Cingular Sued by Users It Inherited
Former AT&T; Wireless customers accused Cingular Wireless in a lawsuit Thursday of misleading them about the benefits of combining the two companies and overcharging them for upgrading service.
Despite a “massive marketing campaign” that promised the transition to Cingular’s system would be seamless, the customers alleged that Cingular had been dismantling the AT&T; network since the two united 21 months ago.
Cingular forces AT&T; customers to pay $18 for a new handset chip and $18 to move to Cingular’s network -- or $175 to terminate service early, according to the lawsuit filed in U.S. District Court in Seattle.
The complaint, which seeks an award of more than $5 million plus punitive damages, was filed on behalf of seven plaintiffs, including five from California.
Cingular would not comment on the suit but said it had spent $6.5 billion on integrating the two networks since it bought AT&T; Wireless for $41 billion in October 2004. It spent $1.8 billion of that in California.
“One of the reasons Cingular acquired AT&T; Wireless was to better serve consumers -- and we’re doing just that,” Cingular spokesman Clay Owen said.
The suit filed Thursday comes two weeks after a California appeals court upheld a $12.1-million fine against Cingular and as much as $10 million in customer refunds for signing up customers faster than it could provide service and then forcing them to pay as much as $550 each to cancel the poor service they received.
Of Cingular’s 55.8 million customers at the end of March, more than 6 million remain on AT&T;’s old analog and digital network.
Before it was bought, AT&T; was rolling out a more modern system.
Cingular has been putting its network together with AT&T;’s. In Southern California, for instance, it sold its own system to T-Mobile USA, which had shared that network, and is using the AT&T; system. The company wants to consolidate all of its customers on a single network and plans to shut down the old AT&T; system in 2008.
The integration, though, is “certainly not finished,” and Cingular’s efforts to win over former AT&T; customers have been lacking, said industry analyst Eddie Hold of research firm Current Analysis Inc.
The company should offer free phones, waive service charges and let former AT&T; customers out of contracts with reduced or no penalties, he said.
In getting rid of the old AT&T; wireless network, “the question is what are their obligations,” said Harvey Rosenfield, one of the plaintiffs’ lawyers and a member of the Foundation for Taxpayer and Consumer Rights in Santa Monica. “You have to move them to the Cingular network for free or let them go without a penalty.”
AT&T; Wireless was spun off from AT&T; Corp. five years ago to become a separate company. Cingular is 60% owned by the former SBC Communications Inc., which acquired AT&T; last year and changed its name to AT&T; Inc. The new AT&T; has a pending deal to buy BellSouth Corp., which owns the rest of Cingular.
Owen said Cingular would soon announce several incentives -- such as new service plans and handsets -- to move customers off the AT&T; network.
