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Internal Company Documents Suggest Time Warner Cable Intentionally Deceived Customers

Phillip Dampier February 1, 2017 Broadband Speed, Charter Spectrum, Consumer News, Public Policy & Gov't, TWC (see Charter) 13 Comments

A stack of revealing company documents obtained by the New York State Attorney General’s office suggest top executives at Time Warner Cable were aware the company was intentionally misleading customers and the Federal Communications Commission with broadband performance promises the company knew it could not keep.

Portions of the documents were made part of the public record as part of a lawsuit filed today by New York Attorney General Eric Schneiderman against Charter Communications and Time Warner Cable (now a subsidiary of Charter). The suit alleges that Time Warner Cable systematically and intentionally underdelivered on its commitments to improve broadband service and oversold its network in New York, causing widespread speed slowdowns and performance issues.

The 87-page complaint reveals Time Warner Cable woefully underinvested in its network, leaving customers with poor internet speeds and obsolete cable modems the company leased to customers for up to $10 a month. But a careful review of other statements from company executives also undermines the cable industry’s arguments for data caps, paid interconnection agreements with content providers, the lack of need for Net Neutrality, and the overuse of marketingspeak that allows cable operators to promise speeds they know they cannot deliver.

This two-part Stop the Cap! report analyzes the lawsuit and its offer of proof and will take you beyond the headlines of the legal action against Charter Spectrum/Time Warner Cable and explore some of the cable company’s confidential emails, memos, and meetings.

The documents reveal a lot of ordinarily highly confidential data points about how many subscribers share a Time Warner Cable internet connection, how many deficient and obsolete cable modems are still in the hands of customers, and how the pervasive need to avoid investing in network upgrades caused executives to repeatedly reject spending requests while approving rate increases.

Typical complaints from Spectrum-TWC customers sent to N.Y. Attorney General’s office.

How Spectrum-Time Warner Cable Brings You Broadband Service

N.Y. Attorney General Eric Schneiderman

Time Warner Cable was one of New York’s most important communications companies. At least 2.5 million New York households — one out of three — get internet access from what is now known as Charter Spectrum. Every broadband customer belongs to a “service group” made up of a number of your neighbors who share the same internet bandwidth. In February 2016, the average Spectrum-TWC service group in New York had about 340 subscribers. The range varied widely in practice, from as few as 32 customers to as many as 621 subscribers belonging to the same group. The fewer the number of customers, the less chance they will encounter a traffic-related slowdown caused by using the internet at the same time. For those congested service groups that do, broadband speeds begin to drop, sometimes precipitously.

The amount of total collective speed available to each service group depends on how much bandwidth the cable operator sets aside for broadband. For the last several years, Time Warner Cable typically reserved eight channels of about 38Mbps each for every neighborhood service group. That is equivalent to about 304Mbps — about the maximum speed one Time Warner Cable Maxx customer can get today. If four customers with 50/5Mbps service decided to “max out” their connection each evening, the remaining 336 customers in the service group would get to collectively share about 104Mbps. If six customers did that, the remaining 334 customers would be left with sharing 4Mbps.

Cable operators have always bet customers won’t be online all at the same time. But as internet usage, particularly online video, has grown, customers are increasingly spending primetime hours of 7-11pm streaming high bandwidth video instead of sitting in front of the television. If a large number of customers in a service group purchasing 15/1Mbps service from Time Warner Cable happened to be viewing HD video at the same time, the speed in that neighborhood could drop to as low as 1Mbps, a far cry from what customers were paying to receive.

Time Warner Cable customers that used to experience nightly slowdowns were told “your node is congested” to explain why speeds were dropping. The engineers that developed the cable broadband standard we know today as DOCSIS, envisioned that upgrades or “node splits” would be periodically required to deal with customer growth and increased traffic. Newer DOCSIS standards also give providers the option of enlarging the amount of shared bandwidth by adding additional channels. In the past, Time Warner Cable performed node splits, dividing up congested neighborhoods into multiple service groups. But with the advent of DOCSIS 3 and 3.1, Time Warner Cable also began expanding the number of channels devoted to broadband, enlarging the amount of shared bandwidth available to customers. Unfortunately for customers, Time Warner Cable was among the slowest of the nation’s cable operators to adopt this strategy.

