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The House and Senate held hearings yesterday on a legislative proposal that would prevent Internet service providers from setting up for-pay Internet “fast lanes” without reclassifying the Internet as a public utility.

The bill, which is sponsored by Sen. John Thune (R-S.D.) and Rep. Fred Upton (R-Mich.) would do essentially everything net neutrality proponents have been asking for.

That includes barring ISPs like AT&T, Verizon, and Comcast from slowing down or blocking traffic to or from certain websites or certain users.

But while Congress debates a legislative solution, the FCC is moving forward toward its own ruling on the matter. That would very likely be a “hybrid” solution in which the “last mile” of the Internet (the connection between the local ISP and the household) would be regulated like a public utility under Title II, but the Internet backbone, comprising the long-haul fiber lines that connect regional markets, would remain free of Title II restrictions. Those fiber lines are owned by players like Verizon and Level 3, which sell wholesale access to regional “last mile” providers, content delivery networks (CDNs) like Akamai, and large content companies like Amazon and Netflix.

The FCC’s ruling could come any time now, even as the Thune/Upton bill is making the rounds on Capitol Hill. If the ruling proposes classifying even part of the Internet under Title II, it will be met immediately with a legal challenge, a Washington source tells VentureBeat.

How we got here

Remember that the FCC’s new round of deliberations on the subject started because of a court decision in January 2014. Reacting to a Verizon lawsuit, a DC District Court struck down the FCC’s first attempt at a set of net neutrality rules. The court was clear that the FCC has the right to establish and enforce net neutrality principles, but said the first set of “open Internet” rules rested on a shaky legal foundation. It sent the ball back into the FCC’s court.

The FCC then suggested a new set of rules last May that seemed to leave the door open for Internet “fast lane” deals, enraging many in the tech business. Network neutrality proponents fear an Internet where big ISPs can sell fast lanes to the richest Internet content companies like Network and Amazon, leaving smaller competing companies at a disadvantage because the packets containing their content won’t be delivered as quickly.

Meanwhile, the Thune/Upton bill faces its own problems. The bill has the best chance of any net neutrality bill we’ve seen yet (it’s got Republican sponsored and faces a GOP-controlled Congress, which will help). But President Obama has already voiced his support for an Internet regulated under Title II. So even if the bill makes it through both the House and Senate, the president still may not sign it. As we saw in the president’s State of the Union address, Obama has become more willing to act unilaterally to impose his will on certain issues like the Keystone pipeline, and, possibly, network neutrality.

The president, and FCC chairman Tom Wheeler, want the agency to have the authority to collect universal service taxes on Internet service in the same way it does for voice service. It also wants to be able to regulate regarding user privacy issues.

Our Washington source said, however, that the Thune/Upton bill may give network neutrality proponents pretty much everything they’ve been asking for, including an FCC that can impose and enforce network neutrality principals, protections against fast lanes, and protections against throttling or blocking any legal content by ISPs.

Still, we’re not likely to see longtime network neutrality proponents suddenly abandon their campaigns for classing the Internet as a public utility. Rather, they will hold on to that demand until the very end, as a way of negotiating for the most consumer-friendly set of rules they can get — either in a Congressional bill or in an FCC ruling.

Stay tuned. This fight isn’t even close to being over.

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