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The Arkansas State Broadband Office's proposal to award Berryville-based Hometown Internet LLC with $88 million to build out high-speed internet infrastructure in six Arkansas counties came under fire from a competing internet provider at a Joint Performance Review Committee meeting on Monday. Representatives from Northern Arkansas Telephone Company Inc., or NATCO, and a broadband engineer raised concerns about the company's finances and ability to complete the project. The state's broadband director told state lawmakers the company met federal requirements and the awards are yet to be finalized. "(Broadband internet) is a game changer for our state. It's everything about the future of economic development in our state," Speaker Brian Evans, R-Cabot, a member of the committee, said. "This is too big of a deal for the state of Arkansas for us to mess up, and I feel like we are right on the edge of messing up with this applicant." Hometown Internet was preliminarily selected to receive $88 million to provide high speed broadband internet to Newton, Boone, Marion, Searcy, Carroll and Benton counties -- an area covering roughly 16,000 underserved internet locations. The grant comes from the federal Broadband Equity, Access and Deployment Program, better known as the BEAD Program. The landmark law, passed in 2021, assigned $1 billion to Arkansas to invest in broadband, a high-capacity transmission technology that is 100 times faster than dial-up internet. The program underwent sweeping federal changes in June that aimed to cut costs. Out of the $1 billion allocated to Arkansas, $308 million is being used to build internet services across the state, much of which will go to rural counties. A broadband expert said Arkansas' initial proposal to provide internet infrastructure to 79,000 homes and businesses was at the "top of the pack" compared to other states. Other preliminary providers selected include Elon Musk's SpaceX and Amazon's Kuiper, who are slated to get $10.2 million to expand broadband connections to nearly 13,000 locations. Employees of NATCO said Hometown was not properly financially vetted. Denise Russell, director of regulatory affairs at NATCO, said Hometown Internet doesn't have the finances to support its Arkansas project, which would come to a total of $114 million. "The copay alone for them -- 25% of that -- is just horrendously huge," she said. "We don't know how hometown internet will come up with the money someplace else, and it's our subscribers that we've served for 75 years that are going to be suffering." Howard Gorter, a broadband engineer employed by Palmetto Engineering & Consulting, said the company may have underbid on its project, leaving it on the hook for any cost overruns he claims it will be unlikely to pay. "You're looking at a company that's not well capitalized, has no real existing telecom assets to leverage. They could easily go broke, just from a cash flow standpoint, in the middle of this project," Gorter said. "Granting Hometown Internet $88 million in BEAD money is not only highly risky for the state of Arkansas, but it's very likely to be a serious compliance and public relations problem ... this award has potentially put Arkansas in the news for all the wrong reasons," he said. Glen Howie, the state broadband director, said at the hearing that the company met the federal requirements for the program. Howie said capitalization and being able to complete a project are things the office has to account for when selecting projects. "Folks are not building out the whole thing at once. Some providers go out and get extra equity investors that are added to their portfolio of owners," Howie said. Howie said awardees like Hometown Internet will be reimbursed as the construction is completed. The state's proposal has guardrails, including a clause that requires each subgrantee to provide services to customers no later than four years after receiving the sub-grant. The office will also establish a "comprehensive monitoring plan" and requires a minimum of quarterly updates from subgrantees, according to the proposal published in August. Hometown Internet was awarded $7.4 million for the Arkansas Rural Connect Grant Program. After two years of work, they are only at 32% completion, Gorter said. In response to questioning from legislators about the project's progress, Howie said the company was projected to finish the project on time. Both Russell and Gorter said Hometown Internet didn't file a report with the Federal Communications Commission for broadband reporting, which would make them out of compliance with the commission and subject to enforcement actions. In response to questions from lawmakers about Hometown's filing issue, Howie said the broadband office is "looking at that right now." Howie stressed the preliminary awards are not final and are subject to review from both the broadband office and the state Legislature. The idea that the preliminary selections are "concrete" and that each preliminary selectee will automatically sign a grant agreement is "not the case." "There's a whole other set of requirements we have to work through before we would even sign a grant agreement ... this is a rolling process, with qualifications that happen throughout different parts of the process. It's not over," he said. The broadband office's plan was submitted to the federal government in September. If it receives federal approval and final authorization from the state legislature by Dec. 4, construction of the new broadband systems could begin as soon as the first half of 2026, according to a news release from the office. Hometown Internet is owned by Rodney Ballance, a Berryville-based businessman who is currently running for the Republican nomination for the House District 6 seat in 2026. According to Secretary of State filings, Hometown Internet is based in Ballance's home in Berryville. Ballance could not be reached for comment. State legislators raised questions about NATCO's reasoning for coming out publicly against Hometown Internet, a rival internet service provider. NATCO was a preliminary selection for $12.7 million to provide fiber service to 1,436 locations across northern Arkansas, just east of Hometown Internet's proposed service area under the BEAD buildout. "Certainly, we are disappointed that we didn't get an award for the grant area that we applied for. I think anybody would acknowledge that," NATCO General Manager Steven Sanders said in an interview. "We'd certainly have liked to have had some of the area awarded to us. But I think we have a big concern that the entity that's going to get it might not be able to follow through and be able to finish the projects, which will leave people unserved." Howie said he was not told about the committee meeting Monday. Lucas Dufalla is a Report for America Corps member. Financial support for this coverage came from the Community Journalism Project.
