The regulations are not "weird". Before telcos were required to route all calls without discrimination, they didn't. And as soon as telcos are no longer required to route their competitors' calls, they stop. A recent example is the new area code for VOIP calls introduced in Germany in 2009. Major telcos just didn't route them, citing "technical reasons" despite being able to route local area numbers with the same mechanism without problem.

Competition is only a solution for problems where the telcos' interest and the consumers' interest align. And that's very rare.