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Negotiations… Interrupted: Charter Spectrum Panics As Time Runs Out to File N.Y. Exit Plan

Phillip Dampier November 21, 2018 Charter Spectrum, Consumer News, Public Policy & Gov't, Rural Broadband 23 Comments

Charter Communications ‘productive negotiations’ with New York’s Public Service Commission have deteriorated.

On Monday, Charter Communications filed a Motion for Stay to block the regulator’s July order revoking Charter’s merger with Time Warner Cable and requiring the cable company to file an orderly exit plan with the state no later than Dec. 24.

“Discussions have, so far, not resulted in a settlement,” the company admitted in the legal filing.

Get Out of New York

Calling the order “draconian” and against the public interest, Charter all but accused the Commission of being petty for throwing the country’s second largest cable company out of the state over what it called “the Commission’s revisionist interpretation” of the agreement to expand cable broadband service to unserved parts of the state. It called the Commission unreasonable for not giving the company due process, setting an unreasonable deadline to formulate an exit from the state, and violating the company’s 1st Amendment rights.

“The Revocation Order imposes a draconian penalty on Charter’s New York operations, commanding Charter to undo a significant portion of a multi-billion dollar merger the Commission approved over two-and-a-half years ago and purporting to evict Charter from the State where Charter serves 3.1 million customers and has more than 11,000 employees,” the company’s lawyers argued. “To top it off, the Order, as extended, gives Charter only until December 24 to formulate an exit plan, and six months thereafter to accomplish the exit, timing that would (as the Commission knows) effectively insulate the Commission’s actions from any judicial review. The Commission’s actions reflect not reasoned decision-making directed to the public interest, but rather retaliation against Charter because Charter challenged the Commission by advocating for its good-faith reading of the expansion condition.”

“The Revocation Order is unprecedented in its scale and represents a unique and extremely unusual penalty that, to Charter’s knowledge, no other major cable or telecommunications provider has ever faced in New York,” the company added. “Merely developing an exit plan to meet the December 24, 2018 deadline would force Charter to divert significant resources from its business operations in order to explore what an exit plan might look like, if it is feasible at all. Already, business executives in various departments of Charter have had to take time away from overseeing the business in order to explain the impacts of the Revocation Order and expected impacts of any exit plan. Continuing to divert resources to such an effort, including the time of Charter’s management teams, will necessarily impact Charter’s ability to focus on its core operations.”

The 25-page attack on the Public Service Commission suggest negotiations have strained between the company and regulators, despite several deadline extensions and often-repeated claims from both sides that “productive negotiations” were underway. In a footnote, Charter attempts not to burn all of its bridges with the Commission, noting, “Charter is filing this petition to preserve its substantial and compelling legal rights. Nothing in this application is intended to foreclose the possibility of further discussions with the Commission to resolve this dispute without the need for judicial review.”

The company wants the Commission to stop the clock it imposed on Charter to get its affairs in order in preparation of leaving New York. It is requesting a stay that will drop the deadlines until the courts wrangle over what Charter is calling an “unprecedented and unlawful action.”

Scrambled Eggs

Charter argues the Commission has no right to insist on much of anything, because much of its business operation is unregulated and attempts to interfere with it would cause the company “clear and substantial irreparable harm,” and violate the company’s constitutional rights.

The harm from Charter’s actual departure from New York roughly seven months from now would itself be massive and irreparable, as there would be no way for Charter to restore its position by “re-entering” the State in a commercially reasonable way if Charter later prevailed on judicial review. The eggs here are scrambled—the merged companies’ national operations are fully integrated, and there is no obvious way to separate them. Any obligation to do so would require a massive commitment of time and resources—starting immediately—to navigate the complex business, legal, and regulatory requirements needed to implement the Commission’s order to unscramble the eggs. Moreover, the preparation of an exit plan would itself negatively impact Charter’s reputation with employees, customers, and suppliers in highly competitive markets and require Charter to expend substantial effort, resources, and money that could not be recovered if Charter ultimately prevails in challenging the Revocation Order.

The filing does not acknowledge that Charter was informed of the Commission’s decision in late July and that multiple deadlines have already been extended on the company’s behalf by regulators. Charter also does not mention there is a long history of cable companies separating, spinning off, selling, or trading parts of the business to other cable operators when business or regulatory conditions warrant. Several cable industry mergers have required spinoffs of certain cable properties which have been accomplished with little protest from the cable companies involved.

Charter also argues that the very idea New York’s PSC would demand the company leave the state is irreparably harming the company’s good reputation with its customers — a contention long in dispute with many of those customers and customer satisfaction surveys which have rated the company among the worst in the country. But that did not stop Charter’s attorneys from trying:

[…] The Revocation Order has negatively affected Charter’s reputation and goodwill, and will continue to do so unless stayed. The Revocation Order unfairly paints Charter as an irredeemable bad actor, and the Revocation Order’s unwarranted requirement that Charter exit the State within a matter of months has damaged Charter in the general public’s eye. Indeed, Charter’s goodwill was already harmed by the initial media attention the Revocation Order received, and this harm is likely to be exacerbated by the filing of an exit plan that will spur a second round of news stories and public speculation regarding the dispute.

