Sprint/T-Mobile merger on hold for FCC investigation over misuse of millions of dollars

Sprint has been accused of taking millions of dollars from the FCC’s Lifeline program – which is meant to subsidize phone and internet services for low-income consumers.

Addressing internet inequality has been one of the Federal Communications Commission’s highest priorities with significant resources having been put in place over the past few years to offer affordable internet to all Americans. Having uncovered misconduct that “amounts to corporate malfeasance”, Commissioner Geoffrey Starks of the FCC has said, I’m outraged that Sprint appears to have unlawfully obtained at least tens of millions of dollars that should have gone to our lowest income communities.”

In a statement released by the FCC, the “enormity of the apparent wrongdoing” has forced the Federal Communications Commission to call a halt to merger discussions.

The drama-ridden merger discussions between Sprint/T-Mobile began back in 2017. The companies have come up against several barriers to their plans to merge. To date, Sprint and T-Mobile both have multiple high-profile FCC investigations that remain unresolved including allegations of the dangerous and unlawful disclosure of wireless customer geolocation information, and the submission of inaccurate coverage data to the FCC’s Mobility Fund II proceeding.

On Wednesday, FCC Chairman, Ajit Pai, announced an investigation into Sprint’s alleged misappropriation of Lifeline support for 885,000 ineligible accounts.

Sprint allegedly misappropriated millions of dollars (nearly 10 percent of the entire Lifeline program). The program offers a $9.25-per-month subsidy to Sprint and other telco providers to allow them to provide services to low-income customers. But the subsidy only remains active while the customers continue their service. If the customers cancel or stop using Sprint’s services, the FCC subsidy also ends.

Sprint apparently fraudulently kept almost 1 million inactive customers on its rolls in order to continue receiving subsidized monies from the Lifeline program.

“I am outraged. Our universal service dollars are precious. Every dollar must get to its intended recipient. This is particularly true for our Lifeline program, which makes communications services affordable for the most vulnerable communities.”

“Unprecedented scale of apparent Lifeline violations raises questions about the future of proposed merger.”

“There is no credible way that the merger before us can proceed until this Lifeline investigation is resolved and responsible parties are held accountable.”

-FCC Commissioner, Geoffrey Starks 

The investigation will continue with urgency to collect payments for these accounts and restore confidence in the Lifeline program.

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