Many Unlimited Tech Services Appear to Have Limits

If you sign up for an unlimited Internet service, you expect it to be a service that comes, well, without limits, right?

That's what Jim P. expected when he subscribed to Clearwire's high-speed wireless Internet service. What he got, however, was Internet service that was so slow, it became unusable. The reason, Clearwire told him: He used his "unlimited" account too much. Company representatives said that because of his "excessive bandwidth" use, his Internet speeds were being throttled.

Jim P., who posted about his experience at Clearwiresucks.com, is far from alone. Browsing the gripe site reveals dozens of users with similar complaints. You'll also find them on the Clearwire Sucks Twitter feed, as well as at ComplaintBoards.com. Clearwire is now facing a class-action lawsuit over this very issue.

But the wireless Internet service provider is hardly the only company to place limits on its so-called unlimited services. Online backup providers do it, and so do VoIP providers. Chances are, just about any unlimited tech service comes with plenty of limits. (See T-Mobile's new offering.) And it's making consumers angry.

Other companies, notably many cellular service providers, have had enough, and are pulling the plug on their unlimited plans. But many more companies remain committed to offering unlimited services, and are just as adamant about defending the limitations they impose on them. What's a consumer to do?

Court Case

Clearwire is feeling the heat over its claims of unlimited service. A class-action lawsuit (PDF) filed earlier this month in the U.S. District Court for the Western District of Washington argues that Clearwire's offer of unlimited service is "false, deceptive, and misleading because, in truth and in fact, Clearwire subscribers cannot 'upload, download, and surf' as much as they want." Instead, the lawsuit alleges, Clearwire imposes a hidden usage cap, and once users exceed that cap, Clearwire deliberately slows their Internet speeds.

If you read Clearwire's Terms of Service, you'll see that the company very well may be putting the brakes on some users. The document states: "Clearwire reserves the right to engage in reasonable network management to protect the overall integrity of its network...through techniques such as reducing the aggregate bandwidth available to excessive bandwidth users during periods of congestion."

You'd never know this by reading Clearwire's marketing materials, however. "With our unlimited 4G data plans, you get all the Internet, all the speed, and all the data you want, virtually whenever you want it," the company's site claims. Also on the Clearwire site, though, is the following sentence: "Unlimited plans subject to CLEAR's Acceptable Use Policy (CLEAR is a registered trademark of Clearwire)."

Thomas Enraght-Moony, Clearwire's senior vice president of marketing, says the policy is needed to keep the service up and running. "A wireless network is designed and built as a shared resource. That means a small group of users has the ability to detrimentally impact everyone else. During periods of heavy usage, they may lose a little bandwidth so as not to affect other users," Enraght-Moony says. "It's a shared resource, so some users may have to give up a little bandwidth to protect the network."

The problem is, of course, that too many users believe that they have given up more than just a little bandwidth--especially when this limitation wasn't explicitly stated at signup. Tim Lopez is one of the users left frustrated with what he calls Clear's less-than-clear policies. In fact, Lopez was so frustrated that he founded Clearwiresucks.com back in 2006, after he had been a Clearwire subscriber for about six months. "For the first few weeks, the service was great," Lopez says of his unlimited plan. "But then the speed dropped a lot, to the point where it was unusable."

Clearwire's speeds were so slow, Lopez resorted to tethering his cell phone to his computer to act as a modem, he says. Frustrated with being trapped in a contract and unable to resolve the issues with Clearwire's support staff, he launched the gripe site--a move that he says was unlike anything he'd done in the past. "I'm not the kind of person who just does this sort of thing. I have a hard time even writing a bad review on Yelp," he says. "But I felt really duped by Clearwire. I felt really bitter about my experience. And I started this site as a way to stick up for myself and for everyone else."

Lopez hasn't been a Clearwire subscriber since 2006, when he was able to terminate his service. But he maintains the site because people remain interested, he says, especially given the recent lawsuit filed against Clearwire.

Although Clearwire's Enraght-Moony wouldn't comment specifically on that lawsuit, the company did issue a statement saying, "Our network management practices comply with applicable law and are consistent with our acceptable-use policy."

Clearwire's dilemma is the same one facing all companies that provide an unlimited service: If every single customer were to use the service at its maximum capacity, the service would suffer--or perhaps be rendered inoperable. That's why nearly all service providers have a similar fair-use policy in place. Users, however, may not see such policies as genuinely fair; instead they may perceive them as limits imposed on a so-called unlimited service.

Sync or Storage?

The dilemma is quite familiar to IDrive, an online storage provider that recently started an unlimited service of its own. When the service launched in 2007, it did not offer an unlimited option, even though competitors such as Carbonite and Mozy had such plans. "The unlimited plans that our competitors were offering at that time were deleting data from your online account if you deleted [the data] from your desktop. That's not a true archive service; it's more of a sync service," says Raghu Kulkarni, CEO of IDrive's parent company Pro Softnet.

