Question:
I've been torn on this subject myself for as long as I can remember. Having competing water companies, for instance, just isn't practical.

Why not? Once a delivery system is in place, usually built by the property developer, the procurement merely feeds the delivery system. This is an over-simplification, but to say that competition is impractical is totally false.

Answer: The poster asks why private investors would not build water purification plants, miles-long viaducts, waste disposal systems, and water/sewer pipes to all homes in a community in order to compete with existing public systems. The answer is that the investment would be staggering and there would be virtually no chance of making a profit. This is obvious when you consider that capital flows towards those projects that seem most likely to be profitable. For example: a tunnel was built under the English Channel. Financially, this project is a disaster. Do you think that private investors would like to build another such tunnel? Back to water systems: to build a privately owned water/sewer system in existing communities you would have to get easements from every property owner and from the owner of the streets. You would have to dig up all of the streets and all of the yards. Won't happen!