So now the "middle mile" ISP is completely undifferentiated and basically owns one router with some ports connected to the local exchange and some ports connected to the municipal last mile... Why bother? Why not just nationalize the whole thing?
It's basically enforced separation of the wholesale and retail markets. The roads that get you to brick and mortar stores are publicly owned, why not the last mile of fiber? Vertical integration is good for some markets, but markets where your customer is captive because you own the lines outside their house, vertical integration is terrible.