Apparently anticipating a defeat, Level 3 Communications yesterday withdrew its petition to ask the Federal Communications Commission not to impose the current access fee structure on phone calls made using voice over IP.

The move delays what was a potential key ruling for the VoIP community. In a statement released late Monday, Level 3 Chairman and CEO James Crowe said the shift in FCC leadership prompted his company's last-minute decision. By law, the FCC had until today to rule on Level 3's forbearance petition or see it accepted by default.

"Level 3 has withdrawn the petition in deference to the commission," Crowe said in a statement. "Given the appointment of new leadership only three business days before the statutory deadline for ruling on the petition, we determined it was inappropriate to ask the agency to resolve this important issue in the timeframe required by law."

FCC Chairman Michael Powell, a staunch backer of VoIP, cleaned out his office by March 18 and his predecessor, Kevin Martin, was announced March 16.

The ruling was a potential landmark decision that could have far-reaching impact on the VoIP community. If the FCC ruled against Level 3, the cost structure of VoIP services, currently sold to consumers as cheap service, would change dramatically with the addition of costly access fees that VoIP carriers would have to pay to traditional phone companies to let VoIP calls traverse the public phone network.

Had the FCC not ruled, or ruled in favor of Level 3, it would have been a major victory for the VoIP industry, and a defeat for incumbents. At a farewell address at the Voice on the Net show in San Jose March 8, Powell carefully dodged an audience question about what the FCC would do with Level 3's petition, choosing only to explain how the annual deadline worked. In recent days, the rumors had begun to fly out of Washington that the four-person FCC would rule against Level 3.

In releasing a statement praising the withdrawal, the U.S. Telecom Association claimed the proposal was facing "unanimous defeat" at the FCC.

"Level 3's retreat ensures that consumers benefit from real competition in today's vibrant communications market," said Walter B. McCormick, Jr., President and CEO of the USTA, in that prepared statement. "We applaud the FCC for recognizing that it should not take a piecemeal approach to intercarrier compensation reform and we look forward to working with the commission on a comprehensive approach to these issues."

It's not clear at this point, however, when the FCC will begin to address a wide range of intercarrier compensation issues. Competitors are hoping to reform the legacy access fee structure while incumbents are looking to protect the millions in access fees they collect and to prevent new competitors from getting a free ride on the public network.