The US is still lagging behind on that realization and it's a common mistake to think that privatizing water supplies holds benefits for towns and consumers. Most often in these cases, deregulation brings benefits in the short term as private actors compete heavily to win public markets, but not in the long term when the market tends to an oligopoly / monopoly and private actors don't have any more incentive to push on innovation or investments.
The issue of lack of investment isn't a problem of too much regulation, on the contrary. These are markets with very high costs of entry where you need a strong regulatory framework to mandate a couple actors to a large enough market for those investments to be viable. You quote the example of communications, in France by law France Telecom had to expand its network to reach any citizen, whether 10km away from the grid or 10m at no cost for the consumer. This led to a great coverage of the territory and very high access to broadband for most of the population.
Take the example of the US, where internet access costs easily $100 a month, has just a couple actors sharing the market in each city, in a proper position of cartel, and where government regulation is nearly non-existent; and oppose this to most european countries where a 100mb symmetrical connection will cost you 30 EUR.... On the counter, what really disrupted the French Telecom market was the arrival of Free, which offered costs so low Telecoms had to find ways to match their prices.
It's a fallacy to think that these markets don't need regulation, but it's another one to think government can do everything ;)
Sources: http://in.reuters.com/article/water-utilities-paris-idINL6N0... http://thewip.net/2009/01/28/local-water-renaissance-in-fran...