A mobile phone trade group has dropped a lawsuit against the U.S. Federal Communications Commission challenging the commission's rules requiring so-called open access rules on a block of valuable spectrum auctioned earlier this year.

CTIA, representing mobile phone carriers, has quietly dropped its lawsuit, which challenged whether the FCC had the authority to require the winner of the spectrum to allow outside devices such as mobile handsets from other carriers and to allow users to run outside applications on the network.

The FCC imposed open-access rules on the C block in the 700MHz spectrum auction, which concluded in March. The C block is a 22MHz block of spectrum that covers nearly all of the U.S., and Verizon Wireless won the auction by agreeing to pay US$4.7 billion for the spectrum.

Verizon had also sued the FCC for the open-access conditions, but later dropped its lawsuit. CTIA on Thursday didn't explain why it dropped the lawsuit, but continued to insist that the FCC's reasons for the open-access conditions were flawed. FCC members had suggested that the mobile phone marketplace, particularly the handset marketplace, was not competitive, with customers unable to bring outside handsets to a new mobile carrier.

"It is evident to even the most casual observer that the American consumer enjoys a handset marketplace that is vibrantly and fiercely competitive," CTIA said in a statement. "The FCC's suggestion to the contrary was not true then and it is not true today."

Verizon and other carriers have committed to allowing outside handsets on their networks since the open-access requirements were first proposed.

Representatives of two advocacy groups that called for the open-access rules applauded CTIA's decision to drop the lawsuit, which was filed in U.S. District Court of Appeals for the District of Columbia.

"That's a very welcome development," said Art Brodsky, spokesman for digital rights group Public Knowledge."We hope it will lead to greater consumer choice and technical innovation. It would be nice if the openness conditions spread to other spectrum bands as well."

Ben Scott, policy director for media reform group Free Press, called CTIA's decision a "remarkable turn of events."

"They fought openness conditions in 700MHz licenses tooth and nail and claimed the sky would fall if they were imposed," he added "But when they realized that consumers actually like openness and liked the FCC's decision -- some of their companies started publicly using openness rhetoric. Now, quietly, they drop their lawsuit and walk off as if nothing happened and everyone always agreed that openness was grand. If they are relying on Washington's legendary amnesia to forget this hypocrisy, here is one public interest group that will not comply."