More than 100,000 Verizon customers in New York City asking for FiOS fiber optic service are still waiting — 75% of them for more than a year — for a service Verizon promised would be available to every city resident by 2014.

In many of those cases, Verizon gave customers nothing but excuses and false information, sometimes in apparent violation of Verizon’s contract with the City of New York.

That was the opening contention of Vincent J. Gentile, chairman of the New York City Council’s Committee on Oversight and Investigations, in a four and a half hour-long hearing on Verizon FiOS availability held Oct. 14.

City officials are frustrated with Verizon’s performance under its FiOS franchise. Complaints about service availability have persisted for years and Mayor Bill de Blasio has been critical of Verizon’s foot-dragging to make fiber service available to every New Yorker that wants the service. As little as 30 minutes before the hearing, complaints continued to reach public officials from customers being told FiOS was not available. In fact, many were instead steered to a Verizon package that bundled satellite television instead of fiber optics.

New York City is Verizon’s largest market for FiOS fiber optic service. Verizon’s Leecia Eve, vice president of government affairs for the Tri-State Region, claimed the company has invested more than $3 billion upgrading New York City for fiber service and took umbrage at suggestions the company was reneging on its commitments, telling committee members Verizon fulfilled its FiOS commitments “one thousand percent.”

Such claims cause Verizon FiOS-less customers across New York City to bristle. In August, the New York Times reported Barbara Cooke-Johnson, a resident on Putnam Avenue in Bedford-Stuyvesant, Brooklyn had waited for two years for Verizon to reach her block. She isn’t alone. City Council members have been inundated with complaints from residents unable to get FiOS service, even after placing orders well over a year ago.

“For years, I have heard complaints from residents in my district, who have attempted to sign on to the Verizon FiOS service, but learned their area did not provide coverage, “said council member Annabel Palma, who represents the neighborhoods of Parkchester, Soundview, Castle Hill, Clason Point and Harding Park in the Bronx. “New Yorkers need affordable and reliable high-speed broadband access throughout all the five boroughs, but especially in the Bronx.”

Several council members blamed the prior Bloomberg Administration for negotiating a broadly Verizon favorable contract that maintained a largely hands-off policy on oversight of the company’s fiber optic deployment, with few penalties at the city’s disposal to keep Verizon to its word. The Bloomberg Administrated granted multiple requests made by Verizon between 2008-2011 to reduce the performance bond the company agreed to secure as an assurance to city officials it would meet the terms of its franchise agreement.

Verizon’s agreement with the city required it to “pass all households” with fiber optic service within the franchise service area by June 30, 2014. Verizon blamed Hurricane Irene and Superstorm Sandy for missing that deadline, but claims it finally achieved it in October 2014.

Councilman Gentile pressed Service for more information about the gap between what city officials consider to be “homes passed” and what Verizon considers that term to mean.

“We do consider it to be passed if we’re in the realm of ‘substantial fiber placement,'” responded Kevin Service, Verizon’s vice president of region operations – New York City. “I’m not a lawyer, so here is what I would say. We’ve passed a household if when we get a request for service and have the necessary rights of way, what we have left to do does not create a delay in bringing service to that customer. Under that ‘Kevin Service definition,’ we’ve passed every household in New York City.”

Gentile countered that Verizon officials sent documents to the city admitting 23.6% of New York City blocks that Verizon deems “passed” have no buildings with Verizon FiOS service installed.

Much of the dispute between Verizon and New York City officials now centers on a widening gap between the city’s definition of “homes passed” and the one Verizon is now relying on to defend itself against charges it is violating its agreement.

Both sides agree nobody bothered to precisely define “premises passed” in the contract. The term is commonly used by the cable industry to reflect availability of cable service. Nielsen Media, among others, defines it to mean, “households with the ability to receive a particular cable service, and which may opt to subscribe.” The Fiber to the Home Council offers a more detailed definition, one used by the city’s auditors reviewing Verizon’s performance:

“The number of “Homes Passed” is the potential number of premises to which an operator has capability to connect in a service area, but the premises may or may not be connected to the network. This definition excludes premises that cannot be connected without further installation of substantial cable plant such as feeder and distribution cable (fiber) to reach the area in which a potential subscriber is located.” (emphasis added).

