If ISPs Are Going to Charge for Bandwidth, Why Not Charge End Users?

| Tue May 13, 2014 3:58 PM EDT

I want to toss out an idea about the latest battle over net neutrality. It's not an original idea by a long way, but for some reason it doesn't seem to be part of the current discussion, and I'm curious if anyone knows why this is.

Here's the problem: ISPs like Comcast and Time Warner want to charge additional fees to companies like Netflix and Google that use a lot of bandwidth. On the surface, this is totally reasonable. If you use more of something, you have to pay more. Every market on the planet works this way.

But why on earth would you charge content providers? It's hellishly complex and opens the door to onerous levels of regulation; it requires lots of lengthy and contentious negotiations; and, as net neutrality advocates point out, it runs the risk of creating unfair discrimination against companies that are too small to pay or that ISPs just don't like for one reason or another. Besides, it's not as if content companies just randomly dump lots of bits on the internet. They do it only when an end user requests those bits by calling up a website or streaming a movie or downloading a file.

The obvious solution here is also an old one: since end users are the ones requesting the bits, charge them for bandwidth. This is far simpler than negotiating private agreements with hundreds or thousands of content providers, and it's fairer too. If you watch a lot of Netflix shows, you're going to need a plan that provides both the bandwidth and the quality of service you need. That's going to cost more than a plan designed for people who just browse a few sites each day or send a bit of email, but why shouldn't it? If you're buying more bits, you should pay for more bits. Everyone with a cell phone data plan understands this.

Now, there's one obvious answer to why ISPs don't do this: customers hate it. We end up paying for all this bandwidth anyway, since the ISP's fees eventually get passed along to us (or to advertisers or whoever foots the ultimate bill), but apparently we all enjoy the fiction that we can use infinite bandwidth for one flat rate. This, of course, is part of a grand American tradition of hiding costs—other examples include banking fees, tax expenditures, loyalty cards, free parking, subsidized cell phones, CAFE standards, and so forth—so that end users don't have to face up to the actual cost of the stuff we buy. The end result, of course, is lots of inefficiency and, in most cases, higher costs than if we just paid up front in the first place.

Anyway, that's my question. There's already a perfectly good, perfectly simple way for ISPs to recover the cost of providing lots of bandwidth: just charge the customers who use it. Existing peering and transit arrangements wouldn't be affected, and there would be no net neutrality implications. So why not do it? What am I missing?