The AT&T and DirecTV merger is all over the tech and telecommunication news these days. The two companies are trying to advertise the merger as good for consumers and competition, while citizen groups across the country are up in arms. What’s all the fuss about? What might this merger mean to you?
The Details of the AT&T and DirecTV Merger
The deal was announced last week. AT&T will be buying DirecTV for about $48.5 billion. This translates into a price of $95 per share that AT&T has agreed to pay. AT&T has a neat little webcast available that details what they consider to be the consumer benefits of this deal.
AT&T will gain access to programming from DirecTV and offer it to their customers for streaming to mobile devices. The deal will also create what looks to be the largest broadband and content provider in the country with more than 70 million subscribers.
Another thing the two companies are saying about the deal is that it will increase broadband expansion across the country. Consumers will be able to buy services from either company at stores run by both once the deal is completed. For example, AT&T currently operates over 2,300 company stores and has several thousand authorized retailers around the country. Buying service from either company, if the deal goes through, will be much easier and more convenient than before.
What the Companies Have to Say
In the press release linked above, DirecTV CEO Mike White said, “This compelling and complementary combination will bring significant benefits to all consumers, shareholders and DirecTV employees, U.S. consumers will have access to a more competitive bundle; shareholders will benefit from the enhanced value of the combined company; and employees will have the advantage of being part of a stronger, more competitive company, well positioned to meet the evolving video and broadband needs of the 21st-century marketplace.”
The Main Benefits of the AT&T and DirecTV Merger
Both companies state that the AT&T and DirecTV merger will give consumers a better alternative to what’s currently available with regard to available packages and bundles for the services both companies offer. I’ve already mentioned that if the deal is approved, consumers will be able to stream their video content to their mobile devices on the go.
One of the things I see as a positive to the deal is that it will allow AT&T to create a larger and more enhanced high-speed broadband network across the country (with up to 15 million new customer locations) due mostly to increased cash flow. This expansion, happily, would be mostly in under-serviced rural areas. Some of this expansion will include fiber to the home and wireless options. I see this as an excellent thing. AT&T says this will be completed within four years of the deal closing.
Other Possible Benefits of the Deal
The combined companies will offer standalone broadband services to consumers This is an excellent option for those that desire to obtain video from online sources like Hulu and Netflix. This service will be provided over existing coaxial cables and will offer speeds up to 6 Mbps where possible. The one scary note is that the press release states this will be offered for three years after closing. This tells me that consumers will have to purchase other services in the future.
The Biggest Benefit
Both companies have pledged a strict commitment to net neutrality. What this means is that the companies have made a pledge to ensure that every company on the net providing content through their pipes will be treated equally with regard to available and allocated bandwidth. This is regardless of whether the FCC returns to its earlier Open Internet protections that they implemented in 2010.
Another good thing about the possible merger is that DirecTV pricing would be nationwide, instead of regional. If you go to the DirecTV website, you will see several packages with what appear to be set prices. However, if you delve deeper, you’re going to be asked for your zip code, so they can tailor what is available for you. If the deal goes through, that will end. Pricing and packages for people living in Boston will be the same as for people living in Brooklyn or San Bernadino.
The Downsides of the AT&T and DirecTV Merger
More companies in any given industry or field is usually supposed to mean competition and lower prices for consumers as those companies fight for your business. However, we haven’t really been seeing that very much of late. It seems that companies are actually fighting to see how high they can raise their prices and still retain customers. Consumer advocates across the country are saying that since this merger will mean less competition in the TV service market it will also mean higher prices for consumers, after the initial euphoria of the deal passes.
Another issue many advocates have is that this deal will make it easier for providers to implement data caps on broadband consumers. If you own a cell phone with a data plan, you already know all about caps. You pay for service at a specific speed, but if you exceed an arbitrary amount of data consumed, they either shut you off or slow you down to crawling. Some broadband providers want to start capping the data consumption of customers. You want to be able to stream more than a few movies from online sources? Get ready to pay more.
Although, there are some positive points about the AT&T and DirecTV merger, there are also many things for consumers to be worried about, in the opinions of many people.