Yves here. It is good fun to see a regulator beat up on an Internet miscreant, but when will Verizon be taken to the woodshed?
By Michael Kern, a newswriter and editor at Safehaven.com, Oilprice.com, and a writer at Crypto Insider. Originally published at SafeHaven
The State of New York is moving to evict its largest internet and cable provider for failing to deliver on fast connection promises that had won it approval two years ago for a merger with Time Warner Cable.
The deal was that rural areas would get high-speed internet access as a result of the merger, but the company—Spectrum (of Charter Communications)—didn’t make it happen on time.
New York is livid, and not only is it revoking Spectrum’s contract, but it’s also revoking its approval of the merger and seeking $3 million in penalties.
In the meantime, in order to cover the gap in internet services for customers, the state is requiring Spectrum to continue to operate for two months while the state seeks a replacement company.
Spectrum ended up getting its broadband network to around 86,000 homes and businesses in New York, but the deal was 145,000 additional addresses.
And while the State of New York is lashing out at Spectrum’s non-compliance with the deal, it’s also playing hardball over what it has called the company’s “brazenly disrespectful behavior toward New York State and its customers”.
That combination, said Public Service Commission chair John B. Rhodes, “necessitates the actions taken today seeking court-ordered penalties for its failures, and revoking the Charter merger approval”.
But things are about to get trickier. The state is demanding that Spectrum handle the transition itself and figure out a smooth way to hand over its operations to another provider by selling its assets, according to Fortune.
Spectrum, in the meantime, seems to think this is a Trump-style negotiation: Grave threats designed to light a fire under its high-speed commitment. The company has also suggested the move was “politically motivated”, though no clear logic was presented for this argument.
The latest moves follow the Public Service Commission’s $2-million fine for Spectrum in June, citing failure to meet expansion goals. That fine was sparked by what local officials say was false reporting by Spectrum when the company illegitimately added 12,000 NYC addresses to its expansion list.
Now that fine is up to $3 million as of Friday, when upped the ante for missed deadlines.
While claiming that the whole thing is “politically motivated”, Spectrum/Charter is also blaming giant rival Verizon, saying that the company is limiting its access to telephone poles.
“In the face of Verizon’s intransigence, Charter has been unable to satisfy the milestones in the Buildout Condition,” Charter said. Essentially, Spectrum/Charter is claiming that Verizon is illegally blocking its use of telephone poles and hindering Charter’s ability to attach wires to poles owned or co-owned by Verizon.
Charter is the second-largest cable company in the U.S. after Comcast, but its own customers rank it poorly.
More than anything, the state’s battle with this giant internet and cable provider is a sign of the times: There’s a serious slack of competition in this field, and customers who have been paying the price now seem to have the support of their state governments.
The message is this: deliver or pay the price, and if you don’t there are increasing cord-cutting options out here.
According to Fortune, the first quarter of this year saw a new cord-cutting record, with over 780,000 customers ditching their cable subscriptions. America now has more than 20 million households without cable, as streaming services become more attractive.
Be careful what you wish fo. When you get it you may not like it. Compared to TWC, my experience is that Spectrum is way better is all aspects. My experiences with Spectrum are all positive. I can’t say that for TWC. What the state really needs to do is to do something about people being forced to purchase products they don’t want or use. Force providers to actually offer the customer to be able to choose exactly what they want to buy. With todays technology this is possible. a would be happy with a max of 10 channels.
I have to disagree. Charter is awful. Broadband is slow and they charge all sorts of fees on top of the regular monthly internet fee, which also went up on Charter’s takeover. I never really noticed TWC because it always worked and the fees weren’t designed to gouge the customer. Anyway, I’m in Manhattan so maybe it was better here than in other parts of NY. But I can’t imagine Charter is better anywhere.
Well, I switched to Charter after years of Verizon DSL — 6mpbs, when it’s working, and 10 days to fix a landline fault — and am now getting near 200 mbps for not much more money. There’s been one outage of 2-3 hours in 12 months of use, and the repair (which I was able to cancel) was scheduled for the next day. There have been no surprise charges (maybe it’s different TV service, I don’t know).
It could have been a lot worse, and it could get a lot worse now — like Verizon, for example. Until there’s real competition, of which there’s no sign in Manhattan, a change of ownership is no joyful prospect.
The Spectrum installation process took a ton of time due to the service guy not being competent. I got it a week later than I should have and had a ridiculously long installation on the failed attempts. I’ve also had way more downtime than I did long ago when I had TWC or Verizon, 2x a month for 2+ hour, always starting around 11:30 PM. Vastly worse than my old copper DSL. It may be faster but for what I do, I don’t need very fast speed, I need reliability.