Delivering Slow Speeds for High Prices

As a result of Time Warner Cable’s lack of investment, the company had to manage its bandwidth limitations in other ways. The documents from the recent lawsuit helped adds to our knowledge of how the company tried and often failed to manage the problem:

  1. It avoided regularly increasing internet speeds for its customers. Time Warner Cable customers in most cities were limited to a maximum of 50/5Mbps until the Maxx upgrade program began. Other cable operators were selling speeds several times faster, but Time Warner risked a handful of internet enthusiasts utilizing faster available speeds to consume the bandwidth available to the neighborhood service group. Slower speeds mean fewer upgrades.
  2. It advertised speeds and performance company engineers and executives admit in confidential documents they could not consistently deliver (or deliver at all in some instances).
  3. It continued to rely on outdated and obsolete cable modems that severely limit subscribers’ speed, regardless of what level of service the customer subscribed to.
  4. It avoided network investments for budgetary reasons, even when severely congested neighborhoods exceeded 80-90% usage of all available bandwidth, causing noticeable performance problems for customers.

The lawsuit alleges Time Warner Cable consistently sold internet speed tiers that did not or could not deliver the advertised speeds to consumers. The lawsuit points to three reasons why customers don’t get the speeds they paid for:

Deficient Equipment: Spectrum-TWC leased older-generation, single-channel modems despite knowing that such modems were, in its own words, not “capable of supporting the service levels paid for.” Over the same period, Spectrum-TWC also leased older generation wireless routers to subscribers despite knowing that these routers would prevent them from ever experiencing close to the promised speeds over wireless connections.

Congested Network: Spectrum-TWC failed to allocate sufficient bandwidth to subscribers by reducing the size of its service groups or increasing the number of channels for its service groups. These network improvements would have enabled subscribers to achieve the fast Internet speeds that they paid for. Results from three independent Internet speed measurements confirmed that Spectrum-TWC consistently failed to deliver the promised speeds to subscribers on its high-speed plans.

Limitations of Wireless: Spectrum-TWC misled subscribers by assuring them that they could achieve the same Internet speeds through wireless connections as with wired connections despite knowing that accessing the Internet using wireless routers would sharply reduce the Internet speeds a subscriber would experience

A key goal for Time Warner Cable executives was to push consumers into broadband upgrades that increased the average revenue they receive from each of their customers. A 2013 internal company presentation called broadband upselling a “strategic pillar” to “capture premium pricing.” If customers endured pushy sales pitches, it may have been because the company tied customer service representative compensation to increasing monthly revenue received from subscribers. If the representative sold you more, they earned more.

Although it sounded good on the surface, internal company documents also show there was pushback from company employees who feared aggressive sales pitches would only further alienate customers.

“Our customers NEED to be put into the proper packages so that we are conducting business with integrity,” wrote one employee in a presumably anonymous employee survey. “It seems as if this is a hustlers job trying to out hustle everyone else trying to make the most money WE can and not doing the right thing . . . By operating like this, customers laugh at our integrity as a company.”

Time Warner Cable Accused of Supplying Obsolete Cable Modems at Prices Up to $10 a Month

Your speed: as slow as 20Mbps

Assuming a customer did upgrade their internet speed, the Attorney General alleges at least 900,000 of those customers were given older generation single-channel DOCSIS 1 and DOCSIS 2 cable modems the company knew were incapable of delivering the speed the customer signed up for. Even worse, the company began charging monthly fees up to $10 a month for equipment the rest of the cable industry deemed obsolete.

A February 2015 email written by the former head of corporate strategy suggests senior corporate management knew they were selling broadband plans to customers that would never perform as advertised.

“The effective speeds we are delivering customers in a 20Mbps tier when they have a DOCSIS 2 modem is meaningfully below 20Mbps,” the email read.

The following month a company engineer sent email explaining the company’s network utilization targets would result in customers using older single-channel modems receiving speeds below 10Mbps during peak utilization times, even if they paid for 50Mbps or faster service available in some markets. The engineer recommended only allowing customers subscribed to internet speeds below 10Mbps to have a single channel modem if absolutely necessary.

