Pennsylvania can move ahead with spending more than $700 million to expand high-speed internet in rural areas after federal officials backed down from a threat to withhold the money due to 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 lack broadband access.
In a statement, a spokesperson for the Department of Community and Economic Development described the delay as "unfortunate" but emphasized that the Shapiro administration insisted on "standing up for workers."
Pennsylvania now has six months to sign contracts with the companies receiving funding, who must then provide internet service within four years. Most locations will be connected via fiber-optic cables, widely regarded as the fastest and most reliable internet technology.
However, due to changes made by the Trump administration, nearly one-quarter of eligible locations will receive satellite internet, which is cheaper to install but often more expensive to subscribe to and may not keep up with future speed demands.
Prevailing Wage Dispute
The grant funding had been uncertain since Pennsylvania submitted its final spending plan to the federal government last September. A long-running dispute centered on 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 these workers should be classified as "electric linemen." Verizon and the Broadband Communications Association of Pennsylvania (BCAP), an industry group, challenged this decision in court, arguing the classification does not accurately reflect the work and unnecessarily drives up costs.
In a December email, a federal official requested "assurances" that Pennsylvania would apply "appropriate" worker classifications, according to documents obtained by Spotlight PA. A grant amendment from early 2026 stated that funding would not be released until the federal government deemed the classifications "reasonable."
However, in late April, the federal government removed the "requirement for accurate wage and worker classifications" from Pennsylvania's funding agreement. In March, a state appeals court had ruled against Verizon and BCAP in their lawsuit seeking to change the classifications.
A spokesperson for the National Telecommunications and Information Administration, the federal agency involved, did not respond to questions about why the condition was removed.
Next Steps and Challenges
With the prevailing wage issue resolved, Pennsylvania can now sign contracts with grant winners, who will have four years to make internet service available. A recent memo from the Benton Institute for Broadband & Society highlighted ongoing federal concern that local and state permitting processes could slow broadband rollout.
The memo states that states must ensure broadband-related permits are processed within 90 days, though it is unclear whether states can guarantee this given 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 permit management system for the broadband program.
This unit, created by Governor Josh Shapiro via executive order in 2023, has worked to fast-track permits for major economic development projects. It remains unclear how Pennsylvania will spend about $400 million in leftover funding due to Trump administration cost-cutting and a reduction in eligible locations.
After rescinding Biden-era guidance on using this money, federal officials said they would release updated rules in March but missed that deadline, stating they needed more time to finalize their approach.
