Advanced Television

AT&T completes DirecTV acquisition

July 27, 2015

By Colin Mann

US telco AT&T has completed its $48.5 billion (€44.2bn) acquisition of pay-TV provider DirecTV following the Federal Communications Commission’s approval – with conditions – of the deal. The FCC determined that granting the merger application was in the public interest. The newly-combined company will become the largest pay-TV provider in the United States and the world.

“Combining DirecTV with AT&T is all about giving customers more choices for great video entertainment integrated with mobile and high-speed Internet service,” said Randall Stephenson, AT&T chairman and CEO. “We’ll now be able to meet consumers’ future entertainment preferences, whether they want traditional TV service with premier programming, their favourite content on a mobile device, or video streamed over the Internet to any screen.”

“This transaction allows us to significantly expand our high-speed Internet service to reach millions more households, which is a perfect complement to our coast-to-coast TV and mobile coverage,” Stephenson added. “We’re now a fundamentally different company with a diversified set of capabilities and businesses that set us apart from the competition.”

AT&T will now provide service to more than 26 million customers in the United States and more than 191 million customers in Latin America, including Mexico and the Caribbean. Additionally, AT&T has more than 132 million wireless subscribers and connections in the US and Mexico; offers 4G LTE mobile coverage to nearly 310 million people in the US; covers 57 million US customer locations with high-speed Internet; and has nearly 16 million subscribers to its high-speed Internet service.

The integration of AT&T and DirecTV will occur over the coming months. In the coming weeks, AT&T will launch new integrated TV, mobile and high-speed Internet offers that give customers greater value and convenience.

AT&T announced that John Stankey will be CEO of AT&T Entertainment & Internet Services, responsible for leading its combined DirecTV and AT&T Home Solutions operations. Stankey will report to Stephenson. DirecTV President, Chairman and CEO Mike White announced his plans to retire.

“Mike is one of the world’s top CEOs and a great leader who built DirecTV into a premier TV and video entertainment company spanning the US and Latin America,” Stephenson said. “He has been a terrific partner and friend, and his legacy will be an important part of our combined company.”

As part of the FCC’s approval of the transaction, AT&T has agreed to the following conditions for the next four years:

  • Within four years, AT&T will offer its all-fibre Internet access service to at least 12.5 million customer locations, such as residences, home offices and very small businesses. Combined with AT&T’s existing high-speed broadband network, at least 25.7 million customer locations will have access to broadband speeds of 45Mbps or higher.
  • Within its wireline footprint, the company will offer 1Gbps service to any eligible school or library requesting E-rate [discounted telecommunications, Internet access, and internal connections to eligible schools and libraries] services, pursuant to applicable rules, within the company’s all-fibre footprint.
  • Within AT&T’s 21-state wireline footprint, it will offer discounted fixed broadband service to low-income households that qualify for the government’s Supplemental Nutrition Assistance Program. In locations where it’s available, service with speeds of at least 10Mbps will be offered for $10 per month. Elsewhere, 5Mbps service will be offered for $10 per month or, in some locations, 3Mbps service will be offered for $5 per month.
  • AT&T’s retail terms and conditions for its fixed broadband Internet services will not favor its own online video programming services. AT&T can and will, however, continue to offer discounted integrated bundles of its video and high-speed Internet services.
  • AT&T must submit to the FCC new interconnection agreements it enters into with peering networks and on-net customers for the exchange of Internet traffic. The company will develop, in conjunction with an independent expert, a methodology for measuring the performance of its Internet traffic exchange and regularly report these metrics to the FCC.
  • AT&T will appoint a Company Compliance Officer to develop and implement a plan to ensure compliance with these merger conditions. Also, the company will engage an independent, third-party compliance officer to evaluate the plan and its implementation, and submit periodic reports to the FCC.

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