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IBM Settles FCC E-Rate Investigation

IBM Headquarters

The FCC said that IBM will pay $2.25 million to settle allegations it violated the FCC's E-rate program rules.

The E-rate subsidizes advance communications to schools and libraries. The FCC alleged that IBM had not satisfied competitive bidding rules in providing communications services to New York City and El Paso, Texas, schools using E-rate money.

The alleged violations date from 2005 to 2008 for New York and 2001 for El Paso, where IBM allegedly provided ineligible equipment and services because it had not satisfied those competitive bidding requirements, which are meant to insure that the FCC, and the federal government, get the most bang for their subsidy buck.

“As stewards of the federal fiscal, we must protect the Universal Service Fund from waste, fraud, and abuse and ensure that funding is distributed in the most cost-effective manner,” FCC chairman Ajit Pai said in a statement, adding: "I would especially like to thank our General Counsel, Tom Johnson, whose hands-on efforts in negotiating the settlement led the way to this successful conclusion.”

In addition to paying the money, IBM agreed to train its employees on the rules prior to submitting any future bids for E-rate money.

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.