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Charter Communications Facing $1 Million Fine and NYC Franchise Revocation

The Chair of the New York State Public Service Commission announced today that the Commission is seeking a possible revocation of Charter Communication’s franchise to serve New York City and a $1 million fine payable to New York State for failing to meet its network buildout obligations agreed to as part of its 2016 merger with Time Warner Cable.

“It is critically important that regulated companies strictly adhere to the state’s rules and regulations,” said Commission chair John B. Rhodes. “If a regulated entity like Charter’s cable business decides to violate or ignore the rules, we will take swift action and hold them accountable to the full extent of the law.”

The most serious potential consequence is the revocation of Charter’s franchise agreement with New York City, which would force the cable operator out of the most important media market in the country. The Commission has opened an official proceeding to investigate whether Charter has tried to achieve its network expansion targets by using addresses in New York City where the company was allegedly already offering service or should have been.

Is Charter Meeting its Buildout Obligations in New York?

One of the key requirements Charter had to meet in New York in return for approval of its buyout of Time Warner Cable was an expansion of its cable footprint to at least 145,000 additional New York homes or businesses over a four-year buildout period. These “passings” — where service would be available for the first time, had to be in areas where the company was not already compelled to offer service through its existing franchise agreements. This requirement was designed to overcome the cable company’s traditional objections to servicing a location because of inadequate Return On Investment. A detailed audit performed by the Commission discovered more than 14,000 ineligible passings included by Charter in its December milestone report. Once these addresses were disqualified, Charter fall short of its obligation by more than 8,000 passings. As a result, this triggers an automatic $1 million fine, payable each time Charter fails to meet its agreed-upon buildout milestones.

New York City officials were concerned that Charter’s most recent milestone report asserted the cable company expanded service to 12,467 addresses in New York City, despite an existing franchise agreement with the city that included requirements that would guarantee those addresses either already had or should have had cable service available. If those allegations are proven true, Charter attempted to meet its buildout obligations by fudging the numbers.

“Metropolitan NYC is one of the most-wired cities in America and the world, and essentially, 100% of the NYC areas are served by one or more 100 Megabits per second (Mbps) wireline providers
such as Verizon FiOS, Cablevision, RCN, and Charter itself,” the Commission wrote.

The PSC’s staff conducted detailed reviews of 490 of those addresses claimed by Charter as having cable service available for the first time. None of them were found to be valid for inclusion in Charter’s service expansion reports, either because they were already serviced by Charter’s network or received service from a competing provider offering at least 100 Mbps service, or both.

In two instances, the staff found Charter was claiming new service expansion in buildings clearly already covered by the city’s existing franchise agreement.

“In a more egregious example, Charter also listed the Reuters Building as countable toward the December 2017 target in Charter’s January 2018 filing, which has a listed address of 3 Times Square,” the PSC wrote. “Staff could not find any photos of the building prior to 2014 beside aerial views, but construction was completed in 2001, well before the effective date of the current franchise agreements.”

In either case, Charter may be stuck between a rock and a hard place. If the company argues it did, in fact, provision cable service only recently, Charter probably materially breached its franchise agreement with the city, providing immediate grounds to begin franchise revocation proceedings under PSL §227.11. If Charter argues instead it was in compliance with its franchise agreement and did in fact already offer cable service to those addresses, Charter would be subject to an investigation about why it misled the regulator by claiming those locations as “new passings” when they were not.

Franchise Fee Dispute

A second controversy involves the amounts of franchise fee payments payable to New York City. City officials claim those payments have declined year-over-year since Charter completed its merger with Time Warner Cable.


A decline in franchise fee payments could be the result of cord-cutting, which has taken its toll on cable TV subscriptions at almost every cable company in the country. The fewer cable TV subscribers, the more likely revenue declines are going to occur, which in turn cuts franchise fee payments.

