The telcos simply fell victim to digital communications, which allowed Triple Play services to be offered over the same line. A historical accident left them with a lower-capacity network than their competitor. So they found themselves in an overbuild situation to remain competitive.
But in this overbuild situation, the cable companies were the incumbent, and the telcos were the challenger. That's not a good position to be in. If your competitor gets to use their existing plant, and you have to build a brand-new one from scratch, then you'll be at a severe cost disadvantage.
The only way this situation could turn around is if bandwidth demands exceeded the carrying capacity of coax, such that fiber-to-the-premises became a necessity. Then the odds would be evened, and neither party would have an advantage.
(Well, not the only way. There could be government intervention. China Telecom and China Unicom are in the middle of a project to replace their entire copper networks with fiber. Their current target is one HUNDRED million homes passed, each, by the end of the current Five-Year Plan: 2011-2015. But, well, that's socialism, and we can't have that.)