Cable Giant Charter Fined $19 Million For Lying About Competitors Going Out Of Business

from the just-another-day-in-US-telecom dept

When last we checked in on cable giant Charter Communications (Spectrum), the company was busy using the Boys and Girl's Club of America as a prop to try and kill helpful conditions affixed to its megamerger with Time Warner Cable. This week, the company's under fire after it circulated advertising telling customers (falsely) that one of its competitors (Windstream Communications) was going out of business. While Windstream had filed for Chapter 11 bankruptcy protection, it very much remains in business. Yet Charter's advertising to customers informed them the company would likely be shuttering its doors soon.

This week Judge Robert Drain of US Bankruptcy Court for the Southern District of New York ruled (pdf) that Charter must now pay Windstream $19 million for spreading false claims about the company:

"Charter's goal with the mailings "was to induce the Debtors' customers to terminate their contracts and switch to Charter by sending them literally false and intentionally misleading information about the Debtors' bankruptcy cases and financial wherewithal," the ruling said. Charter premised its ad campaign "on false assertions regarding the Debtors' bankruptcy cases," the ruling said."

Charter's lawyers had, as they do every time they're in court, tried to argue that lying about a competitor was protected speech, something the Judge didn't look to kindly on:

"Charter claimed that punishment for its "literally false and intentionally misleading advertising campaign would violate their First Amendment right to free speech," the judge wrote. But First Amendment rights are not absolute and do not protect Charter's false statements about Windstream's bankruptcy proceedings and financial wherewithal, he wrote. "Such commercial speech is properly curtailed by precluding such wrongful conduct," he wrote."

All of that said, Charter, hand in hand with Comcast, is securing itself an ever larger monopoly over broadband access in countless US markets, especially at faster speeds. Cable giants now enjoy a 70% market share and growing over fixed broadband access, thanks in large part to regional phone companies that were too lazy, cheap, or heavily indebted (usually from "growth for growth's sake" megamergers) to actually upgrade aging DSL lines. In fact, many of these companies are literally just letting their networks fall apart and refusing to repair customer lines on a timely basis.

As such the irony is that Charter didn't really even need to lie, since most frustrated telco DSL subscribers likely would have eventually headed their direction anyway. But when you're a natural monopoly in a market that's neither competitive nor competently or consistently regulated, you tend to operate as if there's no repercussions for your actions -- because there usually aren't.

Filed Under: broadband, competition, false advertising, truth in advertising
Companies: charter communications, charter spectrum, windstream

RIAA Realizes It Sued Charter Over A Bunch Of Songs It Doesn't Hold The Copyrights For

from the oops? dept

It's been a year since the RIAA sued Charter Communications, using the same strategy it had used against smaller ISPs Cox and Grande Communications -- that the DMCA actually requires internet access providers to completely kick users off upon the receipt of multiple (unproven) claims of copyright infringement. The RIAA has been plotting out this strategy for the better part of a decade.

For years, we've pointed out a number of problems with this, starting (most importantly) with the fact that accusations are not actual proof of infringement. And to kick people off of their sole access to the internet based solely on accusations would represent a real problem. As first noted by TorrentFreak, Charter has finally filed its answer, defenses, and counterclaims to the complaint. There's a lot of interesting stuff in there, but a key part: the RIAA and its labels and publishing partners quietly admitted that they were suing over songs they did not hold the rights to. That's kind of a big deal. Indeed, it reminds me of the revelation in the infamous Viacom/YouTube lawsuit that Viacom was suing over songs it had uploaded itself for marketing purposes.

From the counterclaims:

On January 15, 2020, Plaintiffs amended the list of works in suit, removing over 450 works from this case (the “Dropped Works”).

The Record Company Plaintiffs dropped 272 sound recordings and the Music Publisher Plaintiffs dropped 183 music compositions.

Upon information and belief, Plaintiffs dropped at least some of these works because they do not “own and/or control in whole or in part the copyrights and/or exclusive rights” the works.

Indeed, Plaintiffs dropped these works after they were ordered to produce further documentation relating to their purported ownership or ability to assert the works in suit in this case.

