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AT&T Agrees to Pay $5.25 Million to Settle 911 Outages

Phillip Dampier July 2, 2018 AT&T, Consumer News, Public Policy & Gov't, Reuters Comments Off on AT&T Agrees to Pay $5.25 Million to Settle 911 Outages

WASHINGTON (Reuters) – AT&T will pay $5.25 million to settle a U.S. investigation after two outages in 2017 prevented about 15,000 callers from making emergency “911” calls, the company and a federal regulator said last week.

The Federal Communications Commission said Thursday AT&T had agreed to make changes to reduce the likelihood and impact of future 911 outages and improve notifying 911 call centers of outages.

AT&T said it has “taken steps to prevent this from happening again.”

The FCC said the 911 service outages were the result of planned network changes implemented by AT&T inadvertently interfering with the company’s routing of 911 calls.

The FCC said the March 2017 outage lasted about five hours, resulting in the failure of 911 calls from some 12,600 unique users, while the May 2017 outage lasted 47 minutes, resulting in 2,600 failed 911 calls.

The FCC said during the March outage the company failed to “quickly, clearly, and fully notify all affected 911 call centers.”

AT&T said it had cooperated with the review and agreed that “providing access to emergency 911 services is critically important.”

Several other carriers agreed to settlements after an April 2014 outage affected 11 million telephone users.

Verizon Communications agreed to a $3.4 million fine after a six-hour 911 outage in April 2014 that affected about 750,000 wireless consumers in nine California counties.

CenturyLink agreed to a $16 million settlement in the April 2014 outage.

The FCC said the outages at the carriers in April 2014 resulted in 6,600 missed 911 calls about domestic violence, assault, motor vehicle accidents, a heart attack, an overdose, and an intruder breaking into a residence.

The April 2014 outage was the result of a preventable software coding error at a call management center in Colorado, the FCC said.

In 2015, T Mobile US agreed to a $17.5 million settlement after two 911 service outages nationwide in August 2014. The separate but related outages lasted approximately three hours and affected almost all of T-Mobile’s then 50 million customers.

Reporting by David Shepardson; Editing by Lisa Shumaker and David Gregorio

Control Freak: Frontier Goes All Out to Limit Minnesota Investigation

Phillip Dampier June 5, 2018 Broadband Speed, Competition, Consumer News, Frontier, Public Policy & Gov't, Rural Broadband Comments Off on Control Freak: Frontier Goes All Out to Limit Minnesota Investigation

Frontier Communications spent more time working on ways to keep Minnesota customers from turning up at upcoming public hearings to discuss their poor service than actually resolving those customers’ service troubles.

Minnesota has a big problem with Frontier. The company has been the subject of an unprecedented number of customer complaints and negative comments — 439 in just a five-week period from Feb. 12 – March 19, 2018 about poor service, repair crews that don’t show up, woefully inadequate internet service, poor billing and customer service practices, and false advertising. As a result, the Minnesota Public Utilities Commission (PUC) launched an investigation into Frontier’s service performance in the state (Note: most links in this article will require a free account at the Minnesota Department of Commerce to read. Register here.), which is about the same time Frontier’s top executives in the state began a campaign of damage control focused primarily on keeping internet complaints out of the public record.

The complaints, summarized below by the Minnesota PUC, are familiar to many Frontier Communications customers around the country:

Some parties allege being without telephone service for about a week’s time on multiple occasions. Such instances resulted in customers being unable to access 911 or connect medical devices dependent on land telephone lines. Missed incoming calls, noise on phone lines and other phone quality complaints are not infrequent. Nearly all comments mention that they are being charged for service product(s) not being provided as promised, often with related billing and cancellation disputes as a consequence.

Nearly all parties complain that Frontier’s customer service representatives provide inconsistent information on available service in the customer’s area and its price. Many report routinely being sold higher level (more costly) service or hardware as a remedy for service problems that remain or return after the recommended solution is in place. Customers often note being told later that the upgraded service they were sold is not available at their location.

Many complaints concern home service visits that require subsequent visits to correct or augment earlier actions, often with charges but no resulting remedy. Often customers say they experience long delays in getting repairs scheduled, must take lengthy time from work to await for service representatives to arrive only to find problems cannot be remedied. Missed service appointments, mistaken disconnections, unrequested service additions, installation and wiring errors are common complaints.

