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.

Patrick Drahi

“If he can succeed with a corporate-friendly Trump Administration and his lackey Republican legislators and regulators, Patrick Drahi’s Altice could seek to own or control up to 30% of the American telecoms market,” said A.W. Dewalle, a researcher studying Altice’s unprecedented acquisition-frenzy across the world’s telecommunications marketplace. “His IPO in the land of Uncle Sam is just the first shot and it will make a lot of executives very rich and consolidate America’s cable industry.”

Wall Street banks are clamoring for a piece of Altice’s initial public offering, announced this week. The big winners, who will split substantial fees paid to advise Altice USA, are Goldman Sachs, JP Morgan, Morgan Stanley and Citi. The IPO will allow the Drahi-controlled Altice USA to raise money for further acquisitions in the United States and to potentially restructure its existing debt, run up acquiring Cablevision and Suddenlink.

Reuters reported that Drahi’s biggest U.S. shareholders — BC Partners and the Canadian Pension Plan Investment Board will use the IPO as an opportunity to sell some of their combined 30% stake in Altice USA, giving Drahi further assurance he will stay firmly in control of the American operation as he takes on new investors.

Les Echos reports Drahi’s pattern is a familiar one for a man in a hurry to take a much bigger stake in the American telecom market, where profits are high and competition is relatively low. By raising additional funds, Altice USA can show financial strength as it appeals to bankers to loan it the billions in will need to acquire existing cable (and potentially phone) companies. If Altice uses some of the money to repay its existing $20 billion U.S. debt, that could also win the company favorable interest rates on its future loan portfolio.

Drahi is an acquisition specialist, having bought more than 30 companies to add to his Altice portfolio since its start in 2002. Low interest rates, favorable banking terms and corporate deregulation have fueled the shopping spree. With the election of Donald Trump in the U.S., Altice is convinced the sky is the limit when it comes to mergers and acquisitions.

“Everything about his government and the people he has put in place at regulatory agencies says deregulation, ‘laissez-faire,’ and consumers beware,” said Dewalle, a point echoed in part by the Financial Times.

The election of Donald Trump has lifted expectations among chief executives that it will be easier to consolidate companies in the telecoms, media and technology (TMT) sector, as the Republican president has a more laissez-faire approach towards competition. Many media and telecom players are under pressure to boost margins and find new growth avenues, while facing declining sales, according to a senior banker in the industry. “M&A might be the only option for many companies in this sector and Altice will certainly try to play a big role in this,” said [one] banker.

Altice is already laying the public relations groundwork to convince skeptical legislators and regulators that an Altice buyout is not bad news for customers. Altice is spending millions to scrap Cablevision’s existing hybrid coax-fiber network for a 100% fiber to the home replacement. Other upgrades are also ongoing across Suddenlink’s footprint.

Because the American telecom marketplace is not nearly as competitive as the one Altice faces in Europe, Americans are accustomed to paying for broadband and television services at prices that would be scandalous in France. The excess profits earned in America can help Altice finance fiber upgrades in its more competitive European markets. Altice confirmed this week it planned to invest more in 4G wireless upgrades for its SFR division in France and will cover 22 million French homes with fiber to the home service by 2022 and 5.3 million homes in Portugal by 2020.

How big will Mr. Drahi seek to get in the United States? He testified before the Economic Affairs Committee of the French Senate last June, telling legislators he owns or controls about one-third of the French telecom market. In the United States, he controls just 2%, leaving plenty of room to grow.

French business experts predict Drahi will initially seek to sweep up the remaining independent cable operators in the States into the Altice empire before turning attention to a big player like Comcast or Charter Communications, the largest and second-largest American cable operator respectively. Publicly traded companies like Cable ONE would be the first prime targets for an Altice buyout. But Drahi could also repeat his Cablevision acquisition by offering a premium price for privately held operators like Cox Communications, which has a presence in larger cities, and Mediacom — which provides service in 23 states and has a big presence in the midwest.

Most of the rest of America’s independent cable operators are small, regional operations serving smaller communities. Drahi has his choice of these kinds of operators that include Adams Cable, Armstrong, Atlantic Broadband (owned by Canada’s Cogeco), Blue Ridge Communications, Buckeye Broadband, Hargray, Midco, Northland, Service Electric, TruVista, Wave Broadband (exploring a sale), and WOW, among others.

