Unions, Consumer Groups Wimp Out On Verizon Tracfone Merger

from the surely-THIS-time-will-be-different dept

Last September Verizon announced it would be spending $6.2 billion to buy Tracfone, a prepaid wireless phone provider heavily used by lower income families. Given Verizon's reputation and the US telecom industry's long history of empty pre-merger promises, unions and consumer groups rightfully balked.

They warned Verizon's track record indicated this would likely end in the consolidation harming the sector, and many low-income customers inevitably paying more money than ever for wireless service. They also pointed to the fact that Verizon just got busted exploiting a Covid broadband relief program to upsell users to more expensive plans. In short, they warned that a company like Verizon probably wouldn't be a particularly good steward of a service that catered predominately to low-income Americans. They were correct.

Apparently that was then, and this is now. Unions and several consumer groups appear to now have done a complete 180, announcing they now support the deal after Verizon pinky swore it would behave responsibly:

"The CWA, Public Knowledge, and the Benton Institute for Broadband and Society had initially criticized Verizon’s proposed purchase of Tracfone, suggesting that the deal could harm Tracfone’s low-income customer base. But the groups announced Thursday that they would be withdrawing their opposition in response to the new concessions."

Note that only Benton and Public Knowledge were willing to bend on this. Other consumer groups, like the Open Technology Institute and others, tell me they continue to oppose the deal as currently structured.

Verizon lays out the promises in a press release. In short, they promise to continue offering the FCC's "Lifeline" program to Tracfone subscribers (a measly $9.25 per month subsidy for low-income Americans Verizon has previously attempted to undermine) for at least three years. The company pinky swears it will ensure these users have access to discounted 5G service, and that they'll actively market discounted broadband options (instead of hiding them and making them hard to find and sign up for, something really common in telecom merger promises of this type).

The problem, of course, is that this is....Verizon. And this is the United States, where "feckless" doesn't even begin to describe the country's state and federal regulatory attitude when it comes to holding telecom giants accountable.

Verizon has a long, long, long parade of promises it hasn't lived up to. The company took billions from Pennsylvania taxpayers in the 90s for fiber networks it then failed to deploy. You can also ask New York City, New Jersey, and much of the eastern seaboard what Verizon promises are worth. And that's before you get to the U.S. telecom industry's 30 year history of merger promises that, time after time after time, wind up being worth absolutely nothing. That this endless wave of mergers has been harmful isn't some errant opinion, it's documented history.

The impact of mindless telecom consolidation is everywhere, hugely negative, and generally obvious to the majority of US wireless, broadband, and cable TV subscribers. It has consistently and inevitably resulted in higher prices, worse products, and terrible customer service. And the Verizon Tracfone deal promises to usher forth a whole lot more of it:

"The potential windfall for Verizon is staggering. If this deal were to be approved, the FCC would anoint Verizon as the largest wireless prepaid service operator in the United States and the company would obtain an additional 21 million customers. The merger would also allow Verizon to acquire the fourth-largest wireless company by subscribership in the U.S. The acquisition of TracFone by Verizon will also add $8.1 billion in revenue for Verizon and an additional 90,000 retail locations. Such a position will only continue the wave of consolidation in the cellular service sector and fortify Verizon’s market power as one of the largest wireless communications providers in the country."

The other assumption here is that Verizon will make a promise, then the FCC will follow up consistently to ensure the company is keeping it. But history isn't kind on that subject, either. Telecom companies generally fail to adhere to promises even if they're the ones creating the merger conditions. And years later, assuming underfunded and understaffed U.S. regulators even act in the first place, any penalty for missing deadlines (or outright lying) is usually little more than a light wrist slap. The idea that this deal will somehow be any different is just silly.

Verizon's promises aren't actually worth anything, and I'm surprised some consumer groups and unions folded so easily here. Buckling seems to make Biden FCC approval more likely, leading to even greater consolidation. Verizon will either ignore the restrictions and face few real FCC penalties under future industry-cozy administrations (President Scott Baio!) or will simply wait for the three-year limits to expire before finding creative ways to nickel and dime low-income consumers. You can set your watch by it, and this bipartisan sport we play where we pretend otherwise is just wholly bizarre.

