How exactly did America get stuck with a broadband monopoly in many areas, a duopoly in most others? It did not happen by accident. In this occasional series, “Historical Truths,” we will take you back to important moments in telecom public and regulatory policy that would later prove to be essential for the creation of today’s anti-competitive, overpriced marketplace for broadband internet service. By understanding the trickery and legislative shell games practiced by lobbyists and their elected partners in Congress, you will learn to recognize when the telecom industry and their friends are preparing to sell you another bill of goods. 

Vice President Al Gore watches President Bill Clinton digitally sign the 1996 Telecom Act into law on February 8, 1996.

By the end of the first term of the Clinton Administration, the president faced a major backlash from Republicans two years into the Gingrich Revolution. A well-funded chorus of voices in the business community, the Democratic Leadership Council — a business-friendly group of moderate Democrats, as well as commentators and pundits had the attention of the Beltway media, complaining in unison that the Democrats shifted too far to the left during the first term of the Clinton Administration, leaving it exposed in the forthcoming presidential election to another voter backlash like the one that installed the Gingrich revolutionaries in the House of Representatives and delivered a Republican takeover of the U.S. Senate in 1994.

With pressure over the growing lack of bipartisanship, and a presidential election ahead in the fall, the Clinton Administration was looking for ideas to prove it could work across the aisle and pass new laws that would deliver for ordinary Americans.

Revamping telecommunications policies would definitely touch every American with a phone line, computer, modem, and a television. Before 1996, America’s telecommunications regulation largely emanated from the Communications Act of 1934, which empowered the Federal Communications Commission to establish good order for the growing number of radio stations, telephone, and wire lines crisscrossing the country.

The 1934 Act’s legacy remains today, at least in part. It created the FCC, firmly established the concept of content regulation on the public airwaves, and established a single body to conduct federal oversight of the nation’s telephone monopoly controlled by AT&T.

Efforts to replace the 1934 Act began well before the Clinton Administration. In the early 1980s, Sen. Bob Packwood (R-Ore.) attempted to push for a legislative breakup of AT&T and a significant reduction in the oversight powers of the FCC. The bill met considerable opposition from AT&T, spending $2 million lobbying against the bill in 1981 and 1982. Alarm companies also heavily opposed the measure, terrified AT&T would enter their market and put them out of business. AT&T preferred a more orderly plan of divestiture being carefully negotiated in a settlement of a 1974 antitrust lawsuit by the Justice Department. A 1982 consent decree broke off AT&T’s control of local telephone lines by establishing seven Regional Bell Operating Companies independent of AT&T (NYNEX, Pacific Telesis, Ameritech, Bell Atlantic, Southwestern Bell Corporation, BellSouth, and US West). AT&T (technically an eighth Baby Bell) kept control of its nationwide long distance network.

Also in the 1980s, the cable television industry gained a much firmer foothold across the country, quickly gaining political power through well-financed lobbyists and close political ties to selected members of Congress (particularly Democrat Tim Wirth, who served in the House and later Senate representing the state of Colorado) that allowed them to push through a major amendment to the 1934 Act in 1984 deregulating the cable industry. The result was an early wave of industry consolidation as family owned cable companies were snapped up by a dozen or so growing operators. These buyouts were largely financed by dramatic rate increases passed on to consumers, resulting in cable bills tripling (or more) in some areas almost immediately. By the end of the 1980s, a major consumer backlash began, creating enormous energy for the eventual passage of the 1992 Cable Act, which re-regulated the industry and allowed the FCC to order immediate rate reductions.

The Progress and Freedom Foundation, with close ties to former House Speaker Newt Gingrich, closed its doors in 2010.