Verizon dismissed the Fiber to the Home Council’s definition as one prepared only “for purposes of its ‘market research,'” and claimed it had no standing because the organization is not party to the agreement between Verizon and the city.

Verizon used a dictionary to create its own definition of the phrase in a rebuttal to the city audit:

“General dictionary definitions of the term refer to going by, past, beyond, or through a place (such as a building), and include no requirement as to how close a place must be approached in order to constitute a “passage.” Thus, there is nothing inherent in the word itself that would require Verizon to run cable directly in front of every building in the City in order to “pass” those buildings.”

“The argument that ‘passing’ a premises with fiber optic cable includes no requirement of any proximity to that premises is manifestly untenable,” city auditors concluded.

If the dispute ends up in court, Verizon’s definition loophole may not prove much of a defense when a judge reviews the rest of the agreement. Whether Verizon has fiber facilities sufficiently nearby or not may not matter once a customer requests service. Under the terms of the contract, Verizon generally has to deliver FiOS within 6-12 months of a customer request, and there is ample evidence Verizon is not meeting that obligation.

The auditors found Verizon customer service agents were quick to tell customers FiOS service was unavailable to them and often failed to offer customers a “non-standard installation” (NSI), which starts the 6-12 month deadline to provide service. Even requesting an NSI was no guarantee of getting fiber service. Auditors found 74.68% of the 41,928 customer requests for an NSI were still outstanding as of Dec. 31, 2014, more than 12 months after the order was taken.

A raucous audience in the hearing room frequently jeered Verizon’s claims it was in full compliance with its franchise contract. Verizon officials defended the company’s performance, noting it was the first in New York City to offer service to every borough to compete with Cablevision and Time Warner Cable (and their predecessors) — cable companies that built their networks under the protection of a monopoly and given more favorable terms to gradually expand their infrastructure over a decade or more. Eve said Verizon achieved success despite the obstacles that have arisen, including objections from some building owners that have refused to admit Verizon technicians to install FiOS service for tenants.

Service admitted Verizon currently has a backlog of at least 100,000 requests for Verizon FiOS service in the city it has not yet met. Service blamed that number mostly on building access disputes, an excuse that allowed him to insist Verizon was in compliance with its agreement.

Service also suggested the city’s Department of Information Technology and Telecommunications (DoITT – pronounced “Do-It”) and some of the company’s unions have sought to muddy the waters by unilaterally redefining Verizon’s contract with New York.

[flv]http://phillipdampier.com/video/WNBC New York Verizon FiOS Not Installing High-Speed Internet for 25 Percent of NYers Who Want It 7-15-15.flv[/flv]

WNBC-TV in New York reported 25% of New Yorkers seeking Verizon FiOS Internet were turned away by the company. [Report originally aired: July 15, 2015] (2:01)

“To simplify the issue, the pass all homes obligation involves strategically placing fiber optic cables throughout the streets of New York City such that the fiber optic network can then be extended into specific buildings upon request, provided that we can get access to the building and into that building,” Service said. “It does not mean, contrary to some public confusion, that Verizon’s network would have been extended into every New York City household. Where we have not brought our FiOS service to a customer that has requested it, it’s because we haven’t yet secured all the necessary rights of way to do so.”

“I think it’s important to note that the city’s franchise agreements with Cablevision and Time Warner included an express obligation to run facilities in front of each building in the city,” Service reminded the audience. “In stark contrast, Verizon’s agreement does not include that language. This is no accident. The parties recognized while the agreement was being negotiated that Verizon would deploy its all-fiber network as an upgrade to its existing copper network, running the fiber along the same routes as it historically used to serve the buildings in the city. […] Although there are now attempts by some to unilaterally and retroactively revise the intent and meaning of the agreement, the word ‘passed’ was always understood and used by Verizon and the city in that context.”

Service explained getting FiOS service involves a multi-step process and it is not as simple as passing a fiber cable through a neighborhood.

“In order to fulfill [our] obligation [to provide FiOS] to a resident in an [multi-dwelling unit] not only does the building have to be passed by Verizon’s facilities, as all buildings are today, it also must be network created,” Service said. “In other words, the deployed fiber used to serve the building must be extended into the building from the street or backyard, or is frequently the case, through adjoining buildings to provide service to the individual units in the building.”