Filed Under: competition, lifeline, mergers, mobile phones, mvno, prepaid wireless
Companies: tracfone, verizon

After Exploiting Covid Broadband Program, Verizon Faces Unsurprising Opposition To Tracfone Merger

from the surely-they'll-behave-THIS-time dept

When last we checked in with Verizon, the company had just been caught exploiting the government's Covid broadband relief program to upsell struggling Americans to more expensive plans. Now, as Verizon tries to gain regulatory approval for its $6.2 billion acquisition of Tracfone, consumer groups and a small cadre of Senators are wondering if a company that thinks nothing of exploiting struggling Americans in need is a good steward for a discount phone company whose client base is predominantly comprised of low-income Americans.

Five U.S. Senators recently wrote the FCC, rather timidly wondering if Verizon would use the acquisition to simply upsell these lower-income Americans to more expensive plans (spoiler: yes):

"Senators Richard Blumenthal, Sheldon Whitehouse, Dianne Feinstein, Ron Wyden and Ed Markey said in a letter "Verizon would have significant incentives and opportunities to push subscribers from Lifeline and inexpensive prepaid services to higher revenue plans."

The amusing part here is that there's 40 years of documented history showing how Verizon and AT&T's overall strategy is to acquire everyone, then use that consolidation and reduced competition to relentlessly nickel and dime their subscribers. This is just a factual reality and the way publicly-traded companies are structured to take full tactical advantage of the market and weak regulatory environments to the benefit of investors. It's not some errant opinion that this will happen again in the wake of yet another industry merger, it's the likely outcome based on decades of history.

Yet the concern that they'd do so again here (spoiler: they will) is framed as some kind of radical theoretical or -- as is the preference of the DC Beltway "he said, she said" reporting set -- purely a partisan concern expressed only by Democrats. But the fact Congress could only cobble together five Democratic Senators interested in giving a shit shows you pretty clearly that apathy to this kind of mindless consolidation is very much a bipartisan sport.

1.7 million of Tracfone's customers currently enroll in the FCC's Lifeline program. Started under Reagan and expanded by Bush, the program doles out a measly $9.25 monthly credit that struggling Americans can use to get a discount off of their phone, wireless, or broadband bill (they have to choose one). It's literally the very least the government can do to help poor people afford telecom services, but it's been endlessly demonized by folks like Trump FCC boss Ajit Pai, who think even this half-assed effort is a bridge too far.

If this telecom merger follows the pattern of other U.S. telecom mergers, a bipartisan coagulation of lawmakers will trip over themselves to ignore warnings and approve the deal. They'll then sign off on a bunch of flimsy conditions -- most likely crafted by Verizon -- that not only won't really do all that much, but won't be enforced or adhered to. Meanwhile, Verizon gets way with rather nebulous claims that this deal creates amazing synergies and benefits that you just can't get without greater industry consolidation:

"The company said the proposed deal "will bring value and benefits to value-conscious consumers in a myriad of ways."

Then in two to three years, when policymakers and the press have forgotten all about the deal, Verizon will exploit the consolidation to steadily raise rates. The very same policymakers who signed off on yet more consolidation in the space will then stand around with their hands on their hips and a dumb look on their face wondering how we got here. Right before signing off on yet another "growth for growth's sake" telecom megamerger that benefits absolutely nobody outside of the Hamptons set. Rinse, wash, and repeat, with absolutely nobody learning anything from the experience.

Filed Under: acquisitions, consolidation, fcc, lifeline, mergers, raising rates
Companies: tracfone, verizon

Ajit Pai Tried To Strangle A Broadband Aid Program For Low Income Americans. Then A Pandemic Hit.

from the you're-really-not-helping dept

While recently departed FCC boss Ajit Pai was perhaps best known for ignoring the public and making shit up to dismantle FCC authority over telecom monopolies, many of his other policies have proven to be less sexy to talk about--but just as terrible.

One of the biggest targets throughout Pai's four year tenure as boss was the FCC's Lifeline program, an effort started by Reagan and expanded by Bush Jr. that long enjoyed bipartisan support until Trumpism rolled into town. Lifeline 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). The FCC, under former FCC boss Tom Wheeler, had voted to expand the service to cover broadband connections, something Pai (ever a champion to the poor) voted down.

Despite constant pledges that one of his top priorities was fixing the "digital divide," Pai's tenure as boss included a notable number of efforts to scuttle the Lifeline program that weren't paid much attention to -- until a pandemic came to town. COVID-19 has shone a bright spotlight on the fact that 42 million Americans still can't access broadband (double official FCC estimates), and millions more can't afford service thanks to monopolization and limited competition.

