Last week ATT sent there letter to FCC as to why the FCC should allow ATT to buy DirectTV:
Highlights from it:
AT&T Inc. (“AT&T”) and DIRECTV (collectively, the “Applicants”) have demonstrated
that the savings and synergies made possible by this transaction will fundamentally and
permanently increase the incentives of the combined company to expand and enhance its
broadband networks. Within its wireline footprint, for example, the transaction will allow
AT&T to extend its ultra-fast, fiber-to-the-premises (“FTTP”) GigaPower broadband service
with speeds of up to 1 Gbps to millions of additional customer locations.
WHAT? How? How many millions of people?
Based on the expected content cost savings alone, AT&T concluded that it
will have an economically viable business case to justify expanding FTTP GigaPower’s reach to
at least two million additional customer locations that would not meet investment thresholds
absent the merger, and AT&T has committed to do exactly that within four years of the closing
of the merger. Significantly, this “lift” in the economic viability of FTTP GigaPower service
from the transaction is in addition to any further expansion justified by changes in the constantly
evolving competitive landscape. Consequently, the transaction results in incremental
deployment to millions of customer locations beyond whatever deployments may become
justified by other factors in the future.
Okay. You still haven't said how.
The combination with DIRECTV also allows AT&T to offer customers within its
wireline footprint the new, valuable choice of a fully integrated bundle of wireline broadband
and DIRECTV video. For bundle customers that choose that option, there will be no need to
reserve a fraction of the line capacity for U-verse video service, freeing up more of the line’s
capacity for broadband service. That is yet another benefit of the transaction. But the amount of
capacity freed up by “offloading” the MVPD service to DIRECTV is not competitively material,
and there should be no concern that this additional benefit will somehow reduce AT&T’s
incentives to deploy FTTP in favor of slower, earlier generation, technologies like FTTN.
Wait so you are offloading things using DirectTV? ATT you are crazy.
My thoughts on this:
After what happened with the Comcast Time Warner Merger. It gives me a very small amount of hope that the FCC will not approve of the ATT and DirectTV merger. The letter is also redacted. I read all the letter and it doesn't really explain [Maybe that was in the redacted part or I missed something] how this merger will allow ATT to provide more Gig service. It's almost like ATT said to FCC: Hey you should let us merge with DirectTV because reasons.
The letter was that vague.
What are your guys thoughts on the letter?
My thoughts are that the FCC will probably give ATT the green light to buy DirectTV mainly because they are not really competing services like Comcast and TW are, but once again we have a major US company kinda' semi promising to do something that it was already taken tax monies (in the form of tax breaks) to do and never had any intention to do in the first place, but hey, lets use that banked money to buy another company increasing our bottom line and make a few shallow promises and a few more campaign contributions to seal the deal.
Personally I trust ATT even less than I would trust Comcast or TW because ATT has a very long history of screwing the American public.
Just based on these selections:
ATT: "Let us buy a satellite TV service, so we can give customers satellite TV and boost their U-Verse bandwidth, so we have an incentive to install FTTP, instead of slower old tech like FTTN!"
A key limiting factor in FTTP deployment to date has been the challenging economics of AT&T’s under-scale video service, which means that broadband must bear [BEGIN AT&T CONFIDENTIAL INFORMATION] [END AT&T CONFIDENTIAL INFORMATION] of the burden of repaying any investment in FTTP GigaPower.
Let's forget the confidential stuff at the moment.
How is the "under-scale video service" limiting FTTP?
You know maybe ATT wants to buy DirectTV with the plan of offering internet via satellite to compete with Hughesnet?
They certainly couldn't do a worse job or could they?
Also, why is everyone so interested in providing Television broadcast to their services?
Why have we let the cable companies set this precedence? Do people really need their Jersey Shore, Survivor, and HoneyBooboo that badly?
I don't get how them buying a satellite company = better fiber internet.
if I was the FCC I would be like "how about you expand your gig fiber network in half the cites you are in first as some proof of your promise of doing it before we will let you buy them"
In their twisted way of looking at it they somehow think that if they own DirectTV they will be able to offer TV via Direct and internet via fiber and that that will somehow magically take traffic off the fiber and move it over to satellite. What they fail to mention is that most folks who have satellite service do so because it's their only option for digital TV and that being DirectTV or Dish, most of the subscribers are rural or live in areas that have limited choices, In the case of rural customers they're not likely to see cable or fiber in their area anytime soon. It's a captive market so to speak with only two major players (Direct/Dish), captive markets mean big $$$ for the players which would give ATT a bigger foothold to negotiate with content creators/providers. When you stop and think of just what else Comcast and Time Warner owns in the form of content creation you start to see why a player like ATT needs more leverage to stay in the game.
The bottom line, is that ATT doesn't want to cut into their BOTTOM LINE, in order to expand. They would rather see profits grow to 3x then carve off 1x - 1.5x to do the expansion, so at the end of the year, they can say: "Hey look, we improved profits by 1.5x-2x while expanding all of this, see we made the right move spending 10x on that merger"