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PROPOSED MERGER OF AT&T AND DIRECTV 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

REGULATORY REFORM, 

COMMERCIAL AND ANTITRUST LAW 

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

SECOND SESSION 

JUNE 24, 2014 

Serial No. 113–95 

Printed for the use of the Committee on the Judiciary 

( 

Available via the World Wide Web: http://judiciary.house.gov 
(II) 

COMMITTEE ON THE JUDICIARY 

BOB GOODLATTE, Virginia, Chairman 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

HOWARD COBLE, North Carolina 

LAMAR SMITH, Texas 

STEVE CHABOT, Ohio 

SPENCER BACHUS, Alabama 

DARRELL E. ISSA, California 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JIM JORDAN, Ohio 

TED POE, Texas 

JASON CHAFFETZ, Utah 

TOM MARINO, Pennsylvania 

TREY GOWDY, South Carolina 

RAU ́ L LABRADOR, Idaho 

BLAKE FARENTHOLD, Texas 

GEORGE HOLDING, North Carolina 

DOUG COLLINS, Georgia 

RON DeSANTIS, Florida 

JASON T. SMITH, Missouri 

[Vacant] 

JOHN CONYERS, JR., Michigan 

JERROLD NADLER, New York 

ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

STEVE COHEN, Tennessee 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

PEDRO R. PIERLUISI, Puerto Rico 

JUDY CHU, California 

TED DEUTCH, Florida 

LUIS V. GUTIERREZ, Illinois 

KAREN BASS, California 

CEDRIC RICHMOND, Louisiana 

SUZAN DelBENE, Washington 

JOE GARCIA, Florida 

HAKEEM JEFFRIES, New York 

DAVID N. CICILLINE, Rhode Island 

SHELLEY HUSBAND, Chief of Staff & General Counsel 

PERRY APELBAUM, Minority Staff Director & Chief Counsel 

SUBCOMMITTEE ON REGULATORY REFORM, COMMERCIAL AND ANTITRUST LAW

SPENCER BACHUS, Alabama, Chairman 

BLAKE FARENTHOLD, Texas, Vice-Chairman 

DARRELL E. ISSA, California 

TOM MARINO, Pennsylvania 

GEORGE HOLDING, North Carolina 

DOUG COLLINS, Georgia 

JASON T. SMITH, Missouri 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

SUZAN DelBENE, Washington 

JOE GARCIA, Florida 

HAKEEM JEFFRIES, New York 

DAVID N. CICILLINE, Rhode Island 

DANIEL FLORES, Chief Counsel 
(III) 

C O N T E N T S 

JUNE 24, 2014 

Page 

OPENING STATEMENTS 

The Honorable Spencer Bachus, a Representative in Congress from the State 

of Alabama, and Chairman, Subcommittee on Regulatory Reform, Commercial and Antitrust Law ........................................................................................ 1 

The Honorable Henry C. ‘‘Hank’’ Johnson, Jr., a Representative in Congress 

from the State of Tennessee, and Ranking Member, Subcommittee on Regulatory Reform, Commercial and Antitrust Law ................................................. 2 

The Honorable Bob Goodlatte, a Representative in Congress from the State 

of Virginia, and Chairman, Committee on the Judiciary ................................. 3 

The Honorable John Conyers, Jr., a Representative in Congress from the 

State of Michigan, and Ranking Member, Committee on the Judiciary ......... 4 

WITNESSES 

Michael White, President, Chairman and CEO, DIRECTV 

Oral Testimony ..................................................................................................... 8 

Prepared Statement ............................................................................................. 10 

Randall Stephenson, Chairman, CEO and President, AT&T Inc. 

Oral Testimony ..................................................................................................... 20 

Prepared Statement ............................................................................................. 22 

Ross J. Lieberman, Senior Vice President of Government Affairs, American 

Cable Association 

Oral Testimony ..................................................................................................... 30 

Prepared Statement ............................................................................................. 32 

John Bergmayer, Senior Staff Attorney, Public Knowledge 

Oral Testimony ..................................................................................................... 44 

Prepared Statement ............................................................................................. 46 

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

Prepared Statement of the Honorable John Conyers, Jr., a Representative 

in Congress from the State of Michigan, and Ranking Member, Committee 

on the Judiciary ................................................................................................... 5 

Material submitted by the Honorable Henry C. ‘‘Hank’’ Johnson, Jr., a Representative in Congress from the State of Tennessee, and Ranking Member, 

Subcommittee on Regulatory Reform, Commercial and Antitrust Law .......... 58 

APPENDIX 

MATERIAL SUBMITTED FOR THE HEARING RECORD

Response to Questions for the Record from Michael White, President, Chairman and CEO, DIRECTV .................................................................................... 88 

Response to Questions for the Record from Randall Stephenson, Chairman, 

CEO and President, AT&T Inc. .......................................................................... 90 

Response to Questions for the Record from Ross J. Lieberman, Senior Vice 

President of Government Affairs, American Cable Association ....................... 93 

Response to Questions for the Record from John Bergmayer, Senior Staff 

Attorney, Public Knowledge ................................................................................ 99 

(1) 

PROPOSED MERGER OF AT&T AND DIRECTV 

TUESDAY, JUNE 24, 2014 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON REGULATORY REFORM, COMMERCIAL AND ANTITRUST LAW

COMMITTEE ON THE JUDICIARY, 

Washington, DC. 

The Subcommittee met, pursuant to call, at 10:31 a.m., in room 

2141, Rayburn Office Building, the Honorable Spencer Bachus 

(Chairman of the Subcommittee) presiding. 

Present: Representatives Bachus, Goodlatte, Farenthold, Issa, 

Holding, Collins, Smith of Missouri, Johnson, Conyers, Garcia, 

Jeffries, and Cicilline. 

Staff present: (Majority) Anthony Grossi, Counsel; Austin Carson, Legislative Assistant to Mr. Farenthold; Jon Nabavi, Legislative Director to Mr. Holding; Jennifer Lackey, Legislative Director 

to Mr. Collins; Justin Sok, Legislative Assistant to Mr. Smith of 

Missouri; Ashley Lewis, Clerk; (Minority) James Park, Counsel; 

Slade Bond, Counsel; and Rosalind Jackson, Professional Staff. 

Mr. BACHUS. Good morning. The Subcommittee on Regulatory 

Reform, Commercial and Antitrust Law hearing will come to order. 

Without objection, the Chair is authorized to declare a recess of 

the Committee at any time. 

I recognize myself for my opening statement. 

We are here today to examine the proposed merger between 

AT&T and DIRECTV. As I reminded our witnesses during the recent Comcast/Time Warner merger hearing, today’s proceeding will 

not determine whether the proposed merger will be approved. 

Rather, this hearing provides an open forum to discuss the potential implications of the merger and allow publicly elected representatives an opportunity to pose questions to the leaders of the respective companies and hear a variety of viewpoints on the proposed 

transaction. The record created by today’s hearing will assist the 

Committee in its ongoing oversight of the antitrust enforcement 

agencies and our Nation’s antitrust laws. 

The proposed merger of AT&T and DIRECTV comes at a time 

when the structure of the telecommunications industry could be or 

is undergoing a rapid transformation in a relatively short period. 

The proposed merger between Comcast and Time Warner has already been announced, of course, and there have been reports of 

other potential mergers and acquisitions. The business of telecommunications increasingly requires significant investment to 
2 

construct and update essential infrastructure and to provide innovative products and services to consumers. Merged companies may 

be able to achieve economies of scale and have better ability to access the large amounts of capital needed to build out systems. 

However, consolidation in an industry also raises issues of market power and the possibility for abuse of a firm’s dominant competitive position. These are all issues that are appropriate for consideration in a hearing like this. 

For the most part, the companies before us today engage in very 

different businesses. AT&T is primarily a provider of voice and 

Internet services, while DIRECTV is almost exclusively a video 

service provider. AT&T recently has begun offering a video service 

referred to as U-verse, which is a competitor to DIRECTV in certain parts of the country. In addition to its video service, DIRECTV 

owns and manages a few regional sports networks in the Pittsburgh, Denver, and Seattle areas. 

Today’s hearing will examine, among other things, how the proposed merger may impact the future of U-verse and its ability to 

provide video and Internet services to consumers following the proposed merger and the potential for vertical integration issues related to DIRECTV’s ownership of certain sports networks. 

AT&T and Direct have submitted a public interest statement to 

the Federal Communications Commission arguing that this merger 

will allow the combined company to offer a bundled product that 

would enhance consumer choice by increasing competition in the 

market for bundled products and services. In addition, they contend that the cost savings resulting from the merger would allow 

additional resources to be deployed to expanding broadband access 

particularly in rural communities. 

Again, we have the chairman and CEO of both AT&T and 

DIRECTV with us today to answer any questions arising from the 

public interest filing. 

With that, I look forward to the testimony of our panel of esteemed witnesses on these and other issues related to the proposed 

merger. 

I now turn my Ranking Member, Mr. Johnson, for his opening 

statement. 

Mr. JOHNSON. Thank you, Mr. Chairman. 

Today’s hearing concerns the proposed merger of AT&T, a global 

telecommunications company with approximately 11 million 

broadband subscribers, 5.6 million video subscribers, and 246,700 

employees, with DIRECTV the Nation’s second largest video provider serving approximately 50 million customers. 

The core question at the heart of this merger is whether creating 

an integrated bundle of AT&T’s broadband services and infrastructure with DIRECTV’s popular video programming would serve the 

public interest without substantially lessening competition. 

According to a survey conducted by Consumer Reports last year, 

consumers are overwhelmingly one-stop shoppers who prefer to 

bundle phone, video, and broadband Internet into one package. Not 

only does bundling multiple services often save many consumers 

money at a time of increasing cable costs, but it also avoids the 

problems associated with multiple installation visits, service calls, 

and phone calls to resolve disputes. 
3 

As a new entrant in the video marketplace with only 5.6 million 

subscribers, there is little to suggest AT&T offers serious direct 

competition with DIRECTV’s video services. Instead, the bulk of 

the evidence demonstrates that each company primarily serves different markets with different services. 

Although the proposed merger represents a concerning trend toward industry consolidation, there is ample evidence that this 

transaction would create considerable public interest benefits. 

AT&T argues that the improved bundle and cost savings generated 

by the merger will, quote, fundamentally and permanently improve 

the economics of AT&T’s investment in broadband. End quote. 

Specifically, AT&T plans to deploy its fiber network to 2 million 

homes with speeds up to 1 gigabyte per second and deploy highspeed broadband Internet over a fixed wireless local loop to 13 million homes in largely rural areas with average speeds between 15 

and 20 megabits per second. For millions of homes, this Internet 

service will be the fastest ever improving high-speed access for millions while indirectly benefiting other competitors by bringing 

these homes online. 

As a strong advocate of digital inclusion, I commend this commitment to close the digital divide by bringing us measurably closer 

to the universal adoption of affordable high-speed Internet. It is 

critical that people of color remain competitive in the Internet economy which starts with a fast and affordable Internet connection. 

Additionally, this merger would benefit the public by expanding 

AT&T’s industry-leading standards for labor and corporate diversity to DIRECTV’s employees and suppliers. Given the television 

industry’s infamous reputation for opposing organized labor, this 

merger would have transformational benefit for thousands of employees in this industry, giving labor a strong foothold in the industry. 

I urge the Federal Communications Commission and the Department of Justice to view this merger in light of these public benefits 

and to strongly hold the merged company to these commitments. 

Lastly, as it eyes more than several dozen cities for deployment 

of its ultra-fast fiber network, I call on AT&T to deploy this advanced service in Atlanta, Georgia, which encompasses much of the 

district that I represent. Atlanta is swiftly becoming an innovation 

economy driven to create tinker and improve products and design. 

Deploying an all-fiber network in Atlanta would benefit many existing local startups, as well as untold entrepreneurs, app developers, and other innovators still emerging. As a former county commissioner who understands the power of big ideas, I stand ready 

to work with both AT&T and local government to make this happen. 

I thank the Chair for holding this important oversight hearing, 

and I look forward to today’s testimony. 

And with that, I will yield back. 

Mr. BACHUS. Thank you very much, Mr. Johnson. 

At this time, I recognize the Chairman of the full Committee, Mr. 

Goodlatte of Virginia. 

Mr. GOODLATTE. Thank you, Mr. Chairman. 

Robert Bork famously said the only legitimate goal of antitrust 

is the maximization of consumer welfare. 
4 

Depending on the actions of the antitrust enforcement agencies 

and the Federal Communications Commission, the telecommunications industry may experience significant change over the next 

year. As the Committee and the relevant government agencies examine the potential issues associated with the multiple proposed 

telecommunications mergers, we should be mindful that assuring 

the best interests of consumers is the ultimate goal. It has been 

demonstrated repeatedly that a free and competitive marketplace 

yields lower prices, greater innovation, increased investment, and 

better services. We should strive to ensure that proposed transactions result in enhanced competitive marketplaces so that the attendant benefits continue to run to consumers. 

