In a landmark deal, AT&T announced Sunday that it will buy satellite cable company DirecTV for $48.5 billion, an agreement that will not just solidify the second biggest wireless provider’s stake in the TV market, but could further shortchange customers’ options for reliable and affordable Internet and cable.
The deal marks the latest power move by telecommunications companies to grab a stronghold of the TV industry as customers increasingly turn to mobile apps and devices to watch their favorite shows and films. Comcast’s deal earlier this year set off a controversial chain reaction when it set up a similar agreement to buy Time Warner Cable, the nation’s second leading Internet cable provider.
Possibly capitalizing on recent tumult around net neutrality, AT&T promises to maintain unrestricted Internet access for three years “irrespective of whether the FCC re-establishes such protections” once approved, according to a statement announcing the partnership.
A federal court threw out the Federal Communication Commission’s (FCC) original net neutrality rules, forcing the agency to come up with an alternative that would preserve customers’ Web access. But the FCC’s recent proposal has incited widespread debate among civil liberties activists, tech companies and government regulators, that feel its too lenient on broadband companies. The latter fear the proposal would subject them to undue regulations, similar to those the FCC loosened in 2002.
Regardless of how distasteful the deal between AT&T and DirecTV may seem, analysts believe many more high-profile multi-billion dollar buyouts are to come. Sprint is currently in talks with T-Mobile, a merger that would make it a veritable rival for top wireless providers Verizon and AT&T.
Politicians and government regulators have been highly critical of the Comcast-Time Warner deal, calling for multiple state and federal investigations in hopes of stalling its approval. For AT&T, the deal would make it Comcast’s biggest competitor, potentially boosting its customer base to around 60 million — just 15 million shy of Comcast’s after buying Time Warner. The House Judiciary Committee plans on holding hearing to review the AT&T-DirecTV deal.
Overall, customers aren’t expected see much change with the new deal outside of new bundling packages that combine satellite TV with AT&T’s Internet and mobile phone services. But the true impact will come in the fallout, as similar deals emerge between TV and wireless companies clamoring for control over video streaming and Internet access.
Critics warn that those types of marriages hurt customers and create unfriendly market conditions that cater only to a few major players. But customers are already feeling the pinch of a shrinking telecom market. Cable companies have been swallowing up Internet providers for decades. And as more companies consolidate into oligopolies, customers will have increasingly little to no choices for choosing a broadband and cable providers.
With so few options for customers who want to change providers, companies have little incentive to invest in better infrastructure or lower prices. That problem that is unique to the U.S., where Americans pay more for television and Internet access with slower speeds than other countries.