I still find the fact that level 3 decided to pay comcast the most disturbing. I do not understand the long-term financial benefit of that decision in any way.
Normally, a retailer pays a wholesaler or producer money to get goods, then re-sells them to end users.
Produces set the price, and retail outlets, with a markup, come up with a business strategy ot move that inventory to their customers.
Now - look at Wal-mart. They're big enough that they can go back to the producers and say "Hey, by the way, you're going to knock 1% off the price this year or we're going to drop you - and we can say that because YOU need US."
They can still send packets to Comcast through a transit provider without paying Comcast. What they can't do is start sending 5 times as much data through their free peering agreement, and the renegotiation involves Level(3) paying Comcast. Obviously they will be paying Comcast less money than they would pay a 3rd party transit provider.
A third party who Comcast would charge to accept their traffic. Let's be honst here; wherever Netflix goes, Comcast is going to chase after them demanding money to handle their traffic.
