Last week the Ingham County Circuit Court in Michigan entered a judgment ordering AT&T Michigan to pay ACD Telecom $7,994,590 in damages for breach of contract.
Under the contract, ACD and AT&T had mutually agreed to let their customers under long-term contracts switch their services to the other company without having to pay the early termination fees in their contracts. Most commercial telecommunication services are purchased on term contracts with substantial termination penalties, much like a consumer cell phone contract. This makes it difficult and expensive to switch phone companies when new technology, lower prices or better services become available.
ACD says AT&T refused to honor the agreement and charged two of the customers that switched from AT&T to ACD early termination penalties in excess of $40,000 each.
AT&T then sued these two companies to collect early termination penalties. One of the two companies, Lansing-based ARQ Internet, went out of business in the face of the termination charges AT&T assessed in breach of the contract.
Read the whole story here.
