In common ISP language, peering is a connection between equals that is mutually beneficial so no money usually changes hands, peering connections are usually AS to AS without the ability to transit through to other AS (or at least some kind of policy that prevents you from using your peer for full transit.
Transit is paid for bandwidth that "transits" through an AS to the Internet at large. I can use a paid for transit link to get to the entire Internet (hopefully). I agree that it appears that Netflix should be mostly an access or transit customer rather than a peering partner, however since high bandwidth to Netflix will make the ISPs customers happy, it is probably beneficial to come to some kind of agreement that helps you get the dedicated Netflix connection running. This is kind of the arrangement that exists with Akamai, where it is a mutually beneficial arrangement. I host their server which makes my customer happy, make Akamai's customer happy, and helps lower my costs by allowing me to minimize transit traffic. I don’t see why Netflix would be treated any different. If carriers don’t like the way Netflix servers work, then don’t put them in your network and deal with the bandwidth issues. It is a technical tradeoff whichever way you decide to go. Transit is paid for bandwidth that "transits" through an AS to the Internet at large. I have the right to send anything to anywhere on a transit circuit from say Comcast. Over a peering circuit, I should only be sending traffic bound for a Comcast customer or downstream provider. Steven Naslund Chicago IL
