Affordable Connectivity Program, 60347-60356 [2023-18621]

Agencies

• FEDERAL COMMUNICATIONS COMMISSION

[Federal Register Volume 88, Number 169 (Friday, September 1, 2023)]
[Rules and Regulations]
[Pages 60347-60356]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-18621]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 54

[WC Docket No. 21-450; FCC 23-62; FR ID 167068]


Affordable Connectivity Program

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In this document, the Federal Communications Commission (FCC 
or Commission) adopts rules to establish the enhanced discounts 
available for monthly broadband services provided in high-cost areas by 
participants in the Affordable Connectivity Program (ACP).

DATES: Effective October 2, 2023.

FOR FURTHER INFORMATION CONTACT: For further information, please 
contact, Travis Hahn, Attorney Advisor, Telecommunications Access 
Policy Division, Wireline Competition Bureau, at [email protected] or 
202-418-7400.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Sixth 
Report and Order (Order) in WC Docket No. 21-450; adopted on August 3, 
2023 and released on August 4, 2023. The full text of this document is 
available at the following internet address: https://www.fcc.gov/document/fcc-acts-provide-subsidy-consumers-certain-high-cost-areas-0.

I. Introduction

    1. In this final rule, as required by the Infrastructure Investment 
and Jobs Act (Infrastructure Act), the Commission adopts rules to 
establish the enhanced discounts available for monthly broadband 
services provided in high-cost areas by participants in the ACP. The 
Infrastructure Act recognizes that in certain high-cost areas of the 
country, offering broadband service to ACP eligible households at the 
standard up-to-$30 monthly benefit level could lead providers to 
experience particularized economic hardship such that the provider may 
not be able to maintain the operation of part or all of its broadband 
network. To address this, the Infrastructure Act allows for providers 
to provide an up-to-$75 monthly benefit to ACP eligible households in 
high-cost areas upon a showing of such particularized economic hardship 
in a given high-cost area. The steps the Commission takes to implement 
this provision will help narrow the digital divide by ensuring that 
more low-income households throughout the country, including households 
in rural and insular areas, have access to discounted broadband 
services. In particular, the high-cost area benefit will maximize 
provider participation in the ACP, by encouraging additional providers 
to participate in the ACP in high-cost areas and incentivizing existing 
ACP providers experiencing an economic hardship in high-cost areas to 
continue participating in the program. The high-cost area benefit also 
complements and supports other Federal initiatives, including those in 
the Infrastructure Act, to spur deployment and adoption in rural areas 
by strengthening the business case for providers to deploy broadband in 
rural and insular areas.

II. Discussion

    2. The Commission now establishes the requirements to implement the 
ACP high-cost area benefit as required by the Infrastructure Act. In 
this section, the Commission discusses determining high-cost areas that 
will be eligible for the high-cost area benefit, eligibility to receive 
the high-cost area benefit, requirements to make a showing of economic 
hardship, as well as other administrative aspects necessary to 
implement the high-cost area benefit.
    3. Pursuant to the Infrastructure Act, for purposes of the ACP 
high-cost area benefit, the Commission must use the definition of high-
cost areas established by the National Telecommunications and 
Information Administration (NTIA) for its Broadband Equity, Access, and 
Deployment (BEAD) grant program. The ACP statutory provisions 
specifically reference NTIA's determination of high-cost areas under 
the BEAD program in defining a high-cost area for the ACP high-cost 
area benefit. As such, the high-cost areas used by the Commission for 
the ACP high-cost area benefit will be the same as the high-cost areas 
used for the BEAD program as determined by NTIA.
    4. The statute establishing the BEAD program requires NTIA, ``on or 
after the date on which the [Commission's] broadband DATA maps are made 
public,'' to allocate funding to eligible States for the high-cost 
areas within the State. By definition, a `` `high-cost area' [as 
determined by NTIA in consultation with the Commission] means an 
unserved area in which the cost of building out broadband service is 
higher, as compared with the average cost of building out broadband 
service in unserved areas in the United States.'' For purposes of 
defining ``high-cost area'', the term ``unserved area'' means an area 
in which not less than 80 percent of broadband-serviceable locations 
are unserved locations.
    5. On June 26, 2023, NTIA announced the State allocations for the 
BEAD grant program. As part of BEAD, NTIA has made State allocations in 
part based on the determined ``high-cost areas'' within each State. 
Pursuant to the Infrastructure Act, the Commission therefore makes the 
ACP high-cost area benefit available in those high-cost areas 
identified by NTIA consistent with the Infrastructure Act's definition 
of ``high-cost area,'' and subject to the provider's demonstration of 
particularized economic hardship, as described in further detail in the 
following.
    6. The Commission next addresses the requirements for participating 
providers seeking to offer a high-cost area benefit to eligible 
households located in designated high-cost areas served by the 
provider. Specifically, the Commission defines ``particularized 
economic hardship,'' to clarify that the benefit is limited to 
facilities-based providers, and address the specific showing that 
participating providers must make to demonstrate they are experiencing 
a particularized economic hardship in a given high-cost area. The 
Commission also prescribes the process for submitting, reviewing, and 
taking action on such showings, and for requests for review of adverse 
decisions. Lastly, the Commission clarifies the interplay between the 
qualifying Tribal land and high-cost area benefits by interpreting the 
Infrastructure Act to mean that participating providers can either 
offer one or the other, but not both simultaneously, to eligible 
households located on both a Tribal land and in a designated high-cost 
area.
    7. Particularized Economic Hardship. First, consistent with the 
Infrastructure Act, the Commission will require a participating 
provider to demonstrate economic hardship to be eligible for the high-
cost area benefit. The Infrastructure Act directs the Commission to 
establish a mechanism whereby a ``participating provider'' in a high-
cost area ``may provide'' an enhanced monthly benefit up to $75 ``upon 
a showing that the applicability of the lower [$30] limit . . . would 
cause particularized economic hardship to the provider such that the 
provider may not be able to maintain the

