Trump Administration Pressures California to Abandon Net Neutrality Protections for Broadband Grants

The state of California stands at a crossroads as it prepares to accept $1.86 billion in federal broadband grant funds while the Trump administration demands that it surrender enforcement of net neutrality protections against any Internet service provider receiving a portion of the money.

When the Trump administration restructured the $42 billion Broadband Equity, Access, and Deployment (BEAD) program last year, it imposed a requirement that participating states must pledge not to enforce rate regulation or net neutrality rules on ISPs that obtain funding. This requirement presents a particular challenge for California, which successfully defended its state net neutrality law through years of litigation.

California's net neutrality law, modeled on federal rules that were eliminated during the first Trump administration, prevents ISPs from blocking or throttling lawful content and prohibits them from charging websites or online services for preferential treatment or delivery to users. While the previous Trump administration failed to overturn state net neutrality laws through preemption, the current administration is attempting to achieve the same outcome by tying federal broadband funding to state compliance.

The National Telecommunications and Information Administration (NTIA), which oversees BEAD, has mandated that states participating in the program must exempt ISPs from net neutrality rules and price regulations across their entire service territory, not merely in areas where they deploy broadband using federal funds. This exemption from state enforcement would remain in effect for as long as 14 years.

Under the BEAD structure, each state and territory receives an allocation to distribute to ISPs in exchange for broadband deployment to unserved and underserved communities. According to the BEAD progress dashboard maintained by the NTIA, California and Illinois remain the only states that have not finalized their funding agreements. The California Public Utilities Commission (CPUC) is scheduled to vote tomorrow on a resolution to ratify the state's final BEAD plan.

Vote is "beginning of the end"

California theoretically could continue enforcing its net neutrality law while accepting the federal funds, though doing so would require another protracted court battle to establish its regulatory authority. The Trump administration's requirement that states commit not to enforce net neutrality rules would make this path exceptionally challenging.

A CPUC spokesperson characterized tomorrow's vote as a "procedural requirement" to ratify the state proposal submitted to federal authorities in December 2025. However, nearly 30 technology access advocacy organizations are treating the vote as a pivotal decision and have urged state officials to preserve California's net neutrality protections in a letter sent yesterday.

Paul Goodman, legal counsel at the Center for Accessible Technology and a letter signer, told Ars in an interview that tomorrow's CPUC vote carries far greater significance than a mere procedural step.

It's the beginning of the end

Paul Goodman, Center for Accessible Technology

Goodman explained that mounting a successful court challenge would become substantially more difficult once the state accepts the money. He recommended that the CPUC postpone the vote and that California file suit contending that the NTIA-imposed condition violates federal law.

Beyond net neutrality, Goodman cautioned that California may forfeit additional regulatory authority over carriers including AT&T and Verizon, since the NTIA requirement prohibits rate regulation and "utility-style rules on broadband Internet service" more broadly.

US forbids enforcement anywhere in the state

The advocacy groups directed their letter to Governor Gavin Newsom, Attorney General Rob Bonta, CPUC President John Reynolds, and the other CPUC commissioners.

While our organizations recognize the significance of BEAD funding—and the role it will play in advancing critical broadband infrastructure buildout across the State—we strongly stand against allowing for the presumption of preemption of the State's net neutrality laws in order to accept BEAD funds

advocacy groups in letter to California state leaders

The NTIA justified the statewide exemption by arguing that "applying net neutrality and rate regulation at non-BEAD locations could raise compliance costs and threaten the overall financial viability of the Subgrantee, increasing the risk of default for the Subgrantee at BEAD locations and jeopardizing the success of the entire BEAD program."

According to Goodman, the duration of the exemption stems from the grant timeline: ISPs would have four years to deploy required broadband networks, followed by an extended performance period lasting another 10 years.

Groups: Accepting US terms would set dangerous precedent

The letter to state officials warned that California's acceptance of BEAD money under these conditions "would set a dangerous precedent for the federal government to use federal funding as a cudgel that forces states in line with its agenda… If California were to allow this funding to be used as leverage, there is no telling what other resources the administration would confidently seek to exploit."

The organizations called on California leaders to "defend the hard-won protections that have brought us this far" and committed to "support California leadership in defending our state's values and the progress it has made on closing the digital divide."

Goodman raised concerns that upon receiving BEAD funds, AT&T could inform California that it cannot regulate pricing for AT&T's copper landline phone service or mandate that AT&T serve all customers seeking phone service. AT&T is currently attempting to reduce its state obligations regarding basic phone service in California.

