Texas official wants low-cost broadband requirements tied to federal dollars dropped

This article was originally published by The Texas Tribune.

LUBBOCK — Texas Comptroller Glenn Hegar recommended federal officials change requirements for billions of dollars in broadband funding, including eliminating the low-cost requirement.

Hegar suggested the change in a letter to U.S. Sen. Ted Cruz, who is the chairman for the Senate committee that oversees the federal agency responsible for allocating federal broadband funds.

Texas was awarded $3.3 billion from the Broadband Equity, Access, and Deployment Program, part of the bipartisan infrastructure law signed by former President Joe Biden in 2021 to expand internet access.

In the letter, Hegar says removing the requirement may increase provider participation. He also suggested it would reduce the administrative burden on state broadband offices to identify which households the low-cost option could apply to, and monitor compliance.

“I believe certain 'nonessential' requirements exceed the program's original intent and unnecessarily complicate its implementation,” Hegar wrote in the letter.

Hegar also recommended relaxing or eliminating other guidelines. For example, he wants the state to have the flexibility to offer different types of internet access that aren’t fiber-only cable, which can be difficult to manage in rural areas.

Texas lawmakers have focused on developing the state’s broadband availability in recent years, as an estimated seven million residents don’t have internet access. While the commodity used to be considered a luxury, it’s now largely seen as a necessity for school, job opportunities, and health care in hard to reach places. In 2023, Texas voters approved $1.5 billion to support broadband development. This year, lawmakers are looking to inject another $2.5 billion for expanding access.

Lifeline is the only federal program available for consumers who can’t afford broadband services otherwise. The Affordable Connectivity Program was a similar program that started in 2021 and offered a discount of up to $30 a month for internet services, and up to $75 a month for households on qualifying Tribal lands. Congress did not continue funding the program. It ended last June, with 23 million households nationwide enrolled.

Greg Conte, director for the state broadband office, said the office supports low-cost options but does not want to set prices. Instead, they require providers who use state money to expand services to detail how the companies will provide services to low-income homes.

“We didn’t feel like we’re in the right place to set that standard across the state,” Conte said. “We want the affordability piece too, but we wanted to do it more in an industry-focused manner rather than us telling the industry what they need to charge for their product.”

Christopher Mitchell, director of Community Broadband Network Initiative for the Institute for Local Self-Reliance, a national organization that helps local governments find solutions for issues, said it creates a challenging situation in rural communities. Mitchell said it costs thousands of dollars to connect a home in a rural area, and rural internet providers bear the brunt of that cost in the long run.

“If you’re only charging $30 a month, which is even expensive for the families in the highest poverty, it takes effectively forever to recover those costs,” Mitchell said.

On the other hand, Mitchell said, impoverished families are left figuring out how to budget broadband service for their home, if at all.

“The comptroller’s position is not at all unreasonable,” Mitchell said. “But it means that a significant number of families may not be able to use the internet access we are using public dollars to build.”

Charlie Cano, CEO of Etex Telephone Cooperative in East Texas, said he is concerned with making services affordable for low-income families. However, he said, the costs of maintaining and upgrading a network, on top of offering a more affordable option, isn’t sustainable for providers in the long term.

“That’s where we start getting squeezed at both ends,” Cano said.

Cano suggested the state and federal government create its own subsidies for low-income families.

Hegar also wrote that the requirement is viewed as running counter to a legislative mandate against rate regulation. According to the federal telecommunications agency, the agency is not engaging in rate regulation. Instead, the assistant secretary of the commerce agency reviews and approves low-cost plans.

A spokesperson for the Senate Commerce Committee said it was time for the National Telecommunications and Information Administration, which oversees the broadband program, to remove the “unlawful and onerous bureaucratic obstacles.”

“Sen. Cruz has consistently stated that NTIA is prohibited from setting broadband rates under the BEAD program, and supports Hegar’s effort to eliminate the red tape that hindered BEAD under the previous administration,” the spokesperson said in a statement.

Texas is moving forward under current regulations for broadband development in Texas, Conte said. The broadband office started a webinar series this week about the subgrantee selection process for prospective applicants. They plan on opening the application process in May.