When you watch HBO, there is no marginal cost to anybody. Every person in America could change the channel to HBO at once, and no bad thing would happen to the cable system. HBO bills your cable company monthly for the number of subscribers, and the cable company bills you monthly for subscribing. Makes sense.
The cable company does incur a marginal cost for every byte you transfer, because they aren't tier-1 ISPs for the most part and they have to pay for transit. There is also a cost because their other customers get pissed off by the congestion and switch to a different ISP. So it makes sense for the cable company to bill you by the byte, because it reflects their cost structure.
People who are waiting for Verizon to save them from their cable monopoly are likely to be waiting a while. At current roll-out rates, FiOS will pass every dwelling in the USA in the year 2080.
I use to work for an ISP, and trust me -- they don't pay by the byte. Instead they pay based on the 95th percentile of use - furthermore pull up any charge of wholesale bandwith prices and you'll see they are going down (not UP or even flat) year over year by orders of magnitude. Bandwith costs are NOT where the cable companies are losing their money -- once they pay for their 12/24 month contract to a hook into a core ISP, that cost is FIXED and NOT variable. No ISP in the USA pays for metered wholesale broadband access.
Where ISP's get chewed up on costs is in the upgrade -- if they forecast peak demand at say 10GB/s over the course of the day/month/whatever time period, and demand actually goes to 10.001 GB/s, they get pushed into a higher package wholesale grade (call this the 20GB/s grade), whose costs are generally orders of magnitude higher than the 10GB package cost. This is known as the step function of bandwith costing. There is no incremental wholesale cost - its flat rate till you max it then you go into the next tier where (and this is key) its flat rate again.
Separately, the cost of actually being able to DO 20GB/s doesn't really come from the extra bandwith package, but from the equipment and human resources it takes to install and deploy it. If your IT life-cycle on your business plan was supposed to be 5 years, and in year 3 demand is already maxing out your equipment. You have a budget problem. It doesn't help that the next generation of equipment is obscenely expensive either.
Think about it this way: say you run a home network. You were fine and happy at 10Mbps, but then wanted to do file sharing between your two pc's. This worked pretty well but bogged the network, so you bought a 100Mbps router and 100MBps network cards and maybe even entirely new computers -- the problem went away until you started streaming video from your home server to your Apple TV while wanting to play a CIV IV lan game. Again maxed out, and so now you are looking at doing the same thing 1GBps equipment this time all over again. While you are operating within your home network capacity, it doesn't matter if you are using up all the available bandwith, but once you hit the 'wall' -- the cost of going over the limit becomes a hefty infrastructure upgrade for the entire network. THATS what's killing the cable ISP's -- their failure to anticipate/meet the demand of the market NOT how many $'s it costs them to ship bytes around the world.
Memory is a strange bell, jubilee and knell.
People who are waiting for Verizon to save them from their cable monopoly are likely to be waiting a while. At current roll-out rates, FiOS will pass every dwelling in the USA in the year 2080.
While I wish Verizon was rolling FiOS service out faster, I still think that even with current rollout rates there will probably be some impact. Verizon doesn't have to match the same rollout as Comcast to make Comcast nervous. Verizon has been targeting higher income neighborhoods across the country (to Comcast's chagrin, since most cable companies are required to offer universal coverage). Because of this Verizon has a relatively small presence in a wide variety of geographical regions - but that presence is concentrated in the most profitable areas. Comcast doesn't price by neighborhood though - their pricing is regional. Because of this if they're offering lower pricing to compete against Verizon in one neighborhood, this should still help drive down prices in the whole region, even in areas that doesn't have FiOS service.
I have practically zero broadband choices other than Comcast. No DSL; I'm too far from the hub. No other cable companies; I've checked, there are none. No Verizon fiber. Practically speaking, it's Comcast or dialup.
Oh, there are other options. I've checked them out, and they're all outrageously expensive There's satellite down / dialup up. There's microwave from the Sears tower... if I put a 30' tower on my roof, and pay huge rates for bandwidth.
This proposed policy has to be considered an improvement over current Comcast policy. Despite the fact that they are a natural monopoly with no competition, under current policy if they decide I am using too much internet bandwith, an amount which, by the way, they refused to define but appears to be a percentage ranking relative to other Comcast customers, they cut my broadband access and no matter how much I pay won't give it back. I read an article once about an American in England who was receiving letters from the phone company demanding that he cut us phone usage or be disconnected, regardless of how much he was willing to pay. That's pretty much what current Comcast policy is.
Both WOW and AT&T provide cable services next door to my town, but have decided to my town is too poor to be worth serving. WOW at least has the honesty to just say "service is not available", while AT&T dishonestly blames the refusal of a neighboring town to provide a franchise agreement, while my town offers a cheap franchise agreement which they refuse to take.
Look, I may be being naive here, but if you're a monopoly, aren't you obligated to serve everyone in your area? Can you really just decide that some customers want to use too much, and therefore you will refuse to provide service at any price?
The key regulatory failure here, I think, is that the FCC has completely abrogated any responsibility for regulating the internet, while allowing local municipalities to impose franchise barriers, instead of banning such charges.
Let me say that Comcast service sucks. I've spent hours at a time with requests to Google being intercepted by their Sandvine filters while requests to Yahoo go through just fine. Any new connection has a decent chance to be foiled by spoofed RST packets from Comcast. When they deign to allow you to have service, of course, service is great, though absurdly expensive.
The key resistance here is Know Nothing Tom. Tom knows nothing about the internet. If you tell him he's going to be charged $15 per 10 GB over 250 GB(down only for Comcast, mind you, vs both ways for Time Warner), he has no fucking clue what a GB is, and worries that he'll hit the 250 GB barrier while checking his email, and looks for a different carrier. I have an elderly relative who's a Know Nothing Tom.
250 GB free down, free up and $15 / 10 GB after that is eminently reasonable. Of course, Comcast rates in the first place are absurd because they're a monopoly, but I have no choice but to continue to pay them because they're a monopoly. But the point is that the bandwidth limitation isn't a problem, whatever the normal connection cost. Know Nothing Tom, however, refuses to pay per GB, so bandwidth must remain free, because otherwise in areas where Know Nothing Tom has the option of DSL service, he will choose DSL service instead.
