Or, possible some small providers buy a multi-megabit circuit from a
large provider who gives them transit. The small provider then connects
at a single NAP and picks up bilateral peering sessions with a bunch
of people there. The result is offloading traffic from their
"transit link", which stands a good chance of being priced as a
"burstable" link. (pay for what you use) That gives the small
provider an economic incentive to operate in this manner.
No comment on whether this is a good idea or bad, but I understand
Quite a few CIX members operate this way. The interesting question in my
mind is whether the "big guys" (defaultless nets, for the purposes of this
discussion) think that this represents unfair competition or not.