AT&T fights FCC on $106K E-Rate fine, saying ‘no actual rules were violated’

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AT&T is fighting back against a $106,000 fine imposed by the FCC in late July after the commission said the carrier violated rules governing E-Rate pricing requirements. The company said it didn’t break any rules and that the regulator is making its own rules via “Enforcement Bureau fiat.”

In a blog post published Friday, AT&T’s Joan Marsh, vice president of federal regulatory, said that the provider did not violate rules requiring AT&T to charge school districts the lowest corresponding price (LCP). Those rules state that a provider can't charge more than the lowest price charged to a similarly situated customer buying similar types of telecommunications services.

The FCC contended in its enforcement action that AT&T charged two Florida school districts, in Orange County and Dixie County, rates that were “magnitudes higher” for telephone service than other customers in the state – and that as a result, the Universal Service Fund (USF) had to subsidize those services to the school districts at inflated prices, allowing AT&T to receive $63,760 in additional federal funds.

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AT&T’s Marsh argued that the rates charged to the school districts was within the rules, saying that “the Commission has previously expressed the view that length of contract is a valid basis to price services differently among customers. In this case the school districts at issue never asked for annual contracts, never signed annual contracts and did not behave as though they had annual contracts.”

The State of Florida has an E-Rate consortium in place that enables state-operated organizations including schools to purchase telecom services at low rates. The FCC argued that AT&T should have priced its services in line with the rates charged through the consortium. However, Marsh retorted, “these school districts specifically chose not to purchase through the consortium, preferring instead more flexible month to month service contracts.”

Marsh said that attaching an LCP obligation to such a negotiation, where the services were purchased outside a competitive bidding program, is “extreme,” arguing “that view has never before been articulated in any FCC rule or order.”

AT&T has been the target of FCC scrutiny off and on. Just over a week after the regulator imposed the E-Rate fine, AT&T was forced to pay out up to $7.75 million for basically ignoring a cramming scam by a group of Cleveland-area drug dealers – a penalty that included a $950,000 fine to the U.S. Treasury and millions of dollars repaid to the mostly small businesses affected by the scheme.

The carrier is being more proactive in other areas, announcing it will launch a “robocall strike force” along with 33 other telecom and technology companies to combat the newest wave of annoying automated telemarketing calls.

For more:
- see this Ars Technica article
- see this AT&T blog post 

Related articles:
AT&T fined $106K for overcharging schools in Florida under E-rate program
AT&T pays out $7.75M for allowing directory assistance scam
AT&T to lead robocall strike force, calls for industry-wide cooperation
AT&T faces $600K FCC fine for violating microwave license rules

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