AT&T to offer $5-per-month Internet service to low-income customers to close DirecTV deal

As part of its efforts to get federal regulators to approve its proposed $49 billion acquisition of DirecTV (NASDAQ: DTV), AT&T (NYSE: T) told the FCC that it's prepared to offer discounted broadband services to Americans who are already qualified to receive government aid.

In a regulatory filing, AT&T said it will create two new cheap Internet service plans for those eligible for the government's Supplemental Nutritional Assistance Plan: One would be a 5 Mbps service that would cost $10 a month for the first year, shooting up to $20 a month after 12 months; the other would be a 1.5 Mbps service that would cost $5 a month for the first year before going up to $10 a month thereafter.

The offerings are similar to Comcast's Internet Essentials (NASDAQ: CMCSA) pricing plans, where are available to families whose children qualify for subsidized school lunches. AT&T pledged to provide its options for four years after it closes its DirecTV purchase.

Meanwhile, outside parties including Dish Network (NASDAQ: DISH) and Cogent continue to push for AT&T to sell a standalone Internet plan targeted to cord cutters. AT&T has already volunteered to sell a 6 Mbps standalone service for $34.95 a month.

AT&T's latest filing with the FCC indicates the carrier is backing away from an earlier position, in which it argued that its broadband business should not be involved in any concessions because its proposed DirecTV purchase does not include broadband assets. "In the absence of any increased consolidation of broadband ownership, there can be no justification to require AT&T to provide standalone broadband at below-market prices for an extended period," AT&T stated in an earlier FCC filing.

To obtain government approval for its DirecTV purchase--originally proposed in May 2014--AT&T is expected to also pledge to adhere to the FCC's new net neutrality rules. Charter has already made a similar promise if the FCC and the Department of Justice approve its proposed purchase of Time Warner Cable.

Although reports last week indicated that regulators were poised to approve AT&T's purchase of DirecTV, the carrier's latest promise to offer cheaper Internet service to poor Americans potentially indicates negotiations between the carrier and regulators are ongoing.

For more:
- read this FCC filing
- read this Washington Post story
- read this Dallas Business Journal story

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