Why the AT&T-Time Warner merger could be bad news for consumers

You might be disappointed to hear this but expect to spend more to access television content, mobile phone services and other communication aspects of your life. This comes after a federal judge, Richard Leon, ruled against the Department of Justice (DoJ) and approved the $85.4 billion merger between AT&T and Time Warner.

In fact, Leon even told DoJ not to appeal the case, thus allowing the deal to close by a self-imposed June 21 deadline, which otherwise would trigger a $500 million “break-up” fee. We can assume that the judge wouldn’t want any executives to lose money.

This means that we are going to have a superior power that controls a bigger part of the American airwaves and has a huge amount of money to support political ends. Furthermore, this vertical monopoly could affect us in many other ways that we have never imagined. It’s hard to over-emphasize the impact this ruling might have.

However, industry analysts and consumer advocates have opposed this move saying it will reduce competition and it might turn out to be the most dangerous decision for consumers. If the deal encourages other large mergers, they say, such trends could accelerate.

Time Warner owns a vast array of media brands, including CNN, Turner, HBO, the Cartoon Network, Warner Bros., and many individual shows everything from “Game of Thrones” to “The Big Bang Theory.” All these properties will now be united with AT&T, one of the country’s biggest internet and cellular providers as well as the owner of DirecTV, a satellite TV company.

In addition to DirecTV, AT&T owns DirecTV Now, a cable replacement streaming services with just a handful of competitors in an emerging business. In theory, AT&T could refuse to enter content deals with DirecTV’s competitors or jack up prices to the point where smaller services would be shut out of the market.

“Allowing these two giants to merge hands AT&T control of not only the largest distribution platform but some of the most valuable content on television today,” says Jonathan Schwantes, senior policy counsel for Consumers Union, the advocacy division of Consumer Reports.

“There is a significant opportunity for AT&T to exploit the value of Time Warner’s content in ways that could hurt both consumers and competition alike,” he says. “This merger, combined with the repeal of net neutrality protections earlier this week, is a big loss for consumers.”

While consumers may not see a big shift right away, says Craig Moffett, a senior research analyst and founding partner of the research firm Moffett ­Nathanson, the deal is a sign of a brewing sea change. “Longer term, the writing is on the wall for a very different media ecosystem, one where content exclusivity is the rule rather than the exception,” he adds.

For example, because AT&T will now have control over a wide array of content from Time Warner including CNN, HBO, and The CW it will have more power to affect its competitors’ pricing. And with Time Warner’s content behind it, AT&T will have more leverage to charge higher fees to other cable and satellite television providers such as DISH Network or Spectrum. And inevitably, any higher costs will be passed onto the consumer.

Cable consumers may face the same quandary as those who use multiple streaming platforms and devices. For instance, Amazon doesn’t allow Prime video streaming on Google Chromecast. Therefore, consumers may need to jump through more hurdles to access their favorite shows.

Also, the growth of streaming services may come to an end. For instance, we are all aware that cable and satellite TV is such a cash cow for AT&T and the company could have a vested interest in limiting the expansion of streaming services. And one way AT&T could achieve that through its ownership of Time Warner is by restricting access to its film and TV content. In doing so, AT&T could make competing streaming services appear less attractive to some viewers, thus limiting their subscription base and the ability to grow.

Maybe you should ask yourself, how are Netflix, Amazon, Hulu etc. going to sell you anything over your AT&T-provided internet if AT&T decides not to allow them to do so? Well, it can be seen that the internet service in the United States today is at best an oligopoly and allowing these bigwigs to control content consumers want is the beginning of high prices and stagnated innovation. Our nation seems to exist for the benefit of large corporations, not human beings.

Are we ready for these changes in the telecommunication sector?

Do we have rights anymore?