AT&T takes issue with Netflix on DirecTV gobble

We think that plan for a $49bn buy is just fine, thank you

AT&T has fired a fresh salvo in its exchange with Netflix over the proposed acquisition of DirecTV.

The US telecoms giant issued a filing with the FCC disputing the claims made by Netflix that its would-be merger is an antitrust concern.

"Before it began pressing for deal conditions in support of its own business agenda, Netflix believed that the merger of AT&T and DIRECTV would benefit online video distributors and their customers," AT&T wrote in its letter.

"Indeed, shortly after the transaction was announced last year, Netflix’s CFO publicly stated that this deal is a 'plus for Netflix'."

The letter refers to comments made by Netflix CFO David Wells at a JP Morgan technology summit last year.

In the event, Wells decried the since-deceased Comcast/Time Warner merger and noted that the proposed AT&T/DirecTV monolith would have short term gains for Netflix, and that the company was primarily concerned with consolidation in the internet service market over television providers.

"But there was a mention of rolling out additional 15 million broadband household that would be a plus for Netflix I think," Wells said.

"On the Time Warner cable side, Comcast side, we're mostly concerned with the fact that cable modem is a dominant technology in the provision of internet services and it's not equivalent competition for DSL and other things."

The comments come after Netflix filed with the FCC earlier this week to air it grievances with the proposed $49bn tie-up of AT&T and DirecTV.

Netflix was careful to note that it does not actually object to the acquisition as it stands, but has some rather substantial issues with the plan, specifically that it would in fact turn AT&T into a cable and television behemoth focused on protecting its investment over the best interests of consumers.

"AT&T would become the nation’s largest multichannel video programming distributor. After AT&T’s projected broadband investments, it could become the largest ISP as well," Netflix wrote.

AT&T, for its part, says that Netflix has nothing to worry about, and even stands to benefit from the deal.

"Amid all its recent protests, Netflix neglects to mention an important fact—Netflix has entered into a long-term agreement for direct access to AT&T’s network on terms that will allow Netflix to continue to thrive in the marketplace," AT&T writes.

"Indeed, Netflix has experienced spectacular and consistent growth from 2013 to the present, including during the time periods when Netflix’s congestion occurred."

The FCC continues to wait on a decision over the proposed AT&T DirecTV merger. The commission delayed proceedings in March to take a closer look at the deal. ®

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