Intrigue and espionage are not relegated to summer’s blockbuster movie season. Verizon Wireless filed a lawsuit late last month against Nextel Communications Inc. claiming the Reston, Va.-based carrier used a series of deceitful tactics to garner information on Verizon Wireless’ press-to-talk service, which was expected to launch earlier this month.
In a complaint filed in U.S. District Court for the Eastern District of Virginia, Verizon Wireless claims Nextel unlawfully obtained a pair of Verizon Wireless prototype press-to-talk handsets, gained unauthorized access to Verizon Wireless’ private press-to-talk network, gathered confidential performance-related information and leaked proprietary information on the service to at least one telecom analyst in an attempt to harm Verizon Wireless.
Verizon Wireless said in its complaint that on June 10, Nextel “improperly came into possession of two prototype push-to-talk handsets.” The claim continues that Nextel “then obtained unauthorized access to Verizon Wireless’ private prototype push-to-talk network and tested the handsets and the network by placing hundreds of push-to-talk `calls’ on the network.”
Verizon Wireless claims it has proof of the calls as many passed through its network computer switch in Chantilly, Va., which handles calls for Nextel’s headquarters in Reston, and that Nextel’s unauthorized use of its network “jeopardized and did impair the integrity of the private push-to-talk network, including its computers, and proximately caused a loss to Verizon Wireless of at least $5,000 in value.”
The lawsuit also provided further proof of the imminent launch of Verizon Wireless’ press-to-talk service.
“At the time that Nextel improperly obtained access to Verizon Wireless’ confidential business information and/or property trade secrets, Verizon Wireless was in the process of pre-launch testing to improve the quality and performance of its prototype push-to-talk service before its ultimate release to the public,” Verizon Wireless noted.
Nextel downplayed the allegations and said it believed they were without merit and would defend its position.
“Nextel is confident it has conducted itself properly with respect to the allegations in Verizon Wireless’ complaint,” Nextel said in a statement. “We are, therefore, baffled by the claims made by Verizon Wireless in its filing.”
While Verizon Wireless seems intent on wrestling some form of compensation settlement from Nextel, analysts are less convinced of Verizon Wireless motives, noting there must have been problems with the service as Verizon Wireless was expected to launch its press-to-talk offering by July 1.
“I’m a little surprised by the claim,” said Ned Zachar, telecommunications analyst at Thomas Weisel Partners. “It sounded like Verizon was set to launch the service this month and this action shows that they might not be as ready as people expected.”
Zachar added that it could be difficult to prove any wrongdoing in the case and that he would not be surprised if Nextel’s competitors have been busy themselves dissecting the carrier’s iDEN handsets in an attempt to decipher the company’s magic formula.
“I think the lawsuit looks a little silly,” said Tom Watts, wireless analyst at SG Cowen. “It seems that if the Verizon product was competitive to what Nextel was offering that they would have gone ahead with the launch.”
Watts added that Nextel would have little to gain from stealing Verizon Wireless’ press-to-talk secrets since the service was not expected to match the performance of Nextel’s Direct Connect offering.
“It’s not like Nextel is going to launch a similar service to Verizon,” Watts said, noting that in talks he has had with infrastructure providers Motorola Inc. and its recently acquired subsidiary Winphoria, the Verizon Wireless service is expected to have a five-second call set-up and two-second call latency.
Watts also hinted that the lawsuit could be tied to Nextel’s recently granted trademark for the “push to talk” phrase, noting Verizon Wireless could have been planning to use the phrase liberally in its marketing and was forced at the last minute to alter its plans.
Industry sources also called into question how Nextel was able to obtain the Verizon Wireless handsets.
Verizon Wireless did not provide details on the missing handsets. Motorola and Samsung Corp. are expected to supply press-to-talk handsets to Verizon Wireless.
Watts said he did not think a Verizon Wireless employee would have provided the handsets due to expected tight control by the carrier over the limited number of trial models being used for testing.
