The Federal Communications Commission has decided not to appeal a court decision that allows states to impose laws restricting the growth of municipal broadband.

The FCC in February 2015 voted to block laws in North Carolina and Tennessee that prevent municipal broadband providers from expanding outside their territories, but the states convinced a federal appeals court to keep the laws in place. The FCC could have asked for another appeals court review or gone to the Supreme Court but will instead let the matter drop.

"The FCC will not seek further review of the [US Court of Appeals for the] Sixth Circuit's decision on municipal broadband after determining that doing so would not be the best use of Commission resources," an FCC spokesperson told Ars today. The decision was also reported yesterday in The New York Times.

The cities that were seeking to expand municipal broadband networks—Chattanooga, Tennessee and Wilson, North Carolina—were also involved in the case. The cities have not yet said whether they will appeal.

The FCC relied on a novel legal argument in the case. Congress authorizes the FCC to promote competition in local telecommunications markets and to remove barriers that prevent infrastructure investment, and the FCC said that this authority allows it to preempt the state laws. But Congress never specifically authorized the FCC to preempt state laws, a fact that judges cited in overturning the FCC decision.

About 20 states impose limits on the rights of cities and towns to compete against private Internet service providers. Those laws face no immediate threat as a result of the FCC's court loss, but FCC Chairman Tom Wheeler may not be finished in his attempt to promote municipal broadband. He previously said the commission would consider both legal and policy options in response to the court ruling.