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.

FCC Chairman Ajit Pai may have effectively derailed Sinclair’s $3.9 billion dollar acquisition of Tribune Media today after issuing a statement criticizing the deal.

“Based on a thorough review of the record, I have serious concerns about the Sinclair/Tribune transaction,” Pai said in a statement few expected to see from the current chairman. “The evidence we’ve received suggests that certain station divestitures that have been proposed to the FCC would allow Sinclair to control those stations in practice, even if not in name, in violation of the law.”

Pai is responding to ample evidence from those objecting to the deal showing Sinclair’s proposal to acquire 42 additional Tribune-owned TV stations and effectively maintain shadow control over stations it planned to divest would put the company far over the federal station ownership cap. Sinclair’s proposal to sell 21 stations to win government approval came under close scrutiny when it was revealed most of the buyers had direct ties to Sinclair or its founding Smith family. Critics charged Sinclair offered sweetheart deals to buyers in return for “sidecar” agreements to effectively retain control of the spun-off stations and have the option of buying them back later at a discount.

Pai

“When the FCC confronts disputed issues like these, the Communications Act does not allow it to approve a transaction,” Pai noted. “Instead, the law requires the FCC to designate the transaction for a hearing in order to get to the bottom of those disputed issues. For these reasons, I have shared with my colleagues a draft order that would designate issues involving certain proposed divestitures for a hearing in front of an administrative law judge.”

The chairman’s views were welcomed by FCC Commissioner Jessica Rosenworcel.

“As I have noted before, too many of this agency’s media policies have been custom built to support the business plans of Sinclair Broadcasting,” she said in a statement. “With this hearing designation order, the agency will finally take a hard look at its proposed merger with Tribune. This is overdue and favoritism like this needs to end.”

Industry observers suggest such a referral is a death blow in cases of similar mergers because of long delays and uncertainties. The FCC effectively ended the 2015 Comcast-Time Warner Cable merger when it referred the merger to a similar complicated hearing process. The two companies abandoned the deal after getting the news.

Sinclair’s deal has also been a lightning rod for controversy between liberal and conservative groups. The Washington Post found Sinclair “gave a disproportionate amount of neutral or favorable coverage to Trump during the campaign” while portraying Hillary Clinton negatively in much of its coverage. Politico reported Jared Kushner, President Trump’s son-in-law, made a deal with the president’s campaign to get additional access to the president in return for assurances Mr. Trump would receive, in Kushner’s words, “better media coverage.”

After the election, Sinclair-owned stations have been under growing scrutiny for airing mandated “must-air” conservative-slanted stories and editorials during local newscasts. Recent commentaries from former Trump campaign adviser Boris Epshteyn included praise for the president’s newest nomination for the Supreme Court and criticism over how the president is treated by the media.

Gone from Spectrum lineups across northern New England.

Many Spectrum cable television customers across the country have seen their broadcast TV lineups shrink as the company removes “duplicate” and “semi-local” stations, even as it hikes the cost of its Broadcast TV surcharge.

Southern Maine customers are the latest to be affected with the sudden removal of Boston’s ABC affiliate, WCVB-TV on June 5 — the last Boston area station on the television lineup.

“York (Maine) is part of the Portland TV market and we carry the designated in-market ABC affiliate — WMTW,” responded Andrew Russell, Spectrum’s director of communications for the northeast division. “We no longer carry the out-of-market ABC affiliate.”

Viewers trying to watch WCVB in southern Maine saw a screen stating “programming on this network is no longer available,” instead of local news and traffic information important for a number of southern Maine residents that commute down I-95 into the Boston area for work.

“I am fit to be tied,” York Beach resident Ken Morrison told the Bangor Daily News. “And I’m not alone. A lot of people are very upset about it.”

Subscribers in distant suburbs, exurban or rural areas between two major cities often had access (often for decades) to several stations in adjacent television markets. Each subscriber could choose the station serving the city that was most relevant in their lives. Prior to Spectrum and Time Warner Cable, cable systems in these areas were often locally owned and operated by smaller companies. These operators were responsive to the needs of their customers and distant over-the-air stations were often a part of the cable lineup from the 1970s forward. But as consolidation in cable industry continues, local lineups are now usually determined in a corporate office hundreds of miles away.

This Binghamton, N.Y. PBS station was thrown off the Spectrum lineup across several counties in the Southern Tier.

