STATE OF NEW YORK
PUBLIC SERVICE COMMISSION
At a session of the Public Service
Commission held in the City of
Albany on July 27, 2018
COMMISSIONERS PRESENT:
John B. Rhodes, Chair
Gregg C. Sayre
James S. Alesi
CASE 15-M-0388 – Joint Petition of Charter Communications and
Time Warner Cable for Approval of a Transfer of
Control of Subsidiaries and Franchises, Pro
Forma Reorganization, and Certain Financing
Arrangements.
ORDER DENYING PETITIONS FOR REHEARING AND
RECONSIDERATION AND REVOKING APPROVAL
(Issued and Effective July 27, 2018)
BY THE COMMISSION:
INTRODUCTION
Through this Order, the Commission denies Charter
Communication, Inc.’s (Charter or the Company) petitions for
rehearing and reconsideration and also rescinds and revokes its
previous approval of the Company’s 2016 acquisition of Time
Warner Cable Inc. (TWC or Time Warner).

Charter operates in New

York under the trade name “Spectrum.”
In approving the merger, the Commission stated that,
for the transaction to meet the enumerated statutory “public
interest” standard, it must yield positive net benefits, after
balancing the expected benefits properly attributable to the
transaction offset by any risks or detriments that would remain
after applying reasonable mitigation measures.

As part of its

 CASE 15-M-0388
review, the Commission concluded that additional “enforceable
and concrete conditions,” were needed to satisfy the “net
benefits test” otherwise the merger between Charter and Time
Warner should be – and would be - denied.1

Accordingly, the

Commission explicitly conditioned its approval on a host of
conditions designed to yield incremental net benefits to New
York.

The most critical of those conditions required Charter to

expand the Company’s network to “pass” an additional 145,000
“unserved” (download speeds of 0-24.9 Megabits per second
(Mbps)) and “underserved” (download speeds of 25-99.9 Mbps)
residential and/or business units within less populated areas of
New York (the Network Expansion Condition).2
For the reasons stated herein, the Commission denies
the Company’s petitions for rehearing and reconsideration of the
Commission’s previous orders as discussed below.

The Commission

further finds that Charter’s performance in attempting to comply
with the Approval Order’s Network Expansion Condition and
related matters is deficient and its behavior before the
Commission is contrary to the public policy and the laws of New
York State and the regulations of the Commission to such an
extent that the Commission should now exercise its authority to
revoke and rescind the Approval Order and further order that
Charter cease its operations in New York State previously served
by Time Warner Cable.

1

Case 15-M-0388, Charter Communications and Time Warner Cable Transfer of Control, Order Granting Joint Petition Subject to
Conditions (issued January 8, 2016) (Approval Order), p. 2.

2

Id., p. 53 and Appendix A §I.B.1.
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BACKGROUND
By Joint Petition filed July 2, 2015, TWC and Charter
requested Commission authorization for a holding company-level
transaction that would result in the transfer of control of Time
Warner’s New York subsidiaries, including all of its broadband
Internet, telephone, and cable television systems, franchises
and assets to Charter.

On January 8, 2016, the Commission

granted its approval “subject to the conditions discussed in the
body of this Order and Appendix A, and upon receipt by the
Commission of certification by Charter Communications, Inc.,
that New Charter and its successors in interest unconditionally
accept and agree to comply with the commitments set forth in the
body of this Order and Appendix A.”3
On January 19, 2016, Charter submitted a letter
containing the following written certification:
In accordance with the Commission's Order
Granting Joint Petition by Time Warner Cable
Inc. ("Time Warner Cable") and Charter
Communications, Inc. ("Charter") dated
January 8, 2016, Charter hereby accepts the
Order Conditions for Approval contained in
Appendix A, subject to applicable law and
without waiver of any legal rights.4
As discussed below, Charter subsequently sought to use this
limited and qualified statement to justify its noncompliance
with the Approval Order.
Among those established conditions, was the Network
Expansion Condition wherein the Commission noted its “significant

3

Approval Order, p. 69.

4

See, Case 15-M-0388, Charter Letter Accepting Conditions
(filed January 9, 2016); See, also, Charter Unconditional
Acceptance Letter (filed June 28, 2018).

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concern that there are areas of the State that have no network
access even though they are located within current Time
Warner/Charter franchise areas.”5

To mitigate this concern, the

Commission required the extension of Charter’s network to pass an
additional 145,000 homes and businesses in less densely populated
areas across the State.

Charter was initially required to

complete this buildout in four phases, 25%, or 36,250 premises
per year from the date of the close of the transaction,6 and file
quarterly reports on the status of its network build.

The

Approval Order, therefore, required Charter to complete an
initial buildout of 36,250 premises by May 18, 2017.

Charter,

however, did not comply with that obligation.
The Settlement Agreement
On May 18, 2017, Charter filed an update regarding its
buildout progress.

This update stated that Charter had passed a

total of only 15,164 premises, or 41.8% of the Approval Order’s
initial target.
initiated.

Subsequently, settlement discussions were

The culmination of those discussions resulted in the

filing of a Settlement Agreement in this case on June 19, 2017.7
The Commission adopted the Settlement Agreement on
September 14, 2017.

Among other things, Charter agreed to pay

one million dollars into an escrow account within 30 days of the
adoption of the Settlement Agreement.

