T-Mobile on Wednesday agreed to pay a $200 million fine to settle an investigation by the Federal Communications Commission (FCC) into Sprint’s compliance with the Lifeline program for low-income consumers.
The FCC said the $200 million penalty is the largest fixed-amount settlement it has ever received to resolve an investigation.
In September 2019, the FCC alleged that Sprint had claimed monthly subsidies for serving 885,000 Lifeline subscribers, “even though those subscribers were not using the service.” It was a violation of the “non-usage” rule meant to prevent fraud, waste and abuse in the Lifeline program. Per the rule, service providers may only be reimbursed for a Lifeline subscriber if the subscriber used the service at least once in the past 30 days.
The agreement requires that T-Mobile honor the rules of a consent decree.The provider has to reform company procedures and training to ensure that it only makes legitimate Lifeline claims. A senior manager has to ensure T-Mobile complies with the order, and the company has to submit periodic reports for three years after the start of the decree.
A T-Mobile spokesperson gave 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.”
Sprint previously denied any deliberate abuse. It contended that it made an “error” in 2017 when implementing FCC-related changes. The company said it actively investigated issues and raised them with the FCC, and was “committed” to compensating federal and state governments.
The settlement is ultimately small and won’t significantly affect T-Mobile’s future. It might serve as a warning to carriers, however, if just to ensure they double-check that they’re making claims for customers who genuinely ask for help.
