Sprint took megabuck subsidies for inactive lifeline customers, federally and in California

by Steve Blum • , , , ,

Sprint mwca 2018

Sprint could be collecting payments from California’s broadband and telephone lifeline subsidy program for hundreds of thousands of inactive accounts. A Federal Communications Commission press release accuses Sprint of taking “tens of millions of dollars” for 885,000 federally subsidised customers who weren’t using the service anymore. That represents 30% of Sprint’s national lifeline customer base, says the FCC.

Sprint is the 500 pound gorilla of the California Public Utilities Commission’s lifeline program, which supplements the $9.25 monthly federal subsidy with up to $15 per month. According to a brief submitted by the CPUC’s public advocates office during the ongoing review of Sprint’s proposed merger with T-Mobile…

Sprint, through its Virgin Mobile brand, is the only [facilities-based mobile network operator] that participates in the California LifeLine program. Under the trade name of “Assurance Wireless brought to you by Virgin Mobile,” Virgin Mobile serves roughly 482,000 LifeLine wireless customers in California, over 200,000 more customers than the next largest LifeLine wireless carrier, and more than all other LifeLine wireline carriers combined.

If the FCC’s 30% “inactive” rate applies equally to Sprint’s California lifeline base, then the CPUC gave the company subsidies for 145,000 non-existent customers. There isn’t enough information available yet to figure out how much money that represents, but on a back of the envelope basis, 145,000 inactive accounts subsidised at $15 each comes out to about $2.2 million per month. Even given that every payment wasn’t the $15 max, it doesn’t take too many months for California’s outlay to land in the FCC’s “tens of millions of dollars” ballpark too.

The Communications Workers of America union is one of the leading opponents of the T-Mobile/Sprint merger, in California and federally, and has already asked the FCC to put everything on hold “until [Sprint’s corporate] character issue is investigated and resolved”. It’s a fair bet that T-Mobile and Sprint will have to answer for the false billing – Sprint is calling it an “error” dating back to 2016 – as they try to gain CPUC approval for their merger. A hearing to decide next steps in the case is scheduled at the CPUC on 10 October 2019.