Today’s hearing allows a public forum to discuss the potential 

competitive impact of the proposed merger between AT&T and 

DIRECTV. The leaders of both companies are before us today to explain how the proposed transaction will increase competition for 

the benefit of consumers. We also have witnesses who will raise potential concerns about the merger. Through a fair and objective inquiry by the Committee, a record will be produced that will provide 

an important measure of transparency and thoughtfulness to the 

review of this proposed merger. 

I look forward to hearing from today’s witnesses regarding their 

views on the proposed merger of AT&T and DIRECTV. 

Thank you, Mr. Chairman. I yield back. 

Mr. BACHUS. And I thank you. 

At this time, I recognize the Ranking Member and former Chairman of our Committee, the gentleman from Michigan, Mr. Conyers. 

Mr. CONYERS. Top of the morning, Mr. Chairman and my colleagues and our witnesses and our visitors that are here covering 

this potential transaction. 

Now, last month in May, we had a hearing that covered Time 

Warner and Comcast, and now this month, we are looking at 

DIRECTV and AT&T. And maybe even next month, depending on 

what happens in the intervening time, we may be looking at Sprint 

and T-Mobile. Question: where does this end? 

I am looking at a transaction that highlights the concern that 

there may be too much and too rapid a consolidation in telecommunications, especially when viewed in the light of a flurry of 

deals either announced or rumored. 

One rationale in favor of the merger is that it would create a 

strong competitor to large cable companies, may in fact spur further consolidation in the telecommunications industry as part of 

what might be viewed as a race to the bottom. 

The merger proposed may result in reduced competition for paid 

television services in many of our Nation’s largest markets. The 

sheer size of a combined AT&T/DIRECTV entity could raise content prices for smaller video providers potentially driving some of 

them maybe out of business. 

And finally, there is a need to focus on whether behavioral remedies are in practice affected. 

So while neither we nor the competition enforcement agencies 

should prejudge this deal, there are several concerns that the witnesses to address, as well as the feelings that I have already expressed. That is the fact that we are concerned that there may be 
5 

too much and too rapid consolidation in the telecommunications industry, and while I fully appreciate the goal of antitrust law is to 

protect competition and not competitors per se, this ongoing wave 

of consolidation will, without question, result in fewer firms and 

may harm consumers by limiting choices and also raising prices. 

After all, it is the very threat of losing business in the face of high 

prices or low quality products and services that drive competitive 

business practices. 

Now, one rationale in favor of the merger is that it would create 

a stronger competitor to large cable companies. Now, that may, in 

fact, spur further consolidation in the telecommunications industry. 

I do not doubt that the merged entity that is under consideration 

could be large enough to effectively compete against large cable 

companies, but what is to stop competitors from using the same argument to justify even further consolidation? 

So I will be looking and listening to make sure that we are not 

moving in the wrong direction. And I wanted to put my feelings out 

in front of you so that any of you can feel free to give me any consolation that you want about the concerns that I have. 

And I will put the rest of my statement in the record and thank 

the Chairman. 

[The prepared statement of Mr. Conyers follows:] 

Prepared Statement of the Honorable John Conyers, Jr., a Representative 

in Congress from the State of Michigan, and Ranking Member, Committee on the Judiciary 

Today, we consider the proposed merger of AT&T, the Nation’s second-largest seller of high-speed Internet and wireless telephone services, with DirecTV, the Nation’s second-largest paid television provider. 

While neither we nor the competition enforcement agencies should pre-judge this 

deal, there are several concerns that I want the witnesses to address today. 

To begin with, this transaction raises the concern that there may be too much and 

too rapid consolidation in the telecommunications industry, especially when viewed 

in the light of other recently announced or rumored deals. 

I fear that the trend toward greater consolidation in this industry may ultimately 

benefit large corporations and their shareholders at the expense of consumers. 

While I fully appreciate that the goal of antitrust law is to protect competition 

and not competitors per se, this ongoing wave of consolidation will, without question, 

result in fewer firms and may harm consumers by limiting choices and raising 

prices. 

After all, it is the very threat of losing business in the face of high prices or low 

quality products and services that drives competitive business practices. 

The preeminent purpose of antitrust law is to protect consumers by ensuring that 

no one firm achieves market power such that it no longer risks losing business because it can force consumers to pay higher prices or accept lower quality goods and 

services in the absence of a competitive marketplace. 

I hope that the Justice Department and the Federal Communications Commission 

will carefully consider the overall impact of industry consolidation as they review 

the merits of this particular transaction. 

One rationale in favor of the merger—that it would create a stronger competitor 

to large cable companies—may, in fact, spur further consolidation in the telecommunications industry. 

I do not doubt that the merged AT&T-DirecTV entity could be large enough to 

effectively compete against large cable companies, but what is to stop competitors 

from using the same argument to justify further consolidation? 
6 

After all, cable companies could point to the merged AT&T-DirecTV to justify further consolidation among themselves, which, in turn, could justify further consolidation by competitors to cable companies. 

As a result, we could have a ‘‘race to the bottom’’ whereby large companies seek 

more and more mergers and acquisitions in response to mergers and acquisitions 

by other companies, ultimately leaving fewer choices for all consumers. 

Turning to the specifics of the proposed transaction, I am concerned about the loss 

of a competitor for paid television services in many of the largest markets. 

As a national satellite-television provider, DirecTV is a competitor to AT&T’s UVerse video service in the 22 states where U-Verse is offered. 

And, U-Verse currently competes with DirecTV in 10 of the 20 largest metropolitan markets for paid television. 

The loss of a paid television competitor in those markets where AT&T and 

DirecTV directly compete with each other would reduce consumer choice and could 

have the potential to raise prices. 

Although AT&T has committed to continuing to offer DirecTV as a standalone option for three years after the acquisition, there are no guarantees that consumers 

will continue to have a such an option after that time. 

The burden remains on AT&T to show that this merger will not harm consumers. 

We should also consider whether smaller video providers, in the aftermath of the 

sheer size of a combined AT&T-DirecTV, could face increased content prices, potentially driving some of them out of business. 

In addition to being a video distributor, DirecTV is a video programmer that owns 

three regional sports networks and has interests in some national networks. 

Small competing video distributors fear that the size of a combined AT&TDirecTV—as both a seller and a buyer of programming—could harm smaller competitors in two ways. 

First, a vertically integrated AT&T-DirecTV could discriminate against rival distributors by withholding or charging higher prices for its own programming. 

Second, such a combined entity would be a large enough distributor to command 

discounts from other programmers, potentially forcing smaller distributors to pay 

higher prices for content to make up the difference. 

Finally, we must consider whether imposing behavioral remedies would, in practice, be effective. 

As a condition for approval of the Comcast-NBC Universal transaction, the FCC 

and the Justice Department required Comcast-NBCU to take affirmative steps to 

foster competition—including voluntary compliance with net neutrality protections— 

as well as steps to benefit the public interest. 

AT&T has indicated that it will voluntarily commit to similar types of commitments to its proposed acquisition of DirecTV. 

Some observers, however, are concerned that the behavioral remedies imposed in 

the Comcast-NBC transaction were ineffective and difficult to enforce. 

Accordingly, we should consider whether such commitments should be strengthened and made more enforceable to better protect the public interest in this case. 

I look forward to having a fruitful discussion of these issues so that all stakeholders, particularly consumers and the enforcement agencies, are better informed 

about this significant transaction. 

Mr. BACHUS. I thank you, Mr. Conyers. 

At this time, I would like to introduce our witnesses. We have 

a very esteemed and qualified panel of witnesses. We start by introducing Mr. Mike White, who is President, Chairman, and 

CEO—that pretty much covers everything, does it not—of 

DIRECTV, one of the world’s leading providers of digital television 

entertainment services with more than 20 million customers in the 

United States and more than 15 million customers in Latin America. I am not sure that we realized that there are that many customers also in Latin America. Mr. White joined DIRECTV in Janu-
7 

ary 2010 and also serves as the chairman of the company’s board 

of directors. In addition to his position at DIRECTV, Mr. White 

also serves on Whirlpool Corporation’s board of directors. 

Before joining DIRECTV, Mr. White was the CEO and vice chairman of PepsiCo International from 2003 to 2009. Prior to that role, 

Mr. White served as president and CEO of Frito-Lay’s Europe, Africa, and Middle East Division. And that was part of Pepsi at the 

time. Did they spin it out at some point? They did? He also served 

as CEO of Snack Ventures Europe, PepsiCo’s partnership with 

General Mills International. 

Before joining PepsiCo, Mr. White was the senior vice president 

and general manager for Avon Products. He also has worked as a 

management consultant for Bain and Company and Arthur Andersen and Company. Mr. White holds a masters degree in international relations from Johns Hopkins University and a bachelors 

degree from Boston College. 

We also have Mr. Lieberman who is a graduate of Johns Hopkins. 

Mr. White is also a Ford Foundation fellow at Leningrad State 

University in St. Petersburg, Russia. 

And I say to Mr. White on a personal nature, many of my constituents are very loyal customers of Direct. 

Our next witness is—we are glad to have you—Mr. Randall Stephenson is Chairman and CEO and President of AT&T. Mr. Stephenson—well, let me say this. AT&T is one of the world’s largest 

telecommunications companies with nearly $129 billion in revenues 

last year. I note that over the past 6 years, AT&T has invested 

more capital into the United States’ economy than any other public 

company and more than $140 billion invested in spectrum and 

wireless operations combined. That is a record to be proud of. I 

commend you for that. 

Prior to becoming CEO, he served as AT&T’s Senior Executive 

Vice President and Chief Financial Officer from 2001 to 2004 and 

then as the company’s Chief Operating Officer from 2004 to 2007. 

Mr. Stephenson was appointed to AT&T’s board of directors in 

2005. 

He began his long career in telecommunications in 1982 with 

Southwestern Bell Telephone in Oklahoma. In addition to his leadership of AT&T, Mr. Stephenson is chairman of the Business 

Roundtable, an association of chief executive officers of leading U.S. 

companies. He is also a member of the board of directors of Emerson Electric, a member of the PGA Tour Policy Board, and national 

executive board member of the Boy Scouts of America. 

He received his B.S. in accounting from the University of Central 

Oklahoma and his masters of accountancy from the University of 

Oklahoma. 

We welcome you. I think from that record, you are obviously 

plugged into rural consumers too with your background being in 

Oklahoma. 

Mr. John Bergmayer, we welcome you. He is Senior Staff Attorney at Public Knowledge, specializing in telecommunications, the 

Internet, and intellectual property issues. He advocates for public 

interest before courts and policymakers and works to make sure 
8 

that all stakeholders, including ordinary citizens, artists, and 

innovators, have a say in shaping emerging digital policies. 

Mr. Bergmayer received his B.A. in English lit from Colorado 

State University and his J.D. from the University of Colorado Law 

School where he was elected to the Order of Coif. 

Our final witness is Mr. Ross Lieberman. Mr. Ross Lieberman is 

the Senior Vice President of Governmental Affairs of the American 

Cable Association, which represents 850 independent cable, 

broadband, and phone operators serving smaller markets in rural 

areas. He manages the formulation and implementation of the 

group’s strategic initiatives on Capitol Hill and at Federal agencies, 

including the FCC. 

Prior to joining the American Cable Association, Mr. Lieberman 

handled government relations for EchoStar Communications Corporation where he, among other things, oversaw EchoStar’s filings 

with the FCC for the 2004 Satellite Home Viewer Extension and 

Reauthorization Act. 

He received his B.A. in political science from Johns Hopkins University and his J.D. from American University, Washington College 

of Law. 

We welcome you, Mr. Lieberman. 

Each of the witnesses’ written statements will be entered into 

the record in their entirety. 

At this time, we will ask each of our witnesses to summarize his 

testimony in 5 minutes or less. With that, now we proceed to hear 

from our witnesses. Mr. White, you go first. We will go from my 

left to right. 

TESTIMONY OF MICHAEL WHITE, PRESIDENT, 

CHAIRMAN AND CEO, DIRECTV 

Mr. WHITE. Good morning. Thank you, Chairman Bachus, Ranking Member Johnson, and Members of the Subcommittee. 

My name is Mike White, and I am CEO of DIRECTV. Thank you 

for inviting me to testify on AT&T’s proposed acquisition of 

DIRECTV. 

For any business to succeed in the long term, it must satisfy its 

customers’ needs better than the competition day in and day out. 

This transaction will help DIRECTV and AT&T do exactly that. By 

combining complementary assets and products, we will be able to 

offer new services to customers at a better value. We will help consumers watch the video they want when they want it where they 

want it and on the devices of their choice. And we will be well positioned to compete long into the future. 

I would like to briefly describe DIRECTV’s perspective on the 

transaction. 

Historically DIRECTV is a remarkable American success story. 

