Two years after Verizon promised its FiOS fiber to the home service would be available to every resident of New York City, the city sued Verizon Communications on Monday, alleging Verizon failed to meet its commitment.

The 19-page lawsuit, filed in New York’s Supreme Court, contrasts the city’s interpretation of Verizon’s commitments laid out in a 2008 franchise agreement against Verizon’s claim it has met its obligations. Central to the case is the city’s claim tens of thousands of New Yorkers cannot get FiOS service from Verizon, even though Verizon’s fiber network may be running down the street.

“Verizon must face the consequences for breaking the trust of 8.5 million New Yorkers,” Mayor Bill de Blasio said in a statement. He added that, “It’s 2017 and we’re done waiting. No corporation — no matter how large or powerful — can break a promise to New Yorkers and get away with it.”

A 2015 audit conducted by the city and testimony given in public hearings confirmed Verizon had failed to wire every building for service, despite what the city believed was Verizon’s promise to do so.

Verizon defended its actions, claiming it had met its obligations to New York City by providing FiOS fiber-to-the-home infrastructure throughout the five boroughs. The problem, according to Verizon, is intransigent building owners that have obstructed Verizon’s entry to get service to tenants. Verizon’s defense does come with some evidence. The company has filed numerous complaints with New York’s Public Service Commission to gain entry to properties in the city that have either ignored Verizon’s efforts to wire their buildings or actively opposed it.

Some landlords claimed no tenants in their building wanted Verizon FiOS and the telephone company wasn’t welcome. Others accused Verizon installers of damaging buildings or performing shoddy work and sought assurances Verizon will meet the building owner’s installation standards. Some live-in building managers have even demanded kickbacks or free service in return for entry. New York State law gives Verizon a right of entry and the company has followed legal channels to eventually gain admittance.

Difficulties with landlords alone cannot account for many other instances where willing customers were told service was not available. In some cases, even city officials seeking FiOS were themselves told repeatedly it was unavailable.

Verizon’s defense is likely to come down to a single industry phrase — “homes passed.”

The former Bloomberg Administration signed an agreement with Verizon that committed Verizon to wire its fiber network citywide. Verizon interpreted the contract to mean installing fiber infrastructure that passes every major property in New York, but not wiring every property for the service. The current de Blasio administration argues the contract means Verizon should be able to reach every customer that wants FiOS service within 7-14 days of receiving an order.

Verizon’s lawyer indirectly conceded Verizon has not made the service available to every household that might want the service.

In a letter sent last week to Anne M. Roest, the commissioner of the city’s Department of Information Technology and Telecommunications, Craig Silliman, Verizon’s general counsel, wrote:

“[…]We now pass all households in the city and can provide service to over 2.2 million households within seven to 14 days of receiving a service request.”

According to data from Baruch College, New York City had 3,129,147 households as of 2015, leaving at least 900,000 households unaccounted for.

Verizon’s fiber network may run down the street of each of those homes, but the lawsuit contends Verizon has been unwilling or unable to wire them for service.

“Although Verizon claims it ‘passed’ all residential premises, Verizon still does not accept orders from all city residents,” the city audit concluded. “In fact, it still informs residents that service is ‘unavailable’ at an address if their network has not been created on the block.”

The city and several consumer and civic groups have implored Verizon to ‘speed it up’ for the last two years but contend Verizon’s response has been inadequate, which led to the lawsuit.

McConville

Common Cause New York has been pushing for more FiOS service for years and reports consumers are frustrated with Verizon’s inability to deliver service. They now suspect Verizon’s unwillingness to expand FiOS comes from a lack of investment to complete its fiber network.

“People continue to be very frustrated because it appears that Verizon is motivated by what will be most profitable for them — what buildings to wire and what buildings to ignore,” Common Cause New York’s executive director Susan Lerner told the New York Times. “This really is about undertaking an ambitious obligation and then deciding halfway through that it’s not worth it. We are very happy to see the city holding the vendor’s feet to the fire. This is absolutely what should be done.”

Verizon appeared frustrated for another reason, shared by company spokesman Raymond McConville.

“On a day where the city is preparing for the biggest blizzard of the season, it’s sad that the mayor’s focus is on pursuing a frivolous lawsuit,” McConville wrote in an email to the Times. “The de Blasio administration is disingenuously attempting to rewrite the terms of an agreement made with its predecessor and is acting in its own political self-interests that are completely at odds with what’s best for New Yorkers. We plan to vigorously fight the city’s allegations.”

