The settlement is the result of a 2017 lawsuit that alleged the company and its predecessor Time Warner Cable had been delivering slower than promised Internet speeds to customers since 2012.
(TNS) — After being accused of defrauding its Internet subscribers, Charter Communications Monday agreed to a whopping $174.2 million settlement with New York Attorney General Barbara Underwood, the Daily News has learned.
In February 2017, the AG charged in a civil lawsuit that Charter Communication, and its predecessor Time Warner Cable, knowingly delivered since 2012 slower Internet speed to customers than promised.
Under a deal reached Monday, Charter Communications/Spectrum Management Holding Company, agreed to repay $62.5 million directly to more than 700,000 active customers, who will each receive between $75 and $150 from the company.
It is believed to be the largest ever refund by an Internet provider in U.S. history, according to the Underwood's office.
The company also agreed to provide 2.2 million of its active subscribers in New York more than $110 million worth of streaming services and premium channels at no charge, the AG's office said.
"This settlement should serve as a wakeup call to any company serving New York consumers: fulfill your promises, or pay the price," said Underwood said.
The attorney general said not only will it cost the company tens of millions of dollars, but "it also sets a new standard for how Internet providers should fairly market their services."
Charter, which purchased Time Warner Cable and renamed it Spectrum Cable in 2016, has agreed to implement various reforms, including "substantial network investments," modem replacements, and upgraded WiFi routers, and will also be subjected to new advertising obligations and prohibitions.
It is the first settlement resulting from a broader investigation into broadband Internet service providers in New York.
Charter did not admit to any wrongdoing in the settlement.
"We are pleased to have reached a settlement with the Attorney General on the issue of certain Time Warner Cable advertising practices in New York prior to our merger, and to have put this litigation behind us," said Charter spokesman John Bonomo. "Charter has made, and continues to make, substantial investments enhancing Internet service across the state of New York since our 2016 merger, as acknowledged by the Attorney General in this settlement."
He added: "We look forward to continue providing the best TV, Internet, Voice and Mobile products to our customers, and to bringing broadband to more homes and businesses across the state."
The AG's lawsuit, which was first filed in Manhattan state Supreme Court when Eric Schneiderman was attorney general, included emails showing how top company executives knew that despite the company's promises, they couldn't deliver the higher Internet speeds.
In many cases, Internet speed was up to 80% slower than advertised and customers couldn't access such services as Netflix, Facebook and gaming platforms and Internet, the lawsuit alleged.
"We are going to experience a mismatch between what we actually sell to the customer and what they actually measure on their laptop, tablet, etc.," read one executive's email, according to the lawsuit.
Charter fought to move the case to federal court, but it was ultimately returned to state Supreme Court. It subsequently lost its bid to have the case dismissed outright.
The complaint had also charged that Time Warner Cable had knowingly leased older modems that couldn't deliver high-speed services to 900,000 subscribers.
Meanwhile, the lawsuit is separate from a battle Charter is having with Gov. Cuomo, who has accused the company of going back on its promise to greatly expand broadband Internet access upstate as part of the state Public Service Commission approval of the merger between Charter Communications and Time Warner Cable.
The Public Service Commission earlier this year sought to force Charter out of New York by rescinding its approval and forcing Charter to sell its operations to another cable company. Charter and the PSC have been negotiating the matter, with the state giving the company until the end of the year to reach a settlement.
The cable giant's news channels like NY1 have also been boycotted by many New York Democratic officials like Cuomo and Mayor de Blasio over an ongoing nearly two-year strike by one of its unions.
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