Charter also agreed to a

series of interim targets for its buildout going forward with

5

Id., pp. 52-53. This condition was particularly important to
the Commission’s ultimate decision to conditionally approve the
transaction, accounting for approximately $290 million of the
estimated $435 million in incremental net benefits that the
transaction was expected to accrue for the benefit of New York
customers.

6

The transaction closed on May 18, 2016.

7

Case 15-M-0388, Settlement Agreement (filed June 19, 2017)
(Settlement Agreement).
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the ultimate completion date remaining unchanged from the
Approval Order’s May 18, 2020 date.

The Settlement Agreement

modified Charter's buildout obligations between December 2017
and May 2020, which now require that Charter pass the following
number of premises: 36,771 by 12/16/17; 58,417 by 6/18/18;
80,063 by 12/16/18; 101,708 by 5/18/19; 123,354 by 11/16/19;
and, 145,000 by 5/18/20, and report its actual passings within
21 days after each six-month target date.

If Charter misses any

given target and wishes to make a Good Cause Shown
justification, it may file its claim on the same date as the
report.

The Settlement Agreement also required the filing of a

Letter of Credit in the amount of $12 million to secure
Charter's obligations, subject to draw down if Charter misses
these interim buildout targets.
According to the Settlement Agreement, for each and
every six-month target not met, and where Charter's performance
in attempting to meet the target does not establish Good Cause
Shown, Charter will forfeit its right to earn back one million
dollars. The Settlement Agreement also established that if
Charter misses any six-month target, within three months and 21
days of the six-month target date Charter will report its actual
passings for the three-month period after the six-month target
date.

If three months after any six-month target date Charter

has still not met the target and wishes to make a Good Cause
Shown justification, it may file its claim on the same date as
the report.

A Good Cause justification requires that Charter

“provide a sufficient showing for the Commission to determine
that Good Cause Shown has been established” and requires that
“such a demonstration include, but need not be limited to,
affidavits of witnesses, detailed descriptions of the events

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that led to the delay(s), and supporting documentation for any
factual claims.”8
The Order to Show Cause
On January 8, 2018, Charter filed its first report on
the Company’s buildout progress pursuant to the Settlement
Agreement’s December 16, 2017 target date.

In that filing,

Charter stated that it had passed 42,889 premises by
December 16, 2017, and provided a revised update to its overall
145,000 premises buildout plan.

In response to Charter’s

filing, the Commission issued a Show Cause Order.9

The Order to

Show Cause required the Company to provide evidence as to why
all current addresses that are listed in its January 8, 2018
report that are (1) located within the New York City (NYC)
region (12,467); (2) located where network already existed
(1,762); (3) included in Charter’s July 2016 Negative Space List
(249), or (4) located within any full or partial census blocks
awarded by the Broadband Program Office (BPO) to other service
providers in Phases 1, 2 or 3 (except the subset of locations
that Charter claims as already completed which are located in
the January 31, 2018 BPO Phase 3 census block award areas) of
the Broadband 4 All program (44), should not be disqualified
from consideration of the Settlement Agreement’s December 16,
2017 target, and why all such other similarly situated addresses
should not be precluded from any future Charter 145,000 buildout
plan filings and as to why the Chair of the Commission or his or
her designee should not draw down on the Letter of Credit
8

Case 15-M-0388, Order Adopting Revised Build-Out Targets and
Additional Terms of a Settlement Agreement (issued September
14, 2017) (Settlement Order), Appendix A.

9

Id., Order to Show Cause (issued March 18, 2018); Confirming
Order (issued April 20, 2018).

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established through the Settlement Order in the appropriate
amount.
Charter filed its responses to the Show Cause Order on
May 9, 2018.

In general, Charter stated that the Show Cause

Order disqualified many of its addresses based upon the fact
that they are located: (1) in NYC;10 (2) within a primary service
area under one of Charter’s cable franchises; (3) in the
vicinity of Charter feeder cable (irrespective of whether they
were actually “serviceable” from that cable within 7-10 business
days and without a significant resource commitment); (4) in
census blocks the BPO has bid out for subsidies; and (5) in
Negative Space locations to which Charter had previously
indicated that it did not anticipate expanding its network.
Charter claimed that the Commission is limited to the specific
terms in the Network Expansion Condition as adopted, and that
none of the new criteria it cites above are set forth therein.
Adding them after the fact, according to the Company, would
violate the plain text of the Approval Order.
The June 14 Order
The Commission ultimately determined that Charter had
failed to provide sufficient evidence as to why the Commission
should not (1) disqualify 18,363 passings from its December 16,
2017 buildout report filed on January 8, 2018, thereby causing
Charter to fail to satisfy the required 36,771 new passings
target pursuant to the Settlement Agreement; (2) remove 6,612
Negative Space addresses from Charter’s current 145,000 buildout
plan and preclude any future Negative Space addresses awarded by
the BPO from Charter’s 145,000 buildout plan; and, (3) remove
5,323 not-yet-completed addresses in Charter’s current 145,000

10

Undisputedly, NYC is not a less-populated area within the
State of New York.
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buildout plan that are not in the Negative Space list, but are
co-located in the BPO’s Broadband 4 All Phases 1-3 awarded
census blocks and preclude any future addresses that are not in
the Negative Space list, but are co-located in the BPO’s awarded
census blocks from Charter’s 145,000 buildout plan.11
The Commission further determined through its June 14
Order that Charter had not provided sufficient justification to
establish an independent showing of Good Cause12 for failing to
meet the December 16, 2017 buildout target and that it had
therefore forfeited the right to earn back one million dollars
from the Letter of Credit in accordance with the Settlement
Agreement.

