Education

AT&T fined for allegedly overcharging Florida schools through E-Rate program

The Federal Communications Commission claims the company substantially overcharged two Florida school districts to provide basic telecom services.

By Alex Koma

August 8, 2016

Federal regulators are levying roughly $170,000 in fines against AT&T, claiming the company overcharged a pair of Florida school districts for telecom services.

The Federal Communications Commission issued a “Notice of Apparent Liability” to AT&T late last month, charging that the company violated the terms of the FCC’s E-Rate program, which funds connectivity projects at schools and libraries. Specifically, the commission alleges AT&T failed to charge schools in Orange and Dixie counties the “lowest corresponding price” for the services they provided.

The regulators claim the company charged the schools nearly 400 percent more than they should have, causing “direct harm” to the districts and hampering “the effectiveness of the E-Rate program by depleting limited public funds that could have supplied other schools and libraries with access to crucial learning technologies and services.”

“Charging school districts among the highest rates in the state for telephone or broadband internet service is outrageous,” FCC Enforcement Bureau Chief Travis LeBlanc said in a statement. “Schools and libraries across the country heavily rely upon federal and state funds to afford these critical services. We expect that every service provider will offer participating schools and libraries the same low rates that they charge to other similarly situated customers.”

Now, the FCC wants the company to repay the $63,760 in E-Rate funding it received for the projects, as well as an additional $106,425 in punitive fines.

“The allegations lack merit and we look forward to making that case in detail,” Joan Marsh, AT&T vice president of federal regulatory, wrote in a statement to StateScoop.

The FCC claims the company first ran afoul of E-Rate rules in July 2012 and continued violating them through June 2015. Namely, the regulators believe the company “steadily increased” the rates it charged the two districts for phone service over that time period, until it was assessing the schools “some of the highest prices in the state.”

“AT&T has not offered any justification for its pricing at all, despite requests from the enforcement bureau,” the commission wrote. “We are left to conclude that AT&T sought to maximize profits at the expense of the districts and at the expense of the publicly-funded E-Rate program.”

However, the FCC didn’t decide to issue these fines unanimously — the commission’s two Republican members disputed the ruling.

Indeed, Commissioner Ajit Pai argues that while AT&T may have run afoul of the E-Rate rules, he believes the FCC failed to issue these fines within the statute of limitations for the alleged violations. The company last charged Dixie County on July 1, 2014, and Orange County on June 1, 2015, and federal law outlines a one-year period in which regulators can pursue these claims.

“That’s a shame because the enforcement bureau became aware of AT&T’s conduct two full years ago, just as the statute of limitations was beginning to run and long before it expired,” Pai said in a statement. “That means we could have imposed a lawful forfeiture had we acted with alacrity (or even a modicum of urgency).”

But in the filing, the other commissioners argue that AT&T’s “violations are continuing” because it hasn’t corrected the forms it submitted to the FCC for funding and it’s “retained the excessive reimbursements” it earned through the E-Rate program.

Pai said that argument “stretches the concept of a continuing violation past the breaking point” and doesn’t feel that “a court would find our reasoning … to be persuasive.”

The matter could indeed end up before a judge if AT&T pursues legal action over the fines, though it will first have the chance to persuade the FCC to reduce (or eliminate) the penalty.