The fate of the open Internet just got a little bit clearer.
Reclassification. Wheeler's first step was to say he wanted to rewrite the FCC's net neutrality order to conform to the agency's existing authority, which the D.C. Circuit court affirmed. But backing up that promise is the threat of reclassification, or the act of turning Internet providers into regulated utilities under Title II of the Communications Act. Doing so would entitle the FCC to reinstate all the old rules about traffic blocking and discrimination that were just eliminated by the court. As an extreme outcome most Internet providers would like to avoid, reclassification acts as Wheeler's trump card; if the carriers don't behave, he could still play the card with few legal repercussions. There are two advantages to holding reclassification over the carriers' heads rather than going for it right away: The FCC demonstrates its willingness to pursue more modest steps in line with its existing authorities, and keeping Title II on the table gives the carriers a strong incentive to cooperate.
Municipal broadband. Even if Wheeler can't force Internet providers to treat all traffic equally, he can still create market conditions that do the job for him. Wheeler is hinting he'll be looking at ways to act against state laws that ban cities and towns from setting up their own high-speed Internet. It's still unclear how he'll go about doing that, but eliminating or weakening those laws would make it easier for mayors to create alternatives to the big cable and telephone companies that currently dominate most markets. This is a big deal. More options for consumers might well lead to net neutrality in spite of the FCC's inability to impose regulations to that effect.
Wheeler didn't have to take these steps, but both amount to an assertive use of power under the FCC's existing authority. It's a muscular response to what started out as a short-term defeat for the agency.