First Phase of E-Rate Program Clean-up Nearly Complete

Posted by: Olga Kharif on August 9, 2005

Looks like the mess that’s the federal E-Rate program, offering $2.1 billion worth of discounts on telecom gear to schools and libraries each year, is getting cleared up.

Sources tell BusinessWeek Online that one of the investigations into E-Rate fraud is nearly over. The U.S. House Committee on Energy and Commerce has completed its investigations and is about to start pointing fingers. The committee had been investigating 14 companies, including tech giant IBM and telco SBC, that have sold telecom equipment and services to schools and libraries.

Of course, a number of other investigations into improprieties involving E-Rate, which has only been around since 1998, are still ongoing. The Department of Justice and the Federal Communications Commission, overseeing the E-Rate program, are still investigating more than 30 companies. In fact, just last week, gearmaker Lucent announced that some of its documents were recently subpoenaed by investigators. It's not known whether Lucent is a target or a witness in a case.

Still, the conclusion of the House investigation will certainly be an important milestone. The House committee tackled some of the biggest fish in the telecom business.

It will be interesting to see whether they get off the hook.

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Bloomberg Businessweek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, and Douglas MacMillan, dig behind the headlines to analyze what’s really happening throughout the world of technology. Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.

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