[noise]

In your analogy, sending is not free. Both Netflix has already paid postage to deliver all of the letters (their CDN/bandwidth costs) and each recipient has already paid for their mailbox (cable modem service). In this case the ISP wants Netflix to pay extra money to to deliver their letters even though everyone has already been paid and they weigh about the same as all the grocery flyers and other junk mail already cluttering your mailbox (think youtube).

[waps]

Okay, so here's the rub. If ISPs want to talk to eachother, in order to support "full" bandwidth between them you need n(n-1) connections to support a bandwidth of n mbit.

This is quadratic. You understand why this won't work ?

Let me put the TLDR here : the infrastructure needed to support the internet grows quadratic with the number of endpoints on the internet. Meaning everytime any ISP adds a customer, everyone else's internet should get more expensive, in order to reflect the real cost of interconnection. Since ISPs are not about to let that happen, they demand someone else pays for interconnect.