I assume you’re asking a actual question here. Let’s take the long road; the details are insightful. Sorry it’s a bad version of “War and Peace”.

TL;DR: they’re trying to increase profits because they can, and watching internet “outside” data actually INCREASES their net costs.

A) Anything that lets them earn more profit is good. Raising prices or bundling does that, as long as the costs for any new thing doesn’t exceed the updated price. (And if so, just raise the selling price.) Alternatively, holding prices steady while cutting costs works as long as everyone puts up with it.

THAT is the primary crux of their argument. We’ll make you buy more and pay more, period. Whatever it is doesn’t matter.

B) NOW to the interesting part. I’ll pick on Hulu and Netflix and the Duggars but the comparison is the exact same for literally ANYONE.

Let’s start a isolated home network. Poof, you have computers, routers and (virtual?) cabling connecting everything. The computers can share data between the others, or not. Bandwidth is “free”, after you’ve spent the money to buy and install the cables and routers — ignoring depreciation/replacement, insurance, and power costs. (Lightening strikes happen, and utilities aren’t free. But they’re fairly stable and cheap, so let’s call these operating costs free. Equipment costs are $HARDWARE/(312) or maybe 512.)

Let’s assume we’re the Duggar family with 24 kids. Each has an hour a day to use their separate computer (and thus the network.) A nice, steady bandwidth load that matches just what we’ve installed.

Now let’s bring up a media server — http://plex.tv (Or Emby. Or Kodi, or MediaPortal / Myth / whatever.) Rip your legally purchased DVD/BRs and place the files on a server (and go to jail because that’s highly naughty, you bad pirate!) and now you have more to share besides cooperatively editing homework files between adjacent rooms. The kids start watching cartoons an hour a day. Server space for the DVD files increases, network load increases. But it’s all good and quite manageable.

Now you have upgrade growth costs when the kid in the bedroom completely saturates the link to a computer every day. More capital investment in more computers, routers, and wires, and management and maintenance. (But he’s only supposed to be watching TV an hour a day, not all 24! He’s using 24 people slots, the slacker! Spankings for you!)

So I have to upgrade my equipment because my kids (customers) are using more than their fair share. If they all do, then instead of 24 hour-slots I now have 24x 24 hour-slots. Damn kids, they’re not supposed to be using computers while they sleep, only while they’re awake and physically ON the computer. (When I originally said “Unlimited Usage” I meant YOU, not your COMPUTER. You’re supposed to just know what I meant, even if I change the terms long after the fact.)

But it’s still all manageable. You let bandwidth increase and overload until they kids gripe enough, and then you buy more routers, cables, and servers if necessary. Oh, and more DVDs too. Don’t forget you have to provide that media from somewhere — it costs and takes time to purchase, convert, and so does adding storage space.

As a matter of fact, that’s just SO MUCH of a hassle that you decide to outsource it. You add a special computer connected to a satellite receiver dish that can receive (and then broadcast on your local network) movies that someone else has encoded for you. Heck, they can even start sending real-time video down that pipe that your kids can watch.

Everyone’s happy. The kids are using their computers 1-24 hours a day, network load is manageable with a few peaks now-and-then, your local Plex media server is supplying movies while the dish receiver is feeding the Plex server movies as well as handling real-time shows.

THIS configuration is IMPORTANT. Notice you have a CLOSED NETWORK: the users can only receive what they themselves can provide AND the media sources that YOU provide. Costs are controlled by what you store on the media server and the dish (what you purchase from your media provider.)

In particular, notice you’re watching a show (ie, copying a file) with a specific size (ignore stuff hat changes the size/quality during transmission) that comes from plex/dish over the wires through the routers to your computer. THAT’S A KNOWN STATIC COST: the purchase of the actual media and the operating costs of running the network. Power isn’t $0, and capital certainly isn’t $0 either — buy they’re amortized and mostly fixed.

(Gee, this sounds like Cable-TV 30-odd years ago. I wonder why?)

