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

New York City officials are giving Charter Communications 10 days to send $6 million in unpaid franchise and royalty fees or make a strong and credible case for why it shouldn’t pay, with likely litigation and the possible non-renewal of Spectrum’s contract to supply cable service on the line if the mayor isn’t satisfied.

In a letter addressed to Charter CEO Thomas Rutledge, New York Mayor Bill De Blasio accused the company of deliberately shorting the city’s share of revenue from Spectrum’s advertising sales, calculating the city’s cut based on the lower net amount collected after expenses, instead of on gross revenue, as the contract requires. The mayor also claims Charter is withholding royalty revenue from an ancillary business Charter partly owns.

“Charter Spectrum has proven time and time again that they’re unwilling to play by the rules,” the mayor told the Daily News. “This is money that can be reinvested in our communities instead of going into Charter’s coffers as they continue to hike rates for New Yorkers. [This latest] default is another thing we’ll take into consideration when their contract expires in 2020.”

Charter’s Endless Labor Problems Upset New York Officials

Charter is already in hot water with New York officials over its treatment of workers represented by the International Brotherhood of Electrical Workers (IBEW) Local 3, which have been on strike since March 2017. The highly skilled technicians were incensed when they learned hard-fought benefits were being clawed back by Charter, even as the company paid its CEO a record-breaking $98 million in compensation.

Mayor de Blasio

Over 1,800 middle class workers represented by IBEW Local 3 have suffered greatly over the past two years, according to labor reports. Many have had to cash in retirement savings, some have lost their cars or homes to foreclosure, others face mounting medical bills, in addition to family pressure at home. The union argues it is one of the last bastions to protect all middle-income earners from a race to the bottom mentality that is reducing wages and benefits. When a union worker is replaced with a less-skilled contractor, the pay and benefits Charter offers are significantly lower. Those technicians, regardless of their intentions, are also often poorly trained and risk alienating customers when repairs are incomplete or fail.

Many politicians in New York City have sided with the union strikers and have deplored the seemingly endless strike. Time Warner Cable, in contrast, had reasonably good relations with its unionized workforce. Prior to the merger, the biggest cable vs. labor union friction in the city was between the Communications Workers of America and Cablevision, which began after the CWA started organizing workers in Brooklyn and the Bronx in 2012.

With the Charter dispute approaching its second anniversary, the cable company has been spending subscriber dollars on a slick effort to convince its replacement workers to team up with the cable company to vote for decertification of IBEW Local 3 with the National Labor Relations Board.

Ironically, the same company that has dragged its feet settling the dispute has sent email to replacement workers claiming the union has done a lousy and ineffective job… of wearing down Charter.

In a Jan. 31 internal email obtained by In These Times, Charter Communications regional vice president of New York City operations, John Quigley, told workers, “In my opinion, Local 3 has not earned the right to represent you. Over the past several years they have misled their members, led them out on a strike without a clear plan, mishandled almost every aspect of the strike, made it very clear what they think of employees who are working with us today, and continue to make empty threats about harming our business. We hope that you vote ‘no’ and give us a chance to continue to make Charter a great place to work together.”

Race to the Bottom for Workers, Higher Rates for You

If Charter is successful in organizing replacement workers to side with the cable company and vote in larger numbers than the strikers, the current union representation will essentially end, along with the strike, handing total victory to Charter Communications. The cable company will likely impose its own terms on workers shortly afterwards. Critics claim that should be a familiar story for Spectrum subscribers.

“The company is basically union busting in New York City, and they’ve come in, raised rates on people and set their own terms because they hold a monopoly right now and there’s really no one to stop them from doing what they’re doing,” Troy Walcott, a striking worker, told In These Times.

With ongoing controversies with Charter on both the state and local levels, the company is likely to face increased scrutiny if the cable operator applies for a franchise renewal with the city next year, assuming state regulators do not move to enforce their own July 2018 decision to effectively kick Charter Communications out of New York State.

Brindisi, as he appeared in an ad slamming Charter Spectrum in the summer of 2018.

Rep. Anthony Brindisi (D-N.Y.) today introduced a bill in Congress to force cable operators fined by a state telecommunications regulator to publicly reveal the actual performance of their internet services, subscriber counts, and a complete price listing including all fees and surcharges.

