US cellphone giants to clash in court, on streets

Nov 4, 2009, 0:00 GMT

San Francisco - US cellphone carrier AT&T sued its larger rival Verizon on Tuesday, just days before Verizon is to launch a new phone seen as the most credible threat to the iPhone, which in the US runs exclusively on AT&T's network.

The lawsuit alleges that Verizon uses misleading advertising in a campaign designed to show that its broadband network coverage is much larger than AT&T's.

The campaign attempts to capitalize on the persistent grumps of iPhone users about AT&T's network, which according to analysts has been seriously strained by the phenomenal popularity of the Apple- made device, which requires massive transmissions of data.

The lawsuit, filed in US District Court for the Northern District of Georgia, says that Verizon's ads suggest that coverage areas outside of AT&T's fast 3G service, shown in maps in the ads in white, provide no service at all. In fact, most of those white areas are covered but with slower wireless speeds, AT&T said.

AT&T is seeking an emergency injunction to stop the ads, plus unspecified damages. The lawsuit accused Verizon of false advertising that harms AT&T's ability to compete and caused the company to lose 'incalculable market share' and goodwill with customers.

Verizon denied the allegations, saying that the ads clearly state that designated areas of the map differentiate between areas of 3G coverage and areas of slower networks.

The legal tussle surfaced as Verizon is set to launch the Motorola Droid phone later this week.

Verizon is the largest US carrier, just ahead of AT&T, but it has suffered for lack of a serious smartphone alternative to the iPhone.

The Droid has received widely positive reviews and is the first product of an alliance between Verizon and Google, whose Android operating system powers the new device. The Droid goes on sale Friday for 199 dollars with a new two-year contract.