E-Rate (state program of connection of schools and libraries of the USA to the Internet)

2020: IBM will pay $24 million to U.S. authorities for imposing of IT services to schools at E-Rate accomplishment

At the end of December, 2020 the IBM company agreed to pay to U.S. authorities more than $24 million to settle investigations from the Federal commission on communication of the USA (Federal Communications Commission, FCC) concerning the subsidies for connection of schools and libraries provided to it to broadband access networks within the E-Rate program.

Investigation of the abuses of regulations of the E-Rate program which are presumably allowed by corporation in the school districts of New York and El Paso lasted nearly 15 years. According to the agreement which IBM managed to be reached with the American authorities, the company will return $24.25 million to Universal Services Fund (USF) fund which forms from expels of telecom operators and is used for financing of the E-Rate program and also other projects intended for reduction of digital inequality in the USA. In spite of the fact that IBM agreed to pay means, the corporation did not recognize violation.

IBM agreed to pay $24 million to U.S. authorities for settlement of investigations concerning violations within the E-Rate state program

Legislators and researchers of E-Rate report widespread fraud and abuses in the E-Rate program which was founded by the Congress in 1996. Critics of the program accuse schools and suppliers of IT that they bypass requirements of competitive biddings, levying within E-Rate of means for the equipment which is not allowed to financing and ask the equipment for millions of dollars which schools actually do not need. The program with the annual budget in $2.25 billion is intended for the help to schools in acquisition of technology equipment, such as broadband modems and routers. In particular Video Network Communications (VNCI), NEC, IBM and also National alliance of black school teachers (NABSE) are accused of violations.

"Scheme" of IBM as the representative of FCC Peter Doych called it, was a principal theme of discussion during listenings on the E-Rate program. IBM was accused of a bypass of requirements of competitive biddings, the company imposed contracts for providing consulting services approximately with nine school districts before schools decide what equipment they will use to receiving financing.

According to FCC, investigation concerning IBM showed that the company did not execute the rule of carrying out competitive biddings in New York for 2005-2008 and provided the inadequate equipment and services in El Paso in 2001.

As of the middle of December, 2020 about 35 investigations concerning violations of the companies according to the E-Rate program continue, and rules were violated in 36% from 135 inspections which are carried out by FCC. Walker Fister, the general inspector of FCC reported about it.

IBM will pay U.S. authorities compensation for expected violations at connection of the American schools and libraries to broadband access networks within the E-Rate state program

On a question of the representative of Joe Barton, the republican from Texas, about whether it is necessary to suspend financing of E-Rate until more effective control is introduced, Fister told that this solution will be too "radical".

It is said in the statement of IBM that, according to it, it "worked properly in support of the E-rate program", but for the benefit of peaceful settlement of a question of rather expected violations the company agrees to the agreement. IBM added that through the E-rate program it provided connection to the Internet to thousands of schools and libraries of the USA and also millions of American students.

The chairman of FCC Adrit Pai told that the commission "should protect USF fund from wastes, fraud and abuses and also to provide the most economic distribution of financing". Except payment of $24.25 million IBM also agreed to provide training of the employees concerning competitive biddings of FCC and requirements to participation in them before submission of requests within the E-Rate program.^[1][2]

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