Despite later dropping these works the Record Company Plaintiffs, or their agent acting on their behalf, nevertheless sent notices to Charter in connection with the Dropped Works, claiming that they “have identified a user … reproducing or distributing an unauthorized copy of a copyrighted sound recording” and that the recipient of the notice “may be liable for infringing activity occurring” on Charter’s network. The Record Company Plaintiffs further claimed in their notices that the user’s “Internet account was used to illegally copy and/or distribute copyrighted music over the Internet” and that the notice contained “the details of the illegal file-sharing, including the time, date, and a sampling of the music shared.” The Record Company Plaintiffs’ notices “assert that the information in the notice is accurate” and that they “have a good faith belief that this activity is not authorized by the copyright owner, its agent, or the law.” The notices further stated that “[u]nder penalty of perjury,” “the RIAA is authorized to act on behalf of its member companies in manners involving the infringement of their sound recordings, including enforcing their copyrights and common law rights on the Internet.”

While the Music Publisher Plaintiffs did not send any notices for the music compositions in suit to Charter, the Music Publisher Plaintiffs’ infringement claims in this case purportedly rely on notices sent by the Record Company Plaintiffs to Charter, including those for the Dropped Works.

Upon information and belief, at least in connection with the Dropped Works, the Record Company Plaintiffs sent notices to Charter with inaccurate information, including but not limited to the misrepresentation that the RIAA was authorized on behalf of Plaintiffs to send a notice relating to these allegedly infringed works, that the Record Company Plaintiff on whose behalf the notice was sent owned or controlled the work, and that the actions alleged to have been taken by Charter’s subscribers constituted infringement of the Record Company Plaintiffs’ rights

The counterclaims go on to note that many of the works that have now been dropped due to the fact that the RIAA and its partners did not hold the copyright were the same songs that were previously used in the Cox Communications case:

Many of the same record companies and music publishers that are in this case pursued damages in Sony Music Entertainment et al. v. Cox Communications, Inc. et al, Case No. 1:18-cv-950 (LO/JFA) (E.D. Va.) (“Sony”) for certain of the Dropped Works, and the jury returned a verdict for certain of the Dropped Works in an amount of nearly $100,000 per work.

Yikes.

Now, some may claim that it doesn't really matter if the RIAA and its various partners held the copyright in these works, but it absolutely does for a whole variety of reasons. Most obviously, you can't sue over copyrights where you don't hold the copyright. But, it also shows the incredible sloppiness with which the RIAA and the labels and publishers go about determining "infringement." And that's why we keep pointing out that it very much matters whether you're kicking people off based solely on "accusations." When you're carpet bombing DMCA notices with an automated system, and no one competent seems to be overseeing the process, you get a ton of mistakes. And having people lose all internet access based on mistakes should be seen as a real problem.

The filing goes on to cite numerous examples of the RIAA and its partners mis-identifying infringement (including citing Techdirt), as well as the excellent and important study on DMCA takedown mistakes by Jennifer Urban, Joe Karaganis, and Brianna Schofield.

And, thus as part of the counterclaims, Charter is making a DMCA 512(f) claim of "knowingly sending materially inaccurate notices." As we've discussed for a while, 512(f) is mostly a dead letter, but it would be nice if someone actually got called on abusive takedown notices. The fact that the RIAA and its partners here, nearly a year after filing suit, suddenly dropped hundreds of songs after being asked to show proof that they actually hold the copyright... seems like as good a target as any.

The other parts of the counterclaims are also interesting. Charter makes the (important) point that it cannot and should not be expected to spy on every action by its users, and therefore it's silly to hold Charter liable for copyright infringement by its users. It would be nice if a court actually recognized that fact, but to date, it's been a struggle.

Filed Under: copyright, dmca, lawsuits, repeat infringer policy
Companies: charter, charter communications, riaa

Charter Spectrum Under Fire For Putting The Public At Risk During Coronavirus

from the monopolizing-stupidity dept

Charter Communications literally has some of the worst customer satisfaction ratings of any company in any industry in America. Like Comcast, Charter has spent years merging its way to market domination, and now enjoys a notable monopoly over broadband in numerous U.S. markets. This monopoly, combined with regulatory capture, has resulted in a company that literally doesn't have to give a damn about its customers.

