Clearwire’s often-unclear “network management” policies are the subject of a lawsuit filed yesterday in Seattle seeking class action status.

Angelo Dennings vs. Clearwire Corporation was filed in the Western District of Washington federal court, and seeks refunds for consumers who were mislead by the company’s failure to disclose its network speed throttling and usage limitations, and charged early termination fees when subsequently canceling service.

Clearwire promises that its high-speed Internet service provides a “fast” and “always on, always secure” Internet connection allowing users to “[d]ownload pictures, music and videos.” But Clearwire does not provide an “always on,” “high-speed” connection as it promises. Clearwire purposefully slows the connection of its users because it cannot accommodate the high volume of traffic. Clearwire engages in a practice known as “throttling,” which is the intentional delay and/or blocking of Internet communications. This practice deprives Clearwire customers of the ability to “[d]ownload music and videos,” and leads to slow connection speeds.  Clearwire engages in throttling at times when demand for Internet use is highest, beginning at approximately 7:30 p.m. and ending at about 1:00-to-2:00 a.m.

If users attempt to cancel their service, Clearwire claims that, pursuant to its “contract” with them, it is entitled to collect an early termination or a re-stocking fee. The “contract” referred to by Clearwire is not a contract between it and its customers. The contract between Clearwire and its customers is simply that the customers will pay for, and Clearwire will provide, “unlimited” Internet usage at certain speeds, depending on the speed and payment plan selected in Clearwire’s stores, kiosks, or online.

The remaining “terms” invoked by Clearwire at its convenience are embedded in a document that consumers never see prior to subscribing to Clearwire’s service. Clearwire sells its services in its stores, kiosks at shopping centers, and online. Clearwire’s stores and kiosks do not have copies of this “contract” on hand for potential subscribers to read before they “agree” to its terms. Users who subscribe through Clearwire’s website never see the contract either because the link to it is at the bottom of a page, in substantially smaller font and lighter shade than all of the other text on the page. The text states: “Want to read the fine print (and who doesn’t read the fine print?) It’s all there in the CLEAR Legal Index.” No one wants to read fine print legalese and almost no one does. The statement is obviously and sharply ironic, and mocks anyone who may have been fussy enough to have considered continuing.

Despite not showing its terms to consumers, Clearwire refuses to allow users to cancel their service without paying the unconscionable fees it claims it is owed under this “contract.” These fees include an early termination fee (“ETF”), which penalizes consumers that want out before the end of the two-year term. Although Clearwire breached its contract with its customers, Clearwire insists on the payment of this ETF when customers realize they are not getting what they bargained for.

The suit argues that Clearwire has oversold its wireless broadband network, and allegedly quotes a company representative at one point telling Dennings, “Clearwire had signed up more customers than its cell towers could accommodate, and that therefore it was ‘managing’ users’ accounts.”

Attorney Clifford Cantor argues in the filing that Clearwire reduces customer speeds to 300kbps or lower when their network is congested, making the service unsuitable for most broadband applications.  Dennings, who lives near Ft. Worth, Tex., was outraged to learn Clear sold him a home and mobile broadband account that was advertised as a replacement for wired cable or DSL broadband, but was left with service he considered largely useless when throttled.  Even more upsetting, the suit alleges, Denning was asked to pay a $219 early contract termination and restocking fee when he tried to cancel service over the matter.

Cantor is asking for a court ruling declaring Clear’s policies to be unconscionable, attorneys’ fees of at least $5,000, and refunds for all impacted subscribers.

Thanks to Stop the Cap! reader Michael in Chicago for sending along a copy of the lawsuit.  He runs the “Clear/Clearwire internet not as advertised” Facebook group.

Time Warner Cable is one of many cable companies that try to convince their customers Verizon FiOS and other true fiber-to-the-home providers offer nothing special.  After all, they proclaim: “we’ve got fiber, too!”

Time Warner Cable put this "special notice" on its website for cable subscribers.

More innovation from the late 70s.

In California’s Southland, stretching from the San Fernando and San Gabriel Valley across the Inland Empire to deep within Orange County, the cable operator just finished installing 361,149 miles of fiber, telling the LA Times it has enough fiber to wrap around the equator nearly 15 times.

