Regulator’s chairman says new company’s network must be 10 times larger than AT&T’s current one, which would serve 12.5 million customer locations

The Federal Communications Commission has approved the acquisition of DirecTV by rival AT&T for $48.5bn, but with one especially large catch that the regulator’s chairman, Tom Wheeler, said “would directly benefit consumers”: the new mega-company has to build a network 10 times the size of AT&T’s current network of fiber optic cable.

AT&T also won’t be able to exclude its own video services and content from data caps and will have to submit all interconnection agreements to the FCC itself. A spat over the latter has resulted in low speeds plaguing AT&T customers in Atlanta, according to a study of users conducted by internet activists BattlefortheNet.

If AT&T agrees to the terms, the FCC said the resulting network would serve 12.5 million customer locations and increase the number of Americans with “fiber-to-premise” access by more than 40%.

“Importantly, we will require an independent officer to help ensure compliance with these and other proposed conditions,” Wheeler wrote in a public statement. “These strong measures will protect consumers, expand high-speed broadband availability and increase competition.”



Ironically, the expense of laying new cable to reach new markets is one of the reasons for market consolidation of exactly this kind – it takes years, costs millions and reaches areas of ever-decreasing population density as the market matures and smaller and smaller areas gain access to broadband. Now, AT&T will have to commit to expansion in order to consolidate.

The FCC’s decision came with the Justice Department’s stamp of approval, as well (the most recent merger to come before the FCC, between Comcast and Time Warner Cable, was opposed by both agencies and ultimately rejected in April).

“After an extensive investigation, we concluded that the combination of AT&T’s land-based internet and video business with DirecTV’s satellite-based video business does not pose a significant risk to competition,” said Assistant Attorney General Bill Baer of the DoJ’s antitrust division. “Our investigation benefitted from the division’s close and constructive working relationship with the FCC. The commitments that the proposed FCC order includes, if adopted, will provide significant benefits to millions of subscribers.”