^{Democracy & Technology Blog} Network control unfairly criticized

A paper by M. Chris Riley and Ben Scott for Free Press (“Deep Packet Inspection: The End of the Internet As We Know It?“) concludes that improper use of DPI technology — which enables Internet service providers to inspect the content of messages in real time and which is currently used to priortize time-sensitive traffic when networks become congested — will have dire consequences for innovation and consumers.

Yes, DPI can help alleviate problems of congestion in a network, thus improving the user experience. But the same DPI technology — the same electronics equipment, in fact — also allows providers to monitor and monetize every use of the Internet …

Riley and Scott believe this is bad for consumers for two reasons. First,

[t]he technology permits network operators to reduce the amount they spend on network upgrades by allowing them to oversell their networks while simultaneously increasing the amount the average customer pays, through the creation of new revenue streams.

If the market were noncompetitive, this might be a worry. But in a competitive market, if a service provider tries to restrict output it merely creates an opportunity for rivals to steal sales by offering a better value proposition — such as superior service and/or lower prices.
The vast majority of consumers have a choice between competitive broadband services provided by phone, cable and wireless providers. Therefore, competition will protect most consumers. A small percentage of consumers have fewer competitive options. It is legitimate to ask whether competition is sufficient to protect the minority.
That begs the question, why have some competitors chosen not to serve some consumers. In some cases, it just isn’t economical with current technology. In other words, service providers are not confident that if they built the facilities sales would allow them to recover their investment plus a competitive return on their capital. The effects of current regulation as well as regulatory uncertainty contribute to this skepticism.
Government could promote broadband deployment by reducing unnecessary regulation and regulatory uncertainty, but so far politicians would rather subsidize with stimulus funds than deregulate.
The second concern advanced by Riley and Scott is that DPI “may hurt innovation in high-bandwidth applications, reduce consumer choice and shackle the free market of Internet content and services” because ISPs might use DPI to “force application providers to pay for priority access to avoid being deprioritized and to remain competitive.”
This argument is really nothing more than a barely-concealed plea for the preservation a particular business model at the expense of potential business models, for the benefit of certain politically-favored reliance interests.
Since we all want service providers to increase they amount they spend on network upgrades, why would we want to limit their ability to find ways to pay for it given that the market is competitive and consumers should be able to take it or leave it?