Cricket has relaunched its website with a new logo and service plans as new owner AT&T merges its value-conscious Aio prepaid offering under the acquired Cricket brand name.

Targeting the credit-challenged, Cricket’s new service plans are not groundbreaking, basically copying Aio’s recent offers. Swept away are the low-cost “pay when you use” plans that only levy charges on the days you actually use the phone. Instead, Cricket is looking for a longer, committed relationship with month-long service plans and loyalty discounts:

The relaunch of Cricket will bring changes for existing customers as AT&T begins to decommission Cricket’s freestanding CDMA 3G network in March 2015 in favor of AT&T’s GSM 4G LTE service. That means customers with current Cricket phones will need to eventually switch to a newer handset, a process being made easier with $50 rebates that can make some of Cricket’s smartphones available for free. Enroll in Cricket’s rewards program, stay with them a year, make your payments on time and you will also get a $50 device credit which can be used towards an upgrade next year.

Cricket’s data plans do not carry automatic overlimit charges. Instead, your data connection is throttled to 128kbps until your billing period resets. Customers can buy an extra gigabyte of data at any time for $10.

There are several other changes that probably won’t affect the majority of Cricket customers:

• There is a $5 discount for every month you are enrolled in Auto Pay to keep your phone active;
• A family plan discount provides $10 off the monthly service charge of a second line, $20 off the third line, and $30 off the fourth and fifth line, for a maximum discount of $90 a month;
• While you remain on your current Cricket service (on the CDMA network) you may keep paper billing. When you transition to the new Cricket (the 4G GSM network with nationwide coverage), you will no longer receive a paper bill;
• Customers participating in the 5 for $100 promotion can continue with this rate plan only while on the Cricket CDMA network;
• Cricket no longer offers military or friends & family discounts;
• Cricket will transition out of the wireless Lifeline program. Current Lifeline customers can use Cricket’s CDMA network until it is shut down, after which they must choose a different provider;

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AT&T keeps its name and brand completely off the relaunched Cricket and Aio combined website. This introductory video explains the merger of the two wireless brands and what customers can expect. (1:44)

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For $48.5 billion, AT&T will vault itself into second place among the nation’s largest pay television providers with the acquisition of DirecTV. The Wall Street Journal reports the executives at AT&T have been looking to for a giant deal for several years. Most executives earn special bonuses and other incentives worth millions for successfully completing these kinds of transactions. (3:03)

AT&T plans to spend $48.5 billion to acquire the nation’s biggest satellite television provider, allowing AT&T to become the second largest pay television company, behind a merged Comcast and Time Warner Cable.

The deal, finalized on Sunday, pays $95 per DirecTV share in a combination of stock and cash, about a 10% premium over DirecTV’s closing price on Friday. Including debt, the acquisition is AT&T’s third-largest deal on record, behind the purchase of BellSouth for $83 billion in 2006 and the deal for Ameritech Corp., which closed in 1999, according to data compiled by Bloomberg.

“This is a unique opportunity that will redefine the video entertainment industry and create a company able to offer new bundles and deliver content to consumers across multiple screens – mobile devices, TVs, laptops, cars and even airplanes. At the same time, it creates immediate and long-term value for our shareholders,” said Randall Stephenson, AT&T chairman and CEO. “DirecTV is the best option for us because they have the premier brand in pay TV, the best content relationships, and a fast-growing Latin American business. DirecTV is a great fit with AT&T and together we’ll be able to enhance innovation and provide customers new competitive choices for what they want in mobile, video and broadband services. We look forward to welcoming DirecTV’s talented people to the AT&T family.”

The announced acquisition has left some on Wall Street scratching their heads.

“Like any merger born of necessity rather than opportunity, the combination of AT&T and DirecTV calls to mind images of lifeboats and rescues at sea,” telecommunications analyst Craig Moffett of MoffettNathanson Research wrote this week. AT&T, Moffett wrote, is in “dire need of a cash producer to sustain their dividend.”

