The FCC voted last Friday to deregulate digital subscriber loop broadband services offered by phone companies to bring them into line with unregulated cable modem services offered by cable companies. More than 14 million American homes spend more than $5 billion annually to subscribe to DSL services. Demand is growing rapidly. The credit for orchestrating the vote on the deregulation of these services properly goes to the FCC’s new chairman, Kevin Martin.

But the FCC’s vote is not, as some have suggested, an inevitable and permanent outcome dictated by law and market economics. It was a discretionary deregulatory decision by Chairman Martin and his colleagues. The current FCC could, and a future FCC may, move in the direction of re-regulating many aspects of the communications industry, including DSL.

The most obvious winners in the FCC’s broadband deregulation order are the incumbent telephone companies, particularly the regional Bell operating companies: BellSouth, Qwest, SBC, and Verizon. Previously, these companies have had to make their broadband facilities accessible to other telecommunications companies and to pay the federal government hundreds of millions of dollars annually in various taxes and fees associated with telecommunications services. Those requirements are ending.

The principal losers in the FCC’s broadband deregulation are competitive local telephone companies and independent Internet service providers such as AOL, EarthLink, and hundreds of smaller companies. All these companies have benefited from FCC rules that gave various forms of access to an incumbent. These companies can still reach customers either through their own networks or with contracts, but no longer as the automatic result of FCC rules.

For much of the past decade, new entrants benefited from a sympathetic regulatory structure. Over the past few years, those sympathies have gradually changed, and with them the fate of new entrants. Most new telephone entrants have been left to fight for small market niches, not national markets. The commercial influence of new entrants in the communications industry is diminished.

Cable companies such as Comcast and Time Warner also lose in last week’s broadband decision. For years, cable companies have offered cable modem service without the burdens of federal telecommunications regulation. The FCC has long deemed cable modem service an unregulated “information service.” The heavy regulation and taxation of DSL has contributed to consumer preference for the relatively unregulated cable modem service.

The issue of whether this “information service” designation was appropriate has been litigated for years. In June, the Supreme Court ruled in the Brand X case that, in this particular matter, the federal courts will defer to the expertise of the FCC. If the FCC has the discretion to decide that cable modem services are unregulated, the logic surely holds that the FCC can decide that DSL services offered by phone companies are unregulated as well. The concern is that a future FCC might decide the opposite.

The federal government loses tax revenue as a result of last week’s reclassification of DSL services. The U.S. Treasury will lose approximately $150 million annually in excise tax receipts. Roughly $500 million annually will be lost for the Federal Universal Service Fund, a $6.5 billion federal program that subsidizes telecommunications services for schools, libraries, low-income Americans, and telephone companies in high-cost areas.

To cushion the loss of revenue, the FCC has mandated that Universal Service Fund payments from DSL will continue for nine months or until an alternate funding system is developed. Alternatively, the FCC might consider scaling down some parts of the Universal Service program, such as portions of the schools and libraries program, which have already met their goals.

Along with the deregulation of DSL, the FCC added a dose of new regulation by clarifying the responsibilities of both broadband and voice-over-Internet-protocol telephone services to comply with federal laws. The FCC also passed a “policy statement” recommending that Internet providers not block or impede consumer access to any legitimate Web site.

The laws that govern the telecommunications sector are not the centuries of accumulated precedents of common law but rather the current dispositions of federal regulators. Our highest court has repeatedly given deference to their judgments. With this ruling, Chairman Martin and his colleagues are headed in a deregulatory direction.

A former FCC commissioner, Mr. Furchtgott-Roth is president of Furchtgott-Roth Economic Enterprises. He can be reached at hfr@furchtgott-roth.com.