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Rule2023-16674

Connect America Fund: A National Broadband Plan for Our Future High-Cost Universal Service Support; ETC Annual Reports and Certifications; Telecommunications Carriers Eligible To Receive Universal Service Support; Connect America Fund-Alaska Plan; Expanding Broadband Service Through the ACAM Program

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Published

August 17, 2023

Effective

August 17, 2023

Issuing agencies

Federal Communications Commission

Abstract

In this document, the Federal Communications Commission (FCC or Commission) adopts the Enhanced Alternative Connect America Cost Model (A-CAM) program as a voluntary path for supporting the widespread deployment of 100/20 Mbps broadband service throughout the rural areas served by carriers currently receiving A-CAM support and in areas served by legacy rate-of-return support recipients. In adopting this program, the Commission furthers its long-standing goals by promoting the universal availability of voice and broadband networks, while also taking measures to minimize the burden on the nation's ratepayers.

Full Text

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<title>Federal Register, Volume 88 Issue 158 (Thursday, August 17, 2023)</title>
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[Federal Register Volume 88, Number 158 (Thursday, August 17, 2023)]
[Rules and Regulations]
[Pages 55918-55937]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-16674]

[[Page 55918]]

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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 54

[WC Docket Nos. 10-90, 14-58, 09-197, 16-271; RM 11868; FCC 23-60; FR
ID 160132]

Connect America Fund: A National Broadband Plan for Our Future
High-Cost Universal Service Support; ETC Annual Reports and
Certifications; Telecommunications Carriers Eligible To Receive
Universal Service Support; Connect America Fund--Alaska Plan; Expanding
Broadband Service Through the ACAM Program

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In this document, the Federal Communications Commission (FCC
or Commission) adopts the Enhanced Alternative Connect America Cost
Model (A-CAM) program as a voluntary path for supporting the widespread
deployment of 100/20 Mbps broadband service throughout the rural areas
served by carriers currently receiving A-CAM support and in areas
served by legacy rate-of-return support recipients. In adopting this
program, the Commission furthers its long-standing goals by promoting
the universal availability of voice and broadband networks, while also
taking measures to minimize the burden on the nation's ratepayers.

DATES: Effective August 17, 2023, except for Sec. Sec. 54.308(e)(2),
54.308(e)(6), 54.313(f)(1)(i), 54.313(f)(6)(i), 54.313(f)(6)(ii),
54.313(f)(6)(iii), 54.316(a)(9), 54.316(b)(8). The Commission will
publish a document in the Federal Register announcing the effective
date.

FOR FURTHER INFORMATION CONTACT: For further information, please
contact, Theodore Burmeister, Special Counsel, Telecommunications
Access Policy Division, Wireline Competition Bureau, at
<a href="/cdn-cgi/l/email-protection#06526e636962697463284473746b636f757263744660656528616970"><span class="__cf_email__" data-cfemail="95c1fdf0faf1fae7f0bbd7e0e7f8f0fce6e1f0e7d5f3f6f6bbf2fae3">[email&#160;protected]</span></a> or Jesse Jachman, Deputy Division Chief,
Telecommunications Access Policy Division, Wireline Competition Bureau,
at <a href="/cdn-cgi/l/email-protection#044e617777612a4e65676c69656a446267672a636b72"><span class="__cf_email__" data-cfemail="cb81aeb8b8aee581aaa8a3a6aaa58bada8a8e5aca4bd">[email&#160;protected]</span></a> or 202-418-7400.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Report
and Order (Order) in WC Docket Nos. 10-90, 14-58, 09-197, 16-271; RM
11868; FCC 23-60, adopted on July 23, 2023 and released on July 24,
2023. The full text of this document is available at the following
internet address: <a href="https://docs.fcc.gov/public/attachments/FCC-23-60A1.pdf">https://docs.fcc.gov/public/attachments/FCC-23-60A1.pdf</a>.

I. Introduction

1. With this final rule, the Commission takes significant next
steps in achieving its goal of ensuring all consumers, even those
living in the costliest areas in the nation, have access to affordable
and reliable broadband service so that they can work, learn, engage,
and obtain essential services no matter where they live. The Commission
also focuses on the future and seek comment on how to reform its high-
cost programs so that it can continue to efficiently promote broadband
deployment and meaningfully support networks long term in the face of a
significantly changing broadband landscape.
2. In this final rule, the Commission adopts the Enhanced A-CAM
program as a voluntary path for supporting the widespread deployment of
100/20 Mbps broadband service throughout the rural areas served by
carriers currently receiving A-CAM support and in areas served by
legacy rate-of-return support recipients. In adopting this program, the
Commission furthers its long-standing goals by promoting the universal
availability of voice and broadband networks, while also taking
measures to minimize the burden on the nation's ratepayers. The
Commission also adopts requirements for the Enhanced A-CAM program to
complement existing Federal, state, and local funding programs, so that
broadband funding can be used efficiently to maximize the deployment of
high-quality broadband service across the United States.

II. Report and Order Adopting Enhanced Alternative Connect America Cost
Model

3. In this final rule, the Commission adopts the Enhanced A-CAM
program to promote the widespread deployment of 100/20 Mbps broadband
across areas served by A-CAM recipients and rate-of-return carriers
eligible to receive legacy support. The Commission adopts deployment
and service obligations to align deployment with the requirements of
the Infrastructure Investment and Jobs Act (Infrastructure Act),
encourages the deployment of affordable broadband service, and allows
the Commission to monitor compliance with the program rules. Next, the
Commission extends by 10 years beyond the remaining five years, for a
total of 15 years, the term of support for electing carriers, and sets
a methodology for determining support amounts for locations without
100/20 Mbps broadband service within a potential budget of no more than
$1.27 billion annually, or no more than $1.33 billion annually if
certain conditions are met, using an updated version of the A-CAM.
Finally, the Commission makes eligible for Enhanced A-CAM all current
A-CAM recipients as well as rate-of-return carriers eligible to receive
legacy support, and adopt a voluntary election process for eligible
carriers.
4. The Commission concludes that it is in the public interest to
adopt Enhanced A-CAM before Broadband, Equity, Access, and Deployment
Program (BEAD Program) grants are made, and thus the Commission
requires in the following that carriers make their elections by no
later than October 1, 2023 to ensure alignment with the expected BEAD
Program timeline as required by the Infrastructure Act. By proceeding
now with Enhanced A-CAM, the Commission is able to complement and
bolster congressionally appropriated programs, like the BEAD Program.
Importantly, the Commission obligates carriers electing Enhanced A-CAM
to serve 100% of unserved locations with service levels consistent with
the standard established in the Infrastructure Act. This requirement
helps establish a Federal enforceable commitment and alleviates the
need for BEAD and other broadband funding for these areas, allowing
those funds to be used for other means like extending networks further
or funding other broadband initiatives. The Commission also establishes
a framework to avoid duplicating existing efforts from other government
programs funding broadband deployment. The Commission acknowledges that
some commenters urge them to wait until the BEAD Program and other
Federal funding programs have allocated their funding, or at least have
determined how to allocate funding, before deciding how to proceed with
supporting the remaining areas without 100/20 Mbps or faster service
with universal service support. However, the Commission disagrees that
standing by would serve the public interest.
5. Instead, the Commission finds that proceeding now to fund these
areas with universal service support is an efficient use of Federal
funds. Enhanced A-CAM builds upon years and billions of dollars of
universal service support by leveraging rate-of-return carriers'
existing networks to incrementally increase broadband speeds across
eligible areas and supporting the ongoing operations of those networks.
The Commission is not convinced that it would be more efficient for
another program to overbuild these areas by funding competitive
carriers to deploy new networks, particularly when it has already
committed years of long-term

[[Page 55919]]

universal service support to these areas. Although it is possible that
a rate-of-return carrier will successfully compete for support through
an alternative funding program, it is also possible that other
providers may cherry pick and receive funding for certain portions of a
rate-of-return carrier's study area, leading to multiple funding
programs supporting different locations within the service area and
delays in deployment to the remaining locations while the Commission
determines how to fill in any gaps with universal service support.
Instead, the Commission concludes that obligating one service provider
with an existing supported network to serve 100% of unserved locations
across its study area now will provide more certainty that the unserved
locations in rate-of-return carriers' study areas will be served with
broadband at speeds of 100/20 Mbps in a timely manner.
6. As explained in more detail in the following, the Commission
requires carriers authorized for Enhanced A-CAM to serve all Enhanced
A-CAM required locations in their study areas. The Commission delegates
to the Wireline Competition Bureau (the Bureau) to determine the exact
set of locations that must be served based on the Fabric, the Broadband
Data Collection (BDC), and further deduplication of enforceable
commitments. Although Enhanced A-CAM required locations in each study
area will be identified at the time Enhanced A-CAM offers are made, the
Bureau may make adjustments, by no later than the end of 2025, to
identify: (1) locations in the Fabric when the Bureau sets final
obligations; (2) locations that were already served by an unsubsidized
competitor at the time the offer was made but this competitive service
was not reflected in the BDC; and (3) locations that were subject to an
enforceable commitment for the deployment of broadband of 100/20 Mbps
or greater at the time the offer was made. In making adjustments to the
Enhanced A-CAM required locations, the Bureau will determine which
vintage of National Broadband Map data best reflects serviceable
locations and broadband coverage at the time of the offer. If there is
a substantial decrease in the number of locations, Enhanced A-CAM
support will be decreased according to the procedures adopted herein.
However, if the number of locations that must be served increases, the
Enhanced A-CAM carrier may receive additional support if consistent
with the available budget, but such increases are not guaranteed.
Because Enhanced A-CAM carriers are the incumbent provider in their
service areas, the Commission expects that they are in the best
position to know the number of locations in their study areas and the
availability of competitive broadband alternatives. Therefore, the
Commission finds that Enhanced A-CAM carriers are well positioned to
know the maximum number of locations they may have to serve and based
on their knowledge of their study areas determine whether they should
accept Enhanced A-CAM funding.
7. While the Commission recognizes that funding these areas through
the universal service program will increase the contribution factor, as
it explains in the following, the Commission has adopted a budget that
balances its goals of supporting universal access to voice and
broadband service, and minimizing the burden on contributors. The
Commission is also not persuaded by commenters' speculation that it
should not act now because congressionally mandated funding programs
could ``obviate the need'' for any additional funding in these areas.
Because the Commission has the ability now to efficiently support
deployment across these areas in a manner that is complementary to
other funding programs, it does not believe it would serve the public
interest to further delay deployment so that the Commission can wait
and see if certain locations remain stranded with no or inferior
service after funding programs have finished allocating their funds.
8. Finally, the Commission adopts requirements and safeguards for
Enhanced A-CAM that address other concerns expressed by commenters
requesting that it waits before implementing Enhanced A-CAM. In
response to concerns that areas will not be served as quickly as they
might be if they were funded by the BEAD Program, the Commission, in
the following, aligns the deployment timeline for Enhanced A-CAM
recipients with the timeline required by the Infrastructure Act. And
while it is not possible to know whether a service provider that
received BEAD Program funding or funding from another program may have
provided ``comparable (or better) service at a lower price,'' the
Commission also adopts performance requirements that align with the
Infrastructure Act, and subject Enhanced A-CAM recipients to
performance testing to ensure those performance requirements will be
met. Additionally, the Commission subjects Enhanced A-CAM recipients to
the reporting requirements and non-compliance measures that it applies
to all high-cost support recipients so that it can monitor and
incentivize deployment.
9. Final Deployment Obligations. The Commission adopts deployment
obligations requiring every Enhanced A-CAM recipient to deploy, by the
end of 2028, 100/20 Mbps or faster broadband service, with latency of
100 milliseconds or less, to all Enhanced A-CAM required locations in
their service areas. In the context of this Enhanced A-CAM program,
Enhanced A-CAM carriers are required to deploy to those locations for
which voice and terrestrial broadband services of speeds 100/20 Mbps or
faster are not yet available or lack an enforceable commitment for
deployment (``Enhanced A-CAM required locations''). These deployment
obligations are designed to maximize the Enhanced A-CAM program's
compatibility with the Infrastructure Act and BEAD Program, which also
require deployment of 100/20 Mbps or faster broadband to all locations
within a funded ``project'' and will exclude areas covered 100% by
existing Federal, state, or local commitments to deploy broadband at
such speeds. By committing support through Enhanced A-CAM to deploy
broadband at these speeds to electing carriers' required locations, the
Commission will avoid overlap with the BEAD Program and help more
Americans become connected at modern broadband speeds.
10. Moreover, since the Commission adopted the original A-CAM
program, the nature and use of broadband internet access services have
continued to change. The Infrastructure Act defines an ``underserved
location'' as a location that lacks reliable service with latency
characteristics sufficient to support real-time, interactive
applications at speeds below 100/20 Mbps. The Commission believes the
same deployment goal would be appropriate to future-proof the next
iteration of A-CAM to the maximum extent possible. The Commission thus
rejects the ACAM Broadband Coalition's (Coalition) earlier proposal to
deploy 100/20 Mbps or faster service to only 90% of eligible locations
and 25/3 Mbps or faster service to the remaining 10% of eligible
locations. The Commission also rejects suggestions that Enhanced A-CAM
recipients be required to deploy broadband with symmetrical download
and upload speeds. Requiring 100 Mbps upload speed is at odds with the
congressional determination in the Infrastructure Act.
11. Consistent with past A-CAM offers, the Commission will
determine compliance with deployment obligations based on meeting the
minimum service levels regardless of

