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New York: Goodbye, Spectrum

State rescinds Charter, Time Warner merger

August 3, 2018
By PERRY WHITE and MARCUS WOLF, Watertown Daily Times, and MICHAEL HILL, Associated Press , Lake Placid News

The state Public Service Commission has rescinded its approval of the 2016 merger of Time Warner Cable and Charter Communications and ordered Charter to stop doing business in the state under the name Spectrum.

The PSC ordered the company to find another cable provider for its more than 2 million customers in the state. It must file a plan within 60 days to ensure an "orderly transition to a successor" provider or providers for New York customers. Charter also must ensure that cable and internet customers' service is not interrupted during the transition.

Charter serves 41 states and is New York's largest cable provider. It provides service in Buffalo, Rochester, Syracuse, Albany, Manhattan, Staten Island, Queens and parts of Brooklyn. The cable company completed its $67 billion purchase of Time Warner Cable and Bright House Networks in May 2016.

"Charter's repeated failures to serve New Yorkers and honor its commitments are well documented and are only getting worse. ... [T]he time has come for stronger actions to protect New Yorkers and the public interest," commission Chairman John B. Rhodes said in a prepared statement.

The decision was based on nearly two years of noncompliance by Spectrum on ordered contingencies in the merger approval. Specifically, Spectrum failed the commission's order that it build new service lines to pass 145,000 residences and businesses in poorly served communities within the former Time Warner Cable franchise area.

A Spectrum spokesman responded to the order.

"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," Andrew Russell, director of communications for the company's Northeast branch, said in an email. "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 company would not immediately say whether it planned to challenge the commission's decision.

According to Friday's ruling, Spectrum was to provide these new lines over four years, with service lines past 36,250 potential clients each year. By the end of the first year, Spectrum reported it had added only 15,164 potential customers in the low-service areas required by the PSC.

In June of last year, Spectrum and the PSC reached an agreement which modified buildout requirements to stretch through 2020, with more done each year to compensate for the slow start. The settlement required a $1 million escrow account to be used in case of default, and the filing of a letter of credit for $12 million to secure Spectrum's obligation.

The new schedule called for work to be completed in six-month increments, with semi-yearly reports on progress provided to the PSC. Failure to meet those obligations would cost Spectrum $1 million for each benchmark unmet.

On Jan. 8, Charter filed its first report on the company's buildout progress. It stated that it had passed 42,889 premises by Dec. 16.

Commission staff, in reviewing the report, found addresses listed in areas that did not meet the criteria established by PSC. Of the nearly 43,000 premises listed, 18,522 were in areas that were not eligible for inclusion in the contingency agreement, including 12,467 in the metro New York region.

The failure required a $1 million forfeiture, PSC determined, and brought an appeal from Spectrum.

After its reply and further PSC deliberations, the commission determined that Charter Communications acting as Spectrum could not comply with the contingencies imposed in the 2016 conditional approval of the Charter-Time Warner merger, and the approval was rescinded and Charter banned from doing business in the state.



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