Answering your question first. One of the ironies of digital distribution of data is that its about compressing, or decreasing the amount of data sent. That is the strength in the format. The downside is signal degradation, and hardware limitations. In other words the cable signal you received ten years ago for your favorite channel took up perhaps ten times the bandwidth of the same digital signal today.
Obviously it serves a digital distributors best interests to compress their data, or minimize the amount of data that must be sent. So they use digital trickery. For instance for each frame of video they might only update twenty percent of the picture. The rest of the static frame may not be refreshed. Technically there is no reason to do it, and nobody actually notices. However in doing this data might only need to be twenty percent of the average of an otherwise piece of uncompressed data.
Technically you are right in where your going the space used on the newer formats is mostly superfluous. However there are subtle differences in quality, and more specifically functionality. Further more space on discs has rarely been a issue for the industry did you know that there is such a thing as double sided DVDs almost nobody uses them, but it's just cheaper I suppose to print up a second disc if one is not enough.
Were I in this market I suppose I would be looking into alternate forms of internet access. We already pay a premium for the service. Further more the promise of the service is the ability to download large volumes of data. Telling consumers they can use so little is like saying we can get you there faster, but once your there you cannot do anything. That said what would be the use of the service at that point. Better to go back to cheaper phone service providers, or look into wireless networks.
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