[[Page 55920]]

technology. The Commission does, however, require Enhanced A-CAM
recipients to provide voice service to their required locations. The
Commission's high-cost program historically supported traditional voice
services until 2011, when the Commission reformed the program to
support networks capable of providing both voice and broadband
services. Consistent with the Commission's universal service goals of
connecting Americans to both kinds of services, A-CAM carriers, like
other high-cost support recipients, must already provide voice service
along with broadband service to their required locations.
12. More specifically, the Commission requires a carrier electing
Enhanced A-CAM to provide 100/20 Mbps or faster broadband and voice
service to all Enhanced A-CAM required locations within its study area,
as determined by the National Broadband Map as of the date of the
Enhanced A-CAM offer with adjustments adopted by the Bureau no later
than the end of 2025, including extremely high-cost locations and
locations that currently receive no support because their estimated
cost to serve is below the support threshold. A carrier electing
Enhanced A-CAM must also continue serving locations where it already
provides 100/20 Mbps or faster broadband service. Conversely, Enhanced
A-CAM recipients are not required to provide broadband to locations
where, in addition to voice service, there is existing 100/20 Mbps or
faster broadband service using wireline or terrestrial fixed wireless
technology, offered by an unsubsidized competitor, or where any carrier
has an enforceable Federal or state commitment to deploy 100/20 Mbps or
faster broadband service.
13. In doing so, the Commission declines to adopt the Coalition's
proposed ``two-pronged analysis'' for identifying areas to be excluded
due to competitive overlap. Under the Coalition's proposed analysis,
the Commission would first make a determination for each Enhanced A-CAM
provider and unsubsidized competitor at the state level before making a
separate determination at the census block level. The Coalition's
proposal would, in the Commission's judgment, likely result in funding
for many locations that are already served with 100/20 Mbps by an
unsubsidized competitor. The Commission excludes such locations to
ensure that its limited universal service funds may help bring
broadband at today's standards to as many areas as possible, while
avoiding spending in areas where there either is existing broadband
service of the same quality or for which carriers are already committed
to deploy such service in exchange for other Federal or state support.
14. Consistent with the Broadband DATA Act and the Broadband
Interagency Coordination Act, Enhanced A-CAM offers will be made using
location data from Fabric v.2, broadband coverage data from the
National Broadband Map, and Federal broadband funding data from the
National Broadband Funding Map. The Commission recognizes that there
are ongoing efforts to improve the accuracy of each data set, and those
maps will continue to be refined over the coming months. To avoid
unnecessarily duplicating Federal broadband funding, the Commission
directs the Bureau to coordinate the areas under consideration for
Enhanced A-CAM offers with other Federal agencies, e.g., the Rural
Utilities Service, the National Telecommunications and Information
Administration (NTIA), and the Department of Treasury, and to remove
from eligibility locations already subject to enforceable commitments
to deploy 100/20 or faster broadband service.
15. Complete information on Federal commitments will likely not be
available in the National Broadband Funding Map at the time Enhanced A-
CAM offers are made or elected, and the Map is not expected to include
information regarding commitments made using state funds. Accordingly,
the Commission directs the Bureau and Office of Economics and Analytics
to adjust carriers' lists of required deployment locations as more
complete data become available. These adjustments specifically shall
reflect locations and broadband deployment that existed at the time
Enhanced A-CAM offers were made, but were not reflected in the Fabric
or the National Broadband Map, and locations for which an enforceable
commitment to deploy had been made prior to Enhanced A-CAM offers but
were not included in the National Broadband Funding Map. The Commission
directs the Bureau to conduct a process, as necessary, to identify
enforceable commitments not reflected in the National Broadband Funding
Map. Because these adjustments are consistent with the BEAD Program's
requirements, the Commission expects that they will not result in de-
confliction issues that may cause unnecessary duplication between
Enhanced A-CAM and BEAD. Further, as discussed in the following, the
Bureau should adjust deployment obligations where BEAD awards are made
for Tribal locations and the Enhanced A-CAM carrier and the Tribal
government mutually agree to forego Enhanced A-CAM deployment
obligations. The Commission anticipates that the Bureau will make all
adjustments to the required deployment locations no later than December
31, 2025.
16. The Commission directs the Bureau to treat as served and
therefore exclude in the Enhanced A-CAM offers any locations for which
100/20 Mbps or faster service is provided only by an unsubsidized
competitor via terrestrial fixed wireless technology utilizing entirely
unlicensed spectrum. Although the Commission acknowledges that this
approach is not consistent with NTIA's BEAD Program, it declines to
depart from the Commission's long-standing policy of technological
neutrality at this time. The Commission recognizes that there are
concerns regarding the accuracy of claimed deployment by fixed wireless
providers utilizing entirely unlicensed spectrum. In particular, some
parties assert that, although such providers may be able to serve many
locations with fixed wireless technology utilizing entirely unlicensed
spectrum, they may not be able to simultaneously serve all locations
within their coverage footprint. However, to the extent that any such
coverage claims may be deficient, there have been and will continue to
be opportunities for carriers electing Enhanced A-CAM to challenge such
claims through the BDC processes. In fact, Enhanced A-CAM carriers will
have ample time to challenge any deficient claims made with respect to
the National Broadband Map associated with Fabric v.3, after the
release of this final rule and to be incorporated in the Bureau's
adjustment Enhanced A-CAM carriers' obligations and support.
17. The Commission adopts a deployment timeline that aligns with
the Infrastructure Act's requirements. The Infrastructure Act requires
that carriers in the BEAD Program complete deployment of 100/20 Mbps or
faster broadband to all locations within four years, and, as NTIA
notes, aligning the Enhanced A-CAM and BEAD Program deployment
timelines will ``help[ ] eliminate gaming by providers seeking to delay
deployments.'' The Commission expects that BEAD Program deployment will
not begin until after completion of the processes laid out by NTIA. If
the Commission were to adopt deployment milestones that provided
significantly more time for Enhanced A-CAM carriers to deploy broadband
than for carriers under the BEAD Program, its adoption of Enhanced A-
CAM could

[[Page 55921]]

actually prevent rural consumers in high-cost areas from being served
with broadband as quickly as the BEAD Program requires. The Commission
reiterates that, in adopting this program, it intends to maximize the
effect of Federal dollars to bring broadband to high-cost areas,
consistent with its universal service goals. The Commission thus
rejects the Coalition's proposal to require complete deployment within
eight years and adopt a deployment timeline for Enhanced A-CAM ending
in 2028.
18. Still, the Commission recognizes that there may be unforeseen
delays causing BEAD Program broadband deployment to not be entirely
complete until 2030 in certain states and that these delays may affect
Enhanced A-CAM carriers as well. Although the Commission declines at
this time to adopt a final deployment milestone permitting Enhanced A-
CAM carriers to complete deployment by 2030, to ensure that the
Enhanced A-CAM and BEAD Program deployment timelines remain aligned and
to account for possible unforeseen circumstances, the Commission
directs the Bureau to consider, in 2027, whether a one-year extension
for Enhanced A-CAM carriers' final deployment milestones would be
appropriate in light of any such BEAD Program deployment delays.
19. Interim Deployment Milestones. The Commission adopts interim
deployment milestones requiring Enhanced A-CAM recipients to make
continuous progress with deployment until their final milestones at the
end of the fourth year of Enhanced A-CAM support. At the end of a
carrier's second year of Enhanced A-CAM support, the carrier must
deploy 100/20 Mbps or faster broadband service to at least 50% of
required new locations, and the carrier must deploy such service to an
additional 25% of required new locations at the end of each subsequent
year, until the carrier deploys to 100% of required new locations at
the end of the fourth year of Enhanced A-CAM support.
20. The following table summarizes Enhanced A-CAM carriers'
deployment milestones:

Enhanced A-CAM Interim and Final Deployment Milestones
------------------------------------------------------------------------
Deployment milestone
Milestone date requirement
------------------------------------------------------------------------
December 31, 2025......................... N/A.
December 31, 2026......................... 50% of required locations.
December 31, 2027......................... 75% of required locations.
December 31, 2028......................... 100% of required locations.
------------------------------------------------------------------------

NTIA has not established specific interim deployment milestones for the
BEAD Program--instead, allowing states and territories to establish
such milestones; the interim deployment milestones the Commission
adopts allows it to monitor progress with the goal of achieving
buildout to all required locations by 2028, consistent with the
Infrastructure Act's four-year, final deployment milestone. As noted in
this document, if there are any changes to the BEAD Program's four-year
timeline at a later date, the Bureau will consider whether such common
circumstances require modifying the interim and final deployment
milestones for Enhanced A-CAM as well.
21. Finally, as the Commission tentatively concluded in the
Enhanced A-CAM NPRM, 87 FR 36283, June 16, 2022, Enhanced A-CAM
carriers' interim and final deployment milestones will supersede the
existing deployment milestones required by the A-CAM I and A-CAM II
programs. Subjecting Enhanced A-CAM carriers to a single set of
deployment milestones will reduce administrative complexity for both
the Commission and for carriers, while holding Enhanced A-CAM carriers
to a new, higher standard for broadband deployment. However, to ensure
that A-CAM I and A-CAM II carriers have continued in good faith to
deploy broadband pursuant to the terms of their existing A-CAM
commitments, carriers electing Enhanced A-CAM must still report in the
Universal Service Administrative Company's (USAC) High Cost Universal
Broadband (HUBB) portal any progress made this year (2023) towards
their existing A-CAM I and A-CAM II deployment milestones. Carriers
that elect Enhanced A-CAM, whether currently receiving A-CAM I, A-CAM
II, or legacy support, that do not meet their existing deployment
milestone due by December 31, 2023, will be subject to the compliance
regime set forth in Sec. 54.320(d)(1) of the Commission's rules. As
discussed below, any support withholding or recovery will be based on
support at the time the carrier is notified of non-compliance.
22. Deployment Compliance Gaps. Enhanced A-CAM recipients will also
be subject to the same support withholding and recovery provisions
currently applicable to A-CAM carriers and other high-cost support
recipients. Pursuant to the Commission's rules, if a high-cost support
recipient does not satisfy its final deployment obligation within
twelve months of the final milestone deadline, USAC will recover ``the
percentage of support that is equal to 1.89 times the average amount of
support per location received in the state for that carrier over the
term of support for the relevant number of locations plus 10 percent of
the eligible telecommunications carrier's (ETC) total relevant high-
cost support over the support term for that state.'' For high-cost
support recipients that fail to meet their interim deployment
milestones, carriers with a compliance gap of five percent or more are
subject to quarterly reporting and potentially support withholding/
recovery based on the level of non-compliance. The non-compliance
procedures apply until the carrier failing to meet its interim
deployment milestone reports a compliance gap of less than five
percent. These generally applicable provisions will likewise apply to
Enhanced A-CAM recipients.
23. Performance Measures Requirements. Similarly, Enhanced A-CAM
recipients will be subject to the same performance testing requirements
as other high-cost support recipients. It is a priority of the
Commission to ensure that high-cost support recipients deploy to
required locations on time and at the level of service required.
Accordingly, the Commission requires that high-cost support recipients
annually test and report the speed and latency of a random sample of
locations. Carriers that fail to meet the required performance
standards are subject to additional reporting and may have a percentage
of universal service support withheld based on the level of non-
compliance, but those carriers that later come into compliance may have
their support restored. Enhanced A-CAM recipients will therefore be
subject to performance testing. The Commission delegates to the Bureau
the authority to implement and clarify further details, including the
specific schedule, regarding the performance measures testing regime
for Enhanced A-CAM.
24. Federal Funding Coordination Requirements. As a condition of
receiving Enhanced A-CAM support, the Commission requires carriers to
make efforts to avoid duplicative Federal broadband funding. First, the
Commission requires Enhanced A-CAM recipients to participate, in good
faith, in any relevant BEAD Program challenge processes or other
processes conducted by states or other BEAD Program eligible entities
to determine eligibility of locations for the BEAD Program, to
otherwise coordinate with states, Tribes, and other eligible entities
to help avoid duplicative Federal broadband funding, and to certify
their compliance with this obligation annually. This requirement will
also extend to any other Federal broadband

[[Page 55922]]

funding program and related processes. By engaging in these processes,
carriers will help ensure that more Americans in high-cost areas will
have access to broadband, consistent with the Infrastructure Act's
goals, as well as the Commission's goals for Enhanced A-CAM.
25. Second, the Commission requires, as a condition of receiving
Enhanced A-CAM support, that carriers not receive or use BEAD Program
funding or other future Federal grant funding, unless otherwise
specified herein, that supports broadband deployment to those locations
for which they are receiving Enhanced A-CAM support, and the Commission
requires Enhanced A-CAM recipients to certify their compliance with
this obligation annually. The Commission imposes this requirement as an
additional measure to ensure that Enhanced A-CAM recipients use support
as intended, consistent with the Commission's goals for the program.
Under this requirement, Enhanced A-CAM recipients may seek BEAD funding
for locations that are not eligible for Enhanced A-CAM because they are
served with at least 100/20 Mbps by an unsubsidized competitor (and not
also served by the Enhanced A-CAM carrier), but which are eligible for
BEAD because service is not considered ``reliable broadband'' pursuant
to BEAD. Similarly, Enhanced A-CAM recipients may seek other Federal
funding for locations that are not eligible for Enhanced A-CAM.
26. Third, as the Commission further discusses later in this final
rule, it requires carriers to identify, when electing Enhanced A-CAM,
the broadband technologies (e.g., fiber to the premises) with which
they intend to fulfill their Enhanced A-CAM deployment obligations.
This information may assist states and other BEAD Program eligible
entities in identifying which areas remain eligible for BEAD Program
funding. This information may also be relevant to other Federal
broadband funding programs.
27. Affordability Requirement. The Commission requires Enhanced A-
CAM recipients to participate in the Affordable Connectivity Program
(ACP) as a condition of receiving Enhanced A-CAM support. The
Commission continues to emphasize that ``[p]romoting access to
affordable, high-speed broadband is a priority for the Commission,''
and the ACP plays an important role in helping low-income consumers
obtain affordable internet services. Beyond the Commission, the
Infrastructure Act requires subgrantees of NTIA's BEAD Program to offer
at least one ``low-cost broadband service option.''
28. Commenters broadly supported requiring Enhanced A-CAM carriers
to address affordability. The Coalition, for example, advocated for
``making enrollment in ACP a condition of participation'' while asking
that the Commission ``refrain . . . from adopting specific product
characteristics for the affordable option under ACP,'' consistent with
NTIA's decision to ``grant[ ] states the flexibility to set the
parameters that best serve the needs of residents within their
jurisdictions'' as part of the BEAD Program. Similarly, the California
Public Utilities Commission (California PUC) argued that the Commission
should ``require all carriers participating in Enhanced A-CAM to offer
broadband plans that are affordable to low-income households either by
participating in the ACP or by creating their own low-cost plans.'' The
California PUC explained that programs supporting broadband
infrastructure in unserved areas improve broadband availability but do
not necessarily ensure that broadband is affordable for consumers in
those areas, even though affordability may be a greater concern in
rural and high-cost areas.
29. The Commission agrees that it is appropriate to require
Enhanced A-CAM carriers to participate in the ACP, and further
encourages participating carriers to offer an affordable broadband
option. Accordingly, as part of the Enhanced A-CAM offer and as a
condition for receiving Enhanced A-CAM support, carriers must certify
annually their participation in ACP or a substantially similar
successor program. If a carrier accepts the Enhanced A-CAM offer and
subsequently elects not to participate or ceases to participate in ACP
or a substantially similar successor program, the carrier will be
considered in default of its obligations. The Commission also requires
that the carrier annually describe and certify its compliance with this
affordability requirement in the FCC Form 481. The Commission further
directs the Bureau to take further action to implement this
requirement, as necessary.
30. The Commission declines, however, to make any changes to the
ACP itself, including by adopting an ``enhanced'' ACP benefit of up-to-
$75 per month for households served by high-cost support recipients, as
suggested by the NTCA--The Rural Broadband Association (NTCA). The
Infrastructure Act's direction to the Commission to create an enhanced
ACP benefit for service provided in certain high-cost areas by
providers experiencing particularized economic hardship is under
consideration by the Commission, and it believes that proceeding is the
more appropriate vehicle to resolve those issues in accordance with the
statute's directive. The Commission also finds that the record
regarding whether it should provide an increased ACP benefit for
households served by support from the high-cost program remains
undeveloped in this proceeding and is best addressed in a proceeding
focused on that issue in the ACP.
31. Additional Obligations. Finally, the Commission notes that
Enhanced A-CAM recipients will be subject to other obligations
generally required of high-cost support recipients. Under the USF/ICC
Transformation Order, 76 FR 73830, November 29, 2011, and subsequent
orders, ETCs subject to broadband public interest obligations must
provide broadband at rates that are reasonably comparable to offerings
of comparable broadband services in urban areas, with usage allowances
reasonably comparable to those available through comparable offerings
in urban areas. Likewise, Enhanced A-CAM recipients will be required to
file annual reports pursuant to Sec. 54.313, will be subject to the
existing audit and record retention requirements applicable to all ETCs
pursuant to Sec. 54.320, and will be required to make available
Lifeline service to qualifying low-income consumers.
32. The Commission adopts a budget for the Enhanced A-CAM offers
totaling no more than $1.27 billion annually, or no more than $1.33
billion annually if certain conditions are met, over a 15-year term
beginning January 1, 2024. This figure includes the existing A-CAM
budget, ($1.1 billion per year over five years, 2024-2028), plus an
additional 10-year extension, for a total 15-year support term (2024-
2038). The total budget amount will be distributed at a constant annual
support amount of up to $1.27 billion per year. The Commission also
delegates to the Bureau the authority to increase the overall budget by
$1 billion, up to no more than $1.33 billion annually, if it determines
that this additional support will allow substantial increases in
deployment or if such support is needed to increase support to Enhanced
A-CAM carriers because of updates to the National Broadband Map.
33. In setting the budget for Enhanced A-CAM, the Commission is
mindful of its longstanding goals adopted in the USF/ICC Transformation
Order to ``ensure universal availability of modern networks capable of
providing voice and broadband,'' and to ``minimize the

