The city council in Wilson, North Carolina, has reluctantly voted to turn off the fiber Internet service it provides to a nearby town because of a court ruling that prevents expansion of municipal broadband services.

The Federal Communications Commission in February 2015 voted to block laws in North Carolina and Tennessee that prevent municipal broadband providers from expanding outside their territories. After that vote, Wilson's Greenlight fiber Internet service expanded to the nearby town of Pinetops.

But the states of North Carolina and Tennessee sued the FCC to keep their anti-municipal broadband laws in place, and last month they won a federal appeals court ruling that reinstated the law that prevents Wilson from offering Internet service to nearby municipalities. At last night's city council meeting, Wilson decided not to appeal the court decision and voted to terminate the service agreement with the town of Pinetops, Wilson's city spokesperson, Rebecca Agner, told Ars today.

About 200 home Internet customers in Pinetops will thus lose their Internet service on October 28, Agner said. The nearby Vick Family Farms that employs about 250 people will also lose its service, she said.

"We must comply with our state law," Agner said. But city council members were very vocal in their opposition to the law and regret having to disconnect the service, she said.

"We have not identified a solution where Greenlight can serve customers outside of our county," Wilson City Manager Grant Goings told The Wilson Times earlier this week before the city council vote. “While we are very passionate about reaching underserved areas and we think the laws are atrocious to prevent people from having service, we’re not going to jeopardize our ability to serve Wilson residents.”

Greenlight's fiber network provides speeds of 40Mbps to 1Gbps at prices ranging from $40 to $100 a month. (Ars profiled Greenlight in a story in 2014.) The provider had more than 7,000 customers before expanding to Pinetops.

Wilson already had fiber in Pinetops, which has been an electric customer of Wilson's for more than 40 years. Before deploying Internet access to Pinetops, Wilson was laying fiber in the town to support smart grid initiatives. After the FCC voted to let city Internet services expand outside their boundaries, Wilson extended the fiber network to pass the roughly 700 homes in Pinetops, Agner said. Prior to this, Pinetops residents' only option was CenturyLink DSL, she said.

There are laws in about 20 states that restrict municipal broadband, benefiting private ISPs that often donate heavily to state legislators.

"Pinetops had first requested Greenlight service in 2010, but state legislation passed in 2011 limited Greenlight’s service territory to the Wilson County limits," Wilson said when it announced the expansion late last year. "After the Federal Communications Commission’s ruling in February 2015 permitting service beyond Wilson County, talks resumed between the two parties and agreement was reached in December 2015."

“Current providers haven’t made significant upgrades to our broadband service through the years,” Pinetops Interim Town Manager Brenda Harrell said in that announcement. "They haven’t found us worth the investment." Pinetops has 1,358 residents.

Though the fiber will still be used for electric operations and may support smart meters at customer homes in the future, it's a wasted opportunity. "That is like building a new highway and telling people they can’t drive on it," Goings said in the Wilson Times article.

The Vick Family Farms predicament was described in a recent New York Times article. The business has used Greenlight's faster Internet to support a high-tech packing plant that automatically sorts sweet potatoes by size and quality, with each spud tagged with its own bar code. “We’re very worried because there is no way we could run this equipment on the Internet service we used to have, and we can’t imagine the loss we’ll have to the business,” farm sales head Charlotte Vick said.

The Times also profiled a residential customer in Pinetops who works from home and takes online classes. The customer may move to Wilson in order to keep the broadband service.