The ISP doesn't need to be anything close to a monopoly to get leverage for extortion and (in the process) mess up competition at the application layer.
Yes, we need more competition, but we still need net neutrality rules.
Competition improves prices and service. Net neutrality rules protect competition at the application layer, and they ensure that ISPs are really competing on how good they are at moving data, not just on how good they can get at shaking down the application layer.
Nobody is gonna complain about their ISP when the conversation is simply this: “Aw, shucks, [startup-product] doesn’t work, at least [established-product] works everywhere. The new thing is probably crap anyway.”
Now if every store in a 100 mile radius only had Coke, then switching to Pepsi just got a lot harder despite the two products being literal drop-in replacements for one another.
The result is that said provider is basically running a regional monopoly, but this doesn't get regulated against because the total ISP market isn't monopolized.
Some non negligible percentage of people might choose the one that only works with most websites, due to some other reason, such as they have reduced prices.
That non-negligible amount of people on this other service, could still be leveraged by that ISP to strongarm websites.
An ISP grows a large user base by doing aggressive price competition, then starts shaking down services, rate limiting their traffic if they don't pay up. The services are over a barrel and pay, after which the ISP's users don't see slowdowns and have no reason to switch. Meanwhile they use some of the shakedown money to lower prices and get more users. Smaller ISPs don't have as much leverage to extract the danegeld so they can't compete.
It makes perfect sense to prohibit that business model as an antitrust measure.
Yeah, we’ve already seen this in the Comcast/Netflix debacle and Deutche Telekom vs the world. In fact a lot of large incumbents do this.
> Meanwhile they use some of the shakedown money to lower prices and get more users.
If things were even so rosy. The shakedown money is used for larger profits and monopoly positions to get more users.
They don't block the conferencing systems in the regions where they have an ISP monopoly, they block them for all their users because they have a monopoly on the network path to those users. The conferencing system needs to be able to reach 100% of its own customers' users or they'll be bleeding customers faster than the ISP does, so they blink first and pay, after which the ISP's customers have no reason to switch because the conferencing system is working.
https://techcrunch.com/2014/04/28/netflix-inks-peering-deal-...
But another issue is that if it isn't banned, it can happen in private. The ISP doesn't need to actually throttle the target's traffic if it can credibly threaten to and force them into a contract with an NDA, so we have no way to know how widespread it is.
Competition itself can't protect against net neutrality violations, because even small-marketshare ISPs can break your startup's product for some customers.
Almost none of these customers will ever even learn that the failure is the ISP's fault. And even if they do, who will switch ISPs just to use some not-yet-proven product by a new startup?
Meanwhile your competitor's product will work well, either because they were too big to mess with or because they paid whatever the ISP was demanding. Maybe you should too!
This is why Europe needed net neutrality rules, and actually passed stronger rules than the U.S., even though the system you describe was prevalent there. Amusingly, before the rules existed, the increased competition in Europe had actually led to more net neutrality violations there (specifically, blocking or throttling things like VOIP and BitTorrent) because ISPs in that competitive landscape were under more pressure to cut costs!
My source on this is Stanford's Barbara van Schewick, who is a leading expert on net neutrality policy and whose work informed both the U.S. and E.U. rules.