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Clearwire Sued Over Throttling Practices
Class Action Accuses Company Of Bandwidth 'Ponzi Scheme'

Last fall we were the first to report that Clearwire was not being very, uh, clear about their throttling practices. The company implemented a new system of network management that slowed user connections as low as 256kbps -- though Clearwire didn't inform users how exactly this throttle was triggered. Our conversations with Clearwire were only slightly more helpful, the company simply informing Broadband Reports that they had made adjustments to their "customer experience optimization system," but Clear was unable or unwilling to give specifics, likely since throttle triggers were based on continually changing regional congestion.

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Clearwire's now being sued for this "customer experience." Mitch Lipka directs our attention to a new class action lawsuit filed at the beginning of this month (pdf) for the sudden throttling. The suit notes that Clearwire is requiring users pay early termination fees if they're not satisfied with their sudden and inexplicable 256 kbps connection. The suit goes so far as to argue that Clearwire is operating a "Ponzi scheme" and that the company is advertising a service it cannot deliver:
quote:
"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 -- i.e., Clearwire sells subscriptions prior to build-out of sufficient infrastructure to support the "High Speed Internet" it advertises. Someday, if Clearwire sells enough subscriptions, it may have sufficient funds to go back and create the infrastructure to support its Internet service and make good on its promises."
Calling it a Ponzi scheme might be a little ambitious, but our user forums have been packed with complaints about this throttling since last fall. Clearwire has brought the problems upon themselves by implementing a network management system they're incapable of giving specifics on, but also for inadequate customer communication about what was happening -- something you'll recall plagued terrestrial cable company Comcast several years ago before they implemented a more intelligent system and clear rules. Fortunately, some of Clearwire customers' problems were addressed in January when Clearwire supposedly upgraded their network management platform.
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JasonOD
@comcast.net

JasonOD

Anon

Their own fault..

For selling a wireless service as a wireline. There just isn't the capacity (for now) to do this, and Clear has thrown a lot of cash into their network.

Let this be a lesson for those that want to treat their AT&T, VZ, Sprint, T-Mo broadband card as a wireline provided service. It can't be done.

ArrayList
DevOps
Premium Member
join:2005-03-19
Mullica Hill, NJ

ArrayList

Premium Member

Re: Their own fault..

but didn't you know, that wireless broadband is the future?
Ammler
Premium Member
join:2005-04-19
Pittsburgh, PA

Ammler

Premium Member

Re: Their own fault..

Sorry, I will take a wireline any day of the week over a wireless connection. I only use wireless when I'm on the go.

At home, I expect a certain level of performance.

On the go, I know I'm on a wireless line, and do not fully use the connection as I would at home, knowing there are limitations to such a connection.

I even mind my net manners when I'm at a hotel.

And yes, I do believe Clear has brought this on itself, as their marketing is giving you the impression that this wireless connection is just as good as a top tier cable or fiber connection (funny on the fiber, I know).
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openbox9
Premium Member
join:2004-01-26
71144

1 edit

openbox9 to ArrayList

Premium Member

to ArrayList
Mobile wireless access to the Internet will be the focus for the next several years and will be where significant portions of capital are invested. However, fixed wireless is not a replacement for wired connections except for difficult/remote locations.

ArrayList
DevOps
Premium Member
join:2005-03-19
Mullica Hill, NJ

ArrayList

Premium Member

Re: Their own fault..

sorry. lol /sarcasm
openbox9
Premium Member
join:2004-01-26
71144

openbox9

Premium Member

Re: Their own fault..

I assumed it was sarcasm, but I wanted to distinguish between fixed and mobile. Many people tend to lump all wireless together.

Thaler
Premium Member
join:2004-02-02
Los Angeles, CA

Thaler to openbox9

Premium Member

to openbox9
Problem is, this company attempts to establish its product as "in line" with wired connections. It even goes so far as to differentiate its "mobile" broadband connection coverage area and its ISP operations area (ie. I plugged in my address. It said I didn't qualify for it's residential ISP router & service, but their mobile 3G/4G hotspot product was A-OK).

