A federal appeals court on Wednesday struck down the Federal Communications Commission's (FCC) effort to expand municipal broadband.

Reuters described the decision as "a win for private-sector providers of broadband internet and a setback for FCC Chairman Tom Wheeler."

"These corporate providers invest in campaign contributions rather than in deploying high-quality broadband."

- Michael Copps, Common CauseFor his part, Wheeler, who had promoted the policy, said the decision "appears to halt the promise of jobs, investment, and opportunity that community broadband has provided in Tennessee and North Carolina," adding, "The efforts of communities wanting better broadband should not be thwarted by the political power of those who, by protecting their monopoly, have failed to deliver acceptable service at an acceptable price."

In Feb 2015, the FCC passed rules to preempt state limits on municipal broadband rules in North Carolina and Tennessee. That move was praised as "a watershed moment that will serve as a check against the worst abuses of the cable monopoly for decades to come."

But on Wednesday, "A three-judge panel from the U.S. Court of Appeals for the Sixth Circuit rejected the FCC's justification of its authority and struck down the agency's action," as The Hill reports.

ArsTechnica adds:

About 20 states have laws restricting the rights of cities and towns to compete against private Internet service providers. Municipal ISPs in Tennessee and North Carolina wanted to expand outside their territories but were blocked from doing so by state laws, and thus asked the FCC to preempt the statutes. If the FCC had won, cities and towns in other states could have followed suit and asked the FCC to overturn restrictive laws throughout the nation.

Open internet advocacy group Free Press also previously noted: "Companies like AT&T, with the help of the American Legislative Exchange Council (ALEC), have pushed through legislation blocking municipal broadband."

And last year at The New Yorker, Vauhini Vara outlined why the service is so essential:

Some of the areas around Chattanooga and Wilson don't have broadband Internet access at all, or else it exists only at low speeds; parents report driving their children to local churches or to McDonald's so they can get online and finish homework assignments. Such efforts, proponents argue, demonstrate that, although the Internet may once have been a luxury, these days it's a form of infrastructure, not dissimilar to water pipes or roads—and that towns lacking reliable access to it risk falling behind.

Former FCC Commissioner Michael Copps, now an advisor for advocacy group Common Cause, said the decision harms the public interest. "Let's be clear: industry-backed state laws to block municipal broadband only exist because pliant legislators are listening to their Big Cable and Big Telecom paymasters," he said in a statement. "These corporate providers invest in campaign contributions rather than in deploying high-quality broadband."

"This decision does not benefit our broadband nation," Copps' statement continued. "Nor is it a good reading of the law. But if the FCC cannot set aside these bad laws, then the people must. We will redouble our state-by-state efforts to repeal these odious policies."