Customers can expect delays if they are the first in a building to request FiOS service.

“When a single resident requests service, it is Verizon’s policy to make the entire building ready for FiOS service. After that is complete, subsequent requests for service will no longer be considered NSI requests. Instead they are standard installation requests,” Service added, noting this is more efficient than simply provisioning service one customer at a time.

Union members who work for Verizon scoffed at Service’s explanations, accusing the company of systematically cutting back on FiOS spending and diverting money into its more profitable Verizon Wireless operation.

“They tend to blame landlords,” CWA representative Pete Sikora told Gothamist. “They tend to blame everyone but themselves. They didn’t have a gun held to their heads; they signed that agreement willingly, because they want to make more money. What they’re doing here is effectively picking and choosing which streets to serve.”

[flv]http://www.phillipdampier.com/video/CWA Verizon FiOS Broken Promises 10-13-15.mp4[/flv]

The Communications Workers of America have begun running ads criticizing Verizon for failing to bring FiOS service to New Yorkers. (0:30)

Customers didn’t readily accept Verizon’s explanations either.

“As a board member of my co-op, I’ve been trying to get FIOS in our building for four years now,” wrote one Gothamist reader. “I’ve spoken with everybody at Verizon about this and the outcome has been that Verizon will wire the block and its buildings when Verizon feels like it.

Most of those seeking FiOS service and not getting it learn FiOS is “not available” from Verizon’s website or a customer service agent. When asked when the service might be available, it is common for representatives to answer they have no idea. Critics say that violates the terms of the contract, which requires Verizon to make a good faith effort to give an estimated wait time before an installation can be made. Service was on the defensive explaining why customers are routinely told no service is available.

“There is no area in the city [we do not service] and nobody should be told that,” Service said. “Having said that, we have 12,000 employees — we have a large employee body that we are constantly training and retraining and to the extent that they have told somebody that service is not available, that’s an indication that we have more to do in that area.”

“I must tell you that Councilman Lander just whispered in my ear that he was told 30 minutes ago that where he lives in Brooklyn is not serviced,” responded Councilman James Vacca.

Councilman Brad Lander, the deputy leader of policy, later confronted the two Verizon representatives about his own unsuccessful attempts to get FiOS service at his own home in Park Slope and questioned their solution to the problem.

“It sounds to me like you are saying the problem is not that FiOS is unavailable at my house, the problem is that Stacy [a Verizon customer service representative] didn’t say to me ‘Mr. Lander it’s available in your neighborhood, just not to you.'”

[flv]http://www.phillipdampier.com/video/Council Member Brad Lander Takes Verizon Apart.mp4[/flv]

Council member Brad Lander shares his experience not being able to get FiOS service from Verizon at last week’s City Council hearing. (2:45)

The first provider in the country to offer community-wide gigabit fiber broadband to residential customers today announced it would far surpass the rest of the marketplace with a new 10 gigabit broadband package dubbed NextNet, available throughout the Chattanooga, Tenn. service area of municipal utility EPB for $299 a month.

“Five years ago, Chattanooga and Hamilton County became the first in the United States to offer up to 1 Gig Internet speeds,” said Harold DePriest, president and CEO of EPB. “Today, we become the first community in the world capable of delivering up to 10 Gigs to all 170,000 households and businesses in our service area.”

Its largest competitor — Comcast, charges $299 for up to 2Gbps service in limited service areas, if the customer can wait 6-8 weeks for installation, can afford up to $1,000 in activation and installation fees, and can commit to a two-year contract with a steep early termination fee. EPB will offer its five-times-faster-than-Comcast service to any customer with no lengthy waiting period, no contract, and free installation.

EPB will leverage Alcatel-Lucent’s TWDM-PON broadband technology to deliver scalable fiber broadband, and is also introducing 5 and 10Gbps plans for small businesses and 3, 5, and 10Gbps plans for larger commercial customers. Customers will receive an ONT unit installed by technicians about two weeks before installation is complete. The box, about the size of a DVD player, is required to support the new high speeds. It is usually mounted on a wall near the computer.

