IBM will pay $24.25 million to resolve FCC investigations

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IBM agreed to pay $24.25 million to resolve two investigations by the Federal Communications Commission (FCC), concerning subsidies awarded to bring broadband to schools and libraries. The payment will resolve the two FCC investigations that have taken about 15 years to reach this point.

The FCC alleged that IBM violated ‘E-Rate’ program rules in connection with El Paso and New York City school districts.

In the agreement, IBM agrees that it will return $24.25 million to the Universal Service Fund, which pays for the E-Rate program. However, the company refused to admit to any wrongdoing. Getting rid of these cases could be beneficial, as IBM plans to spin off its $19 billion Managed Infrastructure Service.

IBM admits no wrongdoing

The FCC said that the investigation found IBM had not satisfied the competitive bidding rules in New York for 2005-2008. The other findings were that the company provided ineligible equipment and services in El Paso for 2001.

IBM had something to say about this and issued a rebuttal statement.

The company said that it acted appropriately in its support of the E-Rate program. It added that in the interest of resolving a longstanding matter, it is pleased to have reached the settlement to return the aforementioned amount.

What did Ajit Pai say?

IBM continued to say that it provided internet connectivity for thousands of American schools and libraries and to millions of students, through the E-Rate program.

FCC’s Chairman, the man who killed net neutrality, Ajit Pai, said that the commission must protect the Universal Service Fund from waste, fraud, and abuse by making sure that it is distributed cost-effectively.   

All telecom carriers pay into the Universal Services Fund to connect people in rural areas, subsidize low-income families in the Lifeline program, bring service to Tribal lands and help schools and libraries through the E-Rate program.