Telefonica does this.

Until I switched, it would only peer with other Tier 1 providers 2000 mi away from my location, even though there is a large IX 5 mi from home co-located with a large regional ISP with several other networks and appliances connected to it.

I filed a complaint but it is impossible to escape the event horizon of the customer service black hole, and customer protection regulation agents fail to appreciate how clownish it is to have 100 ms ping to my university 5 mi away.

So I switched and recommended everyone within earshot to do so as well.

To this day I fail to understand the logic behind not peering locally.

The logic is money.

Also if something goes wrong with their traffic ratios, Telefonica would have to pay for transit.