& cplSiteName &

Lawsuit Accuses Clearwire of Subscriber Fraud

Dan Jones
LR Mobile News Analysis
Dan Jones, Mobile Editor
4/1/2011
50%
50%

A new motion in a class action suit filed against WiMax service provider Clearwire LLC (Nasdaq: CLWR) alleges that in mid-2008 the operator intentionally started a scheme to sign up customers outside of its coverage areas in order to boost subscriber numbers and collect on termination fees when the aggravated users left.

The motion was filed Thursday with the United States District Court for the Western District of Seattle alleging that Clearwire’s practices with respect to Early Termination Fees (ETFs) are unlawful. You can read the motion here and associated documents here.

The motion and associated documents claim that top executives at Clearwire knew of a scheme -- supposedly called "Project Star Trek" internally -- that changed the coverage area of the operator's towers in its "pre-qualification" tool so that it appeared that potential customers were in signal range when they weren't.

Clearwire responded to the allegations early Friday afternoon calling them "baseless and absurd."

"We flatly deny any inference of fraud," a company spokesman told us in an email. "We will vigorously defend ourselves against any such allegations.”

On the back of the these new allegations, plaintiffs in a class action suit against Clearwire have asked the court to grant leave for a ruling on a second amended complaint against the operator. The initial class action case was filed in April 2009. The court originally granted Clearwire's motion to dismiss the case in February 2010, but the plaintiffs claim they now have new information at hand.

From the papers filed, much of the new material in the case appears to hang on information offered up by former Clearwire employee Donald Hammond, an ex-general regional manager at the operator, who worked for the company for four years before leaving in early 2010. Hammond claims that executives including former CEO Ben Wolff and COO Perry Satterlee knew of the scheme.

As well as other testimony, Hammond has also provided an email dated May 22, 2008, purporting to be from Gabe Suarez, who is named as a "director of engineering" at Clearwire and "a direct report" to Satterlee. The email states that "last night, the sector limits were changed in the markets below to increase the potential PQ opportunities." The email lists some 20 markets.

The motion goes on to claim that the pre-qualification limits around the fixed wireless towers Clearwire was operating were pushed out from 1.5 miles to 2.5 miles. This is the crucial detail because the motion claims that the executives knew that the towers didn't work well -- or at all -- in providing coverage beyond 1.5 miles to 1.7 miles. The alleged re-programming of the pre-qualification tool, however, would increase the coverage area "passed" by the tower by 280 percent, from nearly eight square miles to 19.6 square miles.

The motion claims that the distance requirements held true for both the Motorola Inc. (NYSE: MOT) Expediance technology that Clearwire used in its first 48 markets and the WiMax technology it began to deploy during 2008. The company launched its first "Clear"-branded WiMax market in January 2009. (See Clearwire Sets Portland WiMax Launch.) The motion claims that this had a two-fold effect for Clearwire. It allowed the operator to try to boost its gross subscribers at a time when this was an "important metric" for Clearwire's potential strategic investors.

Clearwire completed its asset merger with Sprint Corp. (NYSE: S) on November 28, 2008. At the same time, it received a $3.2 billion infusion of cash from Intel Corp. (Nasdaq: INTC), Google (Nasdaq: GOOG), Comcast Corp. (Nasdaq: CMCSA, CMCSK) and others. (See Clearwire, Sprint Complete Merger.)

Furthermore, the motion claims that Clearwire management called for staff to strictly enforce ETFs for customers canning the service within 30 days. The instances of customers wanting to drop their Clearwire service contract allegedly tripled following the claimed pre-qual tool changes that were said to have been made in May 2008.

