Sprint sued AT&T late on Thursday, saying it was misleading consumers into believing that they were using fifth generation or 5G wireless network, a technology that has not yet been widely deployed.
5G can offer data speeds up to 50 or 100 times faster than 4G networks.
Smartphones running on both Android and Apple's iOS platforms are sporting "5G E" for AT&T customers, even though those phones are not equipped to support 5G.
Sprint said that a survey showed 54 percent of AT&T's consumers believed their "5G E" network is the same as or better than a 5G network and 43 percent said if they buy an AT&T phone today, it would be capable of running on 5G.
"We will fight this lawsuit while continuing to deploy 5G Evolution in addition to standards-based mobile 5G. Customers want and deserve to know when they are getting better speeds," AT&T said in response to the lawsuit.
5G Evolution and the 5GE indicator let customers know when their device is in an area where speeds up to twice as fast as standard LTE are available, AT&T said.
AT&T's Chief Executive Officer Randall Stephenson said in an interview with CNBC that the company's customers are seeing an increase in speed and performance on the "5G E" network and this is a step required to get to "ultimate 5G".
Last month, Sprint said it plans to release 5G smartphones with Samsung Electronics Co Ltd in the United States during the summer, while rival Verizon Communications Inc in December also disclosed similar plans for the first half of 2019.
© Thomson Reuters 2019