AT&T defends DirecTV deal to U.S. regulators

By Alina Selyukh and Marina Lopes

WASHINGTON (Reuters) - AT&T Inc's (T.N) acquisition of DirecTV (DTV.O) would offer consumers access to video in a variety of media and give the company scale to compete with larger cable competitors, AT&T told U.S. regulators on Wednesday.

AT&T, the No. 2 wireless carrier, outlined why its proposed $48.5 billion acquisition of the largest U.S. satellite TV provider would benefit consumers in a filing with the Federal Communications Commission, which will examine whether the merger is in the public interest.

"Each company cannot provide on its own what consumers increasingly demand: an integrated and efficient bundle of high-speed broadband and high-quality video from a single provider,” AT&T said in the filing.

A merger would allow customers to save on services through wireless, wireline and television bundles AT&T cannot provide because of its limited video footprint, the company said.

The merger will also face an antitrust review at the U.S. Department of Justice, where critics are expected to raise questions about the areas where AT&T's and DirecTV's TV services overlap.

In Wednesday's filing, AT&T said that DirecTV cannot offer bundled services, while AT&T's video subscribers predominantly choose bundled services, meaning if they abandon AT&T they would be much likelier to switch to cable competitors.

AT&T said it needed DirecTV's customer base to give it scale to compete with its "principal competitors," Time Warner Cable (TWC.N) and Comcast (CMCSA.O).

Comcast's $45.2 billion (26.92 billion pounds) bid for Time Warner Cable, which regulators are currently reviewing, would put AT&T at a further disadvantage, it said in the filing.

"Cable has long been the dominant provider of broadband and video services in the United States, and if the Comcast/Time Warner Cable/Charter transactions are completed, that dominance will swell even further," it said.

If the merger is approved, AT&T promised to continue to offer broadband Internet at reasonable market-based price and to offer DirecTV satellite video service at a standard nationwide price for three years after the merger's closing.

The company also reaffirmed its pledge to abide by the FCC's 2010 "net neutrality" rules, which prohibit Internet service providers from blocking or slowing down users’ access to websites and applications for three years after the closing of the acquisition, even though they were thrown out by an appeals court in January.

The company also said if the merger is approved, it plans to expand its broadband offerings to 15 million customers primarily in rural areas.

(Reporting by Marina Lopes and Alina Selyukh; Additional reporting by Liana Baker; Editing by Leslie Adler)