Feature Article

October 28, 2016

Yesterdays Wars, Today's Regulation! Does HBO From AT&T Really Matter?

When AT&T’s Divestiture occurred in the 1980s, people thought the battle of the future would between AT&T and IBM. The world was turning digital and computing was the future for us all. The viewpoint was that AT&T was going to use its “monopoly” on the local loop to control our future buying power for digital equipment. In addition, the assumption was that Sprint, MCI and others had been disadvantaged by AT&T’s control of the bundle of services that combined long distance. MCI did a brilliant job during Divestiture of hiring almost every good communications law firm, leaving AT&T to defend itself with mostly internal resources.

Now perhaps, we should look at divestiture as a huge success, even though the world did not match up to the model of the 1980s. In fact, it was almost totally the opposite and it continues to flow in a different direction.

Sprint sells off its local loop. Verizon sells off its local loop. Cable operators provide bundles and the concept of long distance is virtually wiped out. Even international dialing is nothing like it used to be.

So if the models associated with the need to divest is gone from a communications standpoint, what about computing?

Once again, the world has changed in amazing ways. AT&T no longer makes equipment. IBM rarely makes equipment. Processing is cheap, storage is cheap and transport is (as indicated above) cheap. Computing is now in the cloud, which is dominated by companies like Amazon, Google and Microsoft.

The question has to be asked then what restrictions are needed for the future?

I would say none, but I have never bought into to Net Neutrality. However, Net Neutrality is now being brought up again as the rationale to block AT&T’s acquisition of Time Warner. It should be remembered that back at the start of HBO it was a service that came from your cable operator. Today HBO is completely independent of the Time Warner cable assets.

Does it make sense that the same rationale to block the acquisition of T-Mobile is being used to block the acquisition of content?

It is rare these days that bundles are compelling. John Oliver mocked the triple play reminding us that “Land” lines were like slippers -useful, but limited. The bundle of DirectTV with AT&T’s service has not been a factor that has made the stock market move.

It’s also clear that content is being bundled in very competitive ways. Amazon Prime, YouTube and Netflix are creating content. Recently, HBO has fared poorly at the awards ceremonies against these services.

If the over the top world has been competitive on content, what makes AT&T a concern?

IMHO, the answer is nothing.

Regulators should accept the fact that yesterday is gone and tomorrow is uncertain.

AT&T deserves the chance to make its own bets on where it will lead.




Edited by Ken Briodagh


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