This has been a great discussion and has really helped me to come to a good mental model about explaining net neutrality.

> Because naway.com's server is so far away, it could cost isp0 more than average to serve this data.

The distance makes no difference to the Internet. I'm not sure how much better to explain how the Internet works but you do keep inventing new ideas to support the idea of an ISP charging a specific domain but it has no basis in reality of how the Internet works.

> If there is a lot of traffic from naway.com, the ISP could compensate by raising prices on all end consumers, throttling the speed to reduce demand, or negotiating with naway.com for extra $$.

There is absolutely no traffic from naway.com coming to ISP0. All the traffic comes from ISP1. And that traffic is an aggregate of all the traffic requested by ISP0 customers. This is arguing about charging more for different tap water based on the source reservoir; at some point it's all just water. Every router reads a bunch of fiber lines, copies that data, and aggregates that output to another line. Both sides agree on how much data they are willing to accept and the router drops anything over that amount.

It's really not feasible for an ISP to have a business relationship with every possible end point.

> Note that isp0 would only bother to do this with domains of sufficient size.

That is the problem. In effect, only large domains would either suffer or get the benefits of these business relationships. Would Facebook ever be possible in a world where Myspace had exclusive relationships with all the major ISPs? Your ISP is effectively picking the winners and losers on the Internet by whom it chooses to do business with.

> Net Neutrality seems to try to correct a symptom of a federally created, legal monopoly's concentration of power with more federal regulation.

One could argue that monopoly concentration in providing Internet is a natural physical consequence of the world. There is only so much right of way, so much wireless spectrum, etc. In a situation where it's physically impossible to start a new ISP, competition is going to be very limited. Perfect is the enemy of good; you want perfection but net neutrality is a good solution to today's problems.

No one is attempting to create a new concept here; net neutrality simply attempts to codify into law what has been convention for most of the existence of the Internet. It's what allowed the Internet to thrive when so many closed networks failed.

Arguing against legislation for legislation sake begs the question that all legislation is bad by default. But that's an entirely different argument. The argument here is whether or not net neutrality is bad policy and I would say that it's entirely not. You have not found an argument, based on the physical reality of how the Internet works, where net neutrality has any real negative consequences. It absolutely doesn't have any for consumers or Internet businesses. And ISPs have been doing brisk business for the last 20 years without issue.

> we need to acknowledge that the natural size for a ISP monopoly is the size of the government entity that owns the streets.

The only solution to this problem of monopoly ISPs is more federal regulation. But as you are against federal regulation in one form you should also be against it here as well.