FCC Says AT&T Violated E-Rate, Overcharged Florida Schools

• By Richard Chang
• 07/29/16

Telecommunications giant AT&T overcharged two Florida school districts for phone service and should have to pay about $170,000 to the U.S. government to settle the allegations, the Federal Communications Commission ruled this week, as reported by Ars Technica, a tech news and information site. AT&T disputes the charges and will contest the decision.

The FCC issued a Notice of Apparent Liability (NAL) to AT&T, an initial step toward enforcing the proposed punishment. The alleged overcharges relate to the FCC’s E-rate program, which funds telecommunications for schools and libraries and is paid for by Americans through surcharges on phone bills.

The FCC said AT&T should have to repay $63,760 it improperly received from the FCC in subsidies for phone services provided to Orange and Dixie counties and pay an additional fine of $106,425. AT&T charged the districts prices that were nearly 400 percent higher than they should have been, according to the FCC.

AT&T violated the FCC’s “lowest corresponding price rule” designed to ensure that schools and libraries “get the best rates available by prohibiting E-rate service providers from charging them more than the lowest price paid by other similarly situated customers for similar telecommunications services,” the FCC said.

Instead of charging the lowest available price, “AT&T charged the school districts prices for telephone service that were magnitudes higher than many other customers in Florida,” the FCC said. Between 2012 and 2015, the school districts paid “some of the highest prices in the state over a number of years for basic telephone services.”

Each year, AT&T submitted forms to the E-rate program “inaccurately claiming that it complied with the commission’s rules,” while “depleting limited public funds that could have supplied other schools and libraries with access to crucial learning technologies and services,” the FCC said. The FCC document also noted that AT&T “dramatically increase[d] its pricing” after Florida deregulated phone service in 2011, leading to the school districts paying much higher rates.

AT&T didn’t disagree with the amounts paid by the school districts, but argues that the charges are legal. “The allegations lack merit and we look forward to making that case in detail in response to the NAL,” AT&T Vice President Joan Marsh said in a statement provided to Ars Technica. “Among other deficiencies, the NAL proceeds from the flawed premise that AT&T should have ignored regulations issued by the state of Florida when selling intrastate E-rate services in Florida.”

Under E-rate rules, schools and libraries aren’t obligated to negotiate lower rates. Providers must offer them the lowest price, the FCC said.