Mobile WiFi hotspot vendor Karma is getting angry heat from customers after the company drastically slowed down its WiFi speeds in response to high data use rates by some customers under its fledgling unlimited data plans.
Karma introduced a $50-a-month unlimited Neverstop data plan for its $149 Karma Go WiFi hotspot back in November, promising speeds of up to 5M bps for uploads and downloads. But unexpectedly high data demands from a minority of customers began to take a toll on the company, Karma said in a Jan. 18 post by company CEO and co-founder Steven van Wel on the Karma Blog. The company also offers fixed non-expiring "Refuel" data packages from 1GB to 10GB priced from $14 to $99.
After the high data use surfaced under the unlimited Neverstop data plan, the situation began to be reconsidered by company officials, van Wel wrote.
"Last week we announced that we were testing lower speeds to find a way to reduce strain on Neverstop," he wrote. "At the same time we asked for your input to improve it and have spent the last week analyzing your feedback."
After that analysis, Karma realized it "made a mistake" with the unlimited data plan and that it could not be sustained, he wrote. "We modeled Neverstop usage to be much higher than usage on Refuel. But we never anticipated that some customers would use over 1,000GB a month."
Van Wel admitted that the problem lay with his company's policy and network, and not with the users who consumed lots of data. "Some of you asked why we don't simply kick off the bad guys," he wrote. "Frankly, we don't think there are any bad guys. We offered an all-you-can-surf option, and people took us up on it. That's on us."
The problem, he wrote, is "usage this high is not something that will work today" for the company.
In response, Karma is dropping the unlimited high-speed offering and instead changing its policies to allow users to consumer up to 15GB of data per month at 5M bps speeds, and then reducing data speeds to 64K to 128K bps for email and chat, for additional data, wrote van Wel.
"Getting online with Neverstop should be simple and work well for most use cases," he wrote.
The company is restarting all users at 0GB in connection to the changes, which should have "little to no impact for most of you, while still reducing strain on Neverstop," he wrote. "But, if you're looking to binge watch Netflix 24/7, this probably isn't the product for you. If that's the case, head to our returns page and we'll take it from there."
Under the new policy, Karma is offering refunds to customers who don't like the new terms of the Neverstop data plan.
More than 200 customers posted mostly angry and annoyed comments about the company's changes on the Karma Blog, with several saying that it was a "bait-and-switch" tactic that could lead to a lawsuit and more venom from additional customers in time.
"Absolutely disgusted with the blatant bait and switch, myself," wrote #SOSImperio. "I was naive to think there could have been a replacement to the Clear service so soon after its demise. Very poorly handled, too; I've never seen a company sound so cold in their emails over the course of such abrupt and unfair changes, blaming everyone for the deeds of a few (who were doing what was promised to us all anyway) … Will be sending my device back and joining the impending class action lawsuit as soon as possible, unless Karma wises up REAL quick."
Another poster, Jay, wrote that "If Karma thinks the backlash now is bad" the company should "Just wait for a week or 2 until the first 15GB of data starts running out and then Web pages won't load at the low speed."
Another user, AnonymousArt3, wrote that he is "very disappointed with this decision as well," and admonished the company for its low speeds after the monthly 15GB limit is reached. Instead, "1Mbps would be good." The significant speed change is "a bit more ... harsh than what we would have wanted as users."
The Karma Go hotspot provides about 5 hours of data use on a charge of its 1,500mAh lithium-ion battery and has a standby time of about 220 hours, according to Karma. The device is 2.9 inches wide, 2.9 inches tall and 0.47 inches thick.
Karma launched its first-generation pocket-sized WiFi device in 2012 and the second-generation Karma Go of today in July 2015. The Karma Go is designed to have nationwide coverage, the company said.