The “Lowest Corresponding Price” Rule Means You Recieve the Lowest Prices - even if you don't ask!
Even for those already familiar with E-Rate it remains meaningful to contemplate the charter that frames and defines this unique program; as stated on the Schools and Libraries Division website;
“Full access to telecommunications and information resources makes possible the rich teaching and learning that take place in schools and libraries. For these institutions to provide the high level of service necessary for their students and patrons to participate fully in American society, the costs can be great. Telecommunications and Internet access, the hardware needed for assembling local networks, and maintenance of systems and machines can stretch budgets that are already under stress. The universal service Schools and Libraries Program, commonly known as “E-Rate,” provides discounts of up to 90 percent to assist most schools and libraries in the United States obtain affordable telecommunications and Internet access.”
It should be noted that E-Rate is the product of a political vision sanctioned by Federal legislation and law. The program owes credit to former President Clinton and his administration. President Clinton wanted to accelerate the deployment of broadband services for our schools and libraries – and to his credit he, and Congress, created the laws and statutes supporting this initiative. Over the years, billions of dollars have been disbursed by the Federal Communications Commission (the FCC). These funds feed and nourish the E-Rate program while the day-to-day operations are managed by the Universal Service Administrative Company (USAC).
There is no question, our schools and libraries have benefitted from this program. But E-Rate has also been beneficial to the Service Providers.
Service providers include the larger telephone and cable companies that furnish the digital conduits (“Priority I” services) to schools and libraries. Even smaller, lesser known companies have benefitted by providing the internal connections (“Priority II” services) that are used by schools and libraries to connect to the external ‘digital highways’ belonging to those major phone and cable companies.
The Investigative Report
Recently, Education Week ran with a story which originated on the independent website ProPublica. With the eye-catching headline “AT&T, Feds Ignore Low-Price Mandate Designed to Help Schools” the article draws attention to a little known rule woven into the original E-Rate statutes created during the Clinton presidency. The critical passage, at least on the surface, is seemingly very benign.
47 CFR § 54.500(f): Lowest Corresponding Price (LCP) is the lowest price that a service provider charges to nonresidential customers who are similarly situated to a particular school, library, or library consortium for similar services.
Why is this small passage, created in the late 1990s, suddenly causing such a stir? Because it is very possible, according to the ProPublica article, that the failure to execute and enforce this component of law has drained valuable funding from schools and libraries and redirected those funds into the corporate coffers of the service providers.
Jeff Gerth, the ProPublica journalist and author of this expose, tracks a sequence of disparate telecom-related audits that trace back to about 2005. These private audits – all involving schools - took place in different states (including Wisconsin, New York and Indiana) and were shepherded by different consultants. Despite the differences in geography and auditors a common theme emerged, E-Rate and the LCP rule.
Two of the cases have reached settlements, New York and Indiana. Refund amounts were not provided in the New York settlement. The case in Indiana, which involved both the FCC and the Department of Justice, ultimately led to a settlement in excess of $8M. The Wisconsin case is still engaged in legal proceedings, but also involves several million dollars in potential refunds.
Parallel to these private telecom-audits has been a series of filings before the FCC. Most notably, a 2010 petition was submitted by the United States Telecom Association which seeks to marginalize application of the LCP rule. Among the positions espoused by the petitioners is the notion that the ‘burden of proof’ (that the LCP was breached) resides with the schools and libraries.
Subsequently, the FCC sought public comment to this petition, and vigorous voices supporting, and denouncing, the petition have surfaced.
What Facts Can Be Agreed Upon?
1. The law does exist –the LCP is real and factual.
2. Claims of over-billing have been predicated on alleged violations of the LCP rule and -according to the research contained in the ProPublica article – some schools have prevailed and secured settlements/refunds.
3. USAC, just recently, has begun to include discussion of the LCP, in their training materials. This is not insignificant. Part of this training material discusses the notion that the “previous three years are still compensatory”.
What Should Your School Do?
· Recognize that your school, even if a private or Charter school, is entitled to the same pricing discounts offered to public schools that are “similarly situated”. You should not hesitate to question your Service Providers about the LCP rule. (NOTE: LCP is applicable to Priority I and Priority II services)
· Take steps to validate the accuracy of what you are being billed and what you have been billed. Most service providers (for Priority I) are required by public service law to publish prevailing rates and prices in Tariffs, which are part of the public domain and typically available from the carrier, or your state Public Service Commission. You can also use the Data Retrieval Tool available from the USAC website to determine what other schools and libraries are being charged by your service provider.
· You also have the right to exercise a Freedom of Information request from any publicly funded entity, including public schools and libraries.
You can also retain the services of a professional telecom audit firm. Most firms will work on a contingency fee basis or you can negotiate a flat-fee with the firm. Remember, if you do receive a refund, you will need to return some of the recovered funds to USAC, since a portion of the original charges may have been reimbursed by USAC.
Please do not hesitate to visit our website – TeleTech Associates – for more information on this and other subjects.