The Commission also concluded that Charter failed to

remedy its missed December target by the Settlement Agreement’s
March 16, 2018 “cure” deadline and failed to make a sufficient
Good Cause justification in this regard, resulting in a forfeit
of its right to earn back an additional one million dollars in
accordance with the Settlement Agreement.

In addition, the

Commission on June 14, 2018, also released a companion Compliance
Order on Charter’s “qualified” acceptance of the Approval Order’s
conditions.13

In the Compliance Order, the Commission directed

the Company to “… cure its defective acceptance by filing a new
letter of full unconditional acceptance of the Approval Order and

11

June 14 Order, pp. 32-33. On June 14, 2018, the Commission
also issued the Compliance Order directing Charter to replace
its incomplete and conditional commitment concerning the
Approval Order and its conditions.

12

The Settlement Agreement provides Charter an opportunity to
establish an independent showing of Good Cause, a process
under which it could be relieved of a portion of the financial
forfeitures under the Settlement Agreement.

13

Case 15-M-0388, Order on Compliance (issued June 14, 2018)
(Compliance Order).

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 CASE 15-M-0388
Appendix A with the Secretary to the Commission within 14 days of
the issuance of this Order.”

If it failed to provide such a

replacement letter of full unconditional acceptance, the
Commission indicated its intention to pursue other remedies at
its disposal including but not necessarily limited to rescinding
and revoking the Approval Order.14
Charter’s July 2018 Submissions
On July 9, 2018, Charter filed its Update and Bulk
Address Report with respect to the Settlement Agreement’s
June 18, 2018 target, which included two exhibits, Confidential
Exhibits A and B.15

Charter stated that Confidential Exhibit A

was the Company’s attempt to address the requirements included
in the Commission’s June 14 Order, to the extent it was
practicable to do so within what it calls a limited time period.
Confidential Exhibit A was modified by the Company using the
previously filed July 5, 2018 Revised Buildout Plan address
list, and included a total of 92,982 addresses.

This list is

not complete, as it is 52,018 addresses short of the required
145,000 addresses.
Subsequently, on July 16, 2018, Charter filed two
petitions for rehearing and reconsideration on the Commission’s
June 14 Order and its Compliance Order, respectively.

With

regard to the Compliance Order, Charter argued it was
unnecessary because the Company does not believe it has
disavowed its commitments in New York.

Moreover, the Company

claimed that its 2016 Acceptance Letter was not a limitation on

14

Id., pp. 1-2, 9.

15

Charter also filed a buildout plan on July 5, 2018 in
compliance with the June 14 Order. That plan has not been
fully audited, but remains under review.

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its acceptance of the commitments in the Approval Order, but
rather a reservation of its legal rights.

The Company also

argued that the Commission waived any alleged defect in the form
of Charter’s voluntary commitments and is now estopped from
revisiting them here.16
With respect the June 14 Order, Charter claimed that
its reported passings satisfy the criteria set forth in the
Approval Order, that the Commission’s subsequent
disqualification of certain addresses was inconsistent with and
exceeds the Commission’s authority, that the Commission’s
disqualification of certain addresses was arbitrary and
capricious, and that, in any event, Good Cause justification
existed for the delay in satisfying the missed targets.17
By its own admission, under the Commission’s June 14
Order, Charter has failed to meet its second milestone, the
June 18, 2018 target.

Confidential Exhibit A contained only

35,681 addresses identified as completed.

This figure is 22,736

short of the 58,417 passings that Charter was required to
complete under the Settlement Agreement by June 18, 2018.18

The

Commission, therefore, determined that Charter missed its

16

See, generally, Motion for Rehearing and Reconsideration of
Order on Compliance filed July 16, 2018 (Compliance Rehearing
Petition).

17

See, generally, Petition for Rehearing and Reconsideration of
June 14 Order filed July 16, 2018 (Buildout Rehearing
Petition).

18

In a companion Order, the Commission separately audited this
list, which resulted in a further reduction of 1,773 for a
total of 33,908 completed passings allowed. This is 42% short
of the Company’s target. See, Case 15-M-0388, Order Confirming
Missed June 2018 Compliance Obligations and Denying Good Cause
Justification (issued July 27, 2018) (July 27 Order).

