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Cingular Sued by Users It Inherited

Former AT&T Wireless customers say they are being overcharged for using a new network.

July 07, 2006|James S. Granelli | Times Staff Writer

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.

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