Federal Communications Commission Chairman Tom Wheeler on Tuesday signaled that he will ask the agency to support AT&T's proposed $49 billion acquisition of DirecTV (DTV) , saying that the deal will mandate that the satellite-TV provider's 12.5 million customers be given access to a high-speed Internet connection.
Wheeler, who has made expanding the country's residential fiber-optic network a high priority, said Dallas-based AT&T would pledge to finance the build-out for DirecTV customers. That expansion would increasing the national high-speed Internet network by 40% while tripling the number of metropolitan areas with high-speed service.
The transaction, which needs majority support of the agency's five-member commission, appeared all but certain to be approved after the Department of Justice followed Wheeler in saying it wouldn't oppose the deal.
AT&T also agreed to follow the FCC's net neutrality rules, which it has gone to court to reverse. Approved in February, the agency's Open Internet Order will mandate that AT&T not be permitted to exclude affiliated video services and content from data caps on its fixed-broadband connections.
Additionally, AT&T will be required to submit all interconnection agreements such as those with Netflix (NFLX) - Get Netflix, Inc. (NFLX) Report and Google's (GOOG) - Get Alphabet Inc. Class C Report (GOOGL) - Get Alphabet Inc. Class A Report YouTube to an independent officer to ensure compliance with its net neutrality rules.
Although AT&T had to accede to FCC demands, the deal marks a major victory for the telecom. AT&T has made the DirecTV acquisition the cornerstone of its plan to expand its services both in the U.S. and Latin America, where satellite TV is particularly popular.
By acquiring DirecTV, AT&T will have more than 26 million pay-TV subscribers, surpassing Comcast (CMCSA) - Get Comcast Corporation Class A Report, which failed earlier this year in its attempt to buy Time Warner Cable (TWC) . St. Louis-based Charter Communications (CHTR) - Get Charter Communications, Inc. Class A Report is now lobbying the FCC and DOJ to support its proposed $78.7 billion acquisition of Time Warner Cable, the latest move in the continuing consolidation of broadband providers.