Cablevision customers get very attractive promotions in the highly competitive northeastern United States, while Suddenlink customers in more rural areas pay more.

The majority of Cablevision and Suddenlink broadband customers want speeds of 100 Mbps or greater from the Altice-owned cable operators, and average monthly data usage by those customers is now reaching 200 GB per month.

Those statistics were part of a quarterly financial results presentation by Altice USA executives about how the company is doing in the United States.

Altice’s cable holdings include Cablevision, serving a generally affluent customer base in and around the New York City area where Verizon FiOS is its biggest competitor, and Suddenlink, which serves in less competitive markets where local economies are often challenged and phone company DSL still has a significant presence.

Regardless of whether customers receive broadband from Cablevision or Suddenlink, Altice USA CEO Dexter Goei made it clear consumers want faster internet service and are consuming exponentially more data than ever before.

Goei said Altice will continue to increase internet speeds over its existing hybrid fiber-coax network (HFC) even as it builds out its fiber to the home replacement network in some areas. At least 95% of Cablevision customers can now subscribe to 400 Mbps broadband on the company’s legacy HFC network. Around 72% of Suddenlink customers can get similar speeds today. Gigabit speed is available to 29% of Altice USA customers.

Goei said 90% of new Cablevision and Suddenlink customers now choose internet plans featuring 100 Mbps or faster broadband. The average data use of those customers “is now reaching about 200 GB” per month, Goei reported. For customers on HFC systems, Goei said the maximum speed Altice’s implementation of DOCSIS 3 can support is around 600 Mbps, depending on how many customers are sharing the connection. As customers transition to fiber service in the northeast, faster speeds are planned. In fact, Goei wants Cablevision to offer speeds even faster than Verizon FiOS, its chief competitor.

“In terms of the speed capabilities, we’ll have the ability to do higher speeds than the competition,” Goei said.

Altice USA’s fiber-to-the-home (FTTH) deployment is “well underway” in New York, New Jersey, and Connecticut, with plans to connect several hundred thousand customers to the new network starting later this year. Goei told investors Altice was accelerating the rollout this year with the hope of further reducing network and customer operation costs related to servicing the older coaxial network.

Cablevision and Suddenlink will gradually be rebranded as Altice, and the company has begun familiarizing customers with the new brand name in various ways, including the rollout of its new deluxe set-top box, called Altice One.

“This is our new entertainment platform with an all in one box, including TV, internet, Wi-Fi, integrated apps such as Netflix and a voice activated remote control,” said Goei. “The service includes an improved Wi-Fi experience […] as many TV boxes double up as Wi-Fi repeaters around the home. This is a key part of our strategy of enhancing the customer experience and we’ll have the capacity for ongoing upgrades and the addition of new apps as they become available.”

But that new platform comes at a cost. Currently, Cablevision customers can pay as much as $10 for each set-top box and $5 for a cable modem. Altice One is regularly priced at $25 a month — $10 more for a customer that has one television set-top box and cable modem. That makes Altice’s box among the most costly in the cable industry. The company is trying to hide the cost of its box by bundling it into promotions targeting price sensitive new customers.

In fact, the cost of service is increasingly becoming a factor, especially for Suddenlink customers. Over the last two years, Altice has been “harmonizing” Suddenlink’s rate plans, which used to be set based on the technical capabilities and performance of each cable system. Goei said Suddenlink comprised “five or six different customer bases” — each served by cable systems with different capabilities and rate plans. In the last two years, Suddenlink customers have been introduced to new rate plans, and some are paying considerably higher rates than before, especially for equipment and surcharges.

“All of that activity was probably more than we ever wanted to or anticipated as harmonizing all the different variables is not that easy,” Goei said. “And so we made a very concerted effort to not implement a usual or industry like price increase at the end of 2017, given all the various changes that happened over both customer bases as we harmonized them.” But Goei added the reprieve from rate hikes won’t last forever, promising a “rate event” strategy sometime this year, different from rate changes in past years.

Altice is emphasizing the progress it is making boosting internet speeds at its Cablevision and Suddenlink cable systems.

