Hawk Electronics seeks $100 million from AT&T in arbitration of contract dispute

Oct 02, 2009 (Fort Worth Star-Telegram - McClatchy-Tribune Information Services via COMTEX) -- TLLE | Quote | Chart | News | PowerRating -- Hawk Electronics, casting itself as a "David" in a bare-knuckle brawl with a "predatory Goliath," is seeking more than $100 million from AT&T through binding arbitration in a contract dispute.

Hawk, a Fort Worth-based unit of Teletouch Communications, claims AT&T violated a long-standing distribution agreement by refusing to sell the company iPhones, then poached thousands of its highest-revenue customers through targeted sales calls.

"AT&T has been trying to deliver a one-two punch in an attempt to run us out of business for some time," said Thomas "Kip" Hyde Jr., chief operating officer of Teletouch and head of Hawk's parent, Progressive Concepts Inc.

Dallas-based AT&T disputed the claims, saying: "AT&T values its relationships with our authorized retailers across the country. We deny PCI's allegations and believe they are without legal merit. We cannot comment further on their demand for arbitration."

Arbitration could take nine to 12 months, Hyde said.

Of the 12,500 subscribers lost since the iPhone was introduced in June 2007, Hawk says, about half left because of its inability to sell the popular Apple handset. This cost Hawk millions in lost profits, Hyde said.

"They are taking our highest-revenue customers, those whom we typically bill $100 a month or more per line, and this includes families with more than one phone," Hyde said.

Hawk had dealt exclusively with AT&T for more than 25 years through a so-called master distribution agreement that expired Aug. 31. Under it, Hawk agreed to use only AT&T telecommunications services, while AT&T allowed Hawk to market all its cellular phones and promised not to solicit Hawk's customers, Hawk claims.

"We were exclusive to AT&T and, quid pro quo, what they offered, we offered -- every price plan, every phone," Hyde said of the arrangement.

At one time, Hawk was one of 17 AT&T master distributors but is now the last left standing, Hyde said.

Even after iPhone sales outlets expanded beyond AT&T and Apple stores to Walmart and Best Buy, AT&T continued to refuse to let Hawk market the model despite their special distributor relationship, he told the Star-Telegram.

After the master agreement ended Aug. 31, Hawk can no longer sell new AT&T accounts but can continue to service current ones, Hyde said.

BARRY SHLACHTER, 817-390-7718

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