So, after Friday’s post you’re probably asking, what is on my Watch List?  Right now, I’m focused on getting back to basics … looking for strong stocks with great sales and earnings growth, big profit margins and (very important!) a solid story that is likely to continue those earnings trends in the quarters to come.

Moreover, I’m attracted to stocks that have been building launching pads for many weeks or months, as opposed to stocks that have motored higher for 10 months.

On that front, I’ll highlight two stocks I’ve been keen on for a while, yet the stocks (and their group) just never got going last year.  But now, it looks like the tide may be turning.

I’m talking about restaurant stocks, but specifically, “new idea” restaurant stocks that aren’t already so big that they’re destined to grow a measly 5% a year.  My two favorite ideas in the group–Chipotle Mexican Grill (CMG) and Buffalo Wild Wings (BWLD)–have tons of expansion potential in the years ahead, which, combined with growth at restaurants already open, should drive earnings sharply higher.

Chipotle Mexican Grill is aiming to re-invent the fast-food business with its simple Mexican fare.  Its hitch is fresh, quality ingredients as well as quick service-most of the firm’s beef, chicken and pork is naturally raised (no hormones, etc.), and much of its vegetables are organic.  More important, the food is good!  Management is also top-notch (the firm was originally a subsidiary of McDonalds before being spun off in 2006), and should be able to guide the firm from its current 900-plus store count to a couple of thousand in the years ahead.  Revenue growth has been humming along at a 15% clip, but earnings are expanding much, much faster (up 49% and 83% the past two quarters).

Buffalo Wild Wings’ (BWLD) is aiming to be a national sports bar of sorts, a novel idea.  The firm makes a lot of its money on alcohol, thanks to its fun, cozy atmosphere, yummy wings (including a dozen different sauces) and crew that is told not to force customers out the door.  The firm currently has 652 stores in 42 states, but management believes 1,000 stores in the U.S. is easily achievable, followed by expansion overseas.  Revenue growth is running in the 25%-plus range, with earnings a little faster.

Both stocks have been building bases since the middle of last year but have perked up in 2010 despite the soggy market.  Also, both are reporting earnings on February 11.  Assuming both stocks get through their earnings reports unscathed, my thought is that they have strong upside in the months ahead as money flows into the fastest-growing companies in this group.

Editor’s Note: From the market’s bottom in March 2003 to the low in March 2009, the S&P 500 lost 18% in total and the Nasdaq lost 3.5%. Cabot Market Letter, however, left them in the dust: Advancing a total of 94% during the past six years (nearly 12% per year). Cabot Market Letter has called every bull market since 1970. In fact, Timer Digest recently named Cabot Market Letter one of the Top Ten Timers for the last one, three, five and 10 years! Don’t miss what our indicators have to say next! Click here now for more.

Note from Elyse Andrews: As longtime readers know, we have expanded since our inception to include the voices of nearly all of our editors. Today I’m bringing you the first issue written by Chloe Lutts, the editor of Dick Davis Digest and Dick Davis Income Digest and a third-generation Cabot employee (her grandfather, Carlton Lutts, founded Cabot and her father, Tim Lutts, is the current publisher). Enjoy!

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Last month, Conan O’Brien hosted his last ever “Tonight Show,” only seven months after inheriting the franchise from Jay Leno. NBC’s decision to move Leno back to his late-night spot, with the side effect of getting rid of Conan, was mostly about ratings. Neither Leno nor Conan had high enough viewership to justify giving them the airtime they were getting.

In the Sunday New York Times published two days after that last show, an article headlined “O’Brien Undone by His Media-Hopping Fans” picked apart some of the reasons “The Tonight Show with Conan O’Brien” didn’t garner more viewers. The article posited that some of Conan’s biggest “problems” were the unconventional media-consumption habits of his most enthusiastic demographic: younger viewers. Though he was popular with 18-34 year olds, the article said,  “regularly assembling those young adult viewers in significant numbers in the late-night hours has become a daunting, if not impossible, task.”

