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Level 3 withdraws request for VoIP fee ruling

One of the most important Internet telephony rulings of the year was expected from federal regulators Tuesday, but now it won't happen.

One of the most important Internet telephony rulings of the year was expected from federal regulators Tuesday, but now it won't happen.

In a surprise move, an Internet telephony company that had asked the Federal Communications Commission for the ruling said late Monday that it was withdrawing its request.

Level 3 Communications had been telling the FCC that the company should be able to pay lower fees to local telephone companies to begin or end voice calls on their networks. The decision from the FCC was expected to have a far-reaching effect on the voice over Internet Protocol, or VoIP, industry. If Level 3 had lost, the prices for some VoIP calls could have jumped.

But because FCC Chairman Michael Powell stepped down last week, the timing was no longer right for a ruling, Level 3 CEO James Crowe said in a statement. "The appointment of new leadership only three business days before the statutory deadline for ruling on the petition" made it "inappropriate to ask the agency to resolve this important issue in the timeframe required by law," Crowe said.

One possibility is that Level 3 and its allies at industry groups like the Voice on the Net Coalition weren't sure what the FCC would decide. With Powell's departure, the FCC boasts two Republican and two Democratic commissioners--with neither a regulatory or deregulatory faction able to command a clear majority.

The Federal Communications Commission had been considering Level 3's request since December 2003. A decision was due in October, but the FCC extended its own deadline to March 22.

Powell indicated last year that he might have voted in favor of Level 3's request. In November, Powell said: "I am committed to ensuring that this commission avoids any action that might slow the IP-services revolution." Kevin Martin, the new FCC chairman, has not been as explicit.

In a related matter, the FCC did rule last April that AT&T had to pay the interconnection fees known as "access charges" for VoIP-in-the-middle calls that began and ended on the public telephone network.

In a sense, Level 3 had asked the FCC to codify a longstanding practice of how VoIP providers such as Vonage gain access to the public network.

Level 3 did not respond to a request for comment earlier Monday. Vonage spokeswoman Brooke Schulz said that if Level 3's petition were granted, "it gets the ball rolling for further reform of inter-carrier compensation. Until now, there'd be no (seminal event) to get all the parties to the table. This is the first step in a long race."

Level 3's petition has been opposed by groups such as the United States Telecom Association (the trade association for the former Baby Bells), some free-market groups, and the rural caucus in the U.S. House of Representatives.

CNET News.com's Ben Charny contributed to this report.