Federal Communications Commission chairman Ajit Pai wasn’t talking about the agency’s investigation into Sprint for what he has called outrageous conduct related to its Lifeline broadband subsidies. That is because the FCC’s Enforcement Bureau is investigating the allegation, which stemmed from a probe by the Oregon Public Utility Commission.
But others were talking about it, including one powerful union that’s been no fan of the deal from the outset and which called for a timeout on the FCC’s vote to approve the T-Mobile-Sprint merger — the Justice Department has already signed off — expected any time now.
“The FCC must pause the merger review pending an investigation into Sprint’s fraud and abuse of the Lifeline program,” Communications Workers of America telecom policy director Debbie Goldman said. “This fraud calls into question the character of Sprint as a licensee. FCC precedent is clear that a company cannot sell a license until the character issue is investigated and resolved.”
Sprint said the subsidy matter was a mistake that has been corrected, and has volunteered to reimburse the government for the gains the FCC suggests were ill-gotten. The FCC does like to clear up legal overhang before approving a merger, so, it did leave the Wire pondering whether the investigation raises fitness questions the FCC needs to address.
MoffetNathanson principal and senior analyst Craig Moffett said the investigation could actually cut either way.
“On the one hand, it is certainly a blow to Sprint’s credibility, and that’s an obvious negative for the merger,” Moffett told The Wire. “But it also highlights how precarious Sprint is as a fourth operator, so I suppose that could be spun as a positive for the deal inasmuch as a merger would effectively take them out as an independent operator.”
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