FCC Settles with IBM in NYC and El Paso E-Rate Program Investigations

The Federal Communications Commission announced a settlement with IBM for alleged violations of the FCC’s E-Rate program rules in connection with the New York City and El Paso school districts. IBM agreed to return $24.25 million to the Universal Service Fund. In past years, IBM provided communications services to the New York City Department of Education and the El Paso Independent School District in Texas using E-Rate subsidies. FCC investigations found that IBM had not satisfied the FCC's competitive bidding rules in New York for Funding Years 2005-2008 and had provided ineligible equipment and services in El Paso for Funding Year 2001. E-Rate program rules require applicants to seek competitive bids from prospective service providers and to treat prices for eligible products and services as the primary factor when selecting among competing service providers. These competitive bidding and eligibility rules are in place to ensure that federal funds are used efficiently and distributed in a fair and transparent manner. In addition to the $24.25 million payment, IBM has agreed to provide training to its employees concerning the Commission’s competitive bidding and eligibility requirements prior to submitting future bids in connection with the E-Rate program.