New York State Votes To Kick Charter Out Of The State For Poor Service, Failing To Meet Merger Conditions

from the goes-around-comes-around dept

In an unprecedented move, the New York State Public Service Commission has voted 4-0 to kick Charter out of the state. According to the announcement (pdf) by the PSC, Charter has been given sixty days to file a plan with the PSC that will “ensure an orderly transition to a successor provider,” including offloading the Time Warner Cable territories acquired in the merger. The PSC also notes the vote was only taken after more than a year of trying to get Charter to adhere to some pretty modest broadband build-out requirements affixed to the deal:

“Charter’s repeated failures to serve New Yorkers and honor its commitments are well documented and are only getting worse. After more than a year of administrative enforcement efforts to bring Charter into compliance with the Commission?s merger order, the time has come for stronger actions to protect New Yorkers and the public interest,” said Commission Chair John B. Rhodes. ?Charter?s non-compliance and brazenly disrespectful behavior toward New York State and its customers necessitates the actions taken today seeking court-ordered penalties for its failures, and revoking the Charter merger approval.”

As noted previously, the state has been trying unsuccessfully for more than a year to get Charter to actually comply with merger conditions. Among them was the promise to expand broadband availability to around 149,000 homes across New York State, something Charter not only didn’t do, but actively misled regulators into thinking had already been completed. In part, by claiming older, existing expansions were new builds.

If you follow telecom (or other major megamergers) for any amount of time, you’ll quickly find that most merger conditions are pretty theatrical in nature. Usually, said conditions are often proposed by the companies themselves and were things they already had planned anyway, making “accomplishing them” rather trivial, zero calorie affairs. Companies sign off on these conditions because it helps them pretend the merger actually benefits the public, and regulators sign off because it provides cheap political brownie points and the illusion that companies are being held accountable. Neither is usually true, especially in telecom.

Even when the conditions are meaningful, it’s pretty routine to see telecom giants like Charter or Comcast ignore them completely, usually with zero real repercussions. For its part, Charter issued a statement claiming that this was all just an election year stunt by New York Governor Andrew Cuomo:

“In the weeks leading up to an election, rhetoric often becomes politically charged. But the fact is that Spectrum has extended the reach of our advanced broadband network to more than 86,000 New York homes and businesses since our merger agreement with the PSC. Our 11,000 diverse and locally based workers, who serve millions of customers in the state every day, remain focused on delivering faster and better broadband to more New Yorkers, as we promised.”

And while Cuomo’s quest to protect his Governorship from challenger Cynthia Nixon likely isn’t entirely absent from the move (beating up on hated cable companies often provides easy political brownie points), the state was forced toward tougher options after Charter ignored $3 million worth of fines for missing merger commitments and misleading regulators.

This is also one of several long-standing state efforts to hold Charter accountable to the public. New York is one of 23 states filing suit against the FCC for its net neutrality repeal, and the state is also in the middle of an ongoing lawsuit against Charter for not only providing terrible service and slow speeds, but also for attempting to mislead regulators on other fronts (including gaming an FCC system that uses custom-firmware-embedded routers to test real-world speeds).

The move also has to be viewed in context of the newfound federal apathy toward consumer welfare as illustrated by the elimination of broadband privacy rules and net neutrality consumer protections. States are increasingly trying to fill the void left by a Trump administration that has made it abundantly clear (at least at the FCC) that openly pandering to despised telecom monopolies and then trolling users about it is now considered brainy tech and telecom policy.

It’s very likely that New York State is simply trying to force Charter to stop bullshitting and simply adhere to existing conditions, and most consumer advocates I’ve spoken to think this simply ends with a Charter settling and remaining in the state. Should Charter be forced to offload its New York State assets to another company, that company would likely be somebody like Comcast, which, based on consumer satisfaction studies, wouldn’t likely be much of an improvement.

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Comments on “New York State Votes To Kick Charter Out Of The State For Poor Service, Failing To Meet Merger Conditions”

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52 Comments
That One Guy (profile) says:

'Do better, or you'll join the last company who had the job'

Should Charter be forced to offload its New York State assets to another company, that company would likely be somebody like Comcast, which, based on consumer satisfaction studies, wouldn’t likely be much of an improvement.

