The Commission says T-Mobile has agreed to pay a $200 million fine following an investigation into whether Sprint broke “non-usage” rules.
T-Mobile will pay a $200 million fine to the U.S. Treasury, according to the Federal Communications Commission (FCC). The announcement comes after Sprint — now a subsidiary of T-Mobile — is accused of failing to comply with the FCC’s rules regarding potential abuse of the Lifeline program, which helped bring phone and broadband services to low-income consumers. In addition to the fine, Sprint will also agree to a compliance plan to make sure it follows the rules in the future.
The Lifeline program was created in 1985 in order to make sure low-income consumers could afford phone services. In March of 2016, the program was revamped to include affordable access to broadband services, in addition to the phone and data bundles already available. These reforms also introduced a set of rules which were meant to prevent waste, fraud and abuse of the program. T-Mobile and Sprint merged in April of this year, leading to the creation of the New T-Mobile. Following which, New T-Mobile announced staff layoffs.
According to an FCC press release, the $200 million fine is the largest ever fixed-amount settlement that the Commission has received from an investigation. The FCC was looking into allegations that Sprint was claiming subsidies for about 885,000 subscribers, based on the result of an earlier investigation by the Oregon Public Utility Commission. As a result, the FCC discovered that not all of Sprint’s subscribers were actually using the service, despite Sprint being accused of continuing to accept subsidies for those same subscribers. In doing so, the FCC alleges that Sprint broke the “non-usage” rule, designed to prevent the wasting of the taxpayer’s money. FCC Chairman Ajit Pai said the outcome sends a “strong message” on how crucial it is for cell phone companies to actually comply with the rules.
What It Means For T-Mobile
In all likelihood, the fine won’t affect T-Mobile in any meaningful way, at least from a financial standpoint. What may hurt, however, is how customers respond to this issue. This isn’t actually the first time T-Mobile has landed in front of the FCC this year. In August, T-Mobile, AT&T and Verizon were called to task by the FCC over potentially overstating coverage. The more times a company like T-Mobile is called out by the FCC, the more damage it could do to T-Mobile’s reputation.
Of course, it isn’t as though there are a lot of options out there for consumers looking for a cell phone company with an entirely clean slate. Between accusations of exaggerating coverage to abusing a program meant to help low-income consumers, carriers are finding they are coming under the spotlight more often for how they treat consumers. Whether or not the shine of the spotlight changes how the smartphone carrier market fundamentally operates, is another question entirely.
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