FCC Suspends Reviews of AT&T-DirecTV, Comcast-TWC Mergers

For the past few years, the battle for control of the Internet in the United States has been waging furiously. The two hottest issues are net neutrality, which seems to be breathing its last breaths, and the move by the giant providers like Comcast, Time Warner, AT&T and DirectTV to merge, giving themselves monopoly-like area control of many markets. In late October, the Federal Communications Commission (FCC) issued a ruling that temporarily halts the offensive, suspending the intended 180 day review window of the mergers. 

The Beginning

In an effort to shore up market share, most likely in anticipation of the end of net neutrality and a switch to tiered broadband service, major cable companies Comcast and Time Warner entered into merger negotiations. Likewise, AT&T entered into negotiations with Satellite provider DirectTV. Neither merger would lead directly to a monopoly in cable or Internet service. However, smaller competitors of the big three Internet providers contend that it will lead to an oligarchy where certain markets will be left at the mercy of only one of the giants. Likewise, it will better position the newly-formed mega providers, who control the vast majority of the US Internet infrastructure, to enact a tiered service model, which would effectively leave the Internet open only to those corporations with the money to pay to play. 

The FCC Response

In early July, the FCC established separate review teams and set an informal 180-day window for issuing a decision on both the proposed merger of Comcast with Time Warner and of AT&T with Direct TV. The FCC was confident it would be able to complete its investigation in 180 days and issue a ruling, that more than likely would allow the mergers to go ahead. 

The Little Guys Fight Back

The smaller providers whose very survival could be in jeapordy if the mergers succeed, did not raise their hands in defeat. Lawyers for companies such as Comptel, Dish Network,Grande Communications and others demanded access to documents that detail agreements already in place between the providers in question and other media outlets, such as CBS, Disney and other media power houses. The companies of course did not want to provide such sensitive documents for review by potential competitors and went against an FCC order requiring a certain amount of disclosure. 

FCC Says, "Oh, No You Didn't"

In response to this affront to their authority, the FCC announced that the 180-day timeframe is suspended indefinitely while they rule on whether or not the companies will have to provide the requested documents before the mergers can proceed. There is no clear indication of how long this review will take and what it will do to the final outcome. A temporary suspension of the FCC review process is far from uncommon. As a historical indicator, the FCC took 234 days to review the 2011 purchase of NBC Universal by Comcast. In that case, there were two separate suspensions of the 180 goal clock.

What's the Take?

Eventually, the FCC will have to make a decision about both the document disclosure and the final merger approval. In the meantime, the delay will likely hurt the big guys, but probably not very much. AT&T, whose stock lost .4% on the announcement, issued a statement saying that the company was not concerned about the delay and that they are confident the mergers will be approved. However, the more time the competitors have to make their case, the better the better the chance of them affecting the mergers. What information might be obtained from fully-disclosed carrier agreements is anyone's guess, but the parties involved in the agreements seem to think them important enough to hide.

Also important is the ongoing net neutrality fight. If net neutrality is upheld, either by the FCC or possibly the Supreme Court, the mergers might not even be so appealing to the interested parties. 

Conclusion

Regardless of where one stands on the merger issue, it is certainly important and will have a lasting impact on many areas of the telecom and Internet world. After acting somewhat sheepishly on the matter of net neutrality, the FCC must be thinking that their future as a respectable regulatory body might be at stake if this review does not go well. Based on this, it's very likely that this will be a somewhat lengthy delay, and probably not the last one before a decision is issued. One should assume that the FCC intends to do its homework on this and make sure there is no way they can be held accountable for the destruction of the U.S. Internet.