Honestly speaking, consumers lose in AT&T-DirecTV deal

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Honestly speaking, consumers lose in AT&T-DirecTV deal

AT&T Chief Executive Randall Stephenson said that the company's deal with DirecTV “is going to prove to be a pro-competitive and pro-consumer transaction.” (Spencer Platt / Getty Images / March 21, 2011)

Nobody should be surprised anymore by news of big, fat telecom mergers. AT&T's acquiring DirecTV for nearly $49 billion is just the latest in a long line of tie-ups among phone, cable and satellite companies.

It's the lies I can't stand.

Shortly after announcing the DirecTV deal over the weekend, AT&T's chief executive, Randall Stephenson, said that "this is going to prove to be a pro-competitive and pro-consumer transaction."

His counterpart at DirecTV, Mike White, said that "this compelling and complementary combination will bring significant benefits to all consumers."

Oh, please.

Why can't these guys just man up and admit the truth: "We're merging because this will give us more clout against the cable industry in our efforts to dominate the market."

The giveaway wasn't in what Stephenson and White said, but in what they didn't say. Two words were noticeably lacking in their deal announcement: "lower prices."

Instead, the companies touted their ability to offer "new bundles," "a more competitive bundle" and "a better bundle" of phone, Internet, TV and wireless services.

And that's fine for AT&T, which wants to lock people in to as many services as possible to make it harder for them to jump ship.

For consumers, however, bundles of telecom options are a far lower priority than reduced bills and better overall service.

So when Stephenson says "pro-consumer," what he really means is "pro-company." His company, in particular.

Craig Aaron, president of the advocacy group Free Press, said AT&T and cable giant Comcast, which has announced its own $45-billion takeover of Time Warner Cable, have nothing up their sleeves except the tired old notion that bigger is better.

"The captains of our communications industry have clearly run out of ideas," he said. "Instead of innovating and investing in their networks, companies like AT&T and Comcast are simply buying up the competition."

Consumers are the last thing they're thinking about, he said.

"These companies don't care about providing better services or even connecting more Americans," Aaron declared. "It's about eliminating the last shred of competition in a communications sector that's already dominated by too few players."

Bingo.

From a purely corporate point of view, consolidation makes a lot of sense. Fewer rivals means more ability to raise prices and not have to compete on costly fronts such as introducing new features and providing better reception.

Delara Derakhshani, policy counsel for Consumers Union, predicted that other telecom heavyweights will now feel pressure to cut their own merger deals if they want to cling to whatever market advantages they enjoy.

"The rush is on for some of the biggest industry players to get even bigger, with consumers left on the losing end," she said.

Many Wall Street analysts believe the next likely mega-merger will be Verizon making a bid for Dish Network — a mirror image of the AT&T-DirecTV deal. On the wireless front, Sprint is expected to redouble its efforts to tie the knot with T-Mobile.

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