Charter Communications to fight back on NY expulsion

Charter Communications plans to push back against the New York State Public Service Commission, which recently voted to revoke the company’s 2016 acquisition of Time Warner Cable, Inside Towers reports. The company stated it will litigate and believes it is in the right.

Charter Chief Executive Officer Tom Rutledge made the announcement to investors at the company’s Q2 earnings report on July 31. The company also revealed its aggressive plans to  deploy new mobile services that require infrastructure support. Charter has already established a broadband network in New York state and claimed its recently merged company with Spectrum has spent approximately $16 billion on technology and infrastructure during the last four years and claims it offers, “the industry’s fastest base broadband speed.”

“Just to put it in perspective, we’re operating in 41 states, we have thousands of franchise agreements and generally, we have good relationships with the communities we serve and we live up to our commitments, and we have in New York State,” Rutledge said.

New York state removed Charter because it felt the company had not complied with broadband construction requirements in an effort to serve 145,000 residential housing units and businesses within four years. The Public Service Commission also fined Charter millions of dollars for missed deadlines.

“We believe we’re in compliance with the plain reading and the build out requirements that the state imposed on us in merger conditions and we have a very strong legal case and ability to defend Charter Communicationsourselves,” Rutledge said. “And it could play out over a lengthy period of time if required.  We do have labor issues in New York City which we believe have politicized the actions of the PSC, and so we’re concerned about that,” he told investors.

Aija Leiponen, an associate professor with Cornell University’s S.C. Johnson School of Business believes the sides will reach an agreement and the company will remain in New York, according to the Watertown Daily Times. Leiponen stated New York will have leverage in court, but it might consider negotiating because removing Charter would be expensive and difficult. Plus, the state needs someone to bring high-speed internet to rural areas.

Meanwhile, Charter wants to stay in New York because despite how much the build out will cost, serving metropolitan areas is a lucrative opportunity. However, the commission is still adamant about replacing Charter and remains hopeful it will fulfill the expansion plan it created when it approved the merger in 2016.

What works against Charter however, is not many companies can match Charter’s assets, according to Leiponen. Comcast is perhaps the only provider that could, but it has not commented publicly on the issue.  The other obstacle facing the state will be selling another provider on its broadband objective.

“There are so few possible buyers. It’s very expensive,” Leiponen told the Watertown Daily Times. “The reason (companies) don’t want to build rural broadband is because it’s unprofitable.”

 

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