Peering

ISPs may engage in peering, where multiple ISPs interconnect at peering points or Internet exchange points (IXs), allowing routing of data between each network, without charging one another for the data transmitted—data that would otherwise have passed through a third upstream ISP, incurring charges from the upstream ISP.
ISPs requiring no upstream and having only customers (end customers and/or peer ISPs) are called Tier 1 ISPs.
Network hardware, software and specifications, as well as the expertise of network management personnel are important in ensuring that data follows the most efficient route, and upstream connections work reliably. A tradeoff between cost and efficiency is possible

source; http://en.wikipedia.org