The CTIA is the wireless industry’s lobbying group

The wireless industry is threatening to withhold upgrades to 5G service unless the United States adopts a spectrum policy that provides wireless carriers with more frequencies.

CTIA president Meredith Baker told attendees at the Accenture conference that the wireless industry wants a new national spectrum plan to clear more frequencies for the exclusive use of mobile providers.

“When and how we introduce 5G in the United States depends, in part, upon whether we keep our spectrum policy as forward-looking as our industry,” Baker said. “The question we face is will the U.S. continue to embrace licensed spectrum – the approach that has made us the global leader in 4G.”

Baker is frustrated with the FCC’s ongoing effort to create “shared-use” spectrum that can be cleared for mobile use in certain sections of the country while still being used for other purposes elsewhere. In some cases, spectrum identified for possible dual-use is used by various government agencies, but only in certain parts of the country. The wireless industry generally does not favor shared-use spectrum policy because it can complicate wireless network buildouts.

Baker

Baker continues to advocate a more forceful approach of “spectrum clearing,” which can force users off existing frequencies to clear it for mobile exclusivity.

“Clearing spectrum will never look easy, particularly years before an auction,” she said. “To be fair, it will never be easy. But it can be done and needs to be done if we are to remain the global leader in mobility.”

The FCC is currently involved in an effort to repack the UHF television dial into a smaller space to make room for more spectrum for the wireless industry. Some companies, notably AT&T, are growing impatient about the process and want faster exclusive use of those frequencies after an incentive auction is held in 2016.

In a filing sent to the FCC, AT&T objects to creating more spectrum rights for secondary and unlicensed users and applications on the frequencies they intend to use. Once the auction is complete, it could take three years or more for AT&T and other spectrum winners to upgrade their networks to use the new frequencies in the 600MHz band. In the meantime, the FCC has proposed allowing low-power television stations and translators, wireless microphones, and other similar unlicensed equipment to continue using those frequencies until the new license holders are ready to become operational.

AT&T considers that an intrusion on its spectrum and has told the FCC it strongly objects allowing any secondary or unlicensed user to use their spectrum “without so much as [paying AT&T] a lease” or getting consent from AT&T. AT&T wants everyone off their frequencies no later than 39 months after the issuance of a Channel Reassignment Public Notice that will identify new channel assignments for full power and Class A television stations that have been reassigned to different channels. AT&T also wants the right to jump ahead of the proposed three years of transition for licensed stations and make it possible to start kicking off all unlicensed users of its frequencies within 120 days notice.

The wireless industry argues without wireless-friendly policies, there will be insufficient incentive to invest in 5G network upgrades.

Critics contend that is just another of the wireless industry’s empty threats. Opponents contend AT&T will invest in network upgrades the moment the company believes it will generate additional profits.

Drahi (center) surrounded by executives.

The billionaire owner of France’s largest cable operator has acquired St. Louis-based Suddenlink in a surprise $9.1 billion deal, and it is likely only the first move for the Altice Group in the U.S. cable business. But it may not be a welcome one for customers, employees, and suppliers of America’s seventh largest cable company about to be introduced to the notorious “Drahi Method” of conducting business that French newspaper La Parisien calls “brutal.”

The acquisition of Suddenlink represents a modest first step for a company that hopes to divide its business half in Europe and half in the United States. Incorporated in Luxembourg for tax-savings purposes, most of Altice’s interests in the cable business are in France and its overseas territories. Numericable is Altice’s cable brand in Luxembourg, France, and parts of Portugal and recently acquired SFR is Altice’s fiber broadband and mobile brand in French-speaking Europe.

Moroccan-born billionaire businessman Patrick Drahi sees investing in cable as a great opportunity to build needed cash flow from America’s pervasive broadband duopoly. Altice is heavily in debt, financing a whirlwind of acquisitions including Israeli cable and mobile providers, Portugal’s largest telecom company, a mobile carrier in the Dominican Republic, in addition to SFR, France’s second largest wireless company, all mostly paid for with debt and junk bonds. That’s a long way from Drahi’s early days in cable, when he sold service door to door for his small regional Internet and cable-TV company in France’s Alsace region.

