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)

Moving on out?

New York’s Public Service Commission on Friday set the stage for ‘an orderly transition’ ending Spectrum’s brief life in New York, to be replaced with a ‘to be announced’ new cable operator to serve the needs of New York subscribers.

Or so the New York Public Service Commission hopes.

Although Friday’s 4-0 unanimous decision to revoke Charter’s merger deal in New York is a public relations and legal nightmare for the country’s second largest cable operator, we suspect top executives are getting a good night’s sleep tonight, not too concerned about the immediate consequences of today’s stunning vote.

Losing New York is what Wall Street would call “a materially adverse event” for any cable operator. New York City is the country’s largest media market. Billions of dollars worth of cable infrastructure, subscriber and advertising revenue, and prestige are at stake. Despite the ‘vote to revoke,’ Charter’s attorneys have signaled for weeks they intend to preserve and protect the cable company’s legal rights, and it is almost certain the PSC’s merger revocation order will meet a court-ordered injunction as soon as next week.

The courts are likely to make the final decision about whether Spectrum can stay or has to go. That aforementioned injunction will stop the clock on any ‘rash action’ and start what could be years of litigation, filled with discovery, endless hearings, stall tactics, blizzards of motions, appeals, more appeals, and then more lawsuits over whatever final exit plan is eventually filed, if one is required by the courts. A judge could also order the cable company and the state to work it out in a court-approved settlement, something the PSC seems loathe to do in its two orders published today which make it clear the regulator is done talking only to feel strung along by the cable company.

For the near term, Spectrum customers won’t notice a thing. Even if the PSC was not taken to court, Charter has 60 days to file a six month transition plan, making the earliest date to waive Spectrum goodbye is sometime in early 2019.

To help readers out, we’ve prepared a short FAQ to address any concerns:

Q. Will I lose my cable and internet service?

A. No. Regardless of what happens, the PSC has ordered a transition plan designed to provide a seamless switch between Spectrum and a future provider. For most customers, it will resemble Charter’s own transition from Time Warner Cable to Spectrum.

Q. Who will replace Spectrum?

Not again.

A. The cable industry often resembles a cartel, whose members go to great lengths to protect each other. Historically, no large cable operator will entertain requests for proposals from cities or states requesting a replacement of a cable company already providing service. In short, if a city is fed up with Comcast and wants to shop around for another provider, it is highly unlikely Charter/Spectrum, Cox, Altice/Cablevision, Mediacom, or other providers will submit a bid to replace Comcast. If they did, Comcast could theoretically retaliate in their service areas. Should the Public Service Commission itself solicit bids to replace Spectrum, it is unlikely any operator will send a proposal unless/until Charter indicates it wants to leave the state. This kind of informal protectionism has proven highly effective limiting the power of towns and cities to play companies off each other to get a better deal for their residents.

Q. If Charter loses its court challenge and has to leave, what happens then?

A. If Charter exhausts its appeals and realizes it can no longer do business in New York, it will seek a private sale or system swap with another provider. Comcast would be the most likely contender, having shown prior interest in serving New York and having contiguous cable operations in adjoining states, especially in northern New England, Massachusetts, Pennsylvania and New Jersey. Comcast could agree to trade its cable systems in states like Texas, Florida, or California in return for its New York State’s Spectrum systems, which cover cities across the state. But that is likely years away.

Q. Isn’t Comcast worse than what we have now with Spectrum?

A. Consumer satisfaction surveys suggest the answer is yes. Comcast is routinely rock bottom in customer satisfaction, customer service, pricing, and service options. Its 1 TB data cap on internet service has not yet reached many of its northeastern customers, but most observers expect it eventually will. In contrast, Charter has agreed not to impose data caps for up to seven years after its 2016 merger. But Comcast has delivered more frequent broadband speed upgrades and has more advanced set-top boxes and infrastructure.

Stop the Cap! would vociferously oppose Comcast’s entry in New York, however, just as we did a few years ago when we participated in the successful fight to stop Comcast’s merger attempt with Time Warner Cable.

Q, What other providers might be interested?

