AT&T Tries to Stomp Out Class Action Rights: Supreme Court Case Could Eliminate Consumer Protections

Not really

Back in 2002 Vincent and Liza Concepcion walked into a southern California AT&T Mobility store to purchase new cellphones for themselves.  AT&T advertised a buy one, get one “free” offer for cellphones.  What AT&T didn’t say was that the family would end up paying more than $30 in hidden sales taxes for both phones.

More than eight years later, that purchase — and the resulting class action lawsuit it launched — threatens to sweep away important consumer protections by letting corporations ban class action cases and curtail Attorneys General from enforcing state consumer protection laws.

Oral arguments in the case AT&T Mobility v. Concepcion were heard before the U.S. Supreme Court last Tuesday in one of the most important consumer protection cases in decades. At issue is this clause, inserted into the Concepcion’s service contract with AT&T that would disallow the family from participating in a class action lawsuit:

“You and AT&T agree that each may bring claims against the other only in your or its individual capacity, and not as a plaintiff or class member in any purported class or representative proceeding.”

That clause clashes with several state laws, California’s included, which basically say consumers cannot be compelled to sign away their basic consumer protection rights.  California law also says some contracts can be considered unenforceable ‘if they are built on deception, are too-one sided, or violate broader public policy.’

Hello, AT&T.

Vincent and Liza, through their attorney, argue that bringing an individual lawsuit against AT&T over $30 in sales taxes would be crazy — no lawyer would take the case and no plaintiff would front a retainer well beyond the amount in dispute.

As Justice Ruth Bader Ginsburg wrote in another class action case, “The realistic alternative to a class action is not 17 million individual suits, but zero individual suits, as only a lunatic or a fanatic sues for $30.”

The “class action” concept provides at outlet for aggrieved consumers who can attract legal representation if a company can be sued on behalf of every impacted customer.  For AT&T, that could mean facing not just the Concepcion family, but millions of Californians — each charged sales taxes for phones the company advertised as “free.”

How AT&T’s Case Has Broadened Into a Major Dispute Over Arbitration vs. Class Action Lawsuits

It's easy to navigate AT&T's terms and conditions to achieve a good outcome from arbitration, right?

But what began as a legal argument over a “free” phone has broadened into a much larger legal case before the Supreme Court: can consumers be compelled to participate in company dispute settlement schemes and give up their legal right to petition the court system for relief?  Further, what happens when those contract clauses conflict with state consumer protection laws?

Following in the footsteps of the credit card industry, AT&T inserted a clause mandating customers stay away from class action lawsuits.  By telling consumers they are forbidden to participate in such cases, AT&T pushes customers into the murky world of “arbitration” — a system where AT&T picks a private company, with whom it has a financial-business relationship, to “impartially” rule on customer complaints in secret proceedings.  Consumers have to pay their own way to attend arbitration hearings, often held in cities a thousand miles away or more.  They also must agree the decisions are binding and final.

AT&T argues, both directly and through its dollar-a-holler advocates, that class action cases are annoying, expensive, and do not typically deliver substantial benefits to class members.  The wireless carrier argues arbitration of individual cases is much faster and potentially more lucrative to would-be class action members.  Stephen J. Ware, a professor of law at the University of Kansas School of Law argues consumers have often done far better avoiding litigation and entering into arbitration programs.

But consumer advocates claim AT&T’s arbitration rules are stacked against consumers.  Arthur H. Byrant, executive director of Public Justice argues:

First, AT&T’s “agreement” bars its customers from court (except small claims court) and requires them to utilize the company’s mandatory arbitration program. Its rules say that, if a customer completes the process and recovers more than the last written settlement offer AT&T made before the arbitrator was chosen, a $7,500 premium will be paid. Second, the “agreement” bans AT&T’s customers from bringing or participating in class actions against it. Third, the “agreement” provides that, if AT&T’s class action ban is found to violate the law (as 20 states have held contractual class action bans do when they effectively immunize a company from liability), the arbitration clause “blows up” and the class action must proceed in court. Then, when the class action ban is struck down under state law (as AT&T knew it would be), the company springs its wacky trap: It argues that the Federal Arbitration Act of 1925 (FAA) pre-empts — and invalidates — that state law because (believe it or not) the state law is biased against arbitration.

