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The federal government said Tuesday it won't pull the plug on AT&T's $48.5 billion deal to buy DirecTV, clearing the way for the merger of the No. 2 wireless carrier and the No. 1 satellite TV service.
AT&T agreed to buy DirecTV in May 2014, saying the deal would give it a larger base of video subscribers and improve its competitiveness against Comcast and Time Warner Cable. The merger could allow AT&T to improve its Internet service by pushing its U-verse TV subscribers into video-over-satellite service, freeing up bandwidth on its network.
(NBCUniversal is a division of Comcast.)
The Justice Department's antitrust division OK'd the deal after the Federal Communications Commission circulated a proposed order earlier Tuesday that would allow it to go ahead.
"After an extensive investigation, we concluded that the combination of AT&T's land-based internet and video business with DirecTV's satellite-based video business does not pose a significant risk to competition," Assistant Attorney General Bill Baer said in a statement.
FCC Chairman Tom Wheeler said the proposed order recommends approving the merger with certain conditions, most notable among them that AT&T and DirecTV won't be allowed to impose data caps on rival content through their broadband connections and that the new company hire an independent officer to monitor compliance.
"If the conditions are approved by my colleagues, 12.5 million customer locations will have access to a competitive high-speed fiber connection," Wheeler said. "This additional build-out is about 10 times the size of AT&T’s current fiber-to-the-premise deployment, increases the entire nation's residential fiber build by more than 40 percent, and more than triples the number of metropolitan areas AT&T has announced plans to serve."
AT&T said in a brief statement that it was "pleased" with the Justice Department decision and said it hoped the FCC would approve the proposed order "so we can quickly begin providing consumers with the benefits of this combination."