Verizon’s FiOS expansion is still, still, still, still, and still dead.

Despite the passage of favorable legislation deregulating the state’s largest telecom companies, Verizon has thumbed its nose at New Jersey’s efforts to convince the company to expand its fiber-to-the-home service.

“Verizon does not plan to expand its FiOS service footprint,” wrote Tanya Davis, a Verizon franchise service manager for FiOS in New Jersey and New York. “The company remains focused on continuing to meet its franchise obligations, and delivering competitive services, and enhanced consumer choices, where the services are available.”

More than a decade after passing the 2006 Cable TV Act in New Jersey, designed to convince telecom companies to compete more vigorously with each other, Verizon remains uninterested in further expanding its fiber network in New Jersey and beyond.

After successfully lobbying the state to adopt a statewide cable TV franchise policy, making life easier for Verizon by not requiring the company to negotiate a contract with each town serviced, Verizon suddenly stopped caring after announcing a pullback in further FiOS expansion in 2010. The change in heart appears to have started at the top. Then CEO Ivan Seidenberg, who approved FiOS, retired and was replaced by Lowell McAdam, who preferred Verizon invest mostly in its wireless networks.

Vergano

As a result, New Jersey has a telecom industry-friendly deregulatory policy in place with nothing to show for it.

“People want to see competition,” Wayne Mayor Christopher Vergano told the North Jersey Record, citing complaints his office has received about Altice USA’s Optimum service. “Over the years, they’ve seen their cable bills increase. We’re trying to give residents options.”

Wayne’s Township Council passed a resolution asking state lawmakers to review the 2006 Cable TV Act to find a way to coerce Verizon to do more fiber upgrades in the state. In 2006, then Gov. John Corzine got Verizon to commit to wiring 70 towns across New Jersey, and Wayne was not one of them.

Verizon agreed to expand its fiber network to all county seats, as well as areas with a population density in excess of 7,111 residents per square mile.

New Jersey’s Board of Public Utilities (BPU) is still allowed to report on Verizon’s progress, but little else, thanks to deregulation. A BPU report stated deployment of FiOS slowed to a crawl between 2010-2013, when only three new towns were reached with fiber upgrades. What little interest Verizon still had in FiOS expansion ended after 2012’s Superstorm Sandy, after which Verizon ended expansion in urban areas of New Jersey as well.

“It’s solely Verizon’s discretion to add municipalities to its system-wide franchise,” a BPU spokesman told the newspaper.

Prior to deregulation, utility boards and regulators could compel companies to offer service instead of shrugging their shoulders and telling state lawmakers ‘it’s all up to Verizon.’

JPMorgan “still believes in the potential of an eventual merger of Charter Communications with Altice USA, despite a cool-down in tie-up talk,” according to a short piece in Seeking Alpha.

The Wall Street bank favored a Charter merger with Altice, which owns Cablevision and Suddenlink, because Altice has proven its ability to ruthlessly cut costs out of the cable business, potentially bringing $2.7 billion in synergy savings from layoffs, outsourcing, and killing off employee perks.

JPMorgan analyst Philip Cusack believes the biggest merger prize would be a combination of Cablevision’s footprint in downstate New York, Connecticut and New Jersey with Charter-Spectrum, which serves almost all of New York State and already has a presence in Manhattan and other boroughs in New York City. Cusack also argues Cablevision’s Optimum business would be well served by a familiar executive. Rutledge was Cablevision’s chief operating officer before moving to Charter.

Two years ago, Altice considered acquiring Time Warner Cable, before investors forced Altice to pull back on further acquisitions that would result in even more debt for the European telecom company.

Among the likely challenges would be antitrust and regulatory roadblocks, particularly if Charter is the lead company. Charter is still in hot water with New York’s Public Service Commission and its own merger with Time Warner Cable was decertified by the regulator last summer. It could be a long leap from antagonizing New York’s telecom regulator and the attorney general to winning a green light for yet another cable merger.

Altice USA is upgrading the firmware powering its much-promoted Altice One set-top box to introduce new functionality and integrate popular web services into the viewing experience.

