In the 1990s, we paid a monthly charge for Internet usage as well as incurring 'per minute' call charges. Soon, companies like Freeserve started to offer 'free' Internet access which didn't incur a monthly fee, although they received a small cut of the call charges from the telecommunications company. At this point, we still had to pay on a per minute basis, and as such the Internet was something you would use when you needed it, and then disconnect.
Soon after, we saw unmetered dial-up services take off, where for a monthly charge you weren't incurring additional per-minute costs. And then, we had broadband. This was initially sold as an 'all you can eat' service, but too many users were tempted to 'download the internet', so various limits have come into force. Today, 'unlimited broadband' is all the rage and some providers are even offering free broadband, although to qualify you need to buy additional services.
The concept of 'unlimited broadband' is really a misnomer as such a product does not exist in the consumer market as all services are designed to provide users with fast speeds when they need it, but assume that users cannot be online 24x7 downloading at maximum capacity; to provide such a service would cost significantly more than the average consumer would be prepared to pay.
All broadband services are limited, in one of three ways:
1. Traffic Shaping - Many broadband service providers implement 'traffic shaping' or 'traffic management' techniques which can slow down traffic depending on the user's track record on usage (e.g. slowing down heavy downloaders), traffic type (e.g. prioritising real-time video traffic over operating system updates) and time of day. Whilst this is often seen as a negative, it can help providers to offer cheaper services as they can load more users onto a single pipe, whilst ensuring that the activities most sensitive to speed or quality problems such as Internet telephony are given priority access to the network. Traffic shaping is akin to a bus lane which gives public transport priority over private cars on the road.
2. Traffic Charging and Caps - By charging users for actual usage, possibly even at different rates during peak and off-peak times, service providers are giving the user an incentive to control their own Internet use. Many users don't like the fact their monthly bills can vary, but often traffic charging can be as simple as picking the "low use" or "high use" plan with the service provider (which has a "cap" or some concept of a fair usage policy). This ensures the provider can cater for different markets at different price points, without degrading service levels for everyone. Traffic charging is a bit like the M6 Toll Road or the London Congestion Charge.
3. Congestion - The providers who promise 'unlimited' broadband with no traffic shaping are effectively opting to allow network congestion to limit the users' behaviour. Imagine if all motorway speed limits were withdrawn—it wouldn't mean that the M25 would be any faster during rush hour.
It is of course possible for broadband providers to decide how much to 'contend' their network by–in other words, how congested will they allow their Internet links to get. Providers focussing on price as their primary selling point are more likely to over-contend their networks, whilst those offering high value services (including services targeted at businesses) would generally provision more capacity per user.
Traffic shaping is often seen as a bad thing, but it ensures that traffic that relies on good connectivity gets priority, so your iPlayer stream will continue to work without pauses, even when the network is congested.
Consumers on an unlimited broadband package will often still be subject to a fair usage policy which sets out reasonable limited to an unlimited service. These are often set out in the fine print, and most users won't be affected by them, but it is important that you check the details before signing up to a broadband service.