> Most everyone will peer with residential ISPs for free

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. These providers definitely charge for traffic to pass into the ISP's network (ingress traffic into an ISP network, egress out of the Tier 1 provider). Without paying that bill, ISP's couldn't exist... and without charging that bill, Tier 1 providers couldn't exist.

Tier 1's peer with other Tier 1's for free because it benefits them and allows them to have connections to other networks that Tier 2 and Tier 3 providers want access to. They make their money charging Tier 2's and 3's for that access.

> because they control the only network path to their customers

Tier 1 providers don't care about residential users. This argument doesn't make any sense.

Comcast got away with charging Netflix for ingress traffic because comcast was going to drop or throttle Netflix traffic. 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. This also led Netflix to create the Open Connect boxes they offer for free to ISP's.

> None of the other customers are going to get a discount from heavy users using less

No, but they won't have their bill raised if the ISP can just charge the heavy users more instead.

> but hey look, the ISP's own video service doesn't

This is because the ISP's own video service's traffic originates in-network, therefore costs nothing additional to provide other than the existing infrastructure costs (there's no ingress traffic to pay for). Netflix (and other out-of-network services) costs more, as previously covered. Open Connect can help mitigate this, but then it's on the ISP to rack the server and pay all the other related costs for keeping it running in their data center... something they might not want to do.

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. Asking Netflix to help pay for that ingress traffic burden doesn't seem so outlandish from a network-ops perspective. Either that, or Comcast could have raised everyone's rates... which people probably wouldn't have liked.

A parallel would be making an ecommerce business and expecting packages to be delivered to customers for free. The customer pays for their mailbox already (in taxes or directly with a PO Box), and paid for the package, so they expect it to get delivered. At some point, the delivery company is going to need to charge for the service, since there's a cost associated in making that delivery. Either the customer can pay for the delivery cost too, or the ecommerce company can pay for the delivery cost. Either way... somebody has to pay that cost.

> only get away with because of the lack of competition.

I don't disagree that we need more residential ISP competition in the US.