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MarketScreener Homepage  >  Equities  >  Nasdaq  >  Charter Communications, Inc.    CHTR

CHARTER COMMUNICATIONS, INC.

(CHTR)
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Broadband Internet Promises Are Left Unfulfilled in Many Rural Areas -- Journal Report

10/22/2020 | 10:50am EST

By Drew FitzGerald

Locals often huddle outside the library in Hudson, N.Y., in cars or seated in the open air, to tap its Wi-Fi network for a high-speed internet connection.

The scene is a far cry from what was promised in the same spot four years ago, when New York Gov. Andrew Cuomo touted a plan to provide universal high-speed home internet service in the state by 2018. The ambitious initiative would spread broadband "faster than anyone has ever contemplated," the governor said then during a press conference at the library.

Residents a few miles away from the library say they are still waiting for service. And their frustration has grown since the coronavirus pandemic forced families in their rural communities to work and study online, often through connections that are barely capable of supporting one video stream, let alone several.

"It's like the apple is dangling in front of my eye," says Marcy Feld, a photographer based in nearby Hillsdale, N.Y., referring to a fiber optic cable that stopped well short of her property but is close enough to be a constant reminder of what she's missing. Her family of five relies on satellite provider HughesNet for relatively slow and expensive internet service.

New York tried to fix this problem years ago by showering rural internet providers with $500 million in state subsidies -- in addition to hundreds of millions in federal subsidies -- to reach more than two million residents who lacked broadband. Separately, a merger settlement forced cable operator Charter Communications Inc. to add 145,000 internet connections in New York in exchange for allowing its purchase of Time Warner Cable.

Neither plan worked as advertised. New York Public Service Commission regulators pushed Charter's broadband-expansion deadline to mid-2021 after the state comptroller found the cable company serving fewer locations than expected. The cable company recently told regulators it had connected 109,000 of the required locations. A spokesman for the comptroller said the watchdog agency is also auditing the state's subsidy program, called New NY Broadband.

'Finish the job'

The digital divide -- in New York and elsewhere -- hasn't gone away, despite much money spent and many speeches made. A patchwork of conflicting government programs, flawed maps and weak enforcement have left broad swaths of the country without access to high-speed or even basic internet service when people need it more than ever.

The result is a longstanding source of personal frustration and economic disadvantage for many rural communities in areas where spread-out housing makes adding new wires expensive. That lack of access extends to many more-crowded suburban and exurban counties where home internet coverage is available in one neighborhood but out of reach just down the road.

Companies including CenturyLink Inc., Frontier Communications Inc. and Consolidated Communications Inc. have used billions of dollars of federal subsidies to wire homes with broadband cables for the first time. But at least 18 million people in the U.S. still lack access to true broadband, according to the Federal Communications Commission's latest national deployment report. Other studies have found a much higher number of households without usable broadband service.

Some homes have fallen through the cracks because federal regulators graded companies' performance using inaccurate maps. The FCC this year devised a plan to use more-accurate geographic data, but the initiative lacks congressional funding.

In New York, the Empire State Development agency oversees the rural expansion program that benefited from $500 million of state funds. The Public Service Commission, another state regulator, oversees Charter's mandated broadband expansion.

A spokesman for Empire State Development said in a statement that New York has narrowed the broadband access gap from 30% of all residential and commercial locations in the state to 2% over the past five years, with construction of connections to thousands of locations continuing.

"Some New NY Broadband projects are ongoing, in part as a result of Covid-related delays," the spokesman said.

"I commend the governor immensely for what he's tried to do," says David Berman, co-chairman of Connect Columbia, an association of local officials drawn from across the county. "Now we've got to finish the job."

Patti Matheney, a member of the town board in nearby Ghent, says that while state subsidies have added many new homes to the network, "it never feels right if I have it and my neighbor doesn't."

"The providers have not been very forthcoming with where they're going, with their maps," Ms. Matheney says. "So we were flying blind a lot of the time."

Maps with gaps

Hillsdale resident Tod Wohlfarth pays $110 a month for a low-speed digital subscriber line from Consolidated Communications. He says the service is unreliable and tops out at 15 megabits per second, well below the 25 megabits level the Federal Communications Commission considers necessary to support broadband applications like videoconferencing and streaming TV.

The New NY Broadband program steered about $1.5 million to Hillsdale and nearly $30 million to Columbia County, according to state data. The region also received federal dollars from the second phase of the Connect America Fund.

Mistrustful of state-supplied data that showed his county well covered by broadband subsidy programs, Mr. Wohlfarth and his neighbors formed a committee to press the issue. The committee earlier this year surveyed Hillsdale residents and found that more than 70% of them lacked broadband service.

Mr. Wohlfarth, a creative marketing director, has been working through local groups he and his neighbors formed to convince Consolidated to string high-speed fiber optic through the area. In July, several Verizon trucks worked on a nearby road, giving him hope that the area was due for an upgrade, but a worker said there was nothing he could do.

The two phone companies operate in different parts of the county. Local provider FairPoint, which Consolidated later acquired, began expanding fiber-optic lines into Verizon territory after Verizon declined to participate in the subsidy program. Program rules affected which homes received upgrades.

"Call your congressman," the Verizon technician advised, according to Mr. Wohlfarth.

County residents say that advice is common. A Public Service Commission spokesman said the department keeps track of internet providers' progress by fielding "inquiries from elected officials and consumers who have questions or concerns about service in their area," in addition to audits and other checks.

Consolidated Communications public-policy executive Michael Shultz says the telephone network operator built new lines to all of the New York locations covered by its federal subsidies and almost all of the locations the state paid to cover. The company would need more funding to reach other locations, he added.

In the meantime, Mr. Wohlfarth says he's waiting for some network operator, whether it's Consolidated, Charter or someone else, to offer service capable of reaching the modern internet.

"I've checked the buildout lookup tool every other month for years now," he said. "Nothing for me."

Lillian Rizzo contributed to this article

Mr. FitzGerald is a Wall Street Journal reporter based in Washington, D.C. He can be reached at andrew.fitzgerald@wsj.com.

Corrections & Amplifications

This item was corrected at 8:13 p.m. ET to reflect that New York Public Service Commission regulators agreed to extend Charter Communications' broadband-expansion deadline. The original version incorrectly suggested it was the state comptroller who prompted the extension.

(END) Dow Jones Newswires

10-22-20 1250ET

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