The Hands Off blog is in recess along with Congress.

“Who are you going to believe, me or your own eyes,” Chico Marx once asked.

We already know that Google perfected the Washington Two-Step: It signs a sweetheart access deal with Sony Ericcson to corner the market on searches in the quickly growing cell phone market, while pushing the Feds to prohibit similar deals in the wired world.

Wonder why? Well, here’s a possible response, courtesy of Stanford’s Larry Lessig from this month’s Gilder-Forbes Telecosm Summit:

“There’s of course an advantage that eBay and Google have because they have very fast caching servers located all over the world. So their ability to serve content is better than their competitors.”

As Orwell might have put it, neutrality regulation would make everyone equal – though eBay and Google would just be more equal than everyone else. To Lessig’s credit, he added that this was “exactly the kind of preference we ought to be encouraging in a competitive market.”

But unfortunately that distinction seems lost on the rest of the pro-regulation crowd. Congress’ neutrality proposals go in precisely the opposite direction, extending rules designed for the simple copper wire onto the fiber optic network. As George Gilder observed in the same debate, such regs support competition “so long as nobody wins or makes any money.”

Indeed, as Gilder later noted, there’s a larger ironic twist. The FCC’s proposed four basic freedoms of the Internet “depend on building out the broadband network. Those freedoms will be denied if the network is not built-out. So the question is, how do you create incentives for building out these vastly expensive fiber and wireless networks all across the country?”

The answer’s clear: The Internet has become a data-rich entertainment medium where freedoms can only be maintained through exponentially growing bandwidth, not regulatory and judicial fiat.

With so many varying definitions of Net neutrality cruising the blogosphere, coming up with a single sensical definition is like nailing Jello to the wall. Given Stanford Prof. Larry Lessig’s comments at this month’s 10th Annual Gilder/Forbes Telecosm Conference, the nailing just got even tougher.

Here’s the background: George Gilder’s annual telecosm schmooze-fest for the technophiles featured a session, “Broadband Brawl: A Debate Over Net Neutrality.”

The Discovery Institute’s Hance Haney asked the Stanford neutrality regulation advocate whether a broadband provider should be allowed to auction rights to its default search bar. The search engine that paid the highest price would have its product load immediately for millions of the broadband provider’s customers. The other search engines would then have to coax those customers to switch.

LESSIG: … I’m totally fine [with that]. It’s end-to-end competition and that’s exactly what we should be encouraging.

Source: Telecosm video podcast

Lessig’s response is 100 percent accurate and 100 percent exasperating. He’s right that with the tab for U.S. broadband build-out at $40+ billion and counting, content providers and carriers should be exploring deals to defray direct costs to users.

Unfortunately, such common sense would be a clear-cut violation of federal law if the neutrality regulations he (and other regulators) champions pass Congress. Check out the clear language of Section 12 of the Snowe-Dorgan bill, which provides that broadband providers shall:

“enable any content, application, or service made available via the Internet to be offered, provided, or posted on a basis that… is at least equivalent to the access, speed, quality of service, and bandwidth that such broadband service provider offers to affiliated content, applications, or services made available via the public Internet into the network of such broadband service provider.” (Emphasis ours)

Source: Library of Congress

So the Good Professor is right about the benefits of mutually beneficial agreements. The Internet’s distinction between content and carriage is already crumbling under the weight of its own obsolescence. But having the Feds regulate this anachronism would only prop up a nonsensical business model.

Tim Lee, a former scholar with the Cato Institute and now a resident at Missouri’s Show Me Institute, penned a great piece on cable deregulation for the Tucson Citizen late last month. We liked this bit especially:�

Worried about possible government regulation of the Internet, which has flourished for the past decade precisely because government has taken a hands-off approach?

See? We’re not the only ones arguing for a hands off approach. It is indeed the free interaction of individuals in the marketplace that has made the Internet so successful over the past decade. And Mr. Lee shares some of our concerns about the immediate future:�

The dishonestly named “Net Neutrality” would actually introduce government regulation into the Internet, which has flourished to date precisely because government bureaucrats have not interfered. Unfortunately, “Net Neutrality” proponents are extorting senators into supporting this alarming intrusion of regulation of the Internet. American and Arizona consumers shouldn’t be held captive to powerful left-wing “Net Neutrality” special interests who wish to regulate the Internet.

Actually, we don’t necessarily see this as a partisan issue. The co-chairman of our organization is Mike McCurry, who was press secretary to President Clinton when the Internet first exploded into the national consciousness, and as he’ll tell you, back then one of the smartest decisions they made was to let the Internet develop on its own. A lot has changed in the world since then, but the importance of a free Internet hasn’t changed a bit.

Interesting catch from Patrick Ross at the Progress & Freedom Foundation — a RAND Europe team wrote a footnote in a 174-page study of telecommunications and business:

The interviewees in this project have indicated that Quality of Service on the Internet is a complex issue and that net neutrality needs greater analysis in order to ascertain the real investment options that can drive content and network investment in Web 2.0 and next-generation network futures.

