[tormeh]

The problem is that the capital expenditures required to wire up houses creates natural monopolies; no government interference required. The free market will dysfunction in such a situation.

The capital expenditure required for downtown areas may not be that high, though. Government may extend the natural monopolies to rich, urban areas by requiring ISPs to wire up poor areas, thus increasing capital expenditure.

Government may make the natural monopoly worse (or better), but the problem is a natural part of the business.