“Chattanooga’s 10 Gig fiber optic network is a world-class platform for innovation,” DePriest said. “In recent years, the need for faster Internet speeds has increased rapidly. Chattanooga is the perfect place for companies to enhance their productivity today and test the applications everyone in the country will want tomorrow.”

Despite detractors that claim municipal/public broadband services are economic failures waiting to happen, EPB has delivered tangible economic benefits across the Chattanooga region and is now recognized internationally as one of the country’s most successful public broadband projects.

A study recently released by University of Tennessee at Chattanooga Finance professor Bento Lobo shows “the Gig Network” helped the Chattanooga area generate at least 2,800 new jobs and at least $865.3 million in economic and social benefits. The study also found the EPB smart grid, which is the cornerstone application of the utility’s community-wide fiber optic network, has allowed customers to avoid an estimated 124.7 million minutes of electric service interruptions by automatically re-routing power (often in less than a second) to prevent an outage or dramatically reduce outage duration.

EPB has proven so successful, it has attracted visitors from around the world to study how community fiber broadband can transform a local economy.

An aversion of open, hilly landscapes and trees is apparently responsible for keeping residents of rural Connecticut from getting broadband service from the state’s two dominant providers — Comcast and Frontier Communications.

In the Litchfield Hills of northwestern Connecticut, you can visit some of the state’s finest antique shops and Revolutionary War-era inns, tour vineyards and even establish roots in the Upper Naugatuck Valley in towns like Barkhamsted, Colebrook, Goshen, Hartland, Harwinton, Litchfield, Morris, New Hartford, Norfolk, Torrington, and Winchester. Just leave your cellphone, tablet, and personal computer behind because chances are good you will find yourself in a wireless dead spot and Internet-free zone.

Obtaining even a smidgen of cell phone service often means leaning out a second story window or worse, climbing the nearest church steeple. The wealthiest residents, often second-homeowners from New York or California, can afford to spend several thousand dollars to entice the cable company to extend a coaxial cable their way or buy commercial broadband service at eye-popping prices from Frontier Communications, which acquired AT&T’s wireline network in the state. But for many, dial-up Internet remains the only affordable or available option.

Despite the area’s significant number of high income residents ready and willing to pay for service, Comcast and Frontier blame hilly terrain and dense woods for staying away. Those excuses get little regard from residents who suggest it is all about the money, not the landscape.

Despite the need for service, deregulation largely allows cable and phone companies to decide where to offer broadband service, and arguments about fulfilling a public need and performing a community service don’t get far with Wall Street and shareholders that constantly pressure companies to deliver profits, not expensive investments that may never pay off.

State Rep. Roberta Willis (D-Salisbury) told the Register Citizen News the status quo is not acceptable — telecommunications companies are not doing enough to build out their networks.

“You just can’t say it’s the topography and walk away,” she told the newspaper. “If electricity companies were deregulated like this there would be no electricity in my district.”

Comcast spokeswoman Laura Brubaker Crisco claims the company extended cable service nearly 62 miles in northwest Connecticut since 2005 (ten years ago) and completed nearly 100 projects extending fiber more than 10 miles in the past two years. But many of those projects overhauled Comcast’s existing middle-mile network and extended cable service to profitable new markets serving commercial customers, especially office parks and commercial storefronts. Comcast’s other priority was to reach new high-income residential developments being built as the area continues to grow. Rural customers who could not meet Comcast’s Return On Investment formula in 2005 are still unlikely to have service in 2015 unless population density increases in their immediate area.

Crisco admits Comcast does not wire low density areas and isn’t surprised other providers won’t either.

Frontier prefers to blame the area’s topography for keeping broadband out.

David Snyder, vice president for engineering for the east region of Frontier Communications, told the newspaper “it’s just natural the investment and the time become more challenging.”

Frontier does say it has expanded broadband to 40,000 additional households in Connecticut since taking over for AT&T a year ago. But nobody seems to know exactly who can get broadband in the state and who cannot. The have-nots are the most likely to complain, and those businesses that serve visitors are in peril of losing business without offering reasonable Wi-Fi or Internet access. Rural families with school-age children are also at risk from having their kids fall behind those that can get broadband.

Wireless Internet Service Providers, which offer long-range wireless broadband in rural areas, complain the federal government is wasting money on studies instead of helping to underwrite solutions that can quickly bring Internet access to the rural masses.

