Cruz bill ties $42B broadband funding to 10-year AI regulation ban

Senator Ted Cruz has introduced legislation that would make states ineligible for $42 billion in federal broadband funding if they attempt to regulate artificial intelligence development. The bill represents a new Republican strategy to enforce a 10-year moratorium on state AI regulation by leveraging critical infrastructure funding as a compliance mechanism.

What you should know: Cruz’s approach differs from a straightforward AI regulation ban previously approved by the House, instead tying compliance to participation in the Broadband Equity, Access, and Deployment (BEAD) program.

• States would be prohibited from enforcing “any law or regulation… limiting, restricting, or otherwise regulating artificial intelligence models, artificial intelligence systems, or automated decision systems entered into interstate commerce” for 10 years.
• The bill adds an extra $500 million to BEAD funding while expanding its scope to include “infrastructure for the provision of… artificial intelligence models, artificial intelligence systems, or automated decision systems.”
• This structure may be designed to circumvent the Senate’s Byrd Rule, which limits “extraneous matter” in budget reconciliation legislation.

Why this matters: The legislation creates a stark choice for states between maintaining AI oversight authority and accessing federal funds needed to expand internet infrastructure to underserved communities.

• Consumer advocacy group Public Citizen called Cruz’s approach “undemocratic and cruel,” arguing it forces states to abandon AI protections to receive broadband funding.
• The strategy effectively nationalizes AI regulation policy by making federal funding contingent on regulatory restraint.

What they’re saying: Critics argue the bill creates an unfair ultimatum for states and communities.

• “Under the committee’s proposal, states would be barred from enforcing their own AI protections as a condition of receiving broadband funds meant to expand Internet access to underserved communities,” Public Citizen said.
• J.B. Branch from Public Citizen added: “Republicans are telling millions of Americans: ‘You can have broadband but only if your state gives up the right to protect you from AI abuses.'”
• Cruz’s summary states his bill “forbids states collecting BEAD money from strangling AI deployment with EU-style regulation.”

BEAD program overhaul: The Trump administration is simultaneously restructuring the broadband funding program to benefit cable companies and satellite providers.

• Commerce Secretary Howard Lutnick announced the elimination of fiber network preferences, adopting a “tech-neutral approach” that benefits cable companies, fixed wireless providers, and Elon Musk’s Starlink satellite service.
• States will no longer be able to require grant recipients to offer low-cost internet plans at specific rates to low-income residents.
• Instead, ISPs can continue offering “their existing, market driven low-cost plans to meet the statutory low-cost requirement.”

Industry reaction: The broadband program changes have drawn mixed responses from advocacy groups and industry players.

• The Benton Institute for Broadband & Society criticized the overhaul as “shortsighted,” arguing that “fiber-based broadband networks will last longer, provide better, more reliable service.”
• Cable lobby group NCTA-The Internet & Television Association praised the changes, saying they “will make it easier for providers to build faster, especially in hard-to-reach communities, without being bogged down by red tape.”