Unfortunately for residential subscribers, the cable company can’t manage to stretch some strands your way.

Most of the $120-million expansion program is designed to benefit area businesses — some 125,000 across the Southland that could potentially tell the phone company to take a hike.  The Business Class expansion delivers service to business parks and campuses across the sprawling region that the cable operator has not wired before.

While Time Warner likes to say they are running “an advanced fiber network,” for many customers it’s the same technology cable companies have been using since the 1990s.  Once it reaches your neighborhood, classic coaxial cable brings service the rest of the way, and some of that coax has been around since the late 1970s.

That makes at least part of Time Warner’s network as fresh and innovative as — the Sony Walkman.

A Time Warner Cable ad implying the cable company delivers a fiber optic experience to customers in southern California.  (1 minute)

Some 1100 communities will have to wait until next year to learn if they are among the one(s) chosen for Google’s new 1 gigabit fiber to the home network.

An announcement on Google’s official blog broke the news to anxious readers this morning:

We had planned to announce our selected community or communities by the end of this year, but the level of interest was incredible—nearly 1,100 communities across the country responded to our announcement—and exceeded our expectations. While we’re moving ahead full steam on this project, we’re not quite ready to make that announcement.

We’re sorry for this delay, but we want to make sure we get this right. To be clear, we’re not re-opening our selection process—we simply need more time to decide than we’d anticipated. Stay tuned for an announcement in early 2011.

Google has also been working on a “beta” network, serving 850 private homes and condominiums on the main campus of Stanford University, owned primarily by the faculty.

That a company the size of Google faces delays from the challenges involved in building a fiber-to-the-home network speaks to similar delays that often slow down municipal broadband deployments.  Community broadband critics often seize on such delays as evidence the networks are not viable and run by unqualified personnel.  But as Google illustrates, such delays are common whether they are run by private or public entities.

Credo Action delivers flowers to the FCC

Over the last two days, the SavetheInternet.com Coalition, their allies and other broadband activists have delivered more than two million signatures from Americans demanding the Federal Communications Commission adopt real Net Neutrality reforms.

FCC Chairman Julius Genachowski is pushing a set of weak regulations that give just about everything to giant phone and cable companies, and leave Internet users with almost nothing.

We still have time to fix this toothless rule before it goes to a vote Dec. 21. Hence, the petitions.

The petition marathon comes as the FCC closes the public comment period on proposed Net Neutrality reforms.  Public interest groups ranging from Free Press, Common Cause, Credo Action, ColorofChange.org, and Public Knowledge, among others were involved in the petition relay.

Credo Action even sent flowers, protesting Genachowski’s apparent retraction on strong Net Neutrality.  Two massive funeral arrangements, one labeled “R.I.P. Net Neutrality” were delivered to the agency on Monday.

“The public will accept nothing less than real Net Neutrality,” said Misty Perez Truedson of Free Press. “No almost Net Neutrality, no half Net Neutrality and no fake Net Neutrality. And we hope that while he is considering his proposed rules, FCC Chairman Julius Genachowski remembers that millions of people are expecting him to keep his promise to protect the open Internet.”

Watch this compilation of videos from those delivering the petitions to the FCC and learn more about why Net Neutrality is important.  (22 minutes)

Satellite company Dish Network suffers a competitive disadvantage its grounded competition doesn’t — the ability to offer a broadband and phone service package along with a lineup of video channels.

Not anymore.

On Monday, Dish announced its intention to acquire Denver-based Liberty-Bell Telecom, a small telephone company serving 6,000 residential and 4,000 business customers in Colorado, New Mexico and Utah.

The purchase, if approved by the Federal Communications Commission, would give Dish the chance to sell a “triple-play” bundle of telephone, broadband, and satellite-delivered TV channels to Liberty-Bell customers.

Martino

Liberty-Bell was started by a consumer reporter, Tom Martino, currently working for KDVR-TV in Denver and host of the national radio program, The Troubleshooter Show.  The acquisition would deliver a 90 percent stake to Dish.  The phone company has an established reputation for consumer-friendly service, even giving out the personal cell phone number of company owner Nigel Alexander in case customers run into trouble.

