New York's attorney general is suing the second-largest cable operator in the US, claiming the company lied about internet speeds.
Eric Schneiderman filed the lawsuit ( pdf) in Manhattan's State Supreme Court on Wednesday, following a 16-month investigation. The attorney general argues that Charter and its subsidiary, Spectrum, have provided subpar services, with internet speeds slower than the company advertised.
Spectrum had been known as Time Warner Cable before Charter purchased it for about $60 billion, in a deal that was completed in May 2016. Schneiderman wants Charter to pay back its customers for broken promises on internet speeds for a period stretching from Jan. 1, 2012, to today.
With 2.5 million New Yorkers using Spectrum-Time Warner, Charter would have to reimburse customers up to $1 billion for each year since 2012, according to the lawsuit.
In today's connected world, internet speeds matter greatly to consumers for countless everyday activities, from streaming Netflix shows and Spotify tunes to paying bills, doing homework, shopping for shoes and gabbing on social media.
The attorney general's investigation found that Spectrum-Time Warner's speeds were much slower than advertised, with executives ignoring engineers' warnings that the promised speeds were impossible.
Customers paying $110 a month for 300 Mbps, were on average, only getting 85 Mbps, Schneiderman said at a press conference Wednesday. Those paying $70 a month for 100 Mbps were barely getting 50 Mbps. On average, Wi-Fi speeds were 80 percent slower than what customers were promised.
AG: A 'business plan built on deceit'
The investigation found internal emails from the company's executives acknowledging their internet speeds didn't match what they advertised.
"It is a consistent story of bad performance and a long-term business plan built on deceit," Schneiderman said.
The lawsuit also criticized Spectrum-Time Warner for charging customers $10 a month to rent subpar modems that slowed down internet speeds even more. In internal emails, the company's engineers recommended at least D3 modems, even as Time Warner's executives continued dishing out D2 modems to save costs.
Between May 2012 and February 2016, subscribers paid $600 million in modem fees alone.
Charter said it had made "significant commitments" to improve Time Warner Cable's services since acquiring the company.
"We are disappointed that the NY Attorney General chose to file this lawsuit regarding Time Warner Cable's broadband speed advertisements that occurred prior to Charter's merger," the company said in a statement.
Schneiderman's office started looking into slow internet speeds in October 2015, through a survey asking New Yorkers what their actual speeds were compared to what their companies advertised.
"New Yorkers should get the internet speeds they pay for. Too many of us may be paying for one thing, and getting another," Schneiderman said in December 2015, when he launched the probe.
The attorney general had blasted Time Warner Cable in the past, telling Charter Communications in his letter than the company "earned the miserable reputation it enjoys among consumers."
When Charter first acquired Time Warner, Schneiderman warned the company to deal with Time Warner Cable's service issues, including slow speeds.
Originally published at 7:39 a.m. PT.
Updated at 8:39 a.m. PT: Added details from the attorney general's press conference and a statement from Charter Communications.
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