IBM Agrees to Pay $24.25 Million to Resolve FCC Probes Over Subsidies

IBM's payment will resolve two FCC investigations that have spanned nearly 15 years over its alleged violations of ‘E-Rate’ program rules.

By Reuters | Updated: 24 December 2020 12:27 IST

IBM Agrees to Pay $24.25 Million to Resolve FCC Probes Over Subsidies

FCC's investigations found IBM had not satisfied the competitive bidding rules in New York for 2005-2008

Highlights

IBM added it provided Internet connectivity to thousands of US schools
All telecommunications carriers pay into the Universal Service Fund
The fund pays to connect people in rural areas in America

IBM has agreed to pay $24.25 million (roughly Rs. 180 crores) to resolve a pair of investigations by the Federal Communications Commission (FCC) over subsidies awarded to connect schools and libraries to broadband.

IBM's payment will resolve two FCC investigations that have spanned nearly 15 years over its alleged violations of "E-Rate" programme rules in connection with New York City and El Paso school districts. Under the agreement, IBM agreed to return $24.25 million (roughly Rs. 180 crores) to the Universal Service Fund that funds the E-Rate programme, but did not admit wrongdoing.

The FCC said its investigations found IBM had not satisfied the competitive bidding rules in New York for 2005-2008 and provided ineligible equipment and services in El Paso for 2001.

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IBM said in a statement it believed it "acted appropriately in its support of the E-rate programme, but in the interest of amicably resolving a longstanding matter we are pleased to have reached this settlement".

IBM added it had provided internet connectivity to thousands of US schools and libraries and millions of American students through the E-rate programme.

FCC Chairman Ajit Pai said the commission "must protect the Universal Service Fund from waste, fraud, and abuse and ensure that funding is distributed in the most cost-effective manner".

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All telecommunications carriers pay into the Universal Service Fund that pays to connect people in rural areas, provide subsidies for low-income Americans through the Lifeline programme, expand service in Tribal lands and assist schools and libraries through the E-rate programme.

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