What AT&T’s Satellite Deal Might Mean

[Commentary] Megamergers always raise lots of questions. And that’s particularly true of the telecommunications industry with its high barriers to entry and limited competition.

AT&T says that its purchase of DirecTV will be good for consumers, and it is promising several goodies like a pledge to bring high-speed Internet service to rural America to get regulators to look favorably upon the deal. But the company has not yet made a convincing case. As with the Comcast-Time Warner Cable deal, regulators should carefully analyze this acquisition for its impact on the market for paid TV service. The biggest potential losers of this deal are consumers in 22 states -- including California, Texas and Illinois -- where AT&T already provides its own TV service through its U-Verse network. A merger with DirecTV would be bad for these customers because it would reduce choices in markets where AT&T currently competes with cable companies as well as the two national satellite-TV firms, DirecTV and Dish Network. This much is clear about AT&T’s move to buy DirecTV, along with the Comcast-Time Warner Cable deal: These mergers will encourage other telecom companies like Dish Network, Verizon, Charter, Sprint and T-Mobile to contemplate deals of their own.

Officials at the Federal Communications Commission and the Justice Department, who have to review mergers for antitrust concerns, need to make sure consumers are not left worse off by these deals.