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

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Published

June 5, 2026

Issuing agencies

Federal Communications Commission

Abstract

In this document, the Federal Communications Commission (FCC or Commission) adopted a Notice of Proposed Rulemaking (NPRM) that kicks off a process to examine how the Commission can make some of its high-cost mechanisms even more efficient and effective into the future. Ensuring a predictable High-Cost Program for years to come--call it High-Cost Modernization--will provide continuing support for our Build America Agenda, supercharge American leadership in Artificial Intelligence (AI) by efficiently supporting the broadband-capable networks upon which AI-enhanced applications and services will be delivered and accessed, and will help accelerate the transition to Internet Protocol (IP) networks.

Full Text

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<title>Federal Register, Volume 91 Issue 108 (Friday, June 5, 2026)</title>
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[Federal Register Volume 91, Number 108 (Friday, June 5, 2026)]
[Proposed Rules]
[Pages 34201-34209]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-11353]

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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 54

[WC Docket Nos. 26-96, 10-90; FCC 26-35; FR ID 349320]

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

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: In this document, the Federal Communications Commission (FCC
or Commission) adopted a Notice of Proposed Rulemaking (NPRM) that
kicks off a process to examine how the Commission can make some of its
high-cost mechanisms even more efficient and effective into the future.
Ensuring a predictable High-Cost Program for years to come--call it
High-Cost Modernization--will provide continuing support for our Build
America Agenda, supercharge American leadership in Artificial
Intelligence (AI) by efficiently supporting the broadband-capable
networks upon which AI-enhanced applications and services will be
delivered and accessed, and will help accelerate the transition to
Internet Protocol (IP) networks.

DATES: Comments are due on or before August 4, 2026, and reply comments
are due on or before September 3, 2026.

ADDRESSES: Pursuant to Sec. Sec. 1.415 and 1.419 of the Commission's
rules, 47 CFR 1.415, 1.419, interested parties may file comments and
reply comments on or before the dates indicated on the first page of
this document. Comments may be filed using the Commission's Electronic
Comment Filing System (ECFS).
<bullet> Electronic Filers: Comments may be filed electronically
using the internet by accessing the ECFS: <a href="https://www.fcc.gov/ecfs">https://www.fcc.gov/ecfs</a>.
<bullet> Paper Filers: Parties who choose to file by paper must
file an original and one copy of each filing.
<bullet> Filings can be sent by hand or messenger delivery, by
commercial

[[Page 34202]]

courier, or by the U.S. Postal Service. All filings must be addressed
to the Secretary, Federal Communications Commission.
<bullet> Hand-delivered or messenger-delivered paper filings for
the Commission's Secretary are accepted between 8:00 a.m. and 4:00 p.m.
by the FCC's mailing contractor at 9050 Junction Drive, Annapolis
Junction, MD 20701. All hand deliveries must be held together with
rubber bands or fasteners. Any envelopes and boxes must be disposed of
before entering the building.
<bullet> Commercial courier deliveries (any deliveries not by the
U.S. Postal Service) must be sent to 9050 Junction Drive, Annapolis
Junction, MD 20701.
<bullet> Filings sent by U.S. Postal Service First-Class Mail,
Priority Mail, and Priority Mail Express must be sent to 45 L Street
NE, Washington, DC 20554.
People with Disabilities: To request materials in accessible
formats for people with disabilities (braille, large print, electronic
files, audio format), send an email to <a href="/cdn-cgi/l/email-protection#e2848181d7d2d6a2848181cc858d94"><span class="__cf_email__" data-cfemail="bfd9dcdc8a8f8bffd9dcdc91d8d0c9">[email&#160;protected]</span></a> or call the
Consumer & Governmental Affairs Bureau at 202-418-0530.

FOR FURTHER INFORMATION CONTACT: For further information, please
contact, Nathan Eagan, Telecommunications Access Policy Division,
Wireline Competition Bureau, at <a href="/cdn-cgi/l/email-protection#9dd3fce9f5fcf3b3d8fcfafcf3ddfbfefeb3faf2eb"><span class="__cf_email__" data-cfemail="ffb19e8b979e91d1ba9e989e91bf999c9cd1989089">[email&#160;protected]</span></a> or (202) 418-0991.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's NPRM
in WC Docket Nos. 26-96, 10-90; FCC 26-35, adopted on May 20, 2026 and
released on May 21, 2026. The full text of this document is available
at the following internet address: <a href="https://www.fcc.gov/document/fcc-proposes-modernization-high-cost-program-0">https://www.fcc.gov/document/fcc-proposes-modernization-high-cost-program-0</a>.
The proceeding this NPRM initiates shall be treated as a ``permit-
but-disclose'' proceeding in accordance with the Commission's ex parte
rules. Persons making ex parte presentations must file a copy of any
written presentation or a memorandum summarizing any oral presentation
within two business days after the presentation (unless a different
deadline applicable to the Sunshine period applies). Persons making
oral ex parte presentations are reminded that memoranda summarizing the
presentation must (1) list all persons attending or otherwise
participating in the meeting at which the ex parte presentation was
made, and (2) summarize all data presented and arguments made during
the presentation. If the presentation consisted in whole or in part of
the presentation of data or arguments already reflected in the
presenter's written comments, memoranda or other filings in the
proceeding, the presenter may provide citations to such data or
arguments in his or her prior comments, memoranda, or other filings
(specifying the relevant page and/or paragraph numbers where such data
or arguments can be found) in lieu of summarizing them in the
memorandum. Documents shown or given to Commission staff during ex
parte meetings are deemed to be written ex parte presentations and must
be filed consistent with rule 1.1206(b). In proceedings governed by
rule 1.49(f) or for which the Commission has made available a method of
electronic filing, written ex parte presentations and memoranda
summarizing oral ex parte presentations, and all attachments thereto,
must be filed through the electronic comment filing system available
for that proceeding, and must be filed in their native format (e.g.,
.doc, .xml, .ppt, searchable .pdf). Participants in this proceeding
should familiarize themselves with the Commission's ex parte rules.
Providing Accountability Through Transparency Act. Consistent with
the Providing Accountability Through Transparency Act, Public Law 118-
9, a summary of this document will be available on <a href="https://www.fcc.gov/proposed-rulemakings">https://www.fcc.gov/proposed-rulemakings</a>.

