> Residential ISP's are typically Tier 3 or maybe Tier 2 providers, and have to get their bandwidth from either a Tier 2 or Tier 1 provider.
You're thinking of the small dial-up ISPs from 20 years ago. The likes of Comcast and Verizon are themselves Tier 1 providers. The other Tier 1 providers' customers are predominantly data centers that want transit to the rest of the internet and aren't themselves (as e.g. Google is) Tier 1 networks.
> Tier 1 providers don't care about residential users. This argument doesn't make any sense.
Tier 1 providers sell transit to the whole internet, so they have to care about having a path to all users or their other customers will be displeased about not being able to reach those networks. The only path to users on Comcast is through Comcast, and there are enough of them that people will actually notice if they're missing.
> Comcast got away with charging Netflix for ingress traffic because comcast was going to drop or throttle Netflix traffic.
This is my point. They have the ability to drop or throttle Netflix traffic and there is nothing Netflix can do about it other than to pay them the danegeld, because they control the only network path to those users.
> Why? Because suddenly the $50 a month comcast was charging wasn't enough to cover the ingress traffic generated by Netflix content into the ISP's network. The decision was to either charge Comcast customers more, or ask Netflix to subsidize that added expense.
They didn't have to pay anything for ingress traffic from Netflix because their transit provider at the time was willing to peer with Comcast for free.
> This also led Netflix to create the Open Connect boxes they offer for free to ISP's.
Netflix was willing to offer them for free but Comcast wanted to be paid to use them. How does that make any sense if Comcast's problem was legitimately the amount they had to pay to other networks for ingress traffic?
> No, but they won't have their bill raised if the ISP can just charge the heavy users more instead.
There isn't anything there to raise the bill for since the additional usage has insignificant cost, and there aren't enough heavy users for that amortized amount to be real money on everybody else's bill even if it didn't.
> Comcast's argument was Netflix was making a ton of profit from streaming content they weren't helping pay to deliver - effectively shifting the delivery cost to the ISP, which was getting stuck with suddenly a bunch of unprofitable residential customers.
Each endpoint's ISP is responsible for carrying traffic to a mutually agreed upon peering exchange where it's handed off to the other endpoint's ISP. Netflix will basically peer with anybody at any peering exchange for free. Carrying the traffic from there to the other endpoint is what the customer is paying Comcast for. Comcast was double dipping, trying to get paid twice for carrying the same traffic. Or get an unfair advantage over a competitor for video services.
> A parallel would be making an ecommerce business and expecting packages to be delivered to customers for free.
A parallel would be Amazon paying FedEx to deliver packages and then discovering that Walmart had bought 20 million apartment units with doormen and was refusing to accept Amazon packages to the residents of those apartment buildings unless they paid Walmart for the privilege.