The primary reason, as set forth in the Times article, is the number of alternative entertainment options available to those “media-hopping” viewers. Those include other TV shows; at 11:35 pm, when “The Tonight Show” aired, 18-34 year olds were as likely to be watching “The Colbert Report” on Comedy Central, Adult Swim cartoons on the Cartoon Network or sports programming on ESPN. In Conan’s first six months on “The Tonight Show,” he averaged 719,000 viewers under 35, versus 746,000 for the satirical news show “The Colbert Report.”

A newer source of “competition” was also mentioned in the article though: “Add to all the other issues the fact that Mr. O’Brien’s young fans did not really have to watch television to see him. His shows were made available later on Web sites like Hulu. And his best comedy bits would frequently be posted on other sites–and passed around by fans–shortly after they appeared.”

That four-line paragraph was the article’s only mention of watching TV online, but if we’re discussing the viewing habits of young media hoppers, I think it deserves much more attention. That may be because, six months ago, I canceled my TV subscription and had a Time Warner Cable representative disconnect my cable box and take it away. I still pay Time Warner Cable for Internet, but my bill is now about $40 less every month.

This step may seem extreme to some, but it was a logical decision after months of under-watching my $40 worth of TV channels. The reason wasn’t, by any means, a lack of interest in television. I enjoy a number of TV shows, including “fake news” shows “The Daily Show” and “The Colbert Report,” the fabulous period drama “Mad Men” and sitcoms including “The Office,” “Parks and Recreation” and “30 Rock.” I also watched “The Tonight Show” occasionally while Conan was on it (but will likely never watch Leno). However, because I never watched “The Tonight Show” at 11:35 on NBC, I wasn’t one of the 700,000 or so viewers counted by NBC. In fact, until three weeks ago, I thought “The Tonight Show” was on at 11.

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As the Times article reported, we now live in a world of near-infinite entertainment options. In my mind, the days of sitting down in front of the television when my favorite shows are on (or worse, sitting down and flipping channels to see what’s on) are over. Instead, I sit on my couch when I’m ready to relax, whether that’s 6:10 p.m. or 1 a.m., and decide what I want to watch. And my options are, if not infinite, far greater than the number of TV shows on cable at that moment.

If I want to watch Jon Stewart skewer hypocritical politicians on the previous night’s “Daily Show,” I turn on my flat-screen TV and switch the input to a computer running the free operating system Linux. What might be called an entertainment PC, this computer is dedicated solely to delivering content to my TV. It cost about $500 to build, the price of about a year of cable.

From there, I can choose one of three different ways to watch “The Daily Show.” The first is to launch the computer’s browser and navigate to Comedy Central’s Web site, where I can watch clips from any show from the “Daily Show” archives. I can watch the last few weeks of shows from start to finish in HD. These shows are completely free and interrupted by only a few short advertisements. (Also on Comedy Central’s Web site, completely free, are full episodes of “The Colbert Report” and “South Park” and clips of many other shows, as well as Web-exclusive stand-up shows and shorts.)

My second option is to go to Hulu, a Web site that officially launched in 2008, and a joint venture of NBC, Fox and ABC. Currently, the site provides completely free access to shows from the three owner-networks as well as Comedy Central, USA Network, Bravo, Syfy, A&E and more. All the videos are free (for now) and are interrupted by a minimal amount of advertising, usually no more than two minutes of ads per half-hour show.

And because Hulu is engineered to run on a computer, some of the ads are interactive, allowing viewers to choose ads that most interest them or follow links to advertisers’ Web sites. By some accounts, this increased potential for user engagement means Hulu can charge more for ads than TV networks can. However, rumors about ad rates vary widely.