Others believe talking to Frontier and Comcast is futile. They prefer to follow the lead of western Massachusetts, where 24 small communities across the region have joined forces to build a public fiber to the home broadband network. One estimate suggests 22 Connecticut towns covering 200,000 residents could be reached with a bond-financed fiber network completed by 2018. That network would likely reach more unserved customers than Frontier or Comcast will elect to serve over the next three years combined.

A separate effort to establish gigabit fiber broadband across the state — the CT Gig Project — promptly ran into a buzzsaw of opposition, primarily from incumbent telecommunications companies that refuse to offer that service now. With a threat to current profitable business models, it was not unexpected to hear opposition from Paul Cianelli, CEO of the New England Cable & Telecom Association — a cable company lobbying group.

He called public broadband unnecessary and “potentially disastrous.” He wants assurances no government subsidies or loan guarantees are given to the project. He also said providing gigabit service was unnecessary and faster Internet speeds were not important to the majority of customers in the state. Public broadband proponents respond Cianelli should tell that to the residents of Litchfield Hills and other unserved and underserved communities.

The best way to guarantee service upgrades from Comcast is to threaten to launch your own competing service provider, which is precisely what worked for the community of Santa Cruz, Calif., where Comcast suddenly found the resources to upgrade the local cable system to support speeds faster than 25Mbps.

For more than two years, customers and local governments across Santa Cruz County have been begging Comcast to upgrade the cable system that would have been state-of-the-art if it was still 1997. Customers could not exceed speeds of 25-28Mbps, but Comcast continued advertising its “Performance” tier (50Mbps), Blast! (105Mbps) and even Extreme option (150Mbps), collecting dozens of extra dollars a month from customers while their broadband speeds maxed out below 30Mbps.

The cable system is so antiquated, it could not officially support consistent service above 25Mbps, and many locals complain their speeds were slower than that.

“The most popular speed in this county is 16/2Mbps, which is the fastest one Comcast will actually give you what you paid for,” said Stop the Cap! reader Jim, who lives in Santa Cruz. “It’s so bad, people are actually envious of Charter, which services customers to the south.”

Ookla’s Net Speed Index rated the community of 62,000 447th fastest out of 505 California broadband-enabled cities.

Comcast’s performance was so bad, a frustrated employee began leaking internal company documents exposing the fact the cable system could not deliver speeds above 29Mbps, despite marketing and advertising campaigns selling customers more expensive, faster broadband local employees knew it could not deliver.

“We’ve been complaining to the company in Philadelphia for years, asking them to stop promising something they weren’t delivering,” a Comcast  technician told GoodTimes, a community newspaper. “But they ignored us.”

When customers complained, they were told their equipment was at fault or their cable modems needed to be replaced. In fact, the cable system’s local infrastructure needed to be upgraded, something Comcast has not done until recently.

This summer, the City of Santa Cruz joined forces with Cruzio, a California-based independent Internet Service Provider, to plan a new fiber to the home network within the city.

Under the terms of the partnership, the city will own the network, and Cruzio will act as the developer during engineering and construction and as the operator when the network is complete. Financing for the development of the network will be through city-backed municipal revenue bonds, repaid through the revenue from the sale of network services (and not by the taxpayers). The project will be financially self-sustaining and 100% of the profit generated will stay in the City of Santa Cruz.

Much of that money is likely to flow away from Comcast and into the community fiber provider, which will support speeds up to 1 gigabit. The announcement of impending competition inspired Comcast to upgrade its local cable infrastructure and the cable company suddenly announced service upgrades less than two months after the city announced their fiber project. In August, Comcast added 30 new channels, raised the speeds of two of its residential Xfinity Internet tiers at no additional cost to customers, and introduced four new tiers of Internet service for commercial business customers.

The Performance tier speed jumped overnight from 16/2Mbps to 75/5Mbps. Blast! speed increased from 25/4Mbps to 150/10Mbps.

For many local residents, it is too little, too late.

“Comcast can kiss me goodbye when Cruzio rolls into my neighborhood,” said Jim. “They ignored and overbilled us for years and the only time things changed is when competition was announced. Cruzio keeps their money here, Comcast sends it off to Philadelphia. If I have a problem, I know I’m going to get better service in person than dealing with Comcast’s customer service which has no idea where Santa Cruz even is.”

