New York City officials are questioning the promised benefits of allowing Patrick Drahi’s Altice to acquire Cablevision in an all-cash deal that would combine ownership of Suddenlink and Cablevision under the European-based cable conglomerate.

Mayor Bill de Blasio’s chief legal counsel told the Wall Street Journal she is skeptical about Altice’s proposed $900 million in cost cutting at Cablevision leading to better service.

“Altice is talking about $900 million in synergies. Well, what’s getting cut? How’s that going to impact the economy of New York and quality of services?” asked Maya Wiley. “We certainly are not afraid to disapprove a transaction.”

Altice’s Public Interest Statement, outlining the public benefits of the acquisition, was perceived as long on rhetoric but woefully short on specifics. Altice officials made vague promises to expand fiber optics across Cablevision’s footprint in return for approval of the transaction, but stopped short of committing to offer fiber to the home service.

Stop the Cap!’s Special Report, reviewing the proposed acquisition of Cablevision, attracted the interest of investors on Wall Street as well as several New York City public officials we spoke with about the proposed buyout.

City Hall of New York (Photo: Will Steacy)

On our recommendation, New York officials reviewed French press coverage of Altice and its colorful CEO Patrick Drahi. Dozens of articles have covered Drahi’s controversial business practices over the years, including efforts to stall payments for suppliers, initiating salary and job cuts, and a reduction in spending on meaningful service upgrades. His French operation SFR-Numericable lost one million customers in just one year. Earlier this year, he promised increased investment to turn those subscriber numbers around.

Wall Street is also increasingly skeptical about Drahi’s American business plans.

Cablevision’s stock price has dropped well below Altice’s all-cash offer of $34.90 a share, telegraphing concern the deal will not escape regulator scrutiny and ultimately will not close.

“The spread has widened in large part because people have become increasingly concerned that neither the city nor the state will find that the transaction is in the public interest, or alternatively, they’ll demand so much in terms of givebacks that ultimately the deal won’t be palatable to Altice,” Craig Moffett, analyst at MoffettNathanson LLC, told the Journal. “Altice dramatically overpaid, and their attempts to cut costs are both overly ambitious and are potentially injurious to what we already expected to be very weak operating results.”

If Drahi wins approval to take over Cablevision, Altice is likely to curtail promotional spending at the cable company. The cable operator competes head-to-head with Verizon FiOS across much of its downstate New York, New Jersey and Connecticut service areas. That will likely lead to higher prices and fewer deals for consumers as price competition cools down.

The deal remains under review by the New York Public Service Commission and the FCC. Decisions from both are not expected until next spring.

On Monday, Altice closed its acquisition deal for Suddenlink, a cable operator serving states with more forgiving and business-friendly regulators.

As expected, Altice immediately named an executive team that will oversee significant cost cutting and reorganization at the cable operator that serves mostly rural and small city customers.

Two Suddenlink employees reached out to Stop the Cap! on Tuesday to tell us morale was dropping among middle managers at the cable operator.

“Most of our employees have little idea who Patrick Drahi or Altice is and they are not aware of the business reviews we’ve been told are coming after the holidays,” said one West Virginia based middle manager. “Some of my colleagues in customer care are updating their resumes this week and I’ve also heard concerns from technicians and IT workers. Some want to jump out early to secure new jobs before expected job cuts cause a small flood of resumes all over the state.”

“It’s a worrisome Christmas because we are not sure how many will be let go,” writes a Suddenlink mid-level IT manager working in Texas. “Salaries at Suddenlink have never been high but a lot of us prefer to work in our hometown and not move to Dallas or Houston to work for companies like Time Warner Cable or AT&T. It’s also a more relaxed work environment, but now there is a lot of concern what the new management will be doing.”

Goei

Chairman and CEO Jerry Kent announced he will be leaving Suddenlink in those roles but has agreed to chair a new advisory council at Altice USA, the subsidiary established to manage Altice’s American cable assets.

Head chopper Michel Combes, the new chief operating officer of Altice NV, is expected to coordinate U.S. operations. Combes brings his reputation for ruthless cost-cutting from his last job — CEO of Alcatel-Lucent. In an effort to boost profitability and cut costs, Combes presided over 10,000 job cuts and a salary freeze (except for himself and select others) at the company better known as the former Bell Labs. Two years after wielding the hatchet, Combes engineered a sale of the company to Nokia and secured a large golden parachute package for himself. The optics of Combes’ overseeing salary freezes and job cuts while later lobbying for a retirement package focusing on his own personal enrichment caused a political furor in France.

The new management of Suddenlink has limited experience in cable but plenty of experience working at Wall Street banks.

