Rural Texans face an imminent connectivity crisis after almost two years in a pandemic that emphasized the need for widespread access to the internet.
A state-administered fund that supports the rural internet infrastructure is depleted, decreasing payments to providers by roughly 70% since the beginning of the year. Now bills are increasing for customers in small towns as providers dig into their own reserves and consider shutting down services entirely.
Just as Texas opens a statewide broadband office and develops plans to get residents connected, the smallest telecommunications companies serving the hardest-to-reach areas may shutter.
Providers who build and maintain phone lines that also allow the internet to reach rural Texas lack financial stability, which could derail progress.
“This is basically the equivalent of saying to rural Texas, ‘We’re going to provide all you guys these fancy new electric cars, and they are going to do everything you need them to,’ but at the same time, you’re not telling them that you’re not going to pay for the roads anymore,” said Mark Seale, the executive director of the Texas Telephone Association.
Lawmakers passed a potential remedy that would have altered the fee structure, but Gov. Greg Abbott vetoed the bill this spring. Abbott’s appointed commissioners on the Public Utility Commission also have not increased financial aid for rural providers.
The association and rural telecommunications providers are suing the state claiming that the PUC violated its own policies and Texas law in declining to adjust fees that keep the fund stable.
The focal point of the lawsuit is the Texas Universal Service Fund, a pot of money established in the late 1980s to help rural telecommunications providers stay financially afloat. It’s expensive to serve the most remote areas of the state, so major providers have mostly stayed away.
In urban areas, a one-mile telephone line’s cost can be shared by 100 people, but in rural towns, it may be split by one or two customers.
“It’s cheaper to operate in a metro area because you have more people,” Seale said. “And they are closer together than it is in East Texas where everyone’s separated by pine trees or in West Texas where everybody’s separated by miles and miles.”.
Fees on phone calls made over landlines and some over cells fund the state effort. But consumer habits have changed — with texting becoming more common — so money flowing into the fund has nearly dried up. The PUC oversees the pot and is charged with adjusting fees to ensure its solvency.
But in June of 2020, when state staffers recommended raising the rate, commissioners took no action. The fund dramatically declined.
PUC executive director Thomas Gleeson described the steep drop in payments to providers during a legislative hearing in May noting that providers have seen about a 70% reduction in funding.
Though the commissioners behind the June 2020 decision were replaced in of the controversy following February’s winter storm, new appointees have also not addressed the issue.
When asked how the PUC wants the fund to move forward, a spokesman replied that providing good internet connectivity is not “an allowed use of TUSF according to statute.”
“Thankfully, the Texas Legislature has taken decisive action to support rural broadband internet along with significant Federal funding,” spokesman Mike Hoke said.
A Travis County District judge dismissed the claims in June, but the rural providers appealed to the Third Court of Appeals. They plan to argue their case in December.
Outside of the court proceedings, lawmakers attempted to solve the problem by almost unanimously supporting a bill to adapt the fee structure.
But the governor vetoed the legislation because “it would have imposed a new fee on millions of Texans,” Abbott spokeswoman Renae Eze said.
When asked about the future of the fund, she emphasized the need for widespread broadband access throughout the state and noted that Abbott made connectivity a top priority for lawmakers. He signed six broadband reform bills in the recent legislative sessions, she said.
Sen. Charles Perry, R-Lubbock, who has worked for years to improve the fund and sponsored the bill, said a group advising Abbott on the veto mischaracterized the legislation as a “tax increase.”
The current fee is about 50 cents per month for a telephone customer. The increase would have added another $6 per year, Perry said.
“It’s really not a tax increase because it’s what I would consider a necessity to maintain communications connectivity to arguably two of the largest budget items in the state budget — oil and gas and agriculture,” Perry said. “You can’t call it a tax.”
This is where the free market doesn’t work, he said, because it doesn’t make financial sense for providers to serve these remote areas. “This is 100% public policy,” Perry said.
Customers — including schools, educators and families — are already seeing increases on their monthly bills, said Michael Lee, the executive director of the Texas Association of Rural Schools.
Schools in remote areas of Texas often livestream virtual instruction into their campuses to offer classes that students wouldn’t otherwise have access to because of limited local resources, Lee said.
Meanwhile, Texas is working toward moving all state standardized exams online. Rural schools may soon have to pay increased costs for their internet and telephone services or have fewer options for providers.
“If you cannot control these costs, but you have to have them, then you have to cut somewhere else that’s going to affect the learning of students,” Lee said.
This reflects the challenges all rural customers face when the cost to connect to the rest of Texas increases, Perry noted.
“It can literally make someone have to choose between food, drugs, energy costs and broadband,” Perry said. “Broadband will lose every time.”
Should the court not remedy the issue, the PUC can still approve a rate increase, Perry noted.
The Legislature will have the opportunity to review the service fund in early 2023 when the PUC comes under sunset review, Seale added. But the crisis will worsen in the meantime and many rural residents could be left without access by then.
The lack of concern over the fund feels out of sync with Texas lawmakers’ recent focus on expanding broadband access for all, Seale said.
Legislators overwhelmingly supported bills that established a statewide office to oversee efforts to tackle the digital divide that separates those with easy and reliable access to the internet and those without.
“We’re advertising that rural broadband is a priority but at the same time, the only way you can deliver that rural broadband — this network — they have turned their back on it,” Seale said.
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