The phone company already had an extensive bundling arrangement with Dish, heavily promoting the satellite service as part of its phone and broadband service package.

The move to acquire Liberty-Bell may be Dish’s first foray into developing its own triple-play package to compete with cable and phone companies.  Liberty-Bell delivers service to customers under a wholesale agreement with incumbent provider Qwest and is licensed to provide service to residential and business customers in 10 states.  Theoretically, Liberty-Bell could develop a much larger reach with wholesale agreements with incumbent phone companies around the country, especially with the financial backing by Dish.

That could create opportunities for the satellite company to meet the needs of an increasing number of Americans seeking telecommunications services from a single company.

Dish currently has reseller agreements with other independent phone companies, including Frontier Communications.

Last year's glossy mailer gave fair warning what subscribers could expect in 2010 were rate increases.

Time Warner Cable customers in several areas of the country are now receiving good tidings in their mailbox — the annual glossy mailer that portends the company’s annual “rate adjustments.”

Customers in areas from snowed-in western New York to fogged-in Los Angeles will find the company quick to congratulate themselves on their “achievements” in 2010 — achievements that someone has to pay for — you.

After you’ve finished reading all of the self-back-patting accolades, somewhere towards the bottom of the piece the company tries to break the bad news, telling you it must periodically “adjust prices.”  We know what that means and so do you.

The company’s new rate schedule for 2011 delivers price increases across the board, but the exact amounts and percentages depend on where you live.  For customers in western New York, expect around a 6 percent rate hike.  In southern California, rates for just about everything are increasing, some by a percentage considered high even for the cable industry.  The more services you bundle with the cable company, the less the total increase will bite your wallet.

Considering America’s inflation rate stands at less than 1 percent and will remain at that level through next year, a rate increase six times that amount is certain to start another round of package trimming and cord cutting from strapped subscribers.

“Everytime they increase their rates, I drop something to keep my bill manageable,” writes our reader David in Charlotte, N.C.  Rate increases in that state were announced in November.

“When I’m down to just standard cable and Internet, I’ll look to drop them,” he adds.

David says he used to have a fully-loaded package from Time Warner, taking every premium channel, Digital Phone, and Road Runner Turbo.  But not anymore.

“When they raised rates three years ago, we dropped several premium channels,” David said. “Two years ago we dropped the rest and some of their HD programming, and last year we chucked Digital Phone for our cell phone.”

What is going in 2011?  Road Runner Turbo.

“It’s a pointless product ever since they raised upload speeds for standard Road Runner customers.”

For customers in Rochester, the latest rate hike is the latest of several over the past year.  The company has been incrementally increasing prices on individual components of the cable package in an effort to drive more customers into bundled service packages.

In Los Angeles, it’s much the same.  Rate increases are on the way for DVR service and for set top boxes.  So are dramatic price hikes for virtually anything requiring an employee to come to your home. Want them to pick up or exchange equipment?  Pony up $29.99 (up 50 percent).  Need someone to install your phone or Internet?  That’s going up 65 percent to $32.99.

The company’s response to these increases?

The usual — programming cost increases.  The company also encourages customers to do installations themselves and drop off equipment at a local cable store to avoid the charges.

Columnists are using the occasion to scream once again for a-la-carte cable — allowing customers to pick and pay for only the channels they want to receive, always a Dead-on-Arrival idea for cable companies.

Tom Joyce from the Mount Airy News noticed as rates increase, the channels he wants to see either aren’t on the system, are being dropped, or are at risk of being dropped because of contract disputes:

What really irks cable television subscribers is that not only are we paying more, we are getting less for our money as well. It would be one thing to simply charge subscribers more for the same service, but what Time Warner seems to be doing is hiking prices while also diminishing the quality of its programming.

For example, C-SPAN2 recently was dropped from the system. C-SPAN2 is a great outlet for public-affairs programming and also focuses on books written on government, history and similar topics.

While some TV watchers might say good riddance to such a high-brow channel, I think it’s a shame viewers now have one less outlet that might actually broaden their intellectual horizons or help them become better-informed citizens.

