What's even more frustrating about it is that we have plenty of examples of what sort of good actual competition produces with U.S. telco services, but they're unfortunately usually in small markets or regional areas so they don't get the national coverage they deserve. The Google Fiber project is a rarity in that regard, for having so much attention on it, including stories about Time Warner's response to it in the areas being served (lowering prices and upping service speeds to compete).
I can relate with you, having seen my city (also a college and university city) triple in size in the last decade. Time Warner has done virtually nothing in that time, at least not on a large scale, and certainly nothing on their infrastructure. However, there's been an upstart, regional competitor that's been moving in, slowly slowly slowly. It's been slow because Time Warner's been fighting them tooth and nail, with legal tactics and otherwise. That company's been building up a modern infrastructure, almost all fiber, with current-gen equipment. They've been spending a lot of money to do it, it's true, but despite that they've been consistently profitable year after year, because customers WANT their service.
Just two years ago, that company finally won the right-of-way access to lay down new lines in my neighborhood. As soon as service was available, I switched. I went from 15Mbps/512Kbps(!) on Time Warner to 65M/5M with the new guys. I also pay less for it, and that's not even their top tier; it's one of their mid-range offerings. Plus, I almost always GET the advertised speed too, thanks to the modern back-end. I'm also still a television watcher (I know, I know..) and I'm getting more channels I actually want, including some that were "premium" with Time Warner, included in my package, while also paying less for the television service. I even get TiVo units direct from the cable provider, instead of Time Warner's horrifically shitty lowest-bidder cable boxes and half-broken cablecards.
The reason I bring all this up (yeah yeah, I know I'm getting off-topic a bit) is to point out Time Warner's response to all of this. In the areas that the new provider manages to get in (and ONLY in those areas!), Time Warner almost immediately moves to upgrade its equipment, lower the prices, and up the broadband speeds and television offerings, trying to hold on to customers they never had to give a shit about before. This has actually gotten them in a bit of trouble, because they're literally charging different prices for the same service, depending on which part of the city you live in (whether your neighborhood has competition or not).
Right after I left, I started getting notices and mailings from Time Warner offering to "win me back" and telling me how they'd "improved their services" in my area, having admittedly spent a bundle to upgrade their lines and equipment, and offer higher broadband speeds and more television channels (ironically, their improved services are still not as good as the new guys and aren't cheaper either). This is the kind of thing that happens over and over and over, again and again, anywhere where even a duopoly springs up, let alone even greater competition. But since it's only some small area in Texas in my case, it doesn't get the coverage it deserves. These kind of things should be brought up on a national platform to point out the kind of lies TW's PR is spewing as in the original article up there. I mean mainstream media; it's already well-known on places like Slashdot but you've got to admit it's not an "everyman" news site.
As an aside, wandering even more off-topic, I know what you mean about AT&T not laying shit for DSL and gouging customers. My neighborhood had DSL when I first moved in (expensive $40/mo for 5Mbps/128Kbps). Less than a year later, AT&T actually went in and pulled all the DSL equipment, dumping the customers that were using the service (this was when Time Warner was the only other competitor in the area, too). Their reason? It wasn't profitable enough. As in, they weren't losing money in the area, they just weren't making enough. So they took their ball and went home (they moved all the DSL equipment to another area of town rather than purchase new equipment to serve that area).