I think bandwidth is becoming a necessity and local government can deliver it (for the record, I did not vote for Obama last time! ;-)
The way I envision it working is:
FTTH is the municipal and they hook it up to a single interchange. From there, someone has to pay for the routing to the rest of the internet, etc. Its the FTTH that is screwed up.
There's also enough money caught up in the retail ISP business that if the infrastructure maintainers failed to do their jobs, the retail ISPs could reasonably compete with them, at least in key markets. This, combined with a strong telecoms regulator pressuring them into developing and maintaining infrastructure, generally works out reasonably well; much of the country, including a lot of small towns, now have 50-70Mbps unlimited unshapedc FTTC for a reasonable price.