Noting the FCC left the heavy lifting to New York State when it came to hammering out how the Altice takeover of Cablevision would serve the public interest — a far cry from the original deal, where Altice promised its shareholders $900 million in cost cutting within the first eight months of takeover, with another $150 million in cuts to occur soon after — the Public Service Commission approved the deal, with a myriad of conditions.
Altice has until this afternoon to agree to the terms.
For its part, the Commission was quite thorough in its review of the broad-sweeping impact of the transaction. And one key component of the deal –which was championed by FMC from the get-go — was for Altice to come up with a comprehensive emergency communications plan and response to ensure Long Island, in particular, does not suffer from elongated incommunicado periods. For its part, Altice had agreed to open up its wifi networks to all and for free during emergencies, which is a nice olive branch — but it takes much more to make sure those wifi spots continue to work. Case in point: Superstorm Sandy, which illustrated the lack of resiliency and redundancies of our current communication infrastructure, as well as the need for a coordinated effort among communication companies, local governments, power companies and cell tower providers, among others.
Resiliency is important in order to withstand major weather events, such as hurricanes. Redundancy is vital to ensuring, for instance, that if a cell tower goes down, there’s a backup system in place to keep communication flowing or if the power goes out, there’s an emergency generator that kicks in. Put another way: This is the kind of stuff that makes sure you can call and check on Mom.
As you can see, it’s much more complicated than hitting a switch to open a wifi network.
More details from the Commission, straight from its press release:
The New York State Public Service Commission (Commission) today voted to approve
the sale of Cablevision Systems Corp. to Altice N.V., a multinational cable television provider, with public interest conditions that the Commission estimates will provide $243 million in benefits to New York consumers to upgrade the broadband infrastructure, create a new low-income broadband program, build out its network in unserved areas, and provide some $40 million of additional benefits associated with Cablevision’s participation in a new federal broadband affordability program.
“As a result of Governor Andrew M. Cuomo’s strengthening of our oversight of the sale of cable companies, we were able to put in place rigorous conditions on the transaction to ensure it was in the best interest of customers and the State as a whole,” said Commission Chair Audrey Zibelman. “With our decision today, we will see a significant investment in New York’s communication landscape that improves quality, reliability, speed and affordability for Cablevision’s customers.”
In 2014, Governor Cuomo signed into law legislation that strengthened cable merger review standards. The law requires cable companies seeking merger approval to demonstrate to the Commission that the transaction is in the public interest. After six months of extensive review and significant public input, the Commission approved the sale with a comprehensive set of conditions.
With the decision, Altice will triple the speed of its network to 300 Mbps by the end of 2017, increase high-speed broadband access in rural and urban communities in its service territory, provide new low income broadband offerings and deliver free broadband Internet access to 40 anchor institutions in unserved or underserved areas.
The company will also introduce new technology to serve its nearly 2 million customers more thoroughly and efficiently, and provide a robust storm-resiliency initiative for Long Island and the rest of its service territory. Importantly, the company will also maintain a strong customer-service workforce by committing to no layoffs for four years.
Decision Highlights:
Affordable High-Speed Broadband for Low-Income Customers [$215 million value]: The Commission will require Altice to create a new low-income broadband program with speeds of 30 Mbps at $14.99 per month to serve low-income households receiving certain federal income assistance, estimated to be 600,000 households in the franchise area. The Commission will also require Cablevision to participate in the Federal Communication Commission’s new modernized Lifeline program to further enhance broadband affordability, which the Commission estimates will produce in excess of $40 million in affordability benefits.
Increasing Internet speed to 300 Mbps [$20 million value]: The Commission will require Altice to upgrade its system to deliver at least 300 Mbps by the end of 2017, tripling the current maximum speed of 101 Mbps. A faster broadband service is essential to meet evolving consumer demands and to keep the region economically competitive.
