New York’s top telecommunications regulator has called Charter Communications a purveyor of fake ads, deception, and broken promises and has again called into question how much longer the company should be allowed to do business in New York State.

The New York State Department of Public Service/Public Service Commission today sent a letter to Charter Communications CEO Thomas Rutledge condemning Spectrum’s false and misleading advertising campaigns and the ongoing deception of New York consumers about its expansion efforts. The letter warned Rutledge Charter must immediately cease and desist airing fake ads about the company’s efforts to expand critical broadband service across the state. The letter also warns that if the misrepresentations and unacceptable way Spectrum conducts its business in New York does not stop, the company could find itself out of business in New York State.

“The situation regarding Charter/Spectrum is getting more serious with each passing day,” Department CEO John B. Rhodes said. “Not only has the company failed to meet its obligations to build out its cable system as required, it is now making patently false and misleading claims to consumers that it has met those obligations without in any way acknowledging the findings of the Public Service Commission to the contrary. Access to broadband is essential for economic development and social equity. Charter/Spectrum’s intentional deception of New Yorkers must end now.”

So far, Charter has ignored the Public Service Commission’s June 14 order demanding Charter indicate full and unconditional acceptance of the 2016 merger agreement and the terms it contained. The deadline for Charter or its attorneys to respond is this Thursday, June 28, 2018. If the deadline passes with no response, the Commission warned it may rescind, modify, or amend the approval order granting the merger, file a lawsuit in the Supreme Court of New York to potentially cancel the merger, and fine Charter for being out of compliance with state law.

Letter from New York regulators to Charter Communications (click image to download or view complete letter).

Charter’s Fake Ads

Rhodes

The letter accuses Rutledge of knowingly misleading New York customers in its advertising and printed materials that claim Charter has fully complied with — and exceeded — its commitments to New York under a merger agreement with the state allowing Charter to acquire Time Warner Cable systems. The letter emphatically states these representations are demonstrably and materially false.

State regulators pointed to Charter’s historic and systematic pattern of false advertising, noting a 2017 lawsuit filed by New York’s Attorney General over the company’s inability to provide advertised speeds has survived several company challenges in court and is moving forward.

The Merger Itself is in Peril

Charter will face the possibility of additional legal troubles as the PSC refers Spectrum’s latest conduct to the Attorney General’s office for possible further legal action. State regulators also suggested Charter was materially deceiving investors in violation of federal securities laws by not disclosing the company’s failure to honor its commitments to New York and warning investors the merger itself was now in significant peril if it is revoked in New York.

Regulators have also put Charter executives on notice that in advance of a possible penalty action by the Commission against the company directly, it further demanded that Spectrum produce records regarding its false representations and preserve all documents, including email, text messages, voice mail, recordings, and other documentation relating to its advertising claims.

A Record of Failure in New York

According to a PSC investigation and a Public Service Commission order, Spectrum missed its required December 16, 2017 build-out commitment to extend its network to pass additional residences and businesses by 12,245 passings. Spectrum also failed to cure, as required, its earlier failure by March 16, 2018. For these two failures, Spectrum was ordered by the Public Service Commission to forfeit $2 million. These failures came on top of earlier failures by Spectrum to meet its commitments. The PSC argues Spectrum has not met a single build-out deadline since the approval of its acquisition of Time Warner Cable in 2016.

The PSC stated that, instead of working to meet its commitments to New York, Charter executives have ignored state regulators as Spectrum knowingly continued to advertise and publish false claims that the company is exceeding its mid-December 2017 commitment made to New York by more than 6,000 locations and is on track to extend the reach of advanced broadband network to 145,000 unserved or underserved locations by May 2020. Both claims are patently false, claims the PSC.

“Spectrum’s failure to meet its build-out commitments hurts unserved and underserved New Yorkers, leaving them without a key public utility service crucial to their future success and well-being,” the regulator wrote.

“Spectrum’s publication of claims that it knows are false harm all consumers who rely on honest and accurate information in choosing suppliers from among competitors,” the PSC wrote. “And when Spectrum continues to advertise and publish false claims even after being directed not to by its governmental regulator, it demonstrates deliberate disregard and lack of respect for the Public Service  Commission, the rule of law, and regulation in New York State. Accordingly, in the name of customers and potential customers, the Department called on Spectrum to set the record straight by advertising and publishing the truth that the company has been found by the Public Service Commission to have failed to keep its buildout commitment to New York State.”

Charter Communications produced this video incorporating similar elements used in its advertising targeting New York consumers. Charter does not mention its investment in rural broadband in New York is not altruistic. It was a core condition the company agreed to as part of a settlement with the New York Public Service Commission to approve the acquisition of Time Warner Cable in 2016. (1:36)

The newest cities getting Charter/Spectrum’s gigabit service.

