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AT&T promises FCC cheaper cable, more rural broadband, net neutrality compliance

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Selling the Federal Communications Commission on its proposed $48.5 billion acquisition of DirecTV (NASDAQ: DTV) in a regulatory filing Wednesday, AT&T (NYSE: T) promised lower pay TV prices, greater broadband availability in rural areas and extended compliance with 2010 net neutrality legislation.

This came one week after AT&T told its investors that the merger would reduce content acquisition costs by 20 percent. AT&T painted a picture of two companies merging complimentary assets, and spurring far greater competition in the consolidated MVPD market as a whole than as stand-alone entities.

"This merger occurs against the backdrop of fundamental shifts in the ways consumers obtain broadband and video services…Through this combination, the companies will marry complementary assets to achieve what they could not achieve separately or through a contractual arrangement: a compelling bundle of video and broadband services," AT&T's FCC filing reads.

The complimentary nature of the marriage, AT&T adds, will put downward pressure on pay TV, broadband and wireless communication prices.

"Because the products and assets of the merging companies are primarily complementary, economic theory predicts that this transaction will put strong downward pressure on the prices for the combined company's bundled products. That, in turn, will trigger competitive responses from competing cable providers, to the further benefit of consumers," the carrier wrote.

Beyond pledging to abide by 2010 net neutrality legislation for three years after the consummation of the merger, AT&T promised further consumer benefits, committing to bringing high-speed broadband to at least 15 million locations, the majority in rural areas.

"Indeed, AT&T is so confident of these savings and other synergies that it is willing to commit to meet this target within four years from the close of this transaction," the filing reads. "Specifically, the combined company will commit to provide FTTP wireline broadband service to 2 million more customer locations. In addition, the combined company will commit to deploy fixed wireless local loop ("WLL") technology to bring high-speed broadband to approximately 13 million largely rural customer locations."

Finally, AT&T downplayed the concern by some analysts of overlap of DirecTV and AT&T services in approximately 25 percent of the country. They fear some regulators might believe that competition will be harmed if the merger were to go through.

AT&T's rationale: In most of the overlapping areas in question, DirecTV offers only pay TV services, while AT&T offers mainly broadband and wireless.

For more:
- read this Los Angeles Times story
- read this Re/code story

Related links:
Moffett: AT&T-DirecTV deal will get done, but not without regulatory 'perspiration'
DirecTV's Latin American operations entice AT&T
AT&T says DirecTV deal will reduce programming costs by 20%

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