Netflix, Inc. (NASDAQ:NFLX) petitioned the Federal Communications Commission (FCC) to reject the proposed $48 billion merger between AT&T Inc. (NYSE:T) and DIRECTV (NASDAQ:DTV) during a recent meeting.
The online video streaming company also submitted an ex parte letter to provide a notice of its meeting with the Commission staff on April 30. In the letter, Netflix reiterated its position against the proposed merger.
Netflix says a merger would make AT&T the largest MVPD, ISP
Netflix told the FCC that the proposed merger would make AT&T the largest multichannel video programming distributor (MVPD) in the United States. The deal would also make AT&T the largest internet service provider (ISP) in the country.
“These two dynamics create a powerful incentive for AT&T to protect its investment in DIRECTV’s bundled programming by using its ability to harm OVDs to prevent or delay cord-cutting and cord shaving,” said Netflix.
According to Netflix, if the FCC approves the proposed merger, the combined company would have an increased ability and incentive to harm online video distributors (OVDs) and other edge based internet content. AT&T perceives such entities as competitive threats.Combined company could harm OVDs
Netflix emphasized that the market power of the combined company would intensify AT&T’s anticompetitive behavior.
“AT&T already has a demonstrated ability to harm OVDs by leveraging its control over interconnection to degrade its own customers’ access to Netflix’s service,” said Netflix.
The online video streaming company added that AT&T also showed interest in using data caps and usage-based pricing methods. Netflix said AT&T could apply its methods “discriminatorily” to advance its services.
Netflix added that AT&T could preserve its market advantage if it can slow the development of the OVD industry or by foreclosing access to broadband customers or imposing discriminatory data caps. It could also shift toward competitive online video offering and away from bundled video/broadband offering.
Furthermore, Netflix pointed out that AT&T and DIRECTV failed to invalidate the likelihood of the harms of the proposed merger. The online video streaming company stressed that the deal will result in a powerful incentive to protect its business model that profits from selling bundled programming packages.