Charter hit with $13M fine for not delivering on broadband promise

Charter Communications sign (use this one)
Charter is facing a $13 million fine.

Charter Communications has been served a whopping $13 million fine by New York State’s Public Service Commission (PSC). The commission claims that Charter, now the largest broadband provider in the state, has failed to make good on promises to expand its broadband service to more rural communities as part of its merger deal with Time Warner Cable (TWC).

New York’s PSC reached an agreement with Charter in 2016 as part of the commission’s approval of the merger with TWC, which had 2.5 million subscribers in New York. Under the deal, Charter made a series of commitments to upgrade its broadband network within its New York footprint, including a promise to extend its Spectrum broadband service to 145,000 more residents and businesses by 2020.

The agreement included statewide speed upgrades reaching 100 Mbps by 2018 and 300 Mbps by 2019, and a timeline for building out its broadband network in chunks of over 36,000 new residents and businesses per year, to be completed by 2020.

Charter was able to upgrade broadband service speeds to 100 Mbps across New York ahead of the 2018 deadline set by its agreement, but has been slow to roll out service to new households and businesses. In its first year, Charter passed just over 15,000 new premises, less than half of what it promised.

In a statement issued earlier this year, Charter claimed the delays were caused by factors outside of Charter’s control. “Charter has met and even exceeded the vast majority of our key year-one commitments in New York associated with the merger,” the statement said. “Delays in pole-attachment approvals and make-ready by pole owners made it impossible to extend our network to the targeted number of homes in the first year post-merger—an important fact that the settlement appropriately reflects. Thousands of Upstate consumers now have access to Spectrum services where approvals and make-ready have occurred, and we have a solid deployment plan to reach the thousands of additional homes in our commitment.”

Commission Chair John Rhodes said in a statement Charter has “failed to expand the reach of its network to un-served and under-served customers at the pace it committed,” and that the fine will help to “ensure full and complete compliance” in the future. The $13 million fine is one of the largest financial settlements of its kind, noted the Times Union. PSC has stipulated that $1 million of that money will fund grants aimed at providing computer and Internet access to low-income New York residents; the remaining $12 million will be set aside as a security for Charter’s compliance.

Charter and PSC have now revised their agreement to allow Charter to extend its broadband service by 21,000 premises over six months through May 2020. Under the new agreement, Charter could also forfeit up to $1 million in revenue for each deadline it misses moving forward. The forfeitures will depend on how much of the 21,000-premise target is reached during each period.

Charter is facing more legal action in the state after New York Attorney General Eric T. Schneiderman sued Charter earlier this year in a separate case. Schneiderman’s suit claims Charter “continues to underserve their subscribers by failing to make the capital investments necessary to live up to their promised speeds,” after a 16-month investigation found TWC marketing around its broadband service promised speeds its network couldn’t deliver.