AT&T is using the Charter-Time Warner Cable docket to take aim at cable consolidation in general, criticisms the National Cable & Telecommunications Association dismisses as self-serving ad hominem attacks to further AT&T's commercial ends.
In a filing on the proposed merger, AT&T said it was not opposing the deal, per se, but proceeded to question it in the larger context of "cable consolidation and coordination."
Charter has said that allowing it to merge with Time Warner Cable would make it a stronger competitor. AT&T says suggestion of the need for stronger competition is because cable operators have chosen not to compete—not to overbuild each other—but instead to "coordinate to gain shared advantages over rivals," which it says further consolidation—like Charter-TWC—would only facilitate.
AT&T said it was prompted to file in the docket in part by Liberty chairman John Malone's statements that there would be opportunities for "inter-company cooperation to create ubiquity of offerings, ubiquity of branding, and scale." Liberty owns a big chunk of Charter.
AT&T said that competition to cable is growing—arguing that was one reason the FCC allowed it to merge with DirecTV—but that that competition from AT&T-DirecTV and over-the-top provides "is vulnerable to coordinated exclusionary actions by cable."
"The Commission's Staff and the Department of Justice concluded that allowing Comcast and Time Warner Cable to merge would created a dominant national platform that could 'block the adoption of innovative products, including 'over-the-top' video services that threaten the traditional cable business model.' The instant merger may be different, but the Commission must ensure that the cable industry cannot use coordination to replicate the same mega-cable threat to competition."
AT&T even took aim at Cable Labs and the Cable Wi-Fi consortium, saying the cable industry had created "a variety of exclusive associations, organizations, and other ventures to advance the competitive interests of cable companies. These joint initiatives, although opaque to outsiders, are transparent to cable-company members who may use them to coordinate strategies against rivals.”
The proposed merger could make that easier. The transaction would reduce by two the number of major cable operators, and create a second cable giant alongside Comcast that together would be able to dictate strategy for the entire cable industry."
AT&T also asked the FCC to look at Malone's interests in Discovery, Starz, QVC, and HSN when it was thinking about programming muscle.
Charter declined comment, though it has pointed out that Malone is an investor in a company—Liberty Broadband—that is an investor in Charter and that there are governance structure to insure programming decisions are independent.
The National Cable & Telecommunications Association came out firing, however.
“AT&T recently merged with Direct TV to become the largest pay TV provider in the United States," so it is an amazing act of hubris to see them implore the government to help them diminish the effectiveness of a competitor, disparagingly citing actions that are common, pro-consumer or purely imaginary," NCTA said in a statement. "Having long criticized others for making sweeping, vague, industry-wide allegations in the context of its own mergers, it is precious to see them employing the same self-serving tactic against others. Undoubtedly, the FCC will see AT&T’s action for what it is, a flimsy ad hominem attack to advance its own commercial interests.”
"We saw nothing in NCTA's statement responding to the specific concerns in our filing, AT&T fired back. "Our point is quite simple, however-- if cable companies have chosen not to compete with each other, for whatever reason, it is not in the public interest that they then be allowed to coordinate to damage a common competitor. NCTA seems to deny any such thing occurs, while also defending cable's right to nonetheless engage in such conduct if it wants. This is the very point we feel should be discussed and debated in the context of the proposed merger."
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