Tom Wheeler, the chairman of the Federal Communications Commission, seemed fired up on Thursday morning when he took his seat in room TW-C305 at F.C.C. headquarters. For months, anticipation had been building for the commission’s decision, planned for later that morning, on the fight over net neutrality—that is, whether Internet providers should be able to charge Web companies to get their content delivered to customers at faster speeds than usual, or whether all content should be treated equally. It would be an unusually high-profile, not to mention political, decision for the F.C.C., and the commissioners had got into the spirit; two of the Democrats who were expected to vote with Wheeler, also a Democrat, in favor of net neutrality—the equal treatment of content—had shown up wearing blue. Net-neutrality advocates were standing by, planning, after the expected decision in their favor, to fly a Grumpy Cat banner over the Philadelphia headquarters of Comcast.

Wheeler began the meeting by considering a different issue, one that has received far less attention than net neutrality but which could also have broad implications for how people in American cities use the Internet—and, that, like net neutrality, is expected to be disputed in the courts. It began when the cities of Chattanooga, Tennessee, and Wilson, North Carolina, petitioned the F.C.C. to take on laws in their states that restricted them from providing broadband Internet service, on their own or through a partnership, to neighboring towns. The F.C.C.’s decision would have implications beyond those cities, as other municipalities—from small towns to cities like Austin, Texas, and Provo, Utah, both of which have built networks in partnership with Google—are increasingly looking to build their own broadband systems, often using fibre-optic cables that can deliver Internet at much faster rates than the traditional broadband service typically offered by cable companies.

Currently, some twenty states ban or restrict municipal broadband. In certain states, these laws have been influenced by lobbying from traditional Internet providers, though lawmakers worry, too, that if local broadband systems fail, taxpayers will be forced to bear the cost of wasted investment. There have been high-profile failures in the past—or, at least, cases in which the investment hasn’t yet proven worthwhile.

With respect to the case before the F.C.C., Tennessee lets local electrical providers add telecommunications services such as cable and Internet anywhere in the state, but they’re allowed to offer the services only in places covered by their electrical system. In Chattanooga, this meant that the nonprofit, city-owned electricity provider, E.P.B., which provided high-speed Internet to the town’s residents, wasn’t allowed to do the same in some nearby places. North Carolina also allows local broadband, but imposes so many conditions on how it can be provided that Wilson, a small town an hour east of Raleigh, was precluded from expanding its broadband service into neighboring counties.

For some time, American cities haven’t been sure whether they could get around state-level restrictions like these. But in the past couple of years, there have been some hints that the F.C.C. might be able to help. The basis for this hope is a relatively obscure clause in the Telecommunications Act of 1996, known as Section 706, which deems that the commission should regularly look into “whether advanced telecommunications capability is being deployed to all Americans in a reasonable and timely fashion.” It adds, “If the Commission’s determination is negative, it shall take immediate action to accelerate deployment of such capability by removing barriers to infrastructure investment and by promoting competition in the telecommunications market.”

Recently, Wheeler has been invoking this concept to make the case that state restrictions on how localities can provide Internet service are exactly the sort of “barriers” that the F.C.C. is meant to remove. And on Thursday, he seemed to relish discussing the issue—his opinion on the subject has been much clearer, in the past several months, than on net neutrality, where he has been criticized for flip-flopping. He described what he considers “irrefutable truths” when it comes to broadband: “One is, you can’t say that you’re for broadband and then turn around and endorse limits on who can offer it. Another is that you can’t say, ‘I want to follow the explicit instructions of Congress to ‘remove barriers’… to infrastructure investment, but endorse barriers on infrastructure investment. I think, as they say in North Carolina, that dog don’t hunt. You can’t say you’re for competition but deny local elected officials the right to offer competitive choices.” He went on to argue that local business and residents were suffering the consequences of restrictive state laws. Finally, before moving on to the net-neutrality issue, he moved that the F.C.C. preëmpt the state laws in Tennessee and North Carolina. The other Democrats agreed with him, and the plan passed, as expected, by a vote of three to two. (Later, the commission voted in favor of net neutrality by the same margin.)

To those who support the growth of municipal broadband, the decision seemed eminently just. 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. “Why should it be the decision of Comcast or any company that the infrastructure that they happen to own in a community is good enough?” Joanne Hovis, the C.E.O. of the Coalition for Local Internet Choice, a group of businesses, cities, and others, told me. “Why shouldn’t a community be able to say, ‘We will work with another provider or work ourselves to be able to provide better infrastructure’?”

There is a straightforward answer to this question: according to federal law, states generally have the authority to write laws governing what their cities can or can’t do. The issues at hand are where the limits to that authority should be drawn, and where the F.C.C.’s jurisdiction begins and ends. With the decision, those questions are likely (as with the net-neutrality issue) to end up in the courts. The executive director of the National Conference of State Legislatures, William Pound, suggested in a press release on Thursday that the F.C.C. decision overstepped the commission’s bounds. He said that his organization “takes the preemption of states very seriously and will continue to pursue our options to ensure that any action taken by the FCC on municipal broadband networks are overturned by the courts.” Walter McCormick, the president of the United States Telecom Association, a trade group whose board members include executives from A.T. & T. and CenturyLink, said the vote “is a distraction from the hard work of improving the regulatory climate for all broadband providers to invest in new and improved infrastructure, and serves little purpose given the likelihood that it will be overturned by the courts.”

The likelihood of legal action risks slowing plans for expansion, in the short term. David Wade, the chief operating officer at E.P.B. in Chattanooga, who was born and raised in a nearby suburb, told me he doesn’t know yet how the decision will affect E.P.B.’s plans. “There are quite a few legal hurdles,” he acknowledged. But he told me he believed it was important for E.P.B. to pursue. When he was growing up, he said, he and his friends played in the streets—games like Capture the Flag and Kick the Can. Now he lives in Chattanooga, and when his granddaughters come over, they often spend their time playing games or watching videos on Internet-connected devices. Not far from Chattanooga, though, he said, “There are some areas that are really close to us that have no provider today. We’d like to provide service there as soon as possible.”

The F.C.C.’s ruling could also embolden cities in other states to move forward with their own broadband plans, but they will have to proceed carefully. The commission has now staked out its authority to overrule laws in those states that allow municipal broadband but employ restrictions. In cases where states have wholesale bans on municipal broadband, however, it could be tougher for the F.C.C. to supersede the principle of state sovereignty. In other words, in the states with the most severe restrictions on municipal broadband, the F.C.C. may, ironically, have less jurisdiction—or even none at all.