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Broadband Roundup: AT&T-DirecTV Merger and its Impact on the Marketplace

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WASHINGTON, May 19, 2014 – AT&T announced that it would acquire DirecTV in a $48.5 billion deal, according to multiple sources. The agreement may allow AT&T to position itself in a way to rival cable firms. AT& would acquire about 20 million of DirecTV’s customers. The Washington Post recounts that the stated goal of the merger is to gain more customers in the high-speed internet, phone, and pay-TV subscriptions market.

Reuters reports that little overlap is shared between AT&T and DirecTV, permitting the telephone giant to tap into the video market more than ever before, including all of DirecTV’s programming. DirecTV, on the other hand, would be able to offer its customers enhanced broadband internet service.

The New York Times speculates that AT&T’s bid is likely in response to Comcast’s announcement of its intent to purchase Time Warner Cable in February for $45 billion. It’s not the first time either that AT&T has attempted this big of a merger: three years ago, the company tried to acquire T-Mobile for $39, only to have the deal fall apart because of antitrust concerns.

“The media chessboard is moving more this year than it has in the past decade,” The Times quotes Richard Greenfield, a media analyst with the brokerage firm BTIG “You’re seeing major shifts. Everyone is jockeying for position.”

The merger first needs approval from federal regulators, who may be unlikely to approve out because of concerns about the possibility of higher prices in the face of less choices. The Post further reports that “in 2012, U.S. cable-TV bills increased 5.1 percent, to an average of $64 a month, triple the rate of inflation, according to a government report.”

The advocacy group Public Knowledge criticized the proposed merger, with senior staff attorney John Bergmayer saying, “The industry needs more competition, not more mergers. The burden is on AT&T and DirecTV to show otherwise…to explain how this merger wouldn’t harm wireless competition, and how whatever new services it plans to offer by combining with DirecTV would offset any harms to wireless and video competition.”

USA Today said that AT&T’s proposed merger with DirecTV would be different from Comcast’s merger with Time Warner Cable, in that the former eliminates a competitor in AT&T’s U-Verse market. In in the aftermath of the FCC’s proposal on net neutrality, concerns have been raised that the “increased concentration of power among the few who provide broadband would give AT&T more leverage if… ISPs are ultimately allowed to charge for “fast lanes” of the Internet for content providers that are willing to pay for them.”

Additionally, Recode reports that Cisco Systems CEO John Chambers recently sent a letter to President Obama requesting that the National Security Agency “curtail” its surveillance activities.

This comes in the wake of recent documents leaked by former NSA contractor Edward Snowden claiming that the NSA “intercepted equipment from Cisco and other manufacturers and loaded them with surveillance software.” Cisco has stated that this was not voluntary cooperation on its part.

“We simply cannot operate this way; our customers trust us to be able to deliver to their doorsteps products that meet the highest standards of integrity and security,” Chambers wrote. “We understand the real and significant threats that exist in this world, but we must also respect the industry’s relationship of trust with our customers.”

Big Tech

Big Tech Reforms Need Review of Cybersecurity to Ensure Capabilities Will Not Be Diminished, Event Hears

Despite their efforts to improve consumer competition and security, some argue Congress’s legislation could have unintended effects.

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Photo of John Negroponte courtesy Duke Univesity

WASHINGTON, May 26, 2022 – Experts warned Monday that antitrust legislation being considered to rein in Big Tech could exacerbate cybersecurity concerns that may jeopardize smaller players.

During a Foreign Policy panel hosted on Monday, American Enterprise Institute Senior Fellow Klon Kitchen said many startups are dependent on the underlying datasets, technologies, and code provided by large technology companies.

He argued that while giants like Microsoft can invest billions of dollars in cybersecurity, smaller companies simply do not have the capital necessary to invest in their own protocols. He called for legislation to have a “robust and honest” security review before it is adopted – reviews he argued are not currently taking place.

Though the panelists did not point specifically to any one bill that is particularly harmful, there are currently several high-profile bills aimed at reforming the tech industry.

