[wmf]

Cable TV also seems like a natural monopoly for the same reason as cable Internet — the cost of running the cable itself. Even before cable modems, most places only had one cable company. And my understanding is that cable franchise agreements were written with that assumption. Maybe I don't understand your argument, though.

[bunderbunder]

Different layers of the OSI model are different. Everything up to layer 3 on the local network is a natural monopoly. But above there it's not, and outside that local network it's not.

In the US, this fact was pretty clearly demonstrated when the regulatory overhaul of the telephone industry in the 1990s introduced competition by requiring owners of the local copper to share it, and also by how people are able to choose their long distance carrier. The latter would be analogous to being able to choose among any number of ISPs while still using the same copper to handle the last mile.