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FCC Fines AT&T And SNET $10.9 Million For Allegedly Abusing Federal Program

April 30, 2015 - Written By Kishalaya Kundu

The largest fixed-line telecommunications service provider in the US, AT&T and its former subsidiary Southern New England Telephone Co. (SNET) have been fined for over-billing a federal program that subsidizes telephone service for low-income families, according to the Federal Communications Commission (FCC). The two companies were accused of providing discounts to landline customers without certifying their eligibility to receive such benefits under the FCC’s Lifeline program. AT&T has been fined $6.9 million, which they have agreed to pay. SNET, now a part of Frontier, has been fined $4 million.

The FCC, while slapping civil penalties against the companies for overcharging the support program, also said that they had found other non-compliance issues as well, including, but not limited to, their inability to de-enroll ineligible customers within the specified time-frame. These fines will be over and above the money that the companies had already refunded last year to fully reimburse the Lifeline program. Lifeline is a federal program that aims to provide universal telecommunication services by reimbursing telecommunication companies up to $9.25 per month for providing discounts to eligible low-income customers. According to the report, an internal audit carried out by AT&T in 2013 found that some customers who no longer qualified for the discounts continued to receive them and AT&T ended up charging the Federal Government for at least one extra month of subsidies. AT&T say that they had voluntarily disclosed this anomaly to the regulator and refunded the entire amount to the Federal Universal Service Fund, last year itself.

As part of this settlement, the FCC will also require AT&T and SNET “to adopt rigorous compliance plans related to their Lifeline activities”. These include a number of stringent measures which will serve as a precaution and act as a deterrent for future recurrences of such issues. The FCC laid out a plan of action whereby AT&T and SNET will each designate a person in senior management in their respective companies to act as a compliance officer to ensure “a comprehensive compliance plan”. They will also be required to report regularly to the Enforcement Bureau to make sure that such issues do not recur in the future.