You can call it fraud and I'd agree with you. The problem is that most of the ISPs are monopolies or, at best, duopolies. If you want to a wired broadband connection to the Internet, you NEED to go through them. They are also big, powerful companies with plenty of lawyers to tie up fraud cases in court and lots of lobbyists to make sure the rules are written to favor themselves.
The end game of all of this isn't so much to cripple the Internet as it is to profit off of it. They see companies making a lot of money off "the Internet" and they feel that they are owed some of that money because those companies are making money off of their (the ISPs') customers. Of course, a pizza place doesn't owe money to Verizon because some of Verizon's customers use their Verizon phones to call the pizza place and order a pie. Still, the big ISPs see others making this money and want a chunk,
Moreover, they feel threatened. Internet video isn't killing off the ISPs' own video offerings, but the potential is there. They aren't stupid and so want to kill off Internet video before it becomes a threat.
When you combine a series of giant organizations with greed and seeing their existing profit centers threatened, you get a dangerous (for consumers) combination.