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AT&T Proposes Broadband Solution for Low-Income Households

In a filing with the FCC, AT&T said it would provide the discount program for a period of four years.

by Rick Barrett, Milwaukee Journal Sentinel / July 10, 2015

(TNS) — Low-income households would receive Internet service for as little as $5 per month under an AT&T Inc. proposal to federal regulators contemplating approval of the company's $48 billion bid for DirecTV.

In a filing with the Federal Communications Commission, AT&T said it would provide the discount program for a period of four years.

It would create two new discount Internet service plans for households that are eligible for the government's Supplemental Nutritional Assistance Plan.

One plan would be for 5 megabits-per-second service for $10 a month for the first year, rising to $20 a month after that. The other plan would be for 1.5 Mbps service for $5 a month, rising to $10 a month after the first year.

Those are maximum speeds you could expect under the plans, and they're not especially fast by today's Internet standards. But either plan would be adequate for email and web surfing.

The FCC "should promptly approve the (DirecTV) transaction so that consumers can begin to enjoy the resulting pro-competitive, public interest benefits," AT&T counsel Peter Schildkraut said in the FCC filing.

AT&T isn't the first telecom company to offer these kinds of discounts in an effort to get a multibillion-dollar deal approved by the government.

Charter Communications, as part of its proposed merger with Time Warner Cable, has offered something similar. In 2011, Comcast Corp. offered low-cost service as part of its takeover of NBC Universal.

"It's lip service to the poor, in order to get the feds to approve a deal," said Barry Orton, a telecommunications professor at University of Wisconsin-Madison.

"This is a copycat kind of program. First it was Comcast, then Charter, and now AT&T has jumped on board with it," Orton added.

AT&T, which is looking for new ways to gain customers through wired or wireless services, is planning to spend $48.5 billion to buy satellite-television provider DirecTV.

All telephone companies have been looking beyond phones for growth, and AT&T has been aggressive through bids like the DirecTV deal.

AT&T already provides television services to about 6 million households in 21 states, through fixed-wire lines, and DirecTV would add more than 20 million households nationwide.

But critics of the deal say it's not consumer friendly.

It "offers no substantial benefits to American consumers, and it will lead to higher prices, less competition, and an expansion of the notorious anti-consumer practices that DirecTV currently imposes on its customers," the group Consumer Watchdog said in an earlier statement.

"The deal may be good for Wall Street fat cats, but AT&T has failed to demonstrate that the merger is in the public interest," said Consumer Watchdog, a Santa Monica, Calif.-based nonprofit that addresses issues in health care, insurance reform, telecommunications and other areas.

The low-cost broadband programs could drum up new business for AT&T as studies have shown that once people subscribe to the service, they usually don't drop it when the discount expires.

Time Warner Cable has a $14.99 per month Internet option, for speeds up to 2 Mbps, that's available to anyone regardless of income.

In some markets, Time Warner experimented with a low-income discount. But it determined that the $14.99 option, for everyone, was a better choice, said spokesman Mike Pedelty.

The advantage of Time Warner's price is it doesn't increase after an introductory period, according to Pedelty.

The FCC could rule on the DirecTV deal yet this summer.

About half of the people who don't subscribe to the Internet say it's because they don't think the service is relevant in their life, said Bill Esbeck, executive director of the Wisconsin State Telecommunications Association.

"And, in many cases, when a computer costs $800, that presents a more significant hurdle than the monthly charge," Esbeck said.

The Associated Press contributed to this report.

©2015 the Milwaukee Journal Sentinel, Distributed by Tribune Content Agency, LLC. 

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