With the latest additions to the list of Charter Communications’ gigabit-capable cities last week, Spectrum’s gigabit internet service is now available to more than 27 million homes, more than half of its 41-state footprint.

The latest cities to receive gigabit upgrades include Charleston, S.C., Bowling Green, Ky., Cleveland and Toledo, Ohio, Erie, Pa., Orlando, Fla. Hartford, Conn., and Springfield, Mass.

Spectrum is calling the occasion “the summer of gig,” with the promise of another wave of newly upgraded cities by Labor Day.

In addition to the availability of gigabit service, which in reality offers speeds up to 940/35 Mbps, customers should see Standard speeds in many of these locations increased to 200/10 Mbps and the introduction of an improved Ultra speed tier of 400/20 Mbps. Some cities have not yet received a free upgrade to 200 Mbps service, but are expected to sometime over the summer.

Gigabit pricing varies, depending on market, with new Spectrum customers paying $104.99/month for the first year. If you already subscribe to Spectrum service, the rate is $114.99 for Spectrum TV customers and $124.99 a month for non-Spectrum TV customers. There is also a mandatory $199 installation fee which cannot be waived.

This company-supplied video celebrates the arrival of gigabit internet for more than four million additional Spectrum customers. (1:10)

Your bundle is bigger than ever.

A-la-carte TV is still dead. Long live the super-sized bundle!

If AT&T and Time Warner wanted to deliver a message to the cable industry as a result of their now-approved blockbuster merger deal, it is one that promises hundreds, if not thousands of more TV channels, movies and shows headed your way in the coming days, bundled into super-sized pricier packages of television, telephone, and internet service.

Despite the fact consumers claim they want to pick and pay only for the entertainment options they specifically want, in reality people are paying for more bundled packages and services — usually from multiple online streaming services — than ever before, with no possibility they will ever watch everything these services have to offer.

AT&T and Time Warner are well aware customers are now subscribing to cable television -and- streaming video services like Hulu and Netflix. But many customers are also buying streaming live cable TV alternatives, despite the fact they already subscribe to a cable television package. Given the option of selling you an inexpensive package of a dozen cable channels you claim to want or selling you much larger and more expensive bundles of services many are actually buying, AT&T will follow the money every time.

What will be different as a result of this merger is where you buy that programming. Before, you may have purchased AT&T Fiber internet access, AT&T wireless mobile phone service, a HBO GO subscription through DirecTV Now, a cable TV alternative, and Netflix. Now, with the exception of Netflix, all of that money will go directly to AT&T. The company will also be able to enhance their bottom line by monetizing content viewed over mobile devices. After taking control of Time Warner’s vast entertainment offerings, which range from HBO to Turner Broadcasting networks like CNN and TNT, AT&T will generously bestow liberal (or possibly free) access to this content for its broadband and wireless customers, while those served by other providers will have to pay up to watch. AT&T will ultimately set the terms of its licensing agreements. AT&T Wireless customers with unlimited data plans already have a sample of this with a free year of DirecTV Now, which customers of other wireless companies have to pay to watch.

AT&T plans to offer the best deals to customers who bundle everything through AT&T. The “quad play” bundle of TV, internet, home phone, and wireless phone will offer customers discounts on each element of the package, but some may experience sticker shock even with the discounts.

The Wall Street Journal noted a premium AT&T customer could pay more than $500 a month for AT&T’s best package — that’s more than $6,000 a year. Most bundled AT&T customers will pay about half that — around $246 a month for a package of 100 Mbps internet, a home phone line, wireless phone and a limited TV package bundling Time Warner content, including HBO. The entry level ‘poverty’ package will still cost around $115 a month.

By controlling each element of the package, AT&T can discourage a-la-carte package pickers by substantially raising the price of standalone services, to encourage bundling. That explains why many customers take a promotional TV offer priced just $10-20 more than the $70 broadband-only package some customers start with. If broadband-only service costs $40 a month and the TV package also costs $40 a month, those leaning towards cord-cutting would find it much easier to pass on cable television.

With Comcast on the verge of picking up much of 21st Century Fox’s content library and studio, Comcast will be able to defend its own turf creating similar giant bundles of content to keep its customers happy. Wall Street is already putting pressure on Verizon to respond with an acquisition of its own to protect its base of FiOS and Verizon Wireless customers.

Companies likely left out in the cold of the next wave of media and entertainment consolidation include online content companies like Google, Facebook, Amazon, and Apple, which will be stuck licensing someone else’s content or bankrolling many more original productions. Charter Communications, which has a small deal with AMC for content, is also stranded, as are smaller cable companies like Cox, Altice, and Mediacom. Independent phone companies like CenturyLink, Windstream, Consolidated, and Frontier are also in a bad position if Wall Street determines telecom companies without content divisions are in serious trouble.