As it turns out, the company doesn't treat its employees much better.

For the last few days, both Gizmodo and TechCrunch have been fielding complaints from a torrent of Spectrum employees who say the company is putting them at unnecessary risk. Employees who say there's no technical reason they can't perform their work remotely have been mandated to continue coming into the office, despite CDC warnings that social distancing will be essential to slow the spread of the pandemic across the United States. Several employees sent internal memos warning all employees the company was ignoring CDC recommendations:

"The CDC guidelines are clear. The CDPHE guidelines are clear. The WHO guidelines are clear. The science of social distancing is real. We have the complete ability to do our jobs entirely from home,” he wrote, reeling off the advice from several state and federal government departments and international health organizations. “Coming into the office now is pointlessly reckless. It’s also socially irresponsible. Charter, like the rest of us, should do what is necessary to help reduce the spread of coronavirus. Social distancing has a real slowing effect on the virus — that means lives can be saved."

But employees who are raising alarm bells that Charter is putting lives at risk are being told to take sick leave or quit:

"Wheeler said he was given an ultimatum. Either he could work from the office or take sick leave. Staff are not allowed to work from home, he was told. Wheeler offered his resignation, but was sent home instead and asked to think about his decision until Monday.

Later in the day, he received a call from work. Charter accepted his resignation, effective immediately."

In some instances, staff are being told to report to work despite positive COVID-19 tests being found at Charter offices. At the heart of the problem is Charter CEO (and formerly Comcast executive) Tom Rutledge, who, much like his belief that streaming password sharing is the biggest problem facing the industry at the moment, doesn't think much of this whole modern telework thing:

"The employees we spoke to said that while Charter has the means to allow staff to work from home, executives are reluctant to relax the policy. Charter chief executive Tom Rutledge said in an internal email to staff this week that employees are “more effective from the office."

The same monopoly mindset -- in which the reality on the ground doesn't, can't, and won't matter because there's no organic or regulatory penalty for bad behavior -- is certainly evident in the way Charter treats its employees. Though it's not just monopoly power, given that Comcast is not only letting its employees work from home but is doling out hazard pay. Which means at the end of the day it comes down to terrible management, and an unwillingness to listen to your own employees, and a top down failure in leadership that's literally now putting human lives at risk. Not just those of Charter employees, but, given the symptomless transmission evident in COVID-19, everybody in the regions that Charter does business.

Update: It sounds like Charter may finally be getting the message.

Filed Under: coronavirus, covid-19, efficiency, health and safety, remote work, tom rutledge, work from home
Companies: charter communications

Charter Spectrum Once Again 'Competes' By... Raising Prices

from the nickel-and-dime dept

When Charter Communications (Spectrum) proposed merging with Time Warner Cable and Bright House Networks in 2016, the company repeatedly promised that the amazing "synergies" would lower rates, increase competition, boost employment, and improve the company's services. Of course like countless telecom megamergers before it, that never actually happened. Instead, the company quickly set about raising rates to manage the huge debt load. And its service has been so aggressively terrible, the company almost got kicked out of New York State, something I've never seen in 20 years of covering telecom.

Fast forward to 2019, and despite surging competition from streaming video providers, Charter is once again raising rates on numerous services. Broadband and TV services will all be seeing major price increases next month, as will the company's hardware rental surcharges and the universe of misleading fees the industry uses to covertly jack up the advertised rate post sale. That includes the company's "broadcast TV fee," which is really just a small part of the cost of programming hidden below the line in the form of a (now) $13.50 monthly additional charge:

"With this price change, you will now pay $13.50 a month for broadcast TV fees, which is up from $11.99 a month. This will add up to $162 a year to your bill just watch free over-the-air TV you could get with an antenna."

Note: that fee had already seen a $2 bump early this year.

