Whistleblower Says AT&T Has Been Ripping Off US Schools For A Decade

from the a-pattern-develops dept

In just the last five years or so AT&T has been: fined $18.6 million for helping rip off programs for the hearing impaired; fined $10.4 million for ripping off a program for low-income families; fined $105 million for helping "crammers" by intentionally making such bogus charges more difficult to see on customer bills; and fined $60 million for lying to customers about the definition of "unlimited" data. This is just a few of AT&T's adventures in regulatory oversight, and in most instances AT&T lawyers are usually able to lower the fines, or eliminate them entirely, after years of litigation.

AT&T's latest scandal, like the rest of them, won't make many sexy headlines, but it's every bit as bad. Theodore Marcus, a lawyer at AT&T, emerged this week to accuse the telecom giant of systemically ripping off US schools via the FCC's E-Rate program. According to Marcus, this occurred for years, and tended to harm schools in the nation's most marginalized communities. And when he informed AT&T executives of this they... did nothing:

"There’s been no consequences for a bunch of folks … who failed to do what they were supposed to do for a program that’s supposed to take care of poor children,” he said in an interview with The Washington Post. “That’s what’s driving me. These are poor Black and Brown kids and they cannot fend for themselves and you have to do what’s right. There has to be an accounting."

The FCC's E-Rate program does a lot of good work by helping shore up communications and broadband access to the nation's school systems. Started in 1996, the program is paid for by a small surcharge on phone bills. Under the program, telecom providers charge what the Telecom Act deems to be the "lowest corresponding price," or LCP, defined as the average rate that similar customers might pay for broadband access. But the FCC has often done a somewhat flimsy job on policing carriers, who are in charge of whether or not they're in compliance with the requirement.

Marcus says that AT&T for years didn't do this and intentionally overcharged school districts for service (this is, it should be made clear, is a very obvious pattern that pops up consistently). That, in turn, restricted the total number of schools that could have received service, culminating in America being ill-prepared for the COVID crisis:

"If the pattern of overcharging that Marcus and others have alleged is true, the telecom giant deprived hundreds of school districts nationwide of millions of dollars they could have used for education expenses. Limited money in the E-Rate fund at that time could have funded service to more communities."

AT&T, as is its tendency, has responded by basically calling its own former lawyer a disgruntled liar:

"In a statement, Fletcher Cook, a spokesman for AT&T, said the company has always complied with the lowest-corresponding-price rule. He accused Marcus of raising concerns after a poor performance review and not receiving a position he sought. AT&T also noted that the U.S. government declined to intervene in the lawsuits alleging overcharging, and said internal reviews found that the company did nothing wrong."

Of course for a company like AT&T, that thought helping scammers rip off its own customers for years was ok, an "internal review" means nothing. Neither does the fact that the US government, largely in the back pocket of AT&T lobbyists for the better part of a generation, didn't bother to pursue AT&T for effectively defrauding the program. The Post even managed to get former FCC boss Tom Wheeler on record to admit the agency knew AT&T was doing this stuff for a decade, but couldn't be bothered (under either party) to enforce the agency's own rules:

"Marcus’s claims also raise questions about the government’s role and response, since it knew about these allegations for more than a decade. For years, federal regulators were reluctant to address possible abuses by telecom companies, even as they investigated schools for possible fraud in the program, said Tom Wheeler, who served as FCC chairman from 2013 to 2017.

“In order to incentivize the phone companies to hook up, everybody conveniently ignored the lowest-price rule,” Wheeler said. The government, he added, “never enforced it, because that was considered to be discouraging the companies."

Again this isn't some one off; both AT&T and Verizon were recently fined $116 million for overcharging government agencies in California for decades. AT&T was also just sued by DC for the same thing. Then there's this scandal in Mississippi, where AT&T is being accused of taking taxpayer money for networks it never deployed. And this is on top of AT&T's pretty consistent pattern of ripping off its own customers as well. So yeah, it's kind of hard to give AT&T the benefit of the doubt (though its various policy folks will certainly try).

Granted because AT&T is effectively bone grafted to our intelligence (and now law enforcement systems via FirstNet), it never sees much in the way of genuine accountability for anything. At the same time, AT&T has effectively waged a hugely successful and not so subtle war on government oversight, resulting in federal and state regulators that are underfunded, underpowered, and incapable of really doing battle with the giant. The narrative is then built that the problem is always government, and not that we've let unaccountable telecom monopolies run amok for the better part of a generation, resulting in entirely predictable and avoidable outcomes you wouldn't see in a market with healthy competition and competent, uncorrupted oversight.

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Filed Under: broadband, e-rate, fcc, schools, theodore marcus, whistleblower
Companies: at&t