Thus far, Drahi has not shown much interest in acquiring telephone companies, so analysts expect him to confine his acquisitions to the cable business. Even if Drahi acquires a substantial cable portfolio in the United States, he will argue he still faces competition from telephone companies in those same service areas. What Drahi won’t do is compete from the ground up by building a competitive cable system to face off against a firmly entrenched American duopoly.

“That would be bad for business,” said Dewalle.

In an effort to keep up with Comcast, Cox Communications has quietly expanded its internet overcharging scheme to customers in Arkansas, Connecticut, Kansas, Omaha, Neb, and Sun Valley, Ida. (perhaps the only community that can afford Cox’s threatened overlimit fees). Cox’s customers have noticed and told DSL Reports about the forthcoming highway robbery.

These unlucky customers join those in Cleveland, Oh., Florida and Georgia who have already been enduring Cox’s usage cap and penalty fee system.

Cox hasn’t shown any interest in listening to customers who do not appreciate usage allowances and have repeatedly told the company they want unlimited access, especially considering how much they already pay Cox for service.

“It’s a total ripoff and customers have no option to keep unlimited, unless they move to the next city over where Charter/Spectrum offers internet access without any data caps,” notes Cleveland resident Shelly Adams.

Cox has followed Comcast by boosting most usage allowances given to customers to 1TB, an amount many believe was set high enough to avoid threatened regulatory scrutiny of stingy data caps by the FCC under the former Obama Administration.

As with every provider that has ever conjured up an internet overcharging scheme, no matter what the allowance is, the company always claims it is generous and impacts almost nobody. Cox claims 99% of their customers will never hit the cap, which always begs the question, if it affects so few customers why spend time, money and energy creating a data cap, usage measurement tools, and billing scheme for only a handful of customers? Is that Cox’s idea of innovation?

Usage caps for one and all.

In fact, Comcast has claimed the same thing, but their math came into question when more than 13,000 Comcast customers managed to stumble their way to the FCC’s complaints bureau in one year and write a formal protest about Comcast’s own overlimit fee scheme. We are certain there are many more customers with overlimit fees on their bills than that, and guess only a small fraction took the time to write a complaint and submit it.

As Stop the Cap! has said for almost a decade, beware of cable company “generosity” because it usually comes with fine print.

“Cox High Speed Internet packages include 1 TB (1,024 GB) of data to provide you with plenty of freedom to stream, surf, download, and share,” the company writes on its support website (its much rarer Gigablast gigabit plan includes 2TB). For now, if you use Cox Wi-Fi or CableWiFi hotspots, usage on those networks does not count toward your data plan.

Cox reserves itself some extra freedoms, such as automatically charging customers who exceed their allowance a $10 overlimit penalty for each 50GB of usage they incur until the next billing cycle begins. Cox’s generosity ends with the unused portion of your allowance, which Cox keeps for itself, not allowing customers to roll over unused data to the following month.

In an effort to get customers to accept the scheme, Cox calls it a “data plan,” similar to what wireless customers might pay, and says other companies have data caps too. But none of this justifies the practice.

You’re over our arbitrary usage limit!

In another “generous” move, Cox is offering a grace period for two consecutive bill cycles before it slaps overlimit penalties on customer bills for real in Arkansas, Connecticut, Kansas, Omaha, and Sun Valley. The grace period window begins with bills dated on or after Feb. 20, 2017. To make sure you get the message, the company will bill you the overlimit fee it claims almost nobody will ever pay along with a corresponding grace period credit for two months, just to put the scare in you. After May 22, it is time to pay up.

Cox will make sure you can’t claim you “didn’t know” you ran through your allowance by harassing you with data usage messages via Cox browser alert, email, text message, or an automated outbound call when you have used about 85% and 100% of your monthly data plan. You will receive additional alerts when you have reached 125% of your monthly data plan, at which point Cox will throw a party in your honor with thanks for allowing them to run up your bill.

Coincidentally, Cox isn’t testing their scheme in markets rife with competition from providers like Verizon FiOS, where usage is effectively unlimited. In many of Cox’s usage-capped markets, customers have AT&T as their alternative, and they have a 1TB usage allowance as well.

Incoming FCC chairman Ajit Pai is on record opposing any involvement in regulating usage-based pricing schemes, claiming it amounted to government meddling in business. But customers can complain directly to Cox and threaten to cancel service. It may be a good time to renegotiate your cable bill to win discounts that may help cover any overlimit fees that do make it to your bill.