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 CASE 15-M-0388
June 18, 2018 target under the Settlement Agreement.19

In

addition, the Commission determined that the Company failed to
provide a sufficient Good Cause justification for its failure
and that it had also forfeited its right to earn back an
additional one million dollars from the Letter of Credit on file
with the Commission.20
This failure further resulted in the abrogation of the
Settlement Agreement’s “Sole Remedy” provision.21

This section

states in relevant part that “[t]he Parties … agree that the
sole remedy against Charter for the failure of Charter to meet
build-out "Passings Targets" as defined herein shall be the
financial consequences set forth in paragraphs "l" through "16"
below in this section of the Agreement except where specifically
noted therein to the contrary (hereinafter "Sole Remedy").”
However, the Settlement Agreement further states that “if,
during any period covered by the performance incentives, any two
consecutive six-month targets are missed by more than 15% and
(a) Charter's performance in attempting to meet those two
consecutive targets does not pass the Good Cause Shown test, or
(b) Charter has not provided documentation to the Department
demonstrating that it has filed the requisite number of pole
permit applications necessary to meet the enumerated targets at
least 200 days in advance of the corresponding target deadline,
the performance incentives will continue and, in addition, the
"Sole Remedy" provisions shall not apply and the Commission
reserves the right to assert that such failure is in violation
of a Commission order and to utilize all the rights and remedies
available to the Commission to enforce such violation.”

19

Id.

20

Id.

21

Settlement Agreement, ¶7.
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As a result, the Commission may now seek to enforce
the obligations agreed to by Charter through other means at its
disposal including penalty and enforcement actions in New York
Supreme Court or other proceedings under the Public Service Law.
This Order is the culmination of the Commission’s repeated, and
ultimately unsuccessful, efforts to address through
administrative remedies the Company’s chronic misses on the
Network Expansion Condition and Charter’s persistent actions
demonstrating bad faith.
On July 16, 2018, Charter filed requests for rehearing
of the Commission’s June 14 Order and Compliance Order.22
LEGAL AUTHORITY
Regarding petitions for rehearing, Public Service Law
(PSL) §22 states that “after an order has been made by the
commission any corporation or person interested therein shall
have the right to apply for a rehearing in respect to any matter
determined therein, but any such application must be made within
thirty days after the service of such order, unless the
commission for good cause shown shall otherwise direct;  and the
commission shall grant and hold such a rehearing if in its
judgment sufficient reason therefore be made to appear.”

In the

regulations implementing this section, pursuant to 16 NYCRR
§3.7(b), rehearing may be sought only on the grounds that an
error of law or fact was committed or that new circumstances

22

See, f.n. 14 and 15, supra.
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warrant a different determination.

As discussed below, Charter

has not demonstrated sufficient grounds to grant its relief.23
Turning to the Commission’s authority to rescind and
revoke, the Approval Order specifically stated that “[a]bsent
acceptance of these conditions, the public interest standard
cannot be met, and the petition for transaction approval [should
be] denied.”24

As set forth therein, PSL §§99(2), 100(1) and

(3), and 222(3) require a Commission finding that the proposed
transfers be in the public interest.

In granting its approval,

the Commission determined that the proposed transaction was in
(or otherwise is consistent with) the public interest, provided
that the benefits of the transaction outweighed any detriments,
after mitigating identified harms.

The Commission also noted in

its Approval Order that it had the broad authority provided
through the public interest test to determine what constitutes
the public interest, and that the applicable definition is
reasonably related to the Commission’s general regulatory
authority, the nature of the transaction, and its potential
impact on New Yorkers.

In order to ensure these benefits were

actually obtained by New York customers, the Commission
established concrete, enforceable conditions, including the

23

Moreover, under 16 NYCRR §3.7(d), filings of petitions for
rehearing do not stay or excuse compliance with a Commission
order.

24

Approval Order, p. 2.

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 CASE 15-M-0388
Network Expansion Condition, which Charter has consistently and
continuously violated.25
The Commission is generally empowered to issue orders
regarding regulated telephone and cable companies doing business
in the State of New York and to interpret and enforce its orders
pursuant to PSL §5 and Articles 5 and 11.

The Commission is

also specifically empowered to examine the practices and
facilities of telephone corporations under PSL §94, to issue,
amend or rescind orders regarding cable companies pursuant to
PSL §216, and to terminate cable franchises in the event of a
material breach under PSL §227.
With regard to cable companies, the Commission’s
jurisdiction is broad.

Under PSL §215(c), the Commission is

required “… to prescribe standards by which the franchising
authority shall determine whether an applicant possesses (i) the
technical ability, (ii) the financial ability, (iii) the good
character, and (iv) other qualifications necessary to operate a
cable television system in the public interest[.]”

Pursuant to

PSL §216(1), “[t]he commission may promulgate, issue, amend and
rescind such orders, rules and regulations as it may find
necessary or appropriate to carry out the purposes of this
article.

Such orders, rules and regulations may classify

persons and matters within the jurisdiction of the commission
25

The Network Expansion Condition is consistent with federal
law. 47 U.S.C. §1302(a) states in relevant part that “each
State commission with regulatory jurisdiction over
telecommunications services shall encourage the deployment on
a reasonable and timely basis of advanced telecommunications
capability to all Americans (including, in particular,
elementary and secondary schools and classrooms) by utilizing,
in a manner consistent with the public interest, convenience,
and necessity, price cap regulation, regulatory forbearance,
measures that promote competition in the local
telecommunications market, or other regulating methods that
remove barriers to infrastructure investment.”
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and prescribe different requirements for different classes of
persons or matters.”

And, PSL §216(5) states that the

Commission “shall have and may exercise all other powers
necessary or appropriate to carry out the purposes of this
article.”
PSL §227(1)(a) further empowers to the Commission to
terminate cable television franchises where the franchisee “has
committed a material breach of its franchise or any applicable
provision of [Article 11] or of the regulations promulgated
[t]hereunder….”
Moreover, under PSL §226(1), “[n]o cable television
company, notwithstanding any provision in a franchise, may
abandon any service or portion thereof without giving six
months' prior written notice to the commission and to the
franchisor, if any, and to the municipalities it serves.”

