What next for net neutrality?

The FCC's "middle ground" approach all but guarantees that the decision over how Internet traffic should be regulated will be fought in the courts.

By Dan Mitchell, contributor

FORTUNE -- The Senate on Thursday rejected a Republican attempt to overturn the Federal Communication Commission's rules on net neutrality, which bar Internet providers -- mainly, giant phone and cable companies -- from discriminating among different types of traffic on their networks. The 52-46 vote didn't matter much, though, since President Obama had been expected to veto it if it had passed.

But that doesn't mean the issue is closed -- not by a long shot.  Verizon (VZ) and MetroPCS (PCS) are pursuing lawsuits against the FCC, claiming the agency doesn't have the legal authority to issue such rules. Meanwhile, on the other side of the question, the group Free Press has also sued the FCC because the rules don't apply to mobile services. The question could remain open for years. In the meantime, people connecting to the Internet from terrestrial networks are protected from having their online experiences interfered with by ISPs, but mobile broadband users -- who are, of course, growing in number -- aren't.

The FCC made the situation much more complicated by applying two different sets of rules to mobile and terrestrial networks. The agency's strained attempts to find a "middle ground" have made neither side happy and have all but guaranteed a drawn-out court battle on two fronts.

The Republicans' attempt to block the rules an "appalling legislative stunt," Free Press CEO Craig Aaron said in a statement. He lauded the Senate for killing the bill, but said the focus must now return to "the actual priority here: strengthening these rules to protect all Internet users, no matter if they connect from their home computer or a mobile phone."

The FCC rules allow ISPs to discriminate among traffic on mobile networks except for traffic from competing phone providers.

Both the House vote in April to strike down the rules and Thursday's Senate vote to uphold them were along strict partly lines: Democrats favor net neutrality; Republicans oppose it.

The idea behind net neutrality is to prevent ISPs from slowing down or speeding up traffic (or even blocking it) to favor one source or type of data over another. In a hypothetical example, without such rules, an ISP could favor the traffic of one TV network over another. People who wanted to watch a show online from a competing network might find the video performance wasn't as good as that on the favored network.

That kind of thing hasn't happened on a wide scale. The worry is that, without rules, it could.

Opponents of net neutrality -- mainly, giant telecommunications firms and their political allies -- frame the issue as being a matter of "freedom." For example, the failed bill's sponsor, Sen. Kay Bailey Hutchison (R-Texas), said in a statement Thursday that if "we're going to keep an open and free Internet and keep the jobs it spawns, we should reject the FCC regulation on net neutrality."

The telcos and cable operators say the rules prevent them from having the "flexibility" to manage traffic on their networks to prevent congestion. Proponents of net neutrality note that there are technologies available (and actually in use) that address that problem without the need to give ISPs free rein to discriminate among sources of data.

It comes down to this: data flows on the Internet must be regulated. The question is whether to put that control in the hands of government (which would protect the status quo) or in the hands of corporations (which could potentially decide which kinds of content people can easily access.) It increasingly looks like the ultimate decision will be made by the federal courts.