So this going on:
http://www.nytimes.com/...
AT&T and DirecTV told members of Congress on Tuesday that their proposed $48.5 billion merger would be so good for competition that it would do something that has rarely, if ever, happened: pressure cable companies to lower prices.
“Econometric analysis confirms that by making us more competitive, the merger will put downward pricing pressure on cable products — cable bundles, cable video and cable broadband,” Randall Stephenson, chief executive of AT&T, told antitrust subcommittees in both the House and Senate.
AT&T and DirecTV did not promise that they would lower prices, however, and the claim quickly began to dissolve under scrutiny. Pressed by Senator Richard Blumenthal, a Connecticut Democrat, whether AT&T would pass along to consumers all the savings the company expects to realize from the merger, Mr. Stephenson said, “No sir, I cannot commit to that.”
Mr. Blumenthal then asked whether AT&T would commit to passing part of the savings — 75 percent, or maybe 50 percent — to consumers. Not right here and right now, Mr. Stephenson said.
“I can’t even tell what the prices of these services will be six months from now, much less three years from now,” he said.
So, Mr. Blumenthal asked, the best consumers could hope for would be that the price for television service would increase more slowly than it has in the recent past?
“We hope that will be the product of this,” Mr. Stephenson said.
That line of questioning was about as rough as it got for the executives as they tried to sell subcommittee members on the benefits of a merger. Though knocked slightly off their game, the companies emerged from the hearings mostly unscathed. - New York Times, 6/24/14
But Senator Al Franken (D. MN) wasn't buying it:
http://www.broadcastingcable.com/...
More criticism came from a familiar face, Sen. Al Franken (D-Minn.). He said that when AT&T had promised to offer standalone broadband as part of the deal to buy Bell South back in 2006, AT&T did not promote that option, but instead "hid" the offering. Franken said that sounded like a promise not kept. Stephenson did not respond to that characterization, though during the House hearing on the deal earlier in the day, he said a blogger's characterization that AT&T had not fulfilled all its promises in that Bell South deal was patently untrue.
In any event, Stephenson unequivocally pledged to provide a clear and visible stand-alone broadband option as part of the DirecTV deal, saying broadband, not video, is what drove his businesses--video is a money loser, though he has said the DirecTV deal will change the economics of that.
Franken also hit AT&T hard over the issue of municipal broadband.
Franken said he understood that AT&T had spent a lot of money to lobby for legislation that would prevent municipal broadband, which Franken suggested could otherwise provide "excellent and affordable" service in competition to private companies. He said he was worried about AT&T spreading its rural broadband footprint, as it has pledged to do as part of the deal. He said, "outlawing" municipal broadband that might compete with private companies was blatantly anti-consumer, and asked why AT&T would try to do that.
Stephenson said he did not have a problem with municipal broadband to un-served areas, but did not agree with taxpayer-subsidized broadband where private investment was already providing it. He said that seemed "inconsistent” with the free market.
Franken asked him whether he was denying that AT&T had spent money on legislation preventing municipal broadband. Stephenson said he was not aware of that spending, but when pressed again by a seemingly incredulous Franken said he wasn't saying they hadn't.
Also adding some heat to the light shed by the witnesses on the relevant issues--access to programming, pricing, vertical integration among them--was Writers Guild of America President Christopher Keyser.
The former LA Law writer laid down the law from the independent programmers' perspective. He said from the outset he was there to oppose the deal, saying that seven big companies already determine "what I am allowed to write and you are allowed to watch." He said the combined company would use its power to discriminate against unaffiliated programmers, which will mean a reduction in quality and innovation. He also warned of big companies turning the Internet into an encore presentation of reduced access to broadcast networks--something Franken tied to the scrapping of the FCC's financial interest and syndication rules. The Connecticut senator asked Keyser for the figures of how much independent programming was on the networks before and after the rules, which prevented domestic syndication of network-owned programming, were scrapped. Keyser said it went from about 70-80% to more like 10%, with much of that reality rather than scripted.
He said the current model of consolidated control over distribution meant that independent product was, metaphorically speaking, hidden away on shelves in the back corner of the store. - Broadcasting & Cable, 6/24/14
Here's the argument for the merger:
http://www.cnet.com/...
Even with the criticism of AT&T's past behavior following its previous merger, it still maintained that without this deal with DirecTV, there is no way it can compete against big cable operators. AT&T emphasized that this is especially true as it looks like Comcast will be allowed to merge with Time Warner, creating an even larger rival. Franken noted that this argument on its own is not enough to justify the AT&T/DirecTV merger, but Stephenson and DirecTV CEO Michael White maintain that it is.
The argument goes like this: Consumers want to buy bundles of broadband and TV service, instead of buying these services separately. DirecTV has never been able to effectively compete against cable companies because it lacks an integrated broadband solution. And AT&T, even though it offers its own TV service, can't get the necessary scale to make this service profitable.
Only by combining the two companies can AT&T truly compete against cable, the argument continues. This is especially true when it comes to video. Stephenson noted in both the House and Senate hearings that AT&T pays $0.60 for every $1 it makes on video to programmers. White admitted that the fees it pays for programming is less than what AT&T pays for the same programming.
"We lose money on our video product," Stephenson told lawmakers during each hearing.
Stephenson was unable to guarantee that AT&T would actually benefit from the lower programming costs if the merger was approved. He stopped short of promising that if it was able to negotiate lower programming costs that those savings would be passed on to consumers. But he emphasized that AT&T would be able to use this money to invest further in its broadband market.
"The fiber TV product becomes more profitable with the DirecTV," Stephenson said in the House hearing. "So this allows us to build more fiber to the home. It makes fiber more compelling." - CNET, 6/24/14
But here's the thing:
http://www.washingtonpost.com/...
But citing complexities in the programming industry, Stephenson stopped short of predicting any effects on consumers' bills.
"Any projection as to how much mitigation, how much of a reduction in the rate of increase?" Blumenthal asked.
"As I mentioned, it's a bit episodic. It's a bit specific," said Stephenson.
"I think a lot of consumers would find that answer unsatisfying," said Blumenthal.
"We believe one would have to believe in the market, and market pressures, and that market pressures will drive down margins," said Stephenson. "Cost savings will find their ways into prices."
Video distributors largely blame programming costs for the continued rise in prices. AT&T says 60 percent of its revenue from video subscriptions goes to content companies. For similar reasons, Comcast has declined to commit to reducing prices in hearings about its proposed merger with Time Warner Cable. - Washington Post, 6/24/14
And Franken just isn't sold on this merger:
http://www.sdjewishworld.com/...
“Consumers are more dependent on this industry than ever before,” said Sen. Franken in his prepared opening statement. “We need more investment in telecommunications—investment in infrastructure, in customer service, and in new technologies. Instead, the industry proposes more consolidation.
“Comcast wants to buy Time Warner Cable, and Sprint wants to buy T-Mobile—and AT&T says they need to get bigger, too. To me, that is not a good reason to approve this deal. And we need to examine this merger on its own terms. AT&T and DirecTV have explained why this is a good deal for them. As good corporate citizens, they must also explain why this is a good deal for consumers.” - San Diego Jewish World, 6/24/14
If you would like more information, please do contact Senator Franken's office for more details:
(202) 224-5641
http://www.franken.senate.gov/...
This is just one of many reasons why we need Franken in the Senate. He's been fighting the FCC on net neutrality and the Comcast-Time Warner merger and he's not going easy on AT&T and DirecTV. Click here to donate and get involved with his campaign:
http://www.alfranken.com/...