[[Page 60348]]

operation of part or all of its broadband network.'' The Commission 
implements this directive by requiring a participating provider seeking 
application of the high-cost area benefit to demonstrate the economic 
hardship to which it would be subject if only the standard $30 monthly 
discount were applied to its provision of ACP service in a high-cost 
area(s). This approach to implementing the statute is consistent with 
the positions taken by several commenters in the record.
    8. Next, the Commission defines particularized economic hardship by 
focusing on the provider's operating costs and revenues in the high-
cost area(s) where the provider seeks approval to offer the high-cost 
area benefit. The Commission finds that a provider that demonstrates it 
is unable to cover the costs of maintaining the operation of all or 
part of its broadband network in a high-cost area where it seeks to 
offer the high-cost area benefit as described in the following meets 
the ``particularized economic hardship'' standard. Hereafter, the 
Commission describes such a provider as operating at a loss. To 
establish ``particularized economic hardship,'' the Commission will 
require providers to submit documentation, such as an income statement, 
showing that they are unable to cover the costs of maintaining the 
operation of all or part of their broadband network for each high-cost 
area for which the high-cost area benefit is being sought. Aside from 
required documentation, the Commission will also require each provider 
to certify to and explain how the up to $75 a month high-cost area 
benefit would materially improve the provider's ability to offer 
service through the ACP and maintain and operate its broadband network 
and how the economic hardship limits its ability to ``maintain the 
operation of all or part of its broadband network'' in each high-cost 
area for which it seeks to offer the high-cost area benefit.
    9. The Commission finds this standard to be consistent with the 
language and intent of the statute, as well as the record. Congress did 
not provide details on the nature of the showing of economic hardship 
providers must make to obtain the high-cost area benefit. The statute 
provides that the provider must show that the applicability of the 
basic $30 benefit would cause ``particularized economic hardship . . . 
such that the provider may not be able to maintain the operation of 
part or all of its broadband network.'' The Commission sought comment 
on the mechanism by which providers can show particularized economic 
hardship. Because a provider operating at a loss in the high-cost area 
for which it seeks the high-cost area benefit may be unable to maintain 
broadband network operations in that area, the Commission finds this 
standard to be consistent with the language and intent of the statute. 
For purposes of this standard, the provider will need to factor in the 
standard monthly $30 ACP benefit as well as subsidies and other 
financial benefits the provider receives, including Universal Service 
Fund (USF) high-cost support, as they are directly relevant when 
evaluating the overall costs and revenues of the provider. No commenter 
opposed the Commission's proposal in the Notice of Proposed Rulemaking 
(NPRM), 87 FR 8385, February 14, 2022, of including subsidies and other 
financial benefits in the economic hardship analysis.
    10. The Commission rejects ACA Connects' suggestion to interpret 
``particularized economic hardship'' to mean those instances where the 
provider's administrative costs of participating in the ACP exceeds the 
benefits received, and where the provider shows that in the context of 
its overall financial position, that net loss would affect its ability 
to maintain part of its broadband network. A provider could be 
profitable overall and willing to maintain network operations even if 
the costs of voluntarily participating in the ACP exceeded the benefits 
received. Conversely, a provider could be unprofitable overall, but the 
administrative costs of ACP participation could be less than the 
benefits received. Accordingly, the Commission finds ACA Connects' 
suggested approach would not provide a meaningful indication of whether 
a provider can ``maintain the operation of part or all of its broadband 
network'' when just the standard $30 benefit is available to eligible 
households in the designated high-cost areas it serves.
    11. The Commission also declines to define ``particularized 
economic hardship'' as the serving of less than a Commission-defined 
threshold of broadband subscribers across a smaller provider's entire 
service territory, as suggested by ACA Connects. The Commission did 
seek comment on this approach in the NPRM in response to earlier 
comments by NTCA--The Rural Broadband Association (NTCA) and Conexon. 
However, the Commission received no comments that would help them 
determine how to apply a standard under a threshold-based approach to 
determine whether a provider may not be able to maintain the operation 
of part or all of its broadband network without the high-cost area 
benefit. Furthermore, the Commission believes that a subscriber 
threshold-based approach would be at odds with Congress's directive to 
require a showing of ``particularized'' economic hardship. The 
Commission interprets the meaning of ``particularized'' in the context 
of the high-cost area benefit to mean that a provider must show that it 
is individually experiencing economic hardship. A subscriber-based 
threshold approach is inconsistent with this interpretation because it 
would necessarily assume that all providers that met the threshold were 
experiencing sufficiently similar circumstances to merit access to the 
high-cost area benefit, without regard to whether each provider's 
specific circumstances demonstrated that the provider would experience 
economic hardship absent the application of the high-cost area benefit. 
Accordingly, the Commission finds that the statute requires them to 
define particularized economic hardship based on an individualized 
showing so that each provider can account for its own particularized 
cost and revenue structure.
    12. To the extent that NTCA suggests an approach that allows 
providers to qualify for the high-cost area benefit based solely on the 
receipt of USF high-cost support, the Commission declines to adopt such 
an approach. Recipients of USF high-cost support receive subsidies to 
provide reasonably comparable services at rates reasonably comparable 
to those in urban areas. Indeed, those subsidies are a way for 
providers to cover certain costs of operating and maintaining their 
networks, which may, if anything, make it less likely that a provider 
would be suffering a particularized economic hardship in the geographic 
area where it receives high-cost support. Therefore, receipt of USF 
high-cost support, in and of itself, does not show the provider is 
experiencing a ``particularized economic hardship'' in general, or as 
defined herein. To bolster its argument, NTCA attempts to tie the ACP 
high-cost area benefit to the role USF high-cost support plays in 
enabling `` `affordable' broadband services for all rural consumers, 
regardless of income level.'' NTCA contends that the `` `enhanced' ACP 
subsidy can make up for [the] `gap' between `reasonable comparability' 
and `affordability' that the High-Cost USF program does not close on 
its own.'' However, this argument does not address the specific 
language of the statute, which focuses on a provider's inability to 
``maintain the operation of part or all of [a provider's] broadband

[[Page 60349]]

