Charter Appeals Court Loss Over False Performance Claims

Charter Appeals Court Loss Over False Performance Claims

Charter has appealed a recent loss in the New York Supreme Court. That ruling established that Charter could face a lawsuit from the state of New York. The original lawsuit was filed by Eric Schneiderman against Charter and its Time Warner Cable subsidiary, Spectrum, and alleged that Charter had been advertising internet speeds it could not deliver.

The original lawsuit alleged that Charter had been running a racket against its own customers for years. We’re all familiar with the “up to” speeds that ISPs typically list, and there’s similar general consumer understanding that performance can and will vary over time. What set Charter’s case apart is that it sold customers plans that functionally require DOCSIS 3.0 modems, yet shipped hardware that only supported DOCSIS 1.0 or 2.0. There’s a difference, legally, between telling people “You may see speeds up to X” and selling them hardware that literally can’t deliver anything like the promised performance. Charging customers a rental fee for the privilege of hardware that can’t provide the speeds the company claims it can offer was just the icing on this particular cake.

The more performance you paid for, the less of that performance you got (in percentage terms)
The more performance you paid for, the less of that performance you got (in percentage terms)

Charter’s current defense boils down to this: The FCC defines broadband and the FCC’s Measuring Broadband America (MBA) report lists Charter as one of the better ISP’s. Because Charter depended solely on FCC-mandated tests to determine whether it met legal requirements for performance, Charter cannot be held liable for its poor performance. It’s also apparently argued the demise of net neutrality means it cannot be held liable for failure to provide the service it promised.

What Charter is attempting to argue is that because the FCC sets given broadband standards, it (Charter) can only be measured or evaluated against those standards. But this is a misread of the FCC’s own policy, which explicitly does not preempt state law when it comes to evaluations of fraud or consumer protections.

But Charter doesn’t appear to have a leg to stand on here. It sold some 640,000 New York State subscribers plans that promised performance their modems literally couldn’t access. The original lawsuit notes that it took other actions to limit customer performance as well. To quote:

Spectrum-TWC managed its cable network in a way that did not deliver the promised Internet speeds over any type of connection. 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.

Fraud is still fraud, whether net neutrality is dead for good or not. And in this case, the evidence all points in the same direction. Charter / TWC / Spectrum allegedly defrauded its customers in New York State, and it’s almost certainly going to face a lawsuit over those allegations. You can read Charter’s appeal here; hat-tip to Ars Technica for spotting it.

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