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updated 11/3/2008 9:23:40 PM ET 2008-11-04T02:23:40

The head of the Federal Communications Commission has canceled a controversial Election Day vote on a proposed overhaul of key elements of telecom regulation. Consumer advocates had warned that the changes threatened to raise phone bills for many people .

Abandoning the vote is a setback for FCC Chairman Kevin Martin, one of three Republicans on the five-member commission, who had hoped to pass his proposal before power changes hands in Washington. Martin pulled the item from the agenda for Tuesday's FCC meeting after mounting opposition from many corners of the telecommunications industry, consumer groups and Congress.

Martin had been seeking to reform the multibillion "intercarrier compensation" system, the byzantine menu of charges that telecom carriers pay to access each other's networks, by moving toward uniform, lower rates. His plan also included major changes to the $7 billion Universal Service Fund, which subsidizes telecom service in rural and poor communities through a surcharge on phone bills. Among other things, Martin would have required carriers to use Universal Service money to invest in broadband networks in parts of the country that lack high-speed Internet connections.

But in an interview Monday with The Associated Press, Martin said the other four FCC commissioners were not ready to address his proposal and instead wanted to seek public comments on many of the issues that it raises.

Martin lamented the move to cancel the vote, saying that the ideas in his proposal already have been debated in Washington for years. Martin said the change of course represented "a real missed opportunity" to reform broken regulations and extend broadband services throughout the country.

His proposed change in the telephone access fees had the support of the nation's biggest phone companies, including Verizon Communications Inc. and AT&T Inc., which argue that the existing rules are outdated and based on obsolete regulatory distinctions.

But a broad coalition of competing carriers and rural phone companies feared the plan would diminish the money they get for completing phone calls to their subscribers. Consumer advocates also warned that the proposal could lead to higher phone bills — particularly for rural customers — as phone companies sought to recover lost access revenue from other sources.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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