Look at Chatanooga, TN's munipcal broadband for an example of how a government can be better. As for why, broadband is typically a monopoly or duopoly (phone + cable), which private companies take advantage of by raising prices and spending less money upgrading their networks. Since the municipality isn't limited by shareholders to focus purely on profit, it can invest in infrastructure that's not profitable, such as by providing Internet access to low population areas.
Why should they be any worse? If it's a municipal utility, you eliminate a profit motive, which naturally helps control prices and promote access.
Ideally, there is some competition between multiple providers to drive innovation and efficiency, and that's what regulators are trying to achieve. So you get the best of both worlds.
You did notice the bit about ISPs being a natural monopoly, though? What material difference is there between a privately owned, but well regulated monopoly, and a government owned enterprise, except the lack of profit motive on the part of the latter?
The goal of regulation here is to create competition between multiple providers. Remember that only the last mile to your home is a natural monopoly which can be awarded through public tenders. Everything else, such as the backbone and actual sales to the end customer, is not a natural monopoly, and monopolizing these areas would actually be detrimental to the customer.