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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_

8 Comments

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  1. I used clearwire for ten years and have had enough of their poor service so this is my last month with clearwire as my new E-mail address will be gmail.I was with clearwire for over 10 years over which time I was forced to buy new modems that were supposed to upgrade my sevice.Of course it never did.I will not pay over $45 a month for clearwire’s inferior service.Please invlude me in the class action suit.
    Thankyou,
    Sincerely,
    Eric Buechelmaier
    ebuechelmaier2@gmail.com

  2. Do you realize that the e-mail address that they provide to you is actually a google e-mail. Google e-mail is really free!!!! They charge you for a free e-mail account.
    Cancel your account come the billing date, they will cancel your account on the day you called in, and then they say they will re-activate you. Once you have changed companies, have the telephone number even moved to another company, they will then re-activate your internet account including prior e-mail which will not work — and then begin billing you.
    You don’t hear from them until the bill has reached $200.00 or more, and then you have to fight them somemore to get it removed.
    This company is one big scam company!
    Here is a good phone number for their escalation department 877-537-1458
    Here is a good e-mail address for their Executive Escalation department
    ExecutiveEscalations@clearwire.com
    This company needs to close its wires / doors permanently!

  3. I own a cell phone store in the Nashville area. A while back a clear representative came in trying to sell me on becoming an authorized dealer. I agreed to meet with her and honestly her pitch sold me. There commission structure was one of the best I had seen, the upfront dealer costs of $1000 were cheap compared to other companies, a large percentage of that money went to purchasing promotional items, and she made the service sound solid.One of the prerequisites of becoming a Clear dealer is that you have to purchase there service on a take 3 plan with a 2 year contract. I had no problem with this, if I am to sell there product I should be using it. I was told the service was unlimited with no cap in the 4G bandwidth. I was also told that if I wanted to buy out of my contract I would only have to pay 2 months of service.After purchasing Clear, and becoming a authorized dealer I was pleasantly surprised with the service. My speeds were really fast, I was streaming full movies with no problems, and I was saving money since I was supplying Internet to my store and my home on the same plan.After about a month of service I started to experience the nightmare of Clear. My speeds had dropped dramatically, and the service was unbearable. When it worked it would take minutes to open the simplest of pages. I remember one time where I timed it and it took 1 min 32 seconds to open Craigslist! As a dealer I tried to contact a representative to find out what was happening with my account. For the life of me I could not talk to a customer representative. The first few times I called I gave up after waiting for about 45 minutes.After finally buckling down, determined to talk to a rep, I finally reached one after being on hold for a hour and a half. After another half hour of being given the run around they finally admitted to throttling my speed. I was furious. When I tried to cancel my account I was told my termination fees were close to $300. Way more than my rep quoted me on.The first month I had Clear my rep was helping me to sell it. I sold it to three customers before my account was throttled making back approximately half the money I spent to become a Clear dealer.After my web was throttled I would no longer sell it to my customers. I actually had a few customers come in specifically to buy Clear and I talked them out of it. I make about $300 a customer that I am able to get on a 2 year contract. I threw this money away because I am a firm believer in believing in what you sell. Also, at about the same time our account began to get throttled, the rep that sold us clear was laid off due to Clears massive cutbacks. The new rep that replaced her, I had never met.Clear stole $1000 from me with false promises. Additionally they also are continuing to get $83 from me per month because I am unable to terminate the service. I have since wrote my rep and explained to him my opinions and in turn they terminated my dealer privileges. which is all in good as I would not sell there service anyway.I keep the Clear sign in my store window so that if someone comes in inquiring about it I can save them the nightmare that is Clear. You would think that if there was any customer that they would not throttle it would be there dealers as they are representing them. However they lack the common business sense to do that.Do yourself a favor, if you run into a salesman that is trying to sell you Clear, run as far aways as possible as fast as you can. They are a crook company that should not be allowed to continue to do business.A actual ex-Clear dealer

  4. They need to be made to upgrade their networks as needed so they can feed the growing demand for unlimited speed and bandwidth.

  5. Couldn’t most cellular and other Internet customers sue their providers on the same grounds? I know my so-called high speed 3G is quite slow much of the time.

  6. I hope this sends a clear signal to ISP’s and phone carriers. If you advertise “Unlimited”, then thats what you must provide! Bringing these dishonest practices out into the sunlight will go a long way.

    Sadly, even if ISP’s advertised the truth about caps and bandwidth throttling, there isn’t enough competition in most markets where you could pick the lesser evil. This needs to change! We need to open up the infrastructure to anyone that wants to provide internet service so that bandwidth caps go away and costs drop from market pressure!

    Lets not forget that bandwidth throttling and caps are Big Cable’s way of combating Netflix. They want us to keep paying $150+ a month for their content, instead of changing and evolving into something better. The next decade is going to be tough on content consumers as the old fights tooth and nail before they die, and the new model finally emerges from the ashes.

  7. Isn’t that the standard over-subscription model of most ISPs these days? They just have to advertise a speed “up to” some best-effort figure and they’re free to do whatever underhanded tricks they feel like.

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