A. Altice, which does business as Cablevision or Optimum, is New York’s other big cable operator, providing service exclusively downstate. Altice had aggressive plans to become a big player in the U.S. cable business, but its acquisition dreams were halted by shareholders, concerned about the European company’s already staggering debt, run up acquiring other companies. Altice is currently scrapping Cablevision’s existing Hybrid Fiber Coax infrastructure and replacing it with direct fiber to the home service, which offers improved service. But the company charges a lot for its advanced set-top box, has bloated modem rental fees, and is notorious for vicious cost-cutting, which stalled service improvements at its mobile and cable companies in France and raised a lot of controversy among employees.

Cox could be another contender, but would have to find a few billion to acquire Spectrum’s statewide system. Wild card players include AT&T and Verizon. Verizon would face extreme regulatory challenges, however, because it is the local phone company for most residents in the state. AT&T sold its U-verse system in Connecticut to Frontier Communications and seems increasingly focused on content, not on the systems that deliver content. A hedge fund or private equity firm could also be contenders, but perhaps not considering the high cost to acquire the systems and New York’s reputation for fierce customer protection. Remember, New York insists that a cable company ownership transfer must meet public interest tests, not simply enrich hedge fund participants.

Q. What happens to Charter’s pre-existing deal conditions on rural broadband and speed increases?

A. Officially, the PSC has ordered Charter to continue abiding by the 2016 Merger Order and its deal commitments. The state will likely continue to fine Charter if it keeps missing rural broadband rollout targets until a court stops them or the company leaves. Charter will probably continue rural broadband expansion to show good faith. Charter has met its merger obligations related to speed increases, so it is not currently out of compliance. But a legal challenge offers the opportunity for a third-party judge to suspend or modify existing deal commitments, at least temporarily. It is unlikely Charter will want to invest large sums in its cable systems if it believes it will lose its case in court. The timetable for an upgrade to 200 Mbps Standard speed will likely now occur on a regional basis. The northeast division will still likely activate these speeds across multiple cities in the region sometime this summer, especially in places where it faces competitive pressure. The 300 Mbps upgrade in 2019 is more likely to be impacted by any forthcoming legal action.

Q. Is this political or about the union striking Charter? It is an election year.

A. All things are political to some degree in an election year in New York. That said, the New York Public Service Commission has the nation’s best track record of protecting consumers from bad actor telecom and energy companies. They take their responsibilities very seriously, and have shown consistent independence from the governor’s office, especially in recent years. The Commission was by far the most responsive of any state, including California, in taking our concerns about the Charter/Time Warner Cable merger seriously, and incorporated several of our suggestions into the final Merger Order. We warned the PSC cable companies have routinely reneged or slipped through deal conditions. We even predicted Charter would attempt to count new buildouts in non-rural areas and business office parks towards any commitment to expand their service areas. The PSC smartly conditioned its Merger Order by defining the goal of Charter’s broadband expansion — serving the unserved and underserved. That is why the company is not getting away with counting New York City buildouts towards this commitment.

Cynthia Nixon and Andrew Cuomo, both running for New York governor, neither fans of Charter Spectrum.

Few voters are likely to tie a PSC decision to the governor’s race, although Gov. Andrew Cuomo has repeatedly taken credit and praised the PSC for not tolerating bad behavior from Spectrum. If it was a purely political play, it would originate in the governor’s office. Gov. Cuomo’s Broadband for All program depends on achieving near-100% broadband penetration, something it may not manage if Charter fails its rural buildout commitments. That would be a PR mess. There is ample evidence that Charter’s own conduct was sufficient to trigger this kind of response, with or without an election looming.

New York is also a union-friendly state, and the International Brotherhood of Electrical Workers (IBEW) Local 3 has held out for over a year in the New York City area striking to preserve important job benefits Charter wants to discontinue. New revelations from the PSC outlining Charter’s increasingly bad safety record has strengthened the union’s case that Charter would rather bring in unqualified replacement workers and put safety at risk than settling with a union that essentially built the cable system serving New York City. There is no credible evidence that the union is involved in the PSC’s decision to revoke the merger agreement, although we suspect most affected members will fully support the decision.

