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In Congress this week, two sides presented their cases in front of a Senate committee that’s considering revising a 10-year-old telecommunications bill. The topic was Internet neutrality: the idea that all bits coursing along the Web should be treated equally. It’s been a founding principle of the Internet – that anyone can access any Web page regardless of how they connect to the Internet – and a previous federal regulation had mandated Web neutrality in the dialup era. Now, with broadband the preferred access method, Congress is considering rewriting the rules so that some traffic can get preferential treatment.

On one side of the issue stand powerful Internet and software companies such as Google, Yahoo, Microsoft, and Amazon. They – and others – are arguing that all bits should be equal – that a “best effort” should be made to deliver Internet information, regardless of where it comes from.

On the other side are the powerful infrastructure companies, who own the conduits through which the traffic flows, such as Comcast, Bell South, and SBC. They argue that because they own the pipes, they ought to have the right to charge companies such as Google or Apple something extra to “guarantee delivery” of their data.

At issue, potentially, is the ability of Internet users to visit the sites they want, with no speed difference in the delivery of data between a site that pays for preferential treatment (say, Google) and one that doesn’t (say, your favorite blog).

The issue of net neutrality, while seemingly weak on public awareness and galvanizing sound bites, is actually making headway through Congress. This week, the Senate Commerce Committee held hearings to gather evidence on how best to update the 1996 Telecommunications Act – which was written before the Internet exploded, and therefore is woefully out of date. Representative Joe Barton (R-TX) made it known on Wednesday that he planned on presenting President Bush with a revised telecommunications bill this year. “We don’t have that many legislative days this year, so it is time to stop talking and it is time to start working,” he said at a speech this week in Washington.

One of the key issues Congress is examining is whether or not to codify “net neutrality” in the revised bill. Cable and telecommunications companies are opposed to the idea, because they want to charge firms like Google, Yahoo, Microsoft, and others additional levees to “guarantee delivery” of their traffic over the cable and telco pipes.

Right now, a carrier such as Comcast or BellSouth doesn’t discriminate between data from a competitor or from a service it provides. That’s why – with all variables removed – a video from YouTube.com should load as quickly as something from a Comcast site, and why users can surf to any site they want.

This scenario exists in large part because of a federal regulation that designated telephone companies (at the time the main route for Internet access) as “common carriers.” Under this FCC distinction, telcos couldn’t discriminate against data packets on their networks; they had to send them along just as they would voice calls. This allowed the Internet to flourish.

In August 2005, however, the FCC declared broadband conduits “information services” – not beholden to the same requirements as common carriers. The phone companies argued that this created an unfair competitive landscape, and, as a result, the FCC mandated that all high-speed carriers were information services, but also had to continue to carry other ISPs for one year.

With the net neutrality issue before Congress, the cable and telecommunications companies are mounting a classic “land grab” effort. They want to create a system where bits from companies that agree to pay a toll, essentially, will be given preferred delivery status. Ed Whitacre, CEO of the newly merged AT&T and SBC, laid out his opposition to codifying net neutrality in BusinessWeek magazine in November: “I ain’t going to let them do that because we have spent this capital [on fiber lines] and we have to have a return on it.”

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