And,

under PSL §226(2), “[w]hen abandonment of any service is
prohibited by a franchise, no cable television company may
abandon such service without written consent of the franchisor,
if any, and the commission.

In granting such consent, the

commission may impose such terms, conditions or requirements as
in its judgment are necessary to protect the public interest.”
The Commission jurisdiction over telephone companies
is similarly broad.

PSL §4(1) provides that the Commission

“shall possess the powers and duties hereinafter specified, and
also all powers necessary or proper to enable it to carry out
the purposes of this chapter.”

Under PSL §99(2), “[n]o

telegraph corporation or telephone corporation hereafter formed
shall begin construction of its telegraph line or telephone line
without first having obtained the permission and approval of the
commission and its certificate of public convenience and
necessity….”
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Additionally, PSL §94(2) grants the Commission
“general supervision of all … telephone corporations…within its
jurisdiction … and shall have the power to … examine … their
franchises, and the manner in which their lines and property are
leased, operated or managed, conducted and operated with respect
to the adequacy of and accommodation afforded by their service
and also with respect to the safety and security of their lines
and property, and with respect to their compliance with all
provisions of law, orders of the commission, franchises and
charter requirement.”26
This Order denies the Company’s requests for rehearing
and revokes and rescinds the Commission’s January 8, 2016
Approval Order.

This rescission and revocation is the result of

Charter’s repeated failure to comply with the Approval Order and
§I(B)(1)(a-b) of Appendix A thereof, as well as the Settlement
Agreement.

For the reasons discussed below, Charter has

consistently violated the Approval Order and the Commission’s
laws and regulations, leading the Commission to rescind and
revoke its January 8, 2016 Approval Order and require that
Charter cease operations in New York State, subject to the
conditions laid out below.

26

Additionally, PSL §91(1) requires that telephone corporations’
facilities be “adequate and in all respects just and
reasonable,” and PSL §94(2) requires that the Commission
review the safety of and manner in which telephone plant is
operated. Similarly, PSL §220 requires that facilities
installed by cable companies be adequate and conform with the
Commission’s construction standards, including the National
Electric Safety Code (NESC) and PSL §221, requires that cable
companies comply with the requirements contained in any
franchise agreement confirmed by the Commission.
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DISCUSSION
Through this Order, the Commission denies both of
Charter’s rehearing requests and determines that stronger
remedies are warranted in light of the Company’s continued noncompliance with the Network Extension Condition and continued
bad faith.
Request for Rehearing – June 14 Order
Turning first to the requests for rehearing, the
Commission denies these requests on the basis that Charter has
not alleged an error of fact, or law nor have any new
circumstances been identified, sufficient to grant rehearing
with regard to the June 14 Order.

Charter makes four arguments

in its Buildout Rehearing Petition.

Each argument has been

previously addressed by the Commission in connection with its
June 14 Order and, therefore, the Company has not raised any new
issues of fact or law sufficient to support a grant of
rehearing.
First, Charter argues that each and every address it
submitted in its January 8, 2018 filing complied with the
Approval Order’s requirements.27

The June 14 Order addressed

this argument at length and determined that Charter’s position
lacked merit.

Charter’s request fails to present a basis to

disturb the Commission’s previous determination.

Second,

Charter argues that the Commission added requirements to the
Approval Order through the June 14 Order, and based its
conclusions on “generalized policy rationalizations” and not the
Approval Order itself.28

This argument is also without merit.

The Commission previously explained at length in its June 14
Order that all actions taken therein were grounded in the plain
27
28

Buildout Rehearing Petition, pp. 17-21.
Id., pp. 21-53.
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text of the Approval Order and Appendix A thereof and the
Commission was interpreting and ensuring compliance with the
Approval Order, not adding any new requirements or criteria.
Third, Charter argues that the Commission erred by not
providing earlier notice regarding the disqualified passings and
that Charter’s reliance on that failure should not count against
it.29

Again, the Commission has already considered and rejected

this argument.

Charter was notified repeatedly regarding issues

associated with its claimed passings and did nothing to correct
its behavior or ask the Commission for clarification regarding
the application of the plain meaning of the Approval Order and
Appendix A.

Charter has not presented a reason to disturb the

Commission’s earlier finding on this point.
Finally, Charter alleges that the Commission should
not have reached its Good Cause determination in the June 14
Order, but that since it did, the Commission should have found
that Good Cause existed on the basis that Charter’s failure was
the result of the Commission interpretation of the Approval
Order, and not a failure on Charter’s part to complete its
network buildout.30

Charter’s failure to take steps to respond

to Department of Public Service (DPS) Staff audits or to ask the
Commission to clarify its Approval Order are not the fault of
the Commission, but of Charter’s own making.
Request for Rehearing – Compliance Order
Charter states that if the Compliance Order “takes
issue with the fact that Charter’s acceptance was ‘subject to
applicable law and without waiver of any legal rights,’” then it
is predicated on a legal error.31

29

Specifically, the Company

Id., pp. 53-60.

30

Id., pp. 60-67.