Yet Time Warner’s cuts also could affect mainstream broadcast content as well. There have been announcements that Channel 48, a Triad TV station, is being dropped from the local cable system at the end of this month. I rely on Channel 48 for many entertainment shows, including late-night reruns of “The Office.” This trend isn’t new. It’s been occurring over the years, paralleling a scenario of constant price increases.

The cable package I receive once included the Fox Movie Channel, Encore Westerns and others that I found enjoyable, but which gradually fell by the wayside. Only one bona fide movie selection remains, Turner Classic Movies.

Channels that I now receive basically are a collection of commercial-laden garbage and cheap filler.

David Lazarus at the LA Times agrees:

“I’ve said it before and I’ll say it again: Cable and satellite bills are too high, and it’s nuts that people have to pay through the nose for channels they never watch,” Lazarus writes. “It’s time for cable and satellite companies to switch to a la carte programming so we can start paying for products we actually want, rather than ones that we’re forced to accept.”

Lazarus also noticed Time Warner Cable’s efforts to placate subscribers with freebies backfired again this year as well:

As it did last year, Time Warner is again trying to make its annual rate hike more palatable by giving customers coupons to watch premium movies for just 99 cents.

The catch is that you have to mail in the coupon with your bill to have it redeemed. Or you can mail it separately if you want to add 44 cents in postage to your 99-cent movie.

But what about all those customers who have gone paperless — as Time Warner prefers — with automatic bill payments or electronic cash transfers? Isn’t this unfair to them?

When I suggested last year that maybe the cable giant should include a digital code on its coupons so that customers could redeem them online, a company spokeswoman said this was a good idea and she’d take it up with her superiors.

I suggested the same this year to Gordon. He said it was a good idea and he’d take it up with his superiors.

It’s 27 degrees outside, the oranges are turning into orangesicles, and now this.

AT&T reports an independent construction crew in Volusia County accidentally cut a fiber cable that has resulted in a major cell phone outage for residents across northern and central Florida.

“An AT&T wireless disruption is currently impacting some customers in parts of Jacksonville, Tallahassee, Daytona, Ocala, Gainesville, and Panama City,” says an AT&T spokesperson. “Some customers may have trouble connecting to voice calls and voicemail at this time.”

AT&T is trying to repair the cable to restore service.

Stop the Cap! reader Jasper in Wildwood, Fla., wonders how one fiber cut can take out AT&T’s cell phone network for half the state.

“This sure isn’t your father’s AT&T,” Jasper writes. “Hasn’t AT&T ever heard of redundant backup systems for just these occasions?”

Jasper noticed his AT&T cell phone service quit connecting calls earlier this evening.

“It’s either a fast busy signal or nothing at all,” Jasper reports.  “AT&T froze us out.”

Hobbs

Landel Hobbs tendered his resignation today, leaving as Time Warner Cable’s chief operating officer after serving nine years at the cable operator.

The Wall Street press is characterizing Hobbs’ departure as a leadership shakeup created as the company explores who will eventually succeed CEO Glenn Britt.

Hobbs lost out to Rob Marcus, the company’s current chief financial officer.  Marcus joined Time Warner Cable in 2005 from then-parent company Time Warner Inc., where he led mergers and acquisitions.

Marcus will assume Hobbs’ former position almost immediately, also becoming Time Warner Cable’s president.

Marcus

Hobbs was deeply involved in Time Warner’s 2009 attempt to impose Internet Overcharging schemes on its broadband customers.  Hobbs was a major defender of the company’s plans to charge customers up to three times more for their existing level of broadband service, telling customers the need to impose such pricing was “urgent.”

“If we don’t act, consumers’ Internet experience will suffer,” he wrote. “Sitting still is not an option.”

Time Warner Cable shelved those plans and has since embarked on a broadband upgrade program, introducing DOCSIS 3 technology which provides a much larger broadband pipeline to customers.  The company is expected to upgrade most of its service areas, including the cities where it tested its Internet Overcharging scheme, by the second quarter of 2011.

Marcus’ primary task is expected to be addressing the ongoing loss of Time Warner Cable customers, who have been disconnecting service at a greater rate than the company is adding customers to replace them.

HP's Snowjob: The company that brought you the $70 ink cartridge supports an end to flat rate Internet service to "save" you money.