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Craig Moffett, founder of MoffettNathanson LLC, talks about AT&T Inc.’s plan to buy DirecTV for $48.5 billion. Moffett speaks with Tom Keene, Scarlet Fu, William Cohan, and Adam Johnson on Bloomberg Television’s “Surveillance.” StockTwits founder Howard Lindzon also speaks. (5:12)

The deal would combine AT&T’s wireless, U-verse, and broadband networks with DirecTV’s television service, creating bundling opportunities for some satellite customers. As broadband becomes the most important component of a package including phone, television, and Internet access, not being able to offer broadband has left satellite TV companies at a competitive disadvantage. AT&T’s U-verse platform – a fiber to the neighborhood network – has given AT&T customers an incremental broadband speed upgrade, but not one that can necessarily compete against fiber to the home or cable broadband.

Some analysts are speculating AT&T will eventually shut down its U-verse television service and dedicate its bandwidth towards a more robust broadband offering. Existing television customers would be offered DirecTV instead.

But deal critics contend AT&T is spending a lot of money to buy its competitors instead of investing enough in network upgrades.

“The amount of cash alone AT&T is spending on this deal — $14.55 billion — is as much as it cost Verizon for its entire FiOS deployment, which reaches more than 17 million homes,” Free Press’ Derek Turner tells Stop the Cap! “Add in the $33 billion in AT&T stock and $18.6 billion in debt, and you can see just how wasteful this merger is.”

In effect, AT&T is spending nearly $50 billion to buy DirecTV’s customer relationships, its satellite platform, and its agreements with programmers, all while removing one competitor from the market. Cable has 54 percent of the pay TV market, satellite has 34 percent, and AT&T and Verizon share 11 percent. AT&T’s U-verse has 5.7 million TV customers. DirecTV has 20.3 million. Combining the two gives AT&T 26 million television customers, second only to Comcast/Time Warner Cable.

Rural Americans will effectively see their choice in competitors drop by one-third, giving them the option of the phone company or Dish Network.

AT&T intends to persuade regulators to approve the deal despite its antitrust implications by offering several commitments the company says are in the public interest and protect consumers:

• 15 Million Customer Locations Get More High Speed Broadband Competition. AT&T will use the merger synergies to expand its plans to build and enhance high-speed broadband service to 15 million customer locations, mostly in rural areas where AT&T does not provide high-speed broadband service today, utilizing a combination of technologies including fiber to the premises and fixed wireless local loop capabilities. This new commitment, to be completed within four years after close, is on top of the fiber and Project VIP broadband expansion plans AT&T has already announced. Customers will be able to buy broadband service stand-alone or as part of a bundle with other AT&T services.
• Stand-Alone Broadband. For customers who only want a broadband service and may choose to consume video through an over-the-top (OTT) service like Netflix or Hulu, the combined company will offer stand-alone wireline broadband service at speeds of at least 6Mbps (where feasible) in areas where AT&T offers wireline IP broadband service today at guaranteed prices for three years after closing.
• Nationwide Package Pricing on DIRECTV. DIRECTV’s TV service will continue to be available on a stand-alone basis at nationwide package prices that are the same for all customers, no matter where they live, for at least three years after closing.
• Net Neutrality Commitment. Continued commitment for three years after closing to the FCC’s Open Internet protections established in 2010, irrespective of whether the FCC re-establishes such protections for other industry participants following the DC Circuit Court of Appeals vacating those rules.
• Spectrum Auction. The transaction does not alter AT&T’s plans to meaningfully participate in the FCC’s planned spectrum auctions later this year and in 2015. AT&T intends to bid at least $9 billion in connection with the 2015 incentive auction provided there is sufficient spectrum available in the auction to provide AT&T a viable path to at least a 2×10 MHz nationwide spectrum footprint.

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CNN says AT&T’s buyout of DirecTV is about getting video programming to customers using all types of technology, but public interest groups suspect it’s about reducing competition. (1:17)

A closer look at AT&T’s commitments exposes several loopholes, however.

AT&T U-verse and DirecTV compete head-on in these areas.