That Charter's response to increased streaming video competition and record cord cutting is to raise rates tells you plenty about both the level of competition it sees in broadband, and the regulatory oversight of the sector. These hidden fees in particular are something the FCC (under both parties) has been happy to turn a blind eye to. Much in the same way both parties have rubber stamped a long line of telecom and media megamergers that, time and time again, have only really netted one thing: greater sector consolidation, higher rates, fewer jobs, and worse service.

Giants like Comcast and Charter have one ace in the hole when it comes to the streaming video wars to come. They are enjoying growing monopolies over broadband access thanks to the slow, steady implosion of many US telcos. That limited competition has let Comcast respond to cord cutting and streaming by imposing arbitrary and punitive usage caps and overage fees that are incurred when its broadband users use a competitor's services (say Netflix) but not their own TV offerings. This lets them simultaneously cash in on -- and hinder -- streaming competitors.

Charter's banned from doing this due to a few flimsy conditions affixed to its 2016 merger, but those conditions expire in just a few years, meaning you can expect an even fatter broadband bill over the horizon. The FCC having just effectively neutered its oversight authority over telecom at telecom lobbyist behest certainly isn't likely to help, nor is the death of FCC privacy and net neutrality consumer protections.

Filed Under: competition, consolidation, consumer welfare, mergers, monopoly, prices
Companies: charter communications, spectrum

Charter Spectrum Won't Get Kicked Out Of New York State After ISP Promises To Suck Less

from the fiftieth-time-will-be-the-charm dept

Last summer, New York State took the historically-unprecedented step of voting to kick Charter Communications (aka Spectrum) out of New York State. Regulators say the company misled them about why it repeatedly failed to adhere to merger conditions affixed to the company's $86 billion acquisition of Time Warner Cable and Bright House Networks, going so far as to falsify (according to the NY PUC) the number of homes the company expanded service to. The state has also sued the company for failing to deliver advertised broadband speeds, for its shoddy service, and for its terrible customer support.

While the threat was largely unprecedented, there have been indications that this was largely just a negotiations tactic by the state. However sincere the threat was, it appears to have worked. Charter Spectrum and state regulators have struck a new deal (you can find the settlement here, pdf) that will keep the company in NY State, but will require it to actually, you know, try:

"Nine months after a New York government agency ordered Charter to leave the state over its alleged failure to comply with merger conditions, state officials have announced a settlement that will let Charter stay in New York in exchange for further broadband expansions. The settlement will enforce a new version of the original merger conditions and require a $12 million payment, about half of which could help other ISPs deploy broadband."

As part of the agreement, Charter will agree to expand broadband availability to upstate New York. It's an area (I grew up in) which, like many US markets, suffers from little to no real competition, thanks in part to phone companies that refuse to upgrade their aging DSL lines (largely because it's not profitable enough, quickly enough, for Wall Street's liking). Charter will also be required to pay $12 million to deliver broadband to additional underserved areas, a chunk of which could technically be doled out to competitors if they beat back Charter during a competitive bidding process (often difficult if not impossible).

In a statement, Charter made it clear it was happy the hotly-contested debate was behind it:

"Charter and the Department believe that this action is an important step forward in making high-speed broadband available to all New Yorkers. It allows the parties to move forward with the critical work of expanding access to broadband, by resolving their disagreements without the need for costly litigation. As a result, Charter will invest even more money in New York State than originally planned, bringing the educational, economic and social benefits of high-speed broadband to areas where access is often limited."

It's indisputably positive that the state was able to hold Charter's feet to the fire, expanding access to a notable chunk of underserved users. That said, the settlement really doesn't address the dysfunction that created this problem in the first place: namely regional telecom monopolies that prioritize mergers and acquisitions over providing quality customer service or expanding into new areas. And they're routinely able to get away with this behavior because there's not only limited competition, but such industry giants all but currently dictate federal telecom policy.

Thanks to apathetic telcos and regulatory capture, giants like Charter and Comcast are securing a growing monopoly over broadband in countless markets nationwide, a stranglehold groups like the EFF say pricey 5G service isn't going to fix. New York State doing its job (a rarity on the state level) is positive, but it doesn't address the underlying rot at the heart of the issue: a lack of real competition, and zero genuine willingness to embrace creative, pro-competition policies (like community broadband or public/private partnerships) that help address the underlying problem.

