There's basically 2 costs to running a network, buying routers/switches/laying cable, and electricity.
The only thing that matters is peak usage because then you have to buy faster network equipment. If I buy 100MBit internet from my ISP, they basically need to spend, once, whatever 100Mbit of a port looks like, 1/10th of a gigabit port, 1/100th of a 10G port etc. They only have to do that once, yet I pay them every month, they're fine.
You’re only seeing part of the picture there. Hardware is approximately a one time cost, if you ignore upgrades and maintenance, and electricity is a consideration, but the other part is bandwidth to get data to that port.
ISPs also need a way to get your packets off their network and across to other people’s networks, which are possibly on the other side of the globe. A lot of this is done via peering agreements with other providers, where both parties will agree to connect their networks at a common data centre without charging for data going across that link, but there will still be some data that needs to go across transit providers - these are the companies providing things like transatlantic fibre, or interconnects between different parts of the US. They charge for a pre-agreed amount of bandwidth, and when you burst above that it gets expensive.
These agreements are the core of the net neutrality debate. Traditionally peering agreements would see both parties having a roughly equal amount of traffic going back and forth, however in a world with services like Netflix what you see is a huge amount of bandwidth being used on side of the link. This is why ISPs think Netflix and co should have to pick up the cost of those links.
I don’t agree with that stance since the reason ISPs have customers is often the ability to access those services. However, it’s not quite as clear cut as people make out.
But the same rule that basic cost equals hardware + setup + energy + maintenance also applies to the upstream provider, and their upstream provider, all the way along the selected route including the biggest interchange touched. The economic arrangements are different, but the cost base is just that.
Sure, and they purchase very expensive equipment to cover the peak bandwidth demand then spread out those capital costs in the form of a monthly bill.
If you want more bandwidth, it's "free" as long as there is room available, otherwise the whole chain needs to upgrade so as not to degrade the service of other customers. On a competitive market, the margins available and the prices should tend to go as tight as possible and the economics will lead to pay for usage.
The only thing that matters is peak usage because then you have to buy faster network equipment. If I buy 100MBit internet from my ISP, they basically need to spend, once, whatever 100Mbit of a port looks like, 1/10th of a gigabit port, 1/100th of a 10G port etc. They only have to do that once, yet I pay them every month, they're fine.