The biggest push for a near-complete revision of the 1934 Act came during the Gingrich Revolution. In 1995, the conservative Progress & Freedom Foundation — a group closely tied to then-Speaker Newt Gingrich (R-Ga.) floated a trial balloon calling for the elimination of an independent Federal Communications Commission, replaced by a stripped-down Office of Communications that would be run out of the White House and be controlled by the president. A small army of telecom industry-backed scholars also began proposing privatizing the public airwaves by selling off spectrum to companies to be owned as private property. The intense interest in the FCC by the group may have been the result of its veritable “who’s who” of telecom industry backers, including AT&T, BellSouth, Verizon, the National Cable & Telecommunications Association, cable companies like Comcast and Time Warner; cell phone companies like T-Mobile and Sprint; and broadcasters like Clear Channel Communications and Viacom.

The proposal outraged Democrats and liberal groups who called it a corporate-friendly sell-off and giveaway of the public airwaves. Then FCC Chairman Reed Hundt took the proposal very seriously, because at the time Gingrich lieutenant Tom DeLay’s (R-Tex.) secretive Project Relief group had 350 industry lobbyists, including some from BellSouth and Southwestern Bell literally drafting deregulation bills and a regulatory moratorium on behalf of the new Republican majority, coordinating campaign contributions for would-be supporters along the way. The proposal ultimately went nowhere, lost in a sea of the House Republicans’ constantly changing agendas, but did draw attention to the fact a wholesale revision of telecommunications policy would attract healthy campaign contributions from all corners of the industry — broadcasters, cable companies, phone companies, and the emerging wireless industry.

When it became known Congress was once again going to tackle telecommunications regulation, lobbyists immediately descended from their K Street perches in relentless waves, with checks in hand. There were two very important agendas in mind – deregulation, which would remove FCC rate regulation, service oversight, cross-competition prohibitions, and ownership caps, and ironically, protectionism. The cable and satellite companies had become increasingly fearful of the regional Baby Bells, which arrived in Congress in the early 1990s promoting the idea of entering the cable TV business. The cable industry feared phone companies would cross-subsidize the development of Telco TV by charging telephone ratepayers new fees to finance that entry. The cable industry had carefully developed a de facto monopoly over the prior decade of consolidation. Companies learned quickly direct head-to-head competition between two cable operators in the same market was bad for business.

The original premise of the 1996 Telecom Act was that it would eliminate regulations that discouraged competition. Promoters of the legislation asked why there should only be one phone or cable company in each city and why maintain regulations that kept cable and phone companies out of each others’ markets. Fears about market power and allowing domineering cable and phone companies to grow even larger were dismissed on the premise that a wide open marketplace, with regulations in place to protect consumers and competition would avoid creating telecom robber barons.

The checks handed out by industry lobbyists were bi-partisan. Democrats could crow the new rules would finally give consumers a new choice for cable TV or phone service, and help bring the “information superhighway” of the internet to schools, libraries, and other public institutions. Republicans proclaimed it a model example of free market deregulation, promoting competition, consumer choice, and lower prices.

At a high-brow bill signing ceremony held at the Library of Congress, both President Bill Clinton and Vice President Al Gore were on hand to “electronically sign” the bill into law. Both the president and vice-president emphasized the historical significance of the emerging internet, and its ability to connect information-have’s and have-not’s in an emerging digital divide. Missing from the discussion was an exploration of what industry lobbyists and their congressional allies were doing inserting specific language into the 1996 Telecom Act that would later haunt the bill’s legacy.

On hand to celebrate the bi-partisan bill’s signing were Speaker Gingrich, Sen. Larry Pressler (R-S.D.); Sen. Ernest F. Hollings (D-S.C.); Rep. Thomas J. Bliley Jr. (R-Va.); Rep. John Dingell (D-Mich.); and Ron Brown, the Secretary of Commerce. Pressler was among the soon-to-be-endangered moderate Republicans, Hollings was a holdout against the gradual wave of Republican takeovers in southern “red states,” and Dingell was a veteran lawmaker with close ties to the broadcasting industry.

