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Wheeler’s OK on AT&T-DirecTV Advances Agenda

7/27/2015 8:00 AM Eastern

WASHINGTON — Federal Communications Commission chairman Tom Wheeler signaled two things last week in circulating an order approving the $48.5 billion AT&TDirecTV merger: He isn’t reflexively opposed to big media mergers and he isn’t opposed to using those deals to achieve his vision of a competitive and neutral Internet.

 

AT&T did not have to commit to supporting Title II reclassification, which it is fighting in court, or the bright-line rules, which it is not fighting, according to a source familiar with the document.

 

But net neutrality was nonetheless an integral part of the first big media merger approved on Wheeler’s watch. The deal’s approval had been anticipated for the past several weeks and was ultimately approved by the full commission, 5-0, the FCC said on Friday.

 

The Department of Justice closed its antitrust investigation of the merger last week on the news the chairman had circulated the order; the agency and the Justice Department actually coordinate their reviews.

 

The new net-neutrality rules allow the FCC to look at interconnection deal complaints under Title II authority and at business practices like carveouts from usage-based plans on a case-by case basis under a general Internet conduct standard.

 

Both of those are elements that AT&T and cable ops are challenging in court, and both issues have been baked into the AT&T-DirecTV deal.

 

Wheeler himself made that clear in outlining some of the key conditions, saying they “will build on the Open Internet order.”

 

The new AT&T-DirecTV will:

• Not be allowed to “exclude affiliated video services and content from data caps on its fixed broadband connections;

• Be required “to submit all completed interconnection agreements to the commission, along with regular reports on network performance”;

• Have an independent monitor to ensure compliance with those and other conditions.

 

The chairman also emphasized that AT&T had pledged a tenfold increase in its fiber-to-the-home deployment, boosting the nationwide residential fiber footprint by over 40% and tripling the number of metro areas AT&T had announced plans to roll out.

 

One big difference between AT&T-DirecTV and Comcast-Time Warner Cable, which the FCC opposed, was that the former deal did not combine ISPs.

 

But Matt Wood, policy director for Free Press, says boosting AT&T’s pay TV profile also impacts broadband competition.

 

“People think — wrongly — that the broadband implications are fewer here because of satellite’s limited broadband play,” Wood said. “But giving AT&T more pay TV revenue gives them more to protect against online video competition, and more ability to extract money from bundle customers rather than focusing on standalone broadband deployment.”

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