My router becomes profitable when I make its bandwidth scarce. The same incentive applies to everyone else with a router.
This is a case where the public goods problem works in our favor.
Assume there are many routers, owned by different people, and lower total bandwidth increases total group profit.
If a person is providing 5% of total bandwidth and increases it to 10%, the total bandwidth only increases by about 5%, decreasing overall profits slightly. But that person's share of the profit doubles. Consequently everyone's selfish interest is to increase bandwidth.
Of course this only works out well if there's plenty of competition, rather than the local near-monopolies we mostly have now.
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This is a case where the public goods problem works in our favor.
Assume there are many routers, owned by different people, and lower total bandwidth increases total group profit.
If a person is providing 5% of total bandwidth and increases it to 10%, the total bandwidth only increases by about 5%, decreasing overall profits slightly. But that person's share of the profit doubles. Consequently everyone's selfish interest is to increase bandwidth.
Of course this only works out well if there's plenty of competition, rather than the local near-monopolies we mostly have now.