Telecoms usually a natural monopoly and relatively fixed demand: you probably don't want to dramatically increase your services so the easiest way to increase their per-customer profit is to play games with fees or bundling and cut their costs to the bone, relying on the inconvenience of switching to keep you from leaving. This ensures that you have a reason to call and that the person you reach will be the end result of multiple rounds of lowest-bidder call center deals.
You are very right. There is also this howler from Gattung, the former CEO of Telecom in New Zealand, where she discusses the use of confusion as a marketing tool.
They aren't a natural monopoly-- in the U.S. telecom and video cable (cable internet) are heavily regulated government-granted monopolies. Most U.S. local governments, for example, provide for only one or two cable providers.
“Natural monopoly” doesn't mean what you think it means: it's simply a case where the most efficient setup is a single provider. Telecoms fit this category locally because of the need for cabling to each customer – sure, you can run multiple wires but that's extremely expensive and has externalities (i.e. aesthetic costs).
Regulation is a common response to a natural monopoly: cap profits at a certain level to prevent gouging and establish some sort of minimum service requirement to avoid abuse.
What I would prefer is a hybrid model where the city runs the monopoly portion and leases access to various companies. The political process at least offers more accountability than, say, the typical Comcast monopoly victim enjoys.