What Suddenlink and Cablevision charge for service is very dependent on what the competition is offering in Altice’s various markets. Goei paradoxically noted that some of the most attractive rates go to customers living in the most affluent areas of the New York Tri-State Area because of intense competition from Verizon FiOS. Prices have remained so low historically that, in Goei’s view, “it makes it very difficult for third parties to come into these markets” and compete with attractive offers that can match Cablevision. That also explains why Cablevision customers do not deal with data caps while Suddenlink customers often do.

Goei

Conversely, in Suddenlink service areas where less capable competitors exist, prices can be higher and service is considered less affordable. As a result, financial analysts have noted Suddenlink’s broadband growth has been anemic since Altice bought the company, presumably because would-be customers cannot afford the service or have chosen a more economic package sold by the phone company, even if it less capable.

Goei promised Altice would be more “nimble” in the future about targeting pricing in different service areas, taking current conditions on the ground into account when setting rates.

In more general terms, Altice is dealing with the same challenges most cable operators are facing these days. Cord-cutting continues to result in reduced numbers of video subscribers. The company also recently endured a multi-week programming dispute with Starz that cost the company video subscribers in the Cablevision service area. The dispute eventually ended with a new multi-year affiliation agreement that allows Altice systems to carry Starz and Starz Encore networks, on-demand services, and online access for several years.

But Altice clearly sees broadband as its key product going forward, which is why the company is upgrading its Cablevision and Suddenlink systems to support faster internet speeds.

After 10 months of negotiations between Frontier Communications and the Communications Workers of America (CWA) over the phone company’s job cuts, 1,400 Frontier workers in West Virginia and Ashburn, Va., walked off the job Sunday.

The Communications Workers of America claims they have been unable to reach an agreement on a fair contract with Frontier despite three extensions. The original contract expired in August, 2017. The CWA claims their members have waited long enough and called a strike.

“We have been very clear throughout the bargaining process that our top priority is keeping good jobs in our communities,” said Ed Mooney, vice president of CWA District 2-13. “Going on strike is never easy. It’s a hardship for our members and the customers who we are proud to serve. But the job cuts at Frontier have gone too far — we know it and Frontier’s customers know it. It’s time for Frontier to start investing in maintaining and rebuilding its network in West Virginia.”

The CWA claims Frontier has let go of some of its most experienced technicians while outsourcing an increasing number of jobs to outside contractors. Frontier has also cut over 500 jobs in the area since 2012 and has announced a plan for additional layoffs this month. The union claims Frontier’s customers are suffering too.

“We’re taking a stand,” said Johnny Bailey, president of CWA Local 2226 in Bluefield. “Customers are waiting way too long to have their problems resolved, and too often we’re back fixing the same problems over and over again. Frontier is leaving West Virginia behind. The network has been neglected and there are just not enough experienced, well-trained workers left to handle the service requests.”

According to CWA, complaints filed with the West Virginia Public Service Commission have increased steadily over the past three years, rising 69% from 639 in 2014 to 1,072 complaints in 2017.

“The complaints at Frontier have risen so high in the last few years it is has gotten to the point [… where] we are embarrassed by the product that we have to serve,” said Jeff Anderson, president of CWA Local 2004, which covers large parts of north-central West Virginia, including Harrison, Marion, Monongalia, Taylor, and Doddridge counties. “In some areas we have good service but we beg for that and we ask the company and we will do anything we can to get our people better service cause ultimately that is what keeps our jobs.”

Frontier countered the company is already extremely generous with its workforce.

“Frontier is one of West Virginia’s best employers,” the company said in a statement. “Average annual wages for the Company’s union employees exceed $64,500, and more than half of all union employees earn more than $75,000 per year. For comprehensive family medical coverage, most employees pay less than $150 per month for family coverage, with no annual deductible and low co-pays. Including employee benefits, the Company’s average employee cost per CWA member is more than $100,000.”

Frontier said it has activated its strike contingency plan, which will require Frontier’s management, outside contractors and Frontier employees from other areas to handle service calls and other tasks formerly done by striking workers.