Some of the bill’s industry backers were also there, some who would ironically see its signing as directly responsible for the eventual demise of their independent companies. John Hendricks of the Discovery Channel, Glenn Jones of Jones Intercable (acquired by Comcast in 1999), Jean Monty of Northern Telecom (later Nortel), Donald Newhouse of Advance Publications (eventual part owner of Bright House Networks and later Charter Communications), William O’Shea of Reuters Ltd. and Ray Smith of Bell Atlantic (today part of Verizon) were on hand. Also in the audience was Jack Valenti of the Motion Picture Association of America, representing Hollywood Studios.

Among the fatal flaws in the Telecom Act of 1996 were its various ‘competition tests,’ which were open to considerable interpretation and latitude at the FCC. The Republican supporters of the bill argued that the presence of an open and free marketplace would, by itself, induce competition among various entrants. They were generally unconcerned with the question of whether new competition would actually arrive. Their priority was lifting the protective levers of legacy regulation as soon as possible. Many Democrats assumed what appeared to be carefully drafted regulatory language would protect consumers by preventing the FCC from lifting protections too early in the competitive process. But lobbyists consistently outmaneuvered lawmakers, finding ways to insert loopholes and compromise language that introduced inconsistencies that could be dealt with and eliminated either by the FCC or the courts later.

For example, lawmakers insisted on unbundling telecommunications network elements, an arcane way of saying new competitors must be granted access to existing networks to be shared at wholesale rates. In practice, this meant if a phone company entered the internet service provider business, it must also make its network available for other ISPs as well. In some areas, competing local telephone companies also offered landline service over existing telephone lines, paying wholesale connection fees to the incumbent local phone company. As competition emerged, the incumbent company usually petitioned for a lifting of the regulations governing their business, claiming competition had arrived.

The first warning the 1996 Act was going awry came a year after the bill was signed into law. Phone companies started raising rates from $1.50-6 a month on average. AT&T was petitioning to hike rates $7 a month. Someone would have to pay to replace the scrapped subsidy system in a competitive market — subsidies that had been in place at the nation’s phone companies for decades. By charging higher rates for phone service in cities and for pricier long distance calls before the arrival of companies like MCI and Sprint, the phone companies used this revenue to subsidize their Universal Service obligations, keeping rural phone bills low and often below the real cost of providing service. To establish a truly competitive phone business, the subsidies had to be reformed or go, and that meant someone had to cover the difference.

“This game is called ‘shift and shaft,'” Sharon L. Nelson, the chairwoman of the Washington Utilities and Transportation Commission, said in 1997. “You shift the costs to the states and shaft the consumer.”

Sam Brownback (R-Kansas)

Gradually, consumers suddenly discovered their phone bill littered with a host of new charges, including the Subscriber Line Charge and various regulatory recovery fees and universal service cost recovery schemes. Phone companies also boosted rates on their unregulated Class phone features, like call waiting, caller ID, and three-way calling. The proceeds helped make up for the tens of billions in lost subsidies, but the end effect was that phone bills were still rising, despite promises of competitive, cheap phone service.

At a hearing of the Senate Commerce Committee later that year, several angry senators said they would never have voted in favor of the Telecommunications Act of 1996 if they had thought it would lead to higher rates. Sam Brownback, a Kansas Republican, was in the line of fire because of his rural constituents. Rates for those customers are subsidized more heavily than elsewhere because of the cost of extending service to them. Rates were threatening to skyrocket.

“We would be foolish to build up all these expectations about competition without saying to the American people, ‘We’re going to have to raise your phone bill,'” Brownback said.

But the rate hikes were just beginning. By the beginning of the George W. Bush administration, telecom lobbyists brought a thick agenda of action items to Michael Powell’s FCC. Despite promises of competition breaking out everywhere, that simply was not the case. Republicans quickly blamed the remaining regulatory protections still in place in noncompetitive markets for ‘deterring competition.’ But the companies knew the only thing better than deregulation was deregulation without competition.

Consolidation wave

The Republican-dominated FCC quickly began removing many of those protective regulations, claiming they were outdated and unnecessary. The very definition of competition was broadened, allowing the presence of virtually any company offering almost any service good enough to trip the deregulation levers. Later, even open access to networks by competitors was often limited to pre-existing networks, not the future next generation networks. Republicans argued those networks should be managed by their owners and not subject to “unbundling” requirements.

