If an ISP were to charge Netflix for consuming its bandwidth, it would be like a taxi service slapping fees on an airport for generating so many rides.
"DARN those selfish airports, they're driving my taxi business under with their huge demand for rides!"
If ISPs can't figure out how to make more money from providing more service, they should hand in their business licenses.
The issue is, and this going to be a huge tug of war for a long time to come, is the role of ISPs; either as 'content providers' or as merely a utility provider. One provides huge profits, one is a low margin business.
In the real world, tolls on highways are run typically by the local governments, or in the case of around where I live (nyc) 'public benefit corporations'.
Publicly traded corporations, obviously, don't want to be turned into government run utilities, even though this would probably be in everyone's best interest eventually.
Well then the answer is clear, the market has spoken: they are utilities. That's how they were setup, that's the bargain they made with We the People, and quite frankly, they don't offer content anyone wants (they aren't Netflix).
"Ooh, I want pay per view and Mediacom/Cox/Comcast digital movies", said no one ever. If they want to provide content, they should not be allowed to anti-competitively discriminate against other content providers. This is exactly what Network Neutrality is about.
Unfortunately, it's really hard to do once the govt. money is spent. I'm familiar with AU/NZ. Both are pumping significant public money into broadband infrastructure, and they took different approaches to enforcing fair network access.
In AU, they created a new company (NBN co) to run the "utility" part. See: http://whirlpool.net.au/wiki/nbn
The government is paying the monopoly incumbent to switch users onto the new network.
In NZ, our privately owned largest telco (Telecom NZ) semi-voluntarily split itself into two parts - a retail and a wholesale branch. The shareholders agreed to do this, because that meant the wholesale part (Chorus) would get a big govt. contract to lay fiber to the door.
In theory, the split is "arms length", so other network providers can access the infrastructure on fair terms.
Reference: http://www.stuff.co.nz/business/industries/5858284/Telecom-s...
It remains to be seen whether this is the right way to go about things, but both approaches do seem plausible.
There are two classes of Internet access in the US: Residential/SMB and Enterprise.
We have a second world Residential/SMB bandwidth economy, but I would argue that the US has the only true first world Enterprise Bandwidth Economy. If you think of laid capacity in terms of terabits, the US is the clear winner.
The ISPs built massive highways but they didn't build the community roads necessary for normal people to tap into all this capacity. The bottlenecks for residential bandwidth are at the DSLAMs at the bottom of your street and not in the core routing systems for the biggest carriers.
It's tragic, but the US has a super stratified system. Enterprise users get amazing cheap bandwidth and everyone else is second class.
Imagine that for a second and consider what impact that might have on your ability to hail a taxi :D.
All kidding aside, you make a fair point, but I don't think the playing field is quite as level as you're making it out to be. You can't just start an ISP that can peer at the same level of AT&T, you know?