As this case of fraud took place in New York State, it is possible you may not have heard of Charter Cable. It is the company that was acquired by Time Warner in 2016 and has since become the second largest cable provider in the United States. Learning about ethics the hard way: Charter/Spectrum Cable.
However, the millions of Charter subscribers in New York State knew for quite some time that their service wasn’t all it was cracked up to be. Complaints against the company and frustrations with the slow service dated back to 2012. It wasn’t just the speed of the cable service but the quality. Subscribers were paying but the company did not bother to deliver. In frustration, angry subscribers took the company to court and made their case.
Charter (and its partner Spectrum) while not admitting they intentionally deceived customers were found guilty. The court made a significant award. As of this date, about 720,000 subscribers to the cable service will receive refunds between $75 and $150. Additionally, nearly 2.2 million Charter Cable subscribers are going to receive a free premium channel package along with streaming service. In all, the refunds and programming packages will cost Charter Communications close to $174.2 million. The settlement represents the largest refund that a telecom company has ever paid subscribers.
On December 12, 2018, New York Attorney General Barbara Underwood announced:
“This settlement should serve as a wakeup call to any company serving New York consumers: fulfill your promises, or pay the price. Not only is this the largest-ever consumer payout by an internet service provider, returning tens of millions of dollars to New Yorkers who were ripped off and providing additional streaming and premium channels as restitution – but it also sets a new standard for how internet providers should fairly market their services.” 
Fish in a Barrel
The company has said all of the “right things” in this case, including that they will improve their infrastructure and service. What they have yet to do is to admit their lack of ethics in taking money for better service, but not delivering on their promises.
It begs the question of “How would most of us know?” For most of us, cable is a rather mystical part of the technology world. We might complain on a Saturday night when we sit down to view a movie that we never quite get, but would we definitively know if the service were truly slow?
An unethical cable company promising “fast service” and not delivering, is not so easily found out unless subscribers’ band together and file a class action lawsuit against the provider. Upon investigation, it was determined that the ongoing frustrations were in fact, correct. For an unethical company, charging more for faster service – and not providing them represented a major opportunity. Why spend more on service upgrades if there is no need to do so? In truth, an unethical company might realize that several dozen complaints a night into a call center cost “virtually nothing.” After all, what alternatives would most customers have?
Who knew what?
The need to defraud in this case was apparent. For six years, Charter/Spectrum Cable reaped the rewards of customers paying for upgrades and it was added to the bottom line in pure profit. Profits are what investors want to see. However, at issue here is who knew what – and when. Charter Cable is owned by Time Warner (more recently, Warner Media). It is not an independent company but kicks its profits up to the massive corporate entity with revenues of more than $32 billion. Given the sheer number of staff accountants and financial people, every operating unit within the Warner Media family is well known and precisely tracked. It is hard to imagine that no one at the highest corporate levels was unaware that Charter was not delivering on its promises.
Perhaps the rationalization for committing this fraud was as old, straightforward and as basic as it could get: “if it ain’t broke, why fix it?” The rationalization was an easy one. Customers may have complained for many years, but there was no hurry to do anything ethical.
Insofar as the $174 million awards are concerned, it does sting to some extent, but it won’t cripple anything. It might be tossed off with a shrug. If we think about it, how do we really value a cable package? No doubt, the company will go back to charging for the services they will be giving away for now.
Nevertheless, if customers force companies to be more ethical, the next time around, it could be much worse because expectations are finally in place. Learning about ethics the hard way: Charter/Spectrum Cable
