T-Mobile has agreed to pay a $200 million fine to settle a Federal Communications Commission (FCC) investigation into subsidiary Sprint. This is the "largest fixed-amount settlement" the Commission has ever secured to resolve an investigation.
The case dates back to when the two wireless service providers hadn't merged their services and were operating independently. The FCC had last year caught Sprint of claiming Lifeline program subsidies for 885,000 customers that weren't using the service. For the uninitiated, FCC's Lifeline program provides a $9.25-per-household subsidy per month to carriers that offer discounted phone or internet service to people with lower incomes.
The program's policy requires service providers to proactively remove customers who haven't used the service even once in the past 30 days after giving them a 15-days notice. Since the service doesn't incur any bills to the customers, they didn't have any incentive to relinquish the subscription themselves. This ensures that taxpayer funds are only going to people who genuinely need help.
However, Sprint failed to comply with this rule. It continued to claim reimbursement for subscribers who were no longer using the service. "885,000 subscribers represent nearly 30 percent of Sprint's Lifeline subscriber base," FCC said last year. The numbers also accounted for nearly 10 percent of the entire Lifeline program's subscriber base.
This expectedly attracted an investigation from the Commission. "It's outrageous that a company would claim millions of taxpayer dollars for doing nothing," FCC chairman Ajit Pai said announcing the investigation back in September 2019.
T-Mobile will pay a $200 million fine to settle the investigation
Sprint admitted the violations soon after FCC's announcement. However, the company said it was unintentional, blaming some "software programming" issue. It merged its services with T-Mobile in April this year. And along with everything else, the latter inherited the ongoing FCC investigation as well.
The company has now agreed to pay $200 million to the US treasury to settle the investigation. This is in addition to the money that Sprint agreed to pay back to the FCC following the discovery of the "unintentional" fraud last year.
Additionally, T-Mobile will also have to ensure future adherence to the FCC's rules for the Lifeline program. It will require to submit periodic compliance reports to the Commission for three years.
"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," T-Mobile said in a statement.