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Kagan: Cable Company Wireless Is Designed to Trap You in a Bundle, Not Compete in Wireless Business

Comcast and Charter Communications have no real interest in competing head-to-head in wireless with AT&T, Verizon, T-Mobile, or Sprint. Instead, the two cable companies hope to trap you in a bundled package of services too inconvenient to cancel.

Jeff Kagan, a longstanding telecommunications analyst specializing in the cable industry, believes Comcast, Charter, and other cable operators entering the wireless business have no intention of being a serious competitor to the country’s four largest mobile companies.

“The goal of XFINITY Mobile [from Comcast] is to offer their customers another service and to create a sticky bundle,” Kagan said. “It’s not to lead the wireless wars. It’s not to increase their market share for traditional reasons. It is simply to create a sticky bundle to stabilize and grow their customer base.”

Kagan

XFINITY Mobile and Spectrum Mobile (from Charter), both require customers to be signed up for their respective internet services. If a customer cancels internet service, they will lose their mobile service. That could prove to be a major hassle for wireless customers, because they will have to properly port out their existing phone number(s) to another provider before dropping broadband.

Kagan believes cable operators will use mobile service to further strengthen their bundle by tying discounts to the number of services each customer takes through the cable company.

“Customers who use one service find it easy to switch away to a competitor,” Kagan said. “However, when they use multiple services and get a discount for the bundle, they become sticky and generally stay put. And the more services a customer uses, the larger the discount, the stickier they get and the less likely they are to wander.”

That is also likely to be true with Altice, which operates Optimum (Cablevision) and SuddenLink and has partnered with Sprint to offer cell service.

Sprint and T-Mobile, which are planning to merge, have repeatedly argued cable operators will be aggressive new players in the mobile business, giving the potentially combined carrier fierce new competitors. But Kagan doubts that will prove true.

“The problem is, the sticky bundle is not a low-cost solution,” Kagan offered. “With that said, the higher cost to the cable television companies is less than that of losing their customer base. So, the cost makes sense as simply a cost of doing business.”

The challenge cable operators face is that none plan to own and operate their own traditional cellular network. Comcast and Charter have partnered with Verizon Wireless to resell access to its 4G LTE network and Altice will rely on Sprint. Leasing access on an ongoing basis is likely to be more expensive that relying on your own network, but beyond offering Wi-Fi calling and experimental access to future 5G-type services in the emerging CBRS band, cable operators will remain almost completely dependent on their wireless provider partners, limiting their effective ability to compete.

Kagan believes the goals of the two industries are different. Wireless operators are trying to monetize their networks through usage, while cable operators are trying to find new services that will keep customers loyal and are willing to ignore monetizing their wireless side businesses to achieve that goal.

Altice Upgrades Altice One Platform: Cloud DVR Viewing On-the-Go, More Streaming Services On-the-Way

Phillip Dampier November 19, 2018 Altice USA, Consumer News, Video No Comments

Altice USA is upgrading the firmware powering its much-promoted Altice One set-top box to introduce new functionality and integrate popular web services into the viewing experience.

Altice One v2.0 is rolling out to about 200,000 customers that have the advanced box. Among the new features:

  • Recorded DVR content stored in the cloud can now be played back anywhere using the Altice One mobile app.
  • YouTube Kids and a variety of streaming services will enhance viewing options beyond YouTube, Netflix, and a few other supported streaming services.
  • More 4K content will be available, including Premier League soccer, available on channel 200.
  • Remote control voice search will be available for the YouTube app.
  • Show restart feature expanding to 20 extra channels, including A&E, History Channel, Lifetime, Viceland, Fox News, Fox Sports 1, FX and National Geographic.

The Altice One box, which carries a higher rental fee than traditional cable set-top boxes, has now been rolled out to about 80% of its Cablevision/Optimum and Suddenlink service areas. But only a minority of subscribers choose the box, and it gets poor reviews from customers because of bugs and other unexpected behavior.

Altice One v2.0 promotional video, courtesy of Altice. (0:30)

Optimum and Suddenlink Getting Speed Upgrades as Customers Demand More

Altice USA’s Optimum (formerly Cablevision) and Suddenlink are getting upgraded technology as the two cable companies face increasing demands for speed and broadband usage around the country.

“Over the last two years, the percentage of customers taking over 100 megabits of speed has risen to about 80% of our total customer base,” noted Dexter Goei, CEO of Altice USA. “Recently, we have shifted focus to growing the penetration of 200 Mbps services with about 80% of gross additions now taking these speeds or higher, reaching about half of our total customer base at the end of the third quarter, up from less than 5% two years ago.”

Goei noted that the average of all Optimum and Suddenlink broadband customers’ internet speeds has risen from 56 Mbps to 172 Mbps over the last 24 months, and this is increasing every quarter.

