Consumer Groups Oppose AT&T-Time Warner

Satellite Business News — Fourteen self-styled consumer groups yesterday asked the Department of Justice to block AT&T’s pending purchase of Time Warner.

 In a letter to Attorney General Jeff Sessions, the groups wrote that if the federal government “conclude[s], as appears to us from the available information, that conditions and piecemeal divestitures will not be sufficient, then we hope you will challenge the merger in its entirety.”

The groups argued the combination of AT&T and Time Warner “would create a media and telecommunications giant with the ability to use its assets to dominate markets, hold back competition, and harm consumers by inflating prices and impeding innovative new video services.”

Upon its acquisition of the DirecTv DBS service two years ago, the groups noted, AT&T “is now the largest” video distributor in the country and “with its nationwide satellite service, nationwide wireless broadband footprint, and considerable wireline territory, AT&T has the reach to serve as the Internet access provider and video distributor for nearly every person in the United States.”

Adding Time Warner to its corporate portfolio, the groups argued “would incentivize and enable AT&T to cement its dominance and benefit itself, at the expense of pro-consumer competition in the video distribution market, by raising the cost of Time Warner programming to its rivals.”

The deal “would also incentivize and enable AT&T to put onerous restrictions on programming availability, such as device or [program] windowing restrictions, which are another way of raising the costs of its rivals,” the groups wrote.

The FCC’s decision five years ago to sunset the core of the program access rules, the groups wrote, “unfortunately gives AT&T a freer hand to use any newly-acquired programming to discriminate against rivals.” The new AT&T, they wrote, “As both a major programmer and a major distributor, it would be able to use information from both sides of the negotiating table to give itself better deals than its rivals can obtain—it would necessarily know, for instance, what its programming rivals are charging for their content, and what its distribution rivals are paying.”

The consumer groups also argued the same problems would extend to the on-line video market, where AT&T’s own “DirecTv Now” competes with services such as Netflix and Time Warner’s HBO Now.

“This sort of over-the-top multichannel competition is welcome; but AT&T unfairly leveraging its combined assets against that competition by others would not be,” the groups wrote.

The new company, the groups wrote, could “give its own service advantages in the marketplace,” such as “delaying or denying access to content, to [digital video recording] capability, and to device availability. These sorts of restrictions, in addition to simply demanding more money for Time Warner content, would enable AT&T to raise its rivals’ costs and make their products less attractive to consumers.”

The groups noted the possibility the FCC will scale-back the heart of the current net-neutrality rules, which would allow AT&T to further exempt “its own services from data metering or prioritizing its own service’s traffic.” These “discriminatory actions could allow AT&T to utterly dominate this new market, depriving consumers of choice while raising costs,” they wrote.