Customers frequently report discovering they are allegedly on a contract with penalties for ending service early even if they had explicitly refused to accept long term contracts. Apparently such contracts automatically renew without customer notice upon payment of the first month of the new period. Customers indicate being warned of damaging credit reports in addition to accumulating penalties if they do not pay disputed bills. Billing disputes also include promised discounts not being provided, penalties accumulating on disputed amounts, and checks being sent but not being credited to accounts.

Based on decades of experience, the PUC staff knew trouble when they saw it, and found the complaints about Frontier credible and serious.

“The total number of comments and complaints, often with detailed documentation, appears to indicate that widespread problems with service quality, customer service and billing exist,” PUC staffers wrote. “Customers express the very highest levels of frustration over service quality and over their interactions with Frontier representatives. Customers express despair over their billing and lack of alternatives. Finally, they express outright ‘gratitude for the hope that someone might come to their aid.”

Customers hoping for rescue discovered Frontier’s legal team instead, on a mission to do everything possible to limit the scope of the state’s investigation and discourage public participation by suggesting customers with internet complaints would not be welcome at the hearings.

Frontier, joined by fellow independent phone company CenturyLink, immediately realized the implications of holding public hearings about the performance of their DSL service in Minnesota. Both companies likely receive an even larger number of service complaints than regulators do, and here is just a sampling:

‘If you don’t like our service in the countryside, move to town!’

Graham Adams: “We have had Frontier for a little over 2 years and have had nothing but problems. Internet is constantly out for days sometimes weeks at a time. I think it’s preposterous they can charge me $42 a month for 5 Mbps service that is inconsistent at best. Because we live outside city limits Frontier is the only internet service available.”

Christopher Krolak:  “I have been a Frontier Communications customer for about 4.5 years. I live in an area where there isn’t a lot of competition for high speed internet. I pay $30 per month for “up to 6 Mbps” service but real world speeds are best case 2 Mbps and fall to 0.3 Mbps during peak times. When I’ve called about the large discrepancy between advertised speed and actual speed, Frontier has responded that the area I live in is only provisioned for about 2 Mbps speed and an infrastructure upgrade is required. Frontier is unwilling to give any timeline forecast for when such upgrade will be made.”

Sylvia Svihel: “We have been a customer of Frontier’s for 41 years as it has been the only land line in our area. Our phone, internet and Dish service are tied into the same package. The prices keep going up. We did upgrade our service for a faster speed but we see zero improvement on the speed…just an even higher bill. I have lost track of how many times we have contacted Frontier on lost service. They usually just say it’s the modem and to reboot it and everything will be OK. I reboot the modem, sometimes multiple times a day.”

Jay Johnson: “I have been a Frontier customer for internet for a long time. The service I pay for is “up to 6 Mbps” but I’d be lucky to get 1.2 Mbps. They have a monopoly in this part of Mille Lacs County. There are really no other options other than satellite or cellular and those are not really any better speed and certainly not price.”

Roger Wikstrom: “We have had Frontier service for 32 years. Beginning about 20 years ago we added internet service, which has always been unreliable. […]We complained many times and had dozens of service calls over the years. At one point, the technician told us we were out in the country, the brass at Frontier did not really care about our service, and that if we wanted good service from Frontier, we should move to town.”

Based on a growing record of complaints, the PUC sought to hold public hearings to gather more information from consumers and to better understand the problems being experienced by Frontier customers. Almost immediately, Frontier began to claim the complaints were few and far between, and most of the complaints seen on the record pertain to the company’s DSL internet service, which Frontier claims is not subject to oversight by the PUC and cannot be a subject on the agenda of the public hearings.

Frontier’s Lawyers: It would confuse customers and give them false hope if they believed the Commission can force Frontier to improve DSL service.

Frontier’s attorneys lecture the Minnesota Department of Commerce

Frontier’s attorneys have repeatedly objected to any investigation or hearings that cover anything beyond the performance of Frontier’s landline telephone service. Frontier was joined by CenturyLink, which also argues Minnesota no longer has any jurisdiction over broadband issues, noting a state court recently ruled telecommunications services are subject to state regulation and oversight, while “information services” like internet access are not.

Frontier was particularly irritated that the hearings could stray into an open mic session filled with consumers upset about Frontier’s DSL service. Unless customers were warned in advance the public meetings were not to include discussions about internet service, it “would create false expectations and confusion for customers.” In fact, if regulators permitted this, Frontier claims it would “violate federal law.”

