          =======          ====             =======            ===          =======
AT&T COMMON STOCK GROUP:
(Loss) earnings from continuing
  operations...........................   $  (664)                                                          $   326(h)(j)
Weighted average shares
  outstanding -- basic.................     3,805                                                             3,845
Basic (loss) earnings per share........     (0.17)                                                             0.08(i)
(Loss) earnings from continuing
  operations...........................      (664)                                                              326(h)(j)
Weighted average shares
  outstanding -- diluted...............     3,805                                                             3,851
Diluted (loss) earnings per share......     (0.17)                                                             0.08(i)
LIBERTY MEDIA GROUP:
Basic and diluted loss per share.......   $ (0.27)


 See Notes To AT&T Unaudited Pro Forma Combined Condensed Financial Statements
                                       F-6


                                      AT&T

         UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
                      FOR THE YEAR ENDED DECEMBER 31, 2001



                                                                     AT&T
                                               LIBERTY MEDIA       BROADBAND
                                 HISTORICAL        GROUP             GROUP            OTHER        PRO FORMA
                                  AT&T(A)     DISTRIBUTION(B)   DISTRIBUTION(E)   ADJUSTMENTS(G)     AT&T
                                 ----------   ---------------   ---------------   --------------   ---------
                                                            (DOLLARS IN MILLIONS)
                                                                                    
Revenue........................   $52,550         $   --           $(10,132)           $247         $42,665
OPERATING EXPENSES
Costs of services and
  products.....................    13,960             --             (5,459)            298           8,799
Access and other connection....    12,136             --                 --             (51)         12,085
Selling, general and
  administrative...............    10,832             --             (2,582)             --           8,250
Depreciation and
  amortization.................     9,338             --             (4,780)             --           4,558
Net restructuring and other
  charges......................     2,530             --             (1,494)             --           1,036
                                  -------         ------           --------            ----         -------
Total operating expenses.......    48,796             --            (14,315)            247          34,728
Operating income...............     3,754             --              4,183              --           7,937
Other (expense) income.........    (1,547)            --              2,874              --           1,327
Interest expense...............     3,242             --             (1,735)             --           1,507
(Loss) income from continuing
  operations before income
  taxes, minority interest and
  (losses) earnings related to
  equity investments...........    (1,035)            --              8,792              --           7,757
(Benefit) provision for income
  taxes........................      (791)            --              3,857             (90)          2,976
Minority interest income.......       963             --               (833)             --             130
Equity losses from Liberty
  Media Group..................    (2,711)         2,711                 --              --              --
Net losses related to other
  equity investments...........    (4,850)            --                 69              --          (4,781)
(Loss) income from continuing
  operations...................    (6,842)         2,711              4,171              90             130
Dividend requirements of
  preferred stock..............       652             --                 --              --             652
Premium on exchange of AT&T
  Wireless tracking stock......        80             --                 --              --              80
                                  -------         ------           --------            ----         -------
Net loss from continuing
  operations attributable to
  common shareowners...........   $(7,574)        $2,711           $  4,171            $ 90         $  (602)
                                  =======         ======           ========            ====         =======
AT&T COMMON STOCK GROUP:
Loss from continuing
  operations...................   $(4,863)                                                          $(3,475)(h)(j)
Weighted average shares
  outstanding (basic &
  diluted).....................     3,643                                                             3,695
Basic and diluted loss per
  share........................     (1.33)                                                            (0.94)(i)
LIBERTY MEDIA GROUP:
Basic and diluted loss per
  share........................   $ (1.05)


 See Notes To AT&T Unaudited Pro Forma Combined Condensed Financial Statements
                                       F-7


                                      AT&T

           UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
                      FOR THE YEAR ENDED DECEMBER 31, 2000



                                                                     AT&T
                                               LIBERTY MEDIA       BROADBAND
                                 HISTORICAL        GROUP             GROUP            OTHER        PRO FORMA
                                  AT&T(A)     DISTRIBUTION(B)   DISTRIBUTION(E)   ADJUSTMENTS(G)     AT&T
                                 ----------   ---------------   ---------------   --------------   ---------
                                                            (DOLLARS IN MILLIONS)
                                                                                    
Revenue........................   $55,533         $    --           $(8,445)           $116         $47,204
OPERATING EXPENSES
Costs of services and
  products.....................    12,795              --            (4,600)            117           8,312
Access and other connection....    13,140              --                --              (1)         13,139
Selling, general and
  administrative...............     9,752              --            (2,180)             --           7,572
Depreciation and
  amortization.................     8,589              --            (4,051)             --           4,538
Net restructuring and other
  charges......................     7,029              --            (6,270)             --             759
                                  -------         -------           -------            ----         -------
Total operating expenses.......    51,305              --           (17,101)            116          34,320
Operating income...............     4,228              --             8,656              --          12,884
Other income...................     1,150              --                39              --           1,189
Interest expense...............     2,964              --            (1,323)             --           1,641
Income from continuing
  operations before income
  taxes, minority interest and
  (losses) earnings related to
  equity investments...........     2,414              --            10,018              --          12,432
Provision for income taxes.....     3,284              --             1,183              --           4,467
Minority interest income.......     4,103              --            (4,062)             --              41
Equity earnings from Liberty
  Media Group..................     1,488          (1,488)               --              --              --
Net (losses) earnings related
  to other equity
  investments..................      (588)             --               597              --               9
                                  -------         -------           -------            ----         -------
Net income from continuing
  operations attributable to
  common shareowners...........   $ 4,133         $(1,488)          $ 5,370            $ --         $ 8,015
                                  =======         =======           =======            ====         =======
AT&T COMMON STOCK GROUP:
Earnings from continuing
  operations...................   $ 2,645                                                           $ 3,903(h)(j)
Weighted average shares
  outstanding -- basic.........     3,486                                                             3,526
Basic earnings per share.......      0.76                                                              1.11
Earnings from continuing
  operations...................     2,677                                                             3,903(h)(j)
Weighted average shares
  outstanding -- diluted.......     3,545                                                             3,545
Diluted earnings per share.....      0.75                                                              1.10(i)
LIBERTY MEDIA GROUP:
Basic and diluted earnings per
  share........................   $  0.58


 See Notes To AT&T Unaudited Pro Forma Combined Condensed Financial Statements
                                       F-8


                                      AT&T

           UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
                      FOR THE YEAR ENDED DECEMBER 31, 1999



                                                                     AT&T
                                               LIBERTY MEDIA       BROADBAND
                                 HISTORICAL        GROUP             GROUP            OTHER        PRO FORMA
                                  AT&T(A)     DISTRIBUTION(B)   DISTRIBUTION(E)   ADJUSTMENTS(G)     AT&T
                                 ----------   ---------------   ---------------   --------------   ---------
                                                    (DOLLARS IN MILLIONS)
                                                                                    
Revenue........................   $54,973         $   --            $(5,080)           $32          $49,925
OPERATING EXPENSES
Costs of services and
  products.....................    11,013             --             (2,686)            32            8,359
Access and other connection....    14,439             --                 --             --           14,439
Selling, general and
  administrative...............    10,894             --             (1,253)            --            9,641
Depreciation and
  amortization.................     6,194             --             (1,674)            --            4,520
Net restructuring and other
  charges......................       975             --               (644)            --              331
                                  -------         ------            -------            ---          -------
Total operating expenses.......    43,515             --             (6,257)            32           37,290
Operating income...............    11,458             --              1,177             --           12,635
Other income...................       826             --                (50)            --              776
Interest expense...............     1,503             --               (705)            --              798
Income from continuing
  operations before income
  taxes, minority interest and
  (losses) earnings related to
  equity investments...........    10,781             --              1,832             --           12,613
Provision for income taxes.....     4,016             --                465             --            4,481
Minority interest expense......      (126)            --                126             --               --
Equity losses from Liberty
  Media Group..................    (2,022)         2,022                 --             --               --
Net losses related to other
  equity investments...........      (756)            --                707             --              (49)
                                  -------         ------            -------            ---          -------
Net income from continuing
  operations attributable to
  common shareowners...........   $ 3,861         $2,022            $ 2,200            $--          $ 8,083
                                  =======         ======            =======            ===          =======
AT&T COMMON STOCK GROUP:
Earnings from continuing
  operations...................   $ 5,883                                                           $ 3,450(h)(j)
Weighted average shares
  outstanding -- basic.........     3,082                                                             3,115
Basic earnings per share.......      1.91                                                              1.11

Earnings from continuing
  operations...................     5,909                                                             3,450(h)(j)
Weighted average shares
  outstanding -- diluted.......     3,152                                                             3,152
Diluted earnings per share.....      1.87                                                              1.09(i)

LIBERTY MEDIA GROUP:
Basic and diluted loss per
  share........................   $ (0.80)


 See Notes To AT&T Unaudited Pro Forma Combined Condensed Financial Statements
                                       F-9


                     NOTES TO UNAUDITED PRO FORMA COMBINED
                         CONDENSED FINANCIAL STATEMENTS

     (a) These columns reflect the historical results of operations and
financial position of AT&T Corp.

     (b) These adjustments deduct the historical results of operations of
Liberty Media Group to reflect the split-off of Liberty Media Group from AT&T.

     (c) This entry reflects the fair value adjustment for accounting purposes
which would have been recorded had the distribution of AT&T Broadband Group
occurred on March 31, 2002. Comcast currently owns shares of AT&T common stock
("T"). In the event Comcast retains these shares at the time of the AT&T
Broadband Group distribution, pursuant to certain provisions of the merger
agreement, these shares will be converted into exchangeable preferred stock of
AT&T and Comcast will not participate in the AT&T Broadband Group distribution.
Therefore the distribution would be a non pro-rata transaction among the "T"
shareholders accounted for at fair value.

     Additionally, the timing of the issuance of the AT&T Consumer Services
Group tracking stock is uncertain. However, in the event the AT&T Consumer
Services Group tracking stock is created and distributed prior to the
distribution of AT&T Broadband Group, shareowners of the AT&T Consumer Services
Group tracking stock would not receive shares of AT&T Broadband Group, therefore
the distribution of AT&T Broadband Group would also be a non pro-rata
transaction in these circumstances.

     The distribution has been reflected in the pro forma balance sheet at fair
value, resulting in a nonrecurring loss or gain upon distribution equal to the
deficiency or excess of the fair value of AT&T Broadband Group over AT&T's
carrying value of the net assets of AT&T Broadband Group to be distributed. The
actual loss or gain will be determined upon distribution based on the stock
price of the Comcast shares received pursuant to the merger agreement. Based on
the closing share price of Comcast Corp. on August 8, 2002, the distribution
results in a loss. Due to the fact that the loss is a one-time event, its
effects have not been included as a pro forma adjustment to the income
statement; however it has been included as a pro forma adjustment to retained
earnings on the pro forma balance sheet. The estimated loss is calculated as
follows (dollars in millions):


                                                               
    Fair value of Comcast Corp. shares to be received in the
      transaction (1,235,000,000 shares at a closing stock price
      of $20.20 per share on August 8, 2002)....................  $ 24,947
    Carrying value of AT&T Broadband Group net assets to be
      distributed...............................................    42,803
                                                                  --------
    Loss on distribution........................................  $(17,856)
                                                                  ========


     During the second quarter of 2002, AT&T noted significant changes in the
general business climate, including the cable industry, as evidenced by
significant volatility in the stock market and corporate bankruptcies. These
factors indicated a trigger event, which necessitated the testing of goodwill
and franchise costs for impairment under the provisions of SFAS No. 142,
"Goodwill and Other Intangible Assets." Such testing resulted in the recognition
of $16.5 billion of pretax goodwill and franchise impairment charges.
Accordingly, any gain or loss on distribution will be calculated utilizing the
lower carrying value of AT&T Broadband Group that reflects this charge.

     In the event Comcast does not hold any AT&T shares at the time of the AT&T
Broadband Group distribution and if the AT&T Consumer Services Group tracking
stock is not issued prior to the distribution of AT&T Broadband Group, the
distribution would be a pro-rata transaction. This treatment would still result
in the recognition of a loss in the event the carrying value of AT&T Broadband
Group exceeded the fair value of the Comcast shares received in the transaction
pursuant to the provisions of SFAS No. 144, paragraph 29, however, in the event
the fair value of the Comcast shares received in the transaction exceeded the
carrying value of AT&T Broadband Group, no gain would be recorded in a pro-rata
transaction.

     (d) These entries represent adjustments to AT&T Broadband Group combined
attributed net assets pursuant to the Merger Agreement. The Merger Agreement
calls for the redemption by AT&T of

                                       F-10


approximately $2.1 billion in TCI Pacific Preferred Stock for AT&T Common Stock,
of which a balance of $1.3 billion remained at March 31, 2002. AT&T expects to
issue approximately 52 million shares of common stock (par value $1 per share)
for the redemption, of which approximately 20 million shares were issued in the
first quarter of 2002. In addition, the Merger Agreement stipulates that AT&T
will retain certain liabilities currently reflected in the AT&T Broadband Group
financial statements. Accordingly, these liabilities were transferred to AT&T
along with the related deferred income taxes.

     (e) These adjustments deduct the historical results of operations and the
historical financial position of AT&T Broadband Group to reflect the spin-off of
AT&T Broadband from AT&T. The distribution is being accounted for as a fair
value transaction and as such the fair value of the net assets of AT&T Broadband
Group have been recorded as a reduction to additional paid-in capital, given the
deficit that exists in retained earnings.

     (f) These adjustments reflect the repayment of the intercompany loan
balance from AT&T Broadband Group. The repayment of intercompany indebtedness is
contained in the Separation and Distribution Agreement between AT&T and AT&T
Broadband Corp.

     (g) Reflects certain Inter-Group transactions appropriately reflected in
the separate financial statements of AT&T after excluding the AT&T Broadband
Group on a pro forma basis that were eliminated in the AT&T consolidated
financial statements and were therefore not reflected in AT&T's historical
results and financial position. These transactions include adjustments to
properly reflect the stand-alone tax rates of AT&T subsequent to the
distribution of the AT&T Broadband Group. These entries also reflect the
reclassification of certain items appropriately reflected on the separate
financial statements of AT&T Broadband Group.

     (h) Income attributable to the AT&T Common Stock Group shareholders has
been reduced by $499 and $767 for the three months ended March 31, 2002 and
2001, respectively, and by $2,873, $4,112 and $4,633 for the years ended
December 31, 2001, 2000 and 1999, respectively, to reflect the income
attributable to the AT&T Consumer Services Group tracking stock shareholders.

     (i) Adjusted for the proposed one-for-five reverse stock split of AT&T
common stock, (loss) earnings per basic share would have been $(0.07) and $0.42
for the three months ended March 31, 2002 and 2001, respectively, and $(4.70),
$5.53 and $5.54 for the years ended December 31, 2001, 2000 and 1999,
respectively. (Loss) earnings per diluted share on the same basis would have
been $(0.07) and $0.42 for the three months ended March 31, 2002 and 2001,
respectively, and $(4.70), $5.50 and $5.47 for the years ended December 31,
2001, 2000 and 1999, respectively.

     Additionally, pursuant to the Merger Agreement, prior to the AT&T Broadband
spin-off, shares of AT&T common stock held by Comcast (currently 41.5 million
shares) will be exchanged on a one-for-one basis into a newly created series of
AT&T exchangeable preferred stock. The AT&T exchangeable preferred stock will be
mandatorily exchangeable after the closing of the Comcast merger into shares of
AT&T common stock utilizing a conversion formula. The conversion formula will
provide Comcast with an interest in AT&T that is equal in value to the interest
Comcast held in AT&T prior to the Comcast merger, subject to a maximum share
issuance of 10% of the outstanding shares of AT&T common stock. The conversion
formula is computed as the combination of average post closing AT&T Comcast
Class A common stock and AT&T common stock trading values divided by average
AT&T common stock trading values utilizing ten randomly selected trading days
after the closing of the Comcast merger. At March 31, 2002, assuming a
one-for-five reverse stock split of AT&T common stock, the maximum additional
shares that Comcast could receive would be approximately 64 million shares,
resulting in (loss) earnings per basic share of $(0.07) and $0.39 for the three
months ended March 31, 2002 and 2001, respectively, and $(4.33), $5.08 and $5.02
for the years ended December 31, 2001, 2000 and 1999, respectively.

     (Loss) earnings per diluted share on the same basis would be $(0.07) and
$0.39 for the three months ended March 31, 2002 and 2001, respectively, and
$(4.33), $5.05 and $4.97 for the years ended December 31, 2001, 2000 and 1999,
respectively. At March 31, 2002, assuming no reverse stock split of AT&T common
stock, the maximum additional shares that Comcast could receive would be
approximately

                                       F-11


318 million shares, resulting in (loss) earnings per basic share of $(0.01) and
$0.08 for the three months ended March 31, 2002 and 2001, respectively, and
$(0.87), $1.02 and $1.00 for the years ended December 31, 2001, 2000 and 1999,
respectively. (Loss) earnings per diluted share on the same basis would be
$(0.01) and $0.08 for the three months ended March 31, 2002 and 2001,
respectively, and $(0.87), $1.01 and $0.99 for the years ended December 31,
2001, 2000 and 1999, respectively.

     (j) Pursuant to the pending AT&T Comcast transaction, AT&T has filed a
registration statement whereby AT&T is offering to exchange certain Eligible
AT&T notes (as defined) for New AT&T notes (as defined) that contain an interest
rate adjustment in exchange for the consent of holders of those notes to an
amendment of the related note agreements. The note amendment would clarify that
the AT&T Comcast transaction would not necessitate the notes being assumed by
AT&T Comcast as a successor entity and the New notes would remain obligations of
AT&T after completion of the AT&T Comcast transaction. The income figures
currently reflected do not contemplate the impact of the proposed exchange
offer. For every $1 billion in principal amount of debt exchanged, a 0.25%
increase in the interest rate would decrease annual net income by approximately
$1.5 million. If all Eligible AT&T notes were exchanged and received the
interest rate adjustment, a 0.25% increase in the interest rate would decrease
annual net income by approximately $8.5 million.

                                       F-12


                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

                       COMBINED STATEMENTS OF OPERATIONS



                                                               THREE MONTHS ENDED
                                                                    MARCH 31,
                                                              ---------------------
                                                                2002        2001
                                                              ---------   ---------
                                                              (DOLLARS IN MILLIONS)
                                                                   (UNAUDITED)
                                                                    
Revenue.....................................................   $ 2,439     $ 2,587
Operating expenses:
  Cost of services (excluding depreciation of $524 and $462
     for 2002 and 2001, respectively, included below).......     1,308       1,465
  Selling, general and administrative.......................       625         698
  Depreciation and amortization.............................       720       1,283
  Asset impairment, restructuring and other charges.........        56         808
                                                               -------     -------
Total operating expenses....................................     2,709       4,254
                                                               -------     -------
Operating loss..............................................      (270)     (1,667)
  Investment (expense) income...............................      (101)         69
  Other expense.............................................        (1)     (1,022)
  Interest expense..........................................      (366)       (479)
                                                               -------     -------
Loss before income taxes, net (losses) earnings from equity
  investments, minority interest, extraordinary gain and
  cumulative effect of accounting change....................      (738)     (3,099)
Benefit for income taxes....................................       229         744
Net (losses) earnings from equity investments...............       (20)         49
Minority interest and dividends on subsidiary preferred
  stock.....................................................       (77)        549
                                                               -------     -------
Loss before extraordinary gain and cumulative effect of
  accounting change.........................................      (606)     (1,757)
Extraordinary gain (net of income taxes of $25).............        41          --
Cumulative effect of accounting changes (net of income taxes
  of ($530) and $142).......................................      (856)        229
                                                               -------     -------
Net loss....................................................   $(1,421)    $(1,528)
                                                               =======     =======


                  See Notes to Combined Financial Statements.
                                       F-13


                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

                            COMBINED BALANCE SHEETS



                                                               MARCH 31,    DECEMBER 31,
                                                                 2002           2001
                                                              -----------   ------------
                                                              (UNAUDITED)
                                                                (DOLLARS IN MILLIONS)
                                                                      
ASSETS
Cash and cash equivalents...................................   $     --       $     --
Accounts receivable less allowances of $75 and $73..........        549            584
Investments.................................................        477            668
Other current assets........................................        584            398
                                                               --------       --------
     Total current assets...................................      1,610          1,650
                                                               --------       --------
Property, plant and equipment, net of accumulated
  depreciation of $3,530 and $2,958.........................     14,588         14,519
Franchise costs, net of accumulated amortization of $2,501
  in 2001...................................................     41,381         42,819
Goodwill, net of accumulated amortization of $741 in 2001...     19,361         19,361
Other purchased intangible assets, net of accumulated
  amortization of $507 and $458.............................      1,514          1,561
Investments.................................................     20,625         21,913
Other assets................................................      1,767          1,364
                                                               --------       --------
     Total assets...........................................   $100,846       $103,187
                                                               ========       ========
LIABILITIES AND COMBINED ATTRIBUTED NET ASSETS
Accounts payable............................................   $    620       $    678
Payroll and benefit-related liabilities.....................        442            478
Debt maturing within one year...............................      1,790          2,824
Short-term debt due to AT&T.................................      5,956          3,959
Other current liabilities...................................      1,633          1,691
                                                               --------       --------
     Total current liabilities..............................     10,441          9,630
Long-term debt..............................................     15,523         16,502
Deferred income taxes.......................................     25,447         25,810
Other long-term liabilities and deferred credits............        813          1,059
                                                               --------       --------
       Total liabilities....................................     52,224         53,001
                                                               --------       --------
Minority interest...........................................      2,507          3,302
Company-Obligated Convertible Quarterly Income Preferred
  Securities of Subsidiary Trust Holding Solely Subordinated
  Debt Securities of AT&T...................................      4,723          4,720
Combined attributed net assets..............................     41,392         42,164
                                                               --------       --------
Total liabilities and combined attributed net assets........   $100,846       $103,187
                                                               ========       ========


                  See Notes to Combined Financial Statements.
                                       F-14


                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

        COMBINED STATEMENTS OF CHANGES IN COMBINED ATTRIBUTED NET ASSETS



                                                                  THREE MONTHS
                                                                      ENDED
                                                                    MARCH 31,
                                                              ---------------------
                                                                2002        2001
                                                              ---------   ---------
                                                                   (UNAUDITED)
                                                              (DOLLARS IN MILLIONS)
                                                                    
Combined attributed net assets:
  Balance at beginning of period............................   $42,164     $43,317
  Net loss..................................................    (1,421)     (1,528)
  Contributions from AT&T, net..............................       770       1,531
  Issuance of common stock by affiliates....................        --          16
  Net revaluation of financial instruments..................      (219)       (261)
  Recognition of previously unrealized losses...............        98         754
  Other comprehensive income................................        --          37
                                                               -------     -------
  Balance at end of period..................................   $41,392     $43,866
                                                               =======     =======
Summary of total comprehensive loss:
  Net loss..................................................   $(1,421)    $(1,528)
  Net revaluation of financial instruments (net of income
     taxes of $135 and $161)................................      (219)       (261)
  Recognition of previously unrealized losses (net of income
     taxes of $61 and $476).................................        98         754
  Other comprehensive income (net of income taxes of $18)...        --          37
                                                               -------     -------
  Total comprehensive loss..................................   $(1,542)    $  (998)
                                                               =======     =======


                     See Notes to Combined Financial Statements.
                                       F-15


                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

                       COMBINED STATEMENTS OF CASH FLOWS



                                                                  THREE MONTHS
                                                                      ENDED
                                                                    MARCH 31,
                                                              ---------------------
                                                                2002        2001
                                                              ---------   ---------
                                                                   (UNAUDITED)
                                                              (DOLLARS IN MILLIONS)
                                                                    
Operating activities:
  Net loss..................................................   $(1,421)    $(1,528)
  Adjustments to reconcile net loss to net cash provided by
     (used in) operating activities:
     Cumulative effect of accounting change, net of income
      taxes.................................................       856        (229)
     Extraordinary gain, net of income taxes................       (41)         --
     Gains on sales of businesses and investments...........        --        (150)
     Asset impairment, restructuring and other charges, net
      of cash payments......................................        43         796
     Depreciation and amortization..........................       720       1,283
     Provision for uncollectible receivables................        63          46
     Net losses (earnings) from equity investments..........        32         (80)
     Deferred income taxes..................................        94        (554)
     Investment impairment charges..........................       136          62
     Put option mark-to-market charge.......................        --          63
     Minority interest and dividends on subsidiary preferred
      stock.................................................        65        (561)
     Net revaluation of certain financial instruments.......        (9)      1,035
     Decrease in accounts receivable........................        35         123
     Decrease in accounts payable...........................       (12)       (314)
     Net change in other operating assets and liabilities...      (412)       (640)
     Other adjustments, net.................................        72         (12)
                                                               -------     -------
       Net cash provided by (used in) operating
        activities..........................................       221        (660)
                                                               -------     -------
Investing activities:
  Capital expended for property and equipment, net of
     proceeds from disposal.................................      (781)       (928)
  Sales of marketable securities............................        --          88
  Investment distributions and sales........................         5          85
  Investment contributions and purchases....................        (9)       (239)
  Net cash received for acquisitions and dispositions of
     businesses.............................................        --         598
  Other investing activities, net...........................       (67)        (62)
                                                               -------     -------
       Net cash used in investing activities................      (852)       (458)
                                                               -------     -------
Financing activities:
  Proceeds from long-term debt issuances....................        49          --
  Retirement of long-term debt..............................    (1,396)       (112)
  Dividends paid on preferred securities....................       (22)        (22)
  Change in short-term debt due to AT&T.....................     1,994         877
  Transfers from AT&T, net..................................         6         378
                                                               -------     -------
       Net cash provided by financing activities............       631       1,121
                                                               -------     -------
Net change in cash and cash equivalents.....................        --           3
                                                               -------     -------
Cash and cash equivalents at beginning of period............        --          61
                                                               -------     -------
Cash and cash equivalents at end of period..................   $    --     $    64
                                                               =======     =======


                  See Notes to Combined Financial Statements.
                                       F-16


                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

                     NOTES TO COMBINED FINANCIAL STATEMENTS

                             (DOLLARS IN MILLIONS,
              EXCEPT PER SHARE AMOUNTS AND UNLESS OTHERWISE NOTED)

(1) BASIS OF PRESENTATION

     AT&T Broadband Group is an integrated business of AT&T Corp. ("AT&T") and
not a stand-alone entity. AT&T Broadband Group consists primarily of the assets,
liabilities and business of AT&T Broadband, LLC (formerly Tele-Communications,
Inc. ("TCI")), and MediaOne Group, Inc. ("MediaOne"). AT&T Broadband, LLC
("ATTBLLC") and MediaOne are both separate subsidiaries of AT&T. AT&T Broadband
Group is one of the nation's largest broadband communications providers,
providing cable television, high-speed cable Internet and broadband telephone
services. AT&T intends to assign and transfer substantially all of the assets,
liabilities and business of AT&T Broadband Group to AT&T Broadband Corp., a
newly formed company for AT&T's broadband business, which will be subsequently
merged with Comcast Corporation ("Comcast") as discussed below.

     Comcast and AT&T have agreed to a combination of Comcast and AT&T Broadband
Corp. (the "AT&T Comcast Merger"). The AT&T Comcast Merger is pursuant to, and
subject to the terms and conditions set forth in the Agreement and Plan of
Merger, dated as of December 19, 2001 (the "Merger Agreement"). The AT&T Comcast
Merger will occur in several steps, which are expected to occur on the closing
date of the AT&T Comcast Merger. First, AT&T will assign and transfer to AT&T
Broadband Corp., substantially all of the assets and liabilities of AT&T's
broadband business. Following the transfer, AT&T will spin off AT&T Broadband
Corp. to AT&T shareholders by distributing one share of AT&T Broadband Corp.
common stock to each holder of record of a share of AT&T common stock, NYSE
symbol "T," as of the close of business on the record date for the AT&T
Broadband Corp. spin-off ("AT&T Broadband Spin-off"). Immediately following the
AT&T Broadband spin-off, AT&T Broadband Corp. will merge with AT&T Broadband
Acquisition Corp., a newly formed, wholly owned shell subsidiary of AT&T Comcast
Corporation ("AT&T Comcast"), with AT&T Broadband Corp. continuing as the
surviving corporation. At approximately the same time, Comcast will merge with
Comcast Acquisition Corp., a newly formed, wholly owned shell subsidiary of AT&T
Comcast, with Comcast continuing as the surviving entity. As a result of these
mergers, AT&T Comcast will become the parent company of both AT&T Broadband
Corp. and Comcast.

     AT&T Comcast will issue shares of AT&T Comcast common stock to the AT&T
shareholders who received shares of AT&T Broadband Corp. common stock in the
AT&T Broadband Spin-off. As of the date of execution of the Merger Agreement, it
was estimated that each holder of AT&T Broadband Corp. common stock would have
received 0.34 of a share of AT&T Comcast common stock for each of such holder's
shares of AT&T Broadband Corp. common stock. Assuming Comcast retained its AT&T
shares and converted them into exchangeable preferred stock of AT&T as
contemplated by the Merger Agreement, the exchange ratio would have been
approximately 0.35. In May 2002, Comcast sold approximately 42 million shares of
AT&T common stock and in early June 2002, AT&T completed the sale of 230 million
shares of AT&T common stock. At the date of the stock offering, the exchange
ratio would have been approximately 0.32, regardless of whether Comcast holds or
sells its remaining AT&T shares. The exchange ratio is dependent on a number of
factors that may change between the date of execution of the Merger Agreement
and the date of completion of the AT&T Comcast transaction, including the number
of outstanding shares of AT&T common stock, the value of options and stock
appreciation rights and the price of Comcast Class A common stock.

     On May 3, 2002, AT&T Broadband Corp. and AT&T Comcast, as co-borrowers,
entered into definitive credit agreements with a syndicate of lenders for an
aggregate of approximately $12.8 billion in order to obtain the financing
necessary to complete the AT&T Comcast Merger. Under the terms of the new credit
facilities, the obligations of the lenders to provide the financing upon
completion of the AT&T
                                       F-17

                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Comcast Merger are subject to a number of conditions, including the condition
that AT&T Comcast obtain an investment-grade credit rating. Accordingly, there
can be no assurance that AT&T Broadband Corp. and AT&T Comcast will be able to
obtain the financing necessary to complete the AT&T Comcast transaction.

     On July 10, 2002, shareholders of AT&T and Comcast approved the AT&T
Comcast Merger. The AT&T Comcast Merger still remains subject to certain
governmental reviews and certain other conditions. As a result, there can be no
assurance that the AT&T Comcast Merger will be consummated, or if the AT&T
Comcast Merger is consummated, as to the date of such consummation.