And if that doesn’t work, McConville threatened Verizon may not seek a franchise renewal when the current one ends in three years.

The average Charter/Spectrum customer shares their internet connection with up to 499 of their neighbors, according to an admission made today by Charter Communications CEO Thomas Rutledge.

“Our average node size is around 500 homes,” Rutledge told investors on a morning conference call.

According to a lawsuit filed by the New York State Attorney General Eric Schneiderman, from about 2012, Spectrum-TWC’s network across New York typically provided about 304Mbps (8 x 38Mbps channels) of bandwidth to be shared among all the subscribers in a service group. In some areas, this would mean that 300 customers in a node would have around 1Mbps of bandwidth to use if all 300 subscribers used the internet at the same time. Time Warner Cable had begun expanding bandwidth on DOCSIS nodes to 16 channels at the time Charter Communications acquired the company, giving customers shared bandwidth of about 608Mbps.

Remarkably, Rutledge’s admission suggests some Charter customers may be serviced by DOCSIS nodes even more populated than the ones in New York State that regularly failed to deliver advertised internet speeds and prompted the Attorney General to file a lawsuit against Charter.

New York’s lawsuit claimed as of February 2016, the average Time Warner Cable customer in the state shared their connection with about 340 other customers. Information obtained from Time Warner Cable found some nodes with as few as 32 subscribers while the most overcongested had as many as 621 subscribers.

Rutledge’s comments this morning suggest Charter/Spectrum customers may be sharing their connection with up to 499 of their neighbors, making them more likely to experience congestion potentially worse than experienced with Time Warner Cable. Standard internet service from Charter is also much faster than Time Warner Cable’s corresponding Standard plan — 60Mbps vs. 15Mbps, which has the potential to lead to even worse slowdowns if customers use their internet connections at the same time.

Rutledge defended the average node size by claiming Charter has a lot of fiber in its network.

“And we have the ability to take that fiber deeper,” Rutledge said. “We have the ability incrementally to take the network to a passive network and to do that at reasonably efficient capital cost through time and to do that in very targeted ways where we need the capacity. So we’re very comfortable with the extensibility of our network and the ability to put high capacity anywhere in our network.”

Rutledge said node expansions take place through a “market demand driven sort of process.”

“There are bunch of ways you can manage capacity on our network,” Rutledge explained. “We can do what are called virtual node splits. If you clear analog spectrum and go all-digital, [that can create] excess capacity in your network, and [if] you have demand to put more capacity in a node, there [are] two ways of doing it. One way is to physically split a node into a smaller node, which requires the placing of an electronic device in the field, and maybe the extension of some fiber. It depends on how the architecture of that is structured, but it’s relatively inexpensive on a grand scale capital perspective, but a lot more expensive than a digital or virtual node split. And you can do those if you have channel capacity by just recreating additional DOCSIS paths to create a virtual node essentially. And so we manage our network for the future based on the actual load on the network as opposed to some theoretical issue.”

This is part two of a multi-part series examining Time Warner Cable’s internal documents, made partly public as a result of a lawsuit filed by the New York Attorney General. You can read part one here.

In the summer of 2014, Time Warner Cable had a problem. For three years, the Federal Communications Commission had been issuing reports about the quality of broadband service from the nation’s largest internet service providers. The raw data collected by about 800 subscribers of Time Warner Cable who volunteered to participate in the project began to worry executives because it showed their broadband service was oversold in certain large cities and was no longer capable of consistently achieving advertised speeds. Even worse, the company’s congestion problems threatened to lower Time Warner Cable’s internet performance score at the FCC.

Sam Knows (but so does Time Warner Cable): The Not-So-Independent, Not-So-Confidential FCC Speed Test Program

The FCC commissioned a private company – Sam Knows – to distribute modified internet routers to gather data about the internet connections of thousands of volunteers and shared the results with the FCC to incorporate into its Measuring Broadband America program. After the FCC issued its first report in 2011, providers quickly learned the consequences of overpromising and underdelivering when Cablevision was called out for dramatically overselling its broadband service and not delivering the speeds customers paid to receive. While Cablevision executives publicly attacked the FCC speed test program as unreliable and wrong, they also quietly opened the company’s checkbook and spent millions quickly upgrading their facilities. The metric they failed to achieve was the FCC’s 80/80 test: “speed that at least 80% of the subscribers experience at least 80% of the time over peak periods.”

Here is what broadband performance on an oversold broadband service looks like. Notice Cablevision’s 2011 speed ranking plummets during peak usage periods when too many customers are sharing too little available bandwidth.

