Funny how facts have a way of intruding on the rationale for net neutrality.

Last week, a report from a noted net neutrality proponent at the University of Minnesota suggested that online data growth was not as fast as thought. Therefore, he claimed, net neutrality was necessary to spur additional use.

Yet by week’s end, this announcement from NBC provided fresh evidence that, far from moderating, the growth of data-heavy consumer choices online is accelerating.

NBC announced that it would soon allow users to download – not just stream – favorite programs. What’s the difference? Well, let the numbers tell the story:

According to figures provided by the British-based Broadband Stakeholder Group, a typical standard definition television (SDTV) stream at 30fps requires 3.75 megabits per second. As that’s still above the bandwidth limit of some broadband systems, consumer usage has been limited.

But once you switch from streaming to downloads, this problem goes away so the potential number of viewers increases considerably. (Smart move, NBC. Let’s see how long it takes other networks to follow suit.)

To give you an idea of the data involved, a single half-hour sitcom download can be over 420 MBs, assuming 2 channels, a 1.33:1 aspect ratio and bitrate of 2500 kbps.

And you’ll have to download about 840 MBs just to watch George Takei in “Heroes” tell Masi Oka that he’s Oka’s father. Oh my!

As with the networks rush to stream shows back in 2006, other stations will quickly join NBC in offering downloads. It’s inevitable. Good for them and consumers will be the ultimate beneficiaries.

So don’t believe that web growth is moderating. Not by a long shot.

Amid all the stats coming out of last week’s IDC Security Forum in New York, the most depressing is probably this: 90 percent of all email is now spam or has some mixture of viruses, Trojan Horses, or other malware.

Sad to say, but when it comes to online security, the U.S. is lagging. Symantec concluded as much in March when it issued a report ranking countries by the proportion of malicious activity originating from their networks. The United States had the highest proportion of malicious activity, with 31 percent. China was a distant second, with 10 percent and Germany third, with 7 percent.

The sole ray of hope from the IDC conference is the increasing success of integrating network-based security measures. These can measure traffic spikes that are often the telltale signs of denial-of-service attacks, botnets, and other problems, and then take action to prevent this harm from spreading to consumers.

And net neutrality? Well, remember that if net neutrality becomes law, a company pushing malicious software would gain new legal standing to bring a lawsuit if an Internet service provider “discriminates” against it by filtering or blocking its programs.

That well could inevitably hamper efforts to combat evolving security problems – with net users becoming the ultimate losers.

As a practical matter, think of online security this way: Your anti-virus software is the online version of a deadbolt lock on your front door. Your Internet service provider is like the cops on the street.

Net neutrality effectively takes away the cops on the street, leaving you with only your front door deadbolt. Feel safer?

William Taylor, chair of the communications practice at NERA Consulting in Boston and former MIT professor, has just published this concise economic analysis of the Internet and the likely impact of net neutrality.

His report effectively debunks the idea that innovation would suffer if broadband carriers offer different choices in download speeds. Indeed, precisely the opposite would occur, he concludes, noting:

“[A]dvocating regulation to preserve Internet freedoms is inherently inconsistent.

“Indeed, if priority prices reflected the costs of priority as well as consumers’ valuations of the applications that depend on priority, one would expect more valuable innovation in a market-determined network architecture rather than less.”

Equally helpful, Dr. Taylor offers a timely reminder of how government regulation of service quality in another commercial venture – the airlines – devolved into comic absurdity. That included:

“…prescribing the maximum amount of leg-room, requiring that meals be limited to sandwiches, and establishing uniform additional prices for in-flight entertainment.”

This natural mission creep of regulation is exactly what has so many supporters of a vibrant Internet opposed to the calls for net neutrality.

This is a good study and a breath of fresh air for the net neutrality debate.

If there’s an award for the dumbest historical reference of the week, it would surely go to The Seattle Times for its editorial in favor of net neutrality, “Free the Internet.” It begins:

Democracy is meaningless without structure. It requires support and infrastructure to become a word capable of giving entire nations voice and freedom.

The architects of America’s democracy knew this. The Founding Fathers made sure newspapers and magazines were widely distributed by allowing periodicals to utilize low postage rates.

Come again? Saying that the Founding Fathers encouraged newspapers by allowing them to “utilize” low postage rates is like saying that the USC Trojans are undefeated because the players are encouraged to wear cleats.

The obvious irony, no doubt lost on The Seattle Times editorial board, is that the Founding Fathers truly protected newspapers by prohibiting Congress from “abridging the freedom of speech, or of the press.” Yet The Times’ editorial is actually a cri de coeur for a law giving federal regulators and judges the ultimate say over today’s Internet.

The editorial gets even better: “Constructive regulation is needed to allow the Internet to grow and mature.” Really? For more than a decade, the Net has grown rather nicely without a lot of “constructive regulation” so it seems odd that the editorial doesn’t even offer a reason. Here’s a wild guess why: The deafening silence is The Seattle Times’ admission that there is not a single problem facing net users today that could be resolved with net neutrality.

Finally, the comment that “there is nothing stopping” a carrier from “degrading content from competitors” is an eye-roller given all the antitrust and other laws protecting Net users from online discrimination. For more on this, click here [PDF].

On one point, we do agree with The Seattle Times: The Net requires “support and infrastructure.” Our view is that this should be a shared responsibility involving individual and large corporate users. The Times would exempt the corporations through net neutrality and put the costs entirely on Net users.

That’s their right of course, but it seems an odd way to claim that you’re on the side of the little guy.

