On the Verge of Innovation: AT&T and DirecTV Merger

The House of Representatives Judiciary Committee held a hearing on Tuesday, June 24 regarding the implications involved with the merger of AT&T and DirecTV. Representing AT&T was Randall Stephenson, Chairman and CEO. Also representing the merger was DirecTV Chairman and CEO, Michael White. During Stephenson’s and White’s testimonies, they reiterated that this merger is necessary to serve the wants and demands of their more than 100 million consumers. A successful merger would provide more options for content to consumers, bring better video services to the one fourth of American homes that already enjoy this service, as well as expand video into more homes, increase broadband speeds, create bundled service plans, bring access to 15 million rural American homes, create jobs, and ultimately serve to the convenience of the customers.

However, Ross Lieberman, Senior Vice President of Government Affairs with American Cable Association, and John Bergmayer, Senior Staff Attorney with Public Knowledge, used their testimonies to depict negative effects this merger could bring. Lieberman and Bergmayer pointed out that this merger could bring a loss to competitive choices, on the grounds that few small cable providers have the financials to compete with AT&T. They also believe that this merger will bring increased prices to services, slower services, discriminating pricing practices, and will need to be realigned to match standards created by regulatory agencies such as the FCC. AT&T easily combatted this particular hit by reminding the committee that they aided with input in 2010 FCC regulations.

During the questioning round of the hearing, committee members worked to address both sides of the issue. Members of the panel noted from testimony of the cable companies that DirecTV could take away opportunity for local advertising or have issues not providing local programming. Though Michael White did admit that DirecTV, “certainly has gaps in serving local content to consumers,” he believes this is a problem that will not be apparent with the new merger and stated that they will provide even more local advertising opportunities. Another worry of the comittee was whether or not this merger would remove choice of content from consumers and harm competition of cable providers. However, both White and Stephenson were very adamant that this merger would increase choice of content to consumers. Additionally, being cable companies are the biggest service providers of video and broadband, this merger could in fact provide a more realistic competition to the industry.

Randall Stephenson reiterated many times that this merger would “provide many hard-hat jobs,” and bring a vast amount of new employees into the companies. He also noted that new employees would be put to a vote to determine their joining the Union with AT&T. When committee Chairman, Congressman Bachus, asked whether the merger would bring duplication of jobs versus creating new jobs, both Stephenson and White felt strongly that the laying of cables and integrating the services into homes would, in fact, bring new jobs. The merger will provide new services that will be complimentary assets to consumers in 48 states, proving to be a project of growth and an upgrade for the industry.

The greatest implication congressmen may see is how this merger would affect the future of the industry, being this was the second hearing of its kind, and likely will not be the last before August recess. Based on the ideas the merger will increase choice of content, provide services to rural homes, increase jobs across the nation, and foster innovation, the Judiciary Committee in the House showed to be pleased with the idea. The senate held a hearing later that same day. A conclusion on the matter is soon to come.