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Wednesday, September 17, 2008, 03:30 pm PT (06:30 pm ET)

First post-patch iPhone 3G lawsuit wants Apple to pay $5 million

Jumping on an increasingly overloaded bandwagon, a Little Rock, Arkansas man has started a class action lawsuit expecting at least $5 million in damages for Apple and AT&T overselling iPhone 3G relative to the network load, even though a fix has already been put into place.

Filed this past Friday, just as Apple released its iPhone 2.1 firmware update that appears to have settled most network issues, Aaron Walters' proposed class action follows most of the now familiar pattern found in previous complaints — albeit with a few new twists.

Walters and his legal team allege that Apple, and by extension AT&T, misled the public and violated state trade laws with advertising claims that the new iPhone's cellular data speeds would be "twice as fast" as the original model when it was clear this would never play out in practice. In fact, he says, his device and others have spent most of their time on the slower EDGE (2G) network and have suffered dropped calls.

Like the New Jersey lawsuit that preceded it, the Arkansas case quickly turns to Internet-derived leaks as an explanation for the faltering performance: as the two defending companies sold more iPhones than AT&T's 3G network could handle, the carrier's network has been overwhelmed and triggered the drops. The firms "should have known that the strain on the network would make it impossible to provide reliable and sustained connectivity," according to the 16-page lawsuit.

The plaintiff also points to problems with the handsets themselves that were named in those same unofficial reports, asserting that the phones haven't been sufficiently sensitive to 3G signals and have worsened the problem as a result.

In a new take, however, Walters argues that AT&T specifically is exploiting its captive audience. While complaints have surfaced before regarding the need for a two-year contract that prevents an easy escape to another network, Walters takes issue with the inability to choose another carrier at any cost and accuss AT&T of charging a $10 premium over the original iPhone for monthly fees.

And while the Little Rock resident asks for class action status for the lawsuit to reflect the sheer scale of iPhone subscribers affected by the problem, he's also one of the first to put a more definitive cost to the perceived losses. Walters and representatives estimate that the total financial impact of the claims is likely to exceed $5 million dollars and more than 100 affected users, qualifying it for the bulk legal representation.

How well this latest case will succeed, or whether it will proceed at all in its current form, is less than apparent. At a minimum, the three previous lawsuits already in the US court system are also aiming for class action status and in at least one case have referenced earlier examples.

Also, with Apple having announced its firmware upgrade mending the issues a full three days before the lawsuit was filed, Walters no longer has an ongoing example of apparent neglect by the involved companies to support his complaint; while aware of the source of the problem as mentioned online, he makes no references to the patches that were said to be enroute.