An enormous difference, and one of which you are definitely aware, is the existence of legal monopolies for many network infrastructure providers, as well as lobbying of state governments to limit or prevent the building of publicly-owned network infrastructure in many jurisdictions.
I'm not locked in to using Google in any way other than by consumer preference. I use Bing as well but frankly I find it an inferior product.
My point is that we pay ISPs as much as we pay for the rest of the computing infrastructure, that they are a major player, with tons of money and high profits, and terrible service. That they aren't acting like the big boys, even though they have the cash to.
ISPs are currently entrenched without competition. The current FCC fudges stats to wrongly state that there is competition in the ISP space, whereas in reality almost nobody has more than one broadband option.
Alphabet's net income in 2016 was $19.5 billion, as much as Comcast and Verizon put together. Alphabet's return on invested capital and operating margins were significantly higher than either. There are various reasons to regulate ISPs, but "they make too much money" isn't a particularly good one: http://www.mckinsey.com/business-functions/strategy-and-corp... (telecom ROIC is among the lowest of any industry).
> If there was proper competition, would we be spending such ridiculously high fees on the internet access we get?
Is Google in a market with "proper competition?"