Charter Communications’ business model is also a departure from its predecessor, Time Warner Cable. In addition to ending many pricing promotions, Charter also stopped marketing stripped down, budget-conscious television packages. Many customers also faced dramatic rate increases as a result of Charter’s new bundled TV packages, which in some cases required customers to pay substantially more to keep all the channels included in their original Time Warner Cable package. As a result, many customers changed providers. Others decided to “cut the cord” and drop television service altogether while retaining broadband. The franchise fee does not apply to internet or phone service — just television.

Still, the PSC wants to audit Charter’s books to verify the company’s accounting has not departed from Time Warner Cable’s interpretation of the franchise fee agreement and unfairly undercut the city.

Charter has been given 21 days to respond with clear and convincing evidence it is not in violation of its franchise agreement with New York City or its merger obligations with New York State. If the Commission does not receive satisfactory evidence by the deadline, it is likely to begin hearings on whether Charter has committed material breaches of its agreements serious enough to warrant fines and/or franchise revocation.

Charter May Be Violating NYC Franchise Agreement by Using Out of Area Contractors

Phillip Dampier February 26, 2018 Charter Spectrum, Consumer News, Public Policy & Gov't No Comments

Spectrum workers on strike march in the 2017 Labor Day parade in New York City. (Image courtesy: IBEW/Local 3)

Charter Communications’ list of addresses of some of its “locally based contractors” turned out to be self-storage locations, leading to accusations the company could potentially be in default of its franchise agreement with New York City.

Charter agreed to use city-based contractors wherever possible to maintain and upgrade its expansive cable system in the Big Apple. But an audit by the Department of Information Technology and Telecommunications found only seven of 26 vendors Charter uses are in the city, despite claims by Charter that 77% of its vendors are NYC-based.

On its own, the violation might seem minor, except for the fact Charter Communications has left 1,800 of its best-trained workers in New York and New Jersey out on strike for 11 months, the longest unresolved labor action of 2017.

Workers’ demands, presented by the International Brotherhood of Electrical Workers (IBEW) Local 3, have been largely ignored by Charter, in part because the company can find replacement workers outside of the area.

Charter’s denial of the accusation it was in violation of its agreement to use local labor included an attempt to broaden the definition of “located,” followed by an effort to change the subject to what the company alleges are more than 100 acts of vandalism committed by striking workers or those sympathizing with them.

“We continue to meet our franchise obligations, and our response to their findings is included in the report,” a Charter spokesman told the New York Daily News over the weekend.

Although union resources supporting the striking workers have been tested to their limits, the union and most of its members persevere. But it remains a difficult struggle, with some members on the verge of losing their apartments, and many more now relying on food banks and public assistance.

The dispute began after the former Time Warner Cable employees were transitioned to Charter Communications. Charter announced it wanted to pull out of the union’s pension and healthcare plans and replace them with a company-sponsored healthcare offer and a 401(k) retirement plan.

“They basically said that until we agree that they don’t have to contribute to our pension and health plan, they won’t talk about anything else,” Chris Erikson, business manager of Local 3, told the Daily News last fall. “That’s a gun to our head, they said ‘Take it or leave it.’ And our membership understands the value of what’s at stake here, and they decided to leave it.”

Efforts by large corporations to abandon employee care and retirement plans administered by the unions themselves is part of a broader national attack to make unions irrelevant, argue union defenders. The replacement plans offered by Charter are greatly reduced from what Local 3 fought for and won from Time Warner Cable.

“The practical side of the medical plan that the members have is: my son had a kidney transplant and I got the bill from Columbia Presbyterian hospital and it was $96,000. My share of that was 200 bucks. If I was in Charter’s medical plan I’d probably have to take a loan to pay the hospital bill – that’s with coverage,” Erikson told The Guardian.

Charter can certainly afford to cover its workers’ needs. The company’s CEO was the highest paid in the country in 2016, earning $98 million. The impact of the Trump tax cuts also delivered soaring profits for Charter Communications as a whole.

