Considering I'm in the process of building a network, I find the topic of FUPs and Bandwidth Management both interesting and of some concern.
As a consumer, I look at it from the perspective of "this is unfair, how dare you throttle my connection", while as a provider, I look at it from the "it's literally impossible to provide superior service at the cost consumers are willing to pay".
It's very true that much of the cost of building a network comes from the last mile - equipment and whatnot is a nominal cost as far as I'm concerned, but bandwidth depends very much on the market in which I'm buying it.
Let's assume for a moment I'm buying on the UK market - if I pay say GBP20,000 per month for a 10gbit/s link between New York, that gives me an effective price of GBP2.50 per megabit (80% utilization). Add to that peering of say GBP1000 per month for a 10gbit/s link which gives us GBP0.125 per megabit. Add equipment and last mile costs of GBP5 per subscriber per month and other overheads of about GBP5 per subscriber per month (being not 100% familiar with wholesale prices in the UK, I can only hypothesize, but I do know the prices where I am, so I'm trying to rationalize in the same way) we can establish that I can not effectively charge less than GBP12.625 + VAT for 1mbit/s if I wanted to make no money - add a 30% markup and we could say about GBP16.50.
Considering Virgin charges about that much for a 10mbit/s line (not counting phone or special offers http://shop.virginmedia.com/broadband/up-to-10mb.html), obviously then, there are various points on the network at which there will be contention. It is my understanding that the UK allows a maximum of 50:1 contention ratio (which in my view is a flawed measurement of network performance, but I digress), which effectively limits the amount of data available to each user to consume.
With the ratio at 50:1, a 1mbit/s user could reasonably expect about 6GB of actual usage if the lines were under heavy utilization - a 25:1 ratio 12GB and 10:1 ratio 30GB. Multiply that by the number of megabits they offer on any given plan, and you can see there what the ISP is expecting each user to use.
I mean, sure, a 10mbit/s plan *could* allow you to download about 3TB in a month, and 100mbit/s 30-odd TB, but that kind of usage is impractical to most people.
Then there is the other argument: if you're using more than a few hundred GBs a month, what are you downloading? Of course it's none of my business as a provider, but it's highly likely that there is a significant amount of pirated material there.
The idea is not so much that each user needs to have capacity available megabit for megabit, but that the network is shared in such a way that it can be utilized effectively, that is, transfers are finished sufficiently fast that the lines are free for other users to do their transfers - as such, 100mbit/s for 35 pounds, as the average consumer willing to pay GBP35-40 for less contention, especially if he is only going to be using 50-100-150GB a month. And why should he pay the same amount as you do for significantly less usage?
Being that Virgin is one of the few ISPs to not have a strict data-cap on their plans, this traffic management seems to be a way of trying to avoid going down that path, and while I disagree with FUPs in principle, I understand that they are necessary at some level. On the other hand, I also disagree with provider's use of "Unlimited". We use the term flat-rate because the meanings are very different - as you can probably guess, "unlimited" pertains to usage, whereas "flat-rate" is all about price.
At the end of the day, if you're really so desperate to saturate the lines 24/7, perhaps you should be offered either a pay-as-you-go usage plan, free of traffic management (if the provider charged a nominal amount for the infrastructure, then say 10p per GB), because the next alternative is that you should buy a dedicated line of some kind.