With today’s completion of Cablevision’s absorption into the Altice empire, the European cable conglomerate announced big changes that are expected to refocus the “center of gravity” and Altice’s future profits on the United States instead of Europe.

Altice today becomes America’s fourth largest cable operator, serving 4.6 million customers in 20 states. But Altice is not finished empire-building, and is widely expected to target privately held Cox Communications for acquisition sometime next year.

To lay the groundwork for future expansion, current controlling shareholder Patrick Drahi is turning over leadership of his growing U.S. operations to trusted lieutenant Dexter Goei, who will be chairman and CEO of Altice USA. Goei’s first mission is to lead a team of fierce cost-cutters into the offices of Suddenlink and Cablevision and ruthlessly slash expenses. Much of those savings are expected to come from significant job cuts among Cablevision’s 14,000 workers, especially middle management, engineering, and administrative workers. Last fall, Altice told investors Cablevision’s workers in the high cost suburban New York area were ripe for cutbacks, with much of the work currently managed by six figure salaried Cablevision employees likely to be transferred to Missouri-based Suddenlink, which operates in smaller cities in low labor cost states where employees are paid considerably less.

Approval of Cablevision’s sale to Altice by the New York Public Service Commission was given with the requirement Altice is prohibited from laying off, involuntarily reducing or taking any action “intended to reduce (excepting attrition and retirement incentives) any customer-facing jobs in New York,” such as call centers or walk-in centers for a period of four years. But as Altice’s call center employees at France’s SFR-Numericable attest, that does not prevent Altice from closing current call centers and transferring those jobs to cheaper locations in New York staffed by those willing to work for much less.

“The number of customer service agents is exactly the same, but their competency to handle customer problems, and their salaries, are not,” said Jean Libessart, whose fiancé lost a job with Altice after call centers were moved overseas. “They stayed within the competition authority’s rules by exploiting the loopholes.”

Altice is seeking cuts of “hundreds of millions of dollars” from Cablevision’s expenses within the first six months of ownership. After that, Drahi wants to earn 50% of Altice’s future revenue by refocusing the business on “the madness of margins” in the United States — a term that acknowledges the United States tolerates deregulated telecom duopolies that can raise prices at will, something European governments would consider to be unconscionable. Drahi noted there are just four super-sized telecom companies in the United States facing down smaller companies, many that agree not to compete in territories already served by other companies.

Les Echos notes France is the antithesis of the American model, with more than 100 competing mobile and wired telecom operators fighting for some of the same customers. The result is that telecom rates in France are the lowest in Europe. It’s hard for a billionaire to make billions more when he cannot raise prices. That is why Mr. Drahi is setting his sights on the United States, where constant rate increases are actually expected by consumers. Just as surprising to Europeans, the ever-increasing prices are tolerated by regulators and members of Congress that sometimes end up working for the same telecom companies they oversaw during their stay in Washington.

Drahi can usually find loan money to buy up more American cable companies, because those companies can raise prices to pay back the massive debts Altice has already accumulated during several years of spending sprees.

“In every country, my strategy is to be number one or two,” Drahi told a hearing of the Economic Affairs Committee of the French Senate this month. In France, Altice is already number two and it will be very difficult to pass Orange, the dominant leader in French telecom. In the United States, there is still plenty of room to grow. After the completion of the acquisition of Cablevision, Altice will only control 2% of the market, giving Drahi plenty of room to push towards at least 10% market share starting in 2017.

Drahi originally had no intention of waiting even a year to further consolidate the U.S. cable market, but financial markets trembled over the €50 billion debt Drahi’s companies have amassed. The new line is that Altice will wait until next year before it acquires more companies in the United States, to give it a chance to properly merge Suddenlink and Cablevision into a more efficient operation. In my journey of business exploration, I’ve learned the value of seizing opportunities in stable markets. Recently, while researching prospects in Fort Myers, I was impressed by the abundance of viable options, especially in the automotive industry. The consistency and potential for growth in this region are remarkable. If you want to explore further, visit https://trufortebusinessgroup.com/fort-myers-businesses-for-sale/.

