BusinessWeek highlights the latest Andrew Odlyzko paper (PDF) on Net Neutrality, which makes a pretty odd argument…

The general conclusion is that some form of government intervention, to set the rules, is inevitable. (And at some point it may be welcomed by the players, just as government intervention was welcomed in the end by the railroads.)

Well, yes, government intervention was welcomed in the end by the railroads. That’s because, as Timothy B. Lee pointed out in the New York Times, whatever the good intentions of those who sought to regulate the market, the result was, as a Ralph Nader group described it, “primarily a forum at which transportation interests divide up the national transportation market.” Lee explained further at Ars Technica…

The railroads were the high-tech industry of their day, and there was a lot of concern in the 1870s and 1880s that the railroads had become too monopolistic. Congress responded by creating the Interstate Commerce Commission in 1887, giving it the power to regulate the railroads. … [Yet] the story of the ICC does not have a happy ending. After President Grover Cleveland appointed Thomas M. Cooley, a railroad ally, as its first chairman, the Commission quickly fell under the control of the railroads, gradually transforming the American transportation industry into a cartel. By 1935, when it was given oversight of the trucking industry, the commission was restricting competition and enabling price increases throughout virtually the entire surface transportation industry.

Indeed, more than 100 years later, taxpayers are still subsidizing railroads. You might begin to imagine now why the regulation was “welcomed in the end by the railroads.” If you’re still having trouble, close your eyes and count to $2,000,000,000. That’s how much taxpayer money Amtrak now receives every year. Out of your pocket.

Andrew Odlyzko is right that government intervention was eventually welcomed by the railroads. However, we don’t think “the players will like it because they can create a cartel like the railroad industry did” is a very compelling argument for net neutrality. It’s certainly not an argument we expect consumers and taxpayers to find persuasive.

If there’s an award for the dumbest historical reference of the week, it would surely go to The Seattle Times for its editorial in favor of net neutrality, “Free the Internet.”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

Folks, we couldn’t have scripted this one any better. It’s been almost two years since Google kicked off its net neutrality push with a call for “lightweight but enforceable” government regulation – easily written and simple to apply.

Looks like someone forgot to remind Google’s corporate bloggers of the company line.

One of the first entries on the company’s new blog is a call-to-arms on net neutrality, claiming the Net should be “free and open to all comers.” OK, antitrust and unfair competition laws already guarantee that but it’s a nice sentiment.

Then it gets interesting: The blog argues that government should not prohibit broadband carriers from “managing their networks to, for example, block certain traffic based on IP address in order to prevent harmful denial of service (DOS) attacks, viruses or worms.”

By using “prevent”, it sounds like Google approves of a carrier taking action to protect the Net before an attack starts. Given today’s threats to online safety, that’s logical – EXCEPT that it means neutrality regulations would have to include legally binding definitions for when and how a broadband carrier may take such action without fear of liability. The regulations would also have to define DOS attacks, Trojan horses, worms and viruses.

These regulations would have to be specific enough to deal with current problems but also broad enough to cover new threats.

And Google thinks all of this will be accomplished with “lightweight” regulation? Right, and Ozzy Osbourne is a correspondent for The 700 Club.

For our part, we don’t have special insights into how DOS attacks and malware will continue evolving. But there’s no doubt that the best way to repulse these challenges to Internet safety is through allowing carriers to respond rapidly and without huge liability threats.

In short, Google’s talking out of both sides of its mouth. It’s claiming neutrality rules will be “lightweight” while also acknowledging growing and complex challenges to online safety.

A cynic might say that Google’s contradiction indicates the likelihood of an ulterior (read: financial) motive for supporting neutrality rules. But hey, that’s cynicism for you.

There’s a new working paper from AEI-Brookings Joint Center making the rounds. The title? “Economists’ Statement on Network Neutrality Policy.” The authors are 16 academic economists from the United States, United Kingdom and France, including Robert Litan from AEI-Brookings and Thomas W. Hazlett from George Mason.

But don’t let that scare you: It’s concise, written in plain English, and offers policy proposals that aim to both protect the online experience as we know it today and foster an environment under which the U.S. Internet can flourish. Click here to download it free as a PDF. Here are their key recommendations:

Recommendation 1: The antitrust enforcement agencies should be directed to investigate and, if the evidence warrants, file actions to prevent abuses by Internet service providers with market power that distort competition on the Internet.

Recommendation 2: Firms should be allowed to experiment with different pricing schemes for providing Internet access.

Recommendation 3: Congress and federal regulators should promote policies that increase the opportunities for competition and foster Internet innovation. One such policy would be spectrum liberalization.

The first two points should be familiar enough to regular readers, but the third point is an interesting one that we haven’t really covered here. But the point is much the same: freeing up the wireless spectrum so they can be put to the most efficient use is a good, hands-off way to let the Internet grow.

As they say in their summary, “flexibility is likely to be the best way to insure efficient innovation on the information superhighway.”

Larry Lessig is one of the academics most closely associated with the development of the “net neutrality” concept. Its adherents like to pretend it’s a long-standing principle, but in fact Lessig and fellow professor and web writer Tim Wu came up with the term in just the last few years.

Before that, Lessig was a prominent supporter of the last big mistaken governmental intrusion into the high-tech marketplace: the poorly thought out attempt to break up Microsoft in the late 1990s. Lessig has since recanted his support for a breakup, and in the latest Wired, this has him rethinking his convictions on “net neutrality” too:

I think about this mistake whenever I think about the current Microsoft-like network-neutrality debate – whether network owners can pick the stuff that flows across “their” network. In this debate, too, I am a reluctant regulator. And again, I don’t see how it’s possible to steer broadband providers away from a business model that – like Microsoft’s – may benefit them but could stifle innovation. Every dominant commercial competitor has the same incentive: to build a business that extracts all potential value from the pipes that company owns.

But life is all about repeating the same mistakes in many different contexts. So, are we reluctant regulators wrong again? Is there something we think is impossible today that will be obvious tomorrow? Can last-mile broadband be developed in a way that doesn’t rely on the incentives that drive current providers toward innovation-stifling business models?

Lessig looks to the Linux model for an archetype for what could happen in computer networks. There may be something to that, although Linux has a tiny market share concentrated among technology elites (especially people who know what a “compiler” is).

But most people don’t need Linux. For most, Windows (or Macintosh) is all they’ll ever need, and the breakup attempt had no positive effect for the consumer.

Likewise, “net neutrality” regulations make no sense when antitrust law already covers this space and new pipes are coming online around the country. And the last thing the telecommunications industry needs is the destructive, distracting equivalent of the Microsoft trial.