Nov. 3 (Bloomberg) -- AT&T Inc., the largest U.S. phone company, sued rival Verizon Wireless, saying its advertising about network coverage is misleading.

Verizon’s ads use large areas of white space in maps of so- called 3G network coverage areas to indicate that AT&T customers are “out of touch” in vast parts of the U.S., according to the complaint filed in federal court in Atlanta.

“Contrary to the misleading message conveyed in Verizon’s advertisements, AT&T customers can fully use their wireless devices outside of a 3G coverage area and undisputedly have coverage in areas depicted by the white or blank spaces,” AT&T’s Mobility unit said today in the court document.

AT&T, based in Dallas, is seeking a court order to stop Verizon from using the maps in its ads. Verizon Wireless, based in Basking Ridge, New Jersey, is jointly owned by Verizon Communications Inc. and Vodafone Group Plc.

“These ads are serving to inform customers where the coverage critical to operating a smart phone is available,” Verizon Wireless spokesman Jim Gerace said in an e-mail. “Considering their limited 3G coverage, our competitor should examine whether they are misleading customers with their fastest 3G network claim.”

Data Plans

Verizon, based in New York, surpassed AT&T as the largest mobile carrier in the U.S. this year after it acquired Alltel Corp. The two companies are competing for a dwindling supply of new customers as there are enough wireless devices to cover about 90 percent of the U.S. population, according to the CTIA wireless industry association.

Carriers are turning for growth to sales of data plans, which let customers download applications and access the Web. The 3G, or third-generation, networks make data features perform faster. AT&T said wireless data revenue rose 34 percent to $3.6 billion in the third quarter from a year earlier. Verizon Wireless reported a 48 percent increase to $4.1 billion.

Verizon was the top advertiser in the first six months of 2009, spending $1.19 billion, according to a study by TNS Media. AT&T ranked third, spending $976.8 million. Procter & Gamble Co. was second.

Verizon Communications fell 34 cents to $29.07 p.m. in composite trading on the New York Stock Exchange. The shares have declined 14 percent this year. AT&T fell 23 cents to $25.36, bring the stock’s decline this year to 11 percent.

The case is AT&T Mobility LLC v. Cellco Partnership, 09-cv- 3057, U.S. District Court, Northern District of Georgia (Atlanta). Cellco Partnership does business as Verizon Wireless.

To contact the reporter on this story: Cary O’Reilly in Washington at caryoreilly@bloomberg.net. Amy Thomson in New York at athomson6@bloomberg.net.

Last Updated: November 3, 2009 17:55 EST