Bad Faith

Charter claims the Commission changed the terms of the Merger Order after it was approved. In Charter’s view, the company’s expansion effort to reach unserved parts of New York State should include New York City, one of the most wired metropolitan areas in the United States. That the Commission took offense to Charter’s interpretation of the Merger Order should not mean the company should face the ultimate consequence — being asked to leave the state.

“The unprecedented revocation of the Commission’s approval of a merger that closed over two years ago is grossly disproportionate to any conduct at issue here,” Charter argues. “Although the parties dispute the meaning of the expansion condition in the merger order, the revocation of the merger approval serves no legitimate Commission interest when other remedies are available and when the Commission has no reason to doubt Charter’s readiness to comply with any authoritative judicial construction. Nor can the Commission’s unprecedented action be justified by any finding of “bad faith.” What the Commission inappropriately labels bad faith is simply Charter’s reasonable effort to challenge the Commission’s new interpretation, exhaust administrative remedies, and prepare its case for judicial review. There is no reasonable justification for the punishment the Commission imposed.”

Charter also takes issue with the way the Commission met and voted to throw the company out of New York, calling it “the paragon of procedural irregularity.”

“The Commission issued the ‘revocation’ penalty […] at a rump session of the Commission, without providing Charter with an opportunity to comment or present any argument on the availability of the remedy itself, or upon most of the grounds on which the penalty was predicated,” the company argued. “The Commission also denied the public—including Charter’s customer base, who would be required to switch to a new provider, and the local governments that are parties to Charter’s franchise agreements that the Order purports to vacate—an opportunity to comment on the unprecedented proposal to force Charter to exit New York.”

Charter Sets Its Own Deadline – Nov. 26

Charter expects the PSC to rule on its motion within a week of filing it, demanding a stay before the start of business on Monday, Nov. 26. If the company does not get what it wants, it will seek a stay from the Supreme Court in Albany County instead.

But the company also suggests the PSC is bluffing.

“The Commission is currently pursuing an action to enforce its interpretation of the Expansion Condition in the Supreme Court, suggesting that the Commission itself intends for the condition to remain in effect rather than for Charter to actually discontinue operations and leave the State,” the attorneys wrote. “And even if the Commission truly intended to revoke Charter’s merger approval and require it to leave New York, there is no reason the Commission needs Charter to do so—and to submit a plan to that effect—immediately, before Charter has had an opportunity to seek rehearing and obtain judicial review.”

Currently there are 23 comments on this Article:

  1. William Biggs says:

    Couldn’t happen to a nicer company they’re rude there ain’t considerate will not work with the customers at all I wish I was high I would do the same thing we have two other cable companies here in Ohio that could take their spot easily they’re highly expensive from what you get the company should be broken up and sold off the Time Warner and Charter deal should never went through

  2. Bruce sinnokrot says:

    They’re rude liars thieves you name it .

  3. Felix Martinez says:

    Good,finally they getting kicked back on the rear like they do to customers

  4. dennis says:

    I hope they get a cable company that don’t just think of them self but to all people in ny to me I think spectrum must want to make money from people in ny for them self I seen a lot of lies from spectrum raising prices

  5. Racerbob says:

    I hope that they work this crap out because my Spectrum Internet service works fantastic here ! And I even switched back to Spectrum from Greenlight Networks because I was offered two years at $44.99 a month for 400/20 service. While I would not use their TV product, I have no issues at all with their Internet service. None !


  6. It is unfortunate that money has no eyes! Because if it did Spectrum would see the impact it digs in the less fortunate pockets. Why do we have to pay almost $200 to view tv in a home just because it have 3+ bedrooms. That’s just to much SPECTRUM…PLEASE GET OUT!!!!!!!!!!

    • Daryl says:

      I’ve installed digital cable on contract for charter and I can honestly say that if you rent 4 dvr boxes or cable boxes you will have high bills. This is a fact of digital cable. Analog cable which is not around any longer offered the ability to connect to the TV without the cable box. It wouldnt matter who your able company is, if you rent 4 plus cable boxes you are asking for a large bill. Look in your cable companies app on some of those televisions. The money you will save will pay for the smart TV in months. Buy an HD home run and ask for a cable card as plan b. Or use hdhomeruns service. Look in to options. To yell my bills are high, get out is sad to read as the next cable company will do the same based on how you are using.

      • Andrew Goenner says:

        Or you can get any of the live streaming services like Hulu Live, get free DVR, and watch it on multiple screens in your home without having the price jacked up.

