WASHINGTON D.C. — The Federal Communication Commission has accused Sprint from profiting off of government Lifeline subsidies for accounts that weren’t being used, according to a press release from the FCC.
Lifeline is a government program that lowers the monthly cost of phone and internet services for low-income families and other eligible recipients. Those who qualify get $9.25 off of their monthly bill. The program was designed to keep those who struggle to pay for digital services competitive and current with the modern market.
Sprint is accused of claiming 885,000 accounts for Lifeline subsidies for which the recipient wasn’t even using the services provided. That’s nearly $8.2 million in subsidized bills every month. It’s unclear for how many months the FCC is accusing Sprint of receiving this money.
In an attempt to crack down on other wasteful spending, the FCC created the non-usage rule, which requires providers to de-enroll Lifeline accounts that didn’t actually use their phones. This was made after the agency’s investigations “showed that companies hawked free Lifeline service aggressively and indiscriminately,” the release states.
“It’s outrageous that a company would claim millions of taxpayer dollars for doing nothing,” Chairman Ajit Pai said in the release. “This shows a careless disregard for program rules and American taxpayers.”
In response to the accusation, a spokesperson for Sprint said that those wrongfully-collected subsidy payments were the result of an error and that the company intended to reimburse the federal government.
“In 2016, the FCC approved sweeping changes to the Lifeline program. These changes required Sprint to update how it calculates usage,” Lisa Belot, media relations for Sprint, said. “When the error was discovered, we immediately investigated and proactively raised this issue with the FCC and appropriate state regulators. We also engaged an independent third party to review the results of our review and the effectiveness of our operational changes.”
Belot said the error happened in 2017. The FCC said the new findings were in response to an investigation started by the Oregon Public Utility Commission. It’s unclear when Sprint was planning on repaying the government for this error.
The 885,000 subscribers represent nearly 30% of Sprint’s Lifeline subscriber base and nearly 10% of the entire Lifeline program’s subscriber base, according to the release.
“This raises questions about character and the thoroughness of our record,” FCC Commissioner Geoffrey Starks said in a tweet about the Sprint, T-Mobile merger. “The merger should be paused until we figure this out.”
People eligible for the program include those who have enrolled in SNAP, Medicaid, tribal programs or those whose income is lower than 135 percent of the federal poverty line.
“Lifeline is an important component of our efforts to bring digital opportunity to low-income Americans,” Pai said. “Stopping waste, fraud, and abuse in the program has been a top priority of mine since I’ve been at the Commission.”
Sprint wants to merge with T-Mobile in one of the largest wireless transactions in history. FCC just announced its largest Lifeline investigation ever. This raises questions about character and the thoroughness of our record. The merger should be paused until we figure this out. https://t.co/C7CFPvdfOh
— Geoffrey Starks (@GeoffreyStarks) September 24, 2019