A $174.2 million consumer fraud settlement has been reached between outgoing New York Attorney General Barbara D. Underwood and Charter Communications, delivering $62.5 million in direct refunds to some customers in former Time Warner Cable Maxx territories in New York State and free premium and streaming services for all current New York customers.

The settlement, likely the largest ever reached with an Internet Service Provider (ISP), comes in response to a 2017 lawsuit filed by former Attorney General Eric Schneiderman, accusing Time Warner Cable of short-changing customers on broadband speed and reliability, by knowingly advertising internet speeds it could not deliver. Time Warner Cable was acquired by Charter Communications in 2016.

“This settlement should serve as a wakeup call to any company serving New York consumers: fulfill your promises, or pay the price,” said Underwood. “Not only is this the largest-ever consumer payout by an internet service provider, returning tens of millions of dollars to New Yorkers who were ripped off and providing additional streaming and premium channels as restitution – but it also sets a new standard for how internet providers should fairly market their services.”

The settlement allows Charter to admit no wrongdoing, but the company is required to compensate Spectrum customers in New York and reform its marketing practices. Going forward, Spectrum must offer evidence through regular speed testing that the company can actually deliver advertised speeds. Charter is also required to continue network investments in New York to improve its internet service.

Lawsuit History

Schneiderman

In 2017, the Attorney General’s office filed a detailed complaint in New York State Supreme Court, alleging that Charter had failed to deliver the internet speed or reliability it had promised subscribers in several respects. That includes leasing deficient modems and wireless routers to subscribers – equipment that did not deliver the internet speeds they had paid for; aggressively marketing, and charging more for, headline download speeds of 100, 200, and 300 Mbps while failing to maintain enough network capacity to reliably deliver those speeds to subscribers; guaranteeing that subscribers would enjoy seamless access to their chosen internet content while engaging in hardball tactics with Netflix and other popular third-party content providers that, at various times, ensured that subscribers would suffer through frozen screens, extended buffering, and reduced picture quality; and representing internet speeds as equally available, whether connecting over a wired or Wi-Fi connection – even though, in real-world use, internet speeds are routinely slower via Wi-Fi connection.

The Attorney General’s office prevailed at every major stage of the court proceedings. After Charter sought to move the case to federal court, the Attorney General’s office won a federal court decision returning it to state court. Charter then moved to dismiss the action on various grounds, including federal preemption; the Attorney General’s office successfully opposed that motion, which the trial court denied in full. When Charter appealed parts of that ruling, the Attorney General’s office prevailed again at the Appellate Division.

Underwood

The Settlement

Under the settlement, New Yorkers will be qualified to receive different levels of compensation as a result of the settlement. Here is what customers can expect:

Only current Charter Spectrum internet customers (including those on legacy Time Warner Cable internet plans) can receive benefits under this settlement. If you do not have service today, but had it in the past, you do not qualify for relief.

Cash Refunds

Only customers living in areas upgraded to Time Warner Cable Maxx service can receive cash compensation. At the time of the lawsuit, this included much of New York City area, the Hudson Valley, parts of the Capital Region, and Syracuse-Central New York. Additionally, the customer must have subscribed to a Time Warner Cable legacy speed plan of 100 Mbps or higher. (Customers in non-Maxx areas including Buffalo/WNY, Rochester-Finger Lakes Region, Binghamton, and the North Country will not receive financial compensation.)

If you did subscribe to 100+ Mbps Time Warner Cable service and still subscribe to either your original legacy plan or have since upgraded to a Spectrum plan, you may qualify for:

• a $75 refund (700,000 subscribers) if you were supplied an inadequate cable modem or Wi-Fi router by Time Warner Cable.
• an additional $75 refund (150,000 subscribers) if you were leasing an inadequate cable modem for 24 months or longer.

You do not need to take any action to get these refunds. Charter Spectrum will notify eligible subscribers about the settlement and provide refunds within 120 days. (If you previously received a refund for being supplied with an inadequate modem, you are ineligible for this cash refund).

