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GOP Rival for Governor of New York Backs Charter Spectrum; Calls Cuomo “Putin on the Hudson”

Molinaro

Charter Communications has found itself an ally in Marc Molinaro, Republican candidate for New York’s governor, who attacked Gov. Andrew Cuomo on Tuesday for ordering the removal of Spectrum from New York State.

“We’ve got a megalomaniac on our hands, a veritable ‘Putin on the Hudson,'” Molinaro charged, defending the cable company for being attacked by the governor and “his surrogates” for political purposes.

Cuomo “put his thumb on the scale of a major PSC decision,” said Molinaro. “I think Andrew Cuomo got furious with NY1 News and effectively pulled the plug on an entire cable system as punishment to NY1, and as a warning to others he can affect who dare to ask him tough questions.”

Molinaro has repeatedly claimed the Public Service Commission is in the back pocket of the governor’s office.

Cuomo vs. NY1 – Spectrum’s 24-hour news channel in New York City

Molinaro’s campaign has been critical of an ongoing spat between the governor and reporters from NY1, Spectrum’s 24-hour news channel in New York City.

Earlier this month, Cuomo bristled at a question about improper campaign contributions from Crystal Run Healthcare, a health insurance provider in Middletown. NY1 reporter Zack Fink asked if the governor was considering returning those contributions and launching an internal investigation.

Gov. Cuomo

GOV. CUOMO: […] If the ongoing investigation finds any fraud, then as we’ve always done, we will return the donations. That’s standard operating procedure. We’re doing it in this case; we’ve always done it.

But speaking of fraud, Charter Spectrum has been executing fraud on the people of this state. They were given a franchise for a very specific set of conditions. It is a very valuable franchise. Many companies could have been given the franchise. Charter Spectrum said that they would increase cable access to the poor and rural communities around the state. That was the condition of them getting the franchise. I promised this state 100% high-speed broadband. Why? Because high-speed broadband is going to be the great equalizer, the great democratizer.

Whether you’re a business, an individual, you’re going to need high-speed broadband to be competitive. Charter Spectrum defrauded this state. They are defrauding consumers. Charter Spectrum is running ads that say we are ahead of schedule and at no cost to the taxpayer. The Public Service Commission said they’re behind schedule, not on schedule, and certainly not ahead of schedule. And to say it is no cost to the taxpayers is also a fraud, because that’s the condition upon which the taxpayers gave you the franchise. So you are defrauding the people of this state. That’s a fraud.

Fink

ZACK FINK (NY1): You said the PSC is looking into new operators. Is it the PSC’s place to do that or is it the market’s?

GOV. CUOMO: Are you speaking on behalf of Charter Spectrum or yourself?

ZACK FINK (NY1): No, I’m just asking a question. You brought it up so I’m curious. You said Friday that the PSC was looking at potential new operators.

GOV. CUOMO: Well, the Public Service Commission is saying that Charter Spectrum violated their franchise agreement. If you violate your franchise agreement, then you lose the franchise agreement and then they would have to find another operator without disruption to any of the consumers or the good workers of Charter Spectrum.

Viewers of NY1, a Spectrum News channel, never saw this exchange, which was widely covered elsewhere by the New York media. Viewers also didn’t see an on-the-record call-in by the governor made later than day to NY1’s newsroom to discuss the exchange. News of the call leaked after nobody at NY1 would publicly discuss it or why the news channel refused to air it.

Cuomo’s opponents on both his left and right criticized the governor over his treatment of the NY1 reporter.

“I’ll come right out and say it. It looks to me like Andrew Cuomo is trying to send a chilling message to the news media, ’don’t mess with me’, and I hope the inspector general can prove me wrong,” Molinaro said in a statement.

This week, Molinaro turned up the heat by claiming the governor was “acting more like a third-world dictator trying to intimidate the news media into dropping stories than an elected democratic leader who respects the First Amendment and has nothing to fear from it.”

Cynthia Nixon, running for the Democratic nomination to the left of Cuomo politically, claimed his chastising of NY1 reporters was out of line, resembling how Donald Trump treats the press.

