That's at best the average cost. You can also deliver a few terabytes for something like $3 in postage if you ship a tape, but that average cost would be deceptively low if you were trying to use that bandwidth to watch Netflix.
The real cost is building the infrastructure to handle higher and higher peak bandwidth. Suppose you're Comcast with 20 million subscribers, half of whom are trying to watch 5Mbit Super-HD Netflix during prime time. That's 5 terabit, and even if you could agree with Netflix's providers to divide it up geographically, it's still an outrageous amount of bits to figure out how to ship.
I don't understand: If under total load, with every customer pulling the maximum possible bandwidth simultaneously, Comcast could give you 250Kbps, you want them to sell a product that only gives you 250Kbps all the time just so their advertising will be accurate?
Like everything else, there's fine print: 20Mbps or whatever is described as a maximum speed, and many people actually see burst speeds that high. But as it would be unreasonable to be upset you can't get 20Mbps to Nigeria, it's also somewhat unreasonable to be completely upset at Comcast that you can't get 20Mbps to Netflix if Netflix is paying for cheap ISPs that won't fairly peer. I'm not sufficiently informed to take sides in that dispute, but I can easily imagine that Cogent (for example) is dumping way more traffic into Comcast than Comcast is dumping into it, and trying to get away without paying for that disparity.
> If under total load, with every customer pulling the maximum possible bandwidth simultaneously, Comcast could give you 250Kbps, you want them to sell a product that only gives you 250Kbps all the time just so their advertising will be accurate?
No, their advertising just needs to be accurate! They need to say "250Kbp bandwidth, max peak 20Mb". The real number has to be the lead, not the BS peak number. There's a parallel here to audio amplifiers. Advertising the peak wattage and not the RMS is stupid and deceptive.
There are two key differences: the first is, as other people noted, that they should advertise that range rather than always marketing the highest number. “256KB guaranteed, up to 20Mbs” isn't any harder to sell than telling people they won't always be able drive 65MPH.
The bigger issue, however, is whether those limits are based on the underlying limits of the network or artificial caps: this is currently completely opaque. It'd be much better if they were forced to publish any traffic shaping performed so the consumer can actually make an informed decision. This might lead to other questions such as whether they should be refusing to deploy Netflix OpenConnect nodes which would be healthy – and no doubt a key factor in why they won't talk about it unless forced.
It is practically and theoretically impossible for Comcast (a residential ISP with asymmetrical connection speeds) to have a balanced traffic relationship with any Tier 1 ISP. Every typical internet behavior of a Comcast subscriber follows the pattern of sending a small request, and receiving a large amount of data (webpages, music, video, etc.) in return.
The cost of transferring each bit is exponentially decreasing as network equipment tracks Moore's law. Their costs are going down, not up.
What this is really about is damaging competitors to their cable TV operations. Wail about Netflix using a lot of bandwidth, never mind that the cost of providing that bandwidth is falling as fast as the demand for it is rising, and you can put on a good show for the regulators as to why you need to destroy Netflix and push everybody back onto U-verse and cable TV.
That depends entirely on whether you see bandwidth costs as revenue or an expense. For many of these companies it's both, but generally they make most their money from consumers, and in that case it's an expense (to the degree it's got an ongoing price at all, given peering arrangements).
Isn't the cost to deliver a gigabyte of traffic something less than five cents, and decreasing?