AT&T Sues California Over State’s Refusal to Let It Shut Down Its Traditional Phone Service

AT&T is spending $1 billion a year to keep alive a telephone network that serves just 3% of households in its California territory. Now, the company has filed a federal lawsuit against state regulators, demanding the right to shut it down. The case pits one of America’s largest carriers against California, the only state still blocking this transition, and the outcome could reshape who decides the future of basic phone service. 

The lawsuit, filed May 21, 2026, in U.S. District Court for the Southern District of California, names the California Public Utilities Commission and Attorney General Rob Bonta as defendants. AT&T argues that California’s Carrier of Last Resort (COLR) obligation, which requires the company to offer traditional landline service to any customer who requests it, is no longer defensible. According to AT&T, the copper network hemorrhages resources while fewer and fewer people choose to use it. 

In its filing, AT&T stated that “the copper wires that once served every home now serve just 3% of households in AT&T’s California territory, with consumers fleeing every day to modern broadband services that are more affordable, reliable, and energy-efficient.” The company also cited roughly 2,000 copper theft-related outages in California this year alone as evidence the aging infrastructure has become a liability, setting up a collision between economics and public obligation. 

California Is the Last State Standing

AT&T operates wireline service in 21 states. It has already won relief from the Carrier of Last Resort obligation in 20 of them. California is the sole exception. The CPUC rejected AT&T’s earlier withdrawal application in June 2024, reaffirming what regulators called their commitment to safeguarding access to essential services. For AT&T, that decision was the starting gun for litigation. The company is now asking a federal court to declare California’s rules unenforceable. 

California regulators have not been passive in defending their position. The CPUC’s 2024 ruling made clear the state’s rules are technology-neutral, meaning AT&T could retire copper lines and replace them with fiber or other modern infrastructure while still meeting its obligation. The commission’s point: the COLR requirement does not mandate copper, only coverage. AT&T’s argument that regulation has trapped it with outdated technology, regulators contend, conflates the network with the service requirement. 

What the CPUC’s defense does not fully address is where AT&T actually plans to invest. The company has publicly told investors it will build fiber in the most profitable, densely populated areas, while roughly half of its California wireline territory would receive only wireless replacements. That strategy leaves rural and lower-income communities with a thinner alternative. Landline service, particularly in disaster-prone and remote parts of the state, has historically been the most reliable option when cell networks fail. 

A Federal Regulator Enters the Fight

AT&T is not relying on the lawsuit alone. Simultaneously, the company filed four separate petitions with the Federal Communications Commission, asking the agency to directly override California’s rules. Two petitions seek permission to cut copper service to approximately 184,000 residential customers and 15,000 business customers. The other two ask the FCC for forbearance and preemption orders that would strip California of its authority to enforce the COLR mandate and related program requirements. 

The FCC’s posture matters enormously here. Under Chairman Brendan Carr, the commission issued a Network Modernization Order in March 2026 that made it easier for carriers to abandon copper networks and signaled that state rules conflicting with federal discontinuance approvals could be preempted. AT&T’s lawsuit cites that order directly, arguing that California’s COLR rules “cannot stand” under basic federal preemption principles now that the FCC has authorized the phase-out of traditional phone service. 

Among the specific mandates AT&T wants the FCC to preempt is California’s Lifeline program participation requirement. The company still serves roughly 40,000 Lifeline subscribers in the state, a number that has already dropped sharply since a 2016 FCC order allowed AT&T to stop enrolling new Lifeline customers in most California counties. Eliminating the participation requirement would further reduce low-income residents’ access to subsidized phone service, adding another layer to the public interest debate at the center of this case. 

What Hangs in the Balance

AT&T frames the transition as a straightforward upgrade. The company says its wireless and VoIP offerings, including AT&T Phone-Advanced, are adequate replacements that the FCC has repeatedly recognized as equivalent to traditional landline service. It has pledged to invest $19 billion in California to expand fiber and broadband access to more than 4 million additional households and businesses by 2030, casting the lawsuit as a push for progress rather than a retreat from responsibility. 

Critics see the framing differently. Seniors, people with disabilities, rural residents, and those with medical devices that require a stable, power-independent line have repeatedly raised concerns before the CPUC about the reliability of wireless and VoIP alternatives during emergencies. California has wildfires, earthquakes, and dead zones in its rural interior. In these conditions, a cell tower knocked out by a storm or a VoIP service without battery backup is not a functional equivalent of a copper landline. 

The legal question before the court is whether federal authority over telecommunications has grown large enough to override a state’s judgment about what its most vulnerable residents need. But the practical question is simpler: when a private company’s cost calculations conflict with a public safety net, who decides when the net can be removed? AT&T has already won that argument in 20 states. California’s answer, for now, is that a court should not be the one making it.