     The combined financial statements of AT&T Broadband Group are prepared in
accordance with generally accepted accounting principles and in management's
opinion, include all adjustments necessary for a fair presentation of combined
operations, financial position and statement of cash flows for the periods
presented. The combined financial statements of AT&T Broadband Group reflect the
assets, liabilities, revenue and expenses directly attributable to AT&T
Broadband Group, as well as allocations deemed reasonable by management, to
present the results of operations, financial position, and cash flows of AT&T
Broadband Group on a stand-alone basis. The allocation methodologies have been
described within the notes to the combined financial statements where
appropriate, and management considers the allocations to be reasonable. All
significant intercompany accounts and transactions within the AT&T Broadband
Group have been eliminated. The financial information included herein may not
necessarily reflect the combined results of operations, financial position,
changes in combined attributed net assets and cash flows of AT&T Broadband Group
in the future or what they would have been had AT&T Broadband Group been a
separate, stand-alone entity during the periods presented. In addition, the
combined results for interim periods presented are not necessarily indicative of
results for the full year. Earnings per share disclosure has not been presented
as AT&T Broadband Group is a business unit of AT&T and earnings per share data
is not considered meaningful. The combined financial statements of AT&T
Broadband Group should be read in conjunction with AT&T's Form 10-K/A for the
year ended December 31, 2001, AT&T's Form 10-Q for the quarter ended March 31,
2002, and AT&T Broadband Group combined financial statements for the year ended
December 31, 2001.

     AT&T Broadband Group's operations have been dependent on cash infusions
from AT&T in order for AT&T Broadband Group to operate and execute on its
business and growth strategies. If, for any reason, AT&T is unwilling or cannot
provide the level of financing necessary to fund future operations, AT&T
Broadband Group will need to seek additional financing from third parties.

     Debt attributed to AT&T Broadband Group includes the third party
obligations of ATTBLLC and MediaOne and monetization debt backed by assets held
by AT&T Broadband Group. Additional intercompany debt has been allocated to AT&T
Broadband Group to achieve a total debt level based on several factors,
including prospective financing requirements, desired stand-alone credit
profile, working capital and capital expenditure requirements, expected sources
of future deleveraging, and comparable company profiles. Changes in historical
intercompany debt are based on historical cash flows. Such cash flows include
capital expenditures, operating activities, and investments in and dispositions
of cable companies. The historical interest expense on the allocated
intercompany debt was calculated based on a rate intended to be equivalent to
the rate AT&T Broadband Group would receive if it were a stand-alone entity.
AT&T's expected deleveraging activities that relate to AT&T Broadband Group
include, but may not be limited to, proceeds, if any, that may result from the
exercise of AT&T's registration rights in Time Warner Entertainment ("TWE") and
continued evaluation and sale of non-strategic cable systems.

     As a result of the above methodology, from time to time AT&T Broadband
Group may advance funds to AT&T. These advances will be accounted for as
borrowings between entities and bear interest at

                                       F-18

                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

a market rate that is substantially equal to the rate at which AT&T would be
able to borrow from third parties on debt with similar maturities.

     AT&T performs cash management functions on behalf of the AT&T Broadband
Group. Substantially all of AT&T Broadband Group's cash balances are swept to
AT&T on a daily basis, where they are managed and invested by AT&T. Transfers of
cash to and from AT&T, after giving consideration to the debt allocation
methodology, are reflected as a component of combined attributed net assets. Net
transfers to or from AT&T are assumed to be settled in cash. AT&T's capital
contributions for purchase business combinations and initial investments in
joint ventures and partnerships which AT&T attributed to AT&T Broadband Group
have been treated as noncash transactions. In addition, certain transactions in
which AT&T has issued AT&T common stock in exchange for net assets and
obligations attributed to AT&T Broadband Group have been treated as noncash
transactions.

     General corporate overhead related to AT&T's corporate headquarters and
common support divisions has been allocated to AT&T Broadband Group as it was
not deemed practicable to specifically identify such common costs to AT&T
Broadband Group. The allocation of corporate overhead is divided into an
allocation of shared services (e.g., finance) and other corporate overhead.
Costs of shared services are allocated to AT&T Broadband Group based on
transaction based prices. Other corporate overhead is allocated to AT&T
Broadband Group based on the ratio of AT&T Broadband Group's external costs and
expenses adjusted for any functions AT&T Broadband Group performs on its own.
The costs of these services charged to AT&T Broadband Group are not necessarily
indicative of the costs that would have been incurred if AT&T Broadband Group
had performed these functions entirely as a stand-alone entity, nor are they
indicative of costs that will be charged or incurred in the future. However,
management believes such allocations are reasonable.

     Consolidated income tax provisions or benefits, related tax payments or
refunds, and deferred tax balances of AT&T have been allocated to AT&T Broadband
Group based principally on the taxable income and tax credits directly
attributable to AT&T Broadband Group, resulting in essentially a stand-alone
presentation. AT&T and AT&T Broadband Corp. entered into a tax sharing agreement
effective as of January 1, 2002, which, consistent with the principles described
in the preceding sentence, provides for tax sharing payments based on the tax
expense or tax benefits of a hypothetical affiliated group consisting of AT&T
Broadband Group and AT&T. Based on this agreement, the consolidated tax
liability before credits are allocated between the groups, based on each group's
contribution to the consolidated taxable income of the hypothetical group.
Consolidated tax credits of the hypothetical group are allocated between groups
based on each group's contribution to such tax credit.

(2) SUMMARY OF RECOGNITION OF PREVIOUSLY UNREALIZED LOSSES

     AT&T Broadband Group has investment holdings classified as
"available-for-sale" under the scope of Statement of Financial Accounting
Standard ("SFAS") No. 115, "Accounting for Certain Investments in Debt and
Equity Securities" ("SFAS 115"). These securities are carried at fair value with
any unrealized gains or losses, net of income taxes, included within other
comprehensive income as a component of combined attributed net assets. Under
SFAS 115, when the "available-for-sale" securities are sold or when management
of AT&T Broadband Group believes a decline in the investment value is
other-than-temporary, the previously unrealized gains or losses shall be
recognized in earnings. AT&T Broadband Group recognizes such gains or losses
through investment (expense) income in the accompanying combined statement of
operations. In addition, upon the adoption in January 2001, of SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," ("SFAS 133")
AT&T Broadband Group reclassified certain securities to "trading", resulting in
the recognition in earnings of

                                       F-19

                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

previously unrealized losses through other expense. Following is a summary of
the recognition of previously unrealized losses on "available-for-sale"
securities:



                                                              THREE MONTHS
                                                                  ENDED
                                                                MARCH 31,
                                                              -------------
                                                              2002    2001
                                                              -----   -----
                                                                
Other than temporary investment impairments (net of income
  taxes of $51 and $24).....................................   $81    $ 38
Revaluation of derivatives (net of income taxes of $10 and
  $6).......................................................    17       8
Reclassification of securities to "trading" in conjunction
  with the adoption of SFAS 133 (net of income taxes of
  $446).....................................................    --     708
                                                               ---    ----
     Total recognition of previously unrealized losses......   $98    $754
                                                               ===    ====


(3) ASSET IMPAIRMENT, RESTRUCTURING AND OTHER CHARGES

     During the first quarter of 2002, AT&T Broadband Group recorded $56 of
asset impairment, restructuring and other charges associated with efforts to
reorganize and streamline certain centralized and field functions. The $56 is
comprised of headcount reductions of $42 associated with employee separation
costs resulting from this exit plan, $27 in connection with facility closings
and $4 for other charges. Approximately 900 employees will be involuntarily
separated in conjunction with this exit plan. Approximately 75% of the affected
employees are management employees and 25% are non-management employees. More
than 15% of the affected employees have left their positions as of March 31,
2002 with the remaining reductions expected to occur throughout the remainder of
2002. Termination benefits of approximately $6 were paid to employees during the
first quarter of 2002 related to this exit plan. These charges were partially
offset by the reversal of $17 related to the business restructuring plan from
the second quarter of 2001 which was due to the redeployment of certain
employees to different functions within AT&T Broadband Group.

     The following table displays the activity and balances of the restructuring
reserve account from January 1, 2002 to March 31, 2002.



                                              JANUARY 1,                            MARCH 31,
                                                 2002                                 2002
TYPE OF COST                                   BALANCE     ADDITIONS   DEDUCTIONS    BALANCE
------------                                  ----------   ---------   ----------   ---------
                                                                        
Employee separations........................     $22          $42         $28          $36
Facility closings and lease terminations....      12           27           2           37
Other.......................................      --            4          --            4
                                                 ---          ---         ---          ---
Total.......................................     $34          $73         $30          $77
                                                 ===          ===         ===          ===


     Total deductions included cash payments of $13 related to employee
separations and facility closings and a reversal of $17 related to the second
quarter 2001 business restructuring plan.

     During the first quarter of 2001, AT&T Broadband Group recorded $808 of
asset impairment, restructuring and other charges. The charge included $739 of
asset impairment charges related to Excite@Home and $69 for restructuring and
exit costs, which consisted of $59 for severance costs and $10 for facility
closings and lease terminations.

     The asset impairment charges included $600 recorded by Excite@Home
associated with goodwill impairment from various acquisitions, and a related
goodwill impairment charge of $139 recorded by

                                       F-20

                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

AT&T Broadband Group associated with its acquisition goodwill of Excite@Home.
The impairments resulted from the continued weakness of the online media market
that Excite@Home operated in. Since AT&T Broadband Group, through ATTBLLC,
consolidated Excite@Home but only owned approximately 23% of Excite@Home, 77% of
the charge recorded by Excite@Home is not included as a increase in AT&T
Broadband Group's net loss, but rather is eliminated in the statement of
operations as a component of minority interest and dividends on subsidiary
preferred stock. Excite@Home was deconsolidated from AT&T Broadband Group's
results on September 30, 2001.

     The severance costs of $59 associated with the involuntary separation of
about 2,350 employees primarily resulted from cost reduction efforts by AT&T
Broadband Group and Excite@Home in addition to impacts of the MediaOne Merger.
Approximately 10% of the individuals were management employees and 90% were
non-management employees.

(4) INVESTMENTS

     During the first quarter of 2002, AT&T Broadband Group recorded an
impairment charge on cost method investments through investment (expense) income
of $136. Such charge related primarily to AT&T Broadband Group's investment in
Vodafone, plc. The impairment charge resulted from management's conclusion that
the investment could not be held for a period of time to allow for
recoverability as the Vodafone, plc shares are expected to be used to settle
exchangeable notes due in late 2002. The fair value was based on quoted market
prices.

(5) DEBT OBLIGATIONS

     During the first quarter of 2002, AT&T Broadband Group called $1,312 of TCI
Communications Financing I and II Trust Preferred Securities and MediaOne
Financing Trust A, B and II Trust preferred Securities for early redemption.
This redemption resulted in a gain on early extinguishment of debt recorded as
an extraordinary gain of $41, net of tax ($66 pretax). The gain represents the
difference between the carrying value of the debt and the cash paid to
extinguish the debt.

(6) MINORITY INTEREST

     During the first quarter of 2002, 2.4 million shares of TCI Pacific
Communications Inc. 5% Class A Senior Cumulative Exchangeable preferred stock
("Pacific Preferred Stock") with a carrying value of $800 were exchanged for
19.8 million shares of AT&T common stock. These shares of AT&T common stock were
contributed to AT&T Broadband Group by AT&T and are reflected in combined
attributed net assets. Subsequent to March 31, 2002 the remaining 3.8 million
outstanding shares of Pacific Preferred Stock were exchanged or redeemed for
approximately 32.1 million shares of AT&T common stock. The Pacific Preferred
Stock is reflected in minority interest in the accompanying combined balance
sheets prior to its exchange.

(7) NEWLY ADOPTED ACCOUNTING PRONOUNCEMENTS

  STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 142, "GOODWILL AND OTHER
  INTANGIBLE ASSETS"

     Effective January 1, 2002, AT&T Broadband Group adopted SFAS No. 142
"Goodwill and Other Intangible Assets" ("SFAS 142"). SFAS 142 requires that
goodwill and indefinite-lived intangible assets no longer be amortized, but
instead be tested for impairment at least annually. Intangible assets that have
finite useful lives will continue to be amortized over their useful lives. In
addition, the amortization period of intangible assets with finite lives will no
longer be limited to 40 years. AT&T Broadband Group has determined that
franchise costs are indefinite-lived assets, as defined in SFAS 142, and
therefore are not

                                       F-21

                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

subject to amortization beginning in 2002. In accordance with SFAS 142, goodwill
was tested for impairment by comparing the fair value of the reporting units to
its carrying value. As of January 1, 2002, the fair value of the reporting
unit's goodwill exceeded its carrying value, and therefore no impairment loss
was recognized upon adoption. Franchise costs were tested for impairment as of
January 1, 2002, by comparing the fair value to the carrying value (at the
market level). An impairment loss of $856, net of taxes of $530, was recorded in
the first quarter of 2002 and included in the cumulative effect of accounting
changes in the accompanying combined statement of operations. (See Note 10)

     The following table presents the impact of amortization under SFAS 142 on
net loss had the standard been in effect for the first quarter of 2001.



                                                              THREE MONTHS ENDED
                                                                   MARCH 31,
                                                              -------------------
                                                                2002       2001
                                                              --------   --------
                                                                   
Reported loss before extraordinary gain and cumulative
  effect of accounting changes..............................  $  (606)   $(1,757)
Add back amortization, net of tax:
  Goodwill..................................................       --        170
  Equity method excess basis................................       --         33
  Franchise costs...........................................       --        199
                                                              -------    -------
Adjusted reported loss before extraordinary gain and
  cumulative effect of accounting changes...................     (606)    (1,355)
  Extraordinary gain, net of income taxes...................       41         --
  Cumulative effect of accounting changes, net of income
     taxes..................................................     (856)       229
                                                              -------    -------
Adjusted net loss...........................................  $(1,421)   $(1,126)
                                                              =======    =======


     During the first quarter of 2002, no goodwill was acquired, impaired, or
written off. As of March 31, 2002, AT&T Broadband Group had $19.4 billion of
goodwill. (See Note 10)

     Other purchased intangible assets are amortized and consist primarily of
customer lists. The amortization expense associated with other purchased
intangible assets for the three months ended March 31, 2002 was $49. Annual
amortization expense for other purchased intangible assets is estimated to be
$196 for the years 2002 through 2006.

  SFAS NO. 144, "ACCOUNTING FOR THE IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS"

     On January 1, 2002, AT&T Broadband Group adopted SFAS No. 144, "Accounting
for the Impairment or Disposal of Long-Lived Assets" ("SFAS 144"), which
supercedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to Be Disposed Of" ("SFAS 121"). SFAS 144 applies to all
long-lived assets, including discontinued operations, and consequently amends
Accounting Principles Board ("APB") Opinion No. 30, "Reporting the Results of
Operations-Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions".
Based on SFAS 121, SFAS 144 develops one accounting model for long-lived assets
that are to be disposed of by sale, as well as addresses the principal
implementation issues. SFAS 144 requires that long-lived assets that are to be
disposed of by sale be measured at the lower of book value or fair value less
cost to sell. Additionally, SFAS 144 expands the scope of discontinued
operations to include all components of an entity with operations that (1) can
be distinguished from the rest of the entity and (2) will be eliminated from the
ongoing operations of the entity in a disposal transaction. SFAS 144 also amends
Accounting Research Bulletin No. 51,

                                       F-22

                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

"Consolidated Financial Statements" to eliminate the exception to consolidation
for a subsidiary for which control is likely to be temporary. The adoption of
SFAS 144 had no impact on AT&T Broadband Group's results of operations,
financial position or cash flows.

(8) RELATED PARTY TRANSACTIONS

     As discussed in Note 1, AT&T provides necessary working capital
requirements through intercompany debt and capital contributions to AT&T
Broadband Group. These amounts are reflected in the accompanying combined
balance sheets as short-term debt due to AT&T or a component of combined
attributed net assets. Short-term debt due to AT&T and interest was assumed
based upon the methodology outlined in Note 1. Intercompany debt was $5,956 and
$3,959 at March 31, 2002 and December 31, 2001, respectively. Intercompany
interest expense was $64 and $105 for the three months ended March 31, 2002 and
2001, respectively.

     AT&T Consumer Services Group provides AT&T Broadband Group with sales
support and customer care services at cost based prices. For the three months
ended March 31, 2002 and 2001, such amounts totaled $43 and $47, respectively,
and are included in selling, general and administrative expenses in the
accompanying combined statements of operations.

     In addition, AT&T Business Services Group provides AT&T Broadband Group
with wireline communication and other services. For the three months ended March
31, 2002 and 2001, charges for such services totaled $82 and $57, respectively,
and are included in costs of services in the accompanying combined statements of
operations.

     AT&T allocates general corporate overhead expenses, including finance,
legal, marketing, use of the AT&T brand, planning and strategy and human
resources to AT&T Broadband Group, as well as costs for AT&T employees who
directly support the activities of the AT&T Broadband Group. Charges for such
services amounted to $33 and $40 for the three months ended March 31, 2002 and
2001, respectively. These amounts are included in selling, general and
administrative expenses in the accompanying combined statements of operations
and were determined based on methodology described in Note 1.

     During 2001, AT&T Broadband Group had related party transactions with a
Liberty Media Group ("LMG") subsidiary. Included in cost of services in the
accompanying combined statement of operations were programming expenses related
to such LMG subsidiary of $82 for the three months ended March 31, 2001.

     AT&T Broadband Group transferred $628 of marketable securities and equity
investments and $180 of related deferred tax liabilities to AT&T through
combined attributed net assets during the first quarter of 2001. No gain or loss
was recorded in this transaction.

(9) NEW ACCOUNTING PRONOUNCEMENTS

     In August 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations" ("SFAS 143"). This standard requires that obligations
associated with the retirement of tangible long-lived assets be recorded as
liabilities when those obligations are incurred, with the amount of the
liability initially measured at fair value. Upon initially recognizing a
liability for an asset retirement obligation, an entity must capitalize the cost
by recognizing an increase in the carrying amount of the related long-lived
asset. Over time, this liability is accreted to its present value, and the
capitalized cost is depreciated over the useful life of the related asset. Upon
settlement of the liability, an entity either settles the obligation for its
recorded amount or incurs a gain or loss upon settlement. SFAS 143 is effective
for financial statements issued for fiscal years beginning after June 15, 2002.
For AT&T Broadband Group, this means that the standard will be adopted on
January 1, 2003. AT&T Broadband Group does not expect that the
                                       F-23

                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

adoption of this statement will have a material impact on AT&T Broadband Group's
results of operations, financial position or cash flows.

     On April 30, 2002 the FASB issued SFAS No. 145, "Rescission of FASB
Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13 and Technical
Corrections" ("SFAS 145"). SFAS 145 eliminates the requirement that gains and
losses from the extinguishments of debt be aggregated and classified as an
extraordinary item, net of the related income tax. An entity is not prohibited
from classifying such gains and losses as extraordinary items, as long as they
meet the criteria in paragraph 20 of APB No. 30, "Reporting the Results of
Operations -- Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions." In
addition, SFAS 145 requires that capital leases that are modified so that the
resulting lease agreement is classified as an operating lease be accounted for
in the same manner as sale-leaseback transactions. The rescission of SFAS No. 4,
"Reporting Gains and Losses from Extinguishment of Debt" is effective for fiscal
years beginning after May 15, 2002, which for AT&T Broadband Group means January
1, 2003. Earlier application is encouraged. Any gain or loss on extinguishment
of debt that was previously classified as an extraordinary item would be
reclassified to other income (expense). The remainder of the statement is
generally effective for transactions occurring after May 15, 2002. AT&T
Broadband Group does not expect that the adoption of SFAS No. 145 will have a
material impact on AT&T Broadband Group's results of operations, financial
position or cash flows.

(10) SUBSEQUENT EVENTS

     On April 1, 2002, AT&T Broadband Group called $204 of Trust Preferred
Securities, originally issued by TCI. This amount was included within debt
maturing within one year in the accompanying combined balance sheets.

     AT&T Broadband Group is party to an agreement under which it purchases
certain billing services from CSG Systems, Inc. ("CSG"). On May 10, 2002, AT&T
Broadband Group filed a demand for arbitration against CSG before the American
Arbitration Association. On May 30, 2002, CSG answered and submitted
counterclaims against AT&T Broadband Group. In the event that this process
results in the termination of our agreement with CSG, AT&T Broadband Group may
incur significant costs in connection with its replacement of these billing
services and may experience temporary disruption to its operations.

     On June 7, 2002, AT&T Broadband Group announced that Motorola, Inc.
("Motorola") had notified AT&T Broadband Group of a potential safety hazard,
discovered by its factory quality control tests, in a limited number of DCT-2000
digital cable set top boxes installed from April 1, 2002 through June 7, 2002.
Motorola indicated that no incidents of injury or damage have been reported to
it relating to this condition. Nevertheless, Motorola and AT&T Broadband Group
are acting to address even the potential for such problems. In response to the
notice from Motorola, AT&T Broadband Group has further reviewed the number of
potentially affected set-top boxes either installed in customers' homes or in
inventory. Based on the information currently available, AT&T Broadband Group
does not expect any material financial impact or short-term provisioning delays
resulting from this situation.

     Towards the end of the second quarter, AT&T Broadband Group noted
significant changes in the general business climate, including the cable
industry, as evidenced by significant volatility in the stock market and
corporate bankruptcies. These factors suggested a trigger event had occurred
which necessitated the testing of goodwill and franchise costs for impairment
under SFAS 142. Such testing resulted in the recognition of $16.5 billion of
goodwill and franchise impairment charges on a pretax basis. The fair value was
assessed on the same basis as was used at the time of the initial adoption of
SFAS 142.

                                       F-24

                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

     In addition, the same significant changes in the general business climate
noted above required management to assess the realizability of certain
investments accounted for under either the cost or equity method. AT&T Broadband
recorded an impairment charge through net losses related to equity investments
of $0.5 billion, net of taxes of $0.3 billion, on certain cable partnerships
accounted for under the equity method of accounting. AT&T Broadband Group also
recorded a pretax impairment charge of $1.1 billion on "available-for-sale"
securities, net of a related hedged derivative.

     AT&T Broadband Group has investments of $834 in partnerships accounted for
under the equity method of accounting with subsidiaries of Adelphia
Communications Corporation ("Adelphia"). On June 25, 2002, Adelphia and its
subsidiaries, including these partnerships, filed for Chapter 11 bankruptcy
protection. Accordingly, AT&T Broadband Group recorded an impairment charge
through net losses related to equity investments of $143, net of taxes of $90.

                                       F-25


                       REPORT OF INDEPENDENT ACCOUNTANTS

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

     In our opinion, the accompanying combined balance sheets and the related
combined statements of operations and changes in combined attributed net assets
and of cash flows present fairly, in all material respects, the financial
position of AT&T Broadband Group at December 31, 2001 and 2000, and the results
of their operations and their cash flows for each of the two years in the period
ended December 31, 2001 and for the ten-month period ended December 31, 1999, in
conformity with accounting principles generally accepted in the United States of
America. These financial statements are the responsibility of AT&T Broadband
Group's management; our responsibility is to express our opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted in the
United States of America, which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

     AT&T Broadband Group is a fully integrated business unit of AT&T Corp.;
consequently, as indicated in Note 1, these combined financial statements have
been derived from the consolidated financial statements and accounting records
of AT&T Corp. and reflect certain assumptions and allocations. Moreover, as
indicated in Note 1, AT&T Broadband Group relies on AT&T Corp. for
administrative, management and other services. The financial position, results
of operations and cash flows of AT&T Broadband Group could differ from those
that would have resulted had AT&T Broadband Group operated autonomously or as an
entity independent of AT&T Corp. As more fully discussed in Note 1, the combined
financial statements of AT&T Broadband Group should be read in conjunction with
the audited consolidated financial statements of AT&T Corp.

     As discussed in the notes to the financial statements, AT&T Broadband Group
was required to adopt Statement of Financial Accounting Standards No. 133,
Accounting for Derivative Instruments and Hedging Activities, effective January
1, 2001.

PricewaterhouseCoopers LLP
New York, New York
March 25, 2002

                                       F-26


                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

                       COMBINED STATEMENTS OF OPERATIONS



                                                                   YEAR ENDED          TEN MONTHS
                                                                  DECEMBER 31,           ENDED
                                                             ----------------------   DECEMBER 31,
                                                                 2001        2000         1999
                                                             ------------   -------   ------------
                                                                     (DOLLARS IN MILLIONS)
                                                                             
Revenue....................................................    $10,132      $ 8,445      $5,080
  Operating expenses:
  Cost of services (excluding depreciation of $1,881,
     $1,291 and $663 for 2001, 2000 and 1999, respectively,
     included below).......................................      5,459        4,600       2,686
  Selling, general and administrative......................      2,582        2,180       1,253
  Depreciation and other amortization......................      2,626        1,674         805
  Amortization of goodwill, franchise costs and other
     purchased intangibles.................................      2,154        2,377         869
  Asset impairment, restructuring and other charges........      1,494        6,270         644
                                                               -------      -------      ------
Total operating expenses...................................     14,315       17,101       6,257
                                                               -------      -------      ------
Operating loss.............................................      4,183        8,656       1,177
  Investment (expense) income..............................     (1,947)         (84)         47
  Other (expense) income...................................       (927)          45           3
  Interest expense.........................................      1,735        1,323         705
                                                               -------      -------      ------
Loss before income taxes, net losses from equity
  investments, minority interest and cumulative effect of
  accounting change........................................      8,792       10,018       1,832
Benefit for income taxes...................................      3,857        1,183         465
Net losses from equity investments.........................         69          597         707
Minority interest income (expense).........................        833        4,062        (126)
                                                               -------      -------      ------
Loss before cumulative effect of accounting change.........      4,171        5,370       2,200
Cumulative effect of accounting change (net of income taxes
  of $142).................................................        229           --          --
                                                               -------      -------      ------
Net loss...................................................    $ 3,942      $ 5,370      $2,200
                                                               =======      =======      ======


      The notes are an integral part of the combined financial statements.
                                       F-27


                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

                            COMBINED BALANCE SHEETS



                                                                  DECEMBER 31,
                                                              ---------------------
                                                                2001        2000
                                                              ---------   ---------
                                                              (DOLLARS IN MILLIONS)
                                                                    
ASSETS
Cash and cash equivalents...................................  $     --    $     61
Accounts receivable, less allowances of $73 and $74.........       584         774
Other receivables...........................................       214         267
Investments.................................................       668       2,204
Other current assets........................................       184         200
                                                              --------    --------
     Total current assets...................................     1,650       3,506
Property, plant and equipment, net..........................    14,519      15,187
Franchise costs, net of accumulated amortization of $2,501
  and $1,664................................................    42,819      48,218
Goodwill, net of accumulated amortization of $741 and
  $240......................................................    19,361      21,139
Investments.................................................    21,913      25,045
Other assets, net of accumulated amortization of $563 and
  $578......................................................     2,925       4,439
                                                              --------    --------
     Total assets...........................................  $103,187    $117,534
                                                              ========    ========

LIABILITIES AND COMBINED ATTRIBUTED NET ASSETS
Accounts payable............................................  $    678    $  1,250
Payroll and benefit-related liabilities.....................       478         570
Debt maturing within one year...............................     2,824       3,073
Short-term debt due to AT&T.................................     3,959       5,830
Deferred income tax liability...............................        --         486
Liability under put options.................................        --       2,564
Other current liabilities...................................     1,691       2,177
                                                              --------    --------
     Total current liabilities..............................     9,630      15,950
Long-term debt..............................................    16,502      19,517
Deferred income taxes.......................................    25,810      28,550
Other long-term liabilities and deferred credits............     1,059       1,069
                                                              --------    --------
     Total liabilities......................................    53,001      65,086
Minority interest...........................................     3,302       4,421
Company-Obligated Convertible Quarterly Income Preferred
  Securities of Subsidiary Trust Holding Solely Subordinated
  Debt Securities of AT&T...................................     4,720       4,710
Combined attributed net assets..............................    42,164      43,317
                                                              --------    --------
Total liabilities and combined attributed net assets........  $103,187    $117,534
                                                              ========    ========


      The notes are an integral part of the combined financial statements.
                                       F-28


                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

        COMBINED STATEMENTS OF CHANGES IN COMBINED ATTRIBUTED NET ASSETS



                                                                 YEAR ENDED        TEN MONTHS
                                                                DECEMBER 31,         ENDED
                                                              -----------------   DECEMBER 31,
                                                               2001      2000         1999
                                                              -------   -------   ------------
                                                                   (DOLLARS IN MILLIONS)
                                                                         
COMBINED ATTRIBUTED NET ASSETS:
  Balance at beginning of period............................  $43,317   $14,889     $14,377
  Net loss..................................................    3,942     5,370       2,200
  Contributions from AT&T, net..............................    1,928    35,101       2,128
  Issuance of common stock by affiliates....................       39       (54)        515
  Net revaluation of financial instruments..................     (599)   (1,402)         69
  Reclassification of previously unrealized losses..........    1,414       146          --
  Net minimum pension liability adjustment..................      (22)       --          --
  Other comprehensive income................................       29         7          --
                                                              -------   -------     -------
  Balance at end of period..................................  $42,164   $43,317     $14,889
                                                              =======   =======     =======
SUMMARY OF TOTAL COMPREHENSIVE LOSS:
  Loss before cumulative effect of accounting change........  $ 4,171   $ 5,370     $ 2,200
  Cumulative effect of accounting change....................      229        --          --
                                                              -------   -------     -------
  Net loss..................................................    3,942   $ 5,370     $ 2,200
  Net revaluation of financial instruments (net of income
     tax (provision) benefit of $375, $778 and $(36)).......     (599)   (1,402)         69
  Recognition of previously unrealized losses (net of income
     tax benefit of $891, $29 and $0).......................    1,414       146          --
  Net minimum pension liability adjustment (net of income
     taxes of $16, $0 and $0)...............................      (22)       --          --
  Other comprehensive income (net of income taxes of $7, $0
     and $0)................................................       29         7          --
                                                              -------   -------     -------
     Total comprehensive loss...............................  $ 3,120   $ 6,619     $ 2,131
                                                              =======   =======     =======


      The notes are an integral part of the combined financial statements.
                                       F-29


                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

                       COMBINED STATEMENTS OF CASH FLOWS



                                                                 YEAR ENDED        TEN MONTHS
                                                                DECEMBER 31,         ENDED
                                                              -----------------   DECEMBER 31,
                                                               2001      2000         1999
                                                              -------   -------   ------------
                                                                   (DOLLARS IN MILLIONS)
                                                                         
OPERATING ACTIVITIES:
  Net loss..................................................  $(3,942)  $(5,370)    $(2,200)
  Adjustments to reconcile net loss to net cash (used in)
    provided by operating activities:
    Cumulative effect of accounting change, net of income
      taxes.................................................     (229)       --          --
    Net losses (gains) on sales of businesses and
      investments...........................................      710      (616)        (39)
    Asset impairment, restructuring and other charges, net
      of cash payments......................................    1,370     6,216         594
    Depreciation and amortization...........................    4,780     4,051       1,674
    Provision for uncollectible receivables.................      246       154          75
    Net losses from equity investments......................      106       967       1,145
    Deferred income taxes...................................   (3,579)     (880)       (422)
    Impairment of investments...............................      539       240          --
    Put option settlement and mark-to-market charge.........      838       537          --
    Minority interest (income) expense......................     (872)   (4,039)        180
    Net revaluation of certain financial instruments........      959        --          --
    Decrease (increase) in receivables......................       57      (263)       (116)
    (Decrease) increase in accounts payable.................     (515)      (90)        447
    Net change in other operating assets and liabilities....     (635)     (298)        143
    Other adjustments, net..................................       64       193        (101)
                                                              -------   -------     -------
      Net cash (used in) provided by operating activities...     (103)      802       1,380
                                                              -------   -------     -------
INVESTING ACTIVITIES:
  Capital expended for property and equipment, net of
    proceeds from disposal..................................   (3,413)   (4,426)     (3,161)
  Sales of marketable securities............................      102        96          --
  Purchase of marketable securities.........................      (18)      (14)         --
  Investment distributions and sales........................    1,429       578         817
  Investment contributions and purchases....................     (276)     (593)     (1,308)
  Net cash received (paid) for acquisitions and dispositions
    of businesses...........................................    4,898       (71)        740
  Other investing activities, net...........................     (179)      (81)         (3)
                                                              -------   -------     -------
      Net cash provided by (used in) investing activities...    2,543    (4,511)     (2,915)
                                                              -------   -------     -------
FINANCING ACTIVITIES:
  Proceeds from long-term debt issuances....................    1,025     3,862          --
  Issuance of convertible securities........................       --        --       4,638
  Retirements of long-term debt.............................     (938)   (1,429)     (2,031)
  Retirements of redeemable securities......................       --      (152)         --
  Dividends paid on preferred securities....................     (336)     (294)       (135)
  Change in short-term debt due to AT&T.....................   (2,252)    1,533       4,297
  Transfers from (to) AT&T, net.............................       --       765      (5,234)
  Other financing activities, net...........................       --      (515)         --
                                                              -------   -------     -------
      Net cash (used in) provided by financing activities...   (2,501)    3,770       1,535
                                                              -------   -------     -------
Net change in cash and cash equivalents.....................      (61)       61          --
Cash and cash equivalents at beginning of period............       61        --          --
                                                              -------   -------     -------
Cash and cash equivalents at end of period..................  $    --   $    61     $    --
                                                              =======   =======     =======


      The notes are an integral part of the combined financial statements.
                                       F-30


                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

                     NOTES TO COMBINED FINANCIAL STATEMENTS
   (DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS AND UNLESS OTHERWISE NOTED)

(1) BASIS OF PRESENTATION

     AT&T Broadband Group is an integrated business of AT&T Corp. ("AT&T") and
not a stand-alone entity. AT&T Broadband Group consists primarily of the assets,
liabilities and business of AT&T Broadband, LLC (formerly Tele-Communications,
Inc. ("TCI")), acquired by AT&T on March 9, 1999 in the TCI merger, and MediaOne
Group, Inc. ("MediaOne"), acquired by AT&T on June 15, 2000 in the MediaOne
merger. AT&T Broadband, LLC ("ATTBLLC") and MediaOne are both separate
subsidiaries of AT&T. AT&T Broadband Group is one of the nation's largest
broadband communications providers, providing cable television, high-speed cable
Internet and broadband telephone services. AT&T intends to assign and transfer
substantially all of the assets, liabilities and business of AT&T Broadband
Group to AT&T Broadband Corp., a newly formed holding company for AT&T's
broadband business, which will be subsequently merged with Comcast Corporation
("Comcast") as discussed below.