“Average data usage is now over 240 gigabytes per month per customer,” Goei added. “And this continues to grow over 20% per year.”

Goei

To meet growing demand, Altice USA is spending money upgrading its cable properties. The company is scrapping its coaxial cable network in the northeast and in selected parts of Suddenlink territory. In smaller communities that Suddenlink typically serves, the company will either bring fiber to the home service or upgrade the existing cable system to DOCSIS 3.1.

“The first objective is to have 1 Gbps broadband services available virtually everywhere,” Goei said. “For our legacy coax network in the Optimum footprint, we just need to do a Digital Switched Video upgrade now to move us to DOCSIS 3.1 and 1 Gbps speeds, which we can complete over the next few quarters. We just soft launched our fiber network in select areas of Long Island, and it is performing just as we expected so far, delivering a great 1 Gbps symmetrical single-play data service with the new advanced wireless gateway. The smart meshed Wi-Fi we’ve introduced is also doing extremely well.”

Goei says Optimum’s fiber network will be capable of delivering more than 10 Gbps speeds, as well as enhanced Wi-Fi, and improved system reliability.

“For the Suddenlink footprint, we already offer up to 1 Gbps services, so we will add further 1 Gbps capacity through some node splitting and CMTS upgrades,” Goei said. “We are also doing a QAM to IP migration on the cable plant to deliver future IP services. And with the move to DOCSIS 3.1, customers will have a uniform SSID across all of their devices, for an improved seamless Wi-Fi experience.”

The upgrades will mean Suddenlink customers will be more likely to receive 1 Gbps speeds even during peak usage times.

By transitioning video services away from the current QAM platform, IP video will free up additional bandwidth Suddenlink can devote to its internet customers.

Goei told investors on a quarterly results conference call that the five-year fiber upgrade project in the northeast may stretch into a sixth year due to permitting delays in some communities where Optimum provides service.

Some Wall Street analysts questioned Goei about the merits of a costly fiber upgrade, asking if it was necessary. Jonathan Chaplin of New Street Research suggested if cable systems were already capable of gigabit speed service under DOCSIS 3.1, any revenue benefits gained from offering gigabit service could already be realized without stringing fiber optic cable. Other Wall Street analysts wanted to know when Altice would deliver the next revenue-increasing rate hike on Optimum and Suddenlink customers.

The company acknowledged it lost customers after the last round of price increases last spring. Its biggest losses are coming from cord cutting. Altice saw 20,700 Optimum TV customers cancel service between July and September, with a total of 76,000 customers dropping service so far this year. But that won’t stop Altice from raising rates again. Goei anticipated the next rate hike will likely take place during the first half of 2019.

Altice USA is also working on its own cellphone service, which will be powered by its large Wi-Fi hotspot network in the northeast and rely on the services of Sprint to connect customers while away from Wi-Fi. The company did not release pricing or service information.

Altice Launches Optimum Fiber on Long Island; Gigabit Service $79.99/Month

Phillip Dampier September 11, 2018 Altice USA, Broadband Speed, Competition, Consumer News 2 Comments

Altice USA this week launched symmetrical gigabit broadband over its new fiber-to-the-home network in parts of Long Island.

The cable company, which acquired Cablevision a few years ago, is gradually mothballing its part-copper wire network and going all-fiber across its footprint in New York, New Jersey, and Connecticut. The fiber buildout will allow Altice to increase internet speeds and have more flexibility providing television, broadband, and phone service.

Where the fiber network has been switched on, customers are being offered 940/940 Mbps (near-gigabit) internet-only service at a price of $79.99 a month. Stop the Cap! has confirmed with our readers that parts of Central Islip now have gigabit fiber service available.

“Altice USA is focused on offering the best network and connectivity experience, and the activation of our full-fiber network with smart Wi-Fi, the most advanced of its kind in the nation, demonstrates our commitment to creating converged customer experiences,” said Hakim Boubazine, Altice USA co-president and chief operating officer. “Delivering our symmetrical Altice Gigabit fiber service is just the start as we continue to scale our fiber network to bring our customers up to 10 gigabit internet speeds to support the explosive growth of data usage while laying the groundwork for the future of the connected universe.”

The company is keeping its precise fiber rollout schedule a closely guarded secret, as it competes with Verizon FiOS across much of its service area. Because the fiber upgrade project will take five years to complete, existing customers still served by Optimum’s older HFC network will not have to wait to get speed increases thanks to DOCSIS 3.0. The company is introducing 400 Mbps speeds this year with gigabit service anticipated in early 2019. Altice will not deploy DOCSIS 3.1, preferring fiber to the home service as a better choice.

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.”

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