Updated September 2015
Lowest corresponding price (LCP) is defined as the lowest price that a service provider charges to nonresidential customers who are similarly situated to a particular applicant (school, library, or consortium) for similar services. See 47 CFR Part 54 Section 54.500(f).
A similarly situated applicant is one that is located in the service provider's geographic service area (i.e., the area in which the service provider is seeking to serve customers with any of its E-rate Program services). See First Report and Order, 12 FCC Rcd 8776, 9032, para. 486.
Similar services include those provided under contract as well as those provided under tariff. First Report and Order, 12 FCC Rcd 8776, 9032, para. 485. See also Fourth Order on Reconsideration, Report and Order 13 FCC Rcd 5318, 5398, para. 133).
Service providers cannot charge applicants a price above the LCP for E-rate Program services. See 47 CFR Section 54.511(b).
This ensures that:
A service provider – regardless of the size of the company or the category of service provided – must ensure that the LCP is provided to applicants. The applicant is not obligated to ask for it, but must receive it. See Federal-State Joint Board on Universal Service, 12 FCC Rcd 87, 383, para. 540.
Moreover, service providers cannot avoid the obligation to offer the LCP by arguing that none of their non-residential customers are identically situated to an applicant or that none of their service contracts cover services identical to those sought by an applicant. See First Report and Order, 12 FCC Rcd 8776, 9033, para. 488.
The service provider's obligation to provide the LCP is not tied to a response to an FCC Form 470 or Request for Proposal (RFP). The service provider must actually charge a rate that is the LCP, not just offer the LCP in a bid response. See 47 CFR Section 54.511 and 47 CFR Section 54.500(f).
If a service provider does not know that a customer participates in the E-rate Program and therefore does not charge the LCP rate, the service provider must actually charge the LCP once it realizes that the customer participates in the program. See 47 CFR Section 54.511 and 47 CFR Section 54.500(f).
An applicant may request lower rates if the rate offered by the service provider does not represent the LCP. See 47 CFR Section 54.504(c)(1).
Service providers may request higher rates from the FCC if they can show that the lowest corresponding price is not compensatory. See 47 CFR Section 54.504(c)(2). This can occur when the service provider can show that it faces demonstrably and significantly higher costs to serve the applicant. Factors that could affect the cost of service include, but are not limited to, volume, mileage from facility, and length of contract. See First Report and Order, 12 FCC Rcd 8776, 9033, para. 488).
In addition, please note that: