The market is effectively already doing this, isn't it? You pick the monthly package with the bandwidth you want, and pay for it. BT have 10, 40 and "unlimited"; Plusnet have 10, and 60.
For ISPs, the GB you use are a very significant part of their costs - there is no such thing as "unlimited" to them, even if they sell a package as such.
And the amount for the GB can be significantly more than the line rental for your access.
We already get dirt-cheap internet in this country because of the fight between providers... and it is that fight that has essentially negated any price differential on the speeds - every marketing department wants to be seen with the highest headline speed (regardless of the small print about distances etc) and the lowest price (regardless of the small print about it going back to full price in 3 months).
Because of this, the price of access is already down to a bare minimum independent of speed - largely because it is exactly that - independent of speed.
The only way left to give discounts to those with terrible lines is to hike the price for those with good lines.
I do sympathise here - but not over the cost. I'm one who knew that DSL would be life-changing back in 2000, and chose to pay for it. I believe that the need here is not to give an individual a rebate when his line isn't up to scratch. Instead it is to fix people's lines so they don't get the terrible speed... but it is going to cost someone, and there has to be technology capable of doing it for the price they are willing to pay.
I'd have been happy with that 50p tax on good lines, if it went to subsidising the bad ones. But perhaps it is fairer coming out of general taxation.
That all comes together in a heap involving: a) some form of tax subsidies to help the worst-off; b) the aim of providing speeds that are decent (and not just a minimum); c) a community effort to ensure no one person has to fix his line alone. With these ideals in mind, and suitable technology available, you can take the final step to d) a USO with a minimum speed requirement.
The USO is strange, because it isn't down to 1 company to provide. Instead it is almost a requirement on the community to ensure that they pick (and fund) technology that is suitable for everyone in their area. I can see there being a need for some kind of internet ombudsman at, say, each council to arbitrate between the funders and the consumers.
And as you point out - the internet grows to consume all the bandwidth thrown at it. A USO of 2Mbps sounds semi-reasonable today (about a decade after it was the highest speed available). That suggests a USO in a decade's time may need to be 40Mbps.
So a USO needs to grow too. And that's one reason why the subsidies for rural areas need to be targetting something much better than 2Mbps.
Then... with an obvious subsidy going toward decent provision - those on the slower speeds can finally stop complaining about paying the same. They will now know that they are being given a subsidised connection.
The infrastructure available in the UK for the Internet is not fit for purpose now, and it will get worse.
The strange thing is that we've got really good value access to the internet today, from a wide range of suppliers. The main reason behind that is a combination of the existing, widespread, copper access network, and a reasonable quality core network (or two), and the fact that we're piggy-backing our new data services on top of something that was originally built (and paid for) with different services in mind.Those 2 networks are long-term assets to the country.
The jump to a really good quality internet requires us to take the investment leap, to replace those networks - but that takes a lot of money. What gave us an advantage in value is now a hinderance in quality. Many, many people expect internet access to be cheap.
BT have made the leap for their core network. (Have Virgin done anything to theirs?)
To make the same leap for the access network, its going to take a bit more. Somehow us consumers have to persuade the people who invest in BT (and their like) that we want an access network fit for purpose.
I appreciate that some will wonder why they should bother about others' speeds etc, but they bother enough to argue that it's not their problem (they get fast BB for little cost, and know it).
I myself get a decent connection, but I've been an advocate of lower bandwidth web design, and better coverage of 2 Meg or 4 Meg for those that don;t get it yet. Why? There will come a time when my 6.5 Meg is not enough. Perhaps in a year or two. Then I'll be the one moaning about my own setup. So it's partly self-interest, and it's partly so I'm not a hypocrit when it's my turn, but it's mostly because it's the right thing to be doing. Some argue that rural folk shouldn't have moved out there, or that they could move to the urban areas. Not all rural folk moved out there. Some have their livelihoods there.
Like you, I do know it, and understand it. Indeed, I deliberately want the fibre-based broadband because it is my share of the investment in the future, paid in small monthly installments. I don't really need 40Mbps today - and 8 (or 6.5) was usually mostly sufficient (but don't tell the wife I said that, OK?). But by making these installments, I'm sending a message that I *do* want the telco providers, and their investors, to keep investing in the future.
200 years ago, families moved to the cities in search of work, to support their families.
Nowadays, fast reliable broadband is a fundamental to my life, and my family's life. For broadly similar reasons, I will now only move to somewhere with decent broadband. Its as fundamental to my choice as the provisions of schools & hospitals.