How come bandwidth doesn't split exactly equally between individuals using the network? How does it happen that a bittorrent user slows down all the other users, as opposed to the other users slowing him down until everyone has exactly the same bandwidth? That seems the most equitable solution. Is it technologically unfeasible? why?
I'm not 100% sure on this, but no doubt someone with more clue will chime in if I'm wrong.
I think if you leave things to run their own way, the distribution will be "equal" but weighted by connections, not users.
Now, web pages use one or a handful of connections at most (one for the text and a few others for images - sometimes), and online gaming uses just one from the player to the server, but bittorrent opens hundreds or even thousands of connections per user (one to each peer). Every connection would be given even priority, but in terms of users, the bittorrent user is getting a weight of thousands compared to a weight of 1 for users of other protocols.
There are technological ways to fight this and the most reasonable seems to be QoS shaping, i.e. the network being configured so: "If there is plenty of vacant bandwidth, your bittorrent connections can have it all. But if a more important protocol demands some bandwidth, your bittorrent packets will be put at the end of the queue and they will be served first".
You might even set this up on your home router if you use bittorrent a lot, and also game or use VOIP telephony - so that bittorrent can run at full speed while you're asleep but gets shoved aside if you make a VOIP call, so that you can have enough bandwidth for a good quality conversation. The technology is old and is even supported now in many consumer grade routers.
Many ISPs, including (from TFS) Rogers do exactly this. What they're saying is that if in the future they're not allowed to do this, by law, then they don't know what they'll do instead.
The strongest suggestion here on /. is that one thing they could do, is stop selling a service like "20MBps unlimited" which is not supportable by their network if more than a small fraction of users actually utilise the full advertised features of the product they paid for. Instead, they could offer a service marketed as "sometimes 20MBps not really unlimited, but close enough for web pages and email and gaming" for that price, and keep the bittorrenters well appraised that "because this service isn't unlimited, really, we'll shape your downloads into oblivion - if you don't want that pay the full price for a low contention business grade connection".
The problem as I see it (although I live in Australia and am removed from the broadband situation on the North American continent) is twofold: one, that services are advertised as unlimited and they really aren't (and cannot feasibly be), which leads to all these issues of how much shaping is legal, what disclosure is required, how much overselling, etc.
Two, is that the amount of bandwidth used by plain old ma and pa customers is going up compared to 10 years ago - without bittorrent, people are watching videos on youtube, streaming TV from hulu, doing video phone chats over the net, uploading gigs of photos and videos to picasa, etc - not just downloading web pages at a few kb of text each like they used to. But, the ISPs still have the same network they did then, and even more customers than they did then as broadband becomes more prevalent.
In Australia the first problem is more or less solved, with the ACCC having successfully lobbied government to make it illegal to advertise plans with any kind of limit as "unlimited". So, they are sold as "20gb per month" with peak and off peak times clearly marked. This wasn't always so in Australia - in fact there was even a baseball cap made with the writing "I signed up for an unlimited Internet account with Telstra but all I got was this 3GB CAP". It beats me why some countries still allow the old style "unlimited" false advertising.
The second problem isn't solved but people are working on it with various ISPs trying for FTTN or FTTH networks and massive government grants going towards this (at least in principle - in practice they're up in the air amidst massive controversy). The short story is though, that Telstra, being the formerly-state-owned-but-now-privatised monopoly, and most expensive ISP by a factor of not less than 2 and possibly as high as 3 compared to the next most expensive on the market, still somehow manage to hold a 50% market share. The other players are getting big enough now to be eyeing this off so there is investment in building a better network than what Telstra have in a bid to steal some of that 50% (which is harder than it sounds because their network - although it's old school copper - was built by the government back in the day with the typical "money is no object" government attitude usually applied to utilities). Nonetheless, Telstra are getting scared and beating their chest saying they'll also build their own new network...
I don't know what's happening in the States and Canada, but it seems from what I read on /. that there's no pressure at all to keep the incumbent monopolies on their toes. So, no new investment is increasing network capacity at all.
Anyway, I think you wanted a simpler answer but you got my rant instead ;) Hopefully you'll still be awake by the time you get to this paragraph.
As an offtopic aside, if my screen width is 1600px, why is the comment edit box about 300px wide? The rest of the space seems to be well used by the important function of displaying gray pixels. It's annoying, fix it!