Under Chairman Ajit Pai's "leadership," the FCC voted 3-2 in late 2017 to eliminate a $25 additional Lifeline subsidy for low-income native populations on tribal land. As part of Pai's effort, he also banned smaller mobile carriers from participating in the Lifeline program. Pai's attempt to neuter Lifeline in tribal areas certainly hurt overall enrollment, but didn't always fare well in the courts. One ruling (pdf), for example, noting that Pai and his staff not only pulled their justifications completely out of their asses, but failed to do any meaningful research whatsoever into how the cuts would impact poor and tribal communities:

"The Commission's adoption of these two limitations was arbitrary and capricious by not providing a reasoned explanation for its change of policy that is supported by record evidence. In adopting the Tribal Facilities Requirement, the Commission's decision evinces no consideration of the exodus of facilities-based providers from the Tribal Lifeline program. Neither does it point to evidence that banning resellers from the Tribal Lifeline program would promote network buildout."

That's a polite way of the court saying that Pai based his decisions on ideology, not evidence (kind of a theme throughout his tenure as reflected by other court rulings). On the other end of these decisions are real, struggling human beings. Human beings the Washington Post recently did an excellent piece on as it surveyed the real-world damage from Pai's decisions to neuter a program that already did the bare minimum to help struggling Americans:

"The restrictions have been especially problematic during the pandemic, as Americans find themselves more dependent than ever on their mobile devices to stay connected. Many Lifeline subscribers say they have had to make unfair trade-offs — talking either to family or to doctors, for example, or participating in their communities or saving precious minutes for emergencies — that most Americans would find unfathomable."

Lifeline as a program is no stranger to fraud, with companies from Sprint to AT&T being routinely busted for taking money for people that don't technically exist. As the report notes, Pai hid his ideological assaults on the program under the guise that he was exclusively worried about said fraud, yet didn't take the steps necessary to prevent said fraud from happening:

"Under Pai’s watch, for example, the U.S. government for years did not fully implement a national verification system — a state-of-the art digital tool designed to determine eligibility and crack down on the fraud Republicans sought to prevent. The myriad missteps are laid bare in a report released by the Government Accountability Office in late January, which found that by summer 2020, most states still had not implemented the technology. Those that did found it even harder for Lifeline applicants to get approved, creating undue delays even in cases in which low-income Americans should have qualified easily for the program."

Again, Pai's tenure was largely pockmarked by doing huge favors for entrenched telecom monopolies, then using flimsy or nonexistent data to justify those policies. All while simply ignoring the fact that monopolization and a lack of competition creates most of the sector's problems (note how he'd never discuss US broadband prices). Concern about fraud was never symmetrical; while Pai went out of his way often to highlight Lifeline fraud, he never once even mentioned the problem with throwing billions in tax cuts and regulatory favors at monopolies like AT&T in exchange for doing absolutely nothing. That's before you even get to Pai's most recent subsidization scandals, which doled out billions to companies that gamed the FCC process.

This kind of facts-optional ideology has, for years, been brushed aside as normal policymaking (former FCC boss turned top cable lobbyist Mike Powell wasn't all that different). Unfortunately while this stuff gets dismissed as boring policy wonkery or "partisan politics," it's good to remember this kind of behavior has very real costs that the purveyors of said policies try very hard not to think much about.

Filed Under: ajit pai, arbitrary and capricious, covid, digital divide, fcc, lifeline, pandemic

Merger 'Synergies' Force T-Mobile To Pay $200 Million Fine For Sprint Falsehoods

from the synergies dept

T-Mobile has been forced to pay $200 million because Sprint took taxpayer money it didn't deserve to "service" customers that apparently don't exist.

In an announcement this week from the FCC, T-Mobile will pay a $200 million penalty to the U.S. Treasury to resolve an investigation into Sprint, a company T-Mobile acquired (against the recommendations of most antitrust experts) for $26 billion earlier this year. According to the FCC, Sprint was taking taxpayer money to serve 885,000 Lifeline subscribers that apparently didn't exist. The Lifeline program, started under Reagan and expanded by Bush Jr., provides a modest $9.25 subsidy users can use for broadband, phone, or wireless service. It's worth noting Trump's FCC has repeatedly tried to undermine the program.

