AT&T take on Broadcom
On August 29th 2024, US Telecoms giant AT&T filed a lawsuit against Broadcom...
On August 29th 2024, US Telecoms giant AT&T filed a lawsuit against Broadcom for “breach of contract [and] breach of the implied covenant of good faith and fair dealing” over the changes they have made to VMware’s T&Cs.
This is yet further evidence that Broadcom’s approach is not particularly…customer friendly.
The changes that Broadcom have ushered in are well known including a move to subscription licensing, increased core minimums, bundled products, sacrificed product lines and more. What is perhaps less well known is that Broadcom are apparently trying to apply these changes retrospectively – that is, changing existing contract terms to match the new terms. It is this that AT&T allege in their suit.
“Broadcom is threatening to withhold essential support services for previously purchased VMware perpetually licensed software unless AT&T capitulates to Broadcom’s demands that AT&T purchase hundreds of millions of dollars’ worth of bundled subscription software and services, which AT&T does not want.”
AT&T state that Broadcom is “contractually obliged” to provide this support including:
- Maintenance
- Patches
- Upgrades
- Troubleshooting
And that without these services, 8,600 servers, 75,000 virtual machines, and millions of AT&T customers including the US Government and emergency services, are at risk. The suit claims that “Broadcom’s threat not only poses a risk to critical government services, but potentially national security and public safety as well.”
While AT&T’s contract expired September 8th, 2024, it included a provision to extend for up to 2 more years prior to that date. Upon AT&T activating this option, Broadcom have refused to honour the extension and say that AT&AT must purchase “tens of millions” of dollars’ worth of additional software and services.
AT&T’s argument shows the importance of contract management as it relies in large part on understanding terms from a variety of agreements over the years and how they behave together. Where Broadcom are claiming that AT&T needed to sign up for a full 3-year renewal rather than taking a 1-year option, this is refuted due to contract language i.e.
“[i]f Customer renews the Covered Offerings [defined as a “one-year renewal of Support Services for the Pre2022 ELA Installed Software”] for an additional one (1) year period, Customer must purchase Production Level Support Services prior to the expiration of support for each stated one (1) year renewal period.”
The emphasis is added by AT&T to indicate that the clause is written to permit a 1-year renewal period, despite Broadcom’s claims. They also call out the “Order of Precedence” clause and what terms govern in the event of a conflict.
Third-party support
Third-party support, where a company other than the original software publisher provides support services for an organisation’s software portfolio, is an established and growing market sector. Historically focused on Oracle and SAP, the market is diversifying and now there are multiple 3rd-party providers of support for VMware software including LemoniaX, Rimini St, and Origina.
In the court documents, AT&T state that “Broadcom and VMware are the only entities with the source code for the Software and, therefore, the only entities that can provide the Support Services”.
Given Broadcom’s apparent insistence on terminating support services unless AT&T spend millions on new software, I wonder if AT&T are investigating/have investigated 3rd-party support as an alternative?
You can see a copy of the complaint here.
You can learn more about the changes, and your potential next steps, with our webinar and eguide. If you’d like to discuss your VMware licensing (or anything else), get in touch with us on info@synyega.com.