When Sprint first announced earlier this month that it will begin upgrading its Sprint Spectrum customers in the Washington-Baltimore area to its PCS network free of charge, it did not mention the main impetus for this move -- a class-action lawsuit settlement.
In a letter that Spectrum customers began receiving last week, Sprint disclosed a court notice, notifying the customers of a class-action suit against the company over deceptive advertising and misrepresentation of services.
This settlement, pending final approval by the Baltimore Circuit Court, requires Sprint to convert all 100,000 of its Spectrum customers to its PCS network, replacing their current phones and accessories at no cost. Sprint officials stress that the switch from Spectrum to the PCS network is an initiative to provide better service to its Spectrum customers, but Sprint spokesman Larry McDonnell said, "I'm not going to say that the lawsuit is not related" to the company's decision to convert customers free of charge.
Filed in July 1997, the suit asserted that Sprint falsely advertised the Spectrum features when it initially marketed its Spectrum network in November 1995, according to Baltimore-based class counsel Charles Piven. As a result, the suit alleged Sprint misled customers to believe that they would be able to use these phones nationwide as well as globally.
While Sprint Spectrum offers international roaming and some nationwide roaming services nationwide, most domestic cities are out of Spectrum range. The lawsuit claimed that the company misrepresented the capabilities of this system.
Sprint Spectrum was one of the nation's first all-digital "personal communications services" and has been successful since its introduction in this market four years ago. Spectrum uses a technology known as Global System for Mobile Communications (GSM), which is widely used in Europe and around the world.
The lawsuit alleged that Sprint "never intended to develop a GSM service to cover the United States," Piven said. Sprint's intention, the suit further claimed, was to eventually phase out Spectrum once the PCS network was up and running.
Sprint officials still deny these charges of deception and misrepresentation in marketing and development strategies, presenting the conversion to the PCS network as an upgrade for Spectrum customers. "We needed to make sure that we can position our customers with an upgrade. It is at that point in time that we decided that PCS was the right product for all our customers," Sprint Regional Vice President Brian McIntee said.
But the company has been backing away from heavy promotion of the Spectrum service since March 1998. The marketing of Sprint Spectrum phones had been sharply curtailed since Sprint introduced the PCS network to the Washington-Baltimore area 15 months ago.
A similar class-action suit, filed in the District of Columbia federal district court last May, has been postponed until this settlement's final approval is decided in a fairness hearing in early August.
According to McIntee, Sprint's move to phase out Spectrum in favor of the PCS network is largely due to costs. "It's not easy to operate two digital networks in one market," he said.
The Washington and Baltimore areas are the last Sprint markets in the country that have not been moved entirely to the PCS network. The transition from Spectrum to PCS will take six months, McIntee estimated, after which Spectrum will no longer be in operation.
While McIntee would not say how much it would cost Sprint to phase out the Spectrum system, he described it as a "sizable investment, but well worth it."
PCS provides a rate plan that would bundle all local and long distance calling charges into one flat rate. The caller only pays for the minutes without accruing long-distance charges or interconnection fees, the fee wireless owners pay for receiving phone calls in the Spectrum system.
CAPTION: Sprint must convert Spectrum customers to the PCS network.