The third way I can watch “The Daily Show” is similar to both the first and second, but involves an additional step. Instead of going directly to Comedy Central’s Web site or Hulu, I can launch an application on my entertainment PC called Boxee. Boxee is a completely free application that anyone can download at www.boxee.tv. It is designed to run on entertainment PCs just like mine, where it makes watching content over the Internet as easy as watching TV.

To watch “The Daily Show” on Boxee, I go to the TV Shows page and search for it or select it from my personalized list of favorite shows. Boxee then offers me the option to stream the show from Hulu or from Comedy Central’s Web site. Both are instant, and contain the same ads, or lack thereof, that are on the site the show is coming from.

Boxee’s real advantage though, is the diversity of content it finds and allows me to play on my TV. The TV Shows page includes streaming content from dozens of Web sites, including Hulu, Comedy Central, NBC and Fox. It also includes TV shows I’ve downloaded from the iTunes store or elsewhere. I can search for a specific show I want to watch, or browse the page to see what shows have recently added new episodes. I can also watch movies from my personal collection, Hulu or other online sources.

After watching TV shows, I use Boxee second most often for playing music. Through Boxee, I can listen to so-called “Internet radio” from Pandora or Last.fm, Web sites that create personalized playlists based on your music preferences. I can also listen to music I’ve copied to the PC.

Finally, dozens of applications expand Boxee’s functionality beyond TV and music, by providing access to third party content. Some of my favorites include The Onion News Network application (or app), which streams the satirical “news” clips available only on the Onion Web site; The BBC News app, which includes hundreds of up-to-date BBC News podcasts; and The Big Picture app, which is a smooth interface for viewing the Boston Globe’s daily photo essay feature, The Big Picture, full screen on my HD TV (it’s even better than on their Web site!). There are dozens more apps with functions I’m not even aware of.

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Boxee’s one drawback is its newness. The application is now in its Beta version, which is significantly more reliable than the Alpha version, but still has bugs (most obnoxious are relatively frequent crashes). I don’t expect the application to gain a wide following until it’s out of Beta.

Boxee also has no obvious business plan yet, though the company has announced it will introduce a payments plan soon to allow it to offer more content. In the blog entry announcing the news, Boxee management wrote: “The move towards the Internet as a main source of entertainment does not mean everything will be free. … The iTunes store has already shown us that people are willing to pay for content when it’s affordable and easy to access. Our goal is to equip the content providers that we’ve spoken with over the past year, both big and small, with a way to monetize their content above and beyond the advertising-only model.”

TV online is still a very new market, and content creators are still trying to figure out how to monetize it without driving users away (to illegal downloading sites, for example.) It’s still too early to predict the winners of the shift to TV online (other than media-hopping consumers.) But when they do emerge, they’ll be the innovators who can make money by delivering the content consumers want to watch when they want to watch it.

I wouldn’t be surprised if Boxee develops a sound business plan and becomes a leader in this market, but I also look forward to other contestants emerging as the market grows. There’s plenty of demand for good online TV sources, and I think there’s also plenty of money to be made.

As the iTunes store showed us, even the media-hopping under-35 demographic is willing to pay for content when they think it’s worth it. I’m a part of that demographic, and I recently willingly increased my monthly entertainment expenditures from $0 to $8.99 in exchange for a subscription to Netflix (NFLX). For that $8.99 a month, I gained unlimited access to thousands of movies and TV shows (that have been released on DVD), many of which aren’t available online.

The defining factor in my decision was the ongoing expansion of Netflix’s streaming library. Through the streaming library, Netflix subscribers can now watch movies and TV shows instantly on their TV, using an internet-enabled device such as a DVR, computer or a video game console (I use an Xbox 360, which works great.)

The streaming library is currently pretty limited, but Netflix is working hard to expand it, partially because it eliminates mailing costs. Earlier this month the company added hundreds of Warner Brothers titles to the instant library in exchange for delaying the rental availability of Warner Brothers’ new releases by 28 days, which the studio hopes will encourage more consumers to buy the DVDs.