AT&T’s call for pre-emption suffers from a bad connection. State law is not biased against arbitration. It allows AT&T to resolve disputes in either arbitration or court. Only AT&T’s “agreement” is biased against arbitration. Its “blowup clause” precludes class actions from proceeding in arbitration, but not in court.

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Using the scroll bar to the right of the player, move down and click on Attorney Paul Bland’s name and watch him argue forcefully that AT&T’s motives are plain and simple — to allow them to get away with anything they want and not face accountability from the legal system. — “Arbitration is not the Candy Bridge into Rainbow Land.”

Tapping Into Consumer Discontent With Class Action Cases for the Benefit of AT&T

What the lawyers get

Ask anyone about the merits of most class action settlements and one will often get a response that the lawyers win while consumers lose.  Just this week many owners of HP printers will get word a deal has been reached over a class action case involving printer ink.  The multiple law firms involved will split not more than $2.9 million under the terms of the proposed settlement.  Consumers will get “e-credit” worth $5, $2, or $6 redeemable at HP’s online store, which sells ink cartridges at inflated prices.  In effect, HP has little to grumble about delivering “awards” to consumers that ultimately benefit its own enterprise, the only place those awards can be redeemed.

With settlements like that all too common, it is easy for AT&T’s advocates to tap into consumer discontent with class action lawyers, proclaiming AT&T’s case is actually consumer-friendly because it would cut those money-grabbers out of disputes with the company.

But consumer advocates stress class action cases do more than deliver settlements — they deter bad behavior on the part of would-be wrongdoers, bring corporations to account fiscally when they are forced to settle, and open the door to legal discovery which can uncover patterns of extensive wrongdoing that would otherwise remain secret in arbitration.

But most important of all, class actions impact every customer, not just the handful who navigate arbitration to achieve a confidential settlement.  That can be critically important to stop unfair business practices.

What you get

Of course, reform is also desperately needed in the class action system.  Too often, judges approve class action cases that deliver maximum benefits to the law firms that bring them, leaving consumers with peanuts.  Strict limits on legal fees recouped in such cases, perhaps tied to a percentage of total recovery would be a start, as are bans on settlements that don’t provide cash refunds to consumers who choose not to conduct further business with companies that abuse them.  Coupons, low value trinkets, and donations to third party groups (non-profit or otherwise) are insufficient.  Attorneys that selfishly claim most of the proceeds for themselves have only themselves to blame when corporations use that fact against them under so-called “tort reform” proposals.

Some advocates of AT&T’s position also argue that government oversight can provide a more effective system of checks and balances against corporate overreach.  While a noble sentiment, anyone who has watched the revolving door of lobbyists going to work for such agencies, later returning to lucrative jobs with the companies they formerly regulated, knows that is a classic case of the fox overseeing the hen house.  In an era of government “oversight” that missed everything from BP’s safety lapses, salmonella-infected eggs, produce, and meat, tainted pet food ingredients from China, and indecisiveness about telecommunications reform like Net Neutrality — such proposals are not to be treated seriously.

The Supreme Court Decision

While it will be months before the Court rules, most observers suspect consumers will ultimately win the case.  Liberals on the court are skeptical AT&T’s efforts to preempt state consumer protection laws are actually for the benefit of consumers, and some of the most conservative members of the court like Justice Clarence Thomas, big believers in “states’ rights” are likely to find for the Concepcion family.

“Based on what was said during the argument, I predict a 8-1 or 7-2 vote for the consumers and California, with Samuel Alito dissenting and John Roberts a toss up. Thomas, who never speaks at oral argument, will vote for the consumers and state on federalism grounds, as he always does in [arbitration] cases,” writes Lawrence Cunningham, Argument in Class Waiver Case Favors Consumers, States, Concurring Opinions.

