That's kind of how it works in the UK, with BT being that last-mile provider for every UK ISP.
Let me tell you: BT sucks. They are technically a private company, but operating with all the ills that a large governmental monolith has accumulated over decades. With the system you're proposing, you're basically creating a BT. Hopefully it's a small, city-specific BT so at least if one city has a very shitty infrastructure you can move to another city to avoid it... but still. Caveat emptor...
BT is not the last-mile provider for every UK ISP. For starters there's Virgin (cable), but there are also a growing number of smaller providers that bypass BT/OpenReach to provide both fibre and wireless services (LTE in particular) without it.
And while I agree with about BT as a whole, OpenReach - the subsidiary of BT that handles the last-mile network - is very different from BT as a whole even though they certainly share a lot of history and baggage. For starters, OpenReach is vastly more tightly regulated (leading to, for example, all prices being publicly available on their website), but OpenReach is also subject to a lot of additional scrutiny and pressure from the 500+ companies that rely on their network to provide services, especially because many of said 500+ companies are directly competing with Virgin for business.
The baggage of BT is also less of an issue simply because while most ISPs uses OpenReach for their backhaul services (relying on OpenReach to provide an IP connection from the subscriber to the ISPs network), OpenReach also provide raw access where the ISP can put equipment in BTs exchanges and get a direct physical connection to the subscribers line, and a number of providers have and do make use of this to provide faster connections than what OpenReach offers for backhaul.
With LLU unbundling the only limitation provided by OpenReach is down to physical constraints of a network they inherited and was not endowed with enough cash to somehow instantly upgrade.
But most ISPs are not willing or able to cover the costs even of taking advantage of the LLU unbundling, which should illustrate that there really isn't a willingness for most to pay for much faster rollouts of higher speeds.
4 out of 5 of the places I've lived in London had DSL but no cable, so for 80% of my experience in London BT was the onyl last mile provider available.
And yes, there are some new developments, there is some hope in the horizon.
Meanwhile, I regularly see tweets from people in, say, Norway, with gigabit internet access.
Yes. But the way the system in the UK works is the worst of both worlds. Openreach is a private company (a subsidiary of BT I believe), which has been granted a monopoly and as a result has to be constantly audited by the government at great expense to ensure that they are not making too much profit or favouring some ISP's over others. As a result, the way they make a profit for their shareholders is by being as tight as possible about everything that has no regulated minimum requirement.
For example, the broadband service in my town suffers from random slowdowns where everyone's speed drops from 8mb/s down to 0.1mb/s for days at a time. As a town we have been complaining about it for years but nothing ever happens as we have no power over Openreach because they are a private company and are not answerable to us and they also have a de facto monopoly on the infrastructure so we can't take our business elsewhere.
At least if broadband was provided by the local council, we could complain to our local councillor when it's not working. This system works fine for other infrastructure, e.g. if the council haven't gritted the roads we phone our councillor and she gets on to the right department, gives them a row and they sort it out.
As it is, most broadband infrastructure improvement projects in the UK are government driven any way. I don't see the point of Openreach existing as a private company, seems like extra unnecessary bureaucracy which exists purely for the dogmatic reason that private companies are supposedly always more efficient, a claim which I have never seen any serious peer reviewed research to support.
If anyone can explain why this is not a stupid system, then I'm all ears.
Let me tell you: BT sucks. They are technically a private company, but operating with all the ills that a large governmental monolith has accumulated over decades. With the system you're proposing, you're basically creating a BT. Hopefully it's a small, city-specific BT so at least if one city has a very shitty infrastructure you can move to another city to avoid it... but still. Caveat emptor...