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N.Y. PSC’s Diane Burman Objects to Special Session Voting Charter/Spectrum Out of New York

Phillip Dampier September 12, 2018 Charter Spectrum, Consumer News, Public Policy & Gov't, Video No Comments

Burman

New York State Public Service Commissioner Diane Burman today voted against motions to give Charter Communications more time to develop its six month exit plan to leave New York and a motion to get more time to file a rehearing request about Charter’s alleged violations of merger conditions governing its behavior in the state.

Burman’s opposition was rooted in her irritation over PSC Chairman John Rhodes’ decision to hold an unscheduled special session of the Commission on July 27 (which Burman did not attend because of a scheduled family vacation) where the three remaining commissioners all voted to cancel approval of the Merger Order allowing Charter Communications to acquire Time Warner Cable in New York State.

“I believe it was wrong to have that special session and I don’t believe that the rationale for it is the right one,” Burman told her fellow commissioners this morning at a regularly scheduled Commission Session. “I think it is a slippery slope that there was a special session without me present and that is concerning.”

Burman argued the Commission’s recent approval of time extensions in the Charter case could set a precedent that could take the regulatory agency down a road where companies like Charter and other utilities could delay proceedings by having informal private talks with Commission staff. As a result, Charter has effectively stopped the Commission’s clock on pre-determined deadlines like a 30-day limit to file a petition asking the Commission for a rehearing.

“The message that I fear we are sending is if there is an order that someone disagrees with and they are going to file a petition for rehearing […] if they are engaged in ‘productive’ dialogue, whatever that term may be, between the staff, we can wait for the petition for rehearing to be filed past the 30 days,” Burman argued. “For me, the impactful piece of it is that by saying ‘don’t file now’ we are blocking the [regulatory and public notice] process and the opportunity to start that clock so that people have the opportunity to comment on what we may be doing, which may be helpful.”

Because the Commission has approved delays allowing Charter company officials and the Commission to continue privately discussing matters, none of those conversations are on the public record and no groups, including Stop the Cap!, can scrutinize the discussions and file comments about those conversations, Commission decisions that may result from those talks, or suggest alternative corrective measures to consider.

The PSC’s counsel this morning admitted the Commission and Charter were engaged in active settlement discussions, but it isn’t known if those talks relate to overturning the Commission’s decision to banish Charter from the state or are about more procedural matters such as how Charter plans to hand over cable service to another entity.

“I think there are lessons to be learned from having the special session without me there and I do think that going forward, we need to be more cognizant of taking into consideration what the perception is by not having the full Commission body, minus one because there is a vacancy, [vote together on matters of great consequence like this] regardless of whether counsel believes there is an appropriate quorum or not,” Burman added.

The final vote on both measures extending deadlines in Charter’s favor was 3-1. Both measures passed.

N.Y. PSC Commissioner Diane Burman opposed the extension of the deadline for Charter Communications to file its plans to leave New York State and to request a rehearing of a July decision revoking their merger with Time Warner Cable in New York. (29:26)

Charter, New York Officials in “Productive Dialogue” to Resolve Disputes

An attorney for Charter Communications revealed that company officials and New York telecom regulators were engaged in a “productive dialogue” over how to resolve the state’s dispute with the cable operator.

In written requests to extend the deadlines for a rehearing of the decision to revoke Charter’s merger with Time Warner Cable and file an “exit plan” to leave New York State, Helmer revealed the two sides were engaged in substantial talks to resolve their differences.

“Good cause exists to further extend the deadlines [….],” wrote Maureen O. Helmer, counsel for Charter Communications. “Charter and the Department [of Public Service] have been involved over the past few weeks in productive dialogue regarding the July Orders as well as the related special proceeding initiated by the Commission in the Supreme Court.”

Helmer added that Charter has been “assembling additional information” about its criticized rural broadband expansion program for review by the Public Service Commission, which decided in late July to evict Charter/Spectrum from New York for consistently failing to meet its merger obligations with the state.

