The text below is something I posted on Slashdot a while ago that makes the case for pay-per-usage or per-KB plans.
The product that the ISPs are providing is network connectivity and downloads. Under the current system, the business (ISP) attempts to limit the amount of product (downloads) that the customer can purchase. When a business tries to limit how much of their product you can purchase, it should be an indication that the pricing model is broken.
Using a straight pay-per-KB plan would benefit most customers. If your wireless provider doesn't offer service in your area, they don't get paid. Currently, it's in AT&T's best interest to offer the bare minimum connection speeds and coverage just to keep people from changing wireless providers. If a pay-per-KB plan were in place, AT&T would be forced to upgrade their network before they would be paid. It would be in the ISPs' best interest to provide the fastest and most complete coverage. It would also benefit the wireless provider to encourage tethering and VoIP, which are currently restricted in many plans.
The issue of net neutrality could also be solved with a pay-per-KB plan. All packets would be delivered without filtering as quickly as possible to their destinations, regardless of content. If the ISP wants to recoup costs, let them negotiate cost-offsets from the service providers. I, as a consumer, prefer Google over Bing. But, if Microsoft agreed to pay for half of my traffic to Bing, I'd consider switching. The traffic would be delivered at the same speed regardless of the source/destination; it would just cost the consumer less money.
Even as someone who streams a fair amount of video and music, I'd still prefer a pay-per-KB plan. It would certainly give my ISP an incentive to offer me faster download speeds. With a pay-per-KB plan, you could have automated notifications that let you know when your bill hits certain dollar amounts. For instance, my Internet budget is $100 per month, so I'd like a notification when my bill hits $80 so that I know I need to start conserving bandwidth for the remainder of the month.
Also, on months that I travel or decide to read a book instead of watch Netflix movies, I'd like to pay less. The current pricing system does not allow that. If you're not worried about going over the monthly data cap limit because you don't use anywhere near the limit, you're paying too much for your monthly ISP subscription.
I think most people pay for electricity by how much they consume. That's certainly the way it has been everywhere I've lived. While I do try to conserve energy, I don't count the seconds every time I turn on the lights. If I need the lights on or want to watch TV, I do it without thinking about how much I'm paying per second for the energy costs. The Internet could be the same way.