Follow up: FCC allows school internet payments to bypass company

A continuing investigation of a state contract with a company providing internet services to Tennessee’s schools will no longer jeopardize students’ access to the web, Tennessee Education Commissioner Lana Seviers said.

The Federal Communications Commission (FCC) in a July 2 decision allowed the state to bypass Nashville-based Education Networks of America (ENA), Seviers said, and instead pay subcontractors directly for internet service. That ensures the service will continue to be available to about 900,000 students, the commissioner said.

In January 2002, the state awarded ENA a five-year, $106 million contract to run the ConnecTEN network, with the FCC’s eRate program providing 70 percent of the money.

That FCC funding has been withheld during a joint state and federal investigation into how contracts were awarded during the administration of former Gov. Don Sundquist, a Republican. The investigation started in December 2002.

In an unprecedented request, the state asked the FCC in April to allow the direct payments to ENA’s subcontractors while the investigation continued, so schools would not lose their internet access (see “Tennessee seeks emergency eRate relief,” The 24 companies, the largest of which is BellSouth Corp., have not been paid since August.

“This is very good news for students and educators across the state,” Seviers said in a statement. “We will, of course, continue to cooperate with the authorities as any other outstanding issues are resolved.”

In their decision, FCC commissioners said allegations of fraud and abuse held up the federal money.

“At the same time, we recognize that inaction on a funding request during the … criminal investigation may have the effect of penalizing parties that are in no way implicated in potential wrongdoing,” the commissioners wrote.

ENA was founded in 1996 by Sundquist friend Al Ganier. Among investors was Monteagle, Tenn., entrepreneur John Stamps, a Sundquist friend who also owns Chattanooga-based Workforce Strategists, which closed its doors in September when agents raided the company offices.

“ENA will continue to provide good service going into the next [school] year,” company spokesman Lewis Lavine said.

The FCC’s ruling denied a request by the state to use federal money to pay 37 “essential employees” of ENA.

“We remain concerned about any funds going to persons currently employed by ENA at this point, especially given the percentage of funding that Tennessee asserts is required to pay these individuals,” the commissioners wrote.

According to the decision, state officials said $324,000 per month is needed to pay ENA employees necessary to keep the network running—an average of $105,000 per year for each critical worker.


Tennessee Department of Education


Federal Communications Commission

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