I agree. I'd rather look to how deregulated electricity markets work. The last-mile infrastructure is owned by either a municipality or a regulated utility, billed at fixed utility rates, and the generation/service portion is floated on the open market.

ISPs aren't identical, but I don't see a strong reason a competitive ISP market couldn't follow the deregulated market that states like Texas use for electricity. Have the last-mile infrastructure owned by some boring regulated entity, and then let ISPs compete to provide connectivity over the pipe, like generators compete to provide electricity over the wires.

I recall that in the late 90's there was a regulation in place that forced the phone and cable companies to lease their coax or DSL lines to competitors who wanted to offer service as an ISP. I recall getting mailers from various little companies with offers. There was a difficulty in determining what the proper lease rate would be for the little guys. And in the end it apparently didn't work out. I don't know if the law was changed or if the cable and telephone companies were able to set the lease rate so high that nobody else could be profitable.

I think it is still the law, but like you said, the wholesale prices are set way to high to be competitive.

Problem is, the "retail" ISPs were competing with the owners of the DSL lines. You would have to get the "wholesale" ISP out of the retail business.

That's how my countries new network is set up. Makes sense to me, tbh.