FCC HEAD OKAYS AT&T/DTV DEAL

FCC HEAD OKAYS AT&T/DTV DEAL 

Very likely, this will be the biggest media merger in history. Tom Wheeler, the chairman of the Federal Communications Commission, has confirmed reports that he sent a letter to the other commissioners recommending approval of AT&T’s bid to purchase DirecTV.

In a statement released on July 21, Wheeler spelled out the conditions for his support of the deal. The combined company must impose the same data caps on itself that it imposes on affiliated internet video services such as Netflix, its interconnection contracts will be subject to FCC review,  it will accelerate the construction of broadband infrastructure, and it will meet certain minimums for broadband speed and access. The last two conditions were expected. From the day AT&T and DirecTV signed the deal, the FCC clearly stated that its approval would require the company’s commitment to greatly increased broadband speed and access.

The rule regarding data caps means that AT&T must agree not to block, throttle, or offer paid prioritization for any legal web traffic on its network. The company must also provide equal access to all content providers, without favoring its own content.

Industry analysts said that they have expected a ruling on the merger for several weeks. The delay is said to stem from concerns about interconnection standards, and conditions arising from the FCC’s recent ‘net neutrality’ ruling. Wheeler said he wants to monitor compliance with these conditions. To this end, he demands oversight by an independent compliance officer.

AT&T, which is buying DirecTV for $49 billion, agreed to submit all interconnection agreements for FCC review before acting on them.

Both companies benefit from the deal. DirecTV, the nation’s largest satellite TV provider, wants a bigger presence  in urban internet markets. AT&T, strong in urban markets, wants more rural and suburban TV customers.

The Department of Justice, which reviewed the deal for itself, announced on July 22 that it “will not challenge” it. If the full FCC board okays the deal, then, no legal hurdles remain. A vote by the full board is expected within days.

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