iPCS has won another battle in its long-running legal war against its affiliate partner Sprint. The Midwestern CDMA operator said today an Illinois circuit court has denied Sprint’s motion to toss out an iPCS lawsuit, which alleges Sprint violated its exclusivity agreement when it merged its WiMax assets with Clearwire. iPCS has taken issue with Clearwire offering competing services in its territory, which sports markets from Iowa to Pennsylvannia, but since their last courtroom clash in November the substance of iPCS’s challenge has changed. Rather than opposing the launch of the WiMax networks, iPCS now claims it should have been given first dibs.
As an affiliate, iPCS has the exclusive right to offer Sprint-branded services in its markets. When Sprint and Clearwire agreed to their WiMax deal last year, iPCS sought to block it on the grounds that Clearwire footprint overlapped its own, violating the affiliate agreement. iPCS’s attempt to block the deal failed, but it may have succeeded in blocking or delaying the launch of one of Clearwire’s initial launch markets, Grand Rapids, MI, where iPCS offers mobile service. Grand Rapids fell off of Clearwire’s list of WiMax launches for 2009, though Clearwire has said the roster isn’t necessarily final.
iPCS’s most recent lawsuit, however, isn’t alleging Clearwire is violating its agreement by competing with iPCS, but rather that Sprint should have made WiMax technology available to iPCS before handing it over to Clearwire. iPCS is seeking an injunction that would prevent Sprint from “obtaining directly or indirectly the benefits of advanced technology without providing that technology and sharing its benefits with its Affiliates.” According to a statement from iPCS CEO and president Timothy Yager:
Technological advances are central to any wireless business and we are confident that after the evidence is presented in this case the Court will uphold the business deal that we reached with Sprint over ten years ago to ‘be Sprint’ in our exclusive territories and offer the most advanced seamless wireless nationwide network to our subscribers. The Illinois courts have consistently upheld our contractual rights and we are confident they will continue to do so.
The fight over WiMax isn’t the only legal pressure Sprint is facing from iPCS. iPCS has won court cases that require Sprint to shut down Nextel’s iDEN network in its territories due to the non-compete clauses of their agreement. Sprint has tried to assure Nextel customers that their service won’t suddenly go dark in parts of the Midwest, saying it is putting contingency plans in place before the order takes effect next January. In the past, Sprint has dealt with challenges from its affiliates by simply buying them outright, and that could be what iPCS is after: positioning itself for a bigger windfall.
Sprint is in a far weaker financial position today than when it began its affiliate buying spree, but the operator may once again be forced to break out the checkbook if it wants its legal troubles to go away. At what price? An article in the Kansas City Star last year, put the cost at $840 million to $935 million.