Filed Under: broadband, merger conditions, new york
Companies: charter communications, spectrum

RIAA Continues Its Legal War To Turn ISPs Into The Copyright Police: Sues Charter Communications

from the stepping-on-up dept

The RIAA's war to force internet access providers to become copyright cops has continued to move forward. The RIAA planned this strategy out years ago, in the wake of losing the SOPA fight. Back in 2012 we wrote about an internal plan to try to convince courts that Section 512(i) of the DMCA actually mean that ISPs had to completely kick users off the internet based solely on accusations of infringement. The end goal here is, as always with the RIAA, to get everyone else to try to police the internet.

Part of the issue here is the incredibly inartful drafting of the DMCA, that has lead to multiple lawsuits over how conflicting aspects of the law should be interpreted. The results over the last decade or so of cases tend to have the courts simply deciding in favor of the more sympathetic party, rather than with any consistency as to the law itself. So, in the Viacom/YouTube case, the court required "actual knowledge" rather than the "general knowledge" that Viacom sought. Yet, in the IsoHunt case (unsympathetic defendant), the court found "red flag" knowledge to be enough. In the first case testing the RIAA's theories on 512(i) and ISPs, against Cox, the RIAA won, but mainly due to Cox's own bad behavior (specifically: internal employees mocked and did not follow the company's own repeat infringer policy).

In the second case testing this theory, against Grande Communications, as was widely expected given an earlier magistrate judge's opinion, the court has said that Grande does not qualify for the DMCA's safe harbors, and therefore may be liable for infringement on its network. Once again, as with Cox, Grande's own actions appeared to doom its argument for safe harbors. The company admitted that it didn't actually have a repeat infringer policy. It had a stated one, but no effort was made to follow it internally -- and since 512(i) requires a "reasonably implemented" policy, the lack of any plan to implement it means... no safe harbors. As we noted when the magistrate judge recommended this finding, this does not mean that Grande automatically loses the case. The RIAA still will need to prove contributory infringement on the part of Grande, which might not be that easy since it will have to show that Grande actively induced people to infringe (as per the Supreme Court's standard in the Grokster case).

Either way, the RIAA is not waiting around and has moved on to an even bigger target: It is now suing Charter Communications on the same basic theory concerning 512(i). The record labels make some fairly bold claims about Charter in the case:

Charter is one of the largest Internet service providers (“ISPs”) in the country. It markets and sells high-speed Internet services to consumers nationwide. Through the provision of those services, Charter has knowingly contributed to, and reaped substantial profits from, massive copyright infringement committed by thousands of its subscribers, causing great harm to Plaintiffs, their recording artists and songwriters, and others whose livelihoods depend upon the lawful acquisition of music. Charter’s contribution to its subscribers’ infringement is both willful and extensive, and renders Charter equally liable. Indeed, for years, Charter deliberately refused to take reasonable measures to curb customers from using its Internet services to infringe on others’ copyrights, including Plaintiffs’ copyrights—even after Charter became aware of particular customers engaging in specific, repeated acts of infringement. Plaintiffs’ representatives (as well as others) sent hundreds of thousands of statutory infringement notices to Charter, under penalty of perjury. Those notices advised Charter of its subscribers’ blatant and systematic use of Charter’s Internet service to illegally download, copy, and distribute Plaintiffs’ copyrighted music through BitTorrent and other online file-sharing services. Rather than working with Plaintiffs to curb this massive infringement, Charter did nothing, choosing to prioritize its own profits over its legal obligations.

You may notice a key problem here -- as we've pointed out in other cases. The RIAA seems to think that mere accusations of infringement are proof of infringement, and thus should lead to people being disconnected from the internet. The RIAA also makes a real stretch of the requirement under the law for a "direct financial benefit" by claiming the following:

Charter has derived an obvious and direct financial benefit from its customers’ infringement. The unlimited ability to download and distribute Plaintiffs’ works through Charter’s service has served as a draw for Charter to attract, retain, and charge higher fees to subscribers. By failing to terminate the accounts of specific recidivist infringers known to Charter, Charter obtained a direct financial benefit from its subscribers’ continuing infringing activity.