network'' rather than on whether the service at issue is affordable to 
subscribers with the standard ACP benefit. Accordingly, the Commission 
rejects this proposal.
    13. The Commission also disagrees with the Wireless Internet 
Service Providers Association's (WISPA) position that small Internet 
Service Providers ``lack the administrative resources to establish 
their specific costs to provide broadband service in an area,'' and 
that it is unnecessary to examine an individual operator's cost of 
doing business.'' Instead, WISPA asserts that all areas eligible for 
the Connect America Fund or Rural Digital Opportunity Fund, as well as 
any census block identified as a high-poverty area on the map created 
by the Department of Agriculture and NTIA, should be designated as 
high-cost areas eligible for the $75 subsidy. WISPA's suggested 
approach would seem to read the ``particularized economic hardship'' 
showing out of the statute entirely. As discussed in this document, the 
statute's particularized economic hardship requirement is separate from 
and in addition to the requirement that this enhanced support only be 
made available in ``high-cost areas,'' and the determination of those 
high-cost areas will be made by NTIA. Moreover, the Commission expects 
that any business, regardless of size, will have knowledge of the costs 
and revenues associated with its business operations, at least to the 
extent necessary to determine if the provider is experiencing 
particularized economic hardship in a high-cost area.
    14. Facilities-Based Provider Limitation. Pursuant to the 
Infrastructure Act's direction that a provider show that particularized 
economic hardship may impair its ability ``to maintain the operation of 
part or all of its broadband network,'' the Commission clarifies that 
only facilities-based providers will be eligible for the high-cost 
benefit. The Commission finds that the Act directs them to prohibit 
non-facilities-based providers from receiving a high-cost area benefit 
as such providers would not experience an inability to maintain their 
network absent the application of the high-cost benefit. For purposes 
of this final rule, the Commission defines facilities-based provider 
consistent with its rules regarding the Form 477 collection, to include 
provider owned physical facilities, and wireless spectrum. The 
Commission directs the Universal Service Administrative Company (USAC) 
to validate and verify a provider's facilities-based status as part of 
the process of approving providers to offer the high-cost area benefit. 
Providers will additionally be required to certify to their status as a 
facilities-based provider as part of their application to offer the 
high-cost area benefit.
    15. Showing to Support Request for Approval to Offer the High-Cost 
Area Benefit. The Commission's objective is to administer the high-cost 
area benefit consistent with the statutory language requiring, among 
other things, a showing of particularized economic hardship by the ACP 
provider balanced with ``a minimal burden on qualifying households and 
providers.'' In implementing this approach, the Commission seeks to 
safeguard program integrity while also minimizing the administrative 
burden for a provider seeking to demonstrate that it is unable to cover 
the costs of operating and maintaining all or part of its network 
operations in the high-cost area(s) absent the high-cost area benefit.
    16. The Commission outlines the type of documentation that it 
expects would be sufficient for a provider to demonstrate that it is 
experiencing ``particularized economic hardship'' for purposes of the 
high-cost area benefit. Participating providers must demonstrate 
particularized economic hardship by submitting an affidavit supported 
by an income statement demonstrating the provider is currently 
operating at a loss in each high-cost area(s) for which the provider is 
seeking approval to offer the high-cost area benefit. To facilitate the 
administration of the benefit and minimize provider burdens, providers 
may submit a single application with supporting documentation for all 
of the high-cost areas where they are seeking approval to offer the 
high-cost area benefit.
    17. To support its affidavit, the provider must include a copy of 
its most recent income statement(s), prepared in the ordinary course of 
business, consolidated and at the component level, as applicable, 
covering the previous fiscal year of operations or the last six 
quarters of operations, and separately identify, in the method 
determined by the Wireline Competition Bureau (the Bureau), the high-
cost areas, as designated by NTIA, that the provider serves and in 
which it is seeking to provide the high-cost area benefit. An income 
statement, otherwise known as a profit and loss statement, showing the 
provider's revenue, expenses, gains, and losses during the required 
time period, strikes the appropriate balance between ensuring the high-
cost area benefit is appropriately limited and minimizing the 
administrative burden on providers. An income statement is a routine 
financial statement prepared by companies, and thus most providers 
already prepare such statements in the normal course of business. The 
income statement must, at a minimum, include detailed information on 
the provider's net income, operating revenue and operating expenses, 
including, but not necessarily limited to, cost of goods sold or 
services, selling, general and administrative expenses and depreciation 
or amortization expenses. To protect program integrity providers that 
are publicly traded or that prepare audited income statements in the 
ordinary course of business shall be required to submit the audited 
income statement, rather than an unaudited income statement, to support 
their affidavit. The Commission delegates authority to the Bureau, in 
consultation with the Office of Economics and Analytics (OEA) as 
appropriate, and consistent with the standard established in this 
Order, to further specify or modify the types of documentation that 
providers must submit to show ``particularized economic hardship''.
    18. To protect program integrity, and consistent with other 
submissions made to justify the receipt of a Federal benefit, such an 
affidavit shall be made under penalty of perjury from a company officer 
with knowledge of the provider company's costs and revenues. The 
affidavit must describe in sufficient detail the methodology used for 
determining that the annualized expenses of maintaining the operation 
of the provider's broadband network in a particular high-cost area 
exceeds the provider's expected total revenues in that high-cost area. 
This should include an allocation of provider broadband internet access 
service revenues and costs for the relevant high-cost area(s) if the 
income statement is too broad to demonstrate that the provider is 
operating at a loss relative to providing broadband internet access 
service in the high-cost area(s) in question. The affidavit should also 
factor in payments from customers for broadband internet access service 
as well as the up-to-$30 ACP benefit and additional subsidies and other 
financial benefits received, including USF high-cost support related to 
providing broadband internet access service. The affidavit must also 
include an explanation as to how the economic hardship resulting from 
the operating loss may limit the provider's ability to maintain the 
operation of all or part of its broadband network in the high-cost 
area(s) for which it seeks to offer the high-cost area benefit. 
Additionally, in the affidavit, each provider must explain when and why 
the provider originally began operating in the high-

[[Page 60350]]

