AT&T Inc. has eliminated nearly 500 jobs in the East Bay during the past year and a half — including 136 during May alone — as the company wrestles with a landline-phone business that has dwindled.

Yet the job cuts, while painful for the employees affected, represent more than a reduction in the company's work force. They also symbolize the fast-shifting nature of the telecommunications business.

Increasingly, that industry is focused on Internet-based and wireless communications products. Far less is focused on the legacy landline or wireline product, commonly known as traditional telephone services.

"The landline business is pretty much dead," said Tim Bajarin, principal analyst with Campbell-based Creative Strategies, a market researcher that tracks emerging technologies. "For a growing number of homes that have them, landline telephones are just a backup service."

The layoffs come at a time when AT&T is attempting to balance its staffing levels to match growth in some businesses and erosion in others, the communications colossus said Tuesday.

"In those parts of our business that are growing, we are adding jobs, most notably in retail stores and U-verse installation," said Marty Richter, a spokesman for AT&T.

U-verse is the company's package of telephone, television and Internet services. It aggressively hawks these packages as a way to capture more market share.


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"At the same time, we are shedding some jobs in the parts of our business that are declining, particularly wireline," Richter said.

About 172 of the AT&T job cuts in the East Bay came during the first five months of 2010, according to official company filings with state labor agencies. The filings show that 324 of the layoffs came during 2009.

San Ramon, where the company maintains a huge presence, was hardest hit by the downsizing, the filings indicate. So far in 2010, San Ramon suffered 113 of the job cuts, while Pleasanton endured 59 lost jobs.

During 2009, San Ramon lost 281 AT&T jobs and Pleasanton lost 43.

"The landline business is being threatened by VOIP (voice over Internet protocol services)," Bajarin said. "People don't really see the need for a landline any more."

In its financial report for the first quarter that ended March 31, AT&T disclosed that its landline business generated $15.42 billion in revenue. That was down 4.6 percent from the same period the year before.

During the same three-month period, AT&T's wireless business brought in $13.9 billion in revenue, an 8.2 percent increase from the year before.

AT&T's switched access lines, commonly known as a phone line, decreased 10.9 percent during the first quarter.

"The reasons for the declining wireline business include continuing pressures on both consumer and business customers from the troubled economy, and rapidly declining wired access lines," Richter said.

Customers have switched to wireless technologies or are seeking out other providers amid an "extremely competitive environment," Richter said.

These trends won't likely reverse themselves. And younger consumers will be even less likely to use a wired telephone in their home, Bajarin said.

"Young people might never see a landline in the house," Bajarin said. "They only use cell phones."

Contact George Avalos at 925-977-8477.