UPDATED at 4 pm to include a statement from Charter Communications.
New York Attorney General Eric Schneiderman accused Charter and Spectrum (formerly Time Warner Cable) of deliberately and systematically defrauding consumers by promising Internet speeds and reliable access to popular online content that it knew it could not deliver.
The cable companies, which merged in 2016, sought to have the civil suit dismissed, arguing that the FCC’s Restoring Internet Freedom Order repealing the commission’s earlier net neutrality rules pre-empted state interference.
The state supreme court judge rejected that argument, writing that the FCC noted that it would not “displace” the role of state and local officials in matters such as “fraud, taxation and general commercial dealings.”
“Today’s decision by the New York Supreme Court marks a major victory for New York consumers — rejecting every single argument made by Charter-Spectrum in its attempts to block our lawsuit,” Schneiderman said in a statement.
Schneiderman filed the civil suit January 31 against Charter and Spectrum, which is the largest provider of residential internet access in New York State.
In an 87-page complaint, the attorney general argues that the cable operator defrauded and misled subscribers by promising Internet speeds it knew it could not deliver, and reliable access to online content, that it new it couldn’t deliver.
Spectrum leased older generation equipment — modems and wireless routers — that it knew were incapable of achieving the promised performance, and failed to make network adjustments to deliver on its advertising claims of “fast, reliable Internet speeds.”
“Because the plans with the faster speeds were more expensive for subscribers, Spectrum-TWC tried to convince as many subscribers as possible to sign up for these high-speed plans as part of its plan to grow revenue,” Schneiderman argued in the complaint.
Internet speed tests, including those run by the FCC, showed subscribers to the high-speed plans received as little as 10% of the promised speed, according to court documents.
The cable operator also promised consumers access to popular Internet content free of buffering, slowdowns, lags or interruptions. “Subscribers encountered all of these things,” the AG argues. Spectrum event took advantage of its access to subscribers to extract fees from online content providers.
“Spectrum-TWC lined its pockets by intentionally creating bottlenecks in its connections with online content providers, despite knowing that these negotiating tactics would create problems for its subscribers in accessing online content,” Schneiderman argued in court documents.
The New York AG’s office received more than 2,800 consumer complaints about Spectrum’s Internet speeds since 2015, with consumers complaining they were having trouble streaming shows from Netflix, Hulu, HBO Go and YouTube.
Spectrum maintained, in court filings, that it promised consumers could expect speeds “up to” a certain maximum performance and that reports show its met or exceeded the advertised speeds. IT relies on the FCC’s consumer labeling program, which spells out the performance consumers could expect for each tier.
“Spectrum not only delivers its advertised internet speeds, we have in fact raised the minimum broadband speeds that all our New York customers receive, at the same price,” said Charter spokesman John Bonomo. “Importantly, the court made no ruling on the allegations about historic Time Warner Cable practices, and we will continue to contest these claims vigorously as the case progresses.”