Net Neutrality is dead as of Tuesday.

A D.C. appeals court, acting on a petition by Verizon, declared that the FCC lacked the authority to enforce the compromise rules it imposed on the telecoms in 2011 that provide your home and mobile phones with internet services.

These rules were intended to let you use the devices and online services of your choice and to prevent Comcast, Verizon and AT&T from mucking with the network to serve their self-interest.

This was not a decision based on a “technicality.” Instead the judges ruled based on something fundamental.

The court essentially said the FCC must decide if the companies that are given rights-of-way along public roads and which have licenses to huge swaths of licensed radio spectrum are to be treated like regulated utilities or are those companies free to operate their networks as they see fit.

The court said the FCC’s attempt to stand in a squishy middle ground has no basis in the law.

This is going to be a long piece, so here’s the tl;dr:

1. The FCC’s attempt to create a third way of regulating ISPs and mobile phone carriers was built of twigs-and-twine. Everyone in tech policy circles knew this decision was all-but-inevitable.

2. The FCC has a very easy way to make new rules on unassailable legal grounds, but the Obama administration lacks the will to do so because Republicans and Fox News hate it.

3. You want your ISPs to act like a utility; Your ISPs have no desire to just be a utility; things will get bad, probably in ways that are hard to detect — like Netflix buffering.

4. This should be a wake-up call to cities to build municipal fiber. The internet is too important for policy and access decisions to be left in the hands of the likes of Comcast and Time Warner Cable.

5. As for mobile, your best hope is the current incarnation of T-Mobile. Give it your dollars.

The court essentially ruled that the FCC formally deregulated ISPs (.pdf) in 2005 and so cannot impose “common carrier” rules.

This is the second time a court has ruled this way. When the Bush administration’s FCC decided to reclassify broadband, then FCC head Michael Powell created ad hoc “net neutrality” rules known as the “Four Freedoms” (.pdf).

Like the ones that got struck down Tuesday, they promised that Americans would be able to use the online services and devices of their choice. These rules weren’t controversial at the time, even among Republicans. Now, however, those principles are anathema to Republicans and the Fox News establishment.

Powell’s rules lasted until the FCC enforced them against Comcast for using deceptive tactics to block people using file-sharing networks. Comcast sued and got the rules thrown out.

So-called common carrier rules apply to services like airlines and the phone company. In the case of airlines, they require that an airline transport any person who has the money to buy a ticket. For the phone company, common carrier rules include the obligation to let any person call any number (along with a whole host of other rules as the phone system is considered to be a necessary lifeline).

Now, free from any rules, ISPs can stop acting like utilities.

If your cable company now wants to slow down Netflix, it can. If it wants to make Skype calls slow, it can. If it wants to make streaming video from its services lightning fast and free from data caps, while slowing down YouTube and counting that data against your monthly allotment, it can do so. If it would simply like to ban peer-to-peer protocols like BitTorrent, that’s now perfectly legal.

There’s all sorts of things a network can do in order to make more money by *not* being a utility, and home broadband providers and mobile carriers are eager to try them out.

They’ve long looked at the money that companies like Google and Facebook make and felt that they deserve that kind of profit, too. See AT&T’s recently announced plan to let online services pay to send data to you without it affecting your data cap.

The FCC could very easily recover from this decision.

The agency could decide to properly re-regulate ISPs by issuing a rule finding that reverses the de-regulation of the Bush era.

The Supreme Court is very clear on this. When the de-regulation happened, the FCC’s decision was fought by a company called Brand X, which relied on the regulations to provide internet service.

The Supreme Court ruled that the FCC’s decision to un-regulate wasn’t necessarily the best interpretation of the law, but that the FCC had the unilateral power to decide whether something was a telecom service (like the phone company) or an “information service” (like a Bloomberg terminal.)

The flip-side of that ruling is that the Supreme Court made it very clear that the FCC could, if it had the will and political capital, simply decide to reverse itself.

The first Obama FCC chief, Julius Genachowski, declined to do so and instead presided over a two-year, Bill Clinton-esque proceeding that created some fairly weak rules built on a legal foundation made of Lincoln logs.

The new FCC chief, Tom Wheeler, is of the same persuasion and previously served as a lobbyist for the cable industry. He will not pick this fight. He may seek to draw it out with an appeals process, but he’s not going to reclassify ISPs as utilities.

That means the big telecoms, with their massive lobbying arms and campaign cash, have won.

So what’s to be done?

Tactically, ISPs have to be fought on every attempt to usurp the network.

But long term, the only way to fight Comcast, AT&T and Time Warner Cable is to build municipal fiber networks that operate on open-access principles. Google Fiber, which Google has launched in a few cities, is a frenemy to this battle.

But even Google Fiber has backtracked on its commitment to open networks (Google Fiber initially promised that other carriers could rent its fiber, but that quietly was killed off). The more it becomes a carrier, the more it will adopt carrier thinking.

Building a municipal fiber network isn’t easy or cheap — and it involves fighting ISPs who will attempt to scuttle those efforts politically.

But it can be done.

Cities can start preparing by literally laying the groundwork. Every time a city street undergoes serious repair, cities should be laying fiber cables that can be “lit” later, as the fiber is cheap.

This is what Santa Monica has been doing for 15 years, and it now has a monster network that it uses to draw businesses in. (For political reasons, Santa Monica hasn’t offered this to residents, but it has the infrastructure to do so if it wanted to take on that fight and it has the infrastructure to threaten to do so if the private operators don’t play nicely).

Municipal fiber networks won’t really help fight the power that mobile ISPs now have to control the networks. Without federal regulation, there’s really no good answer here beyond the moral suasion of outraged customers.

In the short term, the best thing you can do is to support the rebel — T-Mobile. Openness is an underdog strategy and that’s how T-Mobile is fighting now, with data plans that aren’t miserly and contract-less service.

Verizon and Comcast and AT&T didn’t oppose net neutrality rules simply because they thought the FCC was using muddled legal thinking to create a weak, but sensible policy about how citizens get online.

Those companies want the freedom to run the networks as they see fit; to extract as much value as they can without regard to the democratic values of an end-to-end network.

Whether you are an entrepreneur who wants to build on an open network that requires no payola to a middle man or just a citizen who has grown reliant on the most innovative communications network ever invented, you now need to consider the network operators to be your enemy.

That’s because they are, and Obama and FCC is too scared of their money and influence to fight for you.

Photo Credit: Netik/Flickr CC-licensed