Report indicates fine is currently under review at FCC
Sprint is reportedly set to be hit with a $105 million fine from the Federal Communications Commission linked to overcharging customers for services.
According to National Journal, the fine will be the largest ever levied against a company and similar to one charged against AT&T Mobility in October. The Sprint fine has yet to be finalized by the FCC, although it is being reviewed by all five members of the commission.
The report notes the fine is linked to Sprint over-charging customers on behalf of third-party content providers for services the customer did not want or know they were being billed for, a practice also known as bill cramming.
While the fine had not officially come down from the FCC by press time, Sprint said it had no comment on the report.
The Federal Trade Commission earlier this year accused T-Mobile US of similar “bill cramming,” claiming the operator raked in “hundreds of millions of dollars” from the practice. In its complaint, the FTC said T-Mobile US acted as the billing agent for such services, which in some cases had refund rates as high as 40%. The FTC claims such a high refund rate was “an obvious sign to T-Mobile that the charges were never authorized by its customers,” and that internal documents showed that the carrier had received a “high number of consumer complaints at least as early as 2012.”
T-Mobile US claimed the accusations are “unfounded and without merit,” though prior to the FTC action T-Mobile US announced it would begin reaching out to customers that may have been incorrectly charged for third-party, premium messaging services that the carrier used to allow access to through its billing platform. T-Mobile US announced last November that it would stop supporting such billing arrangements.
The premium text message services market has gained a reputation as being filled with fraudulent billing schemes, which wireless carriers have tried to combat.
In other policy news:
• Telecom industry trade group Comptel filed an ex parte with the FCC regarding the heated net neutrality debate, noting what it called discrepancies in recent comments made by Verizon Communications in terms of an investment impact an FCC decision on the matter will have on its operations.
In its filing, Comptel pointed to recent comments from Verizon CFO Fran Shammo at an investor conference where he stated:
“I mean to be real clear, I mean (regulation) does not influence the way we invest. I mean we’re going to continue to invest in our networks and our platforms, both in wireless and wireline FiOS and where we need to. So nothing will influence that. I mean if you think about it, look, I mean we were born out of a highly regulated company, so we know how this operates.”
Verizon, along with AT&T, have come out against any move toward putting Internet regulations under the FCC’s Title II provision, hinting at possible legal action.
“That course will likely also face strong legal challenges and would likely not stand up in court,” Verizon noted in a policy blog.
“Given that Verizon has claimed in this proceeding that ‘[r]eclassification would endanger today’s high level of investment and innovation in broadband infrastructure,’ it is important that the commission consider this disclosure and discount the claims that network investment will decline if the commission reclassifies broadband Internet access services,” Comptel noted in its filing. “Given that Verizon’s wireless business has thrived under this model, it is not surprising that Verizon has acknowledged that Title II reclassification will not impact its network investments.”
A list of 60 companies earlier this month signed a letter sent to the FCC arguing against the government agency bringing Internet services under Title II regulations, which are what govern traditional wireline-based communication services. Those companies, which included Intel, Cisco Systems, Qualcomm and IBM, claimed the move could result in a loss of up to $45.4 billion in capital investment over the next five years.
“Title II would lead to a slowdown, if not a hold, in broadband build out, because if you don’t know that you can recover on your investment, you won’t make it,” the letter stated. “The investment shortfall would then flow downstream, landing first and squarely on technology companies like ours, and then working its way through the economy overall. Just a few years removed from the worst recession in memory, that’s a risk no policymaker should accept, let alone promote.”
President Obama last month sent a letter to the FCC, seeming to indicate his support for broadband services being classified under Title II.
“We cannot allow Internet service providers to restrict the best access or to pick winners and losers in the online marketplace for services and ideas,” Obama noted in a statement on the issue. “That is why today, I am asking the Federal Communications Commission to answer the call of almost 4 million public comments, and implement the strongest possible rules to protect net neutrality.”
In his comments, Obama laid out what he called “bright-line” rules that he has asked the FCC to integrate into its net neutrality plans. Those include preventing an Internet service provider from blocking any content or “intentionally” manipulating network speeds for accessing content. Obama also called for increased transparency when it comes to interconnection between ISPs and the Internet, noting the FCC should make full use of its transparency authority. In addition, Obama stated the FCC should prevent the implementation of paid prioritization for accessing content or for content to run over a broadband connection.
In his comments, Obama also noted that such regulations should be put in place regardless of the connection method, including wireless, though with a caveat.
“The rules also have to reflect the way people use the Internet today, which increasingly means on a mobile device,” Obama noted. “I believe the FCC should make these rules fully applicable to mobile broadband as well, while recognizing the special challenges that come with managing wireless networks.”
• The U.S. Senate confirmed current FCC Commissioner Michael O’Rielly to a full term at his post.
O’Rielly, one of two Republicans at the FCC along with Ajit Pai, was initially confirmed in late 2013 to replace outgoing commissioner Robert McDowell. O’Rielly at that time was confirmed alongside FCC Chairman Tom Wheeler, who replaced former chairman Julius Genachowski.
Make sure to keep up to date on policy news by visiting RCR Wireless News’s Policy page.
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