Over the past year or more, people across New York state have had to make the adjustment to a new cable television and internet provider after Charter Communications merged with Time Warner Cable, spinning off new provider Spectrum. It’s the largest cable television provider in the state and provides internet access to the vast majority of consumers who don’t use a dish. But before they could even finish changing all of the signs on their trucks, Charter has been given only 60 days to prepare for an “orderly transition” of their services to other providers in addition to being hit with three million dollars in fines. (Syracuse.com)
Regulators’ move to kick Spectrum, the largest cable provider in New York, out of the state is an unprecedented action that could lead to a long court fight, industry analysts and observers say.
“This is pretty radical,” said Aija Leiponen, a professor of applied economics and management at Cornell University. “I’ve never heard of such a thing. It’s very drastic.”
The New York State Public Service Commission voted 3-0 Friday to rescind its 2016 approval of Charter Communications’ merger with Time Warner Cable and ordered the company to cease its operations in the state.
The commission said Charter, which operates cable television, broadband and telephone service under the Spectrum brand, has repeatedly failed to meet an important condition of the merger approval – extending its broadband internet service to unserved or underserved areas of the state.
Are they really going to be shut down entirely within sixty days and somehow figure out a way to set up more than ten million consumers with a new provider? Nobody seems to think so. Odds are that the commission is just firing the biggest shot they can imagine over Charter’s bow to spur them on to more action while the cable provider appeals the ruling. It’s doubtful that they even could get other providers in place and delivering to consumers in such a short period of time since they can’t just resurrect Time-Warner from the ashes. They’ve been absorbed.
But what led to this decision in the first place? I think there were major problems with the merger and the new service provider right from the beginning (full disclosure: I’m a Spectrum customer), but not for the reasons the commission cited. They’re going after Spectrum for their failure to expand broadband service in more rural, underserved areas as quickly as they agreed to during negotiations. Spectrum claims they are on track to meet the goals, but the state is saying they’re dragging their feet.
This is a horrible attempt at solving a problem from a couple of angles. First of all, since when is it the business of an optional entertainment service (the internet is still not a “utility,” guys) to meet demands from the state as to who they sell to or what they sell? In a more open, sane system we would have multiple providers available in all areas and they would compete for the chance to get that business, but New York is still telling this private company what to sell and where. There’s nothing wrong with providing an incentive to get service out to the less populated areas, but this sort of iron-fisted contract is no way for the government to stick their nose into the private sector.
A better idea would have been to not approve the merger in the first place and instead break up the few remaining providers so there would be competition. As everyone feared, once Spectrum took over, our prices began going up and service quality went down. There are greater periods where one or more channels of television cut out or break up to the point of being unwatchable and their internet service inexplicably drops out far too often. (As someone who relies on that connection to make their living it’s more than an inconvenience.) The new cable boxes seem cheaply constructed compared to the old ones and don’t even have a clock on them.
It’s all of these mergers and a lack of competition which cause the problems, not an insufficient load of government mandates. If they’re going to kick Spectrum out (which I highly doubt) they should go the extra mile and ensure consumers have multiple choices for service. Then the state could get out of the way and let them compete to offer the best service for the most reasonable price.