What Fred said

Fred Wilson summarizes all the reasons why network neutrality, the idea that carriers should be providing IP connections for a flatTraffic flowing creates value, interference subtracts value. fee and staying out of the way of traffic on the network, is important to network services, carriers and, most importantly, users:

Google is a value added service that runs on the carrier’s networks.  It ADDS VALUE to their networks. Without it, the carriers would have a LESS VALUABLE service.  And yet they want Google to pay them for improving their service.  This is nuts.

Let’s talk about bit torrent.  It sucks up a bunch of bandwidth on the carriers networks.  But it sucks up less than video streaming.  It’s a more efficient service than what came before it. The carriers should be happy that Bit Torrent showed up.  It makes consuming video more popular.  It’s going to drive demand for more bandwidth, which at the end of the day is what the carriers sell.

If carriers start raising the price of individual services by taxing their traffic with extra fees, then the Net becomes useless, a kind of financial crapshoot where the user is always wondering whether they can get the information or entertainment they want at the right price today and if that price will change tomorrow because carrier margins are falling.

It's clear that Google, to use one example, will have to make a huge investment in capacity that the carriers will profit from, if they are reasonable, or lose as the company attempts to route around them. So, even if the Congress decides to do nothing, as it probably will, Fred is correct that the market will work out the differences and the carriers will come out on the losing end.

When a carrier realize that they can profit most from making customers—that is, anyone at the end of one of their connections—happy, that carrier will be successful. Meanwhile, the carriers seeking to choke off the middle of the network to extract fees for data passing through their routers will only see their business continue to sink.

Traffic flowing creates value, interference subtracts value.

UPDATE: Free Press, an advocacy group, is holding a conference call on the issue of net neutrality Friday at 9:30 AM Eastern