Q. Is the PSC being too harsh? Can’t they work it out with Charter?

A. For New York to revoke a merger and effectively boot the company out of business in the state is remarkable. Utility companies that irresponsibly lack a credible disaster plan or do not comply with industry standards to maintain tree trimming and infrastructure repairs that result in plunging parts of upstate into darkness for up to two weeks after wind storms in two consecutive years were fined, but not ordered to leave. The ongoing scandal of competing private ESCO electric companies that have almost all scandalously overcharged New Yorkers with electric bills higher than their incumbent utility have been threatened with de-certification and fines, but are still conducting business, even though much of their marketing material was misleading.

Is it too late to work it out?

That should tell you the PSC’s move today was a final straw. The two parties have negotiated and debated Spectrum’s performance lapses for nearly a year. Tension was clearly rising by the spring after the PSC uncovered evidence Charter was intentionally counting areas it knew were outside of the spirit and language of the merger order’s rural broadband deal commitments. Charter’s brazen behavior achieved a new low when it questioned the PSC’s authority to oversee the merger agreement Charter signed. At one point, it unilaterally announced it would only honor the deal commitments found in one appendix of the Merger Order, conveniently ignoring the section describing and defining the rural broadband commitment Charter agreed to. The company also continued to air what the PSC declared to be false advertising, promoting Charter’s claimed accomplishments in rural broadband expansion. Charter repeatedly ignored warnings to suspend and remove those ads. In fact, the PSC issued strongly worded warnings to Charter at least twice, specifically outlining the possibility of canceling the merger agreement and forcing Spectrum out of the state. In response, Charter began staking out its legal arguments in filings, obviously preparing for litigation.

The PSC would probably argue it is impossible to work things out with a company that repeatedly breaks its own commitments. The PSC also openly worried what message it would send to other regulated utilities if it did not react strongly to Charter’s behavior. If the company had a corporate agenda to cheat New York out of important rural broadband expansion, negotiating, fining, and sanctioning a company is unlikely to change its behavior at the top.

Stop the Cap! had earlier recommended the PSC adopt new sanctions to force Charter to comply with its commitments, and expand them to bring service to many New Yorkers who were left behind by Gov. Cuomo’s Broadband for All program, suddenly saddled with satellite internet service. A large percentage of those affected are frustratingly close to nearby Spectrum service areas and although it would cost Charter a significant sum to reach them, it would deliver a financial sting for their bad behavior while also bringing much-needed internet access to the leftovers left-behind by the governor’s broadband expansion program. Such a settlement would require the company to actually comply with their commitments, something the PSC had been unable to achieve through no fault of their own. Perhaps a judge might have better luck should a negotiated settlement come up in litigation.

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)

For the last year and a half, while Charter/Spectrum has been accused of dragging its feet on rural broadband rollouts across New York State and is now threatened with franchise revocation, the company had plenty of time to spare waiting out the International Brotherhood of Electrical Workers Local 3, who have been on strike to protest a pay-and-benefits-race-to-the-bottom in the New York City.

The strike has attracted attention and support from many high-profile downstate politicians, particularly New York City Mayor Bill de Blasio and Gov. Andrew Cuomo, but so far the dramatically enlarged Charter Communications, which acquired Time Warner Cable in 2016, seems comfortable waiting out the union and hoping to force workers to give up and accept to the cable company’s less generous basic benefits package.

The cost of the strike has hurt average middle class Spectrum employees far more than Charter’s top executives — particularly CEO Thomas Rutledge, who had no objections to accepting a take-home bonus and pay package worth $98 million after overseeing the company’s merger. In contrast, many striking workers have depleted their family’s savings and have sold their homes to relocate to less expensive apartments as they struggle to holdout against the nation’s second largest cable company. A few others were reportedly homeless. The union’s emergency fund has been depleted.

The David vs. Goliath battle has also put enormous strain on some affected families. Some have quit the company and looked for employment elsewhere, some others have returned to work and abandoned the strike, leaving holdouts hoping for a breakthrough.