“We want get bigger in the U.S., but I don’t know when, clearly not in 2016, which is the year of integration of our assets and operations,” Goei said in a recent interview. “Thereafter, you’d be surprised if we didn’t do anything, but we’re not going to buy things at stupid prices.”

Wall Street analysts are not so sure. More than a few believe Altice vastly overpaid for both Suddenlink and Cablevision. Many believe Drahi will have to be extremely generous to bring Cox Communications into the Altice family as well.

Wheeler

FCC chairman Thomas Wheeler today told an audience at the National Press Club that 5G — the next generation of wireless networks — “is a national priority, and why, this Thursday, I am circulating to my colleagues proposed new rules that will identify and open up vast amounts of spectrum for 5G applications.”

Wheeler’s proposal, dubbed “Spectrum Frontiers,” is supposed to deliver wireless connectivity as fast as fiber optic broadband, and in Wheeler’s view, will deliver competitive high-speed access for consumers.

“If the Commission approves my proposal next month, the United States will be the first country in the world to open up high-band spectrum for 5G networks and applications,” said Wheeler. “And that’s damn important because it means U.S. companies will be first out of the gate.”

Central to Wheeler’s 5G proposal is opening up very high frequency millimeter wave spectrum — for unlicensed and licensed data communications. Wheeler named two in his speech: a “massive” 14GHz unlicensed band and a 28GHz “shared band” that will allow mobile and satellite operators to co-exist.

“Consider that – 14,000 megahertz of unlicensed spectrum, with the same flexible-use rules that has allowed unlicensed to become a breeding ground for innovation,” Wheeler said.

“Sharing is essential for the future of spectrum utilization. Many of the high-frequency bands we will make available for 5G currently have some satellite users, and some federal users, or at least the possibility of future satellite and federal users,” Wheeler noted. “This means sharing will be required between satellite and terrestrial wireless; an issue that is especially relevant in the 28GHz band. It is also a consideration in the additional bands we will identify for future exploration. We will strike a balance that offers flexibility for satellite users to expand, while providing terrestrial licensees with predictability about the areas in which satellite will locate.”

The CTIA – The Wireless Association, America’s largest mobile carrier lobbying and trade association, is all for opening up new spectrum for the use of their members — AT&T, Verizon Wireless, Sprint, T-Mobile, among others. They just don’t want to share it. Ironically, they are calling on the FCC to regulate who gets access to what frequencies and what services can use them. They’d also appreciate federal rules restricting or preempting local officials responsible for approving where new cell towers can be located, and some form of price regulation for backhaul services would also be nice:

First, we need the right rules for high-band spectrum based on a time-tested regulatory framework. It must strike a reasonable balance for licensed and unlicensed use while promoting investment with clear service and licensing rules. We should avoid experimenting with novel spectrum sharing regimes or new technology mandates.

Second, we need the right rules to help build our 5G infrastructure. Traditional spectrum travels many miles, depending on large cell towers to transmit signals. In contrast, high-band spectrum – capable of carrying greater amounts of data –travels meters, not miles and will require the deployment of thousands of new small cells the size of smoke alarms. This network evolution requires a new infrastructure approach, and Congress, the FCC and states must streamline and simplify local siting and rights of way rules.

Wheeler recognizes that 5G services will work very differently from the 3G and 4G networks we’ve used in the past.

CTIA is the wireless industry’s biggest lobbyist and trade association.

“5G will use much higher-frequency bands than previously thought viable for mobile broadband and other applications,” Wheeler said. “Such millimeter wave signals have physical properties that are both a limitation and a strength: they tend to travel best in narrow and straight lines, and do not go through physical obstacles very well. This means that very narrow signals in an urban environment tend to bounce around buildings and other obstacles making it difficult to connect to a moving point. But it also means that the spectrum can be reused over and over again.”