I. Introduction

The Commission's Universal Service Fund (USF or Fund) High-Cost
Program plays a critical role in supporting connectivity in America,
particularly in rural areas. Indeed, the FCC's high-cost support
mechanisms have enabled carriers to build out connections to some of
the hardest-to-reach locations in the nation. These mechanisms are
grounded in section 254 of the Communications Act of 1934, which
directs the Commission to preserve and advance universal service with a
guiding principle of promoting ``[a]ccess to advanced
telecommunications and information services . . . in all regions of the
Nation.'' In implementing section 254, the Commission created the High-
Cost Program to support carriers' costs of network deployment and
maintenance in hard-to-serve rural and high-cost areas. There are
currently a dozen different legacy and modernized support mechanisms
under the High-Cost Program.
In this document, the Commission kicks off a process to examine how
it can make some of the Commission's high-cost mechanisms even more
efficient and effective into the future. Ensuring a predictable High-
Cost Program for years to come--call it High-Cost Modernization--will
provide continuing support for the Commission's Build America Agenda,
supercharge American leadership in AI by efficiently supporting the
broadband-capable networks upon which AI-enhanced applications and
services will be delivered and accessed, and will help accelerate the
transition to IP networks. The Commission is also asking these
questions now because several of the relevant high-cost mechanisms are
set to sunset absent Commission action in 2026 and 2028, and others
have no ongoing deployment requirements. In addition, the Commission
wants to ensure that, going forward, it has a rational approach for
aligning various broadband funding programs, including the rollout of
the $42.5 billion Broadband Equity Access and Deployment (BEAD)
program, with the Commission's high-cost mechanisms, and that it
regulates mindful of the increased offerings in rural areas by both
terrestrial and satellite providers.
Through this NPRM, the Commission seeks comment on updating a
certain subset of its high-cost mechanisms that apply to rate-of-return
carriers. Specifically, the Commission is looking at its high-cost
mechanisms that provide funding to legacy rate-of-return carriers that
currently are not subject to any forward-looking buildout obligations:
namely, Connect America Fund Broadband Loop Support (CAF BLS) and High-
Cost Loop Support (HCLS). Separately, the Commission seeks comment on
what next steps, if any, it should take with respect to the areas
supported by the sunsetting Alternative Connect America Cost Model (A-
CAM) I, Revised A-CAM I, and A-CAM II mechanisms. The Commission
distinguishes these mechanisms from Enhanced A-CAM, which offered
nearly $20 billion of forward-looking support over 15 years to carriers
transitioning from A-CAM I, Revised A-CAM I, ACAM II and CAF BLS in
exchange for new service obligations at a broadband speed of at least
100/20 Mbps.
To date, the Commission's high-cost mechanisms have advanced the
goal of ensuring that every American has access to communications
services. But gaps remain for rural America. Consistent with the
Commission's Build America Agenda, its proceeding today seeks comment
on how a High-Cost Modernization initiative could best ensure that all
Americans, particularly those in rural areas, have access to next-
generation services in an ever-changing environment. In particular, the
Commission seeks comment on what should come next for ongoing high-cost
support, what form such support should

[[Page 34203]]

take, and the costs that should be eligible. The Commission also seeks
comment on ways it may modernize its legacy high-cost support
mechanisms to align them with the modern communications landscape.

