On Tuesday, a U.S. appeals court tossed out federal rules requiring that broadband providers treat all Internet traffic the same. The net effect of the so-called net neutrality ruling means sites that hog bandwidth, such as Netflix or Hulu, may be forced to pay extra for usage.

"Given that the commission has chosen to classify broadband providers in a manner that exempts them from treatment as common carriers, the Communications Act expressly prohibits the commission from nonetheless regulating them as such," Judge David Tatel wrote for the court.

A blow to the pro-net neutrality Obama administration, the ruling is causing a massive outcry from industry watchers while others are celebrating the Obama defeat.

Former FCC Comish Speaks Out

We caught up with former Federal Communications Commission (FCC) commissioner Robert M. McDowell, a visiting fellow at think tank The Hudson Institute, to get his take on the ruling. He told us the FCC is now zero for two before the courts in its “misguided attempts” to thrust the government into the Internet’s network Relevant Products/Services management affairs.

“The Internet was working beautifully before these rules were implemented and it will thrive even more now that they have been struck down,” McDowell said. “In the meantime, ample laws already exist to protect consumers should market failures occur.”

Civil Rights Group Disappointed

Rashad Robinson, executive director of ColorOfChange.org, an organization that aims to strengthen Black America’s political voice, called the ruling a serious blow to the millions of Americans who count on the free and open Internet to go about the essentials of their daily lives.

“Because the court has given Internet service providers the green light to start openly discriminating against Web content they don't want to compete with, the Internet could very soon start looking like cable TV, where one corporation holds the power to decide which content we're able to access," he said.

Conservatives Applaud

While this decision may appear to throw a monkey wrench into the net neutrality regime, Matthew Glans, senior policy analyst at think tank The Heartland Institute, said in reality it leaves the door open for even more harmful changes.

“Supporters of a free and open Internet now need to be wary of any proposal that would reclassify the Internet as a public utility and therefore subject to Title II regulation, the burdensome regulatory system that has hindered the growth of the telephone market for decades,” he said.

Meanwhile, Glans’ colleague Scott Cleland, chairman of NetCompetition and a policy advisor to Heartland, said if the parties do not appeal -- and the FCC also works on new broadband information service traffic rules of the road that comport with this decision -- this effectively could settle into a de facto net neutrality peace. The reason: The FCC’s "general authority to regulate" broadband would be unchallenged and the broadband industry’s biggest fear, common carrier regulation of broadband, would be off the table.

“Finally, this decision also underscores the need to modernize the obsolescent 1934 Communications Act for the 21st century," Cleland said.