Lots of this competition is only really possible when you force companies to share the “lines” available with their competitors, or you have a government backed semi-monopoly on the lines. This is what’s being done in the Netherlands with power and gas (and to some extend, the train service) at the moment. Telephony is different because at this point it’s much more efficient to add cellular technology instead of wires, and I wouldn’t be surprised if wire-based phone and internet will be dead in a decade or two.
In most industries, mergers and consolidation are regulated by anti-trust legislation, and mergers aren’t allowed to go through if it would create an undesirable monopoly situation. If Microsoft and Apple were to propose a merger, anti-trust legislation might prevent that, or put conditions on it, on the grounds that it would abuse monopoly power. Since health insurance is exempt, those mergers wouldn’t come under the same scrutiny.
On the topic of innovation, there are competing theories. Some say monopolies suppress innovation, on the grounds that there’s no need to innovate if there’s no competition. Others say that “slack resources” (getting far enough ahead of competitors and expenses so that you can plow money back into the business) facilitate or are even necessary for innovation. That is the case for monopolies as innovative companies.
There is always a fight, and usually the government does a great job of keeping the balance. I remember when satellite TV started competing with the cable companies. Since the cable companies had monopolies, and were tight with the politicians, they were able to get cities to pass “sight blight” ordinances outlawing small satellite dishes.
Not so fast, said the feds. They recognized that veiled attempt to monopolize TV subscriptions in the face of emerging technology and passed a law guaranteeing a home owner/apartment renter the right to install an 18 inch dish or smaller. Your homeowners’ association can tell you what color to paint your house and how high your grass can be, but you can put up your DirecTV whether they like it or not.
IMO, that was a great use of a power of interstate commerce to keep the cable companies in check and it has made them competitive with satellite providers.
We had a small-scale battle over this in the town next to mine. It didn’t provide garbage – residents were supposed to contract with private companies. Three companies competed in the town. City hall was constantly getting complaints that one or another hauler was picking up garbage too early/late, that trucks were breaking street curbs, cutting over the corners of yards, crews did a poor job of picking up trash leaving gabage on the streets, etc.
Finally the town got fed up, put out a contract and hired a single company to serve the entire town. Now the only complaints are that it costs too much.
Our phone company also has a long-running battle with the state PSC. The state will complain about the phone company’s rates, service or something else. The phone company replies that it will welcome open competition, and that the phone company will immediately drop its unprofitable service to rural areas.