“Cuomo can’t hold himself up as New York’s answer to Donald Trump, and simultaneously threaten members of the press for doing their job,” Nixon said, asking the governor to apologize.

Cuomo’s spokesman Rich Azzopardi claimed the ongoing criticism of Charter is nothing new for Gov. Cuomo.

“The governor answered his question and made the same statement that he has made to Charter Spectrum reporters and reporters statewide numerous times over the past few months, communicating the facts of the state’s two-year dispute with Charter for failing to serve the citizens of the state,” Azzopardi said.

Cuomo has made offhand remarks about Charter since the company replaced Time Warner Cable in 2016. He criticized NY1 and other Spectrum News stations around the state for not covering the IBEW strike against the cable company or a lawsuit filed by the state attorney general over the cable company’s failure to deliver on advertised broadband speeds.

“They virtually blacked it out,” Cuomo said of Spectrum News during a press event held on the day the PSC voted to drop Charter as a provider in New York.

Azzopardi also denied Molinaro’s accusation that the governor was involved in the PSC’s decision to force Charter to leave New York and dismissed the Republican opponent for spreading unproven “conspiracy theories.”

Cuomo is widely expected to be re-elected, with both Nixon and Molinaro running significantly behind the governor in polls. The primary is on Sept. 13.

Gov. Andrew Cuomo discusses Charter’s broken promises to New York State during a visit to Rochester, N.Y.  (Courtesy: Democrat & Chronicle) (2:28)

Charter Spectrum Refuses to Air Political Ad Slamming Spectrum for High Rates

Brindisi’s ad has been “censored” by Charter Spectrum.

A Democratic candidate running for Congress in central New York cannot get his 30-second ad slamming New York’s biggest cable company on Spectrum’s cable channels.

Anthony Brindisi slammed Charter Communications for “censoring” his campaign by refusing to air his latest ad which claims Spectrum has almost doubled its rates since taking over for Time Warner Cable and has broken its promises to the state. Brindisi also accused his Republican opponent — incumbent Rep. Claudia Tenney — of siding with the cable company, and “voted to give the company a $9 billion tax cut while they were raising our rates.”

The fact that Brindisi opens his ad claiming, “if you’re watching this ad on Spectrum cable, you’re getting ripped off,” may have been partly responsible for Charter’s refusal to air his ad.

“The ad did not meet our criteria,” said Maureen Huff, a spokesperson for Charter Spectrum.

Rep. Tenney

But the ad is not factually inaccurate, just hyperbolic. Many Spectrum customers complained about steep rate increases switching between their original Time Warner Cable plans and new plans offered by Spectrum. Some customers needed to upgrade to higher tier cable TV packages to keep channels they would otherwise lose and the company’s ongoing digital conversion convinced many customers they needed to rent set-top boxes for every television in their home, at a substantial cost.

Brindisi’s claim that “Claudia Tenney’s campaign is bankrolled by Spectrum,” is slightly misplaced, although Charter Communications has spent $5,000 on contributions to her campaign in 2017. In fact, Comcast is her third largest contributor, spending $12,900 on her campaign so far during the 2017-2018 election cycle. The Koch Brothers, a cable industry ally, comes in fourth.

Brindisi hoped to air his ads in the Utica and Binghamton markets through Spectrum, but will have to spend more buying time on over the air channels. He says he doesn’t like Spectrum’s stranglehold on local views aired on cable channels.

“It’s a scary precedent for them to be setting just because I’ve been a vocal critic of the company,” Brindisi told the New York Times. “I don’t think I should be precluded from informing the public about their practices here in New York State and letting people know that, at the same time they are raising your cable rates, they are a big beneficiary of the tax bill and a major supporter of my opponent.”

Watch the 30-second advertisement Charter Spectrum refused to allow on its cable channels. Anthony Brindisi is a Democratic candidate for Congress in central New York (30 seconds)

National Grid Banned Charter/Spectrum Workers from Its Poles Over Safety Questions

National Grid, the electric and gas company that owns the most utility poles of any company in upstate New York, banned Charter Communications workers from its poles for most of July after a third-party contractor working on behalf of Spectrum electrocuted himself and died.