cost area(s). In support of the affidavit a provider is also required 
to submit any Federal income tax returns relating to the submitted 
income statements. These tax returns could be used to identify 
anomalies or other potential issues in the financial data being 
provided as part of the application for the high-cost area benefit.
    19. To demonstrate that a provider is operating at a loss, the 
income statement, and cost-allocation as applicable, must show that the 
provider's broadband revenue has been below broadband expenses in at 
least four of the last six fiscal quarters or for the last full fiscal 
year for each relevant high-cost area. If the income statement includes 
costs and revenues for broadband network operations outside of the 
high-cost areas for which the provider seeks approval to offer the 
high-cost area benefit, then the provider will need to allocate the 
costs and revenues associated with the relevant high-cost area(s) and 
provide the cost and revenue allocation for the high-cost area(s) in 
the supporting affidavit.
    20. To determine the share of the provider's total operating costs 
that are associated with its broadband network operations in the 
relevant high-cost area(s), the provider must use a reasonable cost 
assignment and/or cost-allocation method. A provider should first 
attempt to directly assign or attribute costs to broadband internet 
access services and to the relevant high-cost area(s). Costs that are 
not directly assignable (e.g., common or shared costs) should be 
allocated based on a cost-causative mechanism wherein the participating 
provider should identify a cost-causative link to an expense category 
(or group of categories) that has already been directly assigned or 
attributed. Finally, where none of the methods described in this 
document are possible, the participating provider should employ a 
reasonable cost-allocation of operating expenses, which may be based on 
factors, such as, for the relevant high-cost area(s), the share of a 
provider's total investments, total locations served, or in proportion 
to the share of directly assignable investments or expenses for the 
relevant high-cost area(s). Different cost allocators may be used to 
allocate different shared costs and must be sufficiently described in 
the supporting affidavit. For providers applying for multiple high-cost 
areas, the cost allocation methods should be consistent for all 
relevant high-cost areas to the extent feasible. To determine the share 
of the provider's total revenues associated with its broadband network 
operations in the relevant high-cost area(s), the provider must 
calculate and allocate revenue for the relevant time periods based on 
revenues for the applicable high-cost area(s), and account for any 
subsidies received by the provider or other financial benefits, 
including USF high-cost support. Regardless of which cost allocation 
methods is used, all company-wide financial data submitted in support 
of an application for the high-cost area benefit must comply with 
generally accepted accounting principles.
    21. To maximize flexibility, the Commission will allow a provider 
to choose the reasonable cost and revenue allocation method(s) within 
the parameters described in this document, rather than prescribe one. 
To mitigate any program integrity issues that this discretion might 
introduce, however, the Commission requires providers to identify and 
justify their chosen allocation method(s). Allowing providers options 
for reasonable cost and revenue allocation method(s) will allow even 
those providers with limited financial expertise to submit a showing 
based on their records that meets the standards adopted herein. The 
Commission directs the Bureau to develop a more detailed process for 
determining, in consultation with OEA, whether the provider's 
allocation method and justification are reasonable.
    22. Notwithstanding the Commission's recognition that the needs to 
minimize the burden on participating providers and to encourage 
provider participation in the ACP are paramount, the Commission 
requires the filing of documentation showing that a provider will 
experience particularized economic hardship, which shall include the 
filing of both an affidavit with the information outlined in this 
document, along with the required income statement, and tax filings. An 
income statement alone would not provide sufficient assurances that a 
provider has satisfied the standard for offering the high-cost area 
benefit in a given high-cost area. The affidavit is an important 
safeguard for ensuring that the high-cost area benefit is appropriately 
limited to providers that are facing ``particularized economic 
hardship'' such that they will be unable to maintain part or all of 
their broadband network if they can only offer the standard $30 ACP 
benefit. The Commission recognizes that providers may not routinely 
prepare cost-allocations specific to the relevant high-cost areas. 
However, for income statements that are not specific to the relevant 
high-cost areas, cost allocations are necessary to satisfy the 
statute's requirement that the high-cost area benefit only be made 
available in high-cost areas where the provider experiences economic 
hardship. As noted earlier, to minimize the burden associated with 
cost-allocations, the Commission allows providers some flexibility in 
determining which cost-allocation method to use where the provider is 
unable to directly assign or attribute costs to broadband internet 
access services and to the relevant high-cost area(s) or use a cost-
causative mechanism. An affidavit accompanying an income statement 
strikes the appropriate balance between protecting program integrity 
while minimizing the burden on providers.
    23. Commenters stressed the importance of the Commission choosing a 
means for ``qualification that imposes the least administrative burdens 
on providers, while protecting against waste, fraud, and abuse.'' The 
Commission agrees, although it also concludes that proposals that 
effectively eliminate the need for any showing altogether are at odds 
with the statute. Similarly, the Commission finds that a mere 
certification as to a provider's particularized economic hardship in 
the high-cost area(s) it serves, as suggested by ACA Connects, is 
insufficient to satisfy the express ``showing'' mandated by Congress 
and impedes the Commission's ability to ascertain whether the provider 
is, in fact, experiencing a particularized economic hardship.
    24. The Commission declines to adopt the suggestion from the 
Mississippi Center for Justice that it requires service providers to 
submit additional speed and coverage tests before allowing a broadband 
service provider to receive the high-cost area benefit. While the 
Commission is sympathetic to concerns about whether a provider's 
asserted coverage and speed matches actual network performance, the 
Infrastructure Act is clear that the only criterion it may consider 
when deciding whether a provider can receive the high-cost area 
benefit, is whether the absence of a high-cost area benefit would cause 
a particularized economic hardship to the provider. Furthermore, the 
Commission has taken steps in other proceedings to address service 
quality concerns and the reporting of accurate coverage and speed data. 
Accordingly, the Commission declines to require participating providers 
to perform these additional tests.
    25. Additional Information Required for High-Cost Area Benefit 
Application. To facilitate the evaluation of a provider request for 
approval to offer the high-cost area benefit and to help protect 
program integrity, the Commission directs USAC to communicate with the

[[Page 60351]]

provider about its request and collect information, as part of the 
application for approval to offer the high-cost area benefit, 
sufficient to identify the provider and the nature of the services it 
offers in the relevant high-cost areas, such as: contact information; 
FCC Registration Number; Unique Entity Identifier; Federal Tax ID 
Number; Service Provider ID Number; whether the provider is facilities-
based in the relevant high-cost areas; and the nature of the provider's 
broadband network technology in the relevant high-cost area(s). 
Finally, a provider's submission must include certifications from a 
company officer with knowledge of the provider's cost and revenues 
under penalty of perjury that: (1) all information submitted is true 
and correct to the best of the filer's knowledge; (2) the provider will 
comply with all applicable statutes and the Commission's rules and 
orders; and (3) the provider will use any reimbursed funds received for 
its intended purpose of providing discounted broadband internet access 
services to eligible low-income households.
    26. To help protect program integrity, a participating provider 
will also be required to indicate in its application seeking to offer 
the ACP high-cost area benefit whether it has previously applied for 
Federal financial assistance in the three fiscal years prior to the 
provider's application. Upon request, the participating provider must 
submit to USAC or the Commission applications for loans submitted to 
the U.S. Department of Agriculture Rural Utility Service (RUS), 
approvals or denials of such loans, the provider's RUS Operating Report 
for Telecommunications Borrowers filed with the RUS, and any financial 
reports filed with a state Public Utility Commission, as applicable. 
The requirement to submit these documents is an important safeguard 
against provider manipulation of the financial information in its 
application. This requirement will also assist USAC in ascertaining the 
validity of the financial information in the provider's application 
materials. Finally, in evaluating a provider's request for approval to 
offer the high-cost area benefit and to help protect program integrity 
the Commission or USAC must consider the extent to which other 
providers are operating in the high-cost area and not requesting this 
benefit.
    27. Submission and Review of Showings and Appeals. The Commission 
directs USAC, under the oversight of the Bureau and the Office of the 
Managing Director, to develop a mechanism to enable participating 
providers to electronically submit the requisite particularized 
economic hardship showings. The Commission further directs USAC, under 
the oversight of the Bureau and OEA, to produce provider education and 
training materials concerning seeking approval to offer the high-cost 
area benefit and the Commission directs the Bureau to provide 
additional guidance to providers on the submission process. All 
provider submissions will be treated as presumptively confidential and 
will not be available for routine public inspection consistent with the 
Freedom of Information Act and the Commission's rules. While the actual 
content of the provider filings will remain confidential, the 
Commission directs USAC to publicly issue information identifying which 
providers are approved to offer the high-cost area benefit and the 
high-cost areas where they are approved to offer it. The Commission 
further directs the Bureau to release a Public Notice within 90 days 
after NTIA's determination of high-cost areas, announcing the date upon 
which providers can start to submit applications requesting authority 
to offer the high-cost area benefit. The Bureau shall have the 
discretion to determine whether to establish an initial deadline for 
provider requests or accept applications on a rolling basis.
    28. The Commission directs USAC to review each economic hardship 
submission for completeness and then either approve or deny each 
submission pursuant to guidance and oversight by the Bureau and OEA. 
Each decision by USAC shall be made in writing, provide a written 
explanation of the basis for the decision, and provide the approval 
period for the high-cost area benefit as appropriate. Each USAC 
decision will be subject to the restrictions of Sec.  54.702(c) of the 
Commission's rules which prohibits USAC from making policy, 
interpreting unclear provisions of the statute or rules, or from 
interpreting the intent of Congress. Any provider aggrieved by an 
action taken by USAC may seek review of that action, as set forth in 
Subpart I of the Commission's rules. While review of that action is 
pending, a provider will be able to submit claims for up to the $30 
standard monthly benefit. Following a successful appeal, providers 
approved to offer the high-cost area benefit may submit revised claims 
for eligible households in the approved high-cost areas as set forth in 
47 CFR 54.1808. The provider may only submit revised claims for up to 
$75 per month per eligible subscriber for the snapshot dates from the 
start of the period of approval, and the provider will be responsible 
for passing the full benefit amount on to subscribers as a discount off 
the price of their monthly bills before seeking reimbursement for the 
high-cost area benefit amount.
    29. The Commission directs USAC to make updates to ACP systems, 
including to the National Lifeline Accountability Database, as 
appropriate, to allow providers that are approved to receive 
reimbursement for the high-cost area benefit to enroll households with 
the high-cost area benefit or to update existing ACP subscribers' 
records to reflect the designated high-cost areas associated with the 
participating provider's approved showing. The Commission also directs 
USAC to incorporate the high-cost area benefit into the ACP claims and 
enrollment tracker, with a separate column for households receiving the 
up to $75 high-cost area benefit. The Commission further directs USAC, 
with Bureau oversight, to develop provider training materials on how to 
enroll or update subscriber information to reflect the high-cost area 
benefit and to seek reimbursement for the enhanced benefit for eligible 
households in the relevant high-cost areas.
    30. Annual Resubmission Requirement. To account for changing 
financial circumstances, participating providers approved to offer the 
high-cost area benefit must annually resubmit a showing of 
particularized economic hardship to demonstrate continued eligibility 
to offer the high-cost area benefit. The Commission directs the Bureau 
to determine any modifications providers should make to the financial 
showing for the resubmission, consistent with the statutory language 
and standard outlined in this Order, as well as the deadline for such 
resubmissions. The deadline shall allow sufficient time for review and 
a determination on the renewal submission, and provider notification to 
households of any benefit level changes as appropriate, before the 
expiration of the prior approval period. The Commission directs USAC to 
issue reminders to providers with current approvals of the renewal 
submission requirements within at least 30 days and at least 15 days of 
the deadline the Bureau announces for resubmissions. These reminders 
shall also inform providers that failure to make a resubmission will 
result in the loss of their approval to offer the high-cost area 
benefit and the date on which the provider must cease offering and can 
no longer claim the high-cost area benefit if it does not timely make a 
renewal submission. The Commission directs the