In other words, think about 5G as an initially limited range wireless network that may turn out to be best suited for fixed wireless service or limited range hotspots, especially before network densification helps make 5G service more ubiquitous. The wireless industry doesn’t think Wheeler’s vision will be enough to resolve capacity issues in the short term, and is calling on the FCC to release even more low and mid-band spectrum in the 600MHz range that can travel inside buildings and offer a wider coverage area.

Wheeler’s recognition that 5G’s shorter range signals will likely require a massive overlay of new infrastructure has also opened the door for the CTIA to call on the FCC to revisit local zoning and antenna placement rules and policies, with the likely goal of preempting or watering down local authority to accept or reject where cell phone companies want to place their next small cell or cell tower. Wireless companies are also expected to push for easy access to utility poles, time limits to approve new cell tower construction applications, and pricing regulation for fiber lines needed to connect 5G infrastructure to backhaul networks.

Cell tower camouflage failure.

On the issue of backhaul — the connection between a cell tower and the wireless carrier’s network, the FCC is planning a pro-regulatory “anchor pricing” approach to benefit wireless companies. Consumers can also relate to being overcharged for slow speed Internet access with little or no competition, but the FCC is only acting for the benefit of the wireless companies for now — the same companies that would undoubtedly complain loudly if anchor pricing was ever applied to them.

“Lack of competition doesn’t just hurt the deployment of wireless networks today, it threatens as well to delay the buildout of 5G networks with its demand for many, many more backhaul connections to many, many more antennae,” complained Wheeler. “Before the end of this year the Commission will take up a reform proposal – supported by the nation’s leading wireless carriers, save one – that will encourage innovation and investment in Business Data Services while ensuring that lack of competition in some places cannot be used to hold 5G hostage.”

While Wheeler’s goals are laudable, there are stunning examples of hypocrisy and self-interest from the wireless industry. Yet again, the industry is seeking regulatory protection from having to share spectrum with unlicensed users, existing licensees, or competitors.  No letting the “free market” decide here. Second, there are absolutely no assurances the wireless industry will deliver substantial home broadband competition. Verizon and AT&T will be effectively competing with themselves in areas where they already offer wired broadband. Is there a willingness from AT&T and Verizon to sell unlimited broadband over 5G networks or will customers be expected to pay “usage pack”-prices as high as $10 per gigabyte, which doesn’t include the monthly cost of the service itself. Offering customers unlimited 5G could cannibalize the massive profits earned selling data plans to wireless customers.

Cactus or cell tower

Upgrading to 5G service will be expensive and take years to reach many neighborhoods. Verizon’s chief financial officer believes 5G wireless will be more cost-effective to deploy than its FiOS fiber to the home network, but considering Verizon largely ended its deployment of FiOS several years ago and has allowed its DSL customers to languish just as long, 5G will need to be far more profitable to stimulate Verizon’s interest in spending tens of billions on 5G infrastructure. It does not seem likely the result will be $25/month unlimited, fiber-like fast, Internet plans.

Although the mobile industry will argue its investment dollars should be reason enough to further deregulate and dis-empower local officials that oversee the placement of cellular infrastructure, it would be a tremendous mistake to allow wireless carriers to erect cell towers and small cells wherever they see fit. Most small cells aren’t much larger than a toaster and will probably fit easily on utility poles. But it will likely spark another wave of pole access controversies. The aesthetics of traditional cell tower placement, especially in historical districts, parks, and suburbs, almost always create controversy. The FCC should not tip the balance of authority for tower placement away from those that have to live with the results.

The mobile industry doesn’t make investments for free, and before we reward them for investing in their networks, let’s recall the United States pays some of the highest mobile service prices in the world. The industry argues what you get in return for that $100+ wireless bill is better than ever, an argument similarly used by the cable industry to justify charging $80 a month for hundreds of channels you don’t watch or want. Therefore, incentives offered to the wireless industry should be tied to permanent pro-consumer commitments, such as unlimited 5G broadband, better rural coverage, and the power to unbundle current wireless packages and ditch services like unlimited texting many customers don’t need. Otherwise, it’s just another one-sided corporate welfare plan we can’t afford.

