On Monday, AT&T announced 38 additional cities that will eventually have access to its gigabit broadband offering – AT&T U-verse with GigaPower, but the company remains coy about the number of customers that can actually order the service today across the 56 metro areas that will eventually be served by AT&T’s fiber to the home network.

“Nearly two years ago, we successfully launched the first AT&T GigaPower metro in Austin, Tex.,” AT&T wrote in its press release. “This launch led to a major expansion in multiple metros beginning in 2014. Recently we marked a major milestone deploying the AT&T GigaPower network to more than 1 million locations, and we expect to more than double availability by the end of 2016.”

Stop the Cap! asked AT&T for information about its claim of offering service to more than “one million locations” and received a response that this number may not reflect strict availability of the gigabit service, but rather the likely number of potential customers served by a central office/exchange where GigaPower was enabled. In reality, not every customer within a central office immediately qualifies for U-verse service, as many customers have complained.

At the current rollout rate of about one million customers per year, it will take AT&T at least 12 years to achieve its goal of more than 14 million residential and commercial locations, probably in the year 2027.

The 38 metro areas that AT&T will be entering, starting with the launch of service in parts of the Los Angeles and West Palm Beach metros today, are:

• Alabama: Birmingham, Huntsville, Mobile and Montgomery
• Arkansas: Fort Smith/Northwest Arkansas and Little Rock
• California: Bakersfield, Fresno, Los Angeles, Oakland, Sacramento, San Diego, San Francisco and San Jose
• Florida: Pensacola and West Palm Beach
• Georgia: Augusta
• Indiana: Indianapolis
• Kansas: Wichita
• Kentucky: Louisville
• Louisiana: Baton Rouge, Shreveport–Bossier, Jefferson Parish region and the Northshore
• Mississippi: Jackson
• Missouri: St. Louis
• Michigan: Detroit
• Nevada: Reno
• North Carolina: Asheville
• Ohio: Cleveland and Columbus
• Oklahoma: Oklahoma City and Tulsa
• South Carolina: Charleston, Columbia and Greenville
• Tennessee: Memphis
• Texas: El Paso and Lubbock
• Wisconsin: Milwaukee

For more information on where the AT&T GigaPower network is and will become available, visit att.com/gigapowermap.

The Communications Workers of America today filed comments with the Federal Communications Commission opposing the proposed sale of Cablevision to Patrick Drahi’s Altice NV, arguing the claimed public interest benefits are illusory.

The CWA, which represents some of Cablevision’s workers in Brooklyn, took a hard look at Altice’s merger proposal and the $8.6 billion in debt Altice will take on to close the deal and called it dangerous, resulting in “considerable harm with no offsetting concrete, verifiable benefits for consumers, workers, and communities.”

“Altice’s track record in France and Portugal clearly shows the danger this deal poses to Cablevision’s customers and employees,” said Dennis Trainor, vice president of Communications Workers of America District 1. “Altice takes on too much debt, outsources as much work as possible and then downsizes its workforce. Customers get worse service and employees lose their job. Unless Altice makes commitments to protect customer service and Cablevision employees, the FCC should reject this deal.”

The CWA is also concerned about the disparity between what Altice is telling regulators and what the company is saying to Wall Street.

Altice’s Public Interest Statement, which outlines the benefits to the public of the proposed transaction, stands out for its lack of specificity. In fact, the application’s only concrete commitments are vague promises to bring Altice’s “expertise” and access to capital for Cablevision’s use. Altice also promises to upgrade Cablevision’s IT systems, including customer care, service, and billing systems, and alluded it would expand Cablevision’s fiber optics deeper into its network, but comes short of promising a direct fiber to the home connection. In fact, the only promised benefit of pushing fiber further out would be “the removal or reduction from the network of coaxial RF amplifiers, which consume substantial electricity and can be the cause of difficult-to-detect service outages (RF amplifier failures).”

“Deeper fiber deployment would enable Cablevision to reduce its power costs and to further improve network reliability, resulting, in turn, in a greater ability to invest further in the network and improved service delivery to subscribers,” Altice dubiously claimed.

