The US Justice Department is currently suing to block a proposed acquisition of Time Warner by AT&T. The deal would create a cable content behemoth to rival Comcast-NBC, and the government is concerned that (brace yourself for this surprise!) the company would use its market power to hike prices and artificially keep a dying cable industry alive.
The telecoms lobby, for what it’s worth, thinks that handing out a few concessions to the government should be all it takes to keep AT&T-Time Warner in line. But if the example of Charter’s acquisition of Time Warner Cable is anything to go by, the government is right to be skeptical.
A New York State Public Service Commission statement unearthed by DSL Reports virtually accuses Charter of lying to New York State about its compliance with broadband deployment plans, which were put in place as a condition of allowing Charter to merge with TWC. Under the terms of the agreement, Charter is obliged to build out service to 2 million locations that didn’t already have service. In New York specifically, Charter was required to build out service to 145,000 unserved or under-served locations within 4 years of the merger. The company was fined $13 million last year for missing those targets, and in a new filing, the Public Service Commission is accusing Charter of misrepentation in its most recent filing:
Turning to network deployment, as stated above, Charter recently filed its first-year buildout target under the Commission’s Approval Order and Settlement Agreement claiming to have passed 42,889 residential and/or business units of which 12,467 were located in NYC, despite the fact that the NYC franchise agreements include network deployment requirements as discussed above. Specifically, based on this representation, DPS Staff has identified concerns as to whether Charter’s network did in fact pass all buildings in its NYC footprint as required by Section 5 of its franchise renewal agreements.
Throughout the statement, the PSC accuses Charter of misrepresenting which buildings have service, whether it was the first time those buildings had service, and of double-counting locations. It also suggests that PSC’s franchise fees paid to the city of NY (also a condition of the merger) have been declining.
If Charter doesn’t respond and alleviate the PSC’s concerns, the Commission has the ability to revoke Charter’s cable franchises within NYC. That’s unlikely, but more fines or conditions are also possible for Charter.