The claim that market makers pass costs on to end users is only true if they have pricing power. In reality, on-exchange liquidity provision is basically the kind of perfect competition that only exists in economics textbooks. Market makers are selling a commodity product (you don't care or control who you trade stocks with) in a market where buyers are purely sensitive to price (tightest market always wins and is enforced by exchange matching rules).

So what actually ends up happening in a market with multiple competitive market makers? To make money, a market maker needs to trade a lot of volume. The only way to trade a lot of volume is to put up the most aggressive (worse for the market maker, better for end users) prices at any time. Market makers can only do this by charging a smaller spread than their competitors. They can only charge a smaller spread by either reducing their margins or getting smarter at deciding when to be in or out of the market, usually a combination of both. The end result is extremely tight markets that react to information very quickly (i.e. cheap to trade and very efficient).

Competition keeps markets honest. If you had one very fast guy, he would clean up, but when you have a dozen guys who are roughly equally fast, they all compete one another down to barely making profit above their cost of doing business. Only the most efficient can survive. If anything, we want more HFT by removing barriers to entry rather than creating a lot of regulations that would ironically help incumbents by killing off weaker competitors.

Except thats demonstrably not what has happened. Market making has gotten cheaper, not more expensive. Spreads have tightened, not gotten wider. Fees have gone down not up. Literally every cost to trading has been reduced.

The single biggest cost to any market maker is their market risk. Latency is exceedingly cheap in comparison. Any increase in latency raises market risk thereby raising their biggest cost.

Moving to a 1 second tic wouldn't save money on infrastructure because HFTers would still have an incentive to wait for the last possible moment before the tic to update their orders to make sure that they had access to all possible information when making their decisions.