A federal judge has given Sprint Nextel initial approval to pay $30m to settle a class-action lawsuit accusing it of colluding with other phone companies to overcharge customers. Qualified customers will receive prepaid calling cards from a cache worth $25m. Attorneys get the remaining $5m for fees and costs.

The case, struck in 2003, accuses Sprint of scheming with AT&T and MCI to charge business and residential customers more than the regulated fee for the Universal Services Fund. Major US telecom providers are required to contribute to the USF, which subsidizes services available to low income, rural and high cost areas. The Federal Communications Commission sets the contribution rate.

The settlement covers long-distance customers who paid the fees between August 1, 2001 and March 31, 2003. This includes Sprint long-distance residential and business customers, MCI long-distance business customers, AT&T long-distance business customers and AT&T long-distance residential customers in California.

Sprint's bills identified the charge as "Federal Universal Services Fee" or "Carrier Universal Service Charge," while AT&T called it a "Universal Connectivity Charge".

The antitrust case had consolidated several smaller class-actions to a federal court in Kansas City. Sprint's co-defendant, AT&T, was not included in the settlement, and still faces litigation.

US District Judge John Lungstrum has scheduled a final hearing for the Sprint settlement on March 3, 2008. ®

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