NASHVILLE (AP) - A federal appeals court is deciding whether to overturn a Federal Communications Commission ruling allowing city-owned broadband services to expand into areas overlooked by commercial providers.

On Tuesday, a Tennessee House bill to allow municipal utilities that offer broadband to also provide ultra-fast Internet outside of their service areas failed for the year.

Tennessee and North Carolina both previously passed laws preventing the expansion of super-fast Internet service in their cities of Chattanooga and Wilson to surrounding areas. The FCC last year voted to override those laws.

A panel of the 6th U.S. Circuit Court of Appeals on Thursday heard an appeal by the two states. In oral arguments posted on the court's website, attorneys for Tennessee and North Carolina argued the FCC was unlawfully inserting itself between the states and their subdivisions.

An attorney for the FCC argued the states are trying to regulate competition, which is the responsibility of the federal agency.

In the Tennessee House, Republican Rep. Kevin Brooks of Cleveland withdrew his bill from consideration on Tuesday after the House Business and Utilities Subcommittee voted 5-3 against an amendment seeking to create a limited pilot program.

The proposal has bogged down in recent years amid opposition from private Internet providers such as AT&T and Comcast, who argue that it's unfair for them to have to compete for customers against government-backed utilities.

But supporters of changing the law note that Chattanooga's EPB utility brought its gigabit-speed service to Hamilton County long before commercial providers were willing to make their service widely available there or in other Tennessee cities.