Netflix urges FCC to reject AT&T, DirtectTV merger

Netflix Inc has called on the US Federal Communications Commission to reject the pending $48-billion merger of AT&T Inc and DirecTV unless its concerns about the deal were addressed.

According to a Netflix spokeswoman, the video streaming company was not opposed to the merger in principle but was seeking remedies that would help resolve its competitive concerns.

"While we are participating in the government's review, we are not opposing the merger," the spokeswoman, Anne Marie Squeo, said in a statement.

"We've been highlighting concerns about AT&T's broadband practices and the need for appropriate remedies since last September."

"The combination of these companies would increase the incentive and ability to limit competition and innovation in the online video space," Squeo said.

Regulatory disclosures posted yesterday say Netflix representatives met recently with over 20 FCC officials and raised concerns about the combined company's gatekeeping power as it would emerge as the country's largest pay-TV provider with potentially expansive broadband reach.

Though the filing did not amount to a formal "petition to deny" the merger, it marked the strongest language yet from Netflix on the proposed merger of the No 2 wireless carrier and the largest US satellite-TV company.

Netflix's meeting with the FCC's merger reviewers on 30 April came only days after the agency's strong opposition helped thwart a mega-deal between the two largest US cable providers, Comcast Corp and Time Warner Cable Inc (See: Comcast scraps merger agreement with Time Warner).

The growing online video and over-the-top video markets had emerged as a critical issue in the review of that merger. Netflix, Dish Network Corp, a number of media groups, and public interest organisations had strongly opposed the deal.

In a letter to the regulators, Netflix said if the deal was completed in its current form, AT&T could decide to hurt online video producers like Netflix and Hulu in order to protect the investment it would make in DirecTV.

It could  do that with the implementation of data caps or usage-based pricing that would make Netflix video more expensive to watch, Netflix said.  The company added that AT&T had already shown it was willing to degrade consumers' access to Netflix streams.

"AT&T's investment in a business model that profits by selling bundled programming packages will result in a powerful incentive to protect that model," Netflix said in the letter.