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FCC Says Major Cell Carrier Misled About Its Rural Coverage When Applying for Billions in Subsidies

The FCC will investigate whether “one or more” major cellular carriers misled the agency in submitting incorrect data when applying for $4.5 billion in subsidies to extend 4G LTE service to rural areas over the next decade as part of the Mobility Fund Phase II (MF-II). FCC Chair Ajit Pai said in a statement, “A preliminary review of speed test data submitted through the challenge process suggested significant violations of the Commission’s rules.”

The carrier wasn’t named. Fortune asked the four major carriers whether they were under investigation by the FCC. AT&T (T), in a statement, didn’t answer that question directly, but said, “Accurate MFII maps will ensure that scarce USF [Universal Service Fund] dollars flow to where they are needed most. We will cooperate with the investigation and look forward to its quick resolution so the auction can proceed.”

Sprint (S), T-Mobile (TMUS), and Verizon (VZ) did not respond to queries. The FCC did not reply to a request for further comment.

The subsidies come as part of a push to expand high-speed mobile broadband in areas that commercial providers have left out of the upgrade to 4G LTE, which provides speeds that compare with DSL and mid-range cable broadband in nearly all urban and suburban areas.

The FCC believes at this preliminary stage that the unidentified carrier or carriers have overstated current data rates across some rural areas, which could be seen an anti-competitive act that also increases costs for other firms. If a carrier purports coverage exists in an area above the minimum speed that cuts off subsidized service, that carrier could maintain less-than-adequate service without facing competition.

Existing rural carriers also said earlier this year that such false data could cause existing subsidies to be reduced. These rural carriers also claimed it would cost them millions in re-testing affected areas.

Carriers had to provide detailed information about coverage that the FCC would merge with data already gathered by an independent body to map which rural areas would qualify for subsidies. The FCC said carriers submitted a combined 21 million speed tests from across their networks.

In August, a trade group representing rural cellular carriers, the Rural Wireless Association, filed a data-heavy letter with the FCC that alleged Verizon had submitted inaccurate information in this rural subsidy process.

Verizon told the FCC at the time that the RWA’s concerns were “unfounded” and that it had followed FCC rules and industry best practices in gathering measurements.

Measurements in some rural areas are fraught. The RWA noted in its filing that “drive testers must protect themselves from rattlesnakes, feral hogs, bobcats, and other dangers.”