Categories Earnings, Technology, U.S. Markets News

Net neutrality and the AT&T-Time Warner ruling – what’s in it for us?

Two major events are happening this week. The first is that starting today, the net neutrality rules that came into effect during the Obama administration will no longer be valid. The second is the fate of the AT&T-Time Warner deal. And these are both more intertwined with each other than you think.

So much has been said about the net neutrality rules that made all web content equally accessible to everyone. Supporters of the net neutrality repeal believe it will be beneficial to competition and will serve to improve internet services while those who oppose it believe this will give broadband providers too much power allowing them to tamper with the speed and access to content and also charge hefty prices for fast access.

Internet service providers have promised that they won’t play dirty, but skeptics are not convinced. There are those who believe that things will not change overnight and in the event of any bad behavior the Federal Trade Commission (FTC) will straighten things out. However, net neutrality advocates believe there is no guarantee for fair play in future and that the FTC might not be able to bring the companies to book in the event of unfair behavior.

If the AT&T-Time Warner deal is approved, AT&T will be a massive company with access to content and distribution

How does the AT&T-Time Warner verdict figure into all this? There are great hopes that the AT&T (T) deal with Time Warner (TWX) will be approved and if that happens, AT&T will be a massive company with access to content and distribution. That’s a lot of power for a single entity. It is also believed that this threat is visible to all and thus, provisions will be made to ensure that doesn’t happen.

It is likely the judge will impose conditions on AT&T and Time Warner including, but not limited to possible disposal of assets or other measures to ensure no harmful competitive behavior in future. There are also chances that the DOJ will not stop if the merger is approved and will appeal against it once more.

In the event that the merger is approved, there will be many more mergers that will follow suit, even those that have been previously halted over antitrust concerns.

Many more media and telecom companies will attempt to merge which will create larger entities with a lot of power. Comcast (CMCSA), for one, is all set to go for Fox’s assets if the AT&T-Time Warner merger is approved. The decision here will determine how horizontal and vertical mergers are dealt with going forward.

A wave of consolidation set to take place in the media-telecom industry combined with lower accountability on net neutrality is likely to prove itself a dangerous combination that raises quite a bit of uncertainty for the consumer.

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