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Charter Spectrum’s “False Ads” Cost Windstream $3-5 Million in Profits, Expert Witness Testifies

Phillip Dampier May 11, 2020 Broadband Speed, Charter Spectrum, Competition, Public Policy & Gov't, Windstream 1 Comment

Windstream Communications lost between $3.2-5.1 million in lost profits because of a 2019 false advertising campaign run by Charter Communications in areas where the two companies compete for internet customers, claimed an expert witness in a court hearing to determine the damages Charter must pay.

In December, U.S. Bankruptcy Judge Robert Drain issued a summary judgment finding Charter responsible for sending out misleading advertising fliers that violated the federal Lanham Act and false advertising laws in place in some states.

“Shortly after Windstream filed for Chapter 11 protection, Charter commenced a false and misleading advertising campaign designed to cause irreparable injury and damage to Windstream’s reputation and business,” the original lawsuit filed with the U.S. Bankruptcy Court for the Southern District of New York stated. “Charter targeted Windstream customers in Alabama, Georgia, Kentucky, Ohio, Nebraska, and North Carolina, which are several of Windstream’s top performing states.”

“On the envelopes for the advertisement, Charter intentionally utilized Windstream’s trademark and signature color pattern to mislead Windstream customers into believing that the advertisement came directly from Windstream. Indeed, Charter’s advertisement stated that it was ‘Important Information Enclosed for Windstream Customers.’”

The offending Charter flier seems to suggest Windstream is going out of business.

A later investigation found Charter sent at least 800,000 mailers to customers in service areas where Windstream competes with Spectrum.

Jeffrey Auman, executive vice president of sales and marketing at Windstream Communications, told the court last week the false ads directly harmed Windstream’s reputation with its customers, with some left believing the phone company was ceasing operations because of its bankruptcy filing. Auman argued it was fair for Charter to pay damages covering Windstream’s legal expenses to file the lawsuit and cover its advertising and promotional expenses incurred to rebut the ads and retain customers.

A company-provided expert witness testified Windstream lost customers and between $3.2 and $5.1 million in lost profits. Spectrum’s ad campaign also created long term negative “fear, uncertainty, and doubt” about Windstream’s health and ability to service customers. The witness claimed Spectrum’s fliers ended a “growth streak” for the phone company and has caused new customer projections to fall behind.

“It was a big deal with us,” Aubrey testified. “Word of mouth in these small communities means a lot.”

Windstream told Judge Drain the company has spent more than $4.3 million on service credits, promotional retention discounts, and cost-free upgrades to keep customers happy.

Charter has countered Windstream’s customer losses come from its inferior technology, which makes Windstream’s speeds slower and less competitive. Spectrum has upgraded internet customers in the midwest and parts of the southern U.S. to up to 200 Mbps for its Standard internet plan, which is much faster than what Windstream offers many of its DSL internet customers.

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Dylan
Dylan
2 months ago

While in a way I feel sorry for Windstream, I don’t really. It’s dsl is slow and it’s a failing company relying on old customers for its support. If you can’t compete, then you shouldn’t be in business. And in this case, Tom Rutledge from Charter does not mess around. If he sees your company is in peril, you’ll be in trouble if you compete with Charter.

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