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FCC signs off on AT&T-DirecTV merger, creating pay-TV behemoth

🕐 2 min read

WASHINGTON — The Federal Communications Commission voted Friday to approve AT&T’s $49 billion acquisition of DirecTV, blessing the biggest merger of the year and ending a months-long negotiation between AT&T and the nation’s top telecom regulator.

The deal gives AT&T control of DirecTV’s 20.4 million customers and valuable programming, turning it into a media giant in addition to a telecommunications company.

Armed with DirecTV’s paid content such as NFL Sunday Ticket, which carries an exclusive broadcast of certain professional football games, AT&T stands to entice new subscribers and provide additional offerings to existing customers. At a time when fierce competition over cellphone service is shrinking profit margins, the acquisition may also help AT&T diversify the content it serves over its mobile network, which increasingly supports non-voice services such as connected cars.

As part of the deal, AT&T has agreed to conditions including promising to expand high-speed Internet to 12.5 million households, schools and libraries. AT&T also agrees not to favor its own or partner content over its networks — a requirement aimed at protecting nascent streaming video services.

In addition, AT&T will offer a discounted residential Internet service to low-income Americans. In regions where AT&T supports speeds of at least 10 megabits per second, the company will offer a $10-a-month service to food-stamp recipients. Where AT&T’s network doesn’t support those speeds, $10 per month will buy low-income Americans access at 5 Mbps. In some locations, AT&T said in a release, 3 Mbps service will be offered at $5 per month.

All of the conditions will last four years. If AT&T doesn’t complete its mandatory buildout of high-speed Internet at the end of four years, all of the conditions will be extended until the construction is complete, according to the deal.

The conditions are aimed at addressing criticism from consumer advocates who said that the acquisition would give AT&T greater incentive to crowd out competitors and would worsen service for underserved populations.

The agency’s three Democrats — FCC Chairman Tom Wheeler and commissioners Mignon Clyburn and Jessica Rosenworcel — voted to approve the deal. The agency’s Republicans were more mixed, with Commissioner Michael O’Rielly concurring in part. Ajit Pai dissented in part, because he disagreed with some of the conditions of the deal.

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