I don't think "net neutrality" implies removal of caps or bandwidth throttling, that is all perfectly acceptable with the concept. What would be affected is "discrimination" against protocols, which is rife.

For example, Telkom offers an "uncapped" LTE service, but with a restriction of 50 GB per month on newsgroups and torrents. 

Net neutrality would be achieved by a service where all protocols are really uncapped, or else capped on volume, throttled on bandwidth, or both, equally.

I don't really have an opinion on whether it is a good or a bad thing, as long as the terms of the contract between provider and user are understood clearly enough . Your free market would quickly ensure that only providers serving markets which need their offerings would survive, as you say.

However, network neutrality does not impose sameness on providers or stifle competition. Providers would still have to compete on quality (coverage, speed, etc), variety and price to maintain a share of the market.