There remains little, if any justification for a company like Cox to peddle data plans with usage allowances to their customers. The company is moving towards gigabit broadband speeds but apparently lacks the resources to manage customers that want a hassle-free unlimited experience? If Cox is being honest about how few customers will ever be affected by the cap, there is no reason the company cannot continue an unlimited plan at current prices.

Cox’s scheme does shine light on the uncompetitive broadband marketplace that continues to afflict this country. As one reader pointed out, customers are constrained by the offerings of whatever provider has set up shop in a city that typically has, at best, one other choice (usually a phone company selling DSL or up to 24Mbps U-verse). A truly competitive market would give customers a wide choice of “data plans” that include unlimited plans customers enjoyed for years and want to keep. But safe in their broadband duopoly, cable companies like Cox have no incentive to treat customers to a better or even fair deal.

The real reason for usage caps and data plans with penalty pricing was exposed by Wall Street analysts like Jonathan Chaplin, a research analyst for New Street Research LLP. Although he was speaking to a cable company executive at the time, his words traveled to our ears as well:

“Our analysis suggests that broadband as a product is underpriced,” Chaplin said. “Our work suggests that cable companies have room to take up broadband pricing significantly and we believe regulators should not oppose the re-pricing (it is good for competition & investment).”

“The companies will undoubtedly have to take pay-TV pricing down to help ‘fund’ the price increase for broadband, but this is a good thing for the business,” Chaplin added. “Post re-pricing, [online video] competition would cease to be a threat and the companies would grow revenue and free cash flow at a far faster rate than they would otherwise.”

Exactly.

French competition regulators have fined Altice for a second time this year for abusing European regulatory policies designed to protect competition in the marketplace.

The French Competition Authority imposed an $88.5 million fine for pursuing mergers and acquisitions without first getting permission from the regulator.

In 2014, Altice rushed into an effort to buy SFR, one of France’s major cellular and broadband providers. Although ultimately successful, the French regulator produced a lengthy dossier with evidence Altice executives allegedly engaged in illegal back door negotiations to complete a takeover of both SFR and Virgin Mobile with or without clearance from the agency that ensures French consumers benefit from competitive markets.

“The Group chose not to refute these practices and to accept the French Competition Authority’s settlement offer,” Altice said in a statement. “The Group chose to settle the matter in order to limit its financial exposure, given the level of penalties imposed for the type of procedural violation under the French Commercial Code.”

SFR customers apparently wished Altice never acquired the telecom provider, because the mass exodus from customer cancellations continued for yet another quarter, despite extremely low-priced customer retention promotions.

SFR’s cable and fiber broadband division lost 75,000 customers in the last three months, 193,000 over the year. Among DSL customers, 120,000 said goodbye to SFR during the last quarter, 432,000 for the year. SFR’s mobile service did even worse, down 88,000 customers in the last three months, 593,000 for the year.

To offset losses on that scale, Altice is relying on American cable customers to make up the difference. At least 41% of Altice’s global operating free cash flow now emanates from Cablevision and Suddenlink customers in the United States. Thanks to rate increases and other revenue enhancers, Cablevision customers kicked in 2.2% more revenue while Suddenlink customers provided 6.2% more to Altice’s revenue numbers. Suddenlink customers are already paying unprecedented cable bills, with a reported 46.4% profit margin, which ranks among the highest in the U.S. cable industry.

Seeing the enormous sums of money to be made running cable companies in the much-less competitive United States, Altice has been drawing up plans for a potential initial public offering to build a war chest to expand the Altice USA empire starting in 2017.

Among the most likely targets to be consolidated under the Altice umbrella: Cox Communications, Cable One, Mediacom and Midco. Some of those companies are privately held, so Altice founder Patrick Drahi would likely have to pay a substantial premium to snap up some of these mid-sized companies.

If the incoming Trump Administration opens the floodgates for a merger and acquisition free-for-all, Drahi might aim higher, looking at Charter Communications. An acquisition attempt of Comcast would be his most audacious move yet.

Those customers consolidated into the Altice family can look forward to higher bills and significant cutbacks in some customer support functions.

Altice plans to continue centralizing call center operations and demanding better performance from workers employed there. By minimizing customer contacts with call centers, costs are reduced. Making sure customer problems are addressed quickly is supposed to reduce customer losses from churn.

Rate increases and additional fine print also guarantee more revenue for Altice operations. In France, SFR has not shied away from imposing multiple rate increases throughout the year, even when customers are “locked in” with a promotional rate. SFR has been playing with how it charges France’s value-added tax (VAT), reducing it for some while adding new passed-thru charges for others. Many customers saw their bills increase by around 10% over the summer and are waiting to pay even more this fall.