I can’t claim to know exactly where the growth of TV-on-the-Internet will take us, but I am sure it’s going to grow. I wouldn’t be surprised if Boxee does well (though it does have competition) and I’m fairly certain Netflix (NFLX) will continue to expand.

Unfortunately, Boxee isn’t a public company. But Netflix (NFLX) is! Last week, the stock broke out to new highs on big volume, following an excellent fourth quarter earnings report. The gap up on earnings may be a sign of renewed strength. Cabot Market Letter Editor Mike Cintolo wrote about post-earnings gap ups in a Cabot Wealth Advisory last week, and said “A big, 20% or more upmove on earnings from a company with a good story and some sponsorship is usually a good buy right away.” NFLX’s gap up was just about 20%.

There are other contenders in the race to put TV online. Comcast (CMCSA) and Time Warner (TWX) introduced a service called TV Everywhere last summer. So far, the service lets users who are already paying cable subscription fees watch TV shows from the cable networks online. It’s interesting, but its reliance on the conventional TV business model could become a liability.

An alternative investment idea is the much-loved Apple (AAPL), which recently reported record quarter profits (thanks in part to a change in iPhone profit accounting.) Thus far, Apple’s only forays into the world of TV online have been the addition of videos to the iTunes store and the introduction of the Apple TV in March 2007.

The Apple TV’s primary function is to play content from your computer’s iTunes Library on your television. It can also play content from YouTube and stream Internet radio, among a few other features. The Apple TV (modified with a warranty-voiding larger hard drive) was actually my first step away from reliance on cable TV, and I think it’s still a good “gateway device.”

However, its capabilities are somewhat limited, compared to those of an entertainment PC. I’m sure Apple, expansionary visionary that it is, is already thinking about its next, more serious foray into the world of TV online. (The company recently began pressuring networks to halve the cost of TV shows sold in the iTunes store.)

I can’t say when Internet-based TV technologies will begin to surpass traditional cable. It probably won’t be tomorrow. But when it does happen, you can expect some legacy businesses will be left in the dust, while new innovators you’ve never heard of will grow with the market.

Today I have Cabot Market Letter and Cabot Top Ten Report Editor Michael Cintolo’s Cabot Weekly Review video. We’ve gotten a huge positive response from you and we appreciate all of your feedback!

Here’s this week’s video, featuring a discussion of the poor price and volume action of the market this week, including the performance of important financial stocks. Mike also demonstrates how to uncover leading stocks in this correction. Stocks discussed include Ford (F), Priceline (PCLN) and Baidu (BIDU).

You can watch the video here.

The biggest thing in the investment universe the past couple of weeks is that the U.S. markets (and most of the world markets) have fallen into a correction.  And I know the common question right now is:  What should I do?  Obviously, I can’t give personalized advice when writing this to so many of you, and I also can’t go through dozens of stocks (that’s what our publications are for).

What I can do is answer some of the most common questions I’ve been getting from subscribers in recent days.  So let’s get to it.

Question: I own XYZ stock, which has a great fundamental story. It’s down 35% or more from its high, including moving nearly straight down in recent days.  I had a decent gain but now I have a large and growing loss.  What should I do?

Answer: I touched on this in my weekly stock market review video on Monday.  In my mind, yes, the odds are favorable that your stock will bounce at some point, but when?  My advice is to take some action by selling some of your shares now, and then looking to sell the rest.  Taking action puts YOU in control … instead of just hoping every morning that your stock will begin its long-awaited bounce.  So, especially if you have a big position relative to your portfolio, I would advise selling some and looking to get out of the rest on a rally of a few percent or more.

Follow-up Question: But I can’t sell now!  I have a big loss!

Answer: Well, you have the loss whether you sell the stock or not … but I do realize that most of these fast movers don’t just head straight south.  They bounce, and some of those bounces are fast and powerful.  That’s why I favor a measured approach-sell maybe half of your shares just to ensure a bad situation doesn’t turn into a truly awful situation.  But holding some is fine, as long as you’re willing to let go of some more of your shares when the stock does rally for two or three days.

