Wall Street wants a deal between T-Mobile and Sprint rich with fees and “synergies,” but nobody counting the money cares whether consumers will actually get better service or lower prices as a result of another wireless industry merger.

Recently, more players have entered the T-Mo/Sprint Drum Circle, seeming in favor of the merger of America’s third and fourth largest wireless carriers. Moody’s Investor Service wouldn’t go as far as Sprint CEO Marcelo Claure in playing up the deal’s “synergy savings” won from cutting duplicate costs (especially jobs) after the merger, but was willing to say the combination of the two companies could cut their combined costs by $3 billion or more annually. Based on earlier mergers, most savings would come from eliminating redundant cell sites, winning better volume pricing on handsets, dramatic cuts in employees and back office operations, and spectrum sharing.

“Imagine if you had a supercharged maverick now going after AT&T and Verizon to stop this duopoly,” Claure told an audience in Miami.

Wells Fargo called Sprint’s large spectrum holdings in the 2.5GHz band undervalued, and could be an important part of any transaction.

Sprint has more high-band spectrum than any other carrier in the U.S. Much maligned for its inability to penetrate well indoors and for its reduced coverage area, most carriers have not prioritized use of these frequencies. But forthcoming 5G networks, likely to offer a wireless alternative to wired home broadband, will dominate high frequency spectrum, leaving Sprint in excellent condition to participate in the 5G splash yet to come.

Wall Street banks can expect a small fortune in fees advising both companies on a merger deal and to assist in arranging its financing. Any deal will likely be worth more than the $39 billion AT&T was willing to pay for T-Mobile back in 2011. With that kind of money at stake, any merger announcement will likely be followed by millions in spending to lobby for its approval. Washington regulators ultimately rejected AT&T’s 2011 buyout, arguing it was anti-competitive. Reducing the U.S. marketplace to three national cellular networks is likely to again raise concerns that reduced competition will lead to higher prices.

A merger is also likely to be disruptive to customers, particularly because Sprint and T-Mobile run very different operations and systems. Moody’s predicted it could take up to five years for any merger to fully consummate, giving AT&T and Verizon considerable lead time to bolster their networks and offerings. Moody’s notes Sprint also has a history with bad merger deals, notably its acquisition of Nextel, which proved to be a distracting nightmare.

“If [another merger] stalls or is derailed by operational missteps, the downside is catastrophic,” Moody’s noted.

Lexington, Ky. officials are mad as hell about some of the sales and customer service tactics heaped on the local citizenry courtesy of Charter Communications, better loathed as “Spectrum.”

In a letter released yesterday, Lexington’s chief administrative officer Sally Hamilton told the cable company her office mail is running hot and a lot of it is from local residents furious about Charter’s business practices and pricing.

The city now wants Charter officials to turn over company records detailing customer complaints and attend a public hearing to discuss the cable company’s performance since taking over for Time Warner Cable.

Lexington officials are also unhappy that Charter recently laid off 56 customer service employees in its local office.

“The city is left wondering what abuse will be heaped upon it next by Charter-Spectrum,” the letter said. “Because of the public urgency regarding Charter’s actions regarding its Spectrum service, we insist on a swift response to this letter,” Hamilton added.

The Herald-Leader obtained copies of earlier correspondence between the city and the cable company detailing its response to accusations of “shoddy customer service.”

Local residents are unhappy that Charter has dramatically raised rates, shows an unwillingness to negotiate over its pricing, and has removed a number of channels from Spectrum’s basic cable lineup.

The cable company has also been accused of aggressive sales techniques, including using door-to-door agents to browbeat mentally and developmentally impaired people into signing up for cable service, even though they are legally not able to sign contracts. The city is demanding to know how many times that has happened.

Charter is also accused of preventing customers from talking to supervisors, lowering advertised broadband speeds, and no longer accepting returned cable equipment through the mail.

Charter’s June 5 letter assured the city that “quality customer service is of the utmost importance to Charter,” and claimed the company was in the process of spending $3.1 million on local improvements, including 860 new outdoor Wi-Fi hotspots, and low-cost internet access for the poor.

States and communities across the country are warning the Federal Communications Commission its proposal to limit local authority over wireless infrastructure siting will create chaos and open the door to public safety and aesthetics nightmares.

The FCC’s proposal would allegedly accelerate wireless infrastructure deployment by removing or pre-empting what some on the Commission feel are improper zoning barriers, unjustified fees meant to deter providers from adding new towers, and various other bureaucratic impediments. It would modify current “shot clock” rules that set time limits on applications and deem them automatically granted if a local or state authority failed to reach a decision in as little as 60 days.

Pai

While the wireless industry has expressed strong support for the proposed changes introduced by FCC Chairman Ajit Pai in March during the FCC’s “Infrastructure Month,” many states and localities are fiercely opposed to what some are calling a federal government takeover of local zoning and permitting. States as diverse as Illinois, Utah, and Maine have submitted comments objecting to the proposal, noting it will turn the FCC into a national zoning agency that could allow the installation of new cell towers and monopole antennas just about anywhere if the clock for consideration has run out.

