California says AT&T can't shut down copper DSL network

The California Public Utilities Commission (CPUC) ruled against AT&T's request to shutter portions of its copper DSL network in the state. The agency argued that AT&T's status as the state's "carrier of last resort" (COLR) obligates the company to maintain its aging copper network despite the fact that it's lightly used and expensive to maintain.

"The CPUC's rejection of AT&T's request underscores the critical importance of ensuring universal access to essential telecommunications services for all Californians," the agency wrote in its announcement. "As the designated COLR, AT&T plays a pivotal role in providing reliable telephone service to communities across the state. Despite AT&T's contention that providers of voice alternatives to landline service – such as VoIP or mobile wireless services – can fill the gap, the CPUC found AT&T did not meet the requirements for COLR withdrawal. Specifically, AT&T failed to demonstrate the availability of replacement providers willing and able to serve as COLR, nor did AT&T prove that alternative providers met the COLR definition."

However, the agency said it would open a new proceeding on the topic.

AT&T, for its part, is looking to sidestep the CPUC with state legislation that could allow it to withdraw from its COLR obligations. One new bill "modernizes regulations while introducing some new provisions that simultaneously take care of California's most vulnerable communities and ensure California remains a leader in innovation," Marc Blakeman, AT&T's top executive in California, wrote earlier this month.

It's not clear exactly how many customers might be left without service if AT&T were to shutter its copper network in the area.

The background

Blair Levin, a policy adviser to New Street Research and a former high-level FCC official, wrote earlier this month that the US government's $42.45 billion Broadband Equity Access and Deployment (BEAD) program ought to eventually resolve AT&T's copper troubles in California. The program is slated to funnel billions of dollars into the rural areas where carriers like AT&T want to shutter their copper networks.

However, he noted the BEAD allocation process remains sluggish, and in the meantime operators like AT&T will need to work with federal and state regulators on the issue.

"Expect to see AT&T and others ramping up policy advocacy on the topic," Levin wrote.

Indeed, AT&T CEO John Stankey recently wrote on social media that the operator shouldn't be required to maintain networks in areas where there are few customers. "It's time to do what capitalism is best suited to do: deploy capital and resources to their highest and best use for customers, communities, and society at large," he wrote.

Levin, the New Street adviser, noted that other states are taking similar stances as California. For example, he noted that regulators in Utah recently moved against CenturyLink's request to shutter its own copper network in the state.

But Levin also wrote that federal regulators at the FCC have taken a relatively soft approach to the topic by approving most of AT&T's requests to discontinue its copper operations.

AT&T, for its part, is in the midst of a massive fiber network buildout program that involves expanding fiber connections to around 30 million locations by 2025. However, according to the financial analysts at Evercore, AT&T serves about 60 million locations with copper, and the operator is working to turn off that aging copper network. Meaning, after everything is done in 2025, analysts estimate at least 15 million AT&T copper locations won't be offered a fiber replacement.

AT&T has promised to offer mobile services in some of those locations. Along those lines, AT&T is now selling a new product that's intended to provide voice calling services across both the operator's wireless network as well as a wired Internet connection.