One of the best movie lines is in All the President’s Men, when Woodward and Bernstein are trying to unravel the Watergate mess: “Follow the money.” This advice is priceless because it’s the answer to so many pressing questions in politics, business, geez, even personal relationships.

“Follow the money” definitely gets to the bottom of the question of why the incumbent telcos have totally lost their mind over net neutrality. It has become a breathtaking display of whining, bullying, fear mongering and distortion of facts. Before tomorrow’s FCC meeting to present the rules (that’s right, all this wailing and gnashing of teeth from people who haven’t even seen the rules), I want to present a basic overview of the debate from a pro-net neutrality perspective.

Recently FCC Chairman Julius Genachowski laid out six principles that ensure the Internet remains a neutral communication medium, meaning everyone gets equal treatment accessing and delivering data, services or applications over the Net. Hence net neutrality. These six principles are:

1) Consumers are entitled to access whatever lawful Internet content they want. A service provider can’t prevent you from accessing the NRA’s Web site or blogs for the Communist Party or any other content.

2) Consumers are entitled to run whatever applications and services they want, subject to the needs of law enforcement. Same idea as #1. If you want to use Google mail, or run a telemedicine application from a local hospital, you can’t be denied these because the ISP has a competing e-mail or cut a deal with a national healthcare conglomerate.

3) Consumers can connect to networks with whatever legal devices they want that doesn’t harm the networks. You shouldn’t be prevented from using the smartphone you love because the wireless provider has an exclusive deal to sell some other type of device.

4) Consumers are entitled to competition between networks, applications, services and content providers. Translation: there should be more than one wireless and one wire-line service provider wherever possible.

5) Service providers are not allowed to discriminate between applications, services and content outside of reasonable network management. A provider can’t allow you to access MySpace but not Facebook (similar service, similar bandwidth), for example, because Facebook didn’t pay the provider a special speed-my-content fee. Reasonable prioritization of medical emergency data over Lady Gaga videos should be ok.

6) Service providers must be transparent about the network management practices they use. A provider can’t, unknown to you, slow down or stop your ability to send or receive data.

Net neutrality is really about ensuring fairness on an Internet that is a channel for open communications. It’s about protecting consumers, businesses, nonprofits and government entities from harmful practices executed in the best financial interests of those 30 or so companies that manage a third of all Internet traffic.

One thing anti-net neutrality advocates fail to tell you is that service providers can indeed charge different prices to different people (or organizations) that access different levels of data. But net neutrality says providers’ pricing policies can’t be predatory/anti-competitive.

A lot of the particulars of the FCC’s net neutrality rules will be unveiled tomorrow. But let’s follow the money to get to the heart of the massive resistance by AT&T, Verizon, et al.

These service providers have a business model and entrenched mindset that necessitate they tightly control the environment in which they do business. A prime example is applications (e.g. ringtones) for the handsets that carriers sell. “Walled garden” was the name given to carriers’ attempts to control and charge for everything in their network. Customers couldn’t buy anything from outside of the garden, many startups and small companies couldn’t get access to the garden.

This mindset and type of business modus operandi is what many people believe carriers will enforce on the Internet. If net neutrality rules are passed, carriers are paralyzed with panic that they won’t be able to maximize profits. Two things loom large to justify both fears.

First, all of the innovations and investments the telcos tell you will surely die because of net neutrality in reality will flow just as strong because of these rules. This is the history of the Internet! Telcos and cable companies are less the innovators they like to claim, but the enablers. The major innovations came from thousands of startups, small businesses and people in their bedrooms creating Internet content, and the dozens of leading software and hardware companies providing technology to move and receive this content. Investments in the billions came from angel investors, venture capitalists and financial institutions preferring the open plains of the Internet rather than walled gardens of service providers.

The telcos provide a pipe. It’s a vital pipe, but it’s like the railroads. Railroads didn’t build Chicago and San Francisco and New Orleans, people did. Railroads made it easy to get innovative people and workers and supplies across America, and it would have been a lot harder to tame the West without them. But the Feds still had to have some basic regulations so railroads wouldn’t ream the public and businesses.

Second, fear of not being able to maximize profits on an open Internet is quite real because if you are mainly an enabling technology and you can’t exert iron control over your environment, better enablers will displace you. Look no further than Wilson, NC for an example of this. Wilson, a small town of under 50,000 with a city IT force of just a few people, built a fiber network that delivers 10 mbps of access for almost a third less money than Time Warner’s similar service. But, here’s the important part, Wilson also offers a service package 10 times faster than the best TW has to offer.

The broadband stimulus is proving there are plenty of public and private entities willing and able to do another Wilson – enable faster service for less money than incumbents, but without losing sleep over net neutrality rules.

Tomorrow let’s see what these rules look like, and I’ll have additional comment on the great net neutrality debate.

- Craig Settles, Successful.com
Twitter: cjSettles