Charter Communications could lose its authorization to operate in New York State because of its failure to meet merger-related broadband deployment commitments, a key government official said.
NY Public Service Commission (PSC) Chairman John Rhodes said that “a suite of enforcement actions against [Charter] Spectrum are in development, including additional penalties, injunctive relief, and additional sanctions or revocation of Spectrum’s ability to operate in New York State,” according to a PSC announcement last week.
Charter agreed to expand its network in exchange for state approval of its 2016 purchase of Time Warner Cable (TWC). New York officials say that Charter has failed to meet its commitments, even though Charter claims it has. Rhodes accused Charter of “gaslighting” and noted that the PSC has already ordered Charter to stop making misleading claims about its broadband deployment progress.
Last week’s PSC announcement said:
Charter has continually failed to meet its commitments to the state, including its obligation to timely extend its high-speed broadband network to 145,000 unserved and underserved homes and businesses. Charter has also continued to make the false claim in advertisements and other public statements that it is exceeding its obligations to New York State, notwithstanding that the Commission has previously directed Charter to cease its misleading campaign and has referred the matter to the New York Attorney General for appropriate action. Charter’s claims are simply false and the Commission will not stand idly by while Charter deceives the public and its shareholders. Charter’s own data shows a gaping hole between its commitments and its performance. New York will not tolerate Charter’s gaslighting its own customers into believing it is meeting its promises.
$2 million fine
The PSC last month ordered Charter to pay a $2 million fine and complete the promised network construction. If Charter doesn’t meet its merger-related obligations, the company will “face the risk of having the merger revoked,” the commission said at the time.
A revocation of the merger could force Charter to spin off its Time Warner Cable division in New York, but it wouldn’t affect Charter’s ownership of TWC in other states.
The NY Department of Public Service sent a recent letter to Charter CEO Thomas Rutledge, saying the company has been running “false advertisements and publications about its compliance with its obligations to New York State.” The department also said it would refer the matter “to the Attorney General of the State of New York for further action in light of Spectrum’s misrepresentations to New Yorkers.”
The department also said it would refer the matter “to the United States Securities and Exchange Commission in light of the company’s failure to provide appropriate disclosure to its investors and the market about its failings to honor its commitments to New York and the possibility that the approval of its acquisition of Time Warner may be revoked.”
“Not only has the company failed to meet its obligations to build out its cable system as required, it continues to make 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,” Rhodes said last week. “Our patience with Charter has come to an end and now we must move to take much stronger actions.”
Charter missed at least one deadline
New York’s 2016 merger approval required Charter to extend its network to 145,000 unserved and underserved residential housing units and businesses within four years.
Charter agreed to a fine and a revised buildout schedule last year after missing a deadline to pass 36,250 homes and businesses within one year of the merger approval. The company says it has met subsequent deadlines, but the PSC says it hasn’t.
Specifically, a PSC audit found that 14,000 homes and businesses claimed by Charter as new construction were ineligible. For example, Charter’s “new” broadband deployments in New York City included addresses that the company was already required to serve as part of the franchise agreements, the commission said in March.
We asked Charter for a response to Rhodes’ statements today and will update this story if we get one. Charter defended itself in a statement to the Times Union of Albany this week, saying that “Spectrum has built out our broadband network to more than 61,000 unserved or underserved homes since the merger.”
“We find it baffling that the PSC thinks that some New Yorkers count and others don’t, given their belief that access to broadband is essential for economic development and social equity,” Charter also said.
Charter told Ars in March that “we exceeded our last buildout commitment by thousands of homes and businesses” and “are in full compliance with our merger order and the New York City franchise.”
Disclosure: The Advance/Newhouse Partnership, which owns 13 percent of Charter, is part of Advance Publications. Advance Publications owns Condé Nast, which owns Ars Technica.