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updated 8/4/2006 7:24:16 PM ET 2006-08-04T23:24:16

Cricket Communications Inc. is hopping mad.

The wireless provider didn't get as much spring as it had hoped after jumping into the Houston market earlier this summer. So Cricket is fighting back with a lawsuit against competitor T-Mobile USA.

In a lawsuit filed in Harris County District Court on July 10, Cricket alleges that T-Mobile has disrupted its launch in the Houston market.

Specifically, San Diego-based Cricket accuses T-Mobile of "strong arm tactics and intimidation" toward indirect dealers -- which are third-party retailers selling services from a variety of providers -- conducting business with Cricket.

Last month, Cricket -- a subsidiary of publicly traded Leap Wireless International Inc. -- launched a slate of wireless products and services through 11 stores in the Houston area. Cricket also planned to sell services through as many as 350 "indirect" dealers in the local market.

The company focuses on selling discount wireless products and services to underserved consumer markets using a low-cost, flat-rate model. (See "Cricket leaps into Houston wireless market," June 9, 2006.)

Houston represented Cricket's largest launch market to date.

According to Cricket's petition, some time prior to the local roll-out, "T-Mobile devised a strategy designed to hinder Cricket's launch and to protect T-Mobile's position in the Houston marketplace."

Cricket alleges that Bellevue, Wash.-based T-Mobile sent letters to indirect dealers in the Houston area warning them not to do business with Cricket and threatening to "withdraw its approval and/or terminate any sub-dealer that agrees to sell Cricket equipment and service." T-Mobile then followed up the letters with visits, according to Cricket's petition.

Cricket also claims that T-Mobile created disparaging T-shirts for company representatives to wear and hand out while conducting dealer visits. The shirts -- which Cricket charges "clearly reveals T-Mobile's malicious intent" -- bear the T-Mobile logo on the front, while the backside includes the phrase "Silence the Chirp" with a graphic of an upside-down, dead cricket and a red line of nullification.

T-Mobile would not respond to Houston Business Journal questions regarding the Cricket lawsuit, saying the company does not comment on pending litigation.

But T-Mobile representatives told industry publication RCR Wireless News that the company had nothing to do with producing or distributing the T-shirts.

Meanwhile, the publication conducted its own investigation into the subject. In a June 30 article, RCR Wireless News reporter Kelly Hill wrote, "Multiple dealers around the country contacted by RCR Wireless News confirmed that T-Mobile USA has upped the pressure on them in recent months ..."

For its part, Cricket hopes the matter will be settled in court.

"It is our policy not to discuss specifics of pending litigation -- that's for the court to decide," the company said in a statement. "We believe that customers should be free to choose what service they want. It's not up to a carrier to attempt to make that decision for them. Likewise, we also believe that dealers should be free to choose their company partners."

RCR Wireless News' Hill says Cricket, in particular, can be considered a threat to T-Mobile because of its low-cost options.

"Among the major national carriers, T-Mobile focuses on value-conscious customers in much the same way Cricket does," Hill told the Houston Business Journal. "To them, even though Cricket is smaller, when it comes down to price, they can be beat in some cases."

Collect call

Cricket alleges that T-Mobile's actions violate the Texas Free Enterprise and Antitrust Act of 1983.

In its lawsuit, Cricket is seeking the issuance of a temporary injunction and a permanent injunction against T-Mobile. The company also is seeking exemplary damages against T-Mobile and is requesting a trial by jury.

David Barden, an analyst with Bank of America Equity Research, says Cricket's launch in the Houston market "has not gone to plan and that the Austin market launch may face hiccups as well," which the company claims is a result of T-Mobile's interference.

"A big new market like Houston open for a short time can be as important as a smaller market like Colorado Springs open longer," Barden wrote in a July 20 research note.

Cricket filed the lawsuit, Barden believes, not because the company feels it's necessary to resuscitate its distribution in the Houston market, but because Cricket "has no interest in repeating the exercise."

He wrote: "Discussing the issue with Leap, the T-Mobile issue appears only to have risen to the level of business impact in Houston."

Cricket has more than 1.6 million customers with service in 44 markets in 20 states.

© 2007 Houston Business Journal

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