During my training I knew a guy whose ISP sent him a letter threatening to cancel his contract if he kept taking the "flat rate" literally. Admittedly, that was one of the really cheap ISPs whose business model was selling "flat rate" accounts to people who would most likely never make substantial use of them.

Also, some ISPs have at least the option in their contracts to throttle the bandwidth after a certain amount of traffic. AFAIK, no ISP has used that option yet, so it has not been challenged in court.

People living in rural areas do have problem, indeed. I know a woman who until a year ago was stuck with freaking ISDN. There are many cases of rural communities pretty much begging the Telekom (Germany's largest ISP, I think) to hook them up with DSL, the Telekom ignoring their requests until the moment those communities start talking with some other ISP. The moment that happens, Telekom will hook them up with DSL faster than anyone can say "Internet".