Verizon has agreed to pay $17 million to settle an FCC investigation in New York over possible violations of competitive bidding rules for the E-Rate program that subsidizes telecom services for local school districts.
The settlement follows an investigation into Verizon’s involvement with New York City schools’ use of the E-rate program.
Under the terms of the settlement, Verizon will pay $17.3 million to the Universal Service Fund through the FCC settlement and $354,634 to the U.S. Treasury through the Justice Department settlement. Additionally, Verizon will surrender any claims against the Universal Service Fund it may have to approximately $7.3 million in undisbursed E-rate support for products and services provided to the New York City Department of Education between Funding Years 2002 and 2013.
Verizon will also surrender any rights to appeal to USAC or the FCC for expensive E-Rate support—valued around $100 million—for the products or services provided to the New York City Department of Education. As part of the FCC’s settlement, Verizon will also operate under a compliance plan for three years.
While the Commission adopted the consent decree in May 2017, it has not been released until today to allow for a global settlement which includes the U.S. Department of Justice. The Department of Justice settlement with Verizon was submitted to the Court for approval in the Southern District of New York today.
In line with the U.S. Department of Justice Civil Fraud Section and U.S. Attorney’s Office for the Southern District of New York, the Commission’s Enforcement Bureau conducted its investigation.
On a related note, former New York City Department of Education consultant Willard “Ross” Lanham was convicted by a federal jury sitting in the Southern District of New York. In December 2015, the Commission settled a related investigation with the New York City Department of Education.
Verizon is not the only telco that’s faced FCC fines over issues with the E-Rate program.
AT&T, for one, was fined $106,425 last July for charging two Florida schools what the FCC says is the highest telecom rates in the state, violating the regulator's "lowest corresponding price" rule.
The FCC alleged that AT&T violated the lowest corresponding price rule from at least mid-2012 to mid-2015, when it charged the school districts in Orange County and Dixie County, Florida.