When asked how demand was allowed to outstrip supply, Western oil companies unanimously say that they didn't see it coming. By coincidence, failing to make timely investments in the development of established oil sources resulted in their breaking the all-time record for corporate profits. Exxon/Mobile made a whopping $90,000 a minute in their latest record-breaking quarter.

Short of provoking economic collapse, the scarcity of an essential commodity drives up its price along with its industry's profits. Internet bandwidth is such a commodity. Short of killing the golden goose, the more bandwidth is restricted, the more expensive it can be.

Unlike the oil companies, U.S. cable and telephone companies clearly see the growing demand for more bandwidth from the Internet backbone to the last mile. But rather than investing to meet the projected demand, they are instead pleading poverty and spreading fear, uncertainty, and doubt about a pending supply crisis like the one that surprised the oil giants. Anticipating the provocation of such a crisis, Enron was busy honing a trading network for bandwidth when their earlier mischief caught up with them. We have already seen what enhanced trading systems for oil and natural gas have done for prices.

Internet service providers know they are the choke point of the Internet and they yearn to monetize that advantage. They also know there's widespread resistance to their evolving into media companies and leaving their common carrier status behind. To pay for all the new bandwidth everybody wants, threatening scarcity is the stick ISPs are using to persuade everyone to let them in on the advertising dollar bonanza. Besides, they argue, putting an end to illegal P2P file sharing would involve implementing the same deep packet inspection technology that enables better-targeted ads.

Recently, Comcast decided to test its ability to limit its customers' Internet usage by inhibiting the use of BitTorrent, a popular file-sharing software program. According to Comcast, a small percentage of its customers using BitTorrent consume a large share of its network capacity, limiting the Internet access of other customers. To address the issue, it slowed down file transfers using BitTorrent. In its ruling on Comcast's bandwidth management scheme, the Federal Communications Commission evoked its Open Internet Access rule for the first time. It found in a 3-2 vote that the company had illegally blocked access to Bittorrent P2P traffic, which just so happens to be a competitive threat to Comcast's own video services. What has this got to do with monitoring user traffic via deep packet inspection?

It's all about the bandwidth demand "problem." Better traffic management means never having to say you're sorry for not increasing bandwidth, while cashing-in on advertising would pay for such increases. Unfortunately, ISP freedom to manage traffic was just undermined by the FCC, while their freedom to inspect packets is under attack by the U.S. House of Representatives.

So what else can cable and telephone companies do to raise enough cash to please shareholders for building-out network capacity? Charge subscribers not just for bandwidth, but for amount used. Comcast is in the process of implementing a billing plan with a gigabytes/month cap. Go over your allotment, and you will pay for it in the next bill. This hearkens back to the good old days of charging everyone for how much they used the phone. Active users never knew what the bill might be from month to month.

ISPs sliding down the slippery slope to tiered "bandwidth + traffic" plans are likely to send a chill down the spines of Internet users accustomed to the all-you-can-eat business model. If everyone won't stop interfering with how ISPs manage their networks and the data they generate, pay-as-you-go scarcity management is the cable and telephone companies' ultimate threat to the Net Neutralistas.

Regardless of what ISPs will or will not be permitted to do, it remains to be seen how quickly companies that make more money by managing scarcity than by creating abundance will roll out bandwidth increases.

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