Just to add a bit to that, the US Government could force providers
to peer with all providers meeting certain requirements (enter
telco history) but I think there would be difficulty requiring
them to peer with non-US companies.
Actually the US Government already has such a policy. Buried deep
inside the original NSF NAP solicitation was the requirement any
provider must peer with any other provider connected to all three
priority NAPs, or it would not qualify as an NSP for NSF connection
grants. There was no requirement for minimum connection speed to
a NAP or between the NAPs to qualify as an NSP.
This was to keep the old NSF mid-level networks from losing connectivity
with each other if they happened to choose different NSPs. I'm guessing
the NSF connection program has wound down by now, so this isn't that much
of a factor any more. But there is no reason why the same conditions
couldn't be imposed on other government funds for network connectivity.
Nor is there anything preventing other customers from choosing their
provider on the same basis, or putting similar conditions in their
If customers don't realize that different providers have different
interconnection policies, they may not know its something they should
consider. I used to recommend UUNET to customers in part because they
peered with lots of other providers.
Markets are usually better at sorting these things out than governments,
as long as the consumer has all the information to make a decision. But
if you like involving government, the big providers usually have more
restrictions on them because they like getting government money. vBNS
and ICM are two examples that could lead to interesting peering requirements
from the government on the providers.