For rural areas, there are wireless ISPs for rural areas here in Colorado where you put an antenna on your roof. You get line of sight to an antenna on a nearby mountain for internet service. I don't see how Starlink can possibly compete with that on a technological or cost basis. It seems like most of the western US could have service like this for many rural markets, if it's not already available.
So I definitely think Starlink could compete in that market. But more as an equal than as the only option.
If SpaceX is going to make huge returns on starlink, they will have to be price competitive with at least the DSL providers that are in many rural communities. Many of your remote rural areas in the US have at least 6 to 10mbps for ~$60 a month, and that's plenty for most casual users. Even for video streaming.
And that's now, when there's still large urban areas in a lot of countries on DSL. Once that DSL is phased out, rural areas are going to need better sattelite options or expensive long stretches of fibre to not fall behind the curve.
The main issue for rural satellite access is no longer bandwidth or even data caps but latency.
And if you have DSL in rural areas, count yourself lucky.
Additionally, there should be about 150-200 satellites above the US in the initial deployment.
They also plan to upgrade the satellites themselves (according to SpaceX's Mueller) so they're much larger. That should, in principle, allow them to exceed the per-satellite throughput of GSO birds like Viasat's which are over 1Tbps per bird.
They aren't competing with fiber in Denver. They're competing with high-latency and expensive satellite internet in rural areas. It's possible they may eventually dip into the cities a bit if they sell out their capacity and then build out their VLEO constellation (total of 12,000 or so satellites, but in much lower orbits enabling yet lower latency and higher bandwidth).
But Iridium's problem wasn't a lack of capacity, it was slow customer acquisition combined with very high interest rates and launch prices. If SpaceX fills up their network with customers to its capacity, they will be just fine.