“[I]t doesn’t look as though there are too many votes at the high court to do away with the right of consumers to band together to sue the great American manufacturers of fine print,” said Dahlia Lithwick, Can You Hear Them Now? The Supreme Court reads the fine print on your cell phone contract, Slate.

If these two observers are wrong, it will be open season on consumers who will be forced into arbitration agreements that deliver all of the benefits to companies like AT&T.  Under such a scenario, there would be little to dissuade companies from developing new fine print to trick and overcharge consumers.  Few will be willing to buy a ticket to fly halfway across the country to sit for arbitration proceedings over a $20 dispute, especially when the arbitration firm’s income depends on fees paid by the very companies that are accused of wrongdoing.

Une mauvaise affaire pour les ontariennes: Bell Gives Bigger Usage Allowance to Quebec Customers

Phillip Dampier November 15, 2010 Bell (Canada), Canada, Data Caps 2 Comments

Ontario residents enjoy less than half a serving of broadband their neighbors in Quebec enjoy from Bell, for less money

Residents of Quebec enjoy more than double the broadband usage allowance Bell provides its Ontario customers, showing once again h0w arbitrary Internet Overcharging schemes are for consumers in North America.

Broadband Reports reader Ironsight200 ponders why customers in Quebec enjoy substantially less abuse from the skimpy usage allowances Bell imposes on its customers.

The prices charged differ as well, with Quebec residents also getting an out-the-door lower monthly price because Bell does not impose charges on the modem Ontario customers rent for $3.95/month — $6.95 a month with the Fibe 25 service.

Let’s take a look (and don’t worry Ontario readers, Bell promises you can still look at least 624,999 additional web pages this month without incurring overlimit fees):

Quebec users get more than double the usage allowance of...

...their neighbors in Ontario.

Pricing for Bell broadband service at the bundled price:

Bell Internet Products Ontario Quebec
Performance $35.90* $34.95
Fibe 16 $50.90* $44.95
Fibe 25 $59.90^ $54.95

*- includes $3.95 modem rental fee. ^- includes $6.95 modem rental fee.

Here We Go Again: Sinclair Threatens Time Warner Cable Subs With Loss of 33 Stations in 21 Cities

Sinclair Broadcasting is threatening to pull 33 television stations in 21 cities from Time Warner Cable customers on January 1st if the cable company doesn’t agree to demands to pay around 20-25 cents per month per subscriber for each of the stations, primarily Fox and MyNetworkTV affiliates.

It’s just the latest in a series of retransmission rights battles underway between broadcasters and cable companies over cable carriage agreements.

Sinclair is a major group owner of television stations, and the impact on viewers in places like western New York, Dayton, Ohio, Greensboro, N.C., San Antonio, Tex., and Pittsburgh, Pa., won’t be missed because these markets have multiple Sinclair-owned or programmed stations involved in the dispute.

As always, the dispute is about money.  This week, viewers of affected stations, including our readers Lance and Andrew, started being annoyed with repeated warnings scrolled at the bottom of screens about the potential loss of their “favorite stations.”  In the case of WUHF, viewers might have thought a serious weather warning was being issued as text crawled against a distinctive red background.

So far, the dispute has not infected Sinclair’s local newscasts, which have often been used as a sounding board for the company’s past retransmission consent fights.  But then, many Sinclair stations have abandoned producing local news themselves over the past few years as a cost-savings measure.  However, many of the stations involved have put the dispute high on their home pages, as a too-cute-by-half link: “Learn About Time Warner Cable’s Plans to Drop Carriage Of This Station.”  Sinclair leaves no doubt about who they blame for the debacle.

