Last Updated on July 29, 2025 by Bertrand Clarke
In a bold move that has ignited a firestorm of debate, Verizon Communications, one of America’s largest telecommunications providers, is facing intense scrutiny from the California Public Utilities Commission (CPUC) over its decision to scale back its Diversity, Equity, and Inclusion (DEI) programs. This shift, part of Verizon’s strategy to secure Federal Communications Commission (FCC) approval for its $20 billion acquisition of Frontier Communications, has raised questions about the company’s compliance with California’s robust supplier diversity laws. As the July 30, 2025, deadline looms for Verizon to address these concerns, the controversy underscores broader tensions between federal and state regulatory priorities, corporate responsibility, and the future of equitable business practices in the telecom industry.
Background: Verizon’s DEI Rollback and the Frontier Deal
Verizon’s decision to revise its DEI policies stems from negotiations surrounding its proposed $20 billion acquisition of Frontier Communications, a major telecom provider in California and beyond. The deal, announced in early 2025, aims to expand Verizon’s fiber and fixed wireless networks, strengthening its competitive position against rivals like AT&T and T-Mobile. However, to gain FCC approval, Verizon agreed to eliminate certain DEI initiatives, a move that has drawn sharp criticism from California regulators. According to a letter sent to the FCC on May 15, 2025, Verizon stated it would no longer maintain quantitative workforce diversity goals or set specific targets for spending with diverse suppliers, opting instead for a broader focus on small business opportunities.
This policy shift was a direct response to FCC Chairman Brendan Carr’s ongoing campaign against corporate DEI programs, which he has labeled as potentially discriminatory. Carr’s influence has led other telecom giants, such as T-Mobile, to make similar concessions to secure regulatory approval for their mergers. Verizon’s revised approach, which emphasizes “increasing opportunities for small businesses” and selecting suppliers based on qualifications rather than diversity metrics, was intended to align with federal expectations. However, this pivot has put the company at odds with California’s stringent supplier diversity requirements under Public Utilities Code Section 8283 and General Order 156 (GO 156).
California’s Response: A Clash of Values
The CPUC, led by Assigned Commissioner John Reynolds, has expressed significant concerns about Verizon’s DEI rollback, arguing that it may violate California law. Section 8283 mandates that large telecommunications providers operating in the state submit annual plans detailing their efforts to engage with suppliers owned by women, minorities, disabled veterans, and LGBT individuals. GO 156 further reinforces these requirements, aiming to foster equitable procurement practices across the utility sector. In a strongly worded statement, Reynolds described Verizon’s responses to CPUC inquiries as “evasive” and “deficient,” accusing the company of downplaying the significance of its policy changes as merely a “different approach.”
Reynolds highlighted six specific instances where Verizon’s prior commitments to supplier diversity, made in GO 156 reports and other regulatory proceedings, appear to conflict with its recent statements to the FCC. For example, Verizon’s earlier reports emphasized quantitative goals for diverse supplier spending, which the company now plans to abandon. Reynolds warned that this shift could undermine California’s efforts to promote economic inclusion, particularly for marginalized communities. “Verizon’s characterization of these significant policy changes as maintaining ‘longstanding commitments’ raises major questions about the candor of the Joint Applicants,” Reynolds wrote, referring to Verizon and Frontier.
The CPUC has given Verizon until July 30, 2025, to provide a detailed response addressing these discrepancies. Failure to satisfy the commission could jeopardize state approval of the Frontier acquisition, potentially derailing a deal that Verizon views as critical to its growth strategy.
The Broader Context: DEI in the Telecom Industry
The controversy surrounding Verizon’s DEI rollback reflects broader tensions within the telecommunications industry, where federal and state regulators often pursue conflicting agendas. At the federal level, FCC Chairman Carr has intensified scrutiny of DEI programs, arguing that they may promote “invidious discrimination.” This stance has prompted companies like Verizon and T-Mobile to adjust their policies to expedite merger approvals. However, California’s progressive regulatory framework prioritizes diversity and inclusion, viewing them as essential to economic equity and social justice.
