A federal appeals court overturned a ruling by the Federal Communications Commission that pushes for the expansion of city-owned broadband services into areas that are not being serviced by commercial providers.

The decision is seen as a victory for private companies that provide internet services and a setback for the FCC and its chairman, Tom Wheeler.

The ruling involves a dispute between the FCC and the states of North Carolina and Tennessee over the expansion of the high-speed broadband internet services that have been established in their respective cities of Wilson and Chattanooga to adjacent areas.

The two states have passed laws to prevent such an expansion, with lawmakers arguing that commercial broadband providers will find it challenging to compete with internet services that are subsidized by the local government.

The FCC, however, voted last year to override the laws passed by North Carolina and Tennessee, prompting the two states to turn to the 6th Circuit Court of Appeals to review the ruling of the FCC.

According to the appeals court, the FCC preempted state laws with its ruling to override the regulations. The action by the FCC, according to the court, requires a clear statement of such an authority within federal laws, and there are none to show.

The city of Wilson constructed the foundation of a fiber-optic network in 2005 to connect all city-owned facilities, which was later expanded to a municipal broadband network known as Greenlight. The city is offering internet, phone and cable services that it claims are cheaper than those offered by private companies, with Wilson also providing a free Wi-Fi network to its whole downtown area.

The city of Chattanooga has also offered high-speed broadband internet services to both residential and commercial customers within a 600-square-mile area, with about 63,000 subscribing to the service.

Residents in nearby communities to these two cities have requested to be able to sign up for the services, but the overturning of the FCC's ruling will make it harder for such a thing to happen.

Wheeler criticized the ruling, stating that it halts promises of jobs, investments and opportunities to other areas that were given to North Carolina and Tennessee due to the community broadband services.

The court decision is not the end of the fight, however, as it only meant that the FCC could not overturn laws passed by states regarding municipal broadband services. If Congress can be convinced to rewrite the laws regarding city-owned broadband internet, things will change.

As such, the upcoming United States presidential elections will play a huge role in determining the future of the issue. If Hillary Clinton wins, she is expected to continue the efforts of outgoing President Barack Obama to promote the expansion of municipal broadband.

In other recent news, the FCC ordered telecommunications provider AT&T to pay out $7.75 million for enabling a phone scam that charged customers about $9 per month in exchange for absolutely nothing. The businesses that ran the scam were able to do so for four and a half years, with AT&T allowing the scammers to charge customers through telephone bills and then receiving a fee for each of the charges placed.