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It hopes cost savings will find their way into prices

AT&T's potential acquisition of DirecTV has many feeling skeptical due to the possibility of higher prices and fewer choices for consumers, and the telecom company's latest remarks in hearings with lawmakers didn't seem to ease that skepticism.

According to Reuters, AT&T CEO Randall Stephenson told lawmakers at hearings in the House of Representatives and the Senate that he can't promise lower prices for consumers "dollar-for-dollar" in the way of savings from lower content fees. 

However, he does see potential savings in other forms. 

"One would have to believe in the market and the market pressures, and that market pressures will compete margins away and cost savings will find their way into prices," said Stephenson.

DirecTV CEO Michael White added that savings could possibly be seen in the way of value bundles, but that committing to lower prices is difficult because of current content prices.

Both companies agree that a merger would allow them to provide rural areas with better Internet services and compete with cable companies.

But many are still concerned about what such a merger means for competition in the cable market, since both AT&T and DirecTV are in the same business. 

The Justice Department and the Federal Communications Commission (FCC) will ultimately decide the fate of the merger. 

AT&T and DirecTV announced their $48.5 billion USD merger just last month. 

The merger comes at a sensitive time when consumers, lawmakers and the tech industry are still dealing with Comcast's $45 billion USD purchase of Time Warner Cable. 

Source: Reuters

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By Solandri on 6/26/2014 9:29:53 AM , Rating: 5
That's already how the U.S. sells natural gas, electricity, and long distance phone service. One company owns the pipes or wires, but multiple companies are allowed to sell the gas or electricity or phone service that flows through them.

Socialist or capitalist has little to do with it. Any time you have a situation where the best method of delivery is clear but the best source of the content being delivered is not, it's best to have a single set of pipes/wires, but multiple competing suppliers. Consequently with gas and electricity, we have a single company awarded a contract for building and maintaining those pipes/wires. But they are prohibited from selling the content that flows through those pipes/wires. They're closely monitored by a PUC (public utilities commission) to make sure they're offering fair pricing to all content providers who wish to sell the content which flow through those pipes/wires. They're even allowed to sell content via an independent subsidiary, as long as they don't give it favorable pricing. Long distance phone service is a bit different but the concept is the same. The local phone company owns and maintains the phone lines, but they're prohibited from providing long distance phone service and must provide fair pricing to all long distance carriers.

Alas that's not the situation with cable TV. The company that owns the cables also entirely controls the content that flows through them. This was necessary way back when cable TV was new and it wasn't clear what was the best way to wire up homes. Different cable TV companies would try out different wiring methods and compete with each other. The ones whose wiring methods were better ended up rising to the top. Capitalism at work. (Same thing with cell phone service. Carriers adopted GSM or CDMA, and CDMA ended up winning. GSM eventually added CDMA to its spec for data services, retaining the original GSM spec only for voice calls. Competition allowed a better communication method to beat the government-mandated method.)

But at this point I think it's pretty clear that fiber to the home is where cable TV and cable Internet is headed. Cable should now be recognized as a utility, and regulated as such. The "cable company" can own the physical cables and charge for installing and maintaining it, but they should be prohibited from selling anything that's carried over those cables. Instead, multiple TV and internet companies can compete to sell you the TV channels and internet service you want - the virtual content which flows through those cables.

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