AT&T-Time Warner merger: What are the global implications?

CEOs from AT&T and Time Warner are aiming today to convince a United States Senate anti-trust panel that their USD 85.4 billion proposed merger will lead to increased competition and better customer experiences.

Key Speakers At The WSJDLive Global Technology Conference

Randall Stephenson, chairman and chief executive officer of AT&T Inc., left, speaks while Jeffrey “Jeff” Bewkes, chairman and chief executive officer of Time Warner Inc., listens during the 2016 WSJDLive Global Technology Conference.  Photographer: Patrick T. Fallon/Bloomberg via Getty Images

“It would be a gross mistake to view this transaction as anything but pro-competitive,” AT&T CEO Randall Stephenson said in his prepared remarks, adding that the deal would create more competition while accelerating the next generation of advanced wireless broadband.

The proposed merger of the second-largest telecommunications company in the US with the media conglomerate that owns a content portfolio including CNN and HBO is one of the biggest media-communications mergers to date. As such, it is being closely watched worldwide.

Authorities are expected to take several months to scrutinize the deal, which, if approved, could trigger a wave of media-communications consolidation that helps give cable and wireless providers the content they need to innovate more quickly as they launch new mobile and digital services needed for growth.

Anti-trust issues?

Yet critics say that the AT&T-Time Warner merger will limit consumer choice and lead to increased prices, and concentrates too much “power in the hands of too few.”

“The only thing that similar mergers have brought customers is higher bills to pay off new debts and compensate top executives,” Tim Karr, senior director of strategy of DC-based public interest group Free Press, told Motherboard, citing prices hikes that followed AT&T’s purchase of DirecTV last year.

Meanwhile, advocates of the deal argue that it does not raise anti-trust issues because the companies operate at different levels of the distribution chain. This, they say, would make the deal a ‘vertical merger’, in which the merging companies can benefit from increased operational efficiencies while the number of competitors remains the same.

Jeff Bewkes, Time Warner’s chief executive, said that it would benefit their rivals, whose content will appear on new mobile and digital services launched by AT&T.

“If the future of entertainment is going to be about selling content to consumers directly, then the strongest players will be the ones with the most customer data. The combined AT&T-Time Warner will have a trove of it,” Matthew Garrahan wrote in the Financial Times.

International impact: the key role of content

Indeed, delivering high-quality, relevant content is one of the keys to driving consumer demand for information and communication technology (ICT) products and services worldwide.

Failure to provide “locally relevant content” has routinely been cited as one of the top stumbling blocks for connecting the unconnected in emerging markets.

For instance, despite having the biggest and fastest-growing mobile market in the world, Asia’s internet adoption is slow with only 45 per cent actively accessing the internet via mobile, according to a GSMA Intelligence survey. The survey showed that 72 per cent of respondents said a lack of awareness and availability of locally relevant content was the primary reason they were not using the Internet.

Beyond the US’ borders, the AT&T-Time Warner merger, if it goes through, could provide future insight for how content providers and distributors can team up to get the right content into the right consumers’ hands by using vast amounts of consumer data to customize offerings.

In the meantime, US authorities will debate whether and how a telecoms company as big as AT&T should control so much content – a debate that could inform ICT regulatory policy across the globe in today’s era of rapid convergence. We’ll be watching.

ITU News

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