Sprint Corp. was accused by the Federal Communications Commisison on Tuesday of falsely accepting millions of dollars in subsidies for low-income subscribers and failing to provide the service.
FCC Chairman Ajit Pai said he has asked the agency’s enforcement bureau to investigate.
“It’s outrageous that a company would claim millions of taxpayer dollars for doing nothing,” Pai said in a statement. “This shows a careless disregard for program rules and American taxpayers.”
Sprint claimed it had used government money to provide monthly subsidies for approximately 885,000 subscribers to Lifeline, a program designed to make phone and broadband service more affordable for low-income consumers by giving them a $9.25 monthly subsidy, the FCC said. In April, the FCC Inspector General reported fraud and abuse of the program.
The amount of federal funds that Sprint received to participate in the program is unknown, said Mark Wigfield, an FCC spokesman. But Sprint collected at least $8.2 million a month for some period of time. A total cost would have to be determined by an investigation, Wigfield said.
The news further muddied whether Sprint will be able to get approval for its $26 billion merger with T-Mobile, which is being challenged by 18 state attorneys generals in a lawsuit that claims the deal would decrease competition and increase prices for consumers.
At least one FCC Commissioner, Geoffrey Starks, said the merger should be paused until the matter is sorted out.
“This raises questions about character and the thoroughness” of what Sprint has told the agency, Starks wrote on Twitter.
Sprint said in a statement that it made an error in July 2017 while implementing changes to the Lifeline program that the FCC had approved in 2016.
“When the error was discovered, we immediately investigated and proactively raised this issue with the FCC and appropriate state regulators,” the Sprint statement said. “We also engaged an independent third party to review the results of our review and the effectiveness of our operational changes.”
Sprint said it would reimburse federal and state governments for the subsidy payments that were collected because of the error.
“We are proud of the benefits we provide to eligible low-income individuals through discounted wireless service,” the Sprint statement said. “We believe this program is valuable for underserved populations.”
Peggy Lowe is a reporter at KCUR and can be found on Twitter at @peggyllowe.