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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internet customers by falsely advertising internet speeds it knew it could not deliver, often with at least 900,000 outdated company-provided cable modems incapable of supporting the higher speeds the company promoted.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.

Currently there are 6 comments on this Article:

  1. Racerbob says:

    So now, a company takes over Time Warner and they start making huge improvements across this state as far as Internet service speed is concerned and now they are liable for the misdeeds of the company they took over ? What a bunch of bull bleep.

    • Yes, they absolutely are responsible.

      1) The investigation and lawsuit were known quantities when Charter Communications acquired Time Warner Cable. This was a liability the company accepted when it made the purchase.

      2) While it is good news that Charter is finally expanding broadband speeds in their service areas, that does not mean Time Warner Cable customers who paid good money for bad service from 2012-2017 (the lawsuit period) should just be out of luck. Restitution is an important consideration and fines levied against bad actors in this state help deter future violations.

      Having liabilities travel from a company to its future owner(s) also ensures that a loophole isn’t created allowing a company to walk away from its legal responsibilities or pending litigation just by selling itself or shutting down and reopening under a new name.

      Although the final judgment could amount to several hundred million dollars for New York customers, which would be returned either by a check for former customers or bill credits for current customers, I think it more likely Charter will settle the case for considerably less once it exhausts its legal appeals. We are still talking about significant sums, especially for New Yorkers given outdated modems (for which TWC charged monthly lease fees for years) that will have to be refunded.

      Most of the alleged offenses in this case occurred in the New York City market where TWC Maxx was deployed. Speeds were increased but capacity to a lot of multiple dwelling units was inadequate to sustain the speed increases.

      • Todd says:

        And 300M to Charter/Spectrum is peanuts.

        They increased ELP Internet from $14.99 to $19.99.

        I’m not a math major, but let me see if I have this right. If they increased just 10% of their 50M paying customers bills by only $5/mo (or 5M customers), that’s 25M per month, or 300M per year, just from one $5 increase.

        By the way, I was able to fight the $5 increase to ELP in my area in small claims. I received an email saying that I was getting a speed increase from 2Mbps to 3Mbps at no additional cost. Instead of sending the email just to customers in NY State, they had instead sent an email to everyone on ELP saying they were getting the 2Mbps to 3Mbps upgrade at no additional cost.

        IMO, they meant to send this email only to the customers in NY State who were actually getting this upgrade for free, but instead, opened the floodgates, and sent this email apparently to most everyone on ELP.

        I got everything I asked for in mediation before it went to a judge. Two years of $5 increases ($120) plus my court costs.

        I wouldn’t say it was worth it, though. I didn’t do it for the money, I did on principle. If you say you’re going to give me a free upgrade, it better darn well be free.

  2. Benjamin Schollnick says:

    Spectrum is no better than Time Warner.

    They are not making “Huge improvements” across this state. They are fulfilling the basic requirements that were forced on them by the governing bodies to allow the purchase.

    No More, and No less than that.

    I do not expect them to do anything that is truly useful to the customer.

    These improvements will be used as a basis to increase the cost of the service.

    I just wish there was some real competition in the Rochester, Ny area.. And No, Green Light Networks is not available in my area. If it was, I would already be using it.

  3. Racerbob says:

    As an almost 20 year user of Time Warner/Spectrum internet service, I have seen it all. But right now, in my home, Spectrum is providing me a superior broadband experience. Nothing short of excellent. Spectrum is making huge improvements across the country, NOT just in NY State. And Phillip and I shall agree to disagree. The AG is out to make a name for himself. So lets fine the crap out of a new business owner to possibly cause prices to go higher. I am signed up for Greenlight and they are another subject . I ordered service in July, 2015 ! I think that Phillip should do some research on exactly how Greenlight is doing business , or not doing business. But hey, you know what ? Spectrum is going to give me 200 Mbps eventually for a base speed. Greenlight can keep my $10 deposit for 100 Mbps. They have missed the boat and now Spectrum is catching up. When I can test at 118-120/12 all day long, including during prime time peak hours, why would I wish to change providers ?

  4. Matthew says:

    They are making huge improvements. Gig speeds are coming soon for WNY. Time Warner would even upgrade WNY to 300 meg. Node splits are going on everywhere and they built new plant to service 42,000 houses in New York already and still have have thousands more houses to build out. But I guess that nothing in the eyes of the blind.

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