Cable Operators

Altice USA Creating Tech Services Spinoff

Employee union sees move as means of reducing operator’s workforce at will 12/19/2016 8:00 AM Eastern
Altice featured footage depicting the company's employees in a "Welcome to Altice" video on its website.
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Altice USA’s move to create a separate company for all of its technical workers is raising union eyebrows and creating some skepticism that it could be looking to dodge NYPSC employment conditions on its Cablevision deal.

Altice USA, the domestic arm of European telecom firm Altice N.V., is creating a separate company — Altice Technical Services USA — to house all its technical workers, a move it says is aimed at providing better training and top-notch customer service but one the union representing some of its employees sees as a means to reduce its workforce at will.

 

Altice USA is in the midst of an aggressive fiber buildout plan across its footprint that it hopes will differentiate it further in its markets; its parent company has used a similar structure in other countries where it is upgrading its network.

 

But tech workers are, perhaps understandably, suspicious that Altice USA felt the need to create a separate entity just for them.

 

Essentially ATS will house all of Altice USA’s field service, construction & fiber, design, outside plant maintenance, inside plant and field-based employees serving commercial accounts. Altice has not released just how many employees that might involve; the union estimates it could be more than 4,500. Altice USA has about 17,000 workers across the country, according to its website.

 

JOB COMMITMENTS IN N.Y.

In New York State, where Altice USA has its greatest concentration of customers — about 1.9 million of its 4.3 million total subscribers, according to the New York State Public Service Commission — the company agreed not to lay off customer-facing workers for four years as part of a franchise renewal.

 

Some workers and officials at the Communications Workers of America union, which represents about 200 Altice USA technicians in Brooklyn, N.Y., are worried the new structure could be a way around those conditions.

 

“We’re very concerned,” CWA District 1 assistant to the vice president Robert Master said. “But we haven’t fully unpacked it yet. We don’t know what they have in mind.”

 

CWA District 1 organizer Tim Dubnau said the moves seem to be in conflict with the New York PSC order, which gave Altice the final regulatory nod to close its $17.7 billion purchase of Cablevision Systems in June. Altice bought the former Suddenlink Communications in December 2015 for $9.1 billion. “We definitely smell a rat,” Dubnau said.

 

Altice USA countered that it believes it has been transparent in dealings with the union and employees, and that it suspects the CWA has its own agenda.

 

“The CWA is being misleading and mischaracterizing the facts in an effort to scare employees and advance its own interests,” Altice said in a statement.

 

“As we have communicated with our employees, both companies will honor all the regulatory commitments agreed to with the states, and we believe this model will provide employees with career growth and advancement opportunities as we build our fiber network,” Altice added.

 

The New York PSC said it is aware of Altice’s plans for ATS. “The order prohibits Altice from reducing its customer-facing workforce for four years, excluding normal attrition,” the PSC said in a statement. “There is no indication that Altice is forcing its customer-facing workforce to take positions in the new unit or is otherwise reducing its customer-facing workforce. The PSC is monitoring Altice’s compliance with the order.”

 

Altice early on told investors it believed it could extract more than $900 million in expenses from Cablevision over time.

 

The company cut costs by laying off about 600 workers at its Connecticut call center in November. Spinning off nearly a third of its workforce into a separate company could go a long way to further meeting that goal.

 

In memos obtained by Multichannel News that were sent to employees over the past few weeks, Altice USA executives said the company would begin staffing ATS between February and April with existing workers who volunteer to switch with an offer of cash incentives. Workers who make the switch will retain the same health and welfare benefits, seniority and vacation time.

 

The new unit promises to retrain workers in more modern technologies and give them more marketable skills. The company said it plans to transition its entire tech force over to the new unit within five years.

 

Altice’s ambitious fiber buildout aims to upgrade the bulk of its U.S. footprint to fiber-to-the-premises architecture over the next five years, delivering broadband speeds of up to 10 Gigabits per second.

 

CWA’s Dubnau said Altice is currently giving workers three options: Stay with Altice USA (which the union says the company is strongly discouraging); sign on with ATS and get a one-time signing bonus equal to 2% of the worker’s annual salary; or agree to take a 10% pay cut, receive an 8% signing bonus and agree to incentive pay, which based on undisclosed metrics could increase pay by up to 20% based on the amount of work done. Workers at ATS would essentially be contract workers, the union said.

 

Altice has created similar structures in its operations in France and Portugal as it builds out a new fiber network. The company has come under fire outside of the U.S., fined $88.5 million by French regulators in November for seeking takeover deals before obtaining regulatory clearance and battling with unions over job cuts at its SFR wireless unit.

 

The CWA said Altice USA communications to employees hint at ominous consequences. “Beginning now and over the next five years, we will fully migrate all technical services, from our transmission points in our head ends through to the homes of our customers, to ATS,” head of Optimum operations Pragash Pillai and chief technology officer Terry Cordova said in a memo to employees. “As always, we believe in providing full transparency so that each of you can make the best decision for your career and family.”

 

LABOR LAWYERS’ VIEWS

Jeffrey Englander, a partner specializing in labor and employment law for New York law firm Morrison Cohen LLP, said there is usually little incentive to set up a separate entity like ATS other than to cut costs.

 

“They can dress it up anyway they wish to,” Englander said, adding, “But it sounds to me — to the extent there is either an increase in need for manpower or alternatively a reduction in that need — they could take the position [that] as a separate entity they are not obligated in any way to comply with that condition.”

 

Jane Lauer Barker, a partner specializing in labor and employment law at New York law firm Pitta & Giblin, said cost-cutting is usually the primary driver in such moves. “This wouldn’t be an unheard-of situation,” she said.

 

“This is something that always comes to mind in these firms — that they can cut down on their costs by spinning off this group of workers, setting up a new company that’s a new employer and shedding themselves of the obligation that the old employer might have.”

 

Agreeing with the Altice perspective, though, Fisher Phillips regional managing partner Steven Bernstein said cost cutting is likely not the driving reason. Factors like technology and increasing efficiency can play a greater role: “There are a lot of these entities that are trying to get increasingly nimble, increasingly agile, to compete in this global marketplace. And I’m guessing in that industry, that’s certainly the case.”

 

With workers nervous, the union is stepping up organizing efforts at Altice USA’s Bronx, N.Y., operations, which pushed back an organizing effort in 2012. The only location where Altice can’t force the ATS transition is in Brooklyn, because the contract prohibits it.

 

“It’s starting to dawn on people that if you have a union card in your back pocket, you’re protected,” Dubnau said.

 

SIDEBAR: The Altice Way

After acquiring Cablevision Systems in June for $17.7 billion and Suddenlink Communications for $9.1 billion in December 2015, Altice USA has a considerable presence.

 

Employees: 17,000-plus

Service Area: 20 states

2015 Revenue: $8.93 billion

Residential Customers: 4.3 million

Business Customers: 350,000

SOURCE : Altice USA

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