Thanks for this! Both you and the previous poster explaining BGP. So many people have misconceptions on how the Internet works. Then there is the added complexity of business.
I really proves nothing that Netflix over a VPN is faster than without a VPN. We already know Verizon-Level3 peering is saturated. Both sides have admitted it. It comes down to how to solve the problem. It is not a technical problem. It is a business problem
So what if Level3 offers to pay for the upgraded link. If the existing agreement is settlement-free upgrading the link will likely push the traffic exchange outside the agreement. So if Level3 starts sending more traffic than it received from Verizon, then they should pay Verizon for transit of that traffic. Verizon has probably told them that. Level3 comes back and says, "But we'll pay for the upgraded equipment." Verizon says, "So what? If the traffic isn't equal, then you pay." And on and on it goes. So, as stated above, the best thing to do is for Netflix to create peering connections with Verizon that have no expectation of equal traffic. They will have to pay Verizon for these connections.
This is NOTHING new people. This is how the Internet has always worked.