Samantha Bookman

AT&T’s announced $85.4 billion acquisition of media giant Time Warner signals a ramp-up in consolidation of content assets that many video industry players and analysts predicted would happen. Gaining ownership of HBO and its online outlet, HBO Now, as well as Warner Brothers and Turner -- which has a classic-movies subscription video on demand (SVOD) service waiting in the wings -- gives AT&T a huge chunk of content for its pending linear over-the-top (OTT) service, DirecTV Now.

AT&T's deal for Time Warner is just the latest – but so far the largest -- in a series of maneuvers by larger corporations to scoop up pricey media and entertainment assets with key pieces of online video delivery services and infrastructure. For example, in August Disney carved away BAM Tech from Major League Baseball Advanced Media, buying a 33 percent share. And last year and early into this year, major cloud players including Amazon and IBM bought up numerous delivery providers. On the surface, Time Warner's media assets should allow AT&T to compete directly with linear multichannel video programming distributors (MVPDs) like Sling TV and PlayStation Vue, and give Netflix, Amazon and Hulu a run for their money. “The need to be competitive in this area is becoming paramount, with the likes of Hulu and YouTube preparing linear-channel-based online subscription offerings of their own,” said IHS Technology Director of Research Ted Hall. Analyst Rich Greenfield of BTIG said that AT&T's strategy in buying Time Warner is to get direct access to Warner Bros and HBO's "content engines." But other analysts are somewhat skeptical that owned content will help AT&T long-term.

“The Internet has eaten the TV,” an analyst for The Diffusion Group pointed out in a post arguing that the Federal Communications Commission needs to stop futzing about with set-top box regulation and instead accept that TV’s future lies in apps, not hardware. With the FCC’s vote on new “unlock the box” set-top rules due Sept 29, TDG analyst Joel Espelien sided squarely with the commission on its “surprisingly radical and surprisingly obvious” new policy recommendation – one that is more in line with the pay-TV industry’s counter-proposal -- that multichannel video programming distributors (MVPDs, or pay-TV) provide an app-based alternative to set-tops after a two-year transition period. That alternative would run on a streaming device like Roku or Google Chromecast and obviate the need to lease a box. Espelien suggested that the industry needs to change its perspective on streaming video and its place in the greater broadband-based internet. Getting access to broadband is far more important than being able to tune into a TV program; that’s why the FCC has encouraged programs that help lower-income Americans get high-speed broadband connections. And that’s why TV has become an “option,” not a necessity, he said.

The Alaska Plan approved recently by the Federal Communications Commission is going to work, said the Alaska Telephone Association (ATA), the leading proponent of the funding plan, mainly because it provides “predictable [Universal Service Fund] support payments” that are critical to keeping carriers in business in the United States’ highest-cost telecommunication operating area. Under the new plan, 15 wireline and wireless providers in the state will receive over $1 billion in federal funds over a 10-year period to invest in their telecommunications infrastructure. “Alaska represents the highest-cost local telecom construction and ongoing operating costs in the nation,” said Ed Cushing, president of the ATA. “Providing rural Alaskans with high-quality, affordably-priced broadband service simply is not possible without the predictable USF support payments secured by the FCC's approval of Alaska Plan." Under the plan, which differs quite a bit from other universal service funding in the lower 48 states, both wireline and wireless carriers in the state will receive funding that is fixed at adjusted 2011 rates.

AT&T is off the hook in a data throttling lawsuit that the Federal Trade Commission brought against the carrier. The Ninth Circuit Court of Appeals dismissed the suit in a move that could have ramifications for both wireless and wireline data delivery. In its decision, the appeals court reversed the decision of a lower court, which had denied AT&T’s motion to dismiss the case, filed by the FTC in 2014. The FTC had accused AT&T of slowing the data speeds, or “throttling,” heavy users on its unlimited wireless data plan, in some cases by as much as 90 percent. The practice, according to the commission, was deceptive. For its part, AT&T didn’t deny that it had throttled some users, but instead argued that an exception is in place for common carriers. The Ninth Circuit agreed with this argument. The FTC has not yet said whether it would appeal the decision, saying that only that it is “considering our options for moving forward.”

Other battles over traffic prioritization, bandwidth throttling and other forms of traffic shaping were key factors in the passage of net neutrality rules by the FCC in early 2015. The rules specifically bar throttling. AT&T will probably not face any other actions around its wireless throttling. The FTC’s lawsuit was originally filed before net neutrality rules came into effect. Since the FTC isn’t suing about the fairness of the throttling practice itself, but about AT&T’s alleged failure to clearly disclose its throttling policy to customers, the judge says this is not an issue of regulatory overlap.