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This AT&T/DirecTV merger is a nightmare: Why we should all be very afraid

Antitrust is a joke. AT&T's deal to buy DirecTV is just one more step on the way to total consolidation


Andrew Leonard
May 19, 2014 8:22PM (UTC)

The breakup of Ma Bell in 1984 was one of the landmark triumphs of antitrust policy in the history of the United States. At the time, AT&T was the biggest company in the U.S. The breakup resulted in the creation of seven regional telephone companies, the "Baby Bells," along with a slimmer version of the old AT&T. A new era of telecom competition began.

But you can't keep a good monopoly down. Ever since, like horrified citizens of a post-apocalyptic wasteland about to be eaten by zombies, we've watched AT&T's constituent parts gradually reassemble themselves into a form strikingly similar to the original monster. Ma Bell lives!

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Of course, the old Ma Bell was never in the TV business, but Monday's announcement that AT&T will purchase satellite TV operator DirecTV for $48.5 billion is still proof that the  relentless logic of consolidation cannot be denied. And it raises an obvious question: What's next? Where does it all end? How big will our current giants get?

Let's take a moment to review the bizarre corporate history of the entity known as AT&T.

In 1984, Southwestern Bell was the smallest of the Baby Bells. That state of affairs did not last long. In 1987, Southwestern Bell bought the cellular phone network Cellular One. In 1995 the company changed its name to SBC Communications. In 1997, SBC bought Pacific Telesis, the Baby Bell that covered California and other parts of the Western U.S. In 1999, SBC bought Ameritech, the Midwestern Baby Bell. In 2001, SBC and Bell South merged their cellular operations to create a separate company called Cingular. In 2005, SBC bought AT&T, and then one year later, AT&T bought Bell South and Cingular became AT&T Wireless.

(Meanwhile, Verizon was busy gobbling up most of the remaining Baby Bells, as well as the long-distance supplier MCI, thus preventing little old Southwestern Bell from fully re-creating Ma Bell.)

Aside from the squelching of AT&T's proposed merger with T-Mobile in 2011, regulators have done little more than impotently wave their hands. The DirecTV merger may even sail right through antitrust review, on the grounds that the new entity will provide the necessary competition to balance out a Comcast/Time Warner cable behemoth!

But when there are only a handful of massive telecom conglomerates left, where will these companies turn for further expansion? There's one obvious answer -- the Internet. The telecom companies have already demonstrated a clear interest in being content providers -- Comcast owns NBC, and AT&T has plans to start its own streaming video service. Further synergy is mandatory! Imagine the excitement if AT&T and Facebook merged, or Comcast and Amazon became a single entity, or Google hooked up with Verizon?

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The only real question: Who would buy whom?

Just entertaining the thought of Amazon or Google owning (or being owned by) a cable or phone company makes clear why we need strong net neutrality laws going forward. But even better would be stronger antitrust enforcement. The great lesson of the initial Ma Bell breakup was that real competition can produce amazing results. After 1984, the phone business exploded with innovation and lower prices. But 30 years later, as the big continue to get ever bigger, we seem to have forgotten that lesson.


Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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Amazon At&t Comcast Consolidation Directv Facebook Google Merger Telecom Companies Timewarner

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