Cingular Sued Over AT&T Net

A lawsuit filed in federal court says that Cingular Wireless purposely neglected the network it acquired when it merged with AT&T Wireless in 2004, allowing customers' service to degrade and forcing AT&T customers to sign new contracts.

Filed in U.S. District Court in Seattle, the class-action suit claims that "After Cingular's acquisition of AT&T Wireless, Cingular deliberately schemed to dismantle the AT&T Wireless network so as to diminish and degrade the service provided to AT&T Wireless customers, despite a massive marketing campaign promising that the merger would be seamless for AT&T Wireless customers."

"This lawsuit is completely without merit," responded Joaquin Carbonell, Cingular Wireless' general counsel, in a statement on Friday. "Cingular has spent nearly $10 billion in integrating and improving its networks in the 21 months since the merger was completed, leading to a significantly improved customer experience and the fewest dropped calls of any national carrier."

Based in Atlanta, Cingular acquired AT&T Wireless Services Inc. for $41 billion in October 2004, and began phasing out AT&T's TDMA network in favor of a more powerful GSM network. Today, 97 percent of the cell-phone minutes carried by Cingular go over the GSM network and 89 percent of Cingular's customers are on the newer infrastructure, according to Cingular spokesman Clay Owen.

The lawsuit "goes on a lot about dismantling the former AT&T network," says Owen. "But the merger of AT&T and Cingular was all about integrating and enhancing these networks. And we've done that, we've dismantled nothing. We've improved the network quality, lowered customer complaints, and our churn rate is at record lows."

Cingular says it invested $6.5 billion in network integration last year and will spend a similar amount this year, expecting to complete the integration of the two networks later this year. The company also says that complaints to the FCC about Cingular service have declined 53 percent, while those about other wireless companies have fallen only 4 percent.

The new lawsuit marks the second time recently that Cingular's customer service has landed it in legal straits. An appeals court in California last month upheld a $12.1 million fine against Cingular for signing up customers faster than it could provide service and for imposing hefty cancellation fees without a trial period. The judgment means Cingular must refund up to $10 million to former customers who had to pay as much as $550 to cancel their contracts.

Cingular Wireless CEO Stan Sigman, speaking at the TelecomNext conference in March, said the company will shut down its legacy, non-GSM networks in 2008. Customers with TDMA handsets will be forced to upgrade to newer GSM phones, at the customer's expense.

— Richard Martin, Senior Editor, Unstrung

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