May 2014

In Wi-Fi, Comcast sees an opportunity to kneecap wireless providers

In what seems certain to become a wider battle, Comcast is eyeing the wireless industry as a possible market for expansion.

Someday soon, Comcast might be counted among the likes of AT&T, Verizon, Sprint and T-Mobile, the businesses that now provide millions of Americans with mobile voice and data services. Thanks to a growing network of Wi-Fi hotspots, Comcast is arguing that it, or another company piggybacking off of its technology, could shake up the wireless industry by delivering cheaper cellular service to consumers and introducing another competitor to the market.

Comcast is already rolling out the infrastructure it would need for such a push; it operates 1 million Wi-Fi hotspots around the country and plans to expand that to 8 million by the end of 2014.

Comcast says that it has no imminent intention to launch a cellular service. But in April, the cable company raised that possibility as one of several arguments to support its Time Warner Cable purchase. "A ubiquitous Wi-Fi network built by Comcast could make a 'Wi-Fi-first' service, which combines commercial mobile radio service with Wi-Fi, a more viable alternative," Comcast wrote in its public interest filing to federal regulators.

What does AT&T buying DirecTV mean for consumers? A whole lot of bundling

We won’t see the first AT&T-DirecTV wireless-broadband-satellite service package until the summer of 2015 -- assuming the deal goes through. But what would such a bundle look like?

AT&T wants to tie together as many of the two companies’ products and services as possible. Most significantly, AT&T wants to tie the video distribution network more closely to the broadband network.

AT&T doesn’t just want consumers to buy their satellite TV and Internet from the same provider, it may require it -- or at least make it much more costly to separate them.

AT&T said it would continue to offer stand-alone DSL and U-Verse connections at guaranteed prices for three years after the deal’s close. The same goes for DirecTV service.

How an AT&T-DirecTV deal might affect your monthly bill

[Commentary] What does the AT&T/DirecTV deal mean for consumers? Details are still rolling in, but here is what we know so far. First, be on the lookout for price increases.

AT&T has said DirecTV customers will continue to pay standard, nationwide prices -- but only for three years. After that, there are no guarantees. AT&T is also committing to offer a stand-alone broadband service, which caters to customers who only watch video content online, for three years after the deal closes.

AT&T and DirecTV don't compete for television customers in most of the country -- U-Verse only reaches about 25 percent of the country. But some consumer advocacy groups are concerned that AT&T could drop one of the services. Getting rid of any option for consumers could drive prices up, or trap customers into service that doesn't serve their needs because they simply don't have other services to run to.

AT&T exec: Deal struck with regulators in mind

The merger of AT&T and DirecTV was designed with regulators in mind and will benefit consumers, executives from the two companies said.

“There were a few areas we looked at that we thought might be areas of concern or caution for regulators,” AT&T CEO Randall Stephenson said. “We’ve tried to be very proactive ... and tried to get out in front of those.” Stephenson added that the companies are making “unprecedented commitments to address concerns that the regulators might have.”

Those commitments include abiding by the Federal Communications Commission’s net neutrality rules, which kept Internet providers from slowing or blocking access to certain websites before they were struck down in federal court in early 2014. As the agency attempts to rewrite them, AT&T is pledging to obey the now-defunct rules for three years if the merger with DirecTV is approved.

Additionally, AT&T said the merger would allow it to expand its Internet service to 15 million households and would not keep the company from participating in the FCC’s upcoming airwave auctions, where it is expected to spend billions. “We have structured this transaction to ensure we have plenty of capacity to be very active in both of these auctions,” Stephenson said.

Senators pledge to monitor AT&T, DirecTV deal

Members of the Senate Judiciary Committee have pledged to monitor the recently announced merger of AT&T and DirecTV.

Committee Chairman Patrick Leahy (D-VT) said that his committee "will be looking closely at this transaction." "I will closely monitor the [Federal Communications Commission's] and the antitrust authorities’ response to this announcement," Sen Leahy said in a statement.

Executives from AT&T and DirecTV are touting the deal as appealing the regulators as it includes commitments to expand Internet access in rural areas and abide by the Obama Administration's net neutrality rules, even though they were struck down by a federal court in early 2014.

In addition to reviewing the deal to combine AT&T and DirecTV, Sen Leahy's committee recently held a hearing to review the $45 billion merger between Comcast and Time Warner Cable, which was announced in February. Sen Leahy said he is "concerned that the telecommunications marketplace is trending even further toward one that favors big companies over consumers."