Stations Impacted

  • AL  Birmingham — WTTO (CW)
  • AL  Birmingham — WABM (MyNetworkTV)
  • FL  Pensacola — WEAR (ABC)
  • FL  Tallahassee — WTWC (NBC)
  • FL  Tampa — WTTA (MyNetworkTV)
  • KY  Lexington — WDKY (Fox)
  • ME  Portland — WGME (CBS)
  • MO  Girardeau — KBSI (Fox)
  • NC  Greensboro — WXLV (ABC)
  • NC  Greensboro — WMYV (MyNetworkTV)
  • NC  Raleigh — WLFL (CW)
  • NC  Raleigh — WRDC (MyNetworkTV)
  • NY  Buffalo — WUTV (Fox)
  • NY  Buffalo — WNYO (MyNetworkTV)
  • NY  Rochester — WUHF (Fox)
  • NY  Syracuse — WSYT (Fox)
  • NY  Syracuse — WNYS (MyNetworkTV)
  • OH  Cincinnati — WSTR (MyNetworkTV)
  • OH  Columbus — WSYX (ABC)
  • OH  Columbus — WTTE (Fox)
  • OH  Dayton — WKEF (ABC)
  • OH  Dayton — WRGT (Fox)
  • SC  Charleston — WTAT (Fox)
  • SC  Charleston — WMMP (MyNetworkTV)
  • PA  Pittsburgh — WPGH (Fox)
  • PA  Pittsburgh — WPMY (MyNetworkTV)
  • TX  San Antonio  —  KABB (Fox)
  • TX  San Antonio — KMYS (MyNetworkTV)
  • VA  Norfolk — WTVZ (MyNetworkTV)
  • WI  Milwaukee — WVTV (CW)
  • WI  Milwaukee — WCGV (MyNetworkTV)
  • WV  Charleston — WCHS (ABC)
  • WV  Charleston — WVAH (Fox)

Sinclair’s website warns viewers negotiations with Time Warner Cable are not promising:

Sinclair (or in some cases the licensees of the television stations not owned by Sinclair) and Time Warner are in the process of negotiating a renewal of the current agreement between Sinclair and Time Warner Cable which is scheduled to expire on December 31, 2010. Without a renewal, Time Warner Cable will no longer have the right to carry the broadcast of the television stations covered by this expiring agreement. Unfortunately, based on the status of the negotiations Sinclair does not believe we are going to be able to reach agreement on an extension of the deal. As a result, Time Warner would no longer be carrying the stations covered by the agreement with Sinclair beginning on January 1, 2011. Although some might try and characterize this as a dispute, in the end it represents nothing more than the failure of two companies to reach a business agreement, something that happens in the business world thousands of times a day.

Taking a cue from News Corp., Sinclair claims Time Warner Cable is stalling, hoping the Obama Administration will intervene and prohibit signal blackouts while negotiations are still underway.  Despite the claim the cable company is the one with the plan to drop stations, Sinclair informs viewers it is giving them early warning to help them make arrangements with alternative providers like Verizon FiOS, AT&T U-verse, or satellite companies to “avoid interruptions” in programming.

Time Warner Cable recognized the seriousness of the Sinclair dispute and has given it top billing on their Roll Over or Get Tough website.  So far, the cable company has rolled over in every dispute, eventually caving to programmer demands.  But the cable company would claim it has at least reduced the rates being demanded, or won concessions that allow subscribers to catch shows on-demand as part of its TV Everywhere project.

Because the cable industry has so far been dealt the weaker hand in these disputes, they are spending an increasing amount on lobbying the issue in Washington, right down to creating a front group that claims to represent viewers.  The s0-called “American Television Alliance,” has a mission statement that, on the surface, doesn’t wade too deep into actual solutions:

The ATVA’s mission is a simple one – to give consumers a voice and ask lawmakers to protect consumers by reforming outdated rules that do not reflect today’s marketplace.  We are united in our determination to achieve our goal: ensure the best viewing experience at an affordable price, without fear of television signals being cut off or public threats of blackouts intended to scare and confuse viewers.

