In summary
California accepted $1.4 billion in federal broadband funding while saying it will stand behind state net neutrality laws the program forbids.
The state of California has agreed to accept $1.4 billion in federal funding to bring broadband internet access to 270,000 people while simultaneously challenging conditions attached to the funding.
Those conditions would stop the state from enforcing broadband laws that reduce costs and guarantee equal access for internet destinations.
California is the last state to accept money from a broadband program created in 2021 as part of an infrastructure bill passed during the Biden administration.
Under terms updated by the Trump administration one year ago, states that accept funding from the Broadband, Equity, Access, and Deployment program must stop enforcing net neutrality rules, which ensure equal connection speeds for every app and website, as well as any rules that influence broadband internet costs. California enjoys the strongest net neutrality laws in the nation.
In recent weeks, digital access advocates argued that if the state accepts the money without meaningfully challenging the terms, it could endanger communities reliant on internet access for emergency services and raise costs for low-income Californians who receive internet subsidies. Through 2040, accepting the terms could cost Californians up to $16 billion, according to an estimate from open internet advocacy group Public Knowledge.
Gov. Gavin Newsom’s office said it is both taking the federal money and maintaining its access rules. In a written statement shared with CalMatters, Anthony Martinez, a spokesperson for the governor, said that “Connecting these communities is the goal, and so is protecting them. California’s laws, including our net neutrality protections, still stand.”
The president of the California Public Utilizes Commission, the agency chosen by Newsom to administer the program, provided the federal agency that administers the program with both a signed notice that California will accept the funding and a letter that calls the terms vague and outside of the commission’s legal authority. The letter sent Monday also acknowledges that the state will not distribute program funding to companies like Comcast, Pacific Bell, SpaceX, and Verizon until disagreements about the terms are resolved.
“The CPUC cannot be bound by any terms or conditions that are unconstitutional or not authorized by law and it expressly does not waive or concede any arguments or challenges concerning the legality, interpretation, or applicability of any term or condition,” wrote CPUC president John Reynolds in the letter.
Stephen Yusko, a spokesperson for the National Telecommunications and Information Administration within the Department of Commerce, responded to the letter today by saying that the terms and conditions of the award constitute the entire agreement between his agency and the utilities commission.
“No part of the letter outlining CPUC’s concerns is incorporated into or made part of the award,” he said in a statement provided to CalMatters.
Last month a group of law professors who work on issues related to internet freedom and access urged the utilities commission and governor’s office not to accept the money without challenging the terms in court. Stanford University professor Barbara van Schewick told CalMatters that “only a court, or NTIA agreeing in writing, can take [the access terms] out of California’s award, and neither has happened.”
But she said she’s happy to see the letter makes clear that the state will not sign agreements with companies getting the federal broadband funding until the utilities commission and federal government resolve their disagreement over the terms. It also preserves a strong legal argument that the utilities commission lacks the authority to prevent other state entities from enforcing the 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 told CalMatters. “If the state enforces its laws when that happens, the letter will have protected Californians.”
She added: “If the state looks the other way, [the terms] will have worked exactly as the providers intended, without a single court ever ruling on it.”
Phil Grosse is a member of the California Democratic Party Rural Caucus. In recent weeks Grosse and dozens of community leaders along the Russian River in Sonoma County urged the governor to challenge the broadband funding terms in court before accepting the money. He believes the terms would end phone service guarantees and backup battery power for cellular towers, endangering the lives of rural Californians.
“We can’t accept the money without all kinds of poisoned pills attached to it, and I’m glad the CPUC acknowledged that, and that they are bound to follow state laws and regulations,” he said, adding that he anticipates the whole ordeal will end up in court. “I’m hopeful the Trump administration will see the wisdom in the CPUC’s letter but I’m rather doubtful.”
