Can someone please explain why we (hosts and websites alike) are charged bandwidth fees and who controls these prices.

For the same reason you are charged for telephone service, electricity, water and other utilities. There is an expense in providing them.

This question was asked very recently (with the same title) and you can learn more of the specifics by doing a search on this topic.

Duster, you mean there isn't magical fiber fairy who lays line and employs elves to maintain the systems? First Santa Claus, now this??? *calls mom*

Seriously Fred, why do you think you wouldn't you be charged for it?