Union leaders are calling for the Federal Communications Commission to pause its review of a proposed merger of T-Mobile and Sprint after officials accused Sprint of taking improper subsidies for a low-income consumer program.
Debbie Goldman of the Communications Workers of America said the allegations against Sprint call its character as a licensee into question.
“FCC precedent is clear that a company cannot sell a license until the character issue is investigated and resolved,” Goldman said.
Sprint has allegedly submitted subsidy claims for about 885,000 subscribers to the Lifeline program, which provides phone and broadband service for low-income consumers and who were actually inactive, union officials said.
FCC Chairman Ajit Pai called Sprint’s actions “outrageous,” saying it had claimed millions of dollars it didn’t deserve.
“This shows a careless disregard for program rules and American taxpayers,” he said. “I have asked our enforcement bureau to investigate this matter to determine the full extent of the problem and to propose an appropriate remedy.”
A Sprint spokesperson told FOX Business that an error occurred when the company previously implemented government-required changes to the program. The company said it would reimburse federal and state governments for any subsidies it collected in error.
The Communications Workers of America had already been opposed to the proposed T-Mobile-Sprint merger. Earlier this month, a group of T-Mobile employees sent a letter to the CEO of its parent company, Deutsche Telekom, over concerns that the merger would result in the loss of jobs, pay cuts and reduced quality for customers.
“We ask that you make solid and verifiable assurances that the New T-Mobile will not discard the front-line workers who have made T-Mobile and Sprint so successful,” the workers wrote.
Pai has previously expressed support for the merger. In May, he said the public would benefit from the deal with faster mobile broadband speeds in rural areas.
It wasn’t immediately clear whether Sprint’s alleged fraud would sour Pai on the deal. But FCC Commissioner Geoffrey Starks tweeted about the merger after the commission announced the allegations against the company.
“This raises questions about character and the thoroughness of our record,” Starks wrote. “The merger should be paused until we figure this out.”
FOX Business' Daniella Genovese contributed to this report.