The Iowa Supreme Court says the state can legally tax the switches, computers and other property of traditional telephone companies, but not force cellular telephone providers to pay similar taxes on equipment.
In a ruling released Friday, the court upheld the state's right to tax Qwest Corp., which filed a lawsuit in 2006 challenging its state property taxes.
Qwest claimed an Iowa law that taxes equipment of traditional telephone companies but virtually none of wireless providers' equipment violates the equal protection clause of the Iowa Constitution.
The court says companies like Qwest maintain "monopoly power" and lawmakers could reasonably conclude that taxing personal property "is an appropriate way to capture some of their monopoly rent."
A spokesman for CenturyLink, which bought Qwest, says the company is disappointed with the ruling.