[[Page 55923]]

universal service burden on consumers and businesses.'' The
Commission's goal is to provide support that is sufficient but not
excessive so as not to impose an unnecessary burden on consumers and
businesses who ultimately pay to support the Universal Service Fund
(USF). The Commission wants to provide enough support to substantially
increase the deployment of high-speed broadband to currently unserved
locations in rural areas, and to maintain the provision of such service
where it is already deployed. At the same time, as stewards of the USF,
the Commission is mindful of the effect increases in overall support
have on the contribution factor. The Commission believes the budget it
has adopted appropriately balances these objectives.
34. The deployment obligations set above are ambitious and will
require additional support to achieve. The requirement to provide 100/
20 Mbps to 100% of required locations is a substantial increase to both
the level of service and the scope of coverage. Further, the number of
unserved locations has increased because of the evolving standard for
unsubsidized competitors to 100/20 Mbps or faster, from 10/1 Mbps for
A-CAM I and 25/3 Mbps for A-CAM II. In addition, locations that might
previously have been identified as served by the Commission's Form 477
data are now recognized as unserved by the more granular information in
the Commission's National Broadband Map. Finally, where carriers have
deployed 100/20 Mbps locations in reliance on the A-CAM I and A-CAM II
support commitments through the end of the current terms, the
Commission assumes some level of continuing support will be required.
35. The Commission finds that the Enhanced A-CAM budget
appropriately balances these concerns. The Commission estimates that
Enhanced A-CAM offers may support deployment to approximately 1 million
Enhanced A-CAM required locations, as well as continuing support for
locations to which A-CAM carriers have already deployed 100/20 Mbps
service, while the effect on the contribution factor will be relatively
small. If every A-CAM recipient elects the Enhanced A-CAM offer, the
revised budget would add $166 million per year, or $41.5 million per
quarter, to the current quarterly universal service demand of $1,947.08
million, an increase of approximately 2%. Based on the current
contribution base, this would increase the contribution factor by .7
percentage point. The Commission believes the benefits of supporting
this standard of deployment to millions of locations outweighs this
limited increase to the contribution factor.
36. Finally, the Commission delegates to the Bureau the ability to
increase the budget up to an additional $1 billion over the term of
support, if it finds that doing so will improve significantly the
amount of deployment that would be expected to occur through Enhanced
A-CAM. For example, the Bureau may increase the funding cap set forth
below to permit an extra $1 billion in the offer amounts, if it
estimates that doing so would result in more acceptances of Enhanced A-
CAM offers and, accordingly, more commitments to deploy 100/20 Mbps or
faster service to locations currently without that level of service.
Changes within the funding parameters discussed below, including those
for currently served locations, may also be considered, if they would
result in higher acceptance rates and more commitments to deploy to
unserved locations. Alternatively, the $1 billion or a portion thereof
may be reserved to provide additional support if warranted if updates
to the National Broadband Map result in increased deployment
obligations. An increase of $1 billion to the total 15-year budget
would increase the annual demand for universal service by approximately
$66.7 million, which would result in an additional .3 percentage point
increase to the contribution factor, using the third quarter 2023
forecasted contribution base and funding requirements.
37. The Commission declines to adopt an annual inflation adjustment
to the Enhanced A-CAM support amounts, as proposed by the Coalition.
Adjusting support annually to account for inflation would require the
Commission to reduce the initial annual Enhanced A-CAM support amounts
to accommodate future inflation-driven increases or such adjustments
could result in support in excess of the budget adopted here. Even
small inflation adjustments would, over the term of support, cause
Enhanced A-CAM to exceed the budget significantly. Inflation
adjustments would undermine the benefits of budgetary certainty
provided by fixed, model-based support, including the ability to
control the future impact of the mechanism on the contribution factor.
38. The Commission recognizes that maintaining this budget will
require parameters and funding limitations to calculate the offers,
including funding caps as past A-CAM offers have used. It is possible
that some current A-CAM I and A-CAM II carriers will not elect the
Enhanced A-CAM offers as a result, finding the support amounts to be
insufficient in comparison to the obligations. If a current A-CAM I or
A-CAM II carrier declines the offer of Enhanced A-CAM support, the
carrier will continue to receive A-CAM support until 2026 or 2028,
consistent with its current authorizations. The Commission will
consider what support, if any, is required in a future proceeding,
consistent with the concurrently adopted Notice of Inquiry (NOI).
39. In the following, the Commission sets forth the process for
calculating Enhanced A-CAM offers. First, the Commission uses an
updated version of A-CAM to estimate the cost for each location served
by eligible A-CAM and legacy rate-of-return carriers. Second, the
Commission sets the parameters for calculating support for currently
unserved locations.
40. Model Cost Estimates. For the Enhanced A-CAM offers, the
Commission will use cost estimates from an updated version of A-CAM
that incorporates the location data from the Fabric v.2 to calculate
the average cost per location in each census block served by an A-CAM
or CAF BLS recipient. The Broadband DATA Act requires that, after the
creation of the Broadband Serviceable Location Fabric and associated
maps, the Commission use those maps ``when making any new award of
funding with respect to the deployment of broadband internet access.''
While the Commission does not believe that the Broadband DATA Act
prescribes any particular method for estimating the cost of serving
locations, cost estimates from the current version of A-CAM would be
nearly impossible to reconcile with location and broadband coverage
data from the Fabric and the National Broadband Map. Because prior
versions of A-CAM used 2010 census block boundaries, while the Fabric
uses 2020 census block boundaries, there are significant differences in
census block location counts, including many census blocks that do not
have model-estimated costs but have Fabric locations. Rerunning the
model with Fabric locations will provide more accurate estimates of the
cost of serving unserved and underserved locations in a census block
and minimize the amount of reconciliation that will be required in the
calculation of offers.
41. Support for Required Locations. In calculating support for
Enhanced A-CAM required locations, the Commission retains the basic
principles of, but make critical changes to, the methodology it used to
calculate support amounts in prior A-CAM offers.

[[Page 55924]]

Generally, A-CAM I and A-CAM II carriers receive support based on the
model-estimated monthly cost of serving locations in eligible census
blocks above a funding threshold of $52.50 per month, subject to a per-
location cap on support of $200 per month for most locations. As
described in the following, the Enhanced A-CAM offers will use the
National Broadband Map to determine eligible locations, rather than
census block eligibility, use a revised funding threshold of $63.69 for
non-Tribal locations, and utilize a combination of per-location caps
and percentages of uncapped support to limit funding above the
threshold.
42. For purposes of determining Enhanced A-CAM offers, the
Commission updates the funding threshold for non-Tribal locations to
$63.69. The funding threshold is the Commission's estimate of the
amount of revenue per location, per month, that a carrier can
reasonably obtain from end-users. The current funding threshold of
$52.50 was established in 2014, as the Commission was developing the
original Connect America Cost Model, and was determined by multiplying
an estimated Average Revenue Per User (ARPU) of $75 by an estimated
take rate of 70%. With nine years having passed, the Commission
believes the estimated ARPU used there is stale, and should be updated
to reflect the revenue a carrier may reasonably expect to recover from
its customers now. The Commission believes the rate benchmark for 25/3
Mbps in the most recent Urban Rate Survey reflects a reasonable
estimate of end-user rates for a modern broadband network. Multiplying
that rate benchmark of $90.98 by the 70% take rate yields a funding
threshold of $63.69. Raising the funding threshold will have a direct
impact on the distribution of Enhanced A-CAM support, causing support
to be allocated to relatively higher cost locations than would have
occurred if the prior funding threshold of $52.50 had been used. The
Commission notes that changing the funding threshold in this manner
does not require carriers to change their end-user rates, which are not
set by the Commission.
43. Consistent with the Coalition's proposal, support amounts for
required locations in Enhanced A-CAM offers will be based on the
greater of two alternative methodologies: (1) the model-estimated cost
of serving the locations above the funding threshold up to a funding
cap, or; (2) an alternative percentage of the difference between the
model-estimated cost of serving the locations and the funding threshold
(i.e., the uncapped support amount). In prior A-CAM offers, only the
first methodology was used. For example, for A-CAM II, for non-Tribal
locations, carriers received support equal to the amount the model-
estimated costs for serving a particular location that exceeded $52.50
per month, up to $200 per month. The Coalition proposed increasing the
funding cap to $300. The Coalition also proposed applying the second
methodology, equaling 80% of the uncapped support amount, when it
provided more support. The Commission finds that including an
alternative funding percentage will have the effect of providing
additional support to locations with estimated costs that significantly
exceed the funding cap. The Commission believes increasing the support
to the very high-cost locations is appropriate, given the requirement
for each electing carrier to serve 100% of its required locations with
100/20 Mbps service. As such, each carrier's support will be determined
at the state level, which will include all its study areas in a state
if it has more than one study area.
44. The Commission does not specify at this time the funding cap or
alternative funding percentage to be applied, and instead delegates to
the Bureau the authority to set, in an Order prior to or concurrently
with the Enhanced A-CAM offers, both the funding cap and an alternative
funding percentage within guidelines set below. This delegation is
necessary because the Commission cannot determine funding caps or
funding percentages that would produce support amounts within the
budget it adopts in this document until it has the updated model
results. The Commission therefore directs the Bureau to aim for a
funding cap for non-Tribal areas that is no higher than $300 per
location per month, with an alternative funding percentage between 40%
and 80%. While the Coalition's proposal of a $300 per location per
month funding cap and an 80% alternative funding percentage may not fit
within the budget the Commission establishes in this document, these
funding guidelines set the Coalition's proposal as the upper boundary
of support for Enhanced A-CAM required locations. The lower boundary on
the alternative funding percentage ensures that an extra measure of
support is provided to carriers that have a significant number of
locations that are much higher than the funding cap. In setting the
funding cap and the alternative funding percentage, the Bureau should
balance the need to ensure adequate funding for as many locations as
possible, while also taking into account the cost of serving extremely
high-cost locations, and also fitting within the budget support for
locations that are currently served, as discussed below.
45. Support for Locations Served with 100/20 Mbps by the Incumbent
Local Exchange Carrier (ILEC). The Commission limits support for
locations that are currently served with 100/20 Mbps by the ILEC. In
light of the budget that the Commission adopts in this document, it
finds that targeting new support primarily to unserved locations would
achieve its goal of widespread 100/20 Mbps deployment better than
providing additional Enhanced A-CAM support to locations that already
are capable of that level of service. In concluding that a full measure
of support is not necessary for ILEC-served locations, the Commission
finds that a carrier's deployment of 100/20 Mbps service with existing
A-CAM support demonstrates that existing A-CAM support was sufficient
to promote deployment, and that it is not necessary to further
incentivize deployment for carriers that elect to participate in the
Enhanced A-CAM program.
46. The Commission recognizes that consumers at locations served
with 100/20 Mbps or faster service by the ILEC only and not by an
unsubsidized competitor will remain dependent on the Enhanced A-CAM
carrier to maintain at least their current level of service. Those
carriers will therefore continue to experience ongoing operational and
depreciation costs associated with these already-constructed locations.
The Commission therefore concludes that such locations should receive
at least 50% of their current support A-CAM support amount for the
duration of the Enhanced A-CAM term. Furthermore, in consideration of
the available budget adopted herein, additional support for operating
expenses and depreciation may be reasonable. Therefore, the Commission
delegates to the Bureau the authority to determine whether support for
these locations should be increased above the 50% rate, within the
overall budget set by the Commission, up to 75% of the support that
they would have received under A-CAM I or A-CAM II. While this range is
somewhat less than $200 cap for served locations proposed by the
Coalition, given the capital recovery that has already occurred for
these locations, the Commission concludes a slight reduction from the
prior A-CAM I or A-CAM II support levels is justified. Furthermore,
because a primary purpose of this ongoing support is to ensure the