QoS is central to the net neutrality debate, though the would-be Internet regulators never seem to get around to discussing it. That might be because if you think about the issue in terms of new services for consumers, their “let’s save the Internet by handing it over to the government” arguments don’t sound very good.

Here’s hoping RAND picks up the issue sooner rather than later.

Google’s acquisition of YouTube is huge news in both the financial and technological worlds — it’s been several years since anybody paid ten figures for a website that didn’t make any money — and it will have an effect in the net neutrality fight as well. Writing for the Financial Times this week, economics professor Thomas Hazlett points out that Google has become

…the leading champion of the hottest topic in technology policy over the past year, asserting that if web innovation such as theirs was to be retained, new laws were warranted. … “Network neutrality” rules were needed, Google argued, because the architecture of the internet demanded it. That structure relies on traffic flowing freely over a network that is “open, end to end”.

Yet the capitalist engine that powers the internet demands something completely different, as Google’s acquisition of YouTube makes clear. That strategy is to integrate Google’s search and advertising sales with YouTube’s users, which could potentially impede access to one of the hottest technologies by other service providers. Jeremy Schoemaker, a net economy expert, sees the deal as superb for Google, “merging to form the biggest video network” and winning a “land-grab for publisher space”. Perhaps even better, it boxes out a rival: “This move is a total ‘in your face’ to Microsoft,” which had made YouTube an offer for an advertising agreement.

So does Google fancy itself an aloof public benefactor or a hard-charging business? It seems to fancy itself as both, but only Google executives and their mothers are likely to believe the two priorities can coexist. It won’t be long before Google’s obligation to their shareholders interferes with their lofty public statements, especially once they start integrating YouTube with their search and advertising features. Precursor Group founder Scott Cleland gets down to details:

Will the Google “searchopolist” with 50% share of the search market pledge to not “block, degrade, or impair video or other content of consumers or competitors? Will they agree to not discriminate against any of “the people’s” youtube videos by giving them a higher/lower search ranking than others based on how much they pay for the search keyword or advertising? Will they keep youtube “democratic” where everyone’s video is treated exactly equally with everyone else’s video?

We’ve been trying to think of a good example of public hypocrisy to illustrate this. It’s not quite fair to compare the company to a single person caught with their hand in the cookie jar, and we wouldn’t go so far as to compare it to Enron. So, dear readers, think of it a little like the fight between Isaiah Washington and Patrick Dempsey from Grey’s Anatomy. Most of the time they’re Burke and McDreamy, saving lives, and entertaining key demographics every Thursday night (and Friday repeats).

In the same way, Google makes a good show of being more than a normal company — just about everyone with a modem has heard their motto “don’t be evil” at least once. But just as Burke and McDreamy are actually real people who get into fights and cause trouble on the set, Google is a self-interested company like any other and therefore will keep it’s eye on the bottom line.

And hey, there’s nothing wrong with that — they’re incorporated as a for-profit enterprise, not a non-profit. But if you try to pretend you’re one thing while you’re actually something else, well, don’t be surprised when everybody notices — and you end up in all the wrong gossip columns.

Note to readers: The Hands Off team has one member who is completely obsessed with Grey’s Anatomy. You may notice more references to the show in our posts, with this being its second mention. Stay tuned!

From The Simpsons, “Much Apu About Nothing” (3F230):

Homer: Not a bear in sight. The Bear Patrol must be working like a charm.

Lisa: That’s specious reasoning, Dad.

Homer: Thank you, dear.

Lisa: By your logic I could claim that this rock keeps tigers away.

Homer: Oh, how does it work?

Lisa: It doesn’t work.

Homer: Uh-huh.

Lisa: It’s just a stupid rock.

Homer: Uh-huh.

Lisa: But I don’t see any tigers around, do you?

Homer: Lisa, I want to buy your rock.

Homer reminds us a bit of ZDNet’s Russell Shaw, who is always preaching an Internet apocalypse. In a late Sept. blog post, he surprises us a bit by approving of Verizon’s new FIOS broadband video service:

And by all Internet video, not just the video content provided by Verizon content partners, but all of it.

“If they follow through, they will have accepted the most important issue in net neutrality - honest consumer access to content of her choice.”

Yes… and you expected otherwise? Just as Homer believes Lisa’s rock keeps away tigers, so does Shaw seem to think the hyperventilation by himself and his allies have made telecom companies change their plans. Never mind that the industry has been perfectly clear all along about wanting to bring as much content to consumers as possible — Mr. Shaw feels that he needs to pat himself on the back.

As AT&T, Comcast, and other companies start rolling out new services, expect more regulation proponents to declare victory because their worst fears didn’t come true. Which would be a pretty neat trick, if it wasn’t so obvious.