NERA Expert Testimony Supports Sprint In Early Termination Fee Court Win

16 June 2008

New York/16 June 2008 -- Three experts from NERA Economic Consulting provided testimony in support of Sprint in a recent favorable jury ruling in a class action lawsuit on early termination fees in Alameda County Superior Court, California.

NERA Senior Vice President Dr. William Taylor and Vice President Christian Dippon testified in Ayyad, et al. v. Sprint Spectrum Limited Partnership, et. al. on the economic damages allegedly inflicted on California consumers by Sprint's decision to charge early termination fees. NERA Senior Vice President Jeffrey Baliban testified on several key accounting aspects of the damages.

The three NERA experts concluded that the damages to Sprint caused by subscribers that terminated their contract early far outweighed the early termination fees charged and collected by Sprint. The NERA team also showed that subscribers typically incur an early termination fee due to non-payment and that Sprint collected very few of these fees from default customers.

After a month-long trial, the California jury ruled on Thursday, 12 June 2008 that the early termination fees were not excessive and, consistent with the NERA experts' testimony, found that the fees were a fair reflection of Sprint's damages when customers terminate their contracts early. The jury determined that, while Sprint customers paid $73.8 million in early termination fees, the breaches of contract caused losses to the company in the amount of $225.7 million. The presiding judge, the Honorable Bonnie Sabraw, still must decide on certain aspects of the case, including liability.

The outcome of this case is likely to impact not only similar outstanding litigation, but potential regulatory action as well. A class action lawsuit involving claims about early termination fees charged by Verizon Wireless begins today in the same Alameda County court. In addition, US Federal Communications Commission (FCC) Chairman Kevin J. Martin said in a hearing Thursday that he would seek to establish a federal policy on the early cancellation fees charged by cell phone and other service providers as early as July 2008.

US Representative Ed Markey (D-Mass) had recently introduced draft legislation calling for the FCC to intervene in this competitive market and to introduce rules regarding early termination fees.

NERA Economic Consulting (www.nera.com), founded in 1961 as National Economic Research Associates, is a unit of the Oliver Wyman Group, an MMC company.

About NERA

NERA Economic Consulting (www.nera.com) is a global firm of experts dedicated to applying economic, finance, and quantitative principles to complex business and legal challenges. For over half a century, NERA's economists have been creating strategies, studies, reports, expert testimony, and policy recommendations for government authorities and the world's leading law firms and corporations. We bring academic rigor, objectivity, and real world industry experience to bear on issues arising from competition, regulation, public policy, strategy, finance, and litigation.

NERA's clients value our ability to apply and communicate state-of-the-art approaches clearly and convincingly, our commitment to deliver unbiased findings, and our reputation for quality and independence. Our clients rely on the integrity and skills of our unparalleled team of economists and other experts backed by the resources and reliability of one of the world's largest economic consultancies. With its main office in New York City, NERA serves clients from more than 25 offices across North America, Europe, and Asia Pacific.