The Transparency for Cable Consumers Act comes in response to New York’s experiences with Charter Communications, which was fined for failing to meet its commitments under a 2016 merger agreement allowing Charter to acquire Time Warner Cable. Brindisi made the cable company’s performance a core issue in his 2018 campaign, brazenly buying commercial time on Spectrum cable systems for 30-second ads slamming the cable company.

“I’ve heard from thousands of Upstate New Yorkers who are sick and tired of dealing with frequent rate hikes, poor customer service, and failed promises,” said Brindisi. “This is more than just an inconvenience. For families on fixed incomes, an unexpected rate hike could wreck their budget. And for people in rural communities, crawling internet speeds can take away their connection to jobs, health care, information, and important online services. When a company enters into an agreement, it should be required to hold up its part of the bargain.  We can’t keep giving these companies a free pass. If we don’t hold them accountable, nothing will change.”

Brindisi has bristled over the New York State Public Service Commission’s decision to repeatedly extend the deadline given to Charter to file an orderly exit plan winding down its cable operations in the state. The most recent extension was approved on Wednesday, now giving Charter Communications until April 5, 2019 to appeal the Commission’s decision and until May 9, 2019 to file its six-month exit plan.

Brindisi complains Spectrum is being allowed to linger even as consumers continue to contact his office with complaints about frequent rate hikes, slow internet speeds, and poor customer service. His December 2018 letter to the PSC asking the Commission to stop giving Charter additional time extensions has gone unanswered, according to Brindisi.

Brindisi’s bill attempts to walk a fine line around the federal government’s wholesale deregulation of the cable industry. Various deregulation measures stripped federal, state, and local officials of most of their powers to oversee the internet and Voice over IP telephone service. Cable television remains subject to some local oversight and regulation, but not in all areas. Many states also have so-called “state franchise” laws in place, which gives blanket authority for cable operators to offer cable television in the state without seeking a separate agreement with each community.

The Transparency for Cable Consumers Act, would require a cable or internet company to disclose information about its operations if it is fined by a state regulator:

• The number of cable and broadband internet customers in each county;
• The average cable bill and broadband internet bill amounts in each county;
• A full accounting of all fees charged customers in each county; and
• The average broadband internet speeds delivered in each county.

Rep. Anthony Brindisi (D-N.Y.) appeared on the House floor this afternoon to introduce the Transparency for Cable Consumers Act. (1:18)

Spectrum cable television customers with Silver or Gold tiers will find two premium channels have disappeared from channel lineups, with no corresponding decrease in rates.

This hidden rate increase took effect Feb. 15 after Spectrum dropped Cinemax from its Silver and Gold packages and EPIX from its Gold package, with little explanation. Customers have been notified they can acquire these channels a-la-carte, for an additional $9.99/mo for Cinemax and $5.99/mo for EPIX.

The premium network cutbacks were originally planned to be significantly worse, however, after Charter Communications notified some customers it was also planning to delete Starz and Encore from its Gold tier, potentially making the $40 add-on not worth the price. Just days before the changes were to take effect, Charter changed its mind about Starz and Encore, allowing those channels will continue to be available as part of the Gold package.

Some customers are upset about the changes.

“It’s a hidden rate hike,” complained Lois Blumenthal. “We are still paying the same price for Silver or Gold, only getting fewer channels for it.”

Spectrum customer service appeared to be sensitive to customer complaints and threats to downgrade cable TV service, which would only increase the impact of cord-cutting. So the company is offering a hidden deal to current customers who subscribed to Silver or Gold TV tiers before Feb. 15 and who call 1-855-70-SPECTRUM to share their displeasure about the changes:

• Silver Plan customers qualify for one year of Cinemax at no charge, after which the network will cost $9.99/month.
• Gold Plan customers qualify for one year of Cinemax -and- one year of EPIX at no charge, after which Cinemax will cost $9.99/mo and EPIX will cost $5.99/mo.

Customers can ask about these promotions when they call. While no expiration date was available on these offers, it makes sense to call sooner rather than later in case they disappear.

It could have been worse. Spectrum notified many of its subscribers the premium network cutbacks originally envisioned also included Starz and Encore. Charter changed its mind, but it was too late to stop notifying some subscribers about the channel deletions.

