The major ISPs don't pay much for transit though. E.g. Comcast is is not tier 1, but with their peering arrangements they pay for less than 1 percent of their traffic.

The notorious Comcast/Netflix case was certainly not motivated by transit costs, since Netflix offers video content free to any ISP - see https://openconnect.netflix.com/

How so?

Because net neutrality already doesn't exist for ISPs: https://en.wikipedia.org/wiki/Internet_transit

Also, because of things like edge caches, there are bits that have to travel a shorter distance, and interact with less hardware, than other bits.

Your GE microwave doesn't require that it gets electricity from a GE power turbine. All watts are the same in that sense. The watts can come from a GE generator (in the town over) or a westinghouse generator (in the local town). It doesn't matter.

But a youtube application does require that the bits come from youtube servers. Youtube cannot use bits from vimeo, and because of network topology, the vimeo bits might be more costly for the ISP to deliver than the youtube bits.