Free Services

Only former TWC Maxx customers qualify for cash refunds.

In addition to the direct refunds detailed above, Charter will offer free streaming services to approximately 2.2 million active internet subscribers (both Spectrum and legacy Time Warner Cable plans qualify):

If you currently subscribe to both Spectrum Internet and TV service, you qualify for three free months of HBO or six free months of Showtime. (If you already subscribe to these premium movie channels, you are ineligible for this part of the settlement. If you subscribe to one, but not both of these networks, select the one you do not currently receive.)

If you currently subscribe to internet-only service from Spectrum, you will receive a free month of Charter’s Spectrum TV Choice streaming service—in which subscribers can access broadcast television and a choice of 10 pay TV networks—as well as a free month of Showtime.

Charter will notify subscribers of their eligibility for video and streaming services and provide details for accessing them within 120 days of the settlement. Receiving the video and streaming services as restitution will not affect eligibility for future promotional pricing.

Pro-Consumer Reform

New York also secured groundbreaking reforms in how Charter Spectrum conducts business. Underwood believes these guidelines could serve as a guide for other states to eventually adopt, delivering consumer benefits to cable subscribers everywhere. For now, New York consumers can expect:

• Internet Speed Proof of Performance: Charter must describe internet speeds as “wired,” disclose wireless speeds may vary, and mention that the number of concurrent users and device limitations will impact your actual internet speed. These disclosures must be made in all marketing materials and ad campaigns. Additionally, Spectrum must regularly certify through actual speed testing that it can deliver the speeds it advertises or discontinue any speed plan that cannot be substantiated.
• Truth in Advertising: Charter Spectrum cannot make unsubstantiated claims about the speed required for different internet activities (eg. streaming, gaming, browsing). It also must not advertise internet service as reliable (eg. no buffering, no slowdowns), or guarantee Wi-Fi speed without proof.
• Equipment Reforms: Charter must provide subscribers with equipment capable of delivering the advertised speed under typical network conditions when they commence service, promptly offer to ship or install free replacements to all subscribers with inadequate equipment via at least three different contact methods, and implement rules to prevent subscribers from initiating or upgrading service without proper equipment for the chosen speed tiers.
• Sales and Customer Service Retraining: Charter must train customer service representations and other employees to inform subscribers about the factors that affect internet speeds. Charter must also maintain a video on its website to educate subscribers about various factors limiting internet speeds over Wi-Fi.

Today’s settlement has no bearing on the well-publicized dispute between the New York Public Service Commission and Charter that led the Commission to cancel approval of Charter’s acquisition of Time Warner Cable. Last summer, the Commission voted to throw Spectrum out of the state, but ongoing negotiations between the PSC and Charter are also likely to culminate in a similar settlement including cash fines and new commitments from the cable operator.

By the year 2022, 60% of the world’s population will be connected to the internet and 82% of online traffic will come from streaming video.

Those are the conclusions found in Cisco’s newest Visual Networking Index (VNI), based on independent analyst forecasts and real-world network usage data tracked by the networking equipment manufacturer.

“By 2022, more IP traffic will cross global networks than in all prior ‘internet years’ combined up to the end of 2016,” Cisco predicts. “In other words, more traffic will be created in 2022 than in the 32 years since the internet started.”

Key predictions for 2022

Cisco’s VNI looks at the impact that users, devices and other trends will have on global IP networks over a five-year period. From 2017 to 2022, Cisco predicts:

1. Global IP traffic will more than triple
   
   • Global IP traffic is expected to reach 396 exabytes per month by 2022, up from 122 exabytes per month in 2017. That’s 4.8 zettabytes of traffic per year by 2022.
   • By 2022, the busiest hour of internet traffic will be six times more active than the average. Busy hour internet traffic will grow by nearly five times (37 percent CAGR) from 2017 to 2022, reaching 7.2 petabytes¹ per second by 2022. In comparison, average internet traffic will grow by nearly four times (30 percent CAGR) over the same period to reach 1 petabyte by 2022.

