Yeah, i don't see how their supposed 'netflix is going to extort us' scare is supposed to work. Everything I remember about how the internet works pretty much invalidates the idea.
I think they're looking at how cable companies have to pay content providers to broadcast their content.
Disney, ESPN, CNN, etc all charge the cable company for their content. If the cable company doesn't pay, then their customers don't get the channels.
Will this happen with websites or Netflix? It doesn't seem possible, yet it's hard to know just where all this is going.
Consider facebook. What would happen if suddenly facebook demanded an ISP pay them for access by the ISP's customers? Who would the customers blame? Would they simply give up on facebook or would they hound their ISP to pay up?