We have competed aggressively by delivering more high definition 

channels, a clearer picture, more advanced equipment, and better 

customer service than cable. And Congress has also had a lot to do 

with our success, making sure, particularly in the early years, that 

we could acquire the programming our subscribers demanded. 

In recent years, however, broadband is changing everything. If 

we want to continue to compete effectively in today’s Internet-driven economy, we too must adapt. 
9 

First, we must provide an integrated bundle of services because 

consumers are increasingly demanding better bundles of both video 

and broadband. And in fact, broadband is now the more important 

element of the two for many. 

Second, as we think about the future, we must serve those customers who want over-the-top video offerings. Young subscribers, 

in particular, want services like YouTube, Netflix, and Hulu, and 

we need a broadband platform if we are to meet their need. 

And third, as technology changes, we must continue to optimize 

our own video service. Cable’s two-way infrastructure lets it offer 

features such as remote DVR’s, video-on-demand programming 

stored in the cloud, and so on. And soon cable will offer cloud-based 

features such as lookback. In fact, cable operators are increasingly 

leveraging the cloud to improve their service more quickly and easily. We too will need to do all of that if we want to keep up and 

continue to compete successfully. 

And fourth and finally, we will have to continue to effectively 

manage content cost increases. Now, rising content costs challenge 

all video providers. Yet, bundled competitors can handle this somewhat better because they earn revenue from multiple sources. 

Historically, DIRECTV has attempted to remain competitive by 

offering what we call synthetic bundles in which the video and the 

broadband are provided by separate companies but marketed together. Synthetic bundles, however, make frankly for a bad customer experience. I hear it from our customers all the time. Customers have to talk to two sales representatives, wait for two different installers to arrive on two different appointments, pay two 

separate bills, and make two calls every time they have a problem. 

Synthetic bundles also tend to be more expensive for consumers 

because each company naturally seeks its own margin on its contribution to the bundled service. 

This transaction will help us meet all of those challenges head 

on. It combines DIRECTV’s premier video assets with AT&T’s 

unique broadband and wireless assets. It will mean better bundles, 

more Internet, particularly in rural areas. It means better video. It 

means lower content costs because of the additional value we can 

offer programmers, and it means more and better broadband to 15 

million new locations predominantly in rural areas. And it will 

mean more innovation particularly combining our expertise in 

video with AT&T’s expertise and capabilities in wireless. 

If you put it all together, you get a transaction that lets us better 

serve our customers, unlocks incremental job growth opportunities, 

and sustains our long-term competitiveness, a transaction, in other 

words, that opens up a new world of possibilities for DIRECTV subscribers. 

Thank you for inviting me to speak today, and I very much look 

forward to your questions. 

[The prepared statement of Mr. White follows:] 
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Mr. BACHUS. Thank you. 

Mr. Stephenson, we welcome you. 

TESTIMONY OF RANDALL STEPHENSON, CHAIRMAN, 

CEO AND PRESIDENT, AT&T INC. 

Mr. STEPHENSON. Thank you, Chairman Bachus and Ranking 

Member Johnson, Members of the Committee. 

I am Randall Stephenson, Chairman and CEO of AT&T, and I 

appreciate the opportunity to visit with you about what we think 

are the significant consumer and strategic benefits of this transaction. 

This transaction is unlike most mergers because it primarily 

combines companies with complementary products and capabilities: 

DIRECTV’s premier pay-TV service and AT&T’s broadband service. 

And the rationale for us coming together is really simple. It is 

about meeting consumer demand. Customers are looking for bundles that combine pay-TV and broadband service because of the 

greater value and the convenience that comes with that. And that 

is something that they can get from the cable providers today. And 

as Mike said, DIRECTV has the premier pay-TV service in the 

U.S., but it does not have a broadband product. 

To effectively compete against cable for broadband customers, 

AT&T markets bundles of services, most importantly, broadband 

and TV, and that is even though our video service is not profitable. 

In fact, fewer than 140,000 of our TV customers—that is less than 

2 percent—purchase TV service on a standalone basis. We do not 

actively market standalone TV service because we do not make 

money on it. Today 60 cents of every video dollar that we earn goes 

straight to the programmers. 

In addition, we can offer video in only a small portion of the 

country, less than a quarter of U.S. households, and we do not even 

cover all of our broadband footprint with video. And that is due to 

technology and economic limitations. 

So as a result, there is no significant competitive overlap between AT&T and DIRECTV in the product that consumers are 

overwhelmingly demanding, and that is a broadband/video bundle. 

The consumer benefits of this transaction are significant. Being 

able to offer DIRECTV nationwide is a game-changer in terms of 

the economics for deploying broadband. It will allow us to expand 

and to enhance broadband service to at least 15 million locations 

across 48 different States, and those are mostly in underserved 

rural areas. This is in addition to the broadband expansion plans 

that we have already announced, and it directly results from the 

synergies created by the transaction. This new broadband commitment includes 13 million locations, 85 percent of which are outside 

our traditional wireline footprint. 

We think this is big news for rural America. We estimate that 

nearly 20 percent of these consumers today have no access to 

broadband service and that another 27 percent are hostage to only 

one provider. For many of these 13 million consumers, AT&T’s 

service will be the fastest available, and for some, it is going to be 

their first chance for truly high-speed broadband. 
21 

The transaction also allows us to expand our 1 gigabit service to 

2 million additional locations, and all told, we will now be able to 

serve 70 million customer locations with broadband. 

This transaction will allow us to price more competitively and 

provide consumers a higher quality experience which will result in 

cable companies pricing more competitively as well and that will 

include all of their products and services. 

Consumers will receive greater convenience with a single point 

of contact, as you heard Mike describe in terms of ordering, installation, billing, customer care. 

We will be able to accelerate the deployment of our new over-thetop video services that are offered by AT&T as well as those offered 

by Netflix and Amazon and Hulu. We will be able to deliver them 

to any screen, whether it be a mobile phone, a computer, a tablet, 

a car. We are even deploying this capability for airplanes now. 

We operate in a competitive environment that is only becoming 

more competitive. The cable companies already dominate both 

broadband and video today, and Google Fiber, Netflix, and everfaster wireless services are really transforming competition daily. 

This transaction gives AT&T the capabilities to be a more effective 

competitor to cable. 

And I want to assure you and I also want to assure our customers that we will do all these things while meeting or exceeding 

the FCC’s net neutrality standards and exceeding our best in class 

diversity and labor practices to the employees and suppliers of the 

combined company. 

So thank you for the opportunity. I look forward to your questions as well. 

[The prepared statement of Mr. Stephenson follows:] 
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Mr. BACHUS. Thank you. 

Mr. Bergmayer? 

TESTIMONY OF JOHN BERGMAYER, SENIOR STAFF ATTORNEY, 

PUBLIC KNOWLEDGE 

Mr. BERGMAYER. Good morning, Chairman Bachus, Ranking 

Member Johnson, and Members of the Subcommittee. Thank you 

for the opportunity to participate in today’s hearing. 

Today I am going to describe how AT&T’s proposed merger with 

DIRECTV could harm the public. 

The legal standard is clear. First, antitrust authorities cannot 

allow this merger to proceed if it may substantially reduce competition in any market. Second, the FCC cannot allow this merger to 

proceed unless AT&T can show that it would benefit the public. 

Based on the record so far, AT&T has not met its burden. 

Additionally, policymakers should be aware of other dangers. As 

a result of this merger, AT&T may leave rural Americans behind 

by providing them with a wireless product that is not of the same 

quality as what is available in cities. Also, AT&T may plan to use 

the acquisition of DIRECTV to jump start an online video service. 

AT&T must offer any such service in a nondiscriminatory way. 

This merger would reduce competition in the pay-TV market. 

AT&T and DIRECTV compete head to head in the pay-TV marketplace in more than 60 local TV markets. If AT&T purchases 

DIRECTV, TV viewers in these markets will lose a competitive 

choice. In many of these markets, the level of market concentration 

would exceed the Department of Justice’s guidelines. That means 

higher prices and more service for millions of viewers. Antitrust 

law exists to prevent mergers of these kinds. 

AT&T’s proposal to fix this does not do enough. It only promises 

to keep DIRECTV prices in markets where it provides U-verse TV 

on par with nationwide DIRECTV prices for 3 years. This does not 

address the structural problems AT&T would cause if it removes 

a competitor from the marketplace. 

AT&T’s public interest commitments are less than meets the eye. 

In the first place, AT&T has a spotty record with regard to past 

merger commitments. For example, AT&T now claims that there 

are residences within its wireline footprint that currently have no 

AT&T broadband. Yet, it committed in 2006 to serve 100 percent 

of the residences in its footprint with broadband. Why are these 

people still unserved? And is it good policy to allow AT&T to make 

the same kind of promise this time? 

AT&T also has a history of using already planned build-out as 

a merger promise. For instance, AT&T promised a certain level of 

LTE coverage of it was allowed to buy T-Mobile, but after that 

merger was blocked, AT&T’s build-out plans did not change. 

When you strip away previously announced plans, even AT&T’s 

best case for this merger is less than it appears. For the most part, 

AT&T is simply stating that it will upgrade portions of its network. 

That is not much. For instance, adding a new kind of home wireless service to an existing wireless coverage area is not as significant an investment as an initial wireless build-out. 

There are further public interest harms. Our universal service 

laws state that consumers in all regions of the Nation, including 
31 

those in rural areas, should have access to telecommunications 

services that are reasonably comparable to those services provided 

in urban areas. AT&T has not shown that its wireless home product is comparable to what it offers in urban areas, for example, its 

U-verse product or DSL. Policymakers should be concerned about 

this seeming shift away from the principles of universal service. 

Finally, AT&T plans to create a new online video service. AT&T 

should be free to enter this market, but it cannot take advantage 

of its position as an Internet service provider to favor its own services at the expense of competition. While AT&T has agreed to abide 

by the terms of the FCC’s 2010 open Internet order, those rules 

provide a lesser degree of protection for wireless users. 

Thank you. My written testimony contains a more detailed analysis of these points, and I look forward to your questions. 

[The prepared statement of Mr. Bergmayer follows:] 
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Mr. BACHUS. Thank you, Mr. Bergmayer. 

Mr. Lieberman? 

TESTIMONY OF ROSS J. LIEBERMAN, SENIOR VICE PRESIDENT 

OF GOVERNMENT AFFAIRS, AMERICAN CABLE ASSOCIATION 

Mr. LIEBERMAN. Thank you. 

An unprecedented wave of consolidation is occurring within the 

video programming and distribution industries that will transform 

the competitive market and consumer experience. This is cause for 

concern. Congress and regulators, therefore, must not only review 

the pending deals. It must also examine and act to address the underlying market problems fueling them. 

Focusing on AT&T’s deal, it is important to realize DIRECTV is 

not only a nationwide provider of pay-TV service, it is also a programmer with interests in three regional sports networks and national programming. This gives DIRECTV an economic incentive 

and ability to charge its rivals higher fees for its programming, especially its regional sports networks. 

Smaller cable operators are concerned that this deal will lead 

DIRECTV’s programmers to hold out for even higher rates. With 

26 million subscribers, AT&T and DIRECTV combined will command better programming deals than DIRECTV would alone. This 

means higher video profits for both DIRECTV and U-verse services. 

Regulators have accepted that as the per video subscriber profits 

of a vertically integrated pay-TV provider rise, so does its interest 

in boosting its rivals’ costs for its programming. Accordingly, payTV providers will feel the pinch when negotiating for DIRECTV’s 

programming and their customers will pay. 

Regulators should not approve the merger without addressing 

this matter. While DIRECTV remains subject to program access 

rules as an FCC condition from a prior deal, it is no longer subject 

to an arbitration condition. However, re-adopting this arbitration 

condition is not enough. It had design flaws that left smaller cable 

operators under-protected. To shield these operators fully, these defects must be eliminated. 

Congress and regulators must also look at the bigger picture by 

reviewing existing rules to ensure that industry-wide problems, 

particularly those driving consolidation, are addressed. This will 

ensure consumers continue to benefit from a competitive pay-TV 

market that includes smaller operators. ACA members have long 

raised alarms about large broadcasters and programmers increasing rates and carriage demands and their discriminatory pricing 

practices. The programming costs for a smaller provider is significantly higher than for a larger provider. The spread, thought to average about 30 percent, puts my members at a substantial disadvantage to bigger competitors like DIRECTV, DISH Network, 

and Comcast. 

AT&T’s desire to acquire DIRECTV does not surprise smaller 

cable operators. Even though AT&T’s subscriber base nearly exceeds that of all smaller cable operators combined, its motives for 

buying DIRECTV point to it facing similar market problems. Like 

ACA’s members, AT&T also understands its competitive standing 

is likely to worsen if the Comcast/Time Warner Cable and Comcast/ 

Charter deals are approved. While AT&T can lower its program-
45 

ming costs and better compete by purchasing DIRECTV, smaller 

cable operators cannot because they lack AT&T’s financial resources and scale. Unable to spend their way out of trouble, these 

video providers will struggle increasingly to remain viable. 

