A number of readers have been sending links to coverage of proposed “net neutrality” regulations being considered by Congress. If you haven’t been following the debate, net neutrality is one of two things—depending on which argument you find more convincing:

1. A way to prevent Internet bandwidth providers—typically cable companies, telephone companies, or ISPs like Earthlink—from providing improved or degraded service between you and websites like Google. Some bandwidth providers are essentially trying to extort companies like Google into paying to prevent the site’s traffic from being routed through slower Internet lanes. But Google is already paying for all the data it sends to you, and you are already paying for all the data you receive. So why should Google have to pay again for what two parties are already paying for, just to prevent its site from being demoted to the slow lane?
2. A regulation that prevents Internet bandwidth providers from managing capacity effectively and according to market demands. Some traffic needs to go through the networks faster—video, for instance—and throwing all the traffic together can create bottlenecks. So, if you want to be able to watch high-quality video without dropouts, you’re going to need special “lanes” set aside for the traffic that needs to be delivered within a certain time. People already pay premiums for faster delivery with FedEx, so why can’t bandwidth providers offer similar services?

You can tell you’re in propaganda-land when neither argument really addresses the other.

It is true that special applications like high-quality video-on-demand require prioritized delivery of data. This requires a certain amount of bandwidth to be set aside for delivery of that data. This really only becomes an issue when a certain part of the network gets saturated. In order to guarantee delivery of high-priority data, there will be times when delivery of lower-priority data must be delayed. Only so much data can be pushed through Internet pipes at any given time. Other limited resources tend to go to the highest bidder. Why should data networks be immune to the basic laws of capitalism?

On the other hand, it is also true that the Googles of the world are essentially being told by bandwidth providers, “Pay up, or it might take a while for people to get to your website through our pipes.” Fearful of jacking up prices on end-users, bandwidth providers are going to the deep pockets and playing the Yahoos of the world off the Googles. So instead of high-priority service being a voluntary choice made by consumers, bandwidth providers sound like they’re trying to start a data protection racket.

In The Weekly Standard, Andy Kessler declares that there’s “no one to root for in the net neutrality debate”:

Telcos and cable companies have no choice but to lobby for legislation that bars neutrality. Because without the ability to extract money from the webbies for the use of their not-so-fast Alexander Graham Bell-era wires (forget that you and I already overpay for this), AT&T or Verizon might not have any business model going forward. With no real competition, they’d rather keep U.S. telecommunications in the Flintstone era and overcharge for calls to Grandma than upgrade their networks. Since 1998, telecommunications companies have outspent computer and Internet firms on politicians $231 million to $71 million, just to keep the status quo.

Hate to break the news, but your “fast” DSL Internet access is no longer considered high speed. In parts of the world, cell phones are faster. Have you wondered why Internet video doesn’t fill your computer monitor and look like a DVD, but instead is pixelated dreck in a tiny one or two inch square? Well, Comcast is dragging its heels, too. With better video over the Internet, who would want E!, let alone the Style Network? [...]

But the answer is not regulations imposing net neutrality. You can already smell the mandates and the loopholes once Congress gets involved. Think special, high-speed priority for campaign commercials or educational videos about global warming. Or roadblocks—like requiring emergency 911 service—to try to kill off free Internet telephone services such as Skype. [...]

A truly competitive, non-neutral network could work, but only if we know its real economic value. If telcos or cable charge too much, someone should be in a position to steal the customer. Maybe then we’d see useful services and a better Internet. Sounds like capitalism.

What new things? It’s not just more bandwidth and better Internet video—how about no more phone numbers, just a name and the service finds you? How about subscribing to a channel and being able to watch it when and where you want, on your TV, iPod, or laptop? How about a baby monitor you can view through your cell phone? Something worth paying for. And that’s just the easy stuff.

The problem isn’t lack of regulation of the Internet, it’s too much regulation in the telephone and cable industries.

All regulations are written according to a set of business assumptions that existed at a specific time. But business and technology are dynamic, ever-changing environments. Government regulations lock in one set of assumptions, so once the environment changes and those assumptions no longer apply, the regulations stifle innovation and keep the old ways in place.

Businesses that fear change—such as companies that have billions of dollars invested in old technology like copper wires and coax cables—then use those regulations to block competition, which leads to the stagnation. Why aren’t we seeing more Internet delivery innovation? My connection at home is the same speed it was five years ago. But everything else from my laptop to my iPod are twice as fast and hold ten times as much. Why is that? Maybe part of the reason is that the government doesn’t micromanage the computer industry the way it does the telecom industry.

The current system may be broken, or at least imperfect. But I don’t know if the solution is to write into law more lofty ideas that will be soon be based on outdated variables. Let’s get rid of the obsolete laws first. Open up the cable and phone companies to real competition. Then, we all might have so much bandwidth for such a cheap price that we won’t need to worry about net neutrality. If the high-priority lanes are 100x faster, are we really going to complain if everything else is only 50x faster?

This problem is easily solved by abundance. We just need to create an economic environment that encourages it.