FCC proposes to fine TracFone Wireless $6 million for subsidy violations

Adds TracFone comment, FCC Chairman comment, background

WASHINGTON, April 2 (Reuters) - The Federal Communications Commission on Thursday proposed to fine TracFone Wireless $6 million for allegedly violating its rules governing the subsidy program for telecommunications services for low income users.

The FCC said TracFone apparently claimed federal funding for customers "who were not actually determined to be eligible for the program."

The Lifeline program provides a monthly discount of up to $9.25 on broadband and phone service for qualifying low-income consumers.

TracFone, a unit of America Movil AMXL.MX, said it would respond "at the appropriate time. As the leading provider of Lifeline services, we take seriously our stewardship of public dollars and will continue to focus on connecting millions of low-income customers to school, jobs, healthcare, and essential social services."

The FCC investigation found that in 2018, TracFone apparently obtained federal support for hundreds of ineligible subscribers in Florida, including using "different addresses using the same name, all seven of whom had birth dates in July 1978 and shared the same last four Social Security Number digits."

FCC chairman Ajit Pai said "we will not sit idly by and let Lifeline carriers fabricate enrollment data to generate more sales." Lifeline is funded using Universal Service Fund money that comes from fees assessed on phone bills.

Spending for the Lifeline program has fallen dramatically in recent years. It handed out $981 million in subsidies in 2019 down from $1.3 billion in 2017.

(Reporting by David Shepardson; additional reporting by Julia Love in Mexico City; Editing by Chris Reese and Daniel Wallis)

((David.Shepardson@thomsonreuters.com; 2028988324;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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