II. Discussion

Since the Commission originally adopted the legacy, cost-based CAF
BLS ($995 million in 2025) and HCLS ($202 million) and model-based A-
CAM I ($8 million), Revised A-CAM I ($166 million), and A-CAM II ($218
million) high-cost mechanisms, there have been dramatic changes in
broadband technology and performance as well as significant broadband
deployment by many providers. These changes only underscore the need
for the Commission to evaluate what comes next for these high-cost
mechanisms. In light of this, the Commission seeks comment on whether
and how it should reform its legacy high-cost support mechanisms and
address the soon-to-be sunsetting model-based support mechanisms. The
Commission also seeks comment on whether and how it should establish a
new support mechanism to ensure sufficient, predictable support for
high-cost carriers.
In considering changes, the Commission asks questions in the
following about the types of support that are necessary in areas where
the carrier already provides service or where a competitor already
provides service or will provide service pursuant to an enforceable
commitment through a funding program such as BEAD. With competitive
voice and broadband options available in these rate-of return areas and
$42.5 billion currently dedicated to any areas that are not already
served, how should the Commission leverage its high-cost mechanisms to
advance universal service principles while promoting the efficient
expenditure of finite federal resources?
The High-Cost Program and intercarrier compensation system were
originally intended to make voice telephone service available to
residential customers in rural, insular, and high-cost areas at just,
reasonable, and affordable rates and at rates reasonably comparable to
the rates for similar services in urban areas. With the ongoing IP
transition from time-division multiplexing to IP-based communications,
the continued emergence of satellite communications, and the increased
availability of alternative federal funding, this document examines the
levels and types of universal service high-cost support needed going
forward for legacy support mechanisms and those A-CAM support
mechanisms that are soon to sunset. The Commission in 2023 sought
comment on how to modernize the legacy support mechanisms to align them
with the current broadband deployment and support environment. The
Commission seeks to refresh the record and further ask whether and how
it should modernize these legacy and A-CAM support mechanisms. For
example, there could be at least three potential paths forward: (1) the
Commission could update these high-cost support mechanisms to align
with the current landscape; (2) the Commission could establish a new
single modernized fixed-support mechanism replacement; or (3) the
Commission could take no further action and maintain the status quo for
legacy support mechanisms and allow the A-CAM support mechanisms to
sunset.
Which of these three approaches should the Commission take to
provide ongoing high-cost support efficiently and effectively? Should a
new high-cost support mechanism be model-based? If not, what other
method could be used to calculate ongoing support, other than cost-
based? What are the advantages and disadvantages of either updating
existing high-cost support mechanisms or establishing a new mechanism?
Should the Commission limit ongoing high-cost support to certain areas?
If so, what type of areas should the Commission support and how should
the Commission determine those areas? If model-based mechanisms
providing support in lieu of CAF BLS and HCLS were allowed to expire,
how would recipients' support levels change?
If the Commission were to modernize the existing mechanisms or
establish a new mechanism, what types of expenses should it prioritize?
Should the Commission focus support on capital expenditures or
operating expenses? Would there be benefits to establishing a new
support mechanism that would enable the deployment of high-speed
networks where gaps remain and/or support the ongoing costs of existing
networks that were built using high-cost funds? If so, would model-
based support be the most appropriate? If a new support mechanism was
established to support only operating expenses for existing high-cost
networks, should it be limited to certain operating costs? To what
extent is support necessary for carrier operating costs to protect
those that have already made substantial investments and rely on the
existing support mechanisms to recover a portion of the costs to
maintain their networks or service existing debt while charging
reasonably comparable rates? To what extent is support necessary for
communities to continue to be served? If the Commission determined that
capital expenses should also be supported under a new mechanism, should
that support be limited to certain capital expenditures and subject to
a cap? What should the cap be? With any changes either to the existing
support mechanisms or with the establishment of a new mechanism, how
much time should the Commission provide for carriers that will
transition to different support level amount than what is currently
authorized? For example, should the Commission provide a transition
path over a number of years where there is a percentage reduction in
support year-to-year during the transition period? Commenters should
provide details on any suggested transition path.
If the Commission takes either approach, should there be deployment
obligations as a condition of receiving support? If there are
deployment obligations, what should they be and what should be the
timeline for deployment? Should there be milestones that carriers must
meet as part of the deployment obligations? If the Commission does
require deployment obligations, should it require the deployment of
voice and broadband service at a speed of at least 100/20 Mbps to
unserved or underserved locations, consistent with the BEAD and
Enhanced A-CAM deployment obligations? In addition to offering a
broadband service speed of at least 100/20 Mbps, what specific latency,
upload thresholds, and capacity are needed to support participation in
the AI economy in rural areas? To what extent should the Commission
require carriers to implement cybersecurity precautions and
capabilities as a condition to receive funding as the Commission did
with Enhanced A-CAM carriers? What is the relationship between the
nature and extent of conditions imposed on high-cost support recipients
and the calculation methodology and/or magnitude of high-cost support
providers will need in order to meet those conditions?
What unserved or underserved locations will remain given the
commitments made under Enhanced A-CAM and BEAD? If the Commission
adopts an obligation to deploy 100/20 Mbps, how should the Commission
determine the number of locations to which the carrier must deploy? If
the Commission modernizes existing mechanisms or establishes a new
mechanism, should it limit support to locations where there is no

[[Page 34204]]