The incident embarrassed and damaged Cablevision’s reputation, and no cable operator wanted to be the next highlighted company for a public spanking by the FCC.

Time Warner Cable’s “Slow-Motion Train Wreck”

In 2013, a Time Warner Cable executive recognized the company’s practice of limiting company-financed expansion of their upstream connections with the rest of the internet would have serious implications for their own speed test scores, because customers were encountering nightly slowdowns on popular websites like YouTube caused by overcongested connections. Company executives feared customers participating in the Sam Knows/FCC program would soon reveal Time Warner Cable’s internet speeds were beginning to suffer some of the same peak usage problems Cablevision was encountering in 2011. The executive’s solution? Temporarily expand upstream connections just long enough to protect Time Warner Cable’s broadband speed scores:

“Our Sam Knows scores are like watching a slow-motion train wreck. We need to get in front of this. One thing I think we may need to be prepared to do is just give more ports to Cogent during sweeps month [when FCC results are measured for purposes of the MBA report]. We don’t have to make any promises, we just have to make it work temporarily.”

But even tricks like that failed to help Time Warner Cable’s speed scores in New York City, where serious congestion problems were obvious, even as late as last year:

The lawsuit filed by New York’s Attorney General revealed that FCC panelists in New York were getting speeds consistently well below the speeds they paid for, especially those paying for premium speeds:

FCC/Sam Knows Time Warner Cable Maxx Panelists in New York Speed Test Reports:

100Mbps subscribers received 73-87% of advertised speed (<80% advertised speed over six month period)
200Mbps subscribers received 49-58% of advertised speed (<60% advertised speed over six month period)
300Mbps subscribers received 33-52% of advertised speed (<38-74% advertised speed over six month period)

Speed test results showed consistent speed deficiencies between 2013-2016 occuring for many reasons, according to the lawsuit, including customers using outdated, company-supplied cable modems insufficient to support the customer’s speed plan, chronically oversold neighborhood groups that Time Warner Cable did not split or upgrade with additional capacity, and inadequate upstream/backbone connections to properly deliver content originating outside of Time Warner Cable’s own broadband network.

Overprovisioning Your Broadband Speed = “Putting Lipstick on a Pig”

We subscribe to 50/5Mbps service but receive closer to 62/6Mbps because Spectrum/Time Warner Cable overprovisions our service.

Instead of investing adequately in network upgrades and node splits, a July 7, 2014 internal email from Time Warner Cable’s former head of corporate strategy told senior colleagues the best way out of this dilemma was to cheat on the FCC broadband tests:

“We recommend increasing over-provisioning our modem speeds to around 20% to drive our Sam Knows scores >100% and then to market that we deliver more than promised speeds.”

In plain English, Time Warner Cable boosted the maximum allowed speed of each customer by about 20%. As a result, during non-peak usage times customers would find, for example, a plan advertising 50/5Mbps speed now delivered around 60/6Mbps. Although some customers considered overprovisioning a hidden free upgrade, Time Warner Cable’s motives were not altruistic. Because the Sam Knows testing program averages scores received from periodic testing, Time Warner Cable padded the results with higher-than-advertised speeds when their network was not congested, which compensated for the slower speeds and worse performance customers were getting during peak usage times. The lawsuit also alleges the practice helped to hide the abundance of obsolete rented cable modems still in use across Time Warner Cable’s broadband network.

The strategy worked to boost Time Warner Cable’s scores, but only as far as the FCC was concerned. Some customers were still finding their visits to YouTube, Netflix, and other websites littered with buffering problems and degraded resolution videos just about every evening. In 2013, before Time Warner Cable went ahead with its overprovisioning plan, the company’s own network engineers called the practice putting “lipstick on a pig.”

The Attorney General had its own analogy:

Using the highway analogy, Spectrum-TWC’s overprovisioning strategy amounts to allowing cars to go faster than the posted speed limit at certain times to compensate for the fact that often the highway slowed to a crawl. Boosting the average results with outlier results masked the enormous frustration for most subscribers stuck in traffic.

Breaking the FCC’s Rules

The lawsuit also alleges Time Warner Cable broke its own commitment to the FCC in the Code of Conduct it signed as a participant in the FCC’s testing program.

The FCC’s Code of Conduct required Spectrum-TWC to “at all times act in good faith” and not do anything “if the intended consequence of such act or omission is to enhance, degrade or tamper with the results of any test.” Specifically, the Code of Conduct prohibited the company from “modifying or improving services delivered to any class of subscribers” that was not “consistent with normal business practices.”