[[Page 60352]]

Bureau to ensure that the renewal resubmissions are reviewed and a 
determination is issued in a reasonable timeframe.
    31. There may be instances where a provider fails to submit the 
renewal submission, or does not satisfy the criteria to offer the high-
cost area benefit based on its renewal submission. The Commission 
recognizes that the loss of the high-cost area benefit may cause a 
financial burden to low-income households that would be transitioned to 
the standard discount rather than the higher subsidy. To mitigate 
financial hardship and to avoid an accrual of household debt related to 
the loss of the high-cost area benefit, the Commission adopts several 
protections for ACP households where the provider is no longer approved 
to offer the high-cost ACP benefit. If a provider fails to submit the 
renewal submission by the deadline, the provider shall provide written 
notice to its ACP households receiving the high-cost area benefit at 
least 30 days prior to the last date that the provider is approved to 
offer the high-cost area benefit and a second notice at least 15 days 
before the last date that the provider is approved to offer the high-
cost area benefit. If USAC determines that a provider no longer 
qualifies for the high-cost area benefit based on its renewal 
submission, the provider shall also follow the same customer 
notification process and deadlines as providers that fail to submit the 
renewal submission by the deadline. Such notices shall include: (1) a 
statement that the provider will no longer be offering the high-cost 
benefit; (2) the effective date of the loss of the high-cost area 
benefit; (3) a statement that upon the effective date of the loss of 
the high-cost area benefit, the ACP-supported service purchased by the 
household will no longer be discounted at the higher subsidy amount; 
and (4) the amount the household will be expected to pay if it 
continues purchasing the service from the provider after the high-cost 
area benefit is no longer available.
    32. The Commission finds that providers may transition a household 
to a lower-priced service plan once the provider is no longer eligible 
to offer the high-cost area benefit upon advance notice to the 
household and after offering a reasonable opportunity for the household 
to agree to retain its current service plan or switch to another 
service plan. If the provider offers to transition the eligible 
household to a lower-priced plan, the offer to transition must be 
included in the required 30-day and 15-day notices, and must: (1) 
provide details about the new plan and monthly price; (2) inform the 
subscribers they can opt out of the transition and retain their current 
service plan or change to a different service plan than the lower-
priced plan the service provider identified; (3) provide instructions 
for opting out of the transition or switching plans; and (4) provide 
the deadline for opting out of the transition or switching plans. The 
Commission believes this approach minimizes the potential for bill 
shock by allowing providers to transition eligible subscribers to a 
lower-priced plan, while also giving them an opportunity to opt out of 
the transition and either remain on their current service plan or 
choose another service plan. The Commission clarifies that moving 
eligible subscribers to a lower-priced plan upon advance notice and 
reasonable opportunity for subscribers to opt out of such a transition 
where the high-cost area benefit is no longer available does not 
constitute inappropriate down-selling.
    33. Subscriber Initial Notice Concerning High-Cost Area Benefit. 
The Commission requires providers to seek annual approval to continue 
offering the high-cost area benefit. Accordingly, there is a potential 
for ACP subscribers receiving the high-cost area benefit to experience 
financial difficulty if their provider ceases being eligible to offer 
the high-cost area benefit.
    34. To promote transparency and avoid the potential for subscriber 
confusion, participating providers approved to offer the high-cost area 
benefit must provide written notice to the subscriber when the provider 
first applies the high-cost area benefit to the subscriber's bill, 
stating: (1) that the subscriber is receiving an high-cost area benefit 
and specifying the difference between the standard ACP benefit and the 
high-cost area benefit being applied to the subscriber's ACP service; 
(2) that the receipt of the high-cost area benefit is contingent on the 
provider's annual continued eligibility to offer the high-cost area 
benefit; (3) that the provider is required to provide the subscriber 
advance notice if the provider is no longer deemed eligible to offer 
the high-cost area benefit; and (4) that the provider is required to 
provide the subscriber advance notice of any changes to the 
subscriber's ACP service rate or service plan stemming from any loss of 
the provider's eligibility to offer the high-cost area benefit.
    35. Program Integrity. To ensure that providers are only seeking 
reimbursement for households that are eligible to receive the ACP high-
cost area benefit, the Commission directs USAC to conduct program 
integrity reviews of claims related to the high-cost area benefit on an 
annual basis, in addition to targeted reviews of providers approved to 
offer the high-cost area benefit as needed (e.g., based on indicia of 
program integrity risks). The Commission recognizes that a risk exists 
where providers receiving the high-cost benefit could attempt to raise 
rates or push ACP subscribers to higher priced pans to maximize their 
reimbursement for the high-cost area benefit claims. The Commission 
reminds providers that they are required to offer the same services to 
ACP households on the same terms and conditions as non-ACP households 
and inappropriate upselling is a violation of the ACP rules. The 
Commission also clarifies that, as with the standard benefit and the 
enhanced Tribal benefit, providers are required to pass through the 
entire benefit to ACP eligible households. In addition to USAC's 
program integrity reviews, the Bureau, in coordination with OEA, shall 
also use available data from ACP providers to maximize program 
integrity with respect to the high-cost area benefit, including, but 
not limited to, inflating rates, or claiming the high-cost area benefit 
for a greater number of households than the number of the provider's 
broadband serviceable locations in a given high-cost area. The 
Commission reminds providers that it may suspend or remove a 
participating provider from the ACP for a variety of reasons, including 
violations of the rules or requirements of ACP or any action that 
indicates a lack of business integrity or business honesty that 
seriously and directly affects the provider's responsibilities under 
the ACP or undermines the integrity of the program. The Commission 
further directs the Bureau, in coordination with USAC, to provide 
additional details and procedures, as necessary, in conformance with 
this Order to ensure the efficient functioning of the high-cost area 
benefit.
    36. Lastly, the Commission reminds providers that the 
Infrastructure Act allows eligible households to apply the ACP benefit 
to ``any internet service offering of the participating provider, at 
the same terms available to households that are not eligible 
households.'' The Commission has found this requirement will help 
``ensure the marketplace will not be limited, and consumers can apply 
the affordable connectivity benefit to a plan of their choosing.'' 
This, in turn, will help minimize concerns that ``providers may 
introduce or alter plans solely to maximize the reimbursement amount.'' 
However, as the Commission clarified, providers are not precluded 
``from making internet service offerings that are only available to ACP

