Reforming the High-Cost Program for an All-IP Future, Connect America Fund: A National Broadband Plan for our Future High-Cost Universal Support

Reforming the High-Cost Program for an All-IP Future, Connect America Fund: A National Broadband Plan for Our Future High-Cost Universal Support

SUPPLEMENTARY INFORMATION:

This is a summary of the Commission's NPRM in WC Docket Nos. 26-96, 10-90; FCC 26-35, adopted on May 20, 2026 and released on May 21, 2026. The full text of this document is available at the following internet address: https://www.fcc.gov/document/fcc-proposes-modernization-high-cost-program-0 .

The proceeding this NPRM initiates shall be treated as a "permit-but-disclose" proceeding in accordance with the Commission's ex parte rules. Persons making ex parte presentations must file a copy of any written presentation or a memorandum summarizing any oral presentation within two business days after the presentation (unless a different deadline applicable to the Sunshine period applies). Persons making oral ex parte presentations are reminded that memoranda summarizing the presentation must (1) list all persons attending or otherwise participating in the meeting at which the ex parte presentation was made, and (2) summarize all data presented and arguments made during the presentation. If the presentation consisted in whole or in part of the presentation of data or arguments already reflected in the presenter's written comments, memoranda or other filings in the proceeding, the presenter may provide citations to such data or arguments in his or her prior comments, memoranda, or other filings (specifying the relevant page and/or paragraph numbers where such data or arguments can be found) in lieu of summarizing them in the memorandum. Documents shown or given to Commission staff during ex parte meetings are deemed to be written ex parte presentations and must be filed consistent with rule 1.1206(b). In proceedings governed by rule 1.49(f) or for which the Commission has made available a method of electronic filing, written ex parte presentations and memoranda summarizing oral ex parte presentations, and all attachments thereto, must be filed through the electronic comment filing system available for that proceeding, and must be filed in their native format ( e.g., .doc, .xml, .ppt, searchable .pdf). Participants in this proceeding should familiarize themselves with the Commission's ex parte rules.

Providing Accountability Through Transparency Act. Consistent with the Providing Accountability Through Transparency Act, Public Law 118-9, a summary of this document will be available on https://www.fcc.gov/proposed-rulemakings.

I. Introduction

The Commission's Universal Service Fund (USF or Fund) High-Cost Program plays a critical role in supporting connectivity in America, particularly in rural areas. Indeed, the FCC's high-cost support mechanisms have enabled carriers to build out connections to some of the hardest-to-reach locations in the nation. These mechanisms are grounded in section 254 of the Communications Act of 1934, which directs the Commission to preserve and advance universal service with a guiding principle of promoting "[a]ccess to advanced telecommunications and information services . . . in all regions of the Nation." In implementing section 254, the Commission created the High-Cost Program to support carriers' costs of network deployment and maintenance in hard-to-serve rural and high-cost areas. There are currently a dozen different legacy and modernized support mechanisms under the High-Cost Program.

In this document, the Commission kicks off a process to examine how it can make some of the Commission's high-cost mechanisms even more efficient and effective into the future. Ensuring a predictable High-Cost Program for years to come-call it High-Cost Modernization-will provide continuing support for the Commission's Build America Agenda, supercharge American leadership in AI by efficiently supporting the broadband-capable networks upon which AI-enhanced applications and services will be delivered and accessed, and will help accelerate the transition to IP networks. The Commission is also asking these questions now because several of the relevant high-cost mechanisms are set to sunset absent Commission action in 2026 and 2028, and others have no ongoing deployment requirements. In addition, the Commission wants to ensure that, going forward, it has a rational approach for aligning various broadband funding programs, including the rollout of the $42.5 billion Broadband Equity Access and Deployment (BEAD) program, with the Commission's high-cost mechanisms, and that it regulates mindful of the increased offerings in rural areas by both terrestrial and satellite providers.

Through this NPRM, the Commission seeks comment on updating a certain subset of its high-cost mechanisms that apply to rate-of-return carriers. Specifically, the Commission is looking at its high-cost mechanisms that provide funding to legacy rate-of-return carriers that currently are not subject to any forward-looking buildout obligations: namely, Connect America Fund Broadband Loop Support (CAF BLS) and High-Cost Loop Support (HCLS). Separately, the Commission seeks comment on what next steps, if any, it should take with respect to the areas supported by the sunsetting Alternative Connect America Cost Model (A-CAM) I, Revised A-CAM I, and A-CAM II mechanisms. The Commission distinguishes these mechanisms from Enhanced A-CAM, which offered nearly $20 billion of forward-looking support over 15 years to carriers transitioning from A-CAM I, Revised A-CAM I, ACAM II and CAF BLS in exchange for new service obligations at a broadband speed of at least 100/20 Mbps.

