Federal Judge Upholds California's Carrier of Last Resort Rules for AT&T

California can keep enforcing rules that require AT&T to offer basic phone service to new customers in its wireline territory, following a federal judge’s ruling last week.

AT&T sued California in May in a bid to end the state’s Carrier of Last Resort (COLR) rules that require it to offer telephone service to any potential customer in its territory. AT&T asked for a preliminary injunction that would prevent California from enforcing the COLR rules while the litigation continues.

To win a preliminary injunction, AT&T had to show it is likely to succeed on the merits of its claim that California rules are preempted by a Federal Communications Commission order. US District Judge Linda Lopez denied AT&T’s request for a preliminary injunction during a motion hearing on Thursday, according to a docket entry. The case is in US District Court for the Southern District of California.

AT&T wants to stop offering basic phone service to new customers and discontinue service for 184,000 residential customers and 15,000 business customers on June 1, 2027. AT&T said the injunction it requested would let it stop offering service to new customers immediately, and that it would preserve service for existing customers while litigation continues.

AT&T could appeal Lopez’s ruling to the 9th Circuit Court of Appeals and could appeal later if it loses the underlying case. But since it has not obtained the injunction it asked for, AT&T for now remains under California’s orders to keep offering phone service to potential customers while the case continues.

California suggests AT&T upgrade old lines to fiber

AT&T has said it has received relief from COLR obligations in 20 of the 21 states in its wireline service territory, all except California. AT&T alleges that “California requires AT&T to spend $1 billion each year to maintain a century-old telephone network that almost no one uses.”

AT&T wants to shut off the copper lines used for its Plain Old Telephone Service (POTS), but is not promising to replace those copper lines with fiber. In any area where AT&T determines it is not profitable enough to install modern phone lines, customers would have to rely on the cellular network for home phone service.

California insists that AT&T must keep offering basic phone service over either the old copper wires or a modern equivalent, such as fiber lines. Opposing the AT&T motion for an injunction, California Attorney General Rob Bonta and the California Public Utilities Commission (CPUC) said the FCC order allowing carriers to stop offering copper-wire service does not conflict with California rules.

“The FCC granted permission for carriers to grandfather services ‘provisioned over copper wire.’ Contrary to AT&T’s representations in the Motion, the COLR rules do not ‘conflict’ with the NMO [the FCC’s Network Modernization Order], because they do not require AT&T to continue offering copper-line POTS to new customers,” California said.

Calling the lawsuit a “facade,” state officials said AT&T can offer basic phone service over fiber:

All the COLR rules require is that AT&T offer basic service to its customers; in fact, AT&T already offers basic service through fiber connections instead of copper connections in some locations… AT&T is using its “analog versus digital” narrative as more palatable window dressing for the relief that it actually wants, namely, a release from its obligations as a COLR altogether. This attempt to manufacture a conflict between federal and state law where there isn’t one cannot succeed. The Court need not go any further.

AT&T claims “irreparable harm” from California rules

AT&T argued that the legal requirements for a preliminary injunction “are easily satisfied.” It said “the Federal Communications Act preempts any California laws or regulations that prevent AT&T from effectuating the grandfathering of POTS that the FCC has already authorized.” Without a preliminary injunction, “AT&T will suffer irreparable harm to both its business interests and its constitutional rights,” the carrier’s motion said.

AT&T also said that “the CPUC has made clear that it will not permit AT&T to substitute a feasible, superior alternative like mobile wireless or AT&T Phone-Advanced, a service that relies on AT&T’s mobile wireless network but allows customers to use existing, analog phones.”

California said its rules are “technology-neutral,” allowing AT&T to use wired, wireless, and/or VoIP service to fulfill its COLR obligations. While AT&T says its wireless AT&T Phone-Advanced (AP-A) is a suitable replacement for copper, California said that “AT&T has never formally sought to substitute POTS with AP-A.”

AT&T “does not want to meet its COLR obligations through AP-A; it seeks relief from meeting them at all,” California said. “That is why AT&T does not claim in this lawsuit, either, that it will offer basic service through AP-A (or any other service) instead.”

AT&T doesn’t promise that AP-A will meet state requirements for basic service, California said. Those state requirements include flat-rate options for unlimited voice calls, discounted Lifeline rates for eligible low-income customers, and telephone relay service for the deaf and hard of hearing, California said.

AT&T seeking more help from FCC

The FCC grandfathering order that AT&T cited in its lawsuit applied industry-wide, not specifically to AT&T. But AT&T also asked the FCC for an order specifically preempting California’s COLR mandates and related requirements, such as tariffing and Lifeline participation rules.

California told the FCC that AT&T is lying when it claims that state rules prevent it from replacing copper with fiber. The Utility Reform Network, an advocacy group in California, told the FCC that AT&T’s wireless home phone service is “an ill-suited replacement for existing legacy infrastructure.”

The advocacy group said that “while AP-A has been approved in other states, none of those states have a remotely similar topographical range or extreme weather events to California. This necessarily means that those residents who live on mountains, in valleys, or other heavily forested areas will likely not have access to a reliable cellular signal.” Power outages from wildfires and earthquakes may last for days or weeks, but AP-A comes with only a 24-hour backup battery, the group said.

In addition to seeking a preemption order, AT&T asked the FCC for permission to discontinue copper-based service to 184,000 residential customers and 15,000 business customers on June 1, 2027. Those petitions were granted automatically after a comment period, but the FCC has not yet acted on AT&T’s request to preempt California rules. Even if the FCC grants AT&T’s petition to preempt state rules, California could challenge such an order in court.