     Comcast and AT&T have agreed to a merger of Comcast and AT&T Broadband
Corp. (the "AT&T Comcast Merger"). The AT&T Comcast Merger is pursuant to, and
subject to the terms and conditions set forth in the Agreement and Plan of
Merger, dated as of December 19, 2001 (the "Merger Agreement"). The AT&T Comcast
Merger will occur in several steps, which are expected to occur on the closing
date of the AT&T Comcast Merger. First, AT&T will assign and transfer to AT&T
Broadband Corp., substantially all of the assets and liabilities of AT&T's
broadband business. Following the transfer, AT&T will spin off AT&T Broadband
Corp. to AT&T shareholders by distributing one share of AT&T Broadband Corp.
common stock to each holder of record of a share of AT&T common stock, NYSE
symbol "T," as of the close of business on the record date for the AT&T
Broadband Corp. spin-off ("AT&T Broadband Spin-off"). Immediately following the
AT&T Broadband spin-off, AT&T Broadband Corp. will merge with AT&T Broadband
Acquisition Corp., a newly formed, wholly owned shell subsidiary of AT&T Comcast
Corporation ("AT&T Comcast"), with AT&T Broadband Corp. continuing as the
surviving corporation. At approximately the same time, Comcast will merge with
Comcast Acquisition Corp., a newly formed, wholly owned shell subsidiary of AT&T
Comcast, with Comcast continuing as the surviving entity. As a result of these
mergers, AT&T Comcast will become the parent company of both AT&T Broadband
Corp. and Comcast.

     AT&T Comcast will issue shares of AT&T Comcast common stock to the AT&T
shareholders who received shares of AT&T Broadband Corp. common stock in the
AT&T Broadband Spin-off. As of the date of execution of the Merger Agreement, it
was estimated that each holder of AT&T Broadband Corp. common stock would have
received 0.34 of a share of AT&T Comcast common stock for each of such holder's
shares of AT&T Broadband Corp. common stock. Assuming Comcast retains its AT&T
shares and converts them into exchangeable preferred stock of AT&T as
contemplated by the Merger Agreement, the exchange ratio would be approximately
0.35. The exchange ratio is dependent on a number of factors that may change
between the date of execution of the Merger Agreement and the date of completion
of the AT&T Comcast transaction, including the number of outstanding shares of
AT&T common stock, the value of options and stock appreciation rights and the
price of Comcast Class A common stock.

     AT&T will pay Comcast a termination fee in the amount of $1.5 billion in
cash if the Merger Agreement is terminated because (i) the AT&T Board withdraws
or modifies, in a manner adverse to Comcast, its recommendation of the AT&T
Comcast transaction, (ii) AT&T willfully and materially breaches certain terms
of the Merger Agreement and (iii) if the AT&T shareholders fail to approve the
AT&T Comcast Merger because a competing acquisition proposal made by a third
party is pending at the time of the AT&T shareholder meeting and within one year
of the AT&T meeting, AT&T enters into an agreement relating to an alternative
material transaction. Comcast will pay to AT&T a sum of $1.5 billion

                                       F-31

                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

termination fee in cash if the Merger Agreement is terminated because the
Comcast shareholders fail to approve the AT&T Comcast Merger.

     Consummation of the AT&T Comcast Merger is subject to the satisfaction or
waiver of several conditions, including but not limited to, approval by the
shareholders of AT&T and Comcast and receipt of all necessary governmental
consents and approvals. As a result, there can be no assurance that the AT&T
Comcast Merger will be consummated, or if the AT&T Comcast Merger is
consummated, as to the date of such consummation.

     On March 9, 1999, AT&T acquired TCI in a merger (the "TCI Merger") which
was attributed to AT&T Broadband Group. The results of operations, financial
position, changes in combined attributed net assets and cash flows of the
business of AT&T Broadband, LLC which are included in AT&T Broadband Group have
been included since March 1, 1999, the deemed effective date of the TCI Merger
for accounting purposes. The impact of the results from March 1 through March 9,
1999 were deemed immaterial to the combined results. On June 15, 2000, AT&T
acquired MediaOne which was attributed to AT&T Broadband Group. The results of
operations, financial position, changes in combined attributed net assets and
cash flows of the businesses of MediaOne which are included in AT&T Broadband
Group have been included since June 15, 2000. See note 4.

     The combined financial statements of AT&T Broadband Group are prepared in
accordance with generally accepted accounting principles. The combined financial
statements of AT&T Broadband Group reflect the assets, liabilities, revenue and
expenses directly attributable to AT&T Broadband Group, as well as allocations
deemed reasonable by management, to present the results of operations, financial
position, changes in combined attributed net assets and cash flows of AT&T
Broadband Group on a stand-alone basis. The allocation methodologies have been
described within the notes to the combined financial statements where
appropriate, and management considers the allocations to be reasonable. All
significant intercompany accounts and transactions within the AT&T Broadband
Group have been eliminated. The financial information included herein may not
necessarily reflect the combined results of operations, financial position,
changes in combined attributed net assets and cash flows of AT&T Broadband Group
in the future or what they would have been had AT&T Broadband Group been a
separate, stand-alone entity during the periods presented. Earnings per share
disclosure has not been presented as AT&T Broadband Group is a business unit of
AT&T and earnings per share data is not considered meaningful. The combined
financial statements of AT&T Broadband Group should be read in conjunction with
AT&T's Form 10-K for the year ended December 31, 2001.

     AT&T Broadband Group's operations have been dependent on cash infusions
from AT&T in order for AT&T Broadband Group to operate and execute on its
business and growth strategies. If, for any reason, AT&T is unwilling or cannot
provide the level of financing necessary to fund future operations, AT&T
Broadband Group will need to seek additional financing from third parties.

     Debt attributed to AT&T Broadband Group includes the third party
obligations of ATTBLLC and MediaOne and monetization debt backed by assets held
by AT&T Broadband Group. Additional intercompany debt has been allocated to AT&T
Broadband Group to achieve a total debt level based on several factors,
including prospective financing requirements, desired stand-alone credit
profile, working capital and capital expenditure requirements, expected sources
of future deleveraging, and comparable company profiles. Changes in historical
intercompany debt are based on historical cash flows. Such cash flows include
capital expenditures, operating activities, and investments in and dispositions
of cable companies. The historical interest expense on the allocated
intercompany debt was calculated based on a rate intended to be equivalent to
the rate AT&T Broadband Group would receive if it were a stand-alone entity.
AT&T's expected deleveraging activities that relate to AT&T Broadband Group
include, but may

                                       F-32

                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

not be limited to, proceeds that may result from the exercise of AT&T's
registration rights in Time Warner Entertainment ("TWE") and continued
evaluation and sale of non-strategic cable systems.

     As a result of the above methodology, from time to time AT&T Broadband
Group may advance funds to AT&T. These advances will be accounted for as
borrowings between entities and bear interest at a market rate that is
substantially equal to the rate at which AT&T would be able to borrow from third
parties on debt with similar maturities.

     AT&T performs cash management functions on behalf of the AT&T Broadband
Group. Substantially all of the AT&T Broadband Group's cash balances are swept
to AT&T on a daily basis, where they are managed and invested by AT&T. Transfers
of cash to and from AT&T, after giving consideration to the debt allocation
methodology, are reflected as a component of combined attributed net assets. Net
transfers to or from AT&T are assumed to be settled in cash. AT&T's capital
contributions for purchase business combinations and initial investments in
joint ventures and partnerships which AT&T attributed to AT&T Broadband Group
have been treated as noncash transactions.

     General corporate overhead related to AT&T's corporate headquarters and
common support divisions has been allocated to AT&T Broadband Group as it was
not deemed practical to specifically identify such common costs to AT&T
Broadband Group. The allocation of corporate overhead is divided into an
allocation of shared services (e.g., payroll and finance) and other corporate
overhead. Costs of shared services are allocated to AT&T Broadband Group based
on transaction based prices. Other corporate overhead is allocated to AT&T
Broadband Group based on the ratio of AT&T Broadband Group's external costs and
expenses adjusted for any functions AT&T Broadband Group performs on its own.
The costs of these services charged to AT&T Broadband Group are not necessarily
indicative of the costs that would have been incurred if AT&T Broadband Group
had performed these functions entirely as a stand-alone entity, nor are they
indicative of costs that will be charged or incurred in the future. However,
management believes such allocations are reasonable.

     Consolidated income tax provisions or benefits, related tax payments or
refunds, and deferred tax balances of AT&T have been allocated to AT&T Broadband
Group based principally on the taxable income and tax credits directly
attributable to AT&T Broadband Group, resulting in essentially a stand-alone
presentation. AT&T and AT&T Broadband Corp. entered into a tax sharing agreement
effective as of January 1, 2002, which, consistent with the principles described
in the preceding sentence, provides for tax sharing payments based on the tax
expense or tax benefits of a hypothetical affiliated group consisting of AT&T
Broadband Group and AT&T. Based on this agreement, the consolidated tax
liability before credits are allocated between the groups, based on each group's
contribution to the consolidated taxable income of the hypothetical group.
Consolidated tax credits of the hypothetical group are allocated between groups
based on each group's contribution to such tax credit.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  REVENUE RECOGNITION

     Video, voice and data services revenue is recognized based upon monthly
service fees, fees per event or minutes of traffic processed. Revenue for
customer fees, equipment rental, advertising, and pay-per-view programming is
recognized in the period the services are delivered. Video and nonvideo
installation revenue is recognized in the period the installation services are
provided to the extent of direct selling costs. Any remaining amount is deferred
and recognized over the estimated average period customers are expected to
remain connected to the cable distribution system.

                                       F-33

                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

  ADVERTISING AND PROMOTIONAL COSTS

     Advertising and promotional costs are expensed as incurred. Advertising and
promotional expenses were $439, $325 and $138 for the years ended December 31,
2001 and 2000 and the ten months ended December 31, 1999, respectively.

  INCOME TAXES

     AT&T Broadband Group is not a separate taxable entity for federal and state
income tax purposes and its results of operations are included in the
consolidated federal and state income tax returns of AT&T and its affiliates.
The provision for income taxes is based on AT&T Broadband Group's contribution
to the overall income tax liability or benefit of AT&T and its affiliates. Under
the balance sheet method, AT&T Broadband Group recognizes deferred tax assets
and liabilities at enacted income tax rates for the temporary differences
between the financial reporting basis and the tax basis of its assets and
liabilities. Any effects of changes in income tax rates or tax laws are included
in the provision for income taxes in the period of enactment. When it is more
likely than not that a portion or all of a deferred tax asset will not be
realized in the future, AT&T Broadband Group provides a corresponding valuation
allowance against the deferred tax asset.

  STOCK-BASED COMPENSATION

     Stock-based compensation is accounted for in accordance with Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees."
AT&T Broadband Group follows the disclosure-only provisions of Statement of
Financial Accounting Standard ("SFAS") No. 123, "Accounting for Stock-Based
Compensation" ("SFAS 123").

  CASH EQUIVALENTS

     All highly liquid investments with original maturities of three months or
less are considered to be cash equivalents.

  INVESTMENTS

     Investments in which AT&T Broadband Group exercises significant influence,
but does not control, are accounted for under the equity method of accounting.
Under the equity method, investments are stated at cost and are adjusted for
AT&T Broadband Group's subsequent contributions and share of earnings, losses
and distributions. The excess of the investment over the underlying book value
of the investee's net assets is being amortized over periods ranging from 25 to
40 years. Effective January 1, 2002, in accordance with SFAS No. 142 "Goodwill
and Other Intangible Assets" ("SFAS 142"), such excess costs will no longer be
amortized. Investments in which AT&T Broadband Group has no significant
influence over the investee are accounted for under the cost method of
accounting. Under the cost method, investments are stated at cost and earnings
are recognized to the extent distributions are received from the accumulated
earnings of the investee. Distributions in excess of accumulated earnings are
recognized as a reduction of the investment balance.

     Marketable equity securities classified as "trading" securities are carried
at fair value with any unrealized gain or loss being recorded within investment
(expense) income in the combined statement of operations. Marketable equity
securities classified as "available-for-sale" are carried at fair market value
with unrealized gains and losses, net of tax, included in combined attributed
net assets as a component of other comprehensive income. The fair market value
of these securities is based on quoted market prices.

                                       F-34

                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

     AT&T Broadband Group recognizes impairment charges on investment holdings
in the combined statement of operations when management believes the decline in
the investment value is other-than-temporary.

  PROPERTY, PLANT AND EQUIPMENT

     Property, plant and equipment is stated at cost. Construction costs, labor
and applicable overhead related to installations and interest during
construction are capitalized. Costs of additions and substantial improvements to
property, plant and equipment are capitalized. The cost of repairs and
maintenance of property, plant and equipment is charged to operations.
Depreciation is computed on a straight-line basis based upon the assets'
estimated useful lives using either the group or unit method. The useful lives
of distribution systems ranges from three to 15 years. The useful lives of
support equipment and buildings ranges from three to 40 years. The group method
is used for most depreciable assets, including distribution systems. Under the
group method, a specific asset group has an average life. The depreciation rate
is developed based on the average useful life for the specified asset group.
This method requires the periodic revision of depreciation rates.

     Under the group method, at the time of ordinary retirements, sales or other
dispositions of assets, the original cost of such asset is deducted from
property, plant and equipment and charged to accumulated depreciation, without
recognition of a gain or loss. Gains and losses are only recognized in
connection with the sales of properties in their entirety.

  FRANCHISE COSTS

     Franchise costs include the value attributed to agreements with local
authorities that allow access to homes in cable service areas acquired in
connection with a business combination. Such amounts are generally amortized on
a straight-line basis over 25 or 40 years. Costs incurred by AT&T Broadband
Group in negotiating and renewing franchise agreements are amortized on a
straight-line basis over the life of the franchise, generally 10 to 20 years.
Beginning in 2002, in accordance with SFAS 142, franchise costs associated with
a business combination will no longer be amortized, but will continue to be
tested for impairment (see note 16).

  GOODWILL

     Goodwill is the excess of the purchase price over the fair value of net
assets acquired in business combinations accounted for as purchases. Goodwill is
amortized on a straight-line basis over seven to 40 years. Beginning in 2002, in
accordance with SFAS 142, such goodwill will no longer be amortized, but will
continue to be tested for impairment (see note 16).

  SOFTWARE CAPITALIZATION

     Certain direct development costs associated with internal-use software are
capitalized, including external direct costs of material and services, and
payroll costs for employees devoting time to the software projects. Such costs
are included within other assets and are amortized over a period not to exceed
five years beginning when the asset is substantially ready for use. Costs
incurred during the preliminary project stage, as well as maintenance and
training costs, are expensed as incurred. Initial operating-system software
costs are capitalized and amortized over the life of the associated hardware.

                                       F-35

                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

  VALUATION OF LONG-LIVED ASSETS

     Long-lived assets such as property, plant and equipment, franchise costs,
goodwill, investments and software are reviewed for impairment annually or
whenever events or changes in circumstances indicate the carrying amount may not
be recoverable. If the total of the expected future undiscounted cash flows is
less than the carrying amount of the asset, a loss is recognized for the
difference between the fair value and carrying value of the asset. Assets to be
disposed of are carried at the lower of their financial statement carrying value
or fair value less cost to sell.

  DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

     Effective January 1, 2001, AT&T Broadband Group adopted SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133"), and
its corresponding amendments under SFAS No. 138. AT&T Broadband Group uses
derivative financial instruments to mitigate market risk from changes in
interest rates and equity prices. Derivative financial instruments may be
exchange-traded or contracted in the over-the-counter market and include swaps,
options, warrants and forward contracts. AT&T Broadband Group does not use
derivative financial instruments for speculative purposes.

     All derivatives are recognized on the balance sheet at fair value. To
qualify for hedge accounting treatment, derivatives, at inception, must be
designated as hedges and evaluated for effectiveness throughout the hedge
period. AT&T Broadband Group designates certain derivative contracts, at the
date entered into, as either (i) a hedge of the fair value of a recognized asset
or liability or of an unrecognized firm commitment ("fair value" hedge) or (ii)
a hedge of a forecasted transaction or of the variability of cash flows to be
received or paid related to a recognized asset or liability ("cash flow" hedge).
Other derivatives ("undesignated") are not formally designated for accounting
purposes. These derivatives, except for warrants, although undesignated for
accounting purposes are entered into to hedge economic risks.

     AT&T Broadband Group records changes in the fair value of fair-value
hedges, along with the changes in fair value of the hedged asset or liability
that is attributable to the hedged risk (including losses or gains on firm
commitments), in other (expense) income in the combined statement of operations.

     AT&T Broadband Group records changes in the fair value of cash-flow hedges
that are highly effective in other comprehensive income, as a component of
combined attributed net assets, until earnings are affected by the variability
of cash flows of the hedged transaction.

     The changes in fair value of undesignated hedges are recorded in other
(expense) income in the combined statements of operations along with the change
in fair value of the related asset or liability.

     AT&T Broadband Group currently does not have any net investment hedges in a
foreign operation.

     AT&T Broadband Group assesses embedded derivatives to determine whether the
economic characteristics of the embedded instruments are not clearly and closely
related to the economic characteristics of the remaining component of the
financial instrument (the host instrument) and whether a separate instrument
with the same terms as the embedded instrument would meet the definition of a
derivative instrument. When it is determined that both conditions exist, AT&T
Broadband Group designates the derivative as described above and recognizes the
derivative at fair value.

     AT&T Broadband Group formally documents all relationships between hedging
instruments and hedged items, as well as its risk-management objective and
strategy for undertaking various hedge transactions. This process includes
linking all derivatives that are designated as fair value or cash flow hedges to
specific assets and liabilities on the balance sheet or to specific firm
commitments or forecasted transactions.

                                       F-36

                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

     AT&T Broadband Group discontinues hedge accounting prospectively when: (i)
it is determined that the derivative is no longer effective in offsetting
changes in the fair value of cash flows of a hedged item; (ii) the derivative
expires or is sold, terminated, or exercised; (iii) it is determined that the
forecasted hedged transaction will no longer occur; (iv) a hedged firm
commitment no longer meets the definition of a firm commitment; or (v)
management determines that designation of the derivative as a hedge instrument
is no longer appropriate.

     When hedge accounting is discontinued because it is determined that the
derivative no longer qualifies as an effective fair value hedge, the derivative
will continue to be adjusted for changes in fair value through other (expense)
income, and the hedged asset or liability will no longer be adjusted for changes
in fair value. When hedge accounting is discontinued because the hedged item no
longer meets the definition of a firm commitment, the derivative will continue
to be adjusted for changes in the fair value through other (expense) income, and
any asset or liability that was recorded pursuant to recognition of the firm
commitment will be removed from the balance sheet and recorded in current period
earnings. When hedge accounting is discontinued because it is probable that a
forecasted transaction will not occur, the derivative will then be adjusted for
changes in the fair value through other (expense) income and gains and losses
that were accumulated in other comprehensive income will be recognized
immediately in other (expense) income. In all other situations in which hedge
accounting is discontinued, the derivative will be carried at its fair value on
the balance sheet, with changes in its fair value recognized in other (expense)
income.

  CASH FLOWS

     For purposes of the combined statements of cash flows, all transactions
between AT&T Broadband Group and AT&T, except for purchase business combinations
and initial investments in joint ventures and partnerships which were funded by
AT&T and contributed by AT&T to AT&T Broadband Group, have been accounted for as
having been settled in cash at the time the transaction was recorded by AT&T
Broadband Group.

  USE OF ESTIMATES

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements, and revenue and expenses during the period reported. Actual results
could differ from those estimates. Estimates are used when accounting for
certain items such as allowances for doubtful accounts, depreciation and
amortization, employee benefit plans, income taxes, restructuring reserves,
impairments and contingencies.

  CONCENTRATIONS

     As of December 31, 2001, except as disclosed below, AT&T Broadband Group
does not have any significant concentration of business transacted with a
particular customer, supplier or lender that could, if suddenly eliminated,
severely impact its operations. AT&T Broadband Group does not have a
concentration of available sources of labor, services, franchises or other
rights that could, if suddenly eliminated, severely impact its operations.

     All video and high-speed data billing services are provided by a single
vendor (see note 14). In addition, all broadband telephone billing services are
provided by a separate single vendor. AT&T Broadband Group also purchases its
digital set-top devices from one source (see note 14).

                                       F-37

                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

  ISSUANCE OF COMMON STOCK BY AFFILIATES

     Changes in AT&T Broadband Group's proportionate share of the underlying
equity of an attributed entity or equity method investee, which result from the
issuance of additional equity securities by such entity, are recognized as
increases or decreases to combined attributed net assets.

  RECOGNITION OF GAINS ON ASSET DISPOSITIONS

     From time to time, AT&T Broadband Group contributes cable television
systems to joint ventures and partnerships in exchange for a non-controlling
interest in such entity. In connection with such contributions, AT&T Broadband
Group may guarantee the debt of the joint venture or partnership. AT&T Broadband
Group defers any gain associated with such transactions until such time as AT&T
Broadband Group has no remaining financial obligation to the joint venture or
partnership.

  RECLASSIFICATIONS

     Certain amounts in previous years have been reclassified to conform to the
2001 presentation.

(3) SUPPLEMENTAL FINANCIAL INFORMATION

  SUPPLEMENTARY STATEMENT OF OPERATIONS INFORMATION



                                                            YEAR ENDED      TEN MONTHS
                                                           DECEMBER 31,       ENDED
                                                          --------------   DECEMBER 31,
                                                           2001     2000       1999
                                                          -------   ----   ------------
                                                                  
INVESTMENT (EXPENSE) INCOME, NET
  Net (losses) gains on sales of businesses and
     investments........................................  $  (318)  $616       $39
  Investment impairment charges.........................     (539)  (240)       --
  Interest and dividend income..........................      140     77         8
  Settlement loss and mark-to-market charge on put
     options............................................     (838)  (537)       --
  Loss on settlement of exchangeable notes..............     (392)    --        --
                                                          -------   ----       ---
     Investment (expense) income, net...................  $(1,947)  $(84)      $47
                                                          =======   ====       ===
OTHER (EXPENSE) INCOME, NET
  Reclassification of securities to "trading" in
     connection with the adoption of SFAS 133...........  $(1,154)  $ --       $--
  Fair value adjustments of derivatives and "trading"
     securities.........................................      195     --        --
  Other.................................................       32     45         3
                                                          -------   ----       ---
     Other (expense) income.............................  $  (927)  $ 45       $ 3
                                                          =======   ====       ===


                                       F-38

                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

  SUPPLEMENTARY BALANCE SHEET INFORMATION



                                                                DECEMBER 31,
                                                              -----------------
                                                               2001      2000
                                                              -------   -------
                                                                  
PROPERTY, PLANT AND EQUIPMENT
  Land and improvements.....................................  $   115   $   135
  Distribution systems......................................   14,186    13,187
  Support equipment and buildings...........................    2,382     2,526
  Construction in progress..................................      794     1,417
  Accumulated depreciation..................................   (2,958)   (2,078)
                                                              -------   -------
     Property, plant and equipment, net.....................  $14,519   $15,187
                                                              =======   =======


  LEVERAGED LEASES

     AT&T Broadband Group leases airplanes and energy-producing facilities under
leveraged leases having original terms of 10 to 30 years, expiring in various
years from 2004 through 2017. The investment in leveraged leases is primarily
included in other assets in the accompanying combined balance sheets. Following
is a summary of AT&T Broadband Group's investment in leveraged leases:



                                                              DECEMBER 31,
                                                              -------------
                                                              2001    2000
                                                              -----   -----
                                                                
Rentals receivable (net of nonrecourse debt*)...............  $ 606   $ 616
Estimated unguaranteed residual values......................    244     244
Unearned income.............................................   (656)   (685)
Allowance for credit losses.................................     (3)     (3)
                                                              -----   -----
Investment in leveraged leases (included in other assets)...    191     172
Deferred taxes..............................................     41      19
                                                              -----   -----
Net investment in leveraged leases..........................  $ 150   $ 153
                                                              =====   =====


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

* The rentals receivable are net of nonrecourse debt of $1.2 billion and $1.3
  billion at December 31, 2001 and 2000, respectively.

                                       F-39

                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

  SUPPLEMENTARY STATEMENT OF CHANGES IN COMBINED ATTRIBUTED NET ASSETS
INFORMATION



                                                            YEAR ENDED      TEN MONTHS
                                                           DECEMBER 31,       ENDED
                                                           -------------   DECEMBER 31,
                                                            2001    2000       1999
                                                           ------   ----   ------------
                                                                  
Reclassification of securities to "trading" in
  conjunction with the adoption of SFAS 133 (net of
  income taxes of $446)(a)...............................  $  708   $ --      $  --
Settlement of exchangeable notes (net of income taxes of
  $152)(b)...............................................     240     --         --
Sale of various securities (net of income tax benefit
  (provision) of $63 and $(16))..........................     100    (27)        --
Other than temporary investment impairments (net of
  income taxes of $197 and $45)..........................     314    173         --
Revaluation of derivatives (net of income taxes of
  $33)...................................................      52     --         --
                                                           ------   ----      -----
Total recognition of previously unrealized losses........  $1,414   $146      $  --
                                                           ======   ====      =====


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

(a) See note 10 for further discussion.

(b) See note 7 for further discussion.

  SUPPLEMENTARY CASH FLOW INFORMATION



                                                           YEAR ENDED       TEN MONTHS
                                                          DECEMBER 31,        ENDED
                                                         ---------------   DECEMBER 31,
                                                          2001     2000        1999
                                                         ------   ------   ------------
                                                                  
Interest payments, net of amounts capitalized..........  $1,555   $1,016       $488
                                                         ======   ======       ====
Income tax (refunds) payments..........................  $ (442)  $   62       $  8
                                                         ======   ======       ====


(4) MERGERS, ACQUISITIONS, VENTURES, DISPOSITIONS AND EXCHANGES

  MERGER WITH TELE-COMMUNICATIONS, INC.

     AT&T Broadband Group was created upon the merger of TCI with a subsidiary
of AT&T. The TCI Merger was completed on March 9, 1999, in an all-stock
transaction valued at approximately $52 billion. TCI simultaneously combined its
Liberty Media Group programming business with its TCI Ventures Group technology
investments business, forming Liberty Media Group ("LMG"). In connection with
the TCI Merger, AT&T issued a separate tracking stock in exchange for the TCI
Liberty Media Group and TCI Ventures Group tracking shares previously
outstanding. LMG is excluded from AT&T Broadband Group.

     The TCI Merger was accounted for under the purchase method of accounting,
accordingly, AT&T recorded the assets and liabilities of TCI at their fair
values and TCI results have been included since March 1, 1999, the deemed
effective date of the merger. Approximately $20 billion of the purchase price of
$52 billion was attributed to franchise costs and is being amortized on a
straight-line basis over 40 years. Pursuant to SFAS No. 109, "Accounting for
Income Taxes," AT&T recorded an approximate $13 billion deferred tax liability
in connection with this franchise intangible, which is also included in
franchise costs. AT&T does not expect that this deferred tax liability will ever
be paid. This deferred tax liability is being amortized on a straight-line basis
over 40 years and is included in the provision for income taxes. Also included
in the $52 billion purchase price was approximately $11 billion related to

                                       F-40

                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

nonconsolidated investments, approximately $5 billion related to property, plant
and equipment, approximately $11 billion of TCI long-term debt, and $7 billion
related to other net liabilities. In addition, $34 billion was attributed to the
investment in LMG which is excluded from the AT&T Broadband Group.

  MERGER WITH MEDIAONE

     On June 15, 2000, AT&T completed a merger with MediaOne in a cash and stock
transaction valued at approximately $45 billion (the "MediaOne Merger"). The
AT&T shares had an aggregate market value of approximately $21 billion and cash
payments totaled approximately $24 billion.

     The MediaOne Merger was accounted for under the purchase method of
accounting, accordingly the results of MediaOne have been included in the
accompanying combined financial statements since the date of acquisition.
Approximately $17 billion of the $45 billion purchase price has been attributed
to franchise costs and is being amortized on a straight-line basis over 40
years. Also included in the purchase price was approximately $22 billion related
to nonconsolidated investments, including investments in TWE and Vodafone Group
plc ("Vodafone"), approximately $5 billion related to property, plant and
equipment, and $5 billion related to other net assets. In addition, included was
approximately $13 billion in deferred income tax liabilities, approximately $10
billion of MediaOne debt and approximately $1 billion of minority interest in
Centaur Funding Corporation, a subsidiary of MediaOne. AT&T did not attribute $7
billion of cash acquired in the MediaOne Merger to AT&T Broadband Group. The
purchase price resulted in goodwill of $20 billion, which is being amortized on
a straight-line basis over 40 years.