[[Page 55925]]

maintenance (or improvement) of service to locations that would
otherwise be unserved, the Commission further extends the support for
ILEC-only served locations to locations that were ineligible for prior
A-CAM offers but which are not served with 100/20 Mbps or faster
service by a competitor. In making this determination, the Bureau will
take into consideration whether there is sufficient funding available
to provide additional funds for already-constructed locations, once the
Bureau has set a reasonable cap and alternative funding percentage for
unserved locations.
47. While the Commission declines to adopt the Coalition's proposal
to provide additional support for Enhanced A-CAM for locations served
with 100/20 Mbps by unsubsidized competitors, it finds that limited
support is warranted to address costs incurred by Enhanced A-CAM
recipients as a result of their expanded network obligations. Unlike
with prior A-CAM offers, the Enhanced A-CAM program requires providers
to deploy service to all eligible Enhanced A-CAM locations in their
study areas. This expanded obligation to build such a network comes
with certain costs associated, which additional support will help to
defray. As a proxy to calculate support toward such costs, the
Commission adopts limited support for locations served by the ILEC with
service of at least 100/20 Mbps or greater and either (1) are served by
an unsubsidized competitor with 100/20 Mbps or greater or (2) will be
served by another provider subject to an enforceable commitment for
deployment pursuant to another Federal or state program at the time the
Enhanced A-CAM offer is extended. Dedicating additional funding to
provide service to locations that are or will be served, without
support from high-cost universal service mechanisms or other Federal
programs, would not be a judicious use of the budget the Commission
adopts in this document. However, in order to provide support to offset
costs associated with their expanded networks, the Commission limits
the Enhanced A-CAM offer to the total amount of support that those
locations would have received pursuant to the A-CAM through the end of
the existing A-CAM term, or 33% per month of their current A-CAM rate
but these payments will continue for an additional 10 years beyond the
original A-CAM term. This support will be paid over the Enhanced A-CAM
term in order to minimize the burden on payers into the USF.
48. Tribal Broadband Factor. The Commission next adopts a Tribal
Broadband Factor for Enhanced A-CAM, as it did for A-CAM II, to address
the unique challenges of deploying high-speed broadband in rural Tribal
communities. The Commission found then that the assumptions underlying
the $52.50 funding threshold, which is based on nationwide assumptions
about take rates and potential average revenues per subscriber, may be
unrealistic in rural, Tribal areas, given the concentration of low-
income individuals and few business subscribers. The Commission agrees
with the National Tribal Telecommunications Association that the Tribal
Broadband Factor continues to be necessary and should be included in
Enhanced A-CAM offers. The Commission will use a funding threshold
reduced by 25 percent in Tribal areas, as it did for A-CAM II. Because
the Commission raises the funding threshold to $63.69, in this
document, the funding threshold for Tribal locations will therefore be
set at $47.76. The Commission also instructs the Bureau to use a
funding cap for Tribal lands that is $15.93 higher than the funding cap
for non-Tribal lands to effectuate the Tribal Broadband Factor. The
Commission also will use the same definition of ``Tribal lands'' that
it adopted for A-CAM II. The Commission expects that Enhanced A-CAM
providers serving Tribal areas will immediately engage the relevant
Tribal governments regarding deployment to Tribal locations and
continue to participate in Tribal engagement throughout the support
term, as required under its rules.
49. Support Adjustments due to Updated Deployment Obligations. In
this document, the Commission directs the Bureau to establish a process
for updating the deployment obligations for carriers electing Enhanced
A-CAM due to improvements in information related to locations,
broadband coverage, and Federal and state funding. Further, as
discussed in the following, there may be instances in which Enhanced A-
CAM carriers and Tribal governments mutually agree to forego the
Enhanced A-CAM deployment obligations for Tribal locations that are
awarded BEAD funds. In most cases, the Commission expects the change
will be de minimis and therefore will not require an amendment to the
amount of Enhanced A-CAM authorized by them. Consistent with prior A-
CAM offers, the Commission sets the de minimis threshold at 5% of the
obligation, so that if the number of locations to which a carrier is
obligated to deploy service are at least 95% of the obligated locations
reflected in the authorization, no further adjustment to support will
be required. To be clear, the Commission does not provide the same 5%
flexibility that it previously provided to A-CAM carriers, which
afforded carriers the unilateral flexibility to meet only 95% of their
deployment obligations. For Enhanced A-CAM, the only basis for a
reduction in obligations would be improved information associated with
locations, broadband coverage, or enforceable commitments to deploy
100/20 Mbps as of the date the Enhanced A-CAM offer is made, or a
mutual agreement with a Tribal government to forgo deployment
obligations to Tribal locations. The Commission directs the Bureau to
provide, in the order setting forth the funding caps and alternative
funding percentages, a methodology to gradually reduce support where
the number of locations to which a carrier is obligated to deploy is
less than 95% but greater than 85% of the obligated locations in the
authorization. The methodology should balance the need to avoid
wasteful spending on locations to which it is no longer necessary to
obligate deployment with the need to avoid creating inappropriate
disincentives for carriers to accurately report location data in a
timely fashion. If the number of locations to which the Enhanced A-CAM
carrier is required to deploy is less than 85% of the obligated
locations in the authorization, the carrier's support will be
recalculated consistent with the support parameters set forth above.
This re-authorization will prevent a windfall to carriers electing
Enhanced A-CAM in cases where they are likely to be aware that material
errors or deficiencies in their favor in the Fabric, the National
Broadband Map, or the National Broadband Funding Map.
50. In the alternative case, in which deployment obligations are
increased as the data improves because additional broadband serviceable
locations are identified, additional funding will be provided only to
the extent that it would not cause the Enhanced A-CAM program to exceed
the budget set forth in this document. Allowing unlimited post-
authorization increases to support could cause Enhanced A-CAM to exceed
the budget, but it is likely that at least some of the budgeted funds
will not be allocated, either because not all eligible carriers will
elect Enhanced A-CAM or because of reductions in support due to
decreased deployment obligations in accordance with the procedures the
Commission sets in this

[[Page 55926]]

document. In addition, it is within the Bureau's delegated authority to
reserve some or all of the extra $1 billion provided in the budget,
above, to address increased deployment obligations. While this creates
an asymmetrical risk for carriers electing offers--their support will
decrease if their deployment obligations are later reduced, but their
support may not increase if their deployment obligations are later
increased and there are insufficient funds available under the budget--
the Commission finds that the carriers are well-placed to assess this
risk when they accept the offer. The Commission emphasizes that the
adjustments to deployment obligations and, if appropriate, a reduction
in support will only be made based on circumstances that in fact
existed at the time of the offer. The Commission believes that the
carriers typically understand where in their service areas there are,
in fact, broadband serviceable locations, deployment by unsubsidized
competitors, and enforceable commitments to deploy broadband. They
should not accept the Enhanced A-CAM offer if they believe the amount
of support offered is insufficient, nor should they expect a windfall
if they recognize the support offered is excessive, based on facts
known to them but not reflected in the publicly available data used to
calculate offers.
51. Transitional Support for Legacy Carriers. The Commission has a
``longstanding objective of transitioning away from legacy rate-of-
return support mechanisms'' based on embedded costs to programs based
on forward-looking costs designed to incentivize operational
efficiencies by providers. For this reason, in addition to current A-
CAM I and A-CAM II carriers, the Commission extends Enhanced A-CAM
offers to carriers eligible to receive legacy support. To encourage
participation, the Commission will provide electing legacy carriers
with a fixed support transition, or ``glide path,'' from legacy support
to their Enhanced A-CAM support amounts. The path will depend on
whether or not the legacy carrier's 2022 support, based on the Connect
America Fund Broadband Loop Support (CAF BLS) and High Cost Loop
Support (HCLS), exceeds the annual amount of the Enhanced A-CAM offer.
52. For legacy carriers whose 2022 support claims are equal to or
greater than the Enhanced A-CAM offer, the Commission adapts a glide
path from proposals by NTCA and the Southeastern Rural Broadband
Alliance for a voluntary pathway to incentive regulation. Specifically,
legacy carriers eligible for and electing Enhanced A-CAM will receive
frozen support equal to their year 2022 support claims for six years,
beginning January 1, 2024. Over the next five years, beginning January
1, 2030, their support will step down to 80% of their 2022 support
amount, in 4% increments. Finally, beginning January 1, 2035, electing
carriers will then transition to model-based Enhanced A-CAM support,
following the three-tiered transition schedule set forth in Sec.
54.311 of the Commission's rules. Legacy carriers electing Enhanced A-
CAM would be required to deploy 100/20 Mbps or faster broadband service
and voice service to 100% of the serviceable locations in their study
areas, subject to the same interim milestones and deployment
obligations as other Enhanced A-CAM participants.
53. As the Commission has previously found, ``a tiered transition
is preferable because it recognizes the magnitude of the difference in
support for particular carriers.'' Further, ``[b]y specifying in
advance how this transition will occur, carriers will have all the
information necessary to evaluate the possibility of electing model
support.'' Pursuant to Sec. 54.311(e) of the Commission's rules, which
addresses a carrier's transition from receiving higher amounts to lower
amounts of support, the transition payments are based on the percentage
difference between model support and legacy support: if the difference
between legacy and model-based support is 10% or less, the carrier will
have a one-year transition; if greater than 10% but not more than 25%,
then the transition period will be four years; and if the difference is
greater than 25%, then the transition will occur over the full-term of
the plan, with no extra transition support only in the final year of
the term. For the purpose of calculating transitional support pursuant
to this final stage, the Commission adopts a base year support amount
equal to 80% of 2022 claims. The Commission recognizes this final
transition schedule may extend past the end of the support term it
adopts for Enhanced A-CAM.
54. For an electing legacy carrier whose 2022 claims are less than
its Enhanced A-CAM support offer, the Commission provides a transition
to the carrier's full Enhanced A-CAM support, after the initial freeze,
over a five-year period. Under this transition, support will be stepped
up in five annual increments until the Enhanced A-CAM support level is
reached by the electing carrier in 2034. This approach minimizes the
impact to the Fund caused by demand increases on the legacy high-cost
budget resulting from the transition payments in years 2030-2034. That
is, electing carriers that are transitioning downward will incur 4%
reductions in 2022 baseline support annually during years 2030-2034,
which will work to offset the demand increases caused by electing
carriers transitioning upwards.
55. The Commission finds having an extended transition glide path
to Enhanced A-CAM for legacy carriers is warranted. Moving legacy
return carriers to model-based support furthers the Commission's core
reform principles of: (1) ``Control[ling] the size of USF as it
transitions to support broadband, including by reducing waste and
inefficiency;'' (2) ``Requir[ing] accountability from companies
receiving support to ensure that public investments are used wisely to
deliver intended results;'' and (3) ``Transition[ing] to incentive-
based policies that encourage technologies and services that maximize
the value of scarce program resources and the benefits to all
consumers.'' The Commission has also emphasized the need ``to phase in
reform with measured but certain transitions, so companies affected by
reform have time to adapt to changing circumstances.''
56. The Commission is embarking on its third offering of model-
based A-CAM support. Many legacy carriers have already committed to A-
CAM I and A-CAM II offerings, and the Commission provided a glide path
with each offering to ease and encourage carriers to accept a
predictable, fixed support amount in exchange for broadband deployment
obligations. A number of legacy carriers, however, continue to find the
business case for moving to model-based support uneconomical.
Accordingly, for these remaining legacy carriers, the Commission finds
a more generous glide path is needed to encourage the transition as
compared to earlier A-CAM offerings.
57. The proposal suggested by NTCA and the Southeastern Rural
Broadband Alliance envisions an incentive regulation option that would
serve as an alternative to Enhanced A-CAM for legacy carriers. The
Commission rejects this proposal to offer a separate incentive
regulation option, but it finds the proposal can also serve as an
important building block to further encourage the transition of legacy
carriers to Enhanced A-CAM support. This approach also provides several
administrative efficiencies. For example, the Commission by using a
frozen, fixed support path to Enhanced A-CAM can thus leverage earlier
A-CAM efforts to address ancillary issues such as matters related to
tariffing and rate regulation. Adopting the new

[[Page 55927]]