Netflix stands alone as the behemoth content company, and is not likely to be impacted by the current wave of consolidation. Hulu will most likely end up in the hands of a telephone or cable company, most likely Comcast, if it successfully acquires Fox’s ownership share of Hulu.

For customers, your future choice of provider is about to get more complicated. In addition to pondering speed tiers and wireless coverage maps, you will also have to decide what content packages are the most valuable. Your choices will range from basic company-owned networks to third-party services like Netflix and Hulu, as well as full cable TV lineups ranging from DirecTV Now to XFINITY TV. Then get ready for the bill, which will likely include charges for most, if not all, of these services.

The Wall Street Journal explains the current wave of media consolidation. (2:44)

Some Spectrum customers are getting nasty surprises in their latest cable bills.

For some customers, it has been one year or more since Spectrum introduced new plans and pricing for former Bright House Networks and Time Warner Cable customers and one year since the company implemented all-digital cable television upgrades that require customers to place equipment on every television wired for cable in the home.

Many customers received “free” equipment as part of the digital upgrades, but may have forgotten that promotion only lasted one year. That is also the length of Spectrum’s various ‘new customer’ and ‘retention’ promotions. When the year is up, your bill goes up — sometimes dramatically.

In Cleveland, Ohio some customers are finding bills increasing $18-30 a month or more, sometimes increasing more than once as rate promotions and free set-top equipment deals end at different times in the year.

It is not unusual to find customers paying $180-225 or more a month for Spectrum’s “triple play” package of television, phone, and internet service, after promotions end. A significant percentage of customers still holding legacy Time Warner Cable and Bright House plans are finding those packages increasing in price as well. In comparison, new customers with a triple play package generally pay between $100-120 a month, depending on equipment.

Some of the rate changes Spectrum imposed over the last 12 months include:

• Equipment rate increases (usually around $1.00 a month per box)
• New “Secure Connection Fee”: $1.00/mo per box – Spectrum claims this fee covers “those measures Spectrum employs to manage and secure the connection between Spectrum’s system and the Spectrum receiver and other devices Subscriber uses to access Spectrum’s services.”
• Broadcast TV Surcharge rate increases
• Internet service rate increases

Although Spectrum has reportedly become more amenable to offering retention deals to customers threatening to leave, the best deals are still for new customers. Some have dropped Spectrum service and signed up again under the name of another household member to secure a better deal. Others will have to wait 30 days after ending service before one is qualified for a new customer deal once again.

WKYC in Cleveland reports some Spectrum customers are upset about sudden bill changes. (2:34)

Small cell antenna

San Jose, Calif., officials announced Monday they have reached a tentative deal with AT&T to permit small cell technology on up to 750 city-owned light poles that could pave the way for future 5G wireless rollouts.

Mayor Sam Liccardo, a former member (and critic) of FCC Chairman Ajit Pai’s Broadband Deployment Advisory Council, told residents he would leverage light pole agreements with wireless companies in return for money that can be spent addressing San Jose’s digital divide, starting with affordable internet access for the poor.

The non exclusive 15-year agreement will allow AT&T to bolster its FirstNet first responder network and offer leased access to light poles for $1,500 per pole per year. AT&T plans to initially place around 170 small cell antennas on light poles beginning later this year that can provide enhanced wireless data speeds and improved cell coverage in the city. The first deployment will not include 5G antennas. The deal still faces approval by San Jose’s city council at a May 1 meeting.

The deal is a victory for Mayor Liccardo, who opposed a wireless industry-written bill that was vetoed by Gov. Jerry Brown late in 2017. That bill would have capped pole attachment lease fees at $250 a year, hampering the mayor’s Smart City Vision initiative introduced two years earlier, with a goal of providing affordable internet access for local residents. Had the wireless industry’s bill become law, the city government would have had to find funds for the mayor’s initiative elsewhere.

Liccardo predicted the deal with AT&T will generate up to $5 million in lease fees, with a $1 million advance from AT&T the city intends to use to launch its low income digital initiatives. Few specifics about the mayor’s affordable internet access program were available at press time.

San Jose’s approach is considerably different from that of the states of Texas and Tennessee — both passing new state laws limiting pole attachment lease fees and reducing local control over small cell placement. Mayor Liccardo wants AT&T to share part of its anticipated new revenue from small cell technology to help poorer residents get access to the internet, while Texas and Tennessee hope that deregulation and limited fees and bureaucracy will strengthen the business case for more rapid expansion of small cell networks in both states.

KGO-TV in San Francisco reports on San Jose’s recent agreement with AT&T to deploy small cells on city-owned light poles. (1:47)