AT&T Says DirecTV Deal Will Bridge Digital Divide

By Josh Long

**Editor’s Note: Please click here for a recap of the biggest communications mergers in Q3 2014.**

AT&T on Thursday reiterated the purported benefits of its pending acquisition of DirecTV, telling the Federal Communications Commission that the merged company will help bridge the digital divide that has deprived rural America of broadband connectivity.

The telecommunications titan said it plans to deploy fixed wireless loop broadband to 13 million homes. The technology is capable of speeds of 15 to 20 Megabits per second and “represents the nation’s best opportunity to begin bridging the growing digital divide between urban areas, which enjoy a rich variety of high-speed broadband options, and rural communities with few, if any, choices,” AT&T said in a 75-page filing.

Nearly 20 percent of the locations where AT&T plans to deploy the wireless technology have no access to landline broadband services, and 27 percent of the locations have only one option, according to the Dallas-based company. AT&T also cited its plans to bring fiber-to-the-premises GigaPower wireline broadband service to two million locations. The service is capable of speeds of up to 1 Gbps, the company noted.

AT&T called on the FCC to approve its acquisition of DirecTV without imposing any conditions and reject filings by opponents of the deal.

Responding to Criticism

The company brushed aside criticism from the likes of Netflix and Cogent Communications, telling the FCC such critics have alternative agendas that are unrelated to the deal.

AT&T disputed Netflix’s assertions that AT&T caused Netflix’s traffic to suffer congestion. Netflix, which accounts for 34.2 percent of downstream traffic during peak times in North America (according to Sandvine), recently revealed that its streaming video service has been performing faster over the network of AT&T U-Verse.

“Netflix’s own business decisions caused its traffic to spike to the point where it was overtaxing the connections Netflix had selected to route its traffic to AT&T’s network,” declared AT&T, whose number of U-Verse video subscribers totals 5.9 million, less than a third of the size of DirecTV’s U.S. customer base (20.2 million). “To resolve this issue, AT&T and Netflix entered into a commercially reasonable long-term contract under terms favorable to Netflix.”

Netflix has not been the only thorn pricking at AT&T’s merger. In September, Cogent Communications urged the FCC to impose conditions on the deal. Without such conditions, the network operator said, AT&T would have stronger incentives to discriminate against unaffiliated video content such as that provided by Netflix.

“AT&T has already discriminated against competing content by refusing to upgrade interconnection ports between its network and Cogent’s network,” Cogent wrote in a Sept. 16 filing, “thereby degrading its end users’ experiences with bandwidth-intensive and latency-sensitive services like online video and VoIP.”

In its filing Thursday, AT&T said the FCC should reject Cogent’s attempts to impose “one-sided obligations” on the company. AT&T added that content providers such as Netflix have a number of options to send traffic over the Internet backbone network.

“In its 2010 Open Internet Order, the Commission declined to regulate these same backbone relationships, and the Commission is just beginning a new inquiry on what Netflix and Cogent concede are industry-wide issues,” AT&T stated. “That new inquiry is the proper forum to decide on a future course of action, not this proceeding.”