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AT&T, DirecTV Claim Merger Will Benefit Customers
AT&T, DirecTV Claim Merger Will Benefit Customers

By Seth Fitzgerald
June 12, 2014 10:19AM

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Without the merger with DirecTV, AT&T said that it will not have the ability to compete against other cable companies because its bundled services are only offered in 22 states. By adding DirecTV's availability, AT&T could be provide more consumers nationwide with additional options at lower prices as well as improved service.
 



AT&T and DirecTV are trying to convince regulators that a merger would be beneficial to consumers. On Wednesday, the two companies told the FCC that consumers will see lower prices and improved service if a deal is approved.

Both the Federal Communications Commission (FCC) and the Justice Department must give their OK before a merger can take place. Regulators first learned of the merger in May when AT&T announced its intention to take over DirecTV for $48.5 billion. Industry experts and consumer advocates have complained about the deal because it could hurt competition, which runs contrary to AT&T's position.

There are two main points that the companies are trying to make, and both center around the idea that competition won't exist without the merger.

Two Arguments

In a public interest statement filed with the FCC, AT&T and DirecTV laid out two basic reasons why the commission should not oppose the merger. The first is that consumers want their TV and broadband services to be combined, so without AT&T, DirecTV cannot compete in the TV market. As a result of the merger, the companies could combine their services and improve DirecTV's chance of success.

Secondly, AT&T said that it does not have the ability to compete against other cable companies because its bundled services are only offered in 22 states. By adding DirecTV's availability, AT&T could be provide more consumers nationwide with additional options.

AT&T also brought up the pending merger between Time Warner Cable and Comcast. According to AT&T, if regulatory authorities approve that merger, there will be even less competition in the cable marketplace unless its own merger is approved. That argument has the potential to backfire, however, since the FCC could simply reject both mergers, maintaining the status quo in the market.

Incentives

Outside of the competition-based arguments, AT&T and DirecTV have also told regulators that they will respect net neutrality -- the idea that all Internet traffic should be treated equally by Internet service providers -- if the merger takes place. To protect net neutrality, AT&T said that it will operate in accordance with the FCC's 2010 Open Internet legislation.

However, AT&T said it will only respect the Open Internet Order for three years after the deal is finalized. The FCC is expected to introduce new net neutrality rules by the end of the year, which means that AT&T's net neutrality promise may not matter.

Not only will AT&T respect net neutrality as a result of the merger, it also plans to lower prices and expand Internet access in rural areas where broadband is historically scarce. At least 15 million locations would receive high speed Internet, according to AT&T. The majority of those locations would be in rural areas.
 

Tell Us What You Think
Comment:

Name:

james:

Posted: 2014-06-16 @ 8:05am PT
I need high speed internet and tv service at my house in the mountains. however all companies that are available can not give me the bandwidth I need at a fair price. I believe direct tv and at&t would increase competition and give customers what they need at a fair price. I would like to see the merger.

Joe Shmoe:

Posted: 2014-06-13 @ 1:17pm PT
Sounds good, but doesn't it always? If I wanted something bad enough, I could certainly make it sound good. The problem is that it is nonsense, and any moron can see that. How is going from 4-5 large internet providers to only 2-3 good for customers? What happens then, when the number one provider wants to buy the number 2? We then end up with only 2 large providers. Prices then skyrocket because consumers have no other choice than to pay the price or drop service all together.



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