AT&T avoids fine for overcharging school districts

(Image: AT&T/Graphic: The Desk)

AT&T will not have to pay a $106,000 fine imposed by the Federal Communications Commission for overcharging two school districts for communications-related services, the government agency ruled this week.

In 2016, the FCC alleged AT&T had overcharged two school districts in Florida for phone and Internet services. The services were provided through the E-Rate Program, a federal fund that subsidizes the cost of phone and Internet services for educational institutions.

Phone and Internet companies that offer service to schools and libraries through the E-Rate Program receive federal funds in exchange for providing below-market rates for service. The FCC accused AT&T of receiving federal funding while overcharging the Florida school districts between 2012 and 2015.

The FCC eventually levied a $106,425 fine against AT&T after finding it violated certain requirements of the E-Rate Program when it overcharged the Dixie County School District and the Orange County School District in Florida for various services.

“Charging school districts among the highest rates in the state for telephone or broadband internet service is outrageous,” Travis LeBlanc, the head of the FCC’s Enforcement Bureau, said in a statement at the time. “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.”

AT&T appealed the fine, saying the statute of limitations had run out because the FCC didn’t issue a notice of apparent liability within one year of the alleged offense as required by law.

On Tuesday, the FCC’s governing board voted 4-1 to cancel the fine, siding with AT&T on the matter and finding the Obama-era commission failed to issue a timely notice. The agency’s decision did not reverse its earlier determination that AT&T overcharged the school districts; it merely found that the commission acted too late to do anything about it.

In a statement issued on Tuesday, FCC Commissioner Michael O’Reilly said he found the previous board’s decision to fine AT&T “offensive to the rule of the law.”

“While I don’t object to the decision to resolve this matter purely on procedural grounds, I would point out that the [notice of apparent liability] was substantively defective as well — AT&T likely would have prevailed even if the claims against it weren’t time-barred,” O’Reilly said.

O’Reilly said the Florida school districts “chose to purchase [AT&T’s] services on a month-to-month basis” instead of through the Florida education system’s process of securing multi-year contracts.

“Requiring AT&T to charge those school districts the same rates charged to those buying services from the bulk consortium contract would be a misapplication of our ‘lowest corresponding price’ rule,” O’Reilly said.

Jessica Rosenworcel, the commissioner who cast the lone dissenting vote, said she respected the decision of her colleagues but disagreed that the notice of apparent liability imposed against AT&T was without merit.

“I believe our initial decision would support greater accountability with respect to universal service funds than the course the agency adopts today,” Rosenworcel said. “That is because our prior approach recognized that some violations of our rules should be treated as continuing until they are remedied.”