incentive regulation plan as proposed by NTCA and the Southeastern
Rural Broadband Alliance, at this time, would in contrast require the
Commission to address such issues anew for which there is limited
advance time before carriers will need to complete the election process
this fall. Further, by building on the proposal for an Enhanced A-CAM
transition path, instead of having a completely new incentive-based
option, the Commission eliminates the need to administer an additional
support program and can better ensure the alignment of support terms
and timelines. That said, NTCA and the Southeastern Rural Broadband
Alliance can propose additional incentive-based options for legacy
carriers in the associated NPRM proceeding if they find additional
options are necessary.
58. The Commission predicts the overall impact of these glide paths
on the high-cost support budget will result in a decrease in support
demand as it endeavors to constrain demand to decrease the USF
contribution factor. As the Commission has acknowledged, ``American
consumers and businesses ultimately pay for USF, and that if it grows
too large this contribution burden may undermine the benefits of the
program by discouraging adoption of communications services.'' By
capping support at the 2022 level for electing carriers for six years,
the Commission prevents future demand increases on the legacy high-cost
support budget. While those electing carriers whose Enhanced A-CAM
offer exceeds their 2022 support levels will receive an increase in
support, increasing over years 7-11 to the Enhanced A-CAM offer of
support. The Commission estimates that such increases will be more than
offset by those carriers phasing down and then transitioning from
higher legacy support levels to the level of their Enhanced A-CAM
support offer.
59. The Commission declines to apply different deployment
obligations to legacy carriers electing Enhanced A-CAM than will be
applied Enhanced A-CAM carriers generally. The Southeastern Rural
Broadband Alliance, as part of its incentive regulation path option,
proposed to exclude serviceable locations in an area where ``a provider
submits cost data indicating the extreme cost to provide 100/20 Mbps
service (e.g., when capital expenditures are estimated to be greater
than $25,000 per location).'' And that for such locations, ``there
could be a process by which companies could provide service via
alternative technologies.'' While the Commission is sympathetic of the
effort required to offer service to the hardest-to-reach areas of the
country, it declines to adopt such an exclusion for the Enhanced A-CAM
glide path. The Commission is committed to extending 100/20 Mbps or
faster broadband and voice service to all Americans, including those
living in high-cost areas. Further, to ensure locations funded with
high-cost support do not become eligible for BEAD, and thus receive
duplicative funding, the Commission must create a path to an
enforceable commitment to serve all locations. If the Commission
permits an exception allowing electing legacy carriers to escape the
obligation to serve not-yet-identified locations subject to some future
process, states applying the BEAD eligibility rules will not be able to
determine whether an enforceable commitment has been made and may
therefore be required to determine that there is no enforceable
commitment for any locations. The Commission therefore cannot permit
such an exclusion. Further, states, unlike this Commission, will have
the ability to conclude that locations are extremely high-cost and
therefore find a carrier's commitment to serve using a technology other
than reliable broadband would still satisfy BEAD's requirements.
60. Eligibility. The Commission adopts its proposal to permit each
current A-CAM I or A-CAM II participant to elect, on a state-by-state
basis, whether to participate in the Enhanced A-CAM program. The
Commission will also extend eligibility (on a state-by-state basis) to
rate-of-return carriers that are eligible to receive legacy support.
Rate-of-return carriers that choose not to accept Enhanced A-CAM
support offers will continue to receive support under the terms of
their existing A-CAM authorizations or legacy rate-of-return plans.
61. Consistent with the Commission's decision to provide capped
support to locations where an A-CAM I or A-CAM II participant has
already deployed broadband at speeds at 100/20 Mbps or greater, the
Commission will permit all A-CAM I and A-CAM-II participants to elect
to participate in the Enhanced A-CAM program even if a service provider
has already deployed broadband at speeds of 100/20 Mbps or faster
throughout its service area. The Commission is persuaded that it would
be an effective use of Enhanced A-CAM funds to support the ongoing
provision of 100/20 Mbps or faster service for the support term of
Enhanced A-CAM and to provide service providers with the resources they
need to repay loans and offer affordable rates. The Commission expects
its decision to cap monthly support for these locations at an amount
lower than that awarded to unserved locations will help balance its
objectives of using support efficiently and ensuring that consumers
remain served at these high speeds.
62. Moreover, consistent with the Commission's longstanding
objective of transitioning away from legacy rate-of-return support
mechanisms and providing high-cost support based on a carrier's
forward-looking, efficient costs, it will permit rate-of return
carriers eligible to receive legacy support to elect to participate in
the Enhanced A-CAM program instead. Commenters generally supported
extending an offer to all rate-of-return carriers that are eligible to
receive legacy support to maximize options for carriers and to maximize
participation in the Enhanced A-CAM program. However, the Commission
balances this objective with its longstanding goal of minimizing the
overall burden of universal service contributions on American consumers
and businesses. Specifically, in this document, the Commission takes
measures to lessen the impact on the budget by freezing Enhanced A-CAM
support for legacy carriers for six years at 2022 levels if their
Enhanced A-CAM offer is more than their total 2022 legacy support
(i.e., CAF BLS and HCLS) in the relevant state, and then gradually
increasing their support to Enhanced A-CAM levels.
63. The Commission notes that legacy rate-of-return carriers
authorized to receive Enhanced A-CAM support will have requirements
related to tariffs. Enhanced A-CAM recipients must exit the National
Exchange Carrier Association (NECA) Common Line pool, although they
have the option of continuing to use NECA to tariff their Common Line
and Consumer Broadband-Only Loop charges. Such carriers must coordinate
with NECA on making any required tariff filings in order to ease the
administrative burden associated with implementation of any changes.
Once USAC confirms that an authorized carrier has notified NECA of its
intention to exit the Common Line pool, USAC may disburse A-CAM
support. Pursuant to the Rate-of-Return BDS Order, 83 FR 67098,
December 28, 2018, Enhanced A-CAM recipients that have not already done
so will also be eligible to move their business data services offerings
to incentive regulation.
64. The Commission will permit otherwise eligible existing A-CAM
and legacy rate-of-return carriers that are currently not in compliance
with the deployment obligations associated with their current support
programs to participate in the Enhanced A-CAM

[[Page 55928]]

program. However, to protect the public's funds, the Commission will
take certain steps to reduce the Enhanced A-CAM support they receive
until they come into compliance with their existing obligations. These
steps will ensure that carriers cannot avoid compliance with existing
obligations by accepting new obligations.
65. Specifically, an existing A-CAM support recipient that has
missed its December 31, 2022 service milestone and that is currently
having its support withheld pursuant to one of the Sec. 54.320(d)(1)
non-compliance tiers, will continue to remain subject to the support
withholding associated with that non-compliance tier once its Enhanced
A-CAM support term begins. The existing A-CAM support recipient will
continue to receive its existing level of support that it received
pursuant to its previous A-CAM program, excluding the support
withholding associated with the applicable non-compliance tier, until
it comes into compliance. At the time that the support recipient
reports that it is eligible for Tier 1 status for the December 31, 2022
service milestone pursuant to its original obligation (i.e., at the
previous A-CAM program performance requirements and for the number of
locations required by the December 31, 2022 service milestone), the
support recipient will have its support fully restored to the level of
support it is eligible to receive pursuant to the Enhanced A-CAM
program, and USAC will repay any funds that were recovered or withheld.
66. An existing A-CAM support recipient that misses the December
31, 2023 service milestone for its previous A-CAM program will receive
its ongoing Enhanced A-CAM support once its Enhanced A-CAM support term
begins, but if its compliance gap with the December 31, 2023 service
milestone makes it eligible for a Sec. 54.320(d)(1) non-compliance
tier that requires support withholding, the Commission will withhold a
percentage of the support recipient's ongoing Enhanced A-CAM support as
required by the relevant non-compliance tier. At the time that the
support recipient reports that it is eligible for Tier 1 status for the
December 31, 2023 service milestone pursuant to its original obligation
(i.e., at the previous A-CAM program performance requirements and for
the number of locations required by the December 31, 2023 service
milestone), it will have its support fully restored and USAC will repay
any funds that were recovered or withheld.
67. If the Commission determines that a legacy rate-of-return
carrier receiving Enhanced A-CAM support has not met its legacy
obligation to offer 25/3 Mbps to a required number of locations in its
service area as required by December 31, 2023, it will treat the 25/3
Mbps deployment obligation as a continuing obligation and subject the
rate-of-return carrier to the Sec. 54.320(d)(1) non-compliance tiers
depending on the size of its compliance gap. Accordingly, the
Commission will withhold a portion of the rate-of-return carrier's
ongoing Enhanced A-CAM support as required by the applicable non-
compliance tier. If it is verified that the rate-of-return carrier has
come into compliance within the one-year cure period, the carrier will
have its support fully restored and USAC will repay any funds that were
recovered or withheld. If the rate-of-return carrier does not come into
compliance within the one-year cure period, the Commission will recover
support associated with the original five-year support term pursuant to
Sec. 54.320(d)(2) for the locations to which it did not commercially
offer 25/3 Mbps service. However, that carrier will be permitted to
remain in the Enhanced A-CAM program and will continue to receive any
remaining Enhanced A-CAM support. Like all high-cost recipients,
Enhanced A-CAM participants will also remain subject to the
Commission's other sanctions for non-compliance with the terms and
conditions of high-cost funding, including but not limited to the
Commission's existing enforcement procedures and penalties, reductions
in support amounts, potential revocation of ETC designations, and
suspension or debarment.
68. The Commission declines to expand eligibility to include
competitive service providers as part of this Enhanced A-CAM offer. The
Commission is not persuaded that it would be an efficient use of funds
at this time. While the Commission has increasingly relied on
competitive processes for delivery of high-cost funding, areas funded
by A-CAM carriers present distinct challenges to competitive entry. In
areas served by price cap carriers, the Commission provided a limited
term of model-based support to incumbents with the goal of moving
towards allocating support on a competitive basis in the relevant
areas. In contrast, the Commission adopted A-CAM as a longer-term
support program with the goal of providing certainty and stability to
permit the incumbent service providers to invest for the future. While
the Commission acknowledges its approach precludes other service
providers from participating that may also be qualified to offer
service in these areas, it would be inefficient now to fund competitive
carriers in A-CAM areas where incumbent service providers have existing
long-term funding commitments. Moreover, the record lacks suggestions
for how to efficiently implement a competitive process. Instead, the
Commission concludes that it is better to address this issue on a
longer term basis in the context of its proceeding regarding the future
of high-cost support. In the concurrently adopted NOI, the Commission
seeks to build a record on how to reform its high-cost programs in the
face of the changing broadband landscape and specifically ask about
alternatives to using a cost model, including using competitive
processes.
69. At the same time, the Commission recognizes the benefits of
competitive processes to allocate government funding for broadband
deployment. Thus, if the incumbent declines the Enhanced A-CAM offer,
the Commission expects the unserved locations will become eligible for
support through a competitive process (the BEAD Program).
70. Elections. The Commission delegates to the Bureau the authority
to implement the process for carriers to elect to receive Enhanced A-
CAM support, consistent with the same procedures adopted for its
carriers electing to receive A-CAM II support. Commenters supported
adopting the same procedures. Like with A-CAM II, elections will be
voluntary, irrevocable, and made on a state-by-state basis.
71. The Commission requires that carriers make their elections by
no later than October 1, 2023. The Commission believes this timing
should ensure that elections are made in time for states and grantees
to be made aware of which areas will be subject to an enforceable
commitment for the deployment of qualifying broadband, and thus
ineligible for BEAD funding. If any of the dependent deadlines or
timeframes are extended, the Commission grants the Bureau the
flexibility to similarly extend the deadline for elections as long as
the elections take place in time for the acceptances to qualify as an
enforceable commitment for the deployment of qualifying broadband as
defined by the BEAD Program Funding (BEAD Program NOFO).
72. The Commission also requires carriers that accept an Enhanced
A-CAM offer to identify in their election letters the technologies they
plan to use to meet their Enhanced A-CAM deployment obligations. The
Enhanced A-CAM deployment obligations are technologically neutral. The
Commission expects that A-CAM

[[Page 55929]]

participants will disclose in good faith the technologies they intend
to use to facilitate coordination with other funding programs. The
Commission finds that requiring such disclosures will further its goal
to maximize the deployment of high-quality broadband service by helping
states and other eligible entities set allocations for the BEAD Program
and further the efficient use of Federal broadband funding, including
additional programs funded by other Federal agencies. The Commission
directs the Bureau to make the acceptances public to inform, among
other processes, the BEAD Program challenges conducted by states or
other eligible entities and prevent any duplication of support to a
location where it is determined that the Enhanced A-CAM service
provider plans to deploy a technology that would satisfy the
requirements for being deemed an enforceable commitment for the
deployment of qualifying broadband to a location. Because acceptances
will be made public, a carrier accepting an Enhanced A-CAM offer should
not include any confidential trade secrets or commercial information in
its acceptance.
73. Participation Threshold. The Commission also adopts a minimum
carrier participation threshold for implementing the Enhanced A-CAM
program. Specifically, the Commission concludes that it may not serve
the public interest to proceed if existing A-CAM participants
collectively choose to accept Enhanced A-CAM offers that in total cover
less than 50% of the unserved locations that are eligible for support
across all the offers to current A-CAM recipients. The Commission will
exclude from this formula any locations covered by offers received by
legacy rate-of-return carriers eligible to receive legacy support.
While the Commission encourages legacy rate-of-return carriers to elect
Enhanced A-CAM and expect that many will do so, it will not forecast a
reasonable participation rate for those carriers. If the 50%
participation threshold is not reached, the Commission will not proceed
with the Enhanced A-CAM program.
74. The Commission believes that a minimum level of participation
in Enhanced A-CAM will prevent the proliferation of high-cost
mechanisms, each with its own rules and administrative requirements,
and each self-selected by carriers to maximize universal service
support. NTCA opposes the imposition of a participation threshold
because it claims the Enhanced A-CAM program will most efficiently and
effectively serve these areas. However, the Commission's goal for the
Enhanced A-CAM program is to maximize the efficient use of universal
service funds--both by leveraging existing A-CAM-supported networks to
support the widespread deployment of 100/20 Mbps or faster broadband
throughout rate-of-return carriers' service areas, and by preventing
the duplication of funds across support programs in these areas. If
fewer than half of the unserved locations included in offers to current
A-CAM recipients are supported through Enhanced A-CAM, it seems
unlikely that this goal will be met. The Commission also is not
persuaded that it should decline to adopt a participation threshold
simply because some commenters assume that ``a very substantial
number'' of carriers will accept offers. Instead, the Commission finds
that adopting a minimum participation threshold is a prudent approach
that will enable us to safeguard the public funds by reassessing the
program in the event that elections are too low to achieve its goals.
75. Tribal Government Engagement. The Commission has long
recognized the deep digital divide that persists between Tribal lands
and the rest of the country and emphasized that engagement between
Tribal governments and communications providers, either currently
providing service or contemplating the provision of service on Tribal
lands, is vitally important to the successful deployment and provision
of service. All recipients of high-cost support that serve Tribal lands
must, pursuant to Sec. 54.313(a)(5) of the Commission's rules,
demonstrate that it has engaged with Tribal governments on a range of
issues, including compliance with local rights of way, land use
permitting facilities siting, and environmental and cultural
preservation review processes, as well as Tribal business and licensing
requirements, that are necessary for a carrier to obtain before
fulfilling its deployment and service obligations. Through these
obligatory Tribal engagements, and as demonstrated through successfully
satisfying deployment obligations through previous high-cost programs,
carriers receiving high-cost support through previous universal service
programs should have received consent from the local Tribal government
to satisfy the requisite permissions to deploy to certain locations.
Further, because carriers that accept an Enhanced A-CAM offer already
have an annual obligation to demonstrate they meaningfully engaged with
the Tribal governments in their supported areas as existing high-cost
support recipients, the Commission expects that they will be able to
leverage any preexisting coordination and collaboration to immediately
engage the relevant Tribal governments with respect to the steps
necessary to complete the deployment required by Enhanced A-CAM. As
such, and to continue the necessary consultation between carriers and
the Tribal governments that oversee the lands which may contain
eligible Enhanced A-CAM locations, Enhanced A-CAM carriers will also
remain subject to the ongoing annual Tribal engagement obligations. Any
carrier accepting an Enhanced A-CAM offer should be prepared to serve
all locations in its study area, including those on Tribal lands.
76. In addition to an annual obligation to demonstrate they
meaningfully engaged with the Tribal governments in their supported
areas, the Commission requires carriers receiving Enhanced A-CAM
support to initiate engagement with any relevant Tribal governments
within 90 days of the Bureau extending an Enhanced A-CAM offer. In
engaging with Tribal governments, Enhanced A-CAM carriers must be aware
that the BEAD Program will not recognize the acceptance of an Enhanced
A-CAM offer as an enforceable commitment for the deployment of
qualifying broadband, ``unless it includes a legally binding agreement,
which includes a Tribal Government Resolution, between the Tribal
Government of the Tribal Lands encompassing that location, or its
authorized agent, and a service provider offering qualifying broadband
service to that location.'' The Commission expects carriers that intend
to accept Enhanced A-CAM offers will act in good faith to provide the
relevant Tribe(s) with an opportunity to consent to the Enhanced A-CAM
carrier's deployment of broadband in the Tribal area. To further the
objectives of encouraging deployment on Tribal lands by facilitating
communications between service providers and the Tribal governments,
and avoiding duplicative support across Federal programs, the
Commission expects that carriers that intend to accept Enhanced A-CAM
offers will take reasonable steps necessary to obtain Tribal consent
meeting the BEAD Program requirements in time for states and other
eligible entities to conduct their challenge processes to identify
locations that are eligible for BEAD Program funding. If the state
concludes that there is no Tribal Government Resolution or

