Such caps are common around the world, but Australian ISPs take the idea one step further by setting up partnerships with entertainment services and music download companies. Any data usage directed at one of these favored services doesn't count against the monthly bandwidth cap...
Part of Australia's problem is that many desirable websites exist outside the country (often in the US or Europe), and transit costs over trans-Pacific cables can quickly become ruinous. Obviously, there are neutral [sic] ways to handle this situation. Straight data caps (with no exemption for partnered services) would be one. Another might be the model seen in South Africa, where ISP Imagine faces the same issue and solves it by offering a two-tier cap: the first 2GB of data can be national or international; after that, the remaining 28GB of data on a 30GB/month plan must all be national. International traffic is hardcapped.
As a consumer, I have no clue how the supposedly "neutral" alternative of blanket caps and the accompanying extravagant overage charges are in any way preferable to the idea of setting up partnerships with content providers who can serve data locally. The article states that the Australian service iiNet has a partnership with the iTunes Music Store, who presumably serves data locally in Australia, yet still provides full access to Apple competitors such as YouTube, Hulu or Netflix. This seems to be an elegant solution to a very expensive network engineering problem.
But the underlying point here has very little to do with Australia. Net neutrality activists in the US are looking to implement, for the first time ever, significant government regulation of the internet. The proposed regulations are aimed explicitly at restricting network operators' abilities to manage their networks. From bandwidth shaping on shared links to port 25 blocking to prevent spam, the "filtering" of content is an important service ISPs provide to minimize costs and improve the level of service to consumers. Getting the FCC involved in how companies manage their own networks will only slow the rate of innovation for internet providers.
The real story of network neutrality is that it would take many of the decisions of network design and move them to bureaucrats and lobbyists in Washington. What is happening here is that many upstream providers, such as Google, want to be able to restrict local ISPs ability to provide services that may have superior performance, like AT&T's U-verse. Do we really want politicians deciding what service is superior, YouTube or U-Verse? Such an idea is silly. As silly as the notion that AT&T would be able to sell a service that blocks access to YouTube.
In the past, there has been much discussion of municipal monopolies on telecoms services. In the old days of cable and telephone, that was somewhat true. But in recent years, this area has become increasingly competitive. Between cable, DSL, FTTP, 3G and upcoming WiMax services, consumers have ever increasing options for internet access. The last thing we need to do now is to saddle this industry with heavy regulation. With Obama proclaiming recently that he is a "big believer in net neutrality", this will likely be the single most significant expansion of government regulation in recent memory. Getting politicians and lobbyists involved in picking technological winners and losers is hardly a neutral position.
