“After consultation with industry groups across the country, I feel we should remove Domain Name System blocking from the Stop Online Piracy Act so that the committee can further examine the issues surrounding this provision. We will continue to look for ways to ensure that foreign websites cannot sell and distribute illegal content to U.S. consumers,” Smith said in a statement.

It was not immediately clear whether Smith would also remove the requirement that, if an ISP decided not to redirect, it must employ other censoring methods such as deep-packet inspection to prevent American citizens from visiting sites the attorney general maintains are dedicated to infringing activities.

Whether or not this represents a victory depends greatly on the exact text of the next draft of the legislation.

Its been noted and discussed that the main stream television media, largely owned by media companies that support SOPA, have not been reporting on the controversy. If Wikipedia goes black on Wednesday, it will no longer be possible for the MSM to fail to report on this controversy. The American people will very quickly learn that Congress is planning to create an Internet Censorship system for them, just like the one they have in China. The consequences of that could be very significant.

By removing that provision now, these Congressmen may be able to discredit the controversy by claiming that people are getting spun up about something that they already removed from the legislation.

Its possible that no alternate draft bill will appear, and it will be back to business once the media cycle is over.

Rep. Smith Waters Down SOPA, DNS-Redirects Out | Threat Level | Wired.com