All of your comments keep ignoring or misunderstanding what peering is. It is supposed to be roughly equal data traffic for both sides. Once it is lopsided in one direction, it is no longer peering.
It doesn't matter who requested what, the fact that L3 traffic is consuming a majority of the bandwidth now is the issue, and Verizon wants L3 to pay to fix that.
If anything, Verizon should be L3s customer, and L3 giving them SFP is doing Verizon a favor.
Verizon is a Tier 1 provider: https://en.wikipedia.org/wiki/Tier_1_network
Yes much of the traffic ends up at end user destinations, but this doesn't negate the fact that the peering arrangement is no longer roughly equal.
Those companies couldn't be more different.
You can start talking about peering and Tier 1 ISPs but Verizon Residential is not the same company as Verizon Business. Verizon Business is a Tier 1 ISP, Residential is not.
L3 can't consume any bandwidth on Verizon's network because their customers don't unilaterally push data to Verizon customers. If there is any traffic from L3 to Verizon it's because Verizon's customers have requested it. That means Verizon should make a good-faith effort to acquire sufficient bandwidth to sate their customers requests all the way up to their theoretical contractual obligations. Only once the bottleneck is COMPLETELY out of Verizon's control do they have any room to suggest that "well our service is only up to X Mbps and in this case it's out of our hands"
In this case they have the power to fix the problem and they are choosing not to, to the detriment of their customers. It's shameful.
EDIT: If the link were 100% saturated in the other direction then you could potentially make the argument that L3 is causing the problems. In that case their customers are requesting so much data from Verizon's customers that the link gets congested. And in that case it would be paramount for L3 to figure out a way to get Verizon to upgrade their side of the peering agreement. But that's not the situation here.
There is a peering location. At this location traffic is supposed to be roughly equal in both directions. At one time it was, and both parties were happy. It no longer is the case. L3 is now consuming >50% of the bandwidth. Verizon states that since they are using more than their fair share they should pay cash to upgrade the network. It doesn't matter who requested what, or from where.
Also your edit is correct. If 90% of the traffic at the peering point was outflow from the Verizon network, then they should be paying to upgrade the bandwidth.
I will sketch out my argument as follows:
1. Data transfer requires mutual consent or else it either a) doesn't happen or b) is considered a network attack
2. On the internet today the majority of transfer flows are asymmetric; regular users download more than they upload. I don't know if this is the natural way of the universe or it happens this way because of the way residential broadband is structured i.e. more download capability than upload
3. People who have more outflow than inflow pay to be connected to the internet (i.e. servers)
4. People who have more inflow than outflow pay to be connected to the internet (i.e. regular users)
5. Somewhere this traffic has to meet in the middle and transition from a network where the sender is paying to the network where the receiver is paying
6. This is typically called a peering point and the transit here is usually settlement-free not because it's usually balanced (though in many cases it is) but because it's the point at which the sender-pays network meets up with the receiver-pays network. In other words the sender pays for the network transit from their servers all the way up to the peering point and the receiver pays for the network transit from the peering point onwards to their house.
7. When looking at the problem this way it's hard for me to determine who is "using" more network bandwidth because again, data is only transferred by the consent of parties on both the sender-pays and receiver-pays network
I understand the argument that Verizon is a Tier 1 ISP and thus deserves to be paid for transit. The Tier 1 ISP is actually Verizon Business a largely separate division of Verizon from Verizon Residential. But Level 3 is also a Tier 1 ISP and thus by that logic also deserves to be paid for transit. http://en.wikipedia.org/wiki/Tier_1_network#List_of_tier_1_n...
I also understand the argument that "all peering needs to be roughly equal or else someone needs to pay" but again when company A has customers who send more than they receive and company B has customers who receive more than they send I can't understand why A and B don't agree to let the ratios move away from balanced. I understand historically the ratios were close to even but when they're both selling asymmetric service to their customers why insist on symmetric peering?
EDIT:
From Wikipedia "peering" is sometimes called "sender keeps"
"In computer networking, peering is a voluntary interconnection of administratively separate Internet networks for the purpose of exchanging traffic between the users of each network. The pure definition of peering is settlement-free, "bill-and-keep," or "sender keeps all," meaning that neither party pays the other in association with the exchange of traffic; instead, each derives and retains revenue from its own customers."
If most of your traffic is residential, then you're not a peer, then you're a subscriber - residental ISPs have to pay others for their Internet access. Verizon has also a valid transit&peering infrastructure, but if we would be looking at their residential business separately, then it would have to pay for the customer<>Netflix traffic on their interconnections.
As well, Netflix will do the same -- literally stick a disk array of videos inside Verizon's network.
