Being able to handle everyone using their connections to the full at all times would require being able to deal with massively more usage then you ever practically see. I'm a pretty heavy user, I work with data sets, watch a lot of streaming TV, have several video chats every day and I also download games through things like Steam.
My usage was less than 15% of what I could use (and that's with a slow connection, I'd not use significantly more data if my connection improved).
This means they can plan around particular users and everyone gets a decent deal. Remember that if they had to have the capacity of (max speed) * (number of people) then I'd just get a slower connection for the same price.
Now, someone running a server could massively outstrip my usage because they're not one person reading reddit but a machine serving millions of people. That breaks the expectations, and means all the actual people do worse off.
"Being able to handle everyone using their connections to the full at all times would require being able to deal with massively more usage then you ever practically see"
So what? All that means is that you can oversell throughput. How does it imply that people cannot or should not be running any particular service over their connection?
The real barrier to hosting commercial services on residential connections should be technical. Your service has little to no uptime guarantee, little to no throughput guarantee, and no guarantee of a static IP address (though with dynamic DNS this might not really matter). That is enough to discourage commercial services, at least at any scale that anyone could care about.
> How does it imply that people cannot or should not be running any particular service over their connection?
To limit the number of people massively over-using their connection?
> The real barrier to hosting commercial services on residential connections should be technical.
Those are just reasons why a service would be unreliable. This would give another good reason for the split, occasional downtime wouldn't render a home connection to be branded as "not fit for purpose". You can't claim it was mis-sold if you were explicitly told you can't run commercial services on it.
I'd have a worse service for the same money. It would force the situation to always be exactly the same as the worst possible situation now (everyone using it at the same time), assuming it was done perfectly. How is that their problem? How is me getting a slower service for the same price not my problem?
Second, where did they lie? My terms and conditions explicitly state that speed is dependent on many factors, including the number of active users.
My usage was less than 15% of what I could use (and that's with a slow connection, I'd not use significantly more data if my connection improved).
This means they can plan around particular users and everyone gets a decent deal. Remember that if they had to have the capacity of (max speed) * (number of people) then I'd just get a slower connection for the same price.
Now, someone running a server could massively outstrip my usage because they're not one person reading reddit but a machine serving millions of people. That breaks the expectations, and means all the actual people do worse off.