If people are really interested in self governance, they could simply declare the nation a individualist republic, with the only authority residing in individual sovereignty. No authority in social constructs would be recognized.
This would disband not only nation states, but potential any social construct that would use aggression through collective means.
In your model, the Service Providers could just as easily form aggressive conflicting factions, up to nation state levels(or even larger, Communism being one example).
RE: Is Panarchy The Answer?