Hmm, I guess I don't understand why sending packets to an end user over an ISP is not "transit", but I'll go ahead and admit I know very little about this subject and am probably wrong.
Peering is when you send packets from your network (or your customers' networks) to my network (or my customers' networks). Transit is when you send packets from your network (or your customers' networks) to my network, and I agree to deliver it, regardless of if it's within my network, my customer's networks or beyond my network (via peering or my own transit connections).
Peering is historically settlement free at public exchanges and in private connections with balanced traffic. When a private peering is not balanced, historically the peering would be disconnected, but in the mid 2000's, paid peering started showing up more frequently as an option. Paid peering is often less expensive than transit, but it depends on the networks involved and the volume.
Yeah, the thing is, I don't consider myself to be part of my ISP's network. I consider my ISP to be "transit"ing packets from the internet to my network. :) But I guess that's not the accepted definition.
If it were considered "transit" in the same sense as delivering packets from one network to another across large distances, then consumer Internet access should be free because it's always biased in favor of receiving rather than transmitting bytes. Verizon should even be paying its customers to accept the extra bits they get.
I think you understand more than you admit ;-). The last-mile infrastructure is indeed a completely different beast, and Verizon is last-mile infrastructure. So backbone-to-backbone might be symmetric, but backbone-to-last-mile should never have been expected to be symmetric.
ISPs pay for transit, tier 1 networks do not (by definition). Level 3 is definitely a tier 1 network, but Verizon is acting as both a tier 1 and an ISP. It isn't a very complex problem, tier 1 networks don't pay transit.
Peering is historically settlement free at public exchanges and in private connections with balanced traffic. When a private peering is not balanced, historically the peering would be disconnected, but in the mid 2000's, paid peering started showing up more frequently as an option. Paid peering is often less expensive than transit, but it depends on the networks involved and the volume.