[[Page 60353]]

subscribers provided that the terms are at least as good as plans that 
are available to non-eligible households. . . .''
    37. Clarification of the Scope of Both ACP Enhanced Benefits. The 
statute is silent on whether a household that is both eligible for the 
ACP high-cost area benefit and the ACP enhanced qualifying Tribal land 
benefit may receive both benefits simultaneously However, nothing 
indicates that Congress intended for households in this scenario to be 
eligible to receive more than one ACP enhanced benefit. Further, 
allowing households to receive both enhanced ACP benefits at the same 
time would not be a fiscally responsible use of limited ACP funds. 
Absent Congressional intent to the contrary, the Commission clarifies 
that the ACP enhanced benefits are not cumulative and thus, a 
participating provider can only offer and seek reimbursement for one 
ACP enhanced benefit to eligible households in such situations. 
Accordingly, a participating provider is allowed to seek reimbursement 
for the enhanced qualifying Tribal land or the high-cost area benefit 
per eligible household up to the maximum benefit amount of $75 per 
month, not both.

III. Procedural Matters

A. Paperwork Reduction Act

    38. Pursuant to 47 U.S.C. 1752(h)(2) the collection of information 
sponsored or conducted under the regulations promulgated in this Order 
is deemed not to constitute a collection of information for the 
purposes of the Paperwork Reduction Act, 44 U.S.C. 3501-3521.

B. Congressional Review Act

    39. 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).
    40. As required by the Regulatory Flexibility Act of 1980, as 
amended (RFA), an Initial Regulatory Flexibility Analysis (IRFA) was 
incorporated in the Notice of Proposed Rulemaking (NPRM) released in 
March 2021. The Commission sought written public comment on the 
proposals in the Notice, including comment on the IRFA. No comments 
were filed addressing the IRFA. This Final Regulatory Flexibility 
Analysis (FRFA) conforms to the RFA.
    41. In the Infrastructure Act, Congress established the ACP, which 
is designed to promote access to broadband internet access services by 
households that meet specified eligibility criteria by providing 
funding for participating providers to offer certain services and 
connected devices to these households at discounted prices. The ACP 
funds an affordable connectivity benefit consisting of a per month 
discount up to $30 on the price of broadband internet access services 
that participating providers supply to eligible households in most 
parts of the country and a per month discount up to $75 on such prices 
for households on qualifying Tribal lands. The Commission established 
rules governing the affordable connectivity standard $30 benefit and 
the enhanced Tribal lands benefit in the ACP Report and Order, 87 FR 
8346, February 14, 2022, adopted on January 14, 2022.
    42. The Infrastructure Act also establishes a separate, enhanced 
affordable connectivity benefit for eligible households served by 
participating providers in certain high-cost areas. Specifically, the 
Infrastructure Act makes available a high-cost area benefit of up to 
$75 per month for broadband internet access service offered by 
participating providers in certain areas where the cost of building 
broadband facilities is relatively high, upon a showing that the lower 
$30 per month benefit ``would cause particularized economic hardship to 
the provider such that the provider may not be able to maintain the 
operation of part or all of its broadband network.'' In the earlier 
NPRM to which the IRFA applied, the Commission sought comment on the 
rules to implement this enhanced benefit.
    43. In the Order, the Commission adopts the rules necessary to 
implement the enhanced benefit in high-cost areas the NTIA designated 
in consultation with the Commission. Specifically, the Commission 
addresses the rules and procedures for participating providers that are 
facilities-based to offer an high-cost area benefit to eligible 
households located in designated high-cost areas served by the 
provider. The Commission defines ``particularized economic hardship'' 
for purposes of determining eligibility for the high-cost area benefit. 
The Commission then addresses the specific showing that participating 
providers must make to demonstrate they are experiencing a 
particularized economic hardship. The Commission also prescribes the 
process for submitting, reviewing, taking action on such showings, and 
for requests for review of adverse decisions.
    44. 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 ``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; (3) 
satisfies any additional criteria established by the Small Business 
Administration (SBA).
    45. Small Businesses, Small Organizations, and Small Governmental 
Jurisdictions. 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's 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 32.5 million businesses.
    46. 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.