I'm all for cellular wireless companies imposing boundaries on their service. However, if you're explicitly competing against offerings of DSL & cable, then your advertised product should actually match up.

Chuck kCAR
@teksavvy.com

Chuck kCAR to ArrayList

Anon

to ArrayList
I hope you're right all the Canadians are begging for wireless from America. So far satellite internet from America for Canadians is garbage but at least it's far cheaper in price than broadband (wired) in Canada.
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SpaethCo
Digital Plumber
MVM
join:2001-04-21
Minneapolis, MN

1 recommendation

SpaethCo to JasonOD

MVM

to JasonOD

Re: Their own fault..

said by JasonOD :

For selling a wireless service as a wireline. There just isn't the capacity (for now) to do this, and Clear has thrown a lot of cash into their network.

Couldn't agree more.

I scratched my head when I saw their marketing campaigns selling themselves as an alternative to "capped" ISPs. If one takes the time to skim the Clear forums, you'll find no shortage of folks who left wired ISPs like Comcast because they didn't want to be limited to 250GB.

The broadband industry as a whole suffers from the same marketing scheme as those used by late night fitness and investment infomercials. They make huge claims that anyone of reasonable intellect can read through, and then hide behind "results not typical" disclosures.

DarkLogix
Texan and Proud
Premium Member
join:2008-10-23
Baytown, TX

DarkLogix

Premium Member

Re: Their own fault..

WTF people actually traded wired broadband for an air card?
I could see someone trading their 5gb capped air card for an uncapped air card but this is insane

SpaethCo
Digital Plumber
MVM
join:2001-04-21
Minneapolis, MN

SpaethCo

MVM

Re: Their own fault..

Not necessarily swapping for an air card. Clear sells stuff like this:

»www.clear.com/devices/de ··· ls/id/53

I actually have that modem myself, and use it for backup connectivity for my Comcast cable connection. It doesn't get used very often, but it's priceless when I need it.

razzoguy
@comcast.net

razzoguy to JasonOD

Anon

to JasonOD
I agree that random, roving throttle policies are deceptive. I work for a fixed-location WISP. I feel that if any ISP has a throttle policy or metered over-usage policy then that policy should be applied to all nodes of the network and be clearly stated in the ISP's AUP.

That said, I also don't feel that caps and metered-usage can be directly blamed on the ISP. What we are dealing with right now is that all sorts of content providers (Netflix for instance) are selling their services to our customers and telling them that if the video delivery is substandard then those customers should contact us. That is wrong.

My company is comprised of cable TV veterans. In that model, when a cable network wants to be carried on a cable system a relationship is formed. The network wants to be carried because their advertising will reach more consumers and the cable company wants to carry the cable network to enhance their service offerings which brings more revenue. The typical deal is that that the cable company bills the customers and pays a percentage per subscriber to the cable network and in return gets time for local advertising spots, allowing the cable company to pursue other revenue options.

In the case of Internet content providers, they feel free to jump over the ISP and directly market to consumers and then blame the ISP if they don't have the infrastructure to deliver the service properly. In this case the ISP network must be upgraded to handle the demand; but that has to be payed for somehow. So, since there is no relationship with the third-party content providers, the customer suffers because the ISP can't handle the cost.

Anyway, I know this is a long-winded reply but I hope it helps clarify what IPS are going through right now.

Thaler
Premium Member
join:2004-02-02
Los Angeles, CA

Thaler

Premium Member

Re: Their own fault..

said by razzoguy :

What we are dealing with right now is that all sorts of content providers (Netflix for instance) are selling their services to our customers and telling them that if the video delivery is substandard then those customers should contact us. That is wrong.