Frank, what you and millions of others are experiencing is the direct result of mega corporations taking over and squeezing the smaller companies out of business. “Bigger” is NOT better. This is all very predictable. No competition means a “we don’t care, we don’t have to” attitude in dealing with the public. When you own the band, everybody dances to your music. Gone are the days of competitive companies offering better service to attract customers. Now it’s more like here it is, take it or leave it !!
I miss the days when you could choose from 30 different dialup providers over the same copper phone line. The providers all competed on service and amenities and you could switch whenever you wanted. The same model is used for broadband in plenty of other countries, but not in good old Third World USA. Nope, we need huge entrenched monopolists in the Land of the Free Market.
A lot of their problems stem from an ongoing strike in which they refuse to deal fairly with their technicians. The ones who actually know what their doing have been on strike for over a year and Spectrum has been using replacements with little experience.
That explains my set up hassle. The guy didn’t know what he was doing.
Comcast rates lower than Charter nationwide, but Charter is lower than Comcast in New York State.
Even with them becoming Spectrum, TWC is still TWC.
A question: How much did 911 effect TWC.
I know a number of New Yorkers who were fine with OTA TV until 911, which took down a lot of transmitters, and then they scrambled for Cable.
My experience was absolutely the opposite of yours. TWC was occasionally spotty, but they were always quick with repairs whenever service did go out.
After the change to Spectrum, I would lose internet connectivity — about once every 2 minutes. Their customer service was disgraceful, and even when I cancelled my service, their customer service center was a nightmare.
I’m quite happy about this development. NYS should never have approved the buyout in the first place.
I’m in one of the outer boroughs of NYC. IMHO, TWC was minimally viable. They had Internet outages once every couple of months, and they often literally took days to fix. When Verizon FIOS finally came to the neighborhood, almost everyone switched. (Verizon subsequently stopped its aggressive capital build-out of service, seemingly in tandem with the rise of over the top services/beginning of decline of cable, and realization that the capital outlays would no longer have the expected ROI, so pretty much whatever areas have FIOS, have it, but new areas won’t be getting it.)
Anyway, so FIOS is a fantastic service, technology wise. However, FIOS is expensive, and they won’t cut customers a break. If Spectrum disappears, as bad as it is, FIOS customers will have no ‘viable threat to quit,’ i.e., no alternative provider options, and thus I expect FIOS will get even more expensive.
Still, I’d rather bite the bullet and grudgingly pay a lot for a service that works, as opposed to TWC, when I was paying a lot for a service I couldn’t rely on.
With regards to cord cutting, while streaming services are popular, their delivery depends on a very imporant cord from Comcast/Spectrum/FiOS/TWC etc. There is still a monopoly to bring internet into your home and a lack of net neutrality and unfavorable FCC regulators make for a toxic stew that means streaming will still line the profits of cable companies.
We have dealt with cable companies in three states and it has always been the same progression: an early, low, introductory monthly fee with a contract that locks you in for a year or two. And, even though we get the next-to-basic service, the monthly bill then starts increasing … steadily … a dollar or two or three per month.
A few years ago, in Colorado, I really got angry when I realized our bill had doubled in a few years and we had no additional services. I called Comcast and announced that we wanted to scale back to the very basic Basic: internet plus cable that would provide only network and PBS. After being shunted up to Customer Retention, they gave us our current service for the cost of basic Basic. Then the bill started increasing by a dollar or two each month …..
Right now we are suffering the same bill escalation in NY state under Spectrum. I am playing my tiny violin while listening to their complaints.
(And, I don’t watch cable, preferring Netflix and books and the internet for news, but my dyslexic husband really likes to listen and watch, so ‘cutting cable’ is not an option right now).
As an alternative, you can buy a Roku (or some other similar device) to stream the news channels, but still have access to Netflix, Hulu, etc… On my Roku TV, I have RT, Al Jazeera, DW (Deutsche Welle), NHK World and France 24. The unfortunate part is that you still need the broadband access to get the streaming video.
…but when will Verizon be taken to the woodshed?
I swore that I would never willingly give another $ to VZ, so this would be great. Ajit Pai used to lawyer for them, any sort of action could get interesting.
Not knowing much about Pai, my Cynicometer kicks into the Red Zone when I learn that a regulator used to work for one of the big corporations he or she is now tasked with overseeing. He may have ‘lawyered’ for Verizon in the past, and the big Dysfunction Junction here is that he very well might end up ‘lawyering’ for them again. It is the oft mentioned “Revolving Door.”
As I mentioned in a comment the other day, the “Appearance of Impropriety” used to be the touchstone for determining the ‘legality’ or ‘illegality’ of an action by an important agent of the Instrumentality.
Zephyr Teachout, in her book on corruption, argues that much of what passes for normalcy in our regulatory sphere would have been considered corruption in the early days of the republic.
It would have been considered and been corruption, forty years ago.
