Broadband

by Karl Bode


Filed Under:
5g, broadband, content, lies, merger, wireless

Companies:
at&t, directv, time warner



AT&T's Already Making Things Up To Get Its Massive New Merger Approved

from the witness-the-firepower-of-this-fully-armed-and-operational-battle-station dept

Over the years, we've noted how AT&T has a nasty habit of lying to sell the public, press and regulators on the company's neverending attempts to grow larger. Whether it's promising broadband expansions that never arrive, or using astroturf to try and argue anti-consumer mergers are good for toddlers, AT&T's lobbyists, lawyers, and policy tendrils work tirelessly to argue that up is down, black is white, and any skepticism of its claims are unfounded hysteria. As we saw with the blocked T-Mobile merger, this sort of behavior doesn't work quite as well as it used to.

Enter AT&T's latest $85 billion planned acquisition of Time Warner. Consumer advocates worry AT&T could use its size and leverage to make content more expensive, while the usage caps and zero rating give AT&T's own upcoming streaming video service an unfair market advantage. Wall Street hasn't exactly been bullish on the idea either, noting how AT&T's $69 billion acquisition of DirecTV, followed by its $85 billion acquisition of Time Warner is not only a giant risk on the eve of the cord cutting revolution, but it saddles AT&T with an absolute mountain of debt that will potentially damage the company's credit rating.

But AT&T being AT&T, the telco is already busy trying to claim the merger will create all manner of amazing consumer benefits. One of the top early claims is that buying a massive media empire will somehow speed up AT&T's fifth-generation (5G) wireless deployments:
"Stephenson this week tried to claim that the $85 billion acquisition of a broadcaster will somehow speed up the company's deployment of fifth generation (5G) wireless broadband. "We would probably have a desire to move faster on 5G, certainly not slower," Stephenson claimed on the company's earnings call this week. AT&T CFO John Stevens agreed, claiming that the massive deal "brings us a lot more financial flexibility... or revenue enhancements and growth that will allow us to fund 5G."
Except that 5G is an evolutionary step up for wireless, one AT&T was unquestioningly-dedicated to before this merger was even announced. AT&T doesn't really have a choice in working toward 5G, which doesn't even have an official standard yet -- and likely won't see any meaningful commercial deployment until 2020. As for "financial flexibility," buying a massive media empire, saddling yourself with debt, having your credit downgraded and potentially hamstringing your ability to participate in current spectrum auctions -- doesn't magically make your wireless network appear more quickly.

AT&T also appears to be trying to convince the press, public and regulators that the deal is somehow making it possible for AT&T to launch its new "DirecTV Now" streaming service, which is expected to launch this Friday. AT&T executives have been claiming repeatedly that the service's $35 per month price point is somehow thanks to a merger that technically doesn't even exist yet:
"AT&T CEO Randall Stephenson today defended his company's proposed acquisition of Time Warner, saying that critics who claim the merger will raise prices are "uninformed." As proof, he said the AT&T-owned DirecTV will soon launch a $35-per-month streaming service called DirecTV Now.

"I'm not surprised [by the criticism]. They're uninformed comments," Stephenson said in response to a question from Wall Street Journal editor Rebecca Blumenstein at the newspaper's WSJDLive Conference. "Anybody who characterizes this as a means to raise prices is ignoring the basic premise of what we're trying to do here, again a $35 product we bring into the market."
Right, except this new streaming service was actually first announced eight months ago. And the licensing contracts supporting this $35 price point (which you know won't be anywhere near $35 once AT&T saddles it with fees and caveats) were already in place long before the merger was even announced. While AT&T is surely going to get better rates for content now that it owns the cow, there's absolutely no historical evidence to suggest that savings will be passed on directly to the consumer. If anything, consumers could pay more as AT&T uses its broadband mono/duopoly power to try and hamstring streaming alternatives.