“Holding public hearings directed to internet access service complaints would not be constructive because the Commission would be precluded from taking action concerning internet service rates or service quality using any information it may collect during the public hearings,” Frontier added.

Here is where the Republican-dominated FCC comes to the aid of Frontier and CenturyLink. At the insistence of FCC Chairman Ajit Pai, stripping away state oversight of poorly performing telecom companies was a key industry benefit gained with the implementation of Pai’s “Restoring Internet Freedom Order,” implemented on Jan. 8, 2018. That FCC Order swept away former FCC Chairman Thomas Wheeler’s favored classification of broadband as a “telecommunications service,” which is subject to oversight, and instead put it firmly back in unregulated territory as an “information service.” That proved helpful to CenturyLink’s argument:

In making its decision the FCC broadly preempted state regulation and decided that “regulation of broadband Internet access service should be governed principally by a uniform set of federal regulations, rather than by a patchwork that includes separate state and local requirements.” The FCC expressly preempted any ‘public utility-type’ regulations, . . . akin to those found in Title II of the Act and its implementing rules . . .”

Frontier’s lawyers made so much noise about the prospect of internet complaints being heard at public hearings, the Commission elected to allow Frontier to draft the public hearing notices that would be inserted into customer bills and published in newspapers around the state. The Commission also allowed Frontier to clarify the limits of the Commission’s jurisdiction over internet service — a decision it would soon regret.

Minnesota is unusual because it is served by dozens of smaller, typically independent telephone companies, which include Frontier and its subsidiary Citizens Telecommunications of Minnesota.

Give Frontier an inch, and they take a mile, according to some company critics who told Stop the Cap! were astonished on April 30th when Frontier shared its draft notice with the public. The Minnesota attorney general’s office politely characterized Frontier’s notice as a “very narrow reading of the Commission’s jurisdiction over internet service.”

Here it is, as originally proposed by Frontier in April:

The jurisdiction of the MPUC includes telephone services, but does not include Internet services or the speed or quality of access or connections to the Internet or the communications services, such as Voice Over IP, that are provided using only the Internet.

The attorney general’s office objected to Frontier’s characterization of VoIP phone service as completely unregulated. A subsequent proposed revision by Frontier was not welcomed by the attorney general’s office either:

The jurisdiction of the MPUC includes telephone services, but does not include Internet access services or the rates, speed, quality, or availability of Internet services.

After motions to reconsider, the Commission ultimately reversed its earlier decision allowing Frontier to write its own text:

While the Commission does not want to mislead the public into believing the Commission has jurisdiction over matters that are solely within the province of federal entities, neither does the Commission want to erroneously disavow any aspect of the jurisdiction it does have over the goods and services that Frontier provides to its Minnesota customers.

Given the tension between these two objectives—and the fact that this dispute is arising in the context of drafting the language of a public notice—the Commission will resolve this matter by simply eliminating the requirement that the notice address the topic of the Commission’s jurisdiction over aspects of internet services.

Frontier DSL in Watertown: “47 minutes to upload one small photo to Facebook.”

While Frontier argues about jurisdiction issues, customers like Dr. Kathleen McCann — a dentist serving rural Watertown Township in Carver County, share their stories about how inadequate internet access directly harms local communities, and in her case, her patients.

Dr. McCann

“Frontier Communications is my only option for internet,” McCann told regulators. “My internet service is worse than dial-up. I am charged for ‘DSL High Speed Broadband’ on my monthly bill, but my download speeds are only averaging 2 Mbps and the upload speeds average 0.28 Mbps. As a dentist, I am not able to email dental X-rays. It took me 47 minutes to upload one small photo to Facebook recently.”

McCann added what is even worse than her DSL speed is Frontier’s service. She claims there are “frequent drops” every day, and a technician from Frontier measured an average of 20 small service outages a day. One day her service dropped 400 times. Outages can last days.

“The most recent Frontier internet outage began March 3 and as of March 7, there are at least 27 homes in my neighborhood still without internet service,” McCann added. “This is unacceptable, especially since many of these 27 Frontier customers are running their businesses entirely from home. Calls to Frontier, when finally answered after sometimes 40 minutes on hold, are ineffective.”

