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AT&T Defends DirecTV Merger to FCC

Daily Insight | Rich Karpinski | June 12, 2014

It’s what customers want, or so says AT&T of its pending US$48.5 billion DirecTV acquisition in a recent filing with the U.S. FCC.
 
Reuters reports AT&T defended the deal saying customers require access to video in a variety of media and the acquisition will give AT&T the scale it needs to compete with large cable companies like Comcast and Time Warner (which are pursuing their own merger). The deal would let customers save on mobile, wireline and TV bundles that AT&T cannot currently provide due to its limited video footprint. If the deal is approved, AT&T promises to offer broadband Internet at a reasonable price and video service at a standard price for three years, as well as to abide by the FCC’s 2010 Net neutrality rules and extend broadband service to 15 million rural customers. 
 
Yankee Group Principal Analyst Rich Karpinski comments
 
“The FCC has its hands full these days. AT&T/DirecTV, while a big-number deal, probably is the easiest to pass. Stand-alone satellite TV companies certainly aren't the future of anything. What AT&T gets with the deal is deeper content connections, which will help both its U-verse and potential over-the-top (OTT) content businesses become better competitors as well. In particular, if Comcast/Time Warner gets a pass, the FCC will have a hard time holding up AT&T/DirecTV. As we've noted, the best path forward for the FCC would be to use this momentous time—multiple mergers in front of it, pending rulings on Net neutrality and network peering still to come—to reshape the communications industry on the fly, and with reasonable consensus among industry players and consumer advocates. The alternative, waiting for Congress to re-regulate, is simply too long a wait. It may be risky, and a bit messy, but it’s the best chance to write (or at least right) the rules of the game moving forward.”
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