I think cities/communities can decide what is best for their citizens better then the big telcos or state and federal governments.
Also, an individual has more sway with the local government then they do with the state/feds, so if something about the service needs to be improved it's more likely to get done. But if all else fails, it's easier to move to a different city then it is out of state or out of country.
What happens if the network is not profitable? Will they take funding from other sources? Will they even know what they are doing? Verizon a company with decades in the business can't get billing write, you think the govt will do better?
Letting the govt control the interweb? Go to China. Less govt is a good thing.