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.

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


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  • icon
    PaulT (profile), 6 Nov 2020 @ 7:24am

    "It's worth noting Trump's FCC has repeatedly tried to undermine the program."

    More to the point, it was a valuable and fairly uncontroversial bipartisan program until the right-wing derposphere tried to pretend that it translated to Obama giving away free cellphones for votes. Trump's actions against it were just another symptom of his a) believing every dumbass he hears on Fox News and b) his attempt to remove everything Obama ever touched, regardless of the necessity of the program (see also: removing pandemic experts)

    reply to this | link to this | view in chronology ]

    • icon
      Koby (profile), 6 Nov 2020 @ 8:37am

      Re:

      The program was filled with fraud. The people who I knew that had it were giving the Obamaphones to their kids to take to school, while they themselves had an iPhone.

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 6 Nov 2020 @ 9:22am

        Re: Re:

        Hi Koby.

        Could explain a few things to help me out?

        First off, how does the scenario display fraud? I can easily imagine a situation where one of both parents require an iphone for their work but can't afford phones for their children who still need them. Please give me more details so that I can understand.

        Also, how many such people do you know? One? Dozens? Hundreds? There are always a few people who take advantage of any system (just think how many took endless degrees or whose families got them cushy national guard positions and who never saw combat during the Vietnam war).

        reply to this | link to this | view in chronology ]

        • identicon
          Anonymous Coward, 6 Nov 2020 @ 9:43am

          Re: Re: Re:

          Maybe it was straight-up fraud, but those are just the kind of people that someone like Koby knows.

          reply to this | link to this | view in chronology ]

        • icon
          Koby (profile), 6 Nov 2020 @ 10:35am

          Re: Re: Re:

          First, in my specific situation, we were in an office surrounded by desk phones. Due to the sensitive nature of the work we did, it was actually prohibited to pull out a cell phone for fear of pictures being taken. If you had to call the school, go ahead from the desk phone. Second, the number was 5.

          The original idea of the program was to provide a first phone line for households that were too poor to afford even one. If you're really in that situation tho, you probably shouldn't own two of the latest iPhone, and this now being the third mobile phone in the house means that the program is just a big corporate giveaway. So, yeah it was fraud that I witnessed, and there's a lot more going on than just the one place I worked at. Very common, and very obvious.

          reply to this | link to this | view in chronology ]

          • icon
            PaulT (profile), 6 Nov 2020 @ 1:26pm

            Re: Re: Re: Re:

            "Due to the sensitive nature of the work we did, it was actually prohibited to pull out a cell phone for fear of pictures being taken"

            So, WTF does that have to do with a kid not in the office having access to a different phone to their parent who had the misfortune of working with you?

            "Second, the number was 5"

            Cool number. So?

            "The original idea of the program"

            ...was written in the 80s. So? Should poor people be forced to stick to landlines in an era when nobody else has one and you're expected to be available when not at home? Also, I know you're enough of an idiot to think "Obamaphone" when referring to a change made by W, but what exactly is your problem with this program?

            "the third mobile phone in the house"

            Are people using the phones while in the house together, or are they needed when outside of the home? If the latter, what's the problem with giving people access to their own line that they would not otherwise be able to afford?

            "So, yeah it was fraud that I witnessed"

            According to you. But, if this is anything like the truth content of the arguments you make in section 230 threads, you probably saw a kid with a Fisher Price phone and made up the rest.

            reply to this | link to this | view in chronology ]

          • icon
            Stephen T. Stone (profile), 6 Nov 2020 @ 4:19pm

            Hey, Koby, keep this axiom in mind in the future: Anecdotal experience is not empirical evidence.

            Also: Did you report the fraud you claim to have witnessed?

            reply to this | link to this | view in chronology ]

            • icon
              PaulT (profile), 6 Nov 2020 @ 11:02pm

              Re:

              At least he’s attempted details with this anecdote, as fictionalised and unlikely as it might be.

              I’d like him to try details with his section 230 ramblings as well. It wouldn’t make his arguments any better, but it would be fun to see what he did to get himself kicked off Twitter and how utterly justified that likely was..

              reply to this | link to this | view in chronology ]

        • icon
          PaulT (profile), 6 Nov 2020 @ 1:30pm

          Re: Re: Re:

          "First off, how does the scenario display fraud?"

          Right-wing media is obsessed with "welfare queens", a Reagan-era fiction pushed to justify removing social safety nets, so any poor person not dressed in sackcloth and ashes and communicating via smoke signals must be thieves in some way. It's a common theme.

          "Also, how many such people do you know?"

          Probably several about whom he's made up stories in his head but don't meet the story in reality.

          reply to this | link to this | view in chronology ]

          • icon
            nasch (profile), 9 Nov 2020 @ 7:01am

            Re: Re: Re: Re:

            Right-wing media is obsessed with "welfare queens", a Reagan-era fiction pushed to justify removing social safety nets, so any poor person not dressed in sackcloth and ashes and communicating via smoke signals must be thieves in some way.

            To such a great extent that Fox News mocked poor people (actually they put it in quotes: "poor" people) for owning conveniences such as refrigerators. As in, if you are rich enough to actually have a refrigerator, you must not really be poor.

            reply to this | link to this | view in chronology ]

            • icon
              PaulT (profile), 9 Nov 2020 @ 7:33am

              Re: Re: Re: Re: Re:

              Yeah, that's the one that comes to mind for me too. Let's forget that refrigerators are not a luxury in the modern era, and let's forget that they save a lot of money for people trying to be frugal by allowing them to stretch their food budget.

              The reason it's such a moronic argument is that most "poor" people rent. They don't "own" the fridge, it came with the apartment. You'd actually have to go a long way out of your way to find an apartment that doesn't have a fridge installed in most places. You might as well be complaining that they have access to running water or electric light - sure, these were luxuries 150 years ago but the world has changed somewhat since then.

              I can't imagine being dumb enough to think it's a good argument, but the people who are that dumb have the same vote as people on speaking terms with reality.

              reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 6 Nov 2020 @ 10:48am

    Not a bug

    I'm pretty confident that it wasn't a "bug"... more than likely, the work to put in a check to make sure the line was still 'qualified' was never done... I suppose you could call it a 'bug', but that's just dishonest, when the reality is that their system was only partially coded...
    From a business perspective, it would be a 'win-win'; it would be an expense to pay someone to put in the logic to make sure a line is qualified, and it would reduce funds from the program... ...
    Leaving it unfinished was far more profitable... and apparently most folks believe the 'bug' bs, so win-win-win.

    reply to this | link to this | view in chronology ]

  • identicon
    Annonymouse, 6 Nov 2020 @ 11:13am

    It is really too bad that the office where the buck stops wasn't also where the stuff flew when it hit the fan.
    Damn executives not actually being responsible for anything except when it's bonus disbursement time.

    reply to this | link to this | view in chronology ]

  • icon
    nasch (profile), 9 Nov 2020 @ 7:02am

    Fines

    Fines for this sort of thing should be double the money the company took in from the violation, at minimum. Maybe that would actually be a deterrent.

    reply to this | link to this | view in chronology ]


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