When there are instances of fraud discovered by others, and too obvious to ignore, the FCC sometimes acts. This latest fine, the biggest in FCC history for this sort of inquiry (not that this is saying much for a historically timid agency), was the end result of an investigation started by the Oregon Public Utility Commission. From the FCC:

"The Bureau’s investigation concerned Sprint’s compliance with Commission Lifeline rules, including the “non-usage” rule. Under this rule, providers of “free” service may only be reimbursed for a Lifeline subscriber if that subscriber has used the service at least once in the past 30 days, and such providers must de-enroll subscribers who don’t use their phones after giving them 15 days’ notice."

Fairly consistently however, carriers are allowed to game the system for years, taking taxpayer money for customers that may not even exist. AT&T was dinged by the FCC five years or so ago for "forgetting" to audit its Lifeline subscriber rolls and purge them of non-existent or no-longer-eligible customers, allowing it to continue taking taxpayer money from a fund intended to aid the poor. As with other instances of dodgy telecom behavior, the fines doled out quite often don't quite line up with the money lost. And quite often they can be negotiated down over time, sometimes to nothing.

Technically, the settlement also closes the FCC's inquiry without any official confirmation of wrongdoing, even though Sprint admitted taking FCC reimbursements for subscribers no longer on the Lifeline program. Sprint claims the error was due to a "software bug" (whoops-a-daisy), though a major one: the impacted customers accounted for 30 percent of Sprint's total Lifeline subscriber base, and around 10 percent of the entire Lifeline program's subscriber count. Surely Sprint, which no longer technically even exists, has learned its lesson.

Filed Under: fcc, fines, lifeline, oregon, puc, subsidies, synergies

House Passes Massive Broadband Bill That Surprisingly Doesn't Suck

from the not-a-chance-in-hell dept

The majority of broadband bills that wind their way through Congress don't actually address the most pressing problem in US telecom: a lack of meaningful broadband competition. Often the bills focus almost exclusively on heavy subsidization of incumbent telecom monopolies, an approach that requires a level of diligence the U.S. has historically not been capable of. The Accessible, Affordable Internet for All Act, which passed the House last week, certainly includes its fair share of subsidization, including $80 billion in fiscal year 2021 to help deploy fiber broadband networks to the underserved parts of the country.

But the bill also contains a number of other improvements most objective experts have long supported, including:

These are, again, all things that actual telecom policy experts (not to be conflated with the army of academics, think tankers, consultants, lobbyists and lawyers often tangentially employed by ISPs to help pretend US broadband isn't a shit show) have been advocating for for years. Many of them -- specifically "dig once" provisions and eliminating protectionist state laws -- generally have wide, bipartisan public support.

But while the bill passed the House with a vote of 233-188, there's not a chance in hell of it passing the Senate or getting Trump's signature. In large part because it runs in stark contrast to the Trump administration's and Pai FCC's approach to telecom policy, which largely involves doling out massive tax cuts, regulatory favors, and other perks to natural monopolies in exchange for massive layoffs and reduced overall sector investment. Then not only pretending that this approach worked wonders, but ignoring the high prices and limited competition that has plagued the US telecom sector for decades.

Like so many other things in tech policy (like net neutrality), actually recognizing a lack of competition in telecom -- and wanting to actually embrace pro-competition policies -- has somehow become a partisan issue, dooming us to inaction and further Comcast and AT&T dominance. While this bill is decent, its backers pushed it as election season fodder with the knowledge it won't pass. Without a dramatic Congressional shakeup, arm in arm with serious efforts to rein in Comcast, AT&T, and Verizon's dominance over state and federal legislatures, it likely never will.

Filed Under: broadband, competition, congress, dig once, fcc, house, lifeline, muni broadband, open access

FCC's Assault On Low-Income Broadband Program Is Making The COVID-19 Crisis Worse

from the pretending-to-care dept

While FCC boss Ajit Pai is best known for ignoring the public and making shit up to dismantle FCC authority over telecom monopolies, his other policies have proven to be less sexy but just as terrible. From neutering plans to improve cable box competition to a wide variety of what are often senseless handouts to the industry's biggest players, most of the administration's policies are driving up costs for the rural Americans and small entrepreneurs he so breathlessly pledges fealty to.

One of Pai's biggest targets has been the FCC's Lifeline program, an effort started by Reagan and expanded by Bush that long enjoyed bipartisan support until Trumpism rolled into town. Lifeline 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). The FCC, under former FCC boss Tom Wheeler, had voted to expand the service to cover broadband connections, something Pai (ever a champion to the poor) voted down.

