Thinking about this from a technical point of view, would it make sense for Netflix (or even ISPs) to put in content-aware routers than can cache frequently requested bits?
Won't this help, to a certain extent, alleviate the congestion? Of course, the assumption here is that for a large enough population, you will have more than one person requesting the same content in a given time period.
At least two of Netflix's three CDNs place servers or connections within the ISPs. Akamai has servers deployed within almost every ISP, and Limelight has peering connections to their datacenters. I'm not sure about Level3 (and they've been pretty tight-lipped given the Comcast brouhaha).
Rather than caching on the router side, I believe most of the magic happens in the load-balancing side. The effect (to the end-user) is the same, though.
If that's the case it'd be up to the ISPs to push that technology to their infrastructure. Van Jacobson gave a very informative presentation at Netflix about it a couple of months ago. It seems you can watch a similar presentation he gave at Google on youtube:
Netflix uses a variety of CDNs (Content Delivery Network). I think Level 3 is currently their primary provider and they used to use Akamai.
I'd say there's a fat chance of seeing Comcast benevolently caching Netflix traffic.
Netflix provides machines to Large ISP's to reduce congestion. I don't know the specifics, but I suspect both Netflix and the ISP save money by doing so.
Won't this help, to a certain extent, alleviate the congestion? Of course, the assumption here is that for a large enough population, you will have more than one person requesting the same content in a given time period.