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Bad Karma: Sprint and Data Caps Kill Neverstop Plan; Customers Claim Bait & Switch

Phillip Dampier February 22, 2016 Broadband "Shortage", Competition, Consumer News, Data Caps, Wireless Broadband 8 Comments
Karma's very expensive $150 startup equipment package.

Karma’s very expensive $150 startup equipment package.

After customers spent $150 on a mobile Wi-Fi hotspot device promising unlimited LTE wireless Internet access for $50 a month, Karma – the company offering the service – has put a stop to its “Neverstop” plan four months after introducing it.

“Karma is a bitch,” complained one customer who spent $250 with Karma trying to find a replacement for Clear’s now discontinued WiMAX service for his rural home. “After spending hundreds for nothing, it should be obvious to everyone why Karma turned off the comment section on its website.”

Neverstop customers have been through a rough ride during the brief life of the service, which started last November. Customers were promised unlimited 5Mbps service for $50 a month, after buying the $150 in required hardware. But not long after the plan was introduced, customers discovered their speeds were throttled to as low as 1.5Mbps to discourage customers from excessively using the service.

Insiders tell us the likely cause of the plan’s demise is Sprint, the wireless company Karma contracts with to offer the service. Sprint reseller contracts are closely guarded, but there is a clear track record of wireless companies taking action against resellers that place unexpected burdens on their networks. Millenicom, a similar provider that won customers largely through word-of-mouth, saw its unlimited offerings curtailed long before Karma announced its Neverstop plan, because wireless companies didn’t appreciate the fact some Millenicom customers relied entirely on the service for Internet access in the home.

Karma-Neverstop

Karma sold a plan that encouraged heavier data usage and then punished customers for using it.

Karma officials claim most of their customers never exceeded 15GB a month, but apparently enough did to get Sprint’s attention. Karma’s own internal research found that despite its insistence Neverstop was not a home broadband replacement, at least 60% of their customers used it exactly for that purpose. A handful of customers ran up hundreds of gigabytes of usage from online video, cloud storage/backup, and file trading. But a larger percentage used the service because they had no access to DSL or cable broadband, and used about as much data as the average household – an amount deemed by Sprint and/or Karma as “unsustainable.” Karma quickly moved to impose universal speed reductions on the service, dropping from 5Mbps to 1.5Mbps in an effort to curtail usage.

“Bait and switch,” complained Shannon Krakosky on Karma’s Facebook page. Many of the company’s earliest customers found the throttles arrived just as their 45-day return window for the expensive equipment expired, saddling them with a $150 paperweight. The company’s Black Friday offer inspired still more customers to sign up at a discount, only to find the equipment backordered, arriving at around the same time the traffic reduction speed throttles were announced.

Just one week before the speed reductions took effect, new customers were enticed with a year-end signup offer, further increasing traffic loads. Then customers received this:

[We] were surprised to learn how many of you are also using it heavily at home. We’ve seen lots of you binge watch Netflix in HD all day, back up your hard drives over the internet, and even connect your Xboxes through ingenious means. It’s a glimpse of how the internet should be, and we love it… but it’s putting a strain on the service and it’s not what the product is meant for today.​

After spending $150 on hardware for $50 unlimited LTE service, less than four months later these are your new choices.

After spending $150 on hardware for $50 unlimited LTE service, less than four months later these are your new choices.

But usage should have never surprised Karma, considering the firm marketed Neverstop in November and December as the perfect answer for “heavier usage, streaming, downloading….”

Only after imposing a speed throttle — later increased to 2.5Mbps — came changes in how Neverstop marketed its service. In early January, Neverstop was now sold as the perfect solution for “daily usage, worry-free browsing, on-the-go work, travel, occasional streaming, and more.” Also gone was the marketing that promoted unlimited usage. The new message to customers: lay off.

Many customers were unhappy about the sudden changes and have filed false advertising complaints with the Better Business Bureau and several state attorneys general.

Karma continued to modify its Neverstop plan later in January, claiming to relent on speed throttling and moving to impose a 15GB usage cap on Neverstop instead. The company claimed the usage cap would allow it to restore 5Mbps service, but most customers complained their speeds remained slow. In effect, customers were being asked to continue paying $50 a month for a shadow of the service originally advertised.

As of late last week, Karma revisited customers again to announce the once unlimited wireless data experience of Neverstop was being stopped… permanently.

van Wel

van Wel

Karma CEO Steven van Wel told Verge the company came to the realization that Neverstop was unsustainable after observing a month of customer usage following January’s adjustments. Even with the restrictive throttling, half of Neverstop customers reached the 15GB cap before the end of their billing cycle, and there was no way for them to easily continue high-speed service, whether by changing plans or paying overage fees. Just one month earlier van Wel told Verge only a few customers were likely to exceed their 15GB cap.

