Broadband projects are big infrastructure projects. Municipalities are state organs, and at the end of the day, the state is on the hook if the municipality gets in over its head. (The states are also up to their eyeballs in debt and many have no hope of paying it off.) There is a real risk that municipalities will build a system and realize that they can't maintain and upgrade it in the long term.
Look at it from a different perspective. In 24 states, including some of the largest ones, there are no restrictions on municipal broad. Nothing is stopping, for example, Baltimore, from building a municipal broadband network. (And indeed, there are quite a few in rural Maryland). Why don't they do it? Because it's not easy, and it's not cheap.
Of course, there are plenty of decent counter-arguments, and counter-counter-arguments. This is just one of those tensions that exists and is fundamentally irresolvable in any capitalist democracy.
Right, when regulation of market is prevented by vested commercial interests, the government (or the community) needs to step in
My father loves to wax poetic about the CWA and WPA during the Great Depression (though they ended before he was born, so he loves the idea more than any actual experience) - his conservative heart loves the idea that if people were struggling, they could get the care they needed as long as they work for it. He doesn't believe me when I respond to his "why don't we do that?" by pointing out that modern conservatives in govt (and many beyond) would have a coronary at the idea of having publicly funded competition to businesses that would otherwise do the work in question.
End result: He's sure there's a better way but he'll support the officials that would prevent that better way. To be fair, the progressives I support have their own list of complaints with such enforced-work-for-aid programs, but I'm not the one asking for them.