Lowest Corresponding Price
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 C.F.R. § 54.500.
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 Schools and Libraries (E-rate) Program services). See First Report and Order PDF (opens in new window) , 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 PDF (opens in new window) , 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 C.F.R. § 54.511(b).
This ensures that:
- Service providers do not charge applicants more than they would charge their other customers for the same services. See First Report and Order, 12 FCC Rcd 8776, 9031-32, para. 484; and
- Any lack of experience in negotiating in a service market does not prevent applicants from receiving competitive prices. See First Report and Order, 12 FCC Rcd 8776, 9031, para. 484.
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 1996 Universal Service Order, 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 C.F.R. §§ 54.511(b), 54.500.
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 C.F.R. §§ 54.511(b), 54.500.
An applicant may request lower rates if the rate offered by the service provider does not represent the LCP. See 47 C.F.R. § 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 C.F.R. § 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:
- There is a rebuttable presumption that rates offered within the previous three years are still compensatory. See First Report and Order, 12 FCC Rcd 8776, 9034, para. 489 and Fourth Order on Reconsideration, 13 FCC Rcd 5318, 5398, para. 133.
- Promotional rates offered by a service provider for a period of more than 90 days must be included among the comparable rates upon which the LCP is determined. See 47 C.F.R. § 54.511.