In 2011, Central government started a big infrastructure project to roll fibre out to ~80% of the population. (Called UFB - ultra fast broadband.) However instead of making this just be state owned, the money was paid as cheap loans with a competitive bid system. Companies bidding had to agree to a significant number of regulations, including a requirement to not act as an ISP and to offer wholesale access to the network for a set fee. They could also offer their own services above and beyond the regulated maximum.
So to start an ISP in NZ, all you need is some national and international transit, and at least one server to do billing and core routing. As a result, we have dozens of major, actually good ISPs and many more niche ones. Most of them service the whole country - at least the UFB service area.
I actually like my ISP. I have IPv6 and a static public IPv4. Peering is excellent and international bandwidth plentiful. Gigabit bandwidth with no usage call and no fair use policy (at least no policy regarding days usage).
Municipal internet is great until you realize you just turned a monopoly into a duopoly. Without competition, what drive your new ISP to do better? If you're super lucky, the goodness of their hearts, I guess. Because you know the old incumbent will just match the new ISP and do not better.
EDIT: Folks in other threads have pointed out how bad US government bodies have historically been at investing in infrastructure maintenance. I'd like to note that the NZ model neatly deals with those concerns too. The companies which build out the networks are made the owners presumably when the loans are paid off. These companies become very profitable even though they can't become ISPs themselves, and are thus heavily incentivized to invest their profits back into their networks to keep them working well and to come up with new products to sell. Already a NZ fibre company has deployed 10gbit fibre commercially, with no extra government support.