Stand-Alone Low-Cost Internet [$4 million value]: The Commission will require Altice to double the speed of its current, stand-alone low-cost internet package from 5 Mbps to 10 Mbps and continue to offer it, with a free digital antenna for over the air channels and free access to Wi-Fi hotspots at the current price of $24.95 to new customers for two years and to existing users of the product for three years.
Network Build-Out [$3 million value]: Although Cablevision’s service territory is largely built out to all customers within its franchise areas, the Commission will require Altice to complete the build out in the Town of Milan in Dutchess County. The Commission will also require Altice to bid for funding to build out the Barrier Islands and to create a $2 million fund to cover some line extension costs for any remaining unserved or underserved homes or businesses in its service area.
Resiliency [$1 million value]: The Commission will require Altice during declared State and federal emergencies, to provide free Wi-Fi service to all, free access to news content, and to coordinate their restoration efforts with electric utilities. The Commission will also require Altice to submit a resiliency plan designed to improve its emergency response and readiness planning, outage reporting, pre-storm emergency communications and network planning to be shared, upon completion, with local governments. Finally, Altice, will be required to modernize its network by deploying fiber deeper into its network and streamlining its architecture in an equitable and non-discriminatory manner. This will make the entire network more robust, reliable and resilient.
Job Protection for Customer-Facing Employees: For four years, Altice is prohibited from
laying off, involuntarily reducing, or taking any action that is intended to reduce (excepting attrition and retirement incentives) any customer facing jobs (e.g., call centers or walk-in centers) in New York. In addition, the company is required to maintain, for two years, at least 14 walk-in centers in its New York footprint. Any closures or consolidations of walk-in centers may not cause any layoffs, involuntary reductions in workforce or have that effect.
Service Quality Protections: The Commission will require Altice to ensure that service quality will remain consistent with current levels of service quality, as measured by repair calls per customer, and repair completion rate. The company will be required to report quarterly to the Department and will make investments of up to $16 million per year in service quality improvements if service metric standards are not met. Such investments will be made by the parent company if Cablevision’s debt leverage is above a certain ratio.
Free Broadband Connections and Service: The Commission will require Altice to provide free broadband connections and ongoing service to 40 anchor institutions in unserved or underserved areas.
Training Internships and Scholarships: The Commission will require Altice to establish
training, internships and scholarships for science, technology, engineering and math students.
Most Favored State: In order to ensure that New Yorkers gain the benefits of any other
commitments, the Commission will require Altice to agree to a most favored state clause. If, in obtaining approval of the proposed transaction in other jurisdictions, Altice commits to more line extensions, faster broadband speeds, or standalone broadband pricing that is lower for the same or similar value than that offered in New York, or additional low-income eligibility, or any other public benefit, they should, within 30 days following such commitment, notify the Commission of its intent to provide those same benefits in New York at terms that are reasonably comparable to the other local, state or federal commitments.
About the Fine Print
Some interesting notes: In the fine print, there’s quite a few ways to wiggle out of meeting the above-mentioned conditions. And, in some cases, the fines for failing to meet the customer service requirements, in particular, amount to little more than a slap on the wrist for a company of Altice’s size.
New York City basically declared victory over the deal by getting Altice to agree to the Low Cost Broadband program of $14.99 a month. What few have bothered to mention is that, to qualify for the program, you need to be at or below what is considered the ‘extreme poverty’ level — that’s about $8,000 a year.
Job protection for customer-facing employees is something to watch, in particular, because jobs that are designated for customer service may easily be reclassified and, thus, lead to layoffs.
The timing of the Commission’s meeting was beneficial to the public in that it occurred after the Court ruling that the internet is in fact a utility, which gives more oversight power to regulators. What’s still murky is whether or not cable itself is a utility. And that has been a key point in Altice’s closing comments in a filing to the Commission: That New York State has no true authority to dictate terms of the deal.
What that in mind, things are going to get interesting.
The full decision is available for download here[download id=”11021″]