This isn't capitalism, it's the opposite of capitalism. It's regulatory capture and government corruption. Most major ISPs are cable companies, and most ISPs/cable companies have a cozy legal arrangement with municipal areas to lock out competition. The free market is not in operation here.
No, actually that's roughly the original definition of the word. But then word definitions change over time, and it's now come to be equated with free market capitalism where the capital is privately held. So you're not entirely mistaken in pointed that out.
Then again if we go by the common usage, communism is an entirely useless word, as it has come to mean "whatever china is doing".