Charter has agreed to pay $13 million to New York State after failing to complete broadband construction that was required as part of its purchase of Time Warner Cable. Charter can get $12 million of that back if it completes the buildout under a revised schedule.

Charter was required to extend its network to 36,250 homes and businesses in the state within one year of the TWC merger being approved, but it only completed the buildout to 15,164 of them by the May 18 deadline, state officials said in an announcement Tuesday. The NY Public Service Commission is taking public comments on the settlement before giving it final approval.

The $13 million payment includes $1 million in grants for computer equipment and Internet access for low-income residents. The other $12 million is "a security to meet its network expansion commitment going forward," which Charter can recover upon completing the merger conditions.

"To ensure the company keeps its promise, Charter will forfeit its right to earn back up to $1 million each time it misses a six-month build-out target," the state said. Charter can "earn back up to $12 million based on future performance," the settlement said.

Charter bought Time Warner Cable last year in a deal that made it the second-largest US cable company after Comcast and the biggest in New York. To get the merger approved, it agreed to conditions imposed by the federal government and individual states. The New York merger agreement required Charter to bring service to 145,000 new homes and businesses in unserved or underserved areas of the state by 2020, with 36,250 new locations required each year during the four-year period. The condition is considered met as long as Charter's network passes each home and business, regardless of whether the potential customer signs up for service.

The revised schedule announced this week will still require Charter to complete all 145,000 homes and businesses by May 2020, but the interim targets were changed. Charter's next deadline is now December 16, 2017, when it has to have 36,771 homes and businesses completed.

Overall, Charter's New York franchise area includes 5 million households, and the company has more than 2 million subscribers in the state.

Charter blames pole owners

Charter blamed the delays on utility pole owners.

"Delays in pole-attachment approvals and make-ready [work] by pole owners made it impossible to extend our network to the targeted number of homes in the first year post-merger—an important fact that the settlement appropriately reflects," a Charter spokesperson told Ars. "Thousands of Upstate consumers now have access to Spectrum services where approvals and make-ready have occurred, and we have a solid deployment plan to reach the thousands of additional homes in our commitment."

The cable company pointed out that it met "the vast majority" of its year-one merger commitments, including speed upgrades to existing customers.

Some cities have tried to reduce pole delays with "One Touch Make Ready" rules that let a single ISP make all of the necessary wire adjustments. Charter itself has tried to prevent other ISPs from gaining faster access to poles—last year, Charter sued the local government in Louisville and Jefferson County, Kentucky to stop an ordinance that was designed to give Google Fiber easier access to utility poles.

Disclosure: The Advance/Newhouse Partnership, which owns about 13 percent of Charter, is part of Advance Publications. Advance Publications owns Condé Nast, which owns Ars Technica.