Proposal from AT&T to stop landline services in California rejected

California Public Utilities Commission (CPUC) has rejected AT&T’s proposal to discontinue its landline (wireline) telephone services and relinquish its role as the “carrier of last resort.”

AT&T 5G business

This decision ensures that over 580,000 eligible households in the California state will continue to receive essential communication services from AT&T.

AT&T initially filed the request in March 2023, arguing that maintaining traditional landline services was no longer viable. However, the CPUC highlighted the critical role AT&T plays in providing reliable telephone service across California, Reuters news report said.

What are the potential impacts of CPUC approval of AT&T’s ETC de-designation request on customer bills?

For a household receiving federal Lifeline from AT&T, the bill could increase by $5.25 per month for voice-only service, or $9.25 per month for bundled or internet service. In addition to these amounts, a household on Tribal lands receiving federal Lifeline from AT&T could experience an additional $25 per month bill increase, CPUC website said.

CPUC Commissioner John Reynolds emphasized that the state’s regulations are designed to protect customers’ access to basic telephone services, regardless of their location, income, or access to other communication forms.

AT&T’s Wireline Business

Is the wireline business significant for AT&T. Here are the financial details of the wireline business of AT&T.

In its first-quarter 2024 financial results, AT&T reported a 7.8 percent decline in sales revenue from its Business Wireline segment, amounting to $4,913 million. The segment’s EBITDA margin stood at 29 percent, with an operating income of $64 million. This decline in Business Wireline segment was primarily attributed to reduced demand for legacy voice and data services, despite some offset from growth in connectivity services and non-recurring equipment revenues.

AT&T’s Consumer Wireline segment experienced a 3.4 percent increase in revenues, reaching $3,350 million in Q1 2024. This growth was largely driven by a 7.7 percent rise in broadband revenues to $2,722 million, particularly a 19.5 percent increase in fiber revenues, although this was partially offset by decreases in legacy voice and data services. The segment’s operating income was reported at $213 million.

In response to the CPUC’s decision, AT&T California President Marc Blakeman reiterated the company’s commitment to maintaining customer connections while collaborating with state leaders on transitioning to modern communications infrastructure. Marc Blakeman assured that no customer would be left without essential voice and 911 services during this transition.

The CPUC’s decision does not prevent AT&T from retiring copper facilities or investing in newer technologies such as fiber. The commission also announced the initiation of a new rulemaking proceeding to update its regulations in line with evolving market conditions and technological advancements.

AT&T highlighted its obligation to undergo a stringent review process by the Federal Communications Commission (FCC) to ensure that Californians retain access to reliable voice services. The company also pointed to proposed legislation aimed at safeguarding rural customers from service disruptions.

“We are fully committed to keeping our customers connected while we work with state leaders on policies that create a thoughtful transition that brings modern communications to all Californians,” AT&T stated.

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