unsubsidized competitor presently offering service or a competitor with
an enforceable commitment to serve, thus reducing the chance of
overbuilding? For either approach, the Commission proposes to base
deployment obligations on the broadband serviceable locations (BSL)
Fabric and the Broadband Data Collection (BDC). How can the Commission
ensure that those data sources are used in a way that results in
deployment obligations that are predictable at the time rate-of-return
carriers need to make informed participation decisions? If there are
locations that the carrier will not or cannot serve, should the
Commission remove those locations from the carrier's obligations along
with any corresponding support? Should there be penalties for a carrier
that is unable or unwilling to serve such locations? How should the
Commission's decisions in this regard be informed by the potential
likelihood of, or challenges to, future service to the locations a
carrier is unable or unwilling to serve?
Are there different or additional deployment obligations the
Commission should consider? In light of other federal funding, what
purpose would a support mechanism with no deployment obligations serve?
Similar to the offer to take Enhanced A-CAM, should legacy carriers be
permitted to elect to participate in a new model-based support
mechanism and relinquish any ongoing support from its existing high-
cost mechanism? If so, how should such an offering be structured, e.g.,
term, public interest obligations, and support amounts/limits? Given
the focus on improving performance incentives, should the Commission
structure the offer so that full support is only received once certain
performance objectives are achieved, e.g., broadband adoption rate is
at or above 70%? To the extent the Commission is considering providing
ongoing support for operating expenses, should there be other, non-
deployment obligations that would accompany such support? What should
those obligations be, and how would they be measured?
Even with the substantial amount of high-cost support made
available and the private investment made by carriers, there are
locations in the hardest-to-reach areas that lack access to quality,
terrestrial fixed broadband service. If the Commission updates its
legacy and A-CAM mechanisms or establishes a new mechanism, should it
exclude from future buildout obligations these cost-prohibitive
locations that are not otherwise served by an unsubsidized terrestrial
competitor and that do not otherwise have an enforceable commitment
from another state or federal program? Should the Commission instead
rely on commercially available satellite service for such locations?
How should the Commission identify such locations? Should carriers be
required to make a showing that the areas are too difficult to reliably
serve with fiber-based or terrestrial fixed wireless service and, if
so, what kind of showing is needed? Or should the Commission simply
rely on the National Broadband Map to identify such unserved locations?
If low Earth orbit (LEO) satellite service is available in locations
that are not covered by the high-cost support recipient, should
carriers relinquish a corresponding amount of support? How should the
Commission calculate the amount of corresponding support?
Two-Year A-CAM I Extension. Notwithstanding the information in this
document, the Commission seeks comment on adopting a short-term A-CAM I
extension through the end of 2028. This would align the terms of the
three sunsetting A-CAM mechanisms so that all three will conclude at
the end of 2028. The carriers would continue to receive their
previously authorized annual support amount while the location
adjustment process is implemented.
As a condition of receiving this extension of support, the
Commission proposes to require carriers to maintain voice and broadband
service and be required to serve additional locations upon reasonable
request. The Commission notes that carriers failing to meet broadband
deployment obligations by the end of 2026 will have until the end of
2027 (the cure period) to meet those obligations. Carriers failing to
meet the A-CAM I obligations by the end of the cure period are subject
to support recovery, and the Commission seeks comment on including
support for 2027 and 2028 into the ``carrier's total relevant high-cost
support over the support term for that support area'' that would be
subject to recovery. The Commission notes that if it includes support
for 2027 in the support recovery calculation, that would also apply to
support recovered if the Universal Service Administrative Company
(USAC) later determines in a compliance review that the carrier lacks
evidence to demonstrate it fulfilled its performance obligations.
The Commission further proposes that during the two-year extension,
carriers will remain subject to quarterly network testing obligations
and certifications and annual reporting requirements. Given the
requirement to maintain service, the Commission seeks comment on
specific support recovery rules for carriers failing to meet their
broadband service obligations based on network testing results that are
simple to understand and implement. For instance, the Commission could
apply the current network testing compliance levels to 2028 testing:
(1) full compliance, no support recovery; (2) level 1, USAC would
recover 25% of extension support received in 2028; (3) level 2, USAC
would recover 50% of extension support received in 2028; (4) level 3,
USAC would recover 75% of the extension support received in 2028; and
(5) level 4, USAC would recover 100% of extension support received in
2028. If the Commission adopts an extension of A-CAM I until 2028,
should it take additional measures with regard to performance or
reporting obligations during the extension period? If so, what should
those measures be? Commenters are encouraged to be specific about any
measures the Commission should take.
Based on the National Broadband Map, the Commission estimates there
are approximately 3.1 million BSLs in the areas served by legacy and
the relevant A-CAM rate-of-return carriers. These rate-of-return
carriers collectively offer voice and broadband service of at least
100/20 Mbps to 2.5 million BSLs in these areas, or 80% of the total
BSLs. Unsubsidized competitors, not including satellite providers,
offer broadband service of at least 100/20 Mbps to 58% of the BSLs in
these areas, which includes a BSL overlap of 46% with those carriers
receiving high-cost support. There are about 267,000 BSLs that still do
not receive broadband service of at least 100/20 Mbps--or roughly 9% of
the BSLs in these areas. Nearly all of these BSLs are shown on the June
30, 2025, NBM as served by a LEO satellite provider with a broadband
speed of at least 100/20 Mbps.
Separately, there has been a steady and significant downward trend
in the use of end-user switched access voice lines. Of the 3.1 million
BSLs, legacy and relevant A-CAM carriers collectively reported almost
932,000 switched access voice lines in service as of the end of 2024.
About 1.4 million, or 43%, of these 3.1 million BSLs have fixed voice
service available from an unsubsidized interconnected VoIP competitor.
At least one mobile provider offers voice service to about 99% of the
3.1 million BSLs in these areas.
The Commission has long endorsed a policy that ``providing support
in areas of the country where another voice and broadband provider is
offering high-quality service without government assistance is an
inefficient use of limited universal service funds.'' Support

[[Page 34205]]

