Verizon Class Action Alleges eSIM Conspiracy with AT&T to Stifle Competition

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Verizon Communications Inc. and Cellco Partnership d/b/a Verizon Wireless have been hit with a class action lawsuit filed in New Jersey federal court over an alleged conspiracy among Verizon, AT&T Inc. and AT&T Mobility LLC to stifle competition in the U.S. wireless communication services market.

Plaintiff Brandy A. Allen alleges that Verizon and AT&T limited the use of embedded SIM (or eSIM) technology to prevent consumers from being able to switch wireless carriers.

According to the Verizon class action lawsuit, eSIM technology, which was introduced in 2013, replaces the traditional SIM card in a consumer’s phone, allowing the phone to be reconfigured without having to remove the SIM card from the device.

Most mobile phones have SIM cards that contain a unique reference number tied to a user’s account. The SIM card allows the wireless provider to know that the phone belongs to the consumer who is paying for the Verizon subscription.

When users change wireless providers, they typically need to purchase a new SIM card. With eSIM technology, however, consumers can switch wireless service providers remotely without the need to physically switch SIM cards.

In 2016, Groupe Speciale Mobile Association (GSMA), a mobile industry standards group, released new guidelines supporting the use of eSIM. After these new GSMA guidelines were released, Verizon and AT&T, which reportedly control about 70 percent of the U.S. wireless market, conspired to lock customers’ eSIMs to their respective networks and to convince GSMA to set new standards to allow them to do so.

“Through their collusive scheme to secretly hinder the utility of eSIM technology, Verizon and AT&T sought to manipulate the market for wireless communication services by excluding, restraining and suppressing competition,” the Verizon antitrust class action lawsuit says.

Due to this alleged collusion, Allen says that she and other wireless customers have been faced with artificially limited choices and inflated prices for wireless communication services.

“Verizon’s scheme caused a lack of competition in the market, which deprived consumers fo free and open competition and consumer choice, and reduced price competition, which resulted in Plaintiff and Class members paying higher prices for wireless communication services than would have been charged in a competitive market,” Allen says in the Verizon class action lawsuit.

Earlier this year, the Antitrust Division of the U.S. Department of Justice demanded Verizon, AT&T and GSMA provide information about their potential collusion, the Verizon class action lawsuit says.

The DOJ is reportedly investigating whether Verizon and AT&T worked together with the goal of establishing GSMA standards that would allow them to lock devices with eSIM devices to their respective networks. Consumers were unaware of this potential collusion until reports about the DOJ investigation were published last month, Allen says.

She filed the Verizon antitrust class action lawsuit on behalf of herself and a proposed Class of persons, corporations and other entities that have subscribed to Verizon wireless communication services since 2016.

The Verizon class action lawsuit asserts violations of Section 1 of the Sherman Antitrust Act.

Allen is represented by James E. Cecchi and Caroline F. Bartlett of Carella Byrne Cecchi Olstein Brody & Agnello PC and by Joseph H. Meltzer, Kimberly A. Justice, Melissa L. Troutner, and Samantha Holbrook of Kessler Topaz Meltzer & Check LLP.

The Verizon Antitrust Class Action Lawsuit is Brandy A. Allen v. Verizon Communications Inc., et al., Case No 2:18-cv-08918, in the U.S. District Court for the District of New Jersey.