In his blog post about how some folks want to regulate the internet Mr. Hearney makes a statement
“See, it was already producing the electricity that Bob just purchased, because that’s mostly how generators work – they produce a certain amount of electricity, whether it gets used or not. It’s just that, until Bob signed up, that electricity was going to waste. ”
Of course, that is completely mistaken; otherwise we would just build generators and put them in parking lots. The reality is generators transform one form of energy (the source) into another. When Bob starts using energy, well the generator either burns more fossil fuel, or draws down more water from its limited reservoir. Generation and distribution are often constrained, so during peak demand periods, the market price will rise; in regulated markets there are all sorts of ways to try and balance supply and demand with various price schedules based on all sorts of factors.
In Mr. Hearney’s example, no energy was going to waste because Bob wasn’t consuming it; what was going to waste was distribution capacity of the network. If Bob wants energy they still need to burn some more coal or use some more of this seasons water stored behind a dam.
The transmission and distribution of electricity are generally not competitive. In many places, the generation is very competitive, but the consumer still needs to pay to get the energy delivered somehow, and the transmission network may very well be constrained during peak usage periods. It gets more expensive to deliver electricity when more people want it at the same time.
Where we might take exception to Hearney’s argument on net neutrality is that, yes, you have paid your ISP for delivery from their network to your home; however, you have not paid for the transmission of massive amounts of data from the provider (like youtube or netflix) to the ISP. Who should pay for that cost? All consumers with a broadband package, or those using massive amounts of data from youtube and Netflix? (Please don’t confuse this argument with sympathy for ISPs and the rates they charge us consumers).
The other problem with net neutrality is I want your BitTorrent and Netflix and Youtube and whatever it is people due with their Xboxes throttled a bit when I have a realtime application (like VOIP) which needs a little bandwidth, but needs priority to work well.