True, however if NY follows through and gives Charter the boot they’ll have made it clear that they are willing to send even large companies packing if they don’t toe the line, so I’d expect Comcast to act nice at least for a bit until the heat died down, lest they find themselves also being shown the door.

Anonymous Coward says:

Re: 'Do better, or you'll join the last company who had the job'

Yeah, even if this action does result in Comcast moving in, it still counts as “better than nothing.”

As much as I’d like to see the cable companies divided into small pieces, that’s not likely to happen. I’ll settle for hard-line action of this nature.

More of this, please. Please yes.

rangda (profile) says:

Re: 'Do better, or you'll join the last company who had the job'

It’s an empty threat. Who else besides Charter/Comcast is there to choose? There are so few players in the space there is nowhere to go. Except perhaps for the state to take a crack at providing the service itself. Given the competency of government run programs I can only imagine how well that would go.

And Charter knows this which is why they can be so belligerent.

Anonymous Coward says:

Re: Re: 'Do better, or you'll join the last company who had the job'

As pointed out in the other thread, the termination clauses allow the state to either sell the physical network to another company, or hire another company to run it. A company the size of Google Fiber or Sonic.net might be interested in a prebuilt network as a quick way to expand.

Berenerd (profile) says:

Re: Re: 'Do better, or you'll join the last company who had the job'

VT, NH and ME did it to Verizon when Verizon continually failed to provide the agreed goals of just looking like they were expanding. Then Fairpoint moved in. I had never heard of Fairpoint until then. I would not be surprised if we see new companies pop up to take up the slack now that the big boys are grounded. The government doesn’t have to be the one to run it, just have more say in it to make sure they follow the agreements they make.

Anonymous Coward says:

Re: Re: 'Do better, or you'll join the last company who had the job'

With every merger, there are “redundant” employees who then get jobs as contractors in the same sector, often using the same equipment.

If Charter/Comcast are kicked out, all the ex-employees will form under another corporation to meet the demand. The only problem will be if NY creates a contract that is not fulfillable, at which point either nobody will take the contract, or those who do will fail to meet the agreements, as Charter did. Eventually, companies will stop forming to try and fill this void.

Anonymous Coward says:

Re: 'Do better, or you'll join the last company who had the job'

While I’d love them to threaten Comcast with the same result, I imagine that Comcast would be more emboldened to do as they wish.

Who else would NY state realistically go to? Regional players would not be able to scale up. AT&T may be an option, but they would be one of the last remaining big player choices and thus have even more power should they be chosen. Comcast would know this and be able to flaunt it in NY’s face.

This is a good example of the big problems with allowing these companies to merge into an Oligopoly market like we have now. There is nobody to realistically run to to provide competition.

Anonymous Coward says:

Re: Re: 'Do better, or you'll join the last company who had the job'

While you have a point, this still falls under the “Better than nothing” category.

Additionally, if other states take a cue from New York here, the ISPs could find themselves embattled on multiple fronts. That embattlement will cost money, and money is king.

It should not have been allowed to get this bad, but the reality is that it is this bad. Having acknowledged that, I’d like to see thoughts about steps that can follow on an action like this.

I’m sure New York can hold more than just “get out” over the head of a successor company.

Anonymous Coward says:

Re: Re: 'Do better, or you'll join the last company who had the job'

Who else would NY state realistically go to? Regional players would not be able to scale up.

They’d only have to scale up their customer service and installation/repair divisions—they’d be starting with an existing physical network. And who says the state has to sell the whole thing to one entity? Each headend and its plant could be sold separately.

Anonymous Coward says:

Re: Re: Re: 'Do better, or you'll join the last company who had the job'

It is more than customer service, there would be an extensive amount6 of hardware they would have to purchase too: Modems, routers, cable boxes, cable cards, wire, etc. None of that will remain from Charter. They would take it all with them when they leave. So new company would have to have the funds to be able to purchase or lease millions of the devices from the manufacturers. Unless NY state requires charter to hand over all stock to new company as part of the penalty. even then the new labour cost increases from CS and installation contractors is not a simple thing.

