In 2007 Comcast, a cable TV and Internet service provider in the United States, began to selectively rate limit or “shape” the traffic from users of the peer-to-peer application Bit Torrent. The access technology that Comcast uses is asymmetric in its capacity – the “uplink” from users is much slower than the “downlink.” For client-server applications like Web, this asymmetry is fine, but for peer-to-peer, where home users are serving up huge files for others to download, the uplink quickly becomes congested. Comcast felt that it had to protect the rest of its users from a relatively small number of heavy peer-to-peer users that were using a disproportionate fraction of the system's capacity. In other words, peer-to-peer users were imposing a negative externality by creating congestion that harmed other users.

This negative externality reduces the welfare of the system because users act selfishly. The peer-to-peer user is going to continue to exchange movies even though this action is disrupting his neighbor's critical, work-related video conference. Comcast thought that by singling out users of peer-to-peer applications, it could limit the ill effects of this externality and keep the rest of its users (who mostly don't use peer-to-peer) happy. Instead Comcast's decision placed them in the center of the ongoing network neutrality debate. Supporters of the network neutrality concept feel that the Internet access provider ought not to be allowed to “discriminate” between traffic of different users or different applications.