In the telecom space, you have TRAI which is a national level regulatory body. Rightly so, since telecom networks have national footprint through interconnections, it need not be looked at as a state subject. Drawing a parallel for our state, think of extending BMLTA concept - a Karnataka state land transport authority (KSLTA). Why so? Because we want efficient two or three change connectivity from Whitefield to Haradanahalli as well, and not just to Jayanagar or Malleswaram. Just like the primary schools, every region needs good connectivity.
KSLTA can have circles defined for local transportation, just the way telecom world has circles that span 1 or more states. There could be a fixed number of operators in each circle. Some rolling stock operators could be allowed the equivalent of "STD", meaning they can offer inter-circle transportation as well, but there would be separate set of norms for long distance (inter circle) routes. The norms would look like this
"Roaming" should be a strict no no. Meaning, bus registered in one circle must operate in that circle. The inter-circle buses must do only long haul (inter-circle) business. So, a bus going from Bangalore to Kolar can't stop at HAL to pick up passengers for Marathahalli and Whitefield.
Inter state routes would require some more thinking, as there could be different sets of norms across states. A "reciprocal slot" approach could work here, basically on the lines of how international air routes are worked out. So, as an example, there would be equal number of bus trips originating and ending at Bangalore and Chennai (say 100 from Chennai, and 100 from Bangalore). But a Bangalore based operator could "lease" out its route to a Chennai operator (like how Air India does on many international routes today, it can't afford to operate, so gives them out to that country's carrier).
To summarize all of above:
How does it sound? If someone can do a Karnataka map with possible "local transportation" circles, that will add some cheese here.