Basically, the companies which received the contracts were required to not act as ISPs, instead to wholesale access to their fibre network to any ISP interested. Maximum rates and minimum level of service are set by the Commerce Commission (the govt), though the fibre holders are free to reduce prices or improve services, which they are (we now can get gigabit internet nationwide for less than 100NZD - an excellent price considering there's no competition for the last mile itself).

This is true for our old copper network too. It was built by Telecom, the old govt monopoly, in the 20th century. In 2009(?) the copper network was spun off into its own company, Chorus, and Chorus was bound by the same wholesale and non-ISP regulations.

As a result of these enlightened regulations, NZ now has a super-competitive ISP market. ISPs are super cheap to set up - you basically just need to provide the core network and lease the last mile and backbone.

I'd advise anyone campaigning for better ISP regulations in any other country to look at the NZ example. The free market may work better for extremely high density cities, but these regs are great for any markets where there is only demand for one last-mile network.