Horizon PCS Sues Sprint PCS

The Sprint PCS (SPCS) network is mostly owned and operated by SPCS, but a little known fact is that much of the coverage, particulary rural, is actually provided by independent companies that have affiliated with SPCS. In effect, SPCS is running an MVNO on the affiliates’ network. In May, we discussed how business arrangements between SPCS and the affiliates were putting the latter under financial strain, (iPCS had filed for Chapter 11). Recently, another PCS affiliate, Horizon, has filed for bankruptcy protection, and today Horizon officially launched a suit against SPCS alleging that SPCS deliberately caused them financial duress so that the larger company could control their business. SPCS says the lawsuit is “without merit”, but Horizon’s allegations are not unique: there are a lot of affiliates crying foul ‘without merit’. As we noted in May, SPCS reduced the inbound roaming rate the affiliates earn from 20 cents to 5.8 cents per minute. There are two ways of seeing that: 1) as SPCS pulling the rug out from under their partners, 2) as the effect of a general reduction in what customers pay for a minute of phone use. I’ll leave this one to the courts.

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