The ruling by the U.S. Court of Appeals for the District of Columbia is a big victory for Comcast Corp., the nation's largest cable company. It had challenged the FCC's authority to impose so-called "net neutrality" obligations on broadband providers.

The ruling also marks a serious setback for the FCC, which is trying to officially set net neutrality regulations. FCC Chairman Julius Genachowski argues that such rules are needed to prevent phone and cable companies from using their control over Internet access to favor some online content and services over others.

The decision also has serious implications for the massive national broadband plan released by the FCC last month. The FCC needs clear authority to regulate broadband in order to push ahead with some its key recommendations, including a proposal to expand broadband by tapping the federal fund that subsidizes telephone service in poor and rural communities.

The court case centered on Comcast's challenge of a 2008 FCC order banning the company from blocking its broadband subscribers from using an online file-sharing technology known as BitTorrent. The commission, at the time headed by Republican Kevin Martin, based its order on a set of net-neutrality principles it adopted in 2005 to prevent broadband providers from becoming online gatekeepers. Those principles have guided the FCC's enforcement of communications laws on a case-by-case basis, and now Genachowski is trying to formalize those rules.