Pa. can move ahead with broadband expansion after feds back down on wage dispute

Pennsylvania can move ahead with spending more than $700 million on expanding high-speed internet in rural areas, after federal officials backed down from a threat to withhold the money because of a dispute over state labor law.

The reversal removes what could have been a major roadblock to connecting roughly 130,000 Pennsylvania homes and businesses that still can’t get broadband.

In a statement, a spokesperson for the Department of Community and Economic Development said the delay was “unfortunate” but added that the Shapiro administration insisted on “standing up for workers.”

Pennsylvania now has six months to sign contracts with the companies that will receive funding, who then must provide internet service within four years.

Most locations will be connected via fiber-optic cables, which are widely considered the fastest and most reliable internet technology.

As a result of changes made by the Trump administration, however, almost one-quarter of eligible locations will receive satellite internet, which is cheaper to install but often more expensive to subscribe to. In addition, satellite internet may not be able to keep up with future demands for faster speeds as technology evolves.

Prevailing wages

The status of the grant funding had been up in the air since Pennsylvania submitted its final spending plan to the federal government last September.

Contributing to the uncertainty was a long-running dispute over how workers installing fiber-optic cable for broadband should be classified under Pennsylvania’s prevailing wage law, which sets minimum hourly pay for publicly-funded projects.

Pennsylvania’s Department of Labor and Industry held that those workers should be classified as “electric lineman.”

Verizon and the Broadband Communications Association of Pennsylvania, an industry group representing internet service providers, tried for years to reverse this decision, arguing in court that the classification does not accurately reflect the kind of work being done and unnecessarily drives up costs.

In a December email, a federal official told Brandon Carson, the executive director of the state Broadband Development Authority, that her agency wanted “assurances” that Pennsylvania would apply “appropriate” worker classifications, documents obtained by Spotlight PA under the Right-to-Know law show.

A grant amendment from early 2026 said that the funding would not be released until the federal government had deemed the worker classifications “reasonable.”

In late April, however, the federal government removed the “requirement for accurate wage and worker classifications” from Pennsylvania’s funding agreement, records show.

In March, a state appeals court had ruled against Verizon and BCAP in a lawsuit they had filed seeking to change the classifications.

A spokesperson for the federal agency, the National Telecommunications and Information Administration, did not respond to questions about why the condition was removed.

Next steps

With the prevailing wage issue resolved, Pennsylvania can now move on to the next stage of the process: signing contracts with the companies and other organizations that won the grants. They will then have four years to make the internet service available to residents.

A recent memo, obtained by the Benton Institute for Broadband & Society, a public interest group, shows ongoing concern among federal officials that local and state permitting processes could slow the rollout of broadband projects.

The memo says states must ensure that broadband-related permits are processed within 90 days. In practice, it’s unclear whether states can guarantee this, since they do not control local permitting decisions.

In Pennsylvania, the Broadband Development Authority is working with a special unit in the governor’s office to create a system to manage permits for the broadband program, records show.

The unit, created by Gov. Josh Shapiro via executive order in 2023, has worked to fast-track permits for major economic development projects.

It’s still unclear how Pennsylvania will be able to spend about $400 million in funding leftover as a result of the Trump administration’s cost-cutting measures and a reduction in the number of eligible locations.

After rescinding Biden-era guidance on how states could use this money, federal officials said they would release updated rules in March. But the agency missed that deadline, and in a news release said officials needed more time to finalize their approach.

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