The heads of policy peeps just about exploded last month after the D.C. Circuit Court of Appeals struck down the FCC’s authority to stop internet service providers from conducting data discrimination (violating the informal principle popularly known as “network neutrality“). A couple of weeks of hand-wringing later, and FCC Chairman Julius Genachowski releases a statement outlining his plans to re-empower the agency to regulate the way by which ISPs manage their network traffic.

It’s a somewhat arcane policy principle, but in plain English it breaks down like this: the FCC classifies network service providers in one of two ways – telecommunications providers and information service providers. Telecommunications providers (like old-skool telephony) are subject to “common carriage” rules – this means the networks must not refuse interconnection, cannot discriminate against other carriers and customers, and cannot refuse the use of non-destructive applications on their networks. Information service providers, on the other hand, do not fall under the common carriage paradigm.

The entire net neutrality debate flared up in 2005, when the Supreme Court torturously ruled that cable-based ISPs were “information service providers” and therefore did not have to open up their networks to competition. Telephone companies immediately complained to the (Bush II-era) FCC, who promptly re-classified telephony as an information service provider, thereby leveling the playing field – so that no meaningful competition occurred in the broadband-provision sector of our information economy.

Since then, as one administration left office and another took over, the FCC’s been tip-toeing around the idea of “re-regulating” broadband Internet access. Some just say classify everyone as a telecommunications service provider, and the FCC is back in business. Chairman Genachowski’s “third way” statement seems to suggest a partial move in this direction. Commissioner Michael Copps would have preferred a more direct, authoritative stance on the issue, but he’s not running the show; the other three Commissioners seem to be sitting on the fence.

Now we’ll have rounds and rounds of debate at the FCC about just whether or not the agency has the power to stop data discrimination, and just how far that power extends. The FCC needs to tread carefully, otherwise it’ll open itself to an avalanche of lawsuits from the telecommunications and cable industries.

I am disappointed with the lack of commitment to principle shown by President Obama’s telecommunications advisory folks. That being said, there’s always a way to trump a circuit court of appeals – get Congress to enable an agency with the appropriate powers, and things will change dramatically. The Internet Freedom Preservation Act, by the way – which would do just this – is in an apparent holding pattern on Capitol Hill.

Thus, proponents of network neutrality have a couple of options through which they can conduct their crusade – engage in a rough-and-tumble war of words at the FCC level, or go over the agency’s head and get Congress to re-empower the FCC. Neither is an especially easy task – but with the limited resources available to the media reform movement, it will have to make some important strategic decisions soon.

The sad thing about this is that “net neutrality” doesn’t really do justice to the issue of information freedom online; there are lots of ways that people who control what you see, hear and do online do it. Managing network traffic and degrading applications as a result is just one route; lopsided terms of service agreements, data aggregation (to “personalize” your online experience) and search customization are other ways by which “traffic” gets subtly “shaped,” and information you may want to know about becomes more difficult to find as a result.

I forget who said it, but the axiom in this case is dead-on: the pace of technology development always outruns attempts to regulate it. This has never been more true in the case of network neutrality. But it’s not a one-dimensional issue – us versus ISPs, even as they roll out ever-more sophisticated “network management” tools while the law remains grey. Some of this we bring upon ourselves, by sacrificing digital literacy and autonomy for use of the latest widget or fascination with the notion of “cloud computing“. If you look at it from that perspective, one can make the argument that the ‘net actually lost its “neutrality” a long time ago.