Charter’s lawyer suggests it is in the Commission’s best interest to accept additional delays in the deadlines to file a rehearing appeal of the July eviction order (requesting an extension until Oct. 10, 2018) and to file an orderly exit plan (requesting an extension until Nov. 8, 2018).

“A further extension would allow additional time for discussions between Charter and the Department before the initiation by Charter of additional Commission or court proceedings. Additional proceedings before the Commission and/or the courts would have the potential to divert the resources of both Charter and the Department from discussions regarding both orders, and could have the effect of making it more difficult to resolve the issues raised by the orders without litigation,” Helmer wrote.

There is an increasing likelihood the Public Service Commission’s July order effectively throwing Charter Communications out of New York State was actually a hardball, last-ditch negotiating tactic, potentially to extract additional conditions and more rigid compliance with the orders of the Public Service Commission.

Charter officials originally claimed the July eviction order was an example of election year politics by the governor and a striking union. New York Gov. Andrew Cuomo, who has repeatedly slammed Charter/Spectrum for its performance in New York, is running for re-election. The International Brotherhood of Electrical Workers (IBEW) also continues to strike Charter in the New York City area, attracting support from local politicians.

A Commission that is amenable to Charter’s request for a second delay in meeting its deadlines to file paperwork would send a clear signal the PSC is no longer intent on throwing the cable operator out of the state.

The PSC’s July order rescinding the approval of Charter’s acquisition of Time Warner Cable was based ironically, in part, on Charter’s frequent failure to meet the state’s deadlines.

Dolan Family Suing Altice USA Over Layoffs at Cablevision’s News 12 Operation

Phillip Dampier September 5, 2018 Altice USA, Consumer News, Public Policy & Gov't No Comments

The founding family of Cablevision is suing Altice USA, the company that acquired the suburban New York cable operator in 2016, for violating terms of the merger and committing fraud after laying off staff at Optimum’s News 12 operation.

This week the Dolan family — the founders and original owners of the suburban New York City cable system, filed a lawsuit in Delaware Chancery Court after learning the notorious budget-slashing executives at Altice laid off dozens of workers, with plans to cut many more, despite a merger commitment to maintain at least 462 workers at the news operation and accept financial losses of up to $60 million until 2020.

News 12 is unique in the downstate New York, New Jersey, and Connecticut area where Cablevision provides cable service, delivering “hyper-local” coverage of news events across individually programmed regional news stations, each targeting a different service area. News 12 was among the first cable operator-created local news operations, founded in 1986 by Cablevision founder Charles Dolan.

Over the next three decades, News 12 launched several unique channels to serve customers:

  • News 12 The Bronx/Brooklyn (shared studios/talent, but branded individually to each borough)
  • News 12 Connecticut
  • News 12 Hudson Valley
  • News 12 Long Island
  • News 12 New Jersey
  • News 12 Traffic and Weather
  • News 12 Westchester

Originally exclusive to Cablevision, News 12 has since been licensed for viewing by cable customers of Charter Spectrum, Comcast, and Service Electric across the Tri-State area. Altogether, News 12 reaches about three million viewers in the region.

The lawsuit is an effort to preserve the legacy of News 12 in light of Altice’s legendary reputation for layoffs and budget cuts.

Charles Dolan

“Unfortunately for the employees of News 12, Altice has disregarded its solemn promise to operate News 12” as promised, the lawsuit claims. “The purpose of today’s lawsuit is to enforce Altice’s contractual commitment to stand by the employees of News 12. The Dolan family intends to hold Altice accountable for commitments Altice made at the time of the sale and to protect the quality programming News 12 provides the community.”

The lawsuit alleges Altice USA already laid off 70 News 12 employees in 2017 and notified the Dolans last month it would begin laying off additional workers beginning this week, including popular News 12 anchor Colleen McVey. McVey is a co-plaintiff in the lawsuit.

