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Assuming that natural monopolies do exist, you just described how they actually work. They don't need the protection of the government because the incumbent has so many advantages over the entrant, that (most of the times) there is no need to offer any incentives to any company for it to be the first one to exploit a natural monopoly.

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The government regulations aren't there to create or protect monopolies. They're there to control monopolies that were likely to occur anyway, so that the monopolists can't use their position in an overly extractive manner.

Since these regulations occur at a local level, some of the rules are more effective than others, and some of them are straight-up corrupt. But the common case is not government creating monopolies, but rather government restraining them by regulating them.

Ok, I guess I was looking at it wrong.I was thinking about government-granted monopolies where the government willingly prevents competition. It is my understanding that this was how of most of the telecommunication companies around the world started.

I've heard of other scenarios where the government prevented competition, but they nearly all boil down to the same core: the constituents want X, but some sort of market failure is occurring (or likely to occur) and a temporary market intervention was able to resolve it.

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