About USAC

High Cost Program

The High Cost Program ensures that consumers in all regions of the Nation have access to and pay rates for telecommunications services that are reasonably comparable to those in urban areas.

The primary participants in the High Cost Program are rural and non-rural incumbent local exchange carriers and competitors that serve customers in the service areas of incumbent carriers. Other key stakeholders include state regulators, telecom consultants, legislators, and federal agencies.

High Cost Program Highlights

    • Without High Cost support, consumers in high cost areas would pay significantly more for service due to factors such as dense terrain or sparse population, which raise the cost of building telecommunications networks
    • High Cost support provides assistance to rural, non-rural, and competitive carriers that are designated as eligible telecommunications carriers (ETCs) by a state or the FCC
    • High Cost support ensures that consumers in all regions of the Nation have access to and pay rates for telecommunications services that are reasonably comparable to those in urban areas
    • High Cost support benefits consumers in all 50 states and U.S. territories by providing support to 1,700 service providers
    • More than $18 billion in High Cost support has been disbursed to companies designated as eligible telecommunications carriers since 1998

    What Benefits are Available under the High Cost Program?

    The High Cost Program consists of five components available to eligible telecommunications carriers (ETCs):

    • High Cost Loop (HCL) provides financial assistance to rural telephone companies for providing the "last mile of connection" when the cost of this service exceeds 115 percent of the national average cost per loop.

      • Safety Net Additive (SNA) support provides support above the High Cost Loop ILEC cap for rural carriers that have made significant investments in their rural infrastructure.
      • Safety Valve Support (SVS) is intended to provide support to rural carriers that make substantial investment after acquiring exchanges.
    • High Cost Model (HCM) provides carriers with support for all intrastate costs per line that exceed two (2) standard deviations of the national average cost per loop.
    • Interstate Access Support (IAS) helps price-cap telephone companies recover some of their fixed interstate access charges.
    • Interstate Common Line Support (ICLS) helps rate-of-return telephone companies recover some of their fixed interstate access charges.
    • Local Switching Support (LSS) provides financial assistance designed to reduce the high fixed switching costs for carriers that serve 50,000 loops or fewer.

    How does the High Cost Program Work?

    In order to participate in any of the components of the High Cost support program, a carrier must be an ETC. A carrier can become an ETC by designation of its state utility regulator, or in some cases, the FCC. Procedures differ for carriers seeking designation on non-tribal lands versus carriers seeking designation on tribal lands. Upon receiving ETC designation, a new carrier must apply for a USAC Service Provider Identification Number (SPIN) and submit its ETC order complete with documentation showing areas served.

    Who Pays for the High Cost Program?

    All telecommunications carriers that provide service internationally and between states pay contributions into the USF. USAC makes payments from this central fund to support the High Cost Program, as well as three other programs (Low Income, Rural Health Care, and Schools and Libraries).

    Learn more about the High Cost Program...


    Last modified on 2/18/2008