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AT&T - Time Warner Deal: Politics, Regulation And The Market

The deal between AT&T and Time Warner Inc. is the news of the year. The offer of 85 billion of dollars between the first US Telco Operator and the broadcaster - entertainment producer is not a surprise.

The integration between Media and TLC is not just an opportunity but also a necessity to reach the consumer needs. This is also the only way for the big Telcos to compete against the internet companies.

The crucial point is not just the broadcasting of the contents, but the production of that. It's not a case that AT&T was the first in understanding the integration between these markets and this is the reason why it is going for a continuous M&A strategy.

After the merger with DirecTV and the expansion in Center and South America is now the moment for the offer to make the company stronger in the production of the contents.

The arrival of HBO and CNN in AT&T it's a crucial point to permit the Telco operator to compete against Google-Youtube, Netflix, Facebook or Amazon.

Anyway the strategy of AT&T is not the unique point to favour the competition, because in the sector is needed a regulator able to understand the change of the market.

In fact, in the last year, FCC seems to have a one-way regulation direction, making rules in favor of the internet companies.

It's sure that the arrival of the internet companies was very good for the consumers, because they introduce a new sort of competition, but it is important to understand that TLC, Media and Internet is a unique battlefield between different operators.

The competition is also vertical and not only horizontal. It doesn't exist a real difference between the mobile market and the production of contents (videos online, etc...).

In the last years Telcos made big investments to improve the network infrastructure in US. Giving an idea, it is interesting to make a benchmarking with Europe: the big three Telcos from US made higher investment than all the TLC operators in the five biggest Countries of Europe.

These investments were needed by the internet companies to develop their business model and the regulator has to understand this simple point: without investments in the infrastructure network is impossible to invest in the contents production.

It was clear in some country of Europe (Italy for example), where the low level of the investment in the network infrastructure leads to a lower development of the contents and of the innovation (Infrastructure is not the only one driver of development, but it is the most important).

The deal between AT&T and Time Warner is positive also because the market is going in the direction of the integration. Going opposite to this direction means that it's not clear for regulators or politicians to understand how the sector TLC, Media and Internet will be in four years, especially with the arrival of the 5G.

Last but not least. It is important to have stronger US groups in more and more competitive world. Also the internet giants group like Google, Facebook or Uber weren't able to enter or win the battle in the future first market in the World: China.

To block the merger between AT&T and Time Warner is not a good point to make the America great again, but at the opposite it will put US at the corner.