should instead be directed to areas where ``providers would not deploy
and maintain network facilities absent a USF subsidy.'' If the
Commission updates its existing mechanisms or establishes a new
mechanism, should ongoing support for maintenance of existing networks
and operational expenses be limited to areas where there is no
unsubsidized competitor? How should the Commission weigh the presence
of an unsubsidized competitor when considering how to provide high-cost
support in the future? Should the Commission reevaluate the definition
of an unsubsidized competitor for the purposes of ongoing high-cost
support? What lessons can be drawn from the Commission's proceeding on
technology transitions concerning discontinuances in which the carrier
or unaffiliated providers offer alternative services through
interconnected VoIP, mobile wireless, or other voice services?
Additionally, the Commission in recent years has declined to
provide high-cost support for locations where there was an enforceable
commitment to provide service. What is the role of high-cost support,
if any, where there is already an enforceable commitment to serve
locations? Should support for maintenance and operational expenses be
limited to areas where there is no enforceable commitment to provide
service? Should the Commission only provide support for locations that
are not subject to an enforceable commitment and reduce or eliminate
support for locations where there is an enforceable commitment? How
should the Commission calculate support or any reduction in support?
Competitive Overlap. The Commission seeks comment on measures to
prevent duplication of support where a service provider other than the
legacy rate-of-return carrier is awarded funding for broadband
deployment. For example, Sec. 54.319 of the Commission's rules states
that CAF BLS support will be eliminated for those census blocks of an
incumbent LEC study area ``where an unsubsidized competitor, or
combination of unsubsidized competitors . . . offer voice and broadband
service meeting the public interest obligations [including offering
broadband service at a speed of at least 25/3 Mbps] to at least 85
percent of residential locations in the census block.'' The Commission
adopted this rule change for CAF BLS to address the inefficiency of
providing more universal support than necessary by ``subsidizing a
competitor to a voice and broadband provider that is offering service
without government assistance.''
The Commission seeks comment on how it should evaluate high-cost
support in census blocks for which competitors have been awarded
funding to provide broadband service or where unsubsidized competitors
are operating. The Commission proposes to use the Broadband Funding Map
and the National Broadband Map to identify overlap areas where there is
already a provider with a funding commitment and/or an unsubsidized
competitor is present. How should the Commission use this mapping data
to evaluate high-cost support? As a universal service policy matter, at
what level of granularity (e.g., individual BSLs) or generality (e.g.,
census blocks) should that assessment occur?
Should the Commission's determination of a competitor providing
qualifying service be technology-neutral, and if so, what should that
mean in practice? Should the Commission treat the specific type of
technology used as entirely irrelevant? Or should it look in some
manner at the technology used to provide the services, such as whether
it is provided by fiber, cable, fixed wireless, or LEO satellite? Could
the particular technology used to provide service have any implications
for the Commission's efforts to preserve and advance universal service
through a particular high-cost mechanism?
How closely does mapping data align with particular policy
considerations that might underlie a given high-cost support mechanism,
and how should that inform the use of those data? For example, should
the Commission give different weight to evidence regarding providers
subject to legally-enforceable obligations to provide service to
particular locations than to evidence regarding unsubsidized
competitors not ultimately subject to any legal duty to serve those
locations? How, if at all, should the Commission account for the fact
that mapping data does not include pricing information such as
connection costs and recurring charges, while high-cost support
historically has been used, in part, to preserve and advance reasonable
comparability and affordability of rates in rural and high-cost areas?
How should the ``snapshot'' nature of mapping data be factored in
to the Commission's high-cost support decisions? For example, if the
Commission is undertaking to set policy for a 10- or 15-year support
term, how, if at all, should that inform the use of present
availability data? Are there situations where future demand might
constrain the universe of BSLs that ultimately can be served with a
given technology (such as technologies relying on shared resources like
spectrum)? Are there situations where future technological
advancements, regulatory developments, or both, might improve the
geographic scope and/or quality of service that can be offered using a
given technology? More generally, how should the Commission account for
any changes in availability from an unsubsidized competitor as shown in
the mapping data over time?
To what extent should the Commission provide high-cost support
recipients an opportunity to dispute claims of an unsubsidized
competitor before support is reduced or eliminated? Should the
Commission instead rely on the existing availability challenge process
provided within the BDC? Should any reduced or eliminated support be
restored if subsequent changes in mapping data show a reduced
geographic scope of service availability from an unsubsidized
competitor for a relevant performance level? If so, under what
circumstances and what magnitude of support should be restored? How
should our decisions about reducing or eliminating support, or
restoring support, be informed by potential difficulties a provider
might have--due to lack of geographic contiguity or otherwise--in
serving the BSLs not ultimately served by the unsubsidized competitor?
At times the Commission has treated geographic areas as ineligible for
support despite the fact that less than 100% of subscribers would be
served by the unsubsidized competitor. What factors should the
Commission weigh when making such a policy decision and designing the
associated the high-cost support mechanism?
There has been a rise of broadband service provided by satellite
providers. As discussed previously, LEO satellite systems have emerged
providing widely available low latency coverage at high speeds across
America. These LEO systems, such as SpaceX's Starlink and Amazon's Leo,
can provide broadband service to remote and rural regions with low
population densities and difficult topographies at competitive retail
rates. Starlink offers residential broadband service, ``Residential
Lite,'' with a stated download speed of up to 250 Mbps and an upload
speed of up to 35 Mbps for $80 a month, and a ``Residential'' plan for
$120 a month with a stated typical download speed of up to 305 Mbps and
an upload speed of up to 40 Mbps. In comparison, the Commission
provides as much as $200 each month per location in USF support to
underwrite the provision of voice and 25/3 Mbps broadband service by
some legacy recipients.

[[Page 34206]]

