US video streaming service Netflix is urging the FCC to strap remedies to AT&T’s proposed US$49bn deal for DTH group DirecTV, just weeks before the regulator is expected to state its conditions.
Netflix warned in a letter on Monday that the merger…
US video streaming service Netflix is urging the FCC to strap remedies to AT&T’s proposed US$49bn deal for DTH group DirecTV, just weeks before the regulator is expected to state its conditions.
Netflix warned in a letter on Monday that the merger would increase the companies’ ability and incentive to harm online video distributors (OVDs).
It claimed AT&T had already showed its ability to harm such companies in recent years, with the telco allegedly leveraging its control over its network to degrade customers’ access to Netflix’s service.
“AT&T also has shown an interest in using data caps and usage-based pricing methods, which it can apply discriminatorily to advantage its own services,” wrote Netflix counsel Markham Erickson.
“If AT&T is able to slow the development of the OVD industry, either by foreclosing access to broadband customers or imposing discriminatory data caps, AT&T would be able to preserve its market advantage by slowing or even reversing the shift toward competitive online video offering and away from bundled video/broadband offerings.”
The merger had been seen to be getting a relatively smooth ride so far, as the FCC was caught up in dealing with a more controversial merger attempt between media giants Comcast and Time Warner Cable.
However, Comcast was recently forced to walk away from that US$45bn deal, which Netflix had also resisted, amid regulatory concerns about the risks to online video platforms.
With that deal off the cards, Netflix said AT&T’s merger would see it become the biggest multichannel video programming distributor in the US.
“After AT&T’s projected broadband investments, it could become the largest ISP as well,” it said.
“These two dynamics create a powerful incentive for AT&T to protect its investment in DirecTV’s bundled programming by using its ability to harm OVDs to prevent or delay cord-cutting and cord- shaving.”
A Netflix spokeswoman was later cited saying that the company did not oppose the merger outright.
Speaking during AT&T’s Q1 results on Tuesday, CEO Mike White said he still expected to close the deal this quarter.
He said the merger would give customers a greater choice of services, provide more competition in the marketplace, and enable it to invest more in its broadband network.
