Don't know how it works, but I do think that's how it should be. Municipality providers dark fiber from the CO(s) to every house.

From there, any ISP can rent rack space, and arrange their own backbone/uplink, and get wired to whatever customers they can. Municipality charges a fee to use the fiber, and that's it.

Muni provides the line to the CO, ISP is responsible after that. They can compete on their internet speed, price, support, and whatever else they want (Netflix box, email, low latency to game servers).

Muni could even add a "no-internet" free service that just provides access to city services, library, etc.

The line is a piece of copper or glass that ends in a port in a rack at central point. The ISP is providing the connection from that point in the building to their equipment that does switching, routing, and yes billing you.

In Australia the government a private company owned by the government largely owns the last mile (except where competitors built fibre first). All the backhaul between "points of interconnect" is owned privately.

As a user though you pay for bandwidth at the interchange because that's how the old privatised and divested government monopoly did it.

The model, last mile public utility but all the speed private wouldn't be all that awful if it weren't butchered by various vested interests. In theory the current last mile company will be sold once it becomes profitable.

Last mile ISPs bring your traffic between your house and an internet exchange somewhere in the nearest major city. Transit ISPs bring it from there to some other internet exchange in a different city where the opposite endpoint is. The premise here is that the government would handle the physical part of the last mile and then customers would either buy "internet service" from a transit ISP or from someone reselling transit because the transit provider doesn't want to deal with customer support and retail billing.

YES, roads, water, sewage, electricity, it could all work with this formula. It could all be added to the long list of things you pay for that are build and maintained by taxes. road service providers, water service providers, sewage service providers, electric service providers etc Picture it!

Some operators do have their own infrastructure and most large ISPs have equipment in local exchanges and operate their own backhaul.

Lots of it is just about marketing though.

> If the government owns the lines, what are private telcos... actually doing?

Providing Layer 3.

Just like the government owns the roads and highways, and lets UPS and FedEx use them for delivery.

The theory is that roads/fibre are natural monopolies, but the services that use them can be competitive. There just needs to be a fee for the upkeep of the infrastructure (but it doesn't necessarily need to make a (hufe) profit).