Sprint’s Lifeline problems aren't a new phenomenon – report

Sprint sign MWCLA19
While still a Lifeline problem, a Sprint spokesperson noted the error is distinct from the 2017 mistake disclosed this summer. (Monica Alleven/FierceWireless)

Sprint is currently under investigation by the Federal Communications Commission for incorrectly counting nearly 900,000 inactive Lifeline subscribers, but a new Wall Street Journal report shows that it’s not the first time the carrier erred in its claims for the government subsidy program.  

After obtaining documents through a public information request, the WSJ found a separate usage-based issue was previously discovered in 2014, in which Sprint inaccurately counted certain Lifeline users as far back as 2013 who were not using the service. That resulted in a loss of more than 4,600 Lifeline subscribers for the carrier in Oregon alone. However, then-senior counsel at Sprint expressed via email to Oregon Public Utility Commission officials at the time that the issue was “systemic and not confined to Oregon,” according to the report.

While that figure pales in comparison to the 885,000 Lifeline subscribers related to Sprint’s more recent error that it disclosed earlier this year (and also flagged by the Oregon PUC), it’s unclear how many Lifeline customers Sprint was forced to shed overall when it corrected the earlier mistake made more than five years ago.

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RELATED: FCC slams Sprint for falsely collecting millions in Lifeline funds

In response to questions from FierceWireless, a Sprint spokesperson said that the WSJ report “includes facts that appear to detail an error from years ago in Sprint’s technical compliance with the FCC’s complex Lifeline rules and Sprint’s efforts to correct that error. While the facts make clear that Sprint did make a mistake, it is also clear that Sprint corrected that mistake and cooperated with regulators.”

The 2013-2014 error is distinct from the Lifeline mistake that Sprint disclosed in August 2019, the spokesperson noted.  

When the FCC announced its ongoing investigation, it said Sprint appeared to have improperly collected “tens of millions” of dollars in federal subsidies for inactive subscribers of the Lifeline program , which is meant to make phone and internet service available for low-income consumers.

Participating providers on average receive a $9.25 monthly subsidy for each Lifeline subscriber, which is supposed to be passed on to the customer, making the service free to consumers.

Under the program’s “non-usage” rule, providers can only be reimbursed for a Lifeline subscriber that has used the service at least once in the past 30 days and requires providers to give subscribers 15 days’ notice before removing inactive subscribers.

Sprint in September attributed its most recent Lifeline issue to an error stemming from Sprint’s implementation of new rules to the program that were approved by the FCC in 2016 and required Sprint to “update how it calculates usage and therefore eligibility of Lifeline customers.”

According to the WSJ report, in 2013 and 2014 inactive Lifeline accounts could be kept alive simply by receiving spam texts, and due to an error of how Sprint counted usage at the time it meant the carrier was still able to collect subsidies for those customers.

Sprint has previously said it’s committed to reimbursing federal and state governments for Lifeline subsidy payments it received connected to the ongoing investigation, but the spokesperson did not answer whether Sprint had repaid subsidies it improperly collected related to its 2013-2014 Lifeline subscriber mistake.

“Sprint takes its Lifeline obligations seriously and is committed to strengthening trust in its Lifeline program,” the spokesperson said.

In addition to reimbursements, New Street analysts in September said Sprint could face fines totaling in “the low billions of dollars,” from the FCC investigation. The WSJ noted the FCC never fined Sprint for it’s the earlier error.   

RELATED: Sprint’s Lifeline issue hurts wireless service revenue

Fines for inaccurate Lifeline claims have happened before, including 2018 when the FCC proposed a $63 million fine against wireless reseller American Broadband & Telecommunications for claiming funding for more than 42,000 ineligible Lifeline accounts in one month.

While Sprint has said it proactively addressed Lifeline issues when discovered, the program is one that has been plagued by abuse. In August the FCC again planned changes to address the program’s problems, which the agency said has an improper payment rate of 18.5% and the Government Accountability Office (GAO) in 2017 was unable to confirm the eligibility of about 36% of Lifeline subscribers, or 1.2 million individuals, that it reviewed.

Sprint isn’t the only carrier that lost Lifeline subscribers in the past following rule changes. In 2013 major carriers were forced to shed a significant number of Lifeline customers after the FCC implemented stricter policies, which required providers to certify that subscribers were eligible for the program. At the time, Sprint’s Virgin Media dropped 1.6 million Lifeline subscribers, while AT&T dropped nearly half or about 600,000 of its 1.3 million subscribers, and Verizon dropped 44% of its Lifeline subs.  

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