T-Mobile to Pay $200M for Sprint Lifeline Violations
T-Mobile agreed to pay $200 million to settle an FCC Enforcement Bureau investigation of waste, fraud and abuse connected with Sprint receiving Lifeline subsidies for 885,000 subscribers who weren’t using the service, said an order and consent decree Wednesday (see 2011040016). T-Mobile bought Sprint earlier this year. The payment “is the largest fixed-amount settlement the Commission has ever secured to resolve an investigation,” said an FCC news release. “While we inherited this issue with our merger, we are glad that it is now resolved,” T-Mobile emailed.
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In a voluntary disclosure to the FCC in “late August 2019,” Sprint blamed the violations on a computer problem. “Due to a software programming issue, Sprint’s systems failed to detect that over a million Lifeline subscribers nationwide lacked usage over an extended period of time,” said the order and consent decree. Lifeline providers are required to de-enroll subscribers who don’t use their phones for 15 days after receiving notice that they haven’t used the service in 30 days. The National Lifeline Association and the agency appeared before the U.S. Court of Appeals for the D.C. Circuit last month on a matter connected with the 15-day “cure” period (see 2010130047). NaLA didn't comment Wednesday.
The malfunction led Sprint to potentially claim “Lifeline subsidies for subscribers that Sprint otherwise would not have submitted for such subsidies.” That disclosure came after an Enforcement Bureau investigation into discrepancies between claims Sprint submitted to Universal Service Administrative Co. and lists of low-income customers in Texas, and Sprint claims for ineligible and duplicate subscribers in Florida and Michigan, the order and consent decree said. The matter first emerged due to an Oregon Public Utility Commission investigation, the release said. “It’s encouraging to know that our efforts to curb waste, fraud, and abuse have resulted in a positive outcome nationally for all who rely on the Lifeline discount to stay connected and those who fund the program," said Oregon Lifeline Program Manager Jon Cray in a written statement. "We take our role in providing access to affordable" phone and broadband "service to qualifying low-income Oregonians while safeguarding taxpayer dollars seriously," he said. The FCC didn’t respond to queries.
T-Mobile must enter into a compliance plan for three years, which will include employee training and a compliance manual. The consent decree requires the company to take responsibility for employees complying with Lifeline rules and create procedures for whistleblowers to report violations. T-Mobile is required to report any noncompliance within 30 days.
FCC Chairman Ajit Pai called the Lifeline program “key” to his agency's commitment to “bringing digital opportunity to low-income Americans.” Pai withdrew a draft order on updating the minimum service standards last week (see 2011020065). A Dec. 1 automatic increase in the MSS will occur without further action. “It is especially critical that we make the best use of taxpayer dollars for this vital program,” Pai said.