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LUBBOCK — When Texas was awarded more than $3 billion to expand broadband services to every corner of the Lone Star state, broadband advocates celebrated.
Fast-forward four years, and that same pool of money has become the subject of tense speculation. Lawmakers have lobbed allegations of favoritism to companies — namely Elon Musk’s Starlink — that are set to receive federal money from an official state office.
Now, with an audit of the state’s Broadband Development Office underway, more questions have come up regarding what exactly the state is planning to do with billions in taxpayer dollars to make sure all Texans have internet access.
What are the allegations facing the Broadband Development Office?
The biggest accusations thrown at the BDO have been around favoritism and transparency in the grant-awarding process for the Broadband Equity, Access and Deployment program, or BEAD.
During a Senate committee hearing last month, Sen. Charles Schwertner, a Republican from Georgetown, said his office heard about the concerns regarding taxpayer money.
One of the issues Schwertner brought up was about how much money was disbursed up-front for BEAD projects. Originally, providers were only expected to receive 10% of the grant money up front, and the rest would be dispersed on a tiered system based on how many subscribers use the service.
That was changed, but only for one kind of company — satellite internet providers.
“We did make a change to the disbursement schedule specifically for low-Earth orbit,” Bryant Clayton, the BDO’s director, told lawmakers.
The changes were made one or two days before the grant was awarded, Clayton said. Schwertner asked what the amount changed to, but Clayton did not give a clear answer.
Schwertner said the favorable terms offered to low-Earth orbit satellite companies prompted other applicants to seek changes to their own disbursement schedules.
Clayton said he was not aware of those requests. Schwertner referred to a signed letter from a coalition of businesses that asked for reconsideration. Clayton said he was familiar with the letter but disagreed that it reflected what they were asking for. Schwertner also said the office was requiring applicants to file Public Information Requests to get information on the award process, which he called an adversarial process. Clayton said it was to put the office on a timeline to respond, but Schwertner called for transparency.
“I have my eye on y’all regarding the way y’all are conducting your business,” Schwertner told Clayton. “I don’t care who’s messing with your business, but we, as an oversight committee, are going to oversee it regarding fairness and transparency.”
How much money is at stake?
More than $5 billion of federal and state money has been dedicated to broadband development funds.
A large tranche of that money — $3.3 billion — comes from the Biden Administration’s Infrastructure bill, which created the BEAD program. Despite U.S. Sens. Ted Cruz and John Cornyn both voting against the bill, Texas was still awarded the most BEAD funding out of any state.
How is Elon Musk involved?
One of the initial requirements for the BEAD program was that all projects had to use fiber optic cables before any other option. That was changed in 2025 when the National Telecommunications and Information Administration adopted a technology-neutral stance that opened the door to satellite companies receiving federal money for broadband development projects.
Musk’s Starlink offers residential broadband service through low-earth orbit, or “LEO”, satellite in Texas on a larger scale than any of its competitors. It has at least 12 million active customers globally. Amazon has begun deploying satellites for its own LEO service, Amazon Leo.
Both Starlink and Amazon were listed as subgrantees for the BEAD program on the comptroller’s website, though it did not state how much money was awarded. Musk, who was recently named the world’s first trillionaire, has reportedly received at least $38 billion in government contracts, loans, subsidies and tax credits.
During the hearing, Sen. Nathan Johnson, a Dallas Democrat, expressed his concerns about Musk, who he says has “tremendous control” over the federal government.
“The federal government issues some new edict, and the award happens to go to 99% of his companies which are priced at three times what other companies are pricing,” Johnson said. “I understand there’s probably deficiencies, and there may be a perfectly logical explanation. I hope there is.”
Johnson asked who it was that wanted the BDO to reconsider the payout structure. Clayton said it was Gov. Greg Abbott’s office.
When asked what reason they were given, Clayton said: “We were out of step with other states.”
How has the comptroller responded?
Acting Comptroller Kelly Hancock responded to the allegations directly last week by accusing Amazon of “aggressively” lobbying state legislators, including members of the Business and Commerce committee. According to Hancock, Amazon wanted a reduction in liability requirements and is portraying itself as a victim. The company did receive an award, Hancock said, but they decided to not sign the grant agreement.
“During the hearing, it became clear that certain committee members are unaware of statutory constraints,” Hancock wrote. “Instead, it appears they have received talking points from industry lobbyists.”
Hancock also said he didn’t believe Texans should act as a financial safety net for multibillion-dollar companies.
Hancock’s statement did not mention Musk or Starlink — the focus of the favoritism allegations.
How have lawmakers responded?
Lawmakers are taking the allegations seriously. Last week, Lt. Gov. Dan Patrick and House Speaker Dustin Burrows called for an audit of the state’s broadband office. In a joint statement, the lawmakers said the audit is a result of the concerns raised about the BEAD award process.
“It is critical the Office’s performance and operations meet the expectations of the Texas Legislature and the people of this state,” the lawmakers said in a statement.
In a post on X, Schwertner shared Hancock’s letter, saying the committee believed testimony warranted the audit. Schwertner also expressed his joy at the upcoming change in leadership at the comptroller’s office. Hancock’s tenure is ending this month, and former Republican state senator Don Huffines will take over for the rest of the year.
“It’s good to see new incoming leadership in the comptroller’s office after the failed election and tenure of the current interim comptroller,” Schwertner posted. “No tantrum on the way out of the office will change that.”
Sen. Jose Menendez, a Democrat from San Antonio who sits on the Senate committee, responded to Hancock’s letter Thursday, saying his office was unaware of the lobbying Hancock accused Amazon of doing. Menendez did agree with Hancock’s belief that Texans should not act as a financial safety net for a multibillion-dollar corporation’s liabilities. However, he specified that belief includes Musk’s Starlink.
“Unfortunately, there have been reports that millions of Texas taxpayer dollars have been routed via Starlink, owned by the world’s first apparent trillionaire,” Menendez said. “It is clear that Elon Musk does not need Texas taxpayer dollars.”
Menendez reiterated that Amazon, Starlink and other multibillion-dollar companies shouldn’t be relying on everyday Texans to “pay towards their continued wealth.”
Why is broadband development taking so long?
Despite being awarded the BEAD money in 2023, broadband development projects have not started because of years of delay.
In November 2024, the National Telecommunications and Information Administration, the agency responsible for administering the program, approved Texas’ plan for the BEAD money. Two days later, Cruz wrote to the NTIA, urging them to pause all actions related to the program in anticipation of changes with the incoming Trump Administration.
A few months later, then-Texas Comptroller Glenn Hegar wrote to Cruz saying they could return as much as $1 billion in BEAD funding, citing state-led initiatives and private sector expansion.
When the NTIA changed the requirements last June to have a “technology-neutral” approach, Texas had to scrap its previous plan for BEAD projects and start a new proposal. This one would reflect the “benefit of the bargain” plan, which removed “rules favoring particular technologies” and eliminated “unnecessary regulatory burdens,” including rate regulations.
The BDO accepted applications last July, and the new, final BEAD proposal plan was approved in December. According to the comptroller’s website, projects will begin construction this summer.
What comes next?
According to the BDO, the audit process has already begun. There is not a clear date on when the audit will be completed. However, Patrick and Burrows’ statement said they will take action during the next legislative session, beginning in January.