Interconnection fees for companies like Netflix remain an issue in last-minute talks with regulators for AT&T-DirecTV deal
Cecilia Kang / Washington Post :
Context & Ripple Effects
This closes the loop on a fight the related coverage has tracked for months. In May, Netflix formally asked the FCC to reject the AT&T/DirecTV merger as proposed, making interconnection terms its central objection; by mid-May, U.S. authorities were reported near the end of the review with a block seen as unlikely. The last-minute talks now reported are where those two threads meet: regulators extracting conditions rather than killing the deal.
AT&T has already signaled flexibility — in early June it said it would abide by the new net neutrality rules as part of the DirecTV arrangement — so interconnection fees are the remaining open term. The backdrop is Verizon's December filing arguing the FCC cannot prohibit Netflix-style paid interconnection payments, which frames why regulators are negotiating conduct commitments instead of bans.
First-order effects
- Regulators are pressing AT&T to accept enforceable limits on charging edge providers like Netflix for interconnection before approving the DirecTV acquisition — the direct cost of the clearance AT&T needs to close.
Second-order effects
- A negotiated interconnection commitment would hand Netflix the concession it sought when it called for rejection of the deal, while giving Comcast and other ISPs a template they will face when their own traffic disputes with backbone operators like GTT and Zayo draw scrutiny.
Third-order effects
- If the pattern holds, large mergers become the enforcement vehicle for interconnection policy: since the FCC reportedly cannot flatly bar paid peering, case-by-case merger conditions stand in for a general rule — leaving the market governed by deal-specific consent decrees until Congress or courts settle it.
The trend: Broadband interconnection is being regulated through merger conditions rather than general rules, with each major deal setting precedent for what edge providers pay to reach ISPs' subscribers.