  7. John Gakeler says:

    Anyone that thinks a different cable company will be any different is dillusional. No business wants to spend millions of dollars to service a few customers in remote areas where there will never be return on their investment. The logistics of separating NY out of the Charter system would take years . My guess is Charter stays.

  8. Avery says:

    Good kick them out of ny.

  9. Spectrum/TWC is our only alternative to the evil empire / monopoly, Verizon. Yes, Spectrum is inferior technology. But my cable bill went from $220 to $120 per month when I switched from VZ. BTW, Verizon continued to charge me long distance access fees, and other fees for 2 months AFTER I terminated my account, despite numerous phonecalls and arguments with customer service drones. They only stopped after I complained to the public service commission. VZ still has not issued my refund. Do not leave us at the mercy of an evil, thieving Verizon’s please!

  10. Dylan says:

    Kicking them is very stupid. What provider will come in? Comcast. For those people in favor of this, ask yourself, what will come if Charter leaves? The answer only consists of maybe one or two possible providers. Now, I don’t usually defend large corporations, but if you look at this with both of your eyes (instead of one) then you will figure out Charter has done a lot of upgrades and made a lot of improvements over legacy TWC and you can be sure Charter will not give up at all, without a good fight; all the way to the top. So what’s better? Letting them stay and allowing them to even more upgrades, such as a standard 200 speed for everyone, instead of 100 currently (free upgrade), along with many other upgrades in the future. Or, hand them over to the much worse Comcast or Verizon. Very few choices can be made here, and only one choice is actually going to work. You decide.

  11. Yes, Comcast is the ultimate evil. They make Spectrum look good. What is so obnoxious is these negotiations continue to be held in secret. There are groups like ours that would like to contribute to the record and perhaps extract more concessions from them if they are allowed to stay.

    Very slowly, independent fiber to the home providers are starting to enter this business. There is one in the Syracuse area, one in Rochester, one in the Finger Lakes/Southern tier, and perhaps more. That will be the disruptive competition that will force Spectrum and Verizon and Frontier to get more competitive and less awful.

    We fought off Comcast before when they tried to buy Time Warner Cable. We seriously do not want them in NY.

  12. Dylan says:

    Exactly. And as a customer of Spectrum. I demand that my services do not get moved over to someone like Comcast because of NYS politicians. Now, don’t get me wrong, Charter has done some crap that I definitely don’t like, such as locking us out of the newer 3.1 modems that they are exclusively handing now (this makes it harder for a tech savvy customer like me to diagnose issues with signal) however, it pals in comparison to what Comcast could do to us, such as imposing data caps. But anyways, thank you again though Phil for keeping us informed on this. While also letting people know some of the issues at hand.

    Happy Thanksgiving to you and all as well!

  13. Wilhelm says:

    I certainly agree that Spectrum is tons better than Comcast, and this is why Spectrum can afford to play hardball.
    They know there are no better replacements to them. It all comes down to the need for more competition, which is why I’m signing up for a fiber to the home company when it’s finally available in my area, probably next year. Not so much because I’ve been miserable with Spectrum. It hasn’t been that bad, but I’m a firm believer in competition and someone has to step forward to support ISPs that compete with Spectrum.

  14. Kevin Nelson says:

    I’d be happy to see them leave. Spectrum customer service sucks. For that reason alone I’m leaving the company. They don’t deserve the $1200 a year I pay for internet service.

  15. Larry says:

    Move em out…sorry it might cost you to research what is asked…so don’t research and move on out…

  16. Mario Soto says:

    Bye. I wabw then to dissolve the merger.

  17. Daniel Foster Wells says:

    What the hell is wrong with you people. I’ve never had any problems other than the lack of infrastructure updates. Everyone got a lower bill and higher speeds and the customer service has not changed so you have no right to complain. Quit your whining and learn to deal with it or go away. I’m tired of you entitled jerks assuming you deserve the center of attention. Please grow up and get off the internet.

  18. Now Charter should understand how their striking employees feel when you’re not wanted. If they’s treated the striking employee like Time Warner did, Charter would be able to support and fulfill it franchise obligation.

  19. Dee W. says:

    Spectrum is a horrible company that charges way more for less cable service than Time Warner ever did. There are no special deals or freebies offered at all anymore. The only draconian thing in this whole debacle is Spectrum itself. That being said, the FCC should never have allowed this merger. It makes this cable company too powerful and let’s Spectrum become a monopoly in New York State, hence the rise in overall pricing and the continuing outright lies about internet speeds, with packages requiring unnecessary phone service add,-ons to get the lowest available internet prices. Spectrum is all about the money, not taking onto account New Yorkers on Public Assistance or retirees on fixed budgets, who can’t afford $100 or more a just for the cable service, let alone the additional price for their internet service.

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