     In accordance with the provisions of SFAS 142, AT&T Broadband Group will no
longer amortize goodwill, franchise costs associated with a business combination
or the deferred tax liability associated with franchise costs related to the
mergers discussed above (see note 16 for further discussions of the impacts of
SFAS 142).

  PRO FORMA RESULTS

     Following is a summary of the pro forma results of AT&T Broadband Group as
if the MediaOne Merger had closed effective March 1, 1999:



                                                                              TEN MONTHS
                                                               YEAR ENDED       ENDED
                                                              DECEMBER 31,   DECEMBER 31,
                                                                  2000           1999
                                                              ------------   ------------
                                                                      (UNAUDITED)
                                                                       
Revenue.....................................................    $ 9,770         $7,326
Operating loss..............................................    $ 9,089         $1,832
Net (loss) income...........................................    $(4,422)        $1,047


     Pro forma data may not be indicative of the results that would have been
obtained had the events actually occurred at the beginning of the periods
presented, nor does it intend to be a projection of future results.

  CABLEVISION SYSTEMS CORPORATION ("CABLEVISION") AND RAINBOW MEDIA GROUP

     On January 8, 2001, a subsidiary of AT&T and Cablevision completed the
transfer of cable systems in which AT&T received cable systems serving 358,000
customers in Boston and Eastern Massachusetts. In exchange, Cablevision received
cable systems serving approximately 130,000 customers in northern New York
suburbs, 44 million shares of AT&T common stock valued at approximately $871,
and approximately

                                       F-41

                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

$204 in cash. Cablevision recorded a gain as a result of the transaction. AT&T
Broadband Group did not record any gain or loss on the transaction, however, due
to ATTBLLC's ownership interest in Cablevision, $143, net of taxes, of
Cablevision's gain is included in "net losses from equity investments."

     On October 23, 2001, AT&T Broadband Group, through ATTBLLC, sold
approximately 19.2 million shares of Cablevision NY Group Class A common stock
and, monetized through a trust, 26.9 million shares of a mandatorily
exchangeable trust security that is exchangeable into up to 26.9 million shares
of Cablevision NY Group Class A common stock at maturity in approximately three
years. The offering price was $36.05 per share for both the common shares and
the exchangeable securities. The offerings generated approximately $1,422 of
pretax proceeds, net of underwriting fees. The sale resulted in a pretax loss of
approximately $271 recorded in investment (expense) income.

     On December 12, 2001, AT&T Broadband Group sold approximately 14.7 million
shares of Cablevision's Rainbow Media Group Class A tracking stock and,
monetized through a trust, 9.8 million shares of mandatorily exchangeable trust
security that was exchangeable into up to 9.8 million shares of Rainbow Media
Group Class A tracking stock at maturity in approximately three years. The
offering price was $22.50 per share for both the tracking stock shares and the
exchangeable securities. The offering generated approximately $487 of pretax
proceeds, net of underwriting fees. The sale resulted in a pretax gain of
approximately $63 recorded in investment (expense) income.

  AT HOME CORPORATION

     On August 28, 2000, AT&T and At Home Corporation ("Excite@Home") announced
shareholder approval of a new board of directors and governance structure for
Excite@Home. AT&T was given the right to designate six of the 11 Excite@Home
board members. In addition, Excite@Home converted approximately 50 million of
ATTBLLC's Excite@Home Series A shares into Series B shares, each of which has 10
votes. As a result of these governance changes, AT&T Broadband Group, through
ATTBLLC, gained a controlling interest and began consolidating Excite@Home's
results upon the closing of the transaction on September 1, 2000. As of December
31, 2000, AT&T Broadband Group had, on a fully diluted basis, approximately 23%
of the economic interest and 74% of the voting interest in Excite@Home. The
consolidation of Excite@Home in September 2000 resulted in minority interest of
approximately $2,200, goodwill of approximately $2,400, short-term liabilities
of approximately $2,400 (including an initial put option liability), other net
assets of approximately $1,200 and the removal of the investment in Excite@Home
of approximately $1,900.

     On September 28, 2001, Excite@Home filed for bankruptcy protection under
Chapter 11 in the U.S. Bankruptcy Court, for the Northern District of
California. As a result of the bankruptcy filing and the removal by AT&T of four
of its six directors from the Excite@Home board of directors, AT&T Broadband
Group ceased consolidating Excite@Home as of September 30, 2001. Beginning
October 1, 2001, AT&T Broadband Group no longer records equity earnings or
losses related to Excite@Home since AT&T Broadband Group recognized losses in
excess of its investment in Excite@Home.

     The noncash impacts of the deconsolidation of Excite@Home primarily
included a reduction to property, plant and equipment of approximately $320,
goodwill of approximately $326 and debt of approximately $988. The
deconsolidation of Excite@Home resulted in the recording of a liability which
was approximately $362 at December 31, 2001. The liability will continue to be
evaluated. In addition, other noncash items included a tax benefit of $673
reflecting changes to deferred tax liabilities.

                                       F-42

                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

  COX AND COMCAST AGREEMENT

     In August 2000, in exchange for Cox Communications, Inc. ("Cox") and
Comcast relinquishing their rights under the shareholder agreement in connection
with Excite@Home's governance change, AT&T granted put obligations to Cox and
Comcast. On May 18, 2001, AT&T, Cox and Comcast reached an agreement to revise
the terms of the put options. Under the new agreement, Cox and Comcast retained
their stakes in Excite@Home and AT&T issued 75 million AT&T common shares to Cox
and more than 80 million AT&T common shares to Comcast. The obligation under
these put obligations was recorded at fair value, with gains or losses resulting
from changes in fair value being recorded in investment (expense)income. AT&T
Broadband Group recorded an approximate $838 and $537 loss in investment
(expense) income related to the settlement and mark-to-market of the put option
in 2001 and 2000, respectively. The new agreement resulted in a tax benefit to
AT&T Broadband Group, which essentially offset this loss.

  INSIGHT COMMUNICATIONS COMPANY LP

     Effective January 1, 2001, entities attributed to AT&T Broadband Group sold
to Insight Communications Company LP ("Insight"), for net cash proceeds of $391,
several Illinois cable systems serving approximately 98,400 customers. Insight
subsequently contributed such cable systems and additional cable systems serving
approximately 177,000 customers to Insight Midwest L.P., an entity in which AT&T
Broadband Group, through its attributed entities, has a 50% interest. Entities
attributed to AT&T Broadband Group also contributed several Illinois systems
serving approximately 247,500 customers to Insight Midwest, L.P. The
transactions resulted in a pretax gain of $168, which was deferred due to a debt
support agreement with Insight Midwest, L.P.

  KEARNS-TRIBUNE, LLC

     On January 2, 2001, AT&T, through ATTBLLC, completed the sale of
Kearns-Tribune, LLC to MediaNews Group for $200 in cash. The transaction
resulted in a pretax gain of approximately $117 recorded in investment (expense)
income.

  COMCAST

     On April 30, 2001, a subsidiary of AT&T received 63.9 million shares of
AT&T stock held by Comcast which were valued at $1,423 in exchange for cable
systems attributed to AT&T Broadband Group serving approximately 590,000
customers in New Mexico, Maryland, New Jersey, Pennsylvania, Delaware and
Tennessee. The transaction resulted in a pretax loss of $297 recorded in
investment (expense) income.

     Effective June 30, 2001, AT&T, together with certain subsidiaries
attributed to AT&T Broadband Group, transferred its 99.75% interest in an entity
owning the Baltimore, Maryland cable systems serving approximately 115,000
customers to Comcast for approximately $510 in net cash proceeds. The
transaction resulted in a pretax gain of $149 recorded in investment (expense)
income.

  MEDIACOM COMMUNICATIONS

     On June 29, 2001, a subsidiary of AT&T sold to MediaCom Communications
Corporation ("MediaCom") cable systems attributed to AT&T Broadband Group
serving approximately 94,000 customers in Missouri for approximately $295 in net
cash proceeds. The transaction resulted in a pretax gain of $5 recorded in
investment (expense) income.

                                       F-43

                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

     On July 18, 2001, subsidiaries of AT&T sold to MediaCom cable systems
attributed to AT&T Broadband Group serving approximately 710,000 customers
located primarily in Georgia, Iowa and Southern Illinois for approximately
$1,724 in net cash proceeds. The transaction resulted in a pretax loss of $93
recorded in investment (expense) income.

  CHARTER COMMUNICATIONS

     On June 30, 2001, a subsidiary of AT&T transferred to Charter
Communications, Inc. ("Charter") cable systems attributed to AT&T Broadband
Group serving approximately 563,000 customers in Alabama, California, Illinois,
Missouri and Nevada. AT&T Broadband Group, through its attributed entities,
received $1,497 in net proceeds, $222 in cash restricted for future acquisitions
of cable systems, and a cable system in Florida serving 9,000 customers. The
transaction resulted in a pretax loss of $42 recorded in investment (expense)
income.

  LENFEST COMMUNICATIONS, INC.

     On January 18, 2000, AT&T Broadband Group, through ATTBLLC, sold its
ownership interest in Lenfest Communications, Inc., to a subsidiary of Comcast.
In connection with the sale, AT&T Broadband Group received 47.3 million shares
of Comcast Class Special A common stock. The transaction resulted in a pretax
gain of $224 recorded in investment (expense) income.

  COX COMMUNICATIONS, INC.

     On March 15, 2000, AT&T Broadband Group, through ATTBLLC, received 50.3
million shares of AT&T common stock held by Cox in exchange for an entity owning
cable television systems serving approximately 312,000 customers and certain
other net assets. The AT&T common stock received in such transaction has been
included in combined attributed net assets. The transaction resulted in a pretax
gain of $189 recorded in investment (expense) income.

(5) ASSET IMPAIRMENT, RESTRUCTURING AND OTHER CHARGES

     During 2001, AT&T Broadband Group recorded $1,494 of asset impairment,
restructuring and other charges. The charge included $1,171 of asset impairment
charges related to Excite@Home and $323 for restructuring and exit costs, which
consisted of $151 for severance costs, $156 for facilities closing and $16 for
termination costs of contractual obligations.

     The $1,171 of asset impairment charges recorded during 2001 consisted of
$1,032 related to Excite@Home associated with the write down of goodwill and
other intangible assets, warrants granted in connection with distributing the
@Home service, and property, plant and equipment. These charges were due to
continued deterioration in the business climate of, and reduced levels of
venture capital funding activity for, Internet advertising and other
Internet-related companies, continued significant declines in the market values
of Excite@Home's competitors in the Internet advertising industry, and changes
in their operating and cash flow forecasts for the remainder of 2001. These
charges were also impacted by Excite@Home's decision to sell or shut down
narrowband operations. As a result of the foregoing, and other factors,
Excite@Home entered into bankruptcy proceedings in September 2001. In addition,
AT&T Broadband Group, through ATTBLLC, recorded a related goodwill impairment
charge of $139 associated with its acquisition goodwill of Excite@Home. Since
AT&T Broadband Group, through ATTBLLC, consolidated Excite@Home but only owned
approximately 23% of Excite@Home, a portion of the charges recorded by
Excite@Home has been eliminated in the statement of operations as minority
interest income (expense).

                                       F-44

                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

     The severance costs of $151, for the involuntary separation of
approximately 7,700 employees, primarily resulted from continued cost reduction
efforts by AT&T Broadband Group and Excite@Home in addition to impacts of the
MediaOne Merger. Approximately 36% of the affected employees are management
employees and 64% are non-management employees. Nearly all of the affected
employees have left their positions as of December 31, 2001.

     The following table displays the activity and balances of the restructuring
reserve account from January 1, 2000, to December 31, 2001. There was no
activity in the restructuring reserve account in 1999.



                                                     EMPLOYEE     FACILITY
TYPE OF COST                                        SEPARATIONS   CLOSINGS   OTHER   TOTAL
------------                                        -----------   --------   -----   -----
                                                                         
January 1, 2000...................................     $  --       $  --     $ --    $  --
  Additions.......................................        61          30       --       91
  Deductions......................................       (45)        (30)      --      (75)
                                                       -----       -----     ----    -----
December 31, 2000.................................        16          --       --       16
  Additions.......................................       151         156       16      323
  Deductions......................................      (145)       (144)     (16)    (305)
                                                       -----       -----     ----    -----
December 31, 2001.................................     $  22       $  12     $ --    $  34
                                                       =====       =====     ====    =====


     Total deductions for the year ended December 31, 2000, included cash
payments of $45 related to employee separations and $30 noncash utilization for
the loss realized on disposition of facilities. Total deductions for the year
ended December 31, 2001, included $121 related to the deconsolidation of
Excite@Home and cash payments of $184 related to employee separations, facility
closings, litigation and contractual obligations.

     During 2000, AT&T Broadband Group recorded $6,270 of asset impairment,
restructuring and other charges which included $6,179 of asset impairment
charges related to Excite@Home.

     The charges related to Excite@Home include $4,609 in asset impairment
charges taken by Excite@Home associated with the goodwill impairment from
various acquisitions and a related goodwill impairment of $1,570 recorded by
AT&T Broadband Group associated with its acquisition goodwill of Excite@Home.

     The impairments resulted from the deterioration of the market conditions
and market valuations of Internet-related companies during the fourth quarter of
2000, which caused Excite@Home to conclude that intangible assets related to
their acquisitions of Internet-related companies may not be recoverable. In
accordance with SFAS No. 121, "Accounting For the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of ("SFAS 121"), Excite@Home
conducted a detailed assessment of the recoverability of the carrying amounts of
acquired intangible assets. This assessment resulted in a determination that
certain acquired intangible assets, including goodwill, related to these
acquisitions were impaired as of December 31, 2000. As a result, Excite@Home
recorded impairment charges of $4,609 in December 2000, representing the excess
of the carrying amount of the impaired assets over their fair value.

     The review for impairment included a review of publicly-traded Internet
companies that are comparable to the companies that Excite@Home acquired. These
companies experienced a substantial decline in stock price and market
capitalization during the fourth quarter of 2000.

     Excite@Home also reviewed the business climate for Internet advertising and
web-based infrastructure companies as of December 31, 2000, and observed the
following: (i) investor and consumer enthusiasm for the Internet sector severely
deteriorated during the fourth quarter of 2000; (ii) many

                                       F-45

                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Internet companies, including those acquired by Excite@Home, experienced
significant decelerations in their growth both as a result of economic
conditions and due to Internet-sector specific issues such as competition and
the weakening of the Internet advertising market; and (iii) funding sources for
Internet-based consumer businesses, which require considerable amounts of
capital, had substantially evaporated as of December 31, 2000. As a result,
Excite@Home concluded that fundamental, permanent and significant adverse
changes had occurred during the fourth quarter of 2000 in the business climate
for companies providing Internet advertising and other web-based services.

     In addition, Excite@Home reviewed operating and cash flow projections that
existed at the time Excite@Home made the acquisitions and that were used as a
basis upon which the decisions to complete acquisitions were made. These
operating and cash flow projections indicated that the acquired companies, over
their useful lives, would be profitable and generate positive cash flows. The
operating and cash flow projections were compared to operating results after the
date of the acquisitions through December 31, 2000, as well as to projected
operating results for 2001. These comparisons indicated that certain
acquisitions generated operating and cash flow losses through the end of 2000,
and were projected to continue generating operating and cash flow losses for the
foreseeable future.

     As a result of these factors, Excite@Home determined that the intangible
assets related to the acquisitions might not be recoverable and conducted
impairment tests.

     Generally, the impairment tests were performed at an asset group level
corresponding to the lowest level at which cash flows independent of other
assets could be identified. Each asset group consisted of the goodwill and
acquired identifiable intangible assets related to a specific acquisition.
Acquired intangible assets were combined for those acquisitions where separately
identifiable cash flows that are largely independent of the cash flows of other
groups of assets could not be identified.

     For each of the asset groups to be tested for impairment, Excite@Home
projected undiscounted cash flows over a future projection period of five years,
based on Excite@Home's determination of the current remaining useful lives of
the asset groups, plus an undiscounted terminal period cash flow to reflect
disposition of the entities at the end of their useful lives. Undiscounted
future cash flows were estimated using projected net realizable value in a sales
transaction (undiscounted cash flows during the expected remaining holding
period until disposition were estimated as negligible). The undiscounted future
cash flows were compared to the carrying amount of each asset group and for
those asset groups where the carrying amount exceeded the undiscounted future
cash flows, Excite@Home concluded that the asset group was impaired.

     Excite@Home measured the impairment loss related to impaired asset groups
based on the amount by which the carrying amount of the asset group exceeded the
fair value of the asset group. Measurement of fair value was based on an
analysis by Excite@Home, with assistance from independent valuation experts,
utilizing the best information available in the circumstances using reasonable
and supportable assumptions and projections, and including the discounted cash
flow and market comparison valuation techniques. The discounted cash flow
analysis considered the likelihood of possible outcomes and was based on
Excite@Home's best estimate of projected future cash flows, including terminal
value cash flows expected to result from the disposition of the asset at the end
of its useful life, discounted at Excite@Home's weighted average cost of
capital. Weighted average cost of capital was based on historical risk premiums
required by investors for companies of Excite@Home's size, industry and capital
structure and included risk factors specific to Excite@Home. The market
comparison model represented Excite@Home's estimate of the prices that a buyer
would be willing to pay currently for similar assets, based on comparable
products and services, customer base, risks, earnings capabilities and other
factors.

                                       F-46

                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

     Based on the foregoing, Excite@Home recorded an impairment write-down of
$4,609 in aggregate, which was allocated to each asset group based on a
comparison of carrying values and fair values. The impairment write-down within
each asset group was allocated first to goodwill, and if goodwill was reduced to
zero, to identifiable intangible assets in proportion to carrying values.

     Also as a result of the foregoing, AT&T Broadband Group recorded a goodwill
and acquisition-related impairment charge of $1,570 associated with the
acquisition of ATTBLLC's investment in Excite@Home. The write-down of ATTBLLC's
investment to fair value was determined utilizing discounted expected future
cash flows.

     Since AT&T Broadband Group, through ATTBLLC only owned approximately 23% of
Excite@Home, 77% of the charge recorded by Excite@Home was not included as an
increase in AT&T Broadband Group's net loss, but rather was eliminated in the
combined statement of operations as minority interest income (expense).

     In 2000, a $91 charge for restructuring and exit costs was recorded
primarily as part of the integration of MediaOne, the centralization of certain
functions, and the consolidation of call center facilities. The charge for the
year ended December 31, 2000, included termination benefits of $61 associated
with the involuntary separation of about 1,060 employees. Approximately 25% of
the individuals were management employees and 75% were non-management employees.
The $91 charge included a loss of $30 recognized on the disposition of
facilities as a result of synergies created by the MediaOne Merger.

     During 1999, AT&T Broadband Group recorded $644 of asset impairment,
restructuring and other charges. Such amount included a $594 in-process research
and development charge which reflected the estimated fair value of research and
development projects at AT&T Broadband Group, as of the date of the TCI Merger,
which had not yet reached technological feasibility or that had no alternative
future use. The projects identified related to TCI's efforts to offer voice over
Internet protocol, product integration efforts for advanced set-top devices that
would enable AT&T Broadband Group to offer next-generation digital services, and
cost-savings efforts for broadband telephone implementation. In addition,
Excite@Home had research and development efforts underway, including projects to
allow for self-provisioning of devices and the development of next-generation
client software, network and back-office infrastructure to enable a variety of
network devices, and improved design for the regional data center's
infrastructure.

     The 1999 charge also included a $50 loss related to a contribution
agreement TCI entered into with Phoenixstar, Inc. that requires AT&T Broadband
Group to satisfy certain liabilities owed by Phoenixstar, Inc. and its
subsidiaries.

(6) INVESTMENTS

     Subsidiaries of AT&T have investments in various companies and partnerships
accounted for under the equity method which have been attributed to AT&T
Broadband Group. At December 31, 2001 and 2000, equity investments of $4,286 and
$6,350, respectively, had been attributed to AT&T Broadband Group. The carrying
value of these investments exceeded AT&T Broadband Group's share of the
underlying reported net assets by approximately $2,969 and $5,455 at December
31, 2001 and 2000, respectively. The excess cost is being amortized over periods
ranging from 25 to 40 years. Pretax amortization of the excess cost of $148,
$485 and $476 for the years ended December 31, 2001 and 2000 and for the ten
months ended December 31, 1999, respectively, is reflected as a component of net
losses from equity investments in the accompanying combined statements of
operations. Effective January 1, 2002, in accordance with the provisions of SFAS
142, such excess costs will no longer be amortized (see note 16).

                                       F-47

                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

     Ownership of significant equity investments attributed to AT&T Broadband
Group was as follows:



                                                               AT DECEMBER 31,
                                                              -----------------
                                                               2001       2000
                                                              ------     ------
                                                                   
Cablevision Systems Corporation.............................     --%(a)  27.98%(a)
Texas Cable Partnerships....................................  50.00%     50.00%
Insight Midwest LP..........................................  50.00%     50.00%
Century-TCI California Communications, LP...................  25.00%     25.00%
Kansas City Cable Partners..................................  50.00%     50.00%
Parnassos Communications, LP................................  33.33%     33.33%
US Cable of Coastal-Texas, LP...............................  48.16%     37.06%(b)
Midcontinent Communications.................................  50.00%     50.00%


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

(a) In June 2001, as a result of AT&T no longer having representation on
    Cablevision's board of directors, the accounting for the investment in
    Cablevision was changed from equity method to cost method accounting. At
    December 31, 2001, AT&T Broadband Group owned 29,790,887 shares, or a 16.8%
    ownership interest, of Cablevision NY Class A common stock which had a
    closing market price of $47.45 per share. At December 31, 2000, AT&T
    Broadband Group, through ATTBLLC, owned 48,942,172, shares of Cablevision
    Systems Corporation Class A common stock, which had a closing market price
    of $84.94 per share.

(b) On April 1, 2001, AT&T Broadband Group contributed cable systems serving
    approximately 18,000 customers to US Cable of Coastal-Texas, LP ("US Cable")
    in exchange for an additional 11.10% ownership interest in US Cable.

     Summarized combined financial information for investments accounted for
under the equity method was as follows:



                                                                                 FOR THE
                                                         FOR THE YEAR ENDED     TEN MONTHS
                                                            DECEMBER 31,          ENDED
                                                         -------------------   DECEMBER 31,
                                                           2001       2000         1999
                                                         --------   --------   ------------
                                                                      
Revenue................................................   $4,337     $6,537      $ 6,148
Operating income (loss)................................   $    1     $  175      $(1,401)
Income (loss) from continuing operations before
  extraordinary items and cumulative effect of
  accounting change....................................   $  747     $  (20)     $(2,327)
Net income (loss)......................................   $  736     $  (20)     $(2,327)




                                                                DECEMBER 31,
                                                              -----------------
                                                               2001      2000
                                                              -------   -------
                                                                  
Current assets..............................................  $   483   $ 1,493
Noncurrent assets...........................................  $10,538   $18,262
Current liabilities.........................................  $ 1,009   $ 2,712
Noncurrent liabilities......................................  $ 6,420   $15,034
Redeemable preferred stock..................................  $    --   $ 1,544
Minority interests..........................................  $   186   $   588


     At December 31, 2001, AT&T Broadband Group, through MediaOne, had a 25.51%
interest in TWE. This investment is accounted for as a cost investment since
AT&T Broadband Group does not have the

                                       F-48

                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

right to exercise significant influence. On February 28, 2001, AT&T Broadband
Group exercised its registration rights in TWE and formally requested TWE to
begin the process of converting the limited partnership into a corporation with
registered equity securities.

     Other investments at December 31, 2001 for AT&T Broadband Group consisted
of the following:



                                                    COST       UNREALIZED       ESTIMATED
                                                    BASIS    GAINS (LOSSES)     FAIR VALUE
                                                   -------   --------------   --------------
                                                                     
Trading securities...............................  $ 4,388       $  --            $4,388
Available-for-sale securities....................    3,246        (169)            3,077
Preferred stock..................................    2,164          --             2,164
Cost investments, warrants and other.............      269          --               269
                                                   -------       -----            ------
                                                   $10,067       $(169)           $9,898
                                                   =======       =====            ======


     Other investments at December 31, 2000 for AT&T Broadband Group consisted
of the following:



                                                    COST       UNREALIZED       ESTIMATED
                                                    BASIS    GAINS (LOSSES)     FAIR VALUE
                                                   -------   --------------   --------------
                                                                     
Available-for-sale securities....................  $12,927      $(3,620)         $ 9,307
Preferred stock..................................    1,467          105            1,572
Cost investments, warrants and other.............    1,109           14            1,123
                                                   -------      -------          -------
                                                   $15,503      $(3,501)         $12,002
                                                   =======      =======          =======


     At December 31, 2001 and 2000, $6,547 and $6,473, respectively, of
investments are indexed to certain long-term debt instruments (see note 7). In
addition, approximately $668 and $2,102 of such investments were classified as
current assets at December 31, 2001 and 2000, respectively, since they are
indexed to certain currently maturing debt instruments.

     During 2001, AT&T Broadband Group recorded an impairment charge on
investments of $539, including $20 recorded by Excite@Home, consisting primarily
of charges related to Vodafone, plc, Quokka Sports, Inc. and Internet Pictures,
Inc. The impairment charge primarily resulted from management's conclusion that
declines in fair value were not temporary or the investment could not be held
for a period of time to allow for recoverability of fair value as in the case of
exchangeable notes due in late 2002 that can be settled with shares of Vodafone
ADRs. The fair value was based on quoted market prices.

     During 2000, AT&T Broadband Group recorded an impairment charge on
investments of $111. Management determined the loss was not temporary due to the
downturn in market conditions and its inability to hold the investments as a
result of requirements related to the regulatory approval of the MediaOne
Merger. The fair value was based on quoted market prices.

     During the fourth quarter of 2000, Excite@Home recognized a loss on
investments totaling $129 which included $107 loss on publicly held companies
and $22 on privately held investments. The loss recognized on the publicly held
investment was a result of Excite@Home's decision that the decline in market
value of certain investments was not temporary. The loss recognized on the
privately held companies was based on Excite@Home's determination that the
carrying value of certain investments was not recoverable, based on indicators
such as limited liquidity and poor prospects for additional funding. Since AT&T
Broadband Group, through ATTBLLC owns 23% of Excite@Home, 77% of the loss
recorded by Excite@Home is not included as an increase of AT&T Broadband Group's
net loss, but rather is eliminated in the statement of operations as minority
interest income (expense).

                                       F-49

                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

(7) DEBT OBLIGATIONS

     LONG-TERM DEBT

     DEBENTURES, NOTES AND TRUST PREFERRED SECURITIES(A):



                                                                           DECEMBER 31,
                                                                         -----------------
INTEREST RATES(B)    MATURITIES                                           2001      2000
-----------------    ----------                                          -------   -------
                                                                          
4.00%-6.50%          2002-2008........................................   $ 2,855   $ 4,599
6.55%-7.49%          2002-2037........................................     3,793     4,369
7.53%-8.50%          2002-2097........................................     3,141     3,370
8.60%-10.75%         2002-2038........................................     6,292     6,594
Variable rate        2002-2005........................................     3,309     3,388
                                                                         -------   -------
Total debentures, notes and trust preferred securities................    19,390    22,320
Other (see Note 14)...................................................       247       270
Unamortized discount, net.............................................      (311)       --
                                                                         -------   -------
Total long-term debt..................................................    19,326    22,590
Less currently maturing long-term debt................................     2,824     3,073
                                                                         -------   -------
Net long-term debt....................................................   $16,502   $19,517
                                                                         =======   =======


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

(a) At December 31, 2001 and 2000, these balances included $858 and $946,
    respectively, representing the remaining excess of the fair value over the
    recorded value of debt at the time of the TCI Merger and MediaOne Merger.
    The excess is being amortized to interest expense over the remaining lives
    of the underlying debt obligations.

(b) The actual interest paid on debt obligations may have differed from the
    stated amount due to interest rate swap contracts entered into to manage
    exposure to interest rate risk and other strategies used to reduce finance
    costs (see Note 10).

     Annual maturities at December 31, 2001, of the $19,326 in total long-term
obligations are as follows:


                                                           
2002........................................................  $2,824
2003........................................................   3,416
2004........................................................   3,343
2005........................................................   3,056
2006........................................................   1,107
Later years.................................................   5,580


  EXCHANGEABLE NOTES

     During 2001, AT&T Broadband Group, through ATTBLLC, issued exchangeable
notes which are mandatorily redeemable at AT&T Broadband Group's option into
shares of Cablevision NY Group Class A ("Cablevision NY") common stock or its
cash equivalent (the "Cablevision NY Exchangeable Notes") and Rainbow Media
Group Class A ("Rainbow Media Group") tracking stock or its cash equivalent (the
"Rainbow Exchangeable Notes"). During 2000, AT&T Broadband Group, through
ATTBLLC and MediaOne, issued debt which is mandatorily redeemable at AT&T
Broadband Group's option into shares of Comcast common stock or its cash
equivalent (the "Comcast Exchangeable Notes")

                                       F-50

                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

and Microsoft Corporation ("Microsoft") common stock or its cash equivalent (the
"Microsoft Exchangeable Notes"). During 1999 and 1998, MediaOne issued
exchangeable notes which are mandatorily redeemable at AT&T Broadband Group's
option into (i) Vodafone ADRs held by MediaOne, (ii) the cash equivalent, or
(iii) a combination of cash and Vodafone ADRs (the "Vodafone Exchangeable
Notes"). The maturity value of the exchangeable notes varies based upon the fair
market value of the security it is indexed to.

     Following is a summary of the Cablevision NY Exchangeable Notes outstanding
at December 31, 2001, which are indexed to 26.9 million shares of Cablevision NY
common stock:


                                                           
Maturity Date...............................................    2004
Face value..................................................  $  970
Interest rate...............................................    6.50%
Put price per share.........................................  $36.05
Call price per share........................................  $43.98
Carrying value..............................................  $1,030


     At maturity, the Cablevision NY Exchangeable Notes will be redeemed, at
AT&T Broadband Group's option, with (i) a number of shares of Cablevision NY
common stock equal to the underlying shares multiplied by the exchange ratio, or
(ii) its equivalent cash value. The exchange ratio will be calculated at
maturity in the following manner:

          (a) If the fair market value of a share of Cablevision NY common stock
     is greater than the call price, the exchange ratio will be 0.8197;

          (b) If the fair market value of a share of Cablevision NY common stock
     is less than or equal to the put price, the exchange ratio will be 1;

          (c) If the fair market value of a share of Cablevision NY common stock
     is less than or equal to the call price but greater than the put price, the
     exchange ratio will be a fraction, the numerator of which is equal to the
     put price, and the denominator of which is equal to the fair market value
     of a share of Cablevision NY common stock.

     Following is a summary of the Rainbow Exchangeable Notes outstanding at
December 31, 2001, which are indexed to 9.8 million shares of Rainbow Media
Group tracking stock:


                                                           
Maturity Date...............................................    2005
Face value..................................................  $  220
Interest rate...............................................    6.25%
Put price per share.........................................  $22.50
Call price per share........................................  $27.45
Carrying value..............................................  $  196


     At maturity, the Rainbow Exchangeable Notes will be redeemed, at AT&T's
option, with (i) a number of shares of Rainbow Media Group tracking stock equal
to the underlying shares multiplied by the exchange ratio, or (ii) its
equivalent cash value. The exchange ratio will be calculated at maturity in the
following manner:

          (a) If the fair market value of a share of Rainbow Media Group
     tracking stock is greater than the call price, the exchange ratio will be
     0.8197;

                                       F-51

                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

          (b) If the fair market value of a share of Rainbow Media Group
     tracking stock is less than or equal to the put price, the exchange ratio
     will be 1;

          (c) If the fair market value of a share of Rainbow Media Group
     tracking stock is less than or equal to the call price but greater than the
     put price, the exchange ratio will be a fraction, the numerator of which is
     equal to the put price, and the denominator of which is equal to the fair
     market value of one share of Rainbow Media Group tracking stock.