One such bill that has been in the spotlight for several months is Sen. Amy Klobuchar’s, D-Minn., Consolidation Prevention and Competition Promotion Act of 2021, or S.3267. This bill would severely limit large tech companies from engaging in the acquisition of nascent competitors. The bill has been introduced in the Senate and has been read twice and referred to the Committee on the Judiciary.

American companies targeted in a field with global players

Former Deputy Secretary of State John Negroponte also expressed concerns Monday about various antitrust legislation before Congress.

Maggie Lake and John Negroponte

“The various proposed bills out there generally only apply to a handful of United States companies, and in addition to that, they would not apply at all to foreign companies,” he said. “This is not a purely domestic market, although sometimes reading these laws, you would think that the drafters believe [that is the case].”

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Antitrust

FTC Commissioner Concerned About Antitrust Impact on Already Rising Consumer Prices

Noah Phillips said Tuesday he wants the commission to think about the impact of antitrust rules on rising prices.

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Screenshot of Federal Trade Commissioner Noah Phillips

WASHINGTON, May 17, 2022 – Rising inflation should be a primary concern for the Federal Trade Commission when considering antitrust regulations on Big Tech, said Commissioner Noah Phillips Tuesday.

When considering laws, “the important thing is what impact it has on the consumer,” said Phillips. “We need to continue to guard like a hawk against conduct and against laws that have the effect of raising prices for consumers.”

Current record highs in the inflation rate, which means money is becoming less valuable as products become more expensive, has meant Washington must become sensitive to further price increases that could come out of such antitrust legislation, the commissioner said.

Phillips did not comment on how such movies would mean higher prices, but that signals, such as theHouse Judiciary Committee’s antitrust report two years ago, that reign in Big Tech companies and bring back enforcement of laws could mean higher prices. He raised concerns that recent policies are prohibiting competition rather than facilitating it.

This follows recent concerns that the American Innovation and Choice Online Act, currently awaiting Senate floor consideration, will inhibit America’s global competitiveness by weakening major American companies, thus impairing the American economy. That legislation would prohibit platform owners from giving preference to their products against third-party products.

This act is one of many currently under consideration at Congress, including Ending Platform Monopolies Act and Platform Competition and Opportunity Act.

Small businesses have worried that by enacting some legislation targeting Big Tech, they would be impacted because they rely on such platforms for success.

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Big Tech

Small Business Owners Call for FTC, DOJ to Institute Antitrust Measures Against Big Tech

Small business owners vocalized concerns at a forum hosted by the FTC and the DoJ.

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Screenshot of FTC Chairwoman Lina Khan

WASHINGTON, May 17, 2022 – Small business owners and employees urged the Federal Trade Commission last week to take further action against big tech company mergers that dominate their markets.

With Washington’s focus on scrutinizing potential mergers, small business members that appeared on a forum Thursday hosted by the FTC and Justice Department pushed for antitrust measures against market monopolization that they said undermines small business success. Jonathan Kanter, the assistant attorney general for the antitrust Division, called this a “new generation of digital giants.”

Saagar Enjeti, host of a media podcast, expressed his inability to participate in a truly free and open internet due to the influence of big tech companies, in which he said there has been a rash of misinformation on the coronavirus, the 2020 presidential election, and the Russian invasion of Ukraine.

Bradley Tusk, a venture capitalist who invests in tech startups, said he wants the FTC to have “more scrutiny” on big tech mergers. “The FTC should aggressively do everything in its power to do the job itself,” said Tusk.

Erin Wade agreed for more scrutiny on monopolies in which DoorDash and UberEats compete. As a restaurant owner, she said delivery mega platforms are harming restaurant profits and disrupting their business via tactics including underpricing their delivery fees and “bund[ling] orders so badly it damages customer relations.

“Small businesses are central to the American economy and American democracy,” Wade said during the event, pushing for the FTC to place more scrutiny on big tech companies.

According to FTC Chairwoman Lina Khan, as several digital platforms continue to control the market today, anti-trust agencies should do what they can to encourage competition and provide checks on these big tech companies.

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