The free-market approach to abuses by the providers is to drop any barriers to there being more providers. Competition would then sort things out.
The internet is being treated as was the airwaves. The excuse for government control of the airwaves was limited 'bandwidth.' Bandwidth for the internet is increasing.
The problem here is that some of those barriers are practical/physical. How many data lines can practically be run under the streets and to our homes, and does the cost to lay in a new network constitute a significant barrier to entry?
A potential solution, which some of us are lucky enough to enjoy an approximation of today, is a limited number of "last mile" carriers who are forced not to abuse their near monopoly power to compete in other markets. For example, if my ISP wanted to start their own video streaming project, they should not be allowed to throttle Netflix to give themselves an unfair advantage (whether they should be able to take advantage of the fact that they can put their servers right next to my incoming connection in their data center or whether they should have to throttle their own service to compete "fairly" is an interesting question).
My solution is a small number of last mile carriers who just don't get into additional services at all as a condition of their near monopoly status. I pay them to send ones and zeroes between my house and the internet backbone, and that's it. We're not going to have pure free markets in everything, so where we can't we should limit the scope as much as possible. Break the TV channels and VoIP out of my ISP package, and let the market compete for them, while recognizing that the last mile is something we do have to deal with.
BTW, anyone interested in this stuff may enjoy Flash Boys by Michael Lewis.