This is not even getting into contracts and distribution agreements for the channels.

this system is specifically built to have the absolute highest barriers to entry possible to prevent things like this from happening. The only one who could replace a Charter on short notice is a company of similar size.

Anonymous Coward says:

Re: Re: Re:2 'Do better, or you'll join the last company who had the job'

NYC contracts are posted here: https://www1.nyc.gov/site/doitt/business/cable-tv-franchises.page

If the customers are renting home routers from Charter, that could be a problem. (Don’t rent these, or modems; the payback period on a purchase is never more than 1 or 2 years.) Modems are part of the "Cable System" which can be sold by the state; the contract defines it by reference to 47 U.S.C § 522(7), which says "signal … reception … equipment" is covered.

David says:

Vote pandering?

And while Cuomo’s quest to protect his Governorship from challenger Cynthia Nixon likely isn’t entirely absent from the move

Uh, why shouldn’t an elected official focus on making popular decisions? While susceptibility to populism is a fundamental weakness of democracies and I’d certainly like to see election day promises held to similar standards as contractual obligations, "governing" also implies giving some attention to contracts being heeded in the course of government work.

Anonymous Coward says:

Re: Vote pandering?

That particular line comes directly after the quoted statement by Charter, which implies that the entirety of the motivation for all of this is election year grand-standing.

The way I read it, in context, is "Yes, election year motivations probably played a part, but Charter forced this to occur by being a bunch of little shits."

To my reading, the article is not ragging on Cuomo or saying he shouldn’t take these actions. It’s just acknowledging that a portion of the motivation is political aspirations.

That One Guy (profile) says:

Re: Re: Vote pandering?

And while Cuomo’s quest to protect his Governorship from challenger Cynthia Nixon likely isn’t entirely absent from the move (beating up on hated cable companies often provides easy political brownie points), the state was forced toward tougher options after Charter ignored $3 million worth of fines for missing merger commitments and misleading regulators.

Yeah, that’s how I read it as well. Sending a message like this likely has some political motivations, but in the end Charter laid the grounds for it by being so absolutely terrible at offering service and upholding merger conditions.

Anonymous Coward says:

Re: Re: Re: $3 million

Charter ignored $3 million worth of fines

That’s $20.13 for each of the 149,000 houses they were supposed to start servicing. There’s no way they can hook up a new house for $20; cheaper to pay the fine than do the work. It should be at least $200/house to motivate them, $2000/house to punish them.

David says:

Re: Re: Charter’s Replacement?

Well, Google was not able to compete with Google fibre, but then if the competition gets away with just ignoring their contractual obligations, it’s kind of hard to make a competitive offer. For the next round of underwriting, New York should put drastic penalties into the conditions. And not let the contracts be written by lobbyists experienced in spinning webs of loopholes.

Anonymous Coward says:

a) it’s about time something like this happened, it’s long overdue!!
b) a whole lot more states etc need to take notice and do the same, just so the message gets through loud and clear to these asshole companies
c) Congress needs to take notice as well! maybe, just maybe, they will start to think again about how the whole of the country is dominated by 3 or 4 major broadband companies, none and i mean none of which give a toss about anything except how much profit they can make and how many customers they can screw over on the way!
d) sooner or later the paying public are gonna get totally pissed off and a rebellion will happen by them, not just by the State Commissions and it would be best if Congress were on the side of the people rather than the side of the businesses, certainly if they want to be in a job at the next election!!

Anonymous Coward says:

So...

… do congress critters get free internet? Or is it just part of their seemingly inexhaustible budget, or are they all just so rich that they don’t even notice when their cable bill goes up and up and up?

I would think that having at least one office in their home district, an office in DC or state capitol, and add in their actual residence they would get a clue about what the ISPs are doing.

Makes me wonder if NY legislators are paid that much less that they noticed and cared. Or if <GASP> an elected official actually heard what their constituents were saying.

I don’t get the feeling that shenanigans by large ISPs are going to be a big voter issue this fall. Is this grandstanding to detract from other issues?

To be honest I don’t think that most internet users actually give a hirsute rodents posterior about NN, privacy, or anything other than bottom line price. (How many people gave up their info to FB? Or still use Google? Or still have geo location turned on for their phones?) Anecdotal but you get my point.