The New York Public Service Commission went public with the utility company’s ban as part of last week’s 4-0 decision to cancel Time Warner Cable and Charter Communications’ Merger Order.

“The result of this tragic incident was the issuance of a statewide stop work order from National Grid, the largest pole owner in Charter’s territory,” the Commission wrote. “This prohibition remains in effect as Charter has persistently delayed in providing National Grid and the [PSC] responses to requested actions and information necessary to ensure safe and adequate service. As a result, Charter remains unable to install facilities anywhere in National Grid’s service territory. This incident remains under investigation as do wider safety issues associated with the company’s buildout.”

Syracuse’s Post-Standard newspaper reported the contractor, James R. Fogg, 39, of Fairfield, Maine worked for S.G. Communications, a contractor hired by Charter Communications to perform tasks it outsourced from its own technician and installer workforce.

Cattaraugus County, N.Y.

According to state police, on July 11 at about 4:36 p.m., Fogg was running Spectrum cable lines in Yorkshire, Cattaraugus County in southwestern New York when his truck’s extendable bucket or a tool Fogg was using made contact with National Grid’s electric lines, located at the highest point on the utility pole. Cable and telephone lines are placed lower on utility poles. Fogg was electrocuted by a high voltage line. Paramedics from Delevan Emergency Medical Services performed CPR before transporting him to Bertrand Chaffee Hospital in Springville, where he later died of his injuries.

One day later, National Grid issued a statewide stop-work ban on Charter Communications and its contractors. The newspaper reports National Grid wanted the cable company to explain what happened, why it happened and how the company will prevent such an accident from happening again. The PSC claims for much of July Charter failed to offer National Grid a satisfactory explanation, which effectively left company technicians forbidden to climb National Grid-owned poles statewide for three weeks.

The utility lifted its ban on Tuesday, hours after the newspaper contacted National Grid and Charter about the incident.

Charter claims it is looking forward to resuming network build-out activities in National Grid areas, but National Grid warns if another incident similar to the one on July 12 occurs, it can reinstate the ban on the cable company.

Not Without My Refund! N.Y. Assemblyman Demands Spectrum Issue Rebate Checks

Before Charter Communications is shown the door and exits New York (if Charter loses its anticipated legal action against the state), it should be required to issue refund checks to every subscriber in New York to make up for a series of broken promises.

State Assemblyman Anthony Brindisi (D-Utica) has sent a letter to Acting Attorney General Barbara Underwood and New York Public Service Commission Chairman John Rhodes demanding the cable company pay up before transitioning service to another provider.

Brindisi claims Charter’s Spectrum failed to provide promised internet upgrades, has not met its obligation to improve customer service, and is charging even higher rates than its predecessor, Time Warner Cable.

Brindisi is also concerned Charter’s required transition plan may well be redacted by the company. He wants the transition plan made public, with ample opportunity for New York residents to participate in a discussion about which cable company ultimately replaces Spectrum (again assuming the company loses its legal action).

Here is Brindisi’s letter:

Dear Ms. Underwood and Mr. Rhodes:

I am writing to you as a follow up to the order issued by the New York State Public Service Commission on July 27, 2018 to revoke the 2016 merger agreement between Charter Communications, Inc. doing business in New York as Spectrum, and Time Warner Cable, Inc.

This order is truly in the best interests of New York residents.  For two years, I have received  literally hundreds of emails, letters, and petition signatures from constituents who have endured frequent, often unexpected rate hikes, and who have watched flashy ads from Charter promising lightning-fast internet speeds, as they can barely pay bills or send emails through 1980’s-era infrastructure that has not been improved.

Brindisi

I am respectfully asking that you collaborate to work on a three-point plan that addresses concerns I continue to hear from Charter’s cable and internet customers, as well as from the employees who work for the company.  The following is my proposal for consideration by consumer and utility regulators:

Charter should provide reasonable compensation in the form of rebate checks to its customers who have received cable rate hikes significantly above the national average for cable rate increases, which was 5.8 percent from July, 2016 to July, 2017.