[[Page 60354]]

    47. 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.''
    48. Small entities potentially affected by the rules herein include 
Wireless Broadband internet Access Service Providers (Wireless ISPs or 
WISPs).
    49. High-Cost Area Benefit. Providers of wireline or wireless 
broadband internet access services, including small businesses, that 
voluntarily seek to qualify for the enhanced benefit will need to 
report and retain certain data about their operations. The necessary 
data include the costs of deploying and maintaining broadband internet 
access networks in particular high-cost areas, including the cost of 
capital, depreciation expenses, operating costs, and other associated 
expenses. These costs may vary, in part, depending on the topological 
features, population distribution, and other conditions in such areas. 
Other relevant factors may include estimates of consumer demand and 
likely revenues from providing broadband internet access services. 
Importantly, no small entity will be required to report or retain such 
data as a general matter.
    50. The recordkeeping or reporting requirements adopted in this 
proceeding will apply only to those providers that choose to 
participate in the ACP and that voluntarily seek to provide service 
that qualifies for the enhanced benefit in high-cost areas where the 
benefit may be available. Moreover, because participation is entirely 
optional, the Commission believes that providers that voluntarily avail 
themselves of the enhanced benefit component of the ACP will enjoy 
benefits that far exceed the reporting and recordkeeping costs.
    51. The Commission therefore finds the cost of compliance for small 
entities will be minimal given the steps taken to minimize the 
administrative burden as discussed in this FRFA.
    52. The RFA requires an agency to describe any significant, 
specifically small business alternatives that it has considered in 
reaching its approach, which may include the following four 
alternatives (among others): ``(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 or 
reporting requirements under the rule for such small entities; (3) the 
use of performance, rather than design, standards; and (4) and 
exemption from coverage of the rule, or any part thereof, for such 
small entities.''
    53. The actions taken by the Commission in this final rule were 
considered to be the least costly and minimally burdensome for small 
and other entities impacted by the rules. As such, the Commission does 
not expect the adopted requirements to have a significant economic 
impact on small entities. In the following, the Commission discusses 
actions it takes in this final rule to minimize any significant 
economic impact on small entities and some alternatives that were 
considered.
    54. High-Cost Area Benefit. As discussed in this FRFA, the 
Commission is constrained by the plain language of the statute to 
require a participating provider to make a showing of ``particularized 
economic hardship'' to offer the high-cost area benefit. Such a showing 
inevitably involves a measure of a provider's costs and revenues. The 
Commission has, however, taken steps to minimize the burden on small 
entities. A provider will only need to submit an affidavit asserting it 
will incur a ``particularized economic hardship'' and supply an income 
statement, that businesses routinely keep in the normal course of 
business, to show the provider is operating at a loss. Only if the 
income statement includes costs and revenues for areas outside of the 
designated high-cost areas, would the provider need to submit 
information, in addition to the income statement and an affidavit, to 
allocate costs and revenues to the high-cost areas it intends to serve. 
These steps will greatly minimize the administrative burden on all 
providers that voluntarily seek to offer the high-cost area benefit, 
including small providers, by eliminating the need, in the first 
instance, to gather and submit specific cost and revenue information 
for review and analysis. The Commission did consider the proposal to 
define ``particularized economic hardship'' as the serving of less than 
a Commission-defined threshold of broadband subscribers across a 
smaller provider's entire service area, but determined this approach 
was inconsistent with the statutory language, as discussed in this 
final rule.

IV. Ordering Clauses

    55. Accordingly, it is ordered that, pursuant to the authority 
contained in Section 904 of Division N, Title IX of the Consolidated 
Appropriations Act, 2021, Public Law 116-260, 134 Stat. 1182, as 
amended by Section 60502 of the Infrastructure Investment and Jobs Act 
and codified at 47 U.S.C. 1752, this Sixth Report and Order, is adopted 
and shall be effective thirty (30) days after publication of the text 
or summary thereof in the Federal Register.
    56. It is further ordered, that Part 54 of the Commission's rules, 
47 CFR part 54, is amended as set forth in this document, and such rule 
amendments shall be effective thirty (30) days following publication of 
the text or summary thereof in the Federal Register.

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.
Katura Jackson,
Federal Register Liaison Officer.

Final Regulations

    For the reasons discussed in the preamble, the Federal 
Communications Commission amends part 54 of title 47 of the Code of 
Federal Regulations as follows:

PART 54--UNIVERSAL SERVICE

0
1. The authority citation 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, 1752, unless otherwise 
noted.

Subpart R--Affordable Connectivity Program

0
2. Amend Sec.  54.1803 by revising paragraph (a) to read as follows:


Sec.  54.1803  Affordable Connectivity Program support amounts.

    (a) The monthly affordable connectivity benefit support amount for 
all participating providers shall equal

[[Page 60355]]

the actual discount provided to an eligible household off of the actual 
amount charged to such household but not more than $30.00 per month, if 
that provider certifies that it will pass through the full amount of 
support to the eligible household, or not more than $75.00 per month, 
if that provider certifies that it will pass through the full amount of 
support to the eligible household on Tribal lands, as defined in Sec.  
54.1800(s), or not more than $75.00 per month, if that provider 
certifies that it will pass through the full amount of support to the 
eligible household in a high-cost area, as defined in Sec.  54.1814(a), 
and is approved to offer the enhanced high-cost benefit in that high-
cost area pursuant to the process in Sec.  54.1814(b).
* * * * *

0
3. Add Sec.  54.1814 to read as follows:


Sec.  54.1814  High-cost area benefit.

