Rural Texans, internet providers worry that feds’ broadband expansion plan will have a painfully slow rollout

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Texas is poised to receive more than $3.3 billion in federal money to fund a dramatic expansion of broadband, a historic investment in a state where 7 million residents lack high-speed internet connection.

But distributing that money appropriately and efficiently is a formidable challenge, especially for a relatively new state office still trying to build up a staff that will oversee the work.

And internet providers say they are simultaneously hopeful and skeptical about whether the incoming federal dollars will be enough to connect the most underserved Texans. Historically, other federal rural broadband funding programs have seen limited success because many companies who committed to providing broadband went into default after radically underestimating the costs to deploy broadband infrastructure in far-flung regions. Rural communities that have the greatest needs worry they will continue to be left behind.

“We want to make sure that there’s a responsible allocation of these dollars,” said Rusty Moore, COO of Big Bend Telephone Company in Alpine. “We’ve been very vocal about where the challenges are.”

In 2021, President Joe Biden signed the Infrastructure Investment and Jobs Act, which included $42.5 billion earmarked for the Broadband Equity Access and Deployment Program. The funds aim to connect more than 8.5 million households and small businesses nationwide, including 2.5 million households in Texas. Last summer, the Biden administration announced the state allocations for the program, with Texas receiving the largest portion of the funds. Texas’ Broadband Development Office submitted its initial funding proposals in December, identifying areas of the state that are eligible for funding as well as a comprehensive plan to award subgrantees.

Lawmakers created that state agency in 2021. It has filled about 60% of its positions, director Greg Conte said this month.

As the office awaits approval on its proposals to the National Telecommunications and Information Administration, rural communities are already concerned about a federal requirement that excludes from the BEAD program locations already receiving other government funding.

In a letter obtained by The Tribune that will be sent the Federal Communications Commission, a national coalition including broadband providers and nonprofit organizations noted that some recipients nationwide of previous grant programs have failed to use their allocations to build out broadband networks. Texas Rural Funders, a nonprofit dedicated to rural philanthropy, took the lead in collecting signatures from Texans. They said the FCC should allow those recipients to relinquish their awards without penalty so those regions become eligible for BEAD dollars.

“The Commission should not permit these unserved rural communities to face this type of double whammy and be left behind once again,” the letter, which has been signed by 32 organizations, states.

Kelty Garbee, executive director of Texas Rural Funders, pointed to the $20.4 billion Rural Digital Opportunity Fund. Of the $9.2 billion awarded through phase one of the project, over $2.8 billion has gone into default.

The FCC has proposed fines against at least 95 of the program applicants, according to an FCC filing, including some in Texas. The commission was widely criticized for not properly screening internet service providers. The majority of defaults came from three internet providers who could not provide the level of service they promised.

Garbee said additional providers who have already been awarded money have yet to make good on their promise to develop broadband networks. It is not clear when the remaining funds from the RDOF program will be awarded, or what will happen to defaulted bids.

“There are providers intentionally sitting on a service area to try to keep a competitor out,” Garbee said. “And others trying to make money off of the interest from the grant money.”

In West Texas, Rusty Moore saw that happen firsthand. His company lost a bid to a wireless carrier who ended up defaulting on their grant and not providing internet service.

“That’s disappointing for the citizens of those areas,” Moore said. “We would have been done by now.”

Providers worry that without a rigorous screening process, the same companies who previously defaulted could again win broadband funding but then not implement a project. According to Texas’ draft proposal to NTIA, the primary criteria for selecting a service provider to be a subgrantee of the federal funds is their estimated costs per location as well as how affordable their internet service will be for customers. Providers that can deploy broadband at a lower cost are favored. Other criteria, such as the sustainability of the project and demonstrated readiness, are not given as much weight, though they are still considered.

“I understand the competitive part of this, but when we’re talking about this much public money I’m not sure this is the way to go,” said Jennifer Prather, CEO of Totelcom Communications LLC, a rural broadband and telecommunications company headquartered in De Leon. “Almost no points are awarded for the history of providing service. You’re opening the door to a lot of hopes and dreams and not a lot of proof.”

Conte of the Broadband Development Office said that as part of the subgrantee selection process, his office will make sure applicants meet minimum qualifications for financial, managerial, technical and operational capabilities. He said the office will also include accountability measures to ensure subgrantees follow through on their commitments. Two examples of that are requiring funds to be reimbursed if projects aren’t completed and mandating progress reports.

Still, some providers remain skeptical.

Texas was awarded $363.8 million in broadband funding through the American Rescue Plan Act of 2021. Applicants to that program said they are frustrated with how slow the rollout has been. The state’s broadband office initially said that it would announce who is receiving those funds in the summer or fall of 2023. But applicants have yet to hear back.

“The sense of frustration is extremely high right now because they are sitting on a lot of money,” said Carroll Faulkner, president of Digital Fields, a Texas based company that specializes in communications infrastructure. “There’s not a lot of confidence in what [the Broadband Development Office] is doing.”

Faulkner added that issues with the state’s broadband map contributed to rural residents’ dissatisfaction. In a previous version of the map — which shows regions not connected to the internet — the vast majority of Texans appeared to already have access to broadband and would therefore be ineligible for funding. Many residents and community organizations challenged the map, saying they did not actually have internet access. The broadband office has since ended its contract with mapping vendor LightBox and will instead align their map with the federal map, which has also gone through a challenge process.

In addition to the federal dollars, Texas voters last November approved the creation of the Texas Broadband Infrastructure Fund, which will provide about $1.5 billion to bolster efforts to expand internet availability. It is the biggest state investment in broadband development to date.

Conte said that money will likely be used in part to assist internet providers with meeting federal requirements that they match at least 25% of the total program awards. The office is currently seeking a vendor who will help them manage the administrative task of distributing broadband dollars.

Disclosure: Texas Rural Funders has been financial supporters of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune's journalism. Find a complete list of them here.

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