To date, the Commission's high-cost mechanisms have advanced the goal of ensuring that every American has access to communications services. But gaps remain for rural America. Consistent with the Commission's Build America Agenda, its proceeding today seeks comment on how a High-Cost Modernization initiative could best ensure that all Americans, particularly those in rural areas, have access to next-generation services in an ever-changing environment. In particular, the Commission seeks comment on what should come next for ongoing high-cost support, what form such support should take, and the costs that should be eligible. The Commission also seeks comment on ways it may modernize its legacy high-cost support mechanisms to align them with the modern communications landscape.

II. Discussion

Since the Commission originally adopted the legacy, cost-based CAF BLS ($995 million in 2025) and HCLS ($202 million) and model-based A-CAM I ($8 million), Revised A-CAM I ($166 million), and A-CAM II ($218 million) high-cost mechanisms, there have been dramatic changes in broadband technology and performance as well as significant broadband deployment by many providers. These changes only underscore the need for the Commission to evaluate what comes next for these high-cost mechanisms. In light of this, the Commission seeks comment on whether and how it should reform its legacy high-cost support mechanisms and address the soon-to-be sunsetting model-based support mechanisms. The Commission also seeks comment on whether and how it should establish a new support mechanism to ensure sufficient, predictable support for high-cost carriers.

In considering changes, the Commission asks questions in the following about the types of support that are necessary in areas where the carrier already provides service or where a competitor already provides service or will provide service pursuant to an enforceable commitment through a funding program such as BEAD. With competitive voice and broadband options available in these rate-of return areas and $42.5 billion currently dedicated to any areas that are not already served, how should the Commission leverage its high-cost mechanisms to advance universal service principles while promoting the efficient expenditure of finite federal resources?

The High-Cost Program and intercarrier compensation system were originally intended to make voice telephone service available to residential customers in rural, insular, and high-cost areas at just, reasonable, and affordable rates and at rates reasonably comparable to the rates for similar services in urban areas. With the ongoing IP transition from time-division multiplexing to IP-based communications, the continued emergence of satellite communications, and the increased availability of alternative federal funding, this document examines the levels and types of universal service high-cost support needed going forward for legacy support mechanisms and those A-CAM support mechanisms that are soon to sunset. The Commission in 2023 sought comment on how to modernize the legacy support mechanisms to align them with the current broadband deployment and support environment. The Commission seeks to refresh the record and further ask whether and how it should modernize these legacy and A-CAM support mechanisms. For example, there could be at least three potential paths forward: (1) the Commission could update these high-cost support mechanisms to align with the current landscape; (2) the Commission could establish a new single modernized fixed-support mechanism replacement; or (3) the Commission could take no further action and maintain the status quo for legacy support mechanisms and allow the A-CAM support mechanisms to sunset.

Which of these three approaches should the Commission take to provide ongoing high-cost support efficiently and effectively? Should a new high-cost support mechanism be model-based? If not, what other method could be used to calculate ongoing support, other than cost-based? What are the advantages and disadvantages of either updating existing high-cost support mechanisms or establishing a new mechanism? Should the Commission limit ongoing high-cost support to certain areas? If so, what type of areas should the Commission support and how should the Commission determine those areas? If model-based mechanisms providing support in lieu of CAF BLS and HCLS were allowed to expire, how would recipients' support levels change?

If the Commission were to modernize the existing mechanisms or establish a new mechanism, what types of expenses should it prioritize? Should the Commission focus support on capital expenditures or operating expenses? Would there be benefits to establishing a new support mechanism that would enable the deployment of high-speed networks where gaps remain and/or support the ongoing costs of existing networks that were built using high-cost funds? If so, would model-based support be the most appropriate? If a new support mechanism was established to support only operating expenses for existing high-cost networks, should it be limited to certain operating costs? To what extent is support necessary for carrier operating costs to protect those that have already made substantial investments and rely on the existing support mechanisms to recover a portion of the costs to maintain their networks or service existing debt while charging reasonably comparable rates? To what extent is support necessary for communities to continue to be served? If the Commission determined that capital expenses should also be supported under a new mechanism, should that support be limited to certain capital expenditures and subject to a cap? What should the cap be? With any changes either to the existing support mechanisms or with the establishment of a new mechanism, how much time should the Commission provide for carriers that will transition to different support level amount than what is currently authorized? For example, should the Commission provide a transition path over a number of years where there is a percentage reduction in support year-to-year during the transition period? Commenters should provide details on any suggested transition path.