This is just AT&T getting warmed up. Over the next few months, media outlets will be hammered with op-eds from lawyers, lobbyists, politicians, policy wonks, "consultants" and think tankers (all with undisclosed financial ties to AT&T) happily claiming that this new merger will cure cancer, protect toddlers, and keep the nation's puppies warm and happy. And while it's understandable that ISPs want to get into content and ads as broadband growth slows, the $150 billion spent on DirecTV and Time Warner could have brought fiber optic connections to American homes several times over.

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  • identicon
    Anonymous Coward, 31 Oct 2016 @ 9:55am

    While AT&T is surely going to get better rates for content now that it owns the cow,

    Thats not how Holywood accounting works, milk will cost even more when they own the cow, because they have to pay for its feeding, and that makes it more expensive to sell milk compared to buying it from a cow owner to sell on.

    reply to this | link to this | view in chronology ]

    • icon
      ltlw0lf (profile), 31 Oct 2016 @ 3:38pm

      Re:

      Thats not how Holywood accounting works, milk will cost even more when they own the cow, because they have to pay for its feeding, and that makes it more expensive to sell milk compared to buying it from a cow owner to sell on.

      I know this is Poe, but I'll run right into it anyway.

      Hollywood accounting is a fabrication made up by Hollywood, and it is entirely within the sphere of their control. If it wasn't profitable for them to use Hollywood Accounting, it would go away in a heartbeat. AT&T can decide, once it owns the cow, how much it is going to cost. They will, of course, continue to use Hollywood Accounting because they believe their customers and content providers aren't smart enough to figure out what they are doing, even though cord-cutting and independent production of high-quality (hollywood-level) material is proof that their customers and content providers are far smarter than they think they are.

      Besides, what you said makes absolutely no sense, except to a Hollywood Accountant, since in the real world, the price you pay for milk includes the cost of the feed. The rest of the world has awaken to the stupidity. It's only a matter of time before the courts and Congress wake up and see this for the fraud it is.

      reply to this | link to this | view in chronology ]

  • icon
    freedomfan (profile), 31 Oct 2016 @ 10:02am

    Seems like a broad accusation

    Over the next few months, media outlets will be hammered with op-eds from lawyers, lobbyists, politicians, policy wonks, "consultants" and think tankers (all with undisclosed financial ties to AT&T) [...]

    (emphasis mine)

    I wonder how one would substantiate such an accusation? I have no doubt that AT&T tosses some money in the direction of various think tanks with a like-minded agenda. But, Mr. Bode seems to be claiming that every think tank that opines in favor of the merger is necessarily on AT&T's payroll and that the loot trail is undisclosed. That would be tough to prove, even if it were true, since even one counterexample guts it.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 31 Oct 2016 @ 11:46am

      Re: Seems like a broad accusation

      Well, it happened ther last time AT&T merged with another company, and it happened with the infamous Comcast/NVCUNiversal merger, so...it's going to happen again?

      reply to this | link to this | view in chronology ]

    • icon
      orbitalinsertion (profile), 31 Oct 2016 @ 7:46pm

      Re: Seems like a broad accusation

      One could remove the word "all", but i suspect it is merely super-mild hyperbole. Also, "financial ties" doesn't mean one directly receives money, but that the result and general climate fostered by these things suits them.

      Sure there are hardcore believers and those committed to the sets of ideals that make these things seem like a good idea regardless of the repeated demonstrations of these experimental outcomes through history. Either way, there is some heavily enforced cognitive dissonance about what they think should be and what happens in reality that makes them essentially lie in their pro-position statements. But often enough those sorts have some direct or indirect remunerations for their efforts. All that lobbying cash gets spent on something. Whether it's in the form of entertaining politicians or those doing the writing, or donating funding to the institutions or paying for "studies".

      Yeah, one can never prove "all". And there is hardly a point to doing so.

      reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 1 Nov 2016 @ 6:42am

      Re: Seems like a broad accusation

      "I wonder how one would substantiate such an accusation?"

