The ruling, which is expected to be challenged in court, eased some rules on how much network and equipment access incumbent carriers BellSouth, Qwest Communications, SBC Communications and Verizon must provide to rivals. For instance, the decision would eliminate some obligations to provide network access so that rivals can provide broadband services.

But the ruling stopped short of what FCC Chairman Michael Powell and several key lawmakers were seeking, largely on behalf of the regional carriers: A complete rejection of current competition rules established in the 1996 Telecommunications Act. The decision also "provides for a significant state role in implementing these rules," the agency said.

Indeed, the decision means state regulators would ultimately decide whether competition exists in the U.S. telecommunications industry.

The ruling also means "continued confusion for awhile," said telecom analyst Laura Behrens of GartnerG2 (Stamford, Conn.). So-called "new fiber" won't be regulated, she added, hence incumbents got most of what they sought. If they fail to invest in fiber-to-the-home, "they won't have regulations to blame it on."

Still, Behrens and other analysts agreed that major market hurdles could still prevent incumbents from making the heavy investments that would be needed to deploy broadband all the way to U.S. homes.

FCC Commissioner Kevin Martin succeeded in blunting a sweeping rewrite of the telecom rules and retaining a state role in how broadband services are deployed. The five-member FCC's two Democratic appointees, Michael Copps and Jonathan Adelstein, joined Martin in blunting Powell's attempt to scuttle current competition rules in the name of what Powell characterized as "substantial broadband relief." Commissioner Kathleen Abernathy, a former telecom lobbyist, voted with Powell.

The decision focused specifically on how much regional carriers can charge rivals for access to their unbundled networks elements. The 1996 law required the incumbents to provide access to all elements at steep discounts. Some of those requirements were eliminated, as Powell had proposed.

As for broadband deployment, FCC officials said the ruling would require no unbundling of incumbents' network elements for fiber-to-the-home deployments. Regional carriers also wouldn't have to share bandwidth with rivals for providing broadband services if they deploy fiber to neighborhoods but not necessarily to customers' homes.

Some industry groups praised the FCC ruling, but lawmakers who said unleashing regional carriers was the best way to promote broadband deployment blasted the decision. Calling Martin a "renegade Republican," Rep. Billy Tauzin, R-La., chairman of the House Energy and Commerce Committee, said the ruling means "regulatory reform has been stabbed in the back."

"This latest government-interventionist policy is destined for the judicial junk pile," said Tauzin. He and other legislators promised to renew efforts to free incumbents from the 1996 rules.

Industry groups representing the semiconductor and computer industries said the FCC ruling would ultimately promote broadband deployment. Rhett Dawson, president of the Information Technology Industry Council, said the action provided "incentives for carriers to invest in last mile broadband network facilities" and would promote "competition and accelerate the widespread adoption of affordable, high-speed broadband services."

Like the FCC, there was little unanimity within the high-tech sector. The "FCC decision for broadband is likely to reduce the number of ISPs consumers can choose from by about 99 percent," said Harris Miller, president of the Information Technology Association of America (Arlington, Va.).