http://www.toledotel.com/our-services/internet/
...it's expensive, but he has it. Every time I hear someone say we can't have blazing fast Internet in San Francisco, it's never phrased as a question like "would you be willing to pay $MONTHLY_PRICE for 1gps fiber?" So far, I've only heard "Building fiber in San Francisco isn't possible because of $UNAMBITIOUS_EXCUSE."
The result was mostly institutional connectivity. Rural prisons, hospitals, government, factories, and schools got connected. But local franchise agreements make the last mile pretty much impossible.
Rural telcos had access to this money for sure.
Municipal government really benefited as well — for its own purposes, not municipal broadband.
Purchasing IP connectivity from ToledoTel is the same thing as purchasing IP connectivity from Verizon -- they are both the incumbent telco in their respective geographic areas.
It is possible in some places to get IP transit from someone other than the telco or cable company but almost always that is happening using the layer-2 infrastructure from the telco. I've never heard of that happening via cable but I suppose it is possible.
I've been out of this for a while, but in Connecticut it used to be possible to lease layer-2 connectivity from the telco and then provide the IP services on top of that. This was done via DSL to the end-user with the layer-2 traffic aggregated and backhauled via ATM virtual circuits to the ISPs router in some data center. It was still difficult to compete with the local telco -- who also was selling IP transit of course via the same methodology. Mainly the problem was the economies of scale. The pricing favored high-volume which is hard for a small company competing against the market visibility of the local telco.
Yes, it costs money to build out last-mile infrastructure. But even in very low density areas, it can pay off. Recurring revenues of $50-100/month per customer can in fact pay for the initial investment. Especially if the investment was a wifi tower. It's the kind of thing one motivated local can pull off.
Building a worldwide network of peers who all respect NN is much much more difficult. Even if you could set up some organization like EFF to define some "Bill of Rights" and then certify conformant ISPs with a cool logo of approval, customers will not choose ISPs based on that logo. Average American consumers will not demand NN.
So your local ISP--even a well-intentioned one--will do as you suggest: "Simply purchase transit bandwidth from the big guys." There ends NN.