AT&T Hits Verizon With Lawsuit Over 3G Ads
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AT&T (NYSE: T) is suing Verizon Wireless in an effort to stop its bigger mobile rival from using "misleading" coverage maps in advertisements that AT&T says are causing it to lose "incalculable market share."
According to the lawsuit, which AT&T filed in Atlanta federal court, a recently launched ad campaign shows maps with white spaces that mislead consumers into thinking AT&T has no network coverage outside of areas where it offers high-speed mobile services, known as third-generation or 3G.
But AT&T argued that its customers can "fully use their wireless devices outside of a '3G' coverage area and indisputably have coverage in areas depicted by white or blank spaces on the maps used in Verizon's advertisements."
Verizon Wireless, a venture of Verizon Communications (NYSE: VZ) and Vodafone (NYSE: VOD) said the AT&T suit was without merit.
Verizon Wireless spokeswoman Nancy Stark said the ads in question "clearly state" that voice and data services are available outside 3G areas. She said the ads were intended to tell consumers about coverage for smartphones, which are used for data services.
Since most of the U.S. population already use cell phones for phone calls, operators are depending on high-speed data service offerings to attract new customers or convince existing customers to spend more money on cell services.
AT&T's exclusive U.S. right to sell Apple (NASDAQ: AAPL)'s iPhone helped the No. 2 U.S. operator to gain market share from Verizon Wireless during the quarter ended in September.
But since then, AT&T said the ads launched by Verizon in October have caused it to lose market share.
AT&T described how the Verizon ads use maps comparing 3G coverage in the Verizon Wireless and AT&T network, using color to depict areas where each carrier has 3G and blank spaces to in areas where 3G is not available.
Because Verizon uses white spaces in its own maps for areas where it has no coverage, consumers are incorrectly interpreting the blank spaces on the AT&T maps to mean it has no wireless coverage in those areas, AT&T said.
"Verizon has stepped over the line of legitimate comparative advertising," AT&T said in the lawsuit.