      Watch and learn.

      reply to this | link to this | view in chronology ]

  • icon
    katsai (profile), 31 Oct 2016 @ 10:02am

    The Spin is Already In

    "This is just AT&T getting warmed up. Over the next few months, media outlets will be hammered with op-eds from lawyers, lobbyists, politicians, policy wonks, "consultants" and think tankers (all with undisclosed financial ties to AT&T) happily claiming that this new merger will cure cancer, protect toddlers, and keep the nation's puppies warm and happy."


    This is already happening. Last week, NPR had a segment where they interviewed one of the guys from Mashable, talking about how awesome this will all be for consumers and how great it will be and how zero rating will help people. The interviewer was a little skeptical, but for the most part let this mouthpiece ramble on unchallenged. And who is one of the key investors in Mashable? You guessed it. Time Warner. That little tidbit was not disclosed in the interview. Color me surprised.

    reply to this | link to this | view in chronology ]

    • icon
      nasch (profile), 1 Nov 2016 @ 6:13am

      Re: The Spin is Already In

      The interviewer was a little skeptical, but for the most part let this mouthpiece ramble on unchallenged.

      American journalists are such wimps. The BBC interviewers will pound a question over and over again to try to get the person to actually answer it, and challenge them on BS claims. They can't force the person to answer but after being asked three times in a row it's at least painfully obvious they're dodging. And yet they're still able to get interviews the next day, which is what American journalists seem worried about. I wish they would shape up and stop worrying so much about "access".

      reply to this | link to this | view in chronology ]

  • identicon
    Jim, 31 Oct 2016 @ 10:10am

    Outright fabrications seem to be SOP at all telcos, TV and broadband providers, and wireless providers. Think the FTC or the FCC will ever notice? Not as long as their lobbyists are tossing the big bucks around DC.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 31 Oct 2016 @ 10:22am

    Why should AT&T be any different?

    Hillary says"

    Comey's letter only went to Republicans, that is not true.

    We are now, for the first time ever, energy independent, that is not true.

    Never received nor sent any material that was marked classified, that is not true.

    It was allowed, referring to her email practices, that is not true.

    Bernie Sanders has never had a negative ad run against him, that is not true.

    Trump says:

    Pretty much everything he says isn't true.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 31 Oct 2016 @ 10:28am

    One Ring to rull them all.

    It's time to one huge MEGA-AT&T to emerge. All the Baby-Bells; Now back under one corporation. Every TV network, under the AT&T moniker. Every Cable, ISP, fiber.. That should be under the control of AT&T as well. Western Electric... that too. And once AT&T has a complete monopoly upon media, telecommunication, and data then it's time for them to expand into fast-food and theme-parks.

    reply to this | link to this | view in chronology ]

    • icon
      orbitalinsertion (profile), 31 Oct 2016 @ 8:03pm

      Re: One Ring to rull them all.

      Makes one long for the days of the original real AT&T, not just a Baby Bell that ate other Baby Bells and other things then was somehow allowed to buy the AT&T LD and the use the name. The old AT&T at least had high quality service and equipment and provided the world with tons of amazing basic research. It's almost the saddest thing, the lingering death of what was once Bell Labs. I am still not sure about the trade-off (which could have been had another way) that gave us cheaper long distance calling-code companies and the ability to buy and use cheap crappy phone equipment for a few years before everything changed anyway.

      And yes, if they can merge with Verizon one can have the most nearly complete evil zombie resurrection of the former AT&T.

      Can't make any claims what AT&T I might have become, but i suspect their culture would have made for better stewards of telcom and internet than the fragmented Bells that simply fed the merger and growth by acquisition craze and the mentality that goes along with that.

      (Oh. The original AT&T also gave us hilariously bizarre educational films.)

      Sorry for the tealdeer but after seeing the original AT&T mentioned yet again, i was compelled to braindump.

      reply to this | link to this | view in chronology ]

  • icon
    afn29129 (profile), 31 Oct 2016 @ 10:30am

    damit all! One Ring to rule them all.