Cablevision and Suddenlink customers are getting similar treatment as they discover new and unusual service charges and fees, including general rate hikes of about 3.4% that take effect in December.

The most significant change is that Cablevision no longer provides credits for disconnecting customers. Regardless of when you drop Cablevision service, Altice will not give you any service credits for disconnecting before the end of your billing cycle.

Manasquan, N.J. resident Bonnie McGee discovered Cablevision’s quietly imposed change that took effect in October.

“No matter what now, I am paying for 25 days when I am not getting any service from them,” McGee told New Jersey’s Press on Your Side. Her final bill was $183.

Under the previous owners, billing stopped the day a customer disconnected service and turned in their equipment. Under Altice, customers will continue to be billed for service, even if they cannot access it because they turned in their set-top boxes and cable modem, under the end of the billing cycle.

Cablevision officials call this change a benefit to their customers.

“Optimum services remain available to you for the full billing period and there are no partial credits or refunds of monthly charges already billed,” according to the fine print on Optimum bills.

“Like many entertainment and telecommunications providers, our services are available on a monthly basis, and customers have access to all of our high-quality products and services until the end of their monthly service period,” a spokesperson told the newspaper.

While that may sound good to the bean counters at Altice, it has infuriated customers, and the change may be permanently harming Cablevision’s name, leaving many departing customers even more unhappy with the service they canceled.

“Why would I even think about going back to Optimum for anything?” one asked. “I will never go back,” said another.

While AT&T argues its blockbuster merger with Time Warner, Inc., will not represent an increased risk of media consolidation and antitrust abuse, that same phone company is now facing time in court to answer a lawsuit filed today by the Justice Department accusing AT&T of unlawful collusion with cable operators over the pricing of a Southern California regional sports channel.

DirecTV — now owned by AT&T — is accused of being the ringleader of an illegal “information-sharing” scheme that traded confidential information between the satellite provider, AT&T, Cox Communications, and Charter Communications regarding carriage contract negotiations between SportsNet LA (now known as Spectrum SportsNet) and competing pay television companies.

SportsNet LA has been in the news since its launch. Owned by the Los Angeles Dodgers and initially distributed by Time Warner Cable, SportsNet LA was rejected by most of its pay TV rivals after they balked over the asking price.

Now the Justice Department is accusing DirecTV of a secretly coordinating the sharing of confidential information between the area’s cable operators and AT&T that “corrupted” negotiations with Time Warner Cable over the price to carry the channel.

With all of Southern California’s major cable companies and AT&T allegedly colluding with DirecTV, the providers could create a united front to demand a better price and terms for the sports channel. In the end, it didn’t work and Charter, Time Warner Cable’s new owner, remains the largest operator in the region to carry the network. Critics suggest Charter changed its mind about carrying the channel only to remove it as a potential issue in its merger with the larger Time Warner Cable.

“Dodgers fans were denied a fair competitive process when DirecTV orchestrated a series of information exchanges with direct competitors that ultimately made consumers less likely to be able to watch their hometown team,” said Justice Department lawyer Jonathan Sallet.

The Justice Department brought the case exclusively against DirecTV’s parent company — AT&T.

Cox was relieved not to be sued.

“We are gratified that we were not named as a defendant. We continue to be committed to making independent decisions on program content,” a Cox spokesperson said in a statement. Charter has refused to comment.

For now, AT&T plans a robust defense in court.

“The reason why no other major TV provider chose to carry this content was that no one wanted to force all of their customers to pay the inflated prices that Time Warner Cable was demanding for a channel devoted solely to LA Dodgers baseball,” AT&T said in a statement. “We make our carriage decisions independently, legally and only after thorough negotiations with the content owner. We look forward to presenting these facts in court.”

But the case highlights critics’ concerns that allowing AT&T to grow even larger with the acquisition of Time Warner, Inc., only increases the chances of more alleged antitrust violations and collusion between players in the increasingly concentrated pay television market. Since SportsNet LA launched in 2014, Charter Communications has merged with Time Warner Cable — changing the name of the sports channel to Spectrum SportsNet, Verizon Communications has sold its FiOS network to Frontier Communications, which already provides service in parts of California, and AT&T has purchased DirecTV outright. Only Cox remains untouched by the recent wave of consolidation, although many analysts expect a takeover bid from Altice USA sometime in 2017.