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Actually creating alternative competitor networks are insanely prohibitively expensive,

Luckily, you don't have to. Just nationalise the last mile (and maybe some more infrastructure like the DSLAMs, I'm not sure), and have ISPs lease it. And don't offer bulk prices.

That way, barrier to entry drop, there are less advantages to being big, and the environment is less prone to monopolies.

The idea is simple: let free market and competition run wild where they actually work, and let the state have the inevitable monopolies.

I love this idea and have even spoken to some pretty fundamentalist libertarians that see nationalized last-mile fiber as a solution superior to the government sponsored monopolies we have now (and continued easements and digging up of people's property any time someone wants to introduce some competition).

Sounds good to me, but I doubt the folks who never question the "magic" of the market would go for your compromise.

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