ALBANY — The state Public Service Commission on Friday revoked approval of Charter Communications’ merger with Time Warner Cable and gave it 60 days to submit a plan to transfer operations to another company.
As conditions of the 2016 merger, the PSC ordered that Charter expand service to unserved areas of the state and increase the broadband internet speed it offers customers. The PSC has been critical of Charter’s progress meeting these conditions, levying millions of dollars in penalties and firing off increasingly hostile statements about the communications giant.
PSC Chairman John Rhodes on Friday said Charter’s “brazenly disrespectful behavior” toward the state’s citizens and regulators led to the decision.
Charter — which has more than 2 million customers and 11,000 employees in New York, where it operates under the trade name Spectrum — will almost certainly fight the revocation, though it would not confirm this Friday. It offered only a short statement defending its record:
“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.”
The election reference is likely to Gov. Andrew Cuomo, who has set an ambitious goal of giving every New Yorker access to high-speed internet service by Dec. 31, 2018, eight weeks after voters go to the polls to vote on whether he gets a third term.
To accomplish this, the state and its partners in private industry are pumping $500 million into an initiative called Broadband For All that is now in its final phase.
Charter has declined to be one of these partners.
But the service expansion Charter was required to perform is being counted toward the goal Broadband For All. So if Charter does not fulfill its requirements, the state won’t be able to accurately say every New Yorker has access to high-speed internet service.
The terms of the merger approval in January 2016 called for Charter to:
- Deliver broadband speed upgrades to 100 Mbps statewide by the end of 2018.
- Deliver broadband speed upgrades to 300 Mbps statewide by the end of 2019.
- Build out its network to reach 145,000 un-served or under-served homes and businesses within four years of the closing of the merger in four equal phases of 36,250 per year.
Little more than a year after the merger, cracks began to appear.
PSC went after Charter when Charter, by its own admission, fell behind in the first year of the buildout. In September 2017, PSC and Charter reached a settlement worth up to $13 million that revised the buildout schedule and imposed a $1 million penalty (drawn from the $13 million settlement) for each target Charter missed.
Charter says it has met its targets.
PSC says Charter not only missed but falsely claimed progress it did not make. PSC staffers took the remarkable step of physically visiting 6,389 addresses in upstate New York to determine what Charter had done, and recommended that Charter be denied credit for 1,762 of them.
Further, PSC charged in its order Friday that some of the work Charter has done is unsafe, has caused damage to surrounding equipment, or does not comply with electrical codes. It notes that National Grid, the largest owner of utility poles in Charter’s service area, obtained a stop-work order after a Charter contractor was electrocuted earlier this month. This has effectively halted Charter’s broadband rollout over a wide area.
“As indicated, the gap between required buildout and completed passings is growing, not shrinking, and Charter seems more focused on controlling its public relations perception than its public interest obligations,” the PSC order reads. “The company has had multiple opportunities to correct these issues and either has not done so or has been openly brazen in its efforts to avoid them.”
The PSC on Friday ordered Charter to submit a plan for transitioning to a new service provider within 60 days, and to maintain customer service until the transition to that new provider is complete. It also said it would be seeking additional financial penalties against Charter.
Charter Communications is the largest broadband communications company and second-largest cable operator in the nation. It has more than 26 million customers in 41 states and its services are accessible to nearly 50 million addresses nationwide. It has 92,000 employees and its stock has a total value of $68.1 billion.
Members of the state Public Service Commission are appointed by the governor and confirmed by the Senate; the chairman or chairwoman of the commission is designated by the governor.
Its rulings do not affect the operations in other states of companies such as Charter.