So...if you've set up your hardware correctly and your internet connection sucks, but it's not the ISP's fault...then who's to blame?

jjroysdon
@roysdon.org

jjroysdon

Anon

Re: Their own fault..

ISPs just need to learn to do math. Previously they banked on average usage just being a few hours of email, websurfing, chat and the occasional video.

What they didn't count on is customers actually using the advertised speeds for 4-5 hours per night to watch TV/movies.

What they need to do is remove "unlimited" packages. Just like voice cell phone services, they need to educate users as to how much they need and sell different tiered usages to customers. The customers then pay for what they need.

Just want web, email, and occasional video? Get the $30 package. Want to watch 4-5 hours of TV/movies per day (and if you have multiple people in the home that is only going to multiply)? Then you need to pay an extra $10 per some GB a month. Shoot, even let people "trail" the service for the $30/month rate to see what their average bandwidth usage is.

Then the market will compete and get the price down as much as they can afford to, and customers will shuffle to where the ISPs can handle them. Things will take a bit to settle out, and as things continue to consume more bandwidth and networks are built out things will continue to self-adjust.

When I can hit my "unlimited" cap in 10 days, something is broken. Another part of the brokenness is that I cannot see my usage on most ISPs that practice this. They need more useful information available.

One thing I'd like to see is more decentralization of the internet and tier 2/3 localized providers that peer directly with each other and keep the traffic local (therefore cheaper).

Further, ISPs need to engage large streaming services to allow them to have rack space at their regional POPs to lighten the load of traffic on their backbones.

It's only going to get worse as more and more content is available online. Once all the major sports are streamed, all the guys at my office will switch off their dish/cable.

Thaler
Premium Member
join:2004-02-02
Los Angeles, CA

Thaler

Premium Member

Re: Their own fault..

said by jjroysdon :

Just want web, email, and occasional video? Get the $30 package.

Man, I hope that's not what you expect people to pay. If I were limited to only using my internet for the same set of features I had access to on dial-up, I'd expect to pay dial-up prices (ie. $10/month). There's no way in hell I'd pay beyond $20 a month if all I could access is HTTP & YouTube clips.

That's the problem with many of the proponents of usage-based-billing: its only seen as a way to increase profit, not actually pay for services used. I'll be happy to pay rates based on my "fair share" of broadband utilization. However, if I reduce my internet usage and my bill doesn't drop to match, then I call shenanigans.
Valicore
Premium Member
join:2008-06-10
San Jose, CA

Valicore to JasonOD

Premium Member

to JasonOD
I'd modify it by saying it's their fault for selling their wireless service as identical to wireline.

If this were WiMax 2 it wouldn't present the same problem at all, and once their network is upgraded to WiMax 2 (Since it is a software upgrade) it'll go a lot better for them.

What it comes down to is they were disingenuous with customers when they laid out expectations and customers are getting to the point where they're aware they don't have to take that.

Duramax08
To The Moon
Premium Member
join:2008-08-03
San Antonio, TX

Duramax08

Premium Member

I had to pay a ETF

Of $30 since I owned the modem. I still had a year in the contract so it wasnt that bad. Even then, I dont think the lease ETF's arent that bad either.

But I still dont agree what clear is doing throttling users back to the stone age.

lordfly
join:2000-10-12
Homestead, FL

lordfly

Member

So how does Clearwire transmit their signal?

I have a local WISP for my internet. I have a small dish mounted on a 30 foot pole which is pointed at their 300 foot tower located a couple of miles away. I get 10/1 speeds for $40/mo.

From what I am reading, Clearwire transmits at 2.5Ghz and the modem just sits inside the house receiving this signal. Seems very iffy to me.

At least my provider does not throttle and with all shared type services, I can experience slower download speeds during very brief mounts in the afternoon.

So is Clearwire consider a WISP, or just some sort of very localized access point service?

