Less than a decade ago, AT&T was one of El Paso’s largest private employers, with 2,400 employees. Next month, it will be a shadow of its former self with fewer than 500 local workers after a series of layoffs and call center closures.

AT&T is planning to close its East El Paso office in November, giving 278 employees the option of leaving or relocating to San Antonio, Missouri, or Florida to remain employed by AT&T.

AT&T used to employ thousands of workers in its El Paso call centers and technical facilities. But much of that work is now being shifted to third-party contractors and offshore call centers overseas.

Since 2011, AT&T has eliminated 12,000 call center jobs in the United States, closing and downsizing call centers across the country, according to the Communications Workers of America.

In 2006, AT&T closed a major call center in Massachusetts, despite receiving generous tax benefits from the local and state government, and offered to relocate those employees to the same call centers in El Paso it is closing now.

In 2015, AT&T demanded El Paso and the state of Texas triple their $50 million annual tax break or else they would shift spending elsewhere. It appears tax abatements ultimately had little effect on AT&T’s spending decisions in the western Texas city.

The union reports the annual salaries for those jobs ranged from $32,000 to $65,000 per year, plus commissions and health and retirement benefits. Offshore customer care centers pay a fraction of those salaries and many third-party contractors do not pay benefits because they designate many employees as part-time workers.

AT&T disputes it is increasing its offshore customer service workforce at the cost of American workers.

“It’s important to note that there is a job for every employee who is willing to relocate to the facilities where the work is being consolidated,” and they will get a relocation allowance if they have to move, Marty Richter, a spokesman for AT&T, told the El Paso Times.

“We’re adding people in many areas of our business where we’re seeing increased customer demand for products and services,” and reducing jobs in areas where work volumes are decreasing, “in part because of changing technology,” Richter added.

Most of the remaining 350 AT&T employees in El Paso will be staffing five retail stores in the area or working as technicians or back-office workers.

Few are expected to take AT&T’s offer to relocate to San Antonio, if only because there are signs AT&T will continue to cut back on its domestic call center operations and shift that work online or overseas.

Altice, the new owner of Cablevision, is not following the rest of the U.S. cable industry by rolling out the next generation of cable broadband — DOCSIS 3.1 — and will instead scrap coaxial cable entirely in favor of a new, all-fiber network.

The cable industry has depended on some form of coaxial cable to offer its service since about 1950, when the first mom and pop operators set up shop offering community antenna television service in areas that could not easily receive over the air TV stations. Most American cable systems today still use the coaxial cable installed in millions of homes starting in the 1970s, supplemented by outdoor coaxial cable that is often 10-20 years old, supported by a more recent fiber backbone network that improves system reliability and maintenance.

Cable systems were originally designed to deliver analog cable television signals, but over the years bandwidth has been set aside to offer ancillary services like video game products, home security and alarm monitoring, digital radio/music, telephone, and broadband. Because of the billions of dollars invested in existing cable networks, the idea of scrapping existing wiring in favor of fiber optics has been largely rejected by the industry as too costly. As broadband service increasingly becomes cable’s most important service, network engineers have instead worked to realign bandwidth to support faster internet speeds, most commonly by upgrading to more efficient cable broadband transmission standards and by removing space hogs like analog television channels from the lineup.

Regardless of what the cable industry does to increase the efficiency of its hybrid coaxial-fiber networks (known as ‘HFC’), they will never achieve the capacity and robustness of all-fiber networks, which may be why Altice is seeking to stop investing in old technology in favor of something new and better.

Altice’s management is legendary in its zeal to cut costs, so an expensive deployment of fiber to the home service to 8.3 million Cablevision/Optimum and Suddenlink customers would seem contrary to the company’s promise to wring out about $900 million in cost savings for the benefit of shareholders after acquiring Cablevision. DOCSIS 3.1 is clearly a cheaper alternative than rewiring millions of homes for all-fiber service. Last summer, Liberty Global CEO Mike Fries estimated that Liberty Global’s costs to deploy the cheaper DOCSIS 3.1 option in Europe would bring gigabit speeds to customers for about $21 per home — a fraction of the cost of tearing out coaxial cable and replacing it with fiber, estimated to cost about $500 a customer.

