New York State Tells Charter To Leave Due To 'Persistent Non-Compliance And Failure To Live Up To Promises'

The New York State Public Service Commission (NYPSC) announced on Friday that it has revoked its approval of the 2016 merger agreement between Charter Communications, Inc. and Time Warner Cable, Inc. because:

"... Charter, doing business as Spectrum has — through word and deed — made clear that it has no intention of providing the public benefits upon which the Commission's earlier [merger] approval was conditioned. In addition, the Commission directed Commission counsel to bring an enforcement action in State Supreme Court to seek additional penalties for Charter's past failures and ongoing non-compliance..."

Charter, the largest cable provider in the State, provides digital cable television, broadband internet and VoIP telephone services to more than two million subscribers in in more than 1,150 communities. It provides services to consumers in Buffalo, Rochester, Syracuse, Albany and four boroughs in New York City: Manhattan, Staten Island, Queens and Brooklyn. The planned expansion could have increased to five million subscribers in the state.

Charter provides services in 41 states: Alabama, Arizona, California, Colorado, Connecticut, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maine, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, Wisconsin, and Wyoming.

A unit of the Department of Public Service, the NYPSC site described its mission, "to ensure affordable, safe, secure, and reliable access to electric, gas, steam, telecommunications, and water services for New York State’s residential and business consumers, while protecting the natural environment." Its announcement listed Spectrum's failures and non-compliance:

"1. The company’s repeated failures to meet deadlines;
2. Charter’s attempts to skirt obligations to serve rural communities;
3. Unsafe practices in the field;
4. Its failure to fully commit to its obligations under the 2016 merger agreement; and
5. The company’s purposeful obfuscation of its performance and compliance obligations to the Commission and its customers."

The announcement provided details:

"On Jan. 8, 2016, the Commission approved Charter’s acquisition of Time Warner. To obtain approval, Charter agreed to a number of conditions required by the Commission to advance the public interest, including delivering broadband speed upgrades to 100 Mbps statewide by the end of 2018, and 300 Mbps by the end of 2019, and building out its network to pass an additional 145,000 un-served or under-served homes and businesses in the State's less densely populated areas within four years... Despite missing every network expansion target since the merger was approved in 2016, Charter has falsely claimed in advertisements it is exceeding its commitments to the State and is on track to deliver its network expansion. This led to the NYPSC’s general counsel referring a false advertising claim to the Attorney General’s office for enforcement... By its own admission, Charter has failed to meet its commitment to expand its service network... Its failure to meet its June 18, 2018 target by more than 40 percent is only the most recent example. Rather than accept responsibility Charter has tried to pass the blame for its failure on other companies, such as utility pole owners..."

The NYPSC has already levied $3 million in fines against Charter. The latest action basically boots Charter out of the State:

"Charter is ordered to file within 60 days a plan with the Commission to ensure an orderly transition to a successor provider(s). During the transition process, Charter must continue to comply with all local franchises it holds in New York State and all obligations under the Public Service Law and the NYPSC regulations. Charter must ensure no interruption in service is experienced by customers, and, in the event that Charter does not do so, the NYPSC will take further steps..."

Of course, executives at Charter have a different view of the situation. NBC New York reported:

"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..."

Comments

[Chanson de Roland]

Charter, d.b.a., and hereinafter “Spectrum,” tries to discredit New York’s order that it windup its affairs and cease doing business in New York as being politically motivated. But that is only a legally cognizable defense and cause for relief if New York only enforces its complaints against Spectrum, while not enforcing its similar laws and similar agreements against others who have, in sufficiently similar circumstances, similarly violated those laws and breached similar agreements. But Spectrum’s contract and agreement with New York to do certain things in consideration for New York approving the Charter/Spectrum merger with Time Warner Cable is unique to that transaction, so there is no constitutional violation of equal protection of the law for that agreement. And New York’s court will only look to the agreement to see whether the facts prove New York’s claim and factual allegations of breach. Whatever New York or Governor Cuomo’s motives maybe, it is legally sufficient for New York if the facts prove New York’s allegations of breach, whatever the motive for New York’s order to leave.

What’s matters is whether Spectrum has materially breached its agreement with New York, whereby and for which consideration New York approved the Spectrum-Time Warner Cable merger and the extent to which Spectrum’s breach, if any, has materially deprived New York of its expected consideration and, thus, harmed and taken benefits from New Yorkers that are rightfully theirs. So let’s say ad arguendo that New York’s or rather Gov. Cuomo’s motives are political. So what? After all, every human act is motivated by something. The law only enquires into the motives of the act, if the act is wrong or otherwise actionable. If the facts prove that Spectrum has breached, New York is entitled to its motivations whatever they may be.

In addition to the breach of the merger agreement, supra, which I suspect is sufficient for New York to throw Spectrum out of New York, New York is alleging that Spectrum had engaged in substantial and ongoing breach of certain of its regulations that govern telecommunications companies that operate in New York. And New York also states a claim of fraudulent advertising, as Spectrum has, according to New York, lied to New Yorkers about its compliance with the merger agreement, supra, and its performance of its service in New York.

Are New York’s allegations, supra, true? If they are, notwithstanding any of Spectrum’s smoke and mirrors, the record should substantially prove them, and Spectrum will have to leave New York or settle with New York on terms favorable to New York. Whether New Yorkers think that Cuomo’s prosecuting Charter, which often ranks as the worse in customer service among the hated integrated big ISPs, is worthy of their votes is an issue that is irrelevant and merely incidental to whether Spectrum’s alleged wrongs in New York are true and, thus, authorize New York in banning Spectrum for doing business in New York and banishing from Spectrum from its territory to do business.