The weakened rules also sparked one of the country’s largest consolidation waves in history. Cable companies bought other cable companies and the Baby Bells gradually started putting themselves back together into what would eventually be AT&T, Verizon, and Qwest/CenturyLink. For good measure, phone companies even snapped up a handful of independent phone companies, most notably General Telephone and Electronics, better known as GTE by Verizon and Southern New England Telephone (SNET) by AT&T.

Prices rising as costs dropping.

The cable industry, under the premise it needed territories of scale to maximize potential ad insertion revenue from selling commercials on cable networks, gradually shrunk from at least a dozen well-known companies to two very large ones – Comcast and Charter, along with a few middle-sized powerhouses like Cox and Altice. Merger and acquisition deals faced little scrutiny during the Bush years of 2002-2009, usually approved with few conditions.

The result has been a rate-raising oligopoly for telecom services. In broadcasting, the consolidation wave started in radio, with entities like Clear Channel buying up hundreds of radio stations (and eventually putting the resulting giant iHeartMedia into bankruptcy) and Sinclair and similar companies acquiring masses of local television outlets. On many, local news and original programming was sacrificed, along with a significant number of employees at each station, in favor of inexpensive music, network or syndicated programming. Some stations that aired local news for 50 years ended that tradition or turned newsgathering over to a co-owned station in the same city.

Although telephone service eventually dropped in price with the advent of Voice over IP service, consumers’ cable TV and internet bills are skyrocketing at levels well in excess of inflation. Last year, the Washington Center for Equitable Growth demonstrated that the current consolidated, anti-competitive telecom marketplace results in rising prices for buyers and falling costs for providers.

Your oligopoly tax.

“In truly competitive markets, a significant part of cost reductions would be passed through to consumers,” the group wrote. “Based on a detailed analysis of profits—primarily EBITDA—we estimate that the resulting overcharges amount to more than $45 per month, or $540 per year, an aggregate of almost $60 billion, or about 25 percent of the total average consumer’s monthly bill.”

That is one expensive bill, paid by subscribers year after year with no relief in sight. Several Republicans are proposing to double down on deregulation even more after eliminating net neutrality, which could cause your internet bill to rise further. Several Republicans want to rewrite the 1996 Telecom Act once again, and lobbyists are already sharing their ideas to further curtail consumer protections, lift ownership caps, and promote additional consolidation.

A typical flat/mud flap style antenna.

Proliferating in online ads, newspapers, and sometimes on television, “revolutionary” new antennas are being advertised claiming to replace cable television while getting most (if not all) of the same channels over the air for free.

These misleading scams have been around for several years. We covered one well-funded ad campaign for “Clear Cast” back in 2011. That particular over-the-air antenna was sold through newspaper ads designed to mimic a newspaper story, with bold headlines like “New Invention … Gets Rid of Cable and Satellite TV Bills.” Those who spent upwards of $50 received a slightly dressed-up bow-tie antenna barely suitable to receive UHF TV stations and worked about as well as a similar antenna selling for $1.49.

With the first wave of misleading ads well behind us, marketers have had to work overtime to reinvent the wheel and convince people to spend $40-50 for what usually cost the company under $5 to manufacture.

Now, instead of the “Clear Cast” antenna, there is the “ClearView HDTV Antenna,” marketed by a company named True Signal. It’s hardly alone. The Octa Air, The Fox, and many others are nearly-identical “mud flap”-style antennas, with a tiny “antenna” embedded inside. The concept marginally works when the owner attaches it to a window, which gives it more signal to work with than an antenna placed in the corner of a room.

The ad copy on the manufacturer’s website is usually over the top but is nothing compared to some of the advertiser-sponsored editorials — “advertorials” published by bloggers, third party advertisers, and fly-by-night websites that exist primarily to cash in on sales commissions. More than a few of those stretch marketing claims into the stratosphere.