Fast-forward to earlier this month, when IDrive unveiled its unlimited service. This unlimited plan comes with some familiar-sounding restrictions: After 150GB of data, IDrive throttles your bandwidth, so uploads are slower. And if you delete the data from your desktop, the company deletes the corresponding data from its servers after 30 days. Don't those conditions make the offering more of a sync service, not a true backup service? "For some users, it doesn't matter. They don't want to think about the limits of storage, so they don't mind certain restrictions in exchange for an unlimited service," Kulkarni says.

Next: The morass of legal jargon, and how VoIP provider Ooma handles unlimited service

Legal Jargon

Of course, just how much users are willing to put up with largely depends on what they're aware of--and all too often the limits placed on an unlimited service are buried knee-deep in the legalese of the service's terms of use, a document that many users may not bother to read. And those who do read it may be left scratching their heads.

"If you're not a lawyer, you may not be able to make any sense out of the terms of service that some companies write," notes Jack Lerner, a professor at USC Gould School of Law who specializes in technology and intellectual property issues. "It's not that it's hard to write something more specific, but many companies don't want to do that. They want to have flexibility."

Using vague and confusing language to maintain that flexibility can cause a company to run afoul of the Federal Trade Commission's regulations. Section 5 of the FTC Act prohibits a company from "engaging in unfair or deceptive acts or practices in interstate commerce." And, depending on the situation, burying a disclaimer in the terms of service can be considered deceptive.

"Any qualifications or disclaimers needed to prevent a main claim from being misleading must be clear and prominent," says the FTC's Claudia Bourne Farrell. "We have lots of cases where we've alleged that purported qualifiers were inadequately disclosed when buried in terms of service or end-user license agreements."

Most technology service providers maintain that their terms of service or acceptable-use policies are made easily available to all of their subscribers. Clearwire's Enraght-Moony says the company's tagline--"We're different because we're clear"--reflects its promise to its users.

"We're committed to transparency," he says. " People worry about hidden caps and fees, but we work hard every day to keep our policies clear. If there were examples where consumers say we're not being clear, my number one priority would be to fix it."

Common Sense

Yet most service providers also say that users have to claim some responsibility, too. The first step is reading the terms of service--something that far too many users fail to do. Beyond that, customers need to use at least a small dose of common sense.

"Do I think [consumers are] aware? I think consumers are aware of what normal consumer behavior is. I think if someone is using a residential phone service to run a business, they know they're running a business," says Mike Tempora, senior vice president of product management for Vonage.

Vonage offers a number of Voice-over-IP calling plans that allow unlimited national and international calling for residential users; it also offers plans for business users. The company's terms of service state that you must use the service in a "normal" way for the plan to which you've subscribed.

"We don't define our policies based on the amount of minutes a user uses. We have more sophisticated criteria; there are a range of factors that we use, factors that would indicate that someone is using the service inappropriately," Tempora says.

Many users would beg to differ, however. Vonage's own forums are full of posts from users complaining that their accounts were switched from unlimited home plans to more-expensive business plans after they exceeded a certain number of minutes a month. One poster even writes that Vonage's own customer service told him that his unlimited residential plan was limited to 3000 minutes per month.

Vonage's Tempora defends the company's actions. "We're not trying to be cute with our customers about what 'unlimited' means. If you intend to call your family in the Philippines for hours and hours, you can. But if you intend to run a business, you need a different plan," he says.

Spell It Out

While consumers must shoulder some of the burden by (at the very least) reading the terms of service, the onus ultimately falls on the business that is offering the unlimited service, USC's Lerner says. "Companies really just need to bite the bullet and take a stand. They need to spell out exactly what they're providing," he says.

One company that ended up doing just that was VoIP provider Ooma. The company addressed some of the questions surrounding its unlimited offering on its company blog, in a post that explains why "minutes per month are discussed as part of an unlimited service." The blog post explains that if a user is consistently exceeding 5000 minutes per month on a residential plan, it "sets off a red flag" that the user in question may be using the service for business instead.

"We try to be very forthright about communicating," says Jim Gustke, Ooma's vice president of marketing. "In the end we want people to understand what they're buying, and be satisfied with what they get."

User satisfaction is the biggest reason companies offer unlimited services. Users don't want to count voice minutes when they're making phone calls, or to worry about gigabytes when they're backing up data, or to count megabytes when they're streaming a movie online, providers agree. People want the ease and simplicity that an unlimited service can offer. But for now, at least, they'll also have to put up with the limitations that come along for the ride.

Have you had any experience with a service that limits what it claimed was unlimited? We'd love to hear about it in the comments area below.