HP’s Joe Weinman argues consumers are behind the drive to abandon flat rate, “all you can eat” broadband pricing.

Weinman, whose company sells products and services to some of America’s largest broadband providers, has taken up their position that flat-rate Internet service is bad for you, claiming many are paying too much for Internet service they use too little.

In an essay posted on GigaOM, Weinman brings back the all-y0u-can-eat buffet metaphor:

For the record, I like unlimited Internet access just as much as anyone else. However, such plans appear to be on their way out, and here’s why. As I’ve explored in ”The Market for Melons” (PDF), pay-per-use is not an evil plot by greedy robber barons, but a natural outcome of independent, rational consumer choice. Consider a town with an all-you-can-eat (flat rate) buffet and an a la carte (pay-per-use) restaurant. Smart shoppers on diets will save money by patronizing the a la carte restaurant, whereas heavy eaters will save money by visiting the buffet. As patrons switch, the average consumption of the buffet will increase, driving price increases for the luncheon special, causing even more users to switch to pay-per-use.

Bottom line: it is not the proprietors driving this dynamic, but the customers themselves acting out of pure, rational self-interest—light users, by deciding not to subsidize the heavy ones, foster the vitality of the pay-per-use model.

Unfortunately for Weinman, most American broadband customers don’t believe a word of this, and even he was forced to admit as much when he noted consumers “often prefer to overpay for flat-rate rather than save money but risk bill shock.”

Karl Bode at Broadband Reports wasn’t suckered for a moment either, noting:

[...]Cable industry lobbyists would like the public to believe that such a shift isn’t about making more money, it’s about helping the poor. Not only is the metered billing push absolutely about making money, it’s about artificially constricting the pipe to protect uncompetitive carriers and TV revenues from Internet video. But instead, there’s a very concerted effort afoot to portray this shift as necessary, inevitable, and even altruistic.

Most consumers prefer the simplicity of flat rate pricing, and understand that ISPs are perfectly profitable under the flat-rate pricing model. They also understand that this is a pipe dream forged by never-satisfied investors, and once implemented ends with ever soaring per gig fees and ever shrinking usage caps.

Weinman’s essay completely ignores the reality his preferred pricing model already delivers to those who live under it in Canada.  Canadian broadband rankings continue to decline as customers there pay higher prices for a lower level of service, with usage caps that actually decline when new competitive threats from online video emerge.

Just what the doctor ordered: HP's Rx for American Broadband

We had to take time out to respond directly to Weinman and his cheerleading friends (see the comments section), some who wrote comments below the piece and couldn’t be bothered to disclose they owe their day jobs to industry-backed dollar-a-holler groups that are committed to delivering on behalf of their provider benefactors:

When Big Telecom comes ringing with promises of savings from metered or capped broadband, hang up immediately.

These plans save almost nobody money and expose dramatic overlimit fees to consumers, creating the kind of bill shock wireless phone users endure.

The OPEC-like Internet price-fixing on offer from big players delivers broadband rationing and sky high prices, while retarding Internet innovations that providers don’t own or control.

Consumers are forced to double check their usage and think twice about everything they do online out of fear of being exposed to huge overlimit fees up to $10 a gigabyte for exceeding an arbitrary limit ranging from 5-250GB.

Americans already pay too much for Internet service and now the providers want more of your money. The rest of the world is moving AWAY from the pricing schemes Weinman would have us embrace. It’s such a serious issue in the South Pacific, the governments of Australia and New Zealand are working to address the problem themselves.

Providers are already earning BILLIONS in profits every quarter from their lucrative broadband businesses. Now the wallet biters are back for more, with the convenient side benefit that limiting consumption is a great way to prevent Internet-delivered TV from causing cord-cutting of cable TV packages.

As far as consumers are concerned, and Weinman admits as much, people are happy with today’s unlimited price models. When Big Telecom complains people are overpaying for broadband, wouldn’t their shareholders be telling them to shut up and take the money? There is more to this story.

Weinman defends the extortion proposition Big Telecom would visit on us: either give us limited use pricing or we’ll raise all of your prices.

But as consumers have already figured out, these providers never reduce prices for anyone. When was the last time your cable bill went down unless you dropped services?

