Judge: Sprint Wi-Fi plan may violate pacts with Schaumburg affiliate

Published: 1/2/2009 12:24 PM

Sprint Nextel Corp.'s plan to team with five other companies in building a national high-speed wireless Internet network may conflict with its contractual obligations to a Midwestern affiliate, a Chicago judge ruled.

Cook County Circuit Judge Kathleen Pantle ruled that a 2006 court finding that Sprint's acquisition of Nextel Corp. violated exclusive territory agreements with IPCS Corp. applies in a suit brought by that affiliate seeking to block the Wi-Fi plan.

"Sprint and those acting in concert with Sprint may not compete against IPCS in IPCS's exclusive service areas," Pantle said in a ruling Dec. 30.

The Schaumburg-based affiliate claims exclusive rights to market Sprint products in parts of Illinois, Iowa, Michigan and Nebraska, along with bordering lands in Indiana and Missouri, according to the ruling.

Sprint, based in Overland Park, Kansas, in May announced it was joining with Kirkland, Washington-based Clearwire Corp. to construct the $14.5 billion nationwide high-speed network.

Intel Corp., Comcast Corp., Time Warner Cable Inc, Bright House Networks and Google Inc. have invested $3.2 billion, or about $20 a share, to create an operating company to be called New Clearwire.

Still to be decided at a scheduled March 30 trial is whether Sprint controls New Clearwire and whether the exclusivity agreements apply when Sprint acts through a related party, Pantle said.

Matthew Sullivan, a Sprint spokesman, said the company was pleased that Pantle didn't grant IPCS an outright victory in the new lawsuit. Sullivan also noted that the judge agreed to hold off enforcing the decision until her colleague who issued the 2006 decision, Cook County Circuit Judge Thomas Quinn, rules on a Sprint motion to set aside the ruling in that case on the grounds that new evidence had come to light.

Quinn, citing the affiliate's infrastructure investment of more than $300 million also had ordered Sprint to shed its Nextel operations in the IPCS-controlled territories within 180 days. Sprint appealed Quinn's 2006 rulings and the Illinois Supreme Court on Nov. 13 doubled that time for compliance.

IPCS General Counsel Brian O'Neil and spokeswoman Judith Wilkinson didn't return calls seeking comment. Susan Johnston, a Clearwire spokeswoman, declined to comment.

The case is IPCS Wireless v. Sprint Nextel Corp., 2008-CH- 17214, Cook County, Illinois Circuit Court, Chancery Division (Chicago).