If the Commission takes either approach, should there be deployment obligations as a condition of receiving support? If there are deployment obligations, what should they be and what should be the timeline for deployment? Should there be milestones that carriers must meet as part of the deployment obligations? If the Commission does require deployment obligations, should it require the deployment of voice and broadband service at a speed of at least 100/20 Mbps to unserved or underserved locations, consistent with the BEAD and Enhanced A-CAM deployment obligations? In addition to offering a broadband service speed of at least 100/20 Mbps, what specific latency, upload thresholds, and capacity are needed to support participation in the AI economy in rural areas? To what extent should the Commission require carriers to implement cybersecurity precautions and capabilities as a condition to receive funding as the Commission did with Enhanced A-CAM carriers? What is the relationship between the nature and extent of conditions imposed on high-cost support recipients and the calculation methodology and/or magnitude of high-cost support providers will need in order to meet those conditions?

What unserved or underserved locations will remain given the commitments made under Enhanced A-CAM and BEAD? If the Commission adopts an obligation to deploy 100/20 Mbps, how should the Commission determine the number of locations to which the carrier must deploy? If the Commission modernizes existing mechanisms or establishes a new mechanism, should it limit support to locations where there is no unsubsidized competitor presently offering service or a competitor with an enforceable commitment to serve, thus reducing the chance of overbuilding? For either approach, the Commission proposes to base deployment obligations on the broadband serviceable locations (BSL) Fabric and the Broadband Data Collection (BDC). How can the Commission ensure that those data sources are used in a way that results in deployment obligations that are predictable at the time rate-of-return carriers need to make informed participation decisions? If there are locations that the carrier will not or cannot serve, should the Commission remove those locations from the carrier's obligations along with any corresponding support? Should there be penalties for a carrier that is unable or unwilling to serve such locations? How should the Commission's decisions in this regard be informed by the potential likelihood of, or challenges to, future service to the locations a carrier is unable or unwilling to serve?

Are there different or additional deployment obligations the Commission should consider? In light of other federal funding, what purpose would a support mechanism with no deployment obligations serve? Similar to the offer to take Enhanced A-CAM, should legacy carriers be permitted to elect to participate in a new model-based support mechanism and relinquish any ongoing support from its existing high-cost mechanism? If so, how should such an offering be structured, e.g., term, public interest obligations, and support amounts/limits? Given the focus on improving performance incentives, should the Commission structure the offer so that full support is only received once certain performance objectives are achieved, e.g., broadband adoption rate is at or above 70%? To the extent the Commission is considering providing ongoing support for operating expenses, should there be other, non-deployment obligations that would accompany such support? What should those obligations be, and how would they be measured?

Even with the substantial amount of high-cost support made available and the private investment made by carriers, there are locations in the hardest-to-reach areas that lack access to quality, terrestrial fixed broadband service. If the Commission updates its legacy and A-CAM mechanisms or establishes a new mechanism, should it exclude from future buildout obligations these cost-prohibitive locations that are not otherwise served by an unsubsidized terrestrial competitor and that do not otherwise have an enforceable commitment from another state or federal program? Should the Commission instead rely on commercially available satellite service for such locations? How should the Commission identify such locations? Should carriers be required to make a showing that the areas are too difficult to reliably serve with fiber-based or terrestrial fixed wireless service and, if so, what kind of showing is needed? Or should the Commission simply rely on the National Broadband Map to identify such unserved locations? If low Earth orbit (LEO) satellite service is available in locations that are not covered by the high-cost support recipient, should carriers relinquish a corresponding amount of support? How should the Commission calculate the amount of corresponding support?

Two-Year A-CAM I Extension. Notwithstanding the information in this document, the Commission seeks comment on adopting a short-term A-CAM I extension through the end of 2028. This would align the terms of the three sunsetting A-CAM mechanisms so that all three will conclude at the end of 2028. The carriers would continue to receive their previously authorized annual support amount while the location adjustment process is implemented.

As a condition of receiving this extension of support, the Commission proposes to require carriers to maintain voice and broadband service and be required to serve additional locations upon reasonable request. The Commission notes that carriers failing to meet broadband deployment obligations by the end of 2026 will have until the end of 2027 (the cure period) to meet those obligations. Carriers failing to meet the A-CAM I obligations by the end of the cure period are subject to support recovery, and the Commission seeks comment on including support for 2027 and 2028 into the "carrier's total relevant high-cost support over the support term for that support area" that would be subject to recovery. The Commission notes that if it includes support for 2027 in the support recovery calculation, that would also apply to support recovered if the Universal Service Administrative Company (USAC) later determines in a compliance review that the carrier lacks evidence to demonstrate it fulfilled its performance obligations.

The Commission further proposes that during the two-year extension, carriers will remain subject to quarterly network testing obligations and certifications and annual reporting requirements. Given the requirement to maintain service, the Commission seeks comment on specific support recovery rules for carriers failing to meet their broadband service obligations based on network testing results that are simple to understand and implement. For instance, the Commission could apply the current network testing compliance levels to 2028 testing: (1) full compliance, no support recovery; (2) level 1, USAC would recover 25% of extension support received in 2028; (3) level 2, USAC would recover 50% of extension support received in 2028; (4) level 3, USAC would recover 75% of the extension support received in 2028; and (5) level 4, USAC would recover 100% of extension support received in 2028. If the Commission adopts an extension of A-CAM I until 2028, should it take additional measures with regard to performance or reporting obligations during the extension period? If so, what should those measures be? Commenters are encouraged to be specific about any measures the Commission should take.

