WASHINGTON (Reuters) - A federal appeals court said on Wednesday the U.S. Federal Communications Commission could not block two states from setting limits on municipal broadband expansion.

The decision is a win for private-sector providers of broadband internet. Cities in Tennessee and North Carolina had sought to expand municipal broadband networks beyond current boundaries, but faced laws forbidding or placing onerous restrictions on the expansions.

The FCC voted in 2015 to issue an order seeking to pre-empt those state laws.

(Reporting by David Shepardson, editing by G Crosse)