Refunds Coming for 700,000 Spectrum Internet Customers

Some 700,000 Spectrum/Charter cable and internet customers may soon be getting some unexpected money in the mail following a $174 million settlement with the company that will mean free HBO or Showtime for some households, and direct refunds in other cases.

Under the settlement, parent company Charter Communications will provide $62.5 million in refunds to an estimated 700,000 internet customers who had inadequate modems or routers to get the speeds that had been promised. Also in the deal, three months of free HBO or six months of Showtime to TV and internet customers who don't subscribe to both channels. 

Internet-only customers will be offered a free month of Spectrum's new streaming TV service along with a free month of Showtime.

Charter will notify subscribers of their eligibility for refunds and disburse them within 120 days.

Here's more information from the New York Attorney General's Office

The landmark agreement settles a consumer fraud action alleging that the state’s largest ISP, which operated initially as Time Warner Cable and later under Charter’s Spectrum brand name, denied customers the reliable and fast internet service it had promised. This is the first settlement to result from the Attorney General’s major investigation of broadband internet service in New York.

The settlement includes direct restitution of $62.5 million for over 700,000 active subscribers, who will each receive between $75 and $150, as well as streaming services and premium channels, with a retail value of over $100 million, at no charge for approximately 2.2 million active subscribers.

As part of today’s settlement, Charter agrees to a financial settlement of $62.5 million in refunds plus streaming services and premium channels to subscribers with a retail value of over $100 million. The direct customer refunds alone are believed to constitute the largest consumer relief payout ever paid by an ISP in U.S. history. The direct restitution serves to compensate subscribers who Charter equipped with outdated modems and routers and with premium speed plans that consistently failed to deliver the advertised speeds. The streaming benefits serve to compensate subscribers for Charter’s historic failures to faithfully deliver third-party internet content that it had advertised.

Charter is also required to implement a series of precedent-setting marketing and business reforms, establishing a new model for the broadband industry.

The key financial terms of the agreement and the marketing and business reforms are set out below.

Financial Terms

1) Consumer Relief (Direct Refunds): $62.5 million

a. Charter to award a $75 refund to each of over 700,000 active subscribers based on:

(1) Leasing an inadequate modem; (2) Leasing an inadequate WiFi router; OR(3) Subscribing to a Time Warner Cable legacy speed plan of 100 Mbps or higher.

b. Charter to award an additional $75 refund to each of over approximately 150,000 subscribers who had an inadequate modem for 24 months or more.

Charter will notify subscribers of their eligibility for refunds and disburse them within 120 days.

Note: Charter has already disbursed over $6 million in refunds for inadequate modems to date, separate from today’s settlement. Because these subscribers received full compensation, they are ineligible for a further payment.

2) Consumer Relief (In-Kind Video and Streaming Benefit): Worth over $100 million

In addition to the direct refunds detailed above, Charter will offer free streaming services to approximately 2.2 million active internet subscribers:

a. Charter will offer all subscribers currently receiving internet and cable television from the company a choice of either three free months of HBO or six free months of Showtime. (Note: This benefit is available to subscribers who do not already subscribe to both of the offered networks through Charter.) 

b. All other active Charter internet subscribers will receive a free month of Charter’s Spectrum TV Choice streaming service—in which subscribers can access broadcast television and a choice of 10 pay TV networks—as well as a free month of Showtime.

Charter will notify subscribers of their eligibility for video and streaming services and provide details for accessing them within 120 days of the settlement.

Receiving the video and streaming services as restitution will not affect eligibility for future promotional pricing.

3) Substantial Network Investments

Following the Attorney General’s investigation, Charter made significant investments to address the problems identified in the complaint and improve internet service in New York. This includes network enhancements, modem replacements, and upgraded WiFi routers.

Marketing and Business Reforms

The settlement also includes the follow key injunctive terms:

1) Affirmative Advertising Obligations: Charter is required to (a) describe internet speeds as “wired”; (b) disclose that wireless speeds may vary; and (c) disclose the factors that might lead actual experience to vary, including based on the number of users and device limitations. This applies to all advertising and marketing of speeds, including television and other commercials, website and website communications, print ads, bill inserts, emails, and more.

2) Substantiating Internet Speeds: Charter must substantiate internet speeds using an industry-accepted testing methodology, and discontinue any speed plan that cannot be substantiated.

3) Advertising prohibitions: Charter is prohibited from making unsubstantiated claims about (a) the speed required for particular internet activities like streaming; (b) the reliability of the internet service (e.g., no buffering, no slowdowns); or (c) the availability of the promised speed over WiFi.

Charter is also prohibited from describing internet speeds as “consistent” without fully satisfying the FCC Consistent Speed Metric and must make commercially reasonable efforts to deliver access to all online content and services featured in its advertisements.

4) Equipment Reforms: Charter is required to: (a) provide subscribers with equipment capable of delivering the advertised speed under typical network conditions when they commence service; (b) promptly offer to ship or install free replacements to all subscribers with inadequate equipment via at least three different contact methods; and (c) implement rules to prevent subscribers from initiating or upgrading service without proper equipment for the chosen speed tiers.

5) Sales and Customer Service Training: Charter must train customer service representations and other employees to inform subscribers about the factors that affect internet speeds. Charter must also maintain a video on its website to educate subscribers about various factors limiting internet speeds over WiFi.

Photo: Getty Images

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