You are describing a scenario similar to the Texas power grid where that has indeed happened and then prices go up anyway as services are knocked out from a lack of investment in infrastructure. Similar stuff happens today when a vulnerability in S3 emerges or something like that. It is still a race to the bottom, and we have absolutely seen stagnation in service offerings.

The Independent System Operator (ISO) system works extremely well to field multiple producers and negotiate for the best rates among competition. It’s one of the reasons why we all take electricity for granted, unless you live in Texas or on a less serious scale Arizona where two corprorate entities are grandfathered in to manage the supply, they enjoy a duopoly and the rates for the service is not very competitive.