To be fair, rural areas are insanely cheaper to service with fiber actually. You have cities like SF where NIMBYs are demanding all fiber equipment boxes be buried underground out of sight, and all cabling has to be tunneled. In rural areas you just string fiber on power poles or trench in the ditch.
As well, almost every successful muni fiber out there has been in an area with a muni electric provider, and little to no fiber providers outside of the muni, providing them an almost monopoly for commercial business. In major cities, commercial service is well served by multiple fiber providers, so the investment is mostly residential with no subsidizing by commercial. Many of these rural areas also have some of the cheapest electrical rates in the country as commercial user subsidize those.
Source: I grew up in Dalton GA that has muni fiber/elec 30 mins from Chattanooga who also has muni fiber/elec. I can't see this working in a major city like Atlanta.
Historically, these rural areas have been overlooked by the major private utility companies, and communities have had to DIY if they wanted electricity, telephones, etc. One thing people miss is the reason these areas have municipal electric companies in the first place is it was the only option to get electricity by the communities. There's a history of locally owned utilities working well. Besides electricity, locally owned telephone companies are also popular around the region.
Another big thing is that the interests of the business community and the residents are aligned in rural areas. There was no carrier hotel or POPs by any other providers in Dalton. Before muni fiber in both Dalton and Chattanooga if you wanted high speed internet you'd have to get a private loop backhaul all the way to Atlanta and then also pay for the internet access. No national or local providers had IP routers with gig-e or above ports locally that I'm aware of. Not like in Atlanta where you can get a local loop (from multiple national providers) to a carrier hotel and have your pick of 50+ IP transit providers.
Muni fiber was the only option for affordable internet access for both businesses and residents in these areas, and the utility was guaranteed an almost instant monopoly on high speed internet for business users. They electric cos also had all the rights of way and customer billing infrastructure, pre-built client base, and were running fiber anyway for their own use in managing the power network.
I think there's a reason why almost every successful muni fiber ISP is in a rural area with a muni electric company, and that's that local governments probably shouldn't be in the ISP game, but in some cases it's the only option by communities to obtain high speed internet, and in those cases necessity is the mother of invention.
In larger cities, I think the model would have to be different, and a muni fiber network would be a transport loop only service and you'd get to pick which ISP to connect to on the other end, like DSL in the CLEC days.