Sprint today confirmed the merger of its Assurance Wireless and i-wireless' Access Wireless services to create a new entity that will emerge as a strong competitor in the wireless Lifeline services industry. The new entity will be named i-wireless and will continue to offer low-cost telecommunications services to low-income consumers as a member of Universal Service Fund's Lifeline Assistance Program. It will be led by Paul McAleese who until now was the Founder and CEO of i-wireless but Sprint will still hold 70 percent ownership in the new entity.
Since both companies will be involved with the activities of the new entity, they will share the financial burden which will include acquisition costs, device purchasing scale and working capital flexibility, said Dow Draper, president of prepaid for Sprint. Sprint is among the most successful network operators and i-wireless has been known for its national distribution strength which presents a win-win situation for the new entity. Through an existing partnership with Kroger Co., i-wireless has been instrumental in qualifying a large number of low-income consumers for its Lifeline services. "This alliance will create a vibrant competitor ready to embrace a modernized Lifeline program. As the category transitions to broadband, we're enthusiastic about the potential to help customers more fully participate in today's digital economy by making access to employment, education and healthcare services more affordable to low-income consumers," said CEO Paul McAleese.
Available to low-income consumers since 1985, the federal Lifeline Assistance Program offers discounted phone services and connectivity to jobs, family and emergency services. Prepaid wireless plans were made available from 2005 and all services are available to those whose incomes are lower than 135 percent of the federal Poverty Guidelines and those who are participants of various programs like Medicaid, SSI or the Food Stamps program. Each household is allowed one connection each, whether wireless or landline, and if a low-income consumer's financial condition improves or if he no longer meets the criteria to avail such services, he will be de-rolled from the Lifeline Assistance Program. Last month, the FCC introduced new rules to make broadband services more affordable for low-income consumers, including bringing in minimum standards for mobile broadband service starting at 500 MB per month of 3G data by December 1, 2016, 1 GB by December 1, 2017, and increasing to 2 GB per month by the end of 2018.
While ensuring that all low-income consumers are provided access to phone and broadband services, the FCC also maintains regular checks on operators to ensure that its rules are not abused. Last year, the FCC fined AT&T and its subsidiary SNET to the tune of $10 million for overbilling customers, offering discounted landline services to ineligible customers and not de-rolling ineligible customers within mandated time frames.