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Congress Steps Up E-rate Probe

A subcommittee of the House Commerce Committee on July 14 sent letters to 15 companies seeking specific information about their involvement in the E-rate program. The letters, signed by House Energy and Commerce Committee Chairman Billy Tauzin (R-LA) and Oversight and Investigations Subcommittee Chairman James Greenwood (R-PA), are part of the committee's "expanded investigation" into the E-rate program. None of the letters alleged any wrongdoing.

Although the letters sent to all the vendors were nearly identical, the committee released two separate press releases on Monday — one announcing a list of 13 companies being sent letters requesting more information, and the second release singling out IBM and Alpha Telecommunications — which Tauzin and Greenwood, in the press release, specifically called upon to "turn over documents relating to their involvement" in the E-rate program. The letters state that the subcommittee has been examining E-rate documents provided by both the Federal Communications Commission and the Universal Service Administrative Company, as well as "preliminary information from certain vendors and applicants" and it has "conducted interviews with relevant individuals."

All the companies were asked to respond to nine questions covering virtually all aspects of their E-rate activities and to submit written replies no later than July 28, 2003. Among other things, the E-rate vendors are being asked to provide Congress with "all records relating to the marketing or promotion of your E-rate services, including but not limited to internal records relating to plans, policies or practices to increase or improve your E-rate business, and records relating to communications with clients or potential clients regarding increasing or maximizing E-rate funding."

The firms also must furnish all records relating to the bidding process for E-rate services or equipment, as well as all records regarding "any request, offer, promise, commitment or agreement, whether written or oral, between you and any potential E-rate applicant. . . ." The probe also seeks information on whether any financial assistance was given to potential applicants, directly or through third parties, to assist applicants in paying their required share of E-rate costs.

In addition, IBM was asked to provide "All records relating to E-rate-related services provided to IBM (or any of IBM's E-rate clients or potential clients) by Alpha Communications, Inc. (Alpha) (sic), including but not limited to (i) all records of communications between or among IBM, Alpha, and IBM E-rate clients or potential clients with respect to such services; and (ii) all contracts or statements of work agreed to between IBM and Alpha." Alpha received a slightly different group of questions.

In additions to IBM and Alpha, the 13 other E-rate vendors sent letters include: Avnet, Inc., Tempe, AZ; Checkpoint Communications, Costa Mesa, CA; Computer Assets, Inc., Espanola, NM; Ed-Tec, Inc., Lakewood, NJ; Expanets of North America, Englewood, CO; Micro Systems Enterprises, Houston, TX; NEC Business Network Solutions, Inc., Irving, TX; Network Konnection, Inc., Rockville, MD; SBC Datacom, Richardson, TX; SBC Global Services, Inc., San Antonio, TX; Siemens Enterprise Networks, New York, NY; Southern New England Telephone, Dallas, TX; and Spectrum Communications Cabling Services, Inc., Corona, CA.

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