— Dan Jones, Site Editor, Light Reading Mobile

(2)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
joset01
50%
50%
joset01,
User Rank: Light Beer
12/5/2012 | 5:08:51 PM
re: Lawsuit Accuses Clearwire of Subscriber Fraud


Really interested to see how this plays out.

estrategy
50%
50%
estrategy,
User Rank: Light Beer
12/5/2012 | 5:08:46 PM
re: Lawsuit Accuses Clearwire of Subscriber Fraud


What I don't understand is why this is any different than AT&T and Verizon claiming coverage when they don't have it? 


http://www.deadzones.com/2011/04/clearwire-false-advertising.html

Light Reading’s Upskill U is a FREE, interactive, online educational resource that delivers must-have education on themes that relate to the overall business transformation taking place in the communications industry.
NEXT COURSE
Wednesday, September 14, 1:00PM EDT
What Is Agile?
Kent J. McDonald, Product Owner, Agile Alliance
UPCOMING COURSE SCHEDULE
Friday, September 16, 1:00PM EDT
How to Implement Agile
,
Wednesday, September 21, 1:00PM EDT
What Is DevOps?
Colin Kincaid, CTO, Service Provider, Cisco
Friday, September 23, 1:00PM EDT
How to Implement DevOps
,
in association with:
From The Founder
Light Reading today starts a new voyage as part of a larger Enterprise.
Flash Poll
Live Streaming Video
Charting the CSP's Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
LRTV Custom TV
F5 Virtual Network Function Integrations With Partner Orchestration Platform

8|24|16   |   6:38   |   (0) comments


F5's Kishore Patnam, product manager for F5's service provider solutions, discusses why service providers are moving towards virtualization and how his clients are utilizing F5's solutions.
Between the CEOs
CEO Chat: Intel's Alexis Black Bjorlin

8|17|16   |   06:23   |   (0) comments


Join us for an in-depth interview between Steve Saunders of Light Reading and Alexis Black Bjorlin of Intel as they discuss the release of the company's Silicon Photonics platform, its performance, long-term prospects, customer expectations and much more.
Telecom Innovators Video Showcase
Accelerating Telecom Digital Transformation With Nominum DNS

8|1|16   |   12:04   |   (0) comments


Light Reading's Steve Saunders gets an update from Nominum CEO Gary Messiana on how his company is helping carriers on the digital transformation journey.
LRTV Custom TV
Reinventing Operations for a Virtual, Software-Defined World

7|28|16   |   5:23   |   (0) comments


Heavy Reading Senior Analyst Jim Hodges speaks with Accenture's Larry Socher and Matt Anderson about what service providers must do to transform their business to get the benefits of SDN and NFV including: leveraging DevOps, introducing real-time OSS and implementing analytics.
Women in Comms Introduction Videos
Fujitsu Sales Leader Shares Lessons Learned

7|27|16   |   5:12   |   (1) comment


As Fujitsu's only female sales leader, Annie Bogue knows the importance of asking for what you want, being flexible (she's been relocated five times), keeping a meticulous calendar, 'leaning in,' working harder than everyone else around you, being aware and more.
Telecom Innovators Video Showcase
VeEX Test & Measurement Solutions

7|25|16   |   08:57   |   (0) comments


Cyrille Morelle, president and CEO of VeEX Inc., talks test and measurement with Light Reading's Steve Saunders at BCE 2016. This includes innovative products such as VeSion Cloud-Based platform for network monitoring; MTTplus Modular Test platform for Access, Business, Carrier Ethernet, Transport and Core services; and OPX-BOX+ for Fiber Optics.
LRTV Custom TV
VeEX: Live From BCE 2016

7|25|16   |   03:20   |   (0) comments


VeEX's Senior Director of Business Development, Perry Romano, explains how VeEX provides tools to help install, maintain, monitor and manage network infrastructure efficiently and effectively. The portfolio of products on display include the RXT-6000, MTTplus and TX300s.
LRTV Custom TV
Real-Time Telemetry & Analytics for Intelligent SDN Orchestration

