AT&T Settles Claims It Misappropriated Subsidies, With Partial Admission Of Guilt

AT&T settled with the FCC over claims it submitted false information to obtain funding from US broadband subsidy programs for low-income customers. 

In a consent decree published late last month – but which mostly flew under the news radar – AT&T agreed to fork over $2.3 million to resolve claims that it violated the rules of the Emergency Broadband Benefit (EBB) program designed to subsidize internet costs during the COVID-19 pandemic, and the Affordable Connectivity Program (ACP) that replaced it, to provide discount service and devices to low-income households. 

For those curious, AT&T reported a net income of $145 million in the third quarter of 2024.

The FCC alleged in the order that, between May 2021 and the end of 2023, AT&T "enrolled 3,912 subscribers with incorrect and/or invalid identifying information by repeatedly using the same non-subscriber benefit qualifying person to enrol multiple subscribers," as well as allowing 21 in-store sales reps without appropriate certifications to enrol at least 220 subscribers with similar incorrect information. 

In a third instance, AT&T was alleged to have violated an ACP requirement that telcos were only eligible for reimbursement under the program if a subscriber had used their service at least once in the past 30 days. AT&T claimed reimbursement for 3,289 customers "despite those subscribers having more than 45 consecutive days of non-usage of the service," the FCC observed. 

In all three cases, AT&T was required to certify its claims under penalty of perjury. The FCC argued that it did exactly that, and what's more that AT&T's actions amounted to fraud under the ACP program.

AT&T admitted to at least some parts of the allegations. "AT&T admits for the purpose of this Consent Decree and for Commission civil enforcement purposes … that [the allegations] contain a true and accurate description of the facts underlying the Investigation," the consent decree reads. AT&T didn't make any other admissions, the FCC noted. 

A condition of AT&T's acceptance of the claims is that, as spelled out in the decree, "to avoid further expenditure of public resources, the Bureau agrees to terminate [its] Investigation" into the telco giant's activities.

As part of the agreement, AT&T will also have to designate someone at corporate level to serve as a compliance officer to ensure the rules for any future ACP-like program (funding for ACP ran out in June due to Congressional inaction) are followed. 

AT&T will also have to implement a compliance program that includes training, written procedures, and oversight of third-party vendors and resellers. Most of AT&T's obligations under the consent decree will only take effect if an ACP successor goes into effect – though it has to appoint a compliance officer regardless of future program funding. 

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"When the federal government acted during the COVID-19 pandemic to stand up the Emergency Broadband Benefit program, and then the Affordable Connectivity Program, we quickly implemented both programs to provide more low-cost internet options for our customers," AT&T told The Register when asked about the settlement, without answering any specific questions. "We take compliance with federal programs like these seriously and appreciate the collaboration with the FCC to reach a solution on this matter."

Interestingly enough, AT&T CEO John Stankey said in June that he wanted the FCC to force US telecommunications companies to contribute more cash to the Universal Service Fund (USF) – a program that provides subsidies for telecom services to low-income households. The USF is already funded by US telcos – but currently only through a surcharge on voice services, both traditional and VoIP, but not other internet services. 

"The seven largest and most profitable companies in the world built their franchises on the internet and the infrastructure we provide," Stankey argued in June. "Why shouldn't they participate in ensuring affordable and equitable access to the services of today that are just as indispensable as the phone lines of yesteryear?"

In other words, it's not that he wants AT&T to pay more – he wants other folks to foot part of the bill, too. Whether AT&T's position will change in light of the FCC's allegations is unclear. ®