By Ian Dillingham, Summer Editor in Chief
Published May 21, 2014
This weekend, AT&T announced plans to acquire the satellite television provider DIRECTV for nearly $50 billion. This follows just a few months after Comcast, the Internet and television provider for most of Ann Arbor, announced a $45 billion merger with Time Warner Cable.
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Amanda Lotz, associate professor of Communication Studies, said residents of Ann Arbor should not expect any changes in service due to the recent moves.
While many areas of the city, such as the residential areas on the West Side, are covered solely by Comcast, there are select areas, such as those immediately north or south of Central Campus, which receive coverage through Comcast and AT&T. Lotz said these areas, where consumers have the option of choosing between two providers, are a rare occurrence in the cable industry.
“The cable industry basically operates as a monopoly in any given area,” Lotz said. “In any given place, you don’t have a choice.”
Television providers argue that mergers are necessary to increase bargaining power with media companies — such as Disney, CBS, Fox and others — that provide programming for their consumers. They claim that, by increasing their markets, they can decrease costs when bidding for programs.
Lotz contended that this argument lacks substantiation. While the companies may gain greater bargaining power, she said those savings have not been passed on to customers.
“It could easily be argued that this monopolistic structure isn’t so great for consumers,” she said.
Constant mergers and monopolistic practices also provide such companies with very little motivation to improve service, Lotz said. Compared to some European providers, she said U.S. broadband is in many respects technologically inferior.
Experts have noted that the AT&T-DIRECTV merger was motivated, to a large extent, by a shift toward mobile television services. In the same way that television delivery moved from the airways to cable in the 1950s and 60s, the future of television may see a move from cable delivery to wireless services — accessed through mobile phones and tablets.
“Delivery technologies change,” Lotz said. “The advantage of wireless is its mobility — we are still a long way from the kind of compression technology to allow the amount of data to be transmitted wirelessly relative to a wired line.”
Given that some of the technology needed has yet to be developed, the transition will likely be a very lengthy process.
“Is that probably where we’re ultimately heading — yes,” Lotz said. “But that’s decades away.”