Verizon Settles E-Rate Investigation for $17 Million

Verizon has agreed to pay over $17 million to settle twin investigations into possible violations of the FCC's competitive bidding for E-rate subsidies, which go to advanced telecom for schools and libraries.

The settlement is the result of an investigation into New York City school's use of the program.

Verizon will also forgo claims against the Universal Service Fund for millions more in undisbursed E-rate funds and agree to a three-year compliance plan.

The FCC said the settlement was actually reached last May, but held until the Justice settlement could be included.

"This is an important measure that both enforces our rules and restores critical taxpayer dollars to the Universal Service Fund," said FCC Chairman Ajit Pai.

Commissioner Mignon Clyburn dissented from the settlement, saying that there was $50 million in harm to the fund, for which Verizon was having to pay only 34 cents on the dollar, and no added penalty.

"The timing is particularly concerning since we recently received a letter from Congress expressing “concern about the lack of sufficient resources in the reformed High-Cost mechanism," she said in her dissenting statement. "If we had just said 'we want our money back,' much less assessed a penalty for improper conduct, we could have used the returned money to fund over 11,000 high cost rate-of-return locations for a year. This is a missed opportunity and a waste of consumer dollars."

Pai shot back in his statement that Clyburn's dissent excluded two facts—that the consent decree was negotiated under the prior chairman, and that Clyburn's office had been briefed at that time by the prior chairman's (Tom Wheeler's) office and expressed "no concerns whatsoever."

"If the terms of a settlement that were just fine under a Democratic chair are now unacceptable under a Republican chair, FCC enforcement becomes little more than political caprice.  I hope that that’s not the case going forward," he said.

John Eggerton

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.