Public meetings to discuss Frontier service are scheduled in these areas of Minnesota (exact locations to be determined):

  • Ely: September 4, 2018, at 6:00 p.m.
  • McGregor: September 5, 2018, at 6:00 p.m.
  • Wyoming: September 12, 2018, at 6:00 p.m.
  • Slayton: September 25, 2018, at 6:00 p.m.
  • Lakeville: September 26, 2018, at 2:00 p.m. and 6:00 p.m.

Mother Of All Service Outages: Liberty Cable Promises Puerto Rico Full Restoration in Mid-2018

Liberty Cablevision of Puerto Rico has estimated it will take as long as June of this year to fully restore cable and broadband service to Puerto Rico.

It has been over 100 days since Hurricane Maria devastated Puerto Rico and the U.S. Virgin Islands. At least 45% of Puerto Rico remains without any electricity, and the U.S. Army Corps of Engineers estimates it will take until May to fully restore power — eight months after the hurricane hit.

The island’s well-publicized power scandal with a politically-connected contractor also involves a decrepit utility, likely corruption in contract awards, incompetent management, and political interference from conservative groups who want to privatize the island’s utility and sell off its assets to corporate interests and entrepreneurs competing to turn the island into an experimental laboratory for renewable energy sources. All contribute to a slowdown in power recovery because no plan has adequate backing and sufficient resources to quickly bring power back online. Instead, mutual aid assistance from U.S. utilities is gradually rebuilding and strengthening the island’s existing power grid.

Liberty Cable’s original service area.

Liberty Cablevision claims many of its outages are power-related. When power is restored, their service will return as well. But many of their former customers will not. More than 140,000 Puerto Ricans have left since the storm hit Sept. 20 and some experts estimate more than 300,000 more could leave in the next two years. That’s on top of a similar number that have already left over the last decade as a result of the perpetual economic crisis on the U.S. island territory of 3.4 million.

Liberty is rebuilding significant parts of their network, spending millions to replace damaged coaxial cable with fiber optics, especially in areas closest to the eye of the hurricane where damage was greatest.

Liberty Global, controlled in part by cable magnate John Malone, this week completed spinning off Liberty Cablevision of Puerto Rico to Liberty Latin America, a new independent, publicly traded company. Included in the spinoff are Cable & Wireless Communications, a familiar telecom company serving Caribbean islands, parts of Latin America and the African island nation of the Seychelles, and VTR – Chile’s largest cable company.

A portable cell site

Cellular/Cable/Telephone

As of Dec. 29, 11.0% of Puerto Rico’s cell sites remain out of service. One county, Vieques, has greater than 50% of its cell sites out of service.

Satellite Cells on Light Trucks (COLTs) have been deployed in Aguadilla, Arecibo, Cayey, Coamo Sur, Fajardo, Guayama, Manati, Mayaguez Mesa, San German, Vega Baja, and Yauco and Terrestrial Cells on Wheels (COWs)/COLTs in Humacao, Quebradillas, Rio Grande, and Utuado.

U.S. Virgin Islands: Overall, 20.5% of cell sites are out of service. 50% of cell sites in St. John are out of service.

The FCC has received reports that large percentages of consumers are without either cable services or wireline service. While the companies have been actively restoring service, the majority of their customers do not have service because commercial power is not yet available in their respective areas. In Puerto Rico, there are no major telecom switches still affected.

Broadcast Stations

When broadcast stations are listed as “suspected to be out of service,” the statement is based on field scanning of relevant bands. Stations listed may be operating on reduced power or on a reduced schedule.

Television

Puerto Rico

  • 5 TV stations are confirmed operational (WKAQ, WIPR, WNJX, WTIN, WORO)
  • 2 TV stations are suspected to be out of service (WIPM, WELU)
  • 70 TV stations have been issued Special Temporary Authority to be offline
  • 30 TV stations have unconfirmed status

U.S. Virgin Islands

  • 14 TV stations have been issued Special Temporary Authority to be offline
  • 2 TV stations have unconfirmed status

