Sprint, Tracfone, others implore regulators not to ban MVNOs and other resellers from Lifeline

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The FCC may prevent resellers like MVNOs from participating in the Lifeline program. (Pixabay)

The FCC is currently considering changes to its Lifeline program that would prevent wireless resellers like MVNOs from obtaining funds from the program to provide wireless services to poor people. Arguing against that proposal are a number of companies and entities including Sprint and Tracfone.

That Sprint and Tracfone agree on the issue is notable considering Tracfone, as an MVNO, would be prevented from accessing the government’s Lifeline money, while Sprint wouldn’t because Sprint operates its own wireless network.

Nonetheless, the two companies made it clear neither wants the FCC to ban resellers like MVNOs from participating in the Lifeline program. The FCC has proposed making the program available only to “facilities-based providers,” or those that operate telecom networks.

“While the Commission is rightly seeking ways to improve the effectiveness and sustainability of the Lifeline program, it must be cautious about proposals that threaten affordable access to vital voice and broadband services by low income Americans,” Sprint wrote in its FCC filing on the matter (PDF). “Resellers have played an important and legitimate role in providing competitive broadband and voice service to low-income consumers, and their elimination could have a significant impact on participation in the Lifeline program.”

Indeed, Sprint said it estimated that the top five wireless resellers (TracFone, Q-link Wireless, Access Wireless, Telrite and Boomerang) collectively counted 5.5 million customers—half the total number of Lifeline subscribers—as of December 2017.

However, Sprint said that if the FCC does move to band resellers and MVNOs from Lifeline, it needs to do so carefully to ensure existing Lifeline customers aren’t affected.

Tracfone, not surprisingly, strongly argued against the FCC’s proposal. Tracfone is the nation’s largest MVNO and operates the Safeline brand for wireless service that relies heavily on the nation’s Lifeline program.

Specifically, Tracfone said the FCC’s proposal (PDF) “departs greatly from the light-touch regulatory approach favored by the current Administration, and represents a sweeping, unprecedented, and possibly illegal governmental intrusion into an otherwise healthy and competitive marketplace that lacks signs of widespread market failure. The Commission must reject its proposal that singles out resellers for their collective status, not for their individual behaviors, and that, if implemented, will forever undermine the utility of the Lifeline program for more than two out of every three existing Lifeline subscribers and render it inaccessible or impractical for still millions more.”

As Forbes noted, the FCC in November put the proposal up for discussion, arguing that “the vast majority of Commission actions revealing waste, fraud, and abuse in the Lifeline program over the past five years have been against resellers, not facilities-based providers. And the proliferation of Lifeline resellers in 2009 corresponded with a tremendous increase in households receiving multiple subsidies under the Lifeline program.”

The Lifeline program was created in 1985 in order to provide telecommunications services to Americans who participate in programs like Medicaid and SNAP (commonly referred to as food stamps). It provides $9.25 in monthly discounts on certain voice and broadband services, including wireless phones.

According to the National Lifeline Association, roughly 10.5 million Americans use the government’s Lifeline program and 7 million of those “rely on wireless resellers for their essential communications service made affordable through the Lifeline program.”