The situation I am talking about, is removing the monopoly power given to them and enforced by the local gov. Their power would be taken away, if the government did not keep out competition.
The fear you seem to have boils down to 2 things.
1, you are worried about resources being wasted.
2, you are worried that people will be burdened by having multiple lines going everywhere.
You also seem to be worried that companies might spend investing and fail, which is nice I guess, but I don't think that is the argument you meant to make, so Ill focus on the other 2.
Wasted resources will be limited by investors not wanting to waste their money. In the public arena, companies get funds and don't worry about wasting, because its not their money, and the public cant do much if it fails. If the private company wants to build, they have to get others to give money. If those people are willing to take the risk, great.
As for the second issue, I don't see why anyone would let their property be overrun by things they don't want. If you want just 1 company building lines to your house, and they are willing to build it, then great. If your argument is that they wont want to, because it could possible take too long to get a return, then maybe. Somehow, private markets in other sectors have been able to deal with this though, so I'm not too worried about it.