If you're new to the concept, net neutrality is best explained at Save The Internet: Net Neutrality 101. They are by no means unbiased, but it's about as accurate an explanation you can get in a short article with a short video.
This article, "Net Neutrality 102", is intended to give you a more detailed definition of what net neutrality is.
Definition
Although it is referred to as one concept, network neutrality has several different definitions. But all definitions have this in common: No blocking of Internet content or charging extra for Internet content. "Charging extra" applies to the consumer (you), but it also can apply to the content provider (say, Facebook would pay AT&T so that Facebook will always be accessible, even on AT&T's cheap Internet plans). However, opinions differ on net neutrality's stance on quality of service considerations (the speed at which you get certain types of content). There seem to be three main definitions.
No blocking content
This means an ISP cannot block or charge extra for any Internet content, but they can throttle (slow down) different types of content and charge extra for fast access to that content. This would likely be used to throttle non-website content, like bit torrents or streaming movies from Netflix. But they can't discriminate on the content provider--that is, they can't slow down streaming movies from Netflix, but make streaming movies from XBox Live fast. They can only make all content of that type slow or fast.
No blocking websites nor throttling content for a fee
This means an ISP cannot block or charge extra for Internet content, but they can throttle different types content as long as they don't charge extra for that type of content. So, they can slow down your torrents and Netflix content, but it will be the same slow data for everyone.
No blocking websites nor throttling services at all
This means an ISP cannot block, charge extra or slow down any Internet content. You can browse the Internet, stream Netflix movies, and make VoIP calls (Internet telephone calls) all at the same speeds. This is how the Internet has always worked.
What it doesn't mean
Net neutrality still allows ISPs to block illegal content (like child pornography) and still allow ISPs to institute tiered pricing for connection speed (e.g. $50 for medium fast access, $60 for really fast access).
Violations
You might say, "Is this really an issue? I've never heard of ISPs blocking websites."
The picture on the left is a real marketing slide from a company that sells software that can identify types of Internet data. If they are successful, they will be able to sell their software to an ISP, who can then implement a pricing scheme like the one shown.
Okay, okay, that's just a slide by a software company, and their stuff may never get sold to an actual ISP. Let's look at real examples of actual net neutrality violations.
Comcast admitted to throttling its users' BitTorrent downloads in 2007. Madison River Communications, an ISP in North Carolina blocked Vonage's VoIP service in 2005, presumably so that customers would instead pay to use Madison River's phone service. Also in 2005, Canadian telecom Telus blocked Voices for Change, a website run by the Telecommunications Workers Union during a labor dispute.
More recently, AT&T and other mobile phone companies are charging customers a monthly fee to tether their smartphones to their computers (that is, let the users connect to the Internet on their computers through their phones). The hardware and software are already enabled on the smartphone, but it costs extra to browse the same website on different devices. I haven't seen much written about this, but it seems clear that these mobile companies are violating the definition of net neutrality.
Cons and Pros of Net Neutrality Laws
For the last few years, the FCC has been trying to define net neutrality policies and force ISPs to adhere to these policies. ISPs and some legislators have been fighting back. There are two sides to every coin, so I'll do my best to provide the arguments for both sides of the issue. I feel this is a comprehensive list. Because I'm pro-net neutrality, I shall refute the con arguments.
Con: Tiered Access Could Make for a Better Internet
"Cable providers who invest in their networks are against net neutrality, since they believe tiered access - paying for different levels of Internet service - could pay for more sophisticated infrastructure, which would benefit all the users of that network." ("The Pros and Cons of Net Neutrality", about.com) A more sophisticated infrastructure means faster and/or more consistent Internet access for users.
Rebuttal: This argument posits that ISPs don't have enough money to upgrade their infrastructure and that if they did have more money coming in, they would use that money on upgrading their infrastructure. I feel both of these statements are quite unlikely.
Con: Making Content Providers Pay for ISP Costs
If ISPs charged website owners and other content providers fees, large companies pay for upgrades instead of users. They might not even need to have tiered access for users. For example, they could simply block Netflix for everyone if Netflix doesn't pay up (like what Comcast is currently doing).
Rebuttal: This would be unfair to startup companies that don't have the money to pay off ISPs. It also would be used to create monopolies. Of course Comcast wants any reason they can to block Netflix. Then Comcast Internet users (who are often also Comcast cable customers) are forced to stream movies from Comcast's Movies on Demand.
Con: Do We Really Need More Legislation?
"Net neutrality legislation could do more harm than good, especially since Internet technology changes so quickly. Inadequate laws could actually hinder commonplace safety practices unless specifically excluded, and provide loopholes for unethical exploits." (about.com)
Rebuttal: Yes, we need more legislation. If written correctly, a net neutrality law could be short, concise, easy-to-understand, and future proof. And it's not really adding new policy, it's just codifying an existing standard of electronic communication.
Con: Faster, Cheaper Surfing for Some
By implementing quality of service mechanisms, ISPs can slow down Internet traffic for power users and speed up traffic for everyone else. For example, they could slow down bit torrent downloaders--that are often downloading illegal content--and hardcore gamers, so that people who are streaming online movies or just checking their email can access the web faster.
Rebuttal: Although some definitions of net neutrality allow for quality of service controls (the first two listed in the Definition section of this article), I personally am against this. Partially because I am a power user and partially I don't know if slowing certain means that all other types of traffic will be sped up. I could also see this being used to create monopolies: by slowing down streaming movies from the Internet, ISPs that also provide television access will gain more money for their TV divisions when users just buy the movie on pay-per-view instead.
Pro: The Free Market Fails When Choices Are Few
The government doesn't need to intervene with how many businesses are run because when a business has bad policies, customers flock to a competitor. But 96% of Americans only have access to two or less Internet service providers. There aren't enough competitors for consumers to vote with their dollars. The government must step in and make sure that ISPs play fair.
Pro: Protect Free Speech, Unpopular Speech
Net Neutrality is partially a free speech issue. More and more, the Internet is becoming the place where people get all their news, find all their research and discuss what's on their minds. By arbitrarily blocking or charging fees for ordinarily accessible, free websites, ISPs would be restricting information and shutting down important lines of communication.
Pro: Keep the Internet as It's Always Been
For the more conservative among us who think there is nothing wrong with the Internet as it is, net neutrality is the way to go. There is some confusion among people who think net neutrality will change the Internet somehow, but the truth is that net neutrality just sets in stone the policies that ISPs have always adhered to until recently.
Pro: Startups
Net neutrality is pro-business. If a startup web company can pay for the servers and produce good content, they can become the next Google or Facebook. Without net neutrality policies in place, ISPs are free to make deals with the richest web companies and block upcoming competitors. Net neutrality prevents website monopolies.
Pro: Data is Data
Data is data. It doesn't cost ISPs one cent more when that data is coming from Facebook instead of Myspace. ISPs should charge by data use and data speed, not by data type or data source. Heavy users are more likely to slow down local networks. Users that require speed can cost more because ISPs have to pay to lay down extra fiber. Users of certain types of data or certain websites could be heavy or light users--there's no way to know without examining their data usage. It doesn't make sense to charge by data type or source, except to have an arbitrary fee that ISPs can change at their whim.
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