Texas House approves funding for rural broadband expansion

Legislation creating a state fund to finance expansion of broadband service to rural Texas passed the lower chamber this week, carrying with it an initial $6 billion appropriation from the state’s record treasury surplus.

Rep. Trent Ashby’s (R-Lufkin) House Bill (HB) 9 is a follow-up to last session’s HB 5, which created the state’s Broadband Development Office — the entity responsible for divvying out federal grant dollars for expanding internet service to sparsely-populated areas.

That office falls under the oversight of the Texas Comptroller of Public Accounts, whose office began fielding grant applications at the beginning of April. Service providers will bid into projects associated with the grant program, and the bid winners will then commence construction of their given projects.

“Unserved” areas — defined as those wherein less than 80 percent of the contained population has access to internet speeds of 25 Megabits per second (Mbps) for downloads and 3 Mbps for uploads — are prioritized by the funding. An “underserved” area is one in which less than 80 percent have access to internet speeds between 25/3 Mbps and 100/10 Mbps.

While most unserved or underserved areas are in rural Texas, they do occasionally exist in the state’s inner cities.

Connected Texas, an organization whose mission is to expand broadband service to those lacking internet access, says that as of 2022 more than half a million people in Texas are considered unserved.

View the state’s broadband service map here.

HB 9 creates and appropriates $1 billion to the broadband infrastructure fund, which will exist outside the state’s general revenue fund so as not to affect the constitutional spending limits; it must be made no later than 30 days after the bill’s effective date of January 1, 2024.

Its paired constitutional amendment, House Joint Resolution 125, appropriates $5 billion into the broadband infrastructure fund, which if approved on a statewide ballot would require the comptroller’s deposit by January 15, 2024.

HB 9 passed by a vote of 140 to 8 on third reading Thursday. The “nay” votes came from Reps. Briscoe Cain (R-Deer Park), Brian Harrison (R-Midlothian), Matt Schaefer (R-Tyler), Nate Schatzline (R-Fort Worth), Bryan Slaton (R-Royse City), Tony Tinderholt (R-Arlington), and Steve Toth (R-The Woodlands).

The bill allots $75 million for the state’s “pole replacement program” and limits purposes of the funding to broadband-related functions.

One of those functions is for supplementing the Texas Universal Service Fund (TUSF), a mechanism by which the state ensures its mandate that every Texan has telephone service.

The TUSF has faced a funding rollercoaster over the last three years. Back in 2020, the Public Utility Commission (PUC) declined to increase its rate charged per intrastate telephone call to compensate for rising costs and lost revenues associated with providing telephone service to remote corners of the state.

A bill passed by the Legislature to shore up those “lost revenues” by requiring the fee to apply to Voice over Internet Protocol (VoIP) calls was vetoed by Gov. Greg Abbott, a decision defended on the basis of wanting to prevent a fee increase during the then-ongoing COVID-19 pandemic.

That led to a massive deficit within the TUSF that was projected to reach $300 million by January this year, but after a successful lawsuit by the Texas Telephone Association, a court ordered the PUC to raise its TUSF fee to make the fund whole.

That fee increase became effective in August last year. The PUC said it anticipates the fee will be decreased after the deficit was eliminated, which it estimated would occur one year after the implementation.

Rep. Yvonne Davis (D-Dallas) proposed four amendments to HB 9, only one of which was tacked on to add a section requiring the expansion of broadband in “economically distressed communities.”

Schaefer, among the contingent of conservative members who voted against the bill, stated on the floor that the bill should prioritize satellite internet service, not standard cable connectivity, in remote parts of Texas.

“Rural broadband is very important — [it’s] something that we need,” Schaefer said, speaking against the bill on Wednesday. “However, I will vote no on this bill because I don’t believe it factors in existing technology that’s already providing high-speed internet in the rural areas [like] Starlink and other satellite technologies.”

Starlink is SpaceX founder Elon Musk’s project that provides internet service to most of West Texas, but it hasn’t yet expanded into much of East Texas.

“The private sector is already giving an option to many people in rural areas — people even use it on their boats. … I’m registering my no vote on this bill because we’re not factoring in what the private sector has already provided us in the way of a solution.”

Ashby responded to Schaefer’s argument, saying, “I want to point out that the federal government says that if you have satellite internet service, you are considered unserved. And the reason why that is, is that satellite service has inherent reliability problems because satellites rely on line-of-sight technology.”

“And our weather conditions — cloud cover being the biggest obstacle — they very often impact the signal. The other thing I would say is that satellite technology is not future-proof. It can’t immediately scale to the faster speeds the way other technologies can. … That is not a one-size-fits all solution.”

The bill now moves to the Senate.