Remember a long, long time ago when no major network streamed programs over the net? That was last year.

Now they all do, which is why the Wall Street Journal story that CBS is about to announce a flurry of deals to put shows online seems almost anticlimactic. If you can’t get enough of CSI or Katie, then rejoice. But the fact that once-blockbuster deals like this are now commonplace shows how dramatically networks have migrated to the web since only last year.

But it’s also a timely reminder of how these deals are placing unprecedented strain on the web’s capacity. Internet traffic growth surged past capacity growth last year. Average traffic was up 75 percent while capacity grew only 47 percent, according to the folks at TeleGeography.

Any way you look at it, the web’s capacity has to ramp up and that’s expensive. Now you know why Google and eBay are trying to so hard to avoid paying their share of these costs by lobbying for neutrality regulations. And it’s worth repeating: If they don’t, guess who will?

Wall Street analyst Anna-Maria Kovacs is out with an interesting take on the FCC’s Notice of Inquiry proposal (Link 1). In an email to investors, she notes:

“What is interesting is that the NOI asks about the practices of content and application service providers as well as those of broadband network and access providers. The record built as a result of this NOI could expand the focus of the debate on the potential for harm caused by other parties, such as portals or site managers. Thus, it has the potential to broaden the scope of the debate substantially and to put some of the parties who have been pushing net neutrality on the defense .” (Emphasis ours)

If the FCC follows through on this, consumers could be treated to quite a show as regulations biggest advocates suddenly head for the hills. After all, eBay and Google have been locked in a year-long fight over the security of Google Checkout. eBay uses PayPal… which coincidentally happens to be owned by eBay.

And let’s not forget Amazon, which loves to advertise its one-click check-out simplicity. That company hasn’t exactly welcomed either Checkout or PayPal with open arms.

Of course, the truth is that in a free market, companies that do the best job of appealing to consumer tastes win and it shouldn’t be up to the Feds to save companies from their own shortsighted actions. Still, it would be a little bit fun to see certain folks in San Jose and Seattle squirm over their own non-neutral practices.

How bad is that Skype/eBay “wireless net neutrality” petition to the FCC we’ve been talking about the last few days? Tech Liberation Front (a great blog you should be reading, if you aren’t already) gives good gist:

The Skype-Wu proposal would foreclose such marketplace experimentation by essentially converting cellular networks into a sort of quasi-commons and forcing private network operators to provide network access or services on someone else’s terms.

What does that mean in the big picture? TLF has one idea:

In my opinion, when you get right down to it, this proposal is a declaration of surrender. That is, Skype and Prof. Wu almost seem to be saying that while it’s nice we’ve seen innovation at the core of the wireless sector over the past two decades, we now need to get on with the important business of establishing rules to ensure the maximum amount of output or innovation at the edge of networks while largely ignoring what happens at the core, or even prohibiting certain things from happening at the core. In other words, to maximize the freedom to innovate at the edge of networks, we must now restrict the freedom to innovate at the core in some ways.

And of course, the same is true with “wired net neutrality.” The regulationist side likes to claim they are protecting innovation, but what the companies pushing hardest — Google, eBay and Amazon — really want to do is freeze the market where it is now, with each at the top of their own game.

Regulation rarely is good for any kind of competition, let alone prohibitionist regulation like the Dorgan-Snowe bill under consideration in the Senate now. Online and on the airwaves, it still makes the most sense to hold off and deal with problems if they ever actually materialize.

Our last post highlighted an article from the popular tech website TechDirt that made a true and compelling argument against “wireless net neutrality.” That article also touched on a humorously self-serving petition to the FCC by Skype, the peer-to-peer online telephone service. Here’s the relevant section:

As far as Skype’s petition to the FCC, the less said about this blatant publicity stunt, the better. It’s not really clear why this is so important to Skype: a Windows Mobile version of its client software has been available for a long time, and is pretty much open to US mobile users with compatible Windows Mobile devices. It’s got little room to expand outside that niche, since its CEO says the company can’t seem to get the hang of mobile development. Also, it’s a little ironic that Skype’s demanding openness and use of standards, when it’s eschewed so many standards in the VoIP space, like SIP, in favor of proprietary technologies and systems it refuses to open up.

If you didn’t already know, Skype is owned by eBay, a close ally of Google, which is also not above silly attempts to go on the offensive on this issue. As Scott Cleland at Precursor Blog has been pointing out for months, both have adopted a “neutrality for thee but not for me” attitude. Here’s Cleland, on the same wacky petition:

While most everyone else is looking to see how competition policy is working and how it might be improved, eBay-Skype said in FTC testimony last week, by eBay-Skype official Tod Cohen, that even a competitive market of 4-5 providers won’t solve the problems of limitations on wireless devices by wireless carriers.

Got that? The regulationists have gone from arguing that the broadband marketplace is an unacceptable “duopoly” to declaring that even a quintopoly is not competition enough. Just more evidence that there’s nothing they won’t say to muddy this issue.

With all of the recent activity – midterm elections, new majorities, telecom mergers, etc. – now behind us, we had a hard time picking one thing to start back with, but today we settled on The New York Times’ editorial page. It’s been more than half a year since they’ve picked up the subject of “net neutrality,” and based on the mistakes in the editorial, they seem to be in a bit of a rush to catch up. For instance, early on the editors make a casual assumption that might seem sensible to most:

Internet users now get access to any Web site on an equal basis. Foreign and domestic sites, big corporate home pages and little-guy blogs all show up on a user’s screen in the same way when their addresses are typed into a browser. Anyone who puts up a Web page can broadcast it to the world.

But is it correct that any website will “show up on a user’s screen in the same way” as any other? Not quite. It’s true that a “best effort” delivery is the standard across worldwide networks, but the way things actually work is a lot more complicated. As Wired explained last year, the Internet has never been “as egalitarian as people would like to think it is.” So the New York Times wants to restore an idealized past that never actually existed.

But that’s small potatoes. The biggest mistake comes soon after, where the Times tries to get into what “net neutrality” laws would actually do:

Cable and telephone companies are talking, however, about creating a two-tiered Internet with a fast lane and a slow lane. Companies that pay hefty fees would have their Web pages delivered to Internet users in the current speedy fashion. Companies and individuals that do not would be relegated to the slow lane.

There’s another reason why it’s a good thing our blog is back – the Times could really use another source of information.

Simply put, nobody will be “relegated to the slow lane.” There will never be a slow lane. The “fast” and “slow” lane analogy puts the wrong image in people’s heads. The Times would be accurate if they described the lanes as “faster” and “fast.” With new broadband services coming on line now and in the years ahead, everyone will receive access faster than we already do now.

The Times continues:

Creating these sorts of tiers would destroy the democratic quality of the Internet. Big, wealthy voices would start to overpower the smaller, poorer ones. Innovation would be threatened if start-ups and small companies could not afford the new fees. The next eBay or Google might never be born.

It’s ironic that the Times chose these particular companies – because both are among the “big, wealthy voices” who want the government to get them out of helping to pay for investment on new high-speed fiber. Mind you, that’s the same broadband infrastructure that will them make billions in coming years.

“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.