     Following is a summary of the Comcast Exchangeable Notes outstanding at
December 31, 2001 by year of maturity which are indexed to 25 million shares of
Comcast common stock:



MATURITY DATE                                                 2003     2004     2005
-------------                                                ------   ------   ------
                                                                      
Face value.................................................  $  371   $  314   $  329
Interest rate..............................................    6.75%    5.50%    4.63%
Put price per share........................................  $41.50   $41.06   $39.13
Call price per share.......................................  $49.80   $49.27   $46.96
Carrying value at:
  December 31, 2001........................................  $  320   $  277   $  286
  December 31, 2000........................................  $  371   $  314   $  329


     At maturity, the Comcast Exchangeable Notes will be redeemed, at AT&T's
option, into (i) a number of shares of Comcast common stock equal to the
underlying shares multiplied by the exchange ratio, or (ii) its equivalent cash
value. The exchange ratio will be calculated at maturity in the following
manner:

          (a) If the fair market value of a share of Comcast common stock is
     greater than the call price, the exchange ratio will be 0.8333;

          (b) If the fair market value of a share of Comcast common stock is
     less than or equal to the put price, the exchange ratio will be 1;

          (c) If the fair market value of a share of Comcast common stock is
     less than or equal to the call price but greater than the put price, the
     exchange ratio will be a fraction, the numerator of which is equal to the
     put price, and the denominator of which is equal to the fair market value
     of one share of Comcast common stock.

     Following is a summary of the Comcast Exchangeable Notes outstanding at
December 31, 2001, which are indexed to 22.3 million shares of Comcast common
stock:



MATURITY DATE                                                 2003     2004     2005
-------------                                                ------   ------   ------
                                                                      
Face value.................................................  $  267   $  267   $  267
Interest rate..............................................    6.76%    6.80%    6.84%
Put price per share........................................  $35.89   $35.89   $35.89
Call price per share.......................................  $50.64   $58.39   $67.97
Carrying value at:
  December 31, 2001........................................  $  244   $  244   $  245
  December 31, 2000........................................  $  267   $  267   $  267


     At maturity, such Comcast Exchangeable Notes will be redeemed, at AT&T's
option, with (i) a number of shares of Comcast common stock equal to the
underlying shares multiplied by the exchange

                                       F-52

                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

ratio, or (ii) its equivalent cash value. The exchange ratio will be calculated
at maturity in the following manner:

          (a) If the fair market value of a share of Comcast common stock is
     greater than or equal to the call price, the exchange ratio will be a
     fraction the numerator of which is equal to the sum of (i) the put price,
     plus (ii) the excess of the fair market value of one share of Comcast
     common stock over the call price, and the denominator of which is equal to
     the fair market value of one share of Comcast common stock;

          (b) If the fair market value of a share of Comcast common stock is
     less than or equal to the put price, the exchange ratio will be 1;

          (c) If the fair market value of a share of Comcast common stock is
     less than the call price but greater than the put price, the exchange ratio
     will be a fraction of which the numerator is equal to the put price, and
     the denominator of which is equal to the fair market value of one share of
     Comcast common stock.

     Following is a summary of the Microsoft Exchangeable Notes outstanding at
December 31, 2001, which are indexed to 10 million shares of Microsoft common
stock:



MATURITY DATE                                               2003     2004      2005
-------------                                              ------   -------   -------
                                                                     
Face value...............................................  $  227   $   226   $   226
Interest rate............................................    6.96%     7.00%     7.04%
Put price per share......................................  $67.87   $ 67.87   $ 67.87
Call price per share.....................................  $97.39   $111.64   $128.60
Carrying value at:
  December 31, 2001......................................  $  201   $   198   $   196
  December 31, 2000......................................  $  145   $   144   $   144


     At maturity, the Microsoft Exchangeable Notes will be redeemed, at AT&T's
option, with (i) a number of shares of Microsoft common stock equal to the
underlying shares multiplied by the exchange ratio, or (ii) its equivalent cash
value. The exchange ratio will be calculated at maturity in the following
manner:

          (a) If the fair market value of a share of Microsoft common stock is
     greater than the call price, the exchange ratio will be a fraction the
     numerator of which is equal to the sum of (i) the put price, plus (ii) the
     excess of the fair market value of one share of Microsoft common stock over
     the call price, and the denominator of which is equal to the fair market
     value of one share of Microsoft common stock;

          (b) If the fair market value of a share of Microsoft common stock is
     less than or equal to the put price, the exchange ratio will be 1;

          (c) If the fair market value of a share of Microsoft common stock is
     less than or equal to the call price but greater than the put price, the
     exchange ratio will be a fraction of which the numerator is equal to the
     put price, and the denominator of which is equal to the fair market value
     of one Microsoft common stock.

     In the third quarter of 2001, exchangeable notes that were indexed to a
portion of holdings of Vodafone ADR securities matured. The carrying value of
the notes was $2,337 at December 31, 2000. Prior to the settlement, the carrying
value of the notes was $1,634. These notes were settled with approximately 70
million shares of Vodafone ADR's and $252 in cash. Approximately 57 million
shares of

                                       F-53

                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

the Vodafone ADR's used in the settlement were accounted for as "trading"
securities and the remaining shares were accounted for as "available-for-sale"
securities under SFAS No. 115, "Accounting for Certain Investments in Debt and
Equity Securities ("SFAS 115")." The settlement resulted in a pretax loss of
approximately $392 which was reclassified from other comprehensive income to
investment (expense) income in the statement of operations.

     Following is a summary of the Vodafone Exchangeable Notes outstanding at
December 31, 2001, which are indexed to Vodafone ADRs:



MATURITY DATE                                                  2002
-------------                                                 ------
                                                           
Face value..................................................  $1,129
Interest rate...............................................     7.0%
Put price...................................................  $43.44
Call price..................................................  $51.26
Carrying value at:
  December 31, 2001.........................................  $  715
  December 31, 2000.........................................  $1,012


     The redemption formula for Vodafone Exchangeable Notes that mature in 2002,
which are indexed to 26 million shares of Vodafone ADRs, is as follows:

          (a) If the fair market value of a Vodafone ADR is greater than or
     equal to the call price, each Vodafone exchangeable Note is equivalent to
     0.8475 of a Vodafone ADR;

          (b) If the fair market value of a Vodafone ADR is less than or equal
     to the put price, each Vodafone Exchangeable Note is equivalent to one
     Vodafone ADR; or

          (c) If the fair market value of a Vodafone ADR is less than the call
     price but greater than the put price, each Vodafone Exchangeable Note is
     equivalent to a fraction of a Vodafone ADR equal to (i) the put price
     divided by (ii) the fair market value of one Vodafone ADR.

     AT&T Broadband Group's exchangeable notes that are indexed to Cablevision
NY, Comcast and Microsoft common stock and Rainbow Media Group are secured by
AT&T Broadband Group's investments in Cablevision NY, Comcast, Microsoft and
Rainbow Media Group. AT&T Broadband Group's exchangeable notes which are indexed
to Vodafone ADRs are unsecured obligations, ranking equally in right of payment
with all other unsecured and unsubordinated obligations of AT&T Broadband Group.

     These exchangeable notes are being accounted for as indexed debt
instruments since the maturity value of the debt is dependent upon the fair
market value of the underlying securities. These exchangeable notes contain
embedded derivatives that require separate accounting as the maturity value of
the debt is dependent upon the fair market value of the underlying Cablevision
NY, Rainbow Media Group, Comcast, Microsoft and Vodafone ADR securities, as
applicable. The economic characteristics of the embedded derivatives (i.e.,
equity like features) are not clearly and closely related to that of the host
instruments (a debt security). As a result, the embedded derivatives are
separated from the host debt instrument for valuation purposes and are carried
at fair value within the host debt instrument. The embedded derivatives for
Cablevision NY and Rainbow Media Group exchangeable notes are designated as cash
flow hedges. These designated options are carried at fair value with changes in
fair value recorded, net of income taxes, within other comprehensive income as a
component of combined attributed net assets. There was no ineffectiveness
recognized on the cash flow hedges. The Comcast, Microsoft, Vodafone and certain
of the

                                       F-54

                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Cablevision NY and Rainbow Media Group options are undesignated and are carried
at fair value with changes in fair value recorded in other (expense) income in
the combined statement of operations.

     The options hedge the market risk of a decline in value of Cablevision NY,
Rainbow Media Group, Comcast, Microsoft and Vodafone securities. The market risk
of a decline in these securities, below the respective put prices has been
eliminated. In addition, any market gains AT&T Broadband Group may earn have
been limited to the call prices, with the exception of certain debt indexed to
Comcast stock, the Cablevision NY stock, Rainbow Media Group and Vodafone ADRs,
which provide for participation in a portion of the market gains above the call
price.

     Since all the Cablevision NY and Rainbow Media Group securities and a
portion of the Comcast, Microsoft and Vodafone securities are cost method
investments being accounted for as "available-for-sale" securities under SFAS
115, changes in the maturity value of the options and the underlying securities
are being recorded as unrealized gains or losses, net of income taxes, within
other comprehensive income as a component of combined attributed net assets. The
remaining portion of the Comcast, Microsoft and Vodafone securities are cost
method investments being accounted for as "trading" securities and changes in
the fair value of the options and the underlying securities are being recorded
as net revaluation of securities within other (expense) income.

  OTHER EXCHANGEABLE NOTES

     During 2000, AT&T Broadband Group, through MediaOne, also entered into a
series of purchased and written options to monetize its holdings of 21.9 million
shares of Microsoft common stock and issued floating rate debt, which is
attributed to AT&T Broadband Group. The carrying value of the debt outstanding
at both December 31, 2001 and 2000 was $1,369, which pays interest at the three
month London Inter-Bank Offered Rate ("LIBOR") plus 0.4%. The debt matures
annually with $458 maturing in 2003 and 2004, and $453 maturing in 2005, and is
repayable at AT&T's option in either Microsoft common stock or cash. (See note
10 for discussion of the purchased and written options.)

     In addition, during 1999 two subsidiaries of MediaOne, MediaOne SPC IV and
MediaOne SPC VI, entered into a series of purchased and written options on
Vodafone ADRs contributed to them by MediaOne and issued floating rate debt. The
carrying value of the debt outstanding at both December 31, 2001 and 2000 was
$1,739, which pays interest at a three-month LIBOR plus 0.5%. This debt has been
attributed to AT&T Broadband Group and matures in equal quarterly installments
beginning in 2003 and ending in 2005. The assets of MediaOne SPC IV, which are
primarily 29.1 million Vodafone ADRs, are only available to pay the creditors of
MediaOne SPC IV. Likewise, the assets of MediaOne SPC VI, which are primarily
18.0 million Vodafone ADRs, are only available to pay the creditors of MediaOne
SPC VI. MediaOne SPC IV and VI will generate cash to settle these notes by
selling their Vodafone ADRs to the market (or to AT&T, at AT&T's option) and
cash settle the option. (See note 10 for discussions of the purchased and
written options.)

                                       F-55

                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

 SUBSIDIARY-OBLIGATED MANDATORILY REDEEMABLE PREFERRED SECURITIES OF SUBSIDIARY
 TRUSTS HOLDING SOLELY SUBORDINATED DEBT SECURITIES

     Certain subsidiary trusts (the "Trusts") of AT&T Broadband Group, through
ATTBLLC and MediaOne, had preferred securities ("Trust Preferred Securities")
outstanding at December 31, 2001 and 2000 as follows:



                                                                          CARRYING AMOUNT
                                                    INTEREST   MATURITY   ---------------
SUBSIDIARY TRUST                                      RATE       DATE      2001     2000
----------------                                    --------   --------   ------   ------
                                                                       
TCI Communications Financing I....................    8.72%      2045     $  527   $  528
TCI Communications Financing II...................   10.00%      2045        513      514
TCI Communications Financing III..................    9.65%      2027        380      357
TCI Communications Financing IV...................    9.72%      2036        204      204
MediaOne Financing A..............................    7.96%      2025         30       30
MediaOne Financing B..............................    8.25%      2036         28       28
MediaOne Finance II...............................    9.50%      2036        214      214
MediaOne Finance III..............................    9.04%      2038        504      504
                                                                          ------   ------
                                                                          $2,400   $2,379
                                                                          ======   ======


     The Trusts were created for the exclusive purpose of issuing the Trust
Preferred Securities and investing the proceeds thereof into Subordinated
Deferrable Interest Notes (the "Subordinated Debt Securities") of TCI and
MediaOne. The Subordinated Debt Securities have interest rates equal to the
interest rate of the corresponding Trust Preferred Securities. The TCI
Communications Financing I and II Trust Preferred Securities were redeemable at
face value beginning January and May 2001, respectively. The TCI Communications
Financing III Trust Preferred Securities are callable at 104.825% of face value
beginning in March 2007. TCI Communications Financing IV Trust Preferred
Securities were callable at face value beginning in March 2002. Upon redemption
of the Subordinated Debt Securities, the Trust Preferred Securities will be
mandatorily redeemable. All of the MediaOne Subordinated Debt Securities are
redeemable at a redemption price of $25.00 per security, plus accrued and unpaid
interest. Upon redemption of the MediaOne Subordinated Debt Securities, the
MediaOne Trust Preferred Securities are mandatorily redeemable at a price of
$25.00 per share, plus accrued and unpaid distributions. The 7.96% MediaOne
Subordinated Debt Securities became redeemable after September 11, 2000. The
9.50% and 8.25% MediaOne Subordinated Debt Securities became redeemable after
October 29, 2001. The 9.04% MediaOne Subordinated Debt Securities are redeemable
after October 28, 2003. The Trust Preferred Securities are recorded within
short-term and long-term debt in the accompanying combined balance sheet. AT&T
Broadband, LLC effectively provides a full and unconditional guarantee of all
the TCI Trusts' obligations under the Trust Preferred Securities. In 2000, AT&T
provided a full and unconditional guarantee on the outstanding securities issued
by TCI Communications Financing I, II and IV. MediaOne has effectively provided
a full and unconditional guarantee of the MediaOne trust obligations under the
Trust Preferred Securities. In 2000, AT&T provided a full and unconditional
guarantee of the MediaOne Trust Preferred Securities. Dividends accrued and paid
on the Trust Preferred Securities aggregated $208, $182 and $114 for the years
ended December 31, 2001 and 2000 and the ten months ended December 31, 1999,
respectively, and are included in interest expense in the accompanying combined
statement of operations. AT&T has the right to defer interest payments up to 20
consecutive quarters; as a consequence, dividend payments on the Trust Preferred
Securities can be deferred by the trusts during any such interest-payment
period.

                                       F-56

                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

     On February 26, 2002, AT&T announced that it was notifying holders that it
will call TCI Communications Financing IV Trust Preferred Securities for early
redemption on April 1, 2002. On February 28, 2002, AT&T called for early
redemption the TCI Communications Financing I and II Trust Preferred Securities.
On March 4, 2002, AT&T called for early redemption the MediaOne Financing A,
Financing B and Financing II Trust Preferred Securities. At December 31, 2001,
the TCI Communications Financing I, II and IV and MediaOne A, B and II Trust
Preferred Securities were reclassed from long-term debt to short-term debt.

(8) MINORITY INTEREST

  PREFERRED STOCK OF SUBSIDIARIES

     Prior to the TCI Merger, TCI Pacific Communications Inc. ("Pacific"), an
attributed entity of AT&T Broadband Group, issued 5% Class A Senior Cumulative
Exchangeable preferred stock. Each share is exchangeable, from and after August
1, 2001, for 8.365 shares of AT&T common stock (as adjusted for the July 2001
split-off of AT&T Wireless Services, Inc. from AT&T), subject to certain
antidilution adjustments. Additionally, Pacific may elect to make any dividend,
redemption or liquidation payment in cash, shares of AT&T common stock or a
combination of the foregoing. Dividends on the Pacific preferred stock were $31
for both the years ended December 31, 2001 and 2000 and $26 for the ten months
ended December 31, 1999 and are reflected in minority interest income (expense)
in the accompanying combined statements of operations. The Pacific preferred
stock is reflected within minority interest in the accompanying combined balance
sheets and aggregated $2.1 billion at December 31, 2001 and 2000.

     As of December 31, 2001, 59,187 shares of the Pacific preferred stock had
been exchanged for 494,808 shares of AT&T common stock. At December 31, 2001 and
2000 there were 6.2 million and 6.3 million shares outstanding, respectively,
out of 6.3 million shares authorized. Pacific has elected to exercise its right
to redeem all outstanding shares of the Pacific preferred stock that have not
been exchanged as of April 26, 2002, at a price of $102.50 per share plus
accrued dividends of $0.96 per share. The redemption price will be paid in AT&T
common stock, up to a maximum of the 52.3 million shares which were registered
with the Securities and Exchange Commission in February of 2002, with any
shortfall paid in cash.

  CENTAUR FUNDING CORPORATION

     Prior to the MediaOne Merger, Centaur Funding Corporation ("Centaur"), a
subsidiary of MediaOne, issued three series of preferred shares, the Auction
Market Preference Shares, Series A ("Series A Shares"), the 9.08% Cumulative
Preference Shares, Series B (the "Series B Shares"), and the Preference Shares,
Series C (the "Series C Shares"). Centaur was created for the principal purpose
of raising capital through the issuance of preferred shares and investing those
proceeds into notes issued by MediaOne SPC II, a subsidiary of MediaOne.
Principal and interest payments from the notes are expected to be Centaur's
principal source of funds to make dividend and redemption payments on the
preferred shares. In addition, the dividend and redemption payments on the
preferred shares will be determined by reference to the dividend and redemption
activity of the preferred stock of AirTouch Communications, Inc. ("ATI shares")
held by MediaOne SPC II. AirTouch Communications, Inc. is a subsidiary of
Vodafone. Payments on the preferred shares are neither guaranteed nor secured by
MediaOne or AT&T. The assets of MediaOne SPC II, which include the ATI shares,
are only available to pay creditors of MediaOne SPC II. Centaur and MediaOne SPC
II are attributed entities of AT&T Broadband Group.

                                       F-57

                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

     At December 31, 2001 and 2000, the following Centaur preferred securities,
which have been attributed to AT&T Broadband Group, were outstanding:



                                                                               CARRYING AMOUNT
                                                                   SHARES      ---------------
                                 DIVIDEND RATE   MATURITY DATE   OUTSTANDING    2001     2000
                                 -------------   -------------   -----------   ------   ------
                                                                         
Series A Shares................   Variable          None            400        $  100   $  100
Series B Shares................    9.08%         April 2020       934,500         927      927
Series C Shares................     None         April 2020       715,500         127      118
                                                                               ------   ------
                                                                               $1,154   $1,145
                                                                               ======   ======


     The Series A Shares have a liquidation value of $250 thousand per share and
dividends are payable quarterly when declared by Centaur's Board of Directors
out of funds legally available. The Series B Shares have a liquidation value of
$1 thousand per share and dividends are payable quarterly in arrears when
declared by Centaur's Board of Directors out of funds legally available. In
addition, dividends may be declared and paid only to the extent dividends have
been declared and paid on the ATI shares. The Series C Shares have a liquidation
value of $1 thousand per share at maturity. The value of the Series C Shares
will be accreted to its liquidation value upon maturity. The Series B Shares
rank equally with the Series C Shares as to the redemption payments and upon
liquidation. The Series B and Series C Shares rank senior to the Series A Shares
and the common stock shares of Centaur as to the redemption payments and upon
liquidation. The Series B Shares rank senior to the Series A Shares and the
common shares with respect to dividend payments. The preferred shares issued by
Centaur are recorded within minority interest in the accompanying combined
balance sheets at December 31, 2001 and 2000.

     Dividends on the preferred shares were $99 and $55 for the years ended
December 31, 2001 and 2000 and were included within minority interest income
(expense) in the accompanying combined statements of operations.

(9) COMPANY-OBLIGATED CONVERTIBLE QUARTERLY INCOME PREFERRED SECURITIES

     On June 16, 1999, AT&T Finance Trust I (the "AT&T Trust"), a wholly owned
subsidiary of AT&T completed the private sale of 100 million shares of 5.0%
cumulative quarterly income preferred securities ("Quarterly Preferred
Securities") to Microsoft. Proceeds from the issuance were invested by the AT&T
Trust in junior subordinated debentures ("Debentures") issued by AT&T due 2029,
which represent the sole asset of the AT&T Trust. The Quarterly Preferred
Securities have been attributed to AT&T Broadband Group.

     The Quarterly Preferred Securities pay dividends at an annual rate of 5.0%
of the liquidation preference of $50 per security, and are convertible at any
time prior to maturity into 88.016 million shares of AT&T common stock (as
adjusted for the July 2001 split-off of AT&T Wireless, Services, Inc. from
AT&T). The Quarterly Preferred Securities are subject to mandatory redemption
upon repayment of the Debentures at maturity or their earlier redemption. The
conversion feature can be terminated, under certain conditions, after three
years.

     The Debentures make a quarterly payment in arrears of 62.5 cents per
security on the last day of March, June, September and December of each year.
AT&T has the right to defer such interest payments up to 20 consecutive
quarters. As a consequence, quarterly dividend payments on the Quarterly
Preferred Securities can be deferred by the AT&T Trust during any such
interest-payment period. If AT&T defers any interest payments, AT&T may not,
among other things, pay any dividends on AT&T common stock until all interest in
arrears is paid to the AT&T Trust.

                                       F-58

                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

     Dividends on the Quarterly Preferred Securities were $250, $250 and $135
for the years ended December 31, 2001 and 2000 and the ten months ended December
31, 1999, respectively, and are reported within minority interest income
(expense) in the accompanying combined statements of operations.

     On June 16, 1999, AT&T also issued to Microsoft 53 million warrants, each
to purchase one share of AT&T common stock at a price of $57 per share at the
end of three years (as adjusted for the July 2001 split-off of AT&T Wireless
Services, Inc. from AT&T). Alternatively, the warrants are exercisable on a
cashless basis. If the warrants are not exercised on the three-year anniversary
of the closing date, the warrants expire.

     A discount on the Quarterly Preferred Securities equal to the value of the
warrants of $306 was recognized at the issuance date and is being amortized over
the 30-year life of the Quarterly Preferred Securities as a component of
minority interest income (expense) in the accompanying combined statements of
operations.

     In connection with the AT&T Comcast Merger (see note 1), AT&T Comcast will
assume the Quarterly Preferred Securities. In conjunction with the AT&T Comcast
Merger, Microsoft has agreed to convert the Quarterly Preferred Securities into
115 million shares of AT&T Comcast common stock.

(10) FINANCIAL INSTRUMENTS

  ADOPTION OF SFAS 133

     Effective January 1, 2001, AT&T Broadband Group adopted SFAS 133 and its
corresponding amendments under SFAS No. 138. SFAS 133 establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. All
derivatives, whether designated in hedging relationships or not, are required to
be recorded on the balance sheet at fair value. The adoption of SFAS 133 on
January 1, 2001, resulted in a pretax cumulative effect decrease to net loss of
$371 ($229 net-of-tax).

     AT&T Broadband Group's cumulative effect decrease to net loss of $229 was
attributable primarily to equity based derivative instruments related to indexed
debt instruments and warrants held in both public and private companies.
Included in the after tax cumulative effect benefit of $229 was a $185 benefit
for the changes in valuations of both embedded and non-embedded net purchased
options related to indexed debt instruments and $44 benefit for recording the
fair value of warrants.

     Upon adoption, as permitted by SFAS 133, AT&T Broadband Group reclassified
$9.3 billion of securities from "available-for-sale" to "trading". This
reclassification resulted in the recognition, in the statement of operations, of
losses previously recorded within accumulated other comprehensive income. A
portion of the loss ($1,638 pretax; $1,005 net-of-tax) was recorded as part of
the cumulative effect of adoption. This loss completely offset a gain for
amounts also previously recorded within accumulated other comprehensive income
on the indexed debt obligation that had been considered a hedge of Comcast,
Microsoft and Vodafone "available-for-sale" securities. The reclassification of
securities also resulted in a pretax charge of $1,154 ($708 net-of-tax) recorded
in other (expense) income.

  FINANCIAL INSTRUMENTS

     In the normal course of business, AT&T Broadband Group uses various
financial instruments, including derivative financial instruments, for purposes
other than trading. AT&T Broadband Group does not use derivative financial
instruments for speculative purposes. Financial instruments used by AT&T
Broadband Group include guarantees of debt, letters of credit, option contracts,
equity hedges, warrants and interest rate swap agreements. Collateral is
generally not required for these types of instruments.

                                       F-59

                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

     By their nature, all such instruments involve risk, including the credit
risk of nonperformance by counterparties. The maximum potential loss associated
with such risk may exceed the amount recognized in the balance sheet. However,
at December 31, 2001 and 2000, in management's opinion there was no significant
risk of loss in the event of nonperformance of the counterparties to these
financial instruments. AT&T Broadband Group controls its exposure to credit risk
through credit approvals, credit limits and monitoring procedures. AT&T
Broadband Group does not have any significant exposure to any individual
customer or counterparty, or any major concentration of credit risk related to
any financial instruments.

  GUARANTEES OF DEBT

     From time to time, ATTBLLC and MediaOne may guarantee the debt of their
subsidiaries and certain unconsolidated joint ventures. ATTBLLC has taken
certain steps to support debt compliance with respect to obligations aggregating
$1,461 at December 31, 2001 and 2000 of certain cable television partnerships in
which ATTBLLC has a non-controlling ownership interest and which have been
attributed to AT&T Broadband Group. Although there can be no assurance,
management believes that it will not be required to meet its obligations under
such guarantees. Total notional amounts of guarantees for ATTBLLC and MediaOne
were $1,463 and $1,486 at December 31, 2001 and 2000, respectively. At December
31, 2001 and 2000, there were no quoted market prices for similar agreements.

  LETTERS OF CREDIT

     Letters of credit are purchased guarantees that ensure performance or
payment to third parties in accordance with specified terms and conditions.
Management has determined that letters of credit do not create additional risk
to AT&T Broadband Group. Outstanding letters of credit at December 31, 2001 and
2000 were $288 and $263, respectively. The fair values of letters of credit,
based on fees paid to obtain the obligations, were immaterial at December 31,
2001 and 2000.

  INTEREST RATE SWAP AGREEMENTS

     Interest rate swaps which are usually designated as either cash flow or
fair value hedges, are entered into to manage exposure to changes in interest
rates. AT&T enters into swap agreements to manage the fixed/floating mix of the
debt portfolio in order to reduce aggregate risk to interest rate movements.
Interest rate swaps also allow funds to be raised at floating rates and
effectively swap them into fixed rates that are generally lower than those
available if fixed-rate borrowings were made directly. These agreements involve
the exchange of fixed-rate for floating-rate payments without the exchange of
the underlying principal amount. These floating-rate payments are based on rates
tied to the LIBOR.

     The following table indicates the type of swaps in use at December 31, 2001
and 2000, the notional amounts, and their weighted average interest rates. Their
average variable rates are those in effect at the reporting date and may change
significantly over the lives of the contracts.



                                                              2001   2000
                                                              ----   ----
                                                               
Fixed rate to variable rate swaps
  Notional amount...........................................  $500   $500
  Average receive rate......................................  9.68%  9.68%
  Average pay rate..........................................  4.02%  8.92%


     At December 31, 2001 the fair value and carrying value of the swaps was a
liability of $25. Such swaps were valued using current market quotes that were
obtained from dealers.

                                       F-60

                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

  EQUITY COLLARS

     In 2000, AT&T Broadband Group entered into three series of option
agreements (the "Microsoft Collars") with a single bank counterparty to hedge
exposure to 21.9 million shares of Microsoft common stock. The Microsoft
Collars, combined with the underlying shares, secure a floating-rate borrowing
from the counterparty, the face value of which is equal to the product of (i)
the underlying shares multiplied by (ii) the put price. (See note 7 for
discussion of the debt.)

     The Microsoft Collars are a series of purchased and written options that
hedge a portion of AT&T Broadband Group's holdings in Microsoft common stock.
The Microsoft Collars are undesignated for accounting purposes in accordance
with SFAS 133 and are carried in the balance sheet at fair value, with
unrealized gains or losses being recorded in other (expense) income. These
unrealized gains or losses are largely offset by the changes in the fair value
of a certain number of shares of Microsoft common stock that are classified as
"trading". The carrying value of the Microsoft Collars was $6 and $419 at
December 31, 2001 and 2000, respectively. The fluctuation of the carrying value
of the Microsoft Collars was primarily due to the change in the market prices of
the underlying shares, which were $66.25 per share and $43.375 per share at
December 31, 2001 and 2000, respectively, and the adoption of SFAS 133 which
required the instruments to be valued at fair value rather than intrinsic value.

     The following is a summary of the Microsoft Collars outstanding at December
31, 2001:



MATURITY DATE                                               2003     2004      2005
-------------                                              ------   -------   -------
                                                                     
Put price per share......................................  $62.48   $ 62.48   $ 62.48
Call price per share.....................................  $86.26   $100.44   $118.36


     Since the Microsoft Collars and related debt are contracted with the same
counterparty, the treatment is similar to a debt instrument with an embedded
instrument and will be net settled as follows:

     At the expiration of the Microsoft Collars, AT&T Broadband Group will
satisfy the debt and the net obligations of the Microsoft Collars under the
floating-rate debt by delivering (i) a number of Microsoft shares equal to the
underlying share amount multiplied by the exchange ratio, or (ii) its equivalent
cash value. The exchange ratio will be calculated at expiration in the following
manner:

          (a) If the fair market value of a share of Microsoft common stock is
     greater than the call price, the exchange ratio will be a fraction, the
     numerator of which is equal to the sum of (i) the put price, plus (ii) the
     excess of the fair market value of a share of Microsoft common stock over
     the call price, and the denominator of which is equal to the fair market
     value of a share of Microsoft common stock;

          (b) If the fair market value of a share of Microsoft common stock is
     less than or equal to the put price, the exchange ratio will be 1;

          (c) If the fair market value of a share of Microsoft common stock is
     less than or equal to the call price but greater than the put price, the
     exchange ratio will be a fraction, the numerator of which is equal to the
     put price, and the denominator of which is equal to the fair market value
     of a share of Microsoft common stock.

     Prior to the MediaOne Merger, two subsidiaries of MediaOne, MediaOne SPC IV
and MediaOne SPC VI, each entered into a series of option agreements (the
"Vodafone Collars") with a single bank counterparty to hedge their exposure to
47.2 million Vodafone ADRs. In conjunction with the Vodafone Collars, MediaOne
SPC IV and MediaOne SPC VI also issued floating-rate debt in a series of private
placements, the face value of which is equal to the product of (i) the
underlying shares multiplied by (ii) the put price. Simultaneous with the
execution of the Vodafone Collars, MediaOne SPC IV and MediaOne SPC VI each
entered into floating-to-fixed interest rate swaps in which future fixed
payments

                                       F-61

                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

were prepaid by each of MediaOne SPC IV and MediaOne SPC VI at inception.
Therefore, the on-going interest payments on the floating-rate notes are paid by
the counterparty with no recourse to AT&T Broadband Group. These prepaid
interest rate swaps are designated as cash flow hedges in accordance with SFAS
133.

