AT&T Blog Post: A Most Unusual Deal
Wednesday, October 22, 2014
A Most Unusual Deal
Posted by: Jim Cicconi on October 22, 2014 at 10:15 am
While the comment period on our merger with DIRECTV won’t close until November 5th, the recent round of filings allows us to take stock of where this deal stands in terms of both support and opposition. And I’d have to say that, so far, we’re very encouraged.
As my fellow telecom policy nerds know, the FCC process requires us to show that the combination of DIRECTV with AT&T is in the public interest. We’ve taken this obligation very seriously. In fact, well before the deal was announced, we began analyzing those benefits, building them into the decision about whether to go forward with the transaction. That in itself may be unusual for a merger.
Now, as we review the filings, it’s great to see so many citing the positive impact those benefits will have for their business, community, state, members, or constituency. The FCC filings to date show that support for this merger is both deep and broad, and seems to fall into a number of categories:
Normally, one of the first concerns with any merger is the impact on jobs. In this case, organized labor has clearly concluded this merger is good for workers. No less a source than AFL-CIO President Richard L. Trumka wrote that the merger was not only good for workers, but would also benefit consumers because it “will result in increased competition.” Our largest union, the CWA, echoed this view as did 12 state AFL-CIOs , three state building and construction trade union affiliates, as well as the Minnesota SEIU. It’s hard to recall any merger ever getting such strong support from organized labor.
Similar to labor, it’s rare when America’s small businesses see their future tied to a merger of two larger corporations. Yet that seems to be the case with this deal. We’ve drawn support from 22 state chambers of commerce, ranging from California to Vermont and from North Dakota to New Mexico. Similarly, local and regional chambers have weighed in — from places like Berkshire and Worcester in Massachusetts, to Western Kentucky and the Quad Citiesin Illinois — as have a host of groups like the Illinois Retail Merchants Association and the Business Council of New York State. Not surprisingly, all recognized the vital importance of the broadband infrastructure investment this merger will allow us to bring.
Amidst lots of support, perhaps no single sector is speaking quite so loudly about our merger as the people living and working in rural areas. Nine governors — a very bipartisan group — filed letters of support citing the benefits to rural broadband deployment in their states. Those governors were joined by the Speakers of the House from Kansas, Vermont and Maryland, the Speaker-designate in Arkansas, the State Senate leaders of Iowa,Maryland and Utah, and the Rural Caucus chairmen fromGeorgia and Texas. Many of the state chambers of commerce mentioned above also spoke about rural broadband benefits, as did nine state Farm Bureaus, theNational Grange, the Agriculture Commissioners forGeorgia and Texas, the Iowa Secretary of Agriculture, theWestern Rural Development Center, the Alabama Farmers Federation, the Virginia Rural Center, the California Rangeland Trust, and an array of other state groups representing agribusiness, cattlemen, and future farmers.
Recognition is clearly growing that this merger will provide major benefits for high tech companies, especially edge providers. Microsoft highlighted these, saying our merger provides “a means of furthering the deployment of critical broadband infrastructure.” ITI, representing over 60 high tech companies, agreed, as did Corning, the ACT | The App Association, the Application Developers Alliance, and nine state technology councils. Most notable, though, were the voices of partners at the three most prominent venture capital firms in Silicon Valley. Marc Andreessen of Andreessen Horowitz said “the types of investments enabled by this merger [are] critical to enable the United States to continue to lead the world in Internet technology.” And both Jim Goetz of Sequoia Capital and Ted Schlein of Kleiner Perkins spoke of the new ventures“that will be made possible as a direct result of this merger,” and added it will “bring new competitive choice to millions” and “set the stage for the next phase of innovation.” Powerful stuff.
Content and Programming
Small independent programmers and over-the-top (OTT) content providers also backed the deal, recognizing not just the fair treatment given independents in the past, but also citing new opportunities for OTT over multiple platforms. Michael Schwimmer of NUVOtv said, “the merger is in the best interest of independent programmers, particularly those serving minority communities,” and Mark Cuban, with a broad involvement in all forms of content, said the merger “will provide a new competitive alternative,” and will enable “edge providers new means of reaching consumers with OTT services.”
Diversity and Inclusion
No segment of backing for our DIRECTV merger makes us more proud than the strong support from our nation’s most prominent civil rights organizations. From our internal practices, which are usually viewed as best in class, to our external commitments to stakeholders and communities, AT&T has long been a partner with these groups in furthering important values. So when we read words like these from groups like the National Urban League and the NAACP, it matters:
“A company cannot adequately service the interests of a community unless it takes strong and proactive steps to understand that community’s specific needs. We believe that AT&T’s record clearly shows that the company has done exactly that and accomplished what few other companies have made the commitment to do… We believe the evidence and the company’s record, as well as future impact and commitments post-merger, provide a clear and compelling basis for the FCC to determine that this merger is in the public’s best interest.”
We’re also proud of similar letters received from Hispanic groups, including LULAC and the Hispanic Leadership Institute, as well as Asian American advocates including the Asian Pacific American Institute for Congressional Studies and the Asian Pacific American Labor Alliance. And especially meaningful to us is the support we’ve gotten from the disability community.
A Final Word
To be sure, as in any merger, there are some opposing voices. We have a great deal of respect for their viewpoints, and have tried to reach out to talk, to meet, to see if differences can be bridged. I’m not naïve, and know that if one is philosophically opposed on principle to most mergers, our efforts are unlikely to cause an about-face. Nonetheless, I think we’ve learned a lot from those conversations, and they’ve caused us to think hard about several issues. We also take some comfort in what hasn’t been said, at least publicly.
For one thing, our opponents haven’t filed any economic analyses to counter the persuasive data we’ve submitted—data that proves our merger will provide competitive choices for consumers and put downward pressure on prices. Also, with fingers firmly crossed, so far we’ve not seen the level of rhetoric one has come to associate with mergers in our sector. There are probably lots of reasons for this, but I hope one is that the public interest benefits of our deal are so evident.
If one has been passionate about extending broadband to all Americans, especially in rural areas, it’s sure hard to argue with a deal that promises to do exactly that… and which has drawn incredible support from the states and areas that would benefit most directly. For many millions of Americans, this would be a huge down payment on the goals of our National Broadband Plan.
Similarly, if one has been passionate about the supposed threat of a cable monopoly on broadband to the home, and called for more competition, it’s very hard to argue with a deal that allows a company like AT&T to promise exactly that… with impressive support for that argument from the tech companies and small businesses who have so much at stake.
We know there’s a ways yet to go. And, trust me, I’m personally very conscious of the twists and turns a merger review can take. But we’ve worked very hard to identify the public interest benefits of this deal, to make sure they’re both real and merger-related, and to explain them publicly. We take the incredible number and variety of positive comments as a vindication of those efforts. And we also view them not as support for the merger per se, but instead as expressions of support for the public interest benefits we’ve promised this merger can deliver. There’s a difference, and we’re very aware of it.
And so the process continues from here. We’ll keep answering questions about the facts we’ve placed on the record, explaining details, and reaching out. We truly believe this merger is the unusual sort of deal that will be good for consumers and good for competition. As the government examines the facts, we hope and trust they’ll reach the same conclusion.