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Clearwire Sued Over Throttling Practices
Class Action Accuses Company Of Bandwidth 'Ponzi Scheme'
by Karl Bode 09:59AM Thursday Mar 10 2011
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:
"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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