Many of Altice’s claims appeared “disingenuous and misleading” to the CWA. From the CWA’s filing:

To finance its $17.7 billion acquisition of Cablevision, Altice is taking on $8.6 billion in new debt, which when added to Cablevision’s already heavy debt load of $5.9 billion, will leave the new Cablevision with a total net debt of $14.5 billion.  Given the high cost of the new debt financing, the annual interest payments needed to finance the $8.6 billion in new debt amount to $654 million on top of Cablevision’s current interest payments of $559 million for a total of $1.2 billion in annual interest payments at the new Cablevision, representing a full 112 percent increase in Cablevision debt. The new interest payment ($654 million) plus Altice’s announced $ 1.05 billion in cuts means that the new Cablevision will have $1.7 billion less cash available to spend on the network and service.

“Altice’s business model, the one that it has used to fuel its explosive global growth, requires the acquired company – in this instance, Cablevision — to finance its own acquisition and to provide cash to the parent for future acquisitions,” the CWA argues. “Altice chief financial officer Dennis Okhuijsen explained the capital structure of post-transaction Cablevision: ‘[W]e’re not going to lever up the existing business. This is a stand-alone capital structure, so we’re levering up the target for Cablevision….’”

Translation: Cablevision alone is responsible for the debt Altice raised to pay for Cablevision. Or, as Altice explained to investors in its third quarter 2015 earnings report, the parent company operates its various subsidiaries as “distinct credit silos in Europe and the U.S.”

Altice CEO Patrick Drahi’s business formula is always the same. To raise money to help offset the mountain of debt dumped on the acquired company, Altice’s designated managers helicopter in to the acquired company to begin slashing expenses and find money it can send to Altice headquarters to help fill its coffers to acquire even more companies. French telecom giant Numericable-SFR, while on the road to losing one million customers in just one year, was preoccupied borrowing nearly $2 billion, not to improve the company’s service, but rather to pay Altice a special dividend to help pay down the huge amount of debt Altice incurred when it bought the 60 percent stake in the French mobile and cable company it did not already own.

To keep Altice afloat, Drahi’s business strategy requires a steady supply of company acquisitions to deliver the increased cash flows Altice needs to finance its debt. The CWA warned regulators Altice may require Cablevision to spend its cash flow to help Drahi acquire other companies in the future, further reducing the amount of money Cablevision needs to attract and keep subscribers.

To make the deal a long term success, Altice-Cablevision will either have to cut its return to shareholders, raise its prices, and/or slash expenses and jobs. Past experience with Altice shows shareholders come first, which means company management will likely preside over a harvest of Cablevision’s assets to meet the expectations of Wall Street banks and investors. Customers will feel the cuts from the reduction in service and slowed investments and upgrades.

At the same time Altice was promising the FCC it would continue Cablevision’s “first in class” level of service, the company was telling Wall Street it was planning cuts to the bone. Among Altice’s already-proposed cuts for Cablevision:

• Capital expense: $150 million cut
• Network and Operations: $ 315 million cut
• Customer operations: $135 million cut
• Sales and marketing: $45 million cut
• Eliminate duplicative functions and “public company” costs: $135 million cut
• Other unspecified cuts: $135 million cuts.

The impact of these cuts shift costs onto others, argues the CWA, including making the acquired firm pay for its own demise, making the workforce pay through job loss and reduced compensation, making customers pay through deteriorating service, and making suppliers become Drahi’s bankers by delaying payments.

The CWA says customers will also pay for the privilege of getting declining service.

“In Israel, the cable provider Hot Telecommunications has raised prices multiple times since it was bought by Altice, including a cable rate increase of 20 percent in 2014 and the attempt to raise prices again this year,” the CWA argues. “The top Israeli cable regulator called the price hike ‘greed for its own sake’ which was not justified based on the company’s profit margins.”

In the United States, nobody oversees cable pricing.

“In summary, the experience in France, Portugal, Israel, and elsewhere provides concrete evidence that the Altice business model – one that it plans to replicate with its Cablevision acquisition – does not serve the public interest,” concludes the CWA. “Making an acquired company pay off massive debt load with service-impacting cost cutting has serious and negative consequences for customers, suppliers, communities, and workers. The lesson from France is clear: cutting to the bone leads to massive customer defection. It is not a business model that will benefit the people of New York, Connecticut, and New Jersey.”