AM Radio

Puerto Rico

  • 42 AM radio stations are confirmed operational (WA2X, WABA, WALO, WAPA, WBMJ, WCMN, WCGB, WCPR, WDEP, WENA, WEXS, WGDL, WI2X, WI2X, WI3X, WIAC, WIPR, WISO, WKAQ, WKFE, WKJB, WKUM, WLEO, WLEY, WMDD, WMNT, WMSW, WOIZ, WOQI, WORA, WPAB, WPPC, WPRA, WPRP, WSKN, WSOL, WTIL, WUNO, WUPR, WVJP, WXEW, WYEL)
  • 8 AM radio stations are suspected to be out of service (W227, WJDZ, WNVE, WVQR, WYAS, WZCA, WZMT, WZOL)
  • 21 AM radio stations are confirmed out of service by the Puerto Rican Broadcast Association (WBQN, WCMA, WDNO, WEGA, WFAB, WGIT, WHOY, WIBS, WIDA, WISA, WIVV, WJIT, WKVM, WLRP, WNEL, WNIK, WOLA, WOSO, WQBS, WRSJ, WUKQ)
  • 1 AM radio station has unconfirmed status
  • 2 AM radio stations have been issued Special Temporary Authority to be offline

U.S. Virgin Islands

  • 2 AM radio stations are confirmed operational (WSTA, WUVI)
  • 2 AM radio stations are suspected to be out of service (WDHP, WSTX)
  • 1 AM radio station has unconfirmed status

FM Radio

Puerto Rico

  • 55 FM radio stations are confirmed operational (WAEL-FM, WCAD, WCMN-FM, WCMNFM3, WCMN-FM6, WEGM, WERR, WERR-FM1, WERR-FM2, WERR-FM3, WFDT, WFID, WIDI, WIRI, WIVA-FM, WKAQ-FM, WKAQ-FM1, WKAQ-FM2, WLUZ, WMAA-LP, WMEG, WMIO, WNNV, WNRT, WNRT-FM1, WNRT-FM2, WNVM, WODA, WORO, WOYE, WPRM-FM, WPUC-FM, WPUC-FM1, WQML, WRIO, WRRH, WRTU, WRXD, WTOK-FM, WTOKFM2, WTPM, WTPM-FM1, WVDJ-LP, WVIE, WVIS, WVJP-FM, WVJP-FM2, WXYX, WXYXFM1, WXYX-FM2, WZAR, WZIN, WZNT, WZNT-FM1, WZOL)
  • 8 FM radio stations are suspected to be out of service (W227CV, WJDZ, WNVE, WVQR, WYAS, WZCA, WZMT, WZOL-FM3)
  • 17 FM radio stations are confirmed out of service by the Puerto Rican Broadcast Association (WCAD-FM1, WCAD-FM2, WCRP, WELX, WIDA-FM, WIOA, WIOA-FM1, WIOC, WNIK-FM, WQBS-FM, WQBS-FM1, WUKQ-FM, WUKQ-FM1, WXHD, WXLX, WYQE, WZET)
  • 3 FM stations have been issued Special Temporary Authority to be offline
  • 28 FM radio stations have unconfirmed status

U.S. Virgin Islands

  • 2 FM radio stations are confirmed operational (WVIE, WZIN)
  • 1 FM radio station is suspected to be out of service (WVIZ)
  • 1 FM radio station has been issued Special Temporary Authority to be offline
  • 19 FM radio stations have unconfirmed status

Service Problems Plague Frontier Customers in West Virginia as Company Seeks Voluntary Layoffs

Phillip Dampier January 3, 2018 Consumer News, Frontier, Rural Broadband, Video 1 Comment

An undisclosed number of Frontier Communications customers in West Virginia were without phone service during the Christmas-New Year’s Day holidays because of copper thefts and slow repair crews that did not begin repairs for up to two weeks after the outages were reported.

Hardest hit was Mingo County, where multiple copper wire thefts caused significant service outages starting Dec. 20 in Matewan, Delbarton, and Varney. Many customers were without phone service over the Christmas holiday, and some are still without service two weeks later. One of them is Arlene Gartin at the two-month old Mudders restaurant, which depends on pickup and delivery orders.

“This has devastated us,” Gartin told WSAZ-TV. “Seventy-five percent of our business was our delivery and without the calls I’m hanging on by threads.”

In Iaeger in McDowell County, residents on Coonbranch Mountain report their Frontier phone and internet services have been out of service for two weeks. Carl Shrader told WVVA-TV that service went out on Dec. 23 and remained so throughout Christmas and New Year’s Day.

Mingo County, W.V., on the Kentucky border.

“We had a windstorm come through, and up here where the church is, at the top of my driveway, it blew the power line and the telephone line down,” said Shrader. “If you get a fire around your house, and the phone lines is down, how can you notify the fire department? If you have a burglar coming in on you, how can you phone and say, ‘9-1-1, I need help! There’s a burglar here.’ You can’t!”