Several communities have also submitted comments to the FCC reminding the agency its existing rules have allowed some providers to abuse the system, with further easing of regulatory oversight on the local level only increasing the potential for more abuse.

Communities have complained some providers have intentionally overwhelmed local authorities by submitting “bulk applications” that attempt to win approval for dozens of new sites with incomplete or missing paperwork. Others report providers using the public rights-of-way have placed large pieces of infrastructure in direct line with residents’ front doors, have created public safety problems with equipment that blocks drivers’ views at intersections, and had to contend with requests to place 120-200 foot monopole antennas on the edge of public highways and abandoned retired infrastructure providers fail to maintain or remove.

Can you find the hidden monopole tower?

The Utah Department of Transportation, among others, calls the FCC’s proposal “detrimental to public safety” and warns the FCC could end up creating a new loophole allowing providers to submit defective applications and then stalling required corrections until the shot clock runs out.

“No decisions are made on incomplete applications because the requested information is necessary for a decision to be issued,” Utah’s DOT writes. “This information may include, but is not limited to, when and where the work will be performed, type of installation, impacts to the traffic of the state highway. All safety issues must be addressed. Any shot clock start considerations by the Federal Communications Commission must be based upon completed applications. Otherwise the telecommunications company may fail to submit a completed application and continue to not submit all the requested information until the shot clock time period has run out. Such an approach would have detrimental impacts to safety of the traveling public on state highways because the Federal Communications Commission seeks to remove any authority from the states and local governments to address safety and placement after the shot clock has run out.”

Utah also fears the FCC’s decision to set uniform fees for applications could end up subsidizing large telecom companies with taxpayer dollars.

“Any requirement mandating lower fees than the actual costs will require the states to subsidize the telecommunications industry,” Utah’s DOT warned.

Maine’s Department of Transportation worries the FCC is putting the interests of multi-billion dollar telecom corporations ahead of the citizens of the state and their own needs. By allowing telecommunications companies to win irrevocable rights to place wireless towers where they want by running out the clock, the interests of those companies overshadow the public interest.

“The only ‘right’ that any entity receives to locate within Maine’s highway corridors is a revocable permit,” the DOT wrote. “To minimize overall expense and downtime, it is essential that facilities are appropriately located the first time around and there should not be any rules stating that it is in any way appropriate for an entity to construct facilities in a location that has not been explicitly approved by the applicable licensing authority, property owner or facility owner.”

Because the FCC’s proposal is so wide-ranging and skewed in favor of telecom companies, several state and local agencies are asking the FCC to clearly affirm that a company’s business interests should never come before public safety, future transportation needs, or at the public’s expense.

“Any new or revised rules should clearly affirm a state or local highway agencies’ authority to properly manage the highway corridor in the interest of highway safety, operations, and right of way preservation for future highway purposes,” offers Maine’s DOT, adding that after the state’s experience with financially troubled telecom companies abandoning outdated or damaged infrastructure, the public should not have to pay to clean it up.

“Accommodation of wireless towers or other monopole structures within the highway corridor also present hidden public expense when relocation of those facilities cause construction delays or when such facilities are abandoned by a [company] that declares bankruptcy,” the agency noted.

The Illinois Department of Transportation echoed Utah and Maine, noting the telecom industry needed to work with local and state officials to ensure timely permitting.

Instead, the telecom industry has spent millions lobbying state and federal legislators to curtail or eliminate local oversight and control. While many telecom companies are honest and accommodating, especially when they are considering major infrastructure expansion, some are not and work to game the system.

IDOT notes it is willing to manage the burden of processing applications on a timely basis, but utilities should not be rewarded with a right to run out the clock with an incomplete application.

“The burden of timely issuance of permits is shared by both the state and the industry,” IDOT wrote. “It is important that the utility fulfill its duties and meet their obligations.”

Benjamin

In one instance, a large telecom company submitted a very large number of permit applications across Illinois for a network upgrade it had no plans to commence in the near future, overwhelming permit offices. If the FCC’s reforms were in place, many of those applications would have been automatically approved after the deadline for consideration ran out, even though the provider was in no hurry to start work.

“The concept behind this is […] if a government authority doesn’t respond in a timely manner, the permit is automatically granted,” the filing said. “The [proposal] is attempting to shift the burden of court appeal to the [local permitting authority] as opposed to the permit applicant.”

Columbia, S.C. mayor Steve Benjamin believes the FCC is trying to solve a non-existent problem.

“Simply put, local rights-of-way management does not discourage wireless deployment,” Mayor Benjamin said in March. “Instead, it serves numerous public policy goals and ensures that rights-of-ways are managed in a manner that allows for all users to safely and efficiently use public rights-of-way. The city is deeply concerned […] the Commission is simply seeking to preempt local authority and to dictate how local governments should manage public property, all in an effort to marginally increase the profits of an already profitable industry at the expense of important and legitimate public interest goals.”

South Jersey: The worst broadband problems are in the southernmost counties closest to Delaware.

Customers hoping New Jersey’s telecom regulator would compel Verizon to expand fiber to the home service across southern New Jersey are out of luck.