Based on the National Broadband Map, the Commission estimates there are approximately 3.1 million BSLs in the areas served by legacy and the relevant A-CAM rate-of-return carriers. These rate-of-return carriers collectively offer voice and broadband service of at least 100/20 Mbps to 2.5 million BSLs in these areas, or 80% of the total BSLs. Unsubsidized competitors, not including satellite providers, offer broadband service of at least 100/20 Mbps to 58% of the BSLs in these areas, which includes a BSL overlap of 46% with those carriers receiving high-cost support. There are about 267,000 BSLs that still do not receive broadband service of at least 100/20 Mbps-or roughly 9% of the BSLs in these areas. Nearly all of these BSLs are shown on the June 30, 2025, NBM as served by a LEO satellite provider with a broadband speed of at least 100/20 Mbps.

Separately, there has been a steady and significant downward trend in the use of end-user switched access voice lines. Of the 3.1 million BSLs, legacy and relevant A-CAM carriers collectively reported almost 932,000 switched access voice lines in service as of the end of 2024. About 1.4 million, or 43%, of these 3.1 million BSLs have fixed voice service available from an unsubsidized interconnected VoIP competitor. At least one mobile provider offers voice service to about 99% of the 3.1 million BSLs in these areas.

The Commission has long endorsed a policy that "providing support in areas of the country where another voice and broadband provider is offering high-quality service without government assistance is an inefficient use of limited universal service funds." Support should instead be directed to areas where "providers would not deploy and maintain network facilities absent a USF subsidy." If the Commission updates its existing mechanisms or establishes a new mechanism, should ongoing support for maintenance of existing networks and operational expenses be limited to areas where there is no unsubsidized competitor? How should the Commission weigh the presence of an unsubsidized competitor when considering how to provide high-cost support in the future? Should the Commission reevaluate the definition of an unsubsidized competitor for the purposes of ongoing high-cost support? What lessons can be drawn from the Commission's proceeding on technology transitions concerning discontinuances in which the carrier or unaffiliated providers offer alternative services through interconnected VoIP, mobile wireless, or other voice services?

Additionally, the Commission in recent years has declined to provide high-cost support for locations where there was an enforceable commitment to provide service. What is the role of high-cost support, if any, where there is already an enforceable commitment to serve locations? Should support for maintenance and operational expenses be limited to areas where there is no enforceable commitment to provide service? Should the Commission only provide support for locations that are not subject to an enforceable commitment and reduce or eliminate support for locations where there is an enforceable commitment? How should the Commission calculate support or any reduction in support?

Competitive Overlap. The Commission seeks comment on measures to prevent duplication of support where a service provider other than the legacy rate-of-return carrier is awarded funding for broadband deployment. For example, § 54.319 of the Commission's rules states that CAF BLS support will be eliminated for those census blocks of an incumbent LEC study area "where an unsubsidized competitor, or combination of unsubsidized competitors . . . offer voice and broadband service meeting the public interest obligations [including offering broadband service at a speed of at least 25/3 Mbps] to at least 85 percent of residential locations in the census block." The Commission adopted this rule change for CAF BLS to address the inefficiency of providing more universal support than necessary by "subsidizing a competitor to a voice and broadband provider that is offering service without government assistance."

The Commission seeks comment on how it should evaluate high-cost support in census blocks for which competitors have been awarded funding to provide broadband service or where unsubsidized competitors are operating. The Commission proposes to use the Broadband Funding Map and the National Broadband Map to identify overlap areas where there is already a provider with a funding commitment and/or an unsubsidized competitor is present. How should the Commission use this mapping data to evaluate high-cost support? As a universal service policy matter, at what level of granularity ( e.g., individual BSLs) or generality ( e.g., census blocks) should that assessment occur?

Should the Commission's determination of a competitor providing qualifying service be technology-neutral, and if so, what should that mean in practice? Should the Commission treat the specific type of technology used as entirely irrelevant? Or should it look in some manner at the technology used to provide the services, such as whether it is provided by fiber, cable, fixed wireless, or LEO satellite? Could the particular technology used to provide service have any implications for the Commission's efforts to preserve and advance universal service through a particular high-cost mechanism?

