AT&T Nears US Approval of $48.5 Billion DirecTV Merger

The Federal Communications Commission Chairman Tom Wheeler on Tuesday recommended that the five-member commission vote to approve the merger, and the Justice Department said the deal did not pose a significant risk to competition.

AT&T and the FCC have spent recent weeks negotiating the conditions of the deal that combines the No. 2 wireless carrier with the largest satellite-TV provider, giving DirecTV a broadband product and AT&T new avenues of growth beyond the maturing wireless service. The deal was announced in May 2014.

The proposed approval includes a requirement that AT&T build out high-speed Internet connections to 12.5 million customer locations and share with the FCC all traffic exchange agreements it strikes with content and web transit companies.

AT&T would also pledge to count its affiliated video services towards any data caps on fixed broadband connections, according to the proposed conditions.

In a first for the FCC, Wheeler is also seeking to set up an independent officer to help ensure AT&T complies with the conditions in the long run.

Wheeler's outlined conditions mark an end of negotiations between the company and the agency as the FCC sought to make sure that the merger serves the public interest. The Justice Department ensures that mergers comply with antitrust law.

Video companies Netflix Inc and Dish Network Corp, traffic company Cogent Communications Holdings Inc and others had pushed for limitations to AT&T's power to slow down or charge fees for the web traffic travelling through its networks, as well as protections for rival video services.

"The commitments that the proposed FCC order includes, if adopted, will provide significant benefits to millions of subscribers," Assistant Attorney General Bill Baer said in a statement.

AT&T welcomed the Justice Department's completion of the review and said it was looking forward to the FCC approval to begin providing consumers "the benefits of this combination."

The company had earlier committed to expand access to broadband service in rural areas and to offer standalone Internet service at speeds of at least 6 Megabits per second to ensure consumers can access rival video services online.

The success of the merger in passing regulatory muster is in sharp contrast to the recently derailed rival mega-merger between cable and Internet providers Comcast Corp and Time Warner Cable Inc.

That deal was rejected in April largely over the combined companies' reach into the broadband market.

Comcast's smaller competitor Charter Communications Inc has bid $56 billion for Time Warner Cable.

© Thomson Reuters 2015