Don’t be a sucker to Big Telecom’s “broadband shortage” or pricing myths. Broadband is not comparable to water, gas, or electric. The closest comparison (and the one they always leave out) is to telephone service, and as we’ve seen, that business is increasingly moving TOWARDS flat race, unlimited pricing.

Want to know what metered pricing does to the wallets of consumers? Just ask Time Warner Cable customers in Rochester, Greensboro, San Antonio, and Austin what they thought about the cable company’s “innovative” pricing experiment that tripled the price for the same level of broadband customers used to get for $50 a month. After the torches and pitchforks were raised over $150 a month broadband service, Time Warner backed down.

Either with or without metered pricing, the cable company raised its prices three times last year alone.

The industry’s meme that “usage-based pricing” in inevitable is only true if consumers allow it to happen.  The parade of Internet Overcharging advocates all share one thing in common — they earn a living from the providers that dream about these pricing schemes.  Always follow the money.  As we’ve exposed repeatedly, the vast majority of defenders of these kinds of pricing schemes are not consumers.  They are:

• The providers themselves;
• Wall Street banks, investors, and the business media catering to them;
• Non-profit groups receiving substantial contributions from providers;
• Industry-funded “think tanks” and research that can carry the industry’s public policy agenda, hoping the media that quotes them are too lazy to follow the money;
• Equipment and service vendors, unions, and other groups who depend on the business or jobs they get from providers.

If you are a Frontier DSL customer, your unlimited Internet service is at risk of being arbitrarily limited by a company that wants to cut costs and increase revenue… at your expense.

Suburban Sacramento residents deemed to be “using too much” Frontier Internet service are being told they have to ration their Internet usage or pay more — a lot more — for the same speed service.  Even worse, many customers are paying extra for a “Price Protection Agreement” from Frontier that protects Frontier’s profits while your Internet bill doubles.  That’s a price protection racket only the Sopranos could love.

Frontier’s own representatives are literally at a loss for words when told it’s easy to exceed their “5GB” limit just by web browsing and checking e-mail.  But they are even quieter when customers report Frontier’s own video website – my fitv, a “free online video service” heavily promoted by Frontier, is ultimately responsible for their looming $99.99 monthly Internet bill.

Frontier wants to get tough with some of their best customers.  As a result, many are exploring disconnecting service for a cable competitor.  The best way to fight these Internet Overcharging schemes is to make it clear to Frontier you will not submit to them.  The first step is to bring wider media attention to the issue.

Sacramento-Elk Grove Customers

• Contact the Sacramento Bee, the Elk Grove Citizen and other local newspapers and ask them to write a story about this;
• Contact KOVR-TV’s consumer reporter and ask him to do a story;
• Contact other stations and local call-in shows and draw attention to Frontier’s abuse of its customers;
• If you are on a “price protection agreement” contact the California Public Utilities Commission and file a complaint.

Points to consider raising:

• Frontier’s usage caps are easily broken using the company’s own video website, my fitv;
• What the company suggests most people will not exceed today is not reasonable tomorrow.  Besides, how much customers actually use is considered proprietary and we have to take their word on it;
• Customers on price protection agreements are being asked to pay more than double for the exact same quality of service they used to receive for less.  Where is the price protection?;
• Frontier is generous with their shareholders, paying outrageously high dividends out of step with their earnings, but are notoriously stingy with the customers that deliver them that revenue;
• Where’s the fire?  This is the same company that said it had more than enough capacity to take on millions of ex-Verizon broadband customers, but now suddenly can’t deliver the same level of service to existing customers in Elk Grove without doubling the monthly price?;
• Customers are being asked to pay $1 a gigabyte for a service that costs Frontier far less to actually provide;
• At a time when Frontier continues to lose landline customers, can they afford to alienate more, who take all of their business elsewhere?

Frontier alienating its own customers who pay for their landline and broadband DSL service does not sound like a winning business strategy.  Let Frontier know you will not do business with a company that abuses its big-spending customers.  Let them know in clear terms you will cancel all of your services if the company maintains its Internet Overcharging practices and you will encourage your friends and family to take their business elsewhere as well.