New York PSC Claims Charter Overstated Broadband Expansion
Charter Communications may have to forfeit $1 million to New York state and could lose its franchise agreement in New York City, the state’s telecom regulator said Monday. New York Public Service Commission Chairman John Rhodes said Charter overcounted new connections, which would mean the company missed a December broadband buildout target that was a condition of its 2016 buy of Time Warner Cable. The PSC said it may launch a probe into whether the New York City agreement should be terminated for alleged underpayments and failure to meet cable deployment obligations. A company spokesman denied the allegations, saying it's "in full compliance with our merger order and the New York City franchise, and we will fight these baseless and legally suspect actions vigorously.”
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“It is critically important that regulated companies strictly adhere to the state’s rules and regulations,” said Rhodes. Rhodes issued the orders himself; they may be affirmed by other New York commissioners but are already effective. A counsel for New York Gov. Andrew Cuomo (D) last year raised “pressing concerns” about the TWC acquisition (see 1710030046). Charter and the state earlier agreed to a $13 million settlement for a previous failure to meet buildout requirements (see 1709140041).
The cable operator may have missed a conditional milestone to pass 145,000 houses or businesses within four years, Rhodes said in an order to show cause in case 15-M-0388. Charter was to expand the network to 36,711 places by December -- and the company claimed reaching 42,889 -- but PSC staff’s “detailed audit … found more than 14,000 passings claimed by Charter for its December milestone were ineligible, causing Charter to fall short of the milestone by more than 8,000 passings,” the agency said. Charter must respond within 21 days or pay $1 million, it said.
The company also must show within 21 days “why the Commission should not begin a public notice and opportunity for a hearing on whether the Company has committed material breaches of its franchise agreements with NYC or any applicable provision of PSL Article 11 or of the regulations promulgated thereunder,” Rhodes said in an order in case 18-M-0178. With 12,467 of the new locations claimed by Charter located in New York City, PSC staff “has concerns as to whether Charter complied with the network deployment section of the New York City franchises, which would have required many of these addresses to have already been passed,” the state commission said. The agency also wants to know why franchise fees paid to the Big Apple may have declined following the TWC acquisition. The PSC may terminate a franchise agreement if it’s materially breached, it said.
“Charter is committed to bringing more broadband to more people across New York State," its spokesman said. "We exceeded our last buildout commitment by thousands of homes and businesses. We’ve also raised our speeds to deliver faster broadband statewide."
A PSC management-and-operations audit of Charter phone service quality was opened in December after reports of service interruptions. “An independent third-party auditor will soon be added to the Commission staff’s audit team in the next phase of this ongoing review,” the PSC said. It wants Charter’s end-of-month video subscriber counts for January and February and months to come, said the New York Department of Public Services Telecom Director Debra LaBelle in a Monday letter to the cable company. The data is needed to determine if Charter is meeting a condition that it reduce its video service complaint rate by 17.5 percent from 2014 to 2019, and by 35 percent from 2014 to 2021, she said. The company would have to invest $2.5 million in service enhancements per failed milestone.