As long as ” people who have no idea who or what they are voting for other than what political ad they saw last ” continue to put the same politicians in office nothing will change.

Anonymous Coward says:

Re: So...

I think it’s the

they all just so rich that they don’t even notice when their cable bill goes up and up and up

Also, probably a lot of them are rich enough that they aren’t even the ones who handle their own cables or internet bills. They’ve probably got some secretary or something to do it for them.

Anonymous Coward says:

Re: Re: So...

I recall a story from some time ago (I can’t find it) saying that “important” people like Senators and Congresspeople were getting “special flags” on their accounts, which would cause the company to give them actual good customer service. IOW, they won’t have to spend 12 hours on the line to fix a billing error; it will simply be done.

David says:

Re: So...

… do congress critters get free internet?

What is this Internet I hear everybody talking about? It’s somewhat like the Russian carrier rockets to the International Space Station I reckon, just that it goes to the White House instead. Sort of embarrassing that we have to rely on the Russians to get our people up.

At any rate, I guess in 30 years or so the Senators will know what the Internet is and care. After all, it’s been started by ARPA.

Anonymous Coward says:

If Charter leaves, rather than meet their original promises, what do the 2M subscribers do if no other company steps in?

Charter cannot be expected to walk away w/o compensation from the new company – after all they (or one of the companies that they bought) made the initial infrastructure investment of laying the wire.

Anonymous Coward says:

Re: Re:

Legally speaking, you may be correct.

In all other senses, though, I have no sympathy for Charter, and their actions have, in my mind, obviated themselves of any right to the lines that they have run. If you put those lines on public ground, with the permission of the public, to provide the public a service, and then fail to provide that service, the loss of your investment should be considered entirely upon your own head.

Anonymous Coward says:

Re: Re:

Some sample NYC franchise contracts are linked from another comment on this story. If Charter’s is similar, they can be forced to:

  • continue running the network for 12 months, but with the city/state in control
  • sell the network
  • remove the network from public rights-of-way, except for cabling

Yes, they do have to be compensated.

Anonymous Coward says:

Expected Charter Response: "So What?"

"Charter must ensure no interruption in service is experienced by customers, and, in the event that
Charter does not do so, the Commission will take further steps, including seeking injunctive relief in Supreme
Court in order to protect New York consumers."

Cool. Find a fine or penalty big enough to bother a company like Charter // Time Warner, find a way to enforce it without them stalling out the courts constantly, and prevent federal intervention. Once NY State can sort that out I’ll take this announcement seriously.

Anonymous Coward says:

The planned "estate sale" will never happen. Charter will win.

The state of New York will be fighting a guaranteed lawsuit for many years to come, and by the time it ends there will almost certainly be a new set of commissioners that will be much more friendly to Charter’s interests.

State regulatory agencies can be bought off, and usually are. Big corporations have had plenty of practice doing this for over a hundred years, and are quite good at it. New York was the rare exception, and there’s no doubt that Charter will work hard to make sure it never happens again.

Anonymous Coward says:

boycott or bend over

NY chose NOT to bend over. Good on ’em. Now mandate competition by:
-starting municipal funded ISP’s where applicable
-allow/demand that multiple ISP’s provide access in every city with a population of (at least) 100K or more…in other words, make it so that in these cities you can choose between Comcast, Cox, NorthState, VIOS, etc…

Anonymous Coward says:

Re: boycott or bend over

-starting municipal funded ISP’s where applicable

Also: make it policy to install conduits with fiber whenever the city digs, and when new homes and offices are built. Apart from government rules, you can phone up home builders posing as an interested home-seeker; ask them about their fiber plans.

Joel Coehoorn says:

Miscalculation

What we’re seeing here is these companies (all of them) are transitioning from primarily providing cable TV service to primarily providing internet service. And they’re all making one giant miscalculation as part of this process.

Cable TV was mainly an *entertainment* service. Sure, there was education programming and shopping and news channels, but it was really about entertainment. It was okay (at least a little) for the cable companies to play games with a product that’s really just about entertainment.

But now we’re dealing internet service. Yes, internet provides entertainment. In fact, it provides a LOT of entertainment. But it’s also so much more. Cable companies are quickly finding out the public has much less tolerance for messing around with their internet service.

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