     ¹ A petabyte is equal to 1,000 terabytes or one million gigabytes.

2. Global internet users will make up 60 percent of the world’s population
   
   • There will be 4.8 billion internet users by 2022. That’s up from 3.4 billion in 2017 or 45 percent of the world’s population.
3. Global networked devices and connections will reach 28.5 billion
   • By 2022, there will be 28.5 billion fixed and mobile personal devices and connections, up from 18 billion in 2017—or 3.6 networked devices/connections per person, from 2.4 per person.
   • More than half of all devices and connections will be machine-to-machine by 2022, up from 34 percent in 2017. That’s 14.6 billion connections from smart speakers, fixtures, devices and everything else, up from 6.1 billion.
4. Global broadband, Wi-Fi and mobile speeds will double or more
   • Average global fixed broadband speeds will nearly double from 39.0 Mbps to 75.4 Mbps.
   • Average global Wi-Fi connection speeds will more than double from 24.4 Mbps to 54.0 Mbps.
   • Average global mobile connection speeds will more than triple from 8.7 Mbps to 28.5 Mbps.
5. Video, gaming and multimedia will make up more than 85 percent of all traffic
   • IP video traffic will quadruple by 2022. As a result, it will make up an even larger percentage of total IP traffic than before—up to 82 percent from 75 percent.
   • Gaming traffic is expected to grow nine-fold from 2017 to 2022. It will represent four percent of overall IP traffic in 2022.
   • Virtual and augmented reality traffic will skyrocket as more consumers and businesses use the technologies. By 2022, virtual and augmented reality traffic will reach 4.02 exabytes/month, up from 0.33 exabytes/month in 2017.

Regionally, Asian-Pacific internet users are expected to use far more internet data than North Americans — 173 exabytes a month by 2022 vs. 108 exabytes in North America. Usage caps, usage-based pricing, and overall slower internet speeds in the U.S. and Canada have slowed growth in new high-bandwidth internet applications. The prevalence of low-speed DSL in rural areas also restricts potential traffic growth. Large parts of the Asia-Pacific region use very high-speed fiber to the home technology.

The slowest growing regions — Latin America and the Middle East/Africa, which lag behind in internet penetration, often apply low usage caps or bandwidth restrictions and often do not have the ability to financially scale growth to meet demand. Even by 2022, Latin America will generate only 19 exabytes of traffic per month.

A snowstorm, in winter, in Upstate New York, was the excuse Frontier Communications gave for leaving scores of residents in the Minerva-Johnsburg area without phone or internet service for as long as 10 days this month.

“We are aware of a service interruption in Minerva and have been delayed by a snowstorm that impeded access and diverted resources starting Friday,” Javier Mendoza, vice president of corporate communications and external affairs at Frontier, told The Sun.

The company routinely blames external factors for wide scale service interruptions, which often impact Frontier’s rural customers, totally reliant on aging copper wire infrastructure the company has refused to replace.

“Often [service outages] are due to uncontrollable circumstances like commercial power outages, severe weather, construction crews damaging telecom cables, cars hitting telephone poles or telecom equipment cabinets,” Mendoza said. “These causes can also delay response and restoral efforts beyond Frontier’s control.”

But customers in several states where Frontier provides the only internet access around are just as concerned by poor service that is within Frontier’s control.

Johnsburg’s town supervisor is one of them, complaining regularly about the poor quality of Frontier’s internet service, powered by DSL. It suffers frequent service outages.

Minerva-Johnsburg, N.Y.

“It’s been widespread throughout the town,” Supervisor Andrea Hogan told the newspaper. “People can’t run businesses with that.”

Those who rely on the internet to work from home are challenged by Frontier’s DSL service and frequent service problems.

Greg and Ellen Schaefer retired to the community of North River and planned to do part-time work remotely over the internet. They pay Frontier $228 a month for a package of satellite TV, landline, and internet service. On a good day, they achieve a maximum of 3 Mbps for downloads and 0.5 Mbps for uploads. But in Frontier country, where good days can be outnumbered by bad ones, the couple has often been forced into their car in search of good Wi-Fi. Some days they work from the local library, others they park by an AT&T cell tower near the base of Gore Mountain to use their car’s built-in AT&T hotspot.