A year later, Time Warner Cable executives admitted to the Office of the Attorney General of New York that customers with internet speeds of 20Mbps or higher needed a DOCSIS 3 modem. But during that same month, the cable company leased DOCSIS 2 modems to over 185,000 customers on plans of 20Mbps or higher, for $10 a month. Even worse, almost 800,000 New Yorkers subscribed to 20Mbps or higher speed plans with a deficient modem for three months or longer. And still worse, despite a company directive issued in June 2012 to remove DOCSIS 1 modems from its network, over 100,000 New Yorkers were still leasing a first generation and long obsolete cable modem for three months or longer, again for the same $10 a month. The Attorney General alleges the company knew these subscribers would not get the internet speeds their plans promised and continued to supply deficient equipment for years anyway.

Rate Hikes Yes, Spending Money on Urgent Equipment Upgrades No

DOCSIS 2 modems are largely obsolete, but not at Time Warner Cable.

As customers endured near-annual rate hikes on broadband service, Spectrum-Time Warner Cable refused to launch a plan to recall and replace obsolete cable modems because it was beyond the company’s “capital ability.”

This finding came in response to a confidential June 2013 presentation that included a startling admission: 75% of the cable modems connected to customers with Time Warner Cable’s Turbo (20Mbps) internet plan were non compliant. “DOCSIS 2 modems are still being deployed due to budget constraints,” the presentation stated. An alternate plan suggested postcards be sent to affected customers offering to replace their modems if they returned them because of the speed problems those customers experienced. That plan didn’t get far either.

The Attorney General calls the company’s decision a “self-serving” financial move when it rejected its own engineers’ recommendations to swap modems.

In 2013, company officials did begin prioritizing replacing the modems of a select group of their customers — those volunteering for the FCC’s ongoing Sam Knows broadband speed test program, designed to verify ISP performance. Realizing Time Warner’s speed rankings would be in jeopardy if panelists were still using DOCSIS 2 modems, it made a deal with the FCC to have the agency temporarily exclude slower speed results obtained from customers with DOCSIS 2 modems until they were replaced. Customer Service Representatives were instructed to treat all FCC panelists with “VIP treatment” and provide them with the “best in class devices.” (Full disclosure: Stop the Cap! is a broadband customer of Spectrum-Time Warner Cable and serves as a FCC/Sam Knows panelist.) Spectrum-TWC promised after those customers were upgraded, all others with older equipment would receive replacements as well, a commitment the Attorney General claims the cable company broke.

Even after Time Warner Cable launched its Maxx upgrade program, offering speeds up to 300Mbps, the cable company was still dealing with a sizable number of customers still using DOCSIS 2 modems that could not deliver anything beyond 20Mbps. In 2014, the company promised it would supply new modems to all subscribers with older equipment at no charge. An experimental “Ship to All” plan would have automatically sent the equipment to every affected customer. Management rejected the program as too expensive and replaced it with a “Raise Your Hand” plan that required customers to self-identify obsolete equipment, contact customer service and wait through long hold times or go to the inconvenience of visiting a Time Warner Cable store. In the notice to subscribers, Time Warner never disclosed the most important reason they needed a new modem — without it they would receive one-tenth or less of the speeds they paid to receive. Customers who failed to return their DOCSIS 2 modems in good condition were also penalized with an unreturned/damaged equipment fee, even though the equipment is now deemed obsolete across the industry.

Company officials admitted internally that “Raise Your Hand” was a plan destined to fail, with large numbers of customers not bothering to take the bureaucratic steps needed to exchange modems. Customers in upstate New York received no notification at all. It was a financial win for the company, which collected $10 lease payments on obsolete equipment it did not have to spend any money to replace. The company celebrated the savings, noting in a January 2015 internal presentation “[c]hanging the Maxx [Ship to All] approach to a Raise Your Hand approach (65% of subscribers take an active swap, with passive swaps for the balance) helped us reduce our capital budget by $45 [Million].” Later in 2015, the company internally reported the savings were even greater than expected — only 25% of customers responded to the offer to replace their modems.

New York’s Secret 20Mbps Speed Cap

For reasons unknown, Time Warner Cable also quietly began secretly locking down obsolete DOCSIS 2 cable modems with a speed cap of 20Mbps while not informing customers or customer service that the account should not have or be sold a higher speed plan. Nevertheless, Spectrum-TWC continued to charge customers with DOCSIS 2 modems as much as $70 a month for 100Mbps internet access that would never exceed 20Mbps.

