NY's Record $176 Million Settlement With Charter For Crap Broadband Highlights Cable's Growing Monopoly

from the do-not-pass-go,-do-not-collect-$200 dept

The State of New York has struck a landmark settlement with the nation?s second-biggest cable company after it repeatedly failed to deliver the broadband speeds it advertised, and tried to trick regulators into thinking it had.

Interim New York State Attorney General Barbara Underwood?s office has announced that it has reached a $174.2 million consumer fraud settlement with Charter Communications (Spectrum). As part of that settlement, the cable giant will be required to dole out $62.5 Million in direct refunds to people who paid for speeds the cable giant couldn’t actually deliver. Each impacted customer should net around $75 and $150 each, as well as $100 million in premium channel freebies spread among the 2.2 million customers impacted.

The NY AG was quick to note this was the biggest such payout by a broadband provider in history:

“This settlement should serve as a wakeup call to any company serving New York consumers: fulfill your promises, or pay the price,? said Attorney General Underwood. ?Not only is this the largest-ever consumer payout by an internet service provider, returning tens of millions of dollars to New Yorkers who were ripped off and providing additional streaming and premium channels as restitution ? but it also sets a new standard for how internet providers should fairly market their services.”

Early last year, Charter Spectrum was sued by New York State 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).

Buried in the suit were all manner of interesting allegations, including claims that Charter executives discussed via e-mail how they hoped to manipulate congestion to drive up costs for companies like Netflix (you’ll recall this was part of the whole interconnection slowdowns Netflix and companies like Level3 complained about a few years ago). The suit also highlights how Charter at least considered gaming the results of a program the FCC has traditionally used to measure real-world broadband speeds using custom-firmware embedded routers in consumer volunteer homes.

Charter tried to tap dance out of the suit by flinging pretty much every legal argument against the wall to see if one of them would stick. Most recently, the company tried to claim that the FCC’s recent net neutrality repeal contains language banning states from trying to protect consumers. And while that was certainly the hope of Ajit Pai’s FCC, legal experts have argued that the agency’s claims don’t hold water. More specifically, when the FCC rolled back its Title II authority over ISPs, it also ironically dismantled its legal authority to tell states what to do.

At one point, Charter CEO Tom Rutledge tried to insist the NY AG suit was all just part of a secret, vile “cabal” on the part of Netflix and Google simply because the AG hired Columbia Law Professor Tim Wu as an advisor (narrator: it wasn’t). It’s worth noting that this new settlement is entirely separate from Charter’s battle with the NY State PSC, which has threatened to kick the cable giant out of the state for failing to adhere to recent merger conditions — and lying about it. That will likely end in an even larger settlement than the NY AG case.

With the nation’s telcos refusing to upgrade aging DSL lines giving Comcast and Charter bigger regional monopolies over faster broadband, giant cable ops doing the bare minimum is a problem you’ll likely keep hearing a lot about. And no, rising competition from 5G wireless isn’t going to be some kind of magic panacea for reasons we’ve well discussed. Charter and Comcast’s bad behavior is simply the culmination of years of turning a blind eye to limited broadband competition, or the fact that letting these apathetic giants dictate tech policy continues to be a recipe for disaster.

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Companies: charter communications, spectrum

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Comments on “NY's Record $176 Million Settlement With Charter For Crap Broadband Highlights Cable's Growing Monopoly”

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18 Comments
That One Guy (profile) says:

Re: Re: Why else do you think they feel so safe screwing over people?

The problem with ‘boycott the ISP to make it behave’ is that for many people it’s either them or nothing. They either get internet from the company in question, or they don’t get internet at all, and telling people ‘just do without the internet for a month or two’ is just a titch unrealistic at this point, given how much requires it up to and including being able to work for many people.

That One Guy (profile) says:

"Here's your 1%, we'll just keep the 99% shall we?"

Each impacted customer should net around $75 and $150 each, as well as $100 million in premium channel freebies spread among the 2.2 million customers impacted.

Given it’s all but assured that they got well over that amount per customer the fact that this is a ‘landmark settlement’ is more disappointing/disgusting than good. Even when they face fines that would bankrupt smaller companies they have no reason to not do the same actions in the future, because they’ll almost certainly come out well ahead again should they do so.

You want companies to stop doing stuff like this? Set the penalty at a minimum of 100% of what they gained, so that in the best case scenario(for them) they break even, not gaining anything extra but not losing anything either. If they know that at best they won’t profit then they’ll be much less likely to engage in such activity, but so long as it’s crystal clear that even when they get caught they’ll still come out way ahead then ‘it’s more profitable to ask forgiveness than permission’ will continue to apply.

Bamboo Harvester (profile) says:

Re: "Here's your 1%, we'll just keep the 99% shall we?"

But you’re forgetting the 100 million in Special Programming they’re going to give away for FREE!!!!!

They’ll make available the NEW! Afro-Eskimo-Arabic-Latino Transgender Dandelion Gardening on Dunebuggies channel, A $100 DOLLAR VALUE!!!!! to NYC and that’ll be the end of it.

Ah, yes, they purchased a “season” of that “channel” for a buck thirty-seven….

Iggy says:

Re: Re: "Here's your 1%, we'll just keep the 99% shall we?"

As long as we’re on the barter system, can I pay my traffic ticket with a bowl of lamb pilaf from my mother in-law (retail value $500)? I’d also like ten years of Gigabit broadband access in exchange for my 2003 Honda Civic (MSRP $13,000), and a 3 months of electricity for turning in my old computer ($500 at purchase).

Anonymous Coward says:

Re: "Here's your 1%, we'll just keep the 99% shall we?"

You want companies to stop doing stuff like this?

Actually you want corporations to stop doing stuff like gouging the public the way you put and end to it is make the board members as well as the CEO personally responsible for the actions taken by the corporation since they are the ones that determine this.

Once you’ve done that, then tie prison sentences as well as personal fines to each one depending on level of severity as to level of fine.

You will find near overnight a rapid change in how such a corporation is run once one major corporation is set as an example of what happens.

Anonymous Coward says:

Re: Re: "Here's your 1%, we'll just keep the 99% shall we?"

That is actually a good idea. Why should the shareholders lose value? Don’t fine the company, fine the CEO and board members. PS: have to make sure that the company can not legally reimburse them in any manner, or we will just have the same situation we are currently in.

ECA (profile) says:

The REAL problem..

is that they let this happen FOR HOW LONG???
Before they did anything..
If you add up all the EXCESS crap they install..
All the channels you dont watch, dont want to watch, didnt even know they were there..
Then add in the TRUE price of what the corp pays to Other corps to show the channel.. Add a profit margin…And take it all off the price paid, Plus the BOX REQUIRED(Oh! you can buy those boxes, at $200-500(its worth $10-50)..
They could charge everyone $50 and not have that box and Still make a fortune..

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