Re: "recoup by further hiking"
That's how USOs work. It's how the USO for telephone service works today. It's how the USO for electricity supply and water supply works today.
Services provided under a USO are delivered nationally, with the total annual cost divided by the number of customers to arrive at an average cost. A regulated margin is added and that's the cost.
If you don't do it that way then people in the sticks would be paying £250 a month for a phone line.