Despite endless lip service to the "digital divide," Pai's tenure as boss has included a notable number of efforts to scuttle the Lifeline program that weren't paid much attention to -- until a pandemic came to town. COVID-19 has shone a bright spotlight on the fact that 42 million Americans still can't access broadband (double official FCC estimates), and millions more can't afford service because regulatory capture has helped protect natural monopolies and the resulting lack of competition.

The FCC Lifeline is literally the bare minimum we could be doing to help make broadband more affordable for the poor. Yet despite a pandemic, new data indicates the program has shrunk (by design) notably, and now serves around one fifth of the people it could be helping thanks in part to Pai's cuts:

"Less than a fifth of the 38 million households that qualify for the program are actually enrolled. And despite a recent uptick, enrollment remains down sharply from the Obama era. Starks and other critics lay the low participation rate at the feet of FCC Chairman Ajit Pai, a Republican appointed by President Trump in 2017 to lead the commission."

Pai is, as you might have noticed, a big fan of the idea that if you pull back government oversight of telecom, magic happens (investment spikes, product improves, coverage expands, dogs and cats snuggle up). Except that kind of magical thinking has always been nonsensical in US telecom, given that when you scale back on regulatory oversight, giants like AT&T and Comcast, natural monopolies that they are, simply continue to double down on problematic behavior. That's best exemplified by Pai's promise that killing net neutrality would result in amazing investment, only for us to see investment cuts and mass layoffs.

This kind of ideology is a little harder to push when you're talking about gutting programs intended to help the poor (usually such efforts have to be disguised as "efficiency" and "reform"). Still, Under Chairman Ajit Pai's "leadership," the FCC voted 3-2 in late 2017 to eliminate a $25 additional Lifeline subsidy for low-income native populations on tribal land. As part of Pai's effort he also banned smaller mobile carriers from participating in the Lifeline program, a move opposed by even the larger companies (Verizon, AT&T) that stood to benefit.

Pai's attempt to neuter Lifeline in Tribal areas didn't go so well. The courts ultimately rejected the plan, politely implying in a ruling (pdf) that Pai and his staff not only pulled their justifications completely out of their asses, but failed to do any meaningful research whatsoever into how the cuts would impact poor and tribal communities:

"The Commission's adoption of these two limitations was arbitrary and capricious by not providing a reasoned explanation for its change of policy that is supported by record evidence. In adopting the Tribal Facilities Requirement, the Commission's decision evinces no consideration of the exodus of facilities-based providers from the Tribal Lifeline program. Neither does it point to evidence that banning resellers from the Tribal Lifeline program would promote network buildout.

Nor does it analyze the impact of the facilities requirement on Tribal residents who currently rely on wireless resellers. Further, the Commission ignored that its decision is a fundamental change that adversely affects the access and affordability of service for residents of Tribal lands. Similarly, in adopting the Tribal Rural Limitation, the Commission's decision evinces no consideration of the impact on service access and affordability. Its decision does not examine wireless deployment data related to services to which most Tribal Lifeline recipients subscribe."

Pai's rigid ideology doesn't leave much room for compromise or real-world data. And keep in mind: we're simply talking about a $9.25 subsidy that was created by Ronald Reagan that barely covers even the bullshit fees tacked on to your broadband bill. That should make it abundantly clear why more serious low-income aid programs (or efforts to simply improve broadband competition) are never seriously considered. To folks like Pai, turning the FCC into an AT&T ass kissing bobblehead doll is guaranteed to result in near miraculous outcomes, and any evidence to the contrary is simply ignored.

Filed Under: ajit pai, broadband, covid-19, fcc, lifeline, pandemic

Tracfone Made Up "Fictitious" Users To Defraud Taxpayers, FCC

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 Junior, 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).

On one hand, the program (which you pay into via your telecom bills) genuinely has helped many low income Americans. On the other, the program has routinely been mired in fraud and scandal due to unethical telecom giants, spotty enforcement, and a failure to adequately track how this money is spent.

