AT&T and Time Warner’s top brass met with a US Senate antitrust panel on Wednesday to argue that the proposed $85 billion merger of the two companies would help competition rather than hurt it. This sounds like a big, steamy pile of bullshit.
Federal lawmakers expressed concern that the giant telecom merger would create incentives for AT&T to refuse licensing Time Warner content to competitors like Comcast and Verizon. They also expressed concern that AT&T would favor its own movies and TV shows over content from smaller companies like Netflix. Based on the recent controversy surrounding AT&T giving priority to its own DirectTV Now streaming videos, however, it’s hard to imagine that AT&T will miss the chance to get a leg up against its competition.
In front of the Senate subcommittee today, AT&T CEO Randall Stephenson brazenly dismissed concerns of potentially anticompetitive behavior. The bespectacled executive, according to a New York Times report, told lawmakers that the merger would “disrupt the entrenched pay-TV models” and give customers more options.
The truth is a little more complicated than that. AT&T is already the second-largest US telecommunications company (with 133.3 million subscribers) and the largest pay-TV service in the US and the world. If it merged with Time Warner, the second-largest broadband provider and third-largest video provider in the US, it would create a media conglomerate with unspeakable power. Critics say it would be a conglomerate that many companies just couldn’t compete with.
AT&T is already entangled in an ongoing antitrust battle with the Federal Communications Commission (FCC) over its new DirecTV Now streaming video offering. AT&T acquired DirecTV in 2015 as part of a $50 billion deal, and the newly extra-powerful telecom company has already started using its ownership over the media company to edge out competitors. The controversy started quietly in late November, when the FCC sent a critical letter to AT&T accusing the company of “unreasonably discriminating” against other video services by offering its own DirecTV Now video service without the cost of data charges—something that companies like Netflix and SlingTV could never do without owning a wireless network.
Critics, including the FCC, have called this behavior anticompetitive and say it conflicts with federal net neutrality rules. The concept at play in the DirecTV Now situation is called “zero rating,” and it’s a legal workaround that telecom companies use to offer benefits to customers that the competition either can’t or won’t offer. In the case of DirecTV Now, AT&T customers can watch unlimited DirecTV content, but not Netflix. The business practice is criticized by consumer watchdog groups as a “pay-to-play” situation that favors big content providers who can afford to pay for access to internet users.
Perhaps the scariest thing about AT&T’s recent, monopolistic behavior is the fact that regulations may soon change with the incoming Trump administration. The president-elect has already built an FCC transition team with lifelong opponents of net neutrality, and he’ll soon announce his selection for the new Federal Communications Commission (FCC) chairman with advisement from those individuals. Although AT&T is under fire right now, things could change when Trump appoints a new chairman.
Inevitably, the rhetorical promises AT&T executives made today were total bullshit—but they might just get away with it. It would be crazy to expect anything other than a monstrous telecom conglomerate growing out of the year 2016. The Oxford Dictionary says that the word of the year is “post-truth.” Who knows what could happen next.
We’ve reached out to AT&T to learn more about this situation and will updated this post if we hear back.