Mark Cuban Falsely Tells Congress AT&T's Latest Mega-Merger Will Be Really Wonderful For Consumers

from the you're-not-helping dept

Thu, Dec 8th 2016 10:40am — Karl Bode

Earlier this year, AT&T announced that it planned to shell out $100 billion to acquire Time Warner. That comes on the heels of the company spending $70 billion to acquire DirecTV. Why is AT&T spending countless billions on content and a legacy satellite TV provider when the lion's share of the company's broadband network desperately needs upgrading? Because fixed and wireless broadband subscriber growth has slowed, and telco executives believe they need to turn to content and advertising (read: slinging videos at Millennials) to please investors.

Under fire for the anti-competitive repercussions of its latest deal, AT&T testified this week before the Senate Judiciary Subcommittee on Antitrust, Competition Policy & Consumer Rights. As you might expect, AT&T and Time Warner both breathlessly insist that there are absolutely no downsides to the companies' merger, adding the deal would be an incredible boon to consumers and the video market alike:

"Together, AT&T and Time Warner will disrupt the entrenched pay-TV models giving customers more options, creating more competition for cable TV providers,” AT&T CEO Randall Stephenson said.

“By joining forces, we will accelerate the development and delivery of the next generation of video services that provide consumers with greater choice, convenience, value, and affordability,” Time Warner CEO Jeff Bewkes told lawmakers in prepared testimony.

The problem is that's not really true. Most streaming providers are worried that AT&T, which just launched its new "DirecTV Now" streaming service, will make it harder than ever for streaming competitors to license the content (HBO, etc.) they need to compete. Similarly, many (including the outgoing FCC) are concerned that AT&T's decision to zero rate this DirecTV Now content (exempting AT&T's content from usage caps while still penalizing competitors) twists and distorts the open market. AT&T already effectively eliminated a TV market competitor when it acquired DirecTV. Now it's tilting the playing field unfairly in its favor.

These concerns received fleeting lip service at this week's hearing. Instead, the committee spent a significant amount of time listening to folks like Mark Cuban, who attended the hearing to lavish praise on AT&T's latest mega-merger:

“We need more companies ... with the ability to compete with Apple, Google, Microsoft, Amazon and Facebook. Delivering content to consumers in this app-driven world is not easy, it is very expensive and difficult. ... Alone, it will be very difficult, if not impossible for either AT&T or Time Warner to compete with any of the companies I've mentioned. Together it will still be difficult, but a combined entity at least gives them a chance to battle the dominant players in the marketplace and increase consumer choice and competition for consumer attention."

So one, AT&T is a massive telecom conglomerate that not only owns its own core and last mammoth nationwide network, but also is already the biggest TV provider in the country after its DirecTV acquisition. This scale provides AT&T immeasurable benefits in content negotiations, and the idea that it was in any way difficult for AT&T to compete in this space is laughable. That's before you even mention AT&T's incredible and often comedic lobbying influence on state and federal telecom and media policy. A helpless little daisy, AT&T is not.

And while DirecTV Now might bring some added streaming competition to the space, it's not like Apple, YouTube, Hulu, Sling TV, Sony, HBO and countless other companies aren't flooding into the streaming video space as well. The competition is already coming to this market. Another mega-merger doesn't help this competition, it actively harms it. AT&T is a company with a long, rich history of anti-competitive behavior and defrauding its own customers on multiple occasions. That it will use this expanded size and power in an anti-competitive fashion isn't theoretical. This is what AT&T does.

But zero rating is complicated. Understanding the perils of vertical integration and the threat of one company owning the content and the conduit is difficult. Realizing that AT&T all but owns state and federal government is inconvenient. As such, Cuban tried to trot out a somewhat bizarre little story in which he argues that the AT&T merger would be really wonderful for joe, beer-drinkin' consumer, because, uh, algorithms:

"I would also like to point out one other important element of consumer choice that an AT&T and Time Warner merger would improve.

Each of the largest content companies I have mentioned so far, Facebook, Google, Amazon, Microsoft and Apple present much if not all of their content algorithmically. As a Facebook user I don’t get to pick what content I get to see in my newsfeed. I can try to influence it, but Facebook algorithms control what I see.

In the future, it won’t be algorithms that choose what we see, our choices will be driven by some form of Artificial Intelligence learning from trillions of disparate inputs.

Meanwhile, for those of us who still enjoy our TV the old-fashioned way, on our couch, cold beverage in one hand and remote in the other, there is a lot to be said for having a company that can afford to continue to offer us that choice. As much of a geek as I am, I like having the choice of searching through a programming guide to see what’s on rather than an algorithm telling me what I should watch. I think a lot of consumers would like to see that choice continue as well."

