Free Markets don't work like that. If you charge 100$ for a bottle of water and most people charge 2$ than you end up selling far fewer bottles of water. Only the fact that we don't have a free market for high speed internet has kept prices so high and service so low.
A "free market" concept in it's pure-bred form does not and cannot exist. You either have some form of government control, or you get a monopoly/duopoly/plutocracy situation that skews things around. This is exactly what's happening now with telcos in the US.
Time to crack the whip and restore sanity in these markets. The telcos have become a law unto themselves.
If you get monopolies, they are considered bad only when they become an obstruction to improvement and inventiveness, because if the prices ever rose enough to justify competition again someone could enter the market, assuming it was a market like on-line retail where you can't crowd out competitors from store shelves.
Internet is a terrible commodity, because so much of the cost of connectivity is wrapped up in laying lines and buying server farms than actually maintaining the infrastructure. And that is really what it is - there is a reason roads aren't private, and why no other animal ever evolved wheels. Some things are best done collectively, and I usually lean libertarian but infrastructure is something you can't effectively leave open to free markets or give to private monopolies, because they are so easy to take through monopolistic practices.
It's a question of barriers to entry. Restaurants have not formed a monopoly in any country in the last 1,000+ years. However, places like Disneyland or the Pentagon will often prevent open markets and create a small internal Monopoly on food.
As to cable and high speed internet / cable. Most locations prohibit completion, artificially limiting which company's can sell cable in a given area. They had a rather tough fight getting off the ground even for an incumbent like Verizon.
I agree. Perhaps the "free market" effect is considerably weaker here perhaps due to the popularity of subsidized phone plans which lock in consumers and hide the real costs. To make matters worse, wireless service cannot be compared with price per mb alone, as there is also a bandwidth quality/coverage factor to look at.
It is weaker for plainer reasons, in that the costs associated with phone, tv, and internet are lay cable once and then reap profits. The costs of maintaining the router farms and fiber lines are paltry compared to the costs of buying the servers and laying the fiber in the first place.
That is why the cartel of providers is as bad as it is in the US - most localities sold their phone and cable lines to private businesses so they never had to recoup the costs of laying lines, and thus no one can compete with them because they had an unfair advantage from the get-go, and they have their hands in the pockets of every local and state government to keep anyone else from even getting permits to try putting down fiber. Sonic and Google are two rare exceptions to that rule.