Cable Giant Charter Fined $19 Million For Lying About Competitors Going Out Of Business

from the just-another-day-in-US-telecom dept

When last we checked in on cable giant Charter Communications (Spectrum), the company was busy using the Boys and Girl's Club of America as a prop to try and kill helpful conditions affixed to its megamerger with Time Warner Cable. This week, the company's under fire after it circulated advertising telling customers (falsely) that one of its competitors (Windstream Communications) was going out of business. While Windstream had filed for Chapter 11 bankruptcy protection, it very much remains in business. Yet Charter's advertising to customers informed them the company would likely be shuttering its doors soon.

This week Judge Robert Drain of US Bankruptcy Court for the Southern District of New York ruled (pdf) that Charter must now pay Windstream $19 million for spreading false claims about the company:

"Charter's goal with the mailings "was to induce the Debtors' customers to terminate their contracts and switch to Charter by sending them literally false and intentionally misleading information about the Debtors' bankruptcy cases and financial wherewithal," the ruling said. Charter premised its ad campaign "on false assertions regarding the Debtors' bankruptcy cases," the ruling said."

Charter's lawyers had, as they do every time they're in court, tried to argue that lying about a competitor was protected speech, something the Judge didn't look to kindly on:

"Charter claimed that punishment for its "literally false and intentionally misleading advertising campaign would violate their First Amendment right to free speech," the judge wrote. But First Amendment rights are not absolute and do not protect Charter's false statements about Windstream's bankruptcy proceedings and financial wherewithal, he wrote. "Such commercial speech is properly curtailed by precluding such wrongful conduct," he wrote."

All of that said, Charter, hand in hand with Comcast, is securing itself an ever larger monopoly over broadband access in countless US markets, especially at faster speeds. Cable giants now enjoy a 70% market share and growing over fixed broadband access, thanks in large part to regional phone companies that were too lazy, cheap, or heavily indebted (usually from "growth for growth's sake" megamergers) to actually upgrade aging DSL lines. In fact, many of these companies are literally just letting their networks fall apart and refusing to repair customer lines on a timely basis.

As such the irony is that Charter didn't really even need to lie, since most frustrated telco DSL subscribers likely would have eventually headed their direction anyway. But when you're a natural monopoly in a market that's neither competitive nor competently or consistently regulated, you tend to operate as if there's no repercussions for your actions -- because there usually aren't.

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Filed Under: broadband, competition, false advertising, truth in advertising
Companies: charter communications, charter spectrum, windstream


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  1. identicon
    Anonymous Coward, 14 Apr 2021 @ 8:26am

    Re: I swear, the more I hear...

    Adam smith is a much misunderstood man. He was actually a social justice activist, who lived in an era when much trade was regulated by government fiat and handed to favoured merchants, resulting in the trapping of most of Scotland in perpetual poverty from which there was no hope of escape. His free market philosophy was a very practical attempt to improve the lot of the poor in his native land which, by and large, worked to some degree. He didn't trust businesses or businessmen in the slightest, but had the insight that, if forced to compete with each other, they could better the lot of the common man.

    Too many these days see the ills of rampant and rapacious monopolistic capitalism and espouse a retreat to market management not too different from the kind Smith opposed, not seeing that it would make matters worse, not better. Worse still are the market ideologues who see "free market" as only meaning free for government, not understanding that, without competition, markets are not free and operate solely for the benefit of the monopolists. Adam Smith would oppose both, which unfortunately seem to comprise the majority of the political discourse in this day and age.


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