It works (and is the best option bar-none) until the big few lobby the state to outright ban municipal ISPs as happened in my state (NC). So frustrating.
The other question that would be asked is, perhaps less explictly, is "do you want to drive [employer of X,000 jobs in the region] out of the state?". It doesn't matter if those jobs would be replaced by superior jobs at a publicly-operated telco, or if some of those jobs are complete bloat (and therefore paid for by inflated utility bills among all subscribers). Nobody wants to engage in that argument; it's a losing battle.
Yes, there's an easy answer to that, but when faced with the option of a short-term sacrifice in exchange for a long-term collective gain, people invariably opt not to take it.
If only there were a way to spread that cost equally among the people who would benefit from it, and a legal structure for collecting that payment, representing the interests of the constituent people, and ensuring that the telco held up its end of the arrangement!