State files lawsuit against Spectrum-TWC

BUFFALO--New York Attorney General Eric Schneiderman has filed a lawsuit against Charter Communications Inc. ("Charter") and its subsidiary Spectrum Management Holdings, LLC, (f/k/a Time Warner Cable, Inc.) (together, "Spectrum-TWC") for allegedly conducting a deliberate scheme to defraud and mislead New Yorkers by promising internet service they knew they could not deliver.
With over 570,000 subscribers in the western New York region, Spectrum-Time Warner Cable is the largest supplier of internet service in the state. The complaint alleges since January 2012 Spectrum-TWC's marketing promised subscribers who signed up for its internet service they would get a "fast, reliable connection" to the internet from anywhere in their home. But a 16-month investigation by the Attorney General's office--which included reviewing internal corporate communications and hundreds of thousands of subscriber speed tests--found Spectrum-Time Warner subscribers were getting dramatically short-changed on both speed and reliability.
"Reliable internet is vital for millions of New York families and businesses," said Schneiderman. "As alleged in our complaint, our 16-month investigation found Spectrum-Time Warner Cable's 2.5 million subscribers in New York were repeatedly cheated into paying more [for] internet speeds the company knew it would not provide. That's just wrong. I encourage consumers to read our tips to ensure they don't pay extra for speed their provider just cannot deliver."
The Attorney General's Office looked into thousands of complaints from New York subscribers, including more than 300 from western New York.
The suit alleges subscribers' wired internet speeds for the premium plan (100, 200, and 300 Mbps) were up to 70 percent slower than promised; WiFi speeds were even slower, with some subscribers getting speeds that were more than 80 percent slower than what they had paid for. As alleged in the complaint, Spectrum-TWC charged as much as $109.99 per month for premium plans that could not achieve speeds promised in their slower plans.
"The Attorney General's detailed allegations of widespread false advertising and deceptive practices by Spectrum-Time Warner Cable in marketing and providing high speed broadband service are highly disturbing," said NYPIRG General Counsel Russ Haven.
The complaint specifically alleges a series of false and misleading practices by the company over the course of several years, including:
• Spectrum-TWC misled subscribers by falsely promising speeds it knew it would not deliver.
The complaint alleges since at least 2012, Spectrum-TWC represented to its New York subscribers they could get fast and reliable internet access. However, the company knew these promises were impossible to keep for several reasons. First, Spectrum-TWC leased deficient modem equipment to subscribers that could not deliver the promised speeds. Second, in addition to the equipment failures, Spectrum-TWC's network was overloaded and could not consistently deliver the speeds it promised to subscribers. That was because Spectrum-TWC did not design the network to reliably deliver the promised speeds. Moreover, the complaint alleges Spectrum-TWC decided to cut costs by not fixing the equipment and network failures. To mask its misconduct, the complaint alleges Spectrum-TWC rigged test results.
• Spectrum-TWC misled subscribers by promising wireless connectivity it knew it would not deliver.
The complaint alleges since at least 2012, Spectrum-TWC promised its subscribers go-anywhere wireless connectivity in their homes. However, the company knew the wireless routers provided to subscribers could not deliver the promised speeds or service.
The complaint alleges since at least 2012, Spectrum-TWC represented to their subscribers that they would get fast, reliable access to content online like Netflix and gaming. However, Spectrum-TWC knew it could not deliver on this promise because of the state of interconnection points in the transmission of online content. Specifically, the company was aware of, and sometimes deliberately created, bottlenecks at interconnection points, which resulted in slowdowns and disruptions to subscribers' service.
For example:
Spectrum-TWC knew bottlenecks in its network would result in many subscribers routinely experiencing the very hallmarks of a poor internet connection--slowdowns, lag time, buffering and interruptions, yet its marketing specifically promised they would avoid when streaming videos, playing online games and accessing other online content.
But these executives traded on the fact most subscribers had a limited choice of internet service providers and the technical complexity of deducing the problems would make it difficult for subscribers to pin the blame on the company.
The New York-based cable operator, originally known as Time Warner Cable, is currently rebranding itself as "Spectrum" throughout the state. Spectrum-TWC provides internet service to approximately 2.5 million households/subscribers in New York state, and the complaint covers the subscription plans of almost 5 million subscribers over the relevant period.
In its filing, the New York Attorney General's Office is seeking restitution for New York consumers as well as appropriate injunctive and equitable relief to end Spectrum-TWC's longstanding deceptive practices.