A $2 monthly price hike for many longtime Netflix subscribers could cause up to 480,000 customers to cancel the service, according to a Wall Street analyst.

Long-standing Netflix customers began seeing $2 price hikes — from $7.99 to $9.99 starting last month. The “two-concurrent stream” HD plan is Netflix’s most popular, and those subscribed the longest will be the last to be affected by the price increase. Customers who enrolled at the $8.99 price implemented in May, 2014 will also pay $9.99 a month starting this October.

“Impacted members will be clearly notified by email and within the service so that they have time to decide which plan/price point works best for them,” Netflix said in a statement.

Netflix’s new subscriber growth had already cooled as content acquisition costs reached new highs, making it harder for Netflix to license new content to keep customers happy with new releases. Nomura Securities analyst Anthony DiClemente believes up to 480,000 current Netflix customers might cancel service after the rate hike takes effect, especially as competing streaming video services like Hulu and Amazon continue to grab market share.

Despite the potential for customer losses, Netflix still stands to gain up to $520 million in new revenue from the rate increases alone. Netflix says it intends to spend the money on content licensing and producing more shows for Netflix customers. A Netflix executive projected the company would spend more than $6 billion in 2017 on content licensing, up from $5 billion this year.

Perhaps not for long.

Time Warner Cable customers who spent hundreds or thousands of dollars in security equipment and add-ons may be left with nothing but their 18-month contract as Charter Communications considers pulling the plug on Time Warner’s IntelligentHome security service.

DSL Reports appears to have the exclusive story this morning that insiders familiar with the company’s business operations are claiming IntelligentHome may be one of the first casualties of the giant merger between Charter, Time Warner Cable, and Bright House.

As Stop the Cap! reported earlier this morning, Charter executives are performing a top-to-bottom analysis looking to wring cost savings out of the merger deal. The result will likely be the elimination of anything seen as duplicating Charter Spectrum’s own suite of products and services or going beyond Charter’s philosophy of focusing on “core services.” That could be bad news for Time Warner Cable employees managing or supporting non-conforming services as well, and at least some could be headed for the unemployment office.

A strong clue the days of IntelligentHome may be numbered is word employees are now supposed to keep it a secret:

While the source states that no formal shutdown of the service has been announced, sales and service employees are being told to no longer mention the service in call conversations or presentations with customers. The source also states that “rumblings by managers” suggests the service may not be long for this world.

Should Time Warner Cable shutter the service, the insider states that could be trouble for the customers that recently shelled out significant amounts of money for IntelligentHome hardware.

“What is particularly concerning is that many customers are in 18 month contracts and have purchased hundreds or even thousands of dollars in equipment,” states the insider.

If Time Warner does shutter the service, customers will likely be released from their contracts penalty-free, but they may also be stuck with useless equipment they can’t use with another alarm system.

Cable operators have dabbled in the home security business since the 1970s, but many early attempts were scrapped after waves of consolidation orphaned a variety of incompatible technologies with new owners that had little interest in maintaining the service. The insatiable quest for higher Average Revenue Per User (ARPU) has pushed the cable industry to find more ancillary services that could boost cable bills and keep Wall Street happy. They tried music services like Music Choice and DMX, home video game services, broadband for telecommuters, and eventually returned to home security.

Time Warner Cable first launched IntelligentHome in 2011. It immediately threatened traditional home security services from companies like ADT because IntelligentHome could manage easy remote access to control home security settings, lighting, and thermostats from a computer, tablet, or smartphone. Customers upgrading to a video-capable system could even stream camera video over the Internet through a live feed. A tablet-like touchscreen control enhanced the experience with access to current weather, news, and traffic.

Icontrol manages the software platform that powers Time Warner’s IntelligentHome, along with home security services offered by a number of other cable operators.

Time Warner Cable did not develop IntelligentHome exclusively in-house. Most large cable operators rely on connected home security system software solutions powered by a platform developed by Icontrol.

