Cruz’s Broadband Bill: $42B Funding Tied to AI Moratorium
Senator Ted Cruz (R-Texas), chairman of the Senate Commerce Committee, has introduced new budget reconciliation text that ties eligibility for the $42 billion Broadband Equity, Access, and Deployment (BEAD) program to a 10-year moratorium on state-level artificial intelligence (AI) regulation. This maneuver aims to block any “EU-style” state laws limiting the development or deployment of AI systems by threatening to cut off federal broadband grants.
Background: From House Floor to Senate Byrd Rule
In May 2025, the U.S. House passed a budget bill that included a straightforward 10-year ban on state AI regulation. Cruz’s approach differs substantially: rather than inserting a direct prohibition, his text conditions BEAD funding on states refraining from enforcing any law or regulation that “limits, restricts, or otherwise regulates artificial intelligence models, artificial intelligence systems, or automated decision systems entered into interstate commerce.”
Sen. Ted Cruz: “This provision forbids states collecting BEAD money from strangling AI deployment with EU-style regulation, thereby preserving America’s leadership in next-generation technologies.”
Observers believe Cruz structured this bill to skirt the Senate’s Byrd Rule, which prohibits “extraneous matter” in reconciliation. By leveraging BEAD—a program originally crafted under the Infrastructure Investment and Jobs Act—the senator effectively uses broadband grants as leverage over state AI policy.
Key Provisions of the Cruz Amendment
- Extra $500 million to BEAD: Adds to the existing $42 billion fund.
- Moratorium Clause: States must not enact any AI regulations for 10 years.
- Expanded Eligible Uses: BEAD dollars may now subsidize not only fiber, fixed wireless, and satellite links but also AI infrastructure deployment—including data centers, edge compute nodes, GPU clusters, and high-speed interconnects.
- Enforcement Trigger: Any state-level law deemed restrictive yields automatic funding ineligibility.
BEAD Overhaul Under the Trump Administration
Separately, the Commerce Department under Secretary Gina Raimondo has delayed the Biden-era BEAD grant rollouts to rewrite rules. The Trump appointees announced in June 2025 that they will:
- Eliminate the fiber-first preference in favor of technology-neutral funding, benefiting cable operators, fixed wireless providers, and satellite entrants such as SpaceX’s Starlink.
- Block state mandates for specific low-income plan price caps, allowing ISPs to continue market-driven “lifeline” services.
Benton Institute: “This shortsighted pivot to the cheapest infrastructure undermines long-term performance and scalability, especially in rural America.”
Technical Implications for Broadband Infrastructure
Upgrading Networks for AI Workloads
Deploying AI at scale demands more than just last-mile connectivity. Networks must support low latency (<20 ms round-trip), high throughput (>10 Gbps per node), and quality-of-service (QoS) guarantees. BEAD funds could be used to install:
- Edge Data Centers with racks of NVIDIA H100 or AMD MI300X GPUs connected via 400 GbE or 800 GbE switches.
- Multi-access Edge Compute (MEC) platforms for 5G base stations, requiring sub-1 ms processing times for real-time inference.
- Fiber Backbone Upgrades with Dense Wavelength Division Multiplexing (DWDM) spanning 800 Gbps per fiber pair.
AI Deployment at the Edge: Requirements and Costs
Edge AI nodes vary in capacity and cost:
| Class | Compute | Latency Target | Approx. CapEx |
|---|---|---|---|
| Micro-Edge | 1–2× GPU | 5–10 ms | $20,000–$50,000/node |
| MEC | 4–8× GPU + FPGA | 1–5 ms | $100,000–$250,000/node |
| Enterprise | 16–32× GPU | sub-1 ms | $500,000–$1 million per rack |
Operators estimate that retrofitting rural PoPs (Points of Presence) to support AI inference accelerators raises per-mile costs by 20–35%. Critics argue this will slow deployment where BEAD funding is most needed.
Legal and Policy Analysis: Federalism vs. Innovation
Constitutional law experts warn that Cruz’s approach upends the traditional state-federal power balance. Professor Rachel Lin of Georgetown Law notes:
“Conditioning federal funds on a wholesale ban of state regulatory authority is coercive. The Supreme Court has struck down similar tactics where grants were made contingent on surrendering state police powers.”
On the other hand, proponents argue uniformity is vital for a single national market for AI services. Supporters cite President Biden’s recent AI Executive Order (July 2025) calling for consistent safety standards to prevent patchwork regulations.
Rural Connectivity and Economic Impact
BEAD aims to bring high-speed Internet to the 30 million Americans still lacking service. Imposing an AI moratorium adds a political dimension to rural broadband: local governments now face a choice between fiber and firewalls. Economic development advocates warn:
- Small towns reliant on grants may lose out if they pass basic AI transparency or bias protections.
- Agritech startups could lose access to low-latency compute hubs if their states enforce model-audit rules.
Industry Reactions and Expert Opinions
- Public Citizen: “Undemocratic and cruel—people can’t have broadband if their state dares regulate AI.”
- NCTA (Cable Lobby): “Welcome changes—tech neutrality and fewer low-cost red tape barriers will speed deployment.”
- Telecom Engineer John Morales: “Tying compute infrastructure funding to policy is unprecedented. It could deter states from commonsense AI safety measures.”
Outlook and Next Steps
The Senate is scheduled to debate the reconciliation package in mid-July 2025. If the Cruz amendment survives Byrd Rule challenges, states must weigh the trade-off between broadband subsidies and preserving the right to tailor AI oversight for their residents.