Predictably, the Schaefers question the value for money they receive from Frontier Communications.

Frontier’s name conjures up the notion of a phone company providing service in the rough and rugged Old West, but Glenn Pearsall told The Sun he prefers to think of Frontier as an antique three-speed car, offering customers the choice of “dim, flickering,” or “off.”

Pearsall pays Frontier for internet speeds advertised at 6-10+ Mbps, but receives 0.69 Mbps for downloads and 0.08 Mbps for uploads at his home in Garnet Lake. A typical Microsoft Office software update takes approximately 48 hours to arrive, assuming one of many frequent service outages does not force the upgrade to start anew.

The problem for most Frontier DSL customers, especially in rural areas, is the distance between the company’s local exchange office and customers. The further away one lives, the slower the speed.

Many rural telephone exchanges have tens of thousands of feet in copper wire between the central office and an outlying customer. As a result, in the most rural areas, no internet service is available at all.

Frontier is accepting millions in Connect America Funds (CAF) — paid for by ordinary customers on their phone bill, to expand internet access into unserved areas. Frontier has to replace at least some of its copper wiring with fiber optics, which does not degrade significantly with distance. It can then reach customers part of the way over its existing copper facilities, which saves the company millions in replacement costs.

Demand for internet service and constantly rising traffic volumes suggests Frontier must regularly upgrade its equipment and backhaul connectivity. But in some areas, the company has failed to keep up with demand, resulting in online overcrowding. Customers that access the internet during peak usage times in the evenings report dramatic slowdowns and web pages that refuse to load — both symptoms of oversold network capacity.

Frontier is an integral part of New York Gov. Andrew Cuomo’s rural broadband initiative, which promises 99.9% of New Yorkers will have access to high-speed internet. The company collected $9.7 million in January 2018 to expand service to another 2,735 customers in the North Country, Southern Tier, and Finger Lakes region. The company claims it will deliver 100 Mbps internet speed to those customers in its news releases, but also warns what the company claims is never guaranteed.

“Our products state in our literature what you ‘may’ get. So it’s speeds ‘as fast as.’ You may not get 6 Mbps every moment of the day,” admitted Jan van de Carr, manager for community relations and government affairs.

It is that kind of mentality that has Pearsall keeping a bottle of champagne at the ready on the day he can disconnect Frontier service for good. But considering the alternative is likely to be satellite internet offered by Hughes, that bottle is likely to remain corked for a long time into the future.

Altice USA’s Optimum (formerly Cablevision) and Suddenlink are getting upgraded technology as the two cable companies face increasing demands for speed and broadband usage around the country.

“Over the last two years, the percentage of customers taking over 100 megabits of speed has risen to about 80% of our total customer base,” noted Dexter Goei, CEO of Altice USA. “Recently, we have shifted focus to growing the penetration of 200 Mbps services with about 80% of gross additions now taking these speeds or higher, reaching about half of our total customer base at the end of the third quarter, up from less than 5% two years ago.”

Goei noted that the average of all Optimum and Suddenlink broadband customers’ internet speeds has risen from 56 Mbps to 172 Mbps over the last 24 months, and this is increasing every quarter.

“Average data usage is now over 240 gigabytes per month per customer,” Goei added. “And this continues to grow over 20% per year.”

Goei

To meet growing demand, Altice USA is spending money upgrading its cable properties. The company is scrapping its coaxial cable network in the northeast and in selected parts of Suddenlink territory. In smaller communities that Suddenlink typically serves, the company will either bring fiber to the home service or upgrade the existing cable system to DOCSIS 3.1.

