Well, as far as I understand, some of the residents essentially formed a company (BBNG) which then built a fiber optics connection to the nearest TNG access point. TNG is a regional provider, serving in particular the town of Kiel (capitital of the state of Schleswig-Holstein) and is also (one of) the ISP for the corresponding state government. TNG in turn provides the actual service to the subscribers, and pays a leasing fee to BBNG. BBNG uses that revenue to reimburse the investors.

As for the peerings of TNG: http://www.cidr-report.org/cgi-bin/as-report?as=AS13101