Some critics of AT&T’s deal raise concerns about the number of 

pay-TV providers decreasing from four to three in U-verse territories. In rural areas where three video service providers typically 

exist, programming cost issues have driven some smaller cable operators to close systems, leaving consumers with only two satellite 

TV providers. 

Although the slow but steady decrease in competition in rural 

areas has not generated much concern from Washington, it should 

because it is harmful to rural America and often signals wider market problems. These trends are not irreversible. Congress and regulators can take action to prevent my members and their customers 

from simply being unreasonably disadvantaged compared to their 

larger competitors. 

In conclusion, there are three areas where oversight and action 

would be meaningful. 

First, by examining and addressing programmers’ discriminatory 

pricing practices against smaller pay-TV providers. 

Second, by modernizing program access rules by updating the 

FCC’s definition of a buying group. 

And third, by updating the FCC’s outdated regulatory fee categories so all pay-TV providers, including DIRECTV and DISH, pay 

their fair share. 

Thank you and I look forward to your questions. 

[The prepared statement of Mr. Lieberman follows:] 
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Mr. BACHUS. I thank you, Mr. Lieberman. 

At this time, I will recognize the Chairman of the full Committee, Mr. Goodlatte, for 5 minutes for the purpose of questioning 

the witnesses. 

Mr. GOODLATTE. Thank you, Mr. Chairman. 

Thank you all for your testimony. 

Mr. Stephenson, I noted you taking some notes during Mr. 

Bergmayer’s testimony and maybe Mr. Lieberman’s. I do not have 

a lot of time here, but are there one or two points you want to 

make in response to their criticisms of your merger? 

Mr. STEPHENSON. Yes. Actually it was not a criticism of the 

merger. It was he was citing a blog that a gentleman wrote where 

the blogger stated that we had not fulfilled merger conditions associated with the Bell South deal. And I would just like to make sure 

the Committee hears that blog was patently inaccurate. The data 

was false. We fully complied with every single condition imposed 

in that merger. In fact, what that merger required was that we 

provide 100 percent coverage of broadband, 85 percent with the 

fixed line broadband services. What one has to remember is at that 

time—— 

Mr. GOODLATTE. I have very limited amount of time. So I get 

your response to that point. 

Let me go on to my main—— 

Mr. BACHUS. We have all been blogged before. 

Mr. GOODLATTE. We understand that. 

Let me go on to my main point in my opening statement, which 

is this is all about what happens to the consumer. And let me talk 

about my consumers in my district. In my hometown of Roanoke, 

Virginia, the bundled package that you referred to right now is 

available for Verizon customers with DIRECTV. So I and others 

can get that package that you referred to. 

What will happen to that package that I have or someone else 

might have with Verizon and DIRECTV under this merger? 

Mr. STEPHENSON. My expectation is nothing should change. 

Mr. GOODLATTE. Well, what about AT&T? Do you offer those 

kind of packages right now as well in other parts of the country? 

Mr. STEPHENSON. Yes, we do. Mike referred to those as synthetic 

bundles. 

Mr. GOODLATTE. Why is it necessary to acquire DIRECTV to continue to have that bundle that you are referring to that we already 

enjoy? 

Mr. STEPHENSON. If you are okay with it, I would like for Mike 

to address that for doing this in the marketplace and he has some 

very good data. 

Mr. GOODLATTE. That would be fine. 

Mr. WHITE. So, Congressman, we measure customer satisfaction 

on everything we do, and when we measure the satisfaction of a 

bundle experience versus someone who is just buying DIRECTV 

solo, it is dramatically poorer. And it is two calls on two different 

days, two different installations, two bills. 

Mr. GOODLATTE. So how does Verizon solve that problem? Do 

they acquire DISH? Is that what we are talking about here? Because I am not sure what I have available to me with AT&T, but 

I know what is available with Verizon. And that does not solve the 
56 

complaint you just outlined there with regard to Verizon, although 

I am not familiar with the complaints. We like the service we get. 

Mr. WHITE. Right. 

Mr. GOODLATTE. But I am not sure why one of the two companies 

should own DIRECTV and the other should continue to have the 

bundle experience that was referred to. 

Mr. WHITE. The only way for us to get a seamless integrated 

bundle—we have had discussions for many years about trying to 

find a way that would have a better value for customers when you 

have got two separate companies chasing margin as opposed to one 

integrated company that can spread the costs over that one install. 

So for us, every time we sign up a new customer, we spend $850. 

We can probably reduce that by 20 percent with one call, one truck 

roll, build the router into the set-top box—— 

Mr. GOODLATTE. Is that savings going to get on to the consumer? 

Mr. WHITE. Yes. We have had an economist study it. The bundles 

would be a better value for consumers. Absolutely. 

Mr. GOODLATTE. Since my time is limited, let me ask you about 

another issue related to this. DIRECTV does not provide local 

Harrisonburg, Virginia—this is the northern part of my district— 

ABC. It does not provide that local channel in Page County, Virginia, which is right next to Rockingham County where Harrisonburg is located, despite being legally able to do so. Rather, 

DIRECTV beams in content from Washington, D.C., which is many 

hours away from my district. 

Can you explain why DIRECTV has opted to not provide this valuable local content to my constituents? And can you commit to resolving this situation so that my constituents can receive local content rather than Washington, D.C. content? 

Mr. WHITE. Certainly. 

Mr. GOODLATTE. Nothing against this place where we work, but 

my folks back home—they live in a different world than here and 

they want to watch that world on TV. 

Mr. WHITE. We have been working on our system for many 

years. We now serve 99.4 percent of American households with 

their local channels. We still have a few gaps and you have pointed 

out one of them. 

Mr. GOODLATTE. There are more, though, because I have heard 

from other Members of Congress who have other gaps in other 

parts of the country. 

Mr. WHITE. There are and we are continuing to build out as we 

get satellite capacity. We have got two more satellites going up in 

the next 12 months. For instance, Charlottesville, Virginia is on 

the list for later this year. The others would be on the list as well. 

In addition to that, there are orphan counties. We would certainly be happy to work with you on coverage of some of the orphan counties, provided we do not have to pay retransmission fees 

twice. It kind of comes back to the rules that we have to abide by 

relative to the broadcasters and assuming the spot beam that 

comes from the satellite can reach those rural areas. 

Mr. GOODLATTE. Thank you. 

My time has expired, Mr. Chairman. I appreciate it. I yield back. 

Mr. BACHUS. Thank you. 
57 

At this time I recognize Mr. Johnson, the Ranking Member of the 

Subcommittee. 

Mr. JOHNSON. Thank you, Mr. Chairman. 

As I noted in my opening statement, this transaction presents 

substantial opportunities for transforming labor standards in the 

telecommunications industry. The Communications Workers of 

America noted in a letter that AT&T has the largest full-time 

union workforce of any company in America. And I know everybody 

does not agree that that is something that is worthy, but I think 

it is very worthwhile. 

And with that, I would ask unanimous consent to make a part 

of the record a letter from the Communications Workers of America 

in support of this merger. 

Mr. BACHUS. You are offering something. Right? 

Mr. JOHNSON. Yes, sir. 

Mr. BACHUS. Without objection. I am sorry. 

[The information referred to follows:] 
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Mr. JOHNSON. Thank you. 

Now, Mr. Stephenson, many of your employees, including workers in union positions in my district, enjoy great benefits. How 

would AT&T plan to extend this industry-leading respect for the 

rights of employees to DIRECTV as a result of the proposed merger? 

Mr. STEPHENSON. As you mentioned, Congressman, we have the 

largest full-time union in the United States. We have a long history 

of working with our union members and doing collective bargaining. We have always been open to card check neutrality and 

we have always allowed our employees to make that choice as to 

whether they wanted to be represented in collective bargaining or 

not. And so with DIRECTV, you should assume that the DIRECTV 

employees will be offered that same option to collectively bargain 

or not. It will be their choice. 

Mr. JOHNSON. Thank you. 

Mr. White? 

Mr. WHITE. I agree. We certainly welcome the opportunity. I 

think there is some fabulous talent that AT&T brings, and we 

think DIRECTV has some great talent as well. And I think their 

world-class benefit programs for our employees will be a good 

thing. 

Mr. JOHNSON. Thank you, sir. 

All right. Mr. Stephenson and Mr. White, I would like to ask you 

both to talk a little bit about the company’s commitment to diversity, the merged company’s commitment to diversity in a number 

of different contexts. I know everyone will agree that having a diverse group of individuals as real partners both inside and outside 

of the company is important. AT&T’s public interest statement 

pledges that AT&T’s diversity best practices will be applied to 

DIRECTV. Such action would be laudable given AT&T’s history in 

promoting supplier diversity and inclusion. 

Mr. Stephenson, please describe the best practices referenced in 

the public interest statement. 

Mr. STEPHENSON. Yes, sir. First, I will start with employees. We 

have a strong belief that our employees ought to reflect the markets we serve. I frankly do not believe you can be successful in the 

marketplace if you do not have employees, executives, all the way 

up through a board that reflect the markets we serve. We think we 

have a very good track record in that regard, again all the way 

from our board down to our frontline employees in the market. 

We also extend, as you pointed out, that commitment and that 

expectation to our supplier community, and in fact, in 2013 our 

supplier community, when you look at the total spend external to 

AT&T, over 25 percent of our spend is with diverse suppliers. That 

is in excess of $15 billion in AT&T spend that was invested with 

diverse suppliers. 

I would also suggest that one of the things Mike and I have come 

to realize is that our cultures are very, very compatible. We look 

at DIRECTV. We see very comparable practices, and we are actually enthusiastic. This will be a very seamless integration in that 

regard. 

Mr. JOHNSON. Anything to add, Mr. White? 
65 

Mr. WHITE. Sure. I think from our side 40 percent of our workforce are people of color. 43 percent of our new hires were people 

of color. 42 percent of our summer interns were people of color. 

Having spent most of my career in consumer products, I passionately believe you cannot understand customers if your employee 

base and your management base and your board—and our board 

does as well—reflects that diversity. So we are proud of our commitment to diversity and inclusion at DIRECTV. 

I would say I look forward to leveraging some of the supply chain 

work that I think AT&T has done, which is best in class in this 

area that we will be able to take advantage of. 

Mr. JOHNSON. All right. Well, that is great to hear. 

And do these best practices for diversity apply to banking and finance? 

Mr. STEPHENSON. Yes, for AT&T. It is through all the disciplines, 

our external spend. I will not represent that it is 25 percent across 

all disciplines. That is something we will always work towards, but 

across all disciplines, we impose these diverse supply requirements. 

Mr. JOHNSON. All right. Thank you. 

And I yield back. 

Mr. BACHUS. Thank you. 

My first question is something that concerns Members on both 

sides, and that is how the proposed merger will affect Americans’ 

jobs. And let me go further than that and say also the prices that 

constituents pay for both video and Internet. In other words, how 

will customers benefit and will this create jobs? And I will start 

with Mr. Stephenson or Mr. White, whichever. 

Mr. STEPHENSON. Mike made this comment in his opening statement. It is about growth. I am very enthusiastic about this for a 

couple of reasons. First of all, as we both stated, these are complementary assets. You are not going to have the significant overlap of responsibilities like you do in a traditional merger because 

they are not overlapping. In fact, in 75 percent of the United 

States—we do not even compete to any degree. So that is going to 

mitigate a lot of the overlapping relationships. 

To the extent that there are overlapping jobs that need to be 

taken care of, I think at AT&T we have a very good track record 

on very elegantly working our way through those using attrition 

and placing people in other assignments. So I will stand on our 

record in terms of what we have accomplished there. 

Third, this deal has a lot of investment tied to it. Building out 

15 million or enhancing 15 million homes with new broadband is 

a significant capital outlay in spite of some of the earlier comments. This is significant capital. These are hard-hat jobs that will 

be out deploying this capital. It involves fiber to cell sites. It involves putting new antenna arrays on top of cell site structures. It 

involves installations in the home. And so there is a lot of capital 

investment tied to this, and in our industry, capital investment is 

synonymous with jobs. And so from a jobs standpoint, I feel very 

good about what this will do. 

Mr. BACHUS. Mr. White, do you have anything to add? 

Mr. WHITE. I would only echo what Randall said. I recognize the 

concerns about consolidation. I think of this as more complementary combination, taking the best assets of two. And oftentimes in 
66 

a merger of this size, there are significant job losses. That is not 

the case. This is a very different transaction. In fact, with the investments that Randall is talking about, it is going to create job 

growth. It is going to create significantly better broadband access 

for rural America, and it is a true win-win I think from both sides. 

Mr. BACHUS. And I will say this. We are talking about two service calls on two different days, substituting that, having one. Obviously, customers benefit from that. And that is not the kind of job 

consolidation that I think any are concerned about. To have new 

services offered and capital outlays and new jobs created is what 

we are looking for, not duplication of the same job. 