Profits for the fourth quarter of 2017 hit $9.6 billion, compared with $454 million during the same period in 2016. Profits for the year reached $9.9 billion, compared with $3.5 billion in 2016. Charter earned $41.6 billion in revenue in 2017.

New York Mayor Bill de Blasio thinks the strike has gone on for too long.

“It’s been almost a year that Local 3 workers have been on strike. It’s far past time for management to come to the table with a fair deal,” he said.

Sinclair Offers to Sell WPIX, WGN to Win Approval of Tribune Station Deal

Phillip Dampier February 21, 2018 Competition, Online Video, Public Policy & Gov't No Comments

Sinclair Broadcast Group has told the Federal Communications Commission it is willing to sell two well-recognized TV stations in Chicago and New York owned by Tribune Media if it will help win approval of its $3.9 billion acquisition of Tribune-owned stations by the Justice Department and FCC.

The move is a sign Sinclair may be concerned its blockbuster acquisition might not get approved if the deal remains mired in the regulatory review process.

The filing is effectively a new application because it fundamentally changes the structure of the deal and its impact on several TV markets where Sinclair could own multiple stations in a single city.

Few expected Sinclair would offer to divest WGN-TV Chicago and WPIX-TV in New York, which are major market stations with major advertising revenue. Sinclair also offered to sell off KSWB-TV, San Diego’s FOX affiliate, to keep Sinclair under the FCC’s theoretical 39% nationwide audience cap, which was watered down in 2017 by FCC Chairman Ajit Pai’s plan to count UHF stations at only 50% of their actual viewing audiences — a direct benefit to Sinclair, which already owns and controls an enormous station group that had been constrained from getting much larger.

As part of the revised proposal, Sinclair will sell one or more stations in the following markets, with FOX often mentioned as a potential buyer:

  1. Seattle, Washington;
  2. St. Louis, Missouri;
  3. Salt Lake City, Utah;
  4. Oklahoma City, Oklahoma;
  5. Greensboro-High Point-Winston Salem, North Carolina;
  6. Grand Rapids, Michigan;
  7. Richmond, Virginia;
  8. Des Moines-Ames, Iowa.

But Sinclair is seeking a waiver to continue to own two of the top four stations in Greensboro-High Point-Winston Salem, N.C., Harrisburg-Lancaster-Lebanon-York, Pa., and Indianapolis, Ind.

Selling WPIX and WGN will likely make a significant dent in Sinclair’s acquisition expenses, if the deal is approved.

WPIX and WGNhave been owned by Tribune since both stations first signed on in 1948.

N.Y. Attorney General Overcomes Charter’s Legal Objections to Slow Internet Lawsuit

Phillip Dampier February 20, 2018 Charter Spectrum, Consumer News, Public Policy & Gov't 6 Comments

Charter Communications will have to face a courtroom to answer accusations the cable company intentionally sold internet service at speeds it knew it could not provide to its customers in New York.

New York State Supreme Court Justice O. Peter Sherwood rejected a motion by the cable company to dismiss New York Attorney General Eric Schneiderman’s 2017 lawsuit accusing Time Warner Cable (now owned by Charter) of systematically shortchanging as many as 640,000 New York internet customers by falsely advertising internet speeds it knew it could not deliver, often with at least 900,000 outdated company-provided cable modems incapable of supporting the higher speeds the company promoted.

“Today’s decision by the New York Supreme Court marks a major victory for New York consumers — rejecting every single argument made by Charter-Spectrum in its attempts to block our lawsuit,” said Schneiderman. “This decision ensures that our office can continue to hold Charter-Spectrum to account for its failure to deliver the reliable internet speeds it promised consumers, ripping you off by promising internet speeds it simply could not deliver.”

Charter’s Defense: Spectrum’s Ad Claims for Fast Internet Service are: “Prototypical instances of non-actionable puffery.”

