Federal approval, state authority and the future of California landlines

California's battle with AT&T over the future of traditional telephone service has evolved into a classic federalism dispute. At issue is whether the Federal Communications Commission's approval of AT&T's plan to discontinue copper-based landline service would preempt California's authority to require the company to continue offering basic telephone service to residents who still rely on it.

The stakes are significant. AT&T informed federal regulators that it intends to discontinue legacy copper-based voice service affecting approximately 184,000 residential customers in California. Supporters of the transition argue that maintaining an increasingly obsolete network diverts investment from modern fiber and wireless infrastructure. Opponents, including members of California's congressional delegation, the California Public Utilities Commission (CPUC), and consumer advocates, contend that landlines remain important during wildfires, power outages and other emergencies.

The legal question, however, is not whether landlines continue to serve an important public purpose. It is whether federal law leaves room for California to require landlines' continued availability once the FCC has authorized their retirement.

The regulatory landscape

The Communications Act generally requires telecommunications carriers and interconnected VoIP providers to obtain FCC approval before discontinuing telecommunications or interconnected VoIP services. In June 2026, the FCC approved AT&T's applications to discontinue copper-based plain old telephone service (POTS) in California.

That approval did not immediately free AT&T from California regulation. The company has separate applications pending before the FCC seeking relief from California's carrier-of-last-resort (COLR) obligations and a determination that those requirements are preempted by federal law. AT&T is also pursuing similar relief in federal district court in California.

The dispute arises against the backdrop of the FCC's March 2026 Network Modernization Order, which sought to accelerate retirement of legacy networks and indicated that state requirements compelling carriers to continue offering certain services may be preempted. AT&T relies heavily on that order in both its regulatory filings and its litigation.

CPUC's position

The CPUC's argument rests on two related propositions. First, the agency contends that its COLR requirements ensure universal access to basic telephone service and therefore serve an important public-interest function. Second, the CPUC argues that Congress preserved substantial state authority over intrastate telecommunications services, including the authority to require designated carriers to provide basic service within their service territories.

The CPUC maintains that its rules are technology-neutral. In their view, AT&T remains free to retire copper facilities and deploy newer technologies, but it cannot discontinue its obligation to provide basic telephone service to customers who still depend on it.

Accordingly, the CPUC argues that FCC approval of AT&T's discontinuance application would not automatically eliminate state authority to impose independent service obligations on AT&T.

AT&T's preemption argument

AT&T views the dispute differently. It argues that the Communications Act establishes an exclusively federal framework for discontinuance decisions involving interstate and jurisdictionally mixed services. Relying on Section 214 and the FCC's Network Modernization Order, AT&T contends that California cannot require additional state approval before the company exercises authority granted by the FCC. AT&T also notes that California is the only one of 21 states where it has sought relief from COLR obligations that has not granted it.

The company advances three related preemption theories. First, it argues that Section 214 expressly preempts state requirements that interfere with FCC-authorized discontinuances. Second, it invokes the doctrine referred to as the "impossibility exception," arguing that modern voice services are delivered over integrated networks whose interstate and intrastate components cannot practically be separated. Third, it contends that California's COLR rules stand as an obstacle to the FCC's stated objective of accelerating network modernization and redirecting investment toward next-generation networks. AT&T alleges that the COLR rules require the company to spend $1 billion annually in California maintaining a network that few customers use, even as it invests heavily in fiber and 5G deployment. These arguments draw support from established telecommunications preemption principles.

The central question

The dispute reflects a longstanding tension within communications law. Congress preserved a significant role for state regulators in overseeing intrastate telecommunications services while recognizing that many modern communications services operate over integrated networks carrying both interstate and intrastate traffic. In some circumstances, courts and the FCC have concluded that federal law may preempt state requirements affecting jurisdictionally mixed services, even though states retain authority over purely intrastate communications. Although the FCC has already approved AT&T's discontinuance applications, the CPUC can credibly argue that those approvals alone do not automatically displace state regulatory authority or eliminate independent COLR obligations. If, however, the FCC ultimately determines in the separate pending proceedings that the CPUC's requirements conflict with federal law or federal policy, AT&T will have a substantially stronger basis for arguing that those requirements are preempted.

The key question is whether California's rules impose an independent intrastate obligation or whether they effectively negate the FCC's decision by requiring AT&T to maintain networks that federal regulators have authorized it to retire.

Looking ahead

The controversy illustrates a broader national debate over the transition from legacy communications infrastructure to next-generation networks. Federal policymakers increasingly view copper retirement as essential to network modernization, while eliminating legacy obligations associated with such network facilities. California regulators remain focused on universal service and public safety interests regardless of the type of network at issue.

Ultimately, the dispute is likely to lead to an important ruling on the limits of state and federal authority in an era of converged communications networks. The outcome may depend not only on how the FCC resolves AT&T's pending applications but also on how courts further define the boundary between federal and state authority under the Communications Act. On July 16, the federal district court denied AT&T's request for a preliminary injunction that would have barred California from enforcing its COLR requirements during the litigation. AT&T therefore remains subject to those requirements while the case proceeds, though the court has not yet resolved the parties' preemption claims on the merits.

For now, the answer remains unsettled. But one thing is clear: the fight is about far more than copper wires. It is a test of where federal authority ends and state authority begins in the regulation of essential communications infrastructure.