The communications industry long has promised a future where wireless service, video and the Internet are offered in one convenient package. Three huge possible deals now are bringing that future into view.
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Cellphone and Internet provider AT&TInc. T -0.76% is looking to buy satellite company DirecTV. DTV +2.38% Cable and Internet provider Comcast Corp.CMCSA -1.24% is considering offering mobile-phone service over Wi-Fi if its planned $45 billion merger with Time Warner Cable Inc. TWC -1.10% is approved. And cellphone company Sprint Corp.S -0.91% says it could provide home Internet connections over wireless if it is allowed to buy smaller rival T-Mobile US Inc. TMUS -2.17%
In theory, the deals would usher in an era in which consumers would get new, flexible options to be entertained and communicate wherever and however they choose.
But the path to that idealized world is perilous, requiring that regulators approve mergers that would create still-bigger companies in industries where Americans already have few choices.
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There are two possible outcomes, says Blair Levin, a former Federal Communications Commission chief of staff who helped draft the agency's road map for increasing broadband access.
In one, the companies bulk up and start competing aggressively, creating exciting new services.
In the other, new competition from technologies such as Internet broadband via wireless or mobile-phone service via Wi-Fi don't pan out, giving the biggest legacy companies more pricing power than ever.
It is impossible to know which one will prevail, says Mr. Levin, a fellow at the Aspen Institute think tank. "Anybody who thinks they know is probably wrong."
Consumers have a lot on the line. Wireless, pay TV and broadband Internet service gobble up a big slice of Americans' time and money. Annual household spending on telephone, pay TV and Internet service averaged $2,237 in 2012, the Labor Department says. That was up 20% from 2007, while overall household spending rose just 3.6%.
"Any of these deals individually would represent a major shift," says Rick Kaplan, former head of the FCC's wireless bureau. "Taken together, it is a pretty impressive transformation of the industry in a very short period of time," says Mr. Kaplan, the head of strategic planning at the National Association of Broadcasters.
A marriage of AT&T and DirecTV would produce the most obvious birth of a megatelecom.
DirecTV offers pay television by satellite to more than 20 million subscribers nationwide. AT&T is the second-largest U.S. cellphone carrier, behind Verizon Communications Inc., VZ +0.17% with 85.1 million retail wireless subscribers. AT&T also has 16.5 million broadband Internet customers. But its pay-TV footprint is small, with 5.6 million users.
Telecommunications analyst Craig Moffett of MoffettNathanson figures their merger would reduce pay-TV choices in about 25% of the U.S. Elsewhere, though, it would make AT&T a formidable competitor to cable companies such as Comcast.
Regulators are inclined to look favorably on the proposed deal because they view offering voice or video alone as a dying business model, a person familiar with the FCC's thinking says.
AT&T declines to comment. DirecTV refers to recent conference calls, such as one in February, in which Chief Executive Mike White said Comcast's offer for Time Warner Cable changed the competitive landscape and that DirecTV was looking at how to strengthen its position.
AT&T is working on a two-track approach to video, promoting its pay-TV service U-verse while building services that would circumvent cable or satellite to deliver video and TV content over the Internet and to wireless devices.
The combined company, with annual revenue of roughly $160 billion, theoretically would be in a stronger position to persuade the owners of TV shows and movies to sell AT&T the necessary licenses.
Sprint's ambition to buy T-Mobile is more contentious.
It would combine the country's third- and fourth-largest wireless carriers and has drawn skepticism from the FCC and the Justice Department. The deal would leave the U.S. with three enormous wireless carriers and no viable competitors. The combination would have nearly $60 billion in annual revenue and around 85 million retail wireless subscribers. The next biggest competitor, regional carrier U.S. CellularCorp. USM -0.95% , has just 4.7 million. A Sprint acquisition also would remove T-Mobile from a market where its aggressive marketing has kept a lid on consumer prices.
Sprint Chairman Masayoshi Son has made his case in Washington that a combined Sprint and T-Mobile would add a well-armed competitor to Verizon and AT&T.
He also plans to beam high-speed Internet service to households. Sprint is testing the technology with satellite-TV company Dish Network Corp. DISH -0.56% in Corpus Christi, Texas. But while such technology is getting faster and more efficient at carrying data-heavy traffic like video, many analysts doubt it will ever be a robust alternative.
The continued importance of those wired connections means regulators are giving particularly close scrutiny to the planned merger of Comcast and Time Warner Cable.
Comcast CEO Brian Roberts says his company needs to bulk up to compete effectively with satellite-TV operators, phone companies such as Verizon and relatively new entrants in the video market such as tech heavyweights Google Inc.,GOOGL -2.38% Apple Inc. AAPL -1.09% and Amazon.com Inc. AMZN -4.09% The cable industry's traditional regional structure "has limitations that our national competitors don't have," Mr. Roberts said this year.
Comcast says merging with Time Warner Cable would increase competition and spark innovation. Comcast told the FCC that the company is studying the possibility of offering mobile-phone service that runs mainly on Wi-Fi.
Wi-Fi airwaves already carry about 57% of wireless data traffic in North America, according to Cisco Systems Inc. And Comcast says it plans to expand the number of wireless hot spots in its network this year to eight million from one million.
But while technological advances have made phone over Wi-Fi feasible, it still is inferior to typical wireless service and needs to use the cellular network as a backstop.
If regulators approve the deal, Comcast would be the country's largest Internet broadband supplier, with more than $85 billion in revenue and more than 32 million broadband subscribers, almost 16 million more than No. 2 AT&T.
Part of AT&T's reasoning in making overtures to DirecTV now is to get in front of authorities while they are considering the Comcast deal, a person familiar with the matter says. The fear is that consolidation resulting from a Comcast deal would raise the regulatory bar for subsequent proposals.
Regulators review each deal on its merits, but the FCC and Justice Department say they would be mindful of related developments in the industry.
Companies say regulators ought to view the landscape through a wide-angle lens.
The FCC needs to account for companies that may enter the business down the line, says T-Mobile Chief Executive John Legere. "The analysis would be much more than the three or four that are on the table now," he says. "It would be the adjacent industry and other types of competition."
And Michael Keeley, an antitrust lawyer with Axinn, Veltrop & Harkrider LLP, says regulators will have no choice but to consider the deals' collective impact.
"Even if they try to review the deals separately, the common issues will lead the reviews to all run together," he says.
—Gautham Nagesh and Shalini Ramachandran contributed to this article.
Write to Ryan Knutson at ryan.knutson@wsj.com, Thomas Gryta atthomas.gryta@wsj.com and Brent Kendall at brent.kendall@wsj.com