AT&T Settles FCC Claims Over Misappropriated Subsidies with Partial Admission of Guilt

The Digital Artisan -

AT&T Faces FCC Allegations

Telecommunications giant AT&T has recently found itself in hot water with the Federal Communications Commission (FCC) over allegations of misappropriating subsidies intended for low-income customers. In a legal move to settle claims that have cast a shadow over its operations, AT&T has agreed to pay $2.3 million. The crux of the issue arises from accusations that the company submitted false information to access funds from US broadband subsidy programs, notably during and after the COVID-19 pandemic. These programs – the Emergency Broadband Benefit (EBB), later replaced by the Affordable Connectivity Program (ACP) – were established to help subsidize internet costs for impoverished households, ensuring accessibility during challenging times.

The settlement, grounded in a consent decree that was quietly published last month, reveals AT&T's willingness to resolve these claims without an admission of comprehensive liability. However, the decree acknowledges a partial admission where AT&T concedes to certain allegations for civil enforcement purposes. The telecom behemoth's financial statements reflect a net income of $145 million in the third quarter of 2024, indicating substantial revenue despite these legal challenges.

The Details of the Allegations

Between May 2021 and the end of 2023, AT&T reportedly enrolled nearly 4,000 subscribers using incorrect or invalid identifying information. These actions were alleged to involve repeatedly utilizing the same non-qualifying individual to enroll multiple subscribers and allowing uncertified in-store sales representatives to process enrollments, further muddying the waters of their operations. A significant breach included claiming reimbursements for subscribers who had not used their service for more than 45 consecutive days, contravening ACP guidelines designed to ensure active service utilization.

Fraud and Settlement Conditions

The accusations have inflected significant reputational damage, leading to claims of fraud under the ACP framework. Despite the gravity of the allegations, AT&T's acceptance of particular aspects of the claims comes with strings attached, notably the termination of ongoing FCC investigations to conserve public resources. As part of the settlement terms, AT&T is tasked with implementing a robust compliance program, appointing a corporate compliance officer, and establishing oversight procedures for third-party vendors, ensuring any future subsidy programs are executed in strict accordance with federal regulations.

Looking Ahead

As the dust settles over this high-profile settlement, the compliance measures mandated by the decree serve as a sobering reminder of the stringent requirements and ethical considerations inherent in government-assisted subsidy programs. AT&T's commitment to these measures reflects an industry-wide acknowledgment of the importance of playing by the rules, especially when dealing with programs intended to support economically vulnerable populations. With speculations of potential successors to the ACP, the spotlight remains on AT&T to uphold its compliance obligations as outlined in the decree, regardless of the uncertainties surrounding future program funding.

In conclusion, the outcome of this settlement creates a precedent for transparency and adherence in telecommunications companies, particularly when engaging with government-initiated programs. It serves as a testament to the legal and ethical standards expected by regulatory bodies such as the FCC, serving as a cautionary tale for others in the sector.