But the proposed pricing here is not an incentive to the ISP, its punitive to the customers. At a marginal cost of over $1/GB that's well over 4x the cost of a blank DVD. Marginal pricing for co-lo bandwidth is in the 5-10 cents per GB range - up to 20x times less.
In Australia, we have capped plans where you purchase a set amount each month (say $65 for 12GB). The problem is, the excess usage charges are so expensive that it is critical if you do not go over. It is not unusual to see $0.10 or $0.15/MB (yes, megabyte) excess usage charges. The only way to avoid them is to switch to a higher plan, before you exceed your limit.
Stop whinging about $1/GB - we'd kill for that.