That could explain why Spectrum subscribers living in Tompkins and Cortland counties in New York suddenly lost WSKG-TV, the PBS affiliate from nearby Binghamton in favor of Syracuse-based WCNY-TV. Local residents do not consider themselves a part of Syracuse. Most consider themselves residents of the Southern Tier, which stretches along the New York-Pennsylvania border and includes Binghamton, Corning, Elmira, Hornell, Olean, Salamanca, Dunkirk, Jamestown, and Vestal. Residents will tell you they have more in common with their neighbors in northern Pennsylvania than Syracuse, but Spectrum apparently knew better and announced viewers in the two counties would now have to be satisfied watching a PBS station broadcasting to an audience at least 50 miles away.

Spectrum’s decision in this case does not appear to be a financial one.

“A public media organization like us gets no money from Charter to air our programming,” said WSKG’s management. “Our programming is provided to them for free, by law.”

WSKG believes what is actually behind Spectrum’s decision to change the lineup is the regionalization of their cable system head-ends, from which television programming is managed. Programming seen on Spectrum subscribers’ TV screens across much of the Southern Tier and part of the Finger Lakes region is now managed from Charter offices in Syracuse.

“In this case, because our tower is more than 70 miles from Syracuse’s head-end, where the signal originates, there’s a line of demarcation where they don’t have to carry our signal anymore,” said WSKG station president and chief executive, Greg Catlin. “In this case, that cut-off is Cortland and Tompkins County. They have every right to be doing what they’re doing. That doesn’t mean they have to do it.”

Subscribers were exceptionally unhappy to lose their Binghamton PBS station, and the station received a significant number of listener and viewer contributions from an area that is now cut off. The Southern Tier, like Pennsylvania to the south, is notorious for poor signals due to mountainous terrain, which limits television and FM radio reception. Verizon offers no competing television service in this part of New York, leaving residents with satellite television as the only possible alternative.

WPTZ in Plattsburgh is off Spectrum lineups in several parts of northern New York.

The first week of June was a significant date on the calendar for many residents in Spectrum’s northeastern service areas. In northern New York, Spectrum customers were notified they were losing WPTZ, the NBC affiliate in Plattsburgh, in favor of Syracuse’s NBC station WSTM-TV. That Syracuse station now produces news and current affairs programming for three Syracuse stations – WSTM itself, WTVH (CBS) and WSTQ (CW) under the “CNY Central” brand. But subscribers who lost WPTZ do not consider themselves a part of central New York and would more likely choose to visit Vermont than Syracuse.

In other parts of New England, Spectrum customers also lost WMUR-TV — the New Hampshire station with one of the best regarded news operations in northern New England, in favor of WVNY in Burlington, Vt. Newscasts on WVNY are produced by its sister station WFFF-TV. WMUR has a larger American audience than WVNY. In fact, this Vermont ABC affiliate has far more viewers in southern Québec and Montréal than it does in its own home market.

Back in Maine, the local congressional delegation is turning up the heat on Spectrum, so far to no avail. State Reps. Lydia Blume and Patricia Hymanson of York have written a letter to Spectrum demanding the company reinstate WCVB or reduce the cable television bills of affected customers to compensate. So far, Spectrum has done neither.

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Morrison told the Bangor newspaper Channel 5 “is the channel of the household. We watch it every day, multiple times a day,” he said. “Many people in the York area commute to Boston. The traffic reports on Channel 5 are essential.” WCVB was also the last Boston channel that could be accessed through Spectrum. Boston channels 4 and 7 have already been discontinued.

WMUR in Manchester, N.H. is gone for many New England Spectrum subscribers.

After contacting town officials, who hold the franchise agreement with Spectrum until it expires in 2022, Morrison learned a powerful lesson about deregulation. When a cable company lacks competition or regulation, it can do pretty much what it wants.

York town manager Steve Burns says his hands are tied, noting that Spectrum’s franchise agreement is written to automatically renew (for their convenience) unless the town wants to attempt to renegotiate.

“But negotiate how?” Burns asked. “Comcast is not going to come in and compete with Spectrum. They divvy up the territory. And there’s no one else.”

Spectrum has also made sure that Burns’ phone is among those that rings first when a customer has a complaint, noting Spectrum prints his name and number on each subscriber’s bill, listing him as the “franchise administrator” for the town.