How closely does mapping data align with particular policy considerations that might underlie a given high-cost support mechanism, and how should that inform the use of those data? For example, should the Commission give different weight to evidence regarding providers subject to legally-enforceable obligations to provide service to particular locations than to evidence regarding unsubsidized competitors not ultimately subject to any legal duty to serve those locations? How, if at all, should the Commission account for the fact that mapping data does not include pricing information such as connection costs and recurring charges, while high-cost support historically has been used, in part, to preserve and advance reasonable comparability and affordability of rates in rural and high-cost areas?

How should the "snapshot" nature of mapping data be factored in to the Commission's high-cost support decisions? For example, if the Commission is undertaking to set policy for a 10- or 15-year support term, how, if at all, should that inform the use of present availability data? Are there situations where future demand might constrain the universe of BSLs that ultimately can be served with a given technology (such as technologies relying on shared resources like spectrum)? Are there situations where future technological advancements, regulatory developments, or both, might improve the geographic scope and/or quality of service that can be offered using a given technology? More generally, how should the Commission account for any changes in availability from an unsubsidized competitor as shown in the mapping data over time?

To what extent should the Commission provide high-cost support recipients an opportunity to dispute claims of an unsubsidized competitor before support is reduced or eliminated? Should the Commission instead rely on the existing availability challenge process provided within the BDC? Should any reduced or eliminated support be restored if subsequent changes in mapping data show a reduced geographic scope of service availability from an unsubsidized competitor for a relevant performance level? If so, under what circumstances and what magnitude of support should be restored? How should our decisions about reducing or eliminating support, or restoring support, be informed by potential difficulties a provider might have-due to lack of geographic contiguity or otherwise-in serving the BSLs not ultimately served by the unsubsidized competitor? At times the Commission has treated geographic areas as ineligible for support despite the fact that less than 100% of subscribers would be served by the unsubsidized competitor. What factors should the Commission weigh when making such a policy decision and designing the associated the high-cost support mechanism?

There has been a rise of broadband service provided by satellite providers. As discussed previously, LEO satellite systems have emerged providing widely available low latency coverage at high speeds across America. These LEO systems, such as SpaceX's Starlink and Amazon's Leo, can provide broadband service to remote and rural regions with low population densities and difficult topographies at competitive retail rates. Starlink offers residential broadband service, "Residential Lite," with a stated download speed of up to 250 Mbps and an upload speed of up to 35 Mbps for $80 a month, and a "Residential" plan for $120 a month with a stated typical download speed of up to 305 Mbps and an upload speed of up to 40 Mbps. In comparison, the Commission provides as much as $200 each month per location in USF support to underwrite the provision of voice and 25/3 Mbps broadband service by some legacy recipients.

How should widely available satellite service affect the establishment of a new high-cost support mechanism? For the purposes of determining service adequacy and eligibility for high-cost support, should the Commission classify federally supported terrestrial networks such as fiber optic networks as the primary infrastructure for ensuring resilient communications to critical areas? Should the Commission consider non-terrestrial services, while valuable as a secondary and redundant layer, as an insufficient substitute for robust primary infrastructure? Would support for such secondary and redundant layers constitute "overbuilding" and a waste of federal resources? How is such treatment of satellite service consistent the Commission's technology-neutral approach to address the voice and broadband service needs of consumers? What level of capacity, and what latency, is necessary to support participation in the AI economy? What inferences, if any, should the Commission draw from the mix of technologies, including satellite service, awarded BEAD funding?

If the Commission were to modernize existing mechanisms, how should it consider the presence of satellite service in areas receiving support under those mechanisms? Is there a role for satellite in the most difficult and expensive to serve areas? If so, should those areas be removed from the service requirements of high-cost support recipients? Is there a concern that if terrestrial network carriers are no longer supported in these areas, satellite providers would increase their rates significantly above the reasonably comparable rates charged for similar services in urban areas? Given the economics of satellite deployment, do rates for satellite-based broadband service in rural areas exceed rates in urban areas by a significant amount? How could the Commission address such concern?

In 2023, the Commission released a Notice of Inquiry seeking to build a record to help the Commission explore methods to ensure universally available and affordable fixed broadband services into the future, in light of section 254(c)(1)'s definition of universal service as an "evolving level of . . . service, taking into account advances in telecommunications and information technologies and services." Commenters generally supported the continued funding of on-going support to sustain and maintain operations in high-cost areas. NTCA-The Rural Broadband Association suggested the "first step is to determine where a market failure exists such that ongoing support is needed, followed by a determination of the appropriate level of such support to ensure that the enduring mission of universal service is fulfilled."

In the past, high-cost support largely sought to incrementally upgrade deployed broadband network speeds in high-cost areas. The Commission now seeks additional comment on what role, if any, the Fund can play to encourage the transition to an all-IP network environment. The Commission also seeks comment on the benefits of encouraging a transition to VoIP and an all-IP network, and on the challenges this transition may present to rural areas. Are there special challenges in remote areas supported with high-cost funding, such as the ability of rural 911 systems to operate in an all-IP environment? What are the potential cost savings associated with delivering traffic in IP, including reducing maintenance, electricity, and real estate expenses? How would transitioning to an all-IP network reduce support costs? Are there costs associated with the transition to IP that carriers would need to recover? If so, how would carriers recover those costs? How could universal service funding help ensure a successful IP transition?

