A US federal judge has denied AT&T's request for a preliminary injunction that would have let it stop offering basic wireline phone service to new customers in California, dealing a setback to the company's efforts to exit the state's "Carrier of Last Resort" obligations. The ruling means AT&T must, for now, keep providing telephone service to any customer who requests it in its territory while the underlying lawsuit continues, a decision with significant implications for rural and low-income customers who rely on landlines.

AT&T sued California in May, arguing the state's rules are pre-empted by a Federal Communications Commission order permitting carriers to retire ageing copper networks. US District Judge Linda Lopez rejected the injunction request last week, finding AT&T had not shown it was likely to succeed on the merits. AT&T says it wants to disconnect roughly 184,000 residential and 15,000 business customers by June 2027 and claims it costs $1 billion annually to maintain its "century-old" network, but California's Attorney General and utilities regulator argue AT&T can meet its obligations using fibre rather than copper, and accused the company of using an "analog versus digital" argument to mask its real goal of shedding service obligations entirely. AT&T, which says it has already secured similar relief in 20 of its other 21 states, may still appeal to the 9th Circuit Court of Appeals.