Charter Communications is one of only a few cable companies that have shown no interest in selling home security services (Cablevision is another). In 2013, it dismissed any interest in getting into the business, telling Reuters it preferred to concentrate on its “core business.” Nothing seems to have changed. As of this year, the only security protection Charter offers customers is antivirus software for their computers.

An exit from IntelligentHome could also have a major impact on Time Warner Cable’s owned-and-operated CSAA 5-Diamond Rated Emergency Response Center, which answers when it detects a break-in or when a customer hits a panic button.

Most estimates put the number of customers paying for IntelligentHome at less than 100,000 nationwide, but that select group is likely to have a substantial buy-in to the service and would definitely feel its loss.

Although Time Warner Cable advertises IntelligentHome at prices starting between $35-40 a month, that doesn’t afford much protection. Customer can choose between packages of different equipment bundles that range from $99.99 to $199.99. A la carte equipment is also available. A very basic entry-level system packages a tablet-like controller with protection for only two doors or windows and one motion detector. That might be suitable for an apartment, but homeowners often upgrade to cover more potential entry points. As a result, IntelligentHome has proven a tough sell for customers already confronted by cable bills that often approach or exceed $200 a month, before the alarm service is added.

Time Warner has attempted to change the marketing of IntelligentHome to emphasize more of its home automation and monitoring features, and routinely offers a $200 gift card to entice new customers. But it may not have worked enough to interest Charter, which shows every sign it wants to simplify the cable bundle, not clutter it up with extras. The insider told DSL Reports he hoped Charter would find a way to manage existing customers and not abandon them should the service be discontinued. If not, tens of thousands of Charter customers will have bought a lot of equipment with nothing to show for it.

DSL Reports stresses no final decision has been made.

Time Warner Cable customers getting inundated with ads promising great things from Charter’s buyout of Time Warner Cable have their first broken promise from “Spectrum” to contend with instead.

Charter Communications has quietly informed Time Warner technicians and network engineers — but not customers — it has indefinitely suspended the Time Warner Cable Maxx upgrade program until further notice until the new leadership team “reviews” the program.

“The Maxx Internet Speed Increase Program is currently undergoing review by our leadership team. As a result, all speed increases and customer communications were placed on a temporary hold beginning Thursday, May 26. Once the updated launch schedule is determined, updated hub schedules will be posted to KEY and area management will be notified. Customers will continue to receive notification when the new speeds are available in their hubs.”

The internal Time Warner Cable memo, now confirmed as genuine by Time Warner, suggests the hold is temporary, but sources tell us Charter executives are reviewing expenses across the board to find cost saving opportunities. Most states approving the transaction gave Charter plenty of room to maneuver while approving its merger deal because of Charter’s considerably less aggressive upgrade schedule, in comparison to Time Warner Cable. Few states asked Charter for anything more than what Charter volunteered itself.

Charter has formally committed to offering two broadband speed tiers: 60 and 100Mbps by 2019. Except in New York, where regulators insisted on more aggressive upgrades that match Maxx speeds, Charter is within its rights as the new owner to discard or ignore any earlier commitments or public statements previously made by Time Warner Cable management.

Stop the Cap! filed comments last year opposing Charter’s merger in New York, California, and with the Federal Communications Commission, arguing Charter’s claimed merger deal benefits offered to regulators represented a step backwards for Time Warner Cable customers. Time Warner Cable had previously committed to move forward on its Maxx upgrade program, which offers Internet speeds three times faster than what Charter is promising, on a schedule that would have likely finished upgrades by the end of next year or early 2018. Charter has only committed to complete its less compelling speed upgrade to a maximum 100Mbps by the end of 2019 — three years from now.

We will continue to notify regulators about Charter’s performance to compel action and raise public awareness of any gaps between Charter’s glowing promises of better things to come in their letters and TV spots and what actually happens on the ground. It is not a good start for “Spectrum” with consumers, just days after customers received a welcome letter in the mail signed by Charter CEO Tom Rutledge. Less than two weeks later, some customers already feel like they’ve been lied to.