AT&T and Verizon Set for Court Battle
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Score: Verizon Wireless up by one.
A federal judge just rejected AT&T's (NYSE: T) request to have Verizon Wireless yank ads comparing the two carriers' 3G coverage, which means the rivals are likely to face off at a preliminary court hearing on Dec. 16.
AT&T had requested a temporary restraining order (TRO) that would require Verizon to stop airing the five holiday-themed ads until the issue was settled in court -- but lost this first legal battle.
The legal tussle began earlier this month when AT&T filed a lawsuit in a federal district court in Atlanta claiming that Verizon's ad campaign was misleading.
AT&T put forth the argument that the TV ads, which show side-by-side maps with colored 3G coverage areas for each network, suggest that AT&T customers can't use their mobile phones or access the Internet unless they're in 3G areas. The nuance at issue: subscribers can make calls and connect to the mobile Internet in non 3G-areas, but they must do so on the slower EDGE network.
In response, Verizon tweaked the ads somewhat, making it clearer that the maps show only 3G coverage regions, as opposed to the slower 2.5 service, but refused to back down in a filing in response to AT&T's restraining order request.
In Verizon's response, the nation's No. 1 carrier said AT&T is "trying to kill the messenger," as the ads simply point out that AT&T has not upgraded its infrastructure enough to handle increased traffic from smartphones. AT&T is the sole carrier for the iPhone, though Verizon did not specifically name the device.
Despite the recent setback, AT&T remains committed to the fight. "While we are disappointed with the court's decision on our request for a TRO, we still feel strongly that Verizon's ads mislead consumers into thinking that AT&T doesn't offer wireless service in large portions of the country, which is clearly not the case.
"We look forward to presenting our case to the court in the near future. Meanwhile, our customers continue to enjoy the fastest 3G network and the ability to talk and surf the Web at the same time," an AT&T spokeswoman told InternetNews.com.
In addition to the legal challenge, AT&T is fighting back with its own ad campaign. The firm just released an ad featuring actor Luke Wilson checking off attributes of the network on a magnetic board.
Though Verizon tops AT&T in the size of its user base, with 88.9 million compared to AT&T's 81.6 million, AT&T has enjoyed record-breaking subscriber growth recently, thanks in large part to its support of the iPhone.
The deal with Apple (NASDAQ: AAPL), however, is somewhat bittersweet, as AT&T not only takes a financial hit for subsidizing the cost of the iPhone, but also has had some problems upgrading its over-taxed network to meet the demand of the data-intensive iPhone user demographic -- precisely the shortcomings Verizon is attempting to lampoon in its ads.
Meanwhile, Verizon recently struck a deal with Google to co-develop and release smartphones based on Android, and is expanding its image beyond that of a BlackBerry carrier by attracting new attention with the Droid and Eris releases.