Goodsavingstips.com is designed to look like an online combination of a high-tech website and Consumer Reports. In fact, it is a website that reviews products, but has a financial incentive to write glowing reviews to encourage you to buy whatever they write about.

Goodsavingstips stretches the truth about the ClearView antenna more than a salt water taffy machine on the Atlantic City Boardwalk:

If you could stop paying for cable or satellite TV and still get all of your favorite TV channels in HD for FREE, would you do it? Millions of Americans are doing just that, thanks to a brand new rule in 2018 that allows certain regions access to free TV.

Thankfully, if you live in an area where this new rule went into effect, you no longer need to give your hard earned money away to the big cable companies. As a result, Americans are now cutting the cord on their cable companies in record numbers, saving them thousands of dollars.

Up until 2018, cable companies were allowed to “scramble” their channels so that the general public could not access them without paying for their service. However, that all changed starting in 2018, with the government ruling that TV signals are public property and “belong to the people”. Ever since this rule went into effect, the big cable companies are panicing [sic] because many Americans will no longer need to pay for cable or satellite tv to get their favorite channels in HD. As long as you live in a publicly broadcasted [sic] area, it is now possible to watch all of your favorite channels for free with a TV antenna.

Boastful claims about the TrueSignal antenna.

Several antenna companies market their antennas using similar language. There is, in fact, no 2018 “new rule” suddenly mandating your access to free TV. You have been able to watch free TV for decades. Notice the ad copy does not directly state you can receive cable and satellite channels over the air. It only states you can watch “all your favorite channels,” which in this case better be local TV stations and not networks like USA, TNT, CNN, etc. Consumers did not need a new rule to cut the cable TV cord. They just needed competition.

A map invites consumers to see if “free TV” is available in their state. Unsurprisingly, it is in all 50 states.

The rules regarding scrambling have only toughened against consumers over the last few years, not improved. Cable operators are now permitted to encrypt their entire TV lineup, even those channels customers used to watch using a built-in QAM tuner. The encryption allows cable companies to disconnect service from the office instead of dispatching a truck to physically disconnect the line going to your home or apartment.

However, not all TV antenna’s will work. In an attempt to block the public from picking up their TV signals, the cable companies are broadcasting their signals at very low frequencies since most antenna’s will not be able to pick them up. The trick is to get an antenna that can reliably pick up these low frequency signals, and up until now, there hasn’t been an antenna advanced enough to pick these signals up reliably. (There are other antenna’s out on the market, but they fail miserably in comparison to this one).

This is plainly false. Cable companies do not “broadcast” signals over the air. They send them through cables, hence the name “cable” television. Most cable systems also encrypt their digital lineups and no television antenna alone will decrypt them. If we were charitable, we could hazard a guess the reviewer is trying to suggest there are low-power television stations out there which need a better antenna to receive clearly, but these stations are independent of cable operators, don’t transmit on “very low frequencies,” and have been around for years.

Developed by a NASA engineer using military technology, the ClearView HDTV Antenna was just released this year so that it could specifically pick up these signals reliably and has been hailed as the only “super” HDTV antenna. It uses a discrete mud flap modern design which makes it the most reliable and technologically advanced antenna to hit the market today. It can pick up signals out to 60 miles with no problem (as well as the low frequency signals) to enable you to receive free crystal-clear HD channels.

Phillip Dampier: Debunking mode.

Misleading. In fact, the original design for the so-called “mud flap” antenna came from a Raleigh, N.C. based company Mohu. The company began as a small military contractor and the original intent of the antenna was not to receive free cable television. Mohu’s founder, David Buff, was working under a military contract to research new ways to counteract improvised explosive devices (IEDs) that were used against our armed forces in Iraq and parts of Afghanistan. He devised a low/no-profile antenna that closely resembled a mud flap attached to armored military vehicles that would jam the remote wireless signals used by insurgents to detonate roadside bombs. The military chose a different approach. So if the people selling these antennas were honest, they would have to say, “Developed by a military contractor but rejected by the military itself….”

