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FCC Chairman Recommends AT&T, DirecTV Merger

FCC Chairman Tom Wheeler finds some good things to recommend about the proposed merger between AT&T and DirecTV.
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This week, Federal Communications Commission Chairman Tom Wheeler offered his recommendation for the merger between telecommunications giant AT&T and direct broadcast satellite service provider DirecTV.

The chairman's recommendation follows the July 21 review of the acquisition by the US Justice Department. The full FCC has yet to formally vote on the deal.

Plans for the merger between AT&T and DirecTV were announced back in May 2014 for a transaction valued at $48.5 billion.

AT&T is looking to increase its marketshare in the pay TV sector, since its existing U-Verse brand has only a modest marketshare of 5.7 million users. DirecTV has 20 million US-based customers.

The deal would also give AT&T territorial expansion (U-Verse currently operates in just 22 states), and will give the company access to Latin American markets, where DirecTV has 18 million subscribers.

Wheeler, who has made it his mission to clash with some of the biggest Internet service providers in the US this year thanks to the commission's net neutrality ruling, wrote this week that the AT&T and DirectTV deal can benefit consumers.

"An order recommending that the AT&T/DirecTV transaction be approved with conditions has circulated to the Commissioners," Wheeler wrote. "The proposed order outlines a number of conditions that will directly benefit consumers by bringing more competition to the broadband marketplace. If the conditions are approved by my colleagues, 12.5 million customer locations will have access to a competitive high-speed fiber connection."

He added that the additional build-out is about 10 times the size of AT&T's current fiber-to-the-premises deployment. It increases the entire nation's residential fiber build by more than 40%, and more than triples the number of metropolitan areas AT&T has announced plans to serve.

He also drew attention to the conditions that will build on the Open Internet Order already in effect, addressing two merger-specific issues.

The order consists of a set of regulations that move towards the establishment of the Internet neutrality concept.

In the case of the AT&T merger proposal with DirecTV, in an effort to prevent discrimination against online video competition, AT&T will not be permitted to exclude affiliated video services and content from data caps on its fixed broadband connections.

Secondly, in order to bring greater transparency to interconnection practices, AT&T will be required to submit all completed interconnection agreements to the FCC, in addition to regular reports on network performance.

[Read more about net neutrality.]

"Importantly, we will require an independent officer to help ensure compliance with these and other proposed conditions," Wheeler's statement explained. "These strong measures will protect consumers, expand high-speed broadband availability, and increase competition."

On Tuesday, AT&T released statements on the FCC's and DOJ's recommendations.

The FCC's recommendation follows a full-throated attack on AT&T in June, when the Commission blasted AT&T for sneakily slowing down the wireless Internet speeds of its customers.

The government wants AT&T to cough up $100 million to make up for its transgressions.

In addition to his net neutrality defense, Wheeler, a former cable lobbyist, has issued several pointed opinions on the failed Time Warner and Comcast merger.

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