AT&T offers low-cost broadband commitment to consumers
AT&T is offering up low-cost broadband options as an incentive to government regulators currently debating the telecom giant’s year-long attempt to acquire DirecTV.
In a filing earlier this month with the Federal Communications Commission, AT&T said that should the proposed $48.5 billion deal be approved, it will, in a “reasonable time period” after closing, provide a “low-income discount program” to “qualifying” customers in its wireline footprint for four years “beginning a reasonable time period after closing,” with those discounts ending after four years.
AT&T said the discount program includes making available a DSL-based broadband service with speeds up to 5 megabits at $10 per month for a one-year period, rising to $20 per month for the remainder of the commitment, in markets where it currently offers broadband speeds in excess of 3 Mbps. In markets where its current broadband offering tops out at less than 5 Mbps, it plans to offer DSL services at up to 1.5 Mbps for $5 per month for a one-year period, rising to $10 per month for the remainder of the commitment.
The offers would only be made available to customers who: qualify for the government’s Supplemental Nutritional Assistance Program, with eligibility subject to annual recertification; are not a current AT&T wireline broadband customer or had been a customer for the previous six months; and are not currently in debt to AT&T over unpaid services.
AT&T’s claims of “broadband” service could run afoul of a recent push by the FCC to classify broadband services at 25 Mbps for downloads and 3 Mbps for uploads. The previous benchmark, which was set in 2010, defined adequate broadband as 4 Mbps download speeds and 1 Mbps upload speeds.
AT&T had previously committed to expanding broadband coverage to 15 million rural homes; continue to offer a standalone broadband service providing at least 6 Mbps speed “where feasible” in current markets at a fixed priced for three years; continue offering a standalone DirecTV service for at least three years; and continue its commitment to net neutrality efforts.
More importantly for the wireless industry, AT&T said it remains committed to spending at least $9 billion in the government’s planned 600 MHz incentive auction scheduled for next year if there is sufficient spectrum made available for a nationwide 20 megahertz footprint. AT&T recently shelled out more than $18 billion tied to winning bids in the FCC’s Auction 97 proceedings.
Deal proposed last year, remains on hold
The transaction, which was announced more than one year ago, continues to sit at Day 170 out of a potential 180-day FCC review process, a date it has been stuck on since the FCC stopped the review process in mid-March. AT&T had previously expected the deal to close before midyear, but late last month was forced to file an extension with the Securities and Exchange Commission “to facilitate obtaining final regulatory approval required to close the merger.”
AT&T earlier this year raised $17.5 billion in a bond offering tied to the proposed deal, which at that time The Wall Street Journal said was the second-largest of the year. The bond offer called for the deal to close by Nov. 30 or AT&T must redeem a hefty portion of the notes “at a redemption price equal to 101% of the principal amount of the notes, plus accrued but unpaid interest to, but excluding, the redemption date.” The Wall Street Journal cited an investor following the sale as stating that the bond offer drew approximately $68 billion in orders, suggesting a positive reaction to the offering.
The proposed transaction had been tied to Comcast’s attempt to acquire Time Warner Cable that in April was scuttled by regulators, with analysts in general more positive on the progress of the AT&T-DirecTV deal due to it not being as vertically oriented.
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