AT&T Mobility agrees to settlement worth up to $76M

AT&T Mobility could pay up to $76 million in back taxes and legal fees as part of a tax settlement with Missouri cities that won preliminary approval by a state judge in St. Louis.
The proposed settlement between AT&T Mobility and approximately 250 cities follows similar multi-million-dollar settlements by Verizon Wireless and U.S. Cellular Corp.
Sprint Nextel Corp. said it is pursuing settlements in some cities, while litigation is moving forward in others.
“We are pleased that the court has given preliminary approval to the proposed settlement agreement,” said AT&T Mobility in a statement. “We look forward to working with all of the parties involved, as prescribed by the courts, with the goal of reaching final settlement in May 2008.”
Other wireless carriers operating in the state-including T-Mobile USA Inc. and Alltel Corp.-may eventually settle as well, since they face the possibility of even great financial liability if the class-action litigation continues in cities’ six-year-old lawsuit against cellular companies.
Mobile-phone operators oppose being saddled with gross receipts taxes previously applied to landline telephone companies, but nonetheless have paid them under protest in recent years.
The push to extend municipal utility taxes to wireless carriers has mushroomed into a messy controversy encompassing hundreds of lawsuits and a key ruling by the Missouri Supreme Court that trumped a legislative effort to cap local wireless taxes. Initially, 23 Missouri cities sued wireless carriers in the state before throngs of others joined the cause. Mobile-phone companies responded with legal action against the cities.
Early this year, Sens. John McCain (R-Ariz.) and Jim DeMint (R-S.C.) introduced legislation to impose a three-year moratorium on new discriminatory wireless taxes by states, but the measure remains dormant.