California has agreed to accept $1.4 billion in federal broadband funding meant to connect roughly 270,000 residents to high-speed internet — but state officials are refusing to go along with federal strings attached to the money that would gut California’s consumer protection and net neutrality laws.
The state is the last in the nation to sign on to the Broadband, Equity, Access, and Deployment program, a $42 billion initiative created under the 2021 infrastructure law signed during the Biden administration. But the rules governing that money changed dramatically under President Trump. New terms issued a year ago require any state accepting the funds to abandon enforcement of net neutrality protections — which require internet providers to treat all websites and apps equally — along with any regulations that affect broadband pricing. California has some of the toughest net neutrality laws in the country, and consumer advocates warn that walking away from them could be costly.
Digital rights groups have spent recent weeks sounding the alarm, arguing that giving in to the federal conditions without a fight could jeopardize internet access for emergency responders and drive up costs for low-income residents who depend on subsidized internet service. Public Knowledge, a nonprofit focused on open internet policy, estimates the financial hit to Californians could reach $16 billion by 2040 if the state fully complies with the new terms.
Gov. Gavin Newsom’s administration insists it can have it both ways — taking the federal dollars while keeping state protections intact. “Connecting these communities is the goal, and so is protecting them,” said Anthony Martinez, a spokesperson for the governor. “California’s laws, including our net neutrality protections, still stand.”
To thread that needle, the California Public Utilities Commission — the agency Newsom tapped to oversee the broadband rollout — submitted a signed notice accepting the funding, paired with a sharply worded letter pushing back on the federal conditions. In the letter, sent Monday to federal regulators, CPUC President John Reynolds argued the terms are vague and exceed the commission’s legal authority. The letter also states that California will withhold funding from telecom companies such as Comcast, Pacific Bell, SpaceX and Verizon until the dispute over the conditions is resolved.
“The CPUC cannot be bound by any terms or conditions that are unconstitutional or not authorized by law,” Reynolds wrote, adding that the commission is not waiving any future legal challenges to the requirements.
Federal officials were quick to respond. Stephen Yusko, a spokesperson for the National Telecommunications and Information Administration, said the terms and conditions of the award represent the full and complete agreement between his agency and the state. “No part of the letter outlining CPUC’s concerns is incorporated into or made part of the award,” he said in a statement to CalMatters.
The standoff follows weeks of pressure from legal scholars and advocacy groups. Last month, a coalition of law professors focused on internet policy sent a letter urging the governor’s office and the utilities commission to challenge the funding terms in court rather than simply accept them. Stanford University law professor Barbara van Schewick told CalMatters that only a judge — or written agreement from federal regulators — can actually strip the objectionable conditions from California’s award, and neither has happened yet.
Still, van Schewick said she was encouraged that the state’s letter makes clear California won’t finalize agreements with broadband providers until the dispute is settled, and that it preserves the state’s argument that the CPUC has no authority to stop other parts of state government from enforcing California law.
“The real test comes the first time a BEAD provider blocks a competitor’s app, throttles firefighters, or walks away from a price commitment,” she said. “If the state enforces its laws when that happens, the letter will have protected Californians.” But if state leaders look the other way, she warned, “the terms will have worked exactly as the providers intended, without a single court ever ruling on it.”
The fight has resonated beyond Sacramento policy circles. Phil Grosse, a member of the California Democratic Party’s Rural Caucus, has spent weeks rallying community leaders along the Russian River in Sonoma County to push the governor toward a court challenge before any money changes hands. Grosse fears the federal terms could unravel long-standing phone service guarantees and requirements for backup battery power at cell towers — protections he says are a matter of life and death in rural, fire-prone parts of the state.
“We can’t accept the money without all kinds of poison pills attached to it, and I’m glad the CPUC acknowledged that, and that they are bound to follow state laws and regulations,” Grosse said. He expects the disagreement will ultimately land in court. “I’m hopeful the Trump administration will see the wisdom in the CPUC’s letter,” he added, “but I’m rather doubtful.”
Original source: CalMatters
