Sprint Corp despite non usage of its services by 885,000 low-income subscribers has received government subsidies of tens of millions of dollars for the same, a last week statement by the Federal Communications Commission said.
Shares of Sprint sank 3.3% or 22 cents to $6.37 on that day after FCC’s announcement of an investigation by Enforcement Bureau to look into the subsidies and a Democratic commissioner also asked the agency to stop reviewing Sprint’s $26.5 billion to merge with T-Mobile over that probe.
FCC said it is clearing out the issue of abusing “Lifeline program” of giving a monthly subsidy of $9.25 to low-income subscribers for using broadband or phone services. The 885,000 subscribers comprise about 30% of the Sprint’s subscriber base that have been benefitting from the Lifeline program.
Democratic FCC Commissioner Geoffrey Starks said that the disclosure of receiving subsidies for those subscribers that have not been suing the service should sonvince the FCC to suspend its review into the Sprint-T-Mobile merger deal until the investigation came to any conclusion of the probe.
Though, the U.S Department of Justice has given a go ahead to the two companies for their merger deal in July, but that approval was challenged by 18 state attorneys general in a lawsuit, trial of which is scheduled for December 9.
As part of a consent decree, Sprint is expected to be settling the Lifeline subsidy probe with the FCC, according to two people who were briefed on the matter.
An investigation by the Oregon Public Utility Commission initially brought the matter of Sprint’s non abidance with the rule of not using the service into the light, said the FCC.
The 885,000 subscriber are about 10% of the total number of subscribers that have been getting the benefit of Lifeline program.
The act of a company claiming millions of taxpayer dollars for doing nothing is shameful, which shows a careless disregard not only for program rules but also for American taxpayers, FCC Chairman Ajit Pai said in a statement.