Hi Bill,
I can see no justification under any circumstances why any provider
would refuse to peer with another at an established exchange point for
exchanging their _own_ customers' traffic!
I can give you three:
1/ LargeISP does not want to spend the X hours it takes to
bring up a peering session for SmallISP's routes. The
benefit gained to SmallISP's 5 routes is not great enough.
2/ LargeISP does not have confidence in SmallISPs ability to
properly administer a safe BGP peering connection, and
believes that there is high risk involved with such.
3/ LargeISP knows that if they don't peer with SmallISP, their
customers won't care. LargeISP knows that if SmallISP can't
get traffic to LargeISP, they will have a poor service.
LargeISP knows SmallISP will then/therefore buy
peering/transit (prolly from them). [this perpetuates the
small number of global palyers model]
I don't see that this is necessarily "correct" justification, but
it is justification.
-alan