How should widely available satellite service affect the
establishment of a new high-cost support mechanism? For the purposes of
determining service adequacy and eligibility for high-cost support,
should the Commission classify federally supported terrestrial networks
such as fiber optic networks as the primary infrastructure for ensuring
resilient communications to critical areas? Should the Commission
consider non-terrestrial services, while valuable as a secondary and
redundant layer, as an insufficient substitute for robust primary
infrastructure? Would support for such secondary and redundant layers
constitute ``overbuilding'' and a waste of federal resources? How is
such treatment of satellite service consistent the Commission's
technology-neutral approach to address the voice and broadband service
needs of consumers? What level of capacity, and what latency, is
necessary to support participation in the AI economy? What inferences,
if any, should the Commission draw from the mix of technologies,
including satellite service, awarded BEAD funding?
If the Commission were to modernize existing mechanisms, how should
it consider the presence of satellite service in areas receiving
support under those mechanisms? Is there a role for satellite in the
most difficult and expensive to serve areas? If so, should those areas
be removed from the service requirements of high-cost support
recipients? Is there a concern that if terrestrial network carriers are
no longer supported in these areas, satellite providers would increase
their rates significantly above the reasonably comparable rates charged
for similar services in urban areas? Given the economics of satellite
deployment, do rates for satellite-based broadband service in rural
areas exceed rates in urban areas by a significant amount? How could
the Commission address such concern?
In 2023, the Commission released a Notice of Inquiry seeking to
build a record to help the Commission explore methods to ensure
universally available and affordable fixed broadband services into the
future, in light of section 254(c)(1)'s definition of universal service
as an ``evolving level of . . . service, taking into account advances
in telecommunications and information technologies and services.''
Commenters generally supported the continued funding of on-going
support to sustain and maintain operations in high-cost areas. NTCA--
The Rural Broadband Association suggested the ``first step is to
determine where a market failure exists such that ongoing support is
needed, followed by a determination of the appropriate level of such
support to ensure that the enduring mission of universal service is
fulfilled.''
In the past, high-cost support largely sought to incrementally
upgrade deployed broadband network speeds in high-cost areas. The
Commission now seeks additional comment on what role, if any, the Fund
can play to encourage the transition to an all-IP network environment.
The Commission also seeks comment on the benefits of encouraging a
transition to VoIP and an all-IP network, and on the challenges this
transition may present to rural areas. Are there special challenges in
remote areas supported with high-cost funding, such as the ability of
rural 911 systems to operate in an all-IP environment? What are the
potential cost savings associated with delivering traffic in IP,
including reducing maintenance, electricity, and real estate expenses?
How would transitioning to an all-IP network reduce support costs? Are
there costs associated with the transition to IP that carriers would
need to recover? If so, how would carriers recover those costs? How
could universal service funding help ensure a successful IP transition?
Delete, Delete, Delete. The Commission seeks comment on whether
there are High-Cost Program rules that it should consider removing. Are
there rules that are no longer necessary? Which rules or statutory
provisions will be affected by any changes the Commission may make to
the High-Cost Program? Commenters are encouraged to be as specific as
possible in identifying rules or statutory provisions that may be
impacted.
All filings made in response to the questions in the NPRM should be
filed in WC Docket No. 26-96. The Commission has also opened a new
docket--WC Docket No. 25-311, ``Reforming Legacy Rules for an All-IP
Future,'' and established WC Docket No. 25-208, ``Accelerating Network
Modernization'' and WC Docket No. 25-209, ``Reducing Barriers to
Network Improvements and Service Charges.'' The Commission incorporates
the comments filed in response to these proceedings herein by
reference.
Benefits. The Commission seeks comment on the benefits of the
proposed reforms. What would be the likely benefit of reforms to A-CAM
I, Revised A-CAM I, A-CAM II, CAF BLS, and HCLS? What would be the
likely benefits of the three potential avenues for reform of the model-
based and legacy support programs, for which comment was sought: (1)
update existing legacy high-cost support mechanisms to align with the
current landscape; (2) establish a new high-cost support mechanism that
could replace the different legacy high-cost support mechanisms with a
single, modernized mechanism; or (3) take no further action with regard
to ongoing high-cost support and maintain the status quo for legacy
support mechanisms and allow the relevant A-CAM support mechanisms to
sunset? What would be the benefits of each approach for consumers,
carriers, and the Fund? Would there be any benefit from reduced
administrative burden if these High Cost programs are reformed? How
should the Commission consider the benefits of reforms to High Cost
programs that are set to expire? If funding is reformed and additional
deployment obligations are required, how should the Commission measure
the benefit of those additional obligations? What are the potential
benefits if the Commission decides to limit support to certain areas?
How should the Commission view the benefits of potential reforms given
that satellite service is now widely available?
Costs. The Commission seeks comment on the likely costs of the
proposed rules. Will any of the proposed reforms increase carrier
compliance costs? If so, are these costs expected to be transitory or
ongoing? If the Commission phases down the high-cost mechanisms or
offer carriers participation in other funding programs, would carriers
be forced to incur additional costs to meet new administrative
requirements of those programs? If funding is reformed and additional
deployment obligations are required, how can the Commission evaluate
the cost of these deployments? Additionally, what are the likely costs
if funding is reduced or restricted to certain areas. If the reduction
or restriction in funding causes some carriers to exit the market, what
is the likelihood of this occurrence and what would be the resulting
costs? The Commission encourages commenters to provide quantitative
estimates where feasible and to distinguish between one-time
implementation costs and recurring compliance burdens.
IP Transition and Other Issues. To the extent that any rules the
Commission adopts in the proceeding encourage carriers to transition to
a fully IP-based network, what are the potential benefits and costs of
the IP transition? What would be the potential benefits, to carriers
and customers, of carriers transitioning their network? What would be
the potential costs?
The Rural Broadband Protection Act. On May 11, 2026, the Rural
Broadband

[[Page 34207]]

Protection Act of 2025 (Pub. L. No: 119-89) (RBPA) was enacted. The
Commission invites comment on the application of the RBPA to any
support mechanisms that stem from this item. If there is no direct
application because these mechanisms would not be ``new covered funding
awards,'' are there principles embodied in the RBPA that could be used
to help improve the future operation of these high-cost mechanisms or
the support they distribute? To the extent the RBPA applies to these
mechanisms, how should the specific application of the ``vetting''
principles be informed by processes already developed for the high-cost
auctions?
In this document, the Commission seeks comment on ongoing high-cost
support and existing legacy and modernized high-cost support
mechanisms. In the following, the Commission discusses its legal
authority to initiate this proceeding and invite comment on its
analysis.
Section 254. The Commission intends to rely on its statutory
authority under section 254 of the Act to modernize legacy universal
service support mechanisms. Section 254(d) directs the Commission to
establish and maintain ``specific, predictable, and sufficient
mechanisms . . . to preserve and advance universal service.'' Section
254(c) defines ``universal service'' as ``an evolving level of
telecommunications services that the Commission shall establish
periodically under this section, taking into account advances in
telecommunications and information technologies and services.'' Section
254(e) further states that universal service ``should be explicit and
sufficient to achieve the purposes of this section.''
In establishing the services that may be supported by the Fund, the
Commission must consider the extent to which telecommunications
services are ``(A) essential to education, public health, or public
safety; (B) have, through the operation of market choices by customers,
been subscribed to by a substantial majority of residential customers;
(C) are being deployed in public telecommunications networks by
telecommunications carriers; and (D) are consistent with the public
interest, convenience, and necessity.'' As the Supreme Court has
explained, the ``Act's embrace of evolution--the permission it gives
the FCC to subsidize different services now than 30 years ago--ensures
that the universal-service program will be of enduring utility.'' And,
``nothing in the statute limits the FCC's authority to place conditions
. . . on the use of USF funds,'' including by imposing certain
broadband requirements as the Commission did in the USF/ICC
Transformation Order, 76 FR 73830, November 29, 2011.
Currently, voice telephony service is the telecommunications
service supported by the universal support mechanisms. The service must
be capable of providing ``voice grade access to the public switched
network or its functional equivalent; minutes of use for local service
provided at no additional charge to end users;'' access to emergency
services; and toll limitation services to qualifying low-income
consumers. An eligible telecommunications carrier must offer voice
telephony service to receive Federal universal service support per the
Commission's rules. That said, the Commission recognizes that voice
telephony is simply a service that can be delivered over broadband-
capable loops and thus transformed the ICLS program into CAF BLS that
allows funding for consumer broadband-only loops in conjunction with
the offering voice telephony service by carriers.
As carriers continue to transition to all-IP networks, does the
Commission need to revisit its definition of the supported services for
rural, insular, and high cost areas? Section 54.101 of the Commission's
rules states that the eligible voice telephony service must provide
``access to the public switched network or its functional equivalent.''
Does the Commission need to update its reference to the ``public
switched network'' in light of the IP transition? As the Supreme Court
recently recognized, universal service is an ``evolving level of
telecommunications services'' and thus section 254's ``embrace of
evolution--the permission it gives the FCC to subsidize different
services now than 30 years ago--ensures that the universal-service
program will be of enduring utility.''

