WASHINGTON (The Deal) -- The heads of AT&T (T - Get Report) and DirecTV Group (DTV) on Tuesday twice defended their planned $67 billion merger from critics who said that service enhancements the companies vow will accompany the deal offer little benefit to consumers.
Those critical of the deal contend that the companies are promising little more than upgrades to expansion plans they already had in the works before the deal was announced.
The scrutiny of the companies' plans to form an integrated entity better able to offer bundled telecom and satellite TV services happened during two separate hearings on Capitol Hill -- the first in the morning by the House Judiciary's antitrust subcommittee and then in the afternoon by the House panel's Senate counterpart.
John Bergmayer, senior staff attorney for Public Knowledge, a public interest group focused on telecom and digital information issues, said the merger could only contribute to the continuing consolidation of the telecom industry with very little payoff for consumers. Bergmayer said the public interest benefits the companies have offered to secure approval from the Department of Justice and the Federal Communications Commission are mostly system improvements the companies would undertake anyway.
"AT&T has history of using its existing plans as a merger promise," Bergmayer told the committee. He noted that in 2011 when AT&T was attempting to buy T-Mobile USA it committed to cover 250 million Americans with long term evolution technology (LTE), also known as 4G networks, by the end of 2013. By the end of 2013, however, AT&T covered 270 million Americans with LTE even though a DOJ lawsuit resulted in AT&T terminating the merger. That AT&T not only met, but exceeded, its promise shows that its claims that a merger was necessary to improve service must be viewed with skepticism, he said.
"When you strip away previously-announced plans, even AT&T's best case for this merger is less than it appears," Bergmayer said. "For the most part, AT&T is simply stating that it will upgrade portions of its network. That is not much. For instance, adding a new kind of home wireless service to an existing wireless coverage area is not as significant an investment as an initial wireless build-out."