We do not have a free market capitalistic system in place when it comes to cell phone companies. We have an oligopoly.
Free market capitalism requires numerous suppliers offering a homogeneous product for competition. We do not have numerous suppliers in the cell phone marketplace; at most we have 4 major players (AT&T, Verizon, Sprint, T-Mobile). We do not have a homogeneous product either. Consider the coverage and network differences between the providers. Also consider the number of people flocking to AT&T for the iPhone, despite AT&T's abysmal network quality. Consider the number of people (myself included) who switched to Verizon for the Droid. Consider the differences between GSM networks and CDMA networks.
Free market capitalism also requires low barriers of entry into the marketplace. Barriers of entry are significant in the wireless market. FCC regulations, costs to build your network (or lease it from others, if the providers will let you do it), costs to build a nationwide network of retail stores, agreements with phone manufacturers, etc. all create significant hurdles when it comes to starting up a wireless company. Also consider the time it would take to enter the marketplace; one cannot start up a wireless provider without months (perhaps years) of planning.
It is not free market capitalism that has "screwed us over", as you've put it. It is the lack of free market capitalism that has, in this case.
All of that said, I essentially agree with the points you've made in your post. More government involvement-- at least in setting up a consumers' bill of rights, and creating price ceilings for some things where there is significant mark-up (like text messaging)-- may create enough of a shock to get the market to at least partially correct itself.
I also wish that Google had done more than just provide the operating system for Android-based phones. But I can understand why they didn't-- if they had started their own wireless company and used devices with their own OS, they would have been subject to much more government scrutiny. Players like AT&T and Verizon would likely have pushed the DOJ into investigations, which may have forced Google's hand in some areas, or forced some sort of splitting up of Google's functions similar to what happened with Microsoft in the past.
Strategically, Google did the best thing for themselves. They're getting a number of devices out there with their OS on them, on a number of providers. This gives Google a much larger potential footprint and gets more people using their services, which gives Google much more data to collect on people and sell to advertisers in aggregate form. (This is where Google makes a ton of money, in case you haven't heard.
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It also positions Google very well for moving into other facets of people's lives. Google Voice integrates nicely on Android-based phones, as does Google Maps. Both are potential threats to wireless company revenue, and may eventually lead to revenue streams for Google. I'm sure it's also caused a ton more people who didn't have GMail accounts to get one, leading to more advertising revenue. I could go on, but I'm sure that you've more than gotten the idea by now.
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