SpaethCo
Digital Plumber
MVM
join:2001-04-21
Minneapolis, MN

SpaethCo

MVM

Re: So how does Clearwire transmit their signal?

said by lordfly:

From what I am reading, Clearwire transmits at 2.5Ghz and the modem just sits inside the house receiving this signal. Seems very iffy to me.

It can be a number of different things, from a home WiMAX modem to cell phones that connect to the WiMAX network (Sprint Epic 4G / Evo 4G).

Clear is putting the radios for their network at Sprint cell tower sites.

lordfly
join:2000-10-12
Homestead, FL

lordfly

Member

Re: So how does Clearwire transmit their signal?

said by SpaethCo:

said by lordfly:

From what I am reading, Clearwire transmits at 2.5Ghz and the modem just sits inside the house receiving this signal. Seems very iffy to me.

It can be a number of different things, from a home WiMAX modem to cell phones that connect to the WiMAX network (Sprint Epic 4G / Evo 4G).

Clear is putting the radios for their network at Sprint cell tower sites.

The pings must be all over the place for this type of service. Interesting.
I switched from a DSL line at 14K feet from the CO which had pings >200ms. My pings with the WISP are typically 20-30ms. My neighbor across the street complains about Comcrap because he gets decent speeds, when it works. He happens to like online gaming. He just can't afford the $99.95 initial install fee right now or he would switch.

jjroysdon
@roysdon.org

jjroysdon

Anon

Re: So how does Clearwire transmit their signal?

Sounds like that WISP needs to finance in the install fee (with contract) and/or run time-limted specials waving the install (with a 2 year contract) to a select set of addresses (so they can keep up with the installs).

3 year contract, no fee; 2 year contract, $50 fee; 1 year contract, $100 fee, etc.

lordfly
join:2000-10-12
Homestead, FL

lordfly

Member

Re: So how does Clearwire transmit their signal?

said by jjroysdon :

Sounds like that WISP needs to finance in the install fee (with contract) and/or run time-limted specials waving the install (with a 2 year contract) to a select set of addresses (so they can keep up with the installs).

3 year contract, no fee; 2 year contract, $50 fee; 1 year contract, $100 fee, etc.

I really don't mind the install fee. I am on a 1 year contract for $40/mo for 10/1 speeds. That beat the $32.95/mo I was getting with AT&T DSL with barely 1.2/256 with 1/2 second pings.

It is a locally owned business with a small customer base. I would rather keep them alive and have unlimited support rather than have to deal with the big providers that don't listen to their customers and hire shady installers and support.
flycuban
join:2005-04-25
Homestead, FL

flycuban

Member

Re: So how does Clearwire transmit their signal?

Their service is great. I have for 3 years. beats at&t, and comcast big time. Only had 2 major outages, one being a direct lighting strike to the tower. My pings are under 8ms. skynet is da best.

nukscull
@rr.com

nukscull to lordfly

Anon

to lordfly
Why is that iffy?

That's how cell phones work. Clearwire isn't using 802.11a/b/g/n to offer service. They're using WiMAX.

Their service can be stationary or mobile, you're not tied down to a dish sitting on your house.
MRCUR
join:2007-03-09
Lancaster, PA

MRCUR to lordfly

Member

to lordfly
Iffy? It sounds like you've never used WiFi or a cell phone.
WernerSchutz
join:2009-08-04
Sugar Land, TX

WernerSchutz

Member

Deceptive advertising

"advertises and sells a service, knowing in advance that there is no way it can provide such service on an ongoing basis"

Hmmm. Sounds familiar. Cable ?
openbox9
Premium Member
join:2004-01-26
71144

openbox9

Premium Member

Re: Deceptive advertising

Not really. Cable has a lot more headroom and flexibility with the ability to grow capacity when needed. Clearwire's capacity if fairly fixed and likely requires additional spectrum to grow.
talz13
join:2006-03-15
Avon, OH

talz13

Member

Re: Deceptive advertising

So it all depends on how much service you can't provide?
openbox9
Premium Member
join:2004-01-26
71144

openbox9

Premium Member

Re: Deceptive advertising

Umm, huh? That's not what I stated.
WernerSchutz
join:2009-08-04
Sugar Land, TX

WernerSchutz to talz13

Member

to talz13
said by talz13:

So it all depends on how much service you can't provide?