Charter’s lawyers attempted a variety of legal strategies to get Schneiderman’s lawsuit tossed, including undermining the cable company’s own marketing efforts. Lawyers argued the court should ignore Charter’s claims it sold a “blazing fast, super-reliable connection” that could “stream Netflix and Hulu movies and shows effortlessly” as nothing more than “prototypical instances of non-actionable puffery.”

Scheniderman’s office claimed it was much more than that.

N.Y. Attorney General Eric Schneiderman

“Spectrum-TWC failed to maintain enough network capacity in the form of interconnection ports to deliver this promised content to its subscribers without slowdowns, interruptions, and data loss,” stated Schneiderman. “It effectively ‘throttled’ access to Netflix and other content providers by allowing the ports through which its network interconnects with data coming from those providers to degrade, causing slowdowns. Spectrum-TWC then extracted payments from those content providers as a condition for upgrading the ports As a result, Spectrum-TWC’s subscribers could not reliably access the content they were promised, and instead were subjected to the buffering, slowdowns and other interruptions in service that they had been assured they would not encounter.”

Charter also claimed it was not legally responsible for meeting its own advertised speeds because the company only sold speeds “up to” a level, without guaranteeing customers would get the speeds it advertised.

Even if a judge found Charter lacking in its legal defense, lawyers for the company more broadly argued that under FCC Chairman Ajit Pai’s net neutrality order, state courts and regulators had no power to regulate or oversee broadband providers because “regulation of broadband internet access service should be governed principally by a uniform set of federal regulations, rather than by a patchwork of separate state and local requirements,” according to Charter’s attorney Christopher Clark.

Justice Sherwood uniformly rejected all of Charter’s arguments to dismiss the case:

  • Improper state venue for the lawsuit: “Spectrum-TWC fails to identify any provision [of law] that preempts state anti-fraud or consumer-protection claims, or reflects any intention by Congress to make federal law the exclusive source of law protecting consumers from broadband providers’ deceptive conduct.”
  • False advertising: “This court finds that, contrary to defendants’ contentions, the FCC’s goal of promoting competition through [the Internet Transparency Rule], the FCC stated that the rule was intended to ensure consumers had the “right to accurate information, so [they] can choose, monitor, and receive the broadband internet services they have been promised. New York’s Executive Law and Consumer Protection Act […] require that [providers] refrain from fraud, deception, and false advertising when communicating with New York consumers.
  • Netflix/YouTube slowdowns: The issue of interconnection agreements between content providers and Spectrum-TWC are matters for the court to consider because it is not an attempt to regulate those agreements. “Rather, the complaint simply alleges that Spectrum-TWC misled subscribers by claiming that specific online content would be swiftly accessible through its network, while it was simultaneously deliberately allowing that service to degrade […] and failing to upgrade its network’s capacity to meet demand for this content.”
  • “Up to” speeds: Spectrum-TWC claimed that advertising speeds “up to” a certain level was not misleading because consumers understood this to mean the maximum speed, not average speed. In Spectrum’s argument, it claimed “reasonable consumers understand this is not a promise of ‘minimum’ performance, but rather ‘maximum’ performance.” But the judge disagreed. “Defendant’s theory is contrary to New York law regarding ‘up to’ claims” when those speeds are “functionally unattainable as a result of the defendants’ knowing conduct.”

Schneiderman’s office is seeking civil fines and restitution from Spectrum-TWC for customers in New York.

Charter Spectrum Will Only Talk to Theresa Peartree’s Dead Ex-Husband About Her Account

Phillip Dampier February 9, 2018 Charter Spectrum, Consumer News, Editorial & Site News 8 Comments

He’s dead. Death notice for Richard Peartree published in the Democrat & Chronicle on Oct. 13, 1992.

Charter Communications’ inability to exercise common sense judgment in helping their customers is demonstrated once again by what we call: The Case of Mrs. Peartree and Her Curious Cable Bill. 

Theresa Peartree, a retiree living in Rochester, N.Y., and a customer of “the cable company” under its various names for more than 30 years, has a problem.

Spectrum won’t talk to her. About anything.