This has been described as a merger between a broadband provider and an Internet provider. And I think that is somewhat true. 

I mean a video provider—I am sorry—and a broadband provider. 

Except that U-verse—you do have a video offering at AT&T. It is 

very popular in my area. I want to know whether that is going to 

go forward, whether it is going to slow that deployment or increase 

it, exactly the effect it will have on U-verse. 

Mr. STEPHENSON. Yes, sir. To answer the question directly, yes, 

U-verse will continue and, in fact, we will continue to expand our 

U-verse offering. One of the advantages of this transaction I referenced in my opening comments is that DIRECTV, because of 

their content and programmer relationships—we feel very good 

about what it will do to our overall content costs, including on the 

U-verse platform. And as I mentioned, we are losing money on the 

TV platform on U-verse. This combination will allow us to take 

that from a money-losing proposition to a profitable operation. And 

therefore, what that does is it allows us to expand U-verse because 

it changes the economics. And so with the change in economics, we 

can expand U-verse. In fact, we have an opportunity. We have committed to expanding that platform by an additional 2 million homes 

passed by our U-verse platform with a full 1 gigabit per second 

broadband capability. 

Mr. BACHUS. Thank you. 

My final question is this. It came up in the Comcast/Time Warner hearing. Many of our rural members were concerned. I raised 

issues related to rural programming and the importance to customers in really both rural and urban areas to get that rural programming because many of them have connections or farms or interest in their rural communities. 

And I will ask you a similar question. Is rural America important 

to AT&T? I know it is to Direct, but what is your commitment to 

carry programming that is important and directed at rural America? 

Mr. STEPHENSON. Yes, sir. Rural America is very important to 

us. We had opportunities in the past to sell off our rural assets. We 

have chosen not to. We have been working diligently to try to find 

a broadband solution for rural America. One of the things I am 

most enthusiastic about with this transaction is now when you 

have a profitable TV product that reaches rural America, it 

changes the economics for rural broadband deployment. 

And what this is going to allow us to do is build out a rural 

broadband footprint using new wireless technology. It is called 

fixed wireless local loop. This is one of the more exciting tech-
67 

nologies I have been a part of in quite some time, and we are committing to building out 13 million homes in rural America with this 

technology. They will get 15 to 20 megabit per second services. It 

is adequate for video streaming. It will be priced like a landline 

service, not like a traditional wireless service. So we think this 

transaction gives us the opportunity to really do some things exciting for rural America. 

Mr. BACHUS. Thank you. For rural content. 

At this time, I will recognize the full Committee Chairman, Mr. 

Conyers, for questions. 

Mr. CONYERS. Thank you, sir. 

Mr. BACHUS. Ranking Member. I am sorry. Former Chairman. 

Mr. JOHNSON. Well, perhaps the gentleman has that vision for 

the future. [Laughter.] 

Mr. CONYERS. You can leave it like that. It is all right. 

I just wanted to ask Mr. Bergmayer to comment about anything 

that he has heard during the questioning period so far with our 

two distinguished witnesses. 

Mr. BERGMAYER. Yes, thank you. 

I think when it comes to the investment promises that AT&T is 

making, I would urge the Subcommittee to basically put them in 

context. I think it is important to distinguish upgrades from new 

build-out, and I think a lot of AT&T’s numbers consist of upgrades, 

consist of adding a fixed wireless product to an existing wireless 

coverage area. Now, that might be some amount of investment, but 

it is less than an initial build-out. And I think it is important to 

just put it in context in that way and also put it into the context 

of AT&T’s existing upgrade plans. 

AT&T already has a fairly ambitious build-out plan. It has something called Project VIP which talks about a lot of the new buildout and coverage that AT&T plans to do. AT&T has an initiative 

where it wants to upgrade a number of cities to a gigabit wired 

broadband. However, it is not exactly clear the scope of AT&T’s existing plans. We know that they are ambitious based on AT&T’s 

statements, but it is hard to quantify them. Therefore, it is difficult 

to compare any new commitments that they may be making today 

to those existing plans. 

And when it comes to broadband coverage, I will just make the 

point that broadband is an evolving standard. So if we expected 

AT&T to provide a certain level of service in 2006, you would hope 

that they would meet any commitment and then continue to upgrade that service as the definition of broadband continues to be 

reworked by the FCC and by policymakers. And that is my concern. 

It is not enough to simply meet a certain commitment and then 

stay there, but we expect a continuing level of investment. 

Mr. CONYERS. Do you generally agree with those comments? 

Mr. STEPHENSON. No, sir, I generally do not agree with the comments. 

The commitments we have made—I think they are very well documented, and we have laid them out in public filings on our VIP 

project that we will build broadband to 57 million homes, that we 

will expand our video footprint by 8 million homes passed, and that 

we will pass 1 million business locations with fiber, and that we 

will pass 300 million people with our mobile broadband LTE serv-
68 

ice. Those are all documented. They are all in the public record. 

They are in our financial filings, and we are fulfilling those. The 

commitments that we have made here, the 15 million new or enhanced broadband connections, are all on top of that commitment 

that is already out in the public domain. So all of that is incremental. 

And the capital requirements to do that—I mean, just 2 million 

households with fiber to the home is a significant capital investment. The 13 million fixed wireless local loops—that is a massive 

geography that we are talking about passing, and while it may be 

incremental to some investment that is already there, for a company that is investing $21 billion a year, it is a significant amount 

we are taking out of that. 

Mr. CONYERS. Okay. 

Well, now, do we have a consensus here, Mr. Bergmayer, of his 

rebuttal? Does that work out with you? 

Mr. BERGMAYER. I understand that AT&T has a very ambitious 

build-out plan, but I mean, some of the numbers in question that 

are supposedly in AT&T’s public filing somewhere are redacted and 

confidential in the FCC filings. So I have not looked at them. So 

it is difficult for me to see how the numbers are simultaneously 

public and redacted. 

My overall point, however, is to put AT&T’s incremental promises in context of its existing build-out plan and for the Committee 

to really question how merger-specific these promises are or whether, as happened in the T-Mobile merger, AT&T already has buildout plans and they are simply restating them for the purposes of 

getting a merger approved. 

Mr. CONYERS. Mr. Stephenson, how would allowing this transaction to go forward result in putting downward pricing pressure 

on cable products? 

Mr. STEPHENSON. It is interesting. When you heard Mike describe the process by which he sells video services and we do, it is 

kludgey process to try to get to the market with a bundled 

broadband and satellite TV service. You put the two together. You 

have a lot of customer efficiencies that come as a result of that. It 

is cheaper. The customer experience is better. And we had an economist study this. It is in our filing with the FCC. He did a very 

detailed econometric model, and he said before even the merger 

synergies, the cost synergies were incorporated, this would have 

not only a downward pricing bias on our prices but also the prices 

of cable companies who will have to respond. 

Mr. CONYERS. Let me get a response in from Mr. Lieberman before we close out. 

Mr. LIEBERMAN. Thank you. I just want to say Mr. Stephenson 

and Mr. White are very polished in talking about the benefits that 

will come through this deal, the commitments that they are willing 

to make. But we have not heard them talk about the concerns that 

the programming, particularly the regional sports networks that 

are owned by DIRECTV, are not subject to any arbitration conditions and that they will have an incentive and ability to increase 

the prices for that programming for smaller cable operators. If they 

are going to be making public interest commitments, it would be 
69 

nice to hear them talk about a commitment to address that problem as well. 

Mr. COLLINS [presiding]. Thank you. The distinguished Ranking 

Member’s time has expired. 

The Chair now recognizes himself for his questions. 

I want to go back to something that is just off a little of my other 

question—statements to Mr. White. It happened to come from my 

friend from Georgia. But I want to make it clear. DIRECTV will 

not be forced to unionize. Correct? 

Mr. STEPHENSON. Oh, no, sir. We leave it up to the employees 

to make that decision. 

Mr. COLLINS. And this will be a request for them to vote to join 

the union, or will there be a required vote for them to go to? 

Mr. STEPHENSON. The union has to go in and solicit and see if 

they can hold a vote. 

Mr. COLLINS. Good. 

Mr. Lieberman, as you may know, I have previously expressed 

concerns about the impact of the proposed Comcast/Time Warner 

merger on the ability of small businesses in my district to advertise 

on cable television when the Subcommittee held a hearing on that 

merger earlier this year. Could you give me your view on this issue 

in light of the merger before us today and especially any difference 

in the impact of the Comcast/Time Warner merger compared to the 

AT&T/DIRECTV proposed merger? 

Mr. LIEBERMAN. Gladly. ACA is concerned that Comcast/Time 

Warner Cable would be able to exclude MBPD’s, their agents and 

advertisers from regional advertising interconnects, while this 

would not be the case with AT&T/DIRECTV which do not control 

an advertising interconnect. 

Mr. COLLINS. Good. 

I always like to open it up. Mr. White, would you like to talk 

about that? 

Mr. WHITE. Yes. I would just make two comments. On the advertising, we are quite a different business model. Most of our advertising is national. We are less than 1 percent of the advertising. I 

do not think it affects the market at all. In fact, I think it will open 

up opportunities for small businesses to advertise. 

And as it relates to the regional sports networks, we have three 

of them: one in Denver, one in Seattle, and one in Pittsburgh. 

AT&T does not even have a footprint in those three States. So it 

does not have any impact on those regional sports networks. And 

we are subject to the program access requirements of the FCC. 

Mr. COLLINS. I believe that vigorous competition helps consumers 

get a good deal no matter where it may be. Competitive markets 

as this when there is genuine choice for consumers in terms of who 

supplies the good services that they demand. In both AT&T and 

DIRECTV—your written testimony—it has been stated that this 

merger will increase competition. But competition is not an end, 

however. It should be a mechanism by which consumers realize actual benefits. I am going to open this up to everyone. 

I would like to open this question and say can you say with certainty, or at least as is possible in a business world, that this merger will or will not directly result in more choice and lower cost to 

consumers both in the short term and the long term and to what 
70 

extent. It is often portrayed in these mergers that this is what will 

happen. The reality is life changes. Hearings are over. Spotlights 

are off, and this does not happen. And I would like to hear each 

of you, as best you can, concise as you can, answer that question. 

Mr. WHITE. I will take the pay-TV side and Randall can talk to 

the broadband benefits. 

But from a customer standpoint, we believe in choice. We have 

to. We sell a pure play offering. It is going to be like vanilla, chocolate, and strawberry. We will have the pure play. We will have a 

bundle together with the AT&T capability, particularly with the 15 

million homes they are going to build out, which will be a new benefit for consumers. 

In terms of the overall value to consumers, today those bundles 

are not very competitively priced. When you make one company, as 

our modeling shows, you will see a better value bundle offering to 

those customers. 

Mr. COLLINS. Just a quick question. Let us just say for full disclosure for folks like me who have Direct and have AT&T for two 

different services, is that going to become a bundle opportunity for 

us, or are we stuck within the packages that we currently have 

until they are over? 

Mr. WHITE. Congressman, that will be your choice. I mean, we 

believe in choice. The way we have built our business, it is up to 

the customer to decide. So we are going to give that choice. As I 

said, you can choose A, B, or C or you can stay where you are. 

Mr. COLLINS. Mr. Stephenson? 

Mr. STEPHENSON. There is another facet to this. When you ask 

about consumer benefits, the over-the-top model is evolving very, 

very quickly. We also have 100 million wireless subscribers at 

AT&T who are demanding access to the types of content that Mike 

has on the DIRECTV product. One thing you should expect to see 

us do is begin to integrate those offerings and begin to deliver that 

content seamlessly across mobile devices. That is one benefit in accelerating the OTT model. 

The second is, in terms of consumer benefits, the 15 million additional broadband homes passed is a significant consumer benefit 

that would not happen but for this transaction. We think that is 

significant. 

And then obviously the pricing implications. And I will not go 

into the econometric model, but it is really compelling what happens to pricing not just with us but across the industry as a result 

of this transaction. 

Mr. COLLINS. I may have made a Freudian slip and said more 

choice and more cost. That may be just what I have experienced 

in the past. 

I would assume the other two disagree with that. And I will have 

to—because of time, I have to because I do want to go back to this 

issue the Chairman brought up. It is an issue for me. It is the orphan county issue. It is not just me. There are other Members. Mr. 

White, I have had conversations with your folks. I want to continue 

to make this. I am going to continue to harp on this until we get 

this fixed both with the broadcasters—this is just not an issue that 

I am going to let go of. There are some in the audience. They are 

going their head down. You know, when I get on something, I real-
71 

ly do not leave it until I get an answer. So at this point, I have 

encouraged that. 

My time has expired. We will go to the gentleman from New 

York, Mr. Jeffries. 

Mr. JEFFRIES. Thank you, Mr. Chair. 

Let me thank the witnesses for your testimony here today. 

There has been some discussion about the workforce transition. 

I just want to go over some of that ground again. 

