TR Daily T-Mobile to Make Record $200M Payment to Settle Lifeline Probe
Wednesday, November 4, 2020

T-Mobile to Make Record $200M Payment to Settle Lifeline Probe

T-Mobile US, Inc., has agreed to pay a penalty of $200 million to the U.S. Treasury to settle the FCC’s investigation into allegations of Lifeline rule violations by Sprint Corp., which merged with T-Mobile earlier this year.

The FCC said that the penalty "is the largest fixed-amount settlement the Commission has ever secured to resolve an investigation."

In January 2019, the Universal Service Administrative Co. had referred Sprint to the FCC’s Enforcement Bureau to investigate potential violations by the company of Lifeline program rules, including possible claims of ineligible customers in Texas and duplicative Lifeline support claims for customers in Florida and Michigan, according to the consent decree released today.

The FCC Enforcement Bureau subsequently extended the investigation to cover potential issues related to the FCC’s "non-usage rule," which bars Lifeline support for customers who don’t use the service in a given month, which Sprint had voluntarily disclosed during the course of the investigation, according to the consent decree.

In September 2019, FCC Chairman Ajit Pai announced that he had asked the Enforcement Bureau to investigate Sprint’s claims for monthly Lifeline subsidies for 885,000 subscribers who did not use the supported Lifeline service, in violation of the non-usage rule (TR Daily, Sept. 24, 2019). The FCC announced at the time that those 885,000 subscribers represented nearly 30% of Sprint’s Lifeline subscriber base and nearly 10% of the entire Lifeline program’s subscriber base.

"Sprint’s voluntary disclosure claimed that, due to a software programming issue, Sprint’s systems failed to detect that over a million Lifeline subscribers nationwide lacked usage over an extended period of time. Sprint further disclosed that, in connection with this programming issue, it potentially claimed Lifeline subsidies for subscribers that Sprint otherwise would not have submitted for such subsidies under its policies and procedures. Sprint cooperated with all phases of the Investigation," the consent decree said.

Sprint’s apparent violations of the FCC’s non-usage rule first came to light as a result of an investigation by the Oregon Public Utility Commission.

In addition to the $200 million payment, T-Mobile and its Sprint and Assurance Wireless USA L.P. (f/k/a Virgin Mobile USA L.P.) subsidiaries agreed to designate a compliance officer and develop and implement a compliance plan to ensure future compliance with Lifeline program rules and the terms of the consent decree. The consent decree calls for compliance reports to be submitted to the FCC in 6, 12, 24, and 36 months, after which the compliance provisions of the decree will terminate.

In a statement today, Chairman Pai said, "Lifeline is key to our commitment to bringing digital opportunity to low-income Americans, and it is especially critical that we make the best use of taxpayer dollars for this vital program. I’m pleased that we were able to resolve this investigation in a manner that sends a strong message about the importance of complying with rules designed to prevent waste, fraud, and abuse in the Lifeline program. In addition to the great work of our Enforcement Bureau team, I would like to thank the Oregon Public Utility Commission for its efforts in this case. States play an important role in helping low-income consumers get access to affordable communications through Lifeline and making sure the program is run efficiently."

In a statement, T-Mobile said, "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." —Lynn Stanton, [email protected]

MainStory: FederalNews OregonNews FCC UniversalServiceLifeline

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