“You bait and switched us again,” came a chorus of complaints before Karma switched off public comments on all but its Facebook page.

“Poor business at best,” added Daniel Frisch. “Sell a customer one thing and then switch it to something completely different. You sold me an unlimited data device at a reasonable price and now you have gone from throttling that data to a high-priced limited data plan like everybody else.”

Karma’s latest plan is called Pulse and Neverstop customers will gradually find their existing Neverstop service transitioned to the new plan over the coming month, which will sell 5GB of service for $40 a month. Many complain there are better deals available elsewhere.

Stop the Cap! will continue to seek out options for rural or on-the-go customers who depend on wireless Internet access where DSL and cable broadband are not available. For now, we cannot recommend Karma because of the company’s unstable service plans and the high upfront cost of equipment.

Currently there are 8 comments on this Article:

  1. Dan says:

    I wonder what consumercomplaints.fcc.gov can offer Karma’s customers – maybe refunds? Going to the BBB is futile.

  2. Duffin says:

    I’m getting really sick and tired of these companies treating data like a limited resource akin to gas or electricity. It’s not! 1 GB, 100 GB, it makes no difference. It’s all about the amount of broadband being used at any one time. Let’s say you have a max capacity of 100 users on your network. If you have five people constantly downloading things 24/7, it’s not an issue. Hell, if you have 90 people using data 24/7, it’s not an issue. Now, if you have 120 people downloading all at the same time, you get congestion. Wireless carriers do have an issue in that there is limited bandwidth in the wireless spectrums to work with. I get that. They can’t just add more spectrum to the network like you can with wired internet. It’s more difficult to just expand your network in a certain area to accommodate more users.
    But, they seem to think that by limiting to 5 GB a month, people won’t download constantly the whole month, freeing up random blocks of time for other users. That’s a terrible method of doing so because if I download 100 GB at 3 AM when no one else is really using the network, there’s no worry about congestion. A better method would be to limit really high speeds during high peak times if a user is constantly using bandwidth for multiple hours during peak times, as might be seen if someone is using LTE for home use and is watch 1080p videos on YouTube. Their speeds should be lowered a bit once they reach a certain threshold for length of consistent use and returned to normal after the peak time ends. It should not be a monthly cap of data because data isn’t like the electricity coming to your house. It’s essentially a tunnel connecting one network to another. That’s what you pay the ISPs and carriers for: a tunnel for data to come through. If more people are pushing data through that tunnel at once, you have to limit how much data someone can push through at a time while there’s high volume, not how much total a month they can push through. That makes no sense.
    This is, of course, all assuming their claims of congestion are the reason they have the data caps. Personally, I believe they know damn well this isn’t the best way, but it is most certainly a way to get people to pay more money, either by paying for more data one they reach their cap or for paying a higher monthly bill to get a high cap overall.

    • Jazneo says:

      data caps dont be made they just need slow down speed little

    • SmilingBob says:

      “it is most certainly a way to get people to pay more money, either by paying for more data one they reach their cap or for paying a higher monthly bill to get a high cap overall.”

      Bingo. The wireless carriers have a data cap because it makes them allot of money with the overage fees. If congestion was really the issue, you’d have a tiered system in place where you could choose a speed much like a wired ISP. You could then have more people on simultaneously doing things without issue. And regardless of what anyone thinks, 3-5Mbps is plenty for a freaking phone. 3Mbps will even stream HD Netflix.

      As it is now, you pay an exorbitant amount of money for a very small bucket of data. Your LTE speed is limited only by congestion and is often 50+Mbps, but is nearly useless because you don’t have enough data. It’s a vicious circle of stupidity on the part of the consumer and greed on the part of the wireless providers.

    • kwaharah says:

      I do understand data caps to a point as gig does have a cost associated to it but anything under 1 TB for $40+ is a sad joke. As far as spectrum is concered could they not reduce the range of the towers where there is higher ussage to prevent overlap to the reduce the burden on each band of spectrum?? If they can and just are not its very disturbing companys are able to buy spectrum and then monopolize it as they see fit.

  3. Jazneo says:

    best option for unlimited interent is from Unlimtiedville.com and boost mobile $60 unlimited plan

    • A.J. says:

      Have you used either Boost or Unlimitedville in the past? I looked them both up and Unlimitedville looks appealing. I hope it’s not another bait and switch like Karma.

  4. V.C. says:

    According to Steven Van Wel’s LinkedIN account he no longer works for Karma. Staff levels have gone from 29 employees in March to 18 currently.

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