Not just an oversimplification, but off the mark. The analogy would hold true if I could pick a model (provider) that has a different radio (locals) for a cheaper price. Consumers don't get to choose how much to pay (or how much they cost) for LiL between providers.No different than Toyota deciding what manufacturers to use for their subassemblies. Consumers don't get to decide what radio is put in the car. Yes, oversimplifying, but the point still stands.
As far as "collusion", wouldn't you have to prove the locals are working with each other to set prices?
The collusion comes in as the prices for locals (or basically any other channel) is set (or extorted, in the case of channel disputes) by how much other providers are paying for them. Although, Dish is starting the consumer choice trend with the Flex Pack and breaking out locals costs in their billing.