The chairman of Altice USA is Dexter Goei, who joined Altice in 2009 after a career in investment banking at JP Morgan and Morgan Stanley that spanned 15 years. Charles F. Stuart, also a former investment banker at Morgan Stanley, will become co-president and chief financial officer. Abdelhakim Boubazine, former CEO of Altice’s operations in the Dominican Republic, will also serve as co-president and chief operating officer. His LinkedIn profile mentions his involvement in telecommunications began in 2013. His educational background strongly emphasizes fossil fuel engineering.

Time Warner Cable customers who continue to lease a modem from the cable company instead of buying their own will soon pay Time Warner $120 a year for a modem that likely cost the company no more than $50.

Time Warner Cable customers have been sending Stop the Cap! copies of rate increase notifications that show some steep rate increases that will eventually reach every customer in early 2016:

• Time Warner Cable & Earthlink modem rental fee was $8 a month, now it will be $10;
• The “Sports Programming Surcharge,” paid by every Time Warner cable TV customer, is almost doubling from $2.75 to $5 a month;
• The “Broadcast TV Surcharge,” paid by every Time Warner cable TV customer, is going up by a dollar in many areas. This fee can vary but averages between $3.50-4.00 in most areas;
• Each traditional set-top (not DVR-equipped) box increases from $6.98 per box to $8.50 per box;
• Digital Adapters, used mostly on older analog-only sets (that Time Warner originally said would cost customers 99¢ per month) will now cost $3.25 a month, more than three times what the company charged just two years ago;
• Internet-Only customers will now pay $59.99 a month for Standard (15/1Mbps) Internet service (except in Maxx areas where the speed is 50/5Mbps);
• “Starter TV,” which includes mostly over the air stations, jumps from $14.99 to $18 a month in some areas, over $22 in others;
• “Standard TV,” the more common basic cable package is up $2, for most customers ranging from $80 to $84.99 a month;
• “Variety Pass,” is up $3 from $7 to $10 a month. TWC Sports Pass and Movie Pass are also both increasing to $10 each;
• Cinemax and Starz are both jumping from $12.95 a month to $14.99 each, but in some locations that price will rise to $15.99 and also include Showtime and The Movie Channel.

A typical rate hike notice in your monthly bill from Time Warner Cable. Exact prices vary by service area.

Other than the modem rental fee, the biggest money-maker for Time Warner Cable is their rapidly growing surcharges for sports and over the air stations. Originally added in the summer of 2014, both fees used to amount to $2.25 a month in many locations. Less than two years later, those surcharges will soon approach $10 a month.

Stop the Cap! recommends now, more than ever, customers take control over their Time Warner Cable bill. You can save substantially with just a little effort and less than an hour of your time.

• Buy your cable modem and save $10 a month: Stop the Cap! highly recommends the Arris (formerly Motorola) SB-6141, now available for under $70 on Amazon.com. It does not include built-in Wi-Fi, however. You can also occasionally find this model on sale for similar amounts at Best Buy, Walmart, and Newegg, especially during the holidays. Refurbished models for $10-20 less are also regularly available from eBay. These modems will do fine at speeds up to 100Mbps. If you are in a Time Warner Cable Maxx service area (speeds up to 300Mbps), you will need a different model only if you subscribe to speeds in excess of 100Mbps;
• Get rid of the Digital Adapter and attach a Roku set-top instead ($40-125 depending on model). Roku 3, All Roku 2 Models, Roku LT, Roku HD (2500X) and the Roku Streaming Stick are officially supported. Earlier models are not. Most of the TWC cable lineup is available on Roku, without the need to lease a box.
• If you are Internet-only customer and not bouncing back and forth between Time Warner Cable and Earthlink on new customer promotions, you are probably overpaying by up to $25 a month. Time Warner sells Standard service on a one year promotion for $34.99 a month. When it expires, switch to Earthlink over Time Warner Cable at a similar price for six months… then switch back to TWC.
• Check out our extensive guide on negotiating a better deal from Time Warner, especially if you are no longer paying a promotional rate.

After years of enduring substandard broadband and a law virtually banning community broadband in the state, the 1,300 residents of Pinetops, N.C. are celebrating the forthcoming arrival of public gigabit-capable fiber to the home service from the nearby city of Wilson.

Broadband provider Greenlight will light up its fiber network in the community by April 2016, according to Community Broadband Networks. It isn’t soon enough for frustrated residents and town officials.

“Current providers haven’t made significant upgrades to our broadband service through the years,” said Pinetops interim city town manager Brenda Harrell. “They haven’t found us worth the investment. Through this partnership with Greenlight and our neighbors in Wilson, we are able to meet a critical need for our residents.”

The service comes after five years of negotiations, mostly stalled by the North Carolina Legislature’s passage of HB129, a bill co-authored by Time Warner Cable and celebrated by lawmakers like Rep. Marilyn Avila. Rural North Carolina didn’t get better broadband from HB129, but Avila got a $290 dinner and honored as a guest speaker before grateful cable executives.

