Clearwire Facing Class Action Suit from Former Customers

Embattled and beleaguered internet service provider Clearwire is facing a class action lawsuit filed by former customers, stemming from the service provider’s implementation of QoS controls late last year meant to address network capacity and bandwidth issues due to the unexpected growth and demand for its WiMax-based internet service, which it sells as a home and mobile broadband service. The implementation of the controls proved problematic, as speeds dropped to 256kbps and customers that were not supposed to be capped or throttled, were suddenly faced with 10GB caps and throttling.

The suit alleges that Clearwire is effectively operating as a Ponzi scheme by claiming that the service provider intentionally oversold its services to build the capital needed for network expansion, while also accusing the provider of false advertising by failing to provide the minimum 1Mbps access spelled out in its advertising for the service.The suit stretches across six states in the US, where Clearwire stands accused of violating advertising and fair trade laws.

This follows the sudden resignation of now former CEO Bill Morrow yesterday, citing “personal issues” while the company is undergoing financial turmoil as a result of a lack of capital for its operations. The company is also in a long-running dispute with Sprint regarding revenue sharing from WiMax network access by Sprint’s customers while it seeks to amend the current agreement and seeks buyers for its excess spectrum to build capital.