So how easy is it for someone with a political agenda to manufacture a crisis from normal economic trends? Judging by Monday’s Minneapolis Star-Tribune, the answer is: EXTREMELY.

An article entitled “A Net in Neutral” profiles the work of Andrew Odlyzko, net neutrality supporter and head of the University of Minnesota’s Digital Technology Center. Here’s Odlyzko’s basic claim: The Net isn’t growing as fast as it has been, the annual growth rate of Internet traffic has dropped to 50 percent and because of these trends, Congress should spur growth by passing net neutrality.

From a statistical perspective, this analysis wouldn’t stand up in a freshman year economics class. Look at the following hypothetical product growth and you’ll see why:

Year       Product users    Growth Rate

Year 1     10 million
Year 2     15 million       50%
Year 3     21 million       40%
Year 4     27 million       28%

The fact is that MORE signed up in Year 3 than in Year 2 and that number stayed the same for Year 4. But if you look only at the growth rate, it (shock!) drops almost 50 percent from Year 2 to Year 4. Horrors!

This is what economists call the “Tyranny of the Small Base” and it’s an absurd way to base long-term usage projections.

It also shows why Mr. Odlyzko’s attempt to tie this to net neutrality is as weak as Paris Hilton’s DUI excuse. Of course the growth rate declines but the key measure – total amount of data being sent – continues to surge, which is the fact that’s driving the network’s expensive upgrades.

Two more points out of Econ 101 about new product adoption: First, it’s rarely lineal. Yes, you have surging growth initially but as the market gets increasingly saturated, like today’s broadband market, growth rates often come in spurts. Second, it’s doubtful that latecomers to the broadband web (in other words, the grandparents down the street) are going to use it as much as early adopters.

Finally, some of the other contentions in the article – we can’t tell whether they come from the reporter or Mr. Odlyzko – are especially ludicrous. For example, there’s this nugget:

“Traffic growth may be slowing for several reasons: The speed of computers isn’t increasing as fast as it once did….”

It’s unclear whether this is a reference to home PCs or servers, but in either case it’s an absurd rationale for changes in growth rates.

If this is the best that net neutrality proponents can muster to support net neutrality, they’re in worse shape than we thought. It also brings to mind the old saying, Give me the facts and I’ll see what I can do with them.

Now this is a breath of fresh air from America’s heartland:

“Though attempts are being made to position net neutrality as pro-consumer, in reality it is very anti-consumer. With net neutrality, Web-based companies would avoid compensating network owners for use of their facilities, leaving consumers and network owners to pay those costs. This would force the majority of consumers to pay for the high costs driven by a minority of Internet users….”

The author is Dan Hesse, CEO of Kansas-based Embarq, who penned this great column on the absurdity of net neutrality for the current issue of Chief Executive. As Hesse notes, in 2007 alone, communications companies are investing $70 billion to upgrade the country’s network infrastructure. With America already behind more than a dozen other nations in broadband access, such investment is indispensable and, as Hesse rightly observes, this investment would not continue if Congress enacts net neutrality pricing regulations.

Less than 10 years ago, wired broadband costs ran as high as $60 a month and wireless broadband was a myth. Today, inflation-adjusted prices have plunged 50 percent or more depending on location, while choices have expanded and wireless has become an instant mass-market phenom. Given this, Hesse’s warnings about the cost to consumers of net neutrality’s ultimate cost seem not only correct but downright commonsensical.

Incidentally, on this lovely fall afternoon, we’ll throw another bouquet to the company: that green “origami jet” logo is really cool.

If there’s one area of common ground in net neutrality, it’s the need for broadband deployment.

The logic (or what passes for it) of net neutrality rests on consumers’ supposed lack of broadband choices. But like the blind squirrel that occasionally finds an acorn, this has an element of truth: Yes, consumers do need better broadband choices. We’ve said it repeatedly. So have unions, independent experts and corporations on both sides of the debate.

That’s why this article in the current Economist ought to be required reading for state and federal lawmakers. The article describes a remarkably successful Kentucky partnership to promote broadband deployment and usage:

“According to Brian Mefford, president of ConnectKentucky, a public-private partnership, a few years ago the state had among the lowest rates of broadband availability in the country. Internet service providers could not be sure that there were enough [interested users] in the Kentucky countryside to justify new investment….

“But by the end of this year, Mr Mefford boasts, 98% of residents will have access to inexpensive broadband services. This is primarily because of ConnectKentucky’s effort to map broadband demand in communities that didn’t have access, he says, which indicated that enough people in Kentucky farm country would sign up if providers entered the market. At the same time, the organisation also talked up high-speed internet services to skeptical residents…. Once isolated Kentuckians can now consult with doctors in faraway cities or telecommute.”

The key to Kentucky’s success is clear: a joint effort to promote broadband demand and new investment. Equally clear is how this approach conflicts with Net neutrality, which emphasizes regulation of existing technologies.

But the results speak for themselves and ought to be embraced by all concerned with improving U.S. broadband services.

OK, anyone want to join hands and sing Kumbaya?

There was something almost surreal in this week’s Senate Commerce subcommittee hearing on FTC reauthorization.

These hearings are usually like a kabuki dance but without all the spontaneity. This year, though, with subprime and other financial scams harming millions, it was dismaying to see a couple of well-known consumer advocates testifying about… net neutrality?

Leave aside the obvious question of how shifting broadband deployment costs from corporations to consumers would benefit consumers. The undeniable fact is that scammers are getting more sophisticated and, as the