The overwhelming majority of the interests represented by the ATVA are giant cable and phone companies (and two groups willing to play along when sharing common interests: Public Knowledge and the New America Foundation.)

The group filed comments petitioning the Federal Communications Commission to modify retransmission consent policy to give cable and phone companies additional tools to battle with intransigent broadcasters.  The most important, and one we agree with, is an end to the ban on importing distant network signals from nearby cities to replace those from local stations who simply dump “take it or leave it” offers on operators who then raise rates to cover ever-inflating programming costs.

As it stands now, cable systems cannot grab network stations from other cities to at least restore network programming, because FCC rules prohibit it, even if the nearby station doesn’t mind.  While that might not help Time Warner viewers in cities like Rochester, where the nearby Fox affiliates in both Buffalo and Syracuse are also owned by Sinclair, the cable operator’s extended reach made possible serving all three major upstate cities might still deliver relief by grabbing further distant Fox stations like WYDC in Corning, WFXV in Utica, or WFXP in Erie, Pa and distributing them across all three affected cities.

Unfortunately, the Fox TV network has also made it clear stations could risk their affiliation deals with the network if they were to grant retransmission consent to providers that effectively undercut other Fox affiliates.

The ATVA also wants providers to retain the right to continue carrying disputed signals so long as good faith negotiations are ongoing, and has also suggested binding arbitration as another alternative reform.  Broadcasters have rejected both.

Some of the ATVA’s proposals are worthy of merit to benefit consumer interests, but consumer groups might do better creating their own group to fight this issue, if only to keep broadcasters from dismissing the group as heavily stacked with cable and phone companies with a biased, vested interest in the outcome.

Just reviewing the FCC petition left a bad taste when they quoted everyone’s favorite “dollar-a-holler” group — the League of United Latin American Citizens, which continues to amaze with its omnipresent Zelig-performance in just about every telecommunications policy debate involving LULAC’s benefactors.

More than a few politicians are likely to accept broadcaster arguments, which would ultimately weaken the effectiveness of any reform effort.

Confirmed: Charter Cable About to Ruthlessly Enforce Usage Caps

Phillip Dampier November 11, 2010 Charter Spectrum, Data Caps, Editorial & Site News 12 Comments

Stop the Cap! comments: After today’s confirmation of the story below, it turns out that not only will Charter enforce its usage caps, it is also implementing a throttling scheme that will turn down speeds for “heavy users” when Charter’s overburdened broadband network is congested.  We’ve seen how that works in Europe.  Network management techniques like throttling and usage caps allow providers to turn up the speed and usage controls and turn down the level of investment to grow their broadband networks to meet growing customer demand.

Wall Street will certainly encourage this kind of behavior so long as Charter customers have few alternative choices.  This is bad news for Charter customers who may find the phone company’s unthrottled and typically unlimited broadband a much better alternative, even if it does run slower.

Two separate e-mails arrived in our mailbox this evening from individuals claiming to work for Charter’s call center informing us customer service agents are required to attend a meeting Thursday to explain Charter Cable’s new hard-usage cap Internet Overcharging policy.

It’s too late for us to touch base with company officials for verification, but both our sources shared nearly-identical details of the forthcoming hard usage cap program:

“Effective Nov. 16th, Charter will begin enforcing their Usage Cap policy strictly:

  • Base Service: 100GB per month
  • Plus & Max: 250GB per month
  • Ultra: 500GB per month

Violators will receive two warnings and then face service suspension for up to six months unless they switch to a Business Class broadband product.”

Our other source tells us CSR’s are being trained to deal with irate customers who are deemed violators, all because Charter is in no financial position to keep up with network demands.

Until we receive absolute verification, this should be considered unconfirmed information.

Charter Cable has maintained soft usage caps for some time, rarely enforced on a system-by-system basis with phone calls.  The details are buried on Charter’s website.  They have generally left most customers alone.  But if Charter intends to enforce a formal Internet Overcharging scheme, customers will have just one more reason to despise the company, which already rates as the worst cable broadband provider in the United States according to Consumer Reports (only Wildblue and HughesNet — both satellite fraudband providers scored worse for broadband).