Customers can expect to encounter Frontier’s picket lines in several places:

The Minnesota Public Utilities Commission (MPUC) has opened an inquiry into whether Frontier Communications is meeting its service obligations to customers after receiving a major spike in complaints about the phone company.

The MPUC acknowledged it has been “receiving a large volume of complaints related to the service quality, customer service, and billing practices of Frontier Communications.” The regulator is concerned that “after attempts to mediate these complaints, many of them remain unresolved.”

The investigation will include the Minnesota Department of Commerce and Minnesota’s Attorney General, both tasked with determining if Frontier is complying with MPUC rules and Minnesota state law.

Frontier provides service to more than 98,000 landlines in Minnesota, doing business as Frontier Communications and Citizens Telecommunications. Most Frontier customers are located in northeastern and southern Minnesota, as well as communities like Apple Valley, Burnsville, Farmington, and Rosemount.

A survey of filed complaints found many involved Frontier’s DSL internet service, which customers complained was slow and prone to frequent outages. Other complaints involved inaccurate billing and missed service calls, which sometimes led to delays of days or weeks before service could be restored.

“I’d heard a bunch of complaints of poor service all across my district,” said Rep. Rob Ecklund (DFL-International Falls) in a news release. “I am a Frontier customer myself, and the service has been lousy.”

Other customers had their complaints published in the Timberjay newspaper, which has been the unofficial meeting place for frustrated customers who cannot get satisfaction from Frontier.

“This has been the worst service experience of my life,” said Melissa Holmes, of Embarrass in northeastern Minnesota. “My whole neighborhood here on Wahlsten Road in Embarrass has had service issues with Frontier for decades. Repeated calls to the company go nowhere.”

The newspaper blamed Frontier’s wrong priorities in a scathing editorial last fall:

Prospects for an improvement in Frontier’s service quality appear unlikely given the increasingly tenuous financial condition of the company. Frontier went deeply in debt in early 2016, when it completed an $11 billion purchase of landline infrastructure formerly owned by Verizon in California, Texas, and Florida. The acquisition more than doubled the size of the company, but also prompted a major restructuring, which included significant layoffs.

Frontier officials had touted the acquisition at the time, arguing that the company knew how to make money from traditional landline infrastructure even as the industry is rapidly transitioning to wireless. But the company has yet to demonstrate it is up to the challenge and as complaints over poor service have mounted, the company has hemorrhaged customers, particularly in more populated regions, where customers often have viable alternatives.

In response, Frontier claims it updated its billing software and is making “process improvements” in the way it conducts business.

If you live in Minnesota and wish to share your views with the MPUC, you can visit their website, register, and comment until May 25, 2018.

The state’s initial investigation and report on Frontier is due on May 11.

KSTP-TV in Minneapolis-St. Paul reports Frontier is under investigation by the state telecom regulator for poor service. (2:21)

Despite the massive amount of extra money from the Trump Administration’s corporate tax cuts generating huge revenue spikes for America’s telecom companies, Frontier Communications disappointed investors with today’s news it was suspending its quarterly cash dividend to shareholders after reporting a net loss of $1.03 billion on revenue of $2.2 billion during the fourth quarter of 2017, despite a $830 million tax benefit resulting from the reduction in federal tax rates.

Frontier saw revenue declines across almost every product category: Data and Internet services, $939 million (down 7.3%); Voice services, $687 million (down 11.2%); Video services, $310 million (down 15.1%), but the company slightly improved its churn rate (customers coming and going) to 1.83% for Frontier Legacy service areas (areas not acquired from Verizon or AT&T) and 2.22% for customers in California, Texas, and Florida acquired from Verizon (compared with 1.92% and 2.33% respectively in the third quarter of 2017).

The losses are attributable to:

• Frontier DSL is not competitive with cable broadband in most Frontier Legacy service areas. Cable companies continue to steal customers away with better value broadband packages at much faster speeds;
• Frontier FiOS delivers much better internet speeds, but customers in former Verizon service areas are upset about poor customer service and on-time repair visits and billing errors;
• Frontier landline customers have been disconnecting for years, especially in copper-only service areas.
• Frontier FiOS TV customers are getting better pricing and promotional deals from competing cable and satellite providers, or are cutting the cord entirely.