So one, that entire story makes no goddamned sense. Because Apple, Google and Facebook use algorithms in their news feeds, it's a good idea to let a company with a massive history of anti-competitive behavior grow immeasurably larger? AT&T somehow will provide us with purer access to programming guides free of the nefarious influence of Silicon Valley artificial intelligence? That's so illogical I can't even deconstruct the point Cuban's trying to make. It's like arguing that forest fires are good because pineapples exist.

Granted we've noted a few times that while Cuban has a solid grasp of a number of issues, net neutrality, telecom and media issues aren't among them. As such, he should probably be the last person testifying on the subject before Congress. In fact in writing this piece, I stumbled upon something I wrote for Techdirt back in 2014 when (again) trying to highlight that Cuban doesn't really understand net neutrality:

"Of course Cuban has already made his fortune. Were we to take 1995 Mark Cuban (who was busy building Broadcast.com) and transplant his business into the modern era under AT&T, Verizon and Comcast -- you can be damn sure he'd be taking a very different approach to these issues. Cuban has spent a decade making it abundantly clear he doesn't understand net neutrality, the telecom market or the potential pitfalls of these new cap exempt business models. Perhaps we should put Mark Cuban, Donald Trump and all the rest of the billionaires with plenty to say but little actual understanding in charge of the telecom industry. At least we'd get some entertainment value out of the equation while the Internet burns.

Clearly I opened a portal to another dystopian dimension, and for that I'm truly sorry.

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Filed Under: consumers, internet, mark cuban, mergers, tv
Companies: at&t, directv, time warner

23 Comments

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Anonymous Coward, 8 Dec 2016 @ 10:54am

video services that provide consumers with greater choice

You can but the basic package, or the 50 channel package or.... What do you mean nothing woth watching, just upgrade to our super-mega package for five time as much, and get hundreds more channels you do not^h^h^h want to watch.
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KeillRandor (profile), 8 Dec 2016 @ 10:54am

Lies...
When the bigger the lie, the bigger the win - including the US Presidency - it doesn't make any sense to 'go small' :p
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Thad, 8 Dec 2016 @ 11:00am

In the future, it won’t be algorithms that choose what we see, our choices will be driven by some form of Artificial Intelligence learning from trillions of disparate inputs.

I wonder what he thinks an algorithm is.
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Anonymous Coward, 8 Dec 2016 @ 11:17am

Re: Lies...
Which Ferengi rule of acquisition is that?
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Anonymous Coward, 8 Dec 2016 @ 11:18am

Re:
"In the future, it won’t be algorithms that choose what we see, our choices will be driven by some form of algorithms from trillions of disparate inputs."
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Anonymous Coward, 8 Dec 2016 @ 11:25am

Re: Re: Lies...
There are multiple rules of acquisition that apply here.

10. Greed is eternal.
60. Keep your lies consistent. (this is debatable)
181. Not even dishonesty can tarnish the shine of profit. (so fucking true!!!)
202. The justification for profit is profit!
226. When in doubt, lie.
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CanadianByChoice (profile), 8 Dec 2016 @ 12:02pm

Opening Portals
"Clearly I opened a portal to another dystopian dimension, and for that I'm truly sorry."

You didn't open it - you simply saw it coming well before anyone else I know of.
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Anonymous Coward, 8 Dec 2016 @ 12:46pm

Next up: ATT merges with Google
kills Google Fiber.

"OK Google" starts listening all the time & rebranded as
"Michelle ma bell" (apologies to the Beatles)

Take that, Siri!
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Anonymous Coward, 8 Dec 2016 @ 12:54pm

re: It's like arguing that forest fires are good because pineapples exist.
hahahahaha, that's the quote of the week right there
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Anonymous Coward, 8 Dec 2016 @ 2:14pm

so, um, yeah...
so on one hand, they have to merge in order to compete with the new services that drove innovation in a market they ignored for over a decade. On the other hand they have to merge because he wants to be able to still channel surf.

i so wish some one was there to pick his remarks apart, because it would have been more fun to watch. i mean, first off I can go into netflix and "CHOOSE" what i want to watch, just like i can go on to my cable box and "CHOOSE" what i want to watch. The algorithm argument is about the sort order of the items I "CAN" watch, where cable has a numerically indexed order (1-999999999) and Netflix, et all, has it categorized and ordered to what they think i might like.

i prefer the later, i mean sure i can scroll though an entire list but if netflix doesn't mind keeping track of what i like to watch and then showing that first in a list of thousands of videos, that's good usability. when was the last time cable TV won an award for usability?
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afn29129 (profile), 8 Dec 2016 @ 4:50pm

What's in it for Mark Cuban
My first thought is what's in in for Mark? Mark is being altruistic? I don't think so.
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Anonymous Coward, 8 Dec 2016 @ 5:33pm

I fail to see how AT&T would help others compete against Facebook, Google, Amazon, Microsoft and Apple. I also fail to see why I should care. Those companies were successful because they were good at what they did. Seems more like a cae of throwing names and hoping someone dislikes at least one of them enough to proclaim "Yeah! Let's let AT&T stick it to [company]!".
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Mark Cuban, 8 Dec 2016 @ 6:05pm

So why did GO90 fail ?
If a telecom that owns distribution has no chance of failing, what happened with go90?