Delete, Delete, Delete. The Commission seeks comment on whether there are High-Cost Program rules that it should consider removing. Are there rules that are no longer necessary? Which rules or statutory provisions will be affected by any changes the Commission may make to the High-Cost Program? Commenters are encouraged to be as specific as possible in identifying rules or statutory provisions that may be impacted.

All filings made in response to the questions in the NPRM should be filed in WC Docket No. 26-96. The Commission has also opened a new docket-WC Docket No. 25-311, "Reforming Legacy Rules for an All-IP Future," and established WC Docket No. 25-208, "Accelerating Network Modernization" and WC Docket No. 25-209, "Reducing Barriers to Network Improvements and Service Charges." The Commission incorporates the comments filed in response to these proceedings herein by reference.

Benefits. The Commission seeks comment on the benefits of the proposed reforms. What would be the likely benefit of reforms to A-CAM I, Revised A-CAM I, A-CAM II, CAF BLS, and HCLS? What would be the likely benefits of the three potential avenues for reform of the model-based and legacy support programs, for which comment was sought: (1) update existing legacy high-cost support mechanisms to align with the current landscape; (2) establish a new high-cost support mechanism that could replace the different legacy high-cost support mechanisms with a single, modernized mechanism; or (3) take no further action with regard to ongoing high-cost support and maintain the status quo for legacy support mechanisms and allow the relevant A-CAM support mechanisms to sunset? What would be the benefits of each approach for consumers, carriers, and the Fund? Would there be any benefit from reduced administrative burden if these High Cost programs are reformed? How should the Commission consider the benefits of reforms to High Cost programs that are set to expire? If funding is reformed and additional deployment obligations are required, how should the Commission measure the benefit of those additional obligations? What are the potential benefits if the Commission decides to limit support to certain areas? How should the Commission view the benefits of potential reforms given that satellite service is now widely available?

Costs. The Commission seeks comment on the likely costs of the proposed rules. Will any of the proposed reforms increase carrier compliance costs? If so, are these costs expected to be transitory or ongoing? If the Commission phases down the high-cost mechanisms or offer carriers participation in other funding programs, would carriers be forced to incur additional costs to meet new administrative requirements of those programs? If funding is reformed and additional deployment obligations are required, how can the Commission evaluate the cost of these deployments? Additionally, what are the likely costs if funding is reduced or restricted to certain areas. If the reduction or restriction in funding causes some carriers to exit the market, what is the likelihood of this occurrence and what would be the resulting costs? The Commission encourages commenters to provide quantitative estimates where feasible and to distinguish between one-time implementation costs and recurring compliance burdens.

IP Transition and Other Issues. To the extent that any rules the Commission adopts in the proceeding encourage carriers to transition to a fully IP-based network, what are the potential benefits and costs of the IP transition? What would be the potential benefits, to carriers and customers, of carriers transitioning their network? What would be the potential costs?

The Rural Broadband Protection Act. On May 11, 2026, the Rural Broadband (Pub. L. No: 119-89) (RBPA) was enacted. The Commission invites comment on the application of the RBPA to any support mechanisms that stem from this item. If there is no direct application because these mechanisms would not be "new covered funding awards," are there principles embodied in the RBPA that could be used to help improve the future operation of these high-cost mechanisms or the support they distribute? To the extent the RBPA applies to these mechanisms, how should the specific application of the "vetting" principles be informed by processes already developed for the high-cost auctions?

In this document, the Commission seeks comment on ongoing high-cost support and existing legacy and modernized high-cost support mechanisms. In the following, the Commission discusses its legal authority to initiate this proceeding and invite comment on its analysis.

Section 254. The Commission intends to rely on its statutory authority under section 254 of the Act to modernize legacy universal service support mechanisms. Section 254(d) directs the Commission to establish and maintain "specific, predictable, and sufficient mechanisms . . . to preserve and advance universal service." Section 254(c) defines "universal service" as "an evolving level of telecommunications services that the Commission shall establish periodically under this section, taking into account advances in telecommunications and information technologies and services." Section 254(e) further states that universal service "should be explicit and sufficient to achieve the purposes of this section."

