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Sources: FCC Ready To Bless AT&T-DirecTV

6/29/2015 8:00 AM Eastern
TakeAway

The FCC and Justice Department are poised to sign off on the merger of AT&T and DirecTV, with negotiations on conditions ongoing, sources said.

WASHINGTON — It looks like chairman Tom Wheeler meant it when he signaled that the Federal Communications Commission’s decision not to approve the Comcast-Time Warner Cable merger did not mean all big deals were off.

 

The word last week was that the $48.5 billion merger between telco AT&T and satellite-TV provider DirecTV would get the green light from the FCC and the Justice Department soon, according to a half-dozen industry sources tracking government vetting of the deal. Negotiations over deal conditions are wrapping up, sources said, with a decision likely in “days” or, at most, a couple of weeks. (For more, see Finance)

 

The deal never drew the kind of all-out pushback in Washington that the scrapped combination of Comcast, the No. 1 U.S. cable provider, and second-ranked TWC did.

 

The combined AT&T-DirecTV will almost certainly have to abide by network-neutrality conditions — in fact, the exact structure of that condition was said to have been one of the negotiations’ stickier wickets.

 

The merged company will likely have to adhere to the three bright-line rules against blocking, throttling and paid prioritization, and perhaps agreeing to fair and reasonable interconnection deals — depending on the wording, that would not seem too tough an ask — rather than having to swear allegiance to the Title II regime. One industry attorney thought the optics of getting a major ISP to commit to Title II might be tempting to the FCC, though.

 

AT&T and other ISPs that have sued the FCC over Title II common- carrier reclassification have said they are not challenging those bright-line rules, just the manner in which the FCC arrived at them.

 

Interconnection, and complaints from backbone providers about negotiations with ISPs, is a big issue at the FCC, which made those matters part of the new net-neutrality rules. (See related story) But AT&T has been striking interconnection deals lately with providers including Level 3, Cogent and one other backbone firm that has yet to be announced, according to FCC filings.

 

And AT&T was even signaling some support for the FCC’s case-by-case approach to interconnection complaints, something the other ISPs that have challenged the rules in court have panned. “[T]he commission has established the mechanism for dealing with any legitimate interconnection issues that might arise,” AT&T said in arguing that an interconnection condition was unnecessary.

 

One top industry lobbyist said none of the conditions being proposed appeared onerous.

 

Now that Charter Communications has pledged not to adopt usage-based pricing or data caps, could such promises be among the conditions of its pending acquisition of Time Warner Cable — particularly given the FCC’s recent proposed $100 million fine against AT&T for marketing “unlimited” service when broadband speeds for the top users could be slowed?

 

One industry attorney speaking not for attribution said he didn’t think so. “I don’t sense that,” the source said. “If there is going to be something controversial, I am guessing it is going to be on the interconnection front. There has been a lot more noise about that.” Access to over-the-top video is also likely to be addressed.

 

In meetings earlier this month, AT&T and DirecTV execs assured staffers that AT&T has “strong incentives” to provide customers with access to “the full range of [online video distributor] services that consumers demand.”

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