Even if carriers don’t like net neutrality, their investors should

AT&T’s shareholders today didn’t require the telecommunications giant to implement network neutrality on its wireline and wireless networks. The proposal lost with a mere 5.9 percent of the vote. But based on an interview I had two weeks ago with Jonas Kron, Vice President of Trillium Asset Management, the goal of the shareholder proposal was to get 3 percent of the vote so they could bring it back next year. So in that case, Trillium and other shareholders in favor of the proposal (including Mike D of the Beastie Boys) won.

In fact Kron told me that anything over 5 percent would be a substantial victory because it means that the company would have to pay attention to the issue.

Regardless of change coming from this particular vote, in our talk Kron offered me something far more interesting, an economic justification for broadband companies to embrace network neutrality. So despite Wall Street analysts who argue that such rules would turn the nation’s largest wireline and wireless phone companies into commodity utilities with the profit margins to match, Kron explains why American’s capitalists should be fine with network neutrality.

“Most people are diversified investors and interested in broad-based economic growth. And just because it’s good for a single company doesn’t mean it’s good for the market,” Kron explained when I asked about the potential damage to AT&T’s or Verizon’s profit margins. “The concept of negative externalities comes into play. Just like pollution that isn’t priced in will add costs in the other parts of the market, a free and open Internet is responsible for significant value, and we don’t want to interfere with that. And wireless is where so much activity is moving to — that’s where a lot of money is being made for the market, and that’s why we wanted to make wireless net neutrality a specific issue.”

Now Trillium is in the small class of socially conscious investment firms that take perhaps a more holistic view of their asset management strategy, but compared to returns for the large-cap funds that invest in AT&T and other wireless company, it doesn’t pay a penalty for its social stance. It’s returns in the 1-3-year time frame are slightly lower than the returns from the S&P when you include its management fee, and slightly above the S&P in the 5-to-10 year time frame. Trillium has $1 billion in funds, which means it’s not a small player either.

And given how Comcast appears to be formulating an end-run around wireline network neutrality with its decision to let Xbox streaming of Comcast network traffic sneak onto the network without affecting a user’s data cap, we’re still not done trying to protect the rights of services running on all broadband networks. So on both wireline and wireless networks, network neutrality is still very much a concept we need to pay attention to.

Similar proposals regarding wireless network neutrality are scheduled for votes at the upcoming annual meetings of Verizon Communications (s VZ) on May 3 and Sprint Nextel Corporation (s s)on May 15.