According to several reports, the draft order would empower the Department of Justice to challenge state AI laws on constitutional grounds, including claims that they obstruct interstate commerce.

In parallel, the Commerce Department and Federal Communications Commission (FCC) would be tasked with reviewing where state rules conflict with federal priorities and advising on mechanisms to enforce national standards.

Crucially for the telecoms sector, the administration is said to be considering the use of federal broadband funding as leverage. States deemed to have “onerous” or “innovation-restricting” AI regulations could see access to federal support limited or withdrawn.

Such a move would directly affect regional fibre builders, rural broadband operators and the wider ecosystem of infrastructure players that rely on federal subsidies to complete high-cost deployments.

The proposal reflects the White House’s broader aim of preventing what it views as a patchwork of state regulations that complicate the rollout of emerging AI systems across cloud, telecoms and digital infrastructure.

States including California, Colorado and Illinois have advanced legislation targeting algorithmic transparency, deepfake misuse and AI safety audits, rules the administration believes could slow national deployment of AI-enabled services.

For carriers and large cloud operators, a single national framework could reduce compliance friction, particularly for networks that span multiple states. Operators deploying AI in network optimisation, fraud detection or customer service tools currently face a growing web of state requirements around data usage, model explainability and disclosure.

However, the plan is already meeting resistance. State lawmakers argue that AI risk varies by region and that local legislation is essential to protect citizens from deepfake-driven fraud, automated discrimination and data misuse. Legal scholars have also questioned whether an executive order can legitimately instruct the federal government to challenge duly enacted state laws at scale.

For the telecoms industry, the uncertainty creates yet another regulatory variable in an already volatile year. With the US racing to extend next-generation broadband and expand hyperscale capacity, any disruption to funding channels or compliance obligations could have tangible operational consequences.

The administration is expected to finalise the executive order in the coming weeks, setting the stage for what could become a major federal–state confrontation over the future of AI governance in the United States.

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