One challenge is that in many places (especially the most profitable areas), the last mile is already built out. So by saying "municipally owned fiber" you mean laying new pipes to replace existing pipes (significant material cost) or trying to wrestle control of the existing pipes away from large ISPs (significant political cost). A small to medium sized city cannot just tell AT&T "give me your fiber", and it often lacks the capital to put down new fiber. Even if a small project could be completed, the dominant ISP in the area would simply lower their prices enough to make the project uneconomical, thus preventing the project from recouping its costs and staining the idea of publicly owned internet infrastructure.