No they don't. They haven't spent any money on CAPEX, just a monthly lease for each end user connection: why would they charge more if the costs to them work out to be the same? If I spend the equivalent of $20/month on my own infra instead of $20/month using someone elses, my prices are probably going to be the same.
You're still missing my point. In the absence of price regulation, what you describe can't happen.
Let's say A pays $20/month/subscriber in infrastructure maintenance, upgrades, new development, etc.
Case 1a - there's no price regulation, and A can still sell to consumers.
Case 1b - there's no price regulation, and A cannot sell to consumers, just to the other providers
Case 2a - there is price regulation, and A can still sell to consumers
Case 2b - there is price regulation, and A cannot sell to consumers, just to the other providers
In 1a, A will charge what the market will bear. They'll have incentives for new subscribers and poor people that let them get on the network. The cost will be like $30/month. For most subscribers, the cost will be $40/month. What will A charge B? If they charge less than $40/month... let's say $35/month... they will potentially lose their core customers because B might undercut them at $39/month. Why would they do that?
In 1b, A cannot sell to consumers, just to B. But A still knows that the market can bear so many subscribers at $30/month plus so many more at $40/month. They know if they charge $100/month, nobody will sign up and they'll lose money. They know if they charge $21/month, more people will sign up but their profit will be too low. What do they do? If they're allowed to charge differential prices, it's exactly the same as 1a. "Oh, you want to lease a new line? $30/month special. After a year it's $40/month." If they're not allowed to charge differential prices, they figure out the weighted average and charge that. Maybe $35/month. Their overall profit is the same, meanwhile B and C make money in some areas and lose money in others (perhaps they're regulated to provide equivalent coverage).
In 2a, with price regulation, you say okay A, we know it costs you $20/month, and we think $30/month is a fair profit, so you WILL charge $30/month per line.
In 2b... it's exactly the same.
As you can see, the fake competition provided by B, C, D, E, etc play no role in establishing the market price for the service, because they do not control the service. Only the price controls work. The sub-divisions of "a" and "b" make no difference either... just the price controls.
Provider B gets a committed information rate on Provider A's infrastructure, which for 6mbit/s DSL is probably going to be about 64kbit/s, but since Provider B would have 1,000 customers aggregated, there's total available bandwidth on Provider A's network available of 60mbit/s or so, allowing Provider B's customers to achieve 6mbit/s speeds (in other words, this is how it works already, except that instead of 1 retailer utilizing the infrastructure you have many).
The thing is, you're assuming A is required to allow B to hook up their own interconnects. That's incorrect. That was my point with bringing up Comcast in real life... they can say "Yeah I know it's slow. It sucks. But too bad, we're not letting you connect faster lines to OUR network." This has actually come up in real life. I'm sure you read about Netflix offering to pay 100% of the cost to upgrade Comcast's interconnect with Level 3 (the carrier for Netflix). Comcast refused, because they want a nice fat monthly fee, not a one-time free upgrade.
And if the law is purely "You have to lease the lines you control to B, C, D, E, and F" then you have not changed that (even with price controls). You're going to have to introduce additional regulations that say "And you have to let B, C, D, E, and F have access at the interconnects so they can upgrade them at their own cost or whatever."
But then, you can just have that law to begin with and leave the first part out. Once again, the "competition" on the lines owned by A provides nothing, it's the additional regulations that make the difference.
That all being said, I'd still maintain that ideally what you want are dumb pipes which are owned/operated by a company that doesn't deal with the public whose sole purpose is to build, maintain, extend & upgrade the network, like what has been done in NZ
Yes exactly.. from what I've read, this is how it usually works. And then pricing regulations (or in fact the dumb pipes being government owned outright) removes the problem of market pricing that I was talking about above.
I'm not disagreeing with that, and I support municipal fiber projects (the term for it here in America usually). I'm just pointing out that it's useless to try to shoehorn in competition. It's a technique used these days by big-government people to try to appeal to small-government people. "Look, we use competition! Free market! How can conservatives object to the free market?!" That makes it sound nice. But it's a load of crap... it's not competition that makes municipal fiber so attractive, in fact it's the LACK of competition and the LACK of profit motive on the network owner's part that makes it attractive. The government provides it at cost as a public service, and we use it. Like roads.
That's my only point, because I happen to love free market capitalism and I hate to see it abused. Just call a spade a spade. Not everything has to be free market and competitive.