FCC signs off on $48B AT&T, DirecTV merger

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The Federal Communications Commission (FCC) approved AT&T’s merger with DirecTV on Friday.

The regulator signed off on the $48 billion transaction and placed conditions on the deal after considering it for more than a year.

In approving the deal, the FCC is allowing AT&T to acquire DirecTV and merge the two companies. The merger will create a combined company with the programming offerings of DirecTV and the sprawling wireless and broadband networks of AT&T.

“This transaction allows us to significantly expand our high-speed Internet service to reach millions more households, which is a perfect complement to our coast-to-coast TV and mobile coverage,” AT&T CEO Randall Stephenson said in a statement. “We’re now a fundamentally different company with a diversified set of capabilities and businesses that set us apart from the competition.”

But the expanded company will be required to comply with a set of conditions developed by the commission. A proposed set of conditions was circulated to commissioners by Chairman Tom Wheeler earlier this week.

Under the conditions announced on Friday, the firm will have to expand fiber-based broadband service to 12.5 million customers. They will be required to provide high-speeds to libraries or schools that are eligible for an FCC program called E-Rate and are in an area where they offer service.

The company will be required to offer a affordable standalone broadband service in low-income communities that it serves.

The company must also agree not to place “discriminatory usage-based allowances or other discriminatory retail terms and conditions” on its broadband service.

The FCC is also asking the firm to comply with two conditions aimed at increasing transparency as part of the deal.

The company will have to to disclose its interconnection agreements “so that the Commission may monitor the terms of such agreements to determine whether AT&T-DirecTV is denying or impeding access to its networks in anticompetitive ways through the terms of these agreements.” The company also has to appoint an internal and external compliance officer to monitor whether it is abiding by the terms of the agreement.

The conditions “generally will remain in effect for four years after the merger closes,” the FCC said in a statement.

The Department of Justice has already said it does not intend to challenge the merger on competition grounds.

“After an extensive investigation, we concluded that the combination of AT&T’s land-based internet and video business with DirecTV’s satellite-based video business does not pose a significant risk to competition,” Assistant Attorney General for the Antitrust Division William Baer said in a statement when the FCC’s conditions were proposed by Wheeler.

Though the deal did not trigger a public backlash like the proposed merger of Comcast and Time Warner Cable, it was not without scrutiny.

Netflix expressed concerns this year that the combined company would have extensive power over the video market. Tech advocacy groups including Public Knowledge and Free Press filed petitions telling the FCC to deny the merger.

The FCC approved the deal despite being at odds with AT&T on a number of other issues. The company has sued the agency over new net neutrality rules that give the FCC greater regulatory power over wireless providers.

Last month, the FCC also announced that it was planning on leveling a $100 million fine, the largest proposed in its history, against AT&T for allegedly misleading consumers.

Reaction to the proposed conditions earlier this week was mixed, with some groups saying that Wheeler had not gone far enough in his proposal.

This story was last updated at 3:50 p.m.


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