[How the Content Distributors split these fees among themselves
(for example peering vs. transit) should have no conceptual bearing on
the economics of content distribution costs between Provider and
Consumer. In other worlds, leave the IAPs out of this debate of who
pays for the content distribution. Treat this as a cost of doing
business and pay the IAP]
You are forgetting your first rule, follow the money. As long as IAPs
have money, they won't be left out of the debate.
FoxSports-Midwest recently announced they were going to start charging
cable companies 8 cents per subscriber to carry NHL hockey games. TCI
balked, and was going to drop FoxSports. FoxSports ran a crawl-line
across the bottom of the last NHL hockey game saying TCI customers would
no longer be able to watch NHL hockey. What do you think the final
outcome was? Did TCI end up paying FoxSports, or did FoxSports end
up paying TCI?
Things get more interesting when content is available via one IAP, and
not available (or greatly degraded) through another IAP in the same
market. If IAPs abandon the current universal connectivity model
for the Internet, expect a huge bidding war for content to break out.
Universal connectivity was the one advantage the Internet had over
private online services. It also let IAPs avoid paying content
producers.