Proposed AT&T-DirecTV deal means even less choice for consumers

Telecommunication industry continues to consolidate

Published: May 19, 2014 01:40 PM
As part of a wave of telecom consolidation, AT&T wants to buy DirecTV for $48.5 billion

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Comcast hasn’t even received regulatory approval for its proposed merger with Time Warner Cable, but now two other giants of the telecom industry have reacted by proposing to join forces themselves in a $48.5 billion deal. AT&T, whose U-Verse fiber-optic service (less than 6 million subscribers) gives it a relatively small TV service footprint  compared with Comcast, would gain a large base of subscribers by merging with DirecTV, which has more than 20 million subscribers. DirecTV has had difficulty offering a compelling bundled service package; it would gain the ability to pair AT&T’s broadband Internet along with satellite TV.

But it’s hard to tell what customers will get out of the deal. Any DirecTV customer can already arrange an Internet and phone bundle through multiple carriers, including AT&T, CenturyLink, Verizon, Windstream, and others. An exclusive deal with AT&T will presumably limit that choice.

In the locations where AT&T does offer television through U-verse, it’s hard to see what DirecTV adds to the offer, unless AT&T wanted to use DirecTV as the TV provider and free up capacity on its fiber network for Internet and telephone service.

Learn how to save money on triple-play cable services, and check our Ratings of telecom services, including AT&T and DirectTV.

Regardless, for consumers, the result of the deal could be an awkward technological solution, potentially requiring a satellite dish and either a copper phone line or fiber connection. It's possible that AT&T has some future technological miracle up its sleeve that will marry satellite and terrestrial communications into a seamlessly integrated, easy-to-use, high-speed telecommunications technology, but we don't imagine that will emerge any time soon.

In the meantime, the AT&T-DirecTV announcement has consumer groups on alert. "AT&T’s proposed takeover of DirecTV is just the latest attempt at consolidation in a marketplace where consumers are already saddled with lousy service and price hikes," said Delara Derakhshani, policy counsel for Consumers Union, the policy and advocacy arm of Consumer Reports. "The rush is on for some of the biggest industry players to get even bigger, with consumers left on the losing end. You can’t justify AT&T buying DirecTV by pointing at Comcast’s grab for Time Warner, because neither one is a good deal for consumers.”

—Glenn Derene

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