Sprint Nextel continues to raise ire of iPCS

SCHAUMBERG, Ill.-Sprint Nextel Corp. CDMA affiliate iPCS Inc. is protesting new rates that the larger carrier is charging for back-office services, and has filed a claim that Sprint Nextel is violating the decision of a Delaware court regarding the sale and advertising of iDEN services in iPCS territory.
According to an iPCS filing with the Securities and Exchange Commission, Sprint Nextel has proposed new rates for back-office services such as credit checks, telesales, logistics, shipping and handling, as well as other services including billing, customer care, information technology, premium services, 3G products and directory assistance.
The affiliate’s agreement with Sprint Nextel allows iPCS to submit the changes to arbitration if the company does not agree to the new charges-which were not specified in the filing. The new rates will apply as of Jan. 1, 2007; if the arbitration results in changes, they will be applied retroactively to Jan. 1.
Sprint Nextel was not immediately available for comment.
iPCS also filed a motion for contempt in its case against Sprint Nextel in Delaware, saying that the carrier was violating a judge’s order to not use “confusingly similar” brands or marks, such as the use of the Sprint brand name in selling iDEN plans and services under the same “Fair and Flexible” moniker that iPCS subsidiary Bright Communications Inc. uses within its territory to sell CDMA plans. iPCS said it had complained to Sprint Nextel, which had responded that the use of the plan brand fell outside of the court’s decision.
Sprint Nextel, iPCS fumed, is using a “hair-splitting semantic exercise” and “ignoring the whole point of the trial and the court’s judgment,” according to the motion. The company requested a cease-and-desist order.
The Delaware judge had said that Sprint Nextel could not sell CDMA products in its legacy Nextel stores and had to rebrand the stores so that they were distinct from the affiliates’ Sprint-branded stores; however, the Delaware ruling went more in Sprint Nextel’s favor than in a similar case in Cook County, Illinois, where a judge ruled that Sprint Nextel would have to divest itself of its Nextel operations within the affiliates’ territory. Sprint Nextel is appealing that case.
Paul Saleh, chief financial officer for Sprint Nextel, told analysts recently that the acquisition of iPCS was not a top priority for the carrier, and that it has enough on its plate already.