Suddenlink’s national service area

His mentor is Dr. John Malone, America’s former cable magnate, who followed a similar pattern of buying up cable companies across the United States in the 1970s and 80s to create Tele-Communications, Inc. (TCI), then America’s largest cable company (it was later sold to Comcast). Drahi shares Malone’s philosophy for cash flow-generating acquisitions: “Always start with cable.” He has plenty of opportunities in the United States, which unlike Europe is largely a cable broadband duopoly in big cities and a monopoly everywhere else. While Drahi confronts revenue erosion from European telecom price wars among phone, broadband, and television companies, he has plenty of room to raise the rates on captive customers on the other side of the Atlantic.

The average Suddenlink customer lives in a small to medium-sized city in West Virginia, Texas, Arkansas, Louisiana or Arizona. Suddenlink is well-positioned to sell its 1.5 million customers broadband service, because the alternative is usually low-speed DSL from companies like Frontier, Windstream, CenturyLink or AT&T. Drahi will sell all the services Suddenlink traditionally has, but customers can expect to pay a higher price.

Drahi has decided to focus on his high-end customers and has stopped competing to win customer volume based on price. The customers that pay the most for service also get the best customer service. If lower-end customers feel ignored and decide to leave, that is increasingly an accepted fact of life by Altice management. As a result, Numericable-SFR continues to lose mobile and market share in Francophone markets because customers have found better deals elsewhere. But the company is still keeping its best customers well-pampered and they have stayed, so far.

Life will be anything but pampered for Suddenlink employees and suppliers, who will soon be targeted for Drahi’s traditional culling of the herd and vicious cost cutting. European capitalists look in awe at “the Drahi Method,” a program of ruthless cost controls, job cuts, and threats visited on every acquired company. The French press is buzzing about Drahi’s latest acquisition in the United States, and wonder if Drahi’s slash and burn management style was better suited to America’s greed era of the 1980s and not the Obama’s ‘we are better than that’ era of the 2010s. But they know the story of how Drahi takes over is always the same.

Suppliers complain Drahi’s companies don’t pay their bills.

After each acquisition is complete, Altice flies in a small team of executives who live to slash costs. It’s what Le Echos calls “helicopter management.” Many middle and upper management at the acquired companies are terminated instantly, replaced with relocated Drahi loyalists. Salary freezes are imposed on those remaining and are indefinite. Job cuts in customer service are frequently next and are sometimes severe. In fact, the company’s relationship with its employees is so bad, the French trade union CFDT has taken several actions against Altice-owned SFR-Numericable over pay freezes and terminations they call unjust for a company collecting a profit margin of more than 25%, even during a price war.

But the worst is reserved for the suppliers that provide everything from coaxial cable to paper for the office printer.

“Suppliers are fifth wheel,” complained one French company that considered itself extorted to hand over a 40% discount just to get their past due invoices paid. One told Le Monde the best a supplier can hope for from an Altice-run company is to barely survive. Many more die than live.

Sometimes, the hardball tactics against suppliers and vendors seem to backfire on the company. Les Echos shares the embarrassing story of the major SFR-owned mobile store that had a big problem. This past January, the demonstration display where customers can sample the latest tablets and smartphones was curiously empty, except for a few employees milling around a coffee machine placed there to take up some of the empty space. Where were the phones and tablets to show off to make the sale? The distributor who supplies SFR had not been paid. No payment, no phones.

Drahi’s company even stiffed Cisco, which sent this warning note suspending shipments pending payment.

Just a few months before announcing his deal to acquire Suddenlink, a large group of French suppliers went to French authorities to seek a broad-based mediation to stop Drahi’s promises of payment in return for future discounts.

Les Echos reports Drahi spared no one from the cut.

“Cleaning companies, network equipment manufacturers, call centers, manufacturers of smartphones, TV, everybody goes,” it reported. Drahi’s managers even dared to challenge the local power company, Dalkia, threatening to cancel their energy services contract unless the company was granted an immediate 80 percent discount. Le Figaro reported the company ignored the contracts it had already signed with the energy company.

