NEW YORK, April 26 (Reuters) - A divided federal appeals

court revived a 2021 New York state law intended to provide

affordable high-speed internet service to low-income families,

setting aside a permanent injunction and handing a defeat to

service providers.

In a 2-1 decision on Friday, the 2nd U.S. Circuit Court of

Appeals in Manhattan said federal telecommunications law dating

to the Great Depression did not pre-empt states from regulating

broadband rates.

"Congress intended for the states to retain their regulatory

authority over many interstate communications services - and to

play a role in regulating the rates charged for such services -

unless it said otherwise," Circuit Judge Alison Nathan wrote.

The majority also said a 2018 Federal Communications

Commission order classifying broadband as an information service

stripped that agency of authority to regulate rates.

New York's first-in-the-nation law required broadband

providers to offer plans as low as $15 a month, benefiting an

estimated 7 million New Yorkers in 2.7 million households.

It was signed in April 2021 by former Governor Andrew Cuomo,

after the COVID-19 pandemic forced many students and employees

to work from home.

U.S. District Judge Denis Hurley in Central Islip, New York,

blocked enforcement two months later. Friday's decision set

aside his injunction.

The law had been challenged by several trade groups

including CTIA-The Wireless Association, on behalf of internet

providers such as AT&T ( T ) and Verizon.

In a joint statement, the groups said Friday's decision "not

only discourages the needed investment in our nation's

infrastructure, but also potentially risks the sustainability of

broadband operations in many areas. We urge Congress to maintain

support for low-income Americans on a nationwide basis."

The office of New York Attorney General Letitia James

defended the law. It had no immediate comment.

The case is New York State Telecommunications Association

Inc et al v. James, 2nd U.S. Circuit Court of Appeals, No.

21-1975.