New York is the 4th largest state in terms of population, so obviously it is going to have a big debt compared to, say, Rhode Island. New York has a particularly pathological state government because if you deleted New York City and it's environs, it would be a red state. Thus you have the representatives from Queens who think the government has to subsidize off-track betting to save jobs as well as your share of tea party types. The quality of public services is excellent (they hired a friend of mine to write printer drivers for IBM mainframes fast enough that they can turn around paperwork in 2 days even at peak times) but the level of corruption for elected officials is legendary.
The money argument has nuances. I pay $90 a month for 2 Mbps DSL. From the viewpoint of the phone company, there already is competition for fiber -- they can get $90 a month from me and pay their shareholders a dividend larger than earnings (in fact, pay a dividend even when earnings are negative!) Maybe they could charge $120 a month for fiber, but they could not charge a lot more than that, but from the viewpoint of their investment, they are only getting an extra $30 a month.
Now, a newcomer could get $120 a month, but they would split the market, and some people are going to look for the low cost solution, particularly when the profits the phone company is making are already insane and they could be offering the same service for more like $50.
Probably the most practical situation (what is supposed to happen in my valley) is to work with an incumbent (Charter) to extend service to less profitable areas, because frankly, Charter makes money hand-over-first in all the rest of the areas.