AT&T: Time Warner Merger Will Benefit Consumers

Several weeks ago, a group of U.S. Senators warned that AT&T's proposed mega-merger with Time Warner would leave the company positioned to choke the competition.

Not surprisingly, AT&T is downplaying those concerns. The company responded to the lawmakers by insisting that the deal will spark new innovations and increase competition.

"Together, AT&T and Time Warner will create exciting new ways for consumers to enjoy video anytime, anywhere, and on any device," AT&T Executive Vice President Timothy McKone and Time Warner Senior Vice President Steve Vest told lawmakers Friday in a seven-page letter.

The two executives boast that combining AT&T's broadband network with Time Warner's content will lead to innovations in video delivery, as well as "greater levels of customization and interactivity."



They specifically say the deal could enable the company to offer "more relevant advertising in ad-supported video services." The executives do not elaborate on how they plan to accomplish this.

The companies also boast that the deal will enable AT&T to offer new types of video packages, along the lines of the DirecTV Now streaming service, which lets broadband customers watch DirecTV's programs through their Internet connections. AT&T is zero-rating DirecTV Now, meaning that subscribers can watch DirecTV video through a mobile app without having that data count toward their monthly caps.

Consumer advocates have argued that zero-rating programs give people an incentive to watch video from particular companies -- especially affiliated ones -- at the expense of competitors like Netflix and Amazon Prime.

Late last year, the FCC's Wireless Telecommunications Bureau said AT&T's zero-rating program appeared to violate the net neutrality rules because it "strongly favors AT&T's own video offerings while unreasonably discriminating against unaffiliated ... providers."

But earlier this month, new FCC Chairman Ajit Pai reversed course. He closed the investigation into AT&T's zero-rating practice and endorsed the company's offering. Pai said zero-ratings plans are "popular among consumers, particularly low-income Americans, and have enhanced competition in the wireless marketplace."

In the letter to lawmakers, AT&T also dismisses concerns that it may, in the future, prevent competitors from distributing Time Warner's programs. "Restricting distribution of Time Warner content would not only sacrifice revenues, but also damage Time Warner's reputation and relationships in the entertainment industry," the letter states.

Sen. Al Franken (D-Minnesota), a leading critic of the merger, says AT&T and Time Warner haven't convinced him that the deal will benefit the public.

"Their letter does little to address my concerns and essentially asks American consumers to trust that the combined company won’t engage in anticompetitive behavior, raise prices, violate the principles of net neutrality, or decrease access to diverse voices," Franken stated late last week "Nothing in their letter eases my very serious concerns that this deal will lead to higher prices, fewer choices, and even worse service."

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