And as far as algorithmicly driven news and it's impact , check out the election .

I get too many pineapples have hit you on the head over the years. But it doesn't change the fact that the power is with apple Google and Facebook.

The first two can keep any telecom regardless of size out of the app store or hard to find.

Facebook can make or break a content provider

And how much do fb apple and Google spend on content ?

I get that you won't have much to talk about if you don't pick on telecoms , but that doesn't change reality

M
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Anonymous Coward, 8 Dec 2016 @ 10:28pm

Re: So why did GO90 fail ?
mark, i love u cause im a spurs fan for life, but these companies joining up is about to make my interwebz bills go up. you're rich and i love you, but you won't pay that difference, will you? will you?
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Ninja (profile), 9 Dec 2016 @ 2:31am

Re:
"our choices will be driven by some form of Artificial Intelligence learning from trillions of disparate inputs"

Meaning, we will be dumb apes being fed what Skynet thinks we should be fed. Scary..
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Niall (profile), 9 Dec 2016 @ 5:42am

Re: Opening Portals
Except possibly the Simpsons.
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PRMan, 9 Dec 2016 @ 7:02am

Re:
We already have this. It's called Netflix.
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PRMan, 9 Dec 2016 @ 7:04am

Re: What's in it for Mark Cuban
Shark Tank isn't being picked up the way he would like it to be.
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Thad, 9 Dec 2016 @ 7:07am

Re: Re:
Presumably he's one of those guys who hears "artificial intelligence" and pictures HAL 9000.

But even so, the "AL" in "HAL 9000" is short for "algorithmic".
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Thad, 9 Dec 2016 @ 7:17am

If a telecom that owns distribution has no chance of failing, what happened with go90?

Competition.

And as far as algorithmicly driven news and it's impact , check out the election .

How will telecom mergers prevent this?

I get too many pineapples have hit you on the head over the years. But it doesn't change the fact that the power is with apple Google and Facebook.

The first two can keep any telecom regardless of size out of the app store or hard to find.

Yes, and with the FCC about to gut net neutrality, telecoms can make Netflix unusable.

Your argument isn't saying what you think it is. You're saying that online media are controlled by a few huge, disproportionately powerful companies that have too much control over what content people have access to. So far so good.

But then, bafflingly, you are arguing that the solution to this problem is more mergers, bigger companies, and less competition.

This is the equivalent of being trapped in a hole and saying that the only way to get out is a bigger shovel.
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I.T. Guy, 9 Dec 2016 @ 7:36am

""Together, AT&T and Time Warner will disrupt the entrenched pay-TV models giving customers more options, creating more competition for cable TV providers,” AT&T CEO Randall Stephenson said."

They live in Bizarro land.
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Anonymous Coward, 9 Dec 2016 @ 11:10am

Re:
""Together, AT&T and Time Warner will disrupt the entrenched pay-TV models giving customers more options to pay more for the same or less service, creating more competition for cable TV providers to point at when they need to justify their next merger,” AT&T CEO Randall Stephenson said."

FTFY
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Mike Masnick (profile), 11 Dec 2016 @ 11:01pm

Re: So why did GO90 fail ?
If a telecom that owns distribution has no chance of failing, what happened with go90?

Go90 was set up by 60 year old men trying to be cool to millenials in a space that was already highly competitive and which offered nothing new of interest. That was a space where there was real competition. Allowing for megamergers decreases competition.

And as far as algorithmicly driven news and it's impact , check out the election

Yes, we've discussed how that was completely overblown and how it was mostly confirmation bias.

I get too many pineapples have hit you on the head over the years. But it doesn't change the fact that the power is with apple Google and Facebook.

Yes, they have lots of power, but less than the telcos which have full access to everything. But you know that. Also, what's with the weird ad hom?

The first two can keep any telecom regardless of size out of the app store or hard to find.

Can you provide an example of them actually doing this to the telcos?

Also, how will that change if AT&T owns Time Warner?

Facebook can make or break a content provider

And how will that change if AT&T owns Time Warner?

And how much do fb apple and Google spend on content ?

Google these days spends quite a bit. But again, so what?

I get that you won't have much to talk about if you don't pick on telecoms , but that doesn't change reality

Huh? What's with the ad homs, Mark?
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