    I take the blame for the One Ring msg. TechDirt keeps logging me out randomly.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 31 Oct 2016 @ 10:36am

    AT&T

    No lie untold.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 31 Oct 2016 @ 10:59am

    ' "We would probably have a desire to move faster on 5G, certainly not slower," Stephenson claimed on the company's earnings call this week. '

    Sounds more like a veiled threat, 'if you don't allow us to take over this company and become larger, we will have no motivation to upgrade so it will occur at a slow speed. Competition? snicker,... oh your serious?'

    reply to this | link to this | view in chronology ]

  • identicon
    SpaceLifeForm, 31 Oct 2016 @ 11:38am

    Here is your future shock

    Not far into the future, ATT
    will want to buy CenturyLink/Level3,
    the merger yet to happen.

    (and hopefully never will)

    reply to this | link to this | view in chronology ]

  • icon
    Killer_Tofu (profile), 31 Oct 2016 @ 1:25pm

    What wasn't said publicly

    "AT&T CEO Randall Stephenson today defended his company's proposed acquisition of Time Warner, saying that critics who claim the merger will raise prices are "uninformed."

    R. Stephenson: "Everyone knows that we raise prices every year regardless. This certainly won't affect that."

    reply to this | link to this | view in chronology ]

  • icon
    Ehud Gavron (profile), 31 Oct 2016 @ 2:06pm

    Harold Greene is rolling over in his grave

    In 1984 Judge Greene presided over the breakup of The Bell System into a variety of companies including long-distance telephone services provider AT&T, research arm Bell Laboratories ("Bell Labs"), and the regional Bell operating companies (RBOCs, colloquially "Baby Bells").

    Like pieces of Terminator 2 rushing to re-form as the monster they started out as, these companies have been buying and selling competitors, rivals, foes, and friends.

    Even today CenturyLink, a company that includes the former US West territory and several others, announced its upcoming purchase of Level3 Communications. Level3 competes with CenturyLink in offering fiber-optic carrier services and telephone services. It got big enough by buying among others Time Warner Telecom (not to be confused with Time Warner that AT&T wants or Time Warner Cable that nobody wants) and Xspedius -- two market competitors.

    In time that Terminator 2 will be back and we'll have one big national telco and one big national cable company, and the ultimate duopoly will be complete...

    ...unless regulators or citizen lobbying stops it.

    Ehud

    reply to this | link to this | view in chronology ]

    • icon
      orbitalinsertion (profile), 31 Oct 2016 @ 8:12pm

      Re: Harold Greene is rolling over in his grave

      It's so disappointing of Level 3. There goes one halfway decent player in the space right down the tubes.

      reply to this | link to this | view in chronology ]

  • identicon
    Grady, 31 Oct 2016 @ 2:58pm

    Wait, 5G?

    Why are they bringing up 5G??

    We haven't even hit 4g yet, we are still in this limbo of LTE. I've only experienced 4G on a train in Tokyo. No where in the states has 4G.

    But, it's all about marketing, I gudss...

    reply to this | link to this | view in chronology ]

    • icon
      orbitalinsertion (profile), 31 Oct 2016 @ 8:07pm

      Re: Wait, 5G?

      Yeah after a lot of lobbying and whining the FCC allowed telcos to call G/LTE "4G" because reasons. Which is sort of what i would expect the nature of 5G to be like in the States. 3.8G or something.

      reply to this | link to this | view in chronology ]

  • icon
    Jeremy2020 (profile), 31 Oct 2016 @ 3:22pm

    So $35 which is more expensive than existing streaming services, but is $15 off their price for actual Direct TV...

    I'm very confused by this service that seems more expensive (I need an internet connection) is somehow made cheaper by a merger that hasn't happened yet..

    reply to this | link to this | view in chronology ]


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