The New Jersey Board of Public Utilities (BPU) approved a settlement between Verizon New Jersey, Inc., Cumberland County, and 18 southern New Jersey towns that alleged Verizon failed to properly maintain its wireline network in areas where it has chosen not to deploy FiOS — its fiber to the home service. But the settlement will only compel Verizon to maintain its existing copper network and offer token DSL and FiOS expansion in some unserved rural communities.

“We have heard our customers’ concerns in South Jersey and are pleased to have reached an agreement with the approval of all 17 towns on a maintenance plan going forward,” said Ray McConville, a Verizon spokesman. “We look forward to staying in regular communication with the towns to ensure our customers continue to receive the level of service they expect and deserve.”

“While the Board was fully prepared to proceed on this matter, the parties were able to reach a negotiated settlement which takes into consideration the needs of each community,” said Richard S. Mroz, president, N.J. Board of Public Utilities.

But some residents of those communities beg to differ.

“It’s another example of Chris Christie’s hand-picked regulators letting Verizon off the hook and sticking us in a digital divide,” complained Jeff Franklin, a Verizon DSL customer in Cumberland County. “Verizon should not be allowed to offer one half of the state modern broadband while sticking the rest of us with its slow DSL service.”

Franklin is upset that communities bypassed by Verizon’s FiOS network appear to have little chance of getting it in the future, now that regulators have agreed to allow Verizon to fix its own copper network.

“All the Board did was force Verizon to do what it should have been doing all along, taking care of its own network,” Franklin complained to Stop the Cap! 

Verizon did agree to expand its fiber network into the communities of Estell Manor, Weymouth Township, Corbin City, and Lower Alloways Creek Township, but only because of a 2014 agreement with Verizon compelling them to offer broadband to residents who read and complete a “Bona Fide Retail Request” (BFRR) form which stipulates homes and businesses in Verizon’s New Jersey territory can get broadband if they don’t have it now as long as these criteria are met:

• Have no access to broadband service from a cable provider or Verizon;
• Have no access to 4G-based wireless service; and
• Sign a contract for at least one (1) year of broadband service and pay a $100 deposit.

“BFRR is a joke because it requires potential customers have no access to 4G wireless service,” claimed Franklin. “You have to go to the government’s National Broadband Map to determine eligibility, which is very tough because — surprise, surprise — Verizon itself contributed its 4G wireless coverage information for that map and as far as Verizon is concerned, their 4G coverage in New Jersey is beautiful, even though it really isn’t.”

If a single provider submits map data that shows a home address is already covered by 4G wireless service, even if that isn’t accurate on the ground, that customer is ineligible under the terms of BFRR. Even if they were able to subscribe to 4G broadband, most plans are strictly data capped or throttled.

Under the settlement, Verizon gets to choose what technology to deploy. Outside of the four communities getting FiOS, the rest of South Jersey will have to continue relying on Verizon’s DSL service. Verizon has agreed to extend DSL to 2,000 new residences and businesses in Upper Pittsgrove, Downe, Commercial, Mannington, Pilesgrove, and South Harrison. It will also fix some of its DSL speed congestion problems and monitor for future ones as part of the settlement.

But DSL won’t work if Verizon’s wireline network stays in poor shape. The company has agreed to deploy its “Proactive Preventative Maintenance Tool” (PPMT) to scan its copper network to identify and repair or replace defective cables. Verizon has also agreed to daily inspections of outside facilities and fix any detected problems within 30 days, as well as regularly reporting back on the condition of its infrastructure inside the towns affected under the settlement.

This agreement took a year and a half to reach and will keep the two parties out of court, but many are not satisfied being left with Verizon’s DSL service.

“Unfortunately, the BPU continues to allow Verizon to pick and choose which residents will receive modern telecommunications at an affordable cost,” Greg Facemyer, a Hopewell Township committeeman in Cumberland County, told NewsWorks. “The state legislature needs to recognize these inequities and step in and level the playing field for South Jersey. Otherwise, our region will continue to fall even farther behind and be less competitive.”

Altice USA today revealed the terms of its long-expected initial public offering likely to bring more than a billion dollars to the company’s merger and acquisition fund that many Wall Street analysts now expect will be spent to acquire privately held Cox Communications and/or Mediacom.

Cox has long claimed it is not for sale. But Altice founder Patrick Drahi has a history of being willing to overpay for the companies he covets, including Cablevision, which was a reluctant seller for at least a decade before Altice made an offer the Dolan family that founded Cablevision couldn’t refuse.

Telsey Group analyst Tom Eagan told his Wall Street clients he expected Altice would be “active” in American cable consolidation, with Cox and Mediacom systems being likely targets. Other analysts have downplayed potential interest in Cable ONE, another likely target, because of the company’s recent aggressive rate increases and the fact its systems are often in economically depressed areas. An acquisition of Cox and/or Mediacom would make Altice the third largest cable company in the country, but it would still be far behind Comcast and Charter Communications, which hold first and second place respectively.

Any acquisition would likely not get much scrutiny on the federal level by the FCC and Justice Department, and most states would likely give the deal only a perfunctory review before approving it.

Altice USA has applied to be listed as “ATUS” on the New York Stock Exchange.