AT&T faces merger heat from Netflix and former cellular partners but gets Microsoft's blessing

More than 90 former AT&T (NYSE: T) cellular-industry partners have banded together to petition the FCC against the telco's proposed purchase of DirecTV (NASDAQ: DTV), while Netflix (NASDAQ: NFLX) also sent a notice to the commission noting that powerful conditions restricting paid peering should be put in place. Conversely, the still-powerful enterprise-technology company Microsoft told the commission it supports the merger.

In their joint Federal Communications Commission filing Thursday, the Minority Cellular Partners Coalition (MCPC) outlined what it described as AT&T's "concerted strategy to gain full control of the partnerships' spectrum--spectrum the FCC originally denied to the dominant carrier in order to promote competition and diversity of ownership."

"The FCC has repeatedly recognized the self-evident proposition that an entity's past behavior is the best predictor of its future behavior," said David Cripps, a former executive committee member of the Sarasota, Fla., AT&T partnership. "I can personally attest to the hidden, self-serving agenda AT&T brings to business engagements and the company's disregard for the impact that agenda has on the general public. There is no question in my mind that DirectTV and its customers will be dealt a similar fate."

In its initial comments on the merger, obtained by Multichannel News, Netflix said it believes that AT&T will view Netflix as competition in AT&T's quest to deliver more video over-the-top. Paid peering, Netflix fears, could be used as a competitive advantage.

In a letter dated Sept. 16, meanwhile, Microsoft was much more supportive of the pact, telling the FCC that a larger AT&T--should it live up to its commitments--would support broadband infrastructure and innovation. AT&T has promised to extend fiber-to-the-home service to 2 million additional customer locations.

"This commitment clearly advances a critical national broadband objective with respect to investment in and deployment of high-speed broadband access," Microsoft told the FCC. "We encourage the FCC to give these commitments appropriate public interest weight and to approve the proposed acquisition."

For more:
- read this Reuters story
- read this other Reuters story
- read this Multichannel News story

Related links:
AT&T: DirecTV buy will save it 20% on programming costs
AT&T's Stankey: Company will end up spending more on content after DirecTV purchase
State attorneys general will probe AT&T/DirecTV merger

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