Catalina Island Broadband grant of $37.5 million is at risk as Avalon City Hall fights AVX Networks and the CPUC considers killing the award.
Despite residents needing reliable fiber cables to bring Wi-Fi to Catalina Island, City Hall is now fighting the company that won a $37.5 million grant that could have ended the battle.
The island’s year-round population is about 4,000, and the state has treated Catalina as 100% unserved for true broadband. Even with a path to fix the Wi-Fi problem, the California Public Utilities Commission (CPUC) is considering a draft resolution on Thursday that would kill the $37.5 million grant and free the money for other projects.
When first trying to fix the problem, the island got undersea phone cables in 1923. However, they weren’t buried, so anchors ripped them up, and Catalina got pushed onto microwave links in the 1960s.
No modern fiber line ever replaced that setup.
Instead, big companies treated the island as too expensive to bother with, leaving residents stuck with Catalina Broadband Solutions cable in Avalon. But that shared bandwidth gets worse once tourist season hits and the island fills up.
While some have questioned the use of Starlink being an option for the island, project backers say Starlink won’t fix Catalina. They argue too many people are packed into Avalon, the hills block the dishes, and the service is too weak sending video the other way, which is needed for FaceTime, school, and the hospital.
For years, residents have voiced their concerns citing the same issues. Kids couldn’t even get audio during remote school, the hospital has been limited on telemedicine, and workers outside town keep hitting dead zones.
In December 2025, the CPUC awarded AVX Networks $37,571,833 from the Last-Mile Federal Funding Account for a project titled Digital Equity for Coastal and North Orange County and Catalina Island.
The plan was buried, redundant submarine fiber under the San Pedro Channel from Huntington Beach to Catalina, an open-access backbone so other internet providers could sell service on it, and a low-income plan at about $40 a month for 100/100 Mbps.
The commission is set to vote Thursday on a draft resolution that would pull that grant, and CPUC staff wants it terminated and have the money released for “future” grants.
Staff say AVX botched reimbursement paperwork, including a request for about $2.56 million, and broke federal spending rules. By May, staff told the company to stop spending. Staff also say none of the $37.5 million has actually been paid out.
AVX has not publicly answered those billing claims.
AVX, however, has said the delay sits with City Hall. At a June 25 City Council meeting, City Attorney Scott Campbell said AVX had filed letters at the Federal Communications Commission claiming Avalon blocked permits and interfered with the cable plan.
Campbell said the company also asked Washington to override local rules, arguing city obstruction wastes taxpayer money on a federally funded project.
Campbell told the council those claims were “inaccurate.” The council voted to rescind a May 22 letter to the FCC after a Brown Act problem and authorized Campbell to file a new response. Officials said they want to keep local control instead of letting the federal government override City Hall.
If commissioners decide to kill the grant on Thursday’s vote that money would then go back into a statewide broadband pot for other projects that have yet to be named. The move would notably have Catalina go back on the unserved list, still without the fiber line the grant was supposed to build.
