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Sunday, June 16, 2024 | Back issues
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Suit Over Internet Speed Nets $10 Mil. Settlement

SAN FRANCISCO (CN) - A federal judge approved a settlement that is expected to pay $10 million to rural customers allegedly duped with false promises of fast Internet access.

In a motion supporting the settlement with Hughes Communications earlier this month, class counsel insisted that its approval "is not mere puffery."

"Indeed, just over eighty-seven thousand (87,000) timely claims have already been submitted in anticipation of benefitting from the generous terms of the settlement, which are conservatively valued to be worth in excess of $10,000,000," according to the motion authored by attorney Jennifer Rosenberg, of Bramson, Plutzik, Mahler & Birkhaeuser in Walnut Creek, Calif.

U.S. District Judge Samuel Conti granted the settlement final approval two weeks later on Nov. 16.

In a 2009 complaint, lead plaintiff Tina Walters said she signed up for Internet service with Hughes, lured by its claims of using broadband satellite technology to service rural areas with DSL-comparable hookup speeds, making it possible for customers to download "large files in minutes, not hours."

But Walters says her Hughes subscription was marked by "significantly slow, even non-existent, access and upload and download speeds." Instead of fixing the problem, Hughes allegedly charged for service upgrades, but the pricier service remains spotty and slow.

Hughes tried to disclaim its own advertising by inserting exculpatory clauses in the fine print of subscriber agreements, such as, "stated speeds not guaranteed," which contradicts its own advertisements, according to the complaint.

Walters insisted that the statements cannot release Hughes from false-advertising liability.

Hughes allegedly charges hundreds of dollars if customers want to discontinue the shoddy service before their subscriptions end.

The settlement terms provide $40 cash payments to former Hughes customers who paid an early termination fee before Dec. 6, 2010. Customers who did not pay an early termination fee, but who met other requirements, are entitled to a $5 cash payment.

Hughes also agreed to prorate its early termination fees and provide subscribers with a token per month that allows download allowances to be reset if they reach the maximum download allowance without waiting for the usual rest period to elapse.

The company will also be required to include a website disclosure, for five years, about advertising upload or download speeds in MBPS or KBPS. It must say that the actual upload and download speeds "will vary based on a variety of factors," including computer configuration, number of users, network or Internet congestion and the speed of the websites being accessed.

The disclosure must also include the following statement: "Stated speeds and uninterrupted use of service are not guaranteed. Actual upload and download speeds may be lower than maximum advertised speeds, particularly during peak periods," according to the class's motion supporting the settlement

Hughes must also pay $630,000 in attorneys' fees and costs, and $5,000 incentive payments to the three named plaintiffs: Walters, Christopher Bayless and Eric Shumacher.

Audet & Partners attorney Joshua Ezrin filed a separate motion supporting the settlement on behalf of the proposed class.

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