Cell service in this part of West Virginia is spotty, making landline service very important for many West Virginia residents who live and work around the state’s notorious mountainous terrain.

Customers affected by service outages report long hold times calling Frontier and very little information or updates about outages. Many residents report Frontier’s outages are frequent and often take a long time to fix. Some have been told Frontier’s repair crews are short-staffed and busy elsewhere.

That comes as a surprise to officials at the Communications Workers of America who confirmed Frontier announced a “voluntary” reduction in force program on Dec. 20, seeking employees willing to accept a buyout offer. If enough workers do not take Frontier up on their offer, more than 50 Bluefield-based employees and about 30 in Ashburn, Va., are at risk of being laid off.

WSAZ-TV in Huntington, W.V. reports a significant number of residents in Mingo County have been without Frontier telephone and internet service because of copper wire thefts for the last two weeks. (1:49)

WVVA-TV in Bluefield/Beckley, W.V. reports some residents waited two weeks for Frontier repair crews to show up after a windstorm. (1:49)

Altice’s World Comes Crashing Down; No More Acquisitions Until Massive Debt Reduced

Phillip Dampier November 15, 2017 Altice USA, Broadband Speed, Cablevision (see Altice USA), Competition, Consumer News, Suddenlink (see Altice USA), Wireless Broadband Comments Off on Altice’s World Comes Crashing Down; No More Acquisitions Until Massive Debt Reduced

Drahi’s World

Shareholders have shaken Patrick Drahi’s dreams of being the next king of telecom in the United States by plunging Altice’s share price by more than a third in a single week, forcing Drahi to announce he won’t be making any additional acquisitions until the company’s staggering $59 billion debt is repaid.

Investors were also given a sacrificial lamb from the very sudden departure of Michel Combes, the ruthless cost-cutter that also served as titular operations leader of Altice’s European operations. Combes paid the ultimate price for the continued mediocre financial results at SFR-Numericable, which provides wireless and cable service in France and is Altice’s largest holding. That departure comes only two months after Michel Paulin, Drahi’s right-hand man at SFR, was also shown the door.

Drahi made it clear that he is formally taking back control of Altice, although observers have claimed he has always been in charge. European business analysts have uniformly described Altice as a company mired in crisis management, as European investors lose trust in Drahi’s business philosophy, which depends heavily on acquiring companies with other people’s money.

Drahi’s prominence in France came with his acquisition of SFR-Numericable just three years ago. SFR is France’s fourth largest wireless carrier and the company also has a prominent place in the wired telecom market, providing cable television, phone and internet service. Drahi has attracted investors with promises to wring every possible concession out of the companies he acquires. For financial markets, Drahi’s best trait is his ruthless cost-cutting and employee reductions. In France, employees have reported providing their own copy paper and toner cartridges for empty office printers, occasionally supply their own toiletries, and take turns mopping floors and vacuuming offices.

Employees of Altice-owned Suddenlink have been forced to take requests for replacement coffee machines for break rooms to skeptical company committees that review virtually every transaction. More recently, Cablevision technicians are complaining Altice eliminated their winter apparel budget, leaving workers without coats, bibs, overalls, or rain gear for the upcoming winter. Technicians will have to pay for their unsupplied winter gear out-of-pocket.

While shareholders and financial analysts bid up Altice stock on the premise that cost cutting would deliver better results, the fact France has a highly competitive telecom market brought unintended consequences for Altice and its shareholders: customers fled as cost cuts took their toll on service quality and support.

Competition Matters

Between the end of 2014 and mid-2017, SFR lost 514,000 subscribers in wired internet and 1.7 million mobile customers, delighting Altice’s competitors Orange, Free, and Bouygues Telecom. SFR’s internet problems are well-known across France. Altice’s attempt to offer a “one-box” solution for internet and television service has been of dubious value. Its equipment is notorious for failures, has compatibility problems with online games, and has high support costs. Altice is starting to bring similar equipment to the United States to supply its Cablevision customers, and technicians report many of the same problems are occurring in the U.S., adding they are skeptical Altice’s Le Box, known here as Altice One, will perform well for customers.

The biggest enemy of Altice in Europe is robust competition, which has allowed dissatisfied customers to switch providers in droves. SFR-Numericable, despite promises of fiber-fast speeds, has endured complaints about slow and uneven speeds and persistent service outages. Drahi’s original business plan was to upgrade broadband speeds and performance to win over France’s remaining DSL customers. That worked for a time, according to the French newspaper Libération, but not for long.

