The Most Important Question AT&T Has To Answer Before It Buys DirecTV For $US49 Billion

Att ceo randall stephensonAPAT&T CEO Randall Stephenson

Now that AT&T’s intention to buy DirecTV for about $US49 billion is official, the next step is to convince government regulators that the merger won’t hurt competition or consumers.

Here’s how AT&T plans to dance around any potential concerns:

  • First, AT&T says it will honour the FCC’s net neutrality rules from 2010 for three years following the merger. (More on the in a bit.)
  • Next, AT&T will build out its broadband network, providing access to customers in rural areas. That’s something the government is sure to dig.
  • Finally, AT&T won’t require customers to bundle TV and broadband internet services. You’ll be able buy a standalone internet service package if you just want to watch all your video through streaming services like Netflix or Hulu.

“We designed the commitments to ensure the deal looks consumer friendly and in the public interest,” AT&T’s CEO Randall Stephenson said on a call with analysts this morning.

The moves seem good on the surface, but the net neutrality agreement is a bit worrisome. It means AT&T promises to treat all internet traffic equally for the first three years, but after that it could be open to allowing some internet content companies pay for so-called fast lanes that allow for faster streaming.

Last week, the FCC approved a proposal that would allow companies to pay for faster access to consumers. That has a lot of net neutrality advocates up in arms because it would give an unfair advantage to companies with enough cash to pay.

As AT&T goes through the regulatory stuff with the government, Congress should ask what AT&T’s plans are after those three years. Of course, AT&T will likely follow the same route it’s big competitor Comcast will, but it’s essential to have the company’s thinking of net neutrality on the record as the debate continues.

NOW WATCH: Tech Insider videos

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.