Another Day, Another Telecom Giant Caught Taking Taxpayer Subsidies They Didn't Deserve

from the ill-communication dept

For decades, big and small telecoms alike have abused the FCC Lifeline program, a fund that's supposed to help subsidize telecom connectivity for low income users. Started by Reagan and expanded by Bush, the fairly modest program doles out a measly $9.25 per month subsidy that low-income homes can use to help pay a tiny fraction of their wireless, phone, or broadband bills (enrolled participants have to chose one). While the program (which you pay into via your telecom bills) has been a subject of fraud, enforcement of abuse hasn't always been consistent.

Back in September, the FCC noted that Sprint had been taking taxpayer funds for roughly 885,000 Lifeline customers who were no longer actually using the company's services. The FCC stated that it would be investigating the potential fraud, but hasn't yet announced any actual penalty. This week the Wall Street Journal raised the ante, issuing a report (non-paywalled alternative here) that took a closer look at Sprint documents and found that the problem went much further -- and has been going on for much longer -- than the FCC acknowledged:

"Sprint also made mistakes in tallying how many subscribers were using their Lifeline service in 2013 and 2014, documents obtained by the Journal through a public information request show. Because of an error in how it counted usage at the time, spam texts could keep dormant accounts live and allow Sprint to continue to collect subsidies for those customers, the documents show. In one case, the phone of an Oregon woman who died months earlier was still deemed active.

In Oregon alone, correcting that mistake at the time triggered the loss of more than 4,600 Lifeline subscribers for the company, according to the documents. “The failure was systemic and not confined to Oregon,” a then-senior counsel at Sprint wrote in a September 2014 email to officials at the state Public Utility Commission who asked about the matter.

It remains unclear just how big the problem at Sprint actually was, a task now in the hands of an FCC with a fairly... lacking record when it comes to holding telecoms accountable. These kinds of "errors" aren't uncommon in the subsidy-slathered telecom sector. AT&T was forced to pay $11 million in 2015 by the previous, Tom Wheeler FCC because it "forgot" to remove nonexistent subsidy recipients from its rolls. The Lifeline system is pretty routinely gamed by big and small players alike, though it's usually only the smaller, weaker culprits that see any serious penalty.

And while bigger carriers always insist that these issues are always inadvertent errors, this is a sector with a thirty year history of taking billions upon billions in subsidies in exchange for networks that routinely only wind up half deployed. Context probably matters.

Error or not, the ball now lies in the lap of an Ajit Pai FCC that hasn't done much (read: anything) to seriously hold bigger telecom companies accountable for fraud or bad behavior. You'd think that figuring out the scale of Sprint's unearned subsidies would be something the agency would want to get to the bottom of before approving Sprint's $26 billion merger with T-Mobile, yet somehow these inquiry settlements always arrive a day late and a dollar short.

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Filed Under: fcc, lifeline, scams
Companies: sprint