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T-Mobile Faces Largest-Ever FCC Penalty to Resolve Sprint Lifeline Investigation

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Penalty Flag

T-Mobile will pay a $200 million civil penalty to resolve a Lifeline investigation involving Sprint taking millions of dollars in subsidies.

In the Lifeline program, the subsidies aim to help make phone and broadband service more affordable for low-income consumers.

The Federal Communications Commission (FCC) launched its investigation last fall. It centered on Sprint’s compliance with the commission’s rules regarding waste, fraud and abuse in the Lifeline program.

The payment is the largest fixed-amount settlement the FCC has ever secured to resolve an investigation.

Earlier this year, Sprint and T-Mobile merged, with Sprint continuing as a wholly owned subsidiary of T-Mobile.

When we reached out to T-Mobile, the company sent the following statement:

“While we inherited this issue with our merger, we are glad that it is now resolved. We look forward to continuing to deliver reliable and affordable network connectivity to consumers across the country who depend on it.”

Non-Usage Rule

The settlement comes after an FCC enforcement bureau investigation into reports that Sprint, prior to its merger with T-Mobile, was claiming monthly subsidies for serving about 885,000 Lifeline subscribers, even though those subscribers were not using the service. This was in potential violation of the FCC’s non-usage rule.

The matter initially came to light as a result of an investigation by the Oregon Public Utility Commission. In addition to paying the penalty, Sprint agreed to enter into a compliance plan to help ensure it would adhere to the FCC’s Lifeline program rules going forward.

The FCC's Ajit Pai

FCC’s Ajit Pai

“Lifeline is key to our commitment to bringing digital opportunity to low-income Americans,” said Ajit Pai, FCC chairman. “And it is especially critical that we make the best use of taxpayer dollars for this vital program.”

The penalty sends a “strong message” about complying with the Lifeline rules, he said.

Lifeline Program Details

Providers participating in the Lifeline program get a $9.25 monthly subsidy for most Lifeline subscribers. They must pass this along to consumers as a discount. For most mobile Lifeline consumers, the subsidy makes the service free to the consumer.

Under the non-usage rule, the government reimburses providers for a Lifeline subscriber if that subscriber has used the service at least once in the past 30 days. Furthermore, providers must remove subscribers who don’t use their phones after giving them 15 days’ notice.

The rule aims to protect Lifeline from wasting taxpayer funds on a service that people aren’t using, the FCC said.

Sprint provides wireless Lifeline service under the Assurance Wireless brand to millions of low-income households nationwide.


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