State

Cable company’s future in New York is uncertain after ruling, experts say

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The New York Public Service Commission’s decision to force Charter Communications, which merged with Time Warner Cable in 2016 and operated under the Spectrum brand, out of New York state is an unprecedented action that leaves Charter’s future in the area uncertain, experts said.

The commission unanimously voted on July 27 to rescind its approval of the 2016 merger and gave Charter 60 days to come up with a plan for its exit from the state, according to Syracuse.com.

Earlier this month, the PSC agreed to give Charter an extra two weeks to submit the plan, according to documents on the New York State Department of Public Service website. The deadline for submitting the plan was originally set for Sept. 25 but will now be due Oct. 9.

Michael Park, an assistant professor at the S.I. Newhouse School of Public Communications who specializes in media law, communications policy and sports communication, said the move was “assertive.”

“I don’t recall another state making such a move, essentially kicking out a broadband cable provider particularly for not honoring a franchise agreement,” Park said.



Whether Charter stays or goes won’t have a heavy impact on most people, Park added. As part of the PSC’s July decision, the commission stated that Charter must provide a smooth transition for another company to take over its New York operations.

Natarajan Balasubramanian, an associate professor of management at the Martin J. Whitman School of Management, said he believes it’s unlikely Charter will be kicked out of New York.

“Given the significant transition costs for both Charter to move out of the state and the public to transition to other providers, I would be very surprised if the company and the commission are not able to negotiate a solution,” Balasubramanian said.

The only people who could potentially face major issues are those who have no alternative broadband internet options, he said. Most people can more easily find alternatives to cable television and telephone services, he added.

Patricia Longstaff, a communication law and policy professor in Newhouse, said that while asking an entire company to leave a state isn’t common, companies making promises they struggle to fulfill is not out of the ordinary.

In this case, part of the 2016 merger included a condition where Charter would provide cable services to 145,000 underserved and unserved homes in rural areas, according to Syracuse.com. Charter fell short of goals it was supposed to reach to achieve these numbers.

Park said that while Charter may have broken a main condition, its promise to serve the underserved is a difficult one to keep. The cost, time and effort that need to be put toward building the infrastructure necessary for cable and internet services in rural areas is what he described as the “last mile cost,” which either has to be subsidized through the government or covered by Charter to fulfill their original condition.

“Cities have a grid,” Park said. “But when you’re out in the town 10 miles east of Watertown, New York, or something, that last mile is costly.”

Often times, these promises are considered more like pledges than conditions, Park said. He added that because conditions are contractual in nature, they have more “legal teeth” than pledges do.

Interpreting this legal weight will be critical if the case goes to court, and Longstaff said she’d be surprised if this case didn’t get there.

Given the 60-day time limit given to Charter by the PSC, litigation may be a method employed by Charter to give it more time to find solutions, she said.

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