State doesn’t have equipment, data to properly regulate Spectrum, audit finds

Rick Moriarty

The Post Standard

Mar 3, 2020

The New York Public Service Commission is literally not equipped to properly monitor Spectrum and other utilities across the state, according to an audit released Tuesday by state Comptroller Thomas DiNapoli.

Auditors from DiNapoli’s office found regulators lacked the equipment to measure internet speeds, used inaccurate data to track service reliability and imposed only four penalties in four years, according to the audit.

“When New Yorkers flip on the lights, log in or make a call, they should be confident that someone is making sure these service providers are living up to their promises,” DiNapoli said in a statement Tuesday. “My auditors found the state Public Service Commission was not doing enough to make sure utilities are holding up their end of the deal. PSC lacked critical equipment to do its job and rarely inflicted financial consequences when companies did not deliver. This has to change.”

The commission said it strongly disagreed with the audit’s findings.

“The Department of Public Service uses all enforcement tools at its disposal to hold utilities accountable and major enforcement actions have resulted in more than $675 million in benefits for New York consumers in just the last two years,” it said in a statement. "Our dedicated staff is in the field every day inspecting utility work for compliance and their shareholders pay the consequences when they fail to meet our requirements.

DiNapoli said his office began the audit after lawmakers in the Hudson Valley raised concerns about poor internet service and him to look at Charter Communications, Spectrum’s parent. The Public Service Commission consists of five members appointed by the governor. It regulates 650 utilities operating in the state.

The PSC approved Charter’s merger with Time Warner Cable in January 2016, a merger that made Charter the state’s largest cable company and the second largest in the country. The commission by law cannot regulate broadband, but it conditioned its approval of the merger on Charter extending its network to an additional 145,000 unserved and underserved homes within four years, beginning Jan. 8, 2016, with a goal of 25 percent expansion annually.

The agreement included a provision under which Charter would be required to pay substantial penalties if it failed to meet network build-out milestones. Auditors said the commission should have collected $5 million in fines when the company failed to meet the milestones. However, it has only been able to collect $1 million, according to the audit.

The commission said Charter owed $4 million in fines, not $5 million, and that the commission was legally barred from collecting more than $1 million by litigation filed by the company.

It said it took “vigorous and timely enforcement action against Charter" in mid-2018 when it revoked its approval of the company’s merger with Time Warner Cable.

“Ultimately, the enforcement action was settled in a manner that resulted in a company commitment to expand its network entirely Upstate at an estimated cost of more than $600 million,” it said.

The merger approval also required Charter to upgrade its network to permit the transition to all-digital technology, including an increase in broadband speeds by the end of 2018, DiNapoli said. Charter submitted required documentation stating it had complied with the requirement, but the Department of Public Service, which the commission oversees, did not verify that the upgrades had been completed, he said.

“In fact, DPS staff stated they lack the equipment required to perform such verification,” his office said in a statement.

The commission said it did not (but does now) have specialized broadband speed testing equipment at the end of 2018 when the first portion of the Charter speed enhancement requirement was due. However, it said its verification of Charter’s compliance was not contingent upon a single action of conducting physical speed tests because the required speed enhancement work by Charter “were of a lengthy duration, complex and comprehensive in nature.”

In addition, Charter pledged to invest $50 million in service quality improvements over the two years following approval of the merger, but the department did not verify the improvements had been made by May 2018, auditors said.

The commission said staff resources were dedicated to settlement negotiations and litigation preparation related to its revocation order. Since the settlement with Charter, staff has resumed examining and verifying Charter’s investments in service quality, it said.

DiNapoli recommended the Public Service Commission:

Actively monitor all conditions listed in orders to ensure all utilities are complying. Develop and issue orders that include well-defined, measurable and enforceable conditions. Verify the accuracy of utility company data used by the commission or department to evaluate or make decisions concerning the utilities, including data submitted for performance metrics, safety standards and reports. The commission said it agrees with the comptroller’s recommendations but believes it is already in compliance with most of them.

Lara Pritchard, a spokesperson for Charter, said Wednesday the company has “not only met, but exceeded its merger commitments, bringing hundreds of millions of dollars in new investment and significant enhancements to the products and services offered to its customers in New York."