31

Compliance Rehearing Petition, p. 13.
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argues that its acceptance of the commitments simply restates
“the rule of law that a party’s acquiescence to an agency order
cannot confer jurisdiction on the agency if it otherwise lacks
it.

Merely stating what the law is, is not a deficiency in

Charter’s acceptance letter that requires correction.”32
Charter also states, however that “as Charter is
currently only challenging the Commission’s right to alter the
Expansion Condition and not the condition itself, there is
currently no live dispute on this issue.”33

Based on this

statement, the Commission finds that this issue is moot and,
therefore, not a valid basis for Charter to seek rehearing.
However, as the Commission noted in the June 14 Order, it has
consistently recognized federal jurisdiction over broadband as
an interstate service.

The Company misstates the Commission’s

application of the PSL’s public interest standard in this
proceeding.

The Commission, through the Approval Order,

required that Charter expand its network as a whole; a network
that provides regulated cable television and telephone services
as well as broadband, services that inherently compete against
each other.

This was a significant reason why the Commission

determined that it was appropriate to consider broadband
availability at length, in relation to network buildout in
unserved and underserved areas of the State, and ultimately to
require expansion of that network.34

The Commission did not seek

to regulate broadband service and went so far as to explicitly
acknowledge the federal law preemption.

The Company’s reliance

on such a preemption continues to be a red herring.

32

Id.

33

Id., p. 14.

34

June 14 Order, pp. 52-53.
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 CASE 15-M-0388
Revocation
Both the Commission and the DPS Staff have repeatedly
attempted to correct Charter’s behavior and secure its
performance of the Approval Order’s Network Expansion Condition.
This process began in mid-2016 in the form of informal
consultations and discussions regarding DPS Staff audits of
purported completed passings.

Those efforts next took the form

of the negotiation and adoption of the Settlement Agreement.
Contemporaneous with that effort, DPS Staff undertook the
painstaking process of collaborating with Charter and the
various Pole Owners around the State to ensure Charter was
receiving sufficient pole application approvals to complete its
network buildout, which has yielded substantial results and seen
pole application approvals dramatically increase.
These steps were all insufficient, however, to secure
Charter’s compliance with the Network Expansion Condition.
Charter instead opted to include addresses in its network
buildout December 18, 2017 target that were neither unserved nor
underserved including many addresses in densely populated urban
areas like NYC.

Thus, on March 19, 2018, the Commission was

compelled to issue an Order to Show Cause as to why certain
claimed passings should not be disqualified from the Company’s
buildout plan and in its June 14 Order, in fact, found those
addresses and others to be ineligible.

Through its June 14

Order disqualifying certain claimed passings, the Commission
made a further attempt to ensure that those areas of New York
State that lack access to a network receive service from
Charter, as the Company committed to provide and as the Approval
Order (and the Settlement Agreement) required.
Subsequently, the Company again failed to meet its
June 18, 2018 target and the Commission again determined that
the Company had included ineligible addresses in its buildout
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 CASE 15-M-0388
plan through its July 27 Order.

In short, Charter has had

repeated opportunities to demonstrate its commitment to and
compliance with the Commission’s Approval Order and Settlement
Order, modify its buildout actions to comply with the Network
Expansion Condition, and advance the public’s interest.
Unfortunately, through its systemic actions, Charter has ignored
these opportunities.
In spite of these opportunities, Charter repeatedly
and continuously fails to meet its buildout targets (in the form
of missing the May 2017, December 2017 and June 2018 targets).
And, instead of demonstrating that the gap between its target
and performance is narrowing, Charter’s most recent July 9, 2018
report to the Commission indicates that the gap is growing and
unlikely to ever be satisfied by the Company in the time allowed
under the Settlement Agreement.

Charter continues to show an

inability or a total unwillingness to extend its network in the
manner intended by the Commission to pass the requisite number
of unserved or underserved homes and/or businesses, which make
evident that there was not – and is not – a corporate commitment
of compliance with regard to this important public interest
condition.
Obscuring and Obfuscating Buildout Performance
In addition to Charter’s repeated violations of the
Approval Order’s Network Expansion Condition and the Settlement
Agreement, the Company continues to obscure and obfuscate its
actual performance.

For example, it has most recently insisted

on filing two versions of its buildout plan, including addresses
that the Commission has already disqualified.

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Charter also

 CASE 15-M-0388
continues to challenge the Commission’s June 14 Order,35 despite
the plain language in the Approval Order to the contrary.
The Company continues to advertise and claim that it
is "exceeding its mid-December 2017 commitment made to New York
[S]tate by more than 6,000 locations" and is "on track to extend
the reach of [its] advanced broadband network to 145,000
unserved or underserved locations by May 2020."36

Based upon

those representations, Charter was directed to stop making such
claims in the Commission’s June 14 Order.

The matter was also

referred to the New York State Attorney General for action under
the General Business Law or other relevant statutes and to the
United State Securities and Exchange Commission.37

To date, the

Commission is advised that Charter continues to air these
deceptive advertisements.

Such advertising is a public

declaration by Charter that it refuses to accept the
Commission’s determination of non-compliance.
Another example of Charter misleading the public can
be found in Metropolitan NYC, one of the most-wired cities in
America where essentially, 100% of the NYC areas are served by

35

See, generally, Case 15-M-0388, Charter Rehearing Petition on
Network Expansion Disqualification Order (filed July 16,
2018).

