Charter Spectrum Fails To Wiggle Out From Under State Lawsuit For Crappy Service

from the fat-lady-has-yet-to-sing dept

Early last year, Charter Spectrum was sued by New York Attorney Eric Schneiderman for selling broadband speeds the company knew it couldn’t deliver. According to the original complaint (pdf), Charter routinely advertised broadband speeds executives knew weren’t attainable — while simultaneously refusing to upgrade their network to handle added consumer demand (a problem that only got worse in the wake of its merger with Time Warner Cable and Bright House Networks despite promises of ample “synergies”):

“The AG?s investigation also found that Spectrum-TWC executives knew that the company?s hardware and network were incapable of achieving the speeds promised to subscribers, but nevertheless continued to make false representations about speed and reliability. The investigation further revealed that while Spectrum-TWC earned billions of dollars in profits from selling its high-margin Internet service to millions of New York subscribers, it repeatedly declined to make capital investments necessary to improve its network or provide subscribers with the necessary hardware.”

But the lawsuit also exposed how Charter was gaming an FCC program that uses routers with custom firmware to track real-world ISP performance. The lawsuit also hints at the fact that Charter executives toyed with intentionally creating congestion at peering points in order to extract additional money out of content and transit companies, something you’ll recall was at the heart of an industry battle with Netflix a few years ago. Those problems miraculously disappeared with the passage of net neutrality rules that governed interconnection (read: expect this problem to resurface with the elimination of the rules).

Charter, unsurprisingly, has argued that the lawsuit is without merit. It also tried to have the lawsuit dismissed, claiming that the FCC’s recent repeal of net neutrality includes a provision (lobbied for by ISPs) that prohibits states from trying to hold ISPs accountable for service shortcomings, be they privacy infractions or net neutrality violations. Fortunately for broadband users stuck under cable’s growing U.S. broadband monopoly, New York State’s Supreme Court last week shot down that argument (pdf) in a ruling.

The court argued repeatedly that despite the FCC attempts to pre-empt state authority over broadband ISPs, both the FCC repeal and existing federal law make it clear states still have a role to play in holding ISPs accountable for consumer protection:

“Spectrum-TWC fails to identify any provision of the FCA (Federal Communications Act) that preempts state anti-fraud or consumer-protection claims, or reflects any intention by Congress to make federal law the exclusive source of law protecting consumers from broadband providers’ deceptive conduct.”

Schneiderman’s office was quick to applaud the ruling in a statement:

“This decision ensures that our office can continue to hold Charter-Spectrum to account for its failure to deliver the reliable internet speeds it promised consumers. The allegations in our lawsuit confirm what millions of New Yorkers have long suspected ? Charter-Spectrum has been ripping you off, promising internet speeds it simply could not deliver.”

As we’ve been noting, Charter, Comcast, AT&T and Verizon lobbyists have been busy trying to gut all state and federal oversight of broadband ISPs in an effort that goes well beyond just killing net neutrality. That should be an obvious problem, given that the combination of limited competition and regulatory capture tends to not end particularly well for American consumers historically (Comcast being exhibit A). But with this ruling and the 26 states busy passing their own net neutrality rules in the wake of the federal repeal, that’s going to be a steeper and more expensive uphill climb than many ISP lobbyists anticipated.

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Companies: charter spectrum

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Comments on “Charter Spectrum Fails To Wiggle Out From Under State Lawsuit For Crappy Service”

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DB (profile) says:

I look forward to the day when it’s generally accepted that there must be some truth in advertising.

Saying ‘up to 50Mbps’ is a specific claim. It uses a actual number. The hardware infrastructure involved, every element along the path, should be able to deliver that performance. Perhaps only in ideal circumstances, but they must be achievable ideal circumstances.

Selling a 300 baud modem as a “up to 56Kbps” modem would have been recognized as consumer fraud. cable companies shouldn’t be able to get away with the same fraud just because the technology is much more difficult to understand and evaluate.

It’s a more challenging case when the performance isn’t reached due to over-subscription, but even there it’s a bright line if the performance is never reached.

DB (profile) says:

Re: Re: Re:

That was a carefully chosen example.

In real life the deployed modem wouldn’t reach 56K, but the hardware with the right settings in the ideal conditions could reach that speed. The advertising claim was misleading, and well down a slippery slop, but was holding onto the truth by a fingernail.

In this case Charter was selling a service with hardware that could never reach the advertised speed, even under ideal circumstances.

Anonymous Coward says:

Re: Re:

Saying ‘up to 50Mbps’ is a specific claim. It uses a actual number. The hardware infrastructure involved, every element along the path, should be able to deliver that performance.

Like state lotteries, occasionally someone get the advertised amount. So how about requiring Charter to have a gaming license, and publically annouce the odds, if they want to continue?

Anonymous Coward says:

The main question in this case is if FCC can make it illegal for consumer protection enforcement like FTC and state level equivalent to enforce their rules instead of being protected by the wishy-washy FCC-standards.

I don’t see how the courts could have reached another decission on this dismissal as the ruling is extremely clear. The motion seems desperate at best. While they are able to get away with gaming the FCC, they will at least have to stand trial for some good ole “deceptive advertising”.

Anonymous Coward says:

Re: Re:

this reminds me of the train and oil barons of old. If history holds true, we know how this will turn out.

Reduce the workweek by 50%, raise taxes on the rich, increase the power of unions, promulgate strict regulations and create a new last-mile network as a huge public works project to relieve unemployment?

Anonymous Coward says:

Re: Re: Re: Re:

Sure, I hear their internet service is fast, cheap and good:

"Take the “triple-play” packages—cable, phone, and high-speed Internet access—that tens of millions of Americans buy from companies like Comcast and Time Warner Cable. In France, a country often portrayed as an economic and technological laggard, the monthly cost of these packages is roughly forty dollars a month—about a quarter of what we Americans pay. And, unlike in the United States, France’s triple-play packages include free telephone calls to anywhere in the world. Moreover, the French get faster Internet service: ten times faster for downloading information, and twenty times faster for uploading it." (The New Yorker)

But in fact, everything in the post you replied to happened in America, in response to the Robber Barons and Great Depression. "If history holds true"… though of course in those days, the last-mile services were electricity and telephony, not internet.

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