Wi-Fi Woes

Time Warner Cable Maxx speeds don’t always do well on Wi-Fi.

Spectrum-TWC’s former vice president of customer equipment observed in an October 16, 2014 internal email to senior colleagues that “we do not offer a [device] today that is capable of the peak Maxx speed of 300Mbps via wireless. Generally a customer connecting via wireless will receive less than 100 Mbps,” using the 802.11n wireless routers that Spectrum-TWC leased to subscribers.

This fact of life affected 4 out of every 5 Time Warner Cable Maxx customers subscribed to 200 and 300Mbps plans who leased a Wi-Fi equipped cable modem from Spectrum-TWC. As of February 2016, that meant over 250,000 New York customers were paying for premium internet speeds they would never get over the supplied 802.11n wireless router. Customers were never informed. But company executives were, and as a result, the executive told his colleagues that “we are going to experience a mismatch between what we sell the customer and what they actually measure on their laptop/tablet/etc.”

A separate Spectrum-TWC technical document discussing wireless connectivity, dated January 2015, concluded that “[i]n a real world scenario, most [802.11n] adapters will produce speeds of 50-100Mbps.”

In fact, a Spectrum-TWC internal presentation, dated June 12, 2014, recommended that the company deploy devices with newer generation 802.11ac wireless routers to all subscribers on speed tiers of 200Mbps or higher because such routers came closer to delivering the promised speed. Spectrum-TWC rejected that recommendation, again for financial reasons.

Coming up tomorrow… advertising faster speeds or broken promises, company executives tell the truth about bandwidth costs, how to grossly manipulate the FCC’s speed tests, throttling your favorite websites for bigger profits, and hassling online game fans.

Currently there are 13 comments on this Article:

  1. BobInIllinois says:

    Bothered by 2 items above on the FCC and Time Warner:

    1) Time Warner gives VIP treatment to their FCC/Sam Knows customers. The data from those customers does not reflect reality for the vast majority of Time Warner customers. FCC uses the data from Sam Knows to rate ISPs. Therefore, you can’t trust any FCC Sam Knows reports on Time Warner. Wonder how many other ISPs do the same thing as Time Warner? I doubt that every ISP gives VIP treatment to its Sam Knows customers. Special treatment was given to Time Warner.

    2) In 2013, FCC and Time Warner agreed to temporarily exclude customer data from old DOCSIS 2 modems. Again, this distorts Time Warner’s true customer speeds, and distorts any FCC report on Time Warner. Time Warner was dragging their feet on replacing DOCSIS 2 modems for customers. So, the FCC actually rewarded Time Warner, by making that agreement.

    • LG says:

      I also have a Sam Knows box. I had CenturyLink, which was absolutely terrible until I got the SKnows box, but was still unreliable after nonetheless. When you set it up, they ask permission from the ISP, which is ridiculous. It’s like telling bank robbers that you will be watching that bank they’re looking at on the day they intend to go after it. When CenturyLink upped by bill from $46 to $84 for a paltry, unreliable 20 Mbps DSL connection, I called and asked them to bring the bill back down. They would not, so I went to Comcast. I avoided them for years because of the caps (they go against my principles).. it’s like a phone operator cutting the line mid call saying “you’ve talked enough” lol. Anyway, I tried to get SamKnows to switch it over to the new service and they told me they couldn’t find me in the system. I only had it 8 months and they already lost my account? I was replying to one of their emails with the monthly results and it did nothing for their memory. I’m getting every bit of my 90 Mbps with no cap, so I don’t care, but I don’t want CenturyLink to get a great review because Sam Knows think I get that speed from them lol. I use the box for a hub now, but still get reports, only at Comcast speed instead. Point is the Sam Knows thing should be done anonymously instead of announcing it to the ISP.

      • Absolutely. It’s as if Consumer Reports tested products provided by the manufacturer. You know darn well they are not going to send just any shrink-wrapped item. They are going to make certain that product is flawless before a respected magazine reports it might not be.

        I honestly wondered why I was given VIP Signature Home privileges without paying for Signature Home service. I assumed it was because I spend a lot of time writing about TWC, but now it could very well be a result of my participation in SamKnows.

        BTW, Charter is obviously not caring much because my monthly reports show an average of 35Mbps instead of the 60Mbps I used to report month after month for TWC. Not sure what has caused the big drop, but it started a few months after Charter took over ownership.

