ALBANY — Charter/Spectrum will shell out $174.2 million in a record financial settlement with its customers reached in state Supreme Court, according to the state Attorney General’s Office on Tuesday.
“We are pleased to have reached a settlement with the Attorney General on the issue of certain Time Warner Cable advertising practices in New York prior to our merger, and to have put this litigation behind us,” according to a statement from Charter/Spectrum.
“Charter has made, and continues to make, substantial investments enhancing internet service across the state of New York since our 2016 merger, as acknowledged by the Attorney General in this settlement. We look forward to continue providing the best TV, internet, voice and mobile products to our customers, and to bringing broadband to more homes and businesses across the state.”
The company was accused of defrauding customers and promising internet speeds it couldn’t deliver.
Under the terms of the settlement, $62.5 million in refunds will be sent to more than 700,000 active subscribers, meaning each active subscriber will receive between $75 and $150. More than 2.2 million active subscribers will receive streaming services and premium channels valued at more than $100 million, at no charge, according to the state Attorney General’s Office.
“The streaming benefits serve to compensate subscribers for Charter’s historic failures to faithfully deliver third-party internet content that it had advertised,” according to the Attorney General’s Office.
But the buck doesn’t stop there. Under terms of the settlement, Charter will be required to substantiate speeds through regular testing.
“They will have to be truthful in their advertising, describe their internet speeds as ‘wired,’ and disclose any factors that might lead a consumer’s actual experience to differ from what they have advertised,” Underwood said.
The direct customer refunds alone are believed to constitute the largest consumer relief payout ever paid by an internet service provider in U.S. history.
But the state’s assessment of the case leading up to the settlement was something less than rosy.
“Charter fought us at every major stage of the court proceedings,” Underwood said in a statement. “They moved to dismiss. They appealed. We won at every stage — and now consumers will see the results.”
Charter Communication spokesman Andrew Russell did not know Tuesday how many customers from Greene and Columbia counties would be affected.
Customers don’t need to take any action at this time. Under terms of the settlement, Charter/Spectrum will reach out directly to eligible customers about compensation.
“I want every ISP to listen closely: Fulfill your promises or pay the price,” Attorney General Barbara Underwood said Tuesday in a statement after the settlement was reached.
The class-action lawsuit filed against Charter/Spectrum in 2017 focused on Time Warner Cable’s internet and marketing practices before the merger of Charter Communications and Time Warner.
Charter/Spectrum serves the Columbia County towns of Ancram, Austerlitz, Canaan, Chatham, Copake, Ghent, Hillsdale, New Lebanon, Kinderhook and Stuyvesant.
Since the lawsuit was filed, the state Attorney General’s office has said that Charter, and its predecessor, Time Warner Cable, leased their customers old modems and routers that couldn’t deliver the high speeds that were promised on the premium plans.
Customers couldn’t access applications such as Netflix, Facebook and the internet because speeds were 80 percent slower than advertised, according to the lawsuit.
Charter has made “substantial network enhancements” to improve its internet service across the state, according to the Attorney General’s Office. The company has offered starting speeds of 100 mbps throughout the service area in the state since March 2017.
On July 27, the PSC announced it was rescinding its 2016 approval of the merger between Charter/Spectrum and Time Warner.
The PSC cited Charter/Spectrum for failing to show it would make good on the conditions of the merger to upgrade and expand its services for unserved and underserved locations in the state.
To reach reporter Amanda Purcell, call 518-828-1616 ext. 2500, or send an email to email@example.com, or tweet to @amandajpurcell.