Earlier quoted context omitted.
Continuing the hypothetical :) Let's say we need to drop packets from my lower tier. We'd prefer to keep a good experience for those customers if possible, so it would arguably be preferable to drop lower utility packets rather than grind everyone in that tier to a halt. If 90% of the packets were coming from streaming video, the ISP could drop them all without affecting that tier's ability to access their bank accou…
I think you've taken the hypothetical far beyond plausibility. If you think you need to drop 90% of a customer's traffic because of congestion internal to your network, something has already gone badly wrong. I don't think it's realistic to hypothesize that you have a functioning and profitable ISP that enforces strict priority of higher-paying customer traffic over lower tiers rather than proportional or equal alloc…
The ISP cannot fully rely on all parties behaving well, unfortunately. The question is: Can the ISP drop packets from this low priced tier that it knows are likely video streaming, even well behaved video streaming, over other packets? Is that acceptable, or "legalized extortion"?
Obviously it would selectively drop DOS traffic first, as you mentioned, but we are past that point.