Buff would later expand Mohu as a consumer antenna company, but suggests his proprietary design isn’t the result of the ‘space age’ antenna, but rather the signal amplifier attached to it. But that is hardly groundbreaking if an antenna cannot receive enough signal to amplify.

The “reviewer” promoting the ClearView antenna (who will earn a percentage from every sale that results from a click on his website) was amazed with the results:

What happened next was astonishing…

We turned the TV on and found ourselves staring back at an incredibly clear channel in HD. We kept flipping through channels and to our amazement, every channel was crystal clear. Best of all, we received almost all of the most popular channels you would get with cable.

All in all, we were able to access 68 channels in 1080 HD. It was as if we were getting free cable or satellite TV.

Now, before you cancel your cable or satellite subscription, it is important to note that there were a few channels that we could not get with the antenna. But in the end, we were able to receive about 85% of the same channels and more importantly, they were the most popular channels that people actually watch.

The verdict:If you want to save thousands of dollars and stop paying for cable or satellite tv, and don’t mind losing out on a few random channels you probably won’t even watch….

Up and coming technology: A wireless over the air antenna that receives signals from the best place in the house and then sends channels over an in-home Wi-Fi network.

We were not surprised it was deemed astonishing, considering the companies selling these antennas routinely buy sponsored space to promote their products on independent websites or compensate reviewers with a substantial commission if their reviews result in product sales. (Stop the Cap! does not accept sponsored posts or commissions to peddle products.)

The ClearView antenna did not do well for Amazon customers.

What the reviewer experienced was… over the air television, received through an antenna. Because most television stations now broadcast a digital signal, it is not surprising every channel would appear “crystal clear” because the alternative is typically no signal at all. The article continues to mislead readers, however, when it suggests buyers would “receive almost all of the most popular channels you would get with cable.” In fact, antenna users will only receive free, over the air local stations. Getting 68 over the air digital TV channels (and subchannels) is common only in the largest cities with multitudes of over the air stations. Many of those channels target ethnic minorities with foreign language programming, religious programming or home shopping. In most medium and smaller cities, expect 20-25 channels.

Right until the end, the reviewer was prepared to mislead his readers. The disclaimer itself fails to be completely forthcoming as well, telling prospective buyers there were only “a few” channels not receivable with the antenna. That could refer to over the air stations too weak to receive, but the surrounding context invites readers to believe those few channels are cable television networks. Telling people they will receive about 85% of the “same channels” (whatever that means) and “most channels that people actually watch” is true only if you exclude all cable television networks from that list.

The worst part of this is after spending $40 on the ClearView HDTV antenna, a whopping 52% of reviewers on Amazon.com gave it just one star. One reviewer compared it with a bent coat hanger serving as an improvised antenna and the coat hanger won. Most claimed it completely failed their expectations.

These antennas are made and marketed to a gullible public that has either forgotten about the basic principles of television antenna design or were too young to have ever used one. Many of the “high-tech” antennas we see sold these days are designed to work with UHF channels only, an important issue if one or more local stations still occupies VHF channels 2-13.

A more traditional RCA set-top antenna style common from the early 1970s – today. They work reasonably well and are inexpensive. The two vertical telescoping antennas are for VHF reception and the loop is tuned to receive UHF channels. You need an antenna capable of receiving both bands if you have stations on channels 2-13.

Indoor antennas are only suitable in you live relatively close to the transmitter. In most cases, residents of a city or inner ring suburb can usually get by with two telescoping rod antennas (“rabbit ears”) and a UHF antenna shaped into a small loop or bow tie design. Traditional set-top antennas often incorporate both. The telescoping antennas can be raised or lowered and rotate in various directions until you find the best reception. A UHF antenna usually can be turned to the right or left until best reception is achieved. These antennas are perfectly suitable and cost $20 or less. There are more modern antenna designs, some flat plastic or rubber sheets, others look like miniature replicas of an outdoor antenna mounted on the roof. In most cases, the design itself is what is “revolutionary.” None of these antennas perform miracles, but many are adequate. The key is finding the right direction to point them in or keeping them as close to a window as possible. You may need to find a different window, or change the height or positioning of the antenna to get the best reception.