Stop the Cap! has also learned Time Warner Cable was able to identify each participant of the FCC/Sam Knows Time Warner Cable panel. This allowed the cable company to secretly verify the line quality and equipment in use by each participant, and give extra attention to those customers/volunteers to make sure service was performing as well as possible. In fact, executives instructed customer service representatives to assign FCC panelists “VIP treatment” and “best in class devices” when swapping modems, even as the company continued to supply deficient equipment to other customers who were not FCC panelists.

Still to Come: Playing games with online gamers, company officials tell the truth about bandwidth costs and Net Neutrality, and more….

While AT&T argues its blockbuster merger with Time Warner, Inc., will not represent an increased risk of media consolidation and antitrust abuse, that same phone company is now facing time in court to answer a lawsuit filed today by the Justice Department accusing AT&T of unlawful collusion with cable operators over the pricing of a Southern California regional sports channel.

DirecTV — now owned by AT&T — is accused of being the ringleader of an illegal “information-sharing” scheme that traded confidential information between the satellite provider, AT&T, Cox Communications, and Charter Communications regarding carriage contract negotiations between SportsNet LA (now known as Spectrum SportsNet) and competing pay television companies.

SportsNet LA has been in the news since its launch. Owned by the Los Angeles Dodgers and initially distributed by Time Warner Cable, SportsNet LA was rejected by most of its pay TV rivals after they balked over the asking price.

Now the Justice Department is accusing DirecTV of a secretly coordinating the sharing of confidential information between the area’s cable operators and AT&T that “corrupted” negotiations with Time Warner Cable over the price to carry the channel.

With all of Southern California’s major cable companies and AT&T allegedly colluding with DirecTV, the providers could create a united front to demand a better price and terms for the sports channel. In the end, it didn’t work and Charter, Time Warner Cable’s new owner, remains the largest operator in the region to carry the network. Critics suggest Charter changed its mind about carrying the channel only to remove it as a potential issue in its merger with the larger Time Warner Cable.

“Dodgers fans were denied a fair competitive process when DirecTV orchestrated a series of information exchanges with direct competitors that ultimately made consumers less likely to be able to watch their hometown team,” said Justice Department lawyer Jonathan Sallet.

The Justice Department brought the case exclusively against DirecTV’s parent company — AT&T.

Cox was relieved not to be sued.

“We are gratified that we were not named as a defendant. We continue to be committed to making independent decisions on program content,” a Cox spokesperson said in a statement. Charter has refused to comment.

For now, AT&T plans a robust defense in court.

“The reason why no other major TV provider chose to carry this content was that no one wanted to force all of their customers to pay the inflated prices that Time Warner Cable was demanding for a channel devoted solely to LA Dodgers baseball,” AT&T said in a statement. “We make our carriage decisions independently, legally and only after thorough negotiations with the content owner. We look forward to presenting these facts in court.”

But the case highlights critics’ concerns that allowing AT&T to grow even larger with the acquisition of Time Warner, Inc., only increases the chances of more alleged antitrust violations and collusion between players in the increasingly concentrated pay television market. Since SportsNet LA launched in 2014, Charter Communications has merged with Time Warner Cable — changing the name of the sports channel to Spectrum SportsNet, Verizon Communications has sold its FiOS network to Frontier Communications, which already provides service in parts of California, and AT&T has purchased DirecTV outright. Only Cox remains untouched by the recent wave of consolidation, although many analysts expect a takeover bid from Altice USA sometime in 2017.

Dorothy Ayer said she was quoted a price of $69 a month for a package including landline phone and broadband service from Frontier Communications, but when she received her first bill, she claims she was charged $426.55.

Ayer filed a class action complaint against Frontier Communications Sept. 12 in U.S. District Court for the Central Division of California, claiming the phone company regularly engages in unlawful, unfair, and deceptive business practices including false advertising.

Ayer claims Frontier promised her all installation charges, activation fees and other miscellaneous costs found on her first bill would be waived, but now that the bill is in her mailbox, the company wants to be paid in full.

The lawsuit asks the court to recognize the economic harm and injury done not only to Ms. Ayer, but to other similarly situated Frontier customers. The lawsuit claims Frontier Communications benefits from falsely advertising the prices of its services without properly informing customers of the many other charges the company levies on the first bill.

If Ayer is successful, Frontier will be forced to notify all affected customers and presumably refund or credit their accounts.

The case is being handled by attorneys Todd M. Friedman and Adrian R. Bacon of Law Offices of Todd M. Friedman PC in Woodland Hills, Calif.