Subject: [NEXTEL-1] Affiliate Sues Sprint PCS

From: [email-masked]
Date: Mon, 14 Jul 2003 19:14:03 -0400

Affiliate Sues Sprint PCS
BY SUE MAREK
JULY 14, 2003

Sprint's antagonistic relationship with at least one of its affiliates just
degenerated to a new low. Late Friday, affiliate US Unwired filed a lawsuit
against Sprint Corp., accusing the company of breach of fiduciary duty and fraud.

Specifically, the complaint says Sprint pressured and manipulated US Unwired into
changing its affiliate status from a Type III (which allows the affiliate to
control all business functions including billing, collections and customer
service), to a Type II affiliate (which allows Sprint to provide those functions
and then compensates the company for its services), thus giving the telecom
heavyweight control over US Unwired's OSS and back-office systems. By having
control over these functions, US Unwired claims it became dependent on Sprint for
its daily accounting and business functions.

According to US Unwired, Sprint was able to manipulate the affiliate into changing
its affiliate deal by failing to provide US Unwired with the necessary OSS
connection information so the affiliate could launch Wireless Web services in 1999
along with Sprint and its other affiliates. US Unwired says that after months of
waiting for the OSS connectivity information, Sprint informed the company it would
have to pay between $16.4 million to $20 million to Sprint to integrate its
systems, making it cost prohibitive for US Unwired to remain a Type III affiliate.

And once US Unwired's affiliate designation changed, the company says things went
downhill. According to the filing, when Sprint got control of US Unwired's back
office functions, the company proceeded to route different types of customer calls
on US Unwired's network without the affiliate's consent and without providing
proper compensation. The goal of these maneuvers, according to US Unwired, was so
Sprint could ultimately acquire US Unwired's assets for 'pennies on the dollar.'
The suit doesn't ask for a specific dollar amount but does request actual damages
in addition to punitive damages.

Sprint denies the charges and says the suit is without merit. 'US Unwired's
financial problems are due to its debt. The relationship between Sprint and US
Unwired is a business relationship governed by contracts. Allegations made in the
complaint such as those of fraud and racketeering are absurd. It is in everyone's
best interest for US Unwired to focus on its debt issues,' said Dan Wilinsky, a
Sprint spokesman.

Nevertheless, the suit does show how antagonistic Sprint's relationships with its
affiliates have become. 'I'm surprised Sprint has allowed this situation to
degenerate to the level of lawsuits,' says Ken Hyers, an analyst with In-Stat/MDR,
a sister company of Wireless Week. 'This public washing of dirty laundry is pretty
unusual in the industry.'

http://www.wirelessweek.com/index.asp?layout=newsat2direct&starting=2&pubdate=07/14/03

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