+1 My experience with Spectrum has been good as far as speed, and it has been pretty reliable, except for one outage that lasted nearly two days! We have their second tier of service to get the faster speed. It started out around $45 a month and now is over $65. In Thailand we had decent internet service for $20.
The next version of LTE will provide enough bandwidth to easily use as a household wireless connection. With the right regulations, you’ll get your tv fix over T-Mobile or Consumer Cellular. Real competition coming down the pike.
Glad to hear it, Kent!
IMHO, Internet connectivity should be like radio or rabbit ears TV connectivity. As in, you don’t need a radio service provider or a TV service provider. You just turn your device on, and, boom, you’re on the Internet.
“With the right regulations” is doing a lot of work in that comment.
How’s that going to work? Giant globs of precious spectrum backhauled over fiber? The fiber is (not) being built by the incumbents who are also dominant owners of spectrum. Every iteration of the technology makes fiber buildout more essential.
The cableco’s have had a free ride for too long – Owned by families they bought media assets with their excess returns rather than upgrade network. So they now have heavy lastmile pipes but bad network configurations and little or no resources to fund their own transmission infrastructure. So they demand free access to the telecom companies’ network to reach new customers.
Distance from the CO (central office – the network connection/exchange hub) is probably the issue. If you’re close, you’re probably OK. If you’re not, it gets bad very quickly. Telecoms are likely not looking to invest in more CO infrastructure as more wireless/fiber technology expands. But kudos to NYC for doing this. Making people pay for crappy service when you have no intent of improving the infrastructure that supports it is terrible and merits the action taken.
My 2c: I managed to get ‘next day’ installation when I set up with spectrum (the only option at my crown heights apt)
They spelled my name wrong when setting up my account which made logging in online difficult until I figured that out (sign up was dumb.. did it online which basically prompted me to call someone eventually and they took all my info again)
But besides that the setup was quick, the internet speed is adequate if not fantastic
I have a tough time convincing people that “cutting the cord” does not literally mean “cutting the cord”. Without “the cord” they have no way of getting internet and streaming services, Some people tell me that they have WiFi, so they don’t need cable. I have a hard time getting them to think about where the WiFi comes from.
When I bought my house, I switched from Verizon to Charter (Spectrum). When the existing Verizon “cord” got pulled from my house in a wind storm, Verizon told me to just cut the cord. I literally took the biggest wire cutters I could find, and I cut the Verizon cord. I left the Spectrum cord connected.
I’ll be honest. I think this is going to be a very large cluster…Mind you this is after thinking about it for days. Who can take over? If Charter/Spectrum seeks to spin off the NY into say Neo Time Warner would that be allowable. If not what companies will compete. In the City that leaves Fios and for some RCN. Outside of NY, were there alternatives to Charter/Spectrum in the various areas? Much of our shortsighted for consumers but win win for providers left you with one cable/broadband choice in an area. Will Cox be allowed to buy the equipment/fiber etc? Will those who take over be held to the same buildout required of Charter?
I think we may find a whole lot of people left with no cable/broadband after the two months unless there is some renegotiated deal with Charter. And if smaller companies did try to take over, would they have the same deals with media producers as Charter/Spectrum or would they have to negotiate new deals with all the networks? These smaller companies would not have as much negotiating leverage as the larger ones, which might make content even more expensive. And that doesn’t even consider the debt repayments. If I thought that what this would lead to was a huge infrastructure broadband build out by NY State for a truly public internet service, where cable television operators rented space on the fiber network and had to compete for customers I would be thrilled. But very honestly I think that is the only way this would end up as win for public in the long run.
This should have happened two maybe even three decades ago with the government clearing all comers and forcing them to expand and rent their networks to exist at all. But since I believe that cable should have been declared a public utility, along with the internet and cell service, I’m a renegade in all this.
Municipal fiber network. My medium-sized town in Maryland is currently installing it. I naturally am at the far end of town from where they started, but it isn’t that big a town. In around six months to a year from now I will drop my marginally-adequate DSL. The network is owned by the local municipality and administered by a company that actually knows how to do that. I am counting on political pressure to keep the prices down.
The funny thing is that this exercise in Marxism is being done in a thoroughly red part of the state. These are Main Street Republicans. I disagree with them on the big issues, but they understand that streets need to be paved and plowed and they don’t think that the magic of the free market will do this. They sold the fiber network on the grounds that it will encourage businesses to come into town, and I expect they are right. But in practice they are treating broadband as a municipal utility, just like water and trash. And you know what? In fifteen years here I have never once had the slightest problem with the city water and trash. I am cautiously optimistic of similar efficiency with broadband. And I will never ever again pay Verizon or Comcast or any others of that hive of scum and villainy.
Politics as usual for Andrew Cuomunculus?