Spectrum has adjusted its advertising:

Spectrum Silver (includes TV Select — add $20 a month)

• 175+ cable channels with FREE HD
• Includes HBO, SHOWTIME & NFL Network
• On-the-go with HBO GO, SHOWTIME ANYTIME
• Enjoy thousands of On Demand choices to watch when & where you want
• Watch on your Apple TV, Samsung Smart TV, Roku, Xbox One, tablet, smartphone or visit SpectrumTV.com
• Download 80+ network apps and take on-the-go

Spectrum Gold (includes TV Select and TV Silver — add $40 a month)

• 200+ cable channels with FREE HD
• Includes HBO, SHOWTIME, STARZ, TMC, ENCORE, NFL Network & NFL Redzone
• Enjoy thousands of On Demand choices to watch when & where you want
• Watch on your Apple TV, Samsung Smart TV, Roku, Xbox One, tablet, smartphone or visit SpectrumTV.com
• Download 80+ network apps and take on-the-go

For all Spectrum customers, the cost of adding most premium add-on channels a-la-carte (without a promotion) decreased effective Feb. 15:

• HBO remains unchanged at $15/mo
• Showtime remains unchanged at $15/mo
• Starz was $15, decreasing to $9.99
• Encore was $15, decreasing to $5.99
• Cinemax was $15, decreasing to $9.99
• TMC was $15, decreasing to $9.99
• EPIX was $15, decreasing to $5.99

Santa Broadband: Ajit Pai’s magical world of broadband

God bless deregulation and your local phone and cable companies for making American Broadband Great Again.

That’s the message FCC Chairman Ajit Pai hopes will be the take away in the forthcoming 2019 Broadband Deployment Report — a highly dubious and over optimistic assessment of America’s rural broadband landscape.

“For the past two years, closing the digital divide has been the FCC’s top priority,” Chairman Pai said. “We’ve been tackling this problem by removing barriers to infrastructure investment, promoting competition, and providing efficient, effective support for rural broadband expansion through our Connect America Fund. This report shows that our approach is working. But we won’t rest until all Americans can have access to broadband and the 21st century opportunities it provides to communities everywhere.”

Except closing the rural-urban broadband gap has been a FCC priority for more than two years, and was a particularly high priority for the previous administration, which devoted a large amount of controversial stimulus funding after the Great Recession to internet expansion during the Obama Administration. In fact, Chairman Pai repeatedly claimed credit for broadband expansion projects that were funded by the previous administration, while at the same time criticizing the FCC under former Chairman Thomas Wheeler for harming investment in broadband with the enforcement of net neutrality.

The FCC continues to rely on dubious and flawed data to produce its reports — unverified data typically volunteered by the country’s phone and cable companies. The FCC has been frequently criticized for relying on inaccurate broadband availability maps, taking providers at their word on broadband speeds that fail to materialize in the real world, and reporting expansion projects that do not directly benefit consumers.

Pai’s office this week released a press release attempting to conflate broadband gains to his deregulatory policies and the banishment of net neutrality.

“The private sector has responded to FCC reforms by deploying fiber to 5.9 million new homes in 2018, the largest number ever recorded. And overall, capital expenditures by broadband providers increased in 2017, reversing declines that occurred in both 2015 and 2016.”

But Pai does not offer any evidence to back up those claims. In fact, as Stop the Cap! has reported, many of the country’s largest telecom companies have been cutting capital expenditures, many initiated as part of system upgrades to convert to digital cable television or to increase the amount of fiber optics to increase cable system reliability — neither relevant to the debate about net neutrality. This year, Charter Communications has announced a dramatic drop in spending (despite the repeal of net neutrality) because their long-planned system upgrades surrounding the retirement of analog cable television are now complete. Charter also had its merger agreement with Time Warner Cable revoked in New York for failing to meet its rural broadband commitments in that state.