Case in point: the FCC last week announced it would be fining low cost mobile service provider Tracfone a cool $6 million for making up "fictitious" subscribers in order to nab Lifeline money it wasn't owned. Some of the fraud was almost comical in its depth and scope, and should have been fairly easy to spot earlier:

"TracFone's sales agents—who were apparently compensated via commissions for new enrollments—apparently manipulated the eligibility information of existing subscribers to create and enroll fictitious subscriber accounts. For example, TracFone claimed support for seven customers in Florida at different addresses using the same name, all seven of whom had birth dates in July 1978 and shared the same last four Social Security Number digits. The Enforcement Bureau's investigation also found that, in 2018, TracFone apparently sought reimbursement for thousands of ineligible subscribers in Texas."

Late last year, the Wall Street Journal also issued a report showing Sprint had allegedly been engaging in this kind of fraud for the better part of the last decade. AT&T also spent years ripping off the program before receiving a wrist slap for the behavior. Like most U.S. regulator enforcement action, the fines usually wind up being a tiny fraction of the money that was gleaned for ripping off taxpayers, users, or competitors for the better part of several decades (see: the FCC's wireless location data enforcement action). Often, with some elbow grease by lobbyists and lawyers, the fines can be reduced or eliminated entirely.

While cracking down on this fraud is certainly a good thing, there are a few problems here. One, the Trump FCC is focusing on enforcement on this issue because they're eager to see the program eliminated entirely, despite the fact that the traditionally Republican-created program provides genuine aid to a lot of U.S. low income homes that need it. The Trump FCC already was slapped down by the courts for trying to take subsidies away from tribal areas without providing anything in the way of, well, factual data supporting the move.

The other program is that while the current FCC has cracked down on this kind of fraud (when the evidence is obvious), it has turned a blind eye to oodles of fraud perpetrated on consumers by these same companies. For example the agency did nothing when one major ISP began charging consumers a "rental fee" for hardware they already owned. Nor has the agency ever cracked down on ISPs that use assorted bullshit fees to falsely advertise a lower rate.

So while you'll see this FCC crack down (sometimes) on fraud to try and discredit a program it ideologically disagrees with, genuine enforcement of fraud remains patchy at best. Especially in the wake of the net neutrality repeal, which further eroded the FCC's authority to hold giant ISPs to account for a laundry list of bad behaviors that extend well beyond net neutrality violations.

Filed Under: fake users, fcc, lifeline, scams
Companies: tracfone

Some FCC Subsidized Low Income Phones Are A Chinese Malware Shitshow

from the ill-communication dept

We've long talked about the problems with the FCC's Lifeline program, which was created by Reagan and expanded by Bush Junior (yet somehow earned the nickname "Obamaphone"). The $2 billion 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 choose one). But for years, the FCC has struggled to police fraud within the program, with big and small carriers alike frequently caught "accidentally" getting millions in taxpayer dollars they didn't deserve.

Late last week another issue popped up with the government program, albeit of a different variety. Researchers over at MalwareBytes discovered that one-such government-subsidized low income wireless carrier, Assurance Wireless by Virgin Mobile, has been selling devices to low-income customers that are riddled with malware. One of the questionable apps pre-loaded on the device is dubbed "wireless update," and opens the door to malicious apps being installed without user awareness or consent:

"Thus, we detect this app as Android/PUP.Riskware.Autoins.Fota.fbcvd, a detection name that should sound familiar to Malwarebytes for Android customers. That’s because the app is actually a variant of Adups, a China-based company caught collecting user data, creating backdoors for mobile devices and, yes, developing auto-installers."

Neat! Another malware app actually poses as the device's settings app, and can't be removed at all:

"It’s with great frustration that I must write about another unremovable pre-installed app found on the UMX U683CL phone: the mobile device’s own Settings app functions as a heavily-obfuscated malware we detect as Android/Trojan.Dropper.Agent.UMX. Because the app serves as the dashboard from which settings are changed, removing it would leave the device unusable."

When notified by journalists and lawmakers (Wyden) of the problem, the Ajit Pai FCC did what it's now infamous for, nothing:

Sure, Lifeline doesn't fund handsets, but it does fund this particular carrier, which would quickly take action if it meant losing taxpayer money. This is technically part of a broader problem the FCC/FTC don't seem too concerned about: the market, left to its own devices, is slowly turning things like privacy and security into luxury features exclusive to those who can afford it. A recent study by Privacy International found that the low-income budget phones we throw at the poor with pride routinely come with outdated OS', malware, and other issues we don't seem to care much about.

Filed Under: fcc, lifeline, malware, subsidies
Companies: assurance wireless

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.

Filed Under: fcc, lifeline, scams
Companies: sprint