AT&T is seemingly close to winning approval of its acquisition of DirecTV, in part because it has promised to use the merger’s financial benefits to expand home Internet service.
But this isn’t the first time AT&T has claimed it will expand broadband service if the government approves a merger. Nearly a decade ago, AT&T promised 100 percent broadband coverage throughout its entire territory if it was allowed to buy BellSouth, yet today offers little or no service to millions of people in the 22 states where it operates wireline facilities.
Two opponents of AT&T’s latest merger have petitioned the Federal Communications Commission to delay the DirecTV buy and investigate AT&T for perjury, saying the company falsely claimed to have lived up to its promise. The perjury allegation might be a stretch, as AT&T argues that it did meet the obligation, at least under the definition of broadband that was used at the time it purchased BellSouth. But the petition and various statements made by AT&T illustrate how many gaps there are in AT&T’s network today.
The petition is being filed this week by telecom analyst Bruce Kushnick of New Networks Institute and audit director Tom Allibone of telecom customer advocacy group Teletruth. They pointed to the AT&T/BellSouth merger commitment, in which AT&T promised that by December 31, 2007 it would “offer broadband Internet access service (i.e., Internet access service at speeds in excess of 200kbps in at least one direction) to 100 percent of the residential living units in the AT&T/BellSouth in-region territory,” with at least 85 percent of them getting access to wireline broadband. The rest would get alternative technology such as satellite or Wi-Max fixed wireless.
AT&T falsely said it met this obligation, Kushnick and Allibone claimed.
“In February 2008, AT&T filed with the FCC, signing a document (under penalty of perjury) that it had fulfilled this obligation and all other obligations that were part of the merger agreement,” they wrote.
Various statements by AT&T make it clear that it is not offering broadband throughout the territory today, they noted. “Subsequent statements by AT&T to the Commission, including in [the DirecTV merger] proceeding, directly contradict its February 2008 representation that it had complied with the 2007 broadband deployment condition. The facts presented require immediate investigation into AT&T’s material misrepresentations and perjury and delay of Commission action in this proceeding pending completion of the investigation. Petitioners believe that the results of the investigation will warrant denial the AT&T/DirectTV application and sanctions against AT&T,” they wrote.
The Justice Department and FCC are nearly done their reviews of the AT&T/DirecTV merger “and aren’t likely to block what would be the biggest media deal of the past year,” The Wall Street Journal reported today.
AT&T and the FCC did not respond to requests for comment today.
AT&T has addressed the BellSouth accusations before, though, arguing in an October 2014 filing that critics are wrong to claim that it didn’t meet its broadband commitment. Although AT&T doesn’t offer broadband throughout the territory under today’s definition of broadband, it did under the old 200kbps standard, AT&T said.
“The fact that technology continued to advance and the FCC has subsequently changed the definition of what constitutes ‘broadband’ services is irrelevant,” the company wrote. “AT&T met its commitment and will likewise meet the commitments it has made in this transaction.”
The FCC has changed the definition of broadband twice since the AT&T/BellSouth merger, in 2010 and earlier this year, bringing it up to the current standard of 25Mbps downstream and 3Mbps upstream.
Kushnick and Allibone contend that AT&T never completed its buildouts, even using the older 200kbps definition, but their arguments mainly point to the current status of AT&T’s network and don’t include any definitive proof.
Residents in rural Mississippi said in 2012 that AT&T never offered them Internet service, despite the promise, but the FCC appears to have accepted AT&T’s assertion that it met the requirement.
What have you done for me lately?
What is clear is that AT&T has failed to keep up with modern technology in large parts of its territory. When making the case for its purchase of DirecTV, AT&T admitted it isn’t offering broadband to millions of potential customers.
“On Tuesday, AT&T Inc. CEO Randall Stephenson will argue at a House Judiciary Committee hearing that its proposed $49 billion takeover of DirecTV will bring broadband options to at least 13 million people who currently have limited or no access to the service in rural areas,” said a June 23, 2014 Wall Street Journal article quoted by the petition.
In 2012, AT&T wrote that it would not be economically feasible to build a competitive IP wireline network in “25 percent of AT&T’s wireline customer locations,” the petition also noted.
So will AT&T buying DirecTV really bring broadband to millions more people? AT&T’s promises on this front are not nearly as concrete as the 100 percent commitment it made in 2007. When proposing the merger last year, AT&T said, “The economics of this transaction will allow the combined company to upgrade 2 million additional locations to high speed broadband with GigaPower FTTP (fiber to the premise) and expand our high speed broadband footprint to an additional 13 million locations where AT&T will be able to offer a pay TV and high speed broadband bundle.”
But it was never clear what number those 2 million additional fiber locations were in addition to. AT&T already planned a big fiber expansion, while never saying exactly how extensive it would be. The additional 13 million locations would get fixed wireless service that runs on top of AT&T’s cellular network, but since AT&T’s cellular network is already nationwide there’s nothing stopping the company from offering that today.
While the FCC and Justice Department refused to approve Comcast’s proposed acquisition of Time Warner Cable, they could allow AT&T to buy DirecTV if they believe the deal benefits consumers. What specific promises AT&T is willing to make for broadband expansions could end up playing a key role in the negotiations.