Netflix already pays verizon for DIRECT connection to its customers
Netflix did not pay verizon for its interconnect via Level3.
Verizon is basicaly saying that Netflix routes alot of traffic through Level3 (probably because they're cheaper) instead of via their direct verizon line.
Level 3 is saying that the pipe between Verizon backbone and L3 backbone is where the bandwidth gets clogged.
take out verizon and insert (I'm fairly positive) every single US ISP, and I'm pretty sure you'll hear teh exact same story. L3 will probably blame all the ISPs for their lack of bandwidth interconnecting them. And all the other US isps will say, they're not the issue because their internal networks aren't close to full saturation.
So the real question at hand is, who really should pay for upgrading the capacity between the tier 1 interconnects.
Sounds like there was a handshake agreement between the companies originally. This handshake probably didn't include a late comer like level3.
I would argue that if l3 approached these companies and said, we'll install the cards AND maintain these connections on L3's bill, everything will get resolved.
Ie. L3 is pretty much saying, sure we're tryign to compete with you big ISPs, and we're gaining customers to your detriment on the Inet tier1 space, but we can't seem to maintain our client base if you guys at the last mile/end point don't increase your bandwidth with us.
The 6 other major ISPs are saying to the content providers, why bother using L3, sign up with our own t1 bandwidth and we can provide to your customers directly a great service.