Now on to the Hulu/Netflix stuff: let’s take our Duggar 24-user home network and add a second router that now goes to: the Internet.

You’re paying for that new outside connection either by: $/byte, or flat fee unlimited usage or … peering.

What?!? WTH is PEERING?!!? (http://lmgtfy.com/?q=internet+peering) In a nutshell: it’s a gentleman’s agreement between big regional internet companies that let’s THEM swap data back and forth.

Why is that important? Because “The Internet” and “The Cloud” doesn’t actually exist — it’s just a bunch of independent big, medium, small, and tiny parts all working together, all owned by independent entities.

(The names below have been changed to protect the guilty.)

If you’re physically in NY watching a movie physically located in LA, your PC connects to your (tiny) home network to your ISPs router, which then sends data from your small (suburb) ISP to it’s medium regional (state) provider, which sends your data to IT’S upstream big provider (time zone). Now, this big provider talks to systems within it’s own EST timezone. But there’s a large pipe between EST and CST, and CST and MST, and MST and PST, and LA’s located in PST.

So the four large timezone providers got together and all agreed: You know what? We all have a whole bunch of data running around. We all talk to each other all of the time. These humongous monthly bills we keep sending and paying to each other is ridiculous. I pay you a heap of money, then you turn around and pay most of it right back to me.

SCREW this monthly billing money sloshing around, we’re tired of it. Everyone keep track of what you send and receive to everyone (Remember, there are only 4 of them in this example, and EST doesn’t touch PST. So it’s not hard to figure out what goes where: as a provider, if it comes in either I keep it myself or pass it on.) SO: once a month, they all get together, compare and subtract their numbers, and THEN pay for what they’ve truly used. If EST and CST both ship 5 PB between them, they call it even. If CST ships 1 PB more to MST than it does, MST bills CST for 1 PB of actual usage.

Makes sense? The big-a$$ providers, who swap data between themselves all day long, have a THIRD way of paying for their usage. Even though they might be sending Petabytes of data per second, as long as they receive the same amount from the same source they just call it even.

(Up until a year ago, the Duggars could probably enter a peering group on their own recognizance. Not anymore though. Oops — fame is so short-lived.)

Back to the Duggar’s net internet link.

Let’s watch a brand new show: “Forget About the President: The Stupidest People in Congress Talk to Their Even Stupider Electorates.” It’s an hour long with 535 episodes, each one taking exactly 1 hour and 1 GB of space and bandwidth.

If it comes in over the dish link, we’re just paying known standard media and transmission fees, and each computer receives exactly 1 GB of show over our internal network.

If we’ve stored it on our media server, we’ve paid to receive the show and have to pay for the physical storage to store it. (And this media server, Plex or whatever, allows us to watch Video On our computers whenever we want or even on … Demand. Gee, does a Video On Demand service sound familiar within an ISP?)

But notice that actually watching the show uses 1 GB over the internal routers and network while payment for the media is done once and is effectively “free” from then on (And then maybe a yearly charge for longer access for popular shows — shades of movies Net and Leaving Netflix anyone?)

Notice that bandwidth cost ISN’T free — $0 — but it’s mostly a static cost. More hardware = more capital tied up = more installation charges = more bandwidth cost, but it’s still mostly a static cost. You provision up to the average load, and allocate more when necessary / tired of complaints about sluggishness. Or, maybe not.

AND NOW COMES THE FUN PART: LET’S WATCH HULU. (You’ve been waiting for this, haven’t you — right? Anyone still here? Hello???)

Same show, same 1 GB size. But notice the route: suddenly we’re hitting that new Internet router. HEY WAIT! They’re BILLING us for that! The more we use the more they want to bill. What, do they think we’re made of money? And even worse: it’s not even a static bill — it changes over the amount people watch.