If your reception remains poor, you need a roof or attic-mounted antenna, (remotely rotatable preferred over fixed-mounted). These antennas are mounted higher in a home, giving a less obstructed view to the transmitter tower, and capable of collecting weak signals that would be non-existent indoors. The biggest cost involved with these is often not the antenna but the installation. A high quality roof-mounted antenna will outperform any indoor antenna and will likely receive some stations from adjacent cities.

A relatively recent development is the “wireless antenna” which receives signals from an antenna placed in an area of the home which gets the best reception and transmits received TV channels over an in-home Wi-Fi network, making long antenna cable runs unnecessary. Unfortunately, reviews of many of these products are mixed and hint the technology has to undergo further development to make it less frustrating.

For now, cord-cutters with reception challenges may find the best solution is to subscribe to one of the streaming providers like DirecTV Now, YouTube TV, Hulu, etc. Be sure to verify which stations are available to you from each service before subscribing as they vary widely in each market.

If investing in a TV antenna, start small and inexpensive and consider trying out antennas available in local stores like Walmart, which can be more easily returned if they are unsuitable. If buying online, stick with a retailer like Amazon.com where independent reviews can help give you some insight into each antenna. Just be careful about overly glowing reviews. Fake/compensated reviews are a significant problem on online retailer websites, especially for unknown or unusual products or brands trying to break through in the market.

Your bundle is bigger than ever.

A-la-carte TV is still dead. Long live the super-sized bundle!

If AT&T and Time Warner wanted to deliver a message to the cable industry as a result of their now-approved blockbuster merger deal, it is one that promises hundreds, if not thousands of more TV channels, movies and shows headed your way in the coming days, bundled into super-sized pricier packages of television, telephone, and internet service.

Despite the fact consumers claim they want to pick and pay only for the entertainment options they specifically want, in reality people are paying for more bundled packages and services — usually from multiple online streaming services — than ever before, with no possibility they will ever watch everything these services have to offer.

AT&T and Time Warner are well aware customers are now subscribing to cable television -and- streaming video services like Hulu and Netflix. But many customers are also buying streaming live cable TV alternatives, despite the fact they already subscribe to a cable television package. Given the option of selling you an inexpensive package of a dozen cable channels you claim to want or selling you much larger and more expensive bundles of services many are actually buying, AT&T will follow the money every time.

What will be different as a result of this merger is where you buy that programming. Before, you may have purchased AT&T Fiber internet access, AT&T wireless mobile phone service, a HBO GO subscription through DirecTV Now, a cable TV alternative, and Netflix. Now, with the exception of Netflix, all of that money will go directly to AT&T. The company will also be able to enhance their bottom line by monetizing content viewed over mobile devices. After taking control of Time Warner’s vast entertainment offerings, which range from HBO to Turner Broadcasting networks like CNN and TNT, AT&T will generously bestow liberal (or possibly free) access to this content for its broadband and wireless customers, while those served by other providers will have to pay up to watch. AT&T will ultimately set the terms of its licensing agreements. AT&T Wireless customers with unlimited data plans already have a sample of this with a free year of DirecTV Now, which customers of other wireless companies have to pay to watch.

AT&T plans to offer the best deals to customers who bundle everything through AT&T. The “quad play” bundle of TV, internet, home phone, and wireless phone will offer customers discounts on each element of the package, but some may experience sticker shock even with the discounts.

The Wall Street Journal noted a premium AT&T customer could pay more than $500 a month for AT&T’s best package — that’s more than $6,000 a year. Most bundled AT&T customers will pay about half that — around $246 a month for a package of 100 Mbps internet, a home phone line, wireless phone and a limited TV package bundling Time Warner content, including HBO. The entry level ‘poverty’ package will still cost around $115 a month.

