Glass knows very much what he is talking about - obviously much more than most of those making comments here. After all, he actually does it for a living.
The "Free" peering that the page you posted mentions requires $10K+/month connection, and the "storage appliances" draw significant amounts of power and generate a lot of heat (10 Amp @ 120 VAC each)
The storage appliances are not caching servers, they don't download content on demand and store it if a second customer requests it. They pre-download and store popular content so that it is there IF a customer requests it, and act as their CDN to push content to other servers. They require 10 GB Ethernet connections, often consume over 7 GIGABITS of internet bandwidth even when a customer isn't streaming video, and download a minimum of 7 Terabytes of data nightly for the catalog refresh.
In short, they are extensions of Netflix's infrastructure. Servers that any other company would pay to have co-located at a facility. Netflix tries to bully their way in for free co-location *AND* make the ISP pay to haul the traffic.
Since Netflix has a limited number of peering points, even if you connect to a Tier 1 peer if you aren't geographically close the connection between the peering points (the Internet backbone, outside of the ISP's network) get congested and cause viewing problems even the the ISP's connections to the backbone are nowhere near saturated.