Charter Communications Will Pay $174M for Defrauding Subscribers

New York State and Charter Communication have announced a settlement to their fraud case that will see the ISP pay $174M for various fraudulent, misleading, and consumer-hostile actions it took against its users. The new agreement appears to allow Charter to continue operating in New York State after the dispute between the state and company led NY to pull Charter’s, well, charter to operate in the state.

New York’s argument is simple. Charter (also doing business as TWC and Spectrum) “denied customers the reliable and fast internet service it had promised.” The $174M total of the settlement is made up of several components. $62.5M of it is earmarked for direct refunds to customers, who will receive $75 – $150. Streaming services and premium channels will also be provided to approximately 2.2M subscribers, at an estimated value of $100M (there will be no charge for this service expansion). As someone whose current apartment required him to buy Spectrum service with no option of an alternative provider, I’m personally curious to see what kind of impact, if any, this arrangement will have on my own ISP service.

A key part of the settlement relates to the provision of modems that couldn’t provide the speeds Charter customers were paying for.

That includes leasing deficient modems and wireless routers to subscribers – equipment that did not deliver the internet speeds they had paid for; aggressively marketing, and charging more for, headline download speeds of 100, 200, and 300 Mbps while failing to maintain enough network capacity to reliably deliver those speeds to subscribers; guaranteeing that subscribers would enjoy seamless access to their chosen internet content while engaging in hardball tactics with Netflix and other popular third-party content providers that, at various times, ensured that subscribers would suffer through frozen screens, extended buffering, and reduced picture quality; and representing internet speeds as equally available, whether connecting over a wired or WiFi connection – even though, in real-world use, internet speeds are routinely slower via WiFi connection.

The AG’s office won repeated court cases against Charter, ultimately leading to today’s settlement. Charter will pay $75 to anyone with an inadequate modem and an additional $75 to anyone who leased an inadequate modem for 24 months or more, to be paid within 120 days. It will offer either three months of HBO or six months of Showtime to 2.2M subscribers who do not currently receive those services. All other subscribers will receive a free month of Charter Spectrum TV Choice streaming service and a free month of Showtime.

The terms of the agreement also require Charter to make various changes to its marketing, to test and substantiate its internet speeds more rigorously, and is prohibited from making unsubstantiated advertising claims about its service. It must also provide replacement equipment capable of reaching advertised speeds and is prohibited from initiating future service contracts without ensuring that customers will receive modems capable of handling the traffic speeds customers are paying for.

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