Texas Broadband Awards Face Audit After Lawmakers Question Process

Texas legislative leaders have ordered a performance audit of the office overseeing more than $5 billion in broadband investments following questions about transparency, award decisions and the treatment of competing technologies.

Lt. Gov. Dan Patrick and House Speaker Dustin Burrows directed the State Auditor’s Office to review the Texas Broadband Development Office’s (BDO) administration of state and federal grant programs. The request followed a Senate Committee on Business and Commerce hearing where lawmakers questioned how applications were evaluated, why some award terms changed and whether funding was consistently directed to unserved and underserved areas.

The review is expected to examine the office’s transparency, accountability, mapping data and use of taxpayer funds. Legislative leaders said lawmakers could respond to the findings during the regular session beginning in January 2027.

BDO Director Bryant Clayton told the committee that the office is managing or coordinating more than $5 billion in broadband investments. That includes Texas’ $3.3 billion allocation through the federal Broadband Equity, Access and Deployment program and money approved by Texas voters through the state Broadband Infrastructure Fund.

The federal program, commonly known as BEAD, is intended to expand high-speed Internet service to locations without adequate access. Texas received more than 4,000 applications covering more than 243,000 locations and selected potential recipients for more than $1.2 billion in awards. Federal officials approved the state’s final proposal in November 2025.

Five providers later declined awards or did not execute their agreements, requiring the office to prepare another competitive process for the affected locations.

Questions during the hearing focused in part on low-Earth-orbit satellite providers. Federal officials changed the program’s requirements in 2025 to remove a preference for fiber and require states to evaluate eligible technologies on a technology-neutral basis.

Clayton told lawmakers that the office changed the payment schedule for satellite providers after provisional awards were made but before grant agreements were executed. Applicants originally were expected to receive 10 percent of their grants upfront, with later payments tied to subscriber adoption. The hearing did not establish the revised upfront amount.

Committee Chair Charles Schwertner said other providers subsequently sought comparable changes. Clayton said he was familiar with a letter submitted by a coalition of companies but disputed Schwertner’s characterization of the request.

Lawmakers also questioned the office’s handling of competing satellite applications. During one exchange, a committee member said an application associated with Starlink appeared to cost three times more than another satellite proposal serving similar locations.

Clayton said the competing applicant was allowed to correct deficiencies but did not follow the office’s instructions. Committee members requested the written correspondence supporting that account. The hearing record did not include the applications or award documents needed to independently verify the cost comparison.

The scrutiny extended beyond satellite awards.

Committee members questioned middle-mile projects in Brownsville and Central Texas where industry witnesses said about 98 percent of locations were already served. Middle-mile infrastructure provides backbone capacity rather than direct connections to homes and businesses.

Clayton said those projects could provide additional capacity, resilience and redundancy. Industry representatives countered that the state’s broadband programs were created primarily to connect unserved and underserved Texans.

A representative of Spectrum said two questioned projects involved a Central Texas route between Waco and Round Rock and an area near Brownsville. The representative said the company did not object to a separate project involving Kerrville.

Rusty Moore of Big Bend Telephone questioned a $20 million middle-mile project in Reeves County, where he said fiber infrastructure already existed and many customer locations were assigned to low-Earth-orbit satellite service.

“If all of the locations are going to LEO, what are they middle mileing?” Moore asked.

Moore said satellite technology has an appropriate role in rural broadband networks but should not become an easy alternative to evaluating whether long-term fiber investment is feasible. He said his company operates a hybrid network that includes fiber, wireless and satellite services.

Providers also asked for more information about how applications are scored, how challenges are resolved and why particular projects are rejected.

Moore said his company was unable to discuss the broader economic development rationale behind one of its unsuccessful applications. The office concluded that the proposed project was too expensive compared with satellite service, he said.

Representatives of telecommunications associations said the office generally accepted meeting requests but did not consistently provide opportunities for detailed collaboration about program design, field conditions and award monitoring.

Lawmakers also examined the Texas Broadband Pole Replacement Fund. The office made $75 million available through two reimbursement rounds but awarded about $28 million.

Clayton said the office was considering another round and needed to prevent the same work from being reimbursed through multiple grant programs.

Several committee members said the State Auditor’s Office should examine whether the state’s investments produced broadband deployment that would not have occurred through private investment alone.

Sen. Phil King also questioned whether the BDO should remain within the comptroller’s office. Industry representatives did not take a position on moving the office, saying the more immediate need was to improve transparency and correct problems regardless of where the program is housed.

Schwertner compared the situation to problems lawmakers previously encountered with another state grant program, saying broadband funding must be built on transparency, accountability and an appropriate administrative structure.

For broadband providers and technology companies, the audit could influence future application requirements, disclosure practices, payment schedules and the way Texas compares fiber, wireless and satellite proposals.

The Legislature could also consider changes to mapping, scoring and challenge procedures, along with new requirements for explaining why applications were approved or rejected.