The BEAD funding could also undermine a merger condition requiring Verizon to provide $20-per-month broadband service to low-income Californians. Goodman noted that the financial benefits to low-income residents from these mandated Verizon plans would substantially exceed the BEAD allocation California is scheduled to receive.

Of the $1.86 billion in BEAD funds allocated to California, approximately $1.4 billion is designated for broadband deployment to 270,571 locations.

Law professor: US is overriding Congress' intent

The NTIA-mandated exemption from state laws would apply nationwide to any ISP receiving BEAD funding, including SpaceX's Starlink satellite service.

Stanford Law professor Barbara van Schewick noted that "roughly 69 percent of California's BEAD funding flows to five large, national providers: Comcast ($400 million), AT&T ($331 million), Verizon/Frontier ($173 million), Amazon's Kuiper satellite service ($55 million), and SpaceX's Starlink ($22 million)."

Van Schewick identified another casualty of the BEAD restriction: a 2019 California law prohibiting mobile providers from throttling first responders during emergencies. That law was enacted following an incident in which Verizon throttled an "unlimited" data plan used by Santa Clara County firefighters during a wildfire.

"Those protections exist for a reason: left to their own devices, Internet providers have put profits over public safety before. California is now being asked to sign away those protections for fourteen years," van Schewick wrote.

Van Schewick argued that California would have a strong legal position because the federal BEAD statute requires funded providers to comply with state and local laws. "A federal agency can't use fine print in a grant to override what Congress wrote into the statute," she stated, urging Newsom to "refuse to sign away California's net neutrality, affordability, and public-safety protections and go to court to get the money the way Congress intended: with every state protection intact."

State agency: Vote is "procedural"

In a statement to Ars, a CPUC spokesperson described the resolution scheduled for tomorrow's vote as a "procedural requirement to ratify the Dec. 19, 2025 CPUC draft California Final Proposal submitted to the Federal Government." The NTIA approved the plan on July 17, 2026, following multiple revision cycles.

"The Resolution adopts the now-approved California Final Proposal only. It does not address subgrantee agreements, or the conditions the NTIA requires be included in subgrantee agreements," the CPUC stated.

The BEAD statute, enacted by Congress and signed by President Biden in 2021, requires ISPs receiving grants to provide "low-cost" plans to low-income households, but the Trump administration has instructed states that they cannot regulate the pricing of these plans. This means ISPs retain discretion over the cost of the mandated low-cost broadband offerings.

Last year, California Assemblymember Tasha Boerner introduced legislation requiring ISPs to offer $15 broadband plans to low-income residents. She withdrew the proposal after Trump administration officials cautioned that rate-setting would jeopardize the state's access to broadband grants.

Suing US would be "enormously" difficult

Goodman explained that once California accepts the money, the state attorney general could only challenge the Trump administration's requirements in the US Court of Appeals for the District of Columbia Circuit. The DC Circuit "can really only review that decision for basically fraud or corruption, which is a really high bar to prove," he said.

If California initiates legal action before finalizing the agreement with the Trump administration, the state could file suit in the Ninth Circuit Court of Appeals, which Goodman characterized as more favorable to such claims.

Right now, the California AG could sue saying, 'Hey, these general terms… are illegal. You can't require us to do that.' [The state] could sue here in California and the Ninth Circuit has a sort of favorable view of that claim, so [the state would have a] pretty good view of success

Paul Goodman

Goodman characterized litigation in the DC Circuit as "a much, much harder push. Not impossible, but enormously more difficult." He noted that the CPUC has a deadline at the end of this month to sign the NTIA agreement, but the state "can get a 30-day extension and then challenge the case in court."

On the East Coast, New York faces a similar predicament with its affordable broadband law requiring ISPs to offer $15- or $20-per-month service to low-income customers. New York successfully defended the law in court against broadband industry opposition less than two years ago but has agreed to accept $664.6 million in BEAD funding from the Trump administration.

New York Governor Kathy Hochul stated in an April 2026 press release that closing the digital divide requires "bringing broadband to every household in the state and ensuring that it remains affordable when it gets there. New York is showing the rest of the nation that both are possible through its landmark Affordable Broadband Act and commitment to reaching the final 1 percent of unserved or underserved households."

With New York having accepted the BEAD funding, the state may lack the ability to enforce the Affordable Broadband Act on ISPs receiving grants.