Incumbent Carriers Overview

Frozen Support for Price Cap Carriers

For price cap carriers (and their rate-of-return affiliates), legacy High Cost Program support was frozen at December 31, 2011, levels. High Cost Model support, Interstate Access Support, and frozen-rate Interstate Common Line Support (ICLS) are eliminated.

Also, to ensure fairness for consumers who pay into universal service, existing support levels will be reduced in any areas where a price cap company charges artificially low end-user voice rates.

Reform for Rate-of-Return Carriers

Rate-of-return (ROR) carriers have updated limits on capital and operating costs and corporate operating expense limits (COE) for High Cost Loop (HCL) , and the latter is extended to ICLS. Carriers with artificially low local rates will have their per-line HCL support reduced dollar-for-dollar until it meets the urban rate floor. Also, HCL support received by price caps and their ROR affiliates was removed from the HCL cap. Acquired exchange support was clarified so that carriers will receive the lesser of their costs or the acquired exchange's costs.

As of 2013, Safety Net Additive (SNA) has been phased out for those carriers who achieved 14 percent TPIS per loop growth through line loss. Those who qualified through TPIS growth will continue to receive support through the end of their letters. However, no new carriers will qualify. Effective July 2012, Local Switching Support (LSS) was eliminated, and carriers may recover interstate revenue shortfalls through Access Recovery Charges and the new Connect America Fund ICC mechanism. Further, High Cost Program support for all ILECs will transition to a $250 per line cap over a three-year period.

For all ETCs, the reporting requirements which formerly applied to federally-designated ETCs now apply. In addition, there are new requirements for information on voice/broadband pricing, corporate affiliates, and Tribal outreach.

Process Overview

Rural and non-rural incumbent local exchange carriers (ILECs) serving people in high-cost areas, sparsely populated areas, or areas with dense or rough terrain are the major participants in the High Cost Program. A local exchange carrier is defined as any person who is engaged in the provision of telephone exchange service or exchange access.

ILECs can be a combination of either a rural or non-rural company and also a price cap or rate-of-return company. These categories determine the type of High Cost Program support for which an ILEC is eligible.

Step 1 What Is Supported
Step 2 Eligibility
Step 3 Obtain a SPIN
Step 4 Filing Requirements
Step 5 File Line Counts
Step 6 File Certifications
Step 7 Disaggregation Plans
Step 8 Report Revenue