III. Procedural Matters

A. Paperwork Reduction Act

The NPRM contains proposed new and revised information collection
requirements. The Commission, as part of its continuing effort to
reduce paperwork burdens, will be inviting the general public and the
Office of Management and Budget to comment on the information
collection requirements contained in this document, as required by the
Paperwork Reduction Act of 1995, Public Law 104-13. In addition,
pursuant to the Small Business Paperwork Relief Act of 2002, Public Law
107-198, see 44 U.S.C. 3506(c)(4), the Commission seeks specific
comment on how it might further reduce the information collection
burden for small business concerns with fewer than 25 employees.
As required by the Regulatory Flexibility Act of 1980, as amended
(RFA), the Commission has prepared the Initial Regulatory Flexibility
Analysis (IRFA) of the policies and rules proposed in the NPRM
assessing the possible significant economic impact on a substantial
number of small entities. The Commission requests written public
comments on this IRFA. Comments must be identified as responses to the
IRFA and must be filed by the deadlines for comments specified on the
first page of the NPRM. The Commission will send a copy of the NPRM,
including this IRFA, to the Chief Counsel for the Small Business
Administration (SBA) Office of Advocacy. In addition, the NPRM and IRFA
(or summaries thereof) will be published in the Federal Register.
The USF High-Cost Program plays a critical role in supporting
connectivity in America, particularly in rural areas. The NPRM seeks
comment on potentially reforming our legacy high-cost mechanisms, i.e.,
the CAF BLS and HCLS programs to more efficient fixed support
mechanisms. The NPRM also seeks comment on what next steps, if any, the
Commission should take with respect to the areas served by the soon to
be ending A-CAM I, Revised A-CAM I, and A-CAM II mechanisms, including
a two-year extension of the A-CAM I support mechanism past its 2026
sunset date. The NPRM also seeks comment on the elimination of
regulations that will no longer be necessary in a post time TDM
environment.
Specifically, the three potential avenues for reform of the model-
based and legacy support programs, for which the Commission seeks
comment are to: (1) update existing legacy high-cost support mechanisms
to align with the current landscape; (2) establish a new high-cost
support mechanism that could replace the different high-cost support
mechanisms with a single, modernized mechanism; or (3) take no further
action with regard to ongoing high-cost support and maintain the status
quo for legacy support mechanisms and allow the relevant A-CAM support
mechanisms to sunset.
The RFA directs agencies to provide a description of and, where
feasible, an estimate of the number of small entities that may be
affected by the proposed rules, if adopted. The RFA generally defines
the term ``small entity'' as having the same meaning as the terms
``small business,'' ``small organization,'' and ``small governmental
jurisdiction.'' In addition, the term ``small business'' has the same
meaning as the term

[[Page 34208]]

``small business concern'' under the Small Business Act. A ``small
business concern'' is one which: (1) is independently owned and
operated; (2) is not dominant in its field of operation; and (3)
satisfies any additional criteria established by the SBA. The SBA
establishes small business size standards that agencies are required to
use when promulgating regulations relating to small businesses;
agencies may establish alternative size standards for use in such
programs, but must consult and obtain approval from SBA before doing
so.
The Commission's actions, over time, may affect small entities that
are not easily categorized at present. The Commission therefore
describes three broad groups of small entities that could be directly
affected by its actions. In general, a small business is an independent
business having fewer than 500 employees. These types of small
businesses represent 99.9% of all businesses in the United States,
which translates to 34.75 million businesses. Next, ``small
organizations'' are not-for-profit enterprises that are independently
owned and operated and not dominant their field. While the Commission
does not have data regarding the number of non-profits that meet that
criteria, over 99 percent of nonprofits have fewer than 500 employees.
Finally, ``small governmental jurisdictions'' are defined as cities,
counties, towns, townships, villages, school districts, or special
districts with populations of less than fifty thousand. Based on the
2022 U.S. Census of Governments data, the Commission estimates that at
least 48,724 out of 90,835 local government jurisdictions have a
population of less than 50,000.
The rules proposed in the NPRM will apply to small entities in the
industries identified in the chart below by their six-digit North
American Industry Classification System (NAICS) codes and corresponding
SBA size standard. Where available, the Commission also provides
additional information regarding the number of potentially affected
entities in the industries identified in the following.