Customers with internet service from Charter who never received promised service upgrades should receive compensation in the form of rebate checks from the company.

Any company petitioning the PSC to pick up Charter’s internet, cable, and phone service should pledge to negotiate in good faith with unions representing workers, and should agree not to cut vitally needed pension and health care benefits for workers.

The rate increases Charter customers received shortly after Charter’s acquisition of Time-Warner’s system have been staggering.  One constituent in Utica was billed $91.92 for cable services in January, 2017—and in March, 2018, his bill was $129.26 for exactly the same service.  Another constituent from Rome told me that she paid $108 a month for cable, internet, and telephone service in May, 2016—about the time Charter took over for Time Warner.  By April, 2018, her bill was $200.  These are increases many times the national average, all under the guise of ‘expiring promotional packages’

These cable rate hikes are just as serious a problem for consumers as Charter’s failure to live up to its promises to upgrade its broadband.  Many of the consumers I have heard from are seniors on fixed incomes who depend on cable and internet for information and to communicate with family members.  They should be compensated for what clearly is blatant overcharging.

Thank you very much for all you are doing to protect New York consumers, and for your concern about this issue.  If you have any questions, please feel free to give me a call.

Sincerely,

Anthony Brindisi
Member of Assembly

(Thanks to Todd N., a regular Stop the Cap! reader, for sharing the story.)

New York Public Service Commission Votes 4-0 to Kick Charter’s Spectrum Out of the State

It took the four commissioners of the New York Public Service Commission just 20 minutes to vote unanimously to undo the multi-billion dollar 2016 merger of Charter Communications and Time Warner Cable, by revoking its approval for failing to meet the public interest.

“Charter’s repeated failures to serve New Yorkers and honor its commitments are well documented and are only getting worse. After more than a year of administrative enforcement efforts to bring Charter into compliance with the Commission’s merger order, the time has come for stronger actions to protect New Yorkers and the public interest,” said Commission Chair John B. Rhodes. “Charter’s non-compliance and brazenly disrespectful behavior toward New York State and its customers necessitates the actions taken today seeking court-ordered penalties for its failures, and revoking the Charter merger approval.”

If the order withstands inevitable court challenges, it would be the first time a regulator drove a large cable operator out of business in a state for bad conduct. It would also make history, achieving similar notoriety to the 1981 case of Tele-Communications, Inc., vs. Jefferson City, Mo., when TCI’s national director of franchising personally threatened the mayor and the city’s cable consultant if their franchise was not renewed. When the city voted to award the franchise to another cable operator, TCI refused to sell its system, withheld franchise fee payments, and alternately told the city it would either strip its cables off utility poles in spite or let them “rot on the pole” rather than sell at any price.

Without modification, the Charter/Time Warner Cable merger was a bad deal for New York

After Stop the Cap! and other consumer groups participated in a detailed review of Charter Communications’ proposal to acquire Time Warner Cable, the Public Service Commission adopted many of our pro-consumer suggestions to ensure the merger benefited the people of New York at least partly as much as the executives and shareholders of the two companies. New York State law demands that telecommunications mergers must meet a public interest test to win approval. On its face, the Commission found the Charter/Time Warner Cable proposal failed to meet this test. The state received detailed evidence showing Time Warner Cable’s existing upgrade plan offered a better deal to New York residents than Charter’s own proposal. Time Warner Cable also maintained a large workforce in New York in call centers, direct hire technicians, and its corporate headquarters.

After a detailed analysis, the PSC rejected the merger for failure to meet the public interest. At the same time, it also offered Charter a way to turn that rejection into a conditional approval. If the company agreed to “enforceable and concrete conditions” that would deliver positive net benefits for New Yorkers to share in the rewards of the merger deal, the Commission would approve the transaction.

Charter has complied with most of the deal conditions demanded by the Commission. The company has boosted its broadband speeds across the state ahead of schedule, committed to at least seven years of broadband service without data caps, introduced an affordable internet access program and temporarily maintained an existing offer for $14.99 slow-speed internet access available to any New York customer, and agreed to maintain jobs in New York (with the exception of a 1.5 year strike action ongoing in New York City affecting technicians).