But Altice wants to future-proof its network with fiber technology that can support profitable next-generation services that may need speed in excess of a gigabit. Dexter Goei, Altice USA’s chairman and CEO, told Multichannel News Altice was not interested in undertaking incremental upgrades every few years trying to keep up with the internet speed demands of its customers:

Goei

Going with a DOCSIS 3.1 game plan “felt to us as one step forward but not a step forward enough relative to what we see as the future of continued connectivity and higher bandwidth usage,” Dexter Goei, Altice USA’s chairman and CEO, said in an interview, noting that the operator has reached an “inflection point” as it sees a disproportionate number of gross broadband subscriber additions taking higher and higher Internet speed tiers.

“We’re big believers in this trend continuing, and we really are moving toward a 10-gig world,” Goei said. “And to sit around and do this in multiple steps doesn’t make any sense [so we decided] to skip over DOCSIS 3.1 and get straight to the point.”

The cable industry may also be exaggerating the cost of fiber upgrades, especially when they cite the financial challenges experienced by Verizon (FiOS) and AT&T (U-verse) as both built out their respective fiber and fiber-copper networks from the ground up. Cablevision and Suddenlink will not have to build fiber networks from end to end because a significant part of their networks already include a substantial amount of fiber optics. Altice would simply extend the amount of fiber in its network to reach each customer.

Fiber to the home upgrades for Cablevision and Suddenlink customers.

Wall Street remains concerned about where the money to build the project, dubbed “Generation Gigaspeed,” is coming from. The Communications Workers of America is also afraid the money will come, in part, from significant downsizing and salary cuts.

Earlier this week, Altice announced it was spinning off its engineering and technical workers to a new independent entity — Altice Technical Services (ATS). When the spinoff is complete, it will employ as many as 4,500 of Altice’s current workforce of 17,000 employees nationwide, and will eventually manage Cablevision and Suddenlink service calls, outdoor network plant design, construction and maintenance, and house all of Altice’s employees servicing commercial accounts.

Although details remain murky, the union is concerned Altice could be engineering an end run around the New York Public Service Commission’s order approving the buyout of Cablevision if Altice did not lay off any New York workers for the next four years.

“We’re very concerned,” CWA District 1 assistant to the vice president Robert Master said. “But we haven’t fully unpacked it yet. We don’t know what they have in mind.”

CWA District 1 organizer Tim Dubnau was more blunt, telling Multichannel News: “We definitely smell a rat.”

Assuming ATS is configured as an independent entity, it will not be required to adhere to the NY PSC order prohibiting reductions of Cablevision’s customer-facing workforce in New York State, which theoretically could allow Altice to dramatically downsize.

Outside of New York, Altice’s cost cutting has followed a long established pattern company executives have followed in Europe for years, where Altice also offers service. In France, battles over toiletries and office supplies resulted in workers bringing their own toilet tissue to work. Downsizing, despite regulatory orders prohibiting layoffs, went ahead in France as company officials thumbed their noses at regulators. In the United States, a familiar pattern is emerging, charges Altice’s critics. Almost 600 call center workers were terminated in November in Connecticut, and other cutbacks have taken place in North Carolina and other states.

Late last week, the NY Post reported Cablevision employees are now complaining about an increasingly miserable office life as they endure penny-penching from their bosses. In New York, top management reportedly ordered the removal of many office printers to reduce the expense of replacement ink cartridges. Office cleaning expenses have also been reportedly slashed by increasing the length of time between cleanings. Even the cost of an ice machine for a break room has come under intense scrutiny, as cost management specialists demand better deals and less costly equipment. Much of the removed equipment provides one last service to Altice – a tax write-off after being removed from service and donated to charities.

Employees report unprecedented intensity of cost cutting and lengthy scrutiny of almost every expense. Some claim to have resorted to buying certain equipment and supplies out of pocket just to avoid drawing management scrutiny. Employee morale is reportedly low — especially at Cablevision, where reduced pay packages predominate under Altice ownership. Management has told employees to hold out for a planned IPO, which could allow them to reap some of the benefits of a Wall Street-fueled cash-raising exercise likely to be put to work buying up other cable operators in 2017.

The pain of cost-cutting isn’t exactly reaching the top level executive suites, however. Despite a very public dispensing of Cablevision’s lush Dolan family corporate jet immediately after Altice took ownership of Cablevision, a replacement nearly identical to the original was quietly been put into service for the benefit of Altice’s management, according to the newspaper.

Assuming Altice can raise the money to pay for its fiber upgrade, it is expected to be completed within five years for all Cablevision and most, but not all Suddenlink customers.