Updated 3:04pm ET:  Here is a statement we received from Charter regarding this matter:

Charter is introducing some new programs designed to improve our high-speed Internet service.  We had planned to send information your way when we start to inform our customers directly; however, in the spirit of flexibility here is a quick summary for you today.

As I know that you know, Charter has long offered graduated tiers of Internet service, ranging from lower speed “Lite” (1 Mbps) versions to “Ultra60” (60 Mbps) and each service level has a monthly usage threshold within which customers are supposed to limit their usage.  Until this point, we haven’t taken action to enforce our thresholds; however, in order to continue providing the highest quality Internet service, we do plan to begin enforcing our “No Excessive Use of Bandwidth” policy documented in our Acceptable Use Policy (AUP). The thresholds are substantially above typical use for approximately 98% of our customers.

In December, we will begin reaching out to a select group of customers whose use is excessive to make them aware of their usage patterns, to help identify possible causes (e.g., unsecured wireless routers or viruses) and review security options with these customers to reduce the risk of unauthorized Internet use. We are currently working on a way to present data usage to customers so they can self-monitor their bandwidth usage.  Until we make that tool available directly, customers who are notified of excessive use will be provided a contact at Charter who can check the customer’s usage throughout the month to help them better manage their Internet usage. If the excessive usage continues repeatedly, their Internet service could be suspended. Our intent is to prevent the very small number of users who are consuming excessive amounts of bandwidth from negatively impacting the experience for the majority of our customers.

In tandem with enforcing our “Excessive Use of Bandwidth” policy, we will also introduce a congestion management policy to improve the Internet experience for all of our customers.  Congestion Management will become part of our standard Network Management practices, and the policy will be protocol agnostic, which doesn’t distinguish among the online activities, protocols or applications a customer uses. It applies only during periods of congestion (which we find to be relatively rare).  It affects only the heaviest users (less than 1%) in small time increments, who will have their bandwidth limited during times of congestion, however, no Internet activities will be blocked.  We based this system on the “fair share” model described to the FCC in September of 2008.

We certainly wanted you to know about these initiatives and believe these steps will help us deliver the best possible Internet experience for our residential users.

Anita Lamont

[Updated 12:14pm ET:  We reached out to Charter Cable’s social media reps and media relations in e-mail this morning and are still waiting for a confirmation/denial/comment on this story.  If/when we get one, it will appear here as an update.]


Clearwire in Big Trouble: Laying Off 15% of Staff, Unhappy Customers Fleeing, Money Running Out

A Facebook group has been established to oppose Clear's Internet Overcharging schemes

The clock may be running out on Clearwire, America’s “4G-WiMax” wireless broadband provider controlled by Sprint, with close investment ties to Comcast and Time Warner Cable, who both resell Clear wireless broadband under their own brands.

At issue is money — the lack of it, and the wireless company’s cash on hand has grown so perilously low, Clearwire was forced to admit to its investors it may not survive beyond the first half of next year:

Based on our current projections, we do not expect our available cash and short-term investments as of September 30, 2010 to be sufficient to cover our estimated liquidity needs for the next 12 months. We also do not expect our operations to generate positive cash flows during the next 12 months. Without additional financing sources, we forecast that our cash and short-term investments would be depleted as early as the middle of 2011.

The Securities and Exchange Commission rules governing public companies represent a public relations nightmare for anyone trying to put a positive spin on bad news, and Sprint chief Dan Hesse desperately tried to make lemonade out of the financial lemon Clearwire increasingly represents for the wireless company.

“If you get to the point where you don’t have 12 months of cash in the till, even if you’ve got negotiations going on, or what have you, you have to, from an accounting perspective, say you have a going-concern issue,” Hesse said. “That doesn’t mean that Sprint and other partners won’t continue to fund Clearwire.”

