But what happens when 5% of the paying subscribers use 95% of the existing capacity, and then the other 95% of the subscribers complain about poor performance?
"Capacity" is too vague of a word here. If we assume that the P2P software can be made to recognize the ISP's architecture and prefer peers that are topologically nearby, then the issue focuses on the ISP's own internal capacity. It should not have a major impact on the ISP's upstream capacity which involves stuff that is rented from others (transit, peering). Also, because P2P traffic has its sources evenly distributed, it makes a case for cheap local BGP peering connections, again, to offload traffic from more expensive upstream transit/peering.
What is the real cost to the ISP needing to upgrade the network to handle the additional traffic being generated by 5% of the subscribers when there isn't "spare" capacity?
In the case of DSL/Cable providers, I suspect it is mostly in the Ethernet switches that tie the subscriber lines into the network.
The reason why many universities buy rate-shaping devices is dorm users don't restrain their application usage to only off-peak hours, which may
or may not be related to sleeping hours. If peer-to-peer applications restrained their network usage during periods of peak network usage so it didn't result in complaints from other users, it would probably have a better reputation.
I am suggesting that ISP folks should be cooperating with P2P software developers. Typically, the developers have a very vague understanding of how the network is structured and are essentially trying to reverse engineer network capabilities. It should not be too difficult to develop P2P clients that receive topology hints from their local ISPs. If this results in faster or more reliable/predictable downloads, then users will choose to use such a client.
The Internet is good for narrowcasting, but its still working on mass audience events.
Then, perhaps we should not even try to use the Internet for mass audience events. Is there something wrong with the current broadcast model? Did TV replace radio? Did radio replace newspapers? --Michael Dillon