One of the problems is they're natural monopolies. You only need the one data link and so it's (arguably) more cost effective to have a single regulated monopoly on the last mile side. You can create hybrid systems (like the UK) where other businesses buy capacity wholesale from the monopoly provider and compete over the same infrastructure.
The same could be said of the grocery stores or car dealerships in my town. The problem is that as soon as you say it'd be more efficient to have all our eggs in one basket, the human nature of the carrier kicks in and says, "Hey I've got it made now. I can take it easy because no one's allowed to compete with me". Unfortunately, hiring some delegate who's multiple-times removed from the consumer/voter and is likewise unmotivated to improve the situation doesn't change that.
Yes doing the trenching and tunneling through various neighborhoods is disruptive and requires heavy machinery, etc. but that's just to create a hole in the ground. Once some conduit is laid (as a public good by the municipality?) it should be relatively easy for new carriers to come in and pull fiber or what-have-you. You just have to make the channel big enough for e.g., several cables and then you lease the space to the x highest bidders for five years at a time where x > 1.
There are probably better ways to finance things and minimize the disruption, etc. but overall it doesn't seem infeasible to me.
