Is the AT&T-DirecTV Merger Good for Consumers?

UPDATE: AT&T has given us a copy of the document. One thing that’s notable: AT&T made its offer for DirecTV before the television provider had extended its exclusive deal for NFL Sunday Ticket, which allows customers to watch every out-of-market game throughout the season. Despite the decline in the broader stock market on Friday, investors reacted positively to the news sending the AT&T shares up by more than 1.0%.

AT&T has bought DirecTV in a major buyout. Notably, AT&T is expected to provide the updated financial guidance for 2015 this week.

Chairman Tom Wheeler had given the deal his blessing on Monday, albeit with conditions. However, the company can continue to offer discounted integrated bundles of its video and high-speed Internet services.

Wood noted that the merger would create a single company providing TV service to a quarter of the country.

In announcing the fine, the FCC proposed that AT&T be required to notify customers that it had failed to disclose its network management practices and to give customers a way to leave their “unlimited” plans.

AT&T is also taking umbrage at the sanctions proposed by the commission, which it called “arbitrary and excessive”. The company must develop, in conjunction with an independent expert, a method for measuring the performance of its Internet traffic exchange and regularly report these metrics to the FCC.

The DIRECTV takeover will boost AT&T’s video customer base by an estimated 20.3 million from the current 5.7 million.

In addition to the 26 million pay-TV customers in the US, AT&T will pick up 19 million in Latin America through DirecTV’s operations and a separate expansion in Mexico.

The FCC “requires AT&T-DirecTV, as a condition of this merger, to refrain from imposing discriminatory usage-based allowances or other discriminatory retail terms and conditions on its broadband Internet service”. After the completion of the deployment, the all-fiber broadband service will reach more than 14 million customer locations.

AT&T has said that it expects $2.5 billion in annual savings within three years of the merger’s completion. Comcast’s hook-up with Time Warner Cable, for example, and AT&T’s efforts to purchase T-Mobile, to name another, both raised real questions – and were rightly turned back by regulators.

Most of these synergies will result from a significant reduction in content costs.

The companies also contend that the combined entity will have more leverage for negotiating better content deals. Now AT&T says that “customers on a 3G or 4G smartphone or on a 4G LTE smartphone with an unlimited data plan who have exceeded 3 gigabytes (3G/4G) or 5 gigabytes (4G LTE) of data in a billing period may experience reduced speeds when using data services at times and in areas that are experiencing network congestion”.