FCC Approves AT&T's $69 Billion DirecTV Merger, Announces It Late Friday And Hopes Nobody Notices

from the lava-is-in-the-public-interest dept

Waiting until late Friday afternoon to minimize public and press backlash, the FCC has formally announced that it has voted to approve AT&T's $69 billion acquisition of DirecTV, creating the nation's biggest ever pay TV provider at 27 million subscribers strong. According to the FCC statement, the agency found that the deal, despite the fact it eliminates a direct pay TV competitor, somehow serves the public interest:

"The Commission’s decision is based on a careful, thorough review of the record, which includes extensive economic analysis and documentary data from the applicants, as well as comments from interested parties. Based on this review, the Commission has determined that granting the application, subject to certain conditions, is in the public interest."

It will be curious to see if the DirecTV employees trimmed by AT&T's garden shears as the telco eliminates "redundancies" will feel the same way. Or if the DirecTV customers who'll suddenly face higher TV prices thanks to less direct pay TV price competition feel their interests have been well looked after by this time next year. Only time will illuminate the magical public interest benefits of the deal, since they're not entirely apparent at the moment.

As we noted previously, the temporary conditions attached to the deal appear to be wimpy at best. One condition prevents AT&T from abusing its fixed-line usage caps anti-competitively, but the agency doesn't bother to note that AT&T doesn't have usage caps on the majority of its U-Verse broadband lines, and has no plans to implement them. AT&T's focus, and the current controversy as it pertains to AT&T's use of caps to trample net neutrality, is on wireless, which these conditions wouldn't apply to.

Another condition states that AT&T has to submit any new interconnection agreements to the FCC for review to ensure it's not behaving anti-competitively, but this was already effectively part of the FCC's new net neutrality protections. Thanks to the mere threat of neutrality rules, AT&T was already on its very best behavior in regard to interconnection. Granted AT&T is engaged in two different lawsuits to kill these rules, so at least there's something in place to police interconnection should the neutrality rules get defeated in court. But AT&T promising to avoid interconnection jackassery for a few years is hardly a groundbreaking commitment.

But it's this part of the FCC's statement I find the most misleading:

"Recognizing that the merger reduces AT&T-DIRECTV’s incentive to deploy FTTP service, the Commission adopts as a condition of this merger the expansion of FTTP service to 12.5 million customer locations. This condition also responds to the harm of the loss of a video competitor in areas where AT&T and DIRECTV had directly competed before the merger by providing a pathway for increased competition from services that rely on broadband Internet to deliver video."

One, what good is an expanded "pathway" to Internet video competition if said pathway wanders straight through a monopoly mine field on last mile broadband service? Two, as we noted previously, AT&T and the FCC are being incredibly misleading on this 12.5 million deployment total. A month before the DirecTV deal was even announced, AT&T promised to expand its fiber broadband service (mostly aimed at high-end developments) to "up to" parts of 100 cities. When pressed, AT&T in filings conceded this project, primarily aimed at countering Google Fiber's buzz, would likely bring service to around 11.7 million users. So in short, the lion's share of the 12.5 million total isn't new commitment, it's deployments that were already planned (and in some cases already finished) being dressed up as only having been made possible by the magic of a mega-merger.

So why did an FCC on a bit of a pro-consumer tear approve this deal? It's likely because the FCC knows in time AT&T's acquisition of a satellite TV provider will be made wholly irrelevant by a surge in Internet video competition and cord cutting. The FCC's been engaged in a fierce battle with the broadband industry over net neutrality, a new 25 Mbps definition for broadband, and municipal broadband, so approving this deal was one way to throw the broadband industry a few crumbs with the least amount of market damage. The FCC's likely just picking its battles after having just fought a protracted war.

That said, the short-term harm from effectively killing a pay TV competitor will be felt by TV subscribers and employees alike. And the fact the FCC was so eager to swallow and sell AT&T's miracle math suggests that the FCC hasn't entirely discarded old habits just yet.

Filed Under: competition, fcc, merger, satellite, spectrum, tv
Companies: at&t, directv