According to the Federal Communications Commission, AT&T has overcharged two Florida school districts and may have to pay $170,000 to the government to settle the allegations. The company disputes those charges and will be contesting the decision.
They are said to have violated the FCC E-Rate program, which funds telecommunications bills for schools and libraries. The program is funded through surcharges that Americans pay on their phone bills. Schools are not obligated to negotiate these rates, they must be offered them.
Because of this rule, telecom companies can't charge "more than the lowest price paid by other similarly situated customers for similar telecommunications services." The prices AT&T charged were almost 400% higher than they should have been.
Every year between 2012 and 2015, AT&T would submit forms that it complied with the commission's rules. They also increased their charge when Florida deregulated its phone service prices in 2011.
The FCC issued a Notice of Apparent Liability (NAL) to the company, which is the first step in punishment. It was issued by the FCC's Democratic majority, with Republicans Michael O'Rielly and Ajit Pai dissenting, reports Jon Brodkin of Ars Technica.
Pai takes issue with the one-year statute of limitation on these types of agreements, which is set down by the Communications Act. According to Amir Nasr of the Morning Consult, the FCC became aware of these problems a full two years ago and did not act until now.
The fine would consist of $63,760 in repayment for improper subsidies and an additional fine of $106,425.
The case could end up in court, but AT&T must first convince the FCC to reduce or recant their punishment.
AT&T is not disputing how much the schools paid, but rather that it was unfair. Suncom, a state telecommunications network, has a contract with AT&T that allows schools and libraries to purchase E-rate services at reduced prices. AT&T is arguing that they had the right to charge customers since they did not apply to the Suncom agreement.
However, the FCC says:
"The regulations AT&T identified only specify a procurement process that parties should follow if they wish to purchase from the Suncom agreement. They do not prohibit AT&T from charging other customers the same rate in the agreement."
Other customers got the Suncom rate without applying.
In a statement, AT&T vice president Joan Marsh said:
"The allegations lack merit and we look forward to making that case in response to the NAL. 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."
According to Sean Buckley of Fierce Telecom, in 2014 the FCC decided to devote additional resources to enforcing the lowest corresponding price rule to maximize E-rate's benefits.
The two Florida school districts that have been overcharged are those of Orange and Dixie counties, reports Richard Chang of THE Journal.