Sprints WiMax Venture Under Attack
Posted on: Tuesday, 13 May 2008, 06:00 CDT
An Illinois wireless company is seeking a court order to block Sprint Nextel's new $14.5 billion WiMax spinoff venture.
The company iPCS, a smaller carrier that sells Sprint service over its own network, said in its lawsuit that Sprint intends to offer new high-speed wireless services that would compete unfairly against iPCS.
The company already has been successful in another lawsuit against Sprint. Rulings in that case have ordered Sprint eventually to stop owning and running the Nextel portion of its network in an exclusive territory granted to iPCS.
Sprint is taking preliminary steps toward appealing that case before the Illinois Supreme Court.
"We continue to believe that the lower courts misapplied the law and imposed extreme measures regarding our future operations of the (Nextel) network in iPCS territory," said Matt Sullivan, a Sprint spokesman.
The new case that emerged Monday involves Sprint's announcement last week that it intends to join other companies such as Clearwire, Comcast, Google,Intel and Time Warner Cable in forming a new WiMax company.
The new company is building a national high-speed wireless network to provide Internet access for laptop computers, phones, digital cameras and other electronic devices.
Sprint asked a Delaware court last week for a declaratory judgment stating that Sprint's agreements with iPCS would "in no way prevent the operation of the new Clearwire" in iPCS territory, according to a Sprint statement.
Objecting to the Clearwire plans, iPCS filed a lawsuit in Illinois.
"The scheme challenged in this complaint is, unfortunately, not the first time that Sprint has attempted to compete against its affiliates, break its contractual promises and destroy plaintiffs' contract rights," the iPCS lawsuit states.
From the outset, Sprint's new Clearwire venture would sell products and services that compete directly with services of iPCS, which has spent "substantial sums of money, at Sprint's urging, to offer, promote and sell," the lawsuit states.
Illinois' iPCS spent hundreds of millions of dollars to build a wireless network so it could sell Sprint-branded service. In exchange, it received exclusive rights to markets in portions of states such as Illinois, Michigan, Pennsylvania, Indiana, Iowa and Ohio.
Sprint shares closed Monday at $9.24, down 14 cents.
Source: The Kansas City Star
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