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Pretty sure you could make this a legal requirement even in a democracy.

Not without people screaming about the danger of government meddling in industrial policy and wrangling over it for the better part of a decade.

That's capitalist democracy. You could have a democracy where the government does control (or has significant influence over) industry.

And not allow the government to be the scapegoat for corporate-driven changes and rules.

In the US maybe, but I could easily see something like this happening in Scandinavia. Sweden already has a lot of provider-neutral municipal fiber.

Pretty sure Australia has done just that. State owned central ISP (NBN: National Broadband Network).