AT&T/DirecTV Merger and FCC Ruling Changing the Television and Telecom Landscape
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UPDATED: Jun 3, 2014
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The telecommunication and television landscape is poised for a seismic shift after two major announcements last month. As the Federal Communications Commission moves toward regulation of the internet and the creation of an “Internet fast-lane,” telecom giant AT&T announced its intention to purchase satellite television provider DirecTV for a deal rumored to be in the range of $67 billion.
Consumers to See Less Choice in Merger
Coming on the heels of the proposed merger of cable giants Comcast and Time Warner Cable, the marketplace for in-home entertainment—and internet access—is rapidly shrinking. And the lines between cable, television, phone and Internet service providers are more blurred than ever.
Bundling of services is the order of the day, and while an AT&T/DirecTV will not have a broadband footprint equal to Comcast/Time Warner, they will have a massive advantage in the phone sector.
But what does this mean for consumers?
Just stating the basic facts, it means less choice. Where once there were four separate companies offering the same or similar services, there will soon be only two. Those two companies will control the vast majority of the high-speed Internet infrastructure in the United States, which makes the FCC’s recent proposed rules regarding Net Neutrality/Open Internet of the highest import.
Throwing New FCC Rules Into the Mix
Net neutrality is the term used for the notion that all Internet traffic is created equal—and preferential treatment will not be given to one type of traffic over another. This means that whether you’re getting directions on Google Maps, uploading files to an FTP server or binge watching the latest Netflix Original, your speeds will remain constant. One type of content will not be favored over another.
FCC Chairman Tim Wheeler’s new proposed rules do not explicitly state that net neutrality will be the law of the land. Instead, Wheeler’s proposal relies upon vague definitions of a “baseline of service” and “commercially reasonable” terms. These vagaries are tempered by transparency and disclosure requirements, but critics of the proposal fear that too much is left open to interpretation.
The Fast Lane Benefits Big Business While Squeezing Small Innovators
The creation of an “internet fast lane,” or a premium tier of service that offers unimpeded traffic for high bandwidth applications, is not forbidden. And with the AT&T/DirecTV merger expected to result in the rollout of broadband Internet to over 15 million new locations, the new mega-company will be looking to maximize profits while minimizing high-bandwidth usage. Beyond making life difficult—and expensive—for frequent video streamers, the FCC’s proposed rules and the two pending mergers could serve as a barrier to Internet development, as small companies may not be able to afford the bandwidth to develop or successfully roll out new innovations. This chilling effect in unquantifiable, but any restrictions on Internet development in the United States will eventually have a real effect on the tech sector, which permeates nearly every aspect of the daily life of the average American citizen.
The television, broadband and telecom landscape in the United States is changing on a daily basis. As companies merge and begin to offer new services or new bundles of services, consumer options dwindle. And the current regulatory environment has called into question whether an open Internet is still a priority in a country that has grown accustomed to unencumbered and unrestricted access to the Web.