HP Settles E-Rate Fraud Suit

Hewlett-Packard has agreed to pay $16.25 million
to settle an investigation by the FCC and DOJ into E-rate fraud and violations
of FCC competitive bidding rules.

E-rate is the program through which the government
funds Internet deployment to schools and libraries. It is also one near and
dear to FCC Chairman Julius Genachowski, who helped first implement the

The investigation was into allegations that HP and
others had provided Dallas and Houston school personnel Super Bowl tickets,
yacht excursions, meals and other entertainment to get inside info and secure
contracts, which included $17 million in HP equipment, that were supposed to be
competitive bids.

"Today's settlement shows the extensive
efforts of the FCC and DOJ to protect the E-rate program from waste, fraud, and
abuse, and to deter misconduct in the future." Those three words are much
on the lips of the incoming House Republican majority, which has pledged
muscular oversight of government programs.

HP has agreed to pay $16.25 million and, according
to the FCC, will hew to a compliance regimen that ensures "the company
plays by the rules in the future." That regimen includes audits by the FCC
employee training. If it fails to comply, said FCC General Counsel Austin
Schlick, "it will face substantial penalties."

The FCC in September adopted an order clarifying its prohibition
against E-rate applicants or service providers getting or giving gifts.

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.