Instead, Charter appears to have won a mysterious ally in the form of a Spectrum employee hired after the strike began in 2017. Initially the worker  had a supervisory role in the company with a salary to match, but late last year strangely accepted an apparent demotion to a level three technician, while retaining his very generous managerial salary. That worker, on his own, managed to navigate a complicated procedure and cumbersome process to file a petition to decertify the union with the National Labor Relations Board. If his effort is successful, IBEW Local 3 would lose the right to negotiate for their members, which is another way of saying “break the union.”

“The guy was brought in – he’s a front, pretty much,” Staten Island mom Sanela Djencic told LaborPress. “He was brought in to bust the union.”

Not so, claims Charter.

“Charter had no involvement in the filing of the decertification petition,” Charter/Spectrum spokesperson John Bonomo flatly told LaborPress in an email. “We don’t have any further comment.”

The NLRB ruled the employee’s petition to decertify the union was valid, finding insufficient evidence to prove the worker was actually serving in a managerial capacity at the time.

In a June 27 letter to employees, John Quigley, Charter’s regional vice president of New York City field operations, was considerably less neutral about the union’s involvement in Charter’s business.

“This ruling clears another hurdle in the decertification process that will allow employees to determine their future,” Quigley wrote. “It is a common tactic for unions to delay and/or block decertification efforts as long as possible […] instead of allowing the voice of employees to be heard. We believe that employees should have the right to vote in a secret ballot election to determine their future. It is the fair and right thing to do.”

Quigley

Quigley did not comment on Charter’s own role erecting hurdles to settle the strike action, something that would also allow employees to determine their future. In fact, strikers complain companies like Charter often prefer to stall and block a fair settlement in hopes the union and its members will run out of funds before it is forced to the table to sign a new agreement.

The company’s efforts to reject union demands come at the same time it is under pressure to deliver the merger-related cost savings it promised shareholders and Wall Street as an outcome of the multibillion dollar merger deal. Cutting back on employee benefits is one way to manage that. Bringing in independent contractors, traditionally paid less and offered fewer benefits, is another. But Charter has consistently claimed it is not trying to hurt its workforce.

Scabby the Rat

“Charter did not want this strike and made multiple attempts to resolve it,” a company spokesman said. “But the union has not been a true partner in negotiations. With Local 3 refusing to even discuss the terms in Charter’s offer, we moved forward last summer and implemented wage increases and other worker benefits. Today we are putting more money into our employees’ pockets, providing them with excellent benefits, and making substantial investments to shore up their retirement benefits that are in jeopardy.”

Charter’s declarations of what is ‘fair and right’ have irritated some members of New York City government.

“Charter Communications has betrayed the public trust and is not deserving of the right to do business with our City,” said Councilman I. Daneek Miller (D-St. Albans). “Charter has an established pattern of deceit against its own workers and consumers in the name of boosting its profit margin, and it must be held accountable for its deception. Well-paying middle class jobs, healthcare and the generational security that is best achieved through union membership are core principles of our city, for which the company has demonstrated no appreciation. If Charter continues to engage in bad faith negotiations with Local 3 or sponsors any attempts to break the union, it’ll be hard pressed to persuade the council to renew its franchise agreement.”

In June, Councilman Rory Lancman (D-Hillcrest) told The Tribune, “Charter Communications has spent the past 15 months doing everything in its power to break Local 3 and boost its own bottom line. Charter’s complete disregard for its own workers and unwillingness to negotiate in good faith are beyond shameful and will not be tolerated in New York City.”

Schneiderman

New York’s Attorney General Eric Schneiderman resigned late Monday after four women accused him of physical abuse, causing a political earthquake in Albany and potentially stalling several important telecommunications-related cases that were championed by the Democrat.

The New Yorker magazine published an article late Monday with the accounts of the four women who said Schneiderman subjected them to non-consensual physical violence during romantic encounters.

Schneiderman issued several statements denying he assaulted anyone or took part in non-consensual sex. His resignation announcement said the allegations will effectively prevent him from carrying out his office’s work.

He had been a vocal proponent of the #MeToo movement against sexual assault and harassment, including filing a lawsuit against Harvey Weinstein, one of the many high-profile men in politics, entertainment and business accused of assaulting women.

