Clearwire Faces Internet Throttling Lawsuit

April 06, 2011

Wexler Wallace blog: Clearwire lawsuitFifteen customers have sued Clearwire for allegedly throttling their Internet connection speeds.

Clearwire’s website previously advertised its unlimited data usage:

Usage is unlimited—believe it. You can upload, download, and surf as much as you want for one low price with any of the CLEAR Internet plans. We don’t slow down your connection—the way some Internet providers do—if we think you are using too much bandwidth.

The text appeared in the FAQ section of the site, but since then has been removed.

Despite these claims, users began to experience a slow-down in Internet speeds. Upon contacting customer representatives about the issue, the response they got was different depending on who they spoke with. Some customers were informed that Clearwire held monthly caps while others were informed of a network congestion and told to keep their usage between 500 MB and 1 GB without clear indication as to exactly when the network would be congested.

Why would Clearwire make promises it can’t keep? According to court documents, plaintiffs accuse Clearwire of running something similar to a Ponzi scheme, where Clearwire would sign up customers without having the ability to deliver the advertised services, and then used the customers’ money to grow its network. Plaintiffs alleged that “Clearwire signed up many more subscribers than it could handle so as to maximize revenue and profit”. In addition to false advertisement claims, Clearwire is also accused of fair trade violation in 6 states, and plaintiffs hope this lawsuit will move up to class action status.

Clearwire is already going through debt and management problems: Sprint, which owns more than half of the company, is refusing to offer Clearwire any aid in debt relief, and a Clearwire CEO and chairman have both resigned. With a potential class action lawsuit pending, Clearwire’s reputation is plummeting. But are they worth pitying over? Financial and management woes aside, Clearwire’s false advertising and lack of transparency was bound to lead angry customers to take legal action.

Sources:

Clearwire Sued for Throttling Customers

WiMAX throttling lawsuit: Clearwire can’t deliver the goods

Photo Credit: Bytemarks

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