[[Page 55930]]

legally binding agreement expressing consent as required by the BEAD
Program NOFO, the Tribal locations eligible for Enhanced A-CAM support
may, according to the BEAD Program NOFO, nonetheless become eligible
for BEAD support.
77. To balance the Commission's goals of avoiding duplicative
spending across Federal programs against the important and necessary
engagement with Tribal governments over the deployment and provision of
services over Tribal lands, if a state awards BEAD funds to another
service provider to serve locations subject to an Enhanced A-CAM
authorization, the Commission permits the Enhanced A-CAM carrier and
the Tribal government to notify the Bureau that they mutually agree to
forego the A-CAM deployment obligation, and the Bureau is directed to
adjust the Enhanced A-CAM recipient's support and deployment
obligations. The BEAD awards, unlike the other bases for adjustments to
deployment obligations and support the Commission adopts in this
document, would necessarily occur after the Enhanced A-CAM offers are
made. The Commission finds, however, that carriers considering their
Enhanced A-CAM offers will have adequate notice that Tribal locations
may be de-authorized at a later date. The Commission finds that
performing these adjustments is necessary to avoid duplication of
funding across Federal programs.
78. Adjusting the High-Cost Budget for Carriers Remaining on Legacy
Support. As the Commission has in previous A-CAM elections, it re-set
the legacy support budget for CAF BLS and HCLS to reflect the exit from
the budget control mechanism of newly electing A-CAM carriers. To
effectuate this reset, the Commission set the legacy budget for 2024-25
at a level equal to 2023-24 legacy support claims less any frozen
support received by carriers transitioning from legacy support to
Enhanced A-CAM. The Commission will consider additional budget updates
for legacy carriers proposed by NTCA and the Southeastern Rural
Broadband Alliance in the concurrently adopted NPRM, as such proposals
would benefit from additional comment by interested parties.
79. Recalibrating the budget now provides the added benefit of
mitigating the uncertainty to the remaining legacy carriers caused by
application of the Commission's budget control mechanism as the
Commission considers additional budget updates. Support demand has
outpaced the Commission's predictive judgments made in the December
2018 Rate-of-Return Reform Order, 84 FR 4711, February 19, 2019. The
growth in projected support by carriers is due, in part, to an
increased conversion of voice lines to broadband-only lines, which
receive a higher support amount, and an increase in the number of new
customers subscribing to broadband-only lines. This has ultimately
resulted in projected estimated support demand substantially exceeding
the annual high-cost budget in recent years and thus triggering the
Commission's budget control mechanism. Absent recalibration, carriers
would be under annual threat of increasing budget constraints going
forward and the uncertainty of obtaining waiver relief while the
Commission considers important and necessary budget updates.
80. HCLS Cap. As the Commission has done previously with respect to
A-CAM elections, it directs NECA to rebase the cap on HCLS to reflect
the election of model-based support by HCLS-eligible rate-of-return
carriers. In the first annual HCLS filing following the election of
model-based support, NECA shall calculate the amount of HCLS that those
carriers would have received in the absence of their election, subtract
that amount from the HCLS cap, then recalculate HCLS for the remaining
carriers using the rebased amount.
81. Cybersecurity and Supply Chain Risk Requirements. The
Commission requires Enhanced A-CAM carriers to implement operational
cybersecurity and supply chain risk management plans by January 1,
2024--the start of the Enhanced A-CAM support term. The Commission also
requires carriers to submit such plans to USAC, and certify that they
have done so, by January 2, 2024 or within 30 days of approval under
the Paperwork Reduction Act, whichever is later. Failure to submit the
plans and make the certification shall result in 25% of monthly support
being withheld until the carrier comes into compliance. The
Commission's actions emphasize the critical importance of cybersecurity
and supply chain risk management in modern broadband networks,
consistent with broader initiatives across the Federal government,
while striking an appropriate balance to ensure compliance with this
important requirement that avoids disproportionate disruption to
carriers' support.
82. Adopting this risk management requirement is necessary to
ensure that the Enhanced A-CAM program does not deprive rural consumers
in high-cost areas of broadband service that is as secure as the
service deployed pursuant to other Federal funding initiatives,
including through the BEAD Program. The BEAD Program will not fund
areas where there is an enforceable commitment by an entity to build
broadband. Therefore, if receipt of Enhanced A-CAM funding were not
conditioned upon comparable cybersecurity and supply chain risk
management requirements, the receipt of Enhanced A-CAM funding would
likely leave those rural consumers served by Enhanced A-CAM carriers
without comparable protection.
83. Consistent with the BEAD Program, carriers' cybersecurity risk
management plans must reflect the latest version of the National
Institute of Standards and Technology (NIST) Framework for Improving
Critical Infrastructure Cybersecurity, and must reflect an established
set of cybersecurity best practices, such as the standards and controls
set forth in the Cybersecurity & Infrastructure Security Agency
Cybersecurity Cross-sector Performance Goals and Objectives or the
Center for internet Security Critical Security Controls. Carriers'
supply chain risk management plans must incorporate the key practices
discussed in NISTIR 8276, Key Practices in Cyber Supply Chain Risk
Management: Observations from Industry, and related supply chain risk
management guidance from NIST 800-161.
84. If an Enhanced A-CAM carrier makes a substantive modification
to its cybersecurity or supply chain risk management plan, the
Commission requires that carrier to submit its updated plan to USAC
within 30 days of making that modification. A modification to a
cybersecurity or supply chain risk management plan will be considered
as substantive if at least one of the following conditions apply:
<bullet> There is a change in the plan's scope, including any
addition, removal, or significant alternation to the types of risks
covered by the plan (e.g., expanding a plan to cover new areas such as
supply chain risks to Internet of Things devices or cloud security
could be a substantive change);
<bullet> There is a change in the plan's risk mitigation strategies
(e.g., implementing a new encryption protocol or deploying a different
firewall architecture);
<bullet> There is a shift in organizational structure (e.g.,
creating a new information technology department or hiring a Chief
Information Security Officer);
<bullet> There is a shift in the threat landscape prompting the
organization to recognize that emergence of new threats

[[Page 55931]]

or vulnerabilities that weren't previously accounted for in the plan;
<bullet> Updates are made to comply with new cybersecurity
regulations, standards, or laws;
<bullet> Significant changes are made in the supply chain,
including offboarding major suppliers or vendors, or shifts in
procurement strategies that may impact the security of the supply
chain; or
<bullet> A large-scale technological change is made, including the
adoption of new systems or technologies, migrating to a new information
technology infrastructure, or significantly changing the information
technology architecture.
Further, in their FCC Form 481 filings following each subsequent
support year, carriers shall certify that they have maintained their
plans, whether they have submitted modifications in the prior year, and
the date any modifications were submitted. At any point during the
support term, if an Enhanced A-CAM carrier does not have in place
operational cybersecurity and supply chain risk management plans
meeting the Commission's requirements, it directs the Bureau to
withhold 25% of the Enhanced A-CAM carrier's support until the Enhanced
A-CAM carrier is able to come into compliance. The requirements the
Commission adopts here will improve the cybersecurity of the nation's
broadband networks and protect consumers from online risks such as
fraud, theft, and ransomware that can be mitigated or eliminated
through the implementation of accepted security measures.
85. The Commission also takes steps to mitigate concerns that
development and implementation of cybersecurity plans are expensive and
time consuming particularly for eligible carriers. The Commission
affords carriers flexibility to include standards and controls in their
cybersecurity management plans that are reasonably tailored to their
business needs. The Commission believes that implementation of these
approaches would facilitate the nation's cybersecurity goals.
86. The Commission's approach will also likely reduce compliance
costs by allowing carriers that have already implemented the NIST
Framework for Improving Critical Infrastructure Cybersecurity to comply
with this requirement without redoing their plan so long as they
implement an established set of cybersecurity best practices. To
further mitigate costs for small providers, as suggested by NTCA, the
Commission encourages Enhanced A-CAM providers to take advantage of
existing Federal government resources designed to share supply chain
security risk information with trusted communications providers and
suppliers and facilitate the creation of cybersecurity and supply-chain
risk management plans.

III. Procedural Matters

A. Paperwork Reduction Act

87. This final rule has new and modified information collection
requirements subject to the Paperwork Reduction Act of 1995 (PRA)
Public Law 104-13. It will be submitted to the Office of Management and
Budget (OMB) for review under section 3507(d) of the PRA. OMB, the
general public, and other Federal agencies will be invited to comment
on the new and modified information collection requirements contained
in this proceeding. In addition, the Commission notes that pursuant to
the Small Business Paperwork Relief Act of 2002, it previously sought
specific comment on how they might further reduce the information
collection burden for small business concerns with fewer than 25
employees. The Commission describes impacts that might affect small
businesses, which includes most businesses with fewer than 25
employees.

B. Congressional Review Act

88. The Commission has determined, and the Administrator of the
Office of Information and Regulatory Affairs, OMB, concurs, that this
rule is non-major under the Congressional Review Act, 5 U.S.C. 804(2).
The Commission will send a copy of this final rule to Congress and the
Government Accountability Office pursuant to 5 U.S.C. 801(a)(1)(A).
89. Effective Date. The Commission concludes that good cause exists
to make this final rule effective immediately upon publication in the
Federal Register, pursuant to section 553(d)(3) of the Administrative
Procedure Act, except for those portions containing information
collection requirements that have not been approved by the OMB.
Agencies determining whether there is good cause to make an order take
effect less than 30 days after Federal Register publication must
balance the necessity for immediate implementation against principles
of fundamental fairness that require that all affected persons be
afforded reasonable time to prepare for the effective date.
90. Here, the Commission finds that implementing the rules for the
Enhanced A-CAM program as expeditiously as possible is necessary for
aligning Enhanced A-CAM offers with the allocation of support through
the BEAD program to avoid the duplication of funds across programs and
promote the efficient use of Federal funds in supporting broadband
deployment. The Commission concludes that furthering this objective
outweighs any potential impact on affected parties. This final rule
does not require affected parties to take any specific action until the
Bureau extends Enhanced A-CAM offers, and this final rule delegates to
the Bureau the task of implementing the process for carriers to accept
offers, consistent with the same procedures the Commission adopted for
carriers electing to receive A-CAM II support. Accordingly, even with
immediate implementation, eligible rate-of-return carriers will still
be afforded reasonable time to take any necessary steps to prepare to
accept an Enhanced A-CAM offer before and after the Bureau extends such
offers.
91. As required by the Regulatory Flexibility Act of 1980, as
amended (RFA), an Initial Regulatory Flexibility Analysis (IRFA) was
incorporated in the Connect America Fund: A National Broadband Plan for
Our Future High-Cost Universal Service Support, Notice of Proposed
Rulemaking (Enhanced ACAM FNPRM) released in May of 2022. The
Commission sought written public comment on the proposals in the
Enhanced ACAM NPRM, including comment on the IRFA. No comments were
filed addressing the IRFA. This Final Regulatory Flexibility Analysis
(FRFA) conforms to the RFA.
92. In this final rule, the Commission adopts the Enhanced A-CAM
program as a voluntary path for supporting the widespread deployment of
100/20 Mbps broadband service throughout the rural areas served by
carriers currently receiving A-CAM support and in areas served by rate-
of-return carriers eligible to receive legacy support by the end of
2028. In adopting this program, the Commission furthers its long-
standing goals by promoting the universal availability of voice and
broadband networks, while also taking measures to minimize the burden
on the nation's ratepayers. The Commission also adopts requirements for
the Enhanced A-CAM program to complement existing Federal, state, and
local funding programs, so that broadband funding can be used
efficiently to maximize the deployment of high-quality broadband
service across the United States.
93. In exchange for the commitment to complete this deployment, the
Commission will extend offers to current A-CAM carriers and current
legacy support recipients within a

[[Page 55932]]

