What AT&T's acquisition of Time Warner means for the future of the internet

No one spends $85.4 billion to do you a favor.

In its recent acquisition of Time Warner, AT&T sure as shit isn't about to make you rethink this fundamental truth.

The telecommunications company was approved by a federal judge Tuesday for a massive takeover that has the potential to alter the media landscape in a profound way. And in spite of the perfunctory corporate protestations to the contrary, it doesn't take a market specialist to know who the beneficiaries of such a deal will be.

The odds are that it's not going to be you — or, for that matter, the desiccated scatterings of net neutrality's ghost. In fact, the experts we spoke with suggested that this move threatens competition, consumers, and the future of the internet in general.

The deal, announced in late October of 2016, was problematic from the start. AT&T, which provides internet service across the country, was attempting to get into the content game to challenge the likes of Amazon and Netflix. In other words, the company wanted to both own the pipes and the water they carry to you — along with all the data you send back.

At the time, AT&T framed this as a win-win. "The new company will deliver what customers want," read a 2016 press release, "enhanced access to premium content on all their devices, new choices for mobile and streaming video services and a stronger competitive alternative to cable TV companies."

The Justice Department disagreed, and moved to block the acquisition. Judge Richard J. Leon, of the United States District Court in Washington, noted the disagreement in his opinion finding in favor of AT&T and allowing the purchase to go forward.

"If there ever was an antitrust case where the parties had a dramatically different assessment of the current state of the relevant market and a fundamentally different vision of its future development, this is the one."

So, why is this so bad? Part of the problem comes down to something called zero rating. As the EFF explains, "zero-rating plans exempt particular data from counting against a user's data cap, or from accruing any excess usage charges."

Don't get your hopes up. Credit: Drew Angerer/getty

Essentially, a wireless provider can decide that streaming certain content — say, video from HBO — doesn't count against a customer's monthly data allowance. If that company, like AT&T for example, also happens to own HBO (as they do now that the Time Warner acquisition is complete), then this puts other wireless providers at a competitive disadvantage. That means those not on the AT&T bandwagon could very well end up paying more for access to the same content.

"This sort of behavior distorts competition in the content and application markets," explained Tejas Narechania, Assistant Professor and Faculty Co-Director of the Berkeley Center for Law & Technology, over email. "AT&T will now have an even greater interest in the content market, by way of its acquisition of Time Warner, and so the potential for such distortion is now greater than before."

In a phone conversation Thursday, Stanford Law School Center for Internet and Society fellow Ryan Singel further explained the problem.

"While zero rating often sounds nice on its face, zero rating comes with a lot of problems. [It] gives ISPs incentives to keep data caps low and keep the price of unlimited plans high."

Singel noted that a consumer can expect to pay around eight times more per GB of data if their carrier offers zero rating when compared to a competing provider that does not.

But it's more than that. With net neutrality out the door, AT&T is unshackled in a way we've never really seen before.

"We don’t know exactly what’s going to happen," Singel warned, "but combining one of the nation's top telecommunications providers with a huge content company gives AT&T the means, the motive, and the opportunity to rewrite the internet in their favor.”

We're not sure what an internet molded to the benefit of AT&T looks like, but we'd be willing to bet it isn't pretty. Don't forget, AT&T isn't spending $85.4 billion on your behalf. No one ever is.