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What will consumers gain from AT&T's DirecTV buy?

Ian Paul | May 20, 2014
It's official: AT&T wants to buy DirecTV in a deal valued at around $48.5 billion. And to help the acquisition's public appeal, the telecommunications giant is offering a number of sweeteners.

AT&T's agreement to follow the FCC's old rules are actually nothing new as the company made a similar pledge earlier in February.

So the commitment under the DirecTV deal is a more formal acknowledgment of an earlier promise, suggesting AT&T won't, for example, pursue an interconnection deal with Netflix the way Comcast and Verizon have.

But why only three years? "If net neutrality is such a consumer-friendly policy, why would we only want it for three years?" said Jodie Griffin senior staff attorney at Public Knowledge. "It would logically follow that we should just have net neutrality. If it's a good policy, it's a good policy."

The other problem, Griffin says, is that these special conditions tend to be difficult to enforce after a merger is approved. "There's kind of an incentive from the carrier's perspective to delay [any complaint] proceedings after a condition is in place," Griffin said. "Because that would effectively shorten the time that they had to be under these conditions."

Although AT&T says it supports net neutrality, there are also limits to how far the company is willing to go. Like other major Internet service providers in the U.S., AT&T opposes reclassifying ISPs as common carriers under Title II of the Federal Communications Act. Title II would make it much easier for the FCC to enforce net neutrality rules, but the ISPs say reclassification would do more harm than good.

Current FCC Chairman Tom Wheeler says he is willing to regulate ISPs under Title II. However, Wheeler prefers an approach that would allow ISPs to charge content companies for faster delivery of their Internet traffic.

More broadband

AT&T says it will bring high-speed broadband access to another 15 million customer locations in the U.S. after the DirecTV deal closes.

These locations would be mostly outside of AT&T's current broadband coverage areas and in largely rural locations. The project would be completed within four years after the DirecTV deal closes and would bring AT&T's total reach to 70 million customer locations nationwide.

This appears to be an appeal to one of the FCC's big goals over the past few years: bringing broadband to more locations in the U.S., especially rural ones.

But when it comes to broadband promises, it's all about the details. AT&T says it will fulfill its broadband commitment using a mixture of technologies including fiber to the premises and fixed wireless local loop connections.

Whether that turns out to be a good deal for customers really depends on what AT&T envisions for new fixed wireless connections, according to Griffin. She points to issues such as wireless bandwidth constraints and the tendency for wireless services to have stricter data caps as potential pitfalls to AT&T's promised buildout.

 

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