But the most costly condition for Charter to meet is also the one it has repeatedly failed to meet — its commitment to wire unserved rural areas, largely in upstate New York. Charter committed to a timetable to roll out high-speed internet access for 145,000 homes and businesses that currently lack access to any internet provider.

Charter’s merger deal meets Gov. Cuomo’s Broadband for All Program

Gov. Andrew Cuomo announcing rural broadband initiatives in New York in 2015.

This rural broadband expansion condition was integral to Gov. Andrew Cuomo’s Broadband for All program, promising to make broadband access available to every resident and business in New York State.

Cuomo’s broadband program depended on several sources to accomplish its goal:

  • State/Private Funding: The state invested $500 million of $5.7 billion dollars it earned from settling lawsuits against big banks and insurance companies over the improprieties that helped trigger the 2008 Great Recession. This money was designed to incentivize the private sector to expand high-speed internet access in underserved/unserved areas. Recipients had to provide a 1:1 financial match of whatever grant funds were given, putting the dollar value of this part of the program at over $1 billion.
  • The FCC: The Federal Communications Commission’s Connect America Fund (CAF) offered funding to incumbent providers to expand service in certain areas in New York. Some $170 million of that funding allocated to the state was declined, principally by Verizon, which showed little interest in expanding its rural broadband network. A bipartisan effort to retain and divert those funds into the New NY Broadband Program was successful, allowing the state to fund several rural broadband projects Verizon was not interested in.
  • Charter/Time Warner Cable Merger: To win approval of its merger in New York, Charter agreed to pass an additional 145,000 homes and businesses in less densely populated areas across the state. The company was required to file regular updates on its progress and coordinate with the state the exact locations it planned to serve. This was to ensure Charter would not spend money wiring areas already receiving broadband expansion funding.

For the program to be successful, it was essential that duplication of expansion efforts be avoided. As the program’s public funding wound down, the state discovered it lacked enough money to attract private bidders to serve the last 75,628 locations around the state that remained without a service provider, deemed too remote and expensive to serve. The state awarded over $15 million in state funds and an additional $13.6 million in federal and private funding to Hughes Network Services, LLC, which will furnish satellite-based internet service to those locations. That solution prompted loud complaints from residents discovering they were baited with high-speed internet access that realistically could provide gigabit speed, and suddenly switched to satellite service that cannot guarantee to consistently meet the FCC’s 25/3 Mbps broadband standard and comes with a data cap of 50 GB (or less in some instances) a month, rendering its usefulness highly questionable.

Bait rural upstate customers with the promise of Spectrum internet access, switch to expanding service in New York City instead

Rural broadband for urban customers.

The Cuomo Administration may also have to temper its excitement for successfully completing the Broadband for All program if Charter fails to deliver service to the homes and businesses the state expected it would. In fact, the Commission today accused Charter of substituting broadband expansion in dense urban areas where the company would undoubtedly offer service with or without an expansion commitment for the rural upstate areas it originally promised to service. By adding one customer in a converted loft in Brooklyn while deleting a customer it planned to serve in upstate Livingston County, Charter would save a substantial sum. In all, the Commission alleges Charter’s attempts to count urban areas as “newly passed” while leaving rural upstate areas unserved could save the company tens of millions of dollars.

The company’s failure to meet its rural buildout commitment began almost immediately. Despite a requirement to complete an initial buildout to 36,250 homes and businesses by May 18, 2017, Charter only managed to reach 15,164 premises — just 41.8% of its goal. As a result, the Commission began talks with Charter to get the company back on track and monitor Charter’s claim that utility companies were stalling approval of Charter’s pole attachment requests. The Commission even offered its staff to assist Charter with a comprehensive database tracking pole attachment issues, in hopes of facilitating prompt resolution of any problems that delayed service expansion.

To further assist Charter, the Commission set a new schedule of Charter’s buildout obligations for the period between December 2017 and May 2020, comprised of roughly 20,000-23,000 new passings during each six month period, a significant reduction from the original requirement of 36,250 new passings in the first buildout phase.