  2. Josh says:

    Wow… It sounds like in some areas Charter shouldn’t be selling more than 1-3Mb/s plans, yet is selling up to 300 LOL

    And how about letting people buy their own modems if buying a new modem is so expensive?

    At least Comcast in my area gives me the speed I’m paying for AND lets me use my own modem…so things could be even worse (!)

  3. DMcCunney says:

    Curious. I’m in NYC, and have been a TimeWarner customer for quite some time. I’ve generally been happy with my service. (And a factor is that TW management lives in NYC, and is fussy about *their* service. 🙂 )

    The last major change was a speed boost. I had a 20mbit/sec Turbo connection. That got upgraded to a 100mbit/sec line at no change in my costs. It *did* require a new cable modem, but TWC provided that as well. I’ve done periodic speed tests, and have generally *gotten* my advertised speed.

    One thing that might make a difference is location. The problem with cable modems is that you are sharing a pipe. People constantly complain about slowdowns related to time period. Everyone gets home from work/school in the early evening, the shared pipe is saturated, and bandwidth goes to hell in a hand basket. There simply isn’t enough bandwidth to accommodate everyone at advertised speed simultaneously during peak hours.

    As I understand it, TWC is building out in NYC so that each building is a sub-net. For reasons not relevant here, for years I was the only person in my building with a TWC cable modem, and never saw the contention for bandwidth people elsewhere reported. I still don’t.

    But TimeWarner operates all over the country, and I’ve seen complaints from other areas who haven’t got the rollout of the new higher speed service. TW *did* make plain the initial roll-outs would occur in NYC and LA, with other areas to follow.

    One thing to recall is that TW is trying to fend off Verizon and FIOS. What you see in your area may relate to whether VZ FIOS service is also available. (It explains regular bandwidth increases here at no change in my costs.)

    And I find it interesting that this suit was brought *after* TW’s acquisition by Charter, which makes me wonder if TW is who is intended to get a wake-up call.

    But the problem of not investing to be able to *provide* advertised service is common and widespread. I saw lots of complaints a while back about Comcast customers getting nastygrams stating they were downloading too much and needed to cut back, but Comcast customer service couldn’t tell them how *much* they downloaded, or what they should try to limit themselves to. *Someone* at Comcast knew those numbers, or the customers wouldn’t have gotten the nastygrams, but the info wasn’t availble to the first line support folks. If Comcast explicit used metered service where you paid for bandwidth, it would be one thing, but Comcast explicitly advertised “unlimited” bandwidth. That struck me as a class action lawsuit waiting to occur.

    I’m actually bemused by Josh’s praise of Comcast in his area. Most folks I know consider them a worst offender.

    And TWC actively *wants* customers here to install their own modems, and provides a list of equipment that is compatible. That’s not a surprise. TWC really *doesn’t* want to be responsible for customer premises equipment. They want their responsibility to end at your door, and if they supply the modem, it doesn’t.

    • I think the speed slowdowns are mostly the result of oversold neighborhood groups, especially in large cities like NYC. I can imagine they have packed a lot of customers into one group in a lot of areas of Manhattan and speeds crash every evening when everyone goes online. I do not experience this kind of congestion here in my neighborhood, but my mother-in-law very much did in Spencerport, a nearby suburb. Her complex was definitely oversold because speeds would drop the 3Mbps near every evening. She subscribed to 20Mbps. It was classic overselling.

      • DMcCunney says:

        Like I said, TWC is building out in NYC so each building is a subnet. I was the only one on my subnet for years, so I never had problems. I still don’t for the most part.

        I probably ought to run periodic speed tests now that TWC is part of Charter to see if anything has changed.

        But the underlying issue is that building out networks to *provide* advertised speeds *costs*, and cable providers don’t want to spend the money. Whether they do tends to depend upon competition. I benefited here because TWC was trying to fend off FIOS, and rolling out speed boosts to keep customers. In areas where there *isn’t* that sort of competition, things will differ.

        I’m a bit bemused by the poster here who mentioned switching from TWC to RCN. At a guess, he’s in a area on the border of TWC’s service area, when he *can* get a cable feed from a competitor. I’m just below midtown Manhattan, so that’s not an option here. FIOS isn’t yet available where I am, and satellite dish is not a viable alternative.

