Will the AT&T Merger Hurt Consumers?

http://www.nytimes.com/2016/10/25/opinion/will-the-att-merger-hurt-consumers.html

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The editorial on Tuesday on the acquisition of Time Warner by AT&T generated more than 300 comments. Vikas Bajaj, an editorial writer who covers business and economics, answers a selection of reader questions below.

C.V. Danes, New York: Explain to me again why the government went through all the trouble of breaking up Ma Bell, only to see it reconstitute into a conglomerate with even more power?

There has indeed been a lot of consolidation since the 1984 breakup of the old AT&T, which created seven regional telephone companies known as the Baby Bells, a long-distance business and Lucent, the telecommunications equipment manufacturer. Lucent is now part of Nokia and the eight phone companies are now down to three: AT&T, Verizon and CenturyLink. I agree that the descendants of the old AT&T have gotten a lot bigger and regulators ought to be very concerned about these companies’ ability to raise prices and restrict competition. But they are probably still not as powerful as the old AT&T monopoly was in its heyday. Back then you could get telephone service from only one company. And there was no decent or affordable wireless service to speak of.

jbaroody, Connecticut: I’ve heard media reports that Donald Trump says he would “block” this merger. Does the president have the power to just do that or is he talking off the top of his head?

No, the president cannot block a deal by fiat. The Justice Department’s antitrust division would have to file a lawsuit in federal court to block the deal. A judge would decide if the acquisition should be temporarily halted or permanently prohibited under antitrust laws. State attorneys general could also bring cases

newell mccarty, Oklahoma: Don’t you think you are being a bit hard on AT&T? There are 6 very diverse corporations that control only 90% of the media. You are vastly over-regulating the free market. Like Yoko said, give markets a chance.

It is important to keep in mind that of the six dominant media companies, one, NBC Universal, is controlled by the nation’s largest cable-TV company, Comcast. AT&T’s acquisition of Time Warner would leave just four independent media companies and even that number could shrink very soon. Sumner and Shari Redstone, who control two of those businesses, CBS and Viacom, recently said that they want those companies to merge. Earlier, Fox tried to acquire Time Warner and now it might be interested in making another deal, perhaps with Disney. And telecommunications companies like Verizon and Charter might also be tempted to respond to AT&T by buying media properties themselves.

Passa Caglia: Doesn’t it breach the anti-monopoly legislation? How does it help or hurt ordinary people?

It depends on how courts interpret antitrust laws. The Department of Justice has a strong case that this will hurt people who buy telecommunications and media services by reducing their choices and making it hard for other companies to compete in the market. For example, AT&T could decide to offer HBO to buyers of its wireless and satellite service for one price, and charge people who don’t use its service a much higher price for the channel. Or it could make special “Game of Thrones” episodes that are available only to customers who sign up for DirecTV.

Kurt Kromm: It’s funny how all the AT&T spokespeople have the media focused on talking about content because I could care less about content, if I don’t want to pay for content I don’t have to watch, but I do need an internet provider and right now my only real choices in Kenosha, Wi are AT&T or Time Warner and if they merge I will only have one. Further, why is it I can put up an antenna and watch ABC, NBC, Fox, CBS, etc for free but I can not stream the same channels over the internet?

Time Warner Cable is not part of Time Warner, the media company, nor is it involved in this transaction. Charter recently acquired Time Warner Cable. But you are touching on an important point: Most Americans have only one or two choices for high-speed Internet service. As a result, broadband is expensive and some companies are able to impose limits on how much data people can use without paying extra fees.

The TV networks you mention started as broadcasters and gave away their content to people with antennas while making money from advertisers. But their business model changed over the years. TV stations and networks now also make money from licensing their content to cable and satellite companies. They are reluctant to make their channels freely available on the Internet because that would encourage viewers to drop their cable and satellite service and, thus, reduce their licensing revenue.