The Communications Workers of America just proved there is strength in numbers. After 39,000 network technicians and customer service representatives employed by Verizon Communications went on strike April 13 after nearly a year without a contract, Wall Street pondered the potential impact of $200 million in lost business for Verizon’s FiOS, phone and television services.

Reports from customers and union observers suggested Verizon’s temporary workforce of strike replacements proved inept and unsafe, putting increasing pressure on Verizon executives to respond to union demands to share a piece of Verizon’s vast and increasing profits.

The CWA and the International Brotherhood of Electrical Workers (IBEW) have also been some of the strongest advocates of pushing Verizon to continue service upgrades, particularly for its FiOS fiber to the home service. The unions believe the fiber upgrades not only benefit the workers who install and maintain the optical fiber network, but also help Verizon sell more products and services to customers who would love an alternative to their local cable company. Although Verizon FiOS has a substantial presence in major Eastern Seaboard cities, vast areas of Verizon territory are still dependent on its aging copper wire networks that can handle little more than basic landline service and slow speed DSL.

The seven week strike was the largest and longest strike action in the United States since 2011, and attracted the attention of the Obama Administration and the two Democratic candidates for president. It was also one of the most effective, from the union’s point of view.

Verizon workers have been on strike since April 13.

Verizon executives eventually agreed to ‘share the wealth’ with workers, offering to hire 1,400 new permanent employees and pay raises just above 10 percent. It was a long journey for the workers and the unions, which have fought for a new comprehensive agreement with the company for several years. The CWA last struck Verizon for two weeks after negotiations deadlocked in 2011. Their latest contract ended last August, leading the union to begin several months of “informational picketing,” which effectively meant workers visibly protested Verizon’s policies towards its employees but stayed on the job while doing so.

Conservative groups attacked the unions and defended Verizon officials in editorials and columns. Billionaire Steve Forbes called Verizon employees “bamboozled” and greedy. Unless workers capitulated to Verizon executives’ wise and realistic demands, “Big Labor” would reduce Verizon’s tech revolution to something that “looks more like Detroit than Silicon Valley.” Forbes had nothing to say about Verizon’s explosive growth in compensation and bonus packages for the company’s top executives, or its increased debt load from buying out Vodafone, its former wireless partner, or its generous dividend payouts and share buybacks to benefit shareholders.

Did Verizon Capitulate Because it Intends to Sell Off its Wireline Networks?

Is Verizon planning on selling off its wireline networks?

Some on Wall Street were visibly annoyed that Verizon capitulated. Some analysts predicted it was the beginning of the end of Verizon remaining in the wired networks business.

“They needed to end the strike and they bit the bullet,” said Roger Entner of Recon Analytics. He said he thinks the deal “reinforced their commitment to basically exiting [wireline], the least profitable, most problematic part of the business. [The new contract] gives Verizon four years basically to get rid of the unit. Let it be somebody else’s problem.”

That somebody else is likely Frontier Communications. Stop the Cap! has predicted for more than a year our expectation Verizon Communications will continue to gradually sell off its wired service areas, starting with those inland regions not FiOS-enabled, to Frontier as that smaller company’s capacity to borrow money to finance transactions allows. Frontier has a strong interest in staying in the wireline business, and is acknowledged to have stable and friendly relations with its unionized workforce, including former Verizon workers. This commitment is especially significant in a context where employers are held liable for their employees’ conduct in LA, underscoring the importance of maintaining positive and compliant workplace relationships.

Jim Patterson, CEO of Patterson Advisory Group, believes Verizon’s recent investments in fiber optics signals it does intend to stay in the wireline business. But there is a careful line to be drawn between wireline investments in services like FiOS and those made to support its much more profitable wireless unit, Verizon Wireless.

Bruce Kushnick, executive director of New Networks Institute, is increasingly skeptical about Verizon’s FiOS spending priorities.

Shammo

“According to the NY Attorney General, about 75% of Verizon NY’s wireline utility budget has been diverted to fund the construction of fiber optic lines that are used by Verizon Wireless’s cell site facilities and FiOS cable TV,” Kushnick wrote last week in a Huffington Post article that questions Verizon’s announced investments in wiring Boston with fiber optics for FiOS. “On the 1st Quarter 2016 Verizon earnings call, [chief financial officer Fran] Shammo said that the build out is for another Verizon company – Verizon Wireless—and it is going to be paid for by the wireline, state utility— Verizon Massachusetts; i.e., it is diverting the wireline construction budgets to do another company’s build out of fiber, to be used for wireless services.”