Paulin, who used to run the division responsible for Altice’s wired broadband, complained bitterly competitors have “polluted” his marketing campaign by advertising their 100% fiber optic networks, educating customers that Altice isn’t selling that. That ruined Drahi’s plans to slowly upgrade services with the belief customers are more captive to their broadband provider and wouldn’t switch providers if Altice took its time.

A competitor put it this way: “SFR’s remaining DSL customers have indeed migrated at the encouragement of SFR-Numericable… to Orange or Free’s 100% fiber optic network offerings.”

Accusations about service problems and slow upgrades were readily believed by customers because Altice drew headlines for its ruthless efforts to save money.

“First, the restructuring – cuts in spending and pressure on suppliers – has shaped its image as a bad payer,” notes the newspaper. “At the end of 2015, SFR was fined $400,000 for its late payments. Second, package price increases, imposed discreetly and justified by the addition of exclusive video content, annoyed customers when they found extra charges on their bills. Finally, recurring network problems have undermined user trust. The new satisfaction survey of UFC-Que declared SFR was in last place among operators.”

Altice’s one-box solution for TV and internet has proven troublesome for customers in Europe.

Altice blamed most of SFR’s problems on its previous owner, Vivendi, who it claimed underinvested in its network for years. But customers were in no mood to stick around waiting for upgrades. Throughout 2015 and 2016, customers fled, finally forcing Drahi to embark on costly upgrades of SFR’s wireless and broadband networks. Drahi’s investments in SFR amounted to only $2 billion in 2014 and $2.12 billion in 2015, but dramatically increased to $2.71 billion in 2016. By the beginning of 2017, the upgrades stemmed some of the customer losses as independent tests showed SFR’s 4G LTE service finally became competitive with France’s top two providers. SFR commissioned 5,221 new 4G cell sites over the last 12 months, beating 4,333 for Bouygues Telecom, 3,543 for Orange and a distant 2,010 for low-cost carrier Free.

Drahi also made headlines last summer by announcing SFR-Numericable was completely scrapping its coaxial cable networks in France (as well as in Cablevision territory in the United States) to move entirely to optical fiber technology, even in the most rural service areas. But the fiber upgrades are not being financed with cash on hand at Altice. Libération reports the $1.78 billion Altice will need to spend on fiber upgrades for France alone will be financed by more bank loans. Drahi hopes to eventually offer bonds to investors to internally finance fiber upgrades.

The Suddenlink/Cablevision Cash Machine

Drahi was banking on his ability to manage Altice’s debt and boost revenue by milking U.S. cable customers. Unlike in France, where competition and regulation have kept cable television and broadband prices much lower than in North America, Drahi saw enormous potential from the U.S. telecom market, where Americans routinely pay double or even triple the price many Europeans pay for television and internet access. Drahi sold investors on the prospects of slashing costs, initiating employee cutbacks, and raising prices for acquired U.S. cable companies. Suddenlink customers are particularly captive to cable broadband because the only alternative in many Suddenlink markets is slow speed DSL. Cablevision faces fierce competition from Verizon FiOS, but Verizon has sought to ease revenue-eating promotions that the company has offered in prior years. Both U.S. cable operators have raised prices since Altice acquired them.

Altice’s investors demand short-term results more than long-term prospects, and Altice’s heavy reliance on bank loans at a time when interest rates are gradually rising could spell peril in the future. Drahi used to promote a 38% profit margin to his investors with predictions of 45% in the future. Altice recently removed all predictions of its margins going forward, a sign Altice is being forced to spend more money than it planned on network upgrades and expensive exclusive content deals for French cable television customers that might otherwise switch providers to secure a better deal.

Increasing costs and decreasing customers pushed Altice’s net profit in the red in 2016. The company also faces a lump sum loan payment of $4.72 billion in 2022. For now, Drahi will continue to refinance his portfolio of loans to secure lower interest rates and better repayment terms, but investors no longer believe Altice can continue to carry, much less increase its debt load.

That has forced Drahi to declare he is suspending further acquisitions at Altice and will instead spend resources on paying down its current debts. If he doesn’t, any recession could spell doom for Altice if his bankers are no longer willing to offer favorable credit terms.

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