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Clearwire Facing Class Action Lawsuit: Throttling Unlimited Data is A “Bandwidth Ponzi Scheme”

A class action lawsuit was filed last month against Clearwire in the United States District Court, Western District of Washington At Seattle, with multiple allegations against Clearwire and their practices. The most prevalent allegation regards Clearwire advertising their internet service as unlimited, however throttling it when the customer reaches a threshold.

The class of plaintiffs allege that Clearwire baits customers by promising them “High Speed” or “Faster” unlimited internet to get them to subscribe to the service however once subscribed this class of former customers says something totally different happens.  The lawsuit says “In reality, Clearwire throttles down the speeds of it’s Internet service to speeds similar to dial  up telephone modem speeds…”

It’s widely known that Clearwire has been in financial distress for the last 10 months or so. Their past few quarters they’ve talked about possible cutbacks, closing retail doors and letting go 15% of the work force.  A Clearwire insider has told us that they have been doing significant amount of layoffs and everyone in their office is worried that their days are numbered.

On the other hand, prior to his departure, Clearwire’s former CEO Bill Murrow, reported that Clearwire hit its 2010 rollout goal.  The class of plaintiffs in this lawsuit allege that they did so with this bait and switch.

What’s more significant to us is the fact that the class alleges that Clearwire was engaged in “Bandwidth” ponzi scheme. The lawsuit says “Clearwire’s practice is akin to a bandwidth Ponzi scheme in the sense that Clearwire advertises and sells a service, knowing in advance that there is no way it can provide such service on an ongoing basis – ie, Clearwire sells subscriptions prior to build out of sufficient infrastructure to support the “High Speed Internet” it advertises.”

In other words the class alleges that Clearwire signs subscribers up and then uses those proceeds to beef up the network in that subscribers area by attracting them with unlimited Internet and then throttling speeds.

Seattle based T-Mobile USA is also running unlimited data plans where customers will be throttled after they reach a threshold of 2gb of data. While T-Mobile is upfront in this practice and it’s also a “promotional” plan to get customers to use more talk and text, it’s still a stretch to call it “unlimited” when it in fact is not.

The internet is always ripe with allegations of class action lawsuits against this carrier, service provider or OEM. Typically spearheaded by one or a few disgruntled customers who have not actually sought legal advice from a lawyer in their own town much less the city where the company they have the gripe against is based.

In the case of this class action lawsuit against Clearwire, plaintiffs from around the United States did in fact collaborate with each other and then acquired a Washington State based lawyer to file this lawsuit  last month.

Source: ClearwireAmendedSupplementedComplaint.ECF_

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