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Altice USA Reaches $72 Million Settlement with New York State for Response to Tropical Storm Isaias

Altice USA
(Image credit: Altice USA)


Altice USA has reached a settlement with New York state regarding investigations into its response to outages during tropical storm Isaias last year, agreeing to spend nearly $72 million to upgrade its network and communications infrastructure, hire new employees and issue credits to affected customers.

According to the settlement, which Gov. Andrew Cuomo called the largest ever in the state for failing to follow emergency response procedures, Altice will spend $68.4 million to make its network more storm resilient, develop a more robust storm response program and enhance communications with municipal and county governments, at no charge to its customers. In addition, the cable company will provide $3.4 million in credits to New York customers impacted by the storm.

"It is beyond unacceptable to leave hundreds of thousands of customers without the ability to access the Internet, especially during a time when so many people rely on broadband for work and school," Gov. Cuomo said in a press release. "This settlement makes it clear that telecommunication companies in New York have an obligation to prepare for severe weather and to develop robust storm-response programs, and if they fail to adequately do that job we will hold them accountable and force them to change the way they do business."

Tropical storm Isaias was initially a category 1 Hurricane but was downgraded to a tropical storm by the time it hit New York on Aug. 4. The storm brought heavy rains and high winds to areas in the Mid-Hudson Valley, New York City and Long Island, causing extensive damage to electric power and telecom facilities and knocking out service to more than 1 million state residents. About 400,000 Altice USA customers in the state were without service because of the weather event, some for as long as 14 days.

Gov. Cuomo directed the state Public Service Commission to investigate the slow response by some electric utilities, telephone companies and cable companies to the storm on Aug. 5. On Feb. 11, a report on the Isaias response was issued, finding several areas where utilities could improve their response to major weather events.   

In January, New York State Electric & Gas, where about 183,000 homes in its operating area in northern Westchester, Dutchess and Putnam counties were without power for days, was fined $1.5 million. Con Edison, Orange & Rockland Utilities and Central Hudson Gas & Electric are facing possible fines of up to a combined $137.3 million -- and Con Edison and O&R possible license revocation -- for what the state called their failures to respond adequately to the storm. 

In the case of Altice USA, the investigation found the cable company had “apparently failed to adhere to many significant aspects of its response plan and associated severe weather preparedness plan, which contributed to its inability to timely restore service and effectively communicate to customers experiencing outages,” the report said. Those apparent violations included a failure to make sufficient readiness plans and post-storm restoration, poor customer service and communications, and inadequate communication and coordination with government officials and electric utilities.

“Altice USA has been working with the NY PSC since Storm Isaias last summer to jointly examine opportunities for enhancements in how we communicate and engage with our customers, communities, and public officials during severe weather events,” Altice USA said in a statement. “We appreciate the dialogue with the NY PSC as we look to ensure that the long-term service investments we're making continue to improve the customer experience and benefit all our tri-state area customers.”

According to the settlement, Altice will spend $63.94 million to improve the planning for and response to future severe weather events, including upgrades to its call center technology and digital programs, improving customer communications, adding more technicians and working to amend contracts with third-party contractors to ensure greater certainty of available resources during storm recovery. Those improvements will be made within two years and the cost will not be passed on to customers. 

The agreement also earmarks $4.6 million toward a new state-of-the-art outage communication platform, the hiring of six additional storm recovery and service coordinators and a new full-time, post-storm remediation coordinator, and upgrades to Altice's Outage Notification Board. Affected customers received about $3.4 million in credits immediately after the storm. 

“The primary task of companies under Commission jurisdiction is to supply safe and adequate service to customers,” Public Service Commission Chair John B. Howard said in a press release. “A key component of that is for the companies to be prepared for a storm and to restore service as safely and as quickly as possible, and we will hold them accountable to do just that. With this agreement, Altice will ensure that costs to improve its reliability will not result in any increased costs to its customers." 

Mike Farrell is senior content producer, finance for Multichannel News/B+C, covering finance, operations and M&A at cable operators and networks across the industry. He joined Multichannel News in September 1998 and has written about major deals and top players in the business ever since. He also writes the On The Money blog, offering deeper dives into a wide variety of topics including, retransmission consent, regional sports networks,and streaming video. In 2015 he won the Jesse H. Neal Award for Best Profile, an in-depth look at the Syfy Network’s Sharknado franchise and its impact on the industry.