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ISPs here (the UK) primarily use the same physical last mile (along with their own hardware in the exchanges), and often the same backbone infrastructure, but differentiate on pricing and service.

There's also enough money caught up in the retail ISP business that if the infrastructure maintainers failed to do their jobs, the retail ISPs could reasonably compete with them, at least in key markets. This, combined with a strong telecoms regulator pressuring them into developing and maintaining infrastructure, generally works out reasonably well; much of the country, including a lot of small towns, now have 50-70Mbps unlimited unshapedc FTTC for a reasonable price.

This article goes into more detail of why it works and how the US should follow it (from a former brit): http://arstechnica.com/tech-policy/2014/06/we-dont-need-net-...

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