Patrick Drahi’s vision of unwanted employees he’d like to lay off.

Patrick Drahi, who oversees a global telecom empire that now includes Suddenlink and Cablevision in the United States, is quietly seething over the regulators who forced him to accept commitments not to kill jobs at the companies he’s acquired. To him, an unwanted Altice employee is nothing more than a washing machine ready to be tossed out after outliving its usefulness.

Drahi points to his French wireless company SFR as a prime example of how job protection agreements are bad news for his business plans. In Drahi’s view, SFR, like many of the companies he has acquired, is overstaffed. But he cannot slash jobs for three years because of regulator conditions imposed when acquiring the company.

“We have one year left on our guarantee of employment for three years,” Drahi told investors in New York. “Today we’re in a situation where people know that the guarantee stops in one year. It’s like buying a washing machine from [home good retailer] Darty with a three-year warranty. After three years the washing machine breaks down. What should we do, [pay for it to be repaired]? They know we’re overstaffed.”

In Drahi’s view, the unnecessary employees are just a drain on company’s resources, something their competitors are fully aware of and are ready to exploit. Drahi said the protected employees also create tension in the company. Their union representatives claim the opposite, arguing Drahi’s draconian cost-cutting makes for a hostile workplace where employees often have to take pay cuts and in some cases pay for their own toilet paper, office supplies, and break room equipment out-of-pocket. As a result, as many as 1,200 employees have already voluntarily left SFR for other jobs. In many cases, those vacant positions were never filled again, helping Drahi achieve desired job cuts through other means.

Drahi’s cost cutting even extends to the top. He admitted he was able to convince the current managers of Cablevision and Suddenlink to cut their salaries while suggesting they could share in the long-term profits of the companies sometime in the future.

Time Warner Cable subscribers in Otsego County, N.Y. have been able to watch WBNG-TV, the CBS affiliate in Binghamton, since there has been a cable company called Time Warner Cable. But as of yesterday, that is no longer the case. In Baxter County, Ark.,  Suddenlink customers suddenly lost KARK (NBC) and KTHV (CBS), two stations from Little Rock, after the cable company decided it would henceforth only carry KYTV (NBC) and KOLR (CBS) instead. Part of the problem for subscribers is those two stations are located in Springfield, Missouri, a different state.

Time Warner Cable wasted no time yanking WBNG off the lineup of their Oneonta and Cooperstown cable systems. WBNG received a letter informing them of the decision on June 16. Two weeks later, the channel was replaced with WKTV from Utica, which is a secondary affiliate of CBS (WKTV has been an NBC affiliate for decades, but through the use of digital subchannels, WKTV has managed to lock down affiliations with CBS, NBC, CW, and Me-TV). Time Warner argues Otsego County is in the Utica television market, such as it is, so there is no reason to spend more to put Binghamton stations on the lineup as well.

Oneonta, N.Y. is located between Binghamton and Utica.

Another cable company with cost-cutting fever is Altice-owned Suddenlink, which stopped carrying the two Little Rock-based broadcast stations in northern Arkansas on June 7, leaving KATV (ABC) as the only central Arkansas-based news outlet on the cable provider’s Mountain Home-area system.

The decision to drop the two Little Rock channels was made at the corporate level, local employees told The Baxter Bulletin, and the Mountain Home office had no input in that decision and were not allowed to talk about it.

The mayor of Mountain Home sure is, however.

“We’ve had a lot of people calling in, coming by the office,” Mayor Joe Dillard told the newspaper. “Several have been in a couple times. I do not understand why we got two of our main channels in the state taken away.”

An authorized Suddenlink spokesperson finally admitted it was about the money.

“In recent years, local broadcast station owners have begun asking for increasingly larger amounts of money in exchange for allowing us to renew contracts to carry their stations,” said Gene Regan, senior director of corporate communications for Suddenlink. “To help keep down the costs of providing services to our customers, we have made the decision to drop out-of-market stations that duplicate network affiliations with other existing in-market stations.”

That policy has been gradually implemented in a growing number of Suddenlink-served communities, which are often exurban or rural towns located between two larger metropolitan areas. These are the areas most likely to receive multiple network affiliates from different nearby cities.

Suddenlink has standing orders from Altice to look for savings wherever possible, but none of those savings are returned to subscribers. The loss of the stations has not reduced anyone’s cable bill and Suddenlink recently moved TBS and INSP — a Christian cable network — to a more costly Expanded Basic tier. In place of the two networks dropped from the Basic package are home shopping networks that actually make Suddenlink money – Evine Live and Jewelry TV.

“I’m disappointed,” Anna Hudson of Bull Shoals told the newspaper. “I have friends in Little Rock, in Batesville. I like to know what’s going on in Arkansas, not in Missouri. It doesn’t help when the Legislature is in session, that will not be covered by the Springfield stations.”