To incentivize Charter to stay on track, the Commission also required the company to establish a $12 million Letter of Credit to secure Charter’s obligations. If Charter missed further deadlines, the state could draw funds each time Charter missed a target, typically in $1 million increments.

On Jan. 8, 2018, Charter filed its first report under the new settlement on its buildout progress. The company claimed it exceeded its target by reaching 42,889 homes and businesses in the previous six months. The company also began airing commercials inserted into cable channels seen by Spectrum customers around the state, proclaiming it was expanding service ahead of schedule.

On closer inspection, however, the PSC discovered the most innovative part of Charter’s new-found success was inflating the numbers of new passings by including over 12,000 addresses in New York City and several upstate cities, 1,762 locations where Spectrum service was already available, and more than 250 addresses that were in areas that already received state funding to expand service. In addition to not being rural areas, Charter’s existing franchise agreements would have compelled the company to offer service to most of these addresses with or without the PSC deal conditions.

The state informed Charter it planned to disqualify 18,363 passings from the December report filed on Jan. 8, which meant Charter again failed to satisfy the required 36,771 passings it was supposed to have finished by mid-December. The Commission also removed addresses Charter unilaterally added to its 145,000 buildout plan where other providers already offered service or were planning to with the assistance of already-awarded grant funding.

The many fines for Charter Communications

The Commission has fined Charter $1 million for missing its December targets and another $1 million for not making good on correcting its earlier failures. On Friday, it fined Charter once again for another $1 million, reaching a total of $3 million in fines. The PSC also directed its Counsel to bring an enforcement action in State Supreme Court to seek additional penalties for past failures and ongoing non-compliance with its obligations. Earlier this month, the PSC referred a false advertising claim to the Attorney General’s office regarding Charter’s misleading ads about its progress expanding rural broadband in New York.

The number of alleged misdeeds by Charter has been amply covered by Stop the Cap! in our own investigative report.

In fact, to date, the Commission says Charter has never met any of its rural buildout targets. In response, Charter claimed it effectively did not have to, arguing that once the merger was approved, Charter was under no obligation to answer to the Commission’s regulatory requirements respecting broadband rollouts. Under federal deregulation laws, the state cannot regulate broadband service, Charter argued.

$12 million is a small price to pay when saving tens of millions not expanding rural service

The Commission also suspects that Charter’s $12 million Letter of Credit is a small price to pay for reneging on its broadband commitments.

“It appears that the prospect of forfeiting its right to earn back all of Settlement Agreement’s $12 million Letter of Credit does not seem to be an appropriate incentive where the company stands to save tens of millions of dollars by failing to live up to its buildout obligations in New York,” the Commission wrote.

A 4-0 Vote to Kick Charter Spectrum Out of New York

What has gotten the company’s intention is a 4-0 unanimous vote to cancel the approval of the company’s merger agreement with the state, which effectively puts Charter out of business in New York. The Commission ordered Charter to file a plan within 60 days detailing how it plans to cease service in New York and transition to another provider without causing any service disruptions for customers.

Such a move is unprecedented, but not unwarranted in the eyes of the Commission, which claims it gave Charter ample warnings to correct its bad behavior.

“Both the Commission and the DPS [PSC] Staff have repeatedly attempted to correct Charter’s behavior and secure its performance of the Approval Order’s Network Expansion Condition,” the Commission wrote. “Charter continues to show an inability or a total unwillingness to extend its network in the manner intended by the Commission to pass the requisite number of unserved or underserved homes and/or businesses, which make evident that there was not – and is not – a corporate commitment of compliance with regard to this important public interest condition.”

Now the company faces a requirement to file a six-month transition plan to end service in all areas formerly served by Time Warner Cable in New York State by early 2019. The Commission has also made it clear it is done talking and negotiating with Charter, denying all requests for a rehearing.

“Charter’s repeated, continued, and brazen non-compliance with the Commission-imposed regulatory obligations and failure to act in the public’s interest necessitates a more stringent remedy,” the Commission concluded.

The New York Public Service Commission holds a special session to fine Charter Communications and revoke its merger with Time Warner Cable. (Hearing commences at 5:00 mark) (25:24)

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