     The Vodafone Collars are a series of purchased and written options that
hedge a portion of AT&T Broadband Group's holdings in Vodafone ADRs. The
Vodafone Collars are undesignated for accounting purposes in accordance with
SFAS 133 and are carried in the balance sheet at fair value, with unrealized
gains or losses being recorded to other (expense) income. These unrealized gains
or losses are largely offset by the changes in the fair value of a certain
number of Vodafone ADRs that are classified as "trading" in accordance with SFAS
115. The carrying value of the Vodafone Collars was $462 and $(453) at December
31, 2001 and 2000 respectively. The fluctuation of the carrying value of the
Vodafone Collars is primarily due to the change in the per share market price of
the underlying ADRs, which was $25.68 per share and $35.81 per share at December
31, 2001 and 2000, respectively, and the adoption of SFAS 133, which required
the instruments to be valued at fair value rather than intrinsic value.

     The following is a summary of the Vodafone Collars outstanding at December
31, 2001:



MATURITY DATE                                                 2003     2004     2005
-------------                                                ------   ------   ------
                                                                      
MEDIAONE SPC IV VODAFONE COLLARS
Average put price per share................................  $34.06   $33.78   $33.53
Average call price per share...............................  $49.13   $48.85   $48.60
MEDIAONE SPC VI VODAFONE COLLARS
Average put price per share................................  $39.85   $39.86   $39.86
Average call price per share...............................  $57.72   $57.72   $57.73


     Since the Vodafone Collars and related debt are contracted with different
counterparties, the instruments will be settled independently. MediaOne SPC IV
and MediaOne SPC VI will satisfy its obligations to the floating-rate debt
holders by delivering cash equal to the face value of the debt (see note 7). At
the expiration of the Vodaphone Collars, MediaOne SPC IV and MediaOne SPC VI
will cash settle its Vodaphone Collars with the counterparty. Cash settlement of
the Vodafone Collars will be completed in the following manner:

          (a) If the fair market value of a Vodafone ADR is greater than the
     call price, MediaOne SPC IV or MediaOne SPC VI (as appropriate) will pay a
     sum of cash equal to the excess of the fair market value of a Vodafone ADR
     over the call price;

          (b) If the fair market value of a Vodafone ADR is less than the put
     price, the counterparty will pay to MediaOne SPC IV or MediaOne SPC VI (as
     appropriate) a sum of cash equal to the excess of the put price over the
     fair market price of a Vodafone ADR;

          (c) If the fair market value of a Vodafone ADR is less than or equal
     to the call price but greater than or equal to the put price, the Vodafone
     Collars will expire worthless and no cash payment will be made or received
     by MediaOne SPC IV or MediaOne SPC VI (as appropriate).

     The net value of (i) the sale of all Vodafone ADRs and (ii) the cash
settlement of the Vodafone Collars will always be equal to or greater than the
face value of the floating-rate notes. Any remaining cash will be retained by
MediaOne SPC IV and MediaOne SPC VI and would become available to AT&T Broadband
Group for general corporate purposes.

                                       F-62

                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

  EQUITY HEDGES

     Equity hedges are used to manage exposure to changes in equity prices
associated with stock appreciation rights of previously affiliated companies and
are undesignated in accordance with SFAS 133. The notional amount outstanding on
these contracts at December 31, 2001 and 2000 was $340 and $370, respectively.
These instruments are recorded at fair value based on market quotes and were
liabilities of $71 and $87 at December 31, 2001 and 2000, respectively.

  WARRANTS

     AT&T Broadband Group may obtain warrants to purchase equity securities in
other private and public companies as a result of certain transactions. Private
warrants and public warrants that provide for net share settlement (i.e. allow
for cashless exercise) are considered to be derivative instruments and
recognized in the balance sheet at fair value in accordance with SFAS 133.
Warrants are not eligible to be designated as hedging instruments because there
is no underlying exposure. Instead, warrants are effectively investments in
private and public companies. The fair value of warrants held by AT&T Broadband
Group was $15 at December 31, 2001.

  DEBT AND PREFERRED SECURITIES

     The carrying value of debt maturing within one year approximates market
value. The table below summarizes the carrying and fair values of long-term
debt, excluding capital leases, and certain preferred securities. The market
values of long-term debt were obtained based on quotes or rates available for
debt with similar terms and maturities, and the market value of the preferred
securities was based on market quotes. It is not practicable to estimate the
fair market value of the Centaur Series A Shares, Series B Shares, Series C
Shares and the Quarterly Preferred Securities that aggregated $5,874 and $5,855
at December 31, 2001 and 2000, respectively, as there are no current markets
quotes available on these private placements.



                                                        2001                 2000
                                                 ------------------   ------------------
                                                 CARRYING    FAIR     CARRYING    FAIR
                                                  VALUE      VALUE     VALUE      VALUE
                                                 --------   -------   --------   -------
                                                                     
Debt, excluding capital leases.................  $19,079    $17,237   $22,182    $20,275
Pacific preferred stock........................  $ 2,100    $   948   $ 2,121    $   595


  DERIVATIVE IMPACTS

     For the year ended December 31, 2001, accumulated other comprehensive
income, as a component of combined attributed net assets, net of taxes, included
net unrealized losses of $224 relating to derivatives that are designated as
cash flow hedges. This amount included net losses of $143 related to the ongoing
fair value adjustments of equity based derivative instruments embedded in
certain debt instruments and net losses of $81 related to certain swap
transactions.

     For the year ended December 31, 2001, other (expense) income included net
gains of $1,178, relating to ongoing fair value adjustments of undesignated
derivatives. The fair value adjustments included net gains of $1,247 for
derivatives instruments related to certain debt instruments and net losses of
$69 for changes in the fair value of warrants. These gains were offset by net
losses of $983 from the ongoing mark-to-market adjustments of the "trading"
securities underlying the monetizations.

                                       F-63

                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

(11) PENSION, POSTRETIREMENT AND OTHER EMPLOYEE BENEFIT PLANS

     As a result of the MediaOne Merger, AT&T sponsors a pension plan covering
substantially all former MediaOne employees, and beginning in 2001, AT&T
sponsors a pension plan covering substantially all AT&T Broadband Group
employees. Pension benefits are principally based on pay and service. In
addition, AT&T sponsors retiree benefit plans for certain former MediaOne
employees.

     The following table shows the components of the net periodic benefit costs
included in the accompanying combined statements of operations of AT&T Broadband
Group:



                                                               PENSION     POSTRETIREMENT
                                                              BENEFITS        BENEFITS
                                                             -----------   ---------------
                                                                  FOR THE YEAR ENDED
                                                                     DECEMBER 31,
                                                             -----------------------------
                                                             2001   2000    2001     2000
                                                             ----   ----   ------   ------
                                                                        
Service cost-benefits earned during the period.............  $ 31    $9      $1       $1
Interest cost on benefit obligations.......................    13     8       2        1
Credit for expected return on plan assets..................   (13)   (9)     (1)      --
Amortization of gains......................................     1    --      --       --
Net curtailment gains......................................    (1)   --      (1)      --
                                                             ----    --      --       --
Net periodic benefit cost..................................  $ 31    $8      $1       $2
                                                             ====    ==      ==       ==


     The following tables provide a reconciliation of the changes in the plans'
benefit obligations and fair value of assets, and a statement of the funded
status:



                                                             PENSION     POSTRETIREMENT
                                                            BENEFITS        BENEFITS
                                                           -----------   ---------------
                                                           2001   2000    2001     2000
                                                           ----   ----   ------   ------
                                                                      
CHANGE IN BENEFIT OBLIGATIONS:
Benefit obligation, beginning of year....................  $165   $ --    $ 35     $ --
Acquisition of MediaOne..................................    --    204      --       38
Service cost.............................................    31      9       1        1
Interest cost............................................    13      8       2        1
Plan amendments..........................................    --     (5)     --       --
Actuarial losses (gains).................................    --     17       3       (5)
Benefit payments.........................................   (46)   (68)     (1)      --
Curtailments.............................................    (6)     0      (1)      --
                                                           ----   ----    ----     ----
Benefit obligation, end of year..........................  $157   $165    $ 39     $ 35
                                                           ====   ====    ====     ====
CHANGE IN FAIR VALUE OF PLAN ASSETS:
Fair value of plan assets, beginning of year.............  $148   $ --    $  5     $ --
Acquisition of MediaOne..................................     0    205      --        5
Actual return on plan assets.............................   (12)   (12)     --       --
Employer contributions...................................     8     23      --       --
Benefit payments.........................................   (46)   (68)     (1)      --
                                                           ----   ----    ----     ----
Fair value of plan assets, end of year...................  $ 98   $148    $  4     $  5
                                                           ====   ====    ====     ====


                                       F-64

                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)



                                                             PENSION     POSTRETIREMENT
                                                            BENEFITS        BENEFITS
                                                           -----------   ---------------
                                                                  AT DECEMBER 31,
                                                           -----------------------------
                                                           2001   2000    2001     2000
                                                           ----   ----   ------   ------
                                                                      
Unfunded benefit obligation..............................  $(59)  $(17)   $(35)    $(30)
Unrecognized net loss (gain).............................    56     38      (1)      (5)
Unrecognized prior service cost..........................    (4)    (5)     --       --
                                                           ----   ----    ----     ----
Net amount recorded......................................  $ (7)  $ 16    $(36)    $(35)
                                                           ====   ====    ====     ====


     The following table provides the amounts recorded in AT&T Broadband Group's
combined balance sheet:



                                                             PENSION     POSTRETIREMENT
                                                            BENEFITS        BENEFITS
                                                           -----------   ---------------
                                                                  AT DECEMBER 31,
                                                           -----------------------------
                                                           2001   2000    2001     2000
                                                           ----   ----   ------   ------
                                                                      
Prepaid pension cost.....................................  $  8   $ 36    $ --     $ --
Benefit related liabilities..............................   (53)   (21)    (36)     (35)
Accumulated other comprehensive income...................    38      1      --       --
                                                           ----   ----    ----     ----
Net amount recorded......................................  $ (7)  $ 16    $(36)    $(35)
                                                           ====   ====    ====     ====


     The nonqualified pension plan had an unfunded accumulated benefit
obligation of $19 at December 31, 2001.

     The assumptions in the following table were used in the measurement of the
pension and postretirement benefit obligations and the net periodic benefit
costs as applicable.



                                                              2001   2000
                                                              ----   ----
                                                               
Weighted-average assumptions at December 31:
  Discount rate.............................................  7.25%  7.50%
  Expected return on plan assets............................  9.50%  9.50%
  Rate of compensation increase.............................  4.00%  4.00%


     A 9.5% rate of increase in the per capita cost of covered health-care
benefits (the health-care cost trend rate) was assumed. This rate was assumed to
gradually decline after 2001 to 5% by the year 2011 and then remain level.
Assumed health-care cost trend rates have a significant effect on the amounts
reported for the health-care plans. A one percentage point increase or decrease
in the assumed health-care cost trend rate would increase or decrease the
health-care component of the accumulated postretirement benefit obligation by $4
and $4, respectively. A one percentage point increase or decrease in the assumed
health-care cost trend rate would not have a material impact on the service and
interest-cost components of net periodic postretirement health-care benefit
costs.

     AT&T also sponsors savings plans for the majority of its employees. The
plans allow employees to contribute a portion of their pretax and/or after-tax
income in accordance with specified guidelines. Employee contributions are
matched up to certain limits. AT&T Broadband Group contributions amounted to
$54, $70 and $38 for the years ended December 31, 2001 and 2000 and the ten
months ended December 31, 1999.

                                       F-65

                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

(12) STOCK-BASED COMPENSATION PLANS

     Under AT&T's 1997 Long-term Incentive Program (the "Program"), AT&T grants
stock options, performance shares, restricted stock and other awards on AT&T
common stock as well as stock options or AT&T Wireless Group tracking stock
prior to the split-off of AT&T Wireless Group. The exercise price of any stock
option is equal to the stock price when the option is granted. Generally, the
options vest over two to three years and are exercisable up to 10 years from the
date of grant.

     Under the Program, performance share units are awarded to key employees in
the form of either common stock or cash at the end of a three-year period, based
on AT&T's total shareholder return and/or certain financial-performance targets.

     On July 9, 2001, AT&T completed the split-off of AT&T Wireless Group as a
separate, independently-traded company. The AT&T Wireless common stock held by
AT&T was distributed to AT&T common shareowners on a basis of 0.3218 of a share
of AT&T Wireless for each AT&T share outstanding. All outstanding AT&T common
stock options granted prior to January 1, 2001 were treated in a similar manner.
AT&T modified the terms and conditions of all outstanding stock option grants to
allow the AT&T Wireless Group common stock options held by AT&T employees to
immediately vest and become exercisable for their remaining contractual term.

     Under the AT&T 1996 Employee Stock Purchase Plan (the "Plan"), which was
effective July 1, 1996, and amended on May 23, 2001, AT&T is authorized to sell
up to 105 million shares of AT&T common stock to its eligible employees through
June 30, 2006. Under the terms of the Plan, employees may have up to 10% of
their earnings withheld to purchase AT&T's common stock. The purchase price of
the stock on the date of exercise is 85% of the average high and low sale prices
of shares on the New York Stock Exchange for that day. Under the Plan, AT&T sold
approximately 705 thousand, 506 thousand and 102 thousand shares to AT&T
Broadband Group employees in 2001, 2000 and 1999, respectively.

     AT&T Broadband Group applies Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees," and related interpretations in
accounting for its plans. Accordingly, no compensation expense has been
recognized for stock-based compensation plans other than for performance-based
and restricted stock awards and stock appreciation rights ("SARs"). Stock
based-compensation (expense) income for AT&T Broadband Group was $(4), $268 and
$(366) for the years ended December 31, 2001 and 2000 and the ten months ended
December 31, 1999, respectively. These amounts included (expense) income of
$(3), $269 and $(382) for the years ended December 31, 2001 and 2000 and the ten
months ended December 31, 1999, respectively, related to grants of SARs of
affiliated companies held by certain employees subsequent to the TCI Merger.
AT&T entered into an equity hedge in 1999 to offset potential future
compensation costs associated with such SARs. (Expense) income related to this
hedge was $(16), $(324) and $227 for the years ended December 31, 2001 and 2000
and the ten months ended December 31, 1999, respectively.

     At December 31, 2001, there were 4.5 million AT&T stock options with 2.2
million tandem SARs outstanding that were originally assumed in connection with
the MediaOne Merger. All of the SARs were exercisable at a price of $19.33.
There were no SARs exercised during 2001 or 2000.

     AT&T Broadband Group has adopted the disclosure-only provisions of SFAS
123. If AT&T Broadband Group had elected to recognize compensation costs based
on the fair value at the date of grant for AT&T awards granted to AT&T Broadband
Group employees, consistent with the provisions of

                                       F-66

                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

SFAS 123, AT&T Broadband Group's net loss would have been adjusted to reflect
additional compensation expense resulting in the following pro forma amounts:



                                                           YEAR ENDED       TEN MONTHS
                                                          DECEMBER 31,        ENDED
                                                         ---------------   DECEMBER 31,
                                                          2001     2000        1999
                                                         ------   ------   ------------
                                                                  
Net loss...............................................  $4,011   $5,390      $2,203


     The pro forma effect on net loss for 2001 includes $10 due to the
conversion of AT&T common stock options in connection with the split-off of AT&T
Wireless Group, and also includes $12 due to the accelerated vesting of AT&T
Wireless Group stock options held by AT&T Broadband Group employees after the
split-off.

     AT&T granted approximately 13.8 million, 13.4 million and 1.0 million stock
options to AT&T Broadband Group employees during 2001, 2000 and 1999,
respectively. At the date of grant, the weighted average exercise prices for
AT&T stock options granted to AT&T Broadband Group employees during 2001, 2000
and 1999 were $22.46, $34.17 and $56.56, respectively. The weighted-average fair
values at date of grant for AT&T stock options granted to AT&T Broadband Group
employees during 2001, 2000 and 1999 were $7.13, $10.28 and $17.45,
respectively, and were estimated using the Black-Scholes option-pricing model.
The weighted-average risk-free interest rates applied for 2001, 2000 and 1999
were 4.71%, 6.24% and 5.26%, respectively. The following weighted-average
assumptions were applied for 2001, 2000 and 1999, respectively: (i) expected
dividend yields of 0.85%, 1.7% and 1.7% (ii) expected volatility rates of 36.5%,
33.9% and 28.6%, and (iii) expected lives of 3.8, 3.7 years and 5.7 years.

     In January 2002, AT&T modified its outstanding stock option agreements for
AT&T stock options and other equity awards held by current AT&T Broadband
employees to provide that upon the change in control of AT&T Broadband their
stock options and other equity awards granted prior to January 1, 2002 will be
immediately vested and exercisable through their remaining contractual terms.
The potential compensation cost associated with this modification for current
AT&T Broadband employees has been measured as of the modification date is
approximately $50 pre-tax. The actual charge will be finalized and recorded by
AT&T Broadband at the time of the change in control in connection with the
anticipated merger with Comcast.

(13) INCOME TAXES

     AT&T Broadband Group is not a separate taxable entity for federal and state
income tax purposes and its results of operations are included in the
consolidated federal and state income tax returns of AT&T and its affiliates, as
described in note 1.

                                       F-67

                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

     The components of the provision (benefit) for income taxes are as follows:



                                                      YEAR ENDED
                                                     DECEMBER 31,      TEN MONTHS ENDED
                                                   -----------------     DECEMBER 31,
                                                    2001      2000           1999
                                                   -------   -------   -----------------
                                                              
Federal:
  Current........................................  $  (245)  $  (786)        $(469)
  Deferred ......................................   (3,104)     (215)           64
                                                   -------   -------         -----
                                                    (3,349)   (1,001)         (405)
                                                   -------   -------         -----
State and local:
  Current........................................      (34)     (136)           22
  Deferred ......................................     (477)      (47)          (82)
                                                   -------   -------         -----
                                                      (511)     (183)          (60)
                                                   -------   -------         -----
Foreign:
  Current........................................        3         1            --
                                                   -------   -------         -----
Benefit for income taxes.........................  $(3,857)  $(1,183)        $(465)
                                                   =======   =======         =====


     AT&T Broadband Group also recorded current and deferred income tax benefits
related to minority interest and net equity losses on other equity investments
in the amounts of $100 and $37 for the years ended December 31, 2001, $100 and
$370 for the years ended December 31, 2000 and $54 and $438 for the ten months
ended December 31, 1999, respectively.

     The following table shows the principal reasons for the difference between
the effective income tax rate and the United States federal statutory income tax
rate:



                                                       YEAR ENDED
                                                      DECEMBER 31,     TEN MONTHS ENDED
                                                    ----------------     DECEMBER 31,
                                                     2001     2000           1999
                                                    ------   -------   ----------------
                                                              
U.S. federal statutory income tax rate............      35%       35%          35%
Federal income tax benefit at statutory rate......  $3,077   $ 3,507        $ 642
Operating losses and charges relating to
  Excite@Home.....................................    (649)   (2,758)          --
Investment dispositions, acquisitions and legal
  entity restructuring............................     238       374           --
Deconsolidation of and put obligation settlement
  related to Excite@Home..........................   1,045        --           --
In-process research and development write-off.....      --        --         (208)
State and local income taxes, net of federal
  income tax benefit..............................     333       119           39
Amortization of intangibles.......................    (177)      (81)         (12)
Foreign rate differential.........................      (3)       --           --
Taxes on repatriated and accumulated foreign
  income, net of tax credits......................       3        --           --
Other.............................................     (10)       22            4
                                                    ------   -------        -----
Benefit for income taxes..........................  $3,857   $ 1,183          465
                                                    ======   =======        =====
Effective tax rate................................    43.9%     11.8%        25.3%
                                                    ======   =======        =====


                                       F-68

                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

     Deferred income tax liabilities are taxes AT&T Broadband Group expects to
pay in future periods. Similarly, deferred income tax assets are recorded for
expected reductions in taxes payable in future periods. Deferred income taxes
arise because of differences in the book and tax bases of certain assets and
liabilities. Deferred income tax liabilities and assets consist of the
following:



                                                                DECEMBER 31,
                                                              -----------------
                                                               2001      2000
                                                              -------   -------
                                                                  
LONG-TERM DEFERRED INCOME TAX LIABILITIES:
Property, plant and equipment...............................  $ 1,335   $ 1,319
Investments.................................................    8,130     9,148
Franchises..................................................   16,939    18,571
Other.......................................................    1,519     2,087
                                                              -------   -------
Total long-term deferred income tax liabilities.............   27,923    31,125
                                                              -------   -------
LONG-TERM DEFERRED INCOME TAX ASSETS:
Business restructuring......................................       13         3
Net operating loss/credit carryforwards.....................       80       509
Employee pensions and other benefits, net...................      330       520
Reserves and allowances.....................................       12        65
Valuation allowances........................................      (23)     (726)
Other.......................................................    1,701     2,204
                                                              -------   -------
Total long-term deferred income tax assets..................    2,113     2,575
                                                              -------   -------
Net long-term deferred income tax liabilities...............   25,810    28,550
                                                              -------   -------
CURRENT DEFERRED INCOME TAX LIABILITIES:
Investments.................................................       11       670
Other.......................................................        1         6
                                                              -------   -------
Total current deferred income tax liabilities...............       12       676
                                                              -------   -------
CURRENT DEFERRED INCOME TAX ASSETS:
Employee pensions and other benefits........................        4        22
Reserves and allowances.....................................       10        10
Valuation allowances........................................       --       (39)
Other.......................................................       36       197
                                                              -------   -------
Total current deferred income tax assets....................       50       190
                                                              -------   -------
Net current deferred income tax (liabilities) assets........       38      (486)
                                                              -------   -------
Total deferred income tax liabilities.......................  $25,772   $29,036
                                                              =======   =======


     The valuation allowance for deferred tax assets as of December 31, 2001 and
2000 was $23 and $765, respectively. The realization of AT&T Broadband Group's
deferred tax assets is not dependent upon the consolidated tax group of AT&T. On
a stand alone basis, AT&T Broadband Group has sufficient reversing taxable
temporary differences to warrant recognition of its deferred tax assets without
the need for any additional valuation allowance.

                                       F-69

                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

     At December 31, 2001, AT&T Broadband Group had federal net operating loss
carryforwards of $4, expiring through 2013 and state net operating loss
carryforwards of $60, expiring through 2016. AT&T Broadband Group also has
federal tax credit carryforwards of $16 expiring through 2004. In connection
with the TCI Merger, certain federal and state net operating loss carryforwards
were subject to a valuation allowance of $23 at December 31, 2001. If, in the
future, the realization of these acquired deferred tax assets becomes more
likely than not, any reduction of the associated valuation allowance will be
allocated to reduce franchise costs and other purchased intangibles.

     On September 30, 2001, the assets and liabilities of Excite@Home were
deconsolidated from AT&T Broadband Group's consolidated balance sheet.
Accordingly, AT&T Broadband Group's deferred income tax assets and liabilities
at December 31, 2001, presented above, exclude any amounts related to
Excite@Home.

(14) COMMITMENTS AND CONTINGENCIES

     The Cable Television Consumer Protection and Competition Act of 1992 (the
"1992 Cable Act") imposed certain rate regulations on the cable television
industry. Under the 1992 Cable Act, all cable systems are subject to rate
regulation, unless they face "effective competition," as defined by the 1992
Cable Act and expanded in the Telecommunications Act of 1996 (the "1996 Act"),
in their local franchise area.

     Management of AT&T Broadband Group believes that they have complied in all
material respects with the provisions of the 1992 Cable Act and the 1996 Act,
including its rate setting provisions. If, as a result of the review process, a
system cannot substantiate its rates, it could be required to retroactively
reduce its rates to the appropriate benchmark and refund the excess portion of
rates received.

     In the normal course of business AT&T Broadband Group is subject to
proceedings, lawsuits and other claims, including proceedings under 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 Broadband Group is unable to ascertain the ultimate aggregate
amount of monetary liability or financial impact with respect to these matters
at December 31, 2001. These matters could affect the operating results of any
one quarter when resolved in future periods. However, management believes after
final disposition, any monetary liability or financial impact to AT&T Broadband
Group beyond that provided for at year-end would not be material to AT&T
Broadband Group's annual combined financial statements.

                                       F-70

                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

     AT&T Broadband Group leases land, buildings and equipment through contracts
that expire in various years through 2050. Rental expense under operating leases
was $144, $122 and $68 for the years ended December 31, 2001 and 2000, and the
ten months ended December 31, 1999, respectively. The following table shows the
future minimum lease payments due under noncancelable operating and capital
leases at December 31, 2001:



                                                              OPERATING   CAPITAL
                                                               LEASES     LEASES
                                                              ---------   -------
                                                                    
2002........................................................    $135       $ 58
2003........................................................     129         56
2004........................................................     117         52
2005........................................................      95         51
2006........................................................      77         36
Later years.................................................     270         36
                                                                ----       ----
Total minimum lease payments................................    $823        289
                                                                ====       ====
Less amount representing interest...........................                 42
                                                                           ----
Present value of net minimum lease payments.................               $247
                                                                           ====


     In addition, under certain real estate operating leases, AT&T Broadband
Group could be required to make payments to the lessor up to $155 at the end of
the lease term (lease terms range from 2002 through 2006). The actual amount
paid, if any, would be reduced by amounts received by the lessor upon
remarketing the property.

     In July 1997, ATTBLLC's predecessor, TCI, and ATTBLLC's subsidiary,
Satellite Services, Inc., entered into a 25 year affiliation term sheet with
Starz Encore Group (formerly Encore Media Group) pursuant to which AT&T
Broadband Group may be obligated to make fixed monthly payments in exchange for
unlimited access to Encore and Starz! programming. Starz Encore Group is a
subsidiary of LMG, a former subsidiary of AT&T. The commitment, which is based
on a fixed number of subscribers, increases annually from $306 in 2002 to $315
in 2003, and will increase annually through 2022 with inflation, subject to
certain adjustments, including increases in the number of subscribers. The
affiliation term sheet further provides that to the extent Starz Encore Group's
programming costs increase above certain levels, AT&T Broadband Group's payments
under the term sheet will be increased in proportion to the excess. Excess
programming costs that may be payable by AT&T Broadband Group in future years
are not presently estimable, and could be significant. By letter dated May 29,
2001, AT&T Broadband Group disputed the enforceability of the excess programming
pass through provisions of the term sheet and questioned the validity of the
term sheet as a whole. AT&T Broadband Group also has raised certain issues
concerning the uncertainty of the provisions of the term sheet and the
contractual interpretation and application of certain of its provisions to,
among other things, the acquisition and disposition of cable systems. In July
2001, Starz Encore Group filed suit seeking payment of the 2001 excess
programming costs and a declaration that the term sheet is a binding and
enforceable contract. In October 2001, AT&T Broadband Group and Starz Encore
Group agreed to stay the litigation until August 31, 2002 to allow the parties
time to continue negotiations toward a potential business resolution of this
dispute. The Court granted the stay on October 30, 2001. The terms of the stay
order allow either party to petition the Court to lift the stay after April 30,
2002 and to proceed with the litigation.

     At December 31, 2001, an entity attributed to AT&T Broadband Group has an
agreement with Motorola, Inc. to purchase a minimum of 1.6 million digital
set-top devices at an average price of $234

                                       F-71

                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

per unit in 2002. During 2001, AT&T Broadband Group satisfied its obligation
under a previous agreement with Motorola, Inc. to purchase set-top devices.

     AT&T Broadband Group is party to an agreement under which it purchases
certain billing services from CSG Systems, Inc. ("CSG"). Unless terminated by
either party pursuant to terms of the agreement, the agreement expires on
December 31, 2012. The agreement calls for monthly payments which are subject to
adjustments and conditions pursuant to the terms of the underlying agreements.
The annual commitment under the agreement is $130 for 2002 and will increase
annually with inflation.

(15) RELATED PARTY TRANSACTIONS

     As discussed in Note 1, AT&T provides necessary working capital
requirements through intercompany debt and capital contributions to AT&T
Broadband Group. These amounts are reflected in the accompanying combined
balance sheets as short-term debt due to AT&T or a component of attributed net
assets. Short-term debt due to AT&T and interest was assumed based upon the
methodology outlined in Note 1. Intercompany debt was $3,959 and $5,830 at
December 31, 2001 and 2000, respectively. Intercompany interest expense was
$320, $323 and $91 for the years ended December 31, 2001 and 2000 and for the
ten months ended December 31, 1999, respectively.

     AT&T Consumer Services Group provides AT&T Broadband Group with sales
support and customer care services at cost based prices. For the years ended
December 31, 2001 and 2000 and the ten months ended December 31, 1999, such
amounts totaled $190, $89 and $121, respectively, and are included in selling,
general and administrative expenses in the accompanying combined statements of
operations.

     In addition, AT&T Business Services Group provides AT&T Broadband Group
with wireline communication and other services. For the years ended December 31,
2001 and 2000 and the ten months ended December 31, 1999, charges for such
services totaled $232, $104 and $31, respectively, and are included in costs of
services in the accompanying combined statements of operations.

     Included in current liabilities at December 31, 2001 and 2000, was $2 and
$98, respectively, related to amounts due AT&T Consumer Services Group and AT&T
Business Services Group for the above described services.

     AT&T allocates general corporate overhead expenses, including finance,
legal, marketing, use of the AT&T brand, planning and strategy and human
resources to AT&T Broadband Group, as well as costs for AT&T employees who
directly support the activities of the AT&T Broadband Group. Charges for such
services amounted to $146, $159 and $120 for the years ended December 31, 2001
and 2000 and for the ten months ended December 31, 1999, respectively. These
amounts are included in selling, general and administrative expenses in the
accompanying combined statements of operations and were determined based on
methodology described in note 1.

     AT&T Broadband Group transferred $628 of marketable securities and equity
investments and $180 of related deferred tax liabilities to AT&T through
combined attributed net assets during the first quarter of 2001. No gain or loss
was recorded on this transaction.

     In addition, AT&T Broadband Group had various related party transactions
with LMG. Included in cost of services were programming expenses related to
services from LMG. These expenses amounted to $199, $239 and $184 for the seven
months ended July 31, 2001, the deemed effective date of the LMG spin-off from
AT&T for accounting purposes, the year ended December 31, 2000 and the ten
months ended December 31, 1999, respectively.

     On October 2, 2000, AT&T Broadband Group, through MediaOne, completed the
sale of several equity interests in international ventures acquired as a result
of the MediaOne Merger to the AT&T
                                       F-72

                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Wireless Group. Such interests were sold for approximately $1 billion, which was
based upon a third party valuation. AT&T Broadband Group received 120,335,081 of
AT&T common shares for sale of such equity interests. The AT&T Common stock
received in such transaction has been included in combined attributed net
assets. In connection with such sale, $196 of related deferred tax liabilities
were transferred to AT&T Wireless Group. No gain or loss was recognized on the
sale of such equity interests.

