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My apologies for being so tardy to the debate. Network neutrality was a hot topic on blogs several weeks (maybe months?) ago, but I didn't weigh in at the time because I thought the analysis was short and I wouldn't have much interesting to say about it. I'm writing now by special request… so I hope it's interesting.
The network neutrality debate has generated a lot of propaganda masquerading as information. I've seen a lot of online "explanations" of the topic that are worse than useless, based on straw man arguments and emotionally charged scare tactics. This should not be surprising — Congress is involved! :) You can always rely on politics to turn a reasoned debate into a cacophony of poor logic.
If you'd like to see the information Congress itself is getting, I encourage you to read some of the testimony before the Senate. The Wikipedia entry is fairly technically oriented and although I detect some biases, it does a mostly good job. If technology frightens and confuses you, just ask the ninja what he thinks. And read on to see what I think.
The argument from radical capitalist premises is simple, which is why I originally didn't chime in on this topic: The portions of the Internet that would be covered by potential network neutrality legislation are privately owned, and the owners — telecommunication companies of various sorts — have the right to exercise control over their network, their property, in whatever manner they see fit. Internet content providers and consumers are each free to bargain with internet service providers to reach mutually satisfactory and voluntary arrangements for internet access. Any agreement reached voluntarily is ipso facto permissible. The proposed network neutrality legislation would infringe upon internet service providers' freedom of contract (by prohibiting certain arrangements) and should therefore be rejected. Period, full stop. The campaign in favor of network neutrality legislation is transparently an attempt by certain internet content providers to use the force of government to gain a stronger bargaining position in negotiations with internet service providers.
There are strong technical arguments against network neutrality, too. The basic idea behind network neutrality is that all traffic should be treated equally, without regard to who produced it, who's consuming it, or what kind of traffic it is. That's a fine-sounding idea, but runs into the real-world problem that network capacity is finite.
There are two critical concepts to understand, bandwidth and latency. I'll use the standard plumbing analogy: bandwidth is like the diameter of a pipe, and latency is like its length. Bandwidth is a measure of how much data can move in a period of time, and latency is a measure of how long it takes for any particular piece of data to move from its source to its destination.
Different network applications behave differently when bandwidth is abundant or limited, and when latency is short or long. Some applications such as Voice over IP require short latency but relatively little bandwidth. This data could be given higher priority (to ensure a shorter latency) without much disruption to other traffic. Other applications like delivering movies over the internet require a large amount of bandwidth but are not very sensitive to latency. These two types of applications can coexist fairly well.
Combine both kinds of data in the same application, however, and you run into trouble. Videoconferencing, for example, requires both short latency and large bandwidth. It does not share network capacity well with other applications. But if all data is treated neutrally, as network neutrality proponents desire, this sort of application will be unusable if the network becomes congested. Other applications that are less sensitive to bandwidth and latency will be slower, but still usable.
The only way an application like videoconferencing could thrive on the internet is if it had guaranteed access to the network capacity it needs in order to operate well. Its data needs preferential treatment. Internet service providers are eager to provide preferential treatment in exchange for more money. Network neutrality legislation would block this possibility.
Network neutrality legislation is not neutral — it would pick winners and losers in the application space, making some kinds of applications (such as videoconferencing) impractical over the broad internet because those applications require preferential treatment on the network in order to function acceptably well. A legal prohibition on paying for preferential treatment would prevent a whole class of potentially exciting applications from being viable.
I haven't said anything in direct response to specific pro-network-neutrality arguments. If you'd like me to address any particular argument, let me know.