AT&T/DirecTV Deal Backed by State Entities, Indie Programmers; MVPDs Urge Conditions if Approved

The American Cable Association and Cox Communications highlighted perceived harms to competition and to wholesale video programming. Efficiencies and lower programming prices for AT&T/DirecTV will increase its “opportunity cost of selling its programming to rival MVPDs and thus will raise the price to the MVPDs and part, if not most, of this increase will be passed on to their subscribers,” ACA said (http://goo.gl/eGIezW). It cautioned against using an existing arbitration remedy to ameliorate competitive harms. The Comcast/NBCUniversal remedial conditions didn’t create a feasible remedy for smaller MVPDs, “leaving them unprotected from the recognized harms posed by the merger,” ACA said. The MVPDs will be at even higher risk if the proposed AT&T transaction expanding its distribution footprint and programming heft is approved, it said.

Cox petitioned the commission to place conditions on the deal. The combined company should be barred from entering exclusive programming arrangements, it should be subject to FCC program access rules and it should be required to “install its own inside wiring infrastructure in apartment buildings” to ensure that customers switching to AT&T/DirecTV service in multiple dwelling units “can retain stand-alone data service from the cable operator that wired the building,” it said (http://goo.gl/N9BSLG).

Dish sought conditions on promoting mobile broadband competition, protecting the wholesale of AT&T’s U-Verse video service and protecting satellite TV competition. AT&T should provide U-Verse broadband at “reasonable non-discriminatory wholesale rates to other service providers that seek to offer a competitive bundle of services,” it said (http://goo.gl/iHafB2). That condition would ensure that consumers who want to subscribe to Dish “can easily obtain a standalone broadband connection to power Dish’s online video offerings,” it said.

Netflix also pushed for proper conditions “to avoid significant public interest harms,” it said (http://bit.ly/XNNSVC). AT&T/DirecTV will have “increased incentive to harm edge providers” and it will have the ability to harm open video distributors, it said. Because of the nature of peering and interconnection arrangements, AT&T has power to pressure transit provider, content delivery networks, and fellow peers, “including by congesting their ports ... or even by cutting off the access of those other providers to AT&T’s network entirely,” it said.

NAB didn’t take a position on whether the deal should be approved, but it asked the FCC to adopt conditions to promote localism. A commitment to expand local-into-local service to all 210 markets within the same time frame as the broadband commitment “would be an ideal complement to the expanded broadband service offering,” it said (http://bit.ly/XNO7jH). An approval would give AT&T/DirecTV significant bargaining power in retransmission consent negotiations, which amplifies the need for updated broadcast ownership rules, it said.

Microsoft urged the FCC to approve the deal, saying the combined entity would further deployment of critical broadband infrastructure. The proposed broadband commitment advances a critical national broadband objective “with respect to investment in and deployment of high-speed broadband access services,” it said (http://bit.ly/1pkNtAu).

WISPA cited concerns, including with AT&T’s data on the presence and location of existing fixed broadband providers. The data “may be inaccurate, leading to an overstatement of its claims about the number of unserved and underserved locations that could receive its proposed wireless local loop service” (WLL), it said (http://goo.gl/hdI1e9). It also said the commitment to deploying that service isn’t deal-specific, echoing concerns by Public Knowledge (CD Sept 18 p13). WISPA urged the FCC to impose a condition that bars AT&T from utilizing Connect America Fund subsidies to deploy the WLL service, it said.

Dynamic conditions in the advanced telecom market indicate the deal presents potential consumer benefits, and significant expansion of choice for bundled broadband and MVPD-related services, said Free State Foundation (http://goo.gl/5wL8Yi). The organization didn’t endorse or oppose the deal, but offered an analysis of it under market-based evaluation principles.

Supporters of the takeover highlighted perceived benefits for rural areas, enhanced competition and benefits with independent programmers, employees and the economy. RFD-TV pointed to its recent carriage agreement with AT&T to urge the FCC to ensure that MVPDs carry independent rural programming as it approves further consolidation among large MVPDs (http://goo.gl/HdMuF1). The agriculture-focused programmer reached agreement with AT&T to be carried on U-Verse (CD Sept 9 p15). U-Verse has been a disruptive force in the MVPD marketplace, and expanding its reach “will enhance competition and benefit consumers and independent programmers,” like Herring Networks, Herring said (http://goo.gl/dlNNSb).

Gov. Mike Beebe, D-Ark., and the Texas Department of Agriculture touted the network and technology benefits of the deal for rural parts of their states. With the proposed acquisition, customers in many rural areas of Arkansas “will receive satellite and high-speed broadband networks for the first time,” Beebe said (http://goo.gl/J2KX8c). Chambers of Commerce in Illinois, New Jersey and South Carolina also supported the transaction.

AFL-CIO and Communications Workers of America repeated their support. The deal raises “few, if any, antitrust concerns,” CWA said (http://goo.gl/DHhNYZ). AT&T respects the rights of employees “to make their own choice about union representation,” it said.