The decision is a victory for AT&T, which sued White Plains, N.Y., after the city asked for 5 percent of local calling revenue in return for adding network equipment to its properties. Verizon Communications, which already had a stranglehold on the market, didn't have to pay any fees.
Most of the property AT&T wanted to build on was public right-of-ways, which are owned and operated by the local government.
spokeswoman Deborah Jones said the court victory will likely force a number of other cities to drop similar policies.
"We believe the appeals court decision will serve as precedent for any and all other cases having to do with city and towns imposing unfair franchise fees and right-of-way requirements for telecom companies," she said.
AT&T sued the city of White Plains two years ago, claiming the city policy was anticompetitive. Last September, the 2nd U.S. Court of Appeals ruled in AT&T's favor.
White Plains appealed to the U.S. Supreme Court. The court rejected the city's appeal, without commenting.
A city of White Plains representative did not immediately return calls seeking comment. The city said it devised the policy from its understanding of the, which created rules to increase competition among telephone companies. But attorneys for White Plains noted in court papers there was "some confusion" that needed to be straightened out.