Awesome I can see now the self congratulatory advertisements:

Clearwire: We can provide up to 10% of the service we advertise/sold you !

Comcast: We can consistently do 13% !!!!!! (the 250GB cap provides about 1 Mb/sec sustained vs a 6 Mb/sec sold).

MalibuMaxx
Premium Member
join:2007-02-06
Chesterton, IN

MalibuMaxx

Premium Member

Re: Deceptive advertising

I don't know why comcast gets thrown into this conversation... I never hit my 250 GB cap...

for those who work 40 hours a week... this is a non issue...

heck even when I didn't work 40 hours a week I didn't go over...
WernerSchutz
join:2009-08-04
Sugar Land, TX

WernerSchutz

Member

Re: Deceptive advertising

said by MalibuMaxx:

I don't know why comcast gets thrown into this conversation... I never hit my 250 GB cap...

for those who work 40 hours a week... this is a non issue...

heck even when I didn't work 40 hours a week I didn't go over...

I do not know why you feel to inform us if you do not have a problem, either.

I work 60-80 hrs/week and I hit the cap. No, I do not work from home. Your point is ?
WernerSchutz

WernerSchutz to openbox9

Member

to openbox9
said by openbox9:

Not really. Cable has a lot more headroom and flexibility with the ability to grow capacity when needed.

Sure. That capacity is NEEDED BEFORE you sell stuff. Do not sell stuff you cannot deliver.

•••••••••••
ArizonaSteve
join:2004-01-31
Apache Junction, AZ

ArizonaSteve to WernerSchutz

Member

to WernerSchutz
Virgin Mobile and Cricket Broadband are doing the same thing. I bought their USB dongles and tried them both until the speed dropped to below 56k and they didin't work anymore so now I'm stuck with some dongles that I can't use. I hope they get sued too!

spewak
R.I.P Dadkins
Premium Member
join:2001-08-07
Elk Grove, CA

spewak

Premium Member

Company doublespeak

Whenever a Company cites "Customer experience", LOOK OUT!!

•••••
BHNtechXpert
The One & Only
Premium Member
join:2006-02-16
Saint Petersburg, FL

BHNtechXpert

Premium Member

The lawsuit is spot on!

If you have bothered to read the lawsuit (and I have) it's almost a mirror image of the customer experience on a very consistent basis from start to finish in the relationship (and not just about throttling). Anyone who has been a customer (like myself) can't help but grin and say "see I told you it wasn't a fluke because these things happened exactly to me also as described in the lawsuit".

Clear is going to have a real hard time defending against this one because there is a mountain of evidence against them. Personally it couldn't happen to a more deserving group.

It's really sad actually. Clear had the potential to do it right from the very start and they pissed it all away.

jjroysdon
@roysdon.org

jjroysdon

Anon

Re: The lawsuit is spot on!

Ditto. I've dealt with this for some time. The biggest problem I have with Clear is the locked in contract. If the service is bad and/or fails more than a few times a month or they can't deliver, let me out.

I dealt with for at least 3 months having to reset my modem daily (if not more than that). I could hit the default gateway (their device, beyond the WiMax) but nothing more. Reset the modem, and it would all work again. Sometimes for a few days (rarely), sometimes a day (typically), and sometimes only for a few hours (most frustrating, as that was when I needed it most).

Having said that, it has gotten better for me in the last month or so. I think one thing that could really help them (but cost more) would be pro installs of the "modem" in the best position and with the best signal. That's one thing I spent a bit of time on to get the absolute best signal (accessing the modems web interface to get the dB loss).

