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So-called "network neutrality" legislation hampers innovation and harms business and the public, Verizon's chief spokesperson said this week.

Tom Tauke, Verizon's executive VP of public affairs, said in a speech that efforts to legislate against discrimination would hamper the take up of multi-tier network applications such as VPNs.

"The hospital that wants to provide home health monitoring for a heart patient is not going to rely on the internet," he said.

Net neutrality advocates fear that the Bell telephone company - now reborn in the shape of Verizon and AT&T - will restrict the services that can be run on the open internet, and charge internet companies more for their bandwidth as they seek to compete with cable. The old Bells say that in order to deliver new services such as TV and movies on demand, they need to be able to discriminate between packets. With fiber offering the potential of 10x to 20x connections that today's broadband, they add, there's plenty of bandwidth to go round. We'll come on to quite how much in a moment.

Tauke rebuffed the idea that Verizon would punish internet companies, saying it made as much sense for the telcos to cripple the net as it did for coffee shops to replace their premium bestseller with a cheap and nasty brand. They'd go out of business if they pulled that stunt, he said.

It's the oddest of odd debates. On the one side former deregulation enthusiasts have been rushing to write new laws and regulations. On the other side, the Bell Heads, so often mocked by the Net Heads for their reactionary disdain to new technology, can justifiably claim that they're investing in innovation.

To the average Joe, innovation looks like video on demand - or a faster internet connection. To the Net Heads, innovation means Vonage and Skype. The VoIP services are something the telcos would dearly like eliminate, as they introduce a wildcard into the pricing, but they know they can't, so they'll settle for the next best thing, control.

"The plain truth is that today's access and backbone networks simply do not have the capacity to deliver all that customers expect," Tauke said. "Building out America's internet and broadband infrastructure will require billions more in private capital investment."

In that, he's correct, of course. The passion behind "network neutrality" is largely based on a fear of price gouging, which given the Baby Bells track record, is entirely justifiable. AT&T boss Whitacre sees Google as freeloading on his network and has hinted he wants to charge the internet companies more.

What Whitacre may be trying to point out is another uncomfortable economic truth: who else will finance network improvements? Even the most profitable internet company Google can't afford to make fiber investments on such a scale, even if it spends every penny of its $8bn cash pile. And only an idealist or fool would spend capital funding a new 4G network, for two reasons. The return isn't there when voicecalls promise to be free or nearly free, and TCP/IP doesn't allow the investor a future lock-in. This is simply how the gears of finance turn, and the telcos are considerably richer than the internet companies.

Verizon probably delivered the fatal blow to the "neutrality" campaign very quietly last week. The Boston Globe reported recently from the doorstep on the risky and expensive investments Verizon is making with FiOS TV net installations. But, it notes, the minimum net speed of 5Mbit/s was doubled last week to 10Mbit/s in NY state, New Jersey and Connecticut. This is more likely to sway the debate than any heated rhetoric on either side.

How are "network neutrality" campaigners going to counter this gambit? Does the slogan "Citizens For A Slower Internet", work for you? ®

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