As the Funding Year 2016 competitive bidding season will start in earnest this fall, I wanted to remind service providers of their obligation to provide schools and libraries the lowest corresponding price (LCP) for services and solutions. While I understand that the telecommunications industry has long sought for clarification and further information from the FCC regarding LCP enforcement, USAC continues to audit service providers for LCP compliance. The USAC Schools & Libraries Committee recently approved a few service provider audits where they are seeking recovery of funds for LCP non-compliance, specifically finding that “the Service Provider did not have adequate controls and procedures in place to ensure that the Beneficiary was charged the lowest corresponding price that the Service Provider charges to non-residential customers who are similarly situated to the Beneficiary for the same services….”
Here are specific regulations tied to LCP:
“‘Lowest corresponding price’ is the lowest price that a service provider charges to non-residential customers who are similarly situated to a particular school, library, or library consortium for similar services.” 47 C.F.R. § 54.500(f) (2009).
“Lowest corresponding price. Providers of eligible services shall not charge schools, school districts, libraries, library consortia, or consortia including any of these entities a price above the lowest corresponding price for supported services, unless the Commission, with respect to interstate services or the state commission with respect to intrastate services, finds that the lowest corresponding price is not compensatory. 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 lowest corresponding price is determined.” 47 C.F.R. § 54.511(b) (2009).
“We clarify that a provider of telecommunications services, Internet access, and internal connections need not offer the same lowest corresponding price to different schools and libraries in the same geographic service area if they are not similarly situated and subscribing to a similar set of services. Providers may not avoid the obligation to offer the lowest corresponding price to schools and libraries for interstate services, however, by arguing that none of their non-residential customers are identically situated to a school or library or that none of their service contracts cover services identical to those sought by a school or library. Rather, we will only permit providers to offer schools and libraries prices above the prices charged to other similarly situated customers when those providers can show that they face demonstrably and significant higher costs to serve the school or library seeking service.” In the Matter of Federal-State Joint Board on Universal Service, CC Docket No. 96-45, First Report and Order, FCC 97-157, 12 FCC Rcd 8776, ¶ 488 (1997) (First Report and Order) (internal citations omitted).
“Service providers may request higher rates if they can show that the lowest corresponding price is not compensatory, because the relevant school, library, or consortium including those entities is not similarly situated to and subscribing to a similar set of services to the customer paying the lowest corresponding price.” 47 C.F.R. § 54.504(e)(2) (2009).
“Schools, libraries, and consortia including those entities may request lower rates if the rate offered by the carrier does not represent the lowest corresponding price.” 47 C.F.R. § 54.504(e)(1) (2009).
“Service providers may request higher rates if they can show that the lowest corresponding price is not compensatory, because the relevant school, library, or consortium including those entities is not similarly situated to and subscribing to a similar set of services to the customer paying the lowest corresponding price.” 47 C.F.R. § 54.504(e)(2) (2009).
“[The FCC] conclude[s] that only promotions offered for a period not exceeding 90 days may be excluded from the comparable rates upon which the lowest corresponding price must be determined…. Excluding shorter term promotional rates from consideration here balances the need to provide compensatory rates to providers while ensuring that eligible schools and libraries receive competitive, cost-based rates that are comparable to rates paid by similarly situated non-residential customers for similar services.” In the Matter of Federal-State Joint Board on Universal Service, CC Docket No. 96-45, FCC 97-420, Fourth Order on Reconsideration, 13 FCC Rcd 2372, ¶ 143 (1997).
USAC's LCP guidance can be found here.