An empty bag: No phones at the SFR store.

“It’s vicious,” one supplier told Les Echo. “For them, everything can be renegotiated, even contracts already signed and running.”

An IT company also accused Drahi’s company of refusing to pay for past work unless it received a 30% discount. The firm said no and threatened to sue. It is now facing bankruptcy because its business overwhelmingly depends on Numericable and SFR.

The cuts can also seem petty.

Last December, office workers in Saint-Denis found themselves without paper for the office printers. Numericable SFR management had not bothered to pay its office suppliers and they cut the company off. This year, employees report they often have to bring their own toilet paper to work as the company has stopped stocking employee restrooms, apparently part of another cost-cutting measure.

The problem of unpaid invoices has grown so bad the cable operator is increasingly responsible for suppliers clogging the only Commercial Court in Paris with cases large and small, including those from Pace – the company that provides set-top boxes for Drahi’s cable companies, M6 – a television channel not paid for its programming, STS – a major software company, Orange – a major telecom operator, and even the workers who solicit customers to buy cable service going door to door, who say they have not been paid either. In fact, Numericable-SFR has been hauled into court with stunning regularity, losing almost every case, and forced to pay costs, including court fees and interest. The company has already been convicted 12 times for unpaid bills and in several other cases, it only agreed to settle minutes before a trial began.

Altice’s willingness to put itself deeply in debt just to make more acquisitions was enough for Moody’s to throw a caution flag in February, warning investors the company was under review for a credit downgrade.

“Today’s rating action is prompted by significant uncertainties about the funding of the envisaged €1.95 billion share repurchase program and its impact on Numericable-SFR’s liquidity, leverage and operational flexibility. Moody’s views the potential transaction as aggressive given that the company closed the large acquisition of SFR only recently and is still in the early stage of integrating the acquired asset,” the ratings agency said.

One might forgive Drahi’s desire to economize, considering his recent acquisition of SFR left Altice in debt for more than $12 billion and owing $55 million in interest payments a month. But Drahi continues his acquisitions unabated by those economic realities.

Another problem is Drahi’s crackdown on who is authorized to pay suppliers and other vendors. Under SFR’s old owner, about fifty employees were authorized to sign checks over €100,000 across all of France. Today, any check over €10,000 must be signed by at least one of just three employees. Silicon reports the crackdown became even more severe last winter.

“Since December, any investment must be approved by the investment committee,” a source told Silicon. “All projects are blocked, all expenses must be justified, even 50 Euros. It is set to ‘stop and go’.“

The inherent delays and austerity measures eventually also reach customers, according to ex-employees who say getting a replacement box or new cable strung can be a major problem when suppliers stop shipping and the company stops buying. It can also annoy customers that discover calling customer service no longer means talking to an employee in France. Drahi found call centers in Tunisia and Morocco that would do the same work for a fraction of the price.

Drahi said his Suddenlink acquisition is only the start. He has reportedly also shown an interest in acquiring Time Warner Cable, and shares of Cablevision stock were also increasing this afternoon suspecting that company could also be a target.

Stopping Cox’s money party from getting started, if we can help it.

Stop the Cap! today formally declares war on Cox’s usage cap experiment in Cleveland, Ohio and will coordinate several protest actions to educate consumers about the true nature of usage-based billing and how they can effectively fight back against these types of Internet Overcharging schemes.

Time Warner Cable quickly learned it was deeply mistaken telling customers that a 40GB monthly usage allowance was more than 95% of customers would ever need when introducing a similar concept April 1, 2009 in test markets including Rochester, N.Y., Austin and San Antonio, Tex., and Greensboro, N.C. The company repeatedly suggested only about five percent of customers would ever exceed that cap.

Six years later, it is likely 95% of customers would be paying a higher broadband bill to cover applicable overlimit fees or be forced to upgrade to a more expensive plan to avoid them. Before Time Warner realized the errors of its way, it claimed with a straight face it was acceptable to charge customers $150 a month for the same unlimited broadband experience that used to cost $50.

