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.