T-Mobile has agreed to pay $200 million to the U.S. Treasury in settlement of the Federal Communications Commission's (FCC) investigation into Sprint's violation against a phone subsidy program. The FCC announced the settlement today and noted that it's the "largest fixed-amount penalty to be paid" in its history.
The issue involved Sprint's use of the Lifeline subsidy program for low-income consumers prior to its acquisition by T-Mobile. Lifeline provides a $9.25 subsidy per month for phone or internet service. To protect the program from abuse, the commission requires service providers to remove customers who don't use the service 15 days after giving them notice.
However, an Enforcement Bureau investigation found that Sprint collected subsidy payments from approximately 885,000 Lifeline subscribers even if the service wasn’t used. Under the FCC's rules, providers may claim reimbursement for a Lifeline subscriber only if the service has been used at least once in the past 30 days. Regarding these findings, Chairman Ajit Pai said:
“I’m pleased that we were able to resolve this investigation in a manner that sends a strong message about the importance of complying with rules designed to prevent waste, fraud, and abuse in the Lifeline program. In addition to the great work of our Enforcement Bureau team, I would like to thank the Oregon Public Utility Commission for its efforts in this case. States play an important role in helping low-income consumers get access to affordable communications through Lifeline and making sure the program is run efficiently.”
On top of the settlement, Sprint will also follow a compliance plan meant to ensure obedience to the FCC's Lifeline program rules in the future.
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