The Canadian Radio-television and Telecommunications Commission is asking some hard questions of Quebec-based mobile provider Vidéotron, which began zero-rating preferred partner music streaming services last summer that allow customers to stream all the music they want without it counting against their data cap.

The CRTC is examining whether the practice violates Canada’s Net Neutrality policies, which insist all content be treated equally.

“If, as Vidéotron has stated, congestion is manageable and there is no meaningful risk of service degradation as a result of offering Unlimited Music service, explain why Vidéotron did not either increase or eliminate data usage caps for your broader customer base instead of zero-rating certain applications or services,” the CRTC has asked.

Unlimited Music allows customers to stream Spotify, Google Play Music, Deezer and Canadian-owned Stingray Music without it counting against a customer’s allowance. Other streaming services do count, potentially putting them at a competitive disadvantage.

Observers say zero-rating enhances a customer’s perception that data has a measurable financial value, often arbitrarily assigned by competitors in a marketplace. If providers charge an average of $10 per gigabyte, customers will gradually accept that as the base value for wireless data, despite the fact many providers used to sell unlimited data plans for around $30. Zero rating content can be used in marketing campaigns to suggest customers are getting added value when a provider turns off the usage meter while using those services. Stream 3GB of music and a provider can claim that has a value of $30, but provided to you at “no charge.”

In the United States, most providers generally offer “bonus data” allowances in promotions instead of focusing on individual services. But T-Mobile goes a step further, also offering Music Freedom, a zero-rated music streaming service of its own.

Consumer reaction to the services are mixed. If a customer is a current subscriber to the preferred content, they often perceive a benefit from the free streaming. But customers looking to use a service not on the list may consider such plans unfair.

The CRTC will be awaiting Vidéotron’s formal answer.

Next year’s upgrade to DOCSIS 3.1 will support cable broadband speeds up to one gigabit shortly after introduction.

Telephone companies relying on traditional ADSL service to power their broadband offering will likely face a renewed competitive assault in 2016 that will further reduce their already-challenged market share in areas where cable companies compete.

Cable operators are hungry for profitable broadband customers and the best place to find new prospects is at the phone company, where DSL is still a common technology to deliver Internet access. But while cable Internet speeds have risen, significant DSL speed hikes have proven more modest in the residential market.

In 2016, the cable industry intends to poach some of the remaining price-sensitive holdouts still clinging to DSL with revised broadband offers promising more speed for the dollar.

Cable broadband has already proven itself a runaway success when matched against telephone company DSL service. Over the last year, Strategy Analytics found Comcast and Time Warner Cable alone signed up a combined 71 percent of the three million new broadband customers in the U.S.

“Cable operators continue to increase market share in U.S. broadband,” said Jason Blackwell, a director at Strategy Analytics. “Over the past twelve months, Comcast has accounted for 42 percent of new subscribers among the operators that we track.  Fiber growth is still strong, but the telco operators haven’t been able to shake off the losses of DSL subscribers.  In 2016, we expect to see a real battle in broadband, as cable operators begin to roll out DOCSIS 3.1 for even higher speed offers, placing additional pressure on telcos.”

That battle will come in the form of upgraded economy broadband plans, many arriving shortly after providers upgrade to the DOCSIS 3.1 cable broadband platform. Currently those plans offer speeds ranging from 2-6Mbps. Starting next year, customers can expect economy plan prices to stay generally comparable to DSL, with promises of faster and more consistent speeds. A source tells Stop the Cap! at least two significant cable operators are considering 10Mbps to be an appropriate entry-level broadband speed for 2016, in keeping with FCC chairman Thomas Wheeler’s dislike of Internet speeds below 10Mbps.

Just a few years earlier, most providers wouldn’t think of offering discounted 10Mbps service, fearing it would cannibalize revenue as customers downgraded to get lower priced service. Increasing demands on bandwidth from online video and multiple in-home users have gradually raised consumer expectations, and their need for speed.

