They could shift to a sort of bittorrent distributed system if they wanted to, but that is a huge shift in models and not really worth talking about.

2) IIRC 79% have two providers. Their local telecom and cable company.

3) You can but it's a crappy policy that would destroy the ISPs negotiating position. Potentially even letting the transit providers charge the ISP, like they already charge small ISPs.

A) Remember, Cogent and L3 are still selling Netflix and all their other customers, space on interconnect links that it doesn't have.

In what other business can you sell your client service and then fail to deliver and just blame your supplier for not giving you a cheap deal.

B)If you are going to force free peering on ISPs they should at least be able to charge the peer the actual cost to set up the peer point.