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Small rural carriers that receive Universal Service Fund (USF) support through the traditional high-cost program will breathe a little easier now that the FCC has adopted an order that adjusts a key budget constraint for the high-cost program.

The order adopted yesterday waives the application of a budget constraint for High Cost Loop Support (HCLS) and Connect America Fund Broadband Loop Support (CAF BLS) for the July 2021 to June 2022 tariff year.

The budget constraint was designed to prevent USF expenditures from surpassing the high-cost program’s $2 billion budget. It reduces HCLS and CAF BLS claims as necessary to meet the budget constraints. According to an NTCA report, the impact of this change equates to $111 million over a 12-month period.

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The constraint had been set at 8.6%, which would have been substantially higher than last year.

“These circumstances could pose significant burdens on legacy carriers by subjecting them to insufficient cash flow at a time when they are facing increased expenses,” the commission wrote in the order. “To ensure that these small companies are not subject to financial strain, we find it is in the public interest to waive the application of our rules.”

The order notes that COVID-19 put all Americans under strain and illustrated the importance of broadband. It goes on to say that telecom companies may be subject to increased costs to provide safe working conditions, maintain existing services and meet the demands of new customers at this time.

In a prepared statement, Shirley Bloomfield, chief executive officer of NTCA—The Rural Broadband Association, thanked the FCC for the decision.

“This order provides greater predictability and ensures more sufficient support that will help small operators continue their great work extending networks and delivering services at more affordable rates throughout rural America,” said Bloomfield.

“Small, rural broadband providers have worked to keep networks running and their customers connected during the pandemic, and today’s order is welcome relief that will help hundreds of rural carriers avoid significant and harmful projected losses in USF support.”

Derrick Owens, Senior Vice President of Government & Industry Affairs for WTA added,“As the nation recovers from the COVID-19 pandemic, it is critically important that rural telecommunications companies receiving CAF-BLS and HCLS support have the resources necessary to continue extending and upgrading their broadband networks and to continue providing broadband service to their customers at affordable rates.”

Additional information, including details about the impact of the USF budget constraint adjustment on tariff filings, can be found in the order at this link.

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