Question: I’ve been watching XYZ stock for a few months while it was rocketing higher, and now I’ve noticed that it’s now down 35%.  Isn’t it a bargain now?  Should I be buying?

Answer: No!  In this scenario, the stock is showing outsized and abnormal weakness.  And you have to remember that XYZ (like most stocks) has had a monster run in recent months, which means there are pent-up selling pressures in the stock.  Obviously, many of those pressures are being released (hence the 35% drop), but there are plenty more people who own the stock at much higher prices that want to get out.  If anything, stocks that break their 50-day lines on huge volume after big advances are better sells than buys the first couple of times they attempt to rally.

Follow-up Question: But then what should I be buying?  After all, the market is down a few percent and many stocks are down more.  So bargains abound.

Answer: One of the bigger fallacies is that, to make big money, you have to be “first” in and buy before a big upmove begins.  Wrong!  In the current environment, the sellers are in control, so your best move is to hold some cash and, most important, look for growth stocks that are resisting the market’s downward pull.  Such action means big investors are hesitant to sell, which, in a poor market, really tells you something.

Follow-up Question: OK … so should I buy those growth stocks that are holding up well?

Answer: A couple of small, pilot buys in certain resilient stocks is fine, but for the most part, you want to watch and wait.  As I often say, in poor markets, good stocks can go bad in a hurry.  We’ve already seen that to some extent-many names that held up well during the first few bad days came unglued late last week.  Thus, it’s usually best to limit new buying, though like I said, a couple of small positions here or there could work out.

Question: You talk about raising cash by selling your worst performers.  But what about my winners?  Shouldn’t I actually book some profits instead of booking all losses during this time?

Answer: I do believe you can book some winners … but you should discern which winners to sell.  For instance, if you have a big profit, but the stock is acting funky (like Apple was last week, flopping all over the place following its earnings and iPad announcements), or if the stock is extremely extended to the upside, or if earnings are coming out in a few days, you could take some off the table.  But in general, you should be hesitant to sell all of your best-performing stocks, as they have the best chance to lead the market’s next leg up.

Question: You’ve said that we’re likely in a short- to intermediate-term correction.  How do you know that?  How do you know this isn’t the start of a new bear market?

Answer: Nobody knows the future for certain, so yes, there’s always the possibility that this is the start of a prolonged bear phase.  But there are a few indications that this is not the start of a new bear market-mainly that the broad market, measured by both the Advance-Decline Line and the number of stocks hitting 52-week lows-did NOT diverge from the indexes at all.  And at major tops, you usually see months of diverging action.  Throw into the mix that bull markets rarely up and die after just 10 months (the duration of this one), and in my view, the odds heavily favor this being a correction, not a new bear market.

Follow-Up Question: OK, but if this isn’t a bear market, how long will this correction last?

Answer: Again, no one knows the future.  But studying past intermediate-term corrections, there are usually two or three legs to the decline.  The first leg (which we’ve probably already finished) is a phase where most investors are in disbelief; they feel it’s just a pullback within an overall uptrend.  The second leg down (after a bounce) is when most investors figure out something is really wrong.  And the third leg down, if it happens, is when people start panicking out to get out and believing a new bear market is upon us.  Thus, my best guess is that this correction is in its early or middle stages (call it the third or fourth inning?), though we’ll just take it day by day.

My last point here isn’t a response to a question, but just something for you to keep in mind while this correction grinds on.  What’s likely going on here is that the market and most stocks had such strong rebounds during the past 10 months that they’ve already discounted lots of the good news that’s now being reported (both in earnings reports, and in economic releases).  But that’s not the end of the world.

