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AT&T, DirecTV mega deal poses new threat to everyone Comment on this post ↓
May 18th, 2014 by Warren Swil

‘Ma Bell’ monopolists

poised to rule telecom

DirecTV CEO Mike White called the deal “compelling.”

AT&T’s plan to acquire DirecTV makes the consolidation of the communications industry seem unstoppable – and threatens consumers on several fronts.
The AT&T/DirecTV deal would be a giant step backwards, but it cannot be viewed in isolation. It comes while the Comcast plan to purchase Time Warner is awaiting approval in the wings, and just after the Federal Communications Commission unveiled proposals for new rules on network neutrality. Together, these portend a throwback to the bad old days of Ma Bell, when one firm grew so dominant it gained monopoly power over the entire phone system.
The trend with modern communications is unmistakable. We are witnessing a consolidation of unprecedented proportions, and the losers will be the customers in every case.

One cannot view the three threads in isolation: network neutrality, broadband competition and control over content are tightly interrelated.
According to the AT&T announcement about the deal, “the combined company will be a content distribution leader across mobile, video and broadband platforms.”
This point is understated, to say the least.
Central to both the AT&T and Comcast mega deals is the consolidation of control over delivering data into the home. The issue of television programming is important, but secondary.

The Pew Research Center’s survey of media coverage of net neutrality. Click image to enlarge.

Network neutrality was front and center on Thursday when the FCC voted along party lines to bring forward two proposals relating to the topic.
One would allow ISPs to grant favored treatment to those who can afford to pay more for it, like Netflix and Google. The other would classify broadband providers as public utilities subject to stringent regulation.
In a little-noticed report, Net neutrality: A made-for-web debate the Pew Research Center on May 15 noted that “the Federal Communications Commission vote … could dramatically impact the flow of digital content Americans receive, not to mention the bottom line for many major U.S. technology and content companies.”
But, alarmingly, it found the topic “almost absent” from mainstream television news and newspapers.
“Instead, during key developments, interested members of the public turned to Twitter and online searches to learn more …”
There is not a small amount of irony in the results of the Pew media analysis. But, the consequences of the lack of attention of all but the cognoscenti could come back to haunt everyone.
At the heart of Comcast’s argument is that its merger with Time Warner would not reduce competition – because that competition comes from AT&T (and Verizon) in the broadband space and the two satellite providers, Dish and DirecTV, in the television industry.
Combining AT&T and DirecTV, therefore, would eliminate one of Comcast’s claimed major competitors while giving AT&T an enormous leg up in the television segment – and the influence over content that this would afford.

The USA Today analysis of why the deal makes sense to AT&T. Click image to enlarge.

But the AT&T purchase should not be seen in isolation. It is part of a much broader anti-competitive trend that has major implications for the entire telecommunications world.
If the two proposed mergers survive regulatory scrutiny, we in the US could ultimately be looking at two or three broadband providers and two ­– perhaps three – major TV services. The other players would be so small by comparison as to be negligible.
According to Why AT&T wants DirecTV, an insightful analysis by Mike Snyder in USA Today on May 14, bundling the television service with its broadband service is at the heart of the AT&T/DirecTV deal.
“AT&T wants to build a better bundle of services, wrapping up mobile and data connectivity, TV programming and other services like home security,” Snyder wrote.
That is exactly the point.
As broadband and cable providers merge, they will leave the consumer with few options: all, or nothing.
This is a somber development for US internet users and TV consumers – which means just about everyone. We cannot afford to not pay attention.
The FCC must classify ISPs like the utilities they have become, subject to stringent regulation. Regulators in every agency involved must be pressured to view industry consolidation as a whole, not as separate unrelated deals.
Only by looking at the bigger picture can one see the ominous trends. We must see the forest, not just the trees.

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