36

See, Case 15-M-0388, Letter from Paul Agresta, General Counsel
to Thomas Rutledge, Chairman and Chief Executive Office dated
June 26, 2018.

37

Id.
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 CASE 15-M-0388
one or more 100 Mbps wireline providers.38

Charter included

12,467 addresses in NYC in its January 2018 filing on the
December 2017 target, and indicated that all 12,467 were newly
passed with broadband services.

These addresses, however, were

required to be passed pursuant to the Commission cable rules and
the Company’s cable franchise agreements with NYC.
Further, through the course of its review, the
Commission also determined that Charter sought to include more
than 4,000 addresses in the Cities of Buffalo, Rochester,
Syracuse, Albany, Mt. Vernon, and Schenectady (the most densely
populated cities served by Charter outside of NYC) as part of
its buildout.

U.S. Census Bureau data indicates that the

average density in all of these municipalities is in excess of
35 homes per mile.

Through a review of online mapping, field

audits, and the Charter franchise agreements with these
municipalities, it was determined that all these addresses are
likely located in densely populated areas that already have, or
38

In fact, according to Time Warner Cable’s own press release,
“Time Warner Cable Completes ‘TWC MAXX’ Rollout in Los Angeles
and New York City,” dated November 13, 2014 (available at
https://www.timewarnercable.com/content/twc/en/aboutus/press/twc-completes-twc-maxx-rollout-in-la-and-nyc.html)
every New York City address passed by its network was capable
of receiving 300 Mbps broadband service as a result of the
MAXX project upgrades. The press release states that “[t]he
service transformation was announced by TWC in January 2014 as
a commitment to reinvent the TWC experience market by market,
beginning in LA and NYC. The enhancements have been rolled out
in stages by area as TWC completed a top-to-bottom network
evaluation and upgrades to support the advanced services,” and
that “[e]very customer in our two largest markets now has
access to the superfast Internet and new TV experience
promised by TWC Maxx.” Thus, in any case, no passings in
Charter’s NYC franchise area footprints could be deemed as
unserved (less than 25 Mbps available) or underserved (25
Mbps-100 Mbps) since all locations had 300 Mbps MAXX access as
of 2014, and every location in the franchise areas should have
had service available to it at that time.
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 CASE 15-M-0388
should have had network passing at the street level.

If these

locations were not in fact passed, then Charter may have been in
violation of its respective franchise agreements.
Based on a review of available pole application data,
Charter has no active pole applications for network expansion in
any of these cities, indicating that no new passings could have
been constructed and only new customers were made serviceable,
which means Charter was again attempting to deceive the
Commission and the public-at-large regarding its performance
under the Approval Order’s Network Expansion Condition.
Safety Issues
DPS Staff advises that the Company has been involved
in numerous incidents in which Charter (or its contractors) have
completed work that is not compliant with the National Electric
Safety Code (NESC) or is otherwise unsafe, or in violation of
the PSL and the Commission’s regulations.

These include, but

are not limited to failure to properly set poles, detached guy
wires laying on the ground creating tripping hazards for persons
and yard hazards for lawn mowers; over-tensioning guy wires
causing anchors to be pulled from the ground; cables attached
within inches of power conductors; damaged telephone lines,
disrupting phone service, including E911 service, to telephone
customers; and other unsafe or below standard installation and
construction work that has been identified by pole owners
performing either post-construction surveys, or otherwise
discovered during the routine course of pole owner outside plant
work, that necessitated the pole owners to contact Charter to
immediately dispatch work crews to investigate and repair these
types of non-compliant construction problems.
In addition, in early July 2018, an incident occurred
in which a Charter contractor was electrocuted, and
unfortunately died as a result of his injuries.
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The result of

 CASE 15-M-0388
this tragic incident was the issuance of a State-wide stop work
order from National Grid, the largest pole owner in Charter’s
territory.

This prohibition remains in effect as Charter has

persistently delayed in providing National Grid and the
Department responses to requested actions and information
necessary to ensure safe and adequate service.

As a result,

Charter remains unable to install facilities anywhere in
National Grid’s service territory.

This incident remains under

investigation as do wider safety issues associated with the
Company’s buildout.
In sum, these issues demonstrate that Charter has
failed to comply with the Commission’s laws and regulations,
which require, among other things that cable installations
comply with the NESC and other standards.

Safety is of

paramount importance and these violations are unacceptable and
demonstrate Charter’s unfitness to provide service to the people
of New York State.
Unconditional Acceptance
Finally, as noted above, instead of presenting an
unconditional written acceptance to the Approval Order, Charter
initially submitted an incomplete and conditional statement that
referenced only Appendix A to the Approval Order.

Charter

subsequently sought to use that incomplete and conditional
statement as a means to justify including locations within New
York City as passings that would qualify under the Approval
Order.

In turn, Charter sought to use that argument to avoid

the buildout requirement in unserved and underserved areas in
Upstate New York.

However, the Approval Order required that the

network buildout take place in unserved or underserved areas
located in the less-densely populated areas of the State.
Moreover, there simply can be no legitimate contention that NYC
is a less-populated area of the State.
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Given Charter’s attempt

 CASE 15-M-0388
to use its limited and conditional commitment as a means to
avoid the Network Extension Condition in the less-populated
areas, the Commission directed Charter to replace its defective
January 19, 2016 acceptance letter with a new letter indicating
full unconditional acceptance.