        Fortunately, the bandwidth I have is adequate for my needs, even if it *doesn’t* match advertised speeds. I don’t do the video streaming or online gaming that eats bandwidth wholesale, and am generally content with the speeds I get. Other people’s mileage varies.

        • UnloadedOne says:

          Dennis, I’m in Astoria Queens and have my choice of RCN, TWC/Spectrum or FiOS for my internet. For TV, all of the before mentioned and Dish and Directv are at my disposal. I am definitely seeing an improvement in my internet performance. I’m fortunate that I have options where I am as TWC/Spectrum has been problematic here for a bit. RCN, FiOS definitely run better here in Astoria based on my own experience and anecdotal evidence from friends.

          Went ahead and gave DIRECTV Now a try and it was unwatchable on TWC/Spectrum service. The problems are all but gone now that I’m on RCN and I’m still using my modem and router. I don’t know if AT&T did some work around the same time I switched but in general, I am no longer having the same strange slowdowns and hiccups that I saw with TWC/Spectrum. So not all areas of TWC/Spectrum are created equal when it comes to the NYC area.

          A perfect example is my friends in Manhattan all had terrible experiences with RCN and better performance with TWC/Spectrum. Only one of my friends in Manhattan had good service with RCN.

          I’ve no doubt you are getting good results where you are with TWC/Spectrum, but as it stands now, there are better options here in Astoria.

  4. Required says:

    I’m confused… DOCSIS 2 tops out at 42/30Mbps, and I was personally getting 30Mbps down for years on the Surfboard modem pictured.

    I’m not going to condemn TW for their WiFi speeds, as there’s little they can do. A little note in the fine print that WiFi speeds may be limited is ok. I can’t see 100Mbps being insufficient for any mobile devices I can think of, and many customers may have older, slower devices, anyhow

    • Or you thought you were getting that speed. DOCSIS 2 modems can only lock onto one channel I thought, and if that channel was an important component of a group of channels, if the one you were on got saturated, you had no other channels to fall back on and speeds would crash. Also, some speed test results on these earlier modems have falsely reported faster speeds than they were actually capable of delivering consistently.

      I wonder if the old Speedboost technology TWC used to use (burst of extra download speed for the first few seconds) skewed a lot of speed test results as well.

  5. UnloadedOne says:

    I use my own modem and router capable of the fastest speeds TWC/Spectrum can muster and beyond. But I would still encounter strange drops in performance where things felt like they came to a halt. So while using your own equipment reduces a lot of issues, it didn’t fix everything as it’s an infrastructure problem as well.

    Customer service would always tell me things were fine. The first few years of service were awful. Never had TV or internet work reliably for over an hour. Something was always up.

    However the last year or so saw some steady improvements and up until very recently, things were much better. But this story confirms what was behind the horror stories I had in my first 2 years with TWC. There were so many real issues that I reported where I was just flat out lied to by regular customer service. I thought I was going crazy at one point with them saying it’s only me with these issues. The executive services team was always on the ball and did a lot to help me out. They were absolutely amazing.

    But with this breaking news, I can no longer stay with this company and switched over to RCN. They are smaller but it’s been flawless. He’s, I do miss NY1, but I’m so disappointed with this company that I can’t give them anymore of my hard earned money. I never say never and may return down the road if they get their act together. But given how charter deals with legacy customers and rate hikes, I may stay right where I am.

    And don’t get me started on the ridiculous 200 dollar upgrade fee they started dishing out.

    Keep up the great coverage on this issue. I’m sure there are more ugly details to come.

  6. Julia says:

    If you’re paying for a premium in NY but your internet is still super slow or if you’re getting charged for fees you had no idea existed, David can help you demand a refund from Time Warner Cable/Spectrum. It takes 5 minutes and they’ll fight for a refund on your behalf! -> http://bit.ly/2kAaeHd

    • At this point, you might just want to wait and see what comes from the AG’s lawsuit, which calls for restitution. IMHO, all modem fees should be refunded for DOCSIS 1/2 modems. all unreturned/damaged fees refunded for those modems as well, and substantial credit for speed failures (charge only what the service was actually delivering).

      What we don’t need is another $10 PPV coupon voucher while the state gets $10 million.

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