New York To Charter: Expand Your Network Or We'll Reverse The Time Warner Merger

The New York State Public Service Commission is doing something that just about every consumer wishes they could do to their internet service provider: telling them to actually provide the service promised or get bent. The agency ordered Charter to pay a multi-million dollar fine and complete required expansion of its network or face having its merger with Time Warner Cable reversed in the state.

In an announcement published Thursday and highlighted by Ars Technica, the state commission accused the telecommunications giant of failing to meet the conditions put forth when it acquired competitor Time Warner Cable back in 2016. Any attempt to wipe out the merger made by the state would likely be challenged in court by Charter, but the state appears to be pulling out the big guns by making the threat.

Here's the main point of contention between the commission and Charter: back when the company gobbled up TWC, it was told that it would have to expand its network to reach 145,000 homes and businesses in New York that were otherwise unserved or underserved by ISPs. Charter was given four years to complete the expansion and, after running into delays in the process, reached a settlement with New York State Public Service Commission to expand to 37,000 homes by the end of 2017 with six-month milestones in place beyond that.

Charter claims that it successfully cleared that bar agreed to in the settlement, but the commission says otherwise. In reviewing Charter's supposed expansion, the commission rejected 18,363 addresses that were supposedly newly covered by the Charter network. The commission stated those addresses already had access to a highspeed internet provider or Charter already planned to cover them pursuant to unrelated agreements and regulations.

Here's Commission Chair John B. Rhodes on the issue:

As a condition of our approval of Charter's merger two years ago, we required Charter to make significant investments in its network. Our investigation shows that Charter failed to meet its obligations to expand the reach of its network to unserved and underserved customers at the required pace and that it failed to justify why it wasn't able to meet its obligations.

Furthermore, since the company has taken the unfortunate position of refusing to adhere to all conditions set forth in our initial decision two years ago, we now demand the company unconditionally accept all of the conditions as the Commission unambiguously required in 2016, or run the risk of more severe consequences.

Those consequences include $US2 ($3) million in fines — $US1 ($1) million missing the target initially set forth by the commission, and another $US1 ($1) million for failing to make up for the missed goal within three months of the original deadline. But the big threat being tossed out there by New York is the possibility of rescinding the merger within state lines. Such a move wouldn't change the structure of the Charter-Time Warner agreement elsewhere in the US, but would be disruptive to the company's business in a major market.

Charter, for its part, seems completely perplexed by the Commission's position and denied that it failed to reach the agreed upon goals. A spokesperson for the company told Gizmodo the following:

Spectrum has expanded its network infrastructure to bring broadband to tens of thousands of residences and businesses in New York State; we exceeded our last commitment and we continue to meet our merger obligations.

The spokesperson also said the company is evaluating its options as to how to respond to the commission's threat. Charter has 21 days to submit a revised buildout plan for its network that meets the commission's requirements.

[Ars Technica]

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