Gateway Sues ISP Over Poor Service

Gateway is suing Web
America Networks, the Internet provider that supplied Internet access the
computer maker marketed under its name, for providing inadequate service.

The suit was announced late Tuesday. Gateway has already switched ISP
partners and is now contracting with MCI/Worldcom’s UUNet.

Gateway was the first major PC retailer to begin bundling Internet access
with its services. Now the company claims in a suit filed in Delaware
Chancery Court in Wilmington, Del., that Web America did not live up to its
deal to provide Internet access. Gateway said its customers often
complained of busy signals, frequent disconnections and problems accessing

In a statement, John Von Holle, Gateway’s director of software and Internet
services, said UUNET was chosen for its reliability.

“We chose to work with UUNET because they continue to maintain the
industry’s most reliable, rigorously managed and most widely deployed
network. We came to believe, after repeated discussions and performance
evaluations, that Web America Networks cannot meet the standards for
consistent and
responsive reliability and performance that Gateway requires for its clients.” he said.

Gateway is seeking unspecified damages in the suit.

Philip Midkiff, WebAmerica’s president, told Gateway’s
complaints have nothing to do with the service’s performance.

“It’s clear they want to play the field as opposed to honoring this
exclusive agreement. Being a PC seller doesn’t mean you’re an Internet
visionary. Now, they’re trying to figure out how to use this Internet
capability to their advantage,” he said.

Midkiff also disputed Gateway’s claims that a number of its ISP customers
have experienced connection problems.

“Our software was always constructed to roll (calls) over to multiple
networks. We think that software gives customers the best performance. If I
can route you to UUNet, MFS, IBM or my own network, you should have the
best service,” he said.

This is not the first time the two companies have gone to court.
Web America sued Gateway on Jan. 8 alleging it misappropriated “trade
secrets” on its pricing and business practices when talking to other
Internet providers. Web America also accuses Gateway of defaming its

In its suit, Web America is asking for unspecified damages to recover lost
business as well as unspecified punitive damages. It has also asked for a
temporary restraining order to prevent Gateway from promoting any Internet
service using Web America’s trade secrets.

Gateway’s competitors are making several ISP plays of their own, with Dell Computer Corp. announcing plans to
offer DSL service to its customers in eligible areas. Compaq Computer Corp. also has similar deals.

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