A federal appeals court on Tuesday put on hold Federal Communications Commission rules for opening up the telephone industry to competition.

Phone and cable TV companies had asked the 8th U.S. Circuit Court of Appeals to temporarily block the rules until they can challenge the legality in the same appeals court in January.

FCC Chairman Reed Hundt immediately attacked the decision and said the federal agency would ask the Supreme Court to lift the stay.

“The Eighth Circuit’s stay throws a monkey wrench into the carefully designed congressional machinery for introducing competition into the local exchange market,” Hundt said.

Opponents of the rules hailed the decision as vindicating their position that the rules were unfair.

The three-judge panel wrote in its opinion that the FCC seemed to have overextended its jurisdiction into pricing of telecommunications services, which it said was an issue for states to decide.

“What it means is that the FCC’s efforts to stack the deck against local phone companies has been rebuffed,” said William Barr, general counsel for GTE Corp.

The court’s decision, he said, signaled a belief the phone companies had a strong case and would ultimately prevail.

The FCC issued the rules in early August to implement the Federal Telecommunications Act of 1996. The act removes competitive barriers between telephone, cable and other communications companies.

Objections emerged from almost every side of the industry about the rules.

Local phone companies said the rules would mean their subsidization of the entrance of competitors into their markets. Cable TV companies were upset because they believe the rules allow telephone companies to offer a new form of video service before they could.

In their appeal, opponents argued that the FCC rules take too much power from the states over setting local rates.