But that's not how the "direct financial benefit" aspect works. The point of "financial benefit" in the DMCA is meant to apply to those services that get a financial benefit from the infringement itself and not just the general providing of services. Otherwise, that term is meaningless within the law -- which is exactly how the RIAA would like it to be.

Incredibly, the key bit of "evidence" that the RIAA puts forth to prove that Charter's behavior is so bad... is (and I kid you not), the fact that it advertises high speed internet. Really. In explaining why Colorado is the proper venue for the lawsuit, it focuses on the fact that Charter advertises high speed broadband there, and suggests that the only possible reason why anyone could want high speed internet access is infringement.

Moreover, Charter has engaged in substantial activities purposefully directed at Colorado from which Plaintiffs’ claims arise, including providing Internet service to Colorado subscribers who used Charter’s network to directly and repeatedly infringe Plaintiffs’ copyrights; continuing to provide Internet service to, and failing to suspend or terminate the accounts of, Colorado customers, even after receiving multiple notices of their infringing activity; advertising its high-speed Internet services in Colorado to serve as a draw for subscribers who sought faster download speeds to facilitate their direct and repeated infringements...

This ignores that there are tons of other reasons why people want high speed broadband including, you know, to access licensed services for content such as Netflix and Spotify. But, hey, the complaint chooses to ignore all that and insist it must be because of infringement.

Who knows how this particular lawsuit will go. As with Cox and Grande, much may depend on Charter's internal policies and processes. However, so much of the complaint is utter bullshit. It again shows how the RIAA thinks the only reason people want to go online is to consume its content.

Of course, there's a larger issue that may come up eventually. In 2017 in the Packingham case, the Supreme Court rejected a law that would kick people off the internet, saying being completely barred from the internet is unconstitutional. If the RIAA succeeds in forcing ISPs to kick people off the internet -- without any judicial due process -- then the Supreme Court may need to step in and point out that 512(i) itself is similarly unconstitutional. The RIAA's greedy, unrealistic interpretation of the law could eventually backfire badly.

Filed Under: copyright, dmca, dmca 512, internet access, isps, repeat infringer policies
Companies: charter communications, riaa

Charter Spectrum Keeps Mindlessly Jacking Up Its Bullshit Fees

from the false-and-deceptive dept

When Charter Communications (Spectrum) proposed merging with Time Warner Cable and Bright House Networks in 2016, the company repeatedly promised that the amazing "synergies" would lower rates, increase competition, boost employment, and improve the company's services. Of course like countless telecom megamergers before it, little if any of those promises actually materialized.

Instead, the company quickly set about raising prices to manage the huge debt load. And its service has been so aggressively terrible that the company recently almost got kicked out of New York State, something I've never seen in 20 years of covering telecom. All the while, the company continues to not only jack up its standard pricing, but the sneaky fees it uses to advertise one rate, then charge users something else when the bill actually comes due.

We've noted for some time how cable providers over the last few years have added a "broadcast TV" fee to customer bills. Such a fee, which simply takes a part of the cost of programming and buries it below the line, lets cable providers advertise one rate, then hit customers with a higher bill. It's false advertising, but you'd be hard pressed to find a regulator anywhere in North America that gives much of a damn about the practice, be it in telecom, cable TV, the airline sector, or anywhere else. Culturally, American "leadership" appears to view such fees as the pinnacle of capitalistic creativity.

So it just keeps on going. The Los Angeles Times notes that Spectrum is informing its already angry customers that they'll soon be facing yet another $2 monthly hike in the company's broadcast TV fee, on the heels of another hike just last fall. The fall hike bumped the fee 12% to an additional $8.85 per month. This latest hike bumps it another $2 (20%) to $12 per month. And again, this is just for the cost of programming, something you're supposed to have already paid for in your base, above the line bill.

