It's no different than if Netflix was paying Comcast (or whover ISP) to colo a server(s) in their data centers (you can do this as a normal citizen too).
The only difference, the idea is Comcast wouldn't charge Netflix for colo space since Netflix is "earning" it via cost reduction for the ISP. So they are still technically paying for the colo space.
Perhaps I missed your point though -- because this seems to be a much better way to a neutral net than having ISP's charging both sides of the pipe (which the small guys can't afford even more)
Is colo space at the ISP an unlimited resource? If not, then it will end up priced out of the reach of the small guys.
I suppose the ISP could offer some kind of "virtual colo", where instead of putting your servers in the ISP data center for fast access they offer some kind of faster connection to your data center. This would have two big advantages over physical colo. First, it would not have the space limitations so it could be more widely available. Second, the price could be based on how many customers you are serving at the ISP so that even small content providers can afford it.
This now sounds similar to "fast lanes", which have been the major focus of opposition to the proposed approach to net neutrality of trying to regulate under section 706.
The problem I see is that in both the company specific CDN approach and the "fast lane" approach it comes down to a content provider is making an arrangement with an ISP to make that content provider's content better for its customers on that ISP.
Is that against net neutrality? If the answer is "yes", then I don't see why it should matter if it is done via physical boxes placed on the ISP's network or by prioritizing traffic from that content provider or by purchasing a higher capacity interconnect to the backbone providers that content provider's traffic comes through. This seems to me to be one of those things where it should be looked at as a black box, and net neutrality should be concerned with the externally visible behavior of the box, not the mechanisms within the box.
The small guys can use Akamai who already has many cache boxes in place.
My understanding is that private peering and caches are primarily a cost optimization and are not about performance (as long as the "normal" Internet isn't deliberately congested). This way of thinking makes CDNs compatible with net neutrality.
Unless I'm reading this incorrectly this is a peering arrangement, which is qualitatively different than just hosting a box in a DC run by Comcast (which doesn't exist, as far as I know, so I can't do it as a normal citizen). I could colo a box "near" Comcast, but I'll be more hops away (worse performance) and I'll have to purchase transit from some ISP that does peer with Comcast (more expensive).
Most (all) major ISP's do have DC"s that you can colo in (including comast). Just call up their business services line and ask.
So, yes, you can colo in one of your ISP's DC's. Netflix is doing just that (which is why it's not a peering agreement, it's a colo agreement). They just don't get charged because they are saving the ISP the money they would normally charge for the colo service (sometimes more).
Even if you can colo with Comcast (which I can't find any information about online) you're still not direct-peering with their AS, which is what Netflix is asking for with Open Connect. I'm sure they'll also charge you for bandwidth. This is definitely different than putting a box in a colo facility. This is putting a box in a peering location and eliminating the transit cost and performance hit.
But charging some and not others is pretty clear discrimination. Colocation should definitely be allowed, but Netflix should pay the same rate a start up would.
It's no different than if Netflix was paying Comcast (or whover ISP) to colo a server(s) in their data centers (you can do this as a normal citizen too).
The only difference, the idea is Comcast wouldn't charge Netflix for colo space since Netflix is "earning" it via cost reduction for the ISP. So they are still technically paying for the colo space.
Perhaps I missed your point though -- because this seems to be a much better way to a neutral net than having ISP's charging both sides of the pipe (which the small guys can't afford even more)