Charter avoids getting kicked out of New York, agrees to new merger conditions

Charter Communications won’t be kicked out of New York after all.

Nine months after a New York government agency ordered Charter to leave the state over its alleged failure to comply with merger conditions, state officials have announced a settlement that will let Charter stay in New York in exchange for further broadband expansions. The settlement will enforce a new version of the original merger conditions and require a $12 million payment, about half of which could help other ISPs deploy broadband.

The State Public Service Commission (PSC) had voted in July 2018 to revoke its approval of Charter’s 2016 purchase of Time Warner Cable (TWC), saying Charter failed to meet interim deadlines for broadband-expansion requirements. The order, which came just a month after a $2 million fine, would have required Charter to sell the TWC system to another provider. But the PSC never enforced the merger revocation order as it repeatedly granted deadline extensions to Charter while the sides held settlement talks.

The result is a proposed settlement between Charter and the state Department of Public Service (DPS) that was announced Friday.

“Pursuant to the agreement, Charter would expand its network to provide high-speed broadband service to 145,000 residences and businesses entirely in Upstate New York; the network expansion would be completed by September 30, 2021 in accordance with a schedule providing frequent interim enforceable milestone requirements; and Charter will pay $12 million to expand broadband service to additional unserved and underserved premises,” a DPS statement said.

Half of that $12 million could end up going back to Charter, but Charter would have to use it to deploy broadband to locations in addition to the 145,000 already required. The other $6 million would fund broadband deployment projects in a competitive bidding process, and it could thus end up going to Charter’s competitors—although Charter would be eligible to bid for the funding, too.

The settlement needs approval from the PSC, which is taking public comments on the settlement for 60 days before making a final decision. The proposed settlement “does not constitute a finding or admission of any violation by Charter nor does it constitute a penalty or forfeiture under the New York State Public Service Law,” Charter and the DPS said in a joint letter to the PSC. The settlement “allows the parties to move forward with the critical work of expanding access to broadband, by resolving their disagreements without the need for costly litigation,” the letter said.

Numbers dispute settled

The 2016 merger approval required Charter to extend its high-speed broadband network to 145,000 unserved and underserved homes and businesses by 2020. The “new” 145,000-location requirement in the settlement is thus no different from the existing requirement, except that Charter will now get an extra year to comply.

But the settlement should end the sides’ dispute over what actually counts toward the 145,000 locations. While Charter had claimed it was meeting all merger-condition deadlines, the PSC accused Charter of trying to count locations that weren’t eligible for the deployment requirement. For example, the PSC alleged that Charter wrongly counted broadband deployments at New York City homes and businesses that it was already required to serve as part of its franchise agreements.

Under the settlement, no address in New York City will count toward the 145,000 locations. To count toward the 145,000, a home or business must not be “passed, served, or capable of being served (by either a standard or non-standard installation), by pre-existing network from Charter or any other provider capable of delivering broadband speeds of 100Mbps or higher,” the settlement says.

Last year, Charter claimed that it had deployed new broadband to more than 86,000 New York homes and businesses since the merger agreement. Charter will be able to count most but not all of those toward the 145,000-location requirement, as the settlement says it will get credit for 64,827 homes and businesses that it deployed broadband to as of December 16, 2018.

In addition to the 145,000-location deadline of September 30, 2021, Charter will face six interim deadlines between September 30, 2019 and May 31, 2021. The interim requirements range from 76,521 to 133,586 locations.

If Charter doesn’t meet any of the interim deadlines, it will have to pay $2,800 for each location below the required amount. For example, Charter would have to pay $2.8 million if it fell 1,000 locations short of any of the interim deadlines—though Charter can apply for penalty waivers if there are “extreme weather events” or delays outside of Charter’s control.