The average Frontier Legacy customer pays $65.11 a month. Customers with Frontier FiOS in California, Texas, and Florida pay an average of $107.35 a month.

Despite the anemic results, Frontier CEO Daniel McCarthy was optimistic.

“Our fourth quarter results highlight the ongoing progress on our key initiatives to improve customer retention, enhance the customer experience, and align our cost structure,” McCarthy said in a press release. “We are pleased with continued improvement in subscriber trends and churn in our California, Texas and Florida (CTF) markets, and the continued operating efficiencies achieved in the fourth quarter.”

But McCarthy rattled investors with news Frontier’s board of directors had voted to suspend the company’s dividend payout to shareholders, one of the key reasons investors buy Frontier common stock. Frontier intends to use the $250 million it would have handed shareholders to pay down the company’s massive debts.

In 2018, Frontier will pay more in interest on its outstanding debt ($1.5 billion) than it will spend on network upgrades and other capital expenditures ($1.0 billion to $1.15 billion). Most of the company’s debt comes from Frontier’s aggressive history of acquisitions, buying landline service areas from Verizon and AT&T.

Despite predictions by Frontier’s executives that its $10+ billion acquisition of Verizon service areas in California, Texas and Florida would deliver dramatically better results for Frontier and its shareholders, a botched transition and ongoing complaints about poor customer service and billing errors alienated Frontier’s adopted customers. Many canceled service and have no plans to return.

With Frontier’s financial condition concerning some financial analysts, Frontier is considering selling off its newest service areas to raise money.

Comcast Corporation today made a surprise $31 billion bid to acquire Sky, the British-based satellite TV, internet, and wireless provider, disrupting a rival bid from 21st Century Fox, which spent years trying to acquire the 61% of Sky it doesn’t already own.

Comcast’s bid of £12.50 a share to acquire Sky outright is significantly higher than the £10.75/share offer Fox made to take total control of the satellite venture. A third player – Disney, has been in talks with Fox to acquire a substantial number of its assets, including its minority ownership stake in Sky, for $52 billion. But Comcast’s bid may change everything.

That three American companies are now competing to acquire Europe’s largest media company and biggest pay-TV broadcaster, with more than 23 million subscribers, could create concern among some regulators about foreign ownership of the media. A bid from Comcast is likely to be less controversial than dealing with Rupert Murdoch, however, who already has extensive media holdings in the United Kingdom.

There are three distinct possible bidders for Sky now:

• Comcast, which prefers to take 100% ownership but will accept a majority stake shared with Fox (or possibly Disney).
• Disney wants minority stake in Sky through its $52+ billion acquisition of some of Fox’s assets, including Fox’s part-ownership in Sky.
• Fox, which has sought to take full control of Sky for several years but has met with resistance was originally the most likely buyer. But more recently, Rupert Murdoch has recently shown a willingness to sell some of Fox’s assets, including Sky, if the price is right.

Sky’s share price leaped more than 20% today to £13.47—well above the Comcast offer—as investors believe there will be a bidding war over Sky. Because many hedge funds and investors expect Fox will increase its bid to match Comcast, in turn boosting the value of Sky’s stock, investors are accumulating shares at a rapid pace and driving up share prices further.

Sky has become increasingly valuable because it isn’t just a satellite TV provider. Sky also develops its own original productions, has valuable sports rights deals, and sells broadband and mobile phone service. American media companies are consolidating, preferring to own both the pipes that deliver internet content and the content itself. Acquiring Sky would allow Fox, Disney, and/or Comcast to showcase its own productions in Europe and to a lesser extent import Sky products into the United States.

Regulators in the United Kingdom are likely to press any buyer to protect the independence of Sky News, a well-regarded 24-hour news channel. Many expect regulators to insist that Sky’s buyer  agree to fund Sky for at least 10 years and guarantee its editorial independence.