7|25|16   |   03:09   |   (0) comments


Packet Design CEO Scott Sherwood discusses how real-time network telemetry and analytics are enabling a new breed of SDN orchestration applications.
From the Founder
The Russo Report: Driving Disruption

7|25|16   |   07:44   |   (2) comments


In the first episode of a four-part series, Light Reading Founder and CEO Steve Saunders and Calix President and CEO Carl Russo drive around town discussing the disruptive mega-changes in the communications industry and where hope lies for service providers to meet the escalating demands of the cloud.
LRTV Custom TV
NetScout: Maximizing Enterprise Cloud for Digital Transformation

7|20|16   |   04:53   |   (0) comments


Light Reading Editor Mitch Wagner talks to NetScout CMO Jim McNiel about maximizing the benefits of enterprise cloud and digital transformation while minimizing potential pitfalls with a proper monitoring and instrumentation strategy.
Women in Comms Introduction Videos
Ciena's VP Offers a Career Crash Course

7|20|16   |   4:14   |   (2) comments


How did Ciena's Vice President of Sales, Angela Finn, carve out her career path? Simple, she tells WiC. She stayed true to her company, customers and principles. She shares her advice for women on how to be authentic and credible, as well as for companies that want to make a real change to their culture and practices.
LRTV Custom TV
NFV in 2016: Part 2 – Climbing the Virtualization Maturity Curve

7|19|16   |   06:56   |   (0) comments


Many of the initial use case implementations are single-vendor and self-contained. The industry is still climbing the virtualization maturity curve, needing further clarity and stability in the NFV infrastructure (NFVi) and greater availability and choice of virtualized network functions (VNFs). Interoperability between NFVis and VNFs from different vendors ...
Upcoming Live Events
September 13-14, 2016, The Curtis Hotel, Denver, CO
November 3, 2016, The Montcalm Marble Arch, London
November 30, 2016, The Westin Times Square, New York City
December 1, 2016, The Westin Times Square, New York, NY
December 6-8, 2016, The Westin Excelsior, Rome
May 16-17, 2017, Austin Convention Center, Austin, TX
All Upcoming Live Events
Infographics
Five of the Top 10 most targeted countries in Check Point Software Technologies' global Malware & Threat Index for Q1 2016 are in Africa.
Hot Topics
Cisco Developing 'Monica' Digital Assistant
Mitch Wagner, West Coast Bureau Chief, Light Reading, 8/22/2016
Cisco Throws 5,500 Overboard on Cruise to Richer Waters
Mitch Wagner, West Coast Bureau Chief, Light Reading, 8/17/2016
VoLTE Can Drive 4G Small Cells Adoption
Ravi Narayanan, Senior Analyst – Cloud & Next Generation Mobile Networks, Heavy Reading, 8/18/2016
Rocket Fiber Lights Up Detroit With Gigabit
Elizabeth Miller Coyne, Managing Editor, 8/22/2016
'Most Wanted' Kobi Comes Home
Ray Le Maistre, Editor-in-chief, 8/23/2016
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
Join us for an in-depth interview between Steve Saunders of Light Reading and Alexis Black Bjorlin of Intel as they discuss the release of the company's Silicon Photonics platform, its performance, long-term prospects, customer expectations and much more.
There's no question that, come 2020, 5G technology will turn the world's conception of what mobile networking is on its head. Within the world of 5G development, Dr. ...
Animals with Phones
Live Digital Audio

Bridging the tech skills gap is a major challenge for service providers and suppliers alike today – and the challenge is two-fold when it comes to increasing the number of women in the comms space. Level 3 Communications has made it a priority to overcome both challenges by implementing several unique programs focused on building the right candidates from within – in addition to filling the funnel by supporting STEM and other education programs. During this radio show, you’ll learn about these programs from Mary Beth McGrath, SVP of Global Talent Management at Level 3, and the best ways to bridge your own skills gap so that you are motivated and equipped for change. Plus you’ll have the chance to ask Mary Beth your questions live on the air.