Yesterday, Rep. Ed Markey held the latest of his series of hearings into the future of the Internet, titled “Digital Future of the United States.” The first one was a mild disappointment, with World Wide Web inventor Tim Berners-Lee as the lone guest. The latest hearing was something else altogether, with representatives from YouTube, TiVo, Disney and HDNet — and the subject of “net neutrality” was on everyone’s minds.

The hearing was a big deal in the blogosphere. Because the theme for yesterday’s hearing was “The Future of Video,” Markey held up a digital video camera to capture the first-ever YouTube video taken from the perspective of a House committee chairman:

Things like this are a lot of fun, and another reminder of how far the Internet has come in the past decade. However, the rapid growth of YouTube and other video-sharing services should put us in mind of expanding broadband capacity.

Yesterday, in the video below, Cuban lamented the fight over “net neutrality” issue, which he rightly sees as a distraction from the truly important goal — bringing the United States’s broadband speeds up to the level of our trading partners in Europe and along the Pacific Rim.

As he said yesterday:

This issue goes away completely if bandwidth constraints go away.

Unlike Mr. Cuban, we don’t think that the need for QoS necessarily will go away – guaranteed packet delivery will always have its place – but we agree the “net neutrality” cause could disappear tomorrow and the world would be the better for it, so long as there was much greater broadband capacity and greater competition for providing that broadband for the consumer.

With 100 million views per day and counting, YouTube takes up much more of the limited capacity than AOL chat rooms ever did — and this is especially an issue that Mark Cuban raised over a year ago, in a post at his Blog Maverick site, “Hey Baby Bells & Cable, We need multiple tiers of service.”

And now with TV-like online video services like Joost coming online, it makes even more sense to make last-mile fiber a priority. We’re not at the moment of crisis yet, but considering the ever-growing demands on our nation’s broadband networks, we should be investing now.

That includes making the broadband market more attractive — which also means putting hypothetical worries about “neutrality” aside and building the capacity that will prove it irrelevant.

It was only a matter of time. The net neutrality folks now are taking their one size fits all philosophy into new realms and are objecting to the proposal of the United States Postal Service to charge less per item for larger mailers of print media. Here is one blogger’s account :

I knew the price of stamps was going up again. What I didn’t know was that this time, the proposed rate hike was a comprehensive change to periodical rate structure that benefits high-volume periodicals and penalizes small presses. I think it’s fair to describe this as a postal equivalent of “net neutrality”: high volume customers seem to have negotiated preferential rates.

So now, according to the “neutrality” folks, getting a discount per item because you’re buying in bulk is inherently “non-neutral” and hurts the market. Gee, do you think these people will ever shop at Costco again? What’s next on the agenda, a campaign against group sales of show tickets? Outlawing baker’s dozens? Protesting kids stay free?

When you step back and look at it, it’s pretty clear that “net neutrality” is no life and death issue. Otherwise, why confuse it with “postal neutrality,” whatever that’s supposed to be? Because “net neutrality” is just another pet issue – one more generic cause with a one-size-fits-all rallying cry. The only real surprise is that they let the cat out of the bag.

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?

“Saving” the Internet requires placing restrictions on what the ISPs can and can’t do, right? Wrong. There’s an interesting op-ed in the University of Texas Daily Texan explaining that imposing new laws is not how to save the Internet:

Proponents of net neutrality would like you to think that large service providers had nothing to do with inventing our modern Internet, but this notion isn’t true. Even though explorations into the Internet began at major academic universities for the purpose of research, it is highly unlikely that private companies would never have entered into the market of Internet services. Companies eventually moved into the Internet communications market, albeit backed by government protectionism through such policies as the Communications Act of 1934.

Sure, the government invented the Internet, nobody can dispute that. But it’s equally indisputable that private enterprise and the free market made the Internet great. As we look toward the future, it’s still business and the market that will build the next generation Internet. The only question is who pays for it, and the proponents of “net neutrality” want to shift that burden from big companies, including the ISPs and content providers, to you the consumer:

The net neutrality argument isn’t really a “little guy” movement, but a corporate protectionist measure on behalf of those like Google and Amazon. If economic prosperity in the Internet service industry is our goal, then we should not hinder Internet service providers from demanding varying prices from different content providers to finance important and necessary upgrades to the Internet infrastructure.

If you really want to save the Internet, it doesn’t need saving from the marketplace — it needs to be saved from the regulators.

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.

Hands Off the Internet hearts Sonia Arrison, and in her latest column for Tech News World, she asks an intriguing question: “To what extent are supporters of net neutrality also tacitly supporting piracy?” Arrison works through the issue, and arrives at the conclusion that it’s probably “a lot.” She explains:

Perhaps that’s why the music and movie industry associations, in the past at odds with ISPs over obtaining pirate data, have remained fairly silent in the net neutrality debate. It also makes a recent announcement by the “Future of Music Coalition” look rather silly.

On March 22, Jenny Toomey, executive director of the Future of Music Coalition, said, “With Rock the Net, we intend to get thousands of the nation’s musicians, independent labels and music services to become part of the effort to keep a ‘payola’ system from being established on the Internet.

What’s ironic is that by supporting the issue of Net neutrality, these artists may also be supporting the theft of their products online. That would indeed ensure the elimination of payola, but it would also ensure an elimination of artists’ intellectual property.

The irony is that the music industry has no direct stake in the “net neutrality” debate, yet they have hopped aboard this bandwagon without considering the real threats to their own livelihood.

Networks are great, but they can be abused, and those who use more should pay more. Likewise, if you want to move audio or video packets along a network at a guaranteed rate, that costs a bit more, too. If anything, musicians should want their music and music videos to be delivered using state of the art technology. Whatever Dorgan-Snowe would do, it certainly won’t help that.

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.”