For consumers, risks and benefits in AT&T deal

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For consumers, risks and benefits in AT&T deal

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“Game of Thrones” fans might become more likely customers of AT&T if the telecom giant’s deal for Time Warner, owner of HBO, succeeds.

ANALYSIS

AT&T’s $85 billion agreement to buy Time Warner is a big deal for investors, for employees, and possibly for Atlanta, where so much of Time Warner operates. For consumers, the stakes are not so clear.

Announced late Saturday, the huge merger has the potential to raise profits, move jobs and redirect the flow of money as consumers engage with programming through phones and computers as well as TVs.

The view may not be that different for viewers — at first, anyway.

Assuming regulators let the deal go through, all that programming will not change. You’ll still be able to get your analysis from Anderson Cooper, your myth-making from “Game of Thrones,” your pro basketball from TNT, and all of it on any device you want.

The principle of “Net Neutrality” – affirmed by the courts and currently part of the regulatory framework – means that carriers of Internet traffic have to treat all content on the Net equally, that they cannot give preference to content they own or burden content owned by a rival.

Then why are consumer groups and media critics leery of the deal?

Even before the deal’s announcement , former Labor Secretary Robert Reich urged that regulators quash it. On Saturday, he tweeted a call for its rejection.

Craig Aaron, president of the consumer advocacy group Free Press, said the deal’s reach raises questions. “It’s a massive deal concentrating a huge amount of media power under one corporate umbrella,” he told the New York Times. “Consumers benefit when companies have to negotiate and fight with each other.”

If the deal goes through as crafted, AT&T would have more scope and reach than any other provider, connecting consumers with content through phones, cable and satellite television. It would be able to deliver a broad portfolio of cable channels and movies.

Access to content

John Bergmayer, senior counsel at Public Knowledge, a digital rights advocacy group, told the Times that AT&T could make it more expensive for competitors to gain access to content from Time Warner.

Advocates are concerned for other reasons.

First, the sheer size of the deal. It’s true that, unlike AT&T’s failed attempt to buy T-Mobile, the deal wouldn’t eliminate any rivals in the businesses in which AT&T now competes. But when anti-trust legislation gained traction more than century ago, magnitude was itself seen as a danger. And this would be one very big deal.

Second, Net Neutrality isn’t set in stone, just in an appeals court ruling that could be overturned down the line. Moreover, there hasn’t been enough time to be sure how it will play out in practice.

And third, there are ways for a carrier like AT&T to boost to its home-grown content without overtly handicapping the competition. In particular, there is something called “zero rating.”

With so many people – especially the crucial audience of millennials – relying more and more on mobile devices, the way they are charged for data becomes a competitive factor. So a carrier like AT&T could offer to not count data when a user views AT&T-owned content.

That could make a fan of say, “Game of Thrones,” more likely to use AT&T to see it.

Finally, there’s data collection and tracking. The carriers that provide you the phone can know where you are, what you watch and when you watch it. They can use that data to shape and target their offerings.

Matching interests

That can, theoretically, be very good for consumers, who get offers that match their interests.

But it also constitutes a potentially creepy amount of information about individual Americans that makes media critics nervous

The upshot is an arrangement that will concentrate more power in fewer hands, entangling more decisions about content with control over distribution. How it would play out is hard to predict, even if the immediate effect on consumers seems minimal.

Meanwhile, regulatory review could reshape or even break the deal.

The regulators will be operating under a new presidential administration. Both Hillary Clinton and Donald Trump have expressed skepticism about corporate consolidation, and Trump on Saturday vowed to block the deal.

Even if that doesn’t happen, regulators can negotiate to compel AT&T to accept modifications or conditions.

Saturday’s announcement, in other words, was the pilot episode in a corporate drama that’s just getting started.

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