budget totaling no more than $1.27 billion annually, or no more than
$1.33 billion annually if certain conditions are met, over a 15-year
term beginning January 1, 2024. The Commission requires that carriers
make their Enhanced A-CAM elections by no later than October 1, 2023 to
ensure alignment with the expected BEAD Program timeline as required by
the Infrastructure Act and obligate them to serve 100% of unserved
locations with service levels consistent with the standard established
in the Infrastructure Act. The Commission also establishes a framework
to avoid duplicating existing efforts from other government programs
funding broadband deployment. To address the unique challenges of
deploying high-speed broadband in rural Tribal communities, the
Commission also adopts a Tribal Broadband Factor for Enhanced A-CAM.
The Commission adopts requirements and safeguards for Enhanced A-CAM
that address other concerns expressed by commenters requesting that
they wait before implementing Enhanced A-CAM. In response to concerns
that areas will not be served as quickly as they might be if they were
funded by the BEAD Program, the Commission aligns the deployment
timeline for Enhanced A-CAM recipients with the timeline required by
the Infrastructure Act. The Commission also requires performance
requirements that align with the Infrastructure Act, and subject
Enhanced A-CAM recipients to the reporting requirements and non-
compliance measures that we apply to all high-cost support recipients
so that they can monitor and incentivize deployment. The Commission
also adopts a minimum carrier participation threshold of 50% for
implementing the Enhanced A-CAM program. As the Commission extends
Enhanced A-CAM offers to carriers serving Tribal lands, it requires
Enhanced A-CAM recipients engage, within 90 days of their Enhanced A-
CAM elections and at least annually thereafter, with relevant Tribal
government(s) regarding deployment to Tribal locations.
94. 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 rules adopted herein. 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 that: (1) is independently
owned and operated; (2) is not dominant in its field of operation; and
(3) satisfies any additional criteria established by the Small Business
Administration (SBA).
95. Small Businesses, Small Organizations, Small Governmental
Jurisdictions. The Commission's actions, over time, may affect small
entities that are not easily categorized at present. The Commission
therefore describes, at the outset, three broad groups of small
entities that could be directly affected herein. First, while there are
industry specific size standards for small businesses that are used in
the regulatory flexibility analysis, according to data from the SBA,
Office of Advocacy, 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 33.2 million businesses.
96. Next, the type of small entity described as a ``small
organization'' is generally ``any not-for-profit enterprise which is
independently owned and operated and is not dominant in its field.''
The Internal Revenue Service (IRS) uses a revenue benchmark of $50,000
or less to delineate its annual electronic filing requirements for
small exempt organizations. Nationwide, for tax year 2020, there were
approximately 447,689 small exempt organizations in the U.S. reporting
revenues of $50,000 or less according to the registration and tax data
for exempt organizations available from the IRS.
97. Finally, the small entity described as a ``small governmental
jurisdiction'' is defined generally as ``governments of cities,
counties, towns, townships, villages, school districts, or special
districts, with a population of less than fifty thousand.'' U.S. Census
Bureau data from the 2017 Census of Governments indicate there were
90,075 local governmental jurisdictions consisting of general purpose
governments and special purpose governments in the United States. Of
this number, there were 36,931 general purpose governments (county,
municipal, and town or township) with populations of less than 50,000
and 12,040 special purpose governments--independent school districts
with enrollment populations of less than 50,000. Accordingly, based on
the 2017 U.S. Census of Governments data, the Commission estimates that
at least 48,971 entities fall into the category of ``small governmental
jurisdictions.''
98. Small entities potentially affected by the rules herein include
Wired Telecommunications Carriers, Local Exchange Carriers (LECs),
Incumbent Local Exchange Carriers (Incumbent LECs), Competitive Local
Exchange Carriers (LECs), Interexchange Carriers (IXCs), Local
Resellers, Toll Resellers, Other Toll Carriers, Prepaid Calling Card
Providers, Wireless Telecommunications Carriers (except Satellite),
Cable and Other Subscription Programming, Cable Companies and Systems
(Rate Regulation), Cable System Operators (Telecom Act Standard), All
Other Telecommunications, Wired Broadband internet Access Service
Providers (Wired ISPs), Wireless Broadband internet Access Service
Providers (Wireless ISPs or WISPs), internet Service Providers (Non-
Broadband), All Other Information Services.
99. In this final rule, the Commission adopts rules that will
create recordkeeping, reporting and other compliance obligations for
small and other recipients of the Enhanced A-CAM program. The
Commission adopts a 15-year support term and deployment obligations
that require every Enhanced A-CAM recipient to deploy, over a four-year
term, 100/20 Mbps or faster broadband service, with latency of 100
milliseconds or less, and usage allowances reasonably comparable to
those available through comparable offerings in urban areas, to all
unserved locations in their service areas. Enhanced A-CAM recipients
must also offer voice service to their required locations, and must
offer their voice and broadband services at rates that are reasonably
comparable to offerings of comparable services in urban areas.
Additionally, Enhanced A-CAM recipients must participate in the
Affordable Connectivity Program as well as any successor program and
describe and certify their compliance with this requirement. Enhanced
A-CAM carriers must also implement operational cybersecurity and supply
chain risk management plans by January 1, 2024, submit and certify such
plans, and file updates for the plans when there are substantive
modifications with 30 days of the modification. Enhanced A-CAM carriers
must annually certify that they have maintained their cybersecurity and
supply chain risk management plans, report whether they filed any
substantive modifications, and the date the modification was filed.
100. Like all high-cost support recipients, Enhanced A-CAM
recipients must participate in the Lifeline Program. Enhanced A-CAM
recipients also remain subject to the Commission's National Security
Supply Chain proceeding and remain subject to the annual requirement to
demonstrate they

[[Page 55933]]

meaningfully engaged with the Tribal governments in their supported
areas. To the extent a carrier's Enhanced A-CAM offer covers Tribal
lands, the Commission requires Enhanced A-CAM recipients engage, within
90 days of the Bureau extending an Enhanced A-CAM offer, and at least
annually thereafter--as they currently are, with relevant Tribal
government(s) regarding deployment to Tribal locations.
101. The Commission also adopts interim deployment milestones.
Specifically, at the end of a carrier's second year of Enhanced A-CAM
support, the carrier must deploy 100/20 Mbps or faster broadband
service to at least 50% of required new locations, and the carrier must
deploy such service to an additional 25% of required new locations at
the end of each subsequent year, until the carrier deploys to 100% of
required new locations at the end of the fourth year of Enhanced A-CAM
support. Enhanced A-CAM recipients will also be subject to the same
performance testing requirements as other high-cost support recipients,
along with the same support withholding and recovery provisions
currently applicable to A-CAM carriers and other high-cost support
recipients, with the exception that the Commission does not extend to
Enhanced A-CAM the flexibility for A-CAM carriers to deploy to only 95%
of their required locations by the end of their final milestone without
a reduction in support.
102. To make efforts to avoid duplicative Federal broadband
funding, Enhanced A-CAM recipients will be required to participate, in
good faith, in any relevant BEAD Program challenge processes conducted
by the states or other BEAD Program eligible entities. Additionally,
they will be required to certify annually that they are not receiving
or using BEAD Program funding or other future Federal grant funding,
unless otherwise specified herein, that supports broadband deployment
to those areas in which they are receiving Enhanced A-CAM support.
Eligible carriers that elect to participate in the Enhanced A-CAM
program must identify in their election letters the technology they
intend to use to meet their deployment obligations on a state-by-state
basis. Legacy rate-of-return carriers that choose to accept an Enhanced
A-CAM offer will have requirements related to their tariffs. To monitor
the use of Enhanced A-CAM support to ensure that it is being used for
its intended purposes, support recipients will be required to file
location data on an annual basis in the online High Cost Universal
Broadband (HUBB) portal and to make certifications when they have met
their service milestones. Recipients must also file annual FCC Form 481
reports. Additionally, support recipients will be subject to the annual
Sec. 54.314 certifications and the same record retention and audit
requirements as other high-cost ETCs.
103. The Commission does not have sufficient information on the
record to determine whether small entities will be required to hire
professionals to comply with its decisions or to quantify the cost of
compliance for small entities. The Commission, however, anticipates the
approaches it has taken to implement the requirements will have minimal
or de minimis cost implications and may reduce compliance requirements
for small entities that may have smaller staff and fewer resources.
104. The RFA requires an agency to provide, ``a description of the
steps the agency has taken to minimize the significant economic impact
on small entities . . . including a statement of the factual, policy,
and legal reasons for selecting the alternative adopted in this final
rule and why each one of the other significant alternatives to the rule
considered by the agency which affect the impact on small entities was
rejected.''
105. The Commission has considered the economic impact on small
entities in reaching its final conclusions and taking action in this
proceeding. The rules that the Commission adopts in this final rule
will provide greater certainty and flexibility for all carriers,
including small entities. For example, the Commission adopts a process
for calculating Enhanced A-CAM offers that takes into account the
challenges that all Enhanced A-CAM recipients, including small
businesses, may face in serving high-cost areas. Specifically, the
Commission adopts a voluntary election process that allows each
eligible carrier to consider whether accepting an Enhanced A-CAM offer
will be most beneficial to that carrier. The Commission adopts a Tribal
Broadband Factor to address the unique challenges for deploying high-
speed broadband in rural Tribal communities. Moreover, the Commission
delegated to the Bureau consideration of whether Enhanced A-CAM support
should be increased to cover operational costs for carriers that
already deployed broadband at speeds of 100/20 Mbps, which may ease the
economic burden on small carriers.
106. The Commission creates a voluntary pathway to model-based
support for small carriers that currently receive support under legacy
embedded cost support mechanisms. The Commission also provides
transitional support to those legacy rate-of-return carriers that
accept an Enhanced A-CAM offer that is lower than their existing legacy
support, easing the economic burden on small entities that choose to
accept Enhanced A-CAM offers by giving them time to adapt to the
reduction in support. The legacy carriers that elect model-based
support will also be eligible to elect incentive regulation for their
business data service offerings, reducing the economic burden of
providing those services. The Commission also takes action to re-set
the legacy support budget for CAF BLS and HCLS to reflect the exit from
the budget control mechanism of newly electing A-CAM carriers. This
recalibration will mitigate the uncertainty for rate-of-return carriers
that continue to receive legacy support, many of which are small
businesses, caused by application of the Commission's budget control
mechanism as the Commission considers additional budget updates. Absent
recalibration, carriers would be under annual threat of increasing
budget constraints going forward and the uncertainty of obtaining
waiver relief while the Commission considers important and necessary
budget updates.
107. The Commission also considered the Coalition's proposal to
require complete deployment within eight years, but rejects this in
favor of a four-year deployment timeline for Enhanced A-CAM, beginning
in 2025 and ending in 2028. The additional time may favor small
carriers who may require more time to implement a construction and
deployment plan, however that timeline runs counter to the Commission's
goal of achieving buildout to all locations within four years. Instead,
the Commission directs the Bureau to consider, in 2027, whether a one-
year extension for Enhanced A-CAM carriers' final deployment milestones
would be appropriate in light of any such BEAD Program deployment
delays. In adopting cybersecurity requirements, the Commission took
steps to mitigate concerns that development and implementation of
cybersecurity plans are expensive and time consuming. The Commission
affords carriers flexibility to include standards and controls in their
cybersecurity management plans that are reasonably tailored to their
business needs. The Commission's approach will also likely reduce
compliance costs because it allows carriers that have already
implemented the NIST Framework for Improving Critical Infrastructure
Cybersecurity to comply with the requirement without

[[Page 55934]]

redoing their plan so long as they implement an established set of
cybersecurity best practices. To further mitigate costs for small
providers the Commission encouraged Enhanced A-CAM carriers to take
advantage of existing Federal government resources designed to share
supply chain security risk information with trusted communications
providers and suppliers and facilitate the creation of cybersecurity
and supply-chain risk management plans.
108. Finally, the reporting requirements the Commission adopts for
all Enhanced A-CAM support recipients are tailored to ensuring that
support is used for its intended purpose and so that it can monitor the
progress of recipients in meeting their service milestones. The
Commission finds that the importance of monitoring the use of the
public's funds outweighs the burden of filing the required information
on all entities, including small entities, particularly because much of
the information that it requires they report is information the
Commission expects they will already be collecting to ensure they
comply with the terms and conditions of support and they will be able
to submit their location data on a rolling basis to help minimize the
burden of uploading a large number of locations at once.

IV. Ordering Clauses

109. Accordingly, it is ordered, pursuant to the authority
contained in sections 4(i), 214, 218-220, 254, 303(r), and 403 of the
Communications Act of 1934, as amended, 47 U.S.C. 154(i), 214, 218-220,
254, 303(r), and 403, and Sec. Sec. 1.1 and 1.425 of the Commission's
rules, 47 CFR 1.1 and 1.425 this Report and Order is adopted. The
Report and Order shall be effective upon publication in the Federal
Register, except for portions containing information collection
requirements in Sec. Sec. 54.308, 54.313 and 54.316 that have not been
approved by OMB. The Federal Communications Commission will publish a
document in the Federal Register announcing the effective date of these
provisions.
110. It is further ordered that part 54 of the Commission's rules
is amended as set forth in the following, and that any such rule
amendments that contain new or modified information collection
requirements that require approval by the OMB under the Paperwork
Reduction Act shall be effective after announcement in the Federal
Register of OMB approval of the rules, and on the effective date
announced therein.

List of Subjects in 47 CFR Part 54

Communications common carriers, Health facilities, Infants and
children, Internet, Libraries, Puerto Rico, Reporting and recordkeeping
requirements, Schools, Telecommunications, Telephone, Virgin Islands.

Federal Communications Commission.
Marlene Dortch,
Secretary.

Final Rules

For the reasons discussed in the preamble, the Federal
Communications Commission amends 47 CFR part 54 as follows:

PART 54--UNIVERSAL SERVICE

0
1. The authority for part 54 continues to read as follows:

Authority: 47 U.S.C. 151, 154(i), 155, 201, 205, 214, 219, 220,
229, 254, 303(r), 403, 1004, 1302, 1601-1609, and 1752, unless
otherwise noted.

0
2. Amend Sec. 54.5 by revising the definition of ``High-cost support''
to read as follows:

Sec. 54.5 Terms and definitions.

* * * * *
High-cost support. ``High-cost support'' refers to those support
mechanisms provided pursuant to subparts D, J, K, L, M, and O of this
part.
* * * * *

0
3. Amend Sec. 54.308 by revising paragraph (a)(1) introductory text
and adding paragraphs (a)(1)(v), (a)(3) and (e) to read as follows:

Sec. 54.308 Broadband public interest obligations for recipients of
high-cost support.

(a) * * *
(1) Carriers that have elected to receive Connect America Fund-
Alternative Connect America Cost Model (CAF-ACAM) support pursuant to
Sec. 54.311, other than Enhanced A-CAM support, are required to offer
broadband service at actual speeds of at least 10 Mbps downstream/1
Mbps upstream to a defined number of locations as specified by public
notice, with a minimum usage allowance of 150 GB per month, subject to
the requirement that usage allowances remain consistent with mean usage
in the United States over the course of the term. In addition, such
carriers must offer other speeds to subsets of locations, as specified
in paragraphs (a)(1)(i) through (v) of this section:
* * * * *
(v) After December 31, 2023, to the extent that an Enhanced A-CAM
carrier was previously subject to the foregoing deployment obligations
pursuant to A-CAM I, Revised A-CAM I, or A-CAM II, the Enhanced A-CAM
carrier will instead be subject to Sec. 54.308(a)(3).
* * * * *
(3) An Enhanced A-CAM carrier, as defined by Sec. 54.311(a)(4),
must offer broadband speeds of at least 100 Mbps downstream/20 Mbps
upstream to 100 percent of locations in its study areas within the
state by the end of 2028.
(i) Enhanced A-CAM required locations are those locations
identified in the National Broadband Map within the carrier's service
area where voice and terrestrial broadband services of speeds 100 Mbps
downstream/20 Mbps upstream or faster are not yet available or lack an
enforceable commitment for deployment of such broadband service. In the
context of Enhanced A-CAM, an enforceable commitment exists where a
carrier commits to deploying broadband service as a condition of any
federal or state grants or other funding. The Wireline Competition
Bureau shall provide a list of Enhanced A-CAM required locations for
each carrier concurrently with the Enhanced A-CAM offer pursuant to
Sec. 54.311(a), and will update such list to reflect any additional
information related locations, broadband coverage, or enforceable
commitments determined to have existed at the time of the offer.
(ii) An Enhanced A-CAM carrier that has reported deployment of 100
Mbps downstream/20 Mbps upstream or faster service to particular
locations in its Enhanced A-CAM study area(s) in the National Broadband
Map or the Universal Service Administrative Company's High Cost
Universal Broadband Portal must maintain the same or faster service at
those locations through the end of the Enhanced A-CAM term.
* * * * *
(e) Enhanced A-CAM Cybersecurity and Supply Chain Risk Management
Requirements. (1) An Enhanced A-CAM carrier shall implement operational
cybersecurity and supply chain risk management plans meeting the
requirements of this section by January 1, 2024.
(2) An Enhanced A-CAM carrier shall certify that it has implemented
plans required under paragraph (e)(1) of this section and submit the
plans to the Administrator by January 2, 2024 or within 30 days of
approval under the Paperwork Reduction Act, whichever is later.
(3) Enhanced A-CAM carriers that fail to comply with Enhanced A-CAM
cybersecurity and supply chain risk