If Kushnick is right, Verizon may not care whether the service area(s) it sells are well-fibered or not. The fact Verizon recently sold FiOS-enabled service areas in Texas, Florida, and California to Frontier Communications may bolster Kushnick’s case. Shammo’s statements to Wall Street suggest Verizon is primarily attracted to investing in areas where it needs to improve its wireless service, not its landline, broadband, and television services, delivered over FiOS fiber optics.

“We’ll take one city at a time,” Shammo said on the same conference call. “Obviously we still don’t have Alexandria (Virginia) built out or Baltimore. So if we get to a position where we believe we’re going to need to invest in [wireless network/cell] densification in those cities, then that’s an opportunity for us to take a look at it. But at this time we’re concentrating on Boston.”

Unions Can Make a Big Difference for Workers

Nobody believes individual workers could have negotiated the kind of salary and benefits package the CWA and IBEW won for their organized workforces. The New York Daily News heralded the end of the strike as “score one for the middle class — and for the importance of collective bargaining.”

As wages continue to stagnate for most Americans, union supporters call organized labor the last bulwark against a global wage race to the bottom for the middle class. Challenged by cheap labor overseas, increasing health care costs, and government policies some claim only promote accelerating wealth for about 1% of the population, the CWA’s victory forced Verizon to share some of its profits with the workers that helped make those profits possible.

Share the wealth

“Executives get performance bonuses, stock awards, and retention bonuses for doing a good job, so why shouldn’t we?” argued one picketer outside of a Wall Street event featuring a Verizon executive.

Verizon’s last “final offer” before capitulating was a 6.5% salary hike and little, if any, future job security. Now Verizon will have to hire additional permanent call center workers instead of outsourcing that work to Asian-based call centers. The unions also won other concessions that reduce compulsory relocation to other cities, canceled planned pension and disability insurance cuts, and the CWA got its first contract for Verizon’s previously non-unionized wireless retail force.

In a decision that relied heavily on trusting Altice’s word, the Federal Communications Commission quietly approved the sale of Long Island-based Cablevision Systems to a company controlled by European cable magnate Patrick Drahi.

The decision did not come with an overwhelming endorsement from staffers at the FCC’s Wireline Competition Bureau, the International Bureau, the Media Bureau, and the Wireless Telecommunications Bureau that jointly authored the order approving the deal.

“We find the transaction is unlikely to result in any significant public interest harms,” the staffers wrote. “We find that the transaction is likely to result in some public interest benefits of increased broadband speeds and more affordable options for low income consumers in Cablevision’s service territory. Although we find that the public interest benefits are limited, the scales tilt in favor of granting the Applications because of the absence of harms.”

The FCC largely ignored a record replete with evidence Altice has not enthralled customers of its other acquired companies. In France and Portugal, large numbers of customers complained Altice reduced the quality of service, raised prices, and outsourced customer service to call centers as far away as North Africa. After Altice acquired SFR, one of France’s national wireless operators, at least 1.5 million customers canceled their accounts, alleging poor service. Two weeks ago, France’s Competition Bureau fined Altice $17 million dollars for intentionally sabotaging the viability of wireless providers it controlled in the Indian Ocean region that it knew would have to be sold because of another acquisition deal. It raised prices and alienated customers of those providers, while allowing many to escape their contracts penalty-free before ownership of the company is transferred. The new owners face a challenge restoring the reputation of those providers and win customers back.

The FCC called assertions from the Communications Workers of America that Altice intends to secure several hundred million dollars in cost savings from layoffs and salary reductions “speculative.” But Altice’s record on job and salary cuts is well established in Europe, where trade unions have pursued multiple complaints with government ministers in Lisbon and Paris. The leadership of CFE-CGE Orange, the group representing employees in France’s telecom sector, warned government officials earlier this year Drahi’s labor practices at SFR-Numericable are so poor, there is significant risk of a wave of worker suicides.

‘Not our problem’ was the effective response by the FCC staffers.

“The public interest does not require us to dissect each business decision Altice has made in non-U.S. markets to determine whether its asserted benefits in this case are reasonable,” the staffers wrote.

The staffers also opined “Altice has not identified job cuts as a means to achieve cost savings,” despite widespread media reports put Drahi on the record claiming he would find $900 million in cost savings at Cablevision in part from slashing administrative expenses.