Mr. Stephenson, AT&T has the largest unionized workforce in 

the country. Correct? 

Mr. STEPHENSON. Full-time union. 

Mr. JEFFRIES. And I commend you for that and for demonstrating that you have been able to be an incredibly successful 

company with that workforce composition. 

Now, your employees are represented by the Communications 

Workers of America. Correct? 

Mr. STEPHENSON. That is correct. 

Mr. JEFFRIES. Mr. White, what is the percentage of unionization 

of your current workforce at DIRECTV? 

Mr. WHITE. With DIRECTV, we have outsourced partners, but 

specifically as it relates to DIRECTV, in terms of owned employees, 

it is de minimis. It is mostly a non-union workforce. Some of our, 

however, installers in the Northeast and elsewhere are union. 

Mr. JEFFRIES. Have there been efforts to unionize the workforce 

in the past? 

Mr. WHITE. I think we have had a vote in one geography in California, yes. 

Mr. JEFFRIES. And what was the outcome of that result? 

Mr. WHITE. That result was in favor of unionizing, and I think 

we have had some questions from our standpoint that we are going 

through with the commission about challenging that. But we are 

waiting for the ruling from the NLRB I believe. 

Mr. JEFFRIES. Thank you. 

Now, Mr. Stephenson, in terms of legacy DIRECTV employees, I 

believe you have indicated that they will have an opportunity to 

join CWA. Is that correct? 

Mr. STEPHENSON. We have a policy of open card check neutrality. 

Mr. JEFFRIES. So the process of facilitating that potential transition will be through neutrality in terms of card checks. 

Mr. STEPHENSON. Yes, we have a long track record in this regard. When we bought AT&T Wireless, for example, we opened up 

the workforce to card check. The union came in and held a vote, 

and across many of the locations, they voted to join or to become 

part of the collective bargaining process, some places not. But we 

leave that up to the employees to make that decision. 

Mr. JEFFRIES. Now, you expect the merger to create jobs. I believe, both Mr. White and Mr. Stephenson, you testified in that regard. Correct? 

Mr. STEPHENSON. Yes. We actually are enthusiastic about it. 

First and foremost, we are investing to build out 15 million additional homes with broadband. Those are hard-hat jobs to go build 

out these capabilities. 

Mr. JEFFRIES. So both in terms of the ambitious capital build-out 

program and, I gather, as a result of the complementary nature of 
72 

the company—and there does not seem to be much disagreement 

about that—there is an expectation that you would create jobs now. 

Mr. Bergmayer, is there reason for you to disagree with that assertion? 

Mr. BERGMAYER. I think it is usually the case that in mergers, 

there are job redundancies. It is not the focus of my concern here. 

Today I am focused more on the consumer side. 

Mr. JEFFRIES. Okay. 

Now, Mr. Stephenson, in terms of the potential creation of jobs, 

is there a specific regional distribution that you would anticipate 

would receive any job growth more so than other parts of the country? 

Mr. STEPHENSON. Yes. The places that come to mind first are the 

2 million homes that we are passing with our gigabit technology for 

really high-speed broadband capability. That involves taking fiber 

all the way to the home, putting electronics in the field. That is a 

very significant build. That will be within what I will call our old 

traditional franchise landline territory, so the 22 States where we 

operate today. 

The rural broadband build, which is the wireless deployment, 

will hit 48 States. And so that is going to be a fairly broad-based 

deployment. 

And in our company, jobs align with capital. I mean, they are 

perfectly correlated. As you invest, you hire more people. Now, I do 

not want to mislead. There will be places, to Mr. Bergmayer’s comment, where there are redundancies in jobs, but we do have a very 

good track record on how to address those situations, and we use 

very extensively attrition. And I feel good about our track record 

in that regard. 

Mr. JEFFRIES. Now, you do not currently offer video services in 

the New York City market. Is that right? 

Mr. STEPHENSON. In what market? 

Mr. JEFFRIES. In the New York City market. 

Mr. STEPHENSON. We offer wireless services and we offer service 

to large corporate businesses. 

Mr. JEFFRIES. But not video. 

Mr. STEPHENSON. Not video. Not today. 

Mr. JEFFRIES. Now, Mr. White, DIRECTV does offer video in the 

New York City market. Is that right? 

Mr. WHITE. We do. 

Mr. JEFFRIES. And how do you expect the potentially merged entity, AT&T/DIRECTV, to impact the nature of the services that 

would be offered by a combined company? 

Mr. WHITE. Well, I think in urban markets like New York, there 

would not be any change frankly in general from a pay-TV standpoint. We will continue to compete hard for customers in those geographies. I would say we will have an opportunity to bundle with 

the wireless side. And that is something different that we have not 

done before. 

Mr. JEFFRIES. So there is no current bundle offered in the New 

York City market. 

Mr. WHITE. We might with Verizon and with slower speed Internet service, but not high-speed. FiOS is very competitive in New 

York. 
73 

Mr. JEFFRIES. Thank you. I yield back. 

Mr. BACHUS [presiding]. Thank you, Mr. Jeffries. 

At this time, I recognize the gentleman from Texas, Mr. 

Farenthold for 5 minutes. 

Mr. FARENTHOLD. Thank you, Mr. Chairman. 

Mr. BACHUS. He is the Vice-Chairman of the Subcommittee. 

Mr. FARENTHOLD. Thank you. 

I would like to follow up with you, Mr. White, on a question that 

Mr. Collins asked about local broadcasters. And as the satellite 

technology is adopted in homes, how does the local car dealer reach 

that market outside of the local broadcast station that you carry? 

A car dealer or whomever can go to a cable company and buy some 

of the local avails on those channels, and with satellite, it does not. 

I would assume U-verse had an ability to buy local adds on cable 

as well. If you did not, you should have. 

Mr. WHITE. Yes, you are absolutely right. U-verse, because it is 

a local product, does have local advertising. 

As far as DIRECTV is concerned, the nature of the satellites in 

the sky is they are kind of national. So our advertising business 

grew up as a national business competing with the large media 

companies who are much larger than we are. 

More recently, we have got a new technology that is enabling us 

to do some targeted advertising. We have done a joint venture with 

DISH for political advertising. This is a new technology leveraging 

the Internet, which is enabling us to target homes, and we are 

hopeful to be able to grow the local advertising. But historically I 

think $70 million of our 600 in advertising is local advertising. It 

is very small. 

Mr. FARENTHOLD. We may actually have a technology that is 

helping local broadcasters and then potentially hurting them. 

I wanted to talk now, Mr. Stephenson, a little bit about your 

fiber build-out. Common sense to me dictates that the driving force 

behind broadband right now is video, and if you have got a cheap 

way to deliver video via satellite as opposed to broadband, there is 

a discouragement in rolling out your fiber network. And I read an 

article in the ‘‘Dallas Morning News,’’ though, about how you are 

actually still rolling it out because you are competing with Google 

Fiber. 

So how are we going to see the rollout of fiber affected in markets that Google is not entering yet? When is it going to filter down 

to the mid-sized cities and then eventually to the smaller towns? 

Mr. STEPHENSON. That is one of the, I guess, interesting things 

about this transaction, and I have referenced it a couple of times 

now. But our video service, whether it be over fiber or over our 

fiber-to-the-node technology—we lose money on the video service 

because 60 cents of every dollar goes to the programmers. Combining with DIRECTV and creating the opportunity to make our 

programming costs look like DIRECTV’s programming costs makes 

our fiber-based TV product profitable. And once the TV product becomes profitable, it fundamentally changes the economics of a fiber 

build. 

And so when we announced the deal and that we were going to 

expand our fiber-to-the-home footprint by 2 million homes, it is because of the economics of a more profitable video product. In fact, 
74 

in your district I think Corpus Christi, 16,000 homes will get fiber 

to the home as a result of this transaction. Victoria County, out 

and around that area, a fairly significant number will get fixed 

wireless local loop broadband coverage where they do not have any 

today. So it just changes the economics of a broadband build and 

actually makes a fiber deployment more compelling, not less compelling. 

Mr. FARENTHOLD. All right. So you are willing to tell me under 

oath here that this is not going to slow down your fiber deployment. 

Mr. STEPHENSON. This will what? I am sorry. 

Mr. FARENTHOLD. Not slow down your fiber deployment. 

Mr. STEPHENSON. This will actually cause us to do more fiber deployment. 

Mr. FARENTHOLD. You talk about lowering programming cost and 

the buying power you get with this merger. And I see how that is 

a competitive advantage. What about making space available for 

new television networks? You see a huge growing market in Spanish language networks. You see a growing market in sports and 

news for these sort of things. What is going to happen with respect 

to if I, God forbid, do not get reelected next year and decide to start 

Blank TV? 

Mr. WHITE. Well, as you can imagine, Congressman, we get requests for new channels all the time. I think right now we are considering 50. I do not have satellite capacity for 50, but we do have 

two new satellites going up over the next year. So we have a process internally where a couple times a year I sit down with all the 

requests. We already have 152 independent channels. We welcome 

that as an important part of the diversity of our offerings. So I 

would expect with our new satellite capacity and with things like 

the gigabit to the home where you can do affordably—you can do 

video, that we would have more diversity of independent channels. 

Mr. FARENTHOLD. Thank you very much. 

I see my time has expired. 

Mr. BACHUS. Thank you. 

At this time, Mr. Cicilline is recognized for 5 minutes. 

Mr. CICILLINE. Thank you, Mr. Chairman. 

Thank you to the witnesses for being here. 

I would like to start with Mr. Stephenson. Mr. Bergmayer has 

said that AT&T has failed to demonstrate any public interest benefits from this transaction, and in large part, he argues that the 

build-out that you are speaking about of 15 million customers is, 

in fact, enhancements rather than build-outs and may have actually been something that was part of your capital investment anyway and is something that is not reflected in your public filings 

and not really specific to this merger. 

So could you speak to that, first of all? Can you tell us of that 

15 million, how many are enhancements for people who have existing service, how many are build-outs for new customers? Is it in 

fact something you plan to do anyway and is not specific to this 

merger, not to say it is not a good thing, but in evaluating this, 

could you respond to that? 

Mr. STEPHENSON. Yes, I will be glad to. 
75 

I went through earlier specifically what commitments we have 

made, and they are in our public financial filings where we have 

committed fiber, where we have committed IP broadband to 57 million homes, a million businesses passed with fiber, 300 million people covered with LTE. All of that is just kind of baseline. We made 

those commitments and we are finishing that construction now. 

The 15 million broadband either enhancements or additions are 

all incremental to that. The 15 million is split. And 13 million is 

a technology that we are very enthusiastic about. It is called fixed 

wireless local loop, a very interesting name for the technology. But 

what it is is taking advantage of areas where we have significant 

spectrum, and it tends to be rural America. In fact, it is almost all 

rural America where we have 20 megahertz of spectrum. We are 

deploying this technology and using wireless to deliver 15 to 20 

megabit per second service to those homes. 

Now, to Mr. Bergmayer’s point, yes, we are going to use existing 

cell site infrastructure to put up these capabilities, but we are 

going to go in and put antennas into homes, a lot of installation 

required. That is 13 million. 

There are 2 million homes where it is called ‘‘enhanced,’’ but 

what we are doing is deploying fiber to the home, literally going 

up, digging up streets, and putting fiber into the home. That is a 

significant incremental commitment to what we have already 

made. 

Mr. CICILLINE. Thank you. 

Now, several witnesses, both in their testimony and in the written testimony, have raised issues with respect to net neutrality. 

Should part of the remedy to address some of the issues that have 

been raised with the transaction include extension of the net neutrality rules to wireless? Should we do that as part of this process, 

or should it be done, I should say? 

Mr. STEPHENSON. We have been very, I believe, constructive in 

the net neutrality debate. The rules that went in in 2010—we 

worked extensively with the FCC to design those rules and make 

sure that they accomplished what the tech industry needed, the 

content people, and all. And we think those rules landed at the 

right place. 

Those rules were very cautious to tread into the wireless area because wireless networks are not like fixed line networks. We have 

limited spectrum that this Congress is working aggressively to try 

to deal with. When you have limited spectrum and limited capacity, 

doing things where it constrains what you can do to deliver traffic 

can be very hazardous, if you will, to service quality in general. So 

we felt we ought to walk very cautiously and be very, very delicate 

in how we deal with the wireless situation. 

Mr. CICILLINE. Thank you. 

Mr. White, could you talk to me a little bit about what DIRECTV 

is either committed to doing or what will be part of the terms of 

this merger agreement to ensure that smaller, independent channels will be paid a fair rate, given that DIRECTV already is the 

second largest video distributor and will, presumably, only have its 

market position enhanced as a result of this merger? What commitments have you made or what terms will be part of this merger 

agreement that would protect that? 
76 

Mr. WHITE. So I do not think we have yet put in anything specific to the merger agreement. Clearly, every distributor of video 

right now is struggling with rising content costs, which are 60 percent of our costs, and they are growing at far in excess of consumer 

incomes, high single digits, 8 to 10 percent a year, which has put 

tremendous pressure on the business and our need to raise consumers’ prices. I would say certainly that colors how we look at all 

negotiations with big and small. 

