KANSAS CITY, Mo. — An investigation found Overland Park-based Sprint received millions of dollars worth of subsidies through a federal program without providing the service, prompting at least one FCC commissioner to publicly call for the company’s proposed $26 billion merger with T-Mobile to be put on hold.
In a news release, the Federal Communications Commission said that Sprint allegedly claimed monthly subsidies for around 885,000 Lifeline subscribers, even though the subscribers were not using the service, a violation of the program’s “non-usage” rule.
According to the FCC, the 885,000 subscribers represent nearly 30% of Sprint’s Lifeline subscriber base and nearly 10% of all Lifeline subscribers.
One commissioner on the five-member board, Geoffrey Starks, said the investigation “raises questions about character and the thoroughness of our record.”
“Sprint wants to merge with T-Mobile in one of the largest wireless transactions in history,” Starks said on Twitter. “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.”
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
Lifeline, a federal program that lowers the cost of phone and internet for low-income people, gives providers a $9.25 monthly subsidy that must be passed on to customers, resulting in a free service for most subscribers.
Lifeline’s “non-usage” rule requires providers to unenroll customers receiving the free service who do not use their phones, according to the FCC.
An investigation by the Oregon Public Utility Commission found that Sprint allegedly did not unenroll those customers.
“It’s outrageous that a company would claim millions of taxpayer dollars for doing nothing,” FCC Chairman Ajit Pai said in the news release. “This shows a careless disregard for program rules and American taxpayers.”
Sprint responded to the allegations on Tuesday, saying that “an error occurred” after new requirements for calculating usage and eligibility were implemented in July 2017.
“When the error was discovered, we immediately investigated and proactively raised this issue with the FCC and appropriate state regulators,” Sprint said in the statement. “We also engaged an independent third party to review the results of our review and the effectiveness of our operational changes.”
Sprint said it planned to reimburse federal and state governments “for any subsidy payments that were collected as a result of the error."
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