Netflix isn't a Verizon subscriber. Netflix is what Verizon subscribers pay to access.
The problem is that Verizon has apparently been successful in spinning the story that peering between Verizon and Level3 is supposed to be balanced. As others have already said in these comments, that doesn't make a lick of sense. Peering between backbone providers should be roughly balanced, but Verizon isn't acting as a backbone provider, they're acting as a residential provider, and there's no way peering with Verizon will ever be balanced. That's a fundamental consequence of the asymmetric plans Verizon sells and the fact that their customers are expected to download significantly more than they upload. This means that Verizon will absolutely be receiving a lot more traffic into their network than they send out.
Basically, I doubt Verizon actually has balanced traffic with any other provider, except perhaps other residential providers. But they're only making a stink about Level3 because they're trying to use this claim to double-bill.
Note again, Verizon made the intentional choice to service the residential market, and to sell asymmetric plans. They knew going into all of this that they wouldn't have balanced traffic with providers like Level3. And that's perfectly fine, because the only reason they're receiving this much traffic is because their paying customers are requesting it. Verizon has already been paid to receive this incoming traffic.
Also, and this is something I haven't seen anyone really address, balanced peering agreements between backbone providers is typically meant to prevent one provider from routing traffic through a second provider's network, destined for a third last-mile provider. In that scenario, the second provider doesn't gain anything from the traffic, and hasn't been paid for it. That's why the balanced peering agreement exists, to ensure that no provider gets taken advantage of that way; if you one provider wants to route traffic through another provider's network, they have to be prepared to receive just as much traffic.
But that argument doesn't apply to last-mile providers. The traffic isn't being routed through their network to a third destination. The traffic is being delivered to the network because that's it's destination. If the traffic was unsolicited (for example, a DoS), then it's reasonable for the last-mile provider to try to charge the sender for it. But if the traffic was explicitly requested, which is generally the case (and certainly is for Netflix), then the last-mile provider has no justification for charging the traffic sender. The traffic has already been paid for, by the subscriber who requested the traffic.
You make a much better point than I've seen here. Verizon acting both as a backbone and as an ISP. This creates an internal conflict between those businesses.
The problem is that Verizon has apparently been successful in spinning the story that peering between Verizon and Level3 is supposed to be balanced. As others have already said in these comments, that doesn't make a lick of sense. Peering between backbone providers should be roughly balanced, but Verizon isn't acting as a backbone provider, they're acting as a residential provider, and there's no way peering with Verizon will ever be balanced. That's a fundamental consequence of the asymmetric plans Verizon sells and the fact that their customers are expected to download significantly more than they upload. This means that Verizon will absolutely be receiving a lot more traffic into their network than they send out.
Basically, I doubt Verizon actually has balanced traffic with any other provider, except perhaps other residential providers. But they're only making a stink about Level3 because they're trying to use this claim to double-bill.
Note again, Verizon made the intentional choice to service the residential market, and to sell asymmetric plans. They knew going into all of this that they wouldn't have balanced traffic with providers like Level3. And that's perfectly fine, because the only reason they're receiving this much traffic is because their paying customers are requesting it. Verizon has already been paid to receive this incoming traffic.
Also, and this is something I haven't seen anyone really address, balanced peering agreements between backbone providers is typically meant to prevent one provider from routing traffic through a second provider's network, destined for a third last-mile provider. In that scenario, the second provider doesn't gain anything from the traffic, and hasn't been paid for it. That's why the balanced peering agreement exists, to ensure that no provider gets taken advantage of that way; if you one provider wants to route traffic through another provider's network, they have to be prepared to receive just as much traffic.
But that argument doesn't apply to last-mile providers. The traffic isn't being routed through their network to a third destination. The traffic is being delivered to the network because that's it's destination. If the traffic was unsolicited (for example, a DoS), then it's reasonable for the last-mile provider to try to charge the sender for it. But if the traffic was explicitly requested, which is generally the case (and certainly is for Netflix), then the last-mile provider has no justification for charging the traffic sender. The traffic has already been paid for, by the subscriber who requested the traffic.