Cox’s talking points for customers and the media frames usage caps as a fairness enforcement tool. It is a tired argument and lacks merit because nobody ever pays less for usage-capped broadband service. At best, you pay at least the same and risk new overlimit charges for exceeding an arbitrary usage allowance created out of thin air. At worst, you are forced by cost issues to downgrade service to a cheaper plan that comes with an even lower allowance and an even bigger risk of facing overlimit fees.

Industry trade journal Multichannel News, which covers the cable industry for the cable industry does not frame usage caps in the context of fairness. It’s all about the money.

“If you’re a cable operator, you might want to strike [with new usage caps] while the iron is hot,” said MoffettNathanson principal and senior analyst Craig Moffett, a Wall Street analyst and major proponent of investing in cable industry stocks.

Multichannel News warned operators they “must tread carefully in how they deliver the usage-based message.” Instead of getting away with punitive caps, Time Warner Cable had to “rethink” its definition of fairness, keeping prices the same for heavy users of bandwidth but offering discounts to customers whose usage was lighter. No money party for them.

So how did Cox frame its message in the pages of an industry trade journal to fellow members of the cable industry? Was it about fairness or collecting more of your money. You decide:

Customers will be notified of their data usage and any potential overages beginning in mid- June but won’t have to pay for overages until the October billing cycle, a Cox spokesman said. That gives customers the chance either to alter their usage or step up to a more data-intensive plan.   The additional charges serve as a temporary step-up plan for certain consumers, the spokesman said — they can keep their current level of service and pay the additional fee during months when usage spikes, like when their kids come home from college.

The Government Accounting Office, charged with studying the issue of data caps, found plenty to be concerned about. Consumers rightfully expressed fears about price increases and confusion over data consumption issues. In short, customers hate the kind of usage-based pricing proposed by Cox. It’s a rate hike wrapped in uncertainty and an important tool to discourage consumers from cutting their cable television package.

It’s also nakedly anti-competitive because Cox has conveniently exempted its television, home phone, and home security products from its usage cap. Subscribe to Cox home phone service? The cap does not apply. Use Ooma or Vonage? The cap does apply so talk fast. If a customer wants to use Cox’s Home Security service to monitor their home while away, they won’t eat away their usage cap. If they use ADT to do the same, Cox steals a portion of your usage allowance. Watch a favorite television show on Cox cable television and your usage allowance is unaffected. Watch it on Netflix and look out, another chunk is gone.

While Cox starts rationing your Internet usage, it isn’t lowering your price. A truly fair usage plan would offer customers a discount if they voluntarily agreed to limit their usage. But nothing about Cox’s rationing plan is fair. It’s compulsory, so customers looking for a worry-free unlimited plan are out of luck. It’s punitive, punishing customers for using a broadband connection they already paid good money to buy. It’s arbitrary — nobody asked customers what they wanted. It doesn’t even make sense. But it will make a lot of dollars for Cox.

Cox claims it only wants usage caps to help customers choose the “right plan.”

The right plan for Cox.

To escape Cox’s $10 overlimit fees, a customer will have to pay at least $10 more to buy a higher allowance plan — turning a service that costs less to offer than ever into an ever-more expensive necessity, with few competitive alternatives. Will Cox ever recommend customers downgrade to a cheaper plan? We don’t think so. Customers could easily pay $78-100+ for broadband service that used to cost $52-66.

Back in 2009, the same arguments against usage caps applied as they do today. Industry expert Dave Burstein made it clear usage caps were about one thing:

“Anybody who thinks that’s not an attempt to raise prices and keep competitive video off the network — I have a bridge to sell them, and it goes to Brooklyn,” Burstein said.

In Search Of… AT&T U-verse with GigaPower

AT&T’s gigabit broadband project has appeared in the greater Nashville area, but Stop the Cap! volunteers in the country music capital report you have a better chance getting struck by lightning than finding the service available to your home or business.

AT&T officially unveiled the upgrade in “parts of Clarksville, Lebanon, Murfreesboro, Nashville, Smyrna and surrounding communities located throughout the metro area,” but quickly warned with three asterisks the service was “not available in all areas.”

