The simple way to solve this is charge larger customers more. Usage caps have been 100% the norm in Australia since the end of the dial up era. Of course we have other unrelated internet issues, (NBN CVC usage cost crippling ISPs, etc) I pay $69.99 AUD for the ability to transfer 1TB of data in total, up and down, over my ADSL2 connection at “full speed” before the ISP will throttle me down to something like 128 or 256 kbps which either way is uselessly slow (insert web page bloat rant here) until the end of the calendar month when the counters reset. If I ran a torrent client uploading lots of bits, all I would do is “burn my allotment faster” thereby creating an incentive for me to not abuse their network, at the same time as me paying a rate proportional to my use of their network capacity.
Usage caps make no sense. In normal countries the actual cost to the ISP of higher usage is negligible. Having capacity and not using it doesn't save any money, and the same equipment that allows for higher instantaneous transfer speeds (the thing they market) also supports more total capacity.
The actual cost to the ISP of a customer using 100% of their connection the whole month is not very large. If only a small minority do that then the amortized cost per customer is negligible. If everyone starts to do that then the ISP is still fine as long as they price plans appropriately -- a 100Mbit plan costs more than a 20Mbit plan.
Bandwidth caps are ridiculous. It's like saying some people drive more than others so to reduce traffic congestion, after you've driven more than 500 miles in a month you can only drive 8MPH for the rest of the month. What kind of sense does that make unless you have some weird agenda like getting people to take a "free" bus which happens to only travel directly to your own store?
In theory they could charge more for higher usage, except that if they charged their actual cost for additional bandwidth then it would be so close to zero as to make little difference, e.g. an extra $5/month for full 24/7 usage. Passing traffic is really not that expensive. The cost of getting and maintaining a wire into your house to begin with absolutely dwarfs it.
> You can't simple ignore fixed overhead costs (including capacity to avoid congestion) just because they aren't marginal costs.
There is no ignoring them, they're just small relative to an ISP's other costs.
It costs millions of dollars to lay and maintain cable. You have to dig up the road. The equipment gets damaged by weather and bad drivers and idiots with backhoes and has to be repaired on a regular basis. You have to staff a call center to provide customer support, pay for all the advertising these companies do, bill customers, process payments, handle delinquent debts, hire a bunch of lawyers, pay all your technical staff to maintain the network, pay rent and utilities, etc. etc.
That's what your monthly bill pays for. Not one of those things costs a penny less if you can convince people to transfer less data. The only thing that changes is that the ISP has to upgrade a switch to one with more or faster ports, which is a fixed cost of tens of dollars per customer per upgrade cycle, and in many cases it happens regardless of usage because the existing equipment has reached end of life or newer equipment uses less power. The added cost is a tiny fraction of the bill. Make it twice as big and it's still negligible.