According to a 2024 report by the U.S. Equal Employment Opportunity Commission (EEOC), the telecommunications industry has historically lagged behind other sectors in workforce diversity, with only 15% of executive roles held by women and 12% by racial minorities. Supplier diversity programs, like those mandated by California’s GO 156, aim to address these disparities by ensuring that underrepresented groups have access to lucrative contracts. In 2023, California utilities collectively spent $12.4 billion with diverse suppliers, representing 38% of total procurement spending, according to CPUC data. Verizon’s decision to move away from quantitative diversity goals could reduce opportunities for these businesses, potentially impacting local economies.
Verizon’s Defense: A New Approach to Inclusion
Verizon has defended its revised DEI strategy, arguing that it remains committed to inclusion while adapting to evolving regulatory expectations. In its response to the CPUC, the company stated that it will “comply with GO 156 by focusing on increasing opportunities for small businesses, maintaining access to a wide pool of suppliers, and continuing to ensure procurement is based on selecting the most qualified suppliers.” Verizon emphasized that its new approach prioritizes merit-based selection while still promoting opportunities for underrepresented groups, albeit without specific diversity targets.
The company also highlighted its broader economic contributions, including its role in expanding broadband access. Verizon’s 2025 second-quarter earnings report noted that the company added 278,000 fixed wireless subscribers and 32,000 fiber customers, though these figures fell short of analyst expectations. CEO Hans Vestberg underscored the company’s investment in next-generation technologies, such as C-band spectrum deployment, which is expected to reach 80-90% coverage by year-end. These efforts, Verizon argues, demonstrate its commitment to serving diverse communities, even as it reevaluates its DEI framework.
Stakeholder Reactions: A Divided Landscape
The CPUC’s probe has sparked a range of reactions from industry analysts, advocacy groups, and policymakers. Blair Levin, a policy analyst at New Street Research, suggested that Verizon faces a delicate balancing act. “Verizon must figure out how to thread the needle between what Carr demanded and what California law requires,” Levin noted. He believes the CPUC is unlikely to outright block the Frontier deal but will push Verizon to clarify its DEI commitments to ensure compliance with state law.
Advocacy groups, such as the California Small Business Association, have expressed concern that Verizon’s shift away from diverse supplier goals could harm minority-owned businesses, which often rely on contracts with large corporations to grow. Conversely, some industry observers argue that Verizon’s focus on small businesses, regardless of ownership demographics, could broaden economic opportunities while avoiding potential legal challenges associated with race- or gender-based quotas.
Implications for the Future
The outcome of the CPUC’s inquiry could have far-reaching implications for Verizon, the telecom industry, and DEI policies nationwide. If the CPUC rejects the Frontier acquisition over DEI concerns, it could set a precedent for stricter state-level oversight of corporate mergers, potentially complicating future deals. Conversely, if Verizon successfully navigates California’s requirements, it may provide a blueprint for other companies seeking to balance federal and state expectations.
The controversy also highlights the challenges of implementing DEI programs in a politically polarized environment. While California’s supplier diversity mandates enjoy strong support among progressive lawmakers, critics argue that such policies can create bureaucratic hurdles and inadvertently exclude qualified suppliers. As the telecom industry continues to evolve, with increasing demand for fiber and 5G infrastructure, companies like Verizon will need to navigate these complexities while maintaining public trust.
Conclusion
As Verizon races to meet the CPUC’s July 30 deadline, the telecom giant finds itself at a crossroads. Its decision to overhaul its DEI programs has sparked a broader debate about corporate responsibility, regulatory oversight, and the role of diversity in shaping economic opportunity. With California’s robust supplier diversity laws at odds with federal pressures to scale back DEI initiatives, Verizon’s response in the coming days will likely shape not only the fate of its $20 billion Frontier deal but also the future of equitable business practices in the telecommunications industry. As stakeholders await clarity, the spotlight remains firmly on Verizon to demonstrate that innovation and inclusion can coexist in a rapidly changing regulatory landscape.