In fact, these corrections are actually fruitful in the long run, as they (a) allow you to identify the strongest stocks (those that aren’t going down) and (b) they allow those strong stocks to build new launching pads by scaring off the weak hands and setting the stage for another multi-month upmove.  So now is the time to sit back, take a deep breath, and work on building your Watch List for the next upmove … whenever it begins.

Today’s column is about free speech; it’s also about money, markets, technology, politics, and more.  The key phrase is “Network Neutrality.”

At the heart of the matter is the question of whether all entities should have equal access to the Internet or whether entities that pay more should get premium access.

If you answer the former, you align yourself with groups like Moveon.org, AARP, American Library Association, Gun Owners of America, the Christian Coalition, Vinton Cerf (”father of the Internet”) and Tim Berners-Lee (the inventor of the World Wide Web).  Also on this side are major content providers like Google, Yahoo!, eBay, Amazon, IAC/InterActiveCorp and Microsoft.

If you answer the latter, you side with FreedomWorks Foundation, National Black Chamber of Commerce, Competitive Enterprise Institute, Progress and Freedom Foundation, Citizens Against Government Waste, the National Association of Manufacturers and Bob Kahn (the inventor of Transmission Control Protocol, or TCP).  Also on this side are major Internet service providers like AT&T, Verizon, Time Warner and Comcast.

Be careful how you answer.  Consider the arguments first, and think about it.

Right now, we generally have network neutrality.  If you send a picture of a litter of cute puppies to your aunt in Oregon, it gets the same level of treatment as it passes through the Internet’s connections as a video that’s being streamed from Netflix (one entity with big pockets) to the home of Bill Gates (more big pockets).

In effect, the Internet currently functions as a “dumb network,” where neither the content of the message nor the identities of the sender and recipient matter.  In this simple system (which is, in reality, quite complex, with numerous participants), the job of the service providers is to “Deliver the Bits, Stupid” and let the end-users deal with the content that the bits represent.

Proponents of network neutrality say that they want to preserve this state of affairs by enacting new legislation, and thus permanently protect the system from the corrupting effects of companies like AT&T and Verizon, which are increasingly tempted to charge more to the biggest users of their networks … and whose dominance is growing.

Proponents furthermore claim that the open nature of the Internet has always fostered innovation by players large and small, and that allowing network operators to provide preferential treatment based on financial clout would reward the current big players while disadvantaging younger, smaller competitors.  At worst, say some, it would end up looking like cable TV!

Opponents say that no more regulation is needed, that providers of Internet service already have an incentive to satisfy all their customers, and that no more incentive is needed.  Opponents furthermore say more regulations would stifle innovation and that any attempt at regulation would be clumsy and lead to unintended consequences, in part because no member of Congress can understand how the system works now, let alone look ahead and anticipate how it will work in the future.

Before you decide, let’s take a look at the past, just to get a better view of the landscape.

Exactly 150 years ago, in 1860, a U.S. federal law (the Pacific Telegraph Act of 1860) was passed to subsidize the construction of a telegraph line that joined San Francisco to the eastern part of the country.  Part of that law stipulated, “messages received from any individual, company, or corporation, or from any telegraph lines connecting with this line at either of its termini, shall be impartially transmitted in the order of their reception, excepting that the dispatches of the government shall have priority.”

That turned out pretty well … unless you worked for the Pony Express.

Today, the telegraph network is obsolete.  In its place we have the telephone network, which is governed by similar “common carrier” laws.  These not only require that the networks treat calls from and to all entities equally, they provide the carrier with legal protection from the content that travels on its system.

Moving to the Internet, when DSL (Digital Subscriber Line) service was introduced, it was categorized as a telecommunications service, and subject to common carrier regulations.  (Cable modem Internet access has always been categorized under U.S. law as an information service, and not a telecommunications service, and thus has not been subject to common carrier regulations.)  However, on August 5, 2005, the FCC reclassified DSL services as information services rather than telecommunications services, and replaced common carrier requirements on them with a set of four less-restrictive Net Neutrality principles.

