Similarly to peering, a base amount is required to make this crazy thing we all run work. As we've seen with companies like PSI, those who terminate, or loose significant peering generally end up dead.

no part of worldcom's failure traces to uunet's decision to restrict their peering back in 1993/1994. in fact, that decision was has been spectacularly successful from a business standpoint. unfortunately, one example does not a trend make. also unfortunately, one example can be terrifically inspiring to others. so while i accept your use of the word "generally", i have to say it doesn't look that way to the business people who have quarterly numbers to make and are willing looking at their fellow network operators as possible meat. oh and while i considered PSI's vision faulty, i do not believe that their peering games had anything to do with their failure. (nor do i believe that winning those games would have saved them.) now, let's resolve a point of confusion:

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...at least you know they are paying SOMEBODY, thus supporting the market you want to be in. you can then compete in that market. if everybody who could peer in N places worldwide could just get peering, then all kinds of per-bit revenue for "high tier" network owners would turn into per-port revenue for exchange point operators. where's the market in that? how could a "high tier" even exist in those conditions?

Argument #1, don't peer with the little guy because it takes revenue away from ISP's in general.

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as a local operator myself (ISC), i know that i should not expect peering other than if someone wants their customers to have better access to the f-root server or the kernel.org ftp server or whatever. it's actually easier for me, as a nonprofit, to attract what mr. bill calls 'content peering' relationships, since i don't compete with the folks i peer with.

Argument #2, it's easy for me, a little guy to get peering because I don't compete with the ISP's, I just buy from them.

So which is it? Do you peer with the little guys who don't run networks because content peering is good, or do you not peer with them because it forces them to buy from somebody, and if everyone does that it's good for ISP's in general?

as a business decision, peering with someone like ISC is a no-op. it neither costs nor makes any money, doesn't shift cost or revenue toward anybody, etc. the two reasons for this are (a) the potential peer is not going to be selling transit (therefore there's no revenue stream to want a cut of) and (b) the potential peer isn't making any porno or other revenue, and so is an unlikely transit customer for its own traffic.

It seems to me you want to have your cake and eat it too.

actually i'm trying to explain rather than defend. my arm is still cramped from signing 500 peering agreements at a time back at AS6461, and when i next run an international IP backbone i hope to sign 10X as many. peering is good for business, but only if one has no natural monopoly or first mover advantage (like uunet had) that makes alternatives viable, and only if one's vision extends beyond the next quarterly SEC filing.