HARRISBURG — More Pennsylvanians will receive satellite internet service from SpaceX after last-minute changes to the state’s plan to spend more than $700 million in broadband funding.
The latest adjustments continue a shift that began last summer, when the Trump administration, seeking to lower costs, overhauled the rules for a massive broadband grant program.
Asked about the most recent changes, a spokesperson for the National Telecommunications and Information Administration, which oversees the program, said the agency rejected projects with “excessive costs.”
The new version of the state’s plan more than doubles the number of locations that the Elon Musk-owned SpaceX will cover.
Amazon’s satellite internet service, which is not yet available to the public, also saw an 11% increase in the number of locations it will serve as part of the program.
Internet giant Comcast, which plans to connect residents via fiber-optic cable, will cover about one-quarter fewer locations.
Comcast declined to comment on the reason for the changes. Amazon and SpaceX did not respond to requests for comment.
The changes are the result of an unusual process where federal officials set “arbitrary price caps” and pressured companies to lower their costs to meet them, said Drew Garner, director of policy engagement at the Benton Institute for Broadband & Society.
This increases the risk that some companies will ultimately walk away from or default on the grant awards, he said — a problem that has undermined previous federal broadband investments.
Under President Joe Biden, the grant program sought to connect as many people as possible via fiber-optic cable, which is widely considered the fastest and most reliable technology. It is also the most expensive to install.
Satellite connections have lower upfront costs, but can be more expensive for customers and can’t offer the same maximum speeds as fiber.
Some advocates for rural broadband say the focus on cutting costs is misplaced: The program, the largest-ever U.S. investment in high-speed internet, was intended as a once-in-a-generation opportunity to ensure universal broadband access.
Roughly 130,000 homes and businesses across Pennsylvania still can’t get high-speed internet access. Under the infrastructure law, broadband projects must offer at least 100 megabits per second for downloads and 20 megabits per second for uploads.
After the latest changes to the grant awards, Pennsylvania anticipates spending $711 million to connect them all — far less than the $1.1 billion in funding originally allocated to the commonwealth. State officials are still waiting for federal guidance on how the leftover money can be used.
Public documents and reporting by Spotlight PA show that state and federal officials pushed for further cost reductions after Pennsylvania submitted its plan for federal approval.
Officials wanted the average cost per individual location connected to be below $12,500, the Broadband Communications Association of Pennsylvania said in a legal filing before a state appeals court.
Another company told Spotlight PA that following a request from the federal government, state officials questioned why its anticipated costs were above $6,500 per location served.
The company, Talkie Communications, initially won $7.2 million to bring fiber to around 750 locations in York County, but ultimately turned the grant down.
“I can’t blame anybody for trying to save money but there’s only so much you can squeeze until it explodes,” said co-owner Andre DeMattia.
‘Unreasonably expensive’
The broadband program was created in 2021, as part of the sweeping infrastructure package passed by Congress. The pandemic had brought new urgency to the lack of internet access in many rural areas. The program’s goal was ambitious: to connect every home and business in America that still didn’t have broadband, no matter how remote the location.
Under the Biden administration, federal rules gave priority to fiber internet connections, because of their ability to meet not only the program's minimum speeds but future demands for even faster speeds as technology evolved.
Pennsylvania opened applications for the funding in late 2024. But after President Trump took office, federal officials paused the program while they reworked the rules. Instead of giving priority to fiber, U.S. Commerce Secretary Howard Lutnick said the program would seek “internet access for the lowest cost.”
After sweeping revisions were announced last summer, state officials raced to redo the application process on a tight timeline. In September, Pennsylvania submitted its initial slate of awards to the federal government for final approval.
While the bulk of the commonwealth’s proposed awards were approved, the federal push to lower costs led to tweaks to how much money some companies will receive and which locations they will cover.
In a leaked memo last year, the federal agency overseeing the funding said it was using “tailored, state-by-state data to identify outlier, unreasonably expensive projects.” In some cases, federal officials directed states to ask companies for a “best and final offer” — another chance to lower their costs, or risk losing some of the grant award.
In Pennsylvania, that process led to satellite connections being planned for almost 6,600 more locations. The changes increased the share of Pennsylvania locations that will be served by satellite from 18% to 23%, a Spotlight PA analysis of state data shows.
Comcast will serve roughly 5,000 fewer locations.
Pennsylvania now anticipates spending $711 million — about 10% less than initially proposed. The commonwealth will get to keep the leftover money, although the exact rules for spending it are not yet clear, after updated federal guidance expected in early March was delayed.
Pennsylvania’s spending plan is still in limbo after federal approval came with an unexpected asterisk.
A top federal official said in February that Pennsylvania would only get the money if it changes its position on how to classify broadband workers under a key state labor law.
State officials previously told Spotlight PA they had not received written conditions from the federal government.
Negative ROI
For one company, the pressure to keep cutting costs proved to be too much.
Talkie Communications, a small fiber provider based in Maryland, was initially awarded more than $7 million to connect around 750 locations in York County. It ultimately decided to turn the money down.
In an email to state officials last year, an attorney representing the company said rising construction costs made the project “untenable” because the company would be facing a “negative Return on Investment.”
Increased demand for contractors, as well as the state’s prevailing wage law, raised anticipated construction costs by three or four times what it cost the company to build fiber elsewhere, the attorney wrote.
Talkie was initially approved for almost $40 million in grant funding across Florida, Maryland, and Pennsylvania, the attorney told Spotlight PA, but is only moving ahead in Maryland.
“The math doesn’t make sense,” DeMattia, the company’s co-owner, told Spotlight PA.
“You can’t change the budget after the fact and still make the numbers work in a rural environment.”