AT&T is Already Being Misleading to Get DirecTV Deal Approved
AT&T didn't waste any time today selling the company's planned acquisition of DirecTV
using AT&T's special brand of massaged statistics and misleading claims. Both AT&T and DirecTV CEOs are already promising that eliminating a pay TV competitor will somehow bring consumers more competitive pricing, though most consumer argue the exact opposite is likely to happen. AT&T's already putting forth their own recommended "conditions" for the acquisition -- most of which mean nothing or AT&T already planned on doing.
Among AT&T's promises is a pledge to adhere to the FCC's dead net neutrality rules for a set number of years (Comcast is doing something similar in the hopes of getting their deal approved).
While that sounds nice and will be played up by the press as something meaningful, I've stated time and time again
those original rules didn't do much of anything because they were based on draft language by AT&T, Verizon and Google
that contained numerous loopholes, and more importantly didn't cover wireless -- AT&T's primary focus at the moment.
AT&T's also promising regulators an expansion of broadband services if the deal gets approved, though the lion's share of that expansion appears to be fixed LTE services, the core of which are already largely deployed. From AT&T's deal fact sheet:
15 Million Customer Locations Get More High Speed Broadband Competition. AT&T will use the merger synergies to expand its plans to build and enhance high-speed broadband service to 15 million customer locations, mostly in rural areas where AT&T does not provide high-speed broadband service today, utilizing a combination of technologies including fiber to the premises and fixed wireless local loop capabilities. This new commitment, to be completed within four years after close, is on top of the fiber and Project VIP broadband expansion plans AT&T has already announced.
As we've already noted numerous times, AT&T's "Project VIP" U-Verse spending and deployment projections are already highly inflated and massaged to begin with
, largely only benefiting a few key areas like San Francisco, where U-Verse expansion was derailed over community backlash against VRAD cabinets. Similarly, AT&T's recent, much-covered promised expansion of 1 Gbps service is mostly a PR bluff
focused on small, high-end developments as AT&T tries to save face before the threat of Google Fiber.
This latest "expansion" is similarly theatrical. AT&T already planned to use fixed and mobile LTE as a "good enough" option for rural markets, and that will be the lion's share of this new 15 million homes estimate. AT&T omits to mention LTE is all that will be left after the company gets donebacking away from tens of millions of DSL users
AT&T is unwilling to upgrade. Capped, pricey LTE isn't a substitute for real broadband deployment and competition.
The amount of cash alone AT&T is spending on this deal -- $14.55 billion -- is as much as it cost Verizon for its entire FiOS deployment.
"They could pass that same number of homes with gigabit fiber for far less than just the cash they're spending in this deal, never mind the stock and debt," notes Free Press Research Director Derek Turner, whose group opposes the deal.
Turner's numbers are based on an estimate of $700 per home passed, $800 per home subscribed, and a take-rate of 30% video subs. With those metrics, AT&T could pass 71 million new homes with gigabit fiber, and fully connect 21 million homes for around $67 billion.
While it's true the cost for rural deployment would be considerably higher, keep in mind tens of millions of un-upgraded AT&T customers live in towns and cities where those numbers are accurate. Either way the point remains the same: instead of upgrading their U-Verse network, AT&T is spending money on a no-growth satellite TV provider whose best days are behind it. Why? Simply to grow larger alongside Comcast and eliminate a competitor (DirecTV's consumer-unfriendly NFL exclusive is just a pleasant bonus).
"The amount of cash alone AT&T is spending on this deal -- $14.55 billion -- is as much as it cost Verizon for its entire FiOS deployment, which reaches more than 17 million homes," Turner adds. "Add in the $33 billion in AT&T stock and $18.6 billion in debt, and you can see just how wasteful this merger is."
AT&T also appears to be once again trotting out standalone DSL as a carrot on a stick for regulators, as if we're still living in 2007 (though based on the DSL speeds they're getting, many AT&T customers are). Again, from the fact sheet:
For customers who only want a broadband service and may choose to consume video through an over-the-top (OTT) service like Netflix or Hulu, the combined company will offer stand-alone wireline broadband service at speeds of at least 6 Mbps (where feasible) in areas where AT&T offers wireline IP broadband service today at guaranteed prices for three years after closing.
A few of you might remember the last time AT&T promised to offer standalone DSL at guaranteed pricing for a fixed period of time. AT&T was allowed to write their own merger conditions
(pdf) to get their acquisition of BellSouth approved, though the company then proceeded to hide the offer from consumers
in the hopes nobody would notice it existed. The FCC also allowed AT&T to break whatever merger condition they wanted with impunity
If all of these bunk promises seem pretty familiar (and I'm sure I've missed some), that's because they're not much different from the promises AT&T made when attempting to acquire T-Mobile, or BellSouth, or any of their other deals. T-Mobile was blocked because regulators simply couldn't buy the argument that eliminating a competitor magically creates more competition and jobs. This deal doesn't look much better, and "guarantees" like promising to adhere to meaningless neutrality rules, or broadband "expansions" that aren't expansions don't make the deal (or AT&T) any more attractive.
Re: This quote tells you all you need to know... It's actually a brilliant move. If you think about it AT&T is not in the content business, it's in the delivery business. If they can go after "four mode", this is a big win:
3. Fixed Wireless
If you really think about it, cable WILL be dying, the ruminants left will be real time which is relegated to news, weather, and SPORTS.
Sports is already dominating cable costs, so if AT&T can deliver realtime sports in multiple modes this can allow them to infiltrate areas where they don't have a presence, and augment ones where they do. If they combine fixed wireless with multicast this can deliver sports regionally. DTV also manufacturers their own systems and sats which gives an advantage to AT&T.
I argue that metro areas are already saturated w/ wireline, so what is left is the rest of the country, and that is where sat and fixed wireless will blossom. Sure it's expensive now, but it won't be like that forever, especially if they can used mixed-mode LTE (for backhaul) and whitespace for local delivery. Add in sat and now you can deliver fixed wireless in a more economic form.
How do you get the data to the region? Satellite. Then put a regional CDN box to buffer the last week or so of content for last mile delivery of non-realtime.
Also 4K video and the like can be delivered on the onset from sat without stressing the IP networks. Think new and interactive tech.
Re: This quote tells you all you need to know...
said by smcallah:LOL - you mean they would have to...erm...compete? Heaven fobid /s
Except that if AT&T passed all those homes with fiber, they'd have to invest in more video hardware to get that video to homes, as well as the set top boxes to get that video to homes.
And on top of all that, they'd have to attempt to get people to subscribe to the service.
Quietzone - Protection you can trust!
Re: Convert U-Verse video customers to satellite?
said by BiggA:Hence why I said where possible. In those areas all bandwidth could be allotted to faster speeds.
No. They are two separate services. U-Verse has virtually unlimited channels, albeit pathetic total bandwidth at one time, but the big point is that U-Verse can service MDUs and locations with trees, whereas DirecTV can't.