In establishing the services that may be supported by the Fund, the Commission must consider the extent to which telecommunications services are "(A) essential to education, public health, or public safety; (B) have, through the operation of market choices by customers, been subscribed to by a substantial majority of residential customers; (C) are being deployed in public telecommunications networks by telecommunications carriers; and (D) are consistent with the public interest, convenience, and necessity." As the Supreme Court has explained, the "Act's embrace of evolution-the permission it gives the FCC to subsidize different services now than 30 years ago-ensures that the universal-service program will be of enduring utility." And, "nothing in the statute limits the FCC's authority to place conditions . . . on the use of USF funds," including by imposing certain broadband requirements as the Commission did in the USF/ICC Transformation Order, 76 FR 73830, November 29, 2011.

Currently, voice telephony service is the telecommunications service supported by the universal support mechanisms. The service must be capable of providing "voice grade access to the public switched network or its functional equivalent; minutes of use for local service provided at no additional charge to end users;" access to emergency services; and toll limitation services to qualifying low-income consumers. An eligible telecommunications carrier must offer voice telephony service to receive Federal universal service support per the Commission's rules. That said, the Commission recognizes that voice telephony is simply a service that can be delivered over broadband-capable loops and thus transformed the ICLS program into CAF BLS that allows funding for consumer broadband-only loops in conjunction with the offering voice telephony service by carriers.

As carriers continue to transition to all-IP networks, does the Commission need to revisit its definition of the supported services for rural, insular, and high cost areas? Section 54.101 of the Commission's rules states that the eligible voice telephony service must provide "access to the public switched network or its functional equivalent." Does the Commission need to update its reference to the "public switched network" in light of the IP transition? As the Supreme Court recently recognized, universal service is an "evolving level of telecommunications services" and thus section 254's "embrace of evolution-the permission it gives the FCC to subsidize different services now than 30 years ago-ensures that the universal-service program will be of enduring utility."

III. Procedural Matters

A. Paperwork Reduction Act

The NPRM contains proposed new and revised information collection requirements. The Commission, as part of its continuing effort to reduce paperwork burdens, will be inviting the general public and the Office of Management and Budget to comment on the information collection requirements contained in this document, as required by the Paperwork Reduction Act of 1995, Public Law 104-13. In addition, pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4), the Commission seeks specific comment on how it might further reduce the information collection burden for small business concerns with fewer than 25 employees.

As required by the Regulatory Flexibility Act of 1980, as amended (RFA), the Commission has prepared the Initial Regulatory Flexibility Analysis (IRFA) of the policies and rules proposed in the NPRM assessing the possible significant economic impact on a substantial number of small entities. The Commission requests written public comments on this IRFA. Comments must be identified as responses to the IRFA and must be filed by the deadlines for comments specified on the first page of the NPRM. The Commission will send a copy of the NPRM, including this IRFA, to the Chief Counsel for the Small Business Administration (SBA) Office of Advocacy. In addition, the NPRM and IRFA (or summaries thereof) will be published in the Federal Register .

The USF High-Cost Program plays a critical role in supporting connectivity in America, particularly in rural areas. The NPRM seeks comment on potentially reforming our legacy high-cost mechanisms, i.e., the CAF BLS and HCLS programs to more efficient fixed support mechanisms. The NPRM also seeks comment on what next steps, if any, the Commission should take with respect to the areas served by the soon to be ending A-CAM I, Revised A-CAM I, and A-CAM II mechanisms, including a two-year extension of the A-CAM I support mechanism past its 2026 sunset date. The NPRM also seeks comment on the elimination of regulations that will no longer be necessary in a post time TDM environment.

Specifically, the three potential avenues for reform of the model-based and legacy support programs, for which the Commission seeks comment are to: (1) update existing legacy high-cost support mechanisms to align with the current landscape; (2) establish a new high-cost support mechanism that could replace the different high-cost support mechanisms with a single, modernized mechanism; or (3) take no further action with regard to ongoing high-cost support and maintain the status quo for legacy support mechanisms and allow the relevant A-CAM support mechanisms to sunset.

The RFA directs agencies to provide a description of and, where feasible, an estimate of the number of small entities that may be affected by the proposed rules, if adopted. The RFA generally defines the term "small entity" as having the same meaning as the terms "small business," "small organization," and "small governmental jurisdiction." In addition, the term "small business" has the same meaning as the term "small business concern" under the Small Business Act. A "small business concern" is one which: (1) is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the SBA. The SBA establishes small business size standards that agencies are required to use when promulgating regulations relating to small businesses; agencies may establish alternative size standards for use in such programs, but must consult and obtain approval from SBA before doing so.

The Commission's actions, over time, may affect small entities that are not easily categorized at present. The Commission therefore describes three broad groups of small entities that could be directly affected by its actions. In general, a small business is an independent business having fewer than 500 employees. These types of small businesses represent 99.9% of all businesses in the United States, which translates to 34.75 million businesses. Next, "small organizations" are not-for-profit enterprises that are independently owned and operated and not dominant their field. While the Commission does not have data regarding the number of non-profits that meet that criteria, over 99 percent of nonprofits have fewer than 500 employees. Finally, "small governmental jurisdictions" are defined as cities, counties, towns, townships, villages, school districts, or special districts with populations of less than fifty thousand. Based on the 2022 U.S. Census of Governments data, the Commission estimates that at least 48,724 out of 90,835 local government jurisdictions have a population of less than 50,000.

