In competitive markets, the cost for an item — say, a MB of data delivered to my home — is sold for the cost of supplying that last increment of it. In a monopoly, the seller raises the price until the amount purchased drops faster than the profit increases.

In the US, there appear to be NO competitive markets for home internet service, by any standard of competition. So ISPs raise prices to the perceived “value” of a given bit of data. They can sell it way above their cost because no competitor, even one with superior technology, can sell it for the little bit less that’d have us switch.

In fact, some data costs more to provide than others. Guaranteed- or even prioritized-availability of a connection, as necessary for mobile voice or home Video Over IP, especially during high-traffic hours, requires more capacity headroom than as-available service at 3AM. Strikes me that there IS room for variable pricing under a regulatory environment that would get our society some of the benefits of actual free-market competition that we lack today.

But that variable pricing should be tied to actual cost factors, not internet users’ perceived value; the marketing departments at ISPs are having a field day in trying to extract higher fees from Netflix and others, in ways that have nothing to do with either costs or what would allocate our resources to the best use.

If you think it really has anything to do with protecting lawful content then you are very misguided. This is about companies reaping huge gains without having to pay fair compensation to the ISPs.

I admit it does get messsy because ISPs are few and that makes negotiations difficult. But, this kind of legislation will not be productive. ISPs are the reason those companies are even able to have a business. The ISP should be able to make its own business decisions at its own discretion. If a company does not like it, they can find another ISP or find a new business. Going to the government to regulate the industry is like going to mommy to make it all better.