The Federal Communications Commission's plan to let cities build their own broadband networks hit a major roadblock today, as a federal appellate court ruled that the commission was overstepping its authority. The United States Court of Appeals for the Sixth Circuit said today that the FCC is not able to, essentially, remove state laws that prevent the construction of municipal broadband networks, as it attempted to do in Wilson, North Carolina and Chattanooga, Tennessee last year.

Both Wilson and Chattanooga had petitioned the FCC for permission to build out their own broadband networks — a measure some cities are turning to in order to increase competition among internet providers, who often hold regional monopolies and more or less refuse to compete. State laws, however, prevented them from doing so; that's the case in 19 states in total, all of which could have been affected by future FCC orders had the court ruled in its favor.

"We continue to review the decision."

The FCC had argued it had the power to preempt state law when it comes to "remov[ing] barriers to broadband investment and competition," as is directed in the Telecommunications Act of 1996. However, the commission is not explicitly granted permission to overrule the states like this. And while government agencies are generally given deference to interpret their own powers where a law has left them unclear, the court determined that isn't the case in this situation. That's because it would be going so far as to overrule a state law, and that, the court said, requires an agency's power to be clearly stated in federal law.

The ruling does not bode well for the FCC's municipal broadband plans. The commission could ask the full court to hear the case, but three judges have already ruled against it. It could also try appealing up to the Supreme Court, where it risks facing a court with an empty seat. The commission has not yet indicated what its next steps are, but it sounds generally defeated by today's decision.

Internet providers will be thrilled with this ruling

"While we continue to review the decision, it appears to halt the promise of jobs, investment and opportunity that community broadband has provided in Tennessee and North Carolina," commission chairman Tom Wheeler says in a statement. Wheeler goes on to say that the FCC will "consider all our legal and policy options to remove barriers to broadband deployment" and that he would be happy to testify in cases to repeal "anti-competitive broadband statutes."

More than anyone, the ruling is a win for existing internet providers, who can stop worrying for a bit about increased competition. Or as one former FCC commissioner puts it, "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," says Michael Copps, who's now an advisor for the nonprofit watchdog group Common Cause. He goes on to say, "This decision does not benefit our broadband nation."