The FCC says that it “has learned” that Sprint claimed monthly subsidies for serving subscribers to the Lifeline program that are not using the service. The Lifeline program pays some or all of the costs of a low-income household’s fixed or, in this case, mobile service. The alleged Sprint Lifeline violation centers on the subsidy that the carrier receives for about 885,000 Lifeline subscribers who in reality are not using the service, according to the FCC.
This violation of the “non-usage” rule – intended to prevent waste, fraud and abuse – accounts for about 30% of Sprint’s Lifeline subscriber base and almost 10% of the entire program’s subscriber base, the FCC said.
Lifeline pays participating providers $9.25 per month, which they are required to pass on as a discount to subscribers in the program. According to the FCC, the net result for most people who subscribe to Sprint’s Lifeline service (and for those who subscribe to some other Lifeline offerings) is that the discount makes the service free. The wording of the press release suggests that Sprint violated a requirement that providers cancel service for people who don’t use their free service at least once in 30 days. It also appears that the alleged Sprint misrepresentations were reported to the FCC by the Oregon Public Utility Commission, which according to the press release, made the discovery through an investigation.
The release also suggests that Sprint may not be alone in collecting Lifeline payments in violation of program rules. It notes that the FCC Inspector General has determined that 18.5% of all payments being made through the program are improper.
“Lifeline is an important component of our efforts to bring digital opportunity to low-income Americans, and stopping waste, fraud, and abuse in the program has been a top priority of mine since I’ve been at the Commission,” FCC Chairman Ajit Pai said in a press release. “It’s outrageous that a company would claim millions of taxpayer dollars for doing nothing. 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.”
In an effort to streamline the Lifeline Program, the FCC in August circulated a Further Notice of Proposed Rulemaking to reform the program. The FNPRM proposes strengthening the rules but would not deal with other issues, such as capping the budget of the program.
Joan Engebretson contributed to this report.
