A state judge in Massachusetts delayed Sprint's (NYSE: S) plans to shut down Clearwire's legacy mobile WiMAX network in 75 cities across the country by 90 days. In doing so, the judge sided with two nonprofits that had sued the carrier, alleging that Sprint violated their contract by pushing them to accept LTE service that would have throttled their customers' speeds after 6 GB of data usage.
The emergency injunction, which was granted Thursday, orders Sprint to maintain its WiMAX network in certain areas for 90 days to allow the two groups, Mobile Beacon and Mobile Citizen, time to negotiate terms with Sprint and migrate their WiMAX users to Sprint's LTE network. The court had heard arguments in the case on Tuesday in advance of Sprint's plans to shut down the WiMAX network Friday.
The list of cities covered by the order includes many of the largest markets in the country. They include: Atlanta; Boston; Chicago; Dallas; Denver; Honolulu; Indianapolis; Las Vegas; Los Angeles; Miami; Minneapolis-Saint Paul; New York City; Philadelphia; Salt Lake City; San Francisco; and Washington, D.C.
The order tells Sprint to "maintain all Cost Free Educational Accounts at the same capacity and with the same characteristics as the highest level of premium mass market retail service provided on the Sprint or Clearwire networks at no cost to Licensees, and, in particular, without throttling any of the Cost Free Educational Accounts governed by this Order, except to the extent that Sprint (in the case of Sprint accounts) or Clearwire (in the case of Clearwire accounts) throttles its highest level of retail service and then, only on a nondiscriminatory basis that does not disproportionately impact Licensees' customers in relation to all other Sprint or Clearwire customers."
Judge Janet Sanders of Suffolk Superior Court in Boston ruled that Mobile Beacon and Mobile Citizen "have demonstrated a strong likelihood of success on the merits. The balance of harms also favors plaintiffs."
"This Court's intent is to put plaintiffs in that position that they would occupy under their existing agreements with Clearwire," she said in the order. "It is not to impose affirmative obligations which cannot be feasibly complied with, or to require that Sprint: a) reactivate any parts of the WiMAX service which have already been shut down, or b) provide service which is better than that which Clearwire was contractually obligated to provide."
Sprint spokeswoman Stephanie Vinge Walsh said in a statement to FierceWireless that the company disagreed with the court's decision. "We hope that Mobile Beacon and Mobile Citizen will take this time to work cooperatively with Sprint to resolve the contract dispute," Vinge Walsh said. "Our goal is to ensure that our EBS partners and our subscribers can use Sprint's best 4G LTE advanced broadband services as soon as possible. We remain committed to an equitable solution for all parties and are hopeful that Mobile Beacon and Mobile Citizen will work with Sprint in good faith to get their customers transitioned so that they can remain connected."
Mobile Beacon and Mobile Citizen filed the lawsuit last month and claim they serve 429 schools, 61 libraries and 1,820 nonprofits that are dependent on the WiMAX service for Internet access. They claim those schools, libraries and nonprofits collectively serve more than 300,000 customers, many of them low-income individuals and families who have relied on WiMAX service for Internet access.
Mobile Beacon and Mobile Citizen are entities that hold Educational Broadband Service (EBS) spectrum licenses. Under FCC rules, the firms leased a portion of their spectrum to Clearwire for 30 years in 2006 in exchange for the ability to provide unlimited, high-speed broadband service to schools, libraries and nonprofit organizations across the United States.
At the heart of the dispute is the changing nature of the service Mobile Beacon and Mobile Citizen will get from Sprint. The lawsuit alleges that its agreements with Clearwire and then with Sprint mean that Sprint needs to provide them with "the best level of service it provides its retail customers," and that Sprint is failing to offer that.
"The Sprint broadband service plan that Clearwire and Sprint are imposing on Licensees deliberately slows speeds down drastically from an average download speed of 6-8 Mbps to 256 Kbps after just 6 GB of capacity is used in a month," the lawsuit claimed. "Sprint calls this plan 'SPCTRM256,' and it cannot, unlike Sprint's other plans, be found on the Sprint website. SPCTRM256 is not mentioned in the [interim agreement] and it is both far from 'the best unlimited plan' and one that is not 'available to retail customers.'"
The lawsuit noted that in the case of Mobile Beacon, school modems it offers use an average of 32 GB of data per month, with the top 25 percent using capacity between 50 and 300 or more GB per month.
Katherine Messier, managing director of Mobile Beacon, told FierceWireless that the groups had requested that the WiMAX shutdown be delayed by 90 days in the 75 cities where their customers get service around the country. "My expectation at this point, although we have not heard from Sprint on this matter, is that it will be delayed in those key cities for 90 days," she said.
Messier said "the ultimate purpose of that is to give us time to transition our users. Our hope is that this will make Sprint work with us expediently to get that done."
The plans Sprint had been offering Mobile Beacon and Mobile Citizen do not represent the best options available to Sprint retail customers "by a long shot," Messier said, noting that Sprint offers a plan with 60 GB of data and no throttling before that 60 GB limit is reached.
Messier said the groups had simply asked Sprint to "maintain the status quo" while they negotiate new terms. She noted that injunctions "are by definition extraordinary relief" and that the groups always knew they would face "an uphill battle."
"The fact that we were able to succeed and show how strong the merits of our case were, I do hope that this causes Sprint to take us a lot more seriously in terms of honoring their obligations and not putting forward these plans that do not meet the letter of the contract and fall so far short of it," she said.
"Hopefully we can have a much more productive and cooperative relationship," Messier added, noting that the groups still have 21years left on their contract and need to be able to work together. "We want to have a productive relationship with them over the next 20 years."
Vinge Walsh said Sprint plans to "continue to protect our rights in this contract dispute and expect to prevail on the merits. We are reviewing the decision and evaluating our options."
"I think it's important to note that Sprint has been a leader in providing Internet connectivity for many years, including to schools, nonprofits and the disadvantaged," Vinge Walsh said. "At Sprint we believe in the power of the Internet to change people's lives for the better. We have demonstrated that belief for more than a decade through grants provided by Sprint Project Connect and through industry leading digital access programs, like ConnectED, ConnectHome. Sprint's record of programs to bridge the digital divide proves it cares about ensuring as many customers as possible are connected at all times. This contract dispute and the decision do not affect our retail customers."
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