In a decision worthy of professional boxing, Sprint Nextel Corp. and its affiliates Horizon Personal Communications Inc. and Bright Personal Communications Services L.L.C. claimed victory in a lawsuit that pitted the companies against one another following Sprint Corp.’s acquisition of Nextel Communications Inc. last year.
Horizon and Bright are both subsidiaries of iPCS Inc. Sprint Nextel CDMA affiliate UbiquiTel Inc. had been involved in the lawsuit as well, until it was acquired by the national carrier in July 2005.
The Delaware Chancery Court decision allows Sprint Nextel to continue to own and operate its iDEN network in the affiliates’ territories; the affiliates initially challenged Sprint Nextel’s rights to operate the iDEN network in their territories, but later dropped the issue, according to Vice Chancellor Donald Parsons’ decision. The court also found no evidence that Sprint Nextel breached any of its confidentiality obligations to the affiliates. Sprint Nextel can sell iDEN products in RadioShack Corp. stores within the affiliates’ service areas, but must continue to respect affiliates’ confidentiality agreements.
Sprint Nextel can also rebrand legacy Nextel stores with the new Sprint Nextel brand and logo, but it has to be careful in how it does so-it can indicate that the two companies are now one, but the carrier is not allowed to offer its CDMA phones and services in those stores because the court ruled that Horizon and Bright are the exclusive providers of Sprint-branded CDMA services within their territories.
According to the judge’s decision, Sprint Nextel had intended to rebrand its Nextel stores so that they looked essentially the same as the affiliate stores, but still only offered iDEN service, a move that Parsons compared to “using the Burger King brand and marks … to sell McDonald’s burgers and French fries … from stores branded Burger King.”
Still, Sprint Nextel indicated that the judge’s ruling allows the carrier greater flexibility than the forbearance agreement that it and the affiliates had been operating under while the lawsuit was in progress.
“Sprint Nextel is pleased with the outcome of this case and believes it provides an acceptable framework for Sprint Nextel and Horizon and Bright to continue operating under the existing management agreements,” the carrier said in a statement.
According to iPCS, Sprint Nextel also committed to not waive early termination fees for customers switching from the affiliates services to iDEN service. Further, Sprint Nextel would not use bill inserts to entice Horizon and Bright customers to switch to iDEN.
iPCS indicated in a statement that the carrier “is optimistic that, so long as Sprint Nextel abides by its commitments, these measures will help protect the company from unbalanced competition with Nextel products in its territory.”