Unfortunately for many phone companies that have neglected significant investment in their aging wireline networks, the costs to keep up with cable will become unmanageable unless investors are willing to tolerate significant growth in capital expenses to pay for network upgrades. Frontier Communications still claims most of their customers are satisfied with 6Mbps DSL, neglecting to mention many of those customers live in areas where cable competition (or faster service from Frontier) is not available.

Where competition does exist, it’s especially bad news for phone companies that still rely on DSL. Earlier this year, Frontier’s former CEO Maggie Wilderotter admitted Frontier’s share of the residential broadband market had dropped to less than 25% in 26 of the 27 states where it provides service. In Connecticut, the one state where Frontier was doing better, its acquired AT&T U-verse system has enabled the phone company to deliver broadband speeds up to 100Mbps. But even those speeds do not satisfy state officials who are seeking proposals from providers to build a gigabit fiber network in a public-private partnership.

DSL speed upgrades have been spotty and more modest.

Frontier’s recent experiments with fiber to the home service in a small part of Durham, N.C., and the unintentional revelation of a gigabit broadband inquiry page on Frontier’s website suggests the company may be exploring at least a limited rollout of gigabit fiber service in the state. But company officials have also repeatedly stressed in quarterly results conference calls there were no significant plans to embark on a major spending program to deliver major upgrades across their service areas.

Some phone companies may have little choice except to offer upgrades where cable operators are continuing to rob them of customers. In the northeast, where Frontier has a substantial presence, cable operators including Charter, Comcast and Time Warner Cable are committing to additional speed upgrades. Time Warner Cable’s current standard speed of 15Mbps will rise to 50-60Mbps in 2016, up to ten times faster than Frontier’s most popular “up to” 6Mbps DSL plan.

Most of the broadband customer gains won by Comcast and Time Warner Cable come as a result of DSL disconnects. AT&T said goodbye to 106,000 customers during the third quarter. Verizon managed to pick up 2,000 new subscribers overall, almost all signing up for FiOS fiber to the home service. No cable operator lost broadband market share, reported analyst firm Evercore. Leichtman Research offered additional insight, finding AT&T and Verizon were successful adding 305,000 U-verse and FiOS broadband customers, while losing 432,000 DSL customers during the same quarter.

The message to phone companies couldn’t be clearer: upgrade your networks or else.

Any final approval of Charter Communication’s planned acquisition of Time Warner Cable and Bright House Networks will likely not come before next summer, as regulators in California decide to take a closer look at the blockbuster merger deal that would make Charter the second largest cable company in the country.

An administrative law judge is contemplating the merger’s impact on California, and a decision is unlikely to come before May 2016, with a final vote of the California Public Utilities Commission tentatively scheduled for June 16th. The judge agreed with consumer groups that the deal warrants evidentiary hearings — a sign the deal deserves additional scrutiny.

New York State’s Public Service Commission is also still reviewing the transaction, although it is expected to render a decision within the next few months. On the federal level, the FCC has also not held back, recently requesting answers to a number of questions regarding John Malone’s involvement in the future of “New Charter.” Malone remains Charter’s biggest single shareholder and could wield considerable control over New Charter’s operations. Considering Malone’s long history of antagonizing customers and engaging in what lawmakers called anti-competitive behavior during his realm at Tele-Communications, Inc. (TCI), regulators may not want to see history repeat itself.

What was originally anticipated by industry observers to be an ‘easy approval,’ is now looking more like Comcast’s failed bid for Time Warner Cable, as regulators seem to be in no hurry to give Charter’s deal a green light.

If regulators do ultimately approve the deal, it is likely to come with a number of conditions designed to at least temporarily protect consumers and competitors. Stop the Cap! argued in filings with state and federal regulators Charter’s proposal was uncompelling and consumers were unlikely to benefit from the deal. Time Warner Cable’s ongoing Maxx upgrade program delivers faster Internet speeds and better service than Charter’s more modest proposal offering upgrades up to 100Mbps. Time Warner Cable Maxx offers customers up to 300Mbps broadband for the price the company now charges for 50Mbps.