Sprint Received Lifeline Subsidies for 885,000 Inactive Subscribers

The Federal Communications Commission has learned that Sprint claimed monthly subsidies for serving approximately 885,000 Lifeline subscribers, even though those subscribers were not using the service. That would be a violation of a key rule—the “non-usage” rule—designed to prevent waste, fraud, and abuse in the Lifeline program. The 885,000 subscribers represent nearly 30% of Sprint’s Lifeline subscriber base and nearly 10% of the entire Lifeline program’s subscriber base. The non-usage rule requires Lifeline providers of “free” service to de-enroll subscribers who don’t use their phones—a rule meant to protect Lifeline from wasting payments on service not provided. The FCC developed this and other rules after investigations showed that companies hawked free Lifeline service aggressively and indiscriminately, knowing that they would get paid each month even if consumer didn’t use their phones. And because the consumer paid nothing, he or she had no incentive to relinquish the subscription. Under the non-usage 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. Providers must de-enroll inactive subscribers after giving them 15 days’ notice. Program-wide, the rule resulted in approximately 3.1 million de-enrollments in 2018. Sprint’s apparent disregard of the non-usage rule initially came to light as a result of an investigation by the Oregon Public Utility Commission.