Rural Texas may lose out on billions in broadband infrastructure funding due to federal regulations

When Texas was awarded $3.3 billion in federal money toward expanding broadband infrastructure across the state, government leaders and telecommunication companies celebrated the news. With the federal funds, coupled with $1.5 billion from the state’s wallet, rural and underserved Texas communities finally saw a chance to catch up with technology in the rest of the country. As the state prepares to submit a five-year plan to federal agencies on broadband deployment, the finer details of who may qualify for federal money in the Broadband Equity, Access and Deployment (BEAD) Program has come into sharper focus. And rural Texas advocates and owners of smaller telecommunication companies worry the communities they serve will be shut out of the historic investment. Regulations require each telecommunication company applying for a grant to provide a letter of credit from a major bank that covers at least 25% of the proposed project — essentially putting millions of dollars on the table to apply for a grant it isn’t guaranteed to receive. This is a feasible task for big service providers with access to a qualified bank, but for rural companies, it’s a different story. For many of them, the requirement that they work with a major bank to secure funding is another hurdle in their efforts to bring broadband access to their own backyard. Kelty Garbee, executive director of Texas Rural Funders, said she understands the requirement exists to prevent people from accepting money but not following through with projects. However, she is concerned the rule disenfranchises rural providers.