The issue is probably not interconnection and peering, it's probably provisioning for peak usage.
Take a neighborhood of 1000 houses. Ten years ago there may have been a few people download mp3s, someone downloading a movie, some people doing web and email, aggregated you probably would've gotten away with a 10Mbps connection, maybe less as the internet wasn't as widely used. These days during peak periods you could expect perhaps 100 people streaming HD Netflix to their TV, some downloading torrents, others browsing images, watching youtube videos, you have people on phones, tablets, smart TVs, devices doing updates, etc - that would probably require more like 1Gbps, 100 times more bandwidth than ten years ago.
Interconnection costs less, but you have to upgrade your huge number of expensive routers and various network equipment, upgrade your back-haul, provide local caches for youtube and netflix, etc, etc. Sure they're making increasing profits every year, but it's not like they're standing still.