If the Netflix traffic was exempt from your data cap, you would be paying $(Netflix rate)/(Netflix usage) for Netflix, while you would be paying (monthly rate)/

If the Netflix traffic was exempt from your data cap, you would be paying $(Netflix rate)/(Netflix usage) for Netflix, while you would be paying (monthly rate)/(other usage) other usage. That means different rates for different types of data. The core problem that net neutrality addresses is that, in allowing the ISP to charge different rates for different data, they can prioritize data based on their own interest, rather than what the consumer wants. Say your ISP decides that, instead of offering a flat rate to deliver Netflix service, it will launch its own content service which, when accessed, would not count towards your data cap. In this way, the ISP can undercut Netflix's service because they own a monopoly on the mode of transmission - that is, you can't get Netflix through any other mode of transmission. The same can be said about speed: if your ISP limits the bandwidth of Netflix's video streams so that you can only watch in standard definition, but places no such limits on its own service, then the ISP can again unfairly undercut Netflix (and this happened, actually - Netflix was strong-armed into paying a large sum so that an ISP wouldn't rate-limit Netflix content). Net Neutrality prevents such scenarios from arising, by forcing ISPs to treat all types of data equally. Therefore, it cannot leverage its monopoly on distribution to prevent innovation of Internet services by competitors.