Internet services providers (ISPs) are currently classified as "internet services" providers and not "telecommunications services." As such, they are not held to common carrier rules and regulation by the FCC or any other government body.
As such, ISPs are able and do create "contracts" with municipalities and cities to prevent other ISPs from servicing said areas. In many areas, said ISPs have formed a silent (or unannounced) agreement to not infringe upon the others territory (market). This has prevented the so-called "free market" from existing. As a result, current market-dominating ISPs charge ridiculous prices, for sub-par services in which they're likely to start reducing even more in an attempt to make other services pay for bandwidth.
Protect the consumer, not the companies.