And by the way, we have taken on the big guys. I think we have 

probably been a leader in the industry in battling to try and keep 

costs lower. It is a tough battle. But as it relates to independent 

channels, we have both our public interest obligations that we continue to live with. 4 percent of our channels would be PIO’s. We 

have, I think, 26 of those. We have 152 independent channels. In 

today’s world with over-the-top as an option as well with 

broadband, we can put things up as an application just like we 

have done with Pandora and YouTube so we can expand even beyond that and would certainly look to if consumers want it. 

Mr. CICILLINE. Mr. Chairman, if I might just ask the final between witnesses if they would submit written answers to this question. If there are things that you suggest we could do that would 

allay some of the concerns you both have raised, short of an outright opposition to the merger, but actions we could take as a Congress that will respond to some of the very important issues you 

raised, if you could answer that in writing, I would be grateful. 

And I yield back, Mr. Chairman. 

Mr. BACHUS. Thank you, Mr. Cicilline. 

At this time, I recognize Mr. Issa for 5 minutes. 

Mr. ISSA. I thank you, Mr. Chairman. 

Gentlemen, as the Chairman next door, I am used to going first 

so all the material is mine. When you get down this far, usually 

most of the good questions have been asked, and this is no exception. 

But I just want to run a concept by you because I serve on this 

Committee. I also am a member of the Energy and Commerce Committee that often looks at the other side of your issue in the FCC. 

So when I say, for example, Comcast/Time Warner/NBC, AT&T/ 

DIRECTV, Verizon/Fox, DISH Network/CBS, Spring/T-Mobile/ABC, 

and Google and everyone else, are we looking at a future in which 

in order to be competitive, companies have to find these partnerships, these allies, these mergers in order to be able to create real 

viable competitors in this case AT&T/DIRECTV to some of those 

other hypothetical and not-so-hypothetical names that I mentioned? Mr. Stephenson, Mr. White? 

Mr. WHITE. Well, certainly for anyone distributing the pay-television piece—I will let Randall speak to the broadband aspect, but 

I think there is a story there as well. When 60 percent of your costs 

are the content that you distribute—I mean, we are just a distributor—and seven companies control 75 percent of our content 

costs, so we are already in the world of dealing with big-scale providers of content. They are tough negotiations, big and small. In 

our case, we have had our battles with big ones on behalf of our 

customers. So I think as a reality to do the kind of investments 

that we are talking about in broadband—and I think Mr. 
77 

Bergmayer referred to it earlier. To me the exciting thing about 

this is not just the commitments we are making today, but the fact 

of AT&T having a profitable video business will support them to 

continue to invest in increasing speeds and broadband, which we 

know that is where the future is going for the long term. 

Mr. ISSA. Randall? 

Mr. STEPHENSON. I do not know where future industry moves go 

and what consolidation transpires. Mike and I—we view this as 

very different. This is not Comcast/Time Warner. This is not two 

cable companies getting together. It is not Sprint/T-Mobile—— 

Mr. ISSA. And you do not have a major content element. Some 

of the other names and hypothetical names I mentioned do have, 

and that is why I asked the question that way. 

Mr. STEPHENSON. Yes, so you are exactly right because we are 

putting his TV product with our broadband and wireless product 

and creating a unique value proposition in the marketplace. But 

there is not a content play per se in this transaction. 

Mr. ISSA. Mr. Bergmayer, in your opening statement you were 

very concerned, but I would presume you would have been equally 

or more concerned when major cable companies and content providers join. Right? 

Mr. BERGMAYER. Yes, sir. 

Mr. ISSA. Okay. Mr. Lieberman, the same thing. 

Mr. LIEBERMAN. Yes. There is definitely a concern. 

I just want to say it is not only content providers merging with 

distributors. It is also just distributors getting larger. When they 

get larger, they get more influence over programmers. That drives 

programmers to want to get larger as well. As a small provider who 

does not have the financial resources to get larger themselves, they 

suffer. If we want to have a market that is dominated by larger 

players, where consumers in rural areas do not have options, then 

that may be the market that we are going to look at. 

Mr. ISSA. And this is the reason I started this way. On this side 

of the Rayburn Office Building, we deal in the antitrust question, 

but antitrust, since the dawn of antitrust since Teddy Roosevelt, 

has been about recognizing that companies naturally compete if not 

for a trust situation that gives them an unfair advantage. Do you 

all agree to that, that that is really what antitrust is about, is 

maintaining the opportunity for real competition? 

So now I go back to my basic question which is not just for your 

merger, but in my mind for how this Committee deals with, if you 

will, the promoting of competition. In fact, do we not have a problem that if we do not create certain large entities that can deliver 

product and compete to my household to make sure that I have 

multiple choices to my household wherever I live, that in fact we 

will not have competition either for delivery of content or, quite 

frankly, we have a problem with delivery of content being at a good 

value? Is that not true? 

Mr. WHITE. We think it is certainly true. And I think this merger 

creates a greater opportunity for us to combine with AT&T’s 

broadband capability. For us, every satellite costs $400 million. On 

his wireless business, Randall is spending $10 billion, $15 billion, 

$20 billion a year in capital spending. It is expensive to rewire 
78 

America, and that is kind of what we are about collectively. And 

that is how we compete. 

Mr. ISSA. Thank you. 

Mr. Chairman, fortunately, Viasat is in my congressional district. 

So the good news is that those launches tend to cost a similar 

amount, although SpaceX is reducing the cost of the launch. But 

those satellites are transmitting so many more channels and so 

much more bandwidth that I am confident that in fact competition 

from space becomes one of the competitions that hopefully this 

Committee will realize needs to be viable to maintain an antitrust 

environment. 

I thank you and yield back. 

Mr. JOHNSON. Will the gentleman yield? 

Mr. ISSA. I yield such time as the Chairman may give me. 

Mr. BACHUS. I will yield you 15 seconds. Is that good? 

Mr. JOHNSON. Yes. 

I just want to make a statement about Government investment 

in infrastructure, the space program, the hundreds of millions of 

dollars that the Federal Government, through taxpayer money, 

spent to prepare to turn that industry over to the private sector, 

of which Mr. Issa is so proud and justifiably I think is a tribute 

to Government spending. 

With that, I will yield back. 

Mr. BACHUS. Thank you. 

Mr. Holding, the gentleman from North Carolina, is recognized 

for 5 minutes. 

Mr. HOLDING. Thank you, Mr. Chairman. 

Of course, the folks that I represent back in North Carolina want 

to know in real terms what it means to them—the merger. We 

have lots of good conversation in this hearing. And so I would like 

for you all to succinctly boil it down and answer this question. 

So 3 years from now, what are the top two things that you think 

that my constituents who are your customers will appreciate or dislike about this merger? And I will ask Mr. Stephenson, Mr. White, 

and then I will ask Mr. Bergmayer, Mr. Lieberman to hit their top 

two points. So starting with you, Mr. White, two things that you 

think my constituents will appreciate about this merger in 3 years’ 

time. 

Mr. WHITE. 15 million more rural Americans will have Internet 

service that do not have high-speed Internet today, and I think up 

to 70 million homes in America out of 115 million will have a much 

better bundle offer to compete with the cable companies. 

Mr. HOLDING. Mr. Stephenson? 

Mr. STEPHENSON. And as that plays itself out, what the econometric model will show and we firmly believe is there will be downward pricing pressure in this industry as we become a more viable 

competitor, as our programming costs begin to climb at a lower 

rate. We think it is beneficial to consumers from a pricing standpoint. 

We think also more broadband is very, very good for the overthe-top content distribution models. So more broadband will help 

accelerate the over-the-top models and bring more choices for customers on content. 
79 

Mr. HOLDING. Mr. Lieberman, maybe the top two things that 

they will not appreciate in 3 years. 

Mr. LIEBERMAN. Yes. I think that the rising prices that they will 

see. Their service providers who are not DIRECTV have to pay for 

DIRECTV programming. And I think the number two concern that 

they would have is just the increasing pressures. The decreasing 

competition that smaller providers can provide as a result of the 

increasing consolidation that is happening in the marketplace not 

only due to AT&T/DIRECTV, but also Comcast/Time Warner 

Cable. 

Mr. HOLDING. Mr. Bergmayer? 

Mr. BERGMAYER. If I was a rural resident, I would be wondering 

whether I was resigned to only having wireless choices or whether 

I had some future prospect of getting the same sorts of fiber and 

high-speed broadband options that are available to people in more 

densely populated areas. I agree that over-the-top video is a great 

benefit to consumers, and I think what people benefit from is a 

choice of a variety of over-the-top video providers. So I would hope 

that in the future, customers are not driven toward using just one 

or another over-the-top video provider. For example, if AT&T operates its own over-the-top video service and it does not discriminate 

in favor of that service and discourage people from using competing 

services, for example, by exempting only its own services from data 

caps but not those of its competitors. 

Mr. HOLDING. Thank you. 

Mr. Chairman, I yield back. 

Mr. BACHUS. Thank you, Mr. Holding. 

At this time, I will recognize the gentleman from Missouri, Mr. 

Smith, for 5 minutes. 

Mr. SMITH OF MISSOURI. Thank you, Mr. Chairman. Thank you 

for holding this hearing. 

My first question is for Mr. White. Mr. White, the American 

Cable Association states that reductions in programming costs that 

AT&T and DIRECTV may receive as a result of the proposed merger, which may lead to higher programming costs for their members. 

How do you respond to that? 

Mr. WHITE. First of all, the reduction in programming costs that 

we have referred to is a reduction in the costs that currently AT&T 

pays. So we did not make any assumptions that DIRECTV’s costs 

would go down necessarily, but it is all related to the cost of content that AT&T pays today. Our belief is that, as we look at that, 

frankly all of us battle in these negotiations every day. The cable 

operators do as we do as distributors. And there is a significant 

amount of leverage. But it is hard for me to see in a world where 

there are over $40 billion of affiliate fees that our billion dollars in 

savings out of the $40 billion would make that much difference 

over time to what they would charge the small operators. 

Mr. SMITH OF MISSOURI. So do you think this merger will increase the cost of your competitors by any means? 

Mr. WHITE. That has got nothing to do with our thinking on it. 

This was all about getting a capability to service the 75 percent of 

customers that leave DIRECTV because they cannot get a bundle 

right now and has nothing to do with that. So I do not accept that 

all. 
80 

Furthermore, I think some of our smaller operators—you got to 

remember in a local market, they are very, very powerful in terms 

of their coverage, and they negotiate very tough. And I do not expect them to want to see their prices increase any higher than they 

already are. 

Mr. SMITH OF MISSOURI. Thank you. 

Mr. Stephenson, I have a very rural congressional district in 

southeast Missouri, and it is an unserved population. AT&T and 

many other wireline providers, as well as cable operators, have 

made significant investments to reach my constituents, many of 

whom struggle to get dial-up. Can you explain how this transaction 

will result in increased broadband services for rural communities 

like mine? 

Mr. STEPHENSON. Yes. In fact, I just am looking at a list here. 

In Missouri, the fixed wireless local loop deployment that this 

transaction will accommodate is significant. Again, we have a profitable TV product that we now pair with a broadband technology, 

and it makes the economics for deploying broadband look really attractive. We are going to use a wireless technology which will give 

15 to 20 megabits per second, build 13 million households in rural 

America. In Missouri, that is 340,000 households we pass with this 

technology. And this is one of the areas we are most enthusiastic 

about. We have been looking at this technology a long time, trying 

to get the economics to work, and it works once you put a profitable 

video product, which DIRECTV brings to bear, with this technology. So that is what Missouri should see. 

Mr. SMITH OF MISSOURI. Thank you. 

You know, representing a very rural congressional district, with 

your statements there, I want to point out that the only way that 

I can get Internet service at my house, which is 13 miles from 

Rolla, Missouri, a community of 25,000 people, is through wireless 

or satellite. So that is extremely important for rural America. 

Mr. Lieberman, larger sized competitors typically have an advantage relative to their small rivals as a result of economies of scale. 

Smaller sized competitors can outperform their large rivals on service and product quality. What other competitive advantages, aside 

from size, will the combined entity of AT&T and DIRECTV have? 

Mr. LIEBERMAN. Thank you. As you know, consumers do benefit 

from having independent distributors in the market, companies 

like Boycom and NewWave are just important in their communities, and these are often in areas where larger players do not 

want to invest and do not want to serve. 

With regard to your question, first and foremost, I cannot discount the importance of just being large when you are negotiating 

for programming costs. Even AT&T, DIRECTV have said that 60 

percent of their costs go to programming. That is to deliver their 

video service. That is the same for smaller operators as well. 

