The proposed $48.5 billion merger of AT&T and DirecTV always looked like smooth sailing, unlike the thwarted Comcast bid to consume Time Warner Cable. One big question surrounded the approval: What conditions would the FCC attach to the deal? Now that FCC Chairman Tom Wheeler has previewed the agency's conditions, the question becomes: What promises will AT&T actually keep?
Consumer groups were quick to express disappointment at the conditions, saying they don't go far enough. Given the trail of broken promises left in the wake of previous AT&T mergers, the conditions are largely irrelevant unless the FCC is prepared to enforce them.
Wheeler on Tuesday announced that to win approval AT&T promised to expand high-speed fiber connection to 12.5 million customers, "about 10 times the size of AT&T's current fiber-to-the-premise deployment." The telecom giant also agreed to "prevent discrimination against online video competition," and will submit to the FCC all completed interconnection agreements "to bring greater transparency to interconnection practices." This represents a stricter application of Net neutrality, since under the current Open Internet Order the FCC examines these deals only on a case-by-case basis if complaints are filed.
If AT&T's promise to "expand its broadband Internet fiber network so that more homes in the nation have access to high-speed Internet" has a familiar ring, that's because when wooing the FCC to gain approval for its BellSouth merger in 2006, AT&T promised to provide connections of at least 200Kbps (which met the definition of broadband at the time) to every household in its territory, and "at least 85 percent of such living units using wireline technologies."
How did that promise fare? AT&T claims it met its commitment, albeit through creative fiddling with the definition to include resold satellite, which does indeed go everywhere. As DSL Reports noted: "By that fairly insulting definition, AT&T offered broadband to 100 percent of their legacy customers before the ink was even dry on the FCC approval."
Ars Technica last month exposed how "millions in AT&T territory are still left with either slow Internet service or no wired Internet at all." Yet now we're to believe AT&T's promises that it will deliver broadband to customers that AT&T already pledged -- and failed -- to serve a decade ago?
AT&T also promised to deliver cheap $10 DSL, but skirted the condition by not advertising the services. Despite complaints, the FCC never enforced the terms of the agreement, and AT&T claimed nobody really wanted dirt-cheap unbundled DSL service anyway. Ars Technica disputes the point, noting that people who try to obtain the service are being denied because the telecom giant now claims its network is full.
The history of broken promises stretches clear back to SBC, which in 2005 purchased AT&T and took on its branding. Telecom analyst Bruce Kushnick's "Book of Broken Promises" exhaustively chronicles the gory details of "how America paid over $400 billion and counting, to be the first fully fiber optic-based nation yet ended up 27th in the world for high-speed Internet."
In merger after merger, SBC gobbled up Baby Bells formed after the 1984 breakup of the original AT&T, and closed down fiber optic broadband deployments that were under way in every state it took over. The company later turned around and promised to deploy fiber-to-the-home services -- if only the FCC would close its networks to direct competition and remove unbundling obligations.
Then-FCC Chairman Michael Powell (currently president of the National Cable & Telecommunications Association lobbying group, thanks to the industry's revolving door) gobbled up that carrot. As Powell testified before Congress in 2004: "SBC has committed to serve 300,000 households with a FTTH [fiber-to-the-home]."
But it never happened. Instead, as Kushnick details, "AT&T has simply decided to use the existing, legacy, old, copper wires and added some new technology. But in this 'say anything' world, AT&T keeps repeating that U-verse is 'fiber based'." If only saying made it so.
In addition to promising what it fails to deliver, AT&T is guilty of promising -- as a supposed condition of desired mergers -- what it already intends to deliver.
During its failed attempt to take over T-Mobile in 2011, AT&T claimed it needed T-Mobile's wireless spectrum to bring 4G services to 95 percent of Americans, including rural communities and small towns. "Turns out, that statement was not accurate either," wrote Andy Levin, senior vice president of government affairs at T-Mobile. "Within months after the FCC denied the acquisition, AT&T announced plans to expand its LTE network to cover 94.3 percent of American consumers -- without T-Mobile's help."
In a House Judiciary Committee hearing on the merits of the DirecTV merger, John Bergmayer of Public Knowledge testified that "again and again, AT&T makes the same arguments and the same promises when it wants to acquire a competitor. Yet no merger ever seems to be quite enough for it to achieve its goals, leaving AT&T ample headroom to re-promise and re-commit to the same goals the next time around."
Even some who argued for past mergers have stopped believing in AT&T's promises. "It gives me heartburn," said Tyrone Ellis, who as chairman of Mississippi's public utilities committee in 2006 wrote to the FCC to urge approval of the AT&T-BellSouth deal, citing the promise of rural broadband throughout AT&T's territory. "They didn't follow through. But I don't have the power to force their hand. The FCC does."
But will the FCC choose to do so? "We have a problem at the commission, historically, with following up on merger conditions," said Michael Copps, who served on the FCC from 2001 to 2011, and voted to approve the AT&T-BellSouth merger. "A lot of these conditions that get attached are not that great, and they are not always really enforced."
Hindsight is golden, even if AT&T's promises aren't.