I will try and clarify what this means in terms of capability and cost.
The Access Network:-
With the exception of cable network (owned by Virgin Media) almost all the copper connections from an exchange to the customer premises are owned by Open Reach (apart from an area around Hull).
These are leased to BT Wholesale or Local Loop Unbundlers (LLUs) on an equal basis. There is little chance of seeing fibre deployed in the access network for many years to come - as this means £ billions of capital expenditure and lots of road digging. Therefore most customers will have to use the copper already in the ground.
There are physical limitations mainly due to cross talk that mean many people may not get more than 4Mbps bandwidth from one copper connection – at 4kms from an exchange even ADSL2 degrades to that level. Also note that the more people that take up broadband then that increases the level of cross talk – reducing performance.
There are some new software technologies available that enable lines to bond together – (disclosure: like my own company Sharedband ). This will help people scale services to meet their need for more bandwidth in the access network.
The performance is a physical limitation of the copper loop and the equipment deployed at the exchanges not financial engineering by ISPs or even BT. There is no congestion in the copper from the exchange to each customer.
One ISP with 200k customers (Plusnet) in a recent article explained their cost structure in detail and revealed that the cost of the access network was on average £8.50 per customer per month – regardless of how much each copper line is used.
From the exchange back through the central pipes to the ISP when provided by BTW or in cases when using an LLU service the ISP has to organize their own backhaul infrastructure. Note: LLU availability tends to be limited to more popular exchanges.
The backhaul pipes are always shared (unless you pay a lot of money for an uncontended service) always fibre and the more data that flows down these pipes the more congested they become unless their capacity is increased – which costs more – either to BTW or in building your own infrastructure.
The PlusNet figures show that on average the cost they are paying for this backhaul today is around £3.50 per customer per month, however that only allows for an average usage of 5Gb per customer per month. It also shows that the maximum bandwidth of their central pipes for their 200k customers is about 3500Mbps.
Therefore if the adoption of new bandwidth hungry applications like iPlayer grow in popularity then they will need to add more capacity to avoid excessive congestion – and therefore they will need to increase prices or more likely charge customers on a usage basis.
There are other costs for peering and transit etc but these are small in relation to these other costs.
1) There is no such thing as a free lunch!
2) You only get what you pay for…