By controlling each element of the package, AT&T can discourage a-la-carte package pickers by substantially raising the price of standalone services, to encourage bundling. That explains why many customers take a promotional TV offer priced just $10-20 more than the $70 broadband-only package some customers start with. If broadband-only service costs $40 a month and the TV package also costs $40 a month, those leaning towards cord-cutting would find it much easier to pass on cable television.

With Comcast on the verge of picking up much of 21st Century Fox’s content library and studio, Comcast will be able to defend its own turf creating similar giant bundles of content to keep its customers happy. Wall Street is already putting pressure on Verizon to respond with an acquisition of its own to protect its base of FiOS and Verizon Wireless customers.

Companies likely left out in the cold of the next wave of media and entertainment consolidation include online content companies like Google, Facebook, Amazon, and Apple, which will be stuck licensing someone else’s content or bankrolling many more original productions. Charter Communications, which has a small deal with AMC for content, is also stranded, as are smaller cable companies like Cox, Altice, and Mediacom. Independent phone companies like CenturyLink, Windstream, Consolidated, and Frontier are also in a bad position if Wall Street determines telecom companies without content divisions are in serious trouble.

Netflix stands alone as the behemoth content company, and is not likely to be impacted by the current wave of consolidation. Hulu will most likely end up in the hands of a telephone or cable company, most likely Comcast, if it successfully acquires Fox’s ownership share of Hulu.

For customers, your future choice of provider is about to get more complicated. In addition to pondering speed tiers and wireless coverage maps, you will also have to decide what content packages are the most valuable. Your choices will range from basic company-owned networks to third-party services like Netflix and Hulu, as well as full cable TV lineups ranging from DirecTV Now to XFINITY TV. Then get ready for the bill, which will likely include charges for most, if not all, of these services.

The Wall Street Journal explains the current wave of media consolidation. (2:44)

DirecTV’s satellite lineup, delivered over the internet.

DirecTV satellite customers with broadband connections might be able to scrap their satellite dishes and set-top equipment when AT&T launches its broadband-delivered version of DirecTV by the end of 2018.

AT&T Communications CEO John Donovan made the announcement at the MoffettNathanson Media & Communications Summit on Tuesday, telling the audience the lineup would be nearly identical to the satellite TV packages customers get today from DirecTV’s satellite dish service.

Customers who opt to dump their dish may also save money by moving their subscription to a broadband platform. Currently, AT&T sells DirecTV for $120-200 a month, depending on equipment and channel lineup. The broadband equivalent, which will not require any expensive set-top box equipment and will rely on a cloud-based DVR, will sell for $80-90 a month.

DirecTV satellite packages (new customer promotional rates — regular prices are higher)

“We won’t roll a truck,” to install a satellite dish, Donovan said. “The [equipment costs] will be cheaper. It will be a thinner, lighter version and we will have lower operating costs. We anticipate passing [on] a lot of those cost savings [to customers].”

Donovan believes a transition away from satellite will be a win-win for the company and consumers because both will face lower costs. It also gives DirecTV the chance to expand, marketing its full video lineup to customers who can’t get a satellite signal, don’t want a dish, or live in a building that restricts satellite equipment.

“It will extend our footprint,” Donovan said at the MoffettNathanson event. “It will not only have a lower price point, but it will have margins that are similar and, therefore, better returns because there will be less upfront costs.”

With today’s announcement, AT&T will have at least five different video products on offer for consumers: DirecTV satellite service, DirecTV over broadband, DirecTV Now — a slimmed down package targeting cord-cutters, U-verse TV — AT&T’s traditional cable TV package, and AT&T Watch — a forthcoming ultra-slim offering that will cost $15 a month for non-AT&T wireless customers. Existing AT&T wireless customers will get Watch free of charge, if they have an unlimited data plan.

AT&T CEO Randall Stephenson today announced AT&T would offer a slim-sized version of DirecTV Now offering a significant number of cable networks and live local television stations, but without expensive sports programming.

The new service, AT&T Watch, will sell for $15/month and is expected to arrive sometime this May.

The new option is expected to compete head to head with Dish Network-owned Sling TV.