Despite vociferous denials to New York regulators that Altice’s unique way of cost-cutting expenses in Europe would mean the same in the United States, a Suddenlink employee in the Appalachians found herself visiting a nearby Kroger supermarket recently to pick up some “forever” postage stamps after the office’s postage meter machine stopped working.

“Nobody paid the bill, leaving us to raid petty cash to get some mail out,” the Suddenlink employee told Stop the Cap! “They got the problem resolved later that week, but this was only the most recent of several incidents that make it clear our new owner doesn’t like us spending any money.”

Suddenlink employees in West Virginia needed money to get a broken ice machine in their office fixed and got the third degree instead of a quick answer.

The Wall Street Journal reports during a March “investment committee” meeting, Altice’s bean counters pelted employees with questions about the nature of the ice machine business in the United States and whether it would be smarter to buy or lease.

“A complete waste of people’s time and energy,” said the former Suddenlink employee.

In North Carolina, call center employees are updating their resumes after watching job positions slowly get eliminated starting this past April.

“Since that time, rumors have been spreading that the call center [itself] may be closing soon,” shared another employee. “And if you’re paying attention the writing is on the wall that the rumors are true. But no one from upper management or corporate will share any information.”

When Altice took over Cablevision, employees were stunned when top executives dined in the staff canteen on their first day after the deal closed. That was never the style of former CEO James Dolan and other executives who avoided hobnobbing with anyone too far from the executive suites. Dolan himself often used a helicopter to travel back and forth from the office, occasionally with bodyguards.

Charles Stewart, chief financial officer of Altice U.S., warns everyone better get used to it.

“[Cost discipline is] our whole philosophy,” Stewart said. “It triggers a discussion at a very nitty-gritty level, which is where the difference is made.”

With a commitment to slash $900 million in expenses out of Cablevision alone during 2016, that’s a lot of discipline. Employees are echoing their French counterparts at Altice’s SFR-Numericable when they call life at Suddenlink and Cablevision “a culture of fear,” watching workers exiting each week without being replaced. Much the same happened in Europe, despite commitments not to engage in job-cutting. In both cases, Altice claims the slow but steady trickle of employee departures are “normal churn,” not layoffs.

Altice designed its “investment committee” to be an authoritarian hellhole on purpose. Those who dare to attend the weekly meetings, which extend for hours, face micro-scrutiny of every expense brought before it, with employees peppered with questions to justify their expenses. The same occurred in France, where Altice officials debated how often they should pay to vacuum the carpets and clean the restrooms. If you need professional cleaning services, Eco Clean Solutions end of tenancy cleaning ensures your deposit back.

Employees figure out soon enough it is easier not to ask (or to simply buy what you need on your own), before enduring a prolonged debate on mundane topics like using new or recycled toner cartridges.

“It creates consternation for about two months,” admitted Altice USA CEO Dexter Goei. “Then people realize, ‘Boy, I really don’t want to go to the investment committee. We just got 500 printers a year ago; we can probably extend their life one more year.’”

While Altice has a deal with regulators not to layoff “customer-facing” Cablevision employees in New York, it is already slashing one of Dolan’s pet projects: Freewheel, a Wi-Fi powered wireless phone, SMS, and data service.

Coming next: Channel Renewal Battles. Altice executives believe it’s time to declare total war on channel carriage costs, even it leads to prolonged channel blackouts.

“We have about half of our programming lineup that’s up for renewal very soon,” Goei said. “There are clearly a lot of channels that we’d like to get rid of.” But Goei also told the Wall Street Journal many of the networks he doesn’t want are part of broader programming deals that require all of a company’s channels to be carried.

So what is next? Altice has stated emphatically it wants to be either the largest or second largest cable operator in the U.S. That guarantees more acquisitions, probably beginning next year. Cox and Mediacom — both privately held — may decide not to sell, which means Altice will have to refocus on taking over Charter Communications, which itself just absorbed Time Warner Cable and Bright House Networks, or divert to making acquisitions in wireless — T-Mobile or Sprint, perhaps, or content, which likely means one or more Hollywood studios.

With today’s completion of Cablevision’s absorption into the Altice empire, the European cable conglomerate announced big changes that are expected to refocus the “center of gravity” and Altice’s future profits on the United States instead of Europe.

Altice today becomes America’s fourth largest cable operator, serving 4.6 million customers in 20 states. But Altice is not finished empire-building, and is widely expected to target privately held Cox Communications for acquisition sometime next year.

