Clearwire being sued for WiMax throttling, false advertising

WiMax provider Clearwire has had it rough the past few months. It is still trying to come up with a solution for its monetary woes – Sprint, who owns just over half stake in the company, declined to purchase Clearwire’s debts – and build a bigger WiMax subscriber base. However, the uphill battle for Clearwire just became more steep as users are accusing the wireless provider of throttling data speeds, which is in stark contrast with how it was advertising its services.

According to Ars Technica:

“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 complaint quotes from Clearwire’s website. (That text appears to have been removed at the time of publication).

The suit alleges that Clearwire misled consumers in order to grow its WiMax subscriber base, and ultimately generating enough revenue to build out its network and increase capacity – it’s what the plaintiffs are somewhat inappropriately referring to as a Ponzi scheme by Clearwire.

Aside from the data throttling – some users said that home Internet speeds were sometimes reduced to less than 256Kbps, which is outrageous – Clearwire was a bit ambiguous in explaining which users would be targeted for throttling. Without clear guidelines, users were left to use the services at their own discretion, usually as described in Clearwire’s ads.

This is definitely a another mar on Clearwire’s reputation. When Sprint announced that it wouldn’t be aiding the WiMax service provider in debt relief, chairman Craig McGraw resigned. Even more recently, CEO Bill Morrow resigned from his post citing personal reasons. If the company plans to survive, especially after admitting that it would run out of money by mid-2011 without aid of some sort, it is going to have to remedy this issue really fast. The last thing it needs is to have subscribers dropping like flies because it fails to deliver on its WiMax promises.

[Via: Ars Technica]

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