In February 2015, FCC chairman Thomas Wheeler announced HB129 was overruled by the federal regulator as anti-competitive, finally opening the door for Pinetops to secure a better broadband future for itself.

In its order, the FCC cited many provisions in North Carolina’s law that violate the Telecommunications Act of 1996. Six of those provisions are mysteriously near-identical to language ghost-written by telecom companies in a “model broadband bill” offered to state legislators as a template by the American Legislative Exchange Council (ALEC), according to an analysis by the Center for Public Integrity.

Jim Baller, the attorney representing Chattanooga, Tenn., and Wilson, N.C., in their challenge to overturn those two state’s anti-community broadband laws, told the Center the FCC’s citing of those six provisions in its decision leaves much of ALEC’s model law untenable and subject to challenge.

“Because the North Carolina law uses similar language to that found in the ALEC model legislation, it would seem to follow that any other state that has relied heavily on the ALEC model has also effectively banned municipal broadband investments,” Baller wrote in an email to the group.

ALEC’s “model law” has kept gigabit fiber broadband far away from the residents of Pinetops, challenged by an economic transformation that has put at least a century of tobacco farming and textiles far behind for a small business, high-tech manufacturing, and digitally powered economic future. Just one example is Cary-based ABB, which maintains manufacturing facilities in Pinetops that produce sensors, current transformers, cutouts and other distribution equipment that power smart grid electric utility networks. Bringing more high-tech business to town is a priority for town officials, but having the right infrastructure is crucial.

Gregory Bethea, Pinetops’ former town manager, told the New York Times in 2014, “if you want to have economic development in a town like this, you’ve got to have fiber.”

But Pinetops’ small size almost guaranteed it would never get fiber from North Carolina’s powerful telecom companies, which include AT&T, CenturyLink, and Time Warner Cable. Many rural communities around the country facing anti-municipal broadband laws like HB129 complain corporate influence threatens the economic viability of small communities over a service incumbents have no intention of offering in small towns, and apparently don’t want anyone else to offer either.

The agreement with Pinetops is also good news for Greenlight, which finally gets to expand outside of its existing service area that reaches about 20,000 residents. Growing Greenlight can bring economic benefits including greater economy of scale and better rates for programming. It will also allow communities in the same economic situation as Wilson, 40 miles east of Raleigh, the opportunity to stay competitive with improving broadband networks in cities like Charlotte and the Piedmont Triad cities of Greensboro, Winston-Salem, and High Point.

Marco Rubio drinks AT&T’s Kool Aid while also spending their money.

Eight Republican senators, including presidential candidate Marco Rubio, are so upset about communities building their own broadband networks, they’ve signed a letter demanding the Federal Communications Commission stop making life easier for the would-be competitors.

Rubio joined Sens. Deb Fischer, Ron Johnson, John Cornyn, Pat Roberts, John Barrasso, Michael Enzi, and Tim Scott in protesting the Commission’s interference in “overriding [Tennessee and North Carolina’s] sovereign authority to regulate their own municipalities.”

The senators are concerned about an FCC decision to override state laws in the two states that make it nearly impossible to launch a public broadband network. The laws were widely criticized as being written and lobbied for by incumbent telecom operators that wanted to avoid competition.

The eight adopted the phrase “government-owned networks,” popular with telecom-funded critics of community broadband, to describe local broadband networks owned and operated in the public interest, mostly offering service in areas bypassed or underserved by incumbent phone and cable companies.

The letter complains “agency officials have begun engaging in outreach to persuade communities to deploy municipal broadband networks.”

The senators were particularly upset about remarks from one agency official who stated, “Where you’ve got a community infrastructure or a rural electric company, a rural electric co-op, states shouldn’t be telling local communities what they can and cannot do.”

The eight believe private broadband providers should be given due deference over other competitors but also demanded the FCC stop “choosing winners and losers in the competitive broadband marketplace.”

EPB’s biggest problem is that they are not AT&T. The fiber to the home municipal utility outperforms both Comcast and AT&T and charges dramatically lower pricing for high speed service.

“Typical hypocrisy from those in the back pocket of AT&T,” responds Tim Weller, an advocate for expanding EPB’s municipal fiber network to other communities adjacent to Chattanooga, Tenn. “By telling the FCC to stop allowing cheaper, more reliable, and faster service from municipal utilities like EPB, they have no issue picking AT&T and Comcast as winners. Rubio couldn’t be closer to AT&T if he located his campaign headquarters in their corporate office in Dallas.”