I think being large has other advantages of just having more financial resources whether or not it is marketing to your customers, 

for instance. These things give great advantages to DIRECTV in a 

lot of their competition with smaller operators. 

Mr. SMITH OF MISSOURI. Will the ACA members that are present 

throughout my district be able to compete with the combined entity 
81 

of AT&T and DIRECTV on the basis of better service and higher 

product quality? 

Mr. LIEBERMAN. They will compete. They will do what they can 

to overcome the significant disadvantage that they face in paying 

programming fees that are significantly higher than DIRECTV, but 

that competitive ability is getting more and more difficult over 

time. And if your customers enjoy having a competitive choice between two satellite providers and a local cable operator, then I 

think we need to look at the underlying rules that are in the market that are driving these consolidations to ensure that consumers 

can continue to benefit from that in the future. 

Mr. SMITH OF MISSOURI. Thank you, Mr. Chairman. 

Mr. BACHUS. Thank you. 

We are going to have a second round for Members who are here 

if they desire it. So, Mr. Smith, if you want a second round, you 

can. 

Mr. Johnson, do you have other follow-up questions? I will go 

and then you if you have any. 

Let me start. Mr. Bergmayer, Mr. Stephenson has already mentioned net neutrality and that they were committed to the FCC’s— 

some of their guidance. I am not sure what the FCC’s position on 

net neutrality is. It seems to me they are backing away from what 

was originally conceived as net neutrality. 

Mr. BERGMAYER. As I understand it, AT&T has committed to follow the 2010 open Internet order. Those rules are partly vacated 

by the D.C. Circuit, but as part of a merger condition, certainly 

AT&T might promise to abide by those rules even if they are no 

longer in force for some of the industry. 

I think there is a question about the extent of the protection they 

offer to wireless users. For example, while they provide less protection for wireless users than for wireline broadband users, they do 

not provide no protection. And one of the areas where they offer 

protection for wireless users is for services that the provider itself 

offers. There are some cases where it cannot discriminate against 

competing services. Now, if AT&T does offer a new over-the-top 

video service, those provisions of those rules might kick in where 

previously AT&T did not offer such a video service. So they might 

not. So that is sort of an interesting point with the 2010 rules. 

Mr. BACHUS. I think most Americans and most Members of Congress are very concerned. The Internet has sort of been a gateway 

not a gatekeeper. I know as a telephone company, you are subject 

as a common carrier. We have seen reports of fast lane, slow lane, 

and if there is a reason not to have that, it is concerning. 

Mr. BERGMAYER. Well, Public Knowledge is working at the FCC 

now for strong net neutrality rules that would apply to the entire 

industry not just one company. I mean, I question whether it 

makes a lot of sense to have rules that apply to just one company 

and not others. I would prefer them to be industry-wide. I would 

presume, if we succeed in our effort to get rules that are even better than the 2010 rules in place, if they go beyond the 2002 rules’ 

level of protection, then AT&T would be subject to them. But if 

they go not as far as the 2010 rules, we would still hold AT&T to 

the 2010 rules. 
82 

Mr. BACHUS. I know there is some discussion about what is a 

common carrier. I will not get into all of that. But I think it is 

something the Committee ought to look at. 

Mr. Lieberman, discriminatory pricing obviously is a concern. We 

want to preserve the competition we have. And you have talked 

about a differential of 30 percent in your testimony. You said the 

proposed transaction will increase DIRECTV affiliate programmers’ 

incentive to charge higher prices to AT&T/DIRECTV rivals. And 

then you say regulators should adopt to eliminate the ability of 

DIRECTV affiliated programmers to charge higher prices to AT&T/ 

DIRECTV rivals. I think the same thing would apply to Comcast/ 

NBC and, you know, obviously others. It would not be just 

DIRECTV. 

I know there was some arbitration that expired and DIRECTV 

had to submit to arbitration. I think Comcast still does. I think you 

said in your statement that you did not feel like that was sufficient. Do you want to comment further on that or on discriminatory 

pricing? 

Mr. LIEBERMAN. Yes. Let me start with, I think, the issue that 

is most directly tied to the AT&T/DIRECTV deal, which is 

DIRECTV’s incentive to charge its rivals higher prices for its programming, which will get greater as a result of this deal. Currently 

there is not enough protections to avoid that problem. I think Mr. 

White has explained that the program access rules are subject to 

them currently. However, those rules themselves are not enough. 

Even DIRECTV has suggested in cases, mergers, where program 

access rules already exist, that there should be heightened protections and has argued for arbitration conditions. FCC has asked for 

that same condition. 

So DIRECTV, as part of a 2008 merger, had arbitration conditions opposed to them. Baseball style arbitrations. That was based 

on coming up with a rate that was based on fair market value for 

the programming. That has expired. And we believe that a similar 

condition should be adopted to address that harm. However, the 

one that was previously adopted had some flaws. It remained too 

expensive for smaller operators to use. So if you have a remedy 

that is too expensive for a cable operator with 1,000 subscribers to 

use, you pretty much have no remedy. So we need to relook at this 

type of remedy, put some modifications to it to make sure it works 

for all providers that need it. 

Mr. BACHUS. Just to eliminate the ability altogether. 

Mr. LIEBERMAN. Excuse me? 

Mr. BACHUS. Just to eliminate the ability altogether. 

Mr. LIEBERMAN. Yes. What we should do is eliminate their incentive to increase the prices for their rivals more than the price that 

they would charge to non-rivals. 

Mr. BACHUS. And I think you all support creation of a fee category to include DBS? 

Mr. LIEBERMAN. Yes. 

Mr. BACHUS. An also AT&T has. So that will be interesting as 

you go forward there. 

Let me close by saying what some Members of Congress—I guess 

this is the most frequent question I was asked. And I do not think 

anyone has asked this. One of the principal components of the pro-
83 

posed AT&T/DIRECTV merger is DIRECTV’s continuing relationship with the NFL. What can you share with us regarding that relationship and your customers’ ability to continue to get a package 

which they very much value? 

Mr. WHITE. Well, thank you for the question, Congressman. As 

you can imagine, the NFL content all of our customers are very excited about each year when we kick off the new season. We have 

had a longstanding, actually a 20-year relationship this year with 

the NFL. We very much value that relationship. Our relationship 

is excellent. Our current deal—it was a multiyear deal—expires at 

the end of this coming season. So we are in active discussions with 

the NFL about renewing our NFL Sunday ticket product, and we 

are very hopeful and optimistic that that will happen. And I am 

confident, based on the discussions, that we will get that done before the end of the year. 

Mr. BACHUS. Thank you. 

Mr. Johnson will close the hearing with his questions. 

Mr. JOHNSON. Thank you. 

As part of its merger with NBC Universal, Comcast pledged to 

partner with schools to teach digital literacy and encourage adoption among low-income families. Comcast likewise committed to offering certain low-income families broadband Internet access at affordable rates. And as a result of this program, nearly 1.2 million 

Americans have joined the program, 86 percent of whom now use 

the Internet daily, 21,00 which are in my home State of Georgia, 

with just over 17,000 families in the City of Atlanta alone. 

Will AT&T commit to a similar program to advance the public 

interest through affordable broadband access and digital literacy 

training? 

Mr. STEPHENSON. I am not intimately familiar with it, Congressman, but I will commit to you we will look at it. I think it is probably not only in the communities we serve, but probably in our selfinterest. We are doing a lot in terms of nano degrees trying to help 

with low-cost education for people to get degrees that would equip 

them to do things in the digital world, and we are very, very excited about it. We also have made a number of investments to ensure that we can address that end of the market and ensure that 

customers at that end of the market are getting really robust 

broadband capabilities. 

Our experience, in terms of getting good penetration of 

broadband into lower-income communities, is not the access to 

broadband. It is the access to computers. And what is happening 

and is happening at a very quick pace are these devices. These are 

very low-cost computers that are wirelessly connected and giving 

really low cost for people in lower-income communities to gain access to the Internet and the digital economy. And so we are focused 

in this. But I will be glad to look at the areas you addressed and 

evaluate it. 

Mr. JOHNSON. Thank you. 

As part of its rollout of a fiber network in Kansas City, Google 

includes a free monthly service with basic Internet service if consumers pay a one-time construction fee to connect their home to 

the network. Does AT&T offer a similar service for its fiber networks? 
84 

Mr. STEPHENSON. Google did some very creative things in Kansas 

City, and I take my hat off to them. They then modified their approach and took it to Austin. What they received in terms of permitting to build out a fiber network in Austin from the municipalities was very interesting. And in fact, as soon as they announced 

it, we told the Austin community if you will make the same concessions to us, we will build a fiber network as well. 

We launched our fiber network back in November. Google has yet 

to launch theirs in Austin. But it is a good indication of competition 

and the robustness of fiber deployment in these communities and 

different business models that are emerging like the one you mentioned in Kansas City, a different one in Austin. We have announced one in North Carolina as well. 

Mr. JOHNSON. What other outreach programs does AT&T offer to 

unconnected homes, specifically those in low-income neighborhoods 

and in rural areas? 

Mr. STEPHENSON. So what programs? 

Mr. JOHNSON. Yes. What outreach programs does AT&T offer to 

unconnected homes, specifically those in low-income neighborhoods 

or rural areas? 

Mr. STEPHENSON. I apologize. I do not know off of the top of my 

head, but we can get that to you. 

Mr. BACHUS. You know, they do have AT&T Aspire, which I 

think is a very valuable program. It may not get to all. It certainly 

keeps students from dropping out of school. And that is a very 

large program. And when they do not drop out of school, they get 

a good job and they have the ability to use—— 

Mr. STEPHENSON. We have a multiple hundred million dollar 

commitment to the high school dropout crisis focused particularly 

on Hispanic, African Americans, and Native Americans. The dropout crisis was an epidemic, and so we have made a major commitment of money to address this; it has moved the needle in a lot of 

areas, and that has continued. 

Mr. BACHUS. And was that not $300 million and something? 

Mr. STEPHENSON. The first one was $200 million. The second was 

$250 million I think. 

Mr. JOHNSON. That is commendable. But in terms of outreach to 

enable families, low-income and also rural folks, of what the opportunities are in terms of what you offer and how it can benefit the 

people. So in terms of just outreach, not so much the programming 

itself, but what do you do in order to make people aware of the 

benefits of Internet connection and the other services that you provide? 

Mr. STEPHENSON. It is a good challenge, and like I said, I cannot 

give you specifics of what we are doing there. If nothing, I will let 

you know and we will take it under consideration of what we can 

do and do better. 

Mr. JOHNSON. Thank you. 

Mr. BACHUS. Of course, Aspire is an outreach program. Our biggest program in education is our dropout rate. 

Mr. JOHNSON. You are to be commended for that. 

Mr. STEPHENSON. I would say in that regard one of our biggest 

issues as a company is—— 

Mr. BACHUS. It is a tremendous problem. [Laughter.] 
85 

Mr. JOHNSON. You all agree? 

Yes, sir? 

Mr. STEPHENSON. I was just going to say one of our biggest 

issues as a company over the next 6 years is access to what I would 

call computer- and digital-literate employees. We are going to need 

a significant number of them, and we are doing a lot of creative 

things, not the least of which we are fully funding for any of our 

employees who can qualify a masters in computer science at Georgia Tech University purely online. It has been certified by the Governor and by the Board of Regents as a fully accredited degree, and 

AT&T is committing to pay anybody who can qualify and make it 

into that program. Those who cannot qualify to get into it—we are 

bringing it in house and we will do AT&T certifications to begin to 

build these skill sets for people. 

Mr. JOHNSON. Okay. Well, that is great. 

Digital literacy training. Do you have any programs that enable 

those without that skill to learn about it and take advantage of it? 

Any programs that you might have? 

Mr. STEPHENSON. So we have a number of digital literacy programs. And in fact, the Aspire program that the Chairman referenced—we have actually done some things with the Aspire program where we have invested in companies who do digital literacy 

training and then do things in schools to develop digital curriculum 

and so forth. So we have made some investments in these areas. 

That continues to be a focus of ours. I would be glad to give you 

a full detailed listing of all the efforts that we have going on in 

that area. 

Mr. JOHNSON. Okay. That would be great. And I just look forward to you all thinking outside of the box and coming up with 

some new attractive ways of making your services available to 

those who cannot afford it or who just simply do not know about 

it. You have already covered the fact that those without access— 

you are going to take care of that. But there is that other more 

softer component of it also. 

Mr. STEPHENSON. Noted. 

Mr. JOHNSON. Thank you. 

I yield back. 

Mr. BACHUS. I thank the gentleman. 

This concludes today’s hearing. I thank all of our witnesses for 

attending and answering the questions. I thought you all gave excellent testimony. 

Without objection, all Members will have 5 legislative days to 

submit additional questions for witnesses or additional materials 

for the record. 

This hearing is adjourned, and now you can go over to the Senate. 

[Whereupon, at 12:59 p.m., the Subcommittee was adjourned.] 

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