What happens if a customer uses a service that he/she only can reach through 2 jumps of peering and the service-provider (ex. Netflix) only has a contract with the first ISP in the chain?
The customer will be SOL, the small ISP's too, that's what. The small ISP's will be forced out of the market or bought out by bigger ones. Essentially this paves the way for a few big companies OWNING everything related to content distribution and access to the internet for which the customers will have to pay an extreme premium to use.
And what hope do the customers have? Google laying down more fiber?