Peartree called the cable company to ask why her bill has increased a few dollars a month starting last fall. Spectrum effectively told her it’s none of her business because the account is in the name of her ex-husband, who died in 1992.

Time Warner Cable and Greater Rochester Cablevision — the former names of what today is Spectrum, understood Peartree’s situation and were willing to talk to her about her account, although nobody bothered to suggest she change the name on the account along the way. Spectrum will not talk to her, until she obtains a certified copy of her ex-husband’s death certificate and walk it down to the company’s notoriously overpacked customer service center on Mt. Hope Avenue in the city. Peartree is 89 years old and walks with a cane.

Spectrum’s customer service told Peartree it was easy to get a copy of a death certificate because “they’re a public record.” But most Spectrum customer service representatives are not attorneys or legislators, because if they were, they would have realized the advice they were giving about death certificates in New York was dead wrong.

So Mrs. Peartree and Spectrum are at an impasse. She took her plight to a local talk radio show and finally to David Andreatta, a feisty and occasionally exasperated columnist for the Rochester Democrat & Chronicle, where he usually covers the insanity of local and state politics.

He visited with Peartree and listened in on the legal advice being given by the cable company’s call center employee.

Andreatta knows Spectrum’s claim that death certificates are public records was not quite right:

No, they’re not. In New York, they’re semi-public. If the deceased person has been dead for 50 years, his or her death certificate is public record. If not, only spouses, parents, children or siblings of the deceased are entitled to the death certificate. Exes don’t count.

Others eligible to obtain a death certificate under the law are those with a medical need, a documented lawful claim to receive a benefit or a court order from a state judge.

Peartree has none of those. Her declaration that, “TV is my life,” is a metaphor. Her cable isn’t a “medical need” and her desire to learn why she’s being charged $4 a month more isn’t a “benefit.”

Peartree (Photo courtesy of: Rochester Democrat & Chronicle/Shawn Dowd)

In short, Peartree is trapped by Spectrum. She cannot even close her account because they won’t talk to her. The only chance she has, assuming the public shaming of Spectrum proves ineffective in getting them to budge, is to present herself as a hardship case at the Monroe County Office of Vital Records in hopes of getting them to produce a copy.

But in Monroe County, where the county government prides itself on holding the line on the property taxes (already among the highest in the country) but makes up the difference by charging astronomical fees for almost any county service, that photocopy will cost her $40 — ten times the amount her bill increased last fall.

“They take my money every month,” she told Andreatta, showing him her checkbook with hers being the only name on the account. “They take my money, but they won’t answer my questions.”

“I know they say you can’t believe everything you read in the newspapers, Spectrum, but believe this: Richard is dead and the house you think is his isn’t his,” Andreatta wrote. “It would take a few minutes for your customer service rep to transfer the account in Richard’s name to Peartree’s and tell her why her bill rises $4 a month.”

But so far they won’t. But we can at least answer her question. The additional fees are the result of an increase in Spectrum’s bill padding Broadcast TV Surcharge ripoff and a more recent rate increase on certain cable equipment rental fees.

Andreatta is somehow not surprised:

Ever since Time Warner was rebranded as Spectrum, more readers have asked me to write about their problems with the cable TV and internet provider than any other topic.

I’ve always declined, mostly because their problems were so generic. Their internet was slow. They didn’t want to pay for channels they didn’t watch. That four-hour window for home service.

It was, like, join the club. Cable companies by any name have always been a racket, regularly ranking below airlines, banks and drug makers in opinion polls. What could I do about it?

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  • EJ: What area do you live in? Are you in the area that is affected by the strike? That long of a wait time for phone service is generally not okay. They s...
  • Chris: I am glad I found this site. Been with charter for well over a decade. Finally have phone service available in my area, on the west coast. However, w...
  • C Hines: How bout my phone went out on Sunday and they’re telling me it will be 4/11 before they can maybe get it fixed. I live in a very rural area with no ce...
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