The fate of News 12 was a key issue for the Dolan family during merger talks with Altice. At one point, the family demanded News 12 be spun off as an independent entity not controlled by Altice because of fears the company’s cost-cutters would decimate the news operation. Ultimately, the merger agreement contained language forbidding Altice from laying off News 12 staff except in certain circumstances. The Dolan family claims there is no justification for the layoffs. Altice disagrees, claiming the suit has no merit.

“Altice USA remains committed to offering meaningful news coverage, enhancing our news product for our local communities, and growing our audience,” an Altice USA statement said. “Under Altice USA’s leadership, News 12 remains the most viewed TV network in Optimum households. This achievement reflects the uniqueness of News 12’s hyperlocal content and the high value viewers place on news that is tailored to their neighborhoods. Local news has never been more important, and we’re proud that News 12 continues to be a trusted source of news and information in the communities we serve.”

Consumer, Industry Groups Slam T-Mobile/Sprint Merger Now Before FCC

“Devastating.”

“Too big to fix.”

“A bad, recurring dream.”

“An oligopoly.”

“A meritless merger.”

These were some of the comments from objectors to T-Mobile and Sprint’s desire to merge the two wireless carriers into one.

Consumer and industry groups filed comments largely opposed to the merger on the grounds it would be anti-competitive and lead to dramatic price increases for U.S. consumers facing a consolidated market of just three national wireless carriers.

Free Press submitted more than 6,000 signatures from a consumer petition opposed to the merger.

“This is like a bad recurring dream,” one of the comments said, reflecting on AT&T’s attempt to acquire T-Mobile in 2011.

The comments reflected consumer views that mergers in the telecom industry reduce choice and raise prices.

The American Antitrust Institute rang alarm bells over the merger proposal it said was definitively against the public interest and probably illegal under antitrust laws. It declared two competitive harms: it creates a “tight oligopoly of the Big 3 and [raises] the risk of anticompetitive coordination” and it “eliminates head-to-head competition between Sprint and T-Mobile.”

The group found the alleged merger benefits offered by the two companies unconvincing.

“The claim that two wireless companies need a merger to expand or upgrade their networks to the next generation of technology is well worn and meritless. The argument did not hold any water when AT&T-T-Mobile advanced it in 2011 and the same is true here,” the group wrote. “The FCC should reject it, particularly in light of the merger’s presumptive illegality and almost certain anticompetitive and anti-consumer effects. Both AT&T and T-Mobile expanded their networks in the wake of their abandoned merger. And T-Mobile became a vigorous challenger to its larger rivals. Sprint-T-Mobile’s investor presentation notes, for example ‘T-Mobile deployed nationwide LTE twice as fast as Verizon and three times as fast as AT&T.’”

“The Sprint-T-Mobile merger is one of those mergers that is ‘too big to fix,’” the group added. “Like the abandoned AT&T-T-Mobile proposal, it is a 4-3 merger. It combines the third and fourth significant competitors in the market, creating a national market share for Sprint-T-Mobile of about 32%. Next in the lineup is AT&T, with a share of about 32%. Verizon follows with a share of about 35%. These three carriers would make up the vast majority (almost 99%) of the national U.S. wireless market with smaller MVNOs accounting for the remaining one percent. These carriers include TracPhone, Republic Wireless, and Jolt Mobile, Boost Mobile, and Cricket Wireless, which purchase access to wireless infrastructure such as cell towers and spectrum at wholesale from the large players and resell at retail to wireless subscribers.”

A filing from the groups Common Cause, Consumers Union, New America’s Open Technology Institute, Public Knowledge and Writers Guild of America West essentially agreed with the American Antitrust Institute’s findings, noting removing two market disruptive competitors by combining them into one would hurt novel wireless plans that are unlikely to be introduced by companies going forward.

Rivals, especially AT&T and Verizon, have remained silent about the merger. That is not surprising, considering T-Mobile and Sprint have forced the two larger providers to match innovative service plans, bring back unlimited data, and reduce prices. A combined T-Mobile and Sprint would likely reduce competitive pressure and allow T-Mobile to comfortably charge nearly identical prices that AT&T and Verizon charge their customers.

