Texas House-Passed Broadband Fund Could Reduce Pressure on USF

Texas House members showed wide support for creating a state fund for broadband infrastructure this week, voting 137-7 for a proposed constitutional amendment Wednesday on its second reading. On Thursday, the Senate received HJR-125 and the House voted 140-8 for companion bill HB-9 on third and final reading. Rural carriers applauded the House for passing the measures, which they said would help fill gaps from the state not fully funding Texas USF. “We will now shift our focus to the Senate where we hope to find similar support,” said Texas Telephone Association (TTA) President Mark Seale.

The Texas proposal aims to make “a bold investment in the expansion of broadband infrastructure,” said sponsor Rep. Trent Ashby (R) at Thursday’s livestreamed floor session. “All Texans deserve access to affordable, reliable high-speed internet.” Only HB-9 required a third-reading vote; under House rules, a resolution proposing a constitutional amendment may pass on second reading with a two-thirds vote.

The constitutional amendment still must win two-thirds of the Senate and a majority of voters on the Nov. 7 election ballot to become law. HB-9 needs a Senate majority and approval by Gov. Greg Abbott (R). Sen. Charles Perry (R), who earlier proposed a slightly different bill (SB-377) and constitutional amendment (SJR-27) to set up a connectivity fund, didn’t comment Thursday.

The proposed state broadband pot could fund developing, constructing, reconstructing and expanding broadband and telecom infrastructure or services, operating that infrastructure, providing broadband and telecom services -- including those funded by USF – and “reasonable expenses of administering and managing the investments of the fund,” says HJR-125 text. It would direct the state comptroller to transfer $5 billion from the economic stabilization fund to the broadband fund by Jan. 15. The fund would expire Sept. 1, 2035, unless two-thirds of the House and Senate adopt a concurrent resolution to extend it another 10 years.

Companion bill HB-9 would amend government code to establish the special fund in the state treasury outside the general revenue fund, said bill text. It would restrict money to a purpose described by the statute that set up the state broadband office; funding the state USF, funding 911 and next-generation 911; supporting the state broadband pole replacement program; providing matching funds for federal broadband equity, access and deployment program dollars; supporting the E-rate program, enhancing public safety connectivity, including support for school safety; or supporting administration and enforcement.

The legislative movement followed Texas USF funding drama. The Texas Public Utility Commission approved a whopping increase of the revenue-based surcharge to 24% from 3.3% last summer after a state court ruled that commissioners violated the state’s constitution and utility and administrative procedure laws by choosing in June 2020 not to fully fund TUSF (see 2207140060). RLEC associations TTA and the Texas Statewide Telephone Cooperative, Inc. (TSTCI) sued the PUC over the shortfall.

TTA is “pleased to see the progress of this important legislation,” said Seale. It will fund broadband and “provide a stable source of funding for USF and eliminate the current surcharge that has funded USF previously.”

TSTCI and members appreciate the legislature’s efforts to keep expanding broadband in Texas, said the association’s President Allen Hyer: HB-9 and HJR-125 would bring more funding for high-speed internet deployment “and a stable support funding source for TUSF for the next 10 years. Both are crucial for the maintenance and expansion of the communications infrastructure in Texas.” TSTCI outside counsel Daniel Gibson of Richards Elder said the proposal “would alleviate pressure on the TUSF surcharge that currently exists.”

Texas Cable Association President Walt Baum lauded “this historic investment in expanding reliable, high-speed broadband connectivity in our state.” AT&T Texas President Leslie Ward said the “historic bills will connect Texans to broadband at home, provide critical connectivity for schools and students, fund NextGen 9-1-1 upgrades, as well as save Texas consumers approximately $2 billion.”

Other Texas USF measures are also on the move. Texas senators passed a bill (SB-1710) last week that would direct VoIP providers to contribute to the telecom fund and allow the Texas PUC to review whether previously rural areas should continue receiving support (see 2304190041). Earlier in April, the Senate voted 31-0 Wednesday to pass a bill (SB-1425) that would extend a Sept. 1 sunset on USF support for small telcos until Sept. 1, 2033.