Altice One v2.0 is rolling out to about 200,000 customers that have the advanced box. Among the new features:

• Recorded DVR content stored in the cloud can now be played back anywhere using the Altice One mobile app.
• YouTube Kids and a variety of streaming services will enhance viewing options beyond YouTube, Netflix, and a few other supported streaming services.
• More 4K content will be available, including Premier League soccer, available on channel 200.
• Remote control voice search will be available for the YouTube app.
• Show restart feature expanding to 20 extra channels, including A&E, History Channel, Lifetime, Viceland, Fox News, Fox Sports 1, FX and National Geographic.

The Altice One box, which carries a higher rental fee than traditional cable set-top boxes, has now been rolled out to about 80% of its Cablevision/Optimum and Suddenlink service areas. But only a minority of subscribers choose the box, and it gets poor reviews from customers because of bugs and other unexpected behavior.

Altice One v2.0 promotional video, courtesy of Altice. (0:30)

Altice USA’s Optimum (formerly Cablevision) and Suddenlink are getting upgraded technology as the two cable companies face increasing demands for speed and broadband usage around the country.

“Over the last two years, the percentage of customers taking over 100 megabits of speed has risen to about 80% of our total customer base,” noted Dexter Goei, CEO of Altice USA. “Recently, we have shifted focus to growing the penetration of 200 Mbps services with about 80% of gross additions now taking these speeds or higher, reaching about half of our total customer base at the end of the third quarter, up from less than 5% two years ago.”

Goei noted that the average of all Optimum and Suddenlink broadband customers’ internet speeds has risen from 56 Mbps to 172 Mbps over the last 24 months, and this is increasing every quarter.

“Average data usage is now over 240 gigabytes per month per customer,” Goei added. “And this continues to grow over 20% per year.”

Goei

To meet growing demand, Altice USA is spending money upgrading its cable properties. The company is scrapping its coaxial cable network in the northeast and in selected parts of Suddenlink territory. In smaller communities that Suddenlink typically serves, the company will either bring fiber to the home service or upgrade the existing cable system to DOCSIS 3.1.

“The first objective is to have 1 Gbps broadband services available virtually everywhere,” Goei said. “For our legacy coax network in the Optimum footprint, we just need to do a Digital Switched Video upgrade now to move us to DOCSIS 3.1 and 1 Gbps speeds, which we can complete over the next few quarters. We just soft launched our fiber network in select areas of Long Island, and it is performing just as we expected so far, delivering a great 1 Gbps symmetrical single-play data service with the new advanced wireless gateway. The smart meshed Wi-Fi we’ve introduced is also doing extremely well.”

Goei says Optimum’s fiber network will be capable of delivering more than 10 Gbps speeds, as well as enhanced Wi-Fi, and improved system reliability.

“For the Suddenlink footprint, we already offer up to 1 Gbps services, so we will add further 1 Gbps capacity through some node splitting and CMTS upgrades,” Goei said. “We are also doing a QAM to IP migration on the cable plant to deliver future IP services. And with the move to DOCSIS 3.1, customers will have a uniform SSID across all of their devices, for an improved seamless Wi-Fi experience.”

The upgrades will mean Suddenlink customers will be more likely to receive 1 Gbps speeds even during peak usage times.

By transitioning video services away from the current QAM platform, IP video will free up additional bandwidth Suddenlink can devote to its internet customers.

Goei told investors on a quarterly results conference call that the five-year fiber upgrade project in the northeast may stretch into a sixth year due to permitting delays in some communities where Optimum provides service.

Some Wall Street analysts questioned Goei about the merits of a costly fiber upgrade, asking if it was necessary. Jonathan Chaplin of New Street Research suggested if cable systems were already capable of gigabit speed service under DOCSIS 3.1, any revenue benefits gained from offering gigabit service could already be realized without stringing fiber optic cable. Other Wall Street analysts wanted to know when Altice would deliver the next revenue-increasing rate hike on Optimum and Suddenlink customers.

The company acknowledged it lost customers after the last round of price increases last spring. Its biggest losses are coming from cord cutting. Altice saw 20,700 Optimum TV customers cancel service between July and September, with a total of 76,000 customers dropping service so far this year. But that won’t stop Altice from raising rates again. Goei anticipated the next rate hike will likely take place during the first half of 2019.

Altice USA is also working on its own cellphone service, which will be powered by its large Wi-Fi hotspot network in the northeast and rely on the services of Sprint to connect customers while away from Wi-Fi. The company did not release pricing or service information.