“But it doesn’t mean anything,” Burns told the newspaper. “We have no authority. They decide the programming and the fees. I don’t think we’re important to them.”

So far, all Spectrum has been willing to do is mail out a channel request form to residents who complain, but there is scant evidence the cable company will restore the Boston station, because it has refused other similar requests from subscribers across the country.

For customers in the Berkshires in western Massachusetts, they know only too well how responsive Spectrum is to channel requests. When Spectrum took over Time Warner Cable, local subscribers lost access to several stations (most recently WCVB as well), forcing some to watch local news from stations either in Albany, N.Y., or Springfield, Mass. At the same time, customers were notified Spectrum was increasing its Broadcast TV surcharge, for fewer channels.

Spectrum did not offer any significant response to U.S. Sens. Ed Markey and Elizabeth Warren, or Congressman Richard Neal when they contacted Charter Communications to complain. In Maine, it is the same story for Sens. Angus King and Susan Collins, as well as Rep. Chellie Pingree.

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)

AT&T has won its $85 billion bid to acquire Time Warner, Inc., overturning Justice Department opposition in a court case and completely rejecting allegations the merger was anti-consumer and would raise prices by suppressing competition. The favorable decision is expected to signal the business community the time is right for several more multi-billion dollar media mergers.

U.S. District Court Judge Richard Leon ruled the deal can proceed without any consumer-protecting deal conditions, and warned Department of Justice lawyers not to appeal if the purpose was to stymie the deal from closing before the companies’ agreed on deal expiration date runs out, saying it would be “manifestly unjust” and damaging to the faith of America’s shareholders and business community.

Leon read his decision to a packed courtroom, telling the government’s lawyers they had failed to prove their case the merger would harm consumers. Observers called it one of the worst antitrust court losses the Justice Department has faced in its history.

“Today is a bad day for all internet users and media consumers,” said Free Press policy director Matt Wood. “The Justice Department’s failure to bring a winnable case will now set off a wave of communications and media consolidation that was unthinkable even a few years ago. All of us, regardless of our broadband carrier and no matter what we watch, are about to see higher bills, fewer choices, worse quality for competing options and a further erosion of our privacy rights.”

During a six-week trial held this spring, the government argued AT&T’s combination of DirecTV’s 20 million subscribers with its own U-verse TV customers, and its ownership of Time Warner’s pay television networks including HBO and Cinemax and Turner Broadcasting’s news, entertainment, and sports networks, would give the phone company too much power, allowing AT&T to unfairly raise prices for competing cable, satellite, and online streaming companies. AT&T acquired DirecTV in 2015, but regulators were already concerned about AT&T’s size, only approving the transaction with deal conditions.

AT&T argued it was willing to offer arbitration to make sure its competitors received fair deals, and volunteered to not cut off TV networks from customers during arbitration proceedings to resolve contract renewal disputes.

The decision has dramatic implications far beyond the merger at hand. Waiting in the wings are other media companies, Wall Street bankers, and advisers waiting to begin a frenzy of other blockbuster merger deals. Had the court blocked the merger, it would send a strong signal that the Justice Department’s case against vertical integration mergers — when companies buy other companies they do business with — has standing. The total defeat of the Justice Department in today’s decision may make government lawyers hesitant to challenge future vertical integration deals.

Comcast’s all-cash offer for a large part of 21st Century Fox is likely to proceed now that the AT&T-Time Warner merger was approved. More telecom industry deals are expected to emerge later this year.

The Trump Administration’s choice to oversee antitrust cases — Makan Delrahim, sent signals to Wall Street that he is still inclined to be pro-business on merger transactions, telling reporters most proposed transactions were either good for consumers or neutral — a view consumer advocates generally oppose.

“I understand that some journalists and observers have recently expressed concern that the antitrust division no longer believes that vertical mergers can be efficient and beneficial to competition and consumers,” Delrahim said. “Rest assured these concerns are misplaced.”

If the merger is completed, AT&T will now be the country’s largest pay-TV distributor, controlling more than a dozen “must-have” TV networks that competitors cannot afford to be without. The deal will even affect the wireless industry’s competitive landscape. AT&T’s unlimited wireless customers are expected to be given exclusive free access to a bundle of channels filled with Time Warner-owned content.