Customers Sue Clearwire Over Throttling, False Advertising
A number of customers have filed a class action lawsuit against WiMax provider Clearwire, alleging that the company is guilty of false advertising and operates as a "Ponzi Scheme." The chief complaint arose from users who noticed their broadband service being throttled down to 256Kbps in late 2010, despite marketing materials that say WiMax customers will always have access to 1Mbps or more. At the time, Clearwire explained that it made adjustments to its customer experience optimization system, which might result in slow-downs for some users. Clearwire didn't define under what circumstances throttling might occur. Further, the customers allege that they were forced to pay early termination fees even though they were dissatisfied with the level of service provided by Clearwire. The customers believe Clearwire is guilty of selling services it couldn't support (hence the false advertising claim), and in so doing attempt to generate the capital needed to build the network out in the future (hence the Ponzi scheme claim). The plaintiffs note, "Rather than limiting its subscribers to a number that its broadband infrastructure can accommodate - such that Clearwire can make good on its representations regarding high-speed service and capacity - Clearwire signed up many more subscribers than it could handle so as to maximize revenue and profit." Clearwire stands accused of violating advertising and fair trade practices in six states across the U.S. Clearwire is currently in financial trouble, as it hopes to hammer out a better agreement with partner Sprint.
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