Congress Expected to Scrutinize AT&T/DirecTV in Multiple Hearings

The AT&T deal, part of “an accelerating trend” of video market consolidation, “deserves careful examination,” said Senate Commerce Committee Chairman Jay Rockefeller, D-W.Va., in a statement. “I welcome the commitments made by the two companies to enhance service to rural America, but those commitments must be real and quantifiable, and the companies have to live up to their promises.” The combined company, if the deal is approved, must be “responsive to those demands and the broader public interest,” and Congress “needs to look closely at how to foster more video competition, particularly through online video distribution platforms,” Rockefeller said.

Senate Commerce will likely hold a hearing in June on holistic video market issues, said a Democratic Senate staffer. That hearing would likely address both Comcast/Time Warner Cable and AT&T/DirecTV, and the Satellite Television Extension and Localism Act reauthorization process, he said. AT&T’s proposed acquisition raises more competition issues than the Comcast one, which involved more questions of sheer scale and content issues, the staffer added. He thinks Senate Hill staffers will have a bigger desire to look at what consolidation is doing to the video market overall, and said many staffers want more details about this latest deal.

Judiciary Committee lawmakers in both chambers have said they will hold hearings on AT&T’s proposed deal. Senate Judiciary Antitrust Subcommittee Chairwoman Amy Klobuchar, D-Minn., said she wants “to examine the effect this merger would have on competition, innovation, and the prices, choices, and service offered to consumers across the country.” Subcommittee ranking member Mike Lee, R-Utah, said the deal “raises concerns about the level of consolidation in these markets” despite the occasional benefits of consolidation. Judiciary “will be looking closely at this transaction,” said Chairman Patrick Leahy, D-Vt.. “I am concerned that the telecommunications marketplace is trending even further toward one that favors big companies over consumers."

Sen. Al Franken, D-Minn., is “skeptical that this deal is in consumers’ best interest” and thinks the telecom industry transformation is “going in exactly the wrong direction,” with fewer competitors and driven by big corporations, he said. “I'm going to press regulators to scrutinize this deal, and I want to see hearings in Congress as well.” Franken has been one of the most outspoken critics of Comcast/Time Warner Cable. Sen. Ed Markey, D-Mass., is “deeply concerned” about the AT&T deal and looks forward to congressional hearings, he said.

Walden Watching

The House Communications Subcommittee doesn’t now plan any hearings on the AT&T deal, a Republican aide told us. Subcommittee Chairman Greg Walden, R-Ore., has expressed a preference to watch the processes in place, see how they work and to hold a hearing if the need arises, the aide said. Walden had not wanted to hold one on Comcast/Time Warner Cable but it may look bad if the subcommittee ignores both that and the AT&T proposed acquisition, a House Democratic staffer said. “They certainly have jurisdiction,” Public Knowledge Vice President-Government Affairs Chris Lewis told us, saying it would be “no surprise” were the House Commerce members to hold one.

The House subcommittee released a competition policy white paper associated with its Communications Act update process Monday. It asked many questions on competition policy and asked stakeholders to respond by June 13. “What, if any, are the implications of ongoing intermodal competition at the service level on the FCC’s role in mergers analysis and approval?” one white paper question asked (http://1.usa.gov/1lVJOdP). All the proposed deals will likely lead Congress to heightened focus on what level of merger and acquisition authority the FCC should have, likely through Walden’s Communications Act overhaul process, said Christopher Yoo, a law professor at the University of Pennsylvania.

The AT&T deal will likely receive more congressional scrutiny than the Comcast one, added Yoo, who testified in favor of the Comcast deal before Senate Judiciary. There’s “some overlap” between the areas AT&T and DirecTV serve in the video marketplace, which is not necessarily an antitrust problem but guarantees that additional look, Yoo said.

Public Knowledge’s Lewis expects an uptick in lobbying from AT&T and DirecTV. “AT&T has been working in this town for a long time,” Lewis said, also pointing to DirecTV’s familiarity with Washington. AT&T spent $3.67 million on lobbying in Q1 and employs many high-profile lobbying firms. DirecTV spent $690,000 in that same time. AT&T and DirecTV have begun lobbying Congress in favor of the deal already but it’s been relatively slow, said a House Democratic staffer.

In a “rational” world, “this merger would be just one more nail in the coffin of the 1996 [Telecom] Act, and Congress would focus on writing a new act,” TechFreedom President Berin Szoka told us, saying Walden has already kickstarted that process. Walden’s struggle is to “get other members to focus on a rewrite instead of getting distracted by rearranging deck chairs on the Titanic of an outdated legal system, or arguing over the current configuration of deck chairs,” Szoka said.

"AT&T will take its case to Congress, so there will be spillover,” said Free Press Policy Director Matt Wood. “Just as they were with its T-Mobile takeover attempt, AT&T’s public interest promises here are underwhelming to say the least. The company says it will stick to the promise it made regarding the 2010 Open Internet rules, but that promise comes with an expiration date and it’s tied to the loophole-ridden 2010 order that allowed discrimination on AT&T wireless platforms.” Wood also attacked AT&T’s claim that it would provide broadband to 15 million additional homes, arguing they would be “served by a combination of fiber and fixed wireless technologies, meaning low data caps and slow speeds.” (jhendel@warren-news.com)