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XFINITY Mobile Brings Back Smartphone Subsidies: $200 Off Smartphones

Comcast is bringing back device subsidies with no contracts for smartphone customers signing up for XFINITY Mobile service.

“$200 savings off regular retail price when activating a new XFINITY Mobile line of service. Valid on select devices. While supplies last. Limit 5 per account. Offers valid 8/25/17 through 9/13/17.”

The cable operator launched its mobile phone service this summer, and works over the cable company’s Wi-Fi network and Verizon Wireless.

The subsidy knocks a considerable amount off smartphones. For example, a 64GB Samsung Galaxy S8 that was originally priced at $732 sells for $532 (or $22.17/mo for 24 months at 0% interest). An Apple iPhone 7 (32GB) sells for $449.00 (or $18.75/mo for 24 months at 0% interest).

Customers can choose from two plans:

By the Gig: $12/GB, No line access fees on up to 5 lines, Unlimited nationwide talk and text, Start with 100MB of shared data/month.

Unlimited: $45/Line, No line access fees on up to 5 lines, Unlimited nationwide talk and text, Start with 100MB of shared data/month. After 20GB monthly data use, speeds reduced to a maximum of 1.5Mbps download/750kbps upload.

Communications Struggling in Southeast Texas Post-Harvey

Downtown Houston

Telecommunications services are straining across southeastern Texas and Louisiana after Hurricane Harvey’s remnants have caused unprecedented flooding across the region.

More than 50% of cell sites in Aransas, Calhoun, Refugio, and San Patricio counties in Texas are down as a result of electric outages and wind/water damage caused by Hurricane Harvey and its aftermath. Worst affected is around Rockport, in Aransas County located on the Gulf of Mexico. Just one cell tower in that county remains in service. In Calhoun County, only four cell towers remain functional.

911 services have strained as a result of the storm, with the city of Houston receiving as many as 75,000 calls a day. But in other parts of the region, 911 outages and other problems have forced officials in more than a dozen cities to route incoming calls to other 911 centers in the state:

  • 911 Service Down: Portland Police Department, Tex.
  • Degraded 911 Service: Calhoun County Sheriff, Tex.
  • Rerouted 911 Without Automatic Location Information: Aransas County SO, Tex.; Bee PD, Tex.; Beeville PD, Tex.; Kingsville PD, Tex.; Kleberg County SO, Tex.; Mathis PD, Tex.; Port Aransas PD, Tex.; Refugio County SO, Tex.; and Ingleside PD, Tex.
  • Rerouted 911: Aransas Pass PD, Tex.; Cameron Parish SO, La.; Richmond PD, Tex.; Robstown PD, Tex.; Victoria PD, Tex.; and Wilson County SO, Tex.

There are at least 148,565 wired subscribers out of service in the affected area. This includes users who get service from Comcast and other cable systems, AT&T and other wireline phone companies. There are 11 landline switching/central offices out of service and 21 offices on back-up power.

There are 9 radio stations out of service, all in Texas:

KJOJ-FM, KKTX, KUNO, KPRC, KKWV, KAYK, KZFM, KKBA and KEYS.

As a result of the storm, the Federal Communications Commission activated its Disaster Information Reporting System, which asks providers to report outages so the FCC can track the status of telecommunications networks in disaster areas.

More than two feet of rain has fallen — more than six months of average precipitation in the Houston area — in two days.

Comcast Brings Gigabit DOCSIS 3.1 to Philadelphia, South Jersey

Comcast customers in Bucks, Chester, Delaware, Montgomery, and Philadelphia counties in Pennsylvania as well as parts of New Jersey and New Castle County, Del. can now subscribe to the company’s DOCSIS 3.1-powered gigabit broadband service.

Jim Samaha, senior vice president of Comcast’s “Freedom Region” surrounding southeastern Pennsylvania says at least two million customers will be able to subscribe to the new, faster broadband speed immediately.

“We have been on a pace of doubling our network capacity every 18 to 24 months, ensuring that we stay well ahead of demand,” said Samaha in a statement.

Comcast is running an introductory promotion that will price the gigabit service at $79.99 a month with a one-year contract or $104.95 a month for month-to-month service. A 1TB usage cap did apply to customers on a gigabit plan who did not agree to a term contract, but there was some debate on that point with Comcast representatives giving conflicting answers. Customers who want a cap-free experience with Comcast may have to pay an additional $50 a month.

Who Will Buy Charter? Altice, Comcast, SoftBank, or None of the Above?

The French press did not take kindly to comments from MoffettNathanson analyst Craig Moffett, who suggested Altice’s ability to swallow up Charter Communications in a deal worth at least $185 billion dollars was “not credible.”

Panelists appearing on French language business news channel BFM TV chuckled at Mr. Moffett’s ability to predict Altice chairman Patrick Drahi’s next move.

“Mr. Moffett does not know Mr. Drahi like we’ve come to know Mr. Drahi,” noted one analyst. “We’ve learned not to underestimate his ability to put together business deals that some would call bold, others financially reckless, yet he does it again and again. If Mr. Drahi wants [Charter], he shall have it.”

French business reporters have scoffed at Altice for years, well before the company arrived in the United States to acquire Cablevision and Suddenlink and rebrand them as Altice.

“When you don’t take him seriously, that is when he strikes,” reported BFM.