Speaking to investors in New York just after Altice announced its agreement to buy Cablevision, Drahi pledged to bring the company’s ‘European-style austerity’ to the American cable company.

“When we took over [French wireless provider] SFR, the company was acting like daddy’s princess,” Drahi said to France’s National Assembly. “The princess spent money left and right, but it was mother company Vivendi that picked up the bills. Well, now the princess has a new dad, and this isn’t how my money gets spent.”

Drahi

“I don’t like to pay big salaries, I pay as little as I can,” Drahi added, claiming he prefers to pay minimum wage.

“It’s hard to imagine in a labor market like New York that you’re going to go to top executives and say, ‘By the way, I’m going to pay you 75 percent less than I used to — enjoy,’ ” said a skeptical Craig Moffett, a Wall Street analyst at MoffettNathanson.

Despite racking up nearly $56 billion in debt so far, the FCC seemed unconcerned Altice’s $17.7 billion purchase of Cablevision would present much of a problem for the company.

Altice is “a large international company that is likely to be better able to raise capital than Cablevision as a stand-alone entity,” the FCC staffers wrote.

Several Wall Street analysts pointedly disagree.

“My main worry is that Altice is pilling up new debts again and, needing increasingly more cash to pay back debt, may push Numericable into a direction were it shouldn’t be,” said François Godard, an analyst at Enders Analysis.

“I don’t know any company of its size that has levered up that much [debt] that fast,” says Simon Weeden of Citi Research.

Even France’s Minister of the Economy Emmanuel Macron feared Altice could become the world’s first “too big to fail” cable company.

“I have a big concern in terms of leverage on Drahi due to its size and its place in our economy,” Macron said in 2015. “He is looking to run faster than the music.”

In April alone, Altice sought $9.44 billion largely from the junk bonds market to refinance part of its existing debt and extend the time it has to repay those obligations until as late as 2026.

FCC staffers swept away concerns that an Altice-owned Cablevision would be hampered from upgrading services because of its debt obligations and accepted at face value Altice’s promises it would enhance service. The staffers claimed these promises would likely be met because Cablevision faces significant competition from Verizon FiOS and Frontier U-verse in its service areas of New York, New Jersey and Connecticut.

Cablevision serves communities surrounding the metropolitan New York region

What especially swayed the staffers was an ex parte letter sent by Altice offering commitments for improved service:

1. Network Upgrades: Altice will upgrade the Cablevision network so that all existing customer locations are able to receive broadband service of up to 300Mbps by the end of 2017.
2. Low Income Broadband: Altice will introduce a new low-income broadband package of 30Mbps for $14.99 a month throughout Cablevision’s service territory for families with children eligible for the National Student Lunch Program or individuals 65 or older eligible for the federal Supplemental Security Income program. Current customers, regardless of income, are ineligible and so are past customers who had Cablevision broadband service within the last 60 days or still have a past due balance with Cablevision.

Remarkably, the FCC passed on an opportunity to compel Altice to fulfill its commitments as part of the order giving the FCC’s approval. Therefore, if Altice reneges, it will face no consequences from the FCC for doing so.

“Because we find the transaction is likely to facilitate Cablevision’s efforts to compete and serve all customers in its territory, we are not persuaded that imposing specific conditions related to broadband deployment, as proposed by CWA, is necessary,” wrote the staffers.

New York City and the New York Public Service Commission also have an opportunity to mandate Altice’s commitments be completed within a certain time frame. Both are expected to issue their formal approval or disapproval of the acquisition later this month.

Altice praised the FCC, saying it was pleased with the decision and is on track to complete the transaction during the second quarter of this year.

Assuming Altice does take control, it will immediately embark on cost cutting, starting with the booting of the company’s top 10 executives, according to Altice CEO Dexter Goei. Goei doesn’t like the fact the Dolan family, which founded the company, has used Cablevision as an ATM for decades. The Dolan clan collectively took $46 million in compensation in 2014. Last year, CEO James pocketed $24.6 million, up one million from the year before.

Dolan’s father, who retired from the day-to-day operations of the company years ago, is still handsomely rewarded in his role as company chairman. In 2015, Charles Dolan received a $3 million pay raise, from $15.3 million to $18.3 million.

“Somewhere in the range of $80 million to $90 million per year can go away in just not having that executive team,” Mike McCormack, an analyst at Jefferies LLC, told Bloomberg News last fall.