IBM has agreed to pay US$24.25 million (approximately Rs. 1.8 billion) to resolve two investigations by the Federal Communications Commission (FCC) on subsidies granted to connect schools and libraries to broadband.

The IBM payment will resolve two FCC investigations that have spanned nearly 15 years for alleged violations of “E-Rate” program rules related to New York City and the El Paso School District. According to the agreement, IBM agreed to return 24.25 million U.S. dollars (about 1.8 billion rupees) to the General Services Fund, which provided funds for the E-Rate program, but did not admit wrongdoing.

The FCC stated that the investigation found that IBM did not meet the New York competitive bidding rules for 2005-2008 and provided substandard equipment and services at El Paso in 2001.

IBM said in a statement that it believes “appropriate actions have been taken in support of the E-rate program, but in order to amicably resolve long-standing issues, we are very happy to reach this settlement.”

IBM added that it has provided Internet connections to thousands of American schools and libraries and millions of American students through the E-rate program.

FCC Chairman Ajit Pai stated that the committee “must protect the General Service Fund from waste, fraud and abuse and ensure that funds are allocated in the most cost-effective manner”.

All telecommunications operators pay the Universal Service Fund, which is used to connect people in rural areas, subsidize low-income Americans through the Lifeline Program, expand services in tribal areas, and help schools and libraries through electronic rate programs.

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© Thomson Reuters 2020


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