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.