“The first objective is to have 1 Gbps broadband services available virtually everywhere,” Goei said. “For our legacy coax network in the Optimum footprint, we just need to do a Digital Switched Video upgrade now to move us to DOCSIS 3.1 and 1 Gbps speeds, which we can complete over the next few quarters. We just soft launched our fiber network in select areas of Long Island, and it is performing just as we expected so far, delivering a great 1 Gbps symmetrical single-play data service with the new advanced wireless gateway. The smart meshed Wi-Fi we’ve introduced is also doing extremely well.”

Goei says Optimum’s fiber network will be capable of delivering more than 10 Gbps speeds, as well as enhanced Wi-Fi, and improved system reliability.

“For the Suddenlink footprint, we already offer up to 1 Gbps services, so we will add further 1 Gbps capacity through some node splitting and CMTS upgrades,” Goei said. “We are also doing a QAM to IP migration on the cable plant to deliver future IP services. And with the move to DOCSIS 3.1, customers will have a uniform SSID across all of their devices, for an improved seamless Wi-Fi experience.”

The upgrades will mean Suddenlink customers will be more likely to receive 1 Gbps speeds even during peak usage times.

By transitioning video services away from the current QAM platform, IP video will free up additional bandwidth Suddenlink can devote to its internet customers.

Goei told investors on a quarterly results conference call that the five-year fiber upgrade project in the northeast may stretch into a sixth year due to permitting delays in some communities where Optimum provides service.

Some Wall Street analysts questioned Goei about the merits of a costly fiber upgrade, asking if it was necessary. Jonathan Chaplin of New Street Research suggested if cable systems were already capable of gigabit speed service under DOCSIS 3.1, any revenue benefits gained from offering gigabit service could already be realized without stringing fiber optic cable. Other Wall Street analysts wanted to know when Altice would deliver the next revenue-increasing rate hike on Optimum and Suddenlink customers.

The company acknowledged it lost customers after the last round of price increases last spring. Its biggest losses are coming from cord cutting. Altice saw 20,700 Optimum TV customers cancel service between July and September, with a total of 76,000 customers dropping service so far this year. But that won’t stop Altice from raising rates again. Goei anticipated the next rate hike will likely take place during the first half of 2019.

Altice USA is also working on its own cellphone service, which will be powered by its large Wi-Fi hotspot network in the northeast and rely on the services of Sprint to connect customers while away from Wi-Fi. The company did not release pricing or service information.

AT&T will complete its fiber buildout to areas designated to get fiber to the home service by mid-2019, according to AT&T executives.

John J. Stephens, AT&T’s chief financial officer, told investors on a quarterly conference call that AT&T is on schedule to complete expansion of its fiber to the home commitment to 12.5 million new customer locations, a regulator-required commitment imposed on AT&T in return for approval of its acquisition of DirecTV.

“We are getting near the end of our fiber build project, which is basically laying the foundation for stabilizing our broadband and TV business profits in 2019,” added AT&T CEO Randall Stephenson.

AT&T’s expansion has targeted millions of customer locations for fiber to the home service, replacing the fiber to the neighborhood technology AT&T used for several years to support its U-verse service. AT&T officials say its fiber network will reach more than one million new customers during 2018. That network is key to two AT&T initiatives – its emerging 5G wireless service, which requires fiber connections to cell towers, and AT&T Fiber and its broadband offerings — helping boost internet and online video revenue.

“This shift to fiber is beginning to drive IP broadband ARPU growth,” said John M. Donovan, CEO of AT&T Communications, Inc. “The strategic pivot we’re making with video, combined with our execution with fiber gives us the confidence that we will stabilize Entertainment Group [profitability] next year.”

AT&T Fiber is critical to the company’s ability to compete in the home broadband market against cable operators that have recently boosted internet speeds. AT&T’s hybrid fiber-copper U-verse system proved inadequate to match the significantly faster internet speeds many cable operators are rolling out. But AT&T Fiber will not reach all the company’s landline customers. Rural areas are unlikely to ever receive fiber upgrades and AT&T has had long-term plans to scrap its rural landline network, transitioning those customers to wireless voice and internet using AT&T’s 4G LTE network.