All told, the company nets quite a significant profit from this tap dance, notes the Times David Lazarus:

"That 20% fee increase means big bucks for Charter. The company reported Thursday that it had just over 16 million residential pay-TV subscribers as of the fourth quarter of last year.

Hitting up each of them for an extra $2.04 a month means Charter, the country’s second-largest cable company, will be raking in an additional $391 million in annual revenue, on top of the tens of billions of dollars it already earns."

Keep in mind, this is a company facing unprecedented competition by cheaper, more flexible streaming alternatives. In a functioning, healthy market, you'd either have competition or moderate regulatory oversight applying some pressure to protect consumers. But telecom, cable, and broadband is far from healthy. It's a coagulation of natural broadband monopolies that also sell video, but have such entrenched power over state and federal lawmakers (aka regulatory capture), efforts to actually protect consumers from this nonsense wind up being few and far between in most states.

Until we see somebody in a position of regulatory authority actually crack down on this obvious practice of false advertising, it's pretty clear American leadership's breathless dedication to things like transparency and consumer protection are just empty lip service. Whether we're talking about hotel resort fees or the laundry list of annoying airline fees, we've culturally embraced the idea that false advertising and nickel-and-diming captive customers is not only ignored but actively encouraged. Somebody wake me up when that changes.

Filed Under: broadband, broadcast tv fees, competition, fees, price hikes, tv fee
Companies: charter communications, spectrum

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.

Filed Under: broadband, competition, false advertising, new york
Companies: charter communications, spectrum

Charter Spectrum Jacks Up Rates (Again) Thanks To Merger 'Synergies'

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

When Charter Communications (Spectrum) proposed merging with Time Warner Cable and Bright House Networks in 2016, the company repeatedly promised that the amazing "synergies" would lower rates, increase competition, boost employment, and improve the company's services. Of course like countless telecom megamergers before it, that never actually happened. Instead, the company quickly set about raising rates to manage the huge debt load. And its service has been so aggressively terrible, the company recently almost got kicked out of New York State, something I've never seen in 20 years of covering telecom.

Cities like Lexington, Kentucky continue to explore their legal options in efforts to hold Charter accountable (something it's clear the Trump FCC won't do). Charter, meanwhile, has informed many of these users that they'll be seeing yet another rate hike in November across the company's entire, 41-state territory. All told, users will pay at least $100 more for the same service annually, thanks in part to increases in several of the sneaky fees Charter routinely tacks on to user bills to jack up the advertised price post sale:

"Broadcast TV surcharge will increase from $8.85 to $9.95/month, Charter said, "This reflects costs incurred from local broadcast TV stations."

• Spectrum receivers will increase from $6.99 to $7.50/month.

• An increase from $54.99 to $59.99/month for Spectrum Internet for current customers who subscribe to Spectrum TV.

• An increase from $64.99 to $65.99/month for Spectrum Internet for current customers who do not subscribe to Spectrum TV."

Modest hikes, but they add up. It's worth noting that that "Broadcast TV fee" is simply a part of the cost Charter pays for programming, broken out of the bill, and tacked on below the line to help covertly jack up the advertised rate post sale. It's something most cable operators have been routinely sued for, and regulators enjoy turning a blind eye to (despite largely being false advertising). The company, for its part, continues to insist that these price hikes simply reflect the wonderful service users are now getting from the nation's second biggest cable provider:

"The price of Spectrum Internet reflects the dramatically faster speeds and investments we’ve made in reliability and quality," Michel said. "Earlier this year, we doubled the starting download speed of Spectrum Internet from 100 to 200 megabits per second. Lastly, our receivers are still comparable or lower in price than our major competitors'."

Charter omits that many of these speed hikes only came about thanks to merger conditions, or that its speed increases lagged dramatically behind contemporaries like Comcast as it focused primarily on its last megamerger. Of course higher prices, poor service, and some of the worst ranked customer support of any company in America (no easy feet given the airline and banking industries expertise) are the net result of both the blind deregulation of natural monopolies and our adoration of blindly buying into megamerger promises, a reality that our tech policy never quite seems capable of keying in on.