• AT&T’s “commitment” to expand broadband to 15 million new locations is in addition to their Project VIP U-verse expansion now underway. However, AT&T does not say how many rural customers will see wired U-verse service finally become available vs. how many will lose their landlines permanently and have to rely on AT&T’s wireless landline replacement and expensive, usage-capped wireless broadband;
• AT&T’s speed commitment is largely unenforceable and falls apart with language like, “where feasible.” Anywhere they don’t deliver 6Mbps DSL speed can easily be explained away as “unfeasible.” AT&T also only commits to providing DSL where it already offers DSL, so no expansion there;
• The FCC’s Net Neutrality protections never covered wireless and three years is a very short time to commit to the “light touch” approach the FCC had with Net Neutrality back in 2010;
• AT&T’s wireless auction commitment comes with loopholes like “meaningfully,” “provided there,” and “a viable path to at least.”

“You can’t justify AT&T buying DirecTV by pointing at Comcast’s grab for Time Warner, because neither one is a good deal for consumers,” said Delara Derakhshani, policy counsel for Consumers Union, the advocacy arm of Consumer Reports. “On the heels of Comcast’s bid for Time Warner Cable, AT&T is going to try to pull off a mega-merger of its own. These could be the start of a wave of mergers that should put federal regulators on high alert.  AT&T’s takeover of DirecTV is just the latest attempt at consolidation in a marketplace where consumers are already saddled with lousy service and price hikes. The rush is on for some of the biggest industry players to get even bigger, with consumers left on the losing end.”

“The captains of our communications industry have clearly run out of ideas,” said Craig Aaron, president of Free Press. “Instead of innovating and investing in their networks, companies like AT&T and Comcast are simply buying up the competition. These takeovers are expensive, and consumers end up footing the bill for merger mania. AT&T is willing to pay $48.5 billion and take on an additional $19 billion in debt to buy DirecTV. That’s a fortune to spend on a satellite-only company at a time when the pay-TV industry is stagnating and broadband is growing. For the amount of money and debt AT&T and Comcast are collectively shelling out for their respective mega-deals, they could deploy super-fast gigabit-fiber broadband service to every single home in America.”

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Sen. Al Franken (D-Minn.) appeared on CNN’s New Day this morning to express his skepticism about the consumer benefits of a merger between AT&T and DirecTV. “We need more competition, not less.” (2:40)

The announced merger of Comcast and Time Warner Cable is expected to have far-reaching implications for other companies in the video and broadband business, with expectations 2014 could be one of the busiest years in a decade for telecom industry mergers and buyouts.

AT&T + DirecTV = Less Video Competition

Bloomberg News reports an announcement from AT&T that it intends to acquire DirecTV for as much as $50 billion could be forthcoming before Memorial Day. Such a merger would drop one satellite television competitor in AT&T landline service areas and promote nationwide bundling of AT&T wireless service with satellite television.

Historically low-interest rates would help AT&T finance such a deal and would turn DirecTV into a division of AT&T, easing concerns the satellite company has been at a disadvantage because it lacks a broadband and phone package.

“While the Comcast/TWC deal was the trigger, the backdrop of a slow macro economy, new competitors, shifts in technology and consumer habits all come together and force the need for more scale,” Todd Lowenstein, a fund manager at Highmark Capital Management Inc. in Los Angeles told Bloomberg.

Satellite television companies remain technologically disadvantaged to withstand the growing influence of online video and their subscriber numbers have peaked.

If AT&T buys DirecTV, the wireless giant could theoretically bundle its service with DirecTV’s video product, and in some areas of the country its U-verse high-speed broadband to the home, to compete with cable, said Amy Yong, an analyst at Macquarie Group in New York, in a note to clients.

Sprint + T-Mobile = Less Wireless Competition

Dish + T-Mobile = A Draw

In a less likely deal Sprint is still trying to pursue T-Mobile USA for a potential merger and if regulators reject that idea, Charles Ergen’s Dish Network is said to be interested.

To prepare Washington for another telecommunications deal, SoftBank founder Masayoshi Son’s lobbying firm, Carmen Group, has again been meeting with elected officials and regulators to argue the merits of a merger with T-Mobile, according to a person familiar with the matter.

