AT&T Cell-Phone Customers File Suit, Cite Glitches Following Rapid Growth
May 13, 1999
By NICOLE HARRIS
Staff Reporter of THE WALL STREET JOURNAL
NEW YORK -- Wireless customers of AT&T Corp. have filed a lawsuit
alleging that the communications company signed up droves of new
cell-phone users although AT&T knew its system couldn't accommodate
the growth. The suit was filed last week in New York State Supreme
Court by Naevus International Inc., Upper Saddle River, N.J., a closely
held consumer-products distributing concern.
Naevus is seeking class-action status on behalf of all AT&T Digital One
Rate subscribers. The popular flat-rate calling plan enables consumers to
make wireless calls anywhere in the country without incurring long-distance
or erratic "roaming" fees.
The suit reflects some customer dissatisfaction
with AT&T's growing cell-phone business.
Last weekend, cell-phone users in the New
York metropolitan areas served by the 718, 917 and 914 area codes lost
service due to a switch malfunction. AT&T representatives insist that the
problem was unrelated to capacity challenges.
However, the company has publicly conceded that demand has outpaced
capacity in some of its big markets, such as New York. AT&T Chairman
C. Michael Armstrong has vowed to add capacity to the New York
market by June.
According to the suit, Naevus employees who travel frequently and
depend heavily on their cell phones have experienced repeated dropped
calls and busy signals. The interruptions made the service "grossly
unreliable and virtually unstable," the suit said. The plaintiffs are seeking
unspecified damages for alleged false advertising and fraud.
AT&T dismissed the suit as a "frivolous publicity stunt."
"We've been upfront with our customers about occasionally getting fast
busy signals, which is a normal part of wireless service," said Jane
O'Donaghue, an AT&T Wireless Services spokeswoman. "The astounding
success of Digital One Rate has caused us to work even harder to stay
ahead of the growth curve."
An attorney representing the plaintiffs disagreed. "AT&T really intended to
pay for and build their network with the subscriber fees that they would
collect from signing customers up to this service," said Edwin H. Keusey,
Naevus's lawyer. "They weren't prepared for the growth and couldn't
provide the services that were advertised."
Mr. Keusey compared the AT&T Wireless scenario to Internet-service
provider America Online Inc.'s problems when it moved to flat-rate
pricing. Customers complained of frequent busy signals following a surge in
new memberships. AOL eventually settled a class-action lawsuit.
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