The rules proposed in the NPRM will apply to small entities in the industries identified in the chart below by their six-digit North American Industry Classification System (NAICS) codes and corresponding SBA size standard. Where available, the Commission also provides additional information regarding the number of potentially affected entities in the industries identified in the following.

The RFA directs agencies to describe the economic impact of proposed rules on small entities, as well as projected reporting, recordkeeping and other compliance requirements, including an estimate of the classes of small entities which will be subject to the requirements and the type of professional skills necessary for preparation of the report or record.

In the NPRM, the Commission seeks comment on proposals that, if adopted, would improve the efficient allocation of high-cost universal service support in rural areas. Specifically, the NPRM seeks comment on whether to update existing legacy high-cost support mechanisms to align with the current landscape, whether this new support mechanism should focus on capital or operating expenses, and what deployment and other obligations small and other carriers would have from receiving this support. The NPRM also seeks comment on extending some support mechanisms. For example, as a condition of receiving a short-term extension of A-CAM I support through the end of 2028, the NPRM proposes that carriers be required to maintain voice and broadband service, serve additional locations at a reasonable request, and remain subject to quarterly and annual reporting requirements. Carriers who could not meet those obligations would be subject to existing penalties for partial or non-compliance. The NPRM also seeks comment on how to evaluate the need for high-cost support in areas where there are unsubsidized competitors or an enforceable commitment to provide service. Additionally, the NPRM seeks comment the role of broadband service provided by satellite carriers in establishing a new high-cost support mechanism. Finally, the NPRM requests comment on costs of the proposed changes to the high-cost support mechanism, including whether changes may increase carriers' costs for compliance and other burdens.

The proposals in the NPRM would require the Commission to update existing legacy and soon-to-be sunsetting model-based high-cost support mechanisms to align with the current landscape. The two main categories of mechanisms addressed in the NPRM-legacy rate-of-return and sunsetting A-CAM model support-account for approximately $1.6 billion in support to carriers, which if phased out or allowed to sunset, may impact small and other carriers that participate in these programs. Other proposed rules will have more minor impacts. Primarily this would require carriers to change administrative procedures. Carriers receiving or who have received support should be familiar with reporting, recordkeeping, and obligations of the existing programs, but may need to hire professionals to assist with compliance obligations associated with a new high-cost support mechanism. Before reaching its final conclusions and taking action in this proceeding, the Commission expects to review the comments filed in response to the NPRM and more fully consider the economic impact on small entities and how any impact can be minimized.

The RFA directs agencies to provide a description of any significant alternatives to the proposed rules that would accomplish the stated objectives of applicable statutes, and minimize any significant economic impact on small entities. The discussion is required to include alternatives such as: "(1) the establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities; (2) the clarification, consolidation, or simplification of compliance and reporting requirements under the rule for such small entities; (3) the use of performance rather than design standards; and (4) an exemption from coverage of the rule, or any part thereof, for such small entities."

In the NPRM, the Commission seeks comment on proposals and alternatives that it expects will minimize any significant economic impact of the proposed rules on small entities. Specifically, the Commission invites comment on alternative approaches for high-cost support mechanisms in ways that reduce administrative burdens. The Commission will fully consider the economic impact on small entities as it evaluates the comments filed in response to the NPRM, including comments related to the costs and benefits of these proposed rules. Alternative proposals and approaches from commenters will further develop the record and could help the Commission further minimize the economic impact on small entities. The Commission's evaluation of the comments filed in this proceeding will shape the final conclusions it reaches, the final alternatives it considers, and the actions it ultimately takes to minimize any possible economic impact the final rules may have on small entities.

III. Ordering Clauses

Accordingly, it is ordered that pursuant to sections 1-4, 201-202, 206, 214, 218-220, and 251-254, of the Communications Act of 1934, as amended, and section 706 of the Telecommunications Act of 1996, 47 U.S.C. 151-54, 201-202, 206, 214, 218-220, 251-254, 1302, and §§ 1.1 and 1.412 of the Commission's rules, 47 CFR 1.1, 1.412, the NPRM hereby is adopted .

It is further ordered that, pursuant to applicable procedures set forth in §§ 1.415 and 1.419 of the Commission's rules, 47 CFR 1.415, 1.419, interested parties may file comments on the NPRM on or before 60 days after publication in the Federal Register , and reply comments on or before 90 days after publication in the Federal Register .

[FR Doc. 2026-11353 Filed 6-4-26; 8:45 am]

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