Under the proposed changes, supported by a 3-2 Commission vote, the local telecoms firms, or 'Bells', will no longer be obliged to negotiate UNE-P packages with their rivals. Arrangements already in place between the Bells and competitors will be subject to a year-long phase-out period, during which the latter will not permitted to sign up new customers at discounted rates.

Explaining the reasoning behind the FCC's U-turn on the liberalisation of local telephone services, chairman Michael Powell announced that:

"Regrettably, years of fierce battles to bend the rules entirely toward one sector or another without proper respect for the legal constraints have contributed to a prolonged period of uncertainty and market stagnation."

Speaking following the vote last week, Michael Copps, who was one of the two dissenting FCC commissioners, warned that the removal of discounted access was likely to effectively end competition in the local telephone markets.

"As a result of this decision, there will be less competition, less choice and higher rates," he predicted.

The FCC chief, however, dismissed this suggestion according to national media reports, arguing that:

"Time will show this will not be so. Business models may change, but competition and choice for consumers in the information age will continue to grow and thrive."