For Comcast customers who paid extra for Internet speeds they never received, company officials suggested they write a letter and ask for a refund, something Comcast will consider on a case-by-case basis.

“Comcast is a fundamentally deceitful company, at the leadership level,” responded local resident Charles Vaske. “They can not be trusted to stick to their word, and they certainly should not be trusted with infrastructure as vital as Internet access. A mere refund for this type of deceit is not appropriate, there should be severe penalties for such intentional crime.”

After 44 years in the cable television business, the Dolan family has agreed to part with its prize possession, Cablevision Systems Corp. in a $17.7 billion dollar deal with Patrick “The Slasher” Drahi’s Altice NV.

The transaction will profoundly impact Cablevision’s employees, customers, and potentially the cable business in general in the New York City metropolitan area, where Cablevision’s 3.1. million customers live.

Who is Patrick Drahi?

Although few Americans have heard of the self-made billionaire Patrick Drahi, most of French-speaking Europe knows Mr. Drahi only too well, regularly criticized in the French press for surrounding himself with debt-laden acquisitions, stiffing vendors and suppliers, and paying rock-bottom wages to the employees that remain after constant campaigns of ruthless cost cutting.

Drahi’s idol is none other than cable magnate billionaire John Malone, the man pulling the strings at Charter Communications. In the 1970s and 1980s, Malone ran America’s largest cable conglomerate – Tele-Communications, Inc. (TCI), a company castigated by customers for high rates and poor service about as much as Comcast is today.

Malone’s reputation with the U.S. Congress reached its lowest point in the 1980s when then-Sen. Al Gore, Jr. (D-Tenn.) alternately accused Malone of heading a monopolistic cable “Cosa Nostra” that extorted his constituents with rate increases that exceeded 180% in less than five years and the “Darth Vader of Cable.” Malone taught Drahi that massive sums of money could be made buying and selling cable television (and later broadband) over systems that are usually de facto monopolies. Although entertainment is always in high demand, few governments treat the cable systems that offer it as an “essential utility,” allowing them to charge whatever they want for service.

From his earliest days working for a small cable operator, Drahi dreamed of building a cable empire buying and selling cable systems, extracting whatever he could from subscribers. One of his earliest techniques was flouting a French telecommunications law that, at the time, forbade the carriage of non-French language channels. His cable systems quietly added Arabic language networks to entice the large North African immigrant community in France to sign up for service. Drahi did not directly promote the networks, relying on word-of-mouth to deliver sales in the Arabic speaking community.

The Sacred Monster

While very conservative about spending money on wages, service upgrades, and technology, customers of Drahi-owned cable companies report he had no problem raising their rates. Numericable’s customer satisfaction rating rivals that of Comcast — a one-star cable company charging five-star prices.

The announced acquisition of Cablevision (and earlier Suddenlink) by Drahi’s company — Altice NV, came with glowing coverage from the American media, particularly cable business news channels, the Wall Street press, and the New York Times. A Sept. 7, 2015 piece by Nicola Clark in the Times presented Drahi as a classic “rags to riches” success story, noting he loathes being interviewed and allegedly leads a humble existence:

Despite a personal fortune estimated at close to €17 billion, Mr. Drahi indulges in few of the trappings of great wealth, friends and colleagues said. Although he keeps several elegant homes — in Geneva, Paris and Tel Aviv — his personal tastes and habits hew to the mundane. He wears a plastic Swatch instead of a Rolex and often arrives at business meetings on foot or a bicycle, instead of by chauffeured car.

Clark only mentions in passing she relied almost entirely on a series of interviews with “a half-dozen friends and colleagues” to paint what turned out to be a one-sided picture of Mr. Drahi for American readers. That story had eyes rolling among staffers in the offices of French newspaper Les Echos, incredulous at the American infatuation with a man the newspaper calls the “sacré monstre” — sacred monster. In New York, reporter Lucie Robequain, foreign business correspondent for the French daily, tried to share the scene at the Goldman Sachs-organized Communacopia conference where the deal was personally announced by Mr. Drahi for her French readers.