With Sprint’s 54 percent stake in Clearwire defining the entity as a subsidiary of Sprint, its demise could risk Sprint’s own financial well-being, something Sprint plans to address in 2011, potentially ending its majority stake in the company.

For Hesse and his cable partners, Clearwire’s financial problems are being spun as a result of the venture’s success.  The company says it cannot afford the rapid expansion it has undertaken to expand its WiMax network into additional cities across the country, and faces serious financial challenges from the subsidies consumers demand when buying smartphones.

Hesse particularly complains about the latest whiz-bang smartphones consumers demand, many costing upwards of $600.  Consumers in the United States don’t pay full retail price.  In return for two year contracts carrying steep cancellation penalties, carriers cut the price of most high end phones to $200 or less.

“Subsidies are going through the roof in our industry,” Hesse said. Nearly 40 percent of Sprint customers use the company’s 4G network, and that number is rising.

Revenues are up 114 percent from a year earlier to US$147 million. But Clearwire’s losses for the last quarter alone amounted to $139 million, or $0.58 per share.

As a result, Clearwire slashed 15 percent of its staff, laying off nearly 600 employees and has indefinitely suspended its expansion plans to bring the network to additional cities.  Clearwire will also shutter many of its planned retail outlets — some already built — and delay the introduction of its own branded smartphone.

But even that may not be enough.

Although Clearwire’s growth has been double the level anticipated, achieving a net gain of 1.23 million subscribers in the third quarter — reaching 2.84 million total subscribers, not all of those customers are sticking around once they begin using the service.

Complaints about the company’s poorly disclosed speed throttling continue to be a regular topic on Clear’s support forums.  At least 1,000 complaints have been logged on Clear’s own support forums and elsewhere online about the speed traps.  A Facebook group opposing the schemes has also been established.

Stop the Cap! filed a formal complaint with the New York Attorney General’s office accusing the company of false and misleading advertising and fraud for claiming customers would enjoy “blazing fast speeds” with no limits or speed throttling, despite the fact company officials later admitted they were throttling customers deemed to be “using the service excessively.”  Dozens of additional complaints from Clearwire customers have been filed with state Attorneys General across the country, as well as with the Federal Trade Commission in Washington.

Just how much is too much has never been made clear by the company, but many users report the speed throttle reduces speeds to 250kbps, often for hours at a time.

Clearwire told Electronista:

Throtting is based on the current utilization for each cell tower, and many low-use towers do not throttle speeds at all. For high-use towers, throttling occurs during peak-use times.

A customer’s maximum speed is based on the number of gigabytes of data transferred in the past seven days and the download speeds for the past 15 minutes. Speeds are recalculated every 15 minutes, at which point a throttled customer will be bumped up to a higher speed. Rather than implementing one speed for throttling, the calculations will move customers between 48 different speed brackets.

The worst offenders using peer-to-peer software on Clearwire’s network may face repeated throttling.

Clearwire’s network management speed throttles come despite claims made last March by Chief Commercial Officer Mike Sievert, who said the average subscriber was consuming around 7GB of usage per month and this posed no problem for the provider, which owns up to 150 MHz of wireless spectrum in some markets.

Clearwire advertises a faster Internet experience for their 4G service, but many report they receive speeds far slower, even if they have engaged in very little usage.

Many consumers are also unknowingly finding themselves back on Clear’s network even though they signed up with a third party provider.  Clear resells access to its network under a variety of different brands not limited to Sprint, Road Runner Mobile, Comcast Internet2Go, and Best Buy Mobile/Wireless.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Clear Speed Woes 11-10-10.flv[/flv]

This Clearwire customer visits a Clear hotspot location and discovers even on a Wi-Fi network, Clear’s speeds don’t match their advertising claims.  Then, he discovers just how sneaky Clearwire gets in disclosing important information about the company’s wireless speeds customers might want to know before signing up.  (5 minutes)

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