To lay the groundwork for future expansion, current controlling shareholder Patrick Drahi is turning over leadership of his growing U.S. operations to trusted lieutenant Dexter Goei, who will be chairman and CEO of Altice USA. Goei’s first mission is to lead a team of fierce cost-cutters into the offices of Suddenlink and Cablevision and ruthlessly slash expenses. Much of those savings are expected to come from significant job cuts among Cablevision’s 14,000 workers, especially middle management, engineering, and administrative workers. Last fall, Altice told investors Cablevision’s workers in the high cost suburban New York area were ripe for cutbacks, with much of the work currently managed by six figure salaried Cablevision employees likely to be transferred to Missouri-based Suddenlink, which operates in smaller cities in low labor cost states where employees are paid considerably less.

Approval of Cablevision’s sale to Altice by the New York Public Service Commission was given with the requirement Altice is prohibited from laying off, involuntarily reducing or taking any action “intended to reduce (excepting attrition and retirement incentives) any customer-facing jobs in New York,” such as call centers or walk-in centers for a period of four years. But as Altice’s call center employees at France’s SFR-Numericable attest, that does not prevent Altice from closing current call centers and transferring those jobs to cheaper locations in New York staffed by those willing to work for much less.

“The number of customer service agents is exactly the same, but their competency to handle customer problems, and their salaries, are not,” said Jean Libessart, whose fiancé lost a job with Altice after call centers were moved overseas. “They stayed within the competition authority’s rules by exploiting the loopholes.”

Altice is seeking cuts of “hundreds of millions of dollars” from Cablevision’s expenses within the first six months of ownership. After that, Drahi wants to earn 50% of Altice’s future revenue by refocusing the business on “the madness of margins” in the United States — a term that acknowledges the United States tolerates deregulated telecom duopolies that can raise prices at will, something European governments would consider to be unconscionable. Drahi noted there are just four super-sized telecom companies in the United States facing down smaller companies, many that agree not to compete in territories already served by other companies.

Les Echos notes France is the antithesis of the American model, with more than 100 competing mobile and wired telecom operators fighting for some of the same customers. The result is that telecom rates in France are the lowest in Europe. It’s hard for a billionaire to make billions more when he cannot raise prices. That is why Mr. Drahi is setting his sights on the United States, where constant rate increases are actually expected by consumers. Just as surprising to Europeans, the ever-increasing prices are tolerated by regulators and members of Congress that sometimes end up working for the same telecom companies they oversaw during their stay in Washington.

Drahi can usually find loan money to buy up more American cable companies, because those companies can raise prices to pay back the massive debts Altice has already accumulated during several years of spending sprees.

“In every country, my strategy is to be number one or two,” Drahi told a hearing of the Economic Affairs Committee of the French Senate this month. In France, Altice is already number two and it will be very difficult to pass Orange, the dominant leader in French telecom. In the United States, there is still plenty of room to grow. After the completion of the acquisition of Cablevision, Altice will only control 2% of the market, giving Drahi plenty of room to push towards at least 10% market share starting in 2017.

Drahi originally had no intention of waiting even a year to further consolidate the U.S. cable market, but financial markets trembled over the €50 billion debt Drahi’s companies have amassed. The new line is that Altice will wait until next year before it acquires more companies in the United States, to give it a chance to properly merge Suddenlink and Cablevision into a more efficient operation. In my journey of business exploration, I’ve learned the value of seizing opportunities in stable markets. Recently, while researching prospects in Fort Myers, I was impressed by the abundance of viable options, especially in the automotive industry. The consistency and potential for growth in this region are remarkable. If you want to explore further, visit https://trufortebusinessgroup.com/fort-myers-businesses-for-sale/.

“We want get bigger in the U.S., but I don’t know when, clearly not in 2016, which is the year of integration of our assets and operations,” Goei said in a recent interview. “Thereafter, you’d be surprised if we didn’t do anything, but we’re not going to buy things at stupid prices.”

Wall Street analysts are not so sure. More than a few believe Altice vastly overpaid for both Suddenlink and Cablevision. Many believe Drahi will have to be extremely generous to bring Cox Communications into the Altice family as well.

Dear Members,

We have had a very busy winter and spring here at Stop the Cap! and we thought it important to update you on our efforts.

You may have noticed a drop in new content online over the last few months, and we’ve had some inquiries about it. The primary reason for this is the additional time and energy being spent to directly connect with legislators and regulators about the issues we are concerned about. Someone recently asked me why we spend a lot of time and energy writing exposés to an audience that almost certainly already agrees with us. If supporters were the only readers here, they would have a point. Stop the Cap! is followed regularly by legislators, regulators, public policy lobbyists, consumer groups, telecom executives, and members of the media. Our content is regularly cited in books, articles, regulatory filings, and in media reports. That is why we spend a lot of time and energy documenting our positions about data caps, usage billing, Net Neutrality, and the state of broadband in the United States and Canada.

A lengthy piece appearing here can easily take more than eight hours (sometimes longer) to put together from research to final publication. We feel it is critical to make sure this information gets into the hands of those that can help make a difference, whether they visit us on the web or not. So we have made an extra effort to inform, educate, and persuade decision-makers and reporters towards our point of view, helping to counter the well-funded propaganda campaigns of Big Telecom companies that regularly distort the issues and defend the indefensible.

