• by Wendy Davis  @wendyndavis, June 21, 2017

AT&T's planned $85 billion merger with Time Warner will lead to "higher prices, fewer choices, and worse service for consumers," 11 senators warn in a letter to Attorney General Jeff Sessions.

The lawmakers are urging the Department of Justice to "closely scrutinize" the deal and reject the merger if they find that the "substantial harms arising from the transaction outweigh the purported benefits."

Sen. Al Franken (D-Minn.) and the other lawmakers raise a host of specific concerns about the proposed deal, including that it could spur AT&T to add HBO content to the "zero-rating" program -- a billing system the lawmakers believe violates net neutrality principles.

AT&T currently zero-rates its DirecTV video streams -- meaning that data streamed through the DirecTV app is excluded from wireless customers' monthly data caps. But video streamed through many other services, like Netflix and Amazon Prime, counts toward subscribers' data caps.

Current FCC Chairman Ajit Pai endorsed AT&T's zero-rating system, arguing that it is popular with consumers. But last year, the Democratic-led FCC said that AT&T's zero-rating scheme violated net neutrality principles because it favored AT&T's own video offerings and unreasonably discriminated against video offered by competitors.

AT&T has said that DirecTV pays to have its content zero-rated, and that other companies can also pay for that feature. But Franken and the other lawmakers say the program is still anti-competitive, given that AT&T owns DirecTV.

"The cost of participation has a different financial impact on AT&T-owned DIRECTV than on competing streaming services" they write. "If competitors to DIRECTV Now, including more traditional streaming services like Netflix and Amazon Prime ... choose to pay for equal treatment, they would be forced to raise their monthly user rates to make up for the cost of participation, thus forcing their users to foot the bill for the AT&T subscribers' data."

The lawmakers add that the "anticompetitive problems" would worsen if AT&T decides to zero-rate HBO.

"By offering popular HBO programming free from data charges under an arbitrarily low data cap, AT&T could capture subscribers from competing wireless providers, and DIRECTV Now could capture users from competing streaming services that can't financially justify participation in the Sponsored Data program," the letter states. Also signing the letter are Sens. Ed Markey (D-Mass.), Elizabeth Warren (D-Mass.), Ron Wyden (D-Ore.), Richard Blumenthal (D-Conn.), Jeff Merkley (D-Ore.), Bernie Sanders (I-Vt.), Maria Cantwell (D-Wash.), Sherrod Brown (D-Ohio), Tammy Baldwin (D-Wis.), and Cory Booker (D-N.J.).

The senators raise additional concerns about the merger, including that the deal could hurt the "growing, but fragile" over-the-top market.

"With control of both the DIRECTV and Time Warner content and apps, and in order to favor DIRECTV, AT&T-Time Warner could withhold access entirely or substantially raise prices of its programming for competing distribution platforms, such as Roku and Amazon Fire, as well as OTT services like Hulu, Netflix, and Sling TV," the lawmakers write. "Start-ups could be foreclosed from entering the OTT market altogether."

For its part, AT&T says the merger "is about giving consumers more choices, not less," and that the deal "will expand distribution and creative opportunities for diverse and independent voices.." The company also says that exempting data from subscribers' caps benefits consumers and saves them money.