I also implemented monitoring of the connection from my server at my house and from 2 colo sites I have. Every time it went down, myself or my wife called in and complained. My guess is perhaps this caused them to escalate looking into my tower to find out why I was having problems regularly.

So long as things continue working as is, and they don't go out of business, I think I'll be keep Clear. However, as my financial situation is getting better, I'm considering going back to Comcast and possibly keeping Clear as a backup. I just need to find a good router/distro which can use both connections at once (based on bandwidth, latency, etc.) and notify me when either is down.

Duramax08
To The Moon
Premium Member
join:2008-08-03
San Antonio, TX

Duramax08

Premium Member

Check out their support forum



»forums.clear.com/clearcom
kevin_pink
join:2006-10-15
Bronx, NY

kevin_pink

Member

Re: Check out their support forum

lol at the Recent Praise section...

Duramax08
To The Moon
Premium Member
join:2008-08-03
San Antonio, TX

Duramax08

Premium Member

Re: Check out their support forum

lololol

anon4
@comcast.net

anon4

Anon

Clear Sued

Whats the point of throttling the internet anyways? I hope they lose.
slckusr
Premium Member
join:2003-03-17
Greenville, SC

slckusr

Premium Member

The future

Of metered billing rests on this case then. If telcos are scared away from throttling, they'll just implement caps at least we wont see both :P

GeeWhizBang
@comcast.net

GeeWhizBang

Anon

Clearwire doesn't work

I got Clearwire for a friend. The price seemed reasonable, but it never really worked. I get bills but I don't pay them. I bought the hardware, so they can just go away.
gregvee
join:2005-12-27
Palisades Park, NJ

gregvee

Member

Clearwire needs Comcast to foot the bill for the lawsuit

The reason why Clearwire is doing this is becuase in areas where Comcast is the Cable provider, Comcast does not want it's customers leaving for Clearwire. Comcast owns a percentage of Clearwire and sells clearwire services as a Comcast solution but Comcast is losing money on it's investment. So Comcast is forcing Clearwire to scale back bandwidth so that Clearwire customers either live with it or switch back to Comcast. I know I ended up being one of them thinking Clearwire was going to be cheaper and at least mediocre. The lawsuit should include Comcast as well.
MRCUR
join:2007-03-09
Lancaster, PA

MRCUR

Member

Re: Clearwire needs Comcast to foot the bill for the lawsuit

What in the world are you talking about?

WARNING: Conspiracy theorist above.
firedrakes
join:2009-01-29
Arcadia, FL

firedrakes

Member

yeap

i agree . thats what they get for doing something like this

mix
join:2002-03-19
Romeo, MI

mix

Member

CEO Quits

Clearwire's CEO quit today. The chief commercial officer and CIO are also quitting. I think this company is done.
jtimleck
join:2008-12-24
Baltimore, MD

jtimleck

Member

Good riddance... an old XOHM then Clear customer.

I "early adopted" XOHM here in Baltimore almost three years ago now. In these same forums then even XOHM hosted schills to up-talk the service. That wasn't so bad because, while new it WAS pretty decent, and dirt cheap. Then along came Clear. One day went to check my modem to find that it had been "updated" - the password had been changed as well. And now the password was PERMANENTLY set to 'CLEAR123' (and of course then all modems have the same user name). And then the bad speedtests started as they oversold the network and cannibalized their existing clientele's good will. I went to the wall with the Better Business Bureau TWICE on their practices and 'won' both times. But it was just too stoopid to be trying to watch a Netflix movie and find I had been "throttled" ("We don't throttle the towers optimize your signal" I was told - yeah right) and so I had enough and got out. Now with Cavtel - a little, um, how shall we say? 'Ghetto' but service has been spot on, fast and no bs. I'm relishing watching Clear crash and burn in spectacular fireball of miss opportunity. They deserve every flame that licks at their ______-es.