More and more American households are cutting the cable TV cord every year. There are so many streaming services to choose from these days, it's hard to justify paying a massive monthly bill from cable and satellite providers. That's one reason TV antennas are making a comeback.
The cord cutting trend could be a big reason AT&T is acquiring Time Warner. If you haven't heard, AT&T recently agreed to purchase Time Warner for over $80 billion. But what does this acquisition mean for you?
The deal still needs government regulatory approval before it becomes official. If approved, this will be AT&T's second large acquisition since 2015, when it purchased DirecTV for 48.5 billion.
What this deal means for consumers
A successful merger would pair one of the biggest U.S. telecommunication companies with a large content creator. One concern this raises is if AT&T would then give preferential treatment to content from Time Warner's companies. As of now, brands and developers must pay to deliver content on gadgets that are on AT&T's network.
Some are worried that this type of deal would violate net neutrality principles. Net neutrality means that internet service providers must treat every website on the internet equally. But some internet providers wanted to create "fast lanes," where giants like Google and Netflix would have an advantage over smaller, lesser-known sites.
Beyond net neutrality concerns, advertising, competition and pricing are other issues this merger brings up for consumers.
- Advertising - AT&T says the merger would help it create targeted ads for its customers. By collecting data on its customers, AT&T would be able to tailor ads based on their preferences. The company says targeted ads would bring in more revenue which it could then put into content creation. This could help create less expensive subscription packages for phones, which is an increasingly popular way for consumers to watch videos.
- Competition - HBO, CNN, TBS, TNT, Warner Brothers film studios and even DC Entertainment are all a part of Time Warner. It even owns 10 percent of the Hulu streaming subscriptions service. These content providers would gain a huge advantage over smaller providers if the merger is approved with AT&T's distribution capability. Distribution of content is becoming an issue for content providers with the increasing number of cable cord cutters.
- Pricing - This is the issue that has most skeptics concerned. They are worried about how Time Warner's content will be offered to existing AT&T's customers. Or that AT&T will try and bring in new customers by giving special access to Time Warner's content. AT&T could let its customers stream certain content without adding to their data usage, meaning they wouldn't have to worry about going over their data plan limit. Skeptics fear that customers of other telecom companies would have to pay more for the same content.
Does the thought of this huge merger concern you? Since the merger is awaiting approval from Department of Justice, you can let your voice be heard by contacting your congressperson. Click here to find out the best way to contact them.