Most ISPs are already VPNs. Your connection is tunneled from your router at home, through some expansive DSL/ATM or GPON/PPPoE network, to a box at a data center that serves five neighborhoods with a single link by establishing a tunnel to each individual consumer router.

But the ISP has to make sure the geolocation databases have accurate information about it, and it has to retain logs of which user used which IP address at which time because the law says so. That's why it's not a "VPN".