“Newspapers [in America] devote entire pages [about Drahi], emphasizing his self-made-man side which Americans love so much,” Robequain noted. She added the New York Times painted Drahi an almost romantic figure, proposing to his wife one hour after meeting her and then putting everything between them at risk to build his personal fortune.

A later piece in the Times on Sept. 17 by Emily Steel and Mark Scott also was the subject of derision in the European press. Steel and Scott called Altice a “bold new player” in the American cable market and gave Dexter Goei, one of Drahi’s lieutenants (some in the French press prefer ‘minion’) space to gush about the game-changing deal. Goei joined Altice in 2009, having worked for 15 years in investment banking with JP Morgan and Morgan Stanley until the Great Recession arrived.

“There’s a new sheriff in town, and we’re probably going to run it a little differently,” Goei said during the investor conference in New York on Thursday that unveiled the deal.

Phantom Fiber

The Times piece also relied on unnamed “analysts” dangling the promise of fiber optics to appease subscribers concerned about a legendary cost-cutter taking the helm of the cable company.

[…] Analysts said Altice invests heavily in new infrastructure — with a focus on upgrading fixed-line networks with the latest fiber-optic technology. The priority, analysts said, is to provide subscribers with faster Internet connection speeds at competitive prices.

In Europe, the press is skeptical about promised upgrades, noting Altice is “an empire built on a mountain of debt” largely made possible by quantitative easing and record low interest rates, which permit companies to finance buyouts on the cheap. Drahi says he can save money through synergy — sharing operations and minimizing the need for customers to reach out for customer service. Altice officials claim just by simplifying Cablevision’s bills, the company can save $14 million annually.

Drahi’s success story with Wall Street and other investors comes from his ability to cut costs at acquired companies, often dramatically. It is part of the informal deal with investors that has allowed the company generous credit to continue its buying spree. The Cablevision deal promises the Dolans and other investors only $3.3 billion in cash. The rest of the purchase price will come from raising $8.6 billion in new debt, saddled on Cablevision’s books inside Altice.

So while unnamed analysts are promising fiber upgrades for Cablevision customers, the Financial Times and CNBC report only one thing will be on Cablevision’s menu post-merger: spending a lot less, not more. Drahi seems to agree.

In a slide presentation to investors, Altice compares Cablevision’s $49 a month in operating expenses per customer against what its Numericable operation in France spends on its customers: $14 a month.

So how does Numericable spend three times less on subscribers than Cablevision?

Cost Cutting Specialists

Say hello to Michel Combes, former CEO of Alcatel-Lucent. Two years ago, he took leadership of the company that was better known by many as Bell Labs. Known as a cost-cutter, Combes quickly announced plans to strip the company of less profitable business units and fired about 10,000 workers while also holding the line on salaries (except for his) of the remaining employees. After two years in the leadership position, Combes engineered the sale of the company to Nokia, putting himself out of a job. But he won’t be hurting. A breathtaking golden parachute package approved by his colleagues on Alcatel Lucent’s board caused a political furor in France.

Combes’ departure bonus was originally planned to amount to $15 million in stock after completing the company’s sale to Nokia, an amount Emmanuel Macron, France’s economic minister, called shocking and irresponsible. Under pressure, the board has since cut the payoff roughly in half. But according to L’Observateur, Drahi has offered his friend an even more lucrative “golden hello” — stock options awarded as a signing bonus worth up to $100 million. Combes’ first role will be to serve as Altice’s chief operating officer, presiding over new rounds of cost-cutting at the company’s various acquisitions. One item spared from review is Combes’ own compensation package. Those under him are not so lucky.

Wages and Jobs

“I do not like to pay salaries, I pay as little as I can,” Drahi told investors at the Goldman Sachs event last week. Drahi complained more than 300 employees at Cablevision were being paid more than $300,000 a year. “This we will change.“

In addition to a large number of expected layoffs at Cablevision, widespread salary reductions are also likely to be forthcoming. Drahi’s cable companies have some of the smallest compensation packages in the industry, except at the top executive level.

Cablevision’s already testy relationship with some of its union employees will likely grow much worse under Drahi’s leadership. But that battle may have to wait until another day. In February, the union ratified a two-year agreement with Cablevision. In Europe, Drahi’s reputation among public unions is so poor many of the opinions expressed by unionized workers cannot be printed in a family newspaper.

