AT&T / DirecTV Merger: Should You Care?

The news sounds ominous for consumers. On May 19, telecommunications giant AT&T and DirecTV announced their plans for a $48.5 billion merger. While investors and executives are likely celebrating, media megamergers often lead to decreased competition, worse service, anti-competitive behavior and higher prices for subscribers. On the other hand, the synergies between DirecTV's satellite business and AT&T's broadband service could theoretically lead to better packages. Should you be worried, excited or uninterested in AT&T's pending purchase?

Why is AT&T buying DirecTV?

"[The merger] looks like a head-scratcher," Eddie Hold, vice president of connected intelligence at research firm NPD Group, told Tom's Guide. Buying a satellite company when satellite TV is generally in decline may seem like a counterintuitive strategy, but Hold maintained that AT&T wanted DirecTV's know-how and subscriber base more than its tech.

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"DirecTV has years of experience in getting content, getting the right content and getting a good deal," Hold said. Just as Verizon provides broadband Internet, cable TV and its own streaming-video service (Redbox), so too does AT&T want to offer Internet, TV and streaming video (U-verse).

Are there any benefits for consumers?

There may be some advantages for existing subscribers in seeing AT&T and DirecTV work together, since it will help bolster AT&T's video content and DirecTV customers' access to high-speed broadband. AT&T already offers a combination of TV, home phone and Internet service through its U-verse service, but the company does not serve some of the nation's largest markets, including New York. DirecTV serves many of these markets, but doesn't have high-speed Internet. The combined company could package some of its services with DirecTV subscriptions to offer current subscribers a better deal.

Is AT&T Now Competing with Netflix?

Although the idea of AT&T working hand in hand with a TV provider may seem like a threat to streaming online video, such as Netflix and Hulu Plus, the two fields are still quite distinct. "[Customers want] more streaming solutions and the same linear [cable or satellite] TV options you have today," Hold said. No customer wants to replace Netflix with traditional TV because Netflix is just too darned convenient. They want both services to work in tandem, and AT&T and DirecTV will be sensitive to that, or risk losing business.

Could AT&T Throttle Netflix to Protect DirecTV

If AT&T slows down Netflix, it will probably do so to earn extra money, rather than to protect its new satellite business. If the Federal Communications Commission can't make its new Net neutrality proposal work, AT&T could slow Netflix connections until the streaming service pays for preferential treatment, as it has done with Verizon and Comcast.

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Marshall Honorof

Marshall Honorof is a senior editor for Tom's Guide, overseeing the site's coverage of gaming hardware and software. He comes from a science writing background, having studied paleomammalogy, biological anthropology, and the history of science and technology. After hours, you can find him practicing taekwondo or doing deep dives on classic sci-fi. 

  • glasssplinter
    Fewer choices is not good for the consumer. Plus, not having AT&T services currently I'm sure they'll find a way to penalize me. From the sounds of this, DTV customers will have little improvements and AT&T will just be using the DTV customer base as a cash cow with 0 incentive to upgrade or even keep prices the same. If this approves I'm cancelling my service.
    Did someone from AT&T take a walk through Costco or Sam's Club and get sold onto DirecTV? It happened to me. Worst mistake ever.
  • knowom
    Seems far less ominous for consumers than TWC & Comcast merger. If the latter goes through it might even be better for consumers if AT&T and Direct TV do more so consumers get bent over twice.

    Bad as that is it's still not as a bad as GMO patented seeds that cross pollinate with other seeds and are taking over our natural healthy nature provided food sources.

    What you want to grow your own food pay up!
    You want to eat to right pay up!
    You have a medical problem because you can no longer do either too god damn bad pay up!

    Welcome to the new America dream. Life liberty and the pursuit of screwing others over.
  • teh_chem
    I've stopped caring only because I signed the petitions to the FCC against all of these megamergers. Clearly ex-cable-company lobbyist Tom Wheeler has no interest in protecting consumers. I'm glad we have an alternative to Comcast internet in our area that doesn't suck, and that we don't watch cable TV.
  • Osmin
    The problem is not that we should care, the problem is that we are powerless to stop the wealthy companies from buying elections and placing their lobbyists to chair on their regulation committees. This will never change because the supreme court allowed unlimited money to flow from companies and wealthy individuals. This effectively silenced the voice of the majority of the people and our only hope is that competing companies buy their own candidate to stop anti-consumer decisions. Both democrats and republicans are the same party with different millionaires to support.