These principles say:

To encourage broadband deployment and preserve and promote the open and interconnected nature of the public Internet, consumers are entitled to:

1) Access the lawful Internet content of their choice.

2) Run applications and use services of their choice, subject to the needs of law enforcement.

3) Connect their choice of legal devices that do not harm the network.

4) Competition among network providers, application and service providers, and content providers.

These points are often summarized as “any lawful content, any lawful application, any lawful device, any provider.”

However, these principles are not FCC rules, and therefore not enforceable requirements.

To date, there have been five attempts to legislate certain network neutrality provisions.  Each of these bills sought to prohibit various variable pricing schemes by Internet service providers, a practice known as tiered service in the industry, and as price discrimination by economists.

But every attempt has failed.

Which means that every ISP (Internet Service Provider) has the power today to discriminate (or “prioritize” to use a less politically charged word) on the basis of the type of content, applications or services and the level of service purchased by the user.

Generally, however, they don’t.  Yes, some ISPs sell tiered bandwidth; the more you pay the faster your connection.  But excepting that, the universal practice is all-you-can-eat.

There was a period, some years ago, when peer-to-peer (P2P) networks were growing in power, that some ISPs reduced service to the biggest users (abusers) … typically students illegally sharing large amounts of songs and movies.

But in recent years, the use of P2P networks has grown less significant, in part because companies like Apple, Amazon and Google (owner of YouTube, a major bandwidth hog) have made it so convenient to acquire and view content legally.

For example, five years ago, Internet traffic was proportionally distributed among tens of thousands of networks. Two years ago, 15,000 networks accounted for about 50% of online traffic. Today, 100 networks out of over 35,000 contribute 60% of all online traffic.

The largest source of traffic is Google, which accounts for 6% of all Internet traffic globally.

Fifty-two percent of online traffic is Web (HTTP) traffic, up from almost 42% in 2007.  And somewhere between 25% and 40% of that Web traffic is video … which is not to say that 25% to 40% of Internet users are watching video but that video is so data-intensive a medium that is uses a disproportionate share of the available bandwidth.

In the meantime, there’s been a steady decline in the price of data transit, from $120/Mbps in 2003 to $12/Mbps to an estimated $1.20/Mbps in 2014.

And there’s little doubt these trends will continue … and the major content providers, like Apple, Google, Amazon, Netflix, eBay, Microsoft and Yahoo! will continue to account for a growing percentage of the total.

So what’s the best course?

In principal, I’m against increased legislation; I generally trust the market to adapt to the need of customers.  Imagine how the Internet might work today if the government controlled it!

On the other hand, I’m sensitive to the fact that Google (like the other big content providers) benefits mightily from its leadership position.  Google loves that the Internet appears free, so you keep clicking on the ads and links that generate its profits ($1.6 billion in the third quarter).  But bandwidth is paid for by the service providers!  To use a lousy metaphor, Google is driving its trucks on highways that we’re all paying to maintain, and it’s not paying its “fair share.”

So far, the Internet has grown so fast, and the benefits have been so broad-based, that putting throttles on the system by charging extra for heavy access wasn’t deemed necessary.  But as time goes by, and the growth slows and the heavy users become more identifiable, that is likely to change, and schemes that feature bandwidth restrictions and usage-based pricing are likely to proliferate.

In fact, if I look at where my money goes today, I find that my ISP and my local landline phone service are the only places where I get unlimited usage for one flat fee.  Otherwise, usage-based pricing is the norm.  We use it for cell phone calls, if we go over our minimum.  And we use it when we drive on toll highways, and when we consume electricity, water and natural gas.  Yes, we get “free access” when we drive on municipal roads, and when we use public parks, but those are owned by governments, and thus paid for by taxes.

So, the real question to ask the proponents of network neutrality appears to be this.  “Is the Internet so unique that it merits special legislation that forbids the practice of pricing systems that discriminate based on usage?”  I think not.