On the commercial side they provision a link from point A to point B (which is what his software figures out) and it's dedicated bandwidth. They are never over-subscribed.
I'm almost positive that this is not how they do things on the consumer side. Otherwise the Netflix debacle wouldn't be happening. But basically the consumer side is always over-subscribed and by a reasonably large factor. They're counting on consumer traffic to be bursty which it normally is. Netflix isn't bursty the way they're used to.
I sympathize with the idea of expecting one thing when building a model and seeing it play out differently. It sucks and it can cost a lot of money to make good on promises that you've made. But remember that Verizon is the one that made these promises. Their customers didn't put a gun to their head and say "promise me these crazy high download speeds or else!", Verizon did it willingly to try and steal customers from their competition.
Because they did it to themselves I have little sympathy.
See first page about CDN for a description of how they moved from CDNs paying for access to demanding ISPs installed thier CDN for free. http://arstechnica.com/information-technology/2014/07/how-co...