FCC accuses Sprint of taking improper subsidies for Lifeline subscribers
The Federal Communications Commission lambasted Sprint on Tuesday, claiming the telecommunications company improperly received subsidies for some 800,000 subscribers to Lifeline, a program benefiting low-income consumers.
Sprint submitted claims for roughly 885,000 subscribers who were inactive, a direct violation of the"non-usage” rule, the FCC said in a statement Tuesday. Providers are required to un-enroll subscribers who don’t use their phones to prevent abuse of the program.
“It’s outrageous that a company would claim millions of taxpayer dollars for doing nothing,” FCC chairman Ajit Pai said in the statement. “This shows a careless disregard for program rules and American taxpayers. I have asked our enforcement bureau to investigate this matter to determine the full extent of the problem and to propose an appropriate remedy.”
Lifeline makes phone and broadband service more affordable for low income consumers. Providers participating in the program receive a $9.25 monthly subsidy for most subscribers, which the company must pass along to consumers as a discount, the FCC reported.
A Sprint spokesperson told FOX Business that in 2016, the FCC approved sweeping changes to the program that required the company to update how it calculates usage and eligibility of Lifeline customers. An error occurred when the new requirements were implemented in July 2017, Sprint said, and the company immediately addressed it with the FCC as well as appropriate state regulators.
“While immaterial to Sprint’s financial results, we are committed to reimbursing federal and state governments for any subsidy payments that were collected as a result of the error," the spokeperson said. “We are proud of the benefits we provide to eligible low-income individuals through discounted wireless service.”
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The subsidy makes the service free for most of its users, according to the FCC, but the program has been deluged with waste and fraud. A recent report by the FCC Inspector General shows that 18.5 percent of payments made by the program were improper.
The 885,000 subscribers in this case represent nearly 30 percent of Sprint’s Lifeline subscriber base and almost 10 percent of the entire program.