FCC chairman Kevin Martin has dropped his controversial proposal to overhaul telecoms rules from today’s meeting of the commission. Martin was hoping to get a vote on the controversial Intercarrier Compensation rules and Universal Fund, but the opposition was too much to ignore. As the AP notes, not only were consumer groups and parts of the telecoms industry opposed to the vote, but four fellow FCC commissioners, Democrats Michael Copps and Jonathan Adelstein and Republicans Robert McDowell and Deborah Tate—argued that a public review of the proposal was necessary before moving ahead.

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In a statement, Martin said he was “disappointed” that the commission would “miss the opportunity for comprehensive reform” and blamed his “colleagues” for holding up the process by asking “once again” for public comment. He also questioned whether his fellow commissioners would indeed be ready to vote on the proposal on their alternative suggested date of December 18, asking what new information they might gain in the seven extra weeks. Martin: “I believe the far more likely outcome is that, in December, the other Commissioners will merely want another Further Notice and another round of comment on the most difficult questions.”

Martin’s proposed reform on Intercarrier Compensation—or the system in which carriers pay one another to connect calls and access each other’s networks—had the support of Verizon (NYSE: VZ) and AT&T (NYSE: T), but smaller carriers feared they would get less compensation for completing calls, while consumer groups believed the reforms would lead to more expensive bills, especially for rural customers, as carriers would look to replace lost income. Martin also wanted changes to the $7 billion Universal Service Fund, including requiring carriers who use the fund’s money to build out broadband networks in parts of the country that still doesn’t have high speed internet access.

The FCC will still vote on the other equally controversial proposal on “white spaces,” or the unused portion of TV waves. The two deals that it is slated to review—Verizon Wireless’s purchase of Alltel (NYSE: AT) and the Sprint (NYSE: S) Nextel-Clearwire (NSDQ: CLWR) WiMax deal—are also still up for consideration at today’s meeting.

Statement from Kevin Martin in Word | Statement from Fellow Commissioners | Notice Of Agenda Change