(16) NEW ACCOUNTING PRONOUNCEMENTS

     In June 2001, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 141, "Business Combinations ("SFAS 141")," which supersedes Accounting
Principles Board ("APB") Opinion No. 16. SFAS 141 requires all business
combinations initiated after June 30, 2001 be accounted for under the purchase
method. In addition, SFAS 141 establishes criteria for the recognition of
intangible assets separately from goodwill. These requirements are effective for
fiscal years beginning after December 15, 2001, which for AT&T Broadband Group
means January 1, 2002. The adoption of SFAS 141 will not have a material effect
on AT&T Broadband Group's results of operations, financial position or cash
flow.

     Also in June 2001, the FASB issued SFAS No. 142, "Goodwill and Other
Intangible Assets ("SFAS 142")," which supercedes APB Opinion No. 17. Under SFAS
142 goodwill and indefinite lived intangible assets will no longer be amortized,
but rather will be tested for impairment upon adoption and at least annually
thereafter. In addition, the amortization period of intangible assets with
finite lives will no longer be limited to 40 years. SFAS 142 is effective for
fiscal years beginning after December 15, 2001, which for AT&T Broadband Group
means the standard will be adopted on January 1, 2002. In connection with the
adoption of this standard, AT&T Broadband Group's unamortized goodwill balance
and excess basis related to goodwill of equity method investments will no longer
be amortized, but will continue to be tested for impairment. In addition, AT&T
Broadband Group has determined that franchise costs are indefinite lived assets
and therefore, as of January 1, 2002 will no longer be subject to amortization,
but will continue to be tested for impairment. The adoption of SFAS 142 will
have a significant impact on future operating results due to the cessation of
goodwill and franchise cost amortization. The goodwill balance as of December
31, 2001 was $19.3 billion with related amortization expense for the year ended
December 31, 2001, of $659. The excess basis related to AT&T Broadband Group's
equity method investments as of December 31, 2001 was $3.0 billion with related
amortization of $148. AT&T Broadband Group performed an impairment test on the
goodwill balance as of January 1, 2002. In accordance with SFAS 142, the
impairment test was performed by comparing the fair value of the reporting unit
to its carrying value. As of January 1, 2002, the fair value of the reporting
unit exceeded its carrying value, and therefore no impairment loss will be
recognized upon adoption. The franchise cost balance as of December 31, 2001 was
$42.8 billion with related amortization expense for the year ended December 31,
2001 of $1,224. In accordance with SFAS 142, franchise costs were tested for
impairment as of January 1, 2002, by comparing the fair values to the carrying
values (at a market level). As a result of such tests, an impairment loss of
$856, net of taxes of $530, will be recognized as a change in accounting
principle in the first quarter of 2002.

     In August 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations ("SFAS 143")." This standard requires that obligations
associated with the retirement of tangible long-lived assets be recorded as
liabilities when those obligations are incurred, with the amount of the
liability initially measured at fair value. Upon initially recognizing a
liability for an asset retirement obligation, an entity must capitalize the cost
by recognizing an increase in the carrying amount of the related long-lived
asset. Over time, this liability is accreted to its present value, and the
capitalized cost is depreciated over the useful life of the related asset. Upon
settlement of the liability, an entity either settles the obligation for its
recorded amount or incurs a gain or loss upon settlement. SFAS 143 is effective
for financial statements issued for fiscal years beginning after June 15, 2002,
which for AT&T Broadband Group means
                                       F-73

                              AT&T BROADBAND GROUP
                     (AN INTEGRATED BUSINESS OF AT&T CORP.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

the standard will be adopted on January 1, 2003. AT&T Broadband Group does not
expect that the adoption of this statement will have a material impact on AT&T
Broadband Group's results of operations, financial position or cash flows.

     In October 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets ("SFAS 144")," which supersedes SFAS
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of ("SFAS 121")." SFAS 144 applies to all long-lived
assets, including discontinued operations, and consequently amends APB Opinion
No. 30, "Reporting the Results of Operations -- Reporting the Effects of
Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions." Based on SFAS 121, SFAS 144 develops one
accounting model for long-lived assets that are to be disposed of by sale, as
well as addresses the principal implementation issues. SFAS 144 requires that
long-lived assets that are to be disposed of by sale be measured at the lower of
book value or fair value less cost to sell. Additionally, SFAS 144 expands the
scope of discontinued operations to include all components of an entity with
operations that (i) can be distinguished from the rest of the entity and (ii)
will be eliminated from the ongoing operations of the entity in a disposal
transaction. SFAS 144 also amends Accounting Research Bulletin ("ARB") No. 51,
"Consolidating Financial Statements" to eliminate the exception to consolidation
for a subsidiary for which control is likely to be temporary. SFAS 144 is
effective for AT&T Broadband Group as of January 1, 2002. The adoption of SFAS
144 will not have a material impact on AT&T Broadband Group's results of
operations, financial position or cash flows.

                                       F-74


                              AT&T BROADBAND CORP.
                                 BALANCE SHEET
                                  (UNAUDITED)



                                                              MARCH 31,   DECEMBER 31,
                                                                2002          2001
                                                              ---------   ------------
                                                                    
Assets......................................................   $    --      $    --
                                                               =======      =======
Stockholder's Equity
  Common stock, $0.01 par value, 1,000 shares authorized,
     issued and outstanding.................................   $    10      $    10
  Additional paid-in capital................................       990          990
  Stock subscription receivable.............................    (1,000)      (1,000)
                                                               -------      -------
                                                               $    --      $    --
                                                               =======      =======


                             See note to balance sheet.
                                       F-75


                              AT&T BROADBAND CORP.
                             NOTE TO BALANCE SHEET
                                 MARCH 31, 2002

                                  (UNAUDITED)

1.  ORGANIZATION

     On December 14, 2001, AT&T Broadband Corp. (the "Company") was incorporated
under the laws of the State of Delaware and was authorized to issue 1,000 shares
of $0.01 par value common stock. On December 19, 2001, the Company issued 1,000
shares of its $0.01 par value common stock to AT&T Corp. ("AT&T") for $1 per
share. The Company was organized to conduct the business currently conducted by
AT&T's broadband business ("AT&T Broadband"), subsequent to the combination of
Comcast Corporation ("Comcast") and AT&T Broadband.

     On December 19, 2001, AT&T and Comcast entered into an Agreement and Plan
of Merger that will result in the combination of AT&T Broadband and Comcast (the
"Merger"). AT&T intends to assign and transfer the assets, liabilities and
business of AT&T Broadband to the Company. AT&T will spin-off the Company to its
stockholders immediately prior to the Merger. On July 10, 2002, shareholders of
AT&T and Comcast approved the Merger. The Merger still remains subject to
certain governmental reviews and certain other conditions and is expected to
close by the end of 2002. Upon the completion of the Merger, the Company and
Comcast will be wholly owned subsidiaries of AT&T Comcast Corporation ("AT&T
Comcast").

     On May 3, 2002, the Company and AT&T Comcast, as co-borrowers, entered into
definitive credit agreements with a syndicate of lenders for an aggregate of
approximately $12.8 billion in order to obtain the financing necessary to
complete the Merger and for AT&T Comcast's needs after the merger. Under the
terms of the new credit facilities, the obligations of the lenders to provide
the financing upon the completion of the Merger are subject to a number of
conditions, including the condition that AT&T Comcast holds investment-grade
credit ratings from both Standard & Poor's Ratings Group and Moody's Investors
Service rating agencies at the time of closing. Accordingly, there can be no
assurance that the Company and AT&T Comcast will be able to obtain the financing
necessary to complete the Merger.

     From the date of inception on December 14, 2001 through March 31, 2002, the
Company had no operations.

                                       F-76


                       REPORT OF INDEPENDENT ACCOUNTANTS

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

     In our opinion, the accompanying balance sheet presents fairly, in all
material respects, the financial position of AT&T Broadband Corp. at December
31, 2001 in conformity with accounting principles generally accepted in the
United States of America. This financial statement is the responsibility of the
Company's management; our responsibility is to express an opinion on this
financial statement based on our audit. We conducted our audit of this statement
in accordance with auditing standards generally accepted in the United States of
America, which require that we plan and perform the audit to obtain reasonable
assurance about whether the balance sheet is free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the balance sheet, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall balance
sheet presentation. We believe that our audit of the balance sheet provides a
reasonable basis for our opinion.

PricewaterhouseCoopers LLP
New York, New York
July 29, 2002

                                       F-77


                              AT&T BROADBAND CORP.
                                 BALANCE SHEET
                               DECEMBER 31, 2001


                                                            
Assets......................................................   $    --
                                                               =======
Stockholder's Equity
  Common stock, $0.01 par value, 1,000 shares authorized,
     issued and outstanding.................................   $    10
  Additional paid-in capital................................       990
  Stock subscription receivable.............................    (1,000)
                                                               -------
                                                               $    --
                                                               =======


                           See note to balance sheet.
                                       F-78


                              AT&T BROADBAND CORP.
                             NOTE TO BALANCE SHEET
                               DECEMBER 31, 2001

1.  ORGANIZATION

     On December 14, 2001, AT&T Broadband Corp. (the "Company") was incorporated
under the laws of the State of Delaware and was authorized to issue 1,000 shares
of $0.01 par value common stock. On December 19, 2001, the Company issued 1,000
shares of its $0.01 par value common stock to AT&T Corp. ("AT&T") for $1 per
share. The Company was organized to conduct the business currently conducted by
AT&T's broadband business ("AT&T Broadband"), subsequent to the combination of
Comcast Corporation ("Comcast") and AT&T Broadband.

     On December 19, 2001, AT&T and Comcast entered into an Agreement and Plan
of Merger that will result in the combination of AT&T Broadband and Comcast (the
"Merger"). AT&T intends to assign and transfer the assets, liabilities and
business of AT&T Broadband to the Company. AT&T will spin-off the Company to its
stockholders immediately prior to the Merger. On July 10, 2002, shareholders of
AT&T and Comcast approved the Merger. The Merger still remains subject to
certain governmental reviews and certain other conditions and is expected to
close by the end of 2002. Upon the completion of the Merger, the Company and
Comcast will be wholly owned subsidiaries of AT&T Comcast Corporation ("AT&T
Comcast").

     On May 3, 2002, the Company and AT&T Comcast, as co-borrowers, entered into
definitive credit agreements with a syndicate of lenders for an aggregate of
approximately $12.8 billion in order to obtain the financing necessary to
complete the Merger and for AT&T Comcast's needs after the Merger. Under the
terms of the new credit facilities, the obligations of the lenders to provide
the financing upon the completion of the Merger are subject to a number of
conditions, including the condition that AT&T Comcast holds investment-grade
credit ratings from both Standard & Poor's Ratings Group and Moody's Investors
Service rating agencies at the time of closing. Accordingly, there can be no
assurance that the Company and AT&T Comcast will be able to obtain the financing
necessary to complete the Merger.

     From the date of inception on December 14, 2001 through December 31, 2001,
the Company had no operations.

                                       F-79


                            AT&T COMCAST CORPORATION
                           BALANCE SHEET (UNAUDITED)
                                 MARCH 31, 2002


                                                           
Assets......................................................  $--
Stockholders' Equity
  Stock subscription receivable.............................  $(2)
  Common stock, $.01 par value, authorized 100 shares; 2
     shares issued and outstanding..........................  $--
  Additional capital........................................  $ 2
                                                              ---
                                                              $--
                                                              ===


See note to balance sheet.

                                       F-80


                            AT&T COMCAST CORPORATION
                       NOTE TO BALANCE SHEET (UNAUDITED)
                                 MARCH 31, 2002

1. ORGANIZATION

     On December 7, 2001, CAB Holdings Corp. was incorporated under the laws of
the State of Pennsylvania and was authorized to issue 100 shares of $.01 par
value common stock. At that date of incorporation, CAB Holdings Corp.'s name was
changed to AT&T Comcast Corporation ("the Company") and the Company issued one
share of its $.01 par value common stock to each of Comcast Corporation
("Comcast") and AT&T Corp. ("AT&T") for $1 per share. The Company was organized
to conduct, subsequent to the combination of Comcast and AT&T's Broadband
division ("AT&T Broadband"), the businesses currently conducted by Comcast and
AT&T Broadband.

     On December 19, 2001, Comcast and AT&T entered into an Agreement and Plan
of Merger that will result in the combination of Comcast and AT&T Broadband.
AT&T will spin off AT&T Broadband to its stockholders immediately prior to the
combination. The combined company will also hold AT&T's approximate 25.5%
interest in Time Warner Entertainment. On July 10, 2002, shareholders of both
Comcast and AT&T approved the transaction. The transaction is subject to
customary closing conditions and regulatory approvals and is expected to close
by the end of 2002.

     Upon completion of the combination of Comcast and AT&T Broadband, Comcast
and an entity which will then own AT&T Broadband will be wholly-owned
subsidiaries of the Company.

     From the date of inception on December 7, 2001 through March 31, 2002, the
Company had no operations.

                                       F-81


                          INDEPENDENT AUDITORS' REPORT

Board of Directors and Stockholders
AT&T Comcast Corporation
Philadelphia, Pennsylvania

We have audited the accompanying balance sheet of AT&T Comcast Corporation as of
December 31, 2001. This financial statement is the responsibility of the
Company's management. Our responsibility is to express an opinion on this
financial statement based on our audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the balance sheet
is free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the balance sheet. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall balance sheet
presentation. We believe that our audit provides a reasonable basis for our
opinion.

In our opinion, such balance sheet presents fairly, in all material respects,
the financial position of AT&T Comcast Corporation as of December 31, 2001, in
conformity with accounting principles generally accepted in the United States of
America.

DELOITTE & TOUCHE LLP

Philadelphia, Pennsylvania
April 29, 2002

                                       F-82


                            AT&T COMCAST CORPORATION
                                 BALANCE SHEET
                               DECEMBER 31, 2001


                                                           
Assets......................................................  $--
Stockholders' Equity
  Stock subscription receivable.............................  $(2)
  Common stock, $.01 par value, authorized 100 shares; 2
     shares issued and outstanding..........................  $--
  Additional capital........................................  $ 2
                                                              ---
                                                              $--
                                                              ===


See note to balance sheet.

                                       F-83


                            AT&T COMCAST CORPORATION
                             NOTE TO BALANCE SHEET
                               DECEMBER 31, 2001

1. ORGANIZATION

     On December 7, 2001, CAB Holdings Corp. was incorporated under the laws of
the State of Pennsylvania and was authorized to issue 100 shares of $.01 par
value common stock. At that date of incorporation, CAB Holdings Corp.'s name was
changed to AT&T Comcast Corporation ("the Company") and the Company issued one
share of its $.01 par value common stock to each of Comcast Corporation
("Comcast") and AT&T Corp. ("AT&T") for $1 per share. The Company was organized
to conduct, subsequent to the combination of Comcast and AT&T's Broadband
division ("AT&T Broadband"), the businesses currently conducted by Comcast and
AT&T Broadband.

     On December 19, 2001, Comcast and AT&T entered into an Agreement and Plan
of Merger that will result in the combination of Comcast and AT&T Broadband.
AT&T will spin off AT&T Broadband to its stockholders immediately prior to the
combination. The combined company will also hold AT&T's approximate 25.5%
interest in Time Warner Entertainment. The transaction is subject to customary
closing conditions and shareholder and regulatory approvals and is expected to
close by the end of 2002.

     Upon completion of the combination of Comcast and AT&T Broadband, Comcast
and an entity which will then own AT&T Broadband will be wholly-owned
subsidiaries of the Company.

     From the date of inception on December 7, 2001 through December 31, 2001,
the Company had no operations.

                                       F-84


                          INDEPENDENT AUDITORS' REPORT

Board of Directors and Stockholders
Comcast Corporation
Philadelphia, Pennsylvania

     We have audited the accompanying consolidated balance sheet of Comcast
Corporation and its subsidiaries (the "Company") as of December 31, 2001 and
2000, and the related consolidated statements of operations, stockholders'
equity and cash flows for each of the three years in the period ended December
31, 2001. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

     We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

     In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Comcast Corporation and its
subsidiaries as of December 31, 2001 and 2000, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2001, in conformity with accounting principles generally accepted
in the United States of America.

     As discussed in Notes 2 and 3 to the consolidated financial statements, the
Company adopted Statement of Financial Accounting Standards No. 133, "Accounting
for Derivative Instruments and Hedging Activities," as amended, effective
January 1, 2001.

Deloitte & Touche LLP

Philadelphia, Pennsylvania
February 5, 2002 (July 30, 2002 as to Note 14)

                                       F-85


                      COMCAST CORPORATION AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET



                                                                  DECEMBER 31,
                                                              ---------------------
                                                                2001        2000
                                                              ---------   ---------
                                                              (DOLLARS IN MILLIONS,
                                                               EXCEPT SHARE DATA)
                                                                    
                                      ASSETS
CURRENT ASSETS
  Cash and cash equivalents.................................  $   350.0   $   651.5
  Investments...............................................    2,623.2     3,059.7
  Accounts receivable, less allowance for doubtful accounts
     of $153.9 and $141.7...................................      967.4       891.9
  Inventories, net..........................................      454.5       438.5
  Other current assets......................................      153.7       102.8
                                                              ---------   ---------
     Total current assets...................................    4,548.8     5,144.4
                                                              ---------   ---------
INVESTMENTS.................................................    1,679.2     2,661.9
                                                              ---------   ---------
PROPERTY AND EQUIPMENT, net of accumulated depreciation of
  $2,725.7 and $1,873.1.....................................    7,011.1     5,519.9
                                                              ---------   ---------
INTANGIBLE ASSETS
  Goodwill..................................................    7,507.3     6,945.1
  Cable franchise operating rights..........................   20,167.8    17,545.5
  Other intangible assets...................................    2,833.4     1,485.6
                                                              ---------   ---------
                                                               30,508.5    25,976.2
  Accumulated amortization..................................   (5,999.2)   (3,908.7)
                                                              ---------   ---------
                                                               24,509.3    22,067.5
                                                              ---------   ---------
OTHER NONCURRENT ASSETS, net................................      383.4       350.8
                                                              ---------   ---------
                                                              $38,131.8   $35,744.5
                                                              =========   =========
                       LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
  Accounts payable..........................................  $   698.2   $   813.2
  Accrued expenses and other current liabilities............    1,695.5     1,576.5
  Deferred income taxes.....................................      275.4       789.9
  Current portion of long-term debt.........................      460.2       293.9
                                                              ---------   ---------
     Total current liabilities..............................    3,129.3     3,473.5
                                                              ---------   ---------
LONG-TERM DEBT, less current portion........................   11,741.6    10,517.4
                                                              ---------   ---------
DEFERRED INCOME TAXES.......................................    6,375.7     5,786.7
                                                              ---------   ---------
OTHER NONCURRENT LIABILITIES................................    1,532.0     1,108.6
                                                              ---------   ---------
MINORITY INTEREST...........................................      880.2       717.3
                                                              ---------   ---------
COMMITMENTS AND CONTINGENCIES (NOTE 11)
COMMON EQUITY PUT OPTIONS...................................                   54.6
                                                              ---------   ---------
STOCKHOLDERS' EQUITY
  Preferred stock -- authorized, 20,000,000 shares 5.25%
     series B mandatorily redeemable convertible, $1,000 par
     value; issued, zero and 59,450 at redemption value.....                   59.5
  Class A special common stock, $1 par value -- authorized,
     2,500,000,000 shares; issued, 937,256,465 and
     931,340,103; outstanding, 913,931,554 and 908,015,192..      913.9       908.0
  Class A common stock, $1 par value -- authorized,
     200,000,000 shares; issued, 21,829,422 and
     21,832,250.............................................       21.8        21.8
  Class B common stock, $1 par value -- authorized,
     50,000,000 shares; issued, 9,444,375...................        9.4         9.4
  Additional capital........................................   11,752.0    11,598.8
  Retained earnings.........................................    1,631.5     1,056.5
  Accumulated other comprehensive income....................      144.4       432.4
                                                              ---------   ---------
     Total stockholders' equity.............................   14,473.0    14,086.4
                                                              ---------   ---------
                                                              $38,131.8   $35,744.5
                                                              =========   =========


                See notes to consolidated financial statements.

                                       F-86


                      COMCAST CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENT OF OPERATIONS



                                                                  YEAR ENDED DECEMBER 31,
                                                              --------------------------------
                                                                2001        2000        1999
                                                              ---------   ---------   --------
                                                                   (AMOUNTS IN MILLIONS,
                                                                   EXCEPT PER SHARE DATA)
                                                                             
REVENUES
  Service revenues..........................................  $ 5,756.9   $ 4,682.7   $3,361.8
  Net sales from electronic retailing.......................    3,917.3     3,535.9    3,167.4
                                                              ---------   ---------   --------
                                                                9,674.2     8,218.6    6,529.2
                                                              ---------   ---------   --------
COSTS AND EXPENSES
  Operating (excluding depreciation)........................    2,905.8     2,212.5    1,663.1
  Cost of goods sold from electronic retailing (excluding
    depreciation)...........................................    2,514.0     2,284.9    2,060.0
  Selling, general and administrative.......................    1,552.6     1,250.9      926.1
  Depreciation..............................................    1,141.8       837.3      572.0
  Amortization..............................................    2,306.2     1,794.0      644.0
                                                              ---------   ---------   --------
                                                               10,420.4     8,379.6    5,865.2
                                                              ---------   ---------   --------
OPERATING INCOME (LOSS).....................................     (746.2)     (161.0)     664.0
OTHER INCOME (EXPENSE)
  Interest expense..........................................     (731.8)     (691.4)    (538.3)
  Investment income.........................................    1,061.7       983.9      629.5
  Income (expense) related to indexed debt..................                  666.0     (666.0)
  Equity in net income (losses) of affiliates...............      (28.5)      (21.3)       1.4
  Other income..............................................    1,301.0     2,825.5    1,409.4
                                                              ---------   ---------   --------
                                                                1,602.4     3,762.7      836.0
                                                              ---------   ---------   --------
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES,
  MINORITY INTEREST, EXTRAORDINARY ITEMS AND CUMULATIVE
  EFFECT OF ACCOUNTING CHANGE...............................      856.2     3,601.7    1,500.0
INCOME TAX EXPENSE..........................................     (470.2)   (1,441.3)    (723.7)
                                                              ---------   ---------   --------
INCOME FROM CONTINUING OPERATIONS BEFORE MINORITY INTEREST,
  EXTRAORDINARY ITEMS AND CUMULATIVE EFFECT OF ACCOUNTING
  CHANGE....................................................      386.0     2,160.4      776.3
MINORITY INTEREST...........................................     (160.4)     (115.3)       4.6
                                                              ---------   ---------   --------
INCOME FROM CONTINUING OPERATIONS BEFORE EXTRAORDINARY ITEMS
  AND CUMULATIVE EFFECT OF ACCOUNTING CHANGE................      225.6     2,045.1      780.9
GAIN FROM DISCONTINUED OPERATIONS, net of income tax expense
  of $166.1.................................................                             335.8
                                                              ---------   ---------   --------
INCOME BEFORE EXTRAORDINARY ITEMS AND CUMULATIVE EFFECT OF
  ACCOUNTING CHANGE.........................................      225.6     2,045.1    1,116.7
EXTRAORDINARY ITEMS.........................................       (1.5)      (23.6)     (51.0)
CUMULATIVE EFFECT OF ACCOUNTING CHANGE......................      384.5
                                                              ---------   ---------   --------
NET INCOME..................................................      608.6     2,021.5    1,065.7
PREFERRED DIVIDENDS.........................................                  (23.5)     (29.7)
                                                              ---------   ---------   --------
NET INCOME FOR COMMON STOCKHOLDERS..........................  $   608.6   $ 1,998.0   $1,036.0
                                                              =========   =========   ========
BASIC EARNINGS (LOSS) FOR COMMON STOCKHOLDERS PER COMMON
  SHARE
  Income from continuing operations before extraordinary
    items and cumulative effect of accounting change........  $    0.24   $    2.27   $   1.00
  Discontinued operations...................................                              0.45
  Extraordinary items.......................................                  (0.03)     (0.07)
  Cumulative effect of accounting change....................       0.40
                                                              ---------   ---------   --------
  Net income................................................  $    0.64   $    2.24   $   1.38
                                                              =========   =========   ========
BASIC WEIGHTED AVERAGE NUMBER OF COMMON SHARES
  OUTSTANDING...............................................      949.7       890.7      749.1
                                                              =========   =========   ========
DILUTED EARNINGS (LOSS) FOR COMMON STOCKHOLDERS PER COMMON
  SHARE
  Income from continuing operations before extraordinary
    items and cumulative effect of accounting change........  $    0.23   $    2.16   $   0.95
  Discontinued operations...................................                              0.41
  Extraordinary items.......................................                  (0.03)     (0.06)
  Cumulative effect of accounting change....................       0.40
                                                              ---------   ---------   --------
  Net income................................................  $    0.63   $    2.13   $   1.30
                                                              =========   =========   ========
DILUTED WEIGHTED AVERAGE NUMBER OF COMMON SHARES
  OUTSTANDING...............................................      964.5       948.7      819.9
                                                              =========   =========   ========


                See notes to consolidated financial statements.
                                       F-87


                      COMCAST CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENT OF CASH FLOWS



                                                                   YEAR ENDED DECEMBER 31,
                                                              ---------------------------------
                                                                2001        2000        1999
                                                              ---------   ---------   ---------
                                                                    (DOLLARS IN MILLIONS)
                                                                             
OPERATING ACTIVITIES
  Net income................................................  $   608.6   $ 2,021.5   $ 1,065.7
  Adjustments to reconcile net income to net cash provided
     by operating activities from continuing operations:
     Depreciation...........................................    1,141.8       837.3       572.0
     Amortization...........................................    2,306.2     1,794.0       644.0
     Non-cash interest (income) expense, net................       40.2       (22.6)      (27.8)
     Non-cash (income) expense related to indexed debt......                 (666.0)      666.0
     Equity in net (income) losses of affiliates............       28.5        21.3        (1.4)
     Gains on investments and other income, net.............   (2,303.3)   (3,679.3)   (1,917.0)
     Minority interest......................................      160.4       115.3        (4.6)
     Discontinued operations................................                             (335.8)
     Extraordinary items....................................        1.5        23.6        51.0
     Cumulative effect of accounting change.................     (384.5)
     Deferred income taxes..................................     (240.7)    1,074.6       (73.4)
     Other..................................................       23.6        51.2        41.5
                                                              ---------   ---------   ---------
                                                                1,382.3     1,570.9       680.2
     Changes in working capital, net of effects of
       acquisitions and divestitures
       Increase in accounts receivable, net.................      (15.8)     (195.8)      (89.5)
       Increase in inventories, net.........................      (16.0)      (35.7)      (91.9)
       (Increase) decrease in other current assets..........      (27.1)       13.7        30.7
       (Decrease) increase in accounts payable, accrued
          expenses and other current liabilities............      (93.9)     (133.8)      719.9
                                                              ---------   ---------   ---------
                                                                 (152.8)     (351.6)      569.2
          Net cash provided by operating activities from
            continuing operations...........................    1,229.5     1,219.3     1,249.4
                                                              ---------   ---------   ---------
FINANCING ACTIVITIES
  Proceeds from borrowings..................................    5,686.4     5,435.3     2,786.6
  Retirements and repayments of debt........................   (4,187.7)   (5,356.5)   (1,368.2)
  Issuances of common stock and sales of put options on
     common stock...........................................       27.2        30.5        17.1
  Repurchases of common stock...............................      (27.1)     (324.9)      (30.7)
  Dividends.................................................                               (9.4)
  Deferred financing costs..................................      (22.5)      (55.8)      (51.0)
  Other.....................................................                               (3.0)
                                                              ---------   ---------   ---------
          Net cash provided by (used in) financing
            activities from continuing operations...........    1,476.3      (271.4)    1,341.4
                                                              ---------   ---------   ---------
INVESTING ACTIVITIES
  Acquisitions, net of cash acquired........................   (1,329.0)     (187.3)     (755.2)
  Proceeds from liquidated damages, net.....................                            1,460.0
  Proceeds from sales of (purchases of) short-term
     investments, net.......................................       (6.2)    1,028.1    (1,035.5)
  Capital contributions to and purchases of investments.....     (317.0)   (1,010.7)   (2,012.2)
  Proceeds from sales of investments........................    1,172.8       997.3       599.8
  Capital expenditures......................................   (2,181.7)   (1,636.8)     (893.8)
  Sale of subsidiary, net of cash sold......................                              361.1
  Additions to intangible and other noncurrent assets.......     (346.2)     (409.2)     (263.5)
                                                              ---------   ---------   ---------
          Net cash used in investing activities from
            continuing operations...........................   (3,007.3)   (1,218.6)   (2,539.3)
                                                              ---------   ---------   ---------
(DECREASE) INCREASE IN CASH AND CASH
  EQUIVALENTS -- CONTINUING OPERATIONS......................     (301.5)     (270.7)       51.5
CASH AND CASH EQUIVALENTS, beginning of year................      651.5       922.2       870.7
                                                              ---------   ---------   ---------
CASH AND CASH EQUIVALENTS, end of year......................  $   350.0   $   651.5   $   922.2
                                                              =========   =========   =========


                See notes to consolidated financial statements.
                                       F-88


                      COMCAST CORPORATION AND SUBSIDIARIES

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY



                                               PREFERRED STOCK          COMMON STOCK                          RETAINED
                                               ---------------   ---------------------------                  EARNINGS
                                               SERIES   SERIES   CLASS A                       ADDITIONAL   (ACCUMULATED
                                                 A        B      SPECIAL   CLASS A   CLASS B    CAPITAL       DEFICIT)
                                               ------   ------   -------   -------   -------   ----------   ------------
                                                                         (DOLLARS IN MILLIONS)
                                                                                       
BALANCE, JANUARY 1, 1999.....................  $31.9    $540.7   $698.4     $31.7     $9.4     $ 2,941.7     $(1,488.2)
Comprehensive income:
  Net income.................................                                                                  1,065.7
  Unrealized gains on marketable securities,
    net of deferred taxes of $2,891.9........
  Reclassification adjustments for gains
    included in net income, net of deferred
    taxes of $161.7..........................
  Cumulative translation adjustments.........
Total comprehensive income...................
  Acquisition................................                       8.5                            283.2
  Exercise of options........................                       2.2                             23.7
  Conversion of Series A preferred...........  (31.9)               2.7                             29.2
  Retirement of common stock.................                                (0.8)                  (4.6)        (25.3)
  Cash dividends, Series A preferred.........                                                       (0.8)
  Series B preferred dividends...............             28.9                                     (28.9)
  Share exchange.............................                       4.6      (4.9)                 172.3        (172.0)
  Temporary equity related to put options....                                                      111.2
                                               -----    ------   ------     -----     ----     ---------     ---------
BALANCE, DECEMBER 31, 1999...................            569.6    716.4      26.0      9.4       3,527.0        (619.8)
Comprehensive income:
  Net income.................................                                                                  2,021.5
  Unrealized losses on marketable securities,
    net of deferred taxes of $2,789.3........
  Reclassification adjustments for gains
    included in net income, net of deferred
    taxes of $266.0..........................
  Cumulative translation adjustments.........
Total comprehensive loss.....................
  Acquisitions...............................                     155.7                          7,585.2
  Exercise of options........................                       2.6                             53.9         (27.7)
  Retirement of common stock.................                      (6.0)     (3.1)                 (42.3)       (273.5)
  Conversion of Series B preferred...........           (533.6)    38.3                            495.3
  Series B preferred dividends...............             23.5                                     (23.5)
  Share exchange.............................                       1.0      (1.1)                  44.1         (44.0)
  Temporary equity related to put options....                                                      (40.9)
                                               -----    ------   ------     -----     ----     ---------     ---------
BALANCE, DECEMBER 31, 2000...................             59.5    908.0      21.8      9.4      11,598.8       1,056.5
Comprehensive income:
  Net income.................................                                                                    608.6
  Unrealized gains on marketable securities,
    net of deferred taxes of $114.4..........
  Reclassification adjustments for gains
    included in net income, net of deferred
    taxes of $264.4..........................
  Unrealized losses on effective portion of
    cash flow hedges, net of deferred taxes
    of $0.3..................................
  Cumulative translation adjustments.........
Total comprehensive income...................
  Exercise of options........................                       2.5                             53.3         (17.3)
  Retirement of common stock.................                      (0.8)                           (10.0)        (16.3)
  Conversion of Series B preferred...........            (59.5)     4.2                             55.3
  Temporary equity related to put options....                                                       54.6
                                               -----    ------   ------     -----     ----     ---------     ---------
BALANCE, DECEMBER 31, 2001...................  $        $        $913.9     $21.8     $9.4     $11,752.0     $ 1,631.5
                                               =====    ======   ======     =====     ====     =========     =========


                                                  ACCUMULATED OTHER
                                                    COMPREHENSIVE
                                                    INCOME (LOSS)
                                               ------------------------
                                               UNREALIZED   CUMULATIVE
                                                 GAINS      TRANSLATION
                                                (LOSSES)    ADJUSTMENTS     TOTAL
                                               ----------   -----------   ---------
                                                      (DOLLARS IN MILLIONS)
                                                                 
BALANCE, JANUARY 1, 1999.....................   $1,049.5      $  0.2      $ 3,815.3
Comprehensive income:
  Net income.................................
  Unrealized gains on marketable securities,
    net of deferred taxes of $2,891.9........    5,370.6
  Reclassification adjustments for gains
    included in net income, net of deferred
    taxes of $161.7..........................     (300.3)
  Cumulative translation adjustments.........                   (7.3)
Total comprehensive income...................                               6,128.7
  Acquisition................................                                 291.7
  Exercise of options........................                                  25.9
  Conversion of Series A preferred...........
  Retirement of common stock.................                                 (30.7)
  Cash dividends, Series A preferred.........                                  (0.8)
  Series B preferred dividends...............
  Share exchange.............................
  Temporary equity related to put options....                                 111.2
                                                --------      ------      ---------
BALANCE, DECEMBER 31, 1999...................    6,119.8        (7.1)      10,341.3
Comprehensive income:
  Net income.................................
  Unrealized losses on marketable securities,
    net of deferred taxes of $2,789.3........   (5,180.1)
  Reclassification adjustments for gains
    included in net income, net of deferred
    taxes of $266.0..........................     (494.0)
  Cumulative translation adjustments.........                   (6.2)
Total comprehensive loss.....................                              (3,658.8)
  Acquisitions...............................                               7,740.9
  Exercise of options........................                                  28.8
  Retirement of common stock.................                                (324.9)
  Conversion of Series B preferred...........
  Series B preferred dividends...............
  Share exchange.............................
  Temporary equity related to put options....                                 (40.9)
                                                --------      ------      ---------
BALANCE, DECEMBER 31, 2000...................      445.7       (13.3)      14,086.4
Comprehensive income:
  Net income.................................
  Unrealized gains on marketable securities,
    net of deferred taxes of $114.4..........      212.5
  Reclassification adjustments for gains
    included in net income, net of deferred
    taxes of $264.4..........................     (491.1)
  Unrealized losses on effective portion of
    cash flow hedges, net of deferred taxes
    of $0.3..................................       (0.6)
  Cumulative translation adjustments.........                   (8.8)
Total comprehensive income...................                                 320.6
  Exercise of options........................                                  38.5
  Retirement of common stock.................                                 (27.1)
  Conversion of Series B preferred...........
  Temporary equity related to put options....                                  54.6
                                                --------      ------      ---------
BALANCE, DECEMBER 31, 2001...................   $  166.5      $(22.1)     $14,473.0
                                                ========      ======      =========


                See notes to consolidated financial statements.

