The gem at the center of the new AT&T (T) - Get Report is looking a little tarnished already.

Last month's $16 billion merger paired the massive local phone reach of San Antonio's SBC with the global network of New Jersey's Ma Bell. The deal was billed as creating a bruising communications titan whose shining star would be the old AT&T's top-tier corporate clientele.

But less than a month into the merger, the combined company seems a little banged up. The struggles are apparent particularly at the business service operation that made up the core of the old AT&T.

For starters, Ma Bell's top brass was almost entirely replaced by SBC leadership in the first round of cuts. Then

Comcast

(CMCSA) - Get Report

, AT&T's largest wholesale customer, said Monday it would build its own optical Internet. And some big business customers have complained lately that they are feeling neglected.

Industry watchers worry that San Antonio's finest -- the SBC holdovers who run the new AT&T -- are out of their league in trying to lead a multinational business communications and services operation.

"The enterprise business is the big reason why this deal occurred," says Standard & Poor's analyst Todd Rosenbluth. "It was an opportunity for the combined company to grow as a result of taking SBC's operations and old AT&T and offering a bundle of services, including wireless to customers, that wasn't available before." Rosenbluth has a hold rating on AT&T.

AT&T already has made aggressive promises on the cost-savings front, saying it would wring $15 billion in costs out of the company. But there's more to integration than slashing staff and consolidating office space, say observers.

"My concern is that new AT&T sees this as just another Bell acquisition like Ameritech or Pacific Telesis," says Forrester Research analyst Lisa Pierce. "But as we know, AT&T serves a disproportionate number of Fortune 500 companies, and my concern is that innovation and customer care could suffer."

Pierce consults with big businesses over issues like service provider offerings and communications technology. She says she's heard customers complain recently that they "can't get a knowledgeable account rep on the phone." AT&T didn't respond to a request for comment.

Big companies typically expect a lot of support and hand-holding from their phone and data service providers, say analysts. This is a challenge that

Verizon

(VZ) - Get Report

also will face after its pending acquisition of

MCI

(MCIP)

.

The need has become so large that the market has grown, and several big tech shops like

EDS

(EDS)

and

IBM

(IBM) - Get Report

have moved in as service integrators and system managers. This is a key role that AT&T has long played in the enterprise, and one it would hope to hold onto, say analysts.

"They've been losing market share, and nothing says AT&T has leveled off," says Pierce.

Investors haven't exactly cheered the new AT&T. Shares have been trading in the $25 range since the merger was completed Nov. 18.

"It's a stock to watch," says one money manager with no position. "But I'd rather own Verizon."

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