Comcast cut spending by 3% because it bought fewer set-top TV boxes in light of cord-cutting customer losses. Verizon, which has been aggressively promoting its forthcoming 5G millimeter wave wireless network, slashed spending from $17.2 billion in 2017 to between $16.6-17 billion last year, and a significant sum of that money was earmarked for 5G buildouts in urban areas, not expanding rural internet. AT&T’s capital expenditures for 2019 are not expected to move much, placed in the $23 billion range for 2019, just a little more than last year. But AT&T is expecting to be reimbursed $1.6 billion by the federal government for AT&T’s FirstNet public safety network buildout, and much of its other spending is targeting its wireless business, including a plan to launch 5G services in 19 cities this year. That means less money for AT&T’s wireline network, including fiber broadband for homes and businesses.

Pai’s claims about the increased availability of broadband, at higher speeds, comes largely at similar incremental rates to progress under the Obama Administration. In New York, which is seeking to approach near universal broadband coverage, what moved the needle the most was a large sum of funding available to subsidize rural broadband expansion. The availability of substantial financial assistance from the state government, which some described as corporate welfare, appeared to be the most effective broadband expansion motivator for an industry Pai praised in his press release, not deregulation or the repeal of net neutrality.

In a move that clearly signals cord-cutting is taking a toll on Spectrum cable television, Charter Communications today unveiled a new streaming TV service priced to compete with “over the top (OTT)” streaming services like YouTube TV and DirecTV Now.

“Spectrum TV Essentials” will offer a package of 60 national cable networks for $14.99 a month, when the streaming service debuts in March. The lineup avoids costly cable channels focused on sports and will include no local channels.

“Spectrum TV Essentials is a OTT offering designed to provide Spectrum internet-only customers a new low-price, high-value video option,” said Charter CEO Tom Rutledge. “As we began to assemble the rights for this new video service, we received great enthusiasm and encouragement from these key programming partners, who share our view and embrace creating an innovative video offering we believe will resonate with our internet customers.”

Remarkably, one of Charter’s first programming partners for the newest slimmed-down cable TV package is Viacom, notorious for its bouquet of high-priced cable networks. Viacom has been so insistent on regular rate increases and forced bundling of multiple Viacom-owned cable networks, some cable systems like Cable One dropped all Viacom networks from their lineups just a few years ago.

A management change at Viacom apparently included a new willingness to combat cord-cutting.

“Viacom shared its strong belief and research that suggests there is a large untapped opportunity for a low-priced, entertainment-only bundle unencumbered by the high cost of broadcast retransmission consent fees and expensive sports programming,” Rutledge noted.

The 60-channel lineup is heavy on content from Discovery Networks, Viacom, Hallmark, and AMC. News junkies will be unhappy to find CNN, MSNBC, and Fox News are not on the lineup, although lesser-watched BBC World News, Bloomberg, and NewsmaxTV are there.

The full lineup:

A&E, AMC, American Heroes Channel, Animal Planet, AXS TV, BBC America, BBC World News, BET, BET Her, BET Jams, BET Soul, Bloomberg, Cheddar, CLEO TV, CMT, CMT Music, Comedy Central, Cooking Channel, Destination America, Discovery, Discovery Family, Discovery Life, DIY, Food Network, FYI, Game Show Network, Hallmark Channel, Hallmark Drama, Hallmark Movies & Mysteries, HDNet Movies, HGTV, HISTORY, IFC, Investigation Discovery, Lifetime, Lifetime Movie Network, Logo, MotorTrend Network, MTV, MTV2, MTV Classic, MTV Live, MTVU, NewsmaxTV, Newsy, Nickelodeon, Nick Jr., Nick Music, NickToons, Outdoor Channel, OWN, Paramount Network, Science Channel, Sundance TV, Teen Nick, TLC, Travel Channel, TV Land, VH1, Viceland, The Weather Channel and WEtv.

There will be no DVR option at launch, but Charter is reportedly testing cloud DVR technology for introduction later.

“We’re thrilled to expand and deepen our relationship with Charter. They share both our commitment to the evolution of the the Pay TV ecosystem as well as our understanding of the changing needs of consumers,” said Bob Bakish, Viacom CEO. “As the video marketplace continues to segment across price points and offerings, we believe a high quality, lower priced option for internet-only subscribers is very important. We’re excited to have our global brands as part of Spectrum TV Essentials at launch.”

Access will initially be available on the desktop through SpectrumTV.com and Spectrum’s Roku app. The service will also be available on iOS and Android phones and tablets, Apple TV, Xbox One, Amazon Kindle Fire, and Samsung Smart TVs.