I welcome any ISP who is unhappy about this giving back the broadband infrastructure that governments have already subsidized and paid for as well as given legal monopolies to by, for example, banning municipal broadband.
I also welcome eminent domain to solve this problem.
For the past couple of decades internet access at home has usually been provided over copper phone lines. That infrastructure was originally laid across the country by BT, which was government owned, until a decade ago. The actual digging and trenching work was often done by private contractors, but the resulting infrastructure was owned by the government.
When ADSL broadband rolled out in the 2000s, BT offered their own service, but they were also forced to allow other companies to provide internet access over their infrastructure. At the end of the day the speeds were the same regardless of who you chose, but they competed against each other to gain customers. Unlimited broadband quickly because a thing, and the prices stayed low (compared to the US). Over time they did upgrade the service, and now you can get close to 100mbps over the same, often 40+ year old, cables.
In large cities fibre is rolling out, but it's being done by private companies. The UK has a lot of small towns and villages where that won't make sense, so it will be interesting to see how the market looks in the next 20 years.
In fact BT were going to roll out fibre in 1990 (yes really, I didn't believe this when I first heard but it's true) but Thatcher killed it because it would have given them a monopoly... Yeah. That's exactly as dumb as it sounds. Thanks Tories.
As long as competition exists or can be enforced, municipal services should not exist.
You mention the solution to this already, there’s nothing wrong with a municipal service so long as you allow private industry to service it.