Dish, which failed to buy Sprint last year, would be interested in acquiring T-Mobile if regulators block Sprint’s efforts, Ergen said. That hinges on whether SoftBank Corp. fails to win regulatory approval for its plan to buy T-Mobile, which is controlled by Deutsche Telekom AG, Ergen said last week. The Japanese wireless company owns 80 percent of Sprint.

All three deals carry a combined value of $170 billion in equity and debt and would impact 80 million Americans.

Suitors hope regulators will be in the mood to approve merger deals as they contemplate enlarging Comcast through its purchase of Time Warner Cable.

Even if all the deals don’t pass muster, Wall Street banks will still rake in millions in fees advising players on how to structure the deals. Goldman Sachs and J.P. Morgan would join executives winning considerable sums for reducing the number of competitors providing telecommunications services in the U.S.

Whether customers would benefit is a question open to much debate.

Level 3’s global network: Orange lines represent Level 3-owned infrastructure, yellow lines show leased or co-owned connections.

Five of the largest Internet Service Providers in the country are intentionally sabotaging your use of the Internet by allowing their network connections to degrade unless they receive extra compensation from content companies they often directly compete with.

Mark Taylor, vice president of content and media for Level 3, wrote a lengthy primer on how Internet providers exchange traffic with each other across a vast global network. While clients of Level 3 are likely to have few problems exchanging traffic back and forth across Level 3’s global network, vital interconnections with other providers that make sure everyone can communicate with everyone else on the Internet are occasional trouble spots.

Every provider has different options to reach other providers, but favor those offering the most direct route possible to minimize “hops” between networks, which slow down the connection and increase the risk of service interruptions. These connections are often arranged through peering agreements. Level 3 has 51 peers, minimized in number to keep traffic moving as efficiently as possible.

This oversaturated port in Dallas cannot handle all the traffic trying to pass through it, so Internet packets are often dropped and traffic speeds are slowed.

Taylor writes most peering arrangements were informal agreements between engineers and did not involve any money changing hands. Today, 48 of the 51 Level 3 peering agreements don’t involve compensation. In fact, Level 3 refuses to pay “arbitrary charges to add interconnection capacity.” Taylor feels such upgrades are a matter of routine and are not costly for either party.

Peering agreements have been a very successful part of the Internet experience, even if end users remain completely in the dark about how Internet traffic moves around the world. In the view of many, customers don’t need to know and shouldn’t care, because their monthly Internet bill more than covers the cost of transporting data back and forth.

Because of ongoing upgrades the average utilization of Level 3’s connections is around 36 percent of capacity — busy enough to justify keeping the connection and providing spare capacity for days when Internet traffic explodes during breaking news or over the holidays.

However, Taylor says more than a year ago, something suddenly changed at five U.S. Internet Service Providers. They stopped periodic upgrades and allowed some of their connections to become increasingly busy with traffic. Today, six of Level 3’s 51 peer connections are now 90 percent saturated with traffic for several hours a day, which causes traffic to degrade or get lost.

“[The] congestion [has become] permanent, has been in place for well over a year and […] our peer refuses to augment capacity,” Taylor wrote. “They are deliberately harming the service they deliver to their paying customers. They are not allowing us to fulfill the requests their customers make for content.”

Taylor adds all but one of the affected connections are U.S. consumer broadband networks with a dominant or exclusive market share. Where competition exists, no provider allows their Internet connections to degrade, said Taylor.

Taylor won’t directly name the offenders, but he left an easy-to-follow trail:

“The companies with the congested peering interconnects also happen to rank dead last in customer satisfaction across all industries in the U.S.,” Taylor wrote. “Not only dead last, but by a massive statistical margin of almost three standard deviations.”

Taylor footnotes the source for his rankings, the American Consumer Satisfaction Index. The five worse providers listed for consumer satisfaction:

• Comcast
• Time Warner Cable
• Charter Communications
• Cox Communications
• Verizon

AT&T has also made noises about insisting on compensation for its own network upgrades, blaming Netflix traffic.