Thereafter, Charter filed a new

letter indicating unconditional acceptance that referenced the
entire Approval Order and Appendix A thereto.
Despite this recent written commitment, Charter – in
its filings with the Commission – continues to maintain its
position that NYC locations should count towards the Network
Extension Condition compliance totals established by the
Approval Order.

Thus, despite its submission of a letter

replacing its defective unconditional acceptance letter, Charter
through its conduct continues to display a lack of a commitment
of compliance toward its buildout obligations contained in the
Approval Order.

Charter’s actions continue to demonstrate that

it seeks to avoid the buildout obligations in less-densely
populated areas of the State.
Based on the forgoing, it appears that the prospect of
forfeiting its right to earn back all of Settlement Agreement’s
$12 million Letter of Credit does not seem to be an appropriate
incentive where the Company stands to save tens of millions of
dollars by failing to live up to its buildout obligations in New
York.

For each of the reasons stated above, the Commission

determines that the administrative remedies ordered to date –
establishment of a one million dollar escrow fund and forfeiture
of three million dollars under the Settlement Agreement’s Letter
of Credit - have been ineffective in prompting the Company to
satisfy its buildout obligations under the Network Expansion
Condition.

As indicated, the gap between required buildout and

completed passings is growing not shrinking and Charter seems
more focused on controlling its public relations perception than
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 CASE 15-M-0388
its public interest obligations.

The Company has had multiple

opportunities to correct these issues and either has not done so
or has been openly brazen in its efforts to avoid them.
The Commission is now forced to take the more severe
step of revoking and rescinding its January 8, 2016 Approval
Order, pursuant to the PSL including §§99, 216, 226, and 227.
To that end, Charter is directed to file with the Secretary to
the Commission, within 60 days of the issuance of this Order, a
plan to affect an orderly transition to a successor provider(s).
The plan will be subject to Commission approval.
As discussed in pertinent part, under Article 11
(cable companies), Charter may not abandon any service or
portion thereof without giving six months' prior written notice
to the commission.

Moreover, abandonment of any service is

prohibited without written consent of the franchisor, if any,
and the commission.

In granting such consent, the Commission

may impose such terms, conditions or requirements as in its
judgment are necessary to protect the public interest.

Here,

the Commission is requiring a six-month plan for Charter to
cease operations in areas formerly served by TWC to coincide
with the provisions of abandonment of a cable service.

In doing

so, the Commission is cognizant of the importance of having an
orderly transition to protect the health and safety of its New
York customers.

The Commission recognizes that this is not a

voluntary abandonment, but the statute must be read in
conjunction with the Commission’s most critical authority to
protect the health and safety of the Company’s customers and the
reliability of the network upon which hospitals, emergency
personnel and other first responder rely.
Similarly, to protect the health and safety of the
Company’s telephone customers, Charter is directed to continue
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 CASE 15-M-0388
providing service until Charter’s regulated New York operations
cease – via an orderly process.
Until the orderly cessation of Charter operations in
these areas has been completed, the Company must continue to
comply with all local franchises it holds in New York State and
all obligations under the Public Service Law and the Commission
regulations.

In the event that Charter does not do so, the

Commission will take further steps, including seeking injunctive
relief in Supreme Court to protect New York consumers.
CONCLUSION
The Commission determines that the requests for
rehearing are denied.

In addition, the Commission determines

that the administrative remedies applied to date to Charter’s
ability to comply with the Approval Order’s Network Expansion
Condition are insufficient and, more generally, Charter has
repeatedly failed to meet its obligations under the Approval
Order and to operate in compliance with the Public Service Law
and the laws and regulations of New York State.

Charter’s

repeated, continued, and brazen non-compliance with the
Commission-imposed regulatory obligations and failure to act in
the public’s interest necessitates a more stringent remedy as
discussed herein.
The Commission orders:
1.

Charter Communications, Inc.’s Motion for

Rehearing and Reconsideration on the Order on Compliance filed
July 16, 2018 is denied for the reasons stated in the body of
this Order.
2.

Charter Communications, Inc.’s Petition for

Rehearing and Reconsideration of the June 14 Order Denying
Response to Order to Show Cause and Denying Good Cause
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 CASE 15-M-0388
Justification filed July 16, 2018 is denied for the reasons
stated in the body of this Order.
3.

The January 8, 2016 Order Granting Joint Petition

Subject to Conditions in this proceeding is revoked and
rescinded for the reasons stated in the body of this Order.
4.

Charter Communications, Inc. is directed to file

a plan with the Secretary to the Commission within 60 days of
the issuance of this Order, consistent with the discussion in
this Order.

This plan will be subject to Commission review and

approval.
5.

Charter Communications, Inc. shall not abandon

any regulated service during the pendency of plan required to be
filed pursuant to Ordering Clause 4.
6.

In the Secretary’s sole discretion, the deadlines

set forth in this Order may be extended.

Any request for an

extension must be in writing, must include justification for the
extension, and must be filed at least one day prior to the
affected deadline.
6.

This proceeding is continued.
By the Commission,

(SIGNED)

KATHLEEN H. BURGESS
Secretary

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