High Cost Program Integrity

To ensure effective stewardship of the High Cost Program, USAC, the Federal Communications Commission (FCC), and the U.S. Department of Justice (DOJ) are committed to investigating alleged misuse of public funds, failure to comply with program rules, and other instances of potential waste, fraud, or abuse. To see a full list of investigations across all Universal Service Fund (USF) programs, visit the Investigations Documents webpage.

The High Cost Program provides support through multiple separate funds to eligible telecommunications carriers (ETCs) to deliver voice and broadband service in rural, insular and high-cost areas of the country that would otherwise be unserved. Carriers that receive support must offer service at rates reasonably comparable to those available in urban areas.

• High Cost legacy funds subsidize voice service to ensure universal access to basic phone lines. Legacy funds calculate support based on carrier costs, and participating carriers must comply with applicable FCC rules and regulations, including those governing cost reporting, allowable expenses, and required documentation.
• High Cost modernized funds, which make up the Connect America Fund (CAF) program, subsidize investments in advanced communications networks to ensure that rural communities have access to reliable, affordable voice and broadband connections. Modernized funds disburse set monthly payments to carriers to provide voice and broadband service meeting required minimum speeds in eligible areas. Carriers in funds that support fixed broadband must connect a specific number of locations over a defined timeline, with interim and final deployment milestone deadlines.

Carriers that receive High Cost Program support are subject to USAC audits and extensive oversight reviews to confirm compliance with program rules and regulations, including financial and accounting rules, deployment obligations and network performance requirements.

To submit a Whistleblower Alert to report a potential rule violation or possible waste, fraud, or abuse, use the button below:

Whistleblower Alert Form

Helpful Resources

Annual Certification	To receive High Cost support, carriers in both legacy and modernized funds must be certified as an eligible telecommunications carrier (ETC) by Oct. 1 every year. This annual certification ensures that carriers are using support only to provide, maintain, and upgrade the facilities for which the support was intended. State officials perform this certification for ETCs under their jurisdiction, and ETCs subject to the FCC’s jurisdiction certify on their own behalf.
Forms and Filing Deadlines	Carriers receiving support from High Cost legacy and modernized funds must file all required forms, including FCC Form 481, which collects financial and operational information and is due by July 1 annually. Filing on time and providing adequate supporting documentation are key to avoiding loss or withholding of support.
Confirming Deployment for Modernized Funds	Carriers receiving support from High Cost modernized funds are subject to an extensive compliance review process to ensure that they are using support to deploy high-speed internet access that meets minimum speed and latency standards to required location counts by relevant deployment milestone deadlines in eligible rural areas. This compliance framework consists of several steps: HUBB Portal – Tracking Broadband Deployment Verification Reviews – Confirming Broadband Deployment Network Performance Testing – Measuring Speed and Latency Carriers may also be subject to site visit audits following their final deployment milestones. Carriers found to have missed deployment milestones face increased reporting obligations and potential withholding/recovery of support. For more information about this compliance process, see the public reports published on the RBAP webpage as part of the Rural Broadband Accountability Plan. The Rural Broadband Accountability Plan (RBAP) is an FCC initiative that has expanded oversight of carrier compliance with Connect America Fund (CAF) broadband deployment obligations to enhance program transparency and ensure public funds are properly invested.
Audits	All carriers participating in the High Cost Program are subject to USAC audits, including financial audits of carriers receiving legacy support and site visit audits (to confirm deployment following final milestones) for carriers receiving modernized support. USAC audits fall into several categories, including: Payment Quality Assurance (PQA) assessments to determine if payments were made in accordance with FCC rules and calculate estimated rates of improper payments Beneficiary and Contributor Audit Program (BCAP) audits to ensure carrier compliance with FCC rules and program requirements, including rules that: require adequate, accurate documentation of expenses, assets and liabilities and prohibit use of High Cost Program support for costs or expenses unrelated to program purposes require proper classification/separation of regulated and non-regulated activities require accurate calculation of depreciation Supply Chain Audit Program (SCAP) assessments to evaluate carrier compliance with rules prohibiting the use of USF support to purchase, rent, lease, obtain or maintain any equipment or services produced or provided by any company designated by the FCC as posing a national security threat to the integrity of communications networks or the communications supply chain In addition, as part of ongoing “program integrity assurance” (PIA) activities, the High Cost Program conducts validation checks of carrier data and leverages data analytics and trend analysis to identify potential rule violations.
Additional Resources	More information is available here: High Cost Program Rules → Document Retention → Appeals and Audits → FCC Office of Inspector General → FCC Enforcement Bureau →

High Cost-Related Investigations and Cases

FCC Saves Taxpayers Over $9 Million Following Audit Reviews WCB Denies Request for Review of USAC Decision filed by Copper Valley WCB Denies Request for Review of USAC Decision filed by Big Bend	In 2025, the FCC ordered nine phone companies receiving legacy support to repay more than $16 million after audits discovered overpayments of federal funding. In doing so, the FCC’s Wireline Competition Bureau largely affirmed USAC’s findings that these carriers had sought and received improper support and ordered the support recovery.
Armstrong Group Agrees to Pay $6.5M to Settle False Claims Act Allegations Relating to Subsidies Under the Federal Communications Commission’s High-Cost Program	In 2024, the DOJ announced that five rural carriers owned by the Armstrong Group of Butler, Pa., had agreed to pay $6.5 million for violating High Cost Program rules. The company admitted to “submitting improper costs in order to inflate the subsidies it received” between 2008 and 2023. Armstrong Group entered into a corporate compliance agreement with the FCC requiring it to adopt changes in the company’s internal controls and implement comprehensive oversight and monitoring mechanisms.
U.S. Court of Appeals Affirms FCC Decision Requiring Blanca Telephone Co. to Repay $6.75 Million in Overpayments	In 2021, the U.S. Tenth Circuit Court of Appeals affirmed the FCC’s decision to collect $6.75 million in overpayments made to Blanca Telephone Co., a rural carrier based in Alamosa, Colo., that had improperly claimed support for expenses related to providing mobile phone service even though the carrier was only entitled to support for providing landline service.
FCC Fines Sandwich Isles $49.6 million for Fraud on USF	In 2020, the FCC fined Sandwich Isles Communications of Hawaii, parent company Waimana Enterprises, and Sandwich Isles President Albert S.N. Hee nearly $50 million for violating USF program rules by filing and certifying inaccurate data, misclassifying and overstating costs and failing to keep accurate records. The FCC found that Sandwich Isles Communications, Waimana Enterprises, and Hee defrauded the Universal Service Fund by using USF funds to cover improper expenses that included personal travel, meals and massages, tuition payments, a family home and vehicle, unjustified bonuses paid to Hee, and salaries and benefits for family members who did not perform any actual work.