ACA Troubled By AT&T/DirecTV Deal

The American Cable Association wants the government to look at the big picture when it reviews a proposed AT&T/DirecTV deal, a picture ACA suggests is getting bigger all the time with the recent wave of megadeals.

In a statement, ACA president Matt Polka said the association, which represents mid-sized and smaller cable ops, is concerned by the latest deal announcement, or what he called the "proposed takeover of DirecTV."

“AT&T’s deal merits the closest scrutiny by the Department of Justice and the Federal Communications Commission," he said. "However, it is increasingly clear that Congress and the FCC simultaneously need to take a comprehensive look at the market that will exist if all these deals are approved, and to decide whether existing rules that govern the current market are sufficient for the new industry order."

CWA Upbeat On AT&T/DirecTV

The Communications Workers of America (CWA) appears to like what it sees in the proposed AT&T/DirecTV merger, particularly AT&T's pledge to expand rural broadband.

In a statement on the deal, CWA was quite upbeat, saying that it thought the deal would improve service, make more content available online and "provide better employment opportunities for tens of thousands of employees at both companies."

CWA represents 700,000 workers, including in broadcasting, cable and new media, in private and public sector employment in the United States, Canada and Puerto Rico.

White: AT&T Deal Unlocks Potential

DirecTV CEO Mike White said his company’s pending merger with AT&T will unlock tremendous growth potential for the satellite giant, even as investors sent shares of both participants southward amid doubts about the benefits of the merger.

While the declines in shares were small, they are in sharp contrast to what usually happens to the seller in such mega-deals -- in contrast, Time Warner Cable stock was up 7% on the day it announced its $69 billion deal with Comcast -- and could point to concerns investors have about the deal outside of potential hurdles to regulatory approval.

White, who will continue to head up the DirecTV unit after the deal closes, said the merger offers the satellite giant an opportunity for growth. And while White and Stephenson wouldn’t mention it by name, it appears that the Comcast/Time Warner Cable merger -- which will create a 30-million-subcriber cable powerhouse -- influenced their decision to seek out a deal.

White also sees a big customer service opportunity in the deal, allowing DirecTV to offer more products in a single truck roll. “To me the real opportunity is growth,” White continued. “For us this is a real unlock, it unlocks our way to better serve rural areas, when you think about the 15 million [customer] build out of rural areas.”

AT&T claims to embrace net neutrality but could still offer “fast lanes”

AT&T offered to follow the Federal Communications Commission's old network neutrality rules for three years if the government approves its acquisition of DirecTV.

Even though the FCC's 2010 Open Internet Order was largely overturned by a federal appeals court, AT&T said its merger with DirecTV would come with a "continued commitment for three years after closing to the FCC's Open Internet protections established in 2010, irrespective of whether the FCC re-establishes such protections for other industry participants following the DC Circuit Court of Appeals vacating those rules."

But AT&T hasn't said exactly how it interprets those rules. Judging by statements made by Comcast, AT&T could argue that the 2010 rules allow the controversial Internet "fast lanes" in which Web services pay Internet service providers for priority access to consumers over the network's last mile.

Chinese military unit charged with cyber-espionage against US firms

The Justice Department accused five members of the Chinese military of conducting economic cyber-espionage against American companies, marking the first time that the United States has leveled such criminal charges against a foreign country.

Industries targeted by the alleged cyberspying ranged from nuclear to steel to solar energy, officials said. The hacking by a military unit in Shanghai, they said, was conducted for no other reason than to give a competitive advantage to Chinese companies, including state-owned enterprises.

Attorney General Eric Holder Jr said: “The range of trade secrets and other sensitive business information stolen in this case is significant and demands an aggressive response. . . . Success in the international marketplace should be based solely on a company’s ability to innovate and compete, not on a sponsor government’s ability to spy and steal business secrets.” Attorney General Holder added that the Obama Administration “will not tolerate actions by any nation that seeks to illegally sabotage American companies and undermine the integrity of fair competition in the operation of the free market.”

In response, China’s Foreign Ministry charged that the US government “fabricated facts” in the indictment, which it said “seriously violates basic norms of international relations and damages Sino-US cooperation and mutual trust.” It said China lodged a “protest” with the United States, urging it to “correct the error immediately and withdraw its so-called prosecution.”

Benton

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