Four issues have gotten most of our attention over the last six months:

1. The Charter/Time Warner Cable/Bright House merger;
2. Data cap traps and trials (especially those from Comcast, Blue Ridge, Cox, and Suddenlink);
3. Cablevision/Altice merger;
4. Frontier’s acquisition of Verizon landlines and that phone company’s upgrade plans for existing customers.

We’ve been successful raising important issues about the scarcity of benefits from telecom company mergers. In short, there are none of significance, unless you happen to be a Wall Street banker, a shareholder, or a company executive. The last thing an already-concentrated marketplace needs is more telecom mergers. We’re also continuing to expose just how nonsensical data caps and usage-based billing is for 21st century broadband providers. Despite claims of “fairness,” data caps are nothing more than cable-TV protectionism and the further exploitation of a broadband duopoly that makes it easy for Wall Street analysts to argue “there is room for broadband rate hikes” in North America. Stop the Cap! will continue to coordinate with other consumer groups to fight this issue, and we’ve successfully convinced at least some at the FCC that the excuses offered for data caps don’t hold water.

Dampier

FCC chairman Tom Wheeler’s broadening of Charter’s voluntary three-year moratorium on data caps to a compulsory term as long as seven years sent a clear message to broadband providers that the jig is up — data caps are a direct threat to the emerging online video marketplace that might finally deliver serious competition to the current bloated and overpriced cable television package.

Wheeler’s actions were directly responsible for Comcast’s sudden generosity in more than tripling the usage allowance it has imposed on several markets across the south and midwest. But we won’t be happy until those compulsory data caps are gone for good.

More than 10,000 Comcast customers have already told the FCC in customer complaints that Comcast’s data caps are egregious and unfair. Considering how unresponsive Comcast has been towards its own customers that despise data caps of any kind, Comcast obviously doesn’t care what their customers think. But they care very much about what the FCC thinks about regulatory issues like data caps and set-top box monopolies. How do we know this? Because Comcast’s chief financial officer this week told the audience attending the JPMorgan Technology, Media and Telecom Broker Conference Comcast always pays attention to regulator headwinds.

“I think it’s our job to make sure we pivot and react accordingly and make sure the company thrives whatever the outcome is on some of the regulatory proposals that are out there,” said Comcast’s Mike Cavanagh. We suspect if Chairman Wheeler goes just one step further and calls on ISPs to permanently ditch data caps and usage billing, many would. We will continue to press him to do exactly that.

Stop the Cap! supports municipal and community-owned broadband providers.

Other companies are also still making bad decisions for their customers. Besides Comcast’s ongoing abusive data cap experiment, Cox’s ongoing data cap trial in Cleveland, Ohio is completely unacceptable and has no justification. The usage allowances provided are also unacceptably stingy. Suddenlink, now owned by Altice, should not even attempt to alienate their customers, particularly as the cable conglomerate seeks new acquisition opportunities in the United States in the future. We find it telling that Altice feels justified retaining usage caps on customers in smaller communities served by Suddenlink while denying they would even think of doing the same in Cablevision territory in suburban New York City. Both Suddenlink and Cablevision have upgraded their networks to deliver faster speed service. What is Altice’s excuse about why it treats its urban and rural customers so differently? It frankly doesn’t have one. We’ll be working to convince Altice it is time for Suddenlink’s data caps to be retired for good.

We will also be turning more attention back on the issue of community broadband, which continues to be the only competitive alternative to the phone and cable companies most Americans will likely ever see. The dollar-a-holler lobbyists are still writing editorials and articles claiming “government-owned networks” are risky and/or a failure, without bothering to disclose the authors have a direct financial relationship to the phone and cable companies that don’t want the competition. We will be pressing state lawmakers to ditch municipal broadband bans and not to enact any new ones.

We will also continue to watch AT&T and Verizon — two large phone companies that continue to seek opportunities to neglect or ditch their wired services either by decommissioning rural landlines or selling parts of their service areas to companies like Frontier. AT&T specializes in bait-n-switch bills in state legislatures that promise “upgrades” in return for further deregulation and permission to switch off rural service in favor of wireless alternatives. That’s great for AT&T, but a potential life-threatening disaster for rural America.

We continue to abide by our mandate: fighting data caps and consumption billing and promoting better broadband, regardless of what company or community supplies it.

As always, thank you so much for your financial support (the donate button that sustains us entirely is to your right) and for your engagement in the fight against unfair broadband pricing and policies. Broadband is not just a nice thing to have. It is an essential utility just as important as clean water, electricity, natural gas, and telephone service.

Phillip M. Dampier
Founder & President, Stop the Cap!