Day To Day Radio Program (National Public Radio-NPR)
MADELEINE BRAND, host: The cell phone company Cingular is accused of providing bad service on purpose. A new lawsuit claims that when Cingular bought AT&T, it let that system degrade, thereby forcing the old AT&T customers to sign up for new, more expensive service contracts. MARKETPLACE New York Bureau Chief, Bob Moon, joins me with more on this. And Bob, who filed this lawsuit, and what else are they claiming?
BOB MOON reporting: Well this lawsuit is based on complaints received by a California-based watchdog group. It’s called The Foundation for Taxpayer and Consumer Rights. The lawsuit was filed in U.S. District Court in Seattle, and the attorneys are seeking class-action status. That would mean that they would represent 20 million plus customers that were served by AT&T Wireless.
Attorneys for this group claims Cingular promised to maintain uninterrupted service to customers of AT&T Wireless, back when Cingular acquired that company in 2004, but they say that Cingular in fact, stopped maintaining the AT&T Wireless network, and that caused customers to experience more trouble. They had dropped calls, no signals in some areas where there used to be coverage. And the lawsuit cites news articles that included comments from industry analysts, who were saying that Cingular appeared to be investing little or nothing in the old AT&T Wireless network, and they say that’s a breach of contract and it violated consumer protection laws.
BRAND: And what does Cingular say?
MOON: Well a Cingular spokesman, did tell the Associated Press that the company does eventually plan to phase out the older technology that’s been used by the AT&T Wireless network. That’s a system that’s called TDMA. It’s being phased out, really, by the entire cellular industry. In fact, Cingular says many companies no longer even make the phones that are compatible with that system, but the Cingular spokesman did insist that the company is maintaining the old system in the meantime, and he said Cingular spent about $6 billion plus, on improvements and integration of these systems last year.
BRAND: But Bob, does this lawsuit claim that the Cingular system is poorly maintained, or is it just the old system that the suit is focusing on?
MOON: Well, they’re complaining only about the old service, or as they claim, the lack of service that the former AT&T Wireless customers got after the merger. Now this did take place back in 2004, as we mentioned, and one telecommunications analyst we spoke to today, says he thinks this is an old problem that’s been taken care of. Roger Entner, is from Boston-based Ovum Consulting.
Mr. ROGER ENTER (Ovum Consulting): I don’t think it amounts to much, you know. I think the lawyers would have had a case, you know, a year, two years ago, but not today.
MOON: On the other hand, this consumer watchdog group is arguing that these customers were charged for services that they shouldn’t have had to pay for in the first place. Just last month, by the way, there was a ruling from a state appeals court in California, that it was upholding a $12 million fine against Cingular, for signing up customers faster than they could provide adequate service for.
BRAND: Thank you, Bob. Bob Moon of Public Radio’s daily business show MARKETPLACE, produced by American Public Media.