Few candidates have closer ties to corporate telecom interests than Marco Rubio. AT&T lobbyist Scott Weaver, who works as the public policy co-chair of high-powered DC law firm Wiley Rein, is a close Rubio associate. Weaver, also assisting in litigation against the FCC to curb municipal broadband, is one of three lobbyist money-bundlers working on behalf of the Rubio campaign. He has raised at least $33,000 so far for the Florida senator.

Rubio has lived off AT&T’s generosity since his days in the Florida legislature, spending hundreds of thousands of dollars, including $22,000 in personal expenses, on a state Republican Party American Express card that was paid each month with funds donated by AT&T and other special interests.

The International Business Times reported Rubio’s long history courting companies like AT&T to give heavily to murky Republican-controlled fundraising groups that bypassed Florida’s ban on gifts from lobbyists.

In 2003, as a member of the Florida state House, Rubio created a special fundraising committee, called Floridians for Conservative Leadership, that could accept unlimited contributions. In the span of a year, the committee raised $228,000, with large donations from lobbyists, telecom giant AT&T, health plan manager WellCare and the state’s sugar conglomerates, Florida Crystals and U.S. Sugar. Not all of the contributors were disclosed, and some are listed simply as gold or silver memberships.

By mid-2004, the group had spent $193,000. More than a third of the committee’s money was spent on meals and travel. Some of those expenditures were made as reimbursements to Rubio and his wife, Jeanette. Other payments appear to be multiple items lumped together as single expenditures — an uncommon arrangement — like a $3,476 expense listed under “Citibank Mastercard” that includes hotel, airfare, meals and gas. Another $71,000 was spent on staff and consultants.

While Rubio was in the legislature in the February 2004, he created a federal 527 organization with a similar name, called Floridians for Conservative Leadership in Government. Rubio was listed as the group’s president, with his wife as vice president. The committee raised $386,000 by the end of 2004, with donations from Hewlett-Packard, Dosal Tobacco Corporation and private prison company GEO Group, according to filings with the Internal Revenue Service.

The federal group spent $316,000 by the end of 2005. The bulk of its spending was on consulting, but the committee also paid Rubio’s relatives roughly $14,000 for items wrongly described as “courier fees,” the Tampa Bay Times reported.

As Marco’s money controversies emerged, some members of his staff decided to move to the private sector, including Rubio’s former chief of staff, Cesar Conda, who now works as a professional lobbyist for AT&T. As a U.S. senator, Rubio continues to cash AT&T’s campaign contribution checks.

“This letter is nothing more than naked corporate protectionism from senators that get donations from the same telecom companies that are threatened by a challenge to their monopolies,” Weller added.

The senators also demanded Wheeler answer questions about how much money the FCC has given to municipal providers, whether the presence of municipal providers would lead to cuts in funding for private phone companies from the Universal Service Fund/Connect America Fund, and what exactly the FCC plans to advocate or regulate with respect to public broadband in 2016.

An AT&T Logo is pictured on the side of a building in Pasadena, California, January 26, 2015. REUTERS/Mario Anzuoni

Editor’s Note: Stop the Cap! learned in May from a well-placed source that the FCC would “get serious” about data caps if Comcast moved to further expand them in its service areas across the country. It appears that day has arrived although it is too early to tell what direction the FCC will move in. Comcast’s data cap program has grown the most controversial, triggering at least 13,000 consumer complaints from what the company continues to claim is only a limited “trial.” But wireless providers’ growing interest in exempting certain data from counting against a customer’s allowance — a practice known as “zero rating” — has also attracted interest because of its potential impact on Net Neutrality policies.

WASHINGTON (Reuters) – The Federal Communications Commission said on Thursday it has asked major Internet providers to discuss innovative data policies in the wake of the government’s Net Neutrality rules.

FCC chairman Tom Wheeler told reporters Thursday that commission staff sent letters on Wednesday to AT&T, Comcast and T-Mobile “to come in and have a discussion with us about some of the innovative things that they are doing.”

Wheeler said the letters are focused on data policies.

T Mobile has introduced a new “Binge On” policy that does not count some digital video services against data limits.

Comcast is rolling out its own live streaming TV service called “Stream TV” that would not count usage against data caps if using Comcast services.

AT&T has had “sponsored data plan” programs that allow content providers to subsidize users wireless data.

Wheeler said the commission wants to welcome innovation in its open Internet order. He said the commission wants to “keep aware” of what is going on.

On Dec. 4, a U.S. appeals court heard arguments on Friday over the legality of the FCC’s Net Neutrality rules, in a case that may ultimately determine how consumers get access to content on the Internet.

The fight is the latest battle over Obama administration rules requiring broadband providers to treat all data equally, rather than giving or selling access to a so-called Web “fast lane.”

(Reporting by David Shepardson; Editing by Chizu Nomiyama)