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attdirectThe Federal Communications Commission today approved AT&T’s $48.5 billion acquisition of DirecTV, paving the way to create the largest pay-TV provider in America.

The merger brings together the nation’s second-largest wireless carrier with the largest satellite video provider. The combined company will have about 26 million TV subscribers.

As part of the deal, the FCC mandated that AT&T expand its fiber-optic Internet to 12.5 million customers and eligible schools and libraries, submit Interent interconnection agreements to the FCC, and refrain from using “discriminatory practices to disadvantage online video distribution services.”

AT&T, which already offers TV and landline phone services, has been in talks with DirecTV for more than a year. The merger sets the stage for AT&T to compete with Comcast, which called off its own $45.2 billion merger with Time Warner Cable in April after agencies and regulators, including the Department of Justice and the FCC, expressed concerns about the deal and its affect on consumers.

DirecTV has more than 20 million cable subscribers and posted $8.1 billion in revenue last quarter. The El Segundo, Calif.-based company has numerous other partnerships, including a big one with the NFL. It will be interesting to see if AT&T packages DirecTV’s popular NFL Sunday Ticket service with any of its wireless offerings.

The full release from the FCC is below:

FCC GRANTS APPROVAL OF AT&T-DIRECTV TRANSACTION

WASHINGTON, July 24, 2015 – Today, the Federal Communications Commission grants – with
conditions – approval of the transfer of control of licenses and authorizations from DIRECTV to
AT&T Inc. (AT&T). The approval will allow AT&T to acquire DIRECTV and merge the two
companies into one combined entity. An Order detailing the Commission’s reasoning and the
conditions will be issued shortly.

The Commission’s decision is based on a careful, thorough review of the record, which includes extensive economic analysis and documentary data from the applicants, as well as comments from interested parties. Based on this review, the Commission has determined that granting the application, subject to certain conditions, is in the public interest.

As part of the merger, AT&T-DIRECTV will be required to expand its deployment of highspeed,
fiber optic broadband Internet access service to 12.5 million customer locations as well as
to E-rate eligible schools and libraries. In addition, AT&T-DIRECTV is prohibited from using
discriminatory practices to disadvantage online video distribution services and will submit its
Internet interconnection agreements for Commission review. Finally, AT&T-DIRECTV will
offer broadband services to low-income consumers at discounted rates.

The conditions imposed by the Commission address potential harms presented by the
combination of AT&T, one of the nation’s largest telephone and Internet service providers, and
DIRECTV, the nation’s largest satellite video provider. The conditions also ensure that the
benefits of the merger will be realized. These targeted conditions, which generally will remain in
effect for four years after the merger closes, include:

 Fiber to the Premises (FTTP) Deployment. Recognizing that the merger reduces
AT&T-DIRECTV’s incentive to deploy FTTP service, the Commission adopts as a
condition of this merger the expansion of FTTP service to 12.5 million customer
locations. This condition also responds to the harm of the loss of a video competitor
in areas where AT&T and DIRECTV had directly competed before the merger by
providing a pathway for increased competition from services that rely on broadband
Internet to deliver video.

 Gigabit Service to E-rate Eligible Schools and Libraries. In addition, to ensure that
schools and libraries also benefit from expanded fiber deployment to consumers and
institutions, the Commission is also requiring AT&T-DIRECTV to offer gigabit
service to any E-rate eligible school or library where AT&T-DIRECTV deploys
FTTP service.

 Non-Discriminatory Usage-Based Practices. Recognizing that AT&T is the only
major ISP that applies “data caps” across the board to all of its fixed broadband
customers and that this merger increases the incentive of AT&T-DIRECTV to use
strategies that limit consumers’ access to online video distribution services in order to
favor its own video services, the Commission requires AT&T-DIRECTV, as a
condition of this merger, to refrain from imposing discriminatory usage-based
allowances or other discriminatory retail terms and conditions on its broadband
Internet service.

 Internet Interconnection Disclosure Requirements. Recognizing the importance of
interconnection to the operation of online video services, the Commission also
requires as a condition of this merger that AT&T-DIRECTV submit its Internet
interconnection agreements so that the Commission may monitor the terms of such
agreements to determine whether AT&T-DIRECTV is denying or impeding access to
its networks in anticompetitive ways through the terms of these agreements.

 Discounted Broadband Services for Low-Income Subscribers. While finding that the
availability of better and lower priced bundles of video and broadband service is a
potential benefit of the merger, the Commission also concludes that the public
interest requires us to ensure that a bundle of video and broadband services is not the
only competitive choice for low-income subscribers who may not be able to afford
bundled services. The Commission accordingly requires as a condition of the merger
that AT&T-DIRECTV make available an affordable, low-price standalone broadband
service to low-income consumers in its broadband service area.

 Compliance Program and Reporting. Given the important role that these conditions
serve in securing the public interest benefits of the merger, the Commission requires
that AT&T-DIRECTV retain both an internal company compliance officer and an
independent, external compliance officer that will report and monitor, respectively,
the combined entity’s compliance with all conditions of the merger.

Action by the Commission July 24, 2015 by: Memorandum Opinion and Order (FCC No. 15-94).
Chairman Wheeler and Commissioner Clyburn and Commissioner Rosenworcel, with
Commissioner O’Rielly concurring in part, and Commissioner Pai dissenting in part. Chairman
Wheeler, Commissioners Clyburn, Rosenworcel, Pai and O’Rielly issuing statements.

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