                                       F-89


                      COMCAST CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999

1.  BUSINESS

     Comcast Corporation and its subsidiaries (the "Company") is involved in
three principal lines of business: cable, commerce and content.

     The Company's cable business is principally involved in the development,
management and operation of broadband communications networks in the United
States ("US"). The Company's consolidated cable operations served approximately
8.5 million subscribers and passed approximately 13.9 million homes as of
December 31, 2001.

     The Company's commerce operations consist of the Company's consolidated
subsidiary, QVC, Inc. and subsidiaries ("QVC"). Through QVC, an electronic
retailer, the Company markets a wide variety of products directly to consumers
primarily on merchandise-focused television programs. QVC was available, on a
full and part-time basis, to approximately 82.1 million homes in the US,
approximately 9.5 million homes in the United Kingdom ("UK"), approximately 23.6
million homes in Germany and approximately 3.6 million homes in Japan as of
December 31, 2001.

     Content is provided through the Company's consolidated subsidiaries
including Comcast Spectacor, Comcast SportsNet ("CSN"), Comcast SportsNet
Mid-Atlantic ("CSN Mid-Atlantic"), Comcast Sports Southeast ("CSS"), E!
Entertainment Television, Inc. ("E! Entertainment"), The Golf Channel ("TGC"),
Outdoor Life Network ("OLN") and G4 Media, LLC ("G4 Media"), and through other
programming investments (see Note 5).

     The Company's cable and commerce operations represent the Company's two
reportable segments under accounting principles generally accepted in the United
States. The Company's three 24-hour regional sports programming networks, which
consist of CSN, CSN Mid-Atlantic and CSS, derive a substantial portion of their
revenues from the Company's cable operations. In 2001, as a result of a change
in its internal reporting structure, the Company's regional sports programming
networks are included in the Company's cable segment for all periods presented.
See Note 12 for a summary of the Company's financial data by business segment.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  BASIS OF CONSOLIDATION

     The consolidated financial statements include the accounts of the Company
and all entities that the Company directly or indirectly controls. All
significant intercompany accounts and transactions among consolidated entities
have been eliminated.

  MANAGEMENT'S USE OF ESTIMATES

     The Company prepares its financial statements in conformity with accounting
principles generally accepted in the United States which require management to
make estimates and assumptions that affect the reported amounts and disclosures.
Actual results could differ from those estimates. Estimates are used when
accounting for certain items such as sales returns and allowances, allowances
for doubtful accounts, reserves for inventory obsolescence, investments and
derivative financial instruments, depreciation and amortization, asset
impairment, non-monetary transactions and contingencies.

  FAIR VALUES

     The Company has determined the estimated fair value amounts presented in
these consolidated financial statements using available market information and
appropriate methodologies. However, considerable judgment is required in
interpreting market data to develop the estimates of fair value. The
                                       F-90

                      COMCAST CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
            YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999 (CONTINUED)

estimates presented in these consolidated financial statements are not
necessarily indicative of the amounts that the Company could realize in a
current market exchange. The use of different market assumptions and/or
estimation methodologies may have a material effect on the estimated fair value
amounts. The Company based these fair value estimates on pertinent information
available to management as of December 31, 2001 and 2000. The Company has not
comprehensively updated these fair value estimates for purposes of these
consolidated financial statements since such dates.

  CASH EQUIVALENTS

     Cash equivalents consist principally of commercial paper, money market
funds, US Government obligations and certificates of deposit with maturities of
three months or less when purchased. The carrying amounts of the Company's cash
equivalents approximate their fair values.

  INVENTORIES -- ELECTRONIC RETAILING

     Inventories are stated at the lower of cost or market. Cost is determined
by the average cost method, which approximates the first-in, first-out method.

  INVESTMENTS

     Investments consist principally of equity securities.

     Investments in entities in which the Company has the ability to exercise
significant influence over the operating and financial policies of the investee
are accounted for under the equity method. Equity method investments are
recorded at original cost and adjusted periodically to recognize the Company's
proportionate share of the investees' net income or losses after the date of
investment, additional contributions made and dividends received. The
differences between the Company's recorded investments and its proportionate
interests in the book value of the investees' net assets are being amortized to
equity in net income or loss, primarily over a period of 20 years, which is
consistent with the estimated lives of the underlying assets.

     Unrestricted publicly traded investments are classified as available for
sale or trading securities and recorded at their fair value. Unrealized gains or
losses resulting from changes in fair value between measurement dates for
available for sale securities are recorded as a component of other comprehensive
income. Unrealized gains or losses resulting from changes in fair value between
measurement dates for trading securities are recorded as a component of
investment income.

     Restricted publicly traded investments and investments in privately held
companies are stated at cost, adjusted for any known diminution in value (see
Note 6).

  PROPERTY AND EQUIPMENT

     The Company records property and equipment at cost. Depreciation is
provided by the straight-line method over estimated useful lives as follows:


                                                           
Buildings and improvements..................................  4 - 40 years
Operating facilities........................................  2 - 12 years
Other equipment.............................................  2 - 15 years


     The Company capitalizes improvements that extend asset lives and expenses
other repairs and maintenance charges as incurred. The cost and related
accumulated depreciation applicable to assets sold

                                       F-91

                      COMCAST CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
            YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999 (CONTINUED)

or retired are removed from the accounts and the gain or loss on disposition is
recognized as a component of depreciation expense.

     The Company capitalizes the costs associated with the construction of cable
transmission and distribution facilities and new cable service installations.
Costs include all direct labor and materials, as well as certain indirect costs.

  INTANGIBLE ASSETS

     Goodwill is the excess of the acquisition cost of an acquired entity over
the fair value of the identifiable net assets acquired. The Company amortizes
goodwill over estimated useful lives ranging principally from 20 to 30 years.

     Cable franchise operating rights represent the value attributed to
agreements with local authorities that allow access to homes in cable service
areas acquired in connection with a business combination. The Company
capitalizes these contractual rights and amortizes them over the term of the
related franchise agreements. Costs incurred by the Company in negotiating and
renewing franchise agreements are included in other intangible assets and are
amortized on a straight-line basis over the term of the franchise renewal
period, generally 10 to 15 years.

     Other intangible assets consist principally of cable and satellite
television distribution rights, cable system franchise renewal costs,
contractual operating rights, computer software, programming costs and rights,
license acquisition costs and non-competition agreements. The Company
capitalizes these costs and amortizes them on a straight-line basis over the
term of the related agreements or estimated useful life.

     Certain of the Company's content subsidiaries and QVC have entered into
multi-year affiliation agreements with various cable and satellite system
operators for carriage of their respective programming. The Company capitalizes
cable or satellite distribution rights and amortizes them on a straight-line
basis over the term of the related distribution agreements of 5 to 15 years.

     See Note 3 for a discussion of the expected impact of adoption of Statement
of Financial Accounting Standards ("SFAS") No. 141, "Business Combinations"
("SFAS No. 141") and SFAS No. 142, "Goodwill and Other Intangible Assets" ("SFAS
No. 142").

 VALUATION OF LONG-LIVED ASSETS

     The Company periodically evaluates the recoverability of its long-lived
assets, including property and equipment and intangible assets, whenever events
or changes in circumstances indicate that the carrying amount may not be
recoverable. Such evaluations include analyses based on the cash flows generated
by the underlying assets, profitability information, including estimated future
operating results, trends or other determinants of fair value. If the total of
the expected future undiscounted cash flows is less than the carrying amount of
the asset, a loss is recognized for the difference between the fair value and
the carrying value of the asset. Unless presented separately, the loss is
included as a component of either depreciation expense or amortization expense,
as appropriate.

 FOREIGN CURRENCY TRANSLATION

     The Company translates assets and liabilities of its foreign subsidiaries,
where the functional currency is the local currency, into US dollars at the
December 31 exchange rate and records the related translation adjustments as a
component of other comprehensive income. The Company translates revenues and
expenses using average exchange rates prevailing during the year. Foreign
currency transaction gains and losses are included in other income (expense).

                                       F-92

                      COMCAST CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
            YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999 (CONTINUED)

 REVENUE RECOGNITION

     The Company recognizes video, high-speed Internet, and programming revenues
as service is provided. The Company manages credit risk by disconnecting
services to cable and high-speed Internet customers who are delinquent. The
Company recognizes advertising sales revenue at estimated realizable values when
the advertising is aired. Revenues derived from other sources are recognized
when services are provided or events occur.

     The Company recognizes net sales from electronic retailing at the time of
shipment to customers. The Company classifies all amounts billed to a customer
for shipping and handling within net sales from electronic retailing. The
Company's policy is to allow customers to return merchandise for up to thirty
days after date of shipment. An allowance for returned merchandise is provided
as a percentage of sales based on historical experience.

     See Note 3 for a discussion of the expected impact of adoption of Emerging
Issues Task Force ("EITF") 01-9, "Accounting for Consideration Given to a
Customer (Including a Reseller of the Vendor's Products)" ("EITF 01-9") and EITF
01-14, "Income Statement Characterization of Reimbursements Received for
'Out-of-Pocket' Expenses Incurred" ("EITF 01-14").

 STOCK-BASED COMPENSATION

     The Company accounts for stock-based compensation in accordance with
Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued
to Employees," and related interpretations, as permitted by SFAS No. 123,
"Accounting for Stock-Based Compensation." Compensation expense for stock
options is measured as the excess, if any, of the quoted market price of the
Company's stock at the date of the grant over the amount an employee must pay to
acquire the stock. The Company records compensation expense for restricted stock
awards based on the quoted market price of the Company's stock at the date of
the grant and the vesting period. The Company records compensation expense for
stock appreciation rights based on the changes in quoted market prices of the
Company's stock or other determinants of fair value at the end of the year (see
Note 8).

 POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS

     The Company charges to operations the estimated costs of retiree benefits
and benefits for former or inactive employees, after employment but before
retirement, during the years the employees provide services.

 INVESTMENT INCOME

     Investment income includes interest income, dividend income and gains, net
of losses, on the sales and exchanges of marketable securities and long-term
investments. The Company recognizes gross realized gains and losses using the
specific identification method. Investment income also includes unrealized gains
or losses on trading securities, mark to market adjustments on derivatives and
hedged items, and impairment losses resulting from adjustments to the net
realizable value of certain of the Company's investments (see Note 6).

 INCOME TAXES

     The Company recognizes deferred tax assets and liabilities for temporary
differences between the financial reporting basis and the tax basis of the
Company's assets and liabilities and expected benefits of utilizing net
operating loss carryforwards. The impact on deferred taxes of changes in tax
rates and laws, if

                                       F-93

                      COMCAST CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
            YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999 (CONTINUED)

any, applied to the years during which temporary differences are expected to be
settled, are reflected in the consolidated financial statements in the period of
enactment (see Note 9).

 DERIVATIVE FINANCIAL INSTRUMENTS

     The Company uses derivative financial instruments for a number of purposes.
The Company manages its exposure to fluctuations in interest rates by entering
into interest rate exchange agreements ("Swaps"), interest rate cap agreements
("Caps") and interest rate collar agreements ("Collars"). The Company manages
the cost of its share repurchases through the sale of equity put option
contracts ("Comcast Put Options"). The Company manages its exposure to
fluctuations in the value of certain of its investments by entering into equity
collar agreements ("Equity Collars") and equity put option agreements ("Equity
Put Options"). The Company makes investments in businesses, to some degree,
through the purchase of equity call option or call warrant agreements ("Equity
Warrants"). The Company has issued indexed debt instruments and entered into
prepaid forward sale agreements ("Prepaid Forward Sales") whose value, in part,
is derived from the market value of Sprint PCS common stock, and has also sold
call options on certain of its investments in equity securities ("Covered Call
Options") in order to monetize a portion of those investments.

     Prior to the adoption on January 1, 2001 of SFAS No. 133, "Accounting for
Derivatives and Hedging Activities," as amended ("SFAS No. 133"), Swaps, Caps
and Collars were matched with either fixed or variable rate debt and periodic
cash payments were accrued on a settlement basis as an adjustment to interest
expense. Any premiums associated with these instruments were amortized over
their term and realized gains or losses as a result of the termination of the
instruments were deferred and amortized over the remaining term of the
underlying debt. Unrealized gains and losses as a result of these instruments
were recognized when the underlying hedged item was extinguished or otherwise
terminated.

     Equity Collars, Equity Put Options and Equity Warrants were marked to
market on a current basis with the result included in accumulated other
comprehensive income in the Company's consolidated balance sheet. Covered Call
Options are marked to market on a current basis with the result included in
investment income in the Company's consolidated statement of operations.

     On January 1, 2001, the Company adopted SFAS No. 133. SFAS No. 133
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts and hedging
activities. SFAS No. 133 requires that all derivative instruments, whether
designated in hedging relationships or not, be recorded on the balance sheet at
their fair values.

     For derivative instruments designated and effective as fair value hedges,
such as the Company's Equity Collars, Equity Put Options and Fixed to Variable
Swaps, changes in the fair value of the derivative instrument are substantially
offset in the consolidated statement of operations by changes in the fair value
of the hedged item. For derivative instruments designated as cash flow hedges,
such as the Company's Variable to Fixed Swaps, the effective portion of any
hedge is reported in other comprehensive income until it is recognized in
earnings during the same period in which the hedged item affects earnings. The
ineffective portion of all hedges is recognized in current earnings each period.
Changes in the fair value of derivative instruments that are not designated as a
hedge are recorded each period in current earnings.

     When a fair value hedge is terminated, sold, exercised or has expired, the
adjustment in the carrying amount of the fair value hedged item is deferred and
recognized into earnings when the hedged item is recognized in earnings. When a
hedged item is extinguished or sold, the adjustment in the carrying amount of
the hedged item is recognized in earnings. When hedged variable rate debt is
extinguished, the previously deferred effective portion of the hedge is written
off similar to debt extinguishment costs.

                                       F-94

                      COMCAST CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
            YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999 (CONTINUED)

     Subsequent to the adoption of SFAS No. 133, Equity Warrants are marked to
market on a current basis with the result included in investment income in the
Company's consolidated statement of operations.

     Subsequent to the adoption of SFAS No. 133, derivative instruments embedded
in other contracts, such as the Company's indexed debt instruments and Prepaid
Forward Sale, are bifurcated into their host and derivative financial instrument
components. The derivative component is recorded at its estimated fair value in
the Company's consolidated balance sheet with changes in estimated fair value
recorded in investment income.

     Proceeds from sales of Comcast Put Options are recorded in stockholders'
equity and an amount equal to the redemption price of the common stock is
reclassified from permanent equity to temporary equity. Subsequent changes in
the market value of Comcast Put Options are not recorded.

     The Company periodically examines those instruments that have been entered
into by the Company to hedge exposure to interest rate and equity price risks to
ensure that the instruments are matched with underlying assets or liabilities,
reduce the Company's risks relating to interest rates or equity prices and,
through market value and sensitivity analysis, maintain a high correlation to
the risk inherent in the hedged item. For those instruments that do not meet the
above criteria, variations in their fair value are marked-to-market on a current
basis in the Company's consolidated statement of operations.

     The Company does not hold or issue any derivative financial instruments for
trading purposes and is not a party to leveraged instruments (see Note 7). The
Company manages the credit risks associated with its derivative financial
instruments through the evaluation and monitoring of the creditworthiness of the
counterparties. Although the Company may be exposed to losses in the event of
nonperformance by the counterparties, the Company does not expect such losses,
if any, to be significant.

     See Note 3 for a discussion of the impact of adoption of SFAS No. 133.

 SALE OF STOCK BY A SUBSIDIARY OR EQUITY METHOD INVESTEE

     Changes in the Company's proportionate share of the underlying equity of a
consolidated subsidiary or equity method investee which result from the issuance
of additional securities by such subsidiary or investee are recognized as gains
or losses in the Company's consolidated statement of operations unless gain
realization is not assured in the circumstances. Gains for which realization is
not assured are credited directly to additional capital.

 SECURITIES LENDING TRANSACTIONS

     The Company may enter into securities lending transactions pursuant to
which the Company requires the borrower to provide cash collateral equal to the
value of the loaned securities, as adjusted for any changes in the value of the
underlying loaned securities. Loaned securities for which the Company maintains
effective control are included in investments in the Company's consolidated
balance sheet.

 RECLASSIFICATIONS

     Certain reclassifications have been made to the prior years' consolidated
financial statements to conform to those classifications used in 2001.

                                       F-95

                      COMCAST CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
            YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999 (CONTINUED)

3.  RECENT ACCOUNTING PRONOUNCEMENTS

 SFAS NO. 133, AS AMENDED

     On January 1, 2001, the Company adopted SFAS No. 133. SFAS No. 133
establishes accounting and reporting standards for derivatives and hedging
activities. SFAS No. 133 requires that all derivative instruments be reported on
the balance sheet at their fair values.

     Upon adoption of SFAS No. 133, the Company recognized as income a
cumulative effect of accounting change, net of related income taxes, of $384.5
million and a cumulative decrease in other comprehensive income, net of related
income taxes, of $127.0 million.

     The increase in income consisted of a $400.2 million adjustment to record
the debt component of indexed debt at a discount from its value at maturity (see
Note 7) and $191.3 million principally related to the reclassification of gains
previously recognized as a component of accumulated other comprehensive income
on the Company's equity derivative instruments, net of related deferred income
taxes of $207.0 million (see Note 9).

     The decrease in other comprehensive income consisted principally of the
reclassification of the gains noted above.

 SFAS NO'S. 141 AND 142

     The Financial Accounting Standards Board ("FASB") issued SFAS No. 141 and
SFAS No. 142 in June 2001. These statements address how intangible assets that
are acquired individually, with a group of other assets or in connection with a
business combination should be accounted for in financial statements upon and
subsequent to their acquisition. The new statements require that all business
combinations initiated after June 30, 2001 be accounted for using the purchase
method and establish specific criteria for the recognition of intangible assets
separately from goodwill.

     The Company adopted SFAS No. 141 on July 1, 2001, as required by the new
statement. The adoption of SFAS No. 141 did not have a material impact on the
Company's financial condition or results of operations.

     The Company adopted SFAS No. 142 on January 1, 2002, as required by the new
statement. Upon adoption, the Company will no longer amortize goodwill and other
indefinite lived intangible assets, which consist primarily of cable franchise
operating rights. The Company will be required to test its goodwill and
intangible assets that are determined to have an indefinite life for impairment
at least annually. Other than in the period of adoption or in those periods in
which the Company may record an asset impairment, the Company expects that the
adoption of SFAS No. 142 will result in increased income as a result of reduced
amortization expense.

     The EITF of the FASB is expected to provide further guidance on certain
implementation issues related to the adoption of SFAS No. 142 as it relates to
identifiable intangible assets other than goodwill. Subject to further guidance
to be provided, based upon the Company's interpretation of SFAS No. 142, the
Company may record a charge as a cumulative effect of accounting change, net of
related deferred income taxes, in an amount not expected to exceed $1.5 billion
upon adoption of SFAS No. 142 on January 1, 2002.

     Based on the Company's preliminary evaluation, the estimated effect of
adoption of SFAS No. 142 would have been to decrease amortization expense by
approximately $2.0 billion and to increase deferred income tax expense by
approximately $600 million for the year ended December 31, 2001 (See Note 14).

                                       F-96

                      COMCAST CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
            YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999 (CONTINUED)

  SFAS NO. 143

     The FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations," in June 2001. SFAS No. 143 addresses financial accounting and
reporting for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. SFAS No. 143 is effective for
fiscal years beginning after June 15, 2002. While the Company is currently
evaluating the impact the adoption of SFAS No. 143 will have on its financial
condition and results of operations, it does not expect such impact to be
material.

  SFAS NO. 144

     The FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets," in August 2001. SFAS No. 144, which addresses financial
accounting and reporting for the impairment of long-lived assets and for
long-lived assets to be disposed of, supercedes SFAS No. 121 and is effective
for fiscal years beginning after December 15, 2001. While the Company is
currently evaluating the impact the adoption of SFAS No. 144 will have on its
financial condition and results of operations, it does not expect such impact to
be material.

  EITF 01-9

     In November 2001, the EITF reached a consensus on EITF 01-9. EITF 01-9
requires, among other things, that consideration paid to customers should be
classified as a reduction of revenue unless certain criteria are met. Certain of
the Company's content subsidiaries have paid or may pay distribution fees to
cable television and satellite broadcast systems for carriage of their
programming. The Company currently classifies the amortization of these
distribution fees as expense in its consolidated statement of operations. Upon
adoption of EITF 01-9 on January 1, 2002, the Company will reclassify certain of
these distribution fees from expense to a revenue reduction for all periods
presented in its consolidated statement of operations. The change in
classification will have no impact on the Company's reported operating loss or
financial condition. The effect of the reclassification of cable television and
satellite broadcast distribution fees from expense to a reduction of revenue is
to decrease the amounts reported in the Company's consolidated statement of
operations as follows (in millions):



                                                              YEAR ENDED DECEMBER 31,
                                                              -----------------------
                                                               2001     2000    1999
                                                              ------   ------   -----
                                                                       
Service revenues............................................  $35.8    $17.3    $4.6
Selling, general and administrative expense.................  $ 4.7    $ 5.3    $4.2
Amortization expense........................................  $31.1    $12.0    $0.4


 EITF 01-14

     In November 2001, the FASB staff announced EITF Topic D-103, "Income
Statement Characterization of Reimbursements Received for 'Out-of-Pocket'
Expenses Incurred," which has subsequently been recharacterized as EITF 01-14.
EITF 01-14 requires that reimbursements received for out-of-pocket expenses
incurred be characterized as revenue in the statement of operations.

     Under the terms of its franchise agreements, the Company is required to pay
up to 5% of its gross revenues derived from providing cable services to the
local franchising authority. The Company normally passes these fees through to
its cable subscribers. The Company currently classifies cable franchise fees
collected from its cable subscribers as a reduction of the related franchise fee
expense included within selling, general and administrative expenses in its
consolidated statement of operations.

                                       F-97

                      COMCAST CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
            YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999 (CONTINUED)

     EITF 01-14, by analogy, applies to franchise fees. Upon adoption of EITF
01-14 on January 1, 2002, the Company will reclassify franchise fees collected
from cable subscribers from a reduction of selling, general and administrative
expenses to a component of service revenues in its consolidated statement of
operations. The change in classification will have no impact on the Company's
reported operating income (loss) or financial condition. The effect of the
reclassification of cable franchise fees is to increase the amounts reported in
the Company's consolidated statement of operations as follows (in millions):



                                                             YEAR ENDED DECEMBER 31,
                                                             ------------------------
                                                              2001     2000     1999
                                                             ------   ------   ------
                                                                      
Service revenues...........................................  $192.3   $152.3   $105.6
Selling, general and administrative expense................  $192.3   $152.3   $105.6


4.  EARNINGS PER SHARE

     Earnings for common stockholders per common share is computed by dividing
net income, after deduction of preferred stock dividends, when applicable, by
the weighted average number of common shares outstanding during the period on a
basic and diluted basis.

     The following table reconciles the numerator and denominator of the
computations of diluted earnings for common stockholders per common share
("Diluted EPS") for the years presented.



                                                            YEAR ENDED DECEMBER 31,
                                                          ----------------------------
                                                           2001      2000       1999
                                                          ------   --------   --------
                                                             (AMOUNTS IN MILLIONS,
                                                             EXCEPT PER SHARE DATA)
                                                                     
Net income for common stockholders......................  $608.6   $1,998.0   $1,036.0
Preferred dividends.....................................               23.5       29.7
                                                          ------   --------   --------
Net income for common stockholders used for Diluted
  EPS...................................................  $608.6   $2,021.5   $1,065.7
                                                          ======   ========   ========
Basic weighted average number of common shares
  outstanding...........................................   949.7      890.7      749.1
Dilutive securities:
  Series A and B convertible preferred stock............     1.0       42.5       44.0
  Stock option and restricted stock plans...............    13.8       15.4       26.8
  Put options on Class A Special Common Stock...........                0.1
                                                          ------   --------   --------
Diluted weighted average number of common shares
  outstanding...........................................   964.5      948.7      819.9
                                                          ======   ========   ========
Diluted earnings for common stockholders per common
  share.................................................  $ 0.63   $   2.13   $   1.30
                                                          ======   ========   ========


     Comcast Put Options on a weighted average 0.2 million shares, 1.5 million
shares and 2.7 million shares of its Class A Special Common Stock (see Note 8)
were outstanding during the years ended December 31, 2001, 2000 and 1999,
respectively. Comcast Put Options outstanding during the years ended December
31, 2001 and 1999 were not included in the computation of Diluted EPS as the
Comcast Put Options' exercise price was less than the average market price of
the Company's Class A Special Common Stock during the periods.

     In December 2000 and January 2001, the Company issued $1.478 billion
principal amount at maturity of Zero Coupon Convertible Debentures due 2020 (the
"Zero Coupon Debentures" -- see Note 7). The Zero Coupon Debentures may be
converted at any time prior to maturity if the closing sale price of the
Company's Class A Special Common Stock is greater than 110% of the accreted
conversion price (as defined). The Zero Coupon Debentures were excluded from the
computation of Diluted EPS in 2001 and

                                       F-98

                      COMCAST CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
            YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999 (CONTINUED)

2000 as the weighted average closing sale price of the Company's Class A Special
Common Stock was not greater than 110% of the accreted conversion price.

5.  ACQUISITIONS AND OTHER SIGNIFICANT EVENTS

  AGREEMENT AND PLAN OF MERGER WITH AT&T BROADBAND

     On December 19, 2001, the Company entered into an Agreement and Plan of
Merger with AT&T Corp. ("AT&T") pursuant to which the Company agreed to a
transaction which will result in the combination of the Company and a holding
company of AT&T's broadband business ("AT&T Broadband") that AT&T will spin off
to its shareholders immediately prior to the combination. As of December 31,
2001, AT&T Broadband served approximately 13.6 million subscribers. Under the
terms of the transaction, the combined company will issue approximately 1.235
billion shares of its voting common stock to AT&T Broadband shareholders in
exchange for all of AT&T's interests in AT&T Broadband, and approximately 115
million shares of its common stock to Microsoft Corporation ("Microsoft") in
exchange for AT&T Broadband shares that Microsoft will receive immediately prior
to the completion of the transaction for settlement of their $5 billion
aggregate principal amount in quarterly income preferred securities. The
combined company will also assume or incur approximately $20 billion of AT&T
Broadband debt. For each share of a class of common stock of Comcast that they
hold at the time of the merger, each Comcast shareholder will receive one share
of a corresponding class of stock of the combined company. The Company expects
that the transaction will qualify as tax-free to both the Company and to AT&T.

     The Company will account for the transaction as an acquisition under the
purchase method of accounting, with the Company as the acquiring entity. The
identification of the Company as the acquiring entity was made after careful
consideration of all facts and circumstances, as follows:

          Voting Rights in the New Combined Company.  Former AT&T shareholders
     will own approximately 53.7% of the combined company's economic interest
     and approximately 60.6% of the combined company's voting interest following
     the merger. Microsoft will own shares representing approximately 5.2% of
     the combined company's economic interest and 4.95% of the combined
     company's voting interest following the merger. No individual former AT&T
     shareholder will have any significant ownership or voting interest
     following the merger. Brian L. Robe