Smaller competitors are concerned. Rural areas have been largely ignored by T-Mobile, and Sprint’s modestly better rural coverage has resulted in affordable roaming arrangements with independent wireless companies. Sprint has favored reciprocal roaming agreements, allowing customers of independent carriers to roam on Sprint’s network and Sprint customers to roam on rural wireless networks. T-Mobile only permits rural customers to roam on its networks, while T-Mobile customers are locked out, to keep roaming costs low. Groups like NTCA and the Rural Wireless Association shared concerns that the merger could leave rural customers at a major disadvantage.

Many Wall Street analysts that witnessed the AT&T/T-Mobile merger flop are skeptical that regulators will allow the Sprint and T-Mobile merger to proceed. The risk of further consolidating the wireless industry, particularly after seeing T-Mobile’s newly aggressive competitive stance after the AT&T merger was declared dead, seems to prove opponents’ contentions that only competition will keep prices reasonable. Removing one of the two fiercest competitors in the wireless market could be a tragic mistake that would impact prices for a decade or more.

The American Antitrust Institute reminded regulators:

In 2002, there were seven national wireless carriers in the U.S.: AT&T, Verizon, Sprint, T-Mobile, Nextel, AllTel, and Cingular. In a consolidation spree that began in 2004, Cingular acquired AT&T. This was followed by Sprint’s acquisition of Nextel in 2005—a merger that has been called one of the “worst acquisitions ever.” At the time of the merger, Sprint and Nextel operated parallel networks using different technologies and maintained separate branding after the deal was consummated. The company lost millions of subscribers and revenue in subsequent years in the wake of this costly and confused strategy.

In 2009, Verizon bought All-Tel. This was followed by AT&T’s unsuccessful attempt to buy T-Mobile in 2011 and T-Mobile’s successful acquisition of mobile virtual network operator (MVNO) Metro PCS. The DOJ and the FCC forced the abandonment of the AT&T-T-Mobile deal. Like Sprint-T-Mobile, it was also a 4-3 merger that would have eliminated T-Mobile, a smaller, efficient, and innovative player that set the industry bar high for the remaining rivals.

AT&T’s rationale that the merger with T-Mobile was essential for expanding to the then-impending 4G LTE network technology also did not pass muster. In August of 2014, two years after the abandoned attempt, Forbes magazine concluded that there would have been “no wireless wars without the blocked AT&T-T-Mobile merger.”

Charter Requests, Gets Granted, Delay in Submitting Plans to Exit N.Y.

New York regulators have given Charter Communications two additional weeks to submit its plan to discontinue service in the state after the Commission voted 4-0 in July to de-certify its merger with Time Warner Cable.

Charter’s additional request for an extension of the deadline to ask for a re-hearing of the Commission’s decision to evict Charter from New York remains under consideration.

“Good cause exists to extend both deadlines,” Charter’s attorneys argued. “Granting a short extension would allow time for discussions between Charter and the [PSC] before the initiation by Charter of additional Commission or court proceedings.”

The Commission agreed to a delay for the exit plan, acknowledging the PSC’s staff and commissioners may need additional time to consider Charter’s plan and take action to modify it, if necessary. Charter now has until Oct. 9, 2018 to submit its plan. The delay also gives Charter time to pursue alternative judicial and administrative appeals, most likely in the form of a lawsuit against the state.

If Charter loses its appeal, it will likely have to sell its New York operations in all but a few small communities in New York where it operated cable systems before the merger deal was announced.

The Commission published both Charter’s Aug. 17 request and the Commission’s agreement at the same time on its website Monday morning. Today’s decision also marks a change in tenor for the Commission, which had been increasingly hostile towards Charter in the weeks before deciding to evict the company.

Updated 8/21: Corrected article to reflect the fact Charter’s extension request for a re-hearing is pending and no decision has been made yet.

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