T-Mobile catches fire for alleged ring tone scheme

Local exchange carriers (LECs) have filed a class action lawsuit against T-Mobile related to the carrier’s previous practice of inserting false ring tones in certain calls that were placed but not completed to consumers in rural areas.

T-Mobile in 2018 agreed to pay a $40 million fine as part of a settlement with the FCC after complaints prompted an investigation that found a pattern of continued issues delivering calls to rural areas, as well as the carrier’s practice of injecting false ring tones into “hundreds of millions of calls.”    

However, the proposed class action lawsuit (PDF), filed Friday in an Illinois federal court by Indiana-based Craigville Telephone Company, which does business as AdamsWells Internet Telecom TV, and Minnesota-based Consolidated Telephone Company (CTC), asserts the FCC consent decree did nothing to compensate local carriers for harms from T-Mobile’s “deceptive practices,” arguing it violated the Communications Act, among others, and seeks a judgement of at least $750 million.

As part of its effort to solve lingering issues of rural call completion, the FCC in 2014 prohibited the use of false ring tones, which can confuse a customer into wrongfully believing their call has gone through but that the recipient is not answering.

“That is, the calling party believes the phone is ringing at the called party’s premises when it is not,” the FCC wrote in that order. “An originating or intermediate provider may do this to mask the silence that the caller would otherwise hear during excessive call setup time. As a result, the caller may often hang up, thinking nobody is available to receive the call.”

The new lawsuit claims rural LECs’ businesses were injured by T-Mobile’s fake ring tone scheme in multiple ways, including: lost profits, revenues, and opportunities to seek intercarrier compensation, reputational harm by the T-Mobile’s customers’ false impression that their local rural carrier was responsible for call completion failures, loss of good will with customers, lost time value associated with hours need to investigate and respond to customer complaints, and lost revenue for discounts that needed to be made to retain disgruntled customers.

After the FCC settlement, T-Mobile acknowledged its “oversight,” which it said was unintentional and fixed in early 2017, according to a statement sent to NPR at the time.

The new lawsuit claims a more calculated decision, asserting that “T-Mobile consciously used this illegal practice to mask its intermediate carriers’ routine failure to deliver high cost calls routed to rural areas of the United States that created a negative margin for T-Mobile. The use of the fake ring tones deceived customers into believing the calls were reaching their intended destination and thereby shifted blame for those call failures onto local phone companies, particularly rural carriers, even though the calls never even made it to these rural carriers’ networks.”

In addition to T-Mobile, the lawsuit names Chicago-based intermediate provider Inteliqunet, which transported traffic for T-Mobile to other carriers through a 2015 Master Services Agreement. The complaint alleges Inteliquenet was looking to reduce the cost of access charges, which are paid to local phone companies for using their network to terminate calls made by T-Mobile subscribers. To lower costs, the LEC’s allege Inteliqunet and T-Mobile actively conspired to “develop strategies to deter or prevent customer from making phone calls for which there are high per-minute costs to complete,” including forcing significant volumes of failed calls.

The lawsuit also accuses T-Mobile, Inteliquent and “several currently unidentified co-conspirators” of multiple acts of wire fraud and racketeering activity in violation of the Racketeer Influenced and Corrupt Organizations Act (RICO).   

A T-Mobile spokesperson was not immediately available to respond to request for comment.

The new lawsuit comes as the operator awaits a significantly more visible court case to get started. Next month the trial to decide T-Mobile’s pending merger with Sprint will kick off, unless a settlement is reached with the more than dozen state AGs suing to block the deal.

In its efforts to promote the merger, T-Mobile has pledged to expand wireless coverage, particularly in rural areas.