Drahi is a master of using other people’s money to finance massive telecommunications deals. For him, bigger is essential, and that means he’d either have to acquire Comcast or Charter or hope to build a cable empire out of smaller cable companies he’d acquire and combine.

Drahi (center)

Multiple independent media outlets are tracking Drahi’s movements. Le Figaro reports Drahi has spent months laying the groundwork for his next big takeover in the United States and the newspaper knew all along it would be a major deal, because Drahi is banking on the prospects of emptying the pockets of millions of American cable subscribers to fund his operations. Americans pay vastly more for cable television and broadband service than consumers in Europe because of a lack of regulation and competition.

The newspaper adds that Drahi routinely tells investors and reporters he wants to be “number one or two” in all countries where he does business. Right now Altice is the fourth largest cable operator in the United States, an absolutely intolerable situation for Mr. Drahi.

Drahi is well aware of the enormous cost of a Charter acquisition, and Bloomberg News reports he is considering asking the Canada Pension Plan Investment Board and BC Partners to help fund the potential merger. Both groups are already familiar with Mr. Drahi and Altice and were instrumental in his acquisition of Cablevision and Suddenlink. Despite the potential help, Moffett still believes Charter is well outside of Altice’s reach.

“None of the proposed suitors—Verizon, SoftBank, Altice—have the balance sheet to acquire Charter,” Moffett wrote his investor clients in a research note. He notes Greg Maffei, chairman of Liberty Broadband, is unconvinced of the wisdom of allowing a buyer to use its other highly leveraged companies as compensation in a merger deal.

Moffett believes the deal has to make sense to two people to proceed – John Malone, Charter’s largest shareholder and ironically Drahi’s mentor and Charter CEO Thomas Rutledge, who was America’s highest paid executive in 2016. He stands to get considerably richer if he can fend off a deal until he achieves tens of millions in stock option awards, first when Charter’s average share price tops $455.66 a share and stays there for at least 60 days and then again when the share price exceeds $564 a share and stays there for 60 days. This morning, Charter Communications was selling at just over $399 a share. All of the merger and acquisition talk is helping boost Charter’s stock price, but Rutledge doesn’t want the company sold until after he can walk out with his compensation package fully funded or finds a buyer willing to make him whole.

As for Malone, he’s always been willing to cash out, but only when the deal makes financial sense to him and avoids taxes.

“Let’s put a finer point on it,” Moffett added. “The ONLY reason [Liberty Media chief] John Malone would be willing to swap his equity in Charter for equity in Altice would be if he believed, with real conviction, that Altice could simply manage the asset better than Charter’s current management.  It is not a knock on Altice to suggest that there is simply no way that Liberty would believe that. Next.”

But then, Time Warner Cable’s management didn’t take an acquisition offer from Charter Communications seriously either when it was first proposed. Time Warner Cable believed selling to Comcast made better sense to shareholders and executives. Like Altice, Charter was a much smaller cable operator proposing to buy a much larger one. In the end, regulators rejected the deal with Comcast and with Wall Street beating the drum for someone to acquire Time Warner Cable, Charter’s sweetened second offer was readily accepted.

Charter’s biggest downside to a potential acquirer is the $60 billion in debt it took on buying Time Warner Cable and Bright House Networks. Debt at SoftBank also makes Moffett skeptical of a deal between Sprint and Charter.

“They [SoftBank] already sit on $135 billion of debt,” Moffett wrote. “Add Charter’s $63 billion and you’re within a rounding error of $200 billion. Add any cash at all for Charter’s equity and you’re flirting with a quarter trillion (trillion!) dollars of debt. Were SoftBank to buy Charter, they would become not only the most heavily indebted non-financial company the world has ever seen, they would in fact be more indebted than most countries.”

To avoid crushing debt scuttling a deal, Citigroup speculated in a report to their investors that Comcast and Altice could partner up to divvy up Charter Communications themselves. The Wall Street bank speculates Comcast would help finance a deal if it meant it would take control of Charter’s customers formerly served by Time Warner Cable. Legacy Charter customers and those formerly served by Bright House would become part of the Altice family.

Such a transaction would likely overcome Malone’s objections over an Altice-only offer leaving him with a large pile of Altice USA stock.

Just as with Time Warner Cable, once a company is seen willing to deal, fervor on Wall Street to make a deal — any deal — can drive companies into transactions they might not otherwise have considered earlier. If Charter is seen as a seller, there will be growing pressure to find a buyer, if only to satiate investors and executives hoping for a windfall and Wall Street banks seeking tens of millions in deal advisory fees.

Revolving Door: Head of N.J. Consumer Agency Resigns to Take Comcast Job

Lee

Steve Lee, the director of the New Jersey Division of Consumer Affairs is resigning to take a job with the nation’s largest cable company.

Lee, whose resignation becomes effective Sept. 5, will become Comcast’s deputy general counsel, according to a statement released Tuesday by the state Attorney General’s Office.

Lee has been in charge of the consumer protection agency since 2014, but has spent the last several months speaking with Comcast about accepting a position likely to pay substantially more than he earns in his current role.

Lee’s three years as director has not seen any significant actions against Comcast initiated by his office. During Lee’s tenure, the Division has primarily focused on an aggressive prescription monitoring program to combat opioid abuse, sexual misconduct by doctors in exam rooms, and streamlining state licensing procedures.

The deputy director of the division, Sharon Joyce, will become acting director effective Sept. 6. She has been with the Division of Law since 1979 and has served as the acting director on three prior occasions.

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