It raises the problem of the state controlling Internet. But 1. They already can pass laws to outlaw some parts of the Internet if they want to and 2. ISPs are so big I'm not sure them controlling Internet is more reassuring.
This is just a suggestion. I didn't process all the implications.
Some cities and counties have tried this and were immediately sued by the incumbent operators. Cable and Telco have multidecade long contracts with local municipalities. Having a government just up and attempt to start doing their own thing is arguably a breach of contract/illegal.
Comcast et al. sued Longmont, CO up the road from me when they first started their municipal internet, and tried to get the state senate to retroactively change the law in their favor. Luckily that didn't go anywhere.
Even without state intervention, utility companies tend to become local monopolies, duopolies, or non-competitive oligopolies because of the high barriers to entry. This makes it difficult for startups to compete with the incumbents.
In this case, legislation is much more effective at handling the second-tier consequences of utility companies (e.g. the natural tendency away from competition) than handling the problem itself (the high barriers to entry)