In a familiar sight for observers of the US broadband landscape, Charter Communications has been found guilty of failing to deliver on broadband upgrade promises, this week receiving a $1 million slap on the wrist by New York’s Public Services Commission (PSC). State officials have lost patience, in addition threatening Charter’s NYC franchise agreement, yet penalties must be more severe if internet service providers are to pay attention – setting examples not just for the US, but for the rest of the world.
Time Warner Cable’s infrastructure isn’t exactly famed for its lighting speed and vast footprint, and following Charter’s takeover in 2016, the PSC claims the operator is way off track on plans to reach an additional 145,000 homes and businesses in the state by 2020. Uncovering Charter’s supposed inability to adhere to the project timeline doesn’t bode particularly well for the rest of the country.
Specifically, Charter missed a deadline in December to expand its network to 36,771 additional homes and business without high speed broadband.
Perhaps regulators are being too hasty here, just three months after the most recent deadline. Charter has hardly had enough time to digest the shambles it inherited through Time Warner Cable, let alone propel itself to broadband glory overnight, although there can be no qualms about putting pressure on Charter to get its act together. However, Charter’s latest set of results are a sign of turning the business around, reporting broadband subscriber gains of 300,000 in Q4.
A similar case, dating back to 2012, escalated last month when Charter’s defense against a suit from the New York Attorney general flopped, relating to misleading consumers about advertised broadband speeds. In essence, Time Warner Cable devices were found to be significantly slower than those from rival cable firms, offering approximately 30% of its 200 Mbps advertised speed, and Charter did not provide sufficient evidence to convince the court its broadband performance is on par with the rest of the US.
A point worth mentioning is how Verizon has been tied up in a similar state of affairs in New York, allegedly breaking agreements to upgrade its FTTP FiOS internet services and instead diverted funds to wireless investments. To cut a long story short, aggressive attempts to get Verizon into court for neglecting small businesses and low-income families, dating back to 2010, have fallen short – simply because people don’t believe or fully understand the mounting evidence put forward against negligent ISPs.
An audit conducted by the PSC states more than 14,000 passings claimed by Charter for its December milestone were ineligible, although the specifics of ineligibility have not been detailed.
Charter is being ordered to pay $1 million to the State Treasury for each failure to meet a milestone. At this rate, Charter will end up with a sizable bill by 2020, on top of the punitive damages if the issue of Time Warner Cable throttling Netflix is proved, and not forgetting the $13 million the PSC ordered Charter to pay in 2017, for an identical reason to this week’s case.
Pre-takeover, Time Warner Cable was entirely aware of its poor quality internet services and dropped prices accordingly, so the probable end result is that Charter will hike broadband prices, to help pay off its $48.5 billion Time Warner Cable purchase. Besides, looking to the future, Charter only really cares about wireless.
The Commission Chair’s second, potentially more serious, order relates to Charter’s franchise agreement with NYC, which is under investigation and may result in termination, with the PSC citing alleged underpayments and failure to meet network obligations. To date, Charter claims to have passed 42,889 residential and/or business units, including 12,467 in New York City. However, the Commission claims many of these NYC addresses were required to have been passed already, therefore issuing doubt on whether Charter complied with the network deployment section of these NYC franchises.
The Commission demands Charter explain why franchise fees paid to NYC have allegedly declined following its acquisition of Time Warner Cable. If these franchise agreements are found to have been breached, the Commission has the power to terminate the agreements.
Going from bad to worse, a management and operations audit is underway on Charter’s telephone service quality due to several service interruptions, according to the Commission.
“It is critically important that regulated companies strictly adhere to the state’s rules and regulations. If a regulated entity like Charter’s cable business decides to violate or ignore the rules, we will take swift action and hold them accountable to the full extent of the law,” said PSC Commission Chair John Rhodes.