Earlier this year, AT&T announced
that it planned to shell out $100 billion to acquire Time Warner. That comes on the heels of the company spending $70 billion to acquire DirecTV. Why is AT&T spending countless billions on content and a legacy satellite TV provider when the lion's share of the company's broadband network desperately needs upgrading? Because fixed and wireless broadband subscriber growth has slowed, and telco executives believe they need to turn to content and advertising (read: slinging videos at Millennials) to please investors.
Under fire for the anti-competitive repercussions of its latest deal, AT&T testified this week before the Senate Judiciary Subcommittee on Antitrust, Competition Policy & Consumer Rights. As you might expect, AT&T and Time Warner both breathlessly insist that there are absolutely no downsides to the companies' merger, adding the deal would be an incredible boon to consumers and the video market alike
"Together, AT&T and Time Warner will disrupt the entrenched pay-TV models giving customers more options, creating more competition for cable TV providers,” AT&T CEO Randall Stephenson said.
“By joining forces, we will accelerate the development and delivery of the next generation of video services that provide consumers with greater choice, convenience, value, and affordability,” Time Warner CEO Jeff Bewkes told lawmakers in prepared testimony.
The problem is that's not really true. Most streaming providers are worried that AT&T, which just launched its new "DirecTV Now" streaming service, will make it harder than ever for streaming competitors to license the content (HBO, etc.) they need to compete. Similarly, many (including the outgoing FCC
) are concerned that AT&T's decision to zero rate
this DirecTV Now content (exempting AT&T's content from usage caps while still penalizing competitors) twists and distorts the open market. AT&T already effectively eliminated a TV market competitor when it acquired DirecTV. Now it's tilting the playing field unfairly in its favor.
These concerns received fleeting lip service at this week's hearing. Instead, the committee spent a significant amount of time listening to folks like Mark Cuban, who attended the hearing to lavish praise on AT&T's latest mega-merger
“We need more companies ... with the ability to compete with Apple, Google, Microsoft, Amazon and Facebook. Delivering content to consumers in this app-driven world is not easy, it is very expensive and difficult. ... Alone, it will be very difficult, if not impossible for either AT&T or Time Warner to compete with any of the companies I've mentioned. Together it will still be difficult, but a combined entity at least gives them a chance to battle the dominant players in the marketplace and increase consumer choice and competition for consumer attention."
So one, AT&T is a massive telecom conglomerate that not only owns its own core and last mammoth nationwide network, but also is already the biggest TV provider in the country after its DirecTV acquisition. This scale provides AT&T immeasurable benefits in content negotiations, and the idea that it was in any way difficult for AT&T to compete in this space is laughable. That's before you even mention AT&T's incredible and often comedic
lobbying influence on state and federal telecom and media policy. A helpless little daisy, AT&T is not.
And while DirecTV Now might bring some added streaming competition to the space, it's not like Apple, YouTube, Hulu, Sling TV, Sony, HBO and countless other companies aren't flooding into the streaming video space as well. The competition is already coming to this market. Another mega-merger doesn't help this competition, it actively harms it. AT&T is a company with a long, rich history of anti-competitive behavior
and defrauding its own customers
on multiple occasions
. That it will use this expanded size and power in an anti-competitive fashion isn't theoretical
. This is what AT&T does
But zero rating is complicated
. Understanding the perils of vertical integration and the threat of one company owning the content and the conduit is difficult
. Realizing that AT&T all but owns state and federal government is inconvenient
. As such, Cuban tried to trot out a somewhat bizarre little story in which he argues that the AT&T merger would be really wonderful for joe, beer-drinkin' consumer, because, uh, algorithms:
"I would also like to point out one other important element of consumer choice that an AT&T and Time Warner merger would improve.
Each of the largest content companies I have mentioned so far, Facebook, Google, Amazon, Microsoft and Apple present much if not all of their content algorithmically. As a Facebook user I don’t get to pick what content I get to see in my newsfeed. I can try to influence it, but Facebook algorithms control what I see.
In the future, it won’t be algorithms that choose what we see, our choices will be driven by some form of Artificial Intelligence learning from trillions of disparate inputs.
Meanwhile, for those of us who still enjoy our TV the old-fashioned way, on our couch, cold beverage in one hand and remote in the other, there is a lot to be said for having a company that can afford to continue to offer us that choice. As much of a geek as I am, I like having the choice of searching through a programming guide to see what’s on rather than an algorithm telling me what I should watch. I think a lot of consumers would like to see that choice continue as well."
So one, that entire story makes no goddamned sense
. Because Apple, Google and Facebook use algorithms in their news feeds, it's a good idea to let a company with a massive history of anti-competitive behavior grow immeasurably larger? AT&T somehow will provide us with purer access
to programming guides free of the nefarious influence of Silicon Valley artificial intelligence
? That's so illogical I can't even deconstruct the point Cuban's trying to make. It's like arguing that forest fires are good because pineapples exist
Granted we've noted a few times
that while Cuban has a solid grasp of a number of issues, net neutrality, telecom and media issues aren't among them. As such, he should probably be the last person testifying on the subject before Congress. In fact in writing this piece, I stumbled upon something I wrote for Techdirt back in 2014
when (again) trying to highlight that Cuban doesn't really understand net neutrality:
"Of course Cuban has already made his fortune. Were we to take 1995 Mark Cuban (who was busy building Broadcast.com) and transplant his business into the modern era under AT&T, Verizon and Comcast -- you can be damn sure he'd be taking a very different approach to these issues. Cuban has spent a decade making it abundantly clear he doesn't understand net neutrality, the telecom market or the potential pitfalls of these new cap exempt business models. Perhaps we should put Mark Cuban, Donald Trump and all the rest of the billionaires with plenty to say but little actual understanding in charge of the telecom industry. At least we'd get some entertainment value out of the equation while the Internet burns.
Clearly I opened a portal to another dystopian dimension, and for that I'm truly sorry.