AT&T's DirecTV deal includes plums to woo regulators and consumers

15M more homes, mostly rural, would get fast broadband

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Even amid such attacks, several analysts said AT&T's deal for DirecTV is likely to win federal regulatory approval, especially if the Comcast purchase of Time Warner Cable for $45 billion, first announced in February, wins approval. Regulators are also reportedly in discussions with Sprint, controlled by SoftBank, to merge with T-Mobile.

Hugues de la Vergne, an analyst at Gartner, said he couldn't speculate on whether regulators will approve the various deals. But he said AT&T's timing in the offer for DirecTV is important, since most industry observers expect a TimeWarner-Comcast approval. A combined AT&T-DirecTV would become a direct competitor to Time Warner-Comcast, analysts said.

"Now, regulators have to consider multiple mergers that would be coming before them," de la Vergne said.

In his remarks to financial analysts, Stephenson said regulators "will look at new competition that is generated that frankly wouldn't exist otherwise" without AT&T's plan to buy DirecTV.

Roger Entner, an analyst at ReCon Analytics, said that against the backdrop of a likely Comcast/Time Warner merger, AT&T and DirecTV "should have no problems with any regulatory approval."

He said AT&T and DirecTV don't generally compete today, except in some southern cities -- and even there they have already set up some cross-marketing arrangements.

"There are a lot of upsides for consumers when technology comes together and different silos for connecting [over satellite, wired and wireless] are torn down," Entner said. "The combined entity will be able to give cable companies a lot more competition and it will strengthen competition in vast parts of the country."

Entner also agreed with AT&T's view that TV content providers will have a strong alternative to having to work with Comcast-Time Warner. "This deal weakens Comcast's bargaining power for content," he said. That power provides some potential for keeping content costs in check.

Entner called the plan to offer fixed wireless or fiber to 15 million more homes a deal "sweetener" that isn't possible because of any new revolutionary technology from AT&T or DirecTV. The ability to serve another 15 million homes comes from $1.6 billion in cost savings AT&T expects through the deal with DirecTV, he said

"The fixed wireless technology does not miraculously work better because of this deal," he said. "The FCC is always happy to have more people on fixed wireless broadband."

If opponents block the AT&T-DirecTV deal, Entner said that it would be a "horrible mistake for the country.... We need to integrate all telecom, whether it's voice, data, Internet or video."

Matt Hamblen covers mobile and wireless, smartphones and other handhelds, and wireless networking for Computerworld. Follow Matt on Twitter at  @matthamblen or subscribe to Matt's RSS feed. His email address is mhamblen@computerworld.com.

See more by Matt Hamblen on Computerworld.com.

Copyright © 2014 IDG Communications, Inc.

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