In fact, Netflix traffic seems to be a common point of contention among Internet Service Providers that also sell their own television packages. They now insist the streaming video provider establish direct, paid connections with their networks. Level 3 is affected because it carries a substantial amount of traffic on behalf of Netflix.

Ultimately, the debate is about who pays for network upgrades to keep up with traffic growth. Taylor says Level 3’s cost to add an extra 10Gbps port would be between $10-20 thousand dollars, spare change for multi-billion dollar Americans cable and phone companies. Normally, competition would never allow a traffic dispute like this interfere with a customer’s usage experience. Angry customers would simply switch providers. But the lack of competition prevents this from happening in the United States, leaving customers in the middle.

This leaves Taylor with a question: “Shouldn’t a broadband consumer network with near monopoly control over their customers be expected, if not obligated, to deliver a better experience than this?”

Despite years of arguments from telecom companies that residential customers don’t need or want super-fast broadband speeds, the people of Kansas City think otherwise.

A survey by Wall Street analyst Bernstein Research discovered Google Fiber has signed up almost 75% of homes offered the gigabit fiber-to-the-home service.

“[Customer] penetration measured by our survey was much higher than we had expected,” said Berstein Research analyst Carlos Kirjner.

Haynes and Company conducted a door-to-door survey of more than 200 homes within Google Fiber’s service area in Kansas City, visiting wealthy, middle-income, and challenged urban areas. Despite claims from cable and phone companies that Google is only interested in choosing to offer fiber service in affluent areas, Bernstein Research found Google was doing very well in every neighborhood.

In the poorest neighborhoods, Google is still winning a 30% market share — way above estimates, with customers attracted to Google’s free 5/1Mbps broadband service (customers must pay a recently lowered $30 construction fee). Customer penetration rates in urban areas could grow even higher if Google allowed customers with free Internet service access to its $50 cable television package, now only available to gigabit broadband customers.

Google’s service plans

In middle and upper income neighborhoods, Google has decisively captured a 75% market share — clearly a major problem for incumbent competitors AT&T and Time Warner Cable, which could lose well over half their customers.

Even more worrying for the cable and phone companies, Google is grabbing customers primarily on word-of-mouth testimonials from satisfied customers. At least 98% of Kansas City residents surveyed were aware of Google’s fiber offering. At least 52% said they would “definitely or probably” buy Google Fiber, 25% said they might or might not purchase the service, and only 19% said they definitely or probably wouldn’t buy it.

“Our survey suggests that Google Fiber has gained a significant foothold in its early Kansas City fiberhoods. Consumers are highly satisfied with Google Fiber service, suggesting its share gains are likely not done yet,” Kirjner added.

Bernstein believes Google can grab an even larger share of the Kansas City market by returning to mature fiberhoods in the future with aggressive marketing campaigns that could easily win even more customers.

If Bernstein’s research holds true in other markets, Google Fiber could eventually become a serious competitive threat to both cable and telephone companies, depending on how quickly they expand. Google Fiber is also likely to become a profitable service for the search engine giant, despite the high initial expense of wiring communities for fiber optics.

Bernstein predicts that Google Fiber is positioned to capture a minimum of 50% of the Kansas City market within four years, knocking Time Warner Cable’s out of first place for the first time and posing a serious financial threat for AT&T’s less-capable U-verse platform, which has only attracted a minority share of the market. At least 40% of customers seeking a broadband and cable television package will choose Google Fiber, Bernstein Research predicts.

In almost every market, the traditional cable operator still maintains the largest share of customers. Telephone company competitors usually don’t win more than 20-30% of a market, although Verizon FiOS’ fiber network does better than most. Satellite providers only compete for television customers, which is increasingly less profitable than broadband service.

These kinds of results underline Bernstein Research’s conviction Google Fiber is not an experiment or publicity stunt that the cable industry often claims it to be. Nor does the research firm believe Google is only interested in forcing cable and phone companies to raise broadband speeds. Instead, it is becoming increasingly clear Google is prepared to gradually expand its fiber network across the country, at least in areas bypassed by Verizon FiOS or other fiber networks. However, it will take many years for this to happen.