AT&T’s DirecTV Acquisition Places Major Bet on Proposed FCC Net Neutrality Rules

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AT&T’s DirecTV Acquisition Places Major Bet on Proposed FCC Net Neutrality Rules

Strategy Analytics Predicts "Stars are Aligning for Seamless Broadband Services"

Boston, MA - May 19, 2014 - AT&T's planned acquisition of DirecTV offers benefits in the form of a nationwide footprint for AT&T as a Video Over the Top (OTT) and pay TV operator and ties in with the company's already strong IPTV, broadband and wireless businesses, according to new research from Strategy Analytics' Service Provider Strategies and Wireless Networks & Platforms services.

Combined with the FCC's new proposed rules for Net Neutrality/Open Internet Broadband and the Comcast / Time Warner merger, the stars are all aligning for different reasons to create Seamless Broadband services across wired – cable and telco - and wireless – satellite and mobile – networks.

In two new reports Strategy Analytics covers these hot topics:

Service Provider Strategies analyzes the business impact of AT&T's acquisition in "Is AT&T Showing Interest in DirecTV?"
Wireless Networks and Platforms looks at how AT&T's actions appear to align with the new moves by the FCC in "Stars Align for Seamless Broadband Access as AT&T buys DirecTV and FCC Revisits Net Neutrality Rules."

Jason Blackwell, Director, Service Provider Strategies noted “AT&T's acquisition of DirecTV is the continuation of the trend of consolidation among service providers that will continue throughout 2014 and possibly beyond. The industry is at a turning point where fixed operators are under tremendous pressure from increasing costs but DirecTV is known for having a higher-end customer base, and the ARPU for the company reflects the premium service. Multiplay bundling is an important strategy for AT&T, indicated by the high number of its customers who subscribe to three and four services. Targeting high ARPU, premium customers with DirecTV plays well into AT&T's strategy." He added “Through this deal, AT&T is buying scale in Pay TV, premium customers for greater multi-play service adoption, and a nationwide footprint for quad-play services.“

Sue Rudd, Director, Service Provider Analysis for Wireless Networks and Platforms commented that: “AT&T will probably be able to integrate DirecTV spectrum and delivery mechanisms as well as OTT Video services even more rapidly if the new FCC Net Neutrality rules are adopted. It looks as if AT&T has placed a major bet on this happening. These new FCC rules could dramatically simplify the delivery of multi-device multi-service ‘multiplay' bundles across fixed and wireless; and even stimulate innovation in fixed telco services based on mobile features."

Mobile Broadband is beginning to be viewed by the FCC as ‘just another access technology'. If the eventual FCC ruling eliminates differences between fixed and mobile broadband access regulations, it could accelerate Fixed Mobile Convergence (FMC) and make it much easier organizationally for ILECs to deliver next generation services seamlessly across both fixed and mobile or satellite access. This could in turn lead to significant telecomms cost reductions as processes merge across fixed and mobile operations."

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Sue Rudd

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