Wow. The idea that profit-motivated corporations would voluntarily do what you describe is an idealistic fantasy. That's why some regulation is needed.
Exactly - everywhere there's a natural monopoly, it should be regulated into being a common carrier, when possible.
This allows innovation to flourish on top of a commodity service - fundamentally, the only thing that this kind of provider offers is the last mile, just like the water or electric company.
Personally, I think their definition is a bit broad - I tend to think of natural monopolies are where the universe's physical limitations cause obvious problems either physical or practical for competition.
For example, in a totally libertarian society where you would pay a toll to drive on any road, you wouldn't want hundreds of companies trying to making their own roads between points A and B - it wouldn't be an efficient use of space, and just imagine that turnpike.
Still, someone needs to manage the road to your house, power/cable/telephone/etc. thus the government manages the companies that manage that service.
The reason that these monopolies are "natural" is that there's a physical limitation involved - it just also happens to be codified with a contractual agreement.