----------------------------------------------------------------------------------------------------------------
Regulated industry (footnotes
specify potentially affected SBA size Total small
entities within a regulated NAICS code standard Total firms firms % Small firms
industry where applicable)
----------------------------------------------------------------------------------------------------------------
Wired Telecommunications 517111 1,500 employees. 3,403 3,027 88.95
Carriers.
Wireless Telecommunications 517112 1,500 employees. 1,184 1,081 91.30
Carriers (except Satellite).
All Other Telecommunications.. 517810 $40 million..... 1,673 1,007 60.19
----------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------
2025 Universal service monitoring report telecommunications SBA size standard (1,500 employees)
service provider data (data as of December 2024) -----------------------------------------------
----------------------------------------------------------------- Total number
of FCC form Small firms % Small
Affected entity 499A filers entities
----------------------------------------------------------------------------------------------------------------
Cable/Coax CLEC................................................. 69 63 91.30
CAP/CLEC........................................................ 645 548 84.96
Competitive Local Exchange Carriers (CLECs)..................... 4,049 3,853 95.16
Incumbent Local Exchange Carriers (Incumbent LECs).............. 1,175 920 78.30
Interexchange Carriers (IXCs)................................... 112 92 82.14
Local Exchange Carriers (LECs).................................. 5,224 4,773 82.14
Operator Service Providers (OSPs)............................... 26 24 92.31
Other Toll Carriers............................................. 72 69 95.83
Wired Telecommunications Carriers............................... 4,971 4,531 91.15
Wireless Telecommunications Carriers (except Satellite)......... 608 522 85.86
----------------------------------------------------------------------------------------------------------------

The RFA directs agencies to describe the economic impact of
proposed rules on small entities, as well as projected reporting,
recordkeeping and other compliance requirements, including an estimate
of the classes of small entities which will be subject to the
requirements and the type of professional skills necessary for
preparation of the report or record.
In the NPRM, the Commission seeks comment on proposals that, if
adopted, would improve the efficient allocation of high-cost universal
service support in rural areas. Specifically, the NPRM seeks comment on
whether to update existing legacy high-cost support mechanisms to align
with the current landscape, whether this new support mechanism should
focus on capital or operating expenses, and what deployment and other
obligations small and other carriers would have from receiving this
support. The NPRM also seeks comment on extending some support
mechanisms. For example, as a condition of receiving a short-term
extension of A-CAM I support through the end of 2028, the NPRM proposes
that carriers be required to maintain voice and broadband service,
serve additional locations at a reasonable request, and remain subject
to quarterly and annual reporting requirements. Carriers who could not
meet those obligations would be subject to existing penalties for
partial or non-compliance. The NPRM also seeks comment on how to
evaluate the need for high-cost support in areas where there are
unsubsidized competitors or an enforceable commitment to provide
service. Additionally, the NPRM seeks comment the role of broadband
service provided by satellite carriers in establishing a new high-cost
support mechanism. Finally, the NPRM requests comment on costs of the
proposed changes to the high-cost support mechanism, including whether
changes may increase carriers' costs for compliance and other burdens.
The proposals in the NPRM would require the Commission to update
existing legacy and soon-to-be sunsetting model-based high-cost support
mechanisms to align with the current landscape. The two main categories
of mechanisms addressed in the NPRM--legacy rate-of-return and
sunsetting A-CAM model support--account for approximately $1.6 billion
in support to carriers, which if phased out or allowed to sunset, may
impact small and other carriers that participate in these programs.
Other proposed rules will have more minor impacts. Primarily this would
require carriers to change administrative procedures.

[[Page 34209]]

Carriers receiving or who have received support should be familiar with
reporting, recordkeeping, and obligations of the existing programs, but
may need to hire professionals to assist with compliance obligations
associated with a new high-cost support mechanism. Before reaching its
final conclusions and taking action in this proceeding, the Commission
expects to review the comments filed in response to the NPRM and more
fully consider the economic impact on small entities and how any impact
can be minimized.
The RFA directs agencies to provide a description of any
significant alternatives to the proposed rules that would accomplish
the stated objectives of applicable statutes, and minimize any
significant economic impact on small entities. The discussion is
required to include alternatives such as: ``(1) the establishment of
differing compliance or reporting requirements or timetables that take
into account the resources available to small entities; (2) the
clarification, consolidation, or simplification of compliance and
reporting requirements under the rule for such small entities; (3) the
use of performance rather than design standards; and (4) an exemption
from coverage of the rule, or any part thereof, for such small
entities.''
In the NPRM, the Commission seeks comment on proposals and
alternatives that it expects will minimize any significant economic
impact of the proposed rules on small entities. Specifically, the
Commission invites comment on alternative approaches for high-cost
support mechanisms in ways that reduce administrative burdens. The
Commission will fully consider the economic impact on small entities as
it evaluates the comments filed in response to the NPRM, including
comments related to the costs and benefits of these proposed rules.
Alternative proposals and approaches from commenters will further
develop the record and could help the Commission further minimize the
economic impact on small entities. The Commission's evaluation of the
comments filed in this proceeding will shape the final conclusions it
reaches, the final alternatives it considers, and the actions it
ultimately takes to minimize any possible economic impact the final
rules may have on small entities.

III. Ordering Clauses

Accordingly, it is ordered that pursuant to sections 1-4, 201-202,
206, 214, 218-220, and 251-254, of the Communications Act of 1934, as
amended, and section 706 of the Telecommunications Act of 1996, 47
U.S.C. 151-54, 201-202, 206, 214, 218-220, 251-254, 1302, and
Sec. Sec. 1.1 and 1.412 of the Commission's rules, 47 CFR 1.1, 1.412,
the NPRM hereby is adopted.
It is further ordered that, pursuant to applicable procedures set
forth in Sec. Sec. 1.415 and 1.419 of the Commission's rules, 47 CFR
1.415, 1.419, interested parties may file comments on the NPRM on or
before 60 days after publication in the Federal Register, and reply
comments on or before 90 days after publication in the Federal
Register.

Federal Communications Commission.
Marlene Dortch,
Secretary.
[FR Doc. 2026-11353 Filed 6-4-26; 8:45 am]
BILLING CODE 6712-01-P

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