The fiber-to-the-home (FTTH) feature of the SLCR Series 5 Loop carrier system shifts the channel unit that terminates the copper wire pair to the customer's premises from the remote terminal of the system to the mutliservices distant terminal that is connected to the remote terminal by a fiber umbilical and is located in close proximity of the customer premises. This configuration transforms the traditional metallic-distribution carrier system to a fiber-distribution one, in which the metallic portion of the CO/network interface facility is limited to the extremely short drop between the distant terminal and the network interface. No new channel units are developed for this specific application, and the distant terminal accommodates the existing SLC Series 5 channel units. The Series 5 POTS channel units, that have been designed for a metallic-distribution system, can serve distribution wire pairs long enough to have a dc resistance of up to 1500 ohms in some cases, 900 ohms in others. The loss plan of these units takes into account the transmission loss introduced by the expected wire pair length, and therefore they implement a 0 or 1 dB loss between the CO and their tip- ring interface. This loss plan results in `too loud' complaints from customers served by short drops that are the norm when service is provided by the FTTH feature. The designers of the FTTH feature were faced with the challenge of modifying the loss plan in order to improve the loss grade of service without changing the channel unit circuitry. Ours was a two-step effort: First, determine what the modified loss plan should be. Second, design its implementation outside the channel unit in a cost-effective way. This paper describes the grade-of-service study that yielded the loss plan that was implemented; namely, build up the loss of each POTS channel unit to 4 dB. It then discusses the implementation of this plan, that uses digital signal processing rather than a look-up table, to introduce the loss digitally. We chose this approach for its flexibility and low manufacturing cost. Tests have shown that this implementation meets all the transmission requirements while improving the grade of service.