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The FCC approves AT&T’s mega-merger with DirecTV, but there’s a catch

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Sean Davis / Flickr - Creative Commons
In a move that will have monumental effects throughout the video and telecommunications industries, and well beyond, the Federal Communications Commission today approved the $48.5 billion merger between AT&T and DirecTV, reports Variety. The companies have been working on getting federal approval of the deal since it was first greenlit by their respective boards back in September.

While the Commission claimed the approval of the merger was “in the public interest,” the agency did so while laying out certain conditions to which the newly-formed conglomerate must adhere.

For one, AT&T-DirecTV must expand fiber optic broadband access to 12.5 million customer locations, as well as providing Gigabit Internet to any E-rate schools and libraries (including “public and most non-profit K-12 schools as well as all public and many private libraries”). The FCC included this condition because it believes a combined AT&T-DirecTV would have diminished incentive to expand its Internet services to more people. The company must also offer discounts to those with low incomes.

In addition, the FCC added a restriction that would bar the new corporation from applying discriminatory terms or conditions based on how much data a customer uses. The government will also be putting internal and external compliance officers in place to keep a close eye on the company as it conducts business under the newly consolidated brand, to make sure it adheres to the conditions.

According to the FCC, the mandates for the deal exist in order to avoid any potential negative affects to consumers that might occur should the conglomerate attempt to abuse its expanded reach. “The conditions imposed by the commission address potential harms presented by the combination of AT&T, one of the nation’s largest telephone and Internet service providers, and DirecTV, the nation’s largest satellite video provider,” said the FCC in a statement.

It’s unclear whether AT&T-DirecTV must also adhere to previously laid out mandates the FCC allegedly put forth should the merger be approved, which would bar the new corporation from purposely slowing websites down, preventing people from accessing competing services and websites, and taking money from other website operators in exchange for faster speeds to create so-called Internet “fast lanes.”

FCC chairman Tom Wheeler recommended that the merger be approved earlier this week, according to Variety, and now that the Department of Justice and the FCC have given the go-ahead, AT&T looks geared to trudge forward with its acquisition. Following the merger, AT&T-DirecTV will have around 26 million cable and satellite subscribers combined, surpassing Comcast’s 22 million subscribers, though it’s unknown when the merger will close.

Today’s approval comes at a time of widespread consolidation in the pay TV and Internet industries. Charter Communications announced plans to purchase Time Warner Cable for $55 billion in cash and stock back in May, just months after Comcast also tried, and failed, to acquire TWC for $45.2 billion earlier this year.

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