    (a) Definitions--(1) Audited income statement. For purposes of the 
administration of the Affordable Connectivity Program high-cost area 
benefit, an ``audited income statement'' is an income statement that 
has been audited by an independent Certified Public Accountant (CPA).
    (2) Component-level income statement. For purposes of the 
administration of the Affordable Connectivity Program high-cost area 
benefit, a ``component-level income statement'' is an income statement 
that shows financial results for the subsidiary or business component 
that is operating and/or offering retail broadband internet access 
service for sale in the designated high-cost areas as defined by 47 
U.S.C. 1702(a)(2)(G).
    (3) Consolidated income statement. For purposes of the 
administration of the Affordable Connectivity Program high-cost area 
benefit, a ``consolidated income statement'' is an income statement 
that shows aggregated financial results for multiple entities or 
subsidiaries connected with a single parent company.
    (4) High-cost area. For purposes of the administration of the 
Affordable Connectivity Program high-cost area benefit, the term 
``high-cost area'' means an area as defined by 47 U.S.C. 1702(a)(2)(G) 
as determined by the National Telecommunications and Information 
Administration.
    (5) Particularized economic hardship. A provider has a 
``particularized economic hardship'' in a high-cost area only if:
    (i) It is not possible for that provider to offer service in the 
high-cost area while covering the costs of maintaining the operation of 
all or part of its broadband network in that area at the standard up to 
$30 a month discount; and
    (ii) The up to $75 a month high-cost area benefit would materially 
improve the provider's ability to offer service through the ACP and 
maintain and operate its broadband network in that area.
    (b) High-cost area benefit approval process. A facilities-based ACP 
participating provider in a high-cost area (as defined in paragraph (a) 
of this section) may provide an affordable connectivity benefit in an 
amount up to $75.00 for a broadband internet access service offering in 
a high-cost area upon a showing that the applicability of the standard 
up to $30.00 benefit under Sec.  54.1803(a) by the provider would cause 
particularized economic hardship to the provider such that the provider 
may not be able to maintain the operation of part or all of its 
broadband network in that high-cost area.
    (1) A participating provider seeking approval to provide the high-
cost area benefit must first electronically file a request with the 
Universal Service Administrative Company by the deadline established by 
the Wireline Competition Bureau.
    (i) The electronic request shall require the participating provider 
to specify whether it has previously applied for Federal financial 
assistance, as defined in 2 CFR 25.406, in the three fiscal years prior 
to the provider's application. Upon request, the participating provider 
must submit to the Administrator or the Commission applications for 
loans submitted to the U.S. Department of Agriculture Rural Utility 
Service (RUS), approvals or denials of such loans, the provider's RUS 
Operating Report for Telecommunications Borrowers filed with the RUS, 
and any financial reports filed with a state Public Utility Commission, 
as applicable.
    (ii) [Reserved]
    (2) The participating provider's request shall include the 
documentation required to demonstrate particularized economic hardship. 
The request shall include an income statement, a supporting affidavit, 
any applicable Federal tax filings and/or returns, and any other 
relevant documentation as determined by the Bureau and OEA.
    (i) The income statement(s) must:
    (A) Be produced in the ordinary course of business;
    (B) Include both consolidated and component-level income 
statements;
    (C) Be audited by an independent public accountant, where such 
statements are produced in the ordinary course of business or are 
required by 17 U.S.C. 78m, 78o(d); and
    (D) Include detailed information on the provider's net income, 
operating revenue, and operating expenses, including, but not 
necessarily limited to, cost of goods sold or services, selling, 
general and administrative expenses and depreciation or amortization 
expenses.
    (ii) The supporting affidavit, must include revenue and cost 
allocations and a description of the methodology, demonstrating that 
the provider was operating at a loss related to providing broadband 
internet access service in the relevant high-cost area(s) for the last 
fiscal year or in at least four of the last six fiscal quarters, or 
other acceptable documentation determined by the Wireline Competition 
Bureau in consultation with the Office of Economics and Analytics.
    (iii) The participating provider must first attempt to directly 
assign or attribute costs to broadband internet access services, and if 
that is not possible, must use a cost-causative mechanism to the extent 
possible. If neither is possible, the participating provider must 
employ a reasonable cost-allocation with a justification for its 
methodology.
    (iv) The tax filing should include Form 1120, Form 1120-S or other 
applicable Federal Income Tax returns as required by 26 CFR part 1.
    (2) The participating provider's application must also include 
certifications from a company officer with knowledge of the provider's 
cost and revenues under penalty of perjury that:
    (i) All information submitted is true and correct to the best of 
the filer's knowledge;
    (ii) The provider will comply with all applicable statutes and the 
Commission's rules and orders; and
    (iii) The provider will use any reimbursed funds received for its 
intended purpose of providing discounted broadband internet access 
services to eligible low-income households.
    (iv) The provider is a facilities-based provider as defined by 47 
CFR 1.7001(a)(2)(i) through (v).
    (v) The provider used cost allocation methodology consistent with 
the rules.
    (c) Review process. The Administrator, under oversight of the 
Wireline Competition Bureau and the Office of Economics and Analytics, 
shall review each participating provider's request to offer the high-
cost area benefit and determine whether the provider has demonstrated a 
particularized economic hardship in the

[[Page 60356]]

high-cost areas for which it is requesting to offer the high-cost area 
benefit. If the Administrator finds the particularized economic 
hardship showing is satisfied in accordance with the Commission's rules 
and orders, and any guidance from the Wireline Competition Bureau and 
the Office of Economics and Analytics, then the Administrator will 
approve the request and notify the participating provider. Otherwise, 
the Administrator will deny the request and provide the participating 
provider a written explanation of the basis for the denial.
    (1) The Administrator will review applications within a timeline to 
be determined by the Bureau.
    (2) Providers may appeal the Administrator's determination as set 
forth in subpart I in this part of the Commission's rules.
    (3) Providers may only submit claims for up to the $30.00 standard 
benefit amount while an appeal of an Administrator's determination is 
underway. Following a successful appeal, providers approved to offer 
the high-cost area benefit may submit revised claims for eligible 
households in the approved high-cost areas as set forth in Sec.  
54.1808. The provider many submit revised claims for up to $75.00 only 
from the start of the approval period indicated in the appeal 
determination letter.
    (d) Annual renewal process. A participating provider that has been 
approved to provide the high-cost area benefit must request approval 
annually thereafter to continue to provide the enhanced benefit to 
eligible households in a subsequent year. The participating provider 
will need to demonstrate particularized economic hardship in the 
renewal submission, through the documentation specified by the Wireline 
Competition Bureau. The deadline for submitting the renewal request 
shall be determined by the Wireline Competition Bureau.
    (e) Notice to eligible households. (1) Participating providers 
approved to offer the high-cost area benefit shall provide Affordable 
Connectivity Program subscribers written notice when the provider 
begins applying the high-cost area benefit to the subscriber's bill. 
The written notice must state:
    (i) That the subscriber is receiving a high-cost area benefit and 
the difference between the standard benefit amount and the enhanced 
high-cost benefit being applied to the subscriber's supported service;
    (ii) That the receipt of the high-cost area benefit is contingent 
on the provider's annual continued eligibility to offer the enhanced 
high-cost area benefit;
    (iii) That the provider is required to provide the subscriber 
advance notice if the provider is no longer deemed eligible to offer 
the high-cost area benefit; and
    (iv) That the provider is required to provide the subscriber 
advance notice of any changes to the subscriber's supported service 
rate or service plan stemming from any loss of the provider's 
eligibility to offer the high-cost area benefit.
    (2) If a participating provider fails to timely submit the renewal 
submission by the deadline or no longer qualifies to offer the high-
cost area benefit based on its annual resubmission, then the 
participating provider shall provide written notice to its Affordable 
Connectivity Program customers receiving the high-cost area benefit at 
least 30 days and at least 15 days before the expiration of its 
approval to offer the high-cost area benefit. Such subscriber notices 
shall include:
    (i) A statement that the provider will no longer be offering the 
high-cost area benefit in the relevant high-cost area;
    (ii) The effective date of the end of the high-cost area benefit;
    (iii) A statement that upon the effective date of the loss of the 
high-cost area benefit, the Affordable Connectivity Program supported 
service purchased by the household will no longer be discounted at the 
higher subsidy amount; and
    (iv) The amount the household will be expected to pay if it 
continues purchasing the service from the provider after the high-cost 
area benefit is no longer available.
    (3) If a participating provider is no longer authorized to offer 
the high-cost area benefit, the provider may transition an eligible 
household to a lower-priced ACP service plan once the high-cost area 
benefit is no longer available, upon advance notice to the household 
and an opportunity for the household to opt out of the change and 
remain on its current service plan or select another service plan. 
Participating providers must include the advance transition notice in 
the required written notice about the end of the provider's approval to 
offer the high-cost area benefit. The advanced notice must:
    (i) Provide details about the new plan and monthly price;
    (ii) State that the subscriber may remain on its current plan or 
choose another plan;
    (iii) Provide instructions on how the subscriber can opt out of the 
transition or change its service plan;
    (iv) Provide the deadline for the subscriber to notify the provider 
that the subscriber would like to remain on its current plan or choose 
another plan.

[FR Doc. 2023-18621 Filed 8-31-23; 8:45 am]
BILLING CODE 6712-01-P