AT&T may be required to commit to deploying higher-speed broadband to more rural customers and to offering stand-alone broadband as a condition of its acquisition of DirecTV, which could receive Justice and FCC approvals as soon as next week, according to news reports.
According to a Reuters report this week that cited several unnamed Justice and FCC sources, the Justice Department is set to approve the deal without conditions, while the FCC is expected to approve the deal with conditions, including the broadband deployment commitment. A subsequent Bloomberg report citing an unnamed Justice Department source, also references Justice’s expected approval of the deal without conditions. And a research note from financial researcher Stephen Sweeney of Elevation LLC offers a summary of various unnamed press reports on the subject.
Sweeney noted that some parties have asked that AT&T be required to offer stand-alone broadband at speeds as high as 25 Mbps for $29.95 a month. But he added that he expects final requirements to offer more pricing flexibility and to require a lower speed. The Bloomberg report references target broadband speeds of “at least 6 Mbps.”
AT&T/DirecTV Approval Conditions
None of the reports noted how wide-scale AT&T’s rural broadband deployment commitment would be. But the FCC already has offered the company $494 million to bring broadband at speeds of 10 Mbps downstream to 1.2 million rural locations in its local service territory that cannot get broadband today as part of the Connect America Fund program. Accordingly it wouldn’t be surprising to see the FCC impose a 10 Mbps deployment requirement on AT&T as a condition of approval of the DirecTV deal. An FCC-imposed broadband deployment requirement also would increase the likelihood that AT&T will accept all or most of the CAF dollars it has been offered. AT&T has until next month to accept or decline funding on a state-by-state basis.
The FCC also is expected to impose some type of Net Neutrality conditions on its approval of the AT&T/DirecTV deal, according to the Reuters, Bloomberg and Elevation reports. But considering that Net Neutrality rules went into effect last month, such conditions likely would be superfluous.
AT&T and DirecTV announced their $48.5 billion deal just over a year ago.