The U.S. Court of Appeals for the D.C. circuit today denied Verizon’s challenge to the FCC’s data roaming order – a decision that will be welcomed by virtually all telecom industry stakeholders except the nation’s dominant wireless carriers AT&T and Verizon.

In its challenge, Verizon argued that the FCC had over-stepped its authority in imposing data roaming requirements, that the ruling unlawfully treats mobile Internet providers as common carriers, that the rules constitute an unconstitutional “taking” and that the ruling was arbitrary and capricious. The court rejected all of those arguments.

“Title III of the Communications Act of 1934 plainly empowers the commission to promulgate the data roaming rule,” the court said in its decision. “And although the rule bears some marks of common carriage, we defer to the commission’s determination that the rule imposes no common carrier obligations on mobile Internet providers.”

The FCC adopted the data roaming rule back in April 2011 and Verizon immediately challenged the ruling. AT&T likely would have challenged it as well but was in the middle of attempting to gain regulatory approval for its intended purchase of T-Mobile and apparently didn’t want to make waves.

Smaller wireless carriers lacking nationwide coverage argue that data roaming is required to enable them to compete with larger carriers who operate nationwide.

“This is a decisive victory for consumers and an extremely positive outcome for competitive carriers and competitive policies,” said Steven K. Berry, president and CEO of the Competitive Carriers Association, in a statement.

Berry hinted however that further action may need to be taken to ensure 4G LTE competition, calling today’s decision “one important piece of the puzzle.”

That comment likely was a veiled reference to 4G interoperability issues, which today’s decision does not address.

Verizon owns virtually all the spectrum in one of the 700 MHz bands in which carriers are deploying LTE service and AT&T owns virtually all the spectrum in a different 700 MHz band, while smaller carriers are deploying in a different 700 MHz band and in the AWS band. Smaller carriers have been hoping the FCC would take action to require LTE devices to operate in multiple LTE bands to facilitate data roaming and to help minimize the cost of mobile devices for smaller carriers.

The FCC was considering a requirement for devices operating in AT&T’s band to also operate in one of the bands used by smaller carriers but AT&T argues that such a move would generate too much interference.

A Verizon spokesman said the company has not yet determined if it will make any further challenges on the data roaming order. The spokesman also noted in a statement that today’s ruling upholds rules that require carriers to offer data roaming on “commercially reasonable” terms.

“As we made clear throughout the case, Verizon Wireless regularly enters into such data roaming agreements on commercially reasonable terms to meet the needs of consumers, and will continue to do so,” the statement said.

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