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IPSWICH, Mass. (AP) - AT&T has dropped its lawsuit against a Massachusetts businessman over a $1 million phone bill he says resulted from a hacker's fraud.

Ipswich resident Michael Smith is owner of the small manufacturing company Todd Tool & Abrasive Systems. He said Tuesday he's not dropping a counterclaim for the costs to defend himself in the legal battle his lawyers call unfair.

The telecommunications company says it has dismissed all claims and is "sympathetic" to Smith's situation and remains "open to resolving his concerns."

Smith says someone hacked into his company's phone system in 2009 and made nearly $900,000 in calls to Somalia. AT&T Inc. sued Smith for $1.15 million for the calls plus interest. His lawyers say the company failed to notify him about the suspicious calls before billing him.

(Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)
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