We're talking about local politics. You don't get to consider the realities of the market, just the realities of the political situation. In Philadelphia, Comcast offers basic cable for something like $13/month. That almost certainly doesn't reflect the market cost, and they don't do it out of the kindness of their hearts, they do it as a precondition for their license.
> Then if the city wants to help the poor it can subsidize their fee which doubles your bang for the buck because the lower price creates more sign ups which lowers the unit cost.
Cities don't like to spend their own money subsidizing poor and high cost people. They prefer cross-subsidies, so that people don't see the money on their tax bill. That's how we got the cable franchises in the first place--cities offered exclusive monopolies as a carrot for building out networks and offering cheap basic service.
See: http://www.crainsnewyork.com/article/20140219/TECHNOLOGY/140....
In New York, fiber rollout has become an economic justice/civil rights issue, complete with demagoguery ("'If you can't afford to feed your family by the end of the month, you can't afford $75 a month for the broadband service,' she said. 'And that's what we have to fix.'").
> Not all cities are as broken as Chicago or Detroit.
No, but almost all the major ones are effectively bankrupt. See: http://www.pewtrusts.org/uploadedFiles/wwwpewtrustsorg/Repor... (page 4). Every city on that list besides Milwaukee and Washington, D.C. has an underfunded pension plan. And those numbers are computed by the cities using optimistic projections about future growth. See: http://www.businessinsider.com/pensions-are-still-making-lud....
It seems like your argument is not that good policies don't exist but rather that people are too stubborn, apathetic or corrupt for them to be enacted. But that isn't a policy argument, it's a self-fulfilling prophecy.
> Every city on that list besides Milwaukee and Washington, D.C. has an underfunded pension plan.
That doesn't mean they're bankrupt, it just means they're going to have to reduce spending or raise taxes (or run a deficit). And a municipal fiber project is self-funding through subscription fees. All the city's finances are relevant to is the interest rate paid on the bonds.
That seems like a strong candidate for pricing that reflects the realities of the market: Make the monthly fee include a line item for the cost of installing fiber on your street amortized over the first few years and divided by the number of subscribers on your street who have committed to a multi-year contract. A street gets fiber as soon as someone signs up, but they have to commit to a very large bill if they're the only one. Let people sign up contingent on that price falling below some threshold. That way you get universal service availability but no customers are unprofitable. Then if the city wants to help the poor it can subsidize their fee which doubles your bang for the buck because the lower price creates more sign ups which lowers the unit cost.
> Companies aren't building fiber because there isn't enough money in it under existing regulatory regimes.
That's the whole point of municipal fiber -- to have the municipality front the capital so you don't have to cater to private interests.
> The states and cities are totally bankrupt.
Not all cities are as broken as Chicago or Detroit.