NY sues Charter/Time Warner Cable, alleges false promise of fast Internet

Charter-owned cable provider defrauded and misled customers, AG's complaint says.

New York Attorney General Eric Schneiderman today filed a lawsuit against Charter and its Time Warner Cable (TWC) subsidiary, claiming that the Internet provider "allegedly conduct[ed] a deliberate scheme to defraud and mislead New Yorkers by promising Internet service that they knew they could not deliver."

State officials said they conducted a 16-month investigation that reviewed internal corporate communications "and hundreds of thousands of subscriber speed tests," concluding that Spectrum-TWC customers were "dramatically short-changed on both speed and reliability," the attorney general's announcement said. The 87-page summons and complaint filed in the New York State Supreme Court is available here.

"The suit alleges that subscribers’ wired Internet speeds for the premium plan (100, 200, and 300 Mbps) were up to 70 percent slower than promised; Wi-Fi speeds were even slower, with some subscribers getting speeds that were more than 80 percent slower than what they had paid for," the announcement said. "As alleged in the complaint, Spectrum-TWC charged New Yorkers as much as $109.99 per month for premium plans [that] could not achieve speeds promised in their slower plans."

Charter became the country's second largest cable company last year when it purchased Time Warner Cable and Bright House Networks, and it has 2.5 million customers in New York state. A Charter spokesperson gave Ars a statement, saying the company is disappointed that Schneiderman filed the lawsuit and that it concerns events that occurred before the merger.

"Charter made significant commitments to NY State as part of our merger with Time Warner Cable in areas of network investment, broadband deployment and offerings, customer service and jobs," the company said. "In addition, Charter was among the highest rated broadband providers in the 2016 FCC Broadband Report. Charter has already made substantial investments in the interest of upgrading the Time Warner Cable systems and delivering the best possible experience to customers. We will continue to invest in our business and deliver the highest quality services to our customers while we defend against these allegations involving Time Warner Cable practices."

Contrary to Charter's statement, Schneiderman says that the bad behavior didn't stop after the Charter/TWC merger. "Spectrum-TWC continues to underserve their subscribers by failing to make the capital investments necessary to live up to their promised speeds," the announcement said. "These investments would include substantially upgrading Spectrum-TWC’s network capability and replacing large numbers of deficient modems and wireless routers that subscribers currently pay Spectrum-TWC up to $10 per month to rent."

The lawsuit says the "relevant period" extends from January 1, 2012 to the present. The suit asks for a judgment directing Charter to pay civil fines of $5,000 for each violation and provide refunds to customers by "disgorg[ing] all monies resulting from the fraudulent and illegal practices."

Slow modems, slow Wi-Fi routers

The complaint alleges that TWC leased deficient cable modems that couldn't deliver promised speeds to more than 900,000 subscribers. These were allegedly "older-generation, single-channel D1 and D2 modems that it knew were incapable of delivering the promised Internet speeds." Federal Communications Commission tests showed that the modems couldn't even reliably hit 20Mbps, even though they were rented to subscribers who were promised speeds of 20Mbps and higher, the complaint said.

"To conceal this failure, Spectrum-TWC assured the FCC in or about July 2013, that it would replace its older-generation modems for all of its subscribers, but in fact it did not," the complaint said. "The FCC relied on that commitment to exclude the poor results of the speed tests on those modems in the FCC’s subsequent public reports. Had these modems’ results been included in the FCC’s testing program, they would have revealed Spectrum-TWC’s deceptive practices."

In October 2012, TWC started charging a monthly modem lease fee that is now $10 per month. (Charter doesn't charge a separate modem fee and is in the process of rolling out its pricing across the acquired TWC territory.)

The complaint also says that Spectrum-TWC leased old wireless routers to more than 250,000 subscribers who had paid for speeds of at least 200Mbps, even though the routers were incapable of delivering wireless speeds greater than 100Mbps. "Despite fielding countless calls from subscribers about slow wireless speeds, Spectrum-TWC took no steps to replace these older-generation routers with the appropriate routers, and, instead, continued to charge subscribers to whom it provided older-generation routers for plans that promised Internet speeds of 100Mbps and higher," the complaint said.

Slow network

Even customers who had current-generation equipment in their homes allegedly didn't get the speeds they paid for. "This was because Spectrum-TWC managed its cable network in a way that did not deliver the promised Internet speeds over any type of connection," the complaint said. "It cut corners by packing too many subscribers in the same service group, which resulted in slower speeds for subscribers, especially during peak hours. It also failed to add more channels for each service group, which similarly resulted in slower speeds for subscribers."

Netflix figures into the complaint as well. New York alleges that TWC misled subscribers by falsely promising reliable access to Netflix in advertisements that ran between 2012 and 2014, even though TWC at that time "was engaged in a long-running dispute with Netflix that had a measurable negative impact on the quality of subscribers’ Netflix video streams." That dispute ended around August 2014 when Netflix agreed to pay Time Warner Cable for a direct network connection.

Despite slow speeds, TWC also promised customers that they could "Watch YouTube video[s] without waiting," the complaint said.

NY Senior Enforcement Counsel Tim Wu kicked off an investigation of Verizon, TWC, and Cablevision speeds in October 2015 and invited customers to run speed tests. In June 2016, Wu announced that TWC's results were "abysmal" and sent a letter to Charter demanding improvement.