They either need to enforce proper competition, ie. not allowing the monopolistic tactic of the operators having their own 'territory', or go down the route of franchising, which still allows for competition between operators providing the services on pre-determined routes.
But, as I've said before, if they go down the route of franchising they need to ensure that quality is near the top of the list when it comes to choosing an operator.
RE: Stagecoach North East: Upcoming Service Changes