[[Page 55935]]

management requirements are subject to the following non-compliance
measures:
(i) The Wireline Competition Bureau shall direct the Administrator
to withhold 25 percent of the Enhanced A-CAM carrier's monthly support
for failure to comply with paragraph (e)(2) of this section until the
carrier makes the required certification and submits the required
plans.
(ii) At any time during the support term, if an Enhanced A-CAM
carrier does not have in place operational cybersecurity and supply
chain risk management plans meeting the requirements of this section,
Wireline Competition Bureau shall direct the Administrator to withhold
25 percent of the carrier's monthly support.
(iii) Once the carrier comes into compliance, the Administrator
shall stop withholding support, and the carrier will receive all of the
support that had been withheld pursuant to this section.
(4) An Enhanced A-CAM carrier's cybersecurity risk management plans
shall reflect the latest version of the National Institute of Standards
and Technology (NIST) Framework for Improving Critical Infrastructure
Cybersecurity, and shall reflect an established set of cybersecurity
best practices, such as the standards and controls set forth in the
Cybersecurity & Infrastructure Security Agency (CISA) Cybersecurity
Cross-sector Performance Goals and Objectives or the Center for
Internet Security Critical Security Controls.
(5) An Enhanced A-CAM carrier's supply chain risk management plans
shall incorporate the key practices discussed in NISTIR 8276, Key
Practices in Cyber Supply Chain Risk Management: Observations from
Industry, and related supply chain risk management guidance from NIST
800-161.
(6) If an Enhanced A-CAM carrier makes a substantive modification
to its plans under this section, the carrier shall file an updated plan
with the Administrator within 30 days of making the modification. A
modification to a plan under this section is substantive if at least
one of the following conditions apply:
(i) There is a change in the plan's scope, including any addition,
removal, or significant alternation to the types of risks covered by
the plan (e.g., expanding a plan to cover new areas such as supply
chain risks to Internet of Things devices or cloud security could be a
substantive change);
(ii) There is a change in the plan's risk mitigation strategies
(e.g., implementing a new encryption protocol or deploying a different
firewall architecture);
(iii) There is a shift in organizational structure (e.g., creating
a new information technology department or hiring a Chief Information
Security Officer);
(iv) There is a shift in the threat landscape prompting the
organization to recognize that emergence of new threats or
vulnerabilities that weren't previously accounted for in the plan;
(v) Any updates made to comply with new cybersecurity regulations,
standards, or laws;
(vi) Significant changes in the supply chain, including offboarding
major suppliers or vendors, or shifts in procurement strategies that
may impact the security of the supply chain; or
(vii) Any large-scale technological changes, including the adoption
of new systems or technologies, migrating to a new information
technology infrastructure, or significantly changing the information
technology architecture.

0
4. Amend Sec. 54.311 by:
0
a. Revising paragraphs (a) introductory text, (a)(2) and (3);
0
b. Adding paragraph (a)(4);
0
c. Revising paragraphs (b) and (c);
0
d. Revising paragraph (d) introductory text;
0
e. Adding paragraphs (d)(3) and (4);
0
f. Revising paragraph (e) introductory text; and
0
g. Adding paragraphs (e)(4)(iii), (e)(5) and (6), and (f);
The revisions and additions read as follows:

Sec. 54.311 Connect America Fund Alternative-Connect America Cost
Model

(a) Voluntary election of model-based support. A rate-of-return
carrier (as that term is defined in Sec. 54.5) receiving support
pursuant to subparts K or M of this part shall have the opportunity to
voluntarily elect, on a state-level basis, to receive Connect America
Fund-Alternative Connect America Cost Model (CAF-ACAM) support as
calculated by the Alternative-Connect America Cost Model (A-CAM)
adopted by the Commission in lieu of support calculated pursuant to
subparts K or M of this part, subject to the conditions specific to
each A-CAM offer as determined by the Commission. Any rate-of-return
carrier not electing support pursuant to this section shall continue to
receive support calculated pursuant to those mechanisms as specified in
Commission rules for high-cost support.
* * * * *
(2) For the purposes of this section, ``Revised A-CAM I'' refers to
carriers initially authorized to receive CAF-ACAM support as of January
24, 2017, and were subsequently authorized to receive CAF-ACAM pursuant
to a revised offer on April 29, 2019. For such carriers, the first
program year of CAF-ACAM is 2017.
(3) For the purposes of this section, ``A-CAM II'' refers to
carriers initially authorized to receive A-CAM support on August 22,
2019 or November 13, 2020. For such carriers, the first program year of
CAF-ACAM is 2019.
(4) For purposes of this section, ``Enhanced A-CAM'' refers to
carriers authorized to receive Enhanced A-CAM support after October 1,
2023. For the purpose of determining deployment obligations for such
carriers, the first program year of CAF-ACAM is 2025.
(b) Geographic areas eligible for support. (1) CAF-ACAM model-based
support, except for Enhanced A-CAM support, will be made available for
a specific number of locations in census blocks identified as eligible
for each carrier by public notice. The eligible areas and number of
locations for each state identified by the public notice shall not
change during the term of support identified in paragraph (c) of this
section.
(2) Enhanced A-CAM support will be made available for each
carrier's service areas within the state, in consideration for the
deployment and maintenance obligations described in Sec. 54.308(a)(3).
(c) Term of support. CAF-ACAM model-based support shall be provided
to A-CAM I carriers for a term that extends until December 31, 2026, to
Revised A-CAM I and A-CAM II carriers for a term that extends until
December 31, 2028, and to Enhanced A-CAM carriers for a term that
extends from January 1, 2024, until December 31, 2038.
(d) Interim deployment milestones. Recipients of CAF-ACAM model-
based support must meet the following interim milestones with respect
to their deployment obligations set forth in Sec. Sec. 54.308(a)(1)(i)
and 54.308(a)(3).
* * * * *
(3) For the purposes of A-CAM I, Revised A-CAM I, and A-CAM II,
compliance shall be determined based on the total number of fully
funded locations in a state. Carriers that complete deployment to at
least 95 percent of the requisite number of locations will be deemed to
be in compliance with their deployment obligations. The remaining
locations that receive capped support are subject to the standard
specified in Sec. 54.308(a)(1)(ii).
(4) Enhanced A-CAM carriers must complete deployment of 100/20 Mbps

[[Page 55936]]

service to a number of locations equal to 50 percent of locations
required by Sec. 54.308(a)(3)(i) by the end of 2026, 75 percent of
requisite locations by the end of 2027, and 100 percent of requisite
locations by the end of 2028. After December 31, 2023, to the extent
that an Enhanced A-CAM carrier was subject to the interim deployment
milestones set forth in Sec. 54.311(d)(1) and (2), the Enhanced A-CAM
carrier will instead be subject to the interim deployment milestones
set forth in this paragraph (d)(4).
(e) Transition to CAF-ACAM Support. An A-CAM I, Revised A-CAM I, A-
CAM II, or Enhanced A-CAM carrier not previously subject to A-CAM
support, any of whose final model-based support is less than the
carrier's legacy rate-of-return support in its base year as defined in
paragraph (e)(4) of this section, will transition as follows:
* * * * *
(4) * * *
(iii) For Enhanced A-CAM carriers not previously subject to A-CAM
I, Revised A-CAM I, or A-CAM II, the amount of high-cost loop support
and Connect America Fund--Broadband Loop Support disbursed to the
carrier for 2022 without regard to prior period adjustments related to
years other than 2022, as determined by the Administrator as of July
31, 2023 and publicly announced prior to the election period for the
voluntary path to the model. The first year of the transition pursuant
to this paragraph (e) will be 2035.
(5) An Enhanced A-CAM carrier not previously subject to A-CAM I,
Revised A-CAM I, or A-CAM II, and whose final model-based support is
less than the carrier's legacy rate-of-return support in its base year
as defined in paragraph (e)(4)(iii) of this section, will transition
from its frozen base year support to its full Enhanced A-CAM support on
the following schedule:
(i) In 2024-2029, it will receive its frozen base year support.
(ii) In 2030, it will receive its base year support minus 4% of the
base year support;
(iii) In 2031, it will receive its base year support minus 8% of
the base year support;
(iv) In 2032, it will receive its base year support minus 12% of
the base year support;
(v) In 2033, it will receive its base year support minus 16% of the
base year support;
(vi) In 2034, it will receive its base year support minus 20% of
the base year support;
(vii) In 2035-2038, it will transition to its Enhanced A-CAM
support pursuant to paragraphs (e)(1) through (3) of this section.
(6) An Enhanced A-CAM carrier that was previously subject to A-CAM
I, Revised A-CAM I, or A-CAM II and will continue to receive
transitional support consistent with its prior A-CAM I, Revised A-CAM
I, or A-CAM II authorization, and will not have its transitional
support amount adjusted to reflect its Enhanced A-CAM support amounts.
(f) Legacy Carrier Transitioning to Higher Enhanced A-CAM. An
Enhanced A-CAM carrier that was not subject to A-CAM I, Revised A-CAM
I, or A-CAM II and whose final model-based support is more than the
carrier's legacy rate-of-return support in its base year as defined in
paragraph (f)(2) of this section, will transition from its frozen base
year support to its full Enhanced A-CAM support.
(1) The transition will occur on the following schedule:
(i) In 2024-2029, it will receive its frozen base year support.
(ii) In 2030, it will receive its base year support plus 20% of the
difference between its base year support and its Enhanced A-CAM
support;
(iii) In 2031, it will receive its base year support plus 40% of
the difference between its base year support and its Enhanced A-CAM
support;
(iv) In 2032, it will receive its base year support plus 60% of the
difference between its base year support and its Enhanced A-CAM
support;
(v) In 2033, it will receive its base year support plus 80% of the
difference between its base year support and its Enhanced A-CAM
support; and
(vi) In 2034, it will receive its Enhanced A-CAM support.
(2) The carrier's base year support for purposes of the calculation
of transition payments is the amount of high-cost loop support and
Connect America Fund--Broadband Loop Support disbursed to the carrier
for 2022 without regard to prior period adjustments related to years
other than 2022, as determined by the Administrator as of July 31, 2023
and publicly announced prior to the election period for the voluntary
path to the model.

0
5. Amend Sec. 54.313 by revising paragraph (f)(1) introductory text,
(f)(1)(i), and adding paragraph (f)(6) to read as follows:

Sec. 54.313 Annual reporting requirements for high-cost recipients.

* * * * *
(f) * * *
(1) Beginning July 1, 2015 and Every Year Thereafter. The following
information:
(i) If the rate-of-return carrier is receiving support pursuant to
subparts K and M of this part, a certification that it is taking
reasonable steps to provide upon reasonable request broadband service
at actual speeds of at least 25 Mbps downstream/3 Mbps upstream, with
latency suitable for real-time applications, including Voice over
internet Protocol, and usage capacity that is reasonably comparable to
comparable offerings in urban areas as determined in an annual survey,
and that requests for such service are met within a reasonable amount
of time; if the rate-of-return carrier receives CAF-ACAM support,
except for Enhanced A-CAM support, a certification that it is meeting
the relevant reasonable request standard; if the carrier is receiving
Enhanced A-CAM support, a certification that it is offering broadband
service with latency suitable for real-time applications, including
Voice over internet Protocol, and usage capacity that is reasonably
comparable to comparable offerings in urban areas; or if the rate-of-
return carrier is receiving Alaska Plan support pursuant to Sec.
54.306, a certification that it is offering broadband service with
latency suitable for real-time applications, including Voice over
internet Protocol, and usage capacity that is reasonably comparable to
comparable offerings in urban areas, and at speeds committed to in its
approved performance plan to the locations it has reported pursuant to
Sec. 54.316(a), subject to any limitations due to the availability of
backhaul as specified in paragraph (g) of this section.
* * * * *
(6) Enhanced A-CAM carriers must provide the following:
(i) Enhanced A-CAM carriers must certify that, in the previous
calendar year, they participated, in good faith, in any relevant BEAD
Program challenge processes or other processes conducted by states or
other BEAD Program eligible entities to determine the eligibility of
locations for the BEAD Program, and that they otherwise coordinated
with states, Tribes, and other eligible entities to help avoid
duplicative federal broadband funding. Additionally, Enhanced A-CAM
carriers must certify that, in the previous calendar year, they
complied with the obligation not to receive or use BEAD Program funding
or other future federal grant funding, unless otherwise specified by
the Commission or Bureau, that supports broadband deployment for those
locations for which they are receiving Enhanced A-CAM support.

[[Page 55937]]

(ii) Enhanced A-CAM carriers must describe how and certify that, in
the previous calendar year, they continued to participate in the
Affordable Connectivity Program or any substantially similar successor
program, as required by the terms of their Enhanced A-CAM offers.
(iii) Enhanced A-CAM carriers must certify that they have
maintained their cybersecurity and supply chain risk management plans
pursuant to Sec. 54.308(e), report whether they filed any substantive
modifications pursuant to Sec. 54.308(e)(6) in the prior year, and
report the date they filed any substantive modifications.
* * * * *

0
6. Amend Sec. 54.316 by adding paragraph (a)(9), revising paragraph
(b)(2), and adding paragraph (b)(8) to read as follows:

Sec. 54.316 Broadband deployment reporting and certification
requirements for high-cost recipients.

(a) * * *
(9) Recipients subject to the requirements of Sec. 54.308(a)(3)
shall report the number of locations for each state and locational
information, including geocodes, indicating whether they are offering
service providing speeds of at least 100 Mbps downstream/20 Mbps
upstream.
(b) * * *
(2) Rate-of-return carriers electing CAF-ACAM support pursuant to
Sec. 54.311, other than Enhanced A-CAM carriers, shall provide:
* * * * *
(8) Enhanced A-CAM carriers shall provide, no later than March 1
following each service milestone specified in Sec. 54.311(d)(3), a
certification that by the end of the prior calendar year, it was
offering broadband meeting the requisite public interest obligations to
the required percentage of its required locations in the state.
* * * * *
[FR Doc. 2023-16674 Filed 8-16-23; 8:45 am]
BILLING CODE 6712-01-P

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