AT&T claims its planned purchase of DirecTV will drive down prices — but lawmakers aren't so sure.
Although the company claims the merger would create "downward pressure" on prices, it hasn't made any firm commitments to actually lower anyone's bills.
Rep. John Conyers, the top Democrat on the House Judiciary Committee, said during a Tuesday hearing that the $48.5 billion merger "could reduce consumer choice and could have the potential to raise prices."
He also worried that the deal would only spur further industry consolidation as other companies try to keep up, further restricting the available choices for consumers.
"Will fewer competitors mean higher prices and lower quality service?" Sen. Amy Klobuchar, the chairwoman of the Senate Judiciary's Antitrust Subcommittee, asked during her panel's hearing later in the day. "Will AT&T actually pass the cost savings "¦ on to consumers?"
AT&T CEO Randall Stephenson testified that the merger would create "cost savings" and "synergies" that would allow the company to price its services "more competitively." That in turn would pressure cable giants like Comcast to lower their prices, Stephenson said.
The theory is that by gaining DirecTV's 38 million TV subscribers, AT&T would be able to drive a harder bargain with the entertainment companies that own TV channels. AT&T's own TV service, U-Verse, isn't even profitable now because of high programming costs, Stephenson said.