This is, unfortunately for you, a problem that's only going to get worse before it gets better thanks to a lack of competition in broadband and a refusal to embrace policies that actually encourage said competition. Instead, the telecom industry (with the Trump FCC's help) has been waging a not subtle war on both federal and state consumer protections, while at the same time quietly securing a significant monopoly over faster broadband speeds. You'd think the end result of this would be obvious, but given our refusal to address this reality, you'd apparently be mistaken.

Filed Under: fees, mergers, rates, synergies
Companies: charter, charter communications

DOJ Sues DirecTV, Calling It A 'Ringleader' of Collusion Over Regional Sports Programming

from the room-full-of-villains dept

Back in 2013, Time Warner Cable (now Charter Communications) struck an $8.35 billion deal with the LA Dodgers to create LA SportsNet, the exclusive home of LA Dodgers games. To recoup that money, Time Warner Cable began demanding exorbitant prices from competing cable providers if they wanted access to the channel. Unsurprisingly, all of Time Warner Cable's competitors in the region balked at the $5 per subscriber asking price for the channel. As a result, for three years now a massive portion of Los Angeles hasn't been able to watch their favorite baseball team, since Time Warner Cable's asking price not only kept competing cable operators from delivering the channel, but prohibited over-the-air broadcasts of the games.

Fast forward to this week, when the Department of Justice announced it was suing DirecTV for being the "ringleader" in a collusion effort involving the channel. According to the full DOJ complaint (pdf), DirecTV (now owned by AT&T), worked covertly in concert with local competitors Cox, Charter (before it owned Time Warner Cable) and AT&T (before it owned DirecTV) to coordinate a refusal to pay Time Warner Cable's high prices. The DOJ's statement notes that these companies engaged in "unlawful information exchanges" to coordinate this refusal in violation of antitrust law:

"As the complaint explains, Dodgers fans were denied a fair competitive process when DIRECTV orchestrated a series of information exchanges with direct competitors that ultimately made consumers less likely to be able to watch their hometown team,” said Deputy Assistant Attorney General Jonathan Sallet of the Justice Department’s Antitrust Division. “Competition, not collusion, best serves consumers and that is especially true when, as with pay-television providers, consumers have only a handful of choices in the marketplace."

Right, except calling any of this "competition" is being rather generous. It's an interesting case in that Time Warner Cable had been broadly considered the bad guy in this equation for the last three years by Dodgers fans, 70% of which couldn't watch their favorite team despite living in Los Angeles. And even after the DOJ lawsuit was filed this week, outlets like the Los Angeles Times were perfectly willing to ignore the illegal behavior, claiming that collusion was ok because it punished Time Warner Cable's cash grab to the indirect benefit (sort of) of consumers:

"At a time when there’s open rebellion against soaring pay-TV prices, these companies were clearly acting out of self-interest. The last thing they wanted was to give people another reason to cut the cord. Whatever their primary motive, though, they also were defending their customers’ interests. That’s rare and welcome behavior from an industry that all too often regards consumers as ATMs from which it can make frequent withdrawals."

And while some of that may be true, collusion is still collusion, and the fact that Dodgers fans still can't watch their favorite team can hardly be seen as a win. For whatever it's worth, AT&T, currently trying to sell its $85 billion acquisition of Time Warner (not to be confused with Time Warner Cable) to regulators, was quick to remind everybody that it didn't own DirecTV at the time this occurred:

"The reason why no other major TV provider chose to carry this content was that no one wanted to force all of their customers to pay the inflated prices that Time Warner Cable was demanding for a channel devoted solely to LA Dodgers baseball. We make our carriage decisions independently, legally and only after thorough negotiations with the content owner. We look forward to presenting these facts in court."

It's an amazing case where in reality everybody is the bad guy, and despite companies colluding and covertly exchanging sensitive data, nobody really wound up benefiting. Well, except perhaps those that were able to cut the cord because they don't watch baseball.

Filed Under: baseball, collusion, doj, prices, tv
Companies: at&t, charter communications, directv, la dodgers, time warner cable