Schneiderman was also one of the country’s strongest advocates of holding telecom companies to their agreements. He was actively involved in pursuing the state’s dominant cable company, Charter Communications, for allegedly selling internet speeds his office claimed the company knew it could not deliver, and was more recently investigating Charter for its failure to adequately expand its rural service area to comply with the 2016 merger agreement between Charter, Time Warner Cable and the state’s Public Service Commission.

Schneiderman was elected in 2010 on a platform of pursuing equal justice for all New Yorkers. His website noted, “As the highest ranking law enforcement officer for the State, Schneiderman believes there has to be one set of rules for everyone, no matter how rich or powerful.”

On Tuesday, the governor announced New York Solicitor Barbara Underwood, also a Democrat, has stepped in to serve as acting attorney general.

Underwood, 73, has been the state Solicitor General since 2007 when she was appointed by then Attorney General Andrew Cuomo. Schneiderman left her in place after he won election to the attorney general position in 2010. Underwood has no record of being a political advocate and has no intention to run for the position in the fall elections, making her largely a caretaker of the office. Her role has traditionally been to represent the state in appeals cases.

Underwood

Her lack of political intention was cited by Gov. Cuomo in his remarks introducing her as Schneiderman’s replacement.

Traditionally, caretaker heads of the Attorney General’s office continue existing cases and rely heavily on staff attorneys and their supervisors to continue litigation. But few observers expect Underwood will break ground on new cases or attempt to shift priorities in the office. Because the next scheduled election for New York’s attorney general is this year, most anticipate Underwood will keep a low profile until the election or the legislature replaces her. Had the governor appointed an acting attorney general with political ambitions, most would have expected an active summer and fall of high profile cases to build a list of accomplishments to promote in the fall campaign.

The last Republican to hold the position, Dennis Vacco (1995-1998), told the press the sudden opening of the office could spark considerable interest among Democrats and Republicans. The Attorney General slot has recently proved to be an important position for anyone considering a run for governor in New York. Both Eliot Spitzer and Andrew Cuomo served in this position before being elected to the governor’s office.

Vacco told the Rochester Democrat & Chronicle he expects few changes in the office if Underwood remains a caretaker until the next election.

James

“If she is not a candidate for election, I think that she will be much more status quo-oriented,” he said.

But if the state legislature moves to appoint an interim replacement, the individual chosen will very likely have a political interest in winning the office at the next election opportunity. Vacco said that individual may want to put her or his own imprimatur on the office operations, which means the cases pursued in the future will not likely be the same as those chased by Schneiderman. The idea is “put[ting] distance between yourself and Schneiderman.”

There are multiple Democrats actively considering or who have been mentioned as possible candidates for the position this week:

NY City Public Advocate Letitia James: Favored by Gov. Cuomo, according to a report in the Wall Street Journal, James is no pushover for cable companies. James has led the charge against Charter Communications’ performance in Manhattan and has held Verizon’s feet to the fire over their slow deployment of FiOS in New York’s largest city.

Former Manhattan U.S. attorney Preet Bharara: Has the support of several prominent admirers in New York and Washington, D.C. His indefatigable prosecution of public corruption cases has him feared in some circles and admired in others. He is also a fierce critic of the president. Consumer groups are uncertain what types of cases would get his attention if he were to win the position.

Rep. Kathleen Rice, the former Nassau County district attorney is actively mentioned as a candidate, as is Queens state Sen. Michael Gianaris, and former gubernatorial candidate Zephyr Teachout. Teachout has been actively involved in promoting broadband issues including net neutrality. Another person who has been approached by Democratic officials to weigh a possible run is Ben Lawsky, the former superintendent of the state Department of Financial Services and a former federal prosecutor in the Manhattan U.S. attorney’s office.

Among members of the state legislature, who could quickly appoint a replacement until the fall election, James appears to be the current leading candidate. James would be New York’s first African-American attorney general, and would represent another instance of a female replacing a disgraced male official. She declined comment about her interest in the position.

On the Republican side, lawyer Manny Alicandro is running for the nomination for attorney general. His candidacy is likely to be challenging, given the Democratic enrollment advantage in New York and a mid-term election likely to drive more Democrats to the polls.