“That is the understatement of the year,” said Nashville resident Chris Jensen who can’t wait to ditch Comcast for 15 years of bad service and billing errors. “Unless you live in an upscale apartment complex, a new housing development, Walmart or have a country album on the charts you are probably going to be stuck with traditional U-verse speeds from AT&T.”

Jensen is part of Stop the Cap!’s In Search Of… AT&T GigaPower, our new project using volunteers to pelt AT&T’s qualification tool with addresses (and follow-up phone calls) looking for AT&T’s elusive gigabit speeds in the cities where the service has been introduced.

“Forget it Nashville, it’s another AT&T fiber to the press release and payback to the very friendly state politicians that rubber stamp AT&T’s agenda,” said Jensen.

Despite GigaPower’s rarity, AT&T is the first company to bring gigabit speeds to the Nashville residential market.

AT&T Tennessee president Joelle Phillips is surrounded by AT&T’s political friends from around the state. (Photo: The Tennessean)

Joelle Phillips, president of AT&T Tennessee, used a news release to share the company’s spotlight with a number of local and state politicians identified as supporters of AT&T’s public policy advocacy effort, which includes deregulating AT&T’s business in the state and attempting to keep restrictions on the books to block competing public broadband network expansion in Tennessee.

“We were able to deploy network enhancements fast – in less than a year since we announced our U-verse with AT&T GigaPower plans for Nashville,” said Phillips. “Smart, pro-investment policies, championed at the state level by Governor Haslam and legislative leaders like Speaker Harwell and Lt. Governor Ramsey – as well as streamlined local permitting processes that Mayor Dean and our Metro Council members have embraced – were key in speeding our work.”

Nonsense, says Jensen.

“Tennessee is about as friendly a state AT&T can find — our legislature allows AT&T to basically write its own pieces of legislation, yet the fastest way to get gigabit speeds is to move to Chattanooga where EPB is providing the service without asking to gut consumer protection laws or wait for AT&T to get around to bringing faster service to your home,” said Jensen.

Critics contend AT&T maintains ties with state and local politicians that are too close for comfort, potentially hurting consumers in Tennessee.

According to the National Institute of Money in Politics, telecommunications industry interests wrote at least $643,000 in campaign contribution checks to Tennessee politicians during the two-year 2014 election cycle. AT&T alone put $211,000 into the pockets of legislators. The Tennessee Registry of Election Finance reports AT&T contributed $20,000 during the last election cycle to Republican Lt. Gov. Ron Ramsey’s leadership political action committee, RAAMPAC. AT&T President Joelle Phillips personally gave another $2,000.

House Speaker Beth Harwell benefited from at least $17,000 in AT&T money over the last two years. AT&T spends another $1.3 million on as many as 13 full time lobbyists that devote all of their attention to Tennessee.

Gov. Bill Haslam doesn’t really need AT&T’s money. He is now worth an estimated $2 billion, making him the richest elected official in the country, according to an analysis by Forbes.

In return for this largesse, AT&T is routinely praised by all three state officials, which is returned when AT&T sends out press releases gushing over Tennessee’s ‘AT&T-Friendly’ deregulation policies.

AT&T will charge a range of prices for U-verse GigaPower service in Nashville, which all include AT&T’s right-to-spy on your browsing behavior. If you want to opt out of AT&T’s “Internet Preferences” customer monitoring program, add $29 a month to these prices:

• U-verse High Speed Internet Premier: Internet speeds up to 1Gbps starting at $120 a month, or speeds at 100Mbps as low as $90 a month, with one-year contract required;
• U-verse High Speed Internet Premier + TV: Internet speeds up to 1Gbps and qualifying TV service starting at $150 a month, or speeds at 100Mbps and qualifying TV service as low as $120 a month, with a one year contract;
• U-verse High Speed Internet Premier + TV + Voice: Internet speeds up to 1Gbps with qualifying TV service and Unlimited U-verse Voice starting at $180 a month, or speeds at 100Mbps with qualifying TV service and Unlimited U-verse Voice as low as $150 a month, with a two-year term commitment.

AT&T imposes a 1TB monthly usage cap on its gigabit broadband service. Overlimit fees of $10 per 50GB will apply to customers exceeding that usage allowance.