Charter Settles Suit Over Broadband Speeds For $174 Million

Charter has agreed to refund New York customers $62.5 million in order to resolve allegations that Time Warner Cable duped consumers by advertising faster Internet speeds than it delivered.

The settlement, announced Tuesday by New York Attorney General Barbara Underwood, also requires Charter to offer current subscribers free premium channels and streaming services. In addition, the company agreed to substantiate the internet speeds it advertises, and disclose that wireless speeds vary from wired speeds based on factors like the number of users. Underwood pegs the value of the settlement at $174 million.

The deal resolves a lawsuit filed in February of 2017, when former Attorney General Eric Schneiderman alleged that Time Warner Cable fraudulently induced at least 640,000 subscribers in New York to purchase plans with speeds higher than the company could provide. (Charter purchased Time Warner Cable in 2016 and renamed the company Spectrum.)

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The complaint included allegations that subscribers on a plan promising 300 Mbps typically received 15% of the promised speed when connecting wirelessly. The broadband provider also allegedly failed to provide many customers with modems capable of enabling web-surfing at the advertised speeds.

The complaint also alleges that Time Warner Cable didn't do enough to prevent congestion -- apparently referring to Netflix users' prior problems with choppy streams. In 2014, Netflix largely resolved the issue by agreeing to pay providers extra fees in order to interconnect directly with their networks.

Charter unsuccessfully argued that the lawsuit should be dismissed for several reasons, including that the Attorney General was holding the company to tougher standards than those set out by the FCC in its transparency regulations.

New York County Justice Peter Sherwood rejected that argument, ruling that the FCC's transparency standards don't immunize broadband providers from lawsuits by state attorneys general. "The FCC promulgated the Transparency Rule with full recognition of concurrent state authority over deceptive practices, and it is clear that the claims brought here do not conflict with that rule," he wrote in a ruling issued in February.

Charter also argued that the ads only promised consumers speeds of "up to" a certain maximum -- meaning that consumers could expect speeds that were equal to, or slower than, the advertised figure.

Sherwood rejected that contention as well, writing that Charter's position was "contrary to New York law."

The settlement agreement calls for Charter to provide direct refunds of $62.5 million to more than 700,000 subscribers, who will receive between $75 and $150. The deal also calls for Charter to offer streaming services and premium channels for free to more than 2.2 million subscribers; that portion of the deal is valued at more than $100 million.

Charter stated it was pleased “to have put this litigation behind us.” The company also said it has made “substantial investments enhancing internet service across the state” since the 2016 merger with Time Warner.

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