1. A free-market dynamic requires an actual market. If the buyer can't chose among competing sellers, then it's not a market. At the grocery store you can choose from among many different sellers: that's a functional market. The point where your plumbing connects to the water main, simply isn't.
2. The entire purpose of infrastructure is to generate positive externalities. Ready availability of transport, water and electricity, etc., makes it easy and desirable to do business in a place and with each other. This leads to emergent urban economies, where mutual comparative advantage among a heterogeneous population leads to mutually beneficial exchange, which in turn leads to more growth and prosperity for everyone. The fewer low-level frictions, the more prosperous everyone becomes. But capturing value at the point-of-use -- which is what private operators generally do -- creates a low-level friction with substantial knock-on effects. Every dollar you extract from the farebox of a public transport system, for example, is many dollars removed from the wider economy. It's much more appropriate to subsidise the infrastructure networks and then tax the positive externalities (via sales, income, and property taxes) after the uplift has been created.
3. There are broader socio-economic issues of accessibility to services that profit-driven companies have no incentive to be responsive to.