Please remember that Verizon is also a Tier 1 transit provider! They own (via Verizon Business) the old MCI/Worldcom/UUnet backbone that was one of the largest transit providers. Level3 and Verizon are both transit providers.
Verizon is not a transit provider in this context. Level 3 is not asking Verizon to take traffic in New York and deliver it to customers in California or Germany. They're giving Verizon traffic destined for local Verizon customers.
Importantly, there is no other way to reach those customers. If you need to get traffic from New York to San Francisco you can use Level 3 or Cogent or Verizon or any of a dozen others. If you need to get traffic to a particular household which is a Verizon subscriber, there is no path other than Verizon.
