The US Federal Communications Commission (FCC) has conditionally granted approval of the transfer of control of licenses and authorizations from DirecTV to AT&T. The approval will allow AT&T to acquire DirecTV, and merge the two companies into one combined entity. However, the FCC has put numerous conditions on the deal, requiring AT&T to change many of its more anti-consumer practices and policies.
Recognizing that the merger reduces the combined entity's incentive to deploy fiber to the premises (FTTP) service, the Commission has adopted as a condition of this merger the expansion of FTTP service to 12.5 million new customer locations. In addition, to ensure that schools and libraries also benefit from expanded fiber deployment to consumers and institutions, the Commission is also requiring the company to offer gigabit service to any E-rate eligible school or library where FTTP service is rolled out.
AT&T is the only major ISP that applies "data caps" across the board to all of its fixed broadband customers. As a result, the Commission is requiring that as a condition of this merger, the company will refrain from imposing discriminatory usage-based allowances or other discriminatory retail terms and conditions on its broadband Internet service. Whether or not this is retroactive to existing customers is not yet clear. Related to this, the pair must submit its Internet interconnection agreements so that the FCC can monitor the terms of such agreements.
The FCC is also demanding that the merged company make available an affordable, low-price standalone broadband service to low-income consumers in its broadband service area. Importantly, this is not just the FTTP area, but to any area that the company provides broadband access.
The deal, worth $49 billion, will see AT&T conducting a stock-and-cash transaction based on a $95 per share price. According to the Wall Street Journal, $66.50 will come from AT&T's stock, while the remaining $25.80 will be paid in cash. The resulting company will be a major competitor in emerging media services, adding the ability to further bundle phone, television and broadband applications to fit customer needs. The pair originally portrayed the merger as a good obstacle to the then-live Comcast-Time Warner Cable deal, which has since died on the vine.
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