FCC to smack Sprint with $105m fine over 'cramming' – report

Stuffing customers' bills with bogus charges will cost it

Funnel of cash. Credit: via SXC – http://www.sxc.hu/profile/Leonardini

US mobile carrier Sprint should expect a hefty fine from the Federal Communications Commission for overbilling its customers, say sources with knowledge of the agency's plans.

As first reported by the National Review, the FCC is preparing to vote on action to be taken against Sprint over its role in "cramming" – the practice of allowing advertisers to load up customers' bills with bogus charges for subscriptions they never realized they had signed up for.

FCC officials, who spoke on condition of anonymity, said the commissioners have proposed to fine the carrier as much as $105m, which would tie the largest charge the commission has ever levied against a company.

It was not immediately clear whether Sprint is still negotiating with the FCC to have the potential fine reduced.

The last time the FCC doled out a fine that big it was against mobile carrier AT&T in October, in a case that it co-negotiated with the Federal Trade Commission. And not entirely coincidentally, we suppose, it was for exactly the same practices.

If the commission votes to approve the proposed fine against Sprint, it will be the second time it has fined the carrier this year. The last time was in May, when Sprint agreed to pay $7.5m for disregarding rules on unsolicited marketing calls.

Mind you, even the $113m of the combined fines is a pittance compared to Sprint's tens of billions in annual revenue. But the truth is, Sprint hasn't been pocketing very much of those sales in recent quarters. In its most recent earnings report, the carrier posted an operating loss of $192m on operating revenue of $8.5bn.

Its flagging fortunes are the result of a series of missteps. Sprint failed to react quickly enough as pricing wars in the US market escalated. But the most serious blow came when it was forced to abandon its bid acquire rival carrier T-Mobile in August, after it became apparent that the merger wasn't going to pass regulatory scrutiny.

In the wake of that defeat, Sprint's board booted then-CEO Dan Hesse and appointed former Brightstar chief exec Marcelo Claure to take his place. Since then, Claure has begun what will likely be a protracted and painful restructuring plan that has already seen the company shed some 2,500 jobs – and a whopping big fine from the FCC surely won't help to ease the sting.

Still, it won't be alone. Besides AT&T, the other two "Big Four" US carriers, Verizon and T-Mobile, have each had to make similar payouts for their own cramming practices. ®


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