What is the last mile problem?
The final connection from a network's local distribution point to each individual building is disproportionately expensive, and that single fact shapes almost everything about broadband availability, pricing and competition.
Why the last stretch dominates the cost. Long-distance fibre is comparatively cheap per unit of capacity — one cable serves an enormous number of users. The last mile does not share: every property needs its own connection, and each one requires civil engineering.
The expensive part is not the cable, which is inexpensive. It is digging: road closures, traffic management, permits, reinstating pavements, wayleaves to cross private land, and negotiating access to buildings. Estimates of the cost per property connected are dominated by these, and they vary by an order of magnitude between a dense urban street and a scattered rural area.
What follows from it:
Density determines economics. A block of flats is cheap per connection; a farmhouse at the end of a long track is not. This is why rural coverage lags everywhere, in every country, regardless of policy.
It creates a natural monopoly tendency. Building a second network to the same houses duplicates the most expensive part for no new coverage, so competition at the infrastructure level is hard to sustain.
Hence regulated wholesale access. In the UK, the incumbent network is separated and required to offer access to competitors on equivalent terms, so retail ISPs compete over shared infrastructure. Local loop unbundling and wholesale fibre products exist for exactly this reason.
Alternative networks build their own last mile in areas they judge economic, producing genuine infrastructure competition in some streets and none in others.
Subsidy is unavoidable for the hardest properties, which is why government programmes target the final percentage.
The technologies that try to avoid it: fixed wireless, reusing existing masts; satellite, avoiding ground infrastructure entirely; and reusing other ducts — existing telecom ducts, sewers, and electricity poles, which is why overhead fibre on poles has become common where it is permitted.
Community fibre projects solve it socially, with residents organising wayleaves and sometimes digging, which removes much of the cost that makes commercial deployment uneconomic.