FCC Chief Recommends Approval of AT&T $49 Billion Buyout of DirecTV

NEWS ANALYSIS: Federal Communications Commission Chairman Tom Wheeler says he is recommending approval of AT&T's merger with DirecTV, subject to some conditions.


Federal Communications Commission chairman Tom Wheeler has recommended that the commission vote to approve AT&T's $49 billion acquisition of satellite television service provider DirecTV with some conditions.

"The proposed order outlines a number of conditions that will directly benefit consumers by bringing more competition to the broadband marketplace," Wheeler said in his July 22 announcement. "If the conditions are approved by my colleagues, 12.5 million customer locations will have access to a competitive high-speed fiber connection."

This is about 10 times the current total number of fiber connections for Internet access that AT&T has in place or is currently building. The company also announced on July 22 that it was going to upgrade Durham, N.C. to gigabit fiber as its next big project.

Wheeler said that the fiber upgrade would increase the current national total by about 40 percent. This would make the AT&T fiber broadband network more than half as large as the Verizon FiOS broadband network that currently reaches about 20.1 million users, according to a Verizon spokesman.

In addition, the conditions for approval by the FCC would require that AT&T build on the FCC's current Open Internet order by preventing discrimination against online video competition and provide greater transparency to its interconnection practices.

The non-discrimination provision means that AT&T will not be permitted to exclude its own and affiliated video services from data caps on fixed broadband connections. DirecTV is a major source of video content that will be available to AT&T once the merger takes place.

The transparency requirement means that AT&T will be required to submit its current interconnection agreements with the FCC and file regular reports on network performance.

While the FCC's proposed approval specifically refers only to residential broadband, AT&T's practice in the past has been to offer similar fiber broadband connections to business users. The FCC conditions also require some independent oversight.

"Importantly, we will require an independent officer to help ensure compliance with these and other proposed conditions. These strong measures will protect consumers, expand high-speed broadband availability, and increase competition," Wheeler stated in his announcement.

The Department of Justice has previously said that it does not see potential antitrust law violations in an AT&T-DirecTV merger and does not plan to oppose it. This means that the FCC's approval is the last major legal requirement for the deal.

Wayne Rash

Wayne Rash

Wayne Rash is a freelance writer and editor with a 35 year history covering technology. He’s a frequent speaker on business, technology issues and enterprise computing. He covers Washington and...