Broadband grants paused as critics allege favoritism toward Elon Musk’s Starlink

The Texas Broadband Development Office placed a temporary hold Tuesday on all disbursements of billions of dollars in federal funds related to the Broadband Equity, Access and Deployment program, or BEAD.

The hold comes after the office was accused of favoritism to certain companies, specifically Elon Musk’s Starlink, which led to lawmakers announcing an audit .

In an email obtained by The Texas Tribune, the state broadband office shared with subgrantees that the hold was effective as of Monday, and will be in place “until further notice.” The office did not give a reason as to why the disbursements were paused.

The office did not respond to The Tribune in time for publication.

“No further action is required from subgrantees at this time,” the office said in the email. ”The BDO will provide additional guidance and updates as they become available.”

Last week, Comptroller Don Huffines announced a comprehensive internal review of his office, which includes the broadband office.

Lawmakers began questioning the Broadband Office in June on how it doled out more than $3 billion in BEAD funding. During a Senate committee hearing, Sen. Charles Schwertner , a Republican from Georgetown, said his office heard about the concerns regarding taxpayer money, including how much money was disbursed up-front for the projects. While other providers were only expected to receive 10% of the grant money to start, with the rest dispersed on a tiered system, the rules were changed for low-Earth orbit satellite providers.

According to Bryant Clayton, the BDO’s director, the change was a directive from Gov. Greg Abbott’s office and made just days before the grant was awarded.

In response, Schwertner called for more transparency in the grant award process by the BDO.

“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.”

Starlink is the largest provider of residential broadband service through low-Earth orbit satellites in Texas, and has at least 12 million customers worldwide. Amazon recently began deploying satellites for its own LEO service. Both of the companies were chosen as subgrantees by the BDO.

Sen. Nathan Johnson , a Dallas Democrat running for Texas Attorney General, claimed in a campaign statement that the award process could be corruption from the federal government down.

“Without drawing conclusions for the moment, the whole process may have involved coordinated corruption among the Trump administration, the illegally empowered DOGE czar Musk, private entities (Starlink), the governor’s office and the broadband development office,” Johnson said in the statement.

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.

In his final days as acting comptroller, Kelly Hancock responded to the allegations by accusing Amazon of “aggressively” lobbying state legislators, including members of the Senate committee. Hancock also said he didn’t believe Texans should act as a financial safety net for multibillion-dollar companies. His statement did not mention Musk or Starlink, which is the focus of the allegations.

Schwertner fired back at Hancock, saying in a post on X: “It’s good to see new incoming leadership in the comptroller’s office after the failed election and tenure of the current interim comptroller. No tantrum on the way out of the office will change that.”

The audit process is underway, but there is no clear date on when it will be completed. Patrick and Burrows said in their statement that the legislature will take action during the next session, beginning in January.

This story was originally published by The Texas Tribune and distributed through a partnership with The Associated Press.