How are utilities not a natural monopoly? The cost and disruption of building infrastructure to serve everyone is definitely a monopoly. Do you really want four or five companies digging up streets and building pipes, wires, etc?
Also, if you had multiple companies competing, they would only serve the most profitable customers who live in the most dense areas. You see that now with internet providers - especially fiber.
Utilities are not a natural monopoly because we have multiple examples of competition lasting decades in municipalities. This is not compatible with the economic concept of natural monopoly. It’s a disproof by existence.
If you want to discourage too much digging up the street charge people to do it. If they’re doing too much charge more. Problem solved; the various companies that want to dig up will come to a mutually agreeable arrangement on cost sharing if they want to dig up the street.
Multiple competing companies going after the most profitable customers is very much not proof of the existence of natural monopoly. It’s also perfectly fine. If you want uneconomic customers served for reasons of equity pay for it. You can either pay for it directly and make the costs visible or you can mandate universal service and spread the costs across all customers. Either way the cost is paid; you don’t get anything for free.
And as far as what happens when you let multiple companies dig up the streets that are willing to pay for it, we also have an example of what happens when a company decides to abandon an area when it’s not profitable and leaves the infrastructure and the streets in a mess. Google Fiber and shallow trenching....
https://www.cnet.com/news/google-fibers-secret-weapon-in-its...
What do you think is going to happen when these companies go out of business? Are we now also going to have multiple companies serving the last mile? What happens at the last mile when your water company goes out of business? How long will it take a competitor to get to your home?
Water, sewer, and storm drain, yes, that's a plausible natural monopoly. Electrical power, telephone, and internet, no. At most the conduits that the cables have to go through could be a natural monopoly, but not the services themselves.
> if you had multiple companies competing, they would only serve the most profitable customers who live in the most dense areas. You see that now with internet providers - especially fiber
This could be an argument for individual municipalities building their own infrastructure, owning it, and leasing it to service providers like ISPs.
It is not an argument for what we actually have in the US, which is higher-level governments giving monopolies to private companies, and those private companies successfully suing individual municipalities that try to build their own infrastructure, own it, and lease it to service providers.
There is historical precedent for internet providers competing for internet over a common infrastructure. That use to be required for DSL. None of the companies were profitable. Locally there was MindSpring and Telestream among others that both tried.
If manufacturing semiconductors, with fabs that cost tens of billions of dollars isn’t a natural monopoly, why do we think anything is?
> The Myth ofNatural Monopoly Thomas J. DiLorenzo
> It is a myth that natural monopoly theory was developed first by economists, and then used by legislators to "justify" franchise monopolies. The truth is that the monopolies were created decades before the theory was formalized by intervention-minded economists, who then used the theory as an ex post rationale for government intervention. At the time when the first government franchise monopolies were being granted, the large majority of economists understood that large-scale, capital intensive production did not lead to monopoly, but was an absolutely desirable aspect of the competitive process.
https://cdn.mises.org/rae9_2_3_3.pdf