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Netflix to FCC: Stop the AT&T-DirecTV Union

5 May, 2015 By: Erik Gruenwedel

Fresh off its “success” stymying Comcast’s $45.2 billion acquisition of Time Warner Cable, Netflix is now telling the Federal Communications Commission to reject AT&T’s proposed $48.5 billion acquisition of DirecTV -- in its current form.

The subscription streaming pioneer, which recently met with federal regulators, said the deal would consolidate too much power among multichannel video program distributors (MVPDs).

"The proposed merger would make AT&T the largest MVPD in the country, and potentially lead to it becoming the largest ISP in the country as well," Netflix told the FCC on April 30, according to Reuters.

"Such market power creates new incentives and abilities to harm entities that AT&T perceives as competitive threats, and will exacerbate the anticompetitive behavior in which AT&T has already engaged."

Netflix spokesperson Anne Marie Squeo, in an email, clarified that the SVOD service would be amenable to the transaction provided certain conditions were met.

"We are not opposed to the merger but urge the FCC to consider appropriate remedies," Marie Squeo wrote.

Specifically, Netflix contends that through the merger AT&T would become the nation's largest ISP while at the same time having a vested interest in maintaining DirecTV's bundled channel business.

Citing its own interconnection issues with subscribers using AT&T broadband, as well as AT&T allegedly incorporating data caps and usage-based pricing methods, Netflix says the telecom cannot not be allowed to stymie growth of OTT video by "foreclosing access to broadband customers or imposing discriminatory data caps."

Those arguments mirrored Netflix’s stance against Comcast-Time Warner Cable, which regulators apparently shared, prompting the No. 1 cabler to terminate the deal.

Meanwhile, Cogent Communications, a CDN employed by Netflix and others, reiterated objection to the AT&T-DirecTV merger without increased safeguards.

Last September at a FCC hearing, Cogent urged the regulatory agency to mandate transparency within the deal, that AT&T/DirecTV be required to upgrade ports and cross-connects when interconnects reach 70% capacity; provide settlement-free peering agreements for seven years after the merger; and outlaw discrimination against particular Internet content.

Meanwhile, Netflix continues to steamroll Wall Street, with shares up after Bank of America Merrill Lynch issued a report saying the SVOD service's stock could top $700 a share.

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