BigClassActions.com

Clearwire a Broadband Ponzi Scheme Says Suit

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New York, NYMillions of Americans have signed up with Clearwire, an Internet subscriber service based in Washington state that promises lightning fast performance, but attorney Peter Seidman from the firm of Milberg LLP in New York says many of those subscribers are severely disappointed with what they get.

"You can test the speed of your Internet access, and many of the people that we have spoken to have done just that," says Seidman. "They've reported to us that in many cases their service is as slow as dial-up service used to be."

Milberg LLP has launched a national class action against Clearwire, alleging the company is "akin to a ponzi scheme" because it offers "high speed" or "faster" Internet service knowing that it cannot deliver on what it promises.

"Clearwire leads everyone to believe that you are going to get blazing fast, reliable Internet and they don't do this at all," says Seidman. "So the suit is simple. What they promise isn't there."

Clearwire's promotional material also promises "unlimited usage" and that your connection "will never be slowed down." However, Milberg's investigation of Clearwire has found that the company has signed more subscribers than their infrastructure can handle and, consequently, doesn't have the capacity to do what it says it can.

"When the user achieved a certain level of usage, which is not disclosed, they deliberately slow that user's service in an attempt to even it out for all subscribers," says Seidman.

According to the documents filed, Clearwire "deliberately throttles down" access during peak Internet usage times, making it impossible for users to download music or stream video.

"They are desperately trying to increase their revenues," says Seidman. "They are having significant financial difficulties and they are trying to attract as many subscribers as possible right now. And they do that by making these promises that they can't make good on."

Clearwire has some 70 million subscribers nationwide and Seidman says the suit is based on complaints from many, many of the Internet service provider's unsatisfied customers from across the US.

Adding "insult to injury," the suit alleges that customers who try to exit the service are harangued by extra fees. "When subscribers realize they are not getting high-speed Internet access, Clearwire tries to collect either a termination fee or subscription fee."

The suit charges that Clearwire is in violation of a series of consumer protection laws and is guilty of deceptive trade practices as well as breach of contract. Plaintiffs are asking for themselves and others, equitable relief and treble damages.

In other words, they want their money back and they want the company to pay for breaking the law.


Peter Seidman is a partner with Milberg LLP in New York City. His work focuses on the investigation and prosecution of securities litigation on behalf of defrauded investors. Seidman is a former journalist and Peace Corps volunteer.

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Reader Comments

Posted by

on
I currently have Clearwire and they literally told me on the phone that because I am a heavy user that I was being managed. I asked them than how do I stop being managed and was told that i would have to turn off my modem for several day's perhaps a week! I use my internet to play on-line games, mostly stupid little flash based games on facebook, and my room mate listens to internet radio once a day for about a hour in the mornings. This is enough for them to throttle my connection so severely that playing any games or even opening a webpages takes forever. At this point I wish I had dial-up! It would be faster!

Posted by

on
I have Clear now and I bought all the equipment because they told me it was the best and fastest well its not I hate them.

Posted by

on
I have had clear internet for over two years. I have never had the service they promised. They sent me a new modem at one point that was supposedly "upgraded". Still, slow speed, if any service at all. It was always blamed on the trees and that we needed to try and rotate the modem. I moved into Everett, Wa.,and out of their coverage area. I called to cancel, because they said I could, at not charge, but I got a faint signal from somewhere and had no other way to gain internet access so I changed my mind. I moved to a different apartment in my same complex, still not in service area and cannot get a signal, and they told me they would give me the next three months at $20 a month instead of $35. I agreed figuring I could find somewhere to get a weak signal. Well, I got fed up and called again to cancel thinking my contract had been up for awhile, which is should have since it had been over two years, she told me I could not cancel because my contract had just been renewed a month or so before. She told me my contract was renewed several times which was when I put billing in my name from my mom's, moved to one apartment, moved to the next, and when I agreed to accept the $20 a month for three months to make-up for no service in the previous apartment. She told me even though I am not in the coverage area, that they have new "upgraded" modems and I cannot cancel without paying because they can send me one of those. I have not used the modem in 3-4 months and am sick of paying for the service. I have more than fulfilled my two year contract, should not matter if I move or accept a special plan to make up for bad service. Please help!

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