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FCC and SBC Enter Into E-rate Consent Decree

The Federal Communications Commission has negotiated a consent decree with SBC Communications Inc., and its wholly owned subsidiaries and affiliates, to terminate an investigation into whether SBC Connecticut failed to comply with the E-rate program's rules regarding services provided to the New London Public Schools in that state.

The FCC said that on August 6, 2004, SBC informed the agency's Bureau of Enforcement that SBC had determined it had invoiced the Schools and Libraries Division in one funding year for services provided to the New London schools in another year; that SBC had invoiced the SLD for services for which it had not sought and obtained authorization; and that the subsidiary had invoiced the SLD for services that were not eligible for E-rate support. The FCC said the subsidiary had refunded the amounts collected in connection with these invoices and had withdrawn any outstanding invoices.

Under the agreement, which was formally adopted by the FCC on December 14, SBC Connecticut was required to make a "voluntary contribution" to the U.S. Treasury of $500,000 within 10 days. It was also required to adopt an E-rate compliance plan for the next two years that would include, at a minimum:

  • A training package regarding E-rate program requirements for the employees of its wholly owned subsidiaries who are responsible for sales, account management and project management relating to E-rate contracts and services;
  • Annual E-rate training sessions, as well as training for new employees working in the E-rate area within 45 days of their being assigned their responsibilities.
  • Updates and enhancements of the training to reflect the current FCC rules.
  • Designation of regional E-rate coordinators who will serve as subject matter experts for SBC employees and bring potential violations of the rules to the attention of the SBC Legal Department
  • Establishment of an E-rate Oversight Team, to include representatives of SBC's Regulatory Planning and Policy Group, its Regulatory Compliance Group and its Legal Department. The oversight team will have subcommittees focused on program requirements; training; marketing and communications; billing and collections/IT/invoicing/accounting; and process standardization.
  • Designation of a principal point of contact for SBC with the SLD.

In the order that formally approved the consent decree, the FCC said, "We have reviewed the terms of the consent decree and evaluated the facts before us. We believe that the public interest would be served by approving the consent decree and terminating the investigation." The consent decree said that the bureau had agreed to terminate the investigation "in express reliance on the convenants and representations" contained in the order and "to avoid the further expenditure of scarce resources."

SBC Datacomm, SBC Global Services Inc. and Southern New England Telephone Co. were among the companies whose E-rate records were subpoenaed by the House Energy and Commerce Committee in July 2003 as part of its investigation of the E-rate program.

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