So now I’m PAYING for a service that I provide (you can watch the show on my server, if it’s still there, that is) and I’m not even getting anything out of it. Any payment there goes to Hulu — NONE of that goes to me, and I’m even PAYING for them to access it. That’s not right; that’s just not right. Hulu is completely ripping me off — and my kids/customers? They’re not giving me any money either, they want bandwidth to support this thing. And they tell their siblings, and now THEY want even more bandwidth. Ungrateful whelps.

Let’s put that exact show on Netflix. And the exact same thing happens, they’re absolutely no change to anything except that the name on the outgoing check still isn’t to ME, the one that provides all of their bandwidth.

Netflix, though, in the past tried to be a good neighbor. Netflix, at their own expense for a large enough provider, will set up and remotely manage a Netflix media server: one that holds tens of thousands of movies. There’s still some internet access — Netflix has to update the movies there somehow — but it’s only once per show, not one per time. The people (and computers) watching shows on Netflix talk to this box if possible, and fail back to Internet-Netflix if the show isn’t available.

So our 1 GB Politician show now runs over our local network again. Netflix is using our internet bandwidth to update their boxes, the users are using our internet bandwidth to watch non-popular shows, everyone’s ALWAYS using our internal bandwidth, and we might not be making any money on this Netflix deal but we’re not losing it as much as over Hulu, who ALWAYS goes out and accesses The Internet.

So: Netflix mostly only uses the ISPs internal bandwidth while Hulu always uses The Internet and forces egress charges.

So in summary for watching our special 1G show: A 1GB show … is a 1GB show … is a 1GB show.

As long as the data is stored (sourced) somewhere on our internal network, the cost to us is effectively $0. And you pay for access!

Netflix, even though it’s on our internal network, uses our internal bandwidth, some of our internet bandwidth and doesn’t bother to pay us anything — the losers!

Hulu ISN’T on our internal network and forces an Internet egress charge on every show that gets watched. Not only are they not paying us money, they’re effectively CHARGING us for the privilege. Same with YouTube. Gaaa! THIEVES, ALL OF YOU!!

The Internet is only to be used for blogs and emails and Facebook. Something nice and small and not-heavily used, with text and static pictures even better.

High bandwidth things like movies need to be locally sourced and stay only on our internal networks and not egress outbound that costs money.

Anything that costs us money is bad if it doesn’t have a corresponding profit source. We’ve worked hard for our monopolies, and any high-bandwidth thing actually located on the real internet is costing us money. Even Netflix, located ON our internal network, is costing us money by using our local bandwidth by not paying us for the privilege.

Sigh … so how can we keep the users from internet egress? USAGE CAPS!

We can’t make the internet media companies pay us to support access to them, so we’ll make the users do so in their stead. If they want to go outside our network and NOT use our local services, they’ll pay us for the privilege to do so. We charge more than it costs, so that’s all good.

And if we can coerce them to purchase a bundled plan, we’re now providing a extra service and of course can charge more. After all, the original cost of the system, while expensive, is negligible; the media costs, while expensive, are static. The only wild cards are internet media usage which use our internal bandwidth for free and even make us pay for egress access to their media.

Now, THAT is exactly why 1GB “network-local” HDTV is not 1GB HDTV from (10% egress) Netflix or not 1GB HDTV from (100% egress) Hulu.

You thief. Quit stealing our precious internet bandwidth and pay us more for the privilege, why don’t you already?

And this is why “Net Neutrality” is doomed: internet egress will never be “neutral” since it costs them money while providing absolutely 0 revenue in return. Hell, except for a mandatory bullet point (“We’re the internet”) it’s probably negative revenue.

“We never stop working for you” — sorry, I meant to say stop thinking up ways to charge more and provide less. Netflix in CA? Sorry, too many users, that’s all bottlenecked at egress points. Never mind that Netflix wants to install hardware solutions for free.

“Thank you for your business; your call is very important to us, please hold” — that’s why don’t hire enough call-center workers and waste your time: because you put up with it.

I’m a Plex user, but that’s as far as it goes.