The merger of AT & T and Time Warner of 85 million. USD is now officially official. On Tuesday, a panel of federal appellants approved the agreement, which allowed one of the largest Internet, cable and wireless providers in the United States to become an important content provider. The merger will allow AT&T to continue planning to build its new subsidiary, renamed WarnerMedia, to a video streaming streaming that could include valuable offers such as HBO shows, Cartoon Network and box office hits such as Harry Potter ] franchise. For critics of media consolidation, the agreement presents a number of potentially anti-competitive injuries to consumers. AT&T could use access to HBO or CNN as a carrot to convince customers to ditch another broadband provider, or it may allow other cable providers more money to access those channels and drive prices up to their competitors, or it may stop to carry the contents of its competitors. These are all hypothetical things, just like the argument offered by the Ministry of Justice that the merger should be stopped simply because it could raise prices for consumers. Quote a developing landscape that includes competitors like Netflix and Hulu, but the court said it was unconvinced.
If the Ministry of Justice has made the case different and focused on other anti-competitive damage, the challenge could have been more likely to succeed. AT & T and Time Warner are not in the same business, although there is a symbiotic relationship between a company that owns the pipes and a company that makes the content it carries. This is typically called a vertical merger, which means that the two companies did not compete with each other before. But just because the two companies do not compete directly does not mean that a merger will not leave consumers in bondage.
AT & T enters the content industry without any net neutrality rules on the books that prevent ISPs from blocking or accessing websites. Because the Federal Communications Commission revoked the open internet rules last year, AT & T is now free to decide to offer faster access to WarnerMedia's streaming offer than Netflix or charge Netflix more for the same speed, as long as it reveals such a move. It can be a worse experience for consumers and create a harder room for launching content that wants to enter the market, but cannot afford to pay AT&T to reach users with faster speeds.
"The Ministry of Justice tied at least one hand behind its back when it refused to argue that AT & T could use its power as both a wireline and a mobile broadband internet service provider to favor Time Warner programming over other non- associated with programming, "said Gigi Sohn, who served as a special adviser to the former Federal Communications Commissioner Tom Wheeler, in a statement. It is possible that AT&T was reluctant to point out that it is free to act in a discriminatory manner, because this argument might have violated the Trump era FCC, which favors placing fewer roadblocks in the way of broadband business behavior . Yet, Sohn said the DOJ could have made an argument in this vein that did not directly affirm the now abolished Obama era rules. The current commission justified its new net neutrality rules in part as a way of improving competition by reducing rules that FCC President Ajit Pai claimed that new suppliers would not enter the market. Making a company more powerful, like the AT&T and Time Warner merger, does not make a broadband market without net neutrality a more competitive start.
AT&T has questioned whether DOJ & # 39; s lawsuit was free of political motivation, given President Trump's repeated criticism of CNN for its coverage of his administration. The Ministry of Justice has denied that Trump's views on the merger in his decision to challenge. Regardless of what the Ministry of Justice's reasons were to cope with its narrow arguments over price, failure to challenge the merger could mark a major setback for future antitrust cases against non-direct companies. This was the first time since the Nixon administration that the Justice Department has challenged a vertical merger, and the law may not reflect the changing landscape of broadband and media, increasingly distributing a handful of large conglomerates. The AT & T-Time Warner Agreement, after all, thought of a round of other mergers, including Disney's acquisition of Twentieth Century Fox.
It is important that the judges noted in their judgment that vertical mergers are not harmless to consumers. "Vertical mergers can cause damage beyond higher consumer prices, including reduced product quality and reduced innovation," the decision said. This is something members of Congress are becoming increasingly aware of, especially in the House of Representatives. Rep. David Cicilline, the new Democratic President of the House Judiciary Antitrust Subcommittee, said in a recent interview that he was interested in conducting a review of the AT&T and Time Warner merger to ensure that there was no political interference in how the challenge played out.
AT & T's merger is against a background where the vast majority of Americans have no more than one or two high-speed internet options, a dynamic that makes us highly dependent on a very small number of businesses to access job opportunities, news, emergency information and ways to communicate with family and friends. It may take many years before we know what the unhappiness of broadband providers means for how we use the Internet, but in the meantime, we see that they become more powerful in slow motion. If this really triggers Trump & # 39; s Justice Department, the next thing to do is to make a more complete case.