Most of the discussion about net neutrality and paid peering has been about who shoulders the financial burden for increased broadband use — the Internet Service Providers who need to invest in hardware and manpower to meet demand, or the companies like Netflix, Google, and Amazon whose content is so in-demand that it requires extra support from the ISPs? In the end, it doesn’t really matter since it’s the consumer who ultimately foots the bill, but AT&T is making its argument for weak net neutrality by saying it will lead to lower rates for subscribers.

In a recent filing [PDF] with the FCC, AT&T makes the case that not only should net neutrality continue to be off the table, but that it and other ISPs should be able to charge content companies a premium for preferred access to the end-user. That is one of the practices specifically called out as a no-no in the neutrality rules gutted by a federal court earlier this year.

In fact, AT&T calls for the creation of a “safe harbor” to protect deals between the AT&Ts and Netflixes of the Internet that provide the content companies with priority access.

While this seems to fly in the face of the conventional understanding of net neutrality, the Death Star’s filing contends that it’s actually in the spirit of the Open Internet rules. The company explains that if “an ISP is neither favoring its own content, applications, or services nor providing a service on an exclusive basis, there is no risk of commercially unreasonable discrimination that would constitute a threat to Internet openness.”

Many consumer advocates have argued that allowing ISPs to charge a premium for providing quality delivery of content puts too high a price on entry into the marketplace for a startup competitor. The idea is that larger, deep-pocketed companies will not feel the sting of the additional cost as much as a newer business trying to carve out a customer base. This leads to lack of competition, which can result in higher prices and crippled innovation.

But AT&T has given some thought to this and claims that allowing ISPs to place tolls on “edge providers” — sites and services that deliver bandwidth-heavy content like video — is good for competition and for consumers!

[Reminder, this is the same company that claims forced arbitration is in consumers’ best interest (it’s not), and which failed to convince regulators that a merger with T-Mobile would have been good for consumers (it wouldn’t have been), so take the following quote from the FCC filing with a sizable grain of salt.]

Allowing individualized dealings between ISPs and edge providers is sound policy for a number of reasons. By enabling smaller edge providers to negotiate special arrangements for the handling of their traffic, flexible net neutrality rules will empower start-ups to compete more effectively against more entrenched and well-heeled rivals. And by enabling ISPs to recover the costs of network upgrades not just from consumers but also from the edge providers whose applications benefit from such upgrades, flexible rules also will promote deployment of additional broadband infrastructure and improved features. They also will reduce the cost of broadband service for consumers, facilitating greater adoption.

Before we get to the whole “reduce the costs for consumers” thing, can we all have a good chuckle at the phrase “flexible net neutrality”? AT&T isn’t asking for flexibility, it’s suggesting that the FCC scuttle the entire notion of net neutrality.

But it’s all for the best, right? We’ll be paying less for broadband, yes? AT&T says so right there in the FCC filing that it’s assuming most people will never care to look at.

As Ars Technica points out, just in case there is any doubt that AT&T is promising cheaper Internet if the FCC takes some TNT to the idea of net neutrality, there is an entire subject heading in bold type that reads: “Enabling ISPs to Negotiate with Edge Providers Would Reduce the Costs of Broadband for Consumers.”

In this filing and in a recent blog post, AT&T keeps making the claim that the many customers who don’t use Netflix are shouldering the cost burden for the few who do. Except Netflix has more subscribers than any single cable company and accounts for upwards of around 1/3 of the downstream traffic in the U.S., so this isn’t a case of that next-door neighbor kid who piggybacks on your WiFi and downloads gigabytes of pirated porn. This is many millions of customers trying to access the nation’s largest streaming video provider.

AT&T also deploys the myth of broadband competition to bolster its argument, claiming that fear of customers jumping ship to competing ISPs will keep AT&T and others honest and won’t allow them to gouge the customers or the edge providers.

“[I]f Broadband Provider X began degrading its best-effort Internet access platform to favor its ‘prioritized’ content, such that most applications and content loaded more slowly on X’s network than on its rivals’ Internet access platforms, customers would begin switching to those rivals en masse,” writes AT&T, in complete ignorance of the fact that there is very little competition for true broadband access in much of the country.

About half of the people in U.S. have a grand total of one option (some have none) for even lower-tier broadband service, but AT&T claims that if an ISP starts to suck, “rivals would encourage consumers to do precisely that by running advertisements emphasizing the poor performance on Broadband Provider X’s network. For that matter, application and content providers themselves would likewise be free to broadcast their preference for X’s rivals right on their homepages for all traffic bound for X’s current customers. In short, there is nothing to this concern. Rather, allowing ISPs and edge providers to freely negotiate for service enhancements will bring innovative new services and applications to the Internet ecosystem.”

Of course, no actual price reductions are explicitly promised or mentioned in the filing, just the vague “reduce the cost of broadband for consumers.” Does that mean actual price drops, or smaller price increases? You’ll notice that it also makes no mention of AT&T reducing the rates it charges to consumers, instead hypothesizing that the industry will behave according to AT&T’s logic.

It doesn’t cost anything (aside from the legal fees for the lawyers who wrote them) to make a vague statement of what should happen, but if AT&T, Verizon and the others succeed in neutering net neutrality, consumers can look back on today as a big red IOU.