High Cost Loop

High Cost Loop (HCL) support is available to rural price-cap and rate-of-return incumbent carriers and competitive carriers providing service in the areas of these rural companies, which must be designated as eligible telecommunications carriers (ETCs) by their state commissions or the Federal Communications Commission (FCC).

HCL support provides support for the last mile of connection for rural companies in service areas where the cost to provide this service exceeds 115 percent of the national average cost per line. There also was a limited amount of HCL support for non-rural companies, which was known as interim hold harmless support. At present, there are no non-rural companies that receive interim hold harmless support.

HCL support is subject to an annual indexed cap. For rural carriers, the cap is based on the prior year’s rural HCL support and a Rural Growth Factor, which allows HCL support to change based on annual changes in the Gross Domestic Product-Chained Price Index (GDP-CPI) and the total number of working loops of rural carriers.

Carriers with artificially low local rates will have per-line HCL support reduced dollar-for-dollar until it meets the urban rate floor. Additionally, HCL support received by price cap carriers and their ROR affiliates was removed from the HCL cap.

ROR carriers have updated limits on capital and operating costs for HCL support and updated corporate operating expense limits for HCL support as well as ICLS.

HCL is covered in Subpart F of Part 36 of the FCC’s rules (47 CFR Section 36.601 et seq).