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.

“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.