UPDATED 22:24 EDT / JUNE 14 2018

APPS

AT&T’s acquisition of Time Warner closes, raising concerns over net neutrality

AT&T Inc.’s $85 billion takeover of Time Warner Inc., the acquisition closed today following a ruling Tuesday by a U.S. District Court judge that overruled a ban by the Department of Justice, but the deal is raising concerns in the tech community over net neutrality.

The combined company now includes leading entertainment and online streaming properties such as HBO, not only presenting a major challenge to companies such as Amazon.com Inc. and Netflix Inc., but also adding to concerns that the combined entity may take advantage of the recent abolition of the Obama administration’s net neutrality laws.

“The content and creative talent at Warner Bros., HBO and Turner are first-rate,” AT&T Chairman and Chief Executive Officer Randall Stephenson said in a statement. “Combine all that with AT&T’s strengths in direct-to-consumer distribution, and we offer customers a differentiated, high-quality, mobile-first entertainment experience. We’re going to bring a fresh approach to how the media and entertainment industry works for consumers, content creators, distributors and advertisers.”

For the wider technology and entertainment industries, the deal opens the door for potential future megamergers. Alphabet Inc., Amazon, Apple Inc. and even Microsoft Corp. are all being rumored to have taken an interest in buying entertainment assets.

On the net neutrality front, AT&T could now, in theory, give preference via its fiber internet and cell phone networks to services such as HBO Now over Netflix and Amazon Prime. That preference could take different forms.

In a worst-case scenario, AT&T could choose to block access to subscribers to Netflix and Amazon Prime, the oft-cited fear of net neutrality advocates, although the chance of that occurring are fairly slim. The more likely scenario, albeit not a given either, is that AT&T may decide not to count downloads and streams from Time Warner properties against data caps on its mobile data plans.

Offers where access to particular services don’t count against data caps are common outside the U.S. in countries such as Canada, Australia and the U.K., with unlimited access to services such as Netflix offered as part of promotions to sign up to particular mobile data plans.

Although AT&T now has its own service in the form of HBO Now, it’s reasonably argued that discriminating against Netflix or Amazon Prime would not only be a bad move for the company but also a marketing risk given there are still alternative suppliers.

Image: cerillion/Flickr

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