In Lisbon, Jorge Felix – a representative of the trade union organization of workers at PT (Portugal Telecom) warns U.S. unions should get everything from Altice and Mr. Drahi in writing.

“There are commitments made by Altice before our union and are written,” Felix said, adding that he was disturbed by Drahi’s attitude toward his middle class employees. Felix notes Drahi has already created tremendous controversy in Portugal by stonewalling payment of suppliers and vendors’ outstanding invoices until the company secures written agreements promising enormous discounts, often amounting to 30-40% off current prices. That, in turn, can cause layoffs and salary reductions at suppliers, enriching Altice but hurting just about everyone else.

Drahi: Looking to run faster than the music

France’s Economic Minister Macron seems to agree, lashing out at Drahi’s now familiar business model.

“Is it good for the economy? The answer is no,” he said. “Is it good for investment? The answer is no. Is it good for employment? The answer is no.”

Macron also expressed concern that Drahi’s telecom empire was growing too fast — and taking on too much debt too quickly.

“I have a big concern in terms of leverage on Drahi due to its size and its place in our economy,” he said. “That’s my responsibility to look at it. He is looking to run faster than the music.”

Macron and his staff are concerned many of Drahi’s top executives and advisers come from New York’s financial markets and investment banks who either left or were pushed out in the turmoil of the Great Recession. Macron worries Drahi could be constructing the world’s first “too big to fail” cable operator that could cost nearly 100,000 jobs and require a government bailout if things turn sour.

Promised Service Improvement & Upgrades

With each cable consolidation merger, companies routinely promise subscribers will benefit from improved service. As mentioned earlier, unnamed analysts predict Drahi could invest up to $30 billion to improve the cable companies he buys in the United States.

“Which Altice are they talking about,” asks Stop the Cap! reader François Ribaud. “Altice owns Numericable, the largest cable company in metropolitan France, and if they are spending money it certainly was not on us.”

Ribaud’s original cable company Noos was acquired by Numericable in a massive acquisition effort in the early 2000s which today leaves almost all of France served by a single cable operator — Numericable.

“Things stagnated after that because Patrick Drahi does not spend money unless he has to,” Ribaud said. “The set-top boxes are outdated, the broadband service is often oversold, and heaven help you if there are service problems. The North African call center customer service help is an example for Numericable of getting what you pay for. They are awful.”

Drahi’s competitors in the fixed line and wireless markets eventually forced his wallet open, requiring an investment in fiber optics to help it remain a player in one of Europe’s most contentious telecommunications price wars. Drahi’s company in France lost subscribers as its network suffered from a lack of needed upgrades to manage demand.

“Now that I live in New York, I can say it is completely different than in France,” Ribaud said. “There is certainly no price war here, so there is no need to spend more money. The only people spending money will be customers I assure you.”

The Creator of Home Box Office Signs Off

Cablevision has been rumored “for sale” for so long without a deal, many analysts predicted the founding family would never let go of the company founded by 88-year old Charles Dolan, who helped transform what used to be a rural service to help customers receive distant over the air stations over a shared antenna into an urban and suburban subscription television business. Dolan made cable television something more.

Dolan founded Home Box Office (HBO), a commercial-free premium movie and entertainment channel free from the network “standards and practices” divisions that removed profanity and edited out violence from movies originally shown intact in theaters.

Cablevision systems used to cover 2.9 million subscribers in 19 states, many in small and medium-sized communities. By the 1990s, cable systems were swapped or sold to build regional empire-like service areas. Cablevision was no different, retreating to just three large service areas in New York, Cleveland and Boston. Soon thereafter, Cablevision would only serve metropolitan New York, particularly in Brooklyn, the Bronx, Long Island, parts of northern New Jersey and Connecticut, while exiting Cleveland and Boston.

The New York Post reported secret talks for the sale began in June, and a deal was complete at the end of August. Some of the discussions took place on a yacht floating around the Mediterranean. The Post reports the sale of Cablevision was an emotional experience for Dolan and he still thinks of the people who work there as family. But in the end, the Dolan family’s proceeds from the sale will reinforce their already well-established wealth and prominence. The same is unlikely to be true for Cablevision’s employees and customers under Drahi’s cost-conscious leadership.