IBM agrees to return £17.83 million to the USF to settle FCC investigations

In an announcement on Thursday, IBM Corp (NYSE: IBM) said it will pay £17.83 million to settle FCC (Federal Communications Commission) launched investigations over subsidies to libraries and schools for broadband access.

IBM shares remained almost flat in premarket trading on Thursday. At £91 per share, the NYSE-listed firm is currently about 8% down year to date in the stock market after recovering from an even lower £69.67 per share in March, when the impact of the COVID-19 crisis was at its peak.

IBM did not admit that it violated the rules

The two investigations spanned over roughly fifteen years and alleged the U.S. tech giant of violating E-Rate program guidelines in El Paso and the New York City. IBM said on Thursday it will pay £17.83 million to the USF (Universal Service Fund) but refrained from admitting that it violated the rules.

The E-Rate program currently receives funding from the USF. Earlier this week, IBM said it had partnered with Mimik to make edge computing resources more accessible.

According to the FCC, however, IBM violated the competitive bidding rules from 2005 to 2008 in New York City. In El Paso, the American multinational is alleged of providing ineligible equipment and services in 2001.

In its statement, IBM said:

“IBM acted appropriately in its support of the E-rate program, but in the interest of amicably resolving a longstanding matter we are pleased to have reached this settlement.”

IBM also highlighted on Thursday that it offered broadband access to thousands of libraries and schools in the United States. It also provided internet connectivity through the E-rate program to millions of American students over the years.

FCC Chairman Ajit Pai’s comments on Thursday

Chairman Ajit Pai of FCC also commented on the news and said:

“The commission must protect the Universal Service Fund from waste, fraud, and abuse and ensure that funding is distributed in the most cost-effective manner.”

IBM published